SECURITIES AND EXCHANGE COMMISSION
UNITED STATES
Washington D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: June 2, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _____________________
Commission File Number 0-15034
GEODYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
California 95-2502865
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
21171 Western Avenue, Suite 110, Torrance, California 90501
(Address of principal executive office)
(310) 782-7277
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12 (b) of the Act: (None)
Securities registered pursuant to Section 12 (g) of the Act: Common Stock
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ X ]
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant on July 31, 1995, computed with reference to
the final quotation of such stock as reported in the NASDAQ National Market
System for July 31, 1995 was $25,187,356 for 2,457,303 shares.
As of the close of business on July 31, 1995, the registrant had outstanding
2,636,808 shares of common stock, without par value.
Documents Incorporated By Reference
Portions of the registrant's definitive proxy statement for the 1995 Annual
Meeting of Shareholders to be held on November 16, 1995 are incorporated by
reference in Part III of this report.
PART I
ITEM 1. BUSINESS
Geodynamics Corporation and subsidiaries (Geodynamics or the
Company) provides information engineering services primarily to
Government customers. The majority of revenues (approximately
89% in fiscal 1995) are from contracts with the Department of
Defense (DoD). The Company provides these services to DoD
customers engaged in three major systems areas: command,
control, communications, computers and intelligence (C4I)
(pronounced "C-fourth-I") systems; weapons systems; and space
systems. Non-DoD revenues are primarily in support of petroleum
exploration and Geographic Information Systems (GIS).
On June 2, 1995, Geodynamics had contracts, including task
orders, with intelligence, military and civil agencies of the
U.S. Government and Government prime contractors. Due to the
highly restricted nature of the Company's work, many of its
contracts cannot be described in this report.
The Company acquired LaFehr and Chan Technologies, Inc. (LCT) in
June 1994, the beginning of the current fiscal year. LCT has
offices in Houston, Texas and London, England, and has
approximately 40 employees. It provides software and data
interpretation services for oil and mineral exploration, marine
gravity and airborne data acquisitions. LCT operates the
largest marine gravity meter fleet in the world. Certain of its
meters are also used to perform airborne gravity surveys.
In January 1995, the Company established a wholly-owned
subsidiary, Geodynamics Services Corporation (GSC) to provide
GIS activities.
Business Areas
Although the acquisition of LCT has provided some new business
areas for the Company, Geodynamics' main business remains in the
analysis, specification, design, development and integration
management of information systems for C4I, weapons, and space
projects. The Company's services in these areas include mission
planning, systems engineering technical analysis, performance
analysis of existing and planned programs, determination of
requirements for new systems and technologies design,
development, and integration of commercial off-the-shelf (COTS)
software and custom software.
C4I Systems
C4I systems provide military leaders with the capability to
manage and control intelligence collection and weapons during
peacetime, crises, and military conflict. Intelligence systems
provide the battlefield commander with situation assessments and
pre- and post-strike information on opposing forces. In
addition, selected C4I systems degrade the capability of an
adversary to perform all of those critical functions.
There are a variety of C4I systems. Data collection systems
provide indications and warnings of attack, and strike and
damage assessment information. Command and control systems
support military planning, plus monitoring and execution of
operations. Communications systems provide rapid, accurate and
secure exchange of information among all users. Navigation and
position fixing systems support the deployment of friendly
forces, the planning and execution of force operations, and
facilitate the accurate delivery of military supplies.
Electronic warfare and electronic countermeasure systems are
employed to disrupt the performance of enemy weapons and C4I
systems and to protect U.S. systems from similar disruptions.
The Company is currently in the process of bidding for renewal
of its contract with the TENCAP office of the Air Force Space
Command which requires support in the planning and management of
tactical exercises, intelligence requirements management,
mission assessment analysis, and prototype systems for support
of operational forces. This contract accounted for $8.7 million
of revenue for fiscal year 1995.
Weapons Systems
The Company is engaged in the development of an improved mission
planning capability for the F-15 and F-16 aircraft. This effort
involves the use of multispectral imagery for determining
optimum mission routes to avoid enemy defensive missiles and yet
achieve high probability of mission success.
Geodynamics is involved in the development of the Air Force
Space Command's Space Warfare Center (SWC) which is tasked with
assessing how space systems can most effectively support the war
fighter. This involves mission planning, execution, simulation
of resources and assessment of effectiveness.
Space Systems
Use of data from space systems in preparation for military
operations is part of the forces doctrine. The Company is
providing systems engineering and development support to a
customer for re-engineering a large classified command and
control system. The Company has a long history of performance
analysis for space systems using highly complex modeling and
simulation tools.
Services
The Company's technical expertise in the above business areas
relate to systems engineering, custom applications software
development, and, more recently, the field of application and
integration of COTS software. Special areas of emphasis include
the development of complex gravity field modeling for
non-seismic oil exploration, modeling of vehicle subsystems,
development, operations and maintenance of ground station
command and control systems, guidance system analysis, sensor
platforms and space systems support to the warfighter.
Geodynamics' other skills include development of algorithms
relating to mission planning, signal processing, image
processing, message handling, orbit and trajectory
determination, telemetry data analysis, digital cartographic,
GIS, and linkage analysis. The latter provides the capability
to associate any class of objects (people, organizations, or
events) with any other object class, and is used in a number of
classified government organizations to detect highly
sophisticated criminal or fraudulent activity.
Systems Engineering
The Company provides systems engineering services directly to
U.S. Government intelligence and military agencies and
indirectly through government prime contractors. Geodynamics'
systems engineering capabilities encompass all phases of a
project, from initial concept definition through system
operations. Its services may include: 1) analysis of initial
program objectives to establish system performance requirements
to guide system design activity; 2) review of the availability
of equipment and systems and assessment of the technical
feasibility of their application or adaptability to satisfy
system performance requirements; 3) development and application
of computer simulations of complex systems and "real world"
environments to evaluate system effectiveness and validate
requirements; 4) preparation of test plans, supervision of
tests, analysis of test data, and preparation of test reports
for the entire system, and 5) system operations.
The Company also provides independent verification and
validation of software systems to aid the customer in evaluating
the acceptability of those systems. As part of this effort the
Company will verify and validate the design, development and
implementation of such software to ascertain that the required
objectives are satisfactorily met for each phase of operation.
Applications Software
Geodynamics designs and develops custom applications software
which allows the customer to expedite the investigation of
highly analytical problems pertaining to intelligence and
military applications. In many cases, such software is provided
in connection with the Company's systems engineering services to
meet customer requirements.
Geodynamics has developed and delivered turn-key computer
systems which consist of specifically-designed hardware systems
purchased from third party hardware vendors and packaged with
custom applications software developed by the Company. While
turn-key emphasis has pertained to mid-size and minicomputers,
significant recent emphasis has involved microprocessor
capability, particularly as it applies to planning and
exploitation workstation development.
The Company and its LCT subsidiary have developed a unique
software applications package to separate aircraft accelerations
from true gravity variations in support of airborne gravity
measurements for petroleum and minerals exploration.
Gravity and Magnetic Applications
Through LCT, the Company provides sophisticated gravity and
magnetic data acquisition products and services to the
international energy, mining, engineering and environmental
industries. These services include marine, land and airborne
geophysical data acquisition, processing and interpretation. In
1995, LCT acquired the marine gravity and magnetic assets of a
significant provider of marine gravity and magnetic data
acquisition and processing services.
Customers
Geodynamics provides services primarily to the U.S. Government.
U.S. Government customers include the Defense Intelligence
Agency, the National Security Agency and other intelligence
agencies, various segments of the U.S. Air Force, the U.S. Army,
the U.S. Navy, and United and Specified Commands of the Joint
Chiefs of Staff.
Among the Company's U.S. Air Force customers are the Air Staff,
Space and Missile Center, Space Command, Western Space and
Missile Center, and the Electronic Systems Center. The Company
acts as a subcontractor to such government prime contractors as
Lockheed Martin Corporation, Loral, Hughes Information
Technology Company, and Texas Instruments.
LCT's exploration company customers include Geco-Prakla, Western
Geophysical, Digicon, and a number of oil companies including
British Petroleum, Japan National Oil Company, Amoco, Mobil,
Phillips, and Saudi Aramco.
For the year ended June 2, 1995, contracts with the U.S. Air
Force accounted for 33.8% of the Company's revenues and
subcontracts with Loral accounted for 13.6% of revenues. No
other single customer accounted for more than 10% of fiscal 1995
revenues.
U.S. Government Contracts
Substantially all of Geodynamics' revenues have been derived
from contracts with intelligence and military agencies of the
U.S. Government and from subcontracts with U.S. Government prime
contractors. The revenues and income of the Company could be
materially affected by changes in government procurement
policies or a reduction in government expenditures for services
of the type provided by the Company. The Company's business is
performed under cost reimbursement, fixed price and fixed rate
time and materials contracts.
Cost reimbursement contract types include cost plus fixed fee,
cost plus incentive fee and cost plus award fee contracts.
These contracts provide for reimbursement of costs to the extent
allocable, allowable and funded under applicable regulations,
and payment of a fee, which may either be fixed by the contract
(cost plus fixed fee) or variable, based on actual performance
within specified limits for such factors as cost, technical
performance, and management (cost plus incentive fee) or the
customer's subjective evaluation of the Company's work (cost
plus award fee). Under U.S. Government regulations, certain
costs, including financing costs, are not reimbursable.
Under fixed price contracts, the Company agrees to perform
certain work for a fixed price; under a fixed rate time and
materials contract, the customer agrees to pay a specific rate
per labor hour for each particular service to be performed.
Greater risks are involved under fixed price contracts than
under cost reimbursement contracts or time and material
contracts because in fixed price contracts the Company assumes
responsibility for providing the specific products or services
regardless of the actual costs incurred.
The following table gives the approximate percentage of the
Company's revenues realized from the basic types of contracts
during the fiscal years indicated:
<TABLE>
Year Ended
-------------------------------------------
June 2, 1995 June 3, 1994 May 28, 1993
------------ ------------ ------------
U.S. Government Defense Contracts:
<S> <C> <C> <C>
Cost Reimbursement 49.1% 51.1% 51.4%
Fixed Price 7.3% 9.6% 10.5%
Fixed Rate Time and Materials 32.9% 37.1% 37.2%
------ ------ ------
89.3% 97.8% 99.1%
Non-Defense Revenue 10.7% 2.2% 0.9%
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
</TABLE>
Contract costs for services or products supplied to government
agencies, including allocated indirect costs are subject to
audit and adjustment. The Company's contract costs have been
audited by the Defense Contract Audit Agency through fiscal
1988. Contract costs for periods subsequent to fiscal 1988 have
been recorded at amounts which are expected to be realized upon
final settlement.
The Company's U.S. Government contracts may be terminated, in
whole or in part, at the convenience of the customer (as well as
for cause in the event of default). In the event of a
convenience termination, the customer generally is obligated to
pay the costs incurred by the Company under the contract plus a
fee based upon work completed. The Company has never had a
contract terminated for cause.
A termination or substantial curtailment of the U.S. Government
programs under which Geodynamics holds contracts could have an
adverse effect upon the Company's revenues, income, and backlog.
Long-term U.S. Government contracts generally are conditioned
upon the continuing availability of congressional
appropriations. Congress usually appropriates funds on a fiscal
year basis, even though contract performance may take several
years. Consequently, at the outset of a major program, the
contract is usually partially funded and additional monies are
normally committed to the contract by the procuring agency only
as appropriations are made by Congress for future fiscal years.
Backlog
At June 2, 1995, Geodynamics' backlog was $101 million,
approximately $3 million higher than at the end of the prior
fiscal year. Backlog includes unexercised options which, in the
Company's opinion, will be exercised; however, there is no
assurance that such options will be exercised. All of the
Company's contracts reflected in this backlog are subject to
termination for convenience of the customer. See
"Business--U.S. Government Contracts", and "Management's
Discussion and Analysis".
Marketing
Geodynamics' marketing activities are conducted principally by
its senior management and by its professional staff of
engineers, scientists and analysts. Geodynamics also prepares
proposals in response to government requests for proposals.
Competition
Most of the business areas in which Geodynamics is involved are
competitive, and require highly skilled and experienced
technical personnel with high levels of U.S. Government security
clearances. Recent changes in U.S. Government procurement
policies have increased emphasis on competitive bidding, a trend
the Company anticipates will continue. There are many companies
which compete in the service areas in which the Company is
engaged, some of which have significantly greater financial and
personnel resources.
Government Security Clearances
Geodynamics' ability to maintain its current business base and
to grow in the future is based in part on its ability to provide
employees and facilities which meet rigorous U.S. Government
security requirements. The Company employs a Corporate Security
Director as well as a resident Security Representative at each
of its operational divisions. Each division has a continuing
program to meet applicable security requirements and to maintain
employee awareness of the paramount need for compliance with
security requirements.
Patents and Technical Data
The Company does not consider patent protection to be
significant to its current operations. The U.S. Government has
proprietary rights to the technical data, including software
products, which result from Geodynamics' services under U.S.
Government contracts or subcontracts. In the case of
subcontracts, the prime contractor may also have certain rights
to such technical data.
Employees
A majority of the technical staff holds advanced degrees in the
primary areas of math, physics, electrical and mechanical
engineering, and business. The Company's employees are
generally required to have high level U.S. Government security
clearances to operate under the Company's contract efforts on
behalf of the Government.
At June 2, 1995, Geodynamics employed 473 full-time employees,
including 367 in systems engineering and software development
and energy services, 27 in corporate management and
administration, and 79 in support staff. The numbers reflect an
increase of approximately 6% from the levels reported for the
previous year. The increase is primarily a result of the
purchase of LCT, net of a decrease of approximately 8% for the
remainder of the Company.
The Company's employees are not represented by any labor union.
The Company believes that its employee relations are good, and
it has not experienced any labor disputes or work stoppages.
Executive Officers
Certain information with respect to the Executive Officers of
the Company at the end of fiscal 1995 who are not Director
nominees of the Company is set forth below:
Name Age Position
- ------------------- --- ----------------------------------------------
Kwok Chan 42 President and CEO of LCT
Robert G. Cook 49 Controller, Assistant Corporate Secretary
Joanne M. Dunlap 45 Vice President, Administrative Services
and Corporate Secretary
Paul J. Henrikson 51 Vice President
A. Ronald Jacobsen 59 Vice President & General Manager, Western Division
M. Carolyn Mihara 57 Executive Assistant to the President and CEO
David P. Nelson 54 Vice President/Finance, Chief Financial Officer
Patrick J. Reynolds 53 Corporate Contracts Manager
Jack F. Scherrer 49 Vice President & General Manager, Eastern Division
Richard P. Smith 58 Vice President & General Manager, Central Division
Harry W. Utter 48 General Manager, Geodynanmics Services Corporation
Kwok Chan
Dr. Kwok Chan is President and Co-founder of LCT, a wholly-owned
subsidiary of Geodynamics Corporation. Formerly, he was Senior
Geophysicist of Edcon Incorporated of Denver, Colorado.
Dr. Chan received a Bachelor of Science, a Master of Science and
a Ph.D., all in Engineering Geoscience at the Department of
Materials Science and Engineering, University of California at
Berkeley.
Robert G. Cook
Mr. Cook joined the Company in 1989 as Controller. In 1990, he
was also named Assistant Corporate Secretary. From 1988 through
1989, until he joined the Company, Mr. Cook performed consulting
and contract work in the accounting field, and from 1985 through
1988, he was Accounting Manager for Power Up! Software
Corporation.
Mr. Cook is a Certified Public Accountant and holds a
Bachelor's degree in Accounting, and a Masters of Business
Administration from Santa Clara University.
Joanne M. Dunlap
Ms. Dunlap joined the Company in 1984 as the Corporate Personnel
Manager. In October 1988 she also assumed the duties of
Corporate Secretary and in 1990 she was named Vice President,
Administrative Services.
Ms. Dunlap holds a Bachelor's degree in Business from Alma
College and a Masters of Business Administration from Central
State University of Oklahoma. Ms. Dunlap completed
post-graduate work at the University of Oklahoma.
Paul J. Henrikson
Mr. Henrikson joined the Company in 1979 as Department Head of
the Advanced Technology and Applications Department. In 1982
Mr. Henrikson was named associate Site Director. In 1994, Mr.
Henrikson was appointed Corporate Director of Advanced Programs
and in 1995, he was appointed Vice President.
Mr. Henrikson received his Bachelors degree in Engineering and
Applied Physics from Harvard University and a Masters degree in
Electrical Engineering from the University of Minnesota.
A. Ronald Jacobsen
Mr. Jacobsen joined the company in 1977 as Vice President and
Site Manager of the Los Angeles facility. In May 1984, he
became Vice President of Business Development; in 1990 he
assumed the title of Vice President, Corporate Advanced Programs
and in 1994 he was appointed Vice President and General Manager,
Western Division.
Mr. Jacobsen has a Bachelor of Science degree in Physics from
Northern Illinois University.
M. Carolyn Mihara
Ms. Mihara joined the Company in 1990 and has served as an
Executive Assistant to the Chairman of the Board, President and
Chief Executive Officer since that time.
Ms. Mihara graduated from the Mary Dalton Frye Secretarial
College and holds a Bachelor of Science degree in Business
Management from Pepperdine University.
David P. Nelson
Mr. Nelson joined the Company in 1990 as Vice President/Finance
and Chief Financial Officer. Previously, Mr. Nelson was Senior
Vice President, Chief Financial Officer for Perceptronics, Inc.
for six years.
Mr. Nelson holds Bachelor's and Master's degrees in Economics
from the University of California at Los Angeles.
Patrick J. Reynolds
Mr. Reynolds joined the Company in December 1991 as Corporate
Contracts Manager. He was previously employed by McDonnell
Douglas Electronic Systems Company, Northrop Corporation,
Trident Data Systems, Hughes Aircraft Company and the United
States Air Force as a Contracting Officer. Mr. Reynolds has a
Bachelor's degree in Business Administration from the University
of Iowa.
Jack F. Scherrer
Mr. Scherrer joined the Company in 1985 as a Member of the
Professional Staff. In August 1985, Mr. Scherrer was named as
Program Manager for the ORB Program and in 1994 he was appointed
General Manager, Eastern Division.
Mr. Scherrer received his Bachelor's degree in Physics from
Thomas More College and a Master's degree in Physics from the
University of Dayton.
Richard P. Smith
Mr. Smith is a Corporate Vice President and Division General
Manager for the Company's Central Division headquartered in
Colorado Springs, Colorado. He joined the Company as a member
of the professional staff in June 1982 after a successful career
in the United States Air Force where he served as a
communications and intelligence officer and educator. He
established the first Air Force all-source tactical collection
management capability in Europe and was a key participant in
fielding the Air Force Wargaming Center as part of the Air
University Complex. Mr. Smith initially supported the
development of the Denver Regional business base and opened the
Colorado Springs office in July 1983. As General Manager of the
Central Division, he has been a major influence in
government-wide Tactical Applications of National Capabilities
(TENCAP) support to global military operations.
Mr. Smith holds a Bachelor of Science degree in Education from
Montana State University and a Master's in Business
Administration from Auburn University.
Harry W. Utter
Mr. Utter joined the Company in 1989 as Program Manager for the
Midwest Region. In 1992 he became the Director of Corporate New
Business Development and was appointed General Manager of the
Commercial Division in 1994. Previously, Mr. Utter served in
the United States Air Force where he was a Lieutenant Colonel
and Director of Contract Management. His Air Force career was
spent in acquisition of space systems.
Mr. Utter holds a Bachelor of Science degree in Engineering
Management form the United States Air Force Academy and a
Masters of Business Administration Management from the
University of California at Los Angeles.
ITEM 2. PROPERTIES
Geodynamics maintains the following facilities aggregating
approximately 225,000 square feet:
<TABLE>
Current Square Year Facility
Facility Footage Established Security Level
- --------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Santa Barbara, CA (2) 18,356 1968 --
Washington, D.C. 54,036 1977 Top Secret
Torrance, CA 52,994 1977 Top Secret
Sunnyvale, CA 22,600 1981 Top Secret
Denver, CO 10,795 1982 Top Secret
Colorado Springs, CO 33,321 1984 Top Secret
Hanover, MD 10,575 1984 Top Secret
Gaithersburg, MD 1,050 1989 Unclassified
Tampa, FL 3,933 1993 Top Secret
Hampton, VA 6,156 1993 Top Secret
Houston, TX 9,892 1994 Unclassified
London, England 1,730 1965 Unclassified
</TABLE>
All of the Company's facilities are leased from unaffiliated
third parties. The lease expiration dates range from December
1995 to September 2000. The leases for these facilities, with
one exception, have renewal options ranging from one to five
years. The Company has made significant leasehold improvements
to most of its facilities in order to meet U.S. Government
security requirements. The aggregate annual rent for these
facilities for the fiscal year ended June 2, 1995 was
approximately $2.6 million. The Company believes that its
facilities are adequate and suitable for the conduct of its
current operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not engaged in any legal proceedings which are
material to the business or financial condition of the Company.
In the Company's third quarter Form 10-Q filed April 17, 1995,
the results of a contested shareholder election were described.
The costs involved in the election of approximately $1 million
are believed to be reimbursable costs under its contracts with
the Government. Subsequent to that time, and in order to
resolve litigation surrounding the proxy contest preceding the
shareholder election, the Company entered into a Settlement
Agreement with Alney A. Baham to pay him the total sum of
approximately $328,000, and subsequently granted him two 5-year
options, one for 10,000 shares at a price of $8.00 per share,
and one for 10,000 shares at a price of $10.00 per share. The
price of Geodynamics' stock at the date these options were
approved was $8.75 per share. The Company also entered into a
Settlement Agreement with William Strong and Mason Hill Asset
Management, Inc. and delivered a 2-year stock option to Mr.
Strong for 20,000 shares at a price of $8.75 per share (the
price of Geodynamics' stock when the settlement was authorized).
Each settlement agreement included mutual releases by the
parties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of fiscal
year 1995 to a vote of security holders through the solicitation
of proxies or otherwise.
ITEM 5. MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The Company's common stock is traded on the NASDAQ National
Market System under the symbol "GDYN". As of July 31, 1995,
there were approximately 404 holders of record of the Company's
common stock (exclusive of shares held in street names) and the
closing price of the common stock was $10.25. The Board of
Directors has approved a quarterly dividend policy. Pursuant to
this policy, dividends totaling $.28 per share were declared
during both fiscal 1994 and 1995.
Quarterly stock price data for the two years ended June 2, 1995
was as follows:
<TABLE>
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
FY 95:
High $8 1/4 $8 1/4 $9 1/4 $9 1/2
Low 6 1/2 6 7 7 1/2
FY 94:
High 9 1/4 9 1/4 9 1/4 9 1/2
Low 8 1/4 8 1/4 7 3/4 7 3/4
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
INCOME STATEMENT DATA: (thousands, except per-share data)
<TABLE>
Year Ended
------------------------------------------------------------------------
June 2, 1995 June 3, 1994 May 28, 1993 May 29, 1992 May 31, 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $60,770 $54,823 $57,696 $58,424 $62,114
Costs and expenses 57,937 53,734 55,017 55,487 56,817
------------ ------------ ------------ ------------ ------------
Income from operations 2,833 1,089 2,679 2,937 5,297
Other income 312 351 288 395 278
------------ ------------ ------------ ------------ ------------
Income before provision
for income taxes 3,145 1,440 2,967 3,332 5,575
Provision for income taxes 1,227 555 1,019 1,271 2,100
------------ ------------ ------------ ------------ ------------
Net income $ 1,918 $ 885 $ 1,948 $ 2,061 $ 3,475
============ ============ ============ ============ ============
Earnings per common share $ .73 $ .38 $ .80 $ .77 $ 1.22
============ ============ ============ ============ ============
Weighted average number of
common shares outstanding 2,630 2,327 2,428 2,689 2,856
============ ============ ============ ============ ============
Cash dividends per common
share $ .28 $ .28 $ .28 $ .28 $ .25
============ ============ ============ ============ ============
</TABLE>
BALANCE SHEET AND OTHER DATA: (thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Working capital $15,738 $16,634 $18,405 $17,331 $19,918
Long-term liabilities 1,872 142 305 1,135 1,507
Shareholders' equity 30,456 26,408 26,820 26,334 27,962
Total assets 40,640 32,279 32,722 34,352 38,920
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following tables set forth for the periods indicated the
percentages which selected items in the statements of income
bear to revenues and the annual percentage change of the dollar
amounts of such items for the period indicated.
<TABLE>
Percentage of Revenues
Year Ended
---------------------------------------------
June 2, 1995 June 3, 1994 May 28, 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
Costs and expenses 95.3 98.0 95.4
Income from operations 4.7 2.0 4.6
Income before provision for
income taxes 5.2 2.6 5.1
Provision for income taxes 2.0 1.0 1.7
Net income 3.2 1.6 3.4
</TABLE>
<TABLE>
Percentage Change
Year Ended
-----------------------------
June 2, 1995 June 3, 1994
------------ ------------
<S> <C> <C>
Revenues 10.8% (5.0)%
Costs and expenses 7.8 (2.3)
Income from operations 160.1 (59.4)
Income before provision for income taxes 118.4 (51.5)
Provision for income taxes 121.1 (45.5)
Net income 116.7 (54.6)
</TABLE>
Year Ended June 2, 1995 as Compared with Year Ended June 3, 1994
- ----------------------------------------------------------------
Revenues for fiscal 1995 increased to $60.8 million, a 10.8%
increase over the $54.8 million reported in fiscal year 1994.
The increase is primarily the result of the consolidation of
LCT, the Company's wholly-owned subsidiary which was acquired at
the beginning of the current fiscal year. LCT's revenues for
the current fiscal year were $5.2 million. In addition, the
Company's core DoD business contributed an increase of 3% of
revenues compared to the prior fiscal year.
Costs and expenses for fiscal year 1995 were $57.9 million, as
compared with $53.7 million in the prior fiscal year. Income
from operations and the operating margin in fiscal year 1995
improved to $2.8 million and 4.7%, respectively, from the fiscal
year 1994 comparable figures of $1.1 million and 2.0%. Net
costs involved in the contested shareholder election were
approximately $1 million and are believed to be reimbursable
costs under the Company's contracts with the U.S. Government. A
decrease in operating losses incurred by non-DoD development
activities, from $2.4 million in fiscal 1994 to $.7 million in
fiscal 1995, is primarily responsible for the improvement. In
fiscal 1996, no further losses are expected from these
activities, which have been substantially curtailed, and the
Company does not presently anticipate initiating any new
activities of this nature.
At the beginning of fiscal 1995, the Company acquired 100% of
the stock of LCT for $5 million plus an earnout amount to be
determined by LCT's financial performance through December 31,
1995. The $5 million was payable 1/2 in stock and 1/2 in cash,
which resulted in use of $2.5 million cash and the issuance of
322,000 shares of Geodynamics stock.
LCT conducts gravity and magnetic surveys around the world and
provides related products and services. For the current fiscal
year, LCT reported revenues of $5.2 million compared with $5.7
million for fiscal 1994, which was not consolidated, since it
was pre-acquisition. Net profit was $60,000 compared with
$71,000 in fiscal 1994. Net income in fiscal 1995 reflected
$105,000 of pre-tax charges due to the amortization of assets
written up with respect to purchase accounting for the
acquisition. Fiscal 1995 revenues and profits were below
expectation due to lower actual performance from marine and
gravity surveys.
The Company anticipates that the additional earnout amount, to
be payable 1/2 in stock and 1/2 in cash, will range between $1.0
million and $3.5 million depending on revenues and profit
margins for the two-year period ending December 31, 1995. There
is no assurance that the final amount, which will be subject to
audit, will be within this range.
Backlog at June 2, 1995 was $101 million, approximately 3%
higher than the $98 million reported at June 3, 1994.
Year Ended June 3, 1994 as Compared with Year Ended May 28, 1993
- ----------------------------------------------------------------
Revenues for fiscal 1994 were $54.8 million down 5.0% from the
$57.7 million in fiscal 1993. Of this decrease, approximately
$3.6 million was from the Company's DoD business while non-DoD
(commercial) business provided a $700,000 increase. The DoD
revenue reduction was due primarily to the continuing
contraction of military spending and the reduction or
termination of military programs which impacted a number of the
Company's contracts, including one program being terminated.
Costs and expenses in fiscal 1994 were $53.7 million, down from
$55.0 million in the prior fiscal year. The resulting income
from operations in fiscal 1994 was $1.1 million, down nearly 60%
from the $2.7 million in fiscal 1993. The operating margin was
2.0% in fiscal 1994, down from 4.6% in the prior year. Income
from operations included $3.5 million from DoD business,
representing a 6.5% margin on revenue in the current year versus
income from operations of $3.3 million in fiscal 1993 with a
margin of 5.8%. Non-DoD business showed net expenditures
(primarily for research and development) of approximately $2.4
million in fiscal 1994 including sales of $1.2 million. In the
prior year commercial business incurred net expenditures of
approximately $600,000 including revenues of approximately
$500,000.
Backlog at June 3, 1994 was $98 million, down from $102 million
at May 28, 1993, representing a 4% reduction.
CAPITAL RESOURCES AND LIQUIDITY
Cash and short-term investments of $8.2 million at the end of
fiscal 1995 were down from the $8.8 million in the prior fiscal
year. This decrease is primarily the result of the net cash
impact of the LCT acquisition and of purchases of equipment, net
of numerous cash sources (see Consolidated Statements of Cash
Flows). Contracts receivable were $15.4 million, up from the
$13.6 million at the end of fiscal 1994; this represented aging
at 93 days, as compared with 91 days for 1994. The Company's
working capital position decreased due to the consolidation of
LCT; the current ratio at June 2, 1995 was 2.9 to 1, compared
with 3.9 to 1 at June 3, 1994. The Company's investment in
ERDAS, Inc. remains at $1.2 million, representing a 19.5%
interest in outstanding ERDAS stock. For the year ended
December 31, 1994, ERDAS reported revenues of $11,828,000 and a
net profit of $433,000. As of June 2, 1995, there were
short-term borrowings by LCT under the Company's $8 million
unsecured line of credit totaling $747,000, guaranteed by the
parent company, to provide working capital for LCT.
Subsequent Event
On June 8, 1995, the Company announced that it had retained the
investment banking firm of A.G. Edwards & Sons, Inc. to review
the options available to maximize shareholder value, including
the possible sale of the Company. On August 21, 1995 the
Company also announced that this process was continuing, but
that there had been no decision concerning the sale of the
Company. The Company is continuing in this process.
Effect of Inflation
Geodynamics believes that during the past three years inflation
has not had a material impact on operations, since approximately
one-half of its revenues were derived from cost reimbursement
contracts and most of the balance has been derived from fixed
price contracts which are bid with inflation factors assumed in
the pricing.
PART II
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements are included in
Part II, Item 8:
Report of Independent Public Accountants
Consolidated Balance Sheets at June 2, 1995 and June 3, 1994
Consolidated Statements of Income for the Years Ended
June 2, 1995, June 3, 1994, and May 28, 1993
Consolidated Statements of Shareholders' Equity for the Years
Ended June 2, 1995, June 3, 1994, and May 28, 1993
Consolidated Statements of Cash Flows for the Years Ended
June 2, 1995, June 3, 1994, and May 28, 1993
Notes to Consolidated Financial Statements
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Geodynamics Corporation:
We have audited the accompanying consolidated balance sheets of
GEODYNAMICS CORPORATION (a California corporation) and subsidiaries
as of June 2, 1995 and June 3, 1994, and the related consolidated
statements of income, shareholders' equity and cash flows for each
of the three years in the period ended June 2, 1995. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Geodynamics Corporation and subsidiaries as of June 2, 1995
and June 3, 1994, and the results of their operations and their
cash flows for each of the three years in the period ended
June 2, 1995 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Los Angeles, California
July 28, 1995
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
June 2, June 3,
1995 1994
----------- -----------
ASSETS
Current Assets:
Cash $ 2,310,000 $ 1,237,000
Short-term investments 5,862,000 7,546,000
Receivables :
Contracts, including current portion of
unbilled receivables of $1,910,000 in
1995 and $3,483,000 in 1994 14,524,000 12,607,000
Current portion of employee loans 26,000 142,000
Refundable income taxes --- 430,000
Deferred income taxes 513,000 ---
Prepaid expenses and other 815,000 401,000
----------- -----------
Total current assets 24,050,000 22,363,000
----------- -----------
Equipment and Leasehold Improvements, at cost:
Computer and test equipment 20,073,000 11,511,000
Office furniture and equipment 4,367,000 3,963,000
Leasehold improvements 3,658,000 3,620,000
----------- -----------
28,098,000 19,094,000
Less accumulated depreciation and amortization (16,615,000) (14,188,000)
----------- -----------
Net equipment and leasehold improvements 11,483,000 4,906,000
----------- -----------
Other Assets:
Noncurrent unbilled contract receivables 920,000 1,041,000
Investments 1,277,000 2,812,000
Goodwill, net of amortization of $75,000 1,425,000 ---
Other intangible assets, net of amortization of
$916,000 in 1995 and $209,000 in 1994 1,080,000 750,000
Employee loans receivable, net of current
portion 171,000 175,000
Deferred income taxes --- 80,000
Other noncurrent assets 234,000 152,000
----------- -----------
Total other assets 5,107,000 5,010,000
----------- -----------
$40,640,000 $32,279,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
June 2, June 3,
1995 1994
----------- -----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,907,000 $ 1,692,000
Accrued expenses :
Payroll and payroll related 1,167,000 937,000
Benefit plans 157,000 602,000
Vacation 1,905,000 1,530,000
Dividends payable 182,000 156,000
Income taxes payable 137,000 ----
Deferred income taxes ---- 469,000
Current portion of long-term debt 54,000 ----
Line of credit 747,000 ----
Deferred revenue 246,000 ----
Contract billings in excess of revenues 810,000 343,000
----------- -----------
Total current liabilities 8,312,000 5,729,000
----------- -----------
Long-Term Liabilities:
Long-term debt, net of current portion 163,000 ----
Deferred income taxes 1,570,000 ----
Deferred lease obligations and other 139,000 142,000
----------- -----------
Total long-term liabilities 1,872,000 142,000
----------- -----------
Commitments and Contingencies
Shareholders' Equity:
Common stock, without par value:
Authorized - 10,000,000 shares
Outstanding - 2,605,000 shares at
June 2, 1995 and 2,230,000 shares
at June 3, 1994 11,910,000 8,997,000
Retained earnings 18,542,000 17,414,000
Foreign currency translation 4,000 ----
Less notes receivable from sale of stock ---- (3,000)
----------- -----------
Total shareholders' equity 30,456,000 26,408,000
----------- -----------
$40,640,000 $32,279,000
=========== ===========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended
-----------------------------------------
June 2, June 3, May 28,
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $60,770,000 $54,823,000 $57,696,000
Costs and expenses 57,937,000 53,734,000 55,017,000
----------- ----------- -----------
Income from operations 2,833,000 1,089,000 2,679,000
----------- ----------- -----------
Other income (expense):
Interest income 383,000 366,000 306,000
Interest expense (71,000) (15,000) (18,000)
----------- ----------- -----------
Net other income 312,000 351,000 288,000
----------- ----------- -----------
Income before provision for
income taxes 3,145,000 1,440,000 2,967,000
Provision for income taxes 1,227,000 555,000 1,019,000
----------- ----------- -----------
Net income $1,918,000 $885,000 $1,948,000
=========== =========== ===========
Earnings per common share $0.73 $0.38 $0.80
=========== =========== ===========
Weighted average number of
common shares outstanding 2,630,000 2,327,000 2,428,000
=========== =========== ===========
Cash dividends per common share $0.28 $0.28 $0.28
=========== =========== ===========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Notes
Common Stock Foreign Receivable Total
------------------------ Retained Currency from Sale Shareholders'
Shares Amount Earnings Translation of Stock Equity
---------- ---------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, May 29, 1992 2,419,000 $9,399,000 $16,982,000 $0 $(47,000) $26,334,000
Payments of notes receivable from
sale of common stock --- --- --- --- 25,000 25,000
Exercise of stock options and tax
benefits related to stock
options 4,000 25,000 --- --- --- 25,000
Nonqualified stock options charged
to operations --- 127,000 --- --- --- 127,000
Cash dividends on common stock --- --- (666,000) --- --- (666,000)
Repurchases of common stock (110,000) (443,000) (530,000) --- --- (973,000)
Net income --- --- 1,948,000 --- --- 1,948,000
---------- ---------- ----------- ----------- ---------- ------------
Balance, May 28, 1993 2,313,000 9,108,000 17,734,000 0 (22,000) 26,820,000
Payments of notes receivable from
sale of common stock --- --- --- --- 19,000 19,000
Exercise of stock options and tax
benefits related to stock
options 19,000 87,000 --- --- --- 87,000
Nonqualified stock options charged
to operations --- 157,000 --- --- --- 157,000
Cash dividends on common stock --- --- (631,000) --- --- (631,000)
Repurchases of common stock (119,000) (482,000) (574,000) --- --- (1,056,000)
Employee stock purchase shares
issued 17,000 127,000 --- --- --- 127,000
Net income --- --- 885,000 --- --- 885,000
---------- ---------- ----------- ----------- ---------- ------------
Balance, June 3, 1994 2,230,000 8,997,000 17,414,000 0 (3,000) 26,408,000
Shares issued for LCT, Inc.
acquisition 322,000 2,500,000 --- --- --- 2,500,000
Payments of notes receivable from
sale of common stock --- --- --- --- 3,000 3,000
Exercise of stock options and tax
benefits related to stock
options 32,000 177,000 --- --- --- 177,000
Nonqualified stock options charged
to operations --- 78,000 --- --- --- 78,000
Cash dividends on common stock --- --- (747,000) --- --- (747,000)
Repurchases of common stock (15,000) (63,000) (43,000) --- --- (106,000)
Employee stock purchase shares
issued 36,000 221,000 --- --- --- 221,000
Foreign currency translation --- --- --- 4,000 --- 4,000
Net income --- --- 1,918,000 --- --- 1,918,000
---------- ----------- ----------- ----------- ---------- ------------
Balance, June 2, 1995 2,605,000 $11,910,000 $18,542,000 $4,000 $0 $30,456,000
========== =========== =========== =========== ========== ============
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended
--------------------------------------
June 2, June 3, May 28,
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $1,918,000 $ 885,000 $ 1,948,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Cash effect of changes, net of the
effects from acquired company:
Depreciation and amortization 3,476,000 2,462,000 2,293,000
Loss on retirement of capital assets 39,000 188,000 ---
Nonqualified stock options charged to
operations 90,000 157,000 127,000
Deferred income taxes (1,092,000) 24,000 (89,000)
Loss on investments 31,000 --- ---
(Increase) decrease in:
Contract receivables, net (227,000) 381,000 3,257,000
Refundable income taxes 430,000 (430,000) 1,554,000
Prepaid expenses and other (351,000) (70,000) 206,000
Other noncurrent assets (56,000) 159,000 (208,000)
Increase (decrease) in:
Accounts payable (103,000) 38,000 (1,033,000)
Accrued expenses 148,000 (28,000) (88,000)
Income taxes payable 137,000 (319,000) (642,000)
Deferred lease obligations and other --- (163,000) (257,000)
---------- ----------- -----------
Net cash provided by operating activities 4,440,000 3,284,000 7,068,000
---------- ----------- -----------
Cash flows from investing activities:
Loans to LCT, Inc. --- (1,612,000) ---
Purchases of short-term investments (2,277,000) (10,392,000) (11,428,000)
Sales of short-term investments 3,961,000 10,323,000 8,708,000
Purchase of LCT, net of acquired cash of
$1,319,000 (1,419,000) --- ---
Employee loans, net 120,000 (67,000) 140,000
Purchases of equipment and leasehold
improvements (3,299,000) (1,550,000) (1,679,000)
Additions to other intangible assets (156,000) (313,000) (428,000)
Net cash used in investing activities (3,070,000) (3,611,000) (4,687,000)
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
For the Years Ended
--------------------------------------
June 2, June 3, May 28,
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities:
Line of credit borrowings 747,000 --- ---
Proceeds from exercise of common stock
options and tax benefits related to
stock options 177,000 87,000 25,000
Repurchases of common stock (106,000) (1,056,000) (973,000)
Cash dividends paid (721,000) (637,000) (673,000)
Foreign currency translation 4,000 --- ---
Long-term debt (622,000) --- ---
Payments on notes receivable from sale
of stock 3,000 19,000 25,000
Proceeds from employee stock purchase plan 221,000 127,000 ---
---------- ----------- -----------
Net cash used in financing activities (297,000) (1,460,000) (1,596,000)
---------- ----------- -----------
Net increase (decrease) in cash 1,073,000 (1,787,000) 785,000
Cash at beginning of year 1,237,000 3,024,000 2,239,000
---------- ----------- -----------
Cash at end of year $2,310,000 $1,237,000 $3,024,000
========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period - income taxes $1,704,000 $1,290,000 $659,000
Cash paid during the period - interest $89,000 $15,000 $18,000
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
GEODYNAMICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Line of Business
Geodynamics Corporation and subsidiaries (Geodynamics or the
Company) provides information engineering services and products
for Government, commercial and international customers. The
Company provides these services to programs in several major
systems areas: command, control, communications, computers and
intelligence systems; strategic weapons systems; space systems;
and commercial products. For the year ended June 2, 1995,
approximately 89% of the Company's revenues have been derived
from contracts with intelligence and military agencies of the U.
S. Government and government prime contractors. 33.8 percent of
the Company's fiscal 1995 revenues were derived from contracts
with a U.S. Government agency, and 13.6 percent were derived
from subcontracts with a government prime contractor.
Basis of Consolidation
On June 2, 1995 and for the year then ended, the consolidated
financial statements include the accounts of the Company and the
accounts of its wholly-owned subsidiaries LaFehr and Chan
Technologies, Inc. (LCT) and Geodynamics Services Corporation
(GSC). Statements for the two fiscal years ended June 3, 1994
include only the accounts of Geodynamics Corporation. All
material intercompany accounts and transactions in fiscal 1995
have been eliminated.
Revenue Recognition
Contract revenues are recorded under the
percentage-of-completion method of accounting, primarily on the
basis of costs incurred to total estimated costs. Unbilled
contract receivables represent revenues recognized under the
percentage-of-completion method but not yet billed to customers.
Noncurrent unbilled contract receivables are not expected to be
billable during the succeeding twelve-month period, under
retainage provisions in the contracts. Contract billings in
excess of revenues represent certain contracts for which
billings exceed revenues recognized under the
percentage-of-completion method.
In the period in which it is determined that a loss will result
from the performance of a contract, the entire amount of the
estimated loss is charged to income. Other changes in contract
price and estimates of costs and profits at completion are
recognized prospectively. This method recognizes in the current
period the cumulative effect of the changes on current and prior
periods. Certain government agencies have audited the Company's
contract costs through the fiscal year ended June 3, 1988.
Subsequent years remain open for audit.
Short-term Investments
Short-term investments are stated at market value, which equals
cost, and consist of money market funds. For purposes of the
statements of cash flows, the Company does not consider its
short-term investments as cash equivalents.
Non-current Investments
Non-current investments include $1,200,000 invested in ERDAS,
Inc. In September 1993, the Company converted a portion of its
loan to ERDAS to equity, raising the Company's holdings in ERDAS
common stock from 14 percent to 19.5 percent. Conversion of the
remaining loan balance of $115,000, plus exercise of an option,
would permit the Company to acquire up to a total of 25% of
ERDAS common stock through July 31, 1996.
ERDAS performed services for and paid royalties to the Company
amounting to $3,054,000 and $175,000, respectively, for the year
ended June 2, 1995. These services and royalties were not
material during the two years ended June 3, 1994.
The Company acquired 100% of the stock of LCT on June 9, 1994.
The price, payable 1/2 in stock and 1/2 in cash, was $5,000,000
plus an earn-out amount to be determined by LCT's financial
results through December 31, 1995. The purchase price has been
allocated to the assets acquired based on their estimated fair
value at the acquisition date. The portion of the purchase
price allocated to intangible assets, including goodwill, was
$2,380,000. As part of the agreement, Geodynamics' previous
$1,500,000 loan to LCT was substantially repaid. The
accompanying consolidated financial statements as of June 2, 1995,
include the results of operations of LCT since the acquisition
date. At June 3, 1994, the loan to LCT of $1,500,000 was
included in investments.
Fiscal 1994 proforma results reflect revenues of $60,502,000,
net income of $760,000, and earnings per share of $0.29. This
unaudited proforma revenue and earnings data for the year ended
June 3, 1994 reflects combined results of operations of fiscal
1994 after giving effect to certain adjustments, including
amortization of intangibles, depreciation, and reduction of
interest income and related tax effects as if the acquisition
occurred on May 29, 1993. The proforma results have been
prepared for comparative purposes only and do not purport to
indicate the results of operations which would actually have
occurred had the combination occurred on May 29, 1993 or which
may occur in the future.
Equipment and Leasehold Improvements
Depreciation of equipment is provided using primarily
accelerated methods over the estimated useful lives of the
assets, ranging from three to ten years. Residual values of 50%
of acquisition cost are assumed for gravity meters; all other
assets have none. Leasehold improvements are amortized on a
straight-line basis over the lesser of the life of the asset or
the remaining life of the related lease.
The Company follows the policy of capitalizing expenditures
which materially increase asset lives and charging ordinary
maintenance and repairs to operations as incurred. Maintenance
and repairs expense totaled $497,000, $343,000, and $364,000 for
the years ended June 2, 1995, June 3, 1994, and May 28, 1993,
respectively. When assets are sold or otherwise disposed of,
the cost and related reserves are removed from the accounts and
any resulting gain or loss is included in income.
Earnings Per Common Share
Earnings per common share are computed by dividing net income
available for common shareholders by the weighted average number
of common shares and common share equivalents (consisting of
common stock options) outstanding during the periods. Fully
diluted earnings per share did not vary significantly from
primary earnings per share. The following summarizes the
information used to compute earnings per common share:
<TABLE>
Year Ended
--------------------------------------------
June 2, 1995 June 3, 1994 May 28, 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net income available for common shareholders $1,918,000 $ 885,000 $1,948,000
============ ============ ============
Weighted average common shares outstanding 2,544,000 2,267,000 2,395,000
Dilutive effect of stock options 86,000 60,000 33,000
------------ ------------ ------------
Weighted average shares used to compute
earnings per common share 2,630,000 2,327,000 2,428,000
============ ============ ============
</TABLE>
Foreign Currency Translation
The assets and liabilities for LCT's UK operations are
translated into U.S. dollars using currency exchange rates at
year-end. Income statement items are translated at average
exchange rates prevailing during the period. The resulting
translation adjustments are recorded in shareholders' equity.
During the twelve months ended June 2, 1995, the UK operations
generated revenues of approximately $705,000 and operating
income of $215,000.
Reclassifications
Certain reclassifications have been made to the prior years'
financial statements to conform to the current year presentation.
2. INCOME TAXES
Effective May 29, 1993, the Company changed its method of
accounting for income taxes to comply with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109.
This change had a minimal effect on the Company's financial
statements.
Under SFAS No. 109, deferred income tax assets and liabilities
are computed based on the temporary difference between the
financial statement and income tax bases of assets and
liabilities using the statutory marginal income tax rate in
effect for the year in which the differences are expected to
reverse. Deferred income tax expenses or credits are based on
the changes in the deferred income tax assets or liabilities
from period to period.
The components of the net deferred income tax liability at June
2, 1995 and June 3, 1994 are as follows:
<TABLE>
1995 1994
----------- -----------
<S> <C> <C>
Short-term deferred income taxes:
Assets:
Accrued vacation $ 585,000 $ 471,000
Self-insurance 187,000 182,000
Leases 45,000 61,000
Net operating loss carryforward 123,000 ---
Other 61,000 38,000
----------- -----------
Total deferred assets 1,001,000 752,000
----------- -----------
Liabilities:
Prepaid rent (110,000) (96,000)
Long-term contracts (378,000) (1,125,000)
----------- -----------
(488,000) (1,221,000)
----------- -----------
Net short-term deferred tax asset (liability) $ 513,000 $ (469,000)
=========== ===========
Long-term deferred income taxes:
Assets:
Depreciation $ 298,000 $ 243,000
Deferred compensation 148,000 135,000
Leases 45,000 56,000
Other 55,000 ---
----------- -----------
546,000 434,000
----------- -----------
Liabilities:
Long-term contracts (388,000) (354,000)
Goodwill (1,728,000) ---
----------- -----------
(2,116,000) (354,000)
----------- -----------
Net long-term deferred tax asset (liability) $(1,570,000) $ 80,000
=========== ===========
</TABLE>
The components of the provision for income taxes for the three
years ended June 2, 1995 are as follows:
<TABLE>
Current Deferred Total
---------- ------------ ----------
<S> <C> <C> <C>
1995:
Federal $1,907,000 $ (847,000) $1,060,000
State 417,000 (250,000) 167,000
---------- ------------ ----------
$2,324,000 $ (1,097,000) $1,227,000
========== ============ ==========
1994:
Federal $ 432,000 $ 24,000 $ 456,000
State 99,000 -- 99,000
---------- ------------ ----------
$ 531,000 $ 24,000 $ 555,000
========== ============ ==========
1993:
Federal $1,634,000 $ (761,000) $ 873,000
State 344,000 (198,000) 146,000
---------- ------------ ----------
$1,978,000 $ (959,000) $1,019,000
========== ============ ==========
</TABLE>
A reconciliation of income taxes at the statutory federal income
tax rate and the provision for income taxes is as follows:
<TABLE>
Year Ended
-----------------------------------------------------------------
June 2, 1995 June 3, 1994 May 28, 1993
------------------- ----------------- -------------------
Amount % Amount % Amount %
---------- ----- -------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Expected federal tax $1,069,000 34.0 $490,000 34.0 $1,009,000 34.0
State tax, net of federal tax
benefit 110,000 3.5 59,000 4.1 96,000 3.2
Tax exempt interest and
dividend income (10,000) (.3) (4,000) (.3) (9,000) (.3)
Other items 58,000 1.8 10,000 .7 (77,000) (2.6)
---------- ----- -------- ----- ---------- -----
$1,227,000 39.0 $555,000 38.5 $1,019,000 34.3
========== ===== ======== ===== ========== =====
</TABLE>
Net operating loss carryforwards of approximately $333,000 expire in 2008.
3. LINE OF CREDIT AND LONG-TERM DEBT
Geodynamics has an $8,000,000 unsecured line of credit agreement
with a bank which expires November 1995. Borrowings under the
agreement bear interest at the bank's reference, offshore or
fixed rate. At June 2, 1995, borrowings (advances to LCT,
guaranteed by parent company) under this line were $747,000 and
the interest rate was 9.25%. The weighted average interest rate
in fiscal 1995 was 8.97%. There were no borrowings under this
line in prior years since 1991. The agreement requires the
Company to maintain certain financial ratios and a minimum
tangible net worth of $24,500,000. As of June 2, 1995, the
Company was in compliance with such covenants.
Long-term debt consists of the following loans made to LCT by
its then largest shareholders prior to Geodynamics' acquisition
of LCT:
<TABLE>
June 2, 1995 June 3, 1994
------------ ------------
<S> <C> <C>
11.25% Subordinated Note Payable to shareholder, due 1999 $209,000 ---
6.0% Unsecured Note Payable to former shareholder, due 1996 7,000 ---
6.0% Subordinated Note Payable to former shareholder, due 1997 1,000 ---
------------ ------------
217,000 ---
Less current maturities (54,000) ---
------------ ------------
$163,000 ---
============ ============
</TABLE>
Long-term debt matures as follows: $54,000 in 1996, $53,000 in
1997, $58,000 in 1998, and $52,000 in 1999.
4. LEASE COMMITMENTS
The Company has operating leases for facilities and equipment
expiring at various dates though September 2000, with certain
rights of extension. Certain facility leases provide initial
periods during which the Company is not required to make rent
payments. For these leases the Company has prorated the cost
over the life of the leases. The rent expense under operating
leases was approximately $2,645,000, $2,716,000, and $2,825,000
for the years ended June 2, 1995, June 3, 1994, and May 28,
1993, respectively.
Minimum annual lease payments under all noncancelable leases are
due as follows:
<TABLE>
Fiscal year:
<S> <C>
1996 $2,852,000
1997 2,159,000
1998 1,787,000
1999 1,266,000
2000 696,000
Thereafter 158,000
</TABLE>
Commitments under the facility lease agreements also extend, in
most instances, to property taxes, insurance and maintenance.
5. BENEFIT PLANS
The Company has defined contribution retirement plans which
cover substantially all of its employees. Under the terms of
the plans, contributions are made to a trust at the discretion
of the Company's Board of Directors. The Company also has a
money purchase pension plan covering substantially all of its
employees and contributes ten percent of the total qualifying
compensation of all eligible participants.
Contributions under all plans were approximately $2,435,000,
$2,650,000, and $2,581,000 for the years ended June 2, 1995,
June 3, 1994, and May 28, 1993, respectively.
In addition, the Company has an incentive compensation plan for
certain key employees, pursuant to which cash bonuses are paid
as determined by the Board of Directors. Expenses under this
plan were approximately $71,000, $85,000, and $101,000 for the
years ended June 2, 1995, June 3, 1994, and May 28, 1993,
respectively.
6. CAPITAL TRANSACTIONS
Preferred Stock
The Company has two classes of preferred stock with 2,035,000
shares authorized and none outstanding as of June 2, 1995 and
June 3, 1994.
Common Stock Options
At June 2, 1995, 656,000 shares of common stock were reserved
for issuance under two incentive stock option plans for key
employees. Options outstanding under these plans are
exercisable over a period of five years and were issued at the
fair market value at the date of grant.
At June 2, 1995, 139,000 shares of common stock were reserved
under various nonqualified stock option plans. The Company has
made various grants under these plans at below the then-current
market price. Such options are generally exercisable at 20% per
year. The difference between the exercise price and the fair
market value at the grant date is amortized as compensation
expense over the vesting period.
During fiscal year 1995, the Company adopted a director stock
purchase option plan. This plan allows for options to vest in
20% increments through June 1, 1999. These director options are
included in the following table as Nonqualified Stock Options.
Information relative to common stock options is as follows:
<TABLE>
Incentive Stock Options Nonqualified Stock Options
------------------------- --------------------------
Number Number
of Shares Option Price of Shares Option Price
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares under option, May 29, 1992 494,000 $8.50-16.38 94,000 $2.00- 6.00
Options granted 3,000 7.00- 7.38 32,000 5.00
Options canceled (50,000) 9.00-16.38 (1,000) 6.00
Options exercised -- -- (4,000) 2.00- 6.00
--------- ------------ --------- ------------
Shares under option, May 28, 1993 447,000 7.00-16.38 121,000 2.00- 6.00
Options granted 13,000 8.25- 9.00 60,000 6.00
Options canceled (87,000) 9.00-15.88 (14,000) 6.00
Options exercised -- -- (19,000) 2.00- 6.00
--------- ------------ --------- ------------
Shares under option, June 3, 1994 373,000 7.00-16.38 148,000 2.00- 6.00
Options granted 188,000 6.00 243,000 3.00-12.00
Options canceled (69,000) 6.00-12.88 (6,000) 6.00
Options exercised -- -- (32,000) 3.00- 6.00
--------- ------------ --------- ------------
Shares under option, June 2, 1995 492,000 $6.00-16.38 353,000 $2.00-12.00
========= ============ ========= ============
</TABLE>
As of June 2, 1995, options to purchase 428,000 common shares
were exercisable. The vesting of certain options accelerates if
the Company has a change in control.
Common Stock Purchase Plans
Under the Company's long-term stock purchase plan, the Company
sold shares of common stock to employees at fair market value.
As permitted under this plan, the purchasers paid for these
shares with notes bearing interest at 10 percent per annum,
payable in 40 equal quarterly principal installments. The
amount of the related notes receivable as of June 2, 1995 and
June 3, 1994 is shown as a reduction of shareholders' equity in
the accompanying consolidated balance sheets. No shares were
issued during the three years in the period ended June 2, 1995.
There are no additional shares available for issuance under this
plan at June 2, 1995.
In fiscal 1994, the Company initiated an Employee Stock Purchase
Plan, under which employees may elect to have cash withheld
currently from their paychecks to buy shares of Company stock at
85% of market price on predetermined quarterly purchase dates.
The plan is available to substantially all employees, and
expires 10 years from the date of adoption. As of June 2, 1995,
53,000 shares had been issued under this plan and 77,000
additional shares were available for future subscription by
employees.
In February 1995, the Company adopted the 1994 Employee Stock
Bonus Plan. The plan covers all salaried employees and
officers. The Company reserved 100,000 shares of stock for this
plan and no shares had been issued at June 2, 1995.
7. SIGNIFICANT FOURTH QUARTER EVENTS
In connection with a proxy contest and related changes in
management, the Company entered into various agreements with two
former employees. The settlements included cash payments and
certain additional employee benefits, the effect of which has
been reflected in the accompanying consolidated financial
statements.
The Company also entered into a 20 month employment agreement
with its new president. This agreement provides for a minimum
guaranteed salary if the officer is terminated prior to December
31, 1996 as well as a sign-on bonus, cash distribution bonus,
operations and performance bonuses. The agreement also includes
stock options, some of which become immediately exercisable upon
a change in control. The sign-on bonus as well as the income
statement effect of the options have been reflected in the
accompanying consolidated financial statements.
8. CONTINGENCIES
The Company from time to time is involved in disputes in the
normal course of business. While the outcome of such disputes
can never be predicted with certainty, in the opinion of
management none of the open matters at June 2, 1995 will have a
material effect on its financial statements.
Subsequent to year-end the Company entered into employee
retention agreements with certain key members of management.
These agreements provide for a cash bonus upon a change in
control as well as severance pay and other employee benefits
payable upon termination related to a change in control.
In connection with the purchase of meters from a company which
is now a customer, LCT entered into an agreement to provide a
credit of 50 percent off the standard meter rental on future
business with this customer. Accruals for expected costs in
connection with this transaction have been recorded, and
approximately $726,000 in credits are outstanding which, when
utilized, will result in break-even operating margins on those
jobs.
9. BUSINESS SEGMENT REPORTING
Geodynamics Corporation has two lines of business, Department of
Defense (DoD) contracting and non-DoD services. The following
table summarizes certain financial data by industry segment as
of June 2, 1995 and for the year then ended. Comparative data
for years prior to fiscal 1995 have been omitted because such
data are not meaningful. Geographic area information is omitted
because it is not significant.
<TABLE>
DoD Non-DoD Consolidated
Contracts Services Totals
------------ ----------- -------------
Segment Data :
<S> <C> <C> <C>
Revenues $54,246,000 $6,524,000 $60,770,000
Income (loss) from operations 3,491,000 (658,000) 2,833,000
Identifiable assets 27,922,000 12,718,000 40,640,000
Depreciation and amortization 2,893,000 583,000 3,476,000
Capital expenditures 964,000 2,335,000 3,299,000
</TABLE>
10. QUARTERLY FINANCIAL DATA (Unaudited)
The following table presents summarized quarterly results as
previously reported on Form 10-Q: (in thousands except for per-share data)
<TABLE>
Fiscal Year 1995
-------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $13,144 $14,619 $16,556 $16,451
Income from operations 812 856 735 430
Income before provision for income taxes 859 937 841 508
Net income $ 528 $ 577 $ 517 $ 296
Earnings per common share $ .21 $ .22 $ .20 $ .10
Fiscal Year 1994
-------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Revenues $12,568 $14,788 $14,007 $13,460
Income from operations 411 399 17 262
Income before provision for income taxes 480 488 105 367
Net income $ 298 $ 302 $ 57 $ 228
Earnings per common share $ .13 $ .13 $ .02 $ .10
</TABLE>
PART III
Pursuant to General Instruction G(3) to Form 10-K, the
information called for by items 10, 11 and 12 is incorporated herein
by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
See the information under the caption "Election of Directors"
as set forth in the Company's Proxy Statement for its 1995
Annual Meeting of Shareholders to be held on November 16, 1995,
which is incorporated herein by reference. Also, see Item I,
Part I, of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
See the information under the caption "Executive Compensation"
as set forth in the Company's Proxy Statement for its 1995
Annual Meeting of Shareholders to be held on November 16, 1995,
which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the information under the caption "Security Ownership of
Certain Management Beneficial Owners and Management" as set
forth in the Company's Proxy Statement for its 1995 Annual
Meeting of Shareholders to be held on November 16, 1995, which
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) Financial Statements:
(1) Financial Statements
The following Financial Statements are included in Part II, Item 8:
Report of Independent Public Accountants
Consolidated Balance Sheets at June 2, 1995 and June 3, 1994
Consolidated Statements Of Income for the Years Ended June 2,
1995, June 3, 1994, and May 28, 1993
Consolidated Statements of Shareholders' Equity for the Years
Ended June 2, 1995, June 3, 1994, and May 28, 1993
Consolidated Statements of Cash Flows for the Years Ended June 2,
1995, June 3, 1994, and May 28, 1993
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Financial statement schedules have been omitted because they are
not applicable, not required, or the required information has
been provided in the financial statements or notes thereto.
(B) Reports on Form 8-K:
None.
(C) Exhibits:
See exhibit index following.
EXHIBIT INDEX
Exhibit
Number
3.1 * Form of Amended and Restated Articles of Incorporation
(filed as Exhibit 3.1 to Registration Statement on Form S-1
dated July 18, 1985, File No. 2-97949).
3.2 * Bylaws, as amended (filed as Exhibit 3.2 to Registration
Statement on Form S-1 dated July 18, 1985, File No. 2-97949).
4. * Form of Stock Certificate representing Registrant's Common
Stock (filed as Exhibit 4 to Registration Statement on Form
S-1 dated July 18, 1985, File No. 2-97949).
10.1 * Employee Incentive Plan dated September 20, 1982 (filed
as Exhibit 10.11 to Registration Statement on Form S-1 dated
July 18, 1985, File No.2-97949).
10.2 * Geodynamics Corporation Incentive Stock Option Plan No.
3 dated October 1986 (filed as Exhibit 1 to Form 10-Q for
the quarter ended November 28, 1986).
10.3 * Directors' Stock Option Plan dated November 21, 1988 and
amended on October 17, 1991 (filed as Exhibit A to the
Company's definitive Proxy Statement for the 1991 Annual
Meeting to Shareholders).
10.4 * Amendment and Restatement of Geodynamics Corporation
Profit Sharing Plan and Trust (filed as Exhibit 10.20 to
Form 10-K for the year ended May 29, 1987).
10.5 * Amendment and Restatement of Geodynamics Corporation
Money Purchase Pension Plan and Trust (filed as Exhibit
10.21 to Form 10-K for the year ended May 29, 1987).
10.6 * Amended and Restated Geodynamics Corporation Incentive
Stock Option Plan No. 3, dated August 20, 1987 (filed as
Exhibit 1 to Form 10-Q for the quarter ended November 27,
1987).
10.7 * Geodynamics Corporation 1990 Nonqualified Stock Option
Plan dated October 17, 1990 (filed as Exhibit B to the
Company's definitive Proxy Statement for the 1991 Annual
Meeting of Shareholders).
10.8 * Geodynamics Corporation 1993 Stock Purchase Plan dated
February 18, 1993 (filed as Exhibit 1 to form 10-Q for the
quarter ended November 26, 1993).
10.9 Settlement Agreement with Alney A. Baham, dated April 5,
1995 as amended.
10.10 Agreement with Alney A. Baham, dated April 5, 1995,
as amended.
10.11 Confirmation agreement with Alney A. Baham dated August 15,
1995,including stock options.
10.12 Settlement Agreement with Robert L. Paulson, dated
July 5, 1995.
10.13 Settlement Agreement with William Strong and Mason Hill
Asset Management, Inc., dated .
10.14 Employment Agreement with Bruce J. Gordon, dated June 14,
1995.
10.15 Short-term Stock Purchase Option for 15,000 shares with
Bruce J. Gordon, dated June 14, 1995.
10.16 Long-term Stock Purchase Option for 15,000 shares with
Bruce J. Gordon, dated June 14, 1995.
10.17 Long-term Stock Purchase Option for 30,000 shares with
Bruce J. Gordon, dated June 14, 1995.
10.18 Unfunded Supplemental Employee Retirement Plan between
Geodynamics and Bruce Gordon, dated June 14, 1995.
10.19 Employee Retention Agreement between Geodynamics and
Joanne Dunlap, dated August 10, 1995.
10.20 Employee Retention Agreement between Geodynamics and
Dave Nelson, dated August 10, 1995.
10.21 Employee Retention Agreement between Geodynamics and
Paul Henrikson, dated August 10, 1995.
10.22 Employee Retention Agreement between Geodynamics and
Carolyn Mihara, dated August 10, 1995.
10.23 Form of Director's Option Plan.
13.1 ** Report of Arthur Andersen LLP
* Incorporated herein by references as indicated
** Included in Part II, Item 8 of this Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GEODYNAMICS CORPORATION
by
Date: August 31, 1995 /s/ THOMAS R. LA FEHR
---------------------
Thomas R. LaFehr
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
/s/ THOMAS R. LA FEHR Chairman of the Board August 31, 1995
- -------------------------
Thomas R. La Fehr
/s/ BRUCE J. GORDON President and Chief August 31, 1995
- ------------------------- Executive Officer
Bruce J. Gordon
/s/ DAVID P. NELSON Vice President, Chief
- ------------------------- Financial Officer
David P. Nelson (Principal Financial Officer) August 31, 1995
/s/ ROBERT G. COOK Corporate Controller
- ------------------------- (Principal Accounting Officer) August 31, 1995
Robert G. Cook
/s/ MICHAEL E. EDLESON Director August 31, 1995
- -------------------------
Michael E. Edleson
/s/ W. RICHARD ELLIS Director August 31, 1995
- -------------------------
W. Richard Ellis
/s/ DONALD L. HAAS Director August 31, 1995
- -------------------------
Donald L. Haas
/s/ DELBERT H. JACOBS Director August 31, 1995
- -------------------------
Delbert H. Jacobs
/s/ WILL STACKHOUSE Director August 31, 1995
- -------------------------
Will Stackhouse
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is made as of
the 5th day of April, 1995 between Geodynamics Corporation, a
California corporation ("Geodynamics") and Alney A. Baham
("Baham") (collectively "the Parties") with reference to the
following facts:
A. Baham is an employee of Geodynamics, most recently as a
Senior Systems Engineer in Valley Forge, Pennsylvania. He has
been suspended without pay since January 1, 1995.
B. From mid-1994 through the date of the Geodynamics
Annual Meeting of Shareholders held on February 16, 1995 (the
"Annual Meeting"), Baham conducted various proxy solicitations to
the shareholders of Geodynamics including the presentation of an
opposing slate of nominees for election to the Geodynamics Board
of Directors (the "Board") at the Annual Meeting.
C. Baham has claimed that Geodynamics libeled and
slandered him causing damage to his reputation.
D. Geodynamics and Baham each deny the allegations of
wrongdoing made by the other.
E. Geodynamics and Baham wish to resolve the various
disputes which have arisen between them, to provide for the
termination of Baham's employment by Geodynamics, to settle
Baham's claims for damages to his reputation and emotional
distress and to establish the guidelines respecting the continued
relationship between Baham and Geodynamics.
F. This settlement is the compromise of a disputed claim
and neither the payment hereunder nor this Agreement is to be
construed as an admission of liability on the part of any of the
settling parties. In settling this matter, it is the desire of
the parties to terminate their disputes and buy their peace.
Accordingly, in consideration of the foregoing premises and
the agreements contained herein, Geodynamics and Baham agree as
follows:
1. Effective Date. Geodynamics shall be bound by the
Agreement only if it is approved by a majority of the members of
the Board of Geodynamics; provided, however, that Geodynamics'
obligations under subparagraph 2 (a) (5) and paragraph 5 shall be
effective upon execution of this Agreement. The date
Geodynamics' Board of Directors approves this Agreement shall be
referred to as the "Effective Date." If no such approval is
given, this Agreement, except for subparagraph 2 (a) (5) and
paragraph 5, shall be null and void.
2. Termination of Employment; Payments to Baham.
(a) Concurrently with the Effective Date of this
Agreement, Baham's employment with the Company shall terminate,
and Geodynamics shall pay to Baham an amount equal to:
(1) $21,176.65, representing Baham's unpaid
salary during the period January 1, 1995 through March 3, 1995,
Baham's accrued vacation pay through March 3, 1995, and nine days
of pay attributable to Baham's time to relocate from Pennsylvania
to California;
(2) the sum of $200,000 as damages for
emotional distress and injury to Baham's reputation both arising
from allegedly libelous and slanderous conduct by Geodynamics;
(3) the sum of $95,000 arising from the
alleged wrongful termination of Baham's employment; and
(4) $4,375.00, reflecting the value on March
3, 1995 of Baham's options in a cashless exercise of those
options.
(5) Geodynamics will reimburse Baham for
relocation expenses in the amount of $6,000.00. In addition,
Geodynamics also will reimburse Baham $5,865.04 for expenses
incurred by Baham as a Geodynamics employee.
(b) On the Effective Date all of Baham's rights
to participate in any and all employee benefits of Geodynamics
shall cease (other than his COBRA rights), notwithstanding the
consulting arrangement established by Section 4 hereof, provided,
however, that Geodynamics shall make a contribution to Baham's
self-directed pension accounts of all sums due to Baham under
Geodynamics' pension plan for the period ended March 10, 1995.
It is acknowledged and agreed that Baham's pension accounts are
100% vested, are not subject t any claim by Geodynamics and that
Baham may, at his discretion continue to maintain those accounts
with Geodynamics' designated trustee so long as it is permissible
for terminated employees to do so under Geodynamics' pension plan
and the contracts for administration of the plan.
3. General Releases:
(a) In consideration of the agreements contained
herein, Geodynamics, on the one hand, and Baham and Baham's
spouse (by execution of a joinder concurrently herewith), on the
other hand, on behalf of themselves, their successors, assigns,
grants, heirs, administrators and representatives, each fully and
forever release and discharge the other(s) of them and their
respective officers, directors, employees, attorneys, agents,
insurers and affiliates from any and all cause or causes of
actions, actions, judgments, liens, indebtedness, damages,
losses, claims, liabilities, and demands of whatsoever kind or
character, known or unknown, suspected to exist or not suspected
to exist, anticipated or not anticipated, whether or not
heretofore brought before any state or federal court or before
any state or federal agency or other governmental entity, whether
statutory or common law ("Claims") to the Effective Date,
including without limitation on the generality of the foregoing,
any and all claims, demands or causes of action attributable to,
connected with or incidental to Baham's claims for libel, slander
and infliction of emotional distress and to the employment or
potential employment of Baham by Geodynamics and the separation
of that employment, or otherwise. This release is intended to
apply to any Claims arising from federal, state or local laws
which prohibit discrimination on the basis of race, national
origin, sex, religion, age, marital status, pregnancy, handicap,
perceived handicap, ancestry, sexual orientation, family or
personal leave or any other form of discrimination, any Claims
for severance pay, sick leave, family leave, workplace injury,
vacation, life insurance, bonuses, incentive compensation, health
insurance, disability or medical insurance or any other fringe
benefit or compensation, and all rights and Claims arising under
the Employee Retirement Income Security Act of 1974 ("ERISA"), or
pertaining to ERISA regulated benefits.
(b) IT IS EXPRESSLY UNDERSTOOD that California
Civil Code Section 1542 provides as follows:
A general release does not extend to
claims which the creditor does not know or
suspect to exist in his favor at the time of
executing the release, which is known by him
must have materially affected his settlement
with the debtor.
THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY
EXPRESSLY WAIVED BY EACH OF THE PARTIES HERETO to the fullest
extent that a party may waive all such rights and benefits, if
any, of such provisions pertaining to the matters released
herein. In addition, each of the parties hereto hereby waives
any similar provision in any other jurisdiction, if in any way
applicable, and each of the parties hereto acknowledges that
these waivers are an essential and material term of this
Agreement. In connection with such waiver, each of the parties
hereto acknowledges that such party has been advised of and has
considered the possibility that such party may not now fully know
the number or magnitude of all the Claims that such party may
have against any other party hereto with respect to the matters
released herein, and that such party may hereafter discover
Claims presently unknown or unsuspected, or facts in addition to
or different from those that such party now knows or believes to
be true, with respect to the matters released herein.
Nevertheless, it is each of the parties' intention, through this
release, fully, finally, and forever to settle and release all
such matters, and all Claims relative thereto, which may exist,
or hereto have existed against the other, and each agrees that
this release is such a full and final release. In furtherance of
such intention, the release herein given shall be and remain in
effect as a full and complete release of such additional or
different Claims or facts relative thereto notwithstanding the
discovery by such part of the existence of any additional or
different Claims or facts relating to the Claims.
(c) ADEA Release. Baham agrees and expressly
acknowledges that this Agreement includes a waiver and release of
all claims which Baham has or may have under the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C. $
632, et seq. ("ADEA"). The following terms and conditions apply
to and are part of the waiver and release of ADEA claims under
this Agreement.
(1) The waiver and release of claims under
the ADEA contained in this Agreement does not cover rights or
claims that may arise after the date on which Baham signs this
Agreement.
(2) This Agreement involves consideration in
addition to anything of value to which Baham is already entitled.
(3) Baham is advised to consult, and has in
fact consulted, an attorney before signing this Agreement.
(4) Baham is granted twenty-one (21) days
after he is presented with this Agreement to decide whether or
not to sign this Agreement. If he executes this Agreement prior
to the expiration of such period, he does so voluntarily and upon
advice of counsel.
(5) Baham will have the right to revoke the
waiver and release of claims under the ADEA within seven (7) days
of signing this Agreement.
(6) This paragraph 3 (c) and Geodynamics'
obligation to pay money to Baham under subparagraphs 2 (a) (2)
and (3) shall be effective upon the later of the Effective Date
or the date the revocation period expires without this paragraph
having been revoked. The remaining provisions of this Agreement
shall be effective upon the Effective Date.
4. Consulting Agreement. This Agreement will operate
as a consulting agreement whereby Baham will be retained as a
consultant to Geodynamics for a period commencing on the date of
this Agreement and terminating on the earlier of (i) two years
from the date hereof, or (ii) the date Baham obtains other full-
time employment to which responsibility for his security
clearances could be transferred. Baham shall be paid $1.00 per
year for such consulting agreement. During the period of the
consulting agreement, Geodynamics shall use its best efforts to
maintain Baham's security clearance intact, if possible, but
shall have no other obligations hereunder.
5. Customer Employment Waiver. Geodynamics hereby agrees to
waive any prohibition in any contract with any of its prior,
present or future customers, contractors, subcontractors, vendors
or associates that would preclude or limit such person on entity
from employing Baham, or his employer, in any capacity or
retaining him as a consultant by providing a letter in the form
attached hereto as Exhibit A. Geodynamics will send within three
(3) days of the execution of this Agreement a letter to this
effect to Martin Marietta Corporation. Upon written request of
Baham to Geodynamics, Geodynamics will reaffirm such waiver in
writing to any person or entity.
6. Miscellaneous.
(a) Non-Disclosure. Except as required to comply
with the law, to consult with their financial and tax advisor, or
to meet their contractual obligation, each party agrees to keep
the terms of this Agreement confidential and agrees not to make,
nor cause to be made, any news release, disclosure or public
announcement pertaining to this Agreement or the subject matter
hereof without the prior written approval of the other party.
(b) Equitable Remedies: Each of the parties
hereto acknowledges that the remedy at law for any breach, or
threatened breach, of the provisions of this Agreement will be
inadequate and, accordingly, each of them covenants and agrees
that, with respect to any such breach or threatened breach, the
non-breaching party, in addition to any other rights or remedies
that it may have and regardless of whether such other rights or
remedies have been previously exercised, will be entitled to such
equitable and injunctive relief as may be available.
(c) Arbitration. Except with respect to any
application by Geodynamics or Baham for injunctive or other non-
monetary equitable relief pursuant to paragraph 6 (b) of this
Agreement, any controversy, dispute, or claim between the parties
to this Agreement or any party released pursuant to it, including
any claim arising out of, in connection with, or in relation to
the interpretation, performance or breach of this Agreement shall
be settled by arbitration before a single arbitrator conducted in
Los Angeles, California, in accordance with the most applicable
then existing rules of the American Arbitration Association, and
judgment upon any award rendered by the arbitrator(s) may be
entered by any state or federal court having jurisdiction
thereof. Such arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its nature. In the
event the parties are unable to agree upon an arbitrator, the
parties shall select a single arbitrator by striking alternately
(the first to strike being chosen by lot) from a list of seven
arbitrators designated by the American Arbitration Association;
four shall be retired judges of the Superior or Appellate Courts
resident in Los Angeles or Orange Counties selected from the
"Independent List" of retired judges and three shall be members
of the National Academy of Arbitrators resident within Los
Angeles or Orange Counties, California. In the event of any such
arbitration, the fees of the arbitrator and any costs associated
with the arbitration shall be divided equally between the
parties. The prevailing party shall be awarded reasonable
attorney's fees as part of the arbitration award.
(d) Entire Agreement. This Agreement constitutes
the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, warranties,
statements and understandings, whether oral or written, with
respect to the subject matter hereof.
(e) Notices. All notices, demands, elections, or
requests provided for or permitted to be given pursuant to this
Agreement must be in writing. All notices, demands, elections,
and requests shall be deemed to have been duly given on the date
delivered personally or on the date of receipt if sent by
overnight delivery services, facsimile transmission, or
registered or certified U.S. Mail with return receipt requested,
to the following addresses, or such other addresses as may be
subsequently designated in writing and delivered to the other
parties hereto:
To Geodynamics:
Geodynamics Corporation
21171 Western Avenue, Suite 110
Torrance, California 90501
Attention: Robert L. Paulson,
Chief Executive Officer
Fax: (310) 781-3615
with copies to:
Joseph E. Nida, Esq.
Nida & Maloney
801 Garden Street, Suite 201
Santa Barbara, California 93101
Fax: (805) 568-1955
and
Alexander F. Wiles, Esq.
Irell & Manella
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Fax: (310) 203-7199
To Baham:
Mr. Alney A. Baham
19502 Georgina Avenue
Cerritos, California 90703
Fax: (310) 860-3341
with a copy to:
Mitchell Albert, Esq.
Haight, Brown & Bonesteel
1620 26th Street
Santa Monica, California, 90404
Fax: (310) 829-5117
(f) Governing Law; Attorneys' Fees. This
Agreement and the rights and obligations of the parties
hereunder, shall be interpreted, construed, and enforced in
accordance with the laws of the State of California without
regard to principles of law (such as "conflicts of laws") that
might make the law of some other jurisdiction applicable. In the
event any legal action or arbitration is instituted to construe
or enforce this Agreement or the rights or obligations of any
party, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and expenses incurred in such legal
action. Attorneys' fees incurred in enforcing any judgment in
respect of this Agreement are recoverable as a separate item.
The preceding sentence is intended to be severable from the other
provisions of this Agreement and to survive any judgment and, to
the maximum extent permitted by law, shall not be deemed merged
into any such judgment.
(g) Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
(h) Amendments, Supplements. This Agreement may
not be amended or modified except in a writing signed by
Geodynamics and Baham and expressly stating that it is intended
to amend this Agreement, except for the addresses to which
communications may be sent, which any party may change in
accordance with the terms of this Agreement.
(i) No Third Party Beneficiaries. Nothing
contained in this Agreement is intended to and nothing contained
herein shall be interpreted to confer on any party not a party
hereto or a successor or assign thereof the rights of a third
party beneficiary.
(j) Captions. All section titles or captions
contained in this Agreement or in any schedule or exhibit annexed
hereto or referred to herein are for convenience only, shall not
be deemed a part of this Agreement and shall not affect the
meaning or interpretation of this Agreement. All references
herein to sections shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require.
(k) Severability. If any provision of this
Agreement or the application thereof to any person or
circumstances shall be held to be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent
permitted by law.
(l) Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
(m) No Representations; Counsel. Baham
represents that he has secured the advice of counsel prior to
executing this Agreement and acknowledges that no representations
or warranties have been made by him by Geodynamics to induce him
to enter into this Agreement other than those set forth in
writing in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
GEODYNAMICS CORPORATION
("Geodynamics")
By: /s/
Robert L. Paulson
Chairman of the Board and
Chief Executive Officer
/s/
ALNEY A. BAHAM
CONSENT OF SPOUSE
The undersigned, Julia H. Baham, spouse of Alney A. Baham,
hereby consents to the execution of the foregoing Agreement by
Alney Baham, waives and relinquishes any rights she might
otherwise have in the subject matter thereof, by her community
property interest, if any, or otherwise, and expressly joins in
an reiterates the general release set forth in Section 3 of the
Settlement Agreement and the irrevocable prosy and limitations on
shareholder activity contained in Section 4 of the Agreement.
Dated: April 5th, 1995
/s/
Julia H. Baham
Exhibit A
Customer Waiver Letter
TO WHOM IT MAY CONCERN:
This is to notify you that Geodynamics hereby waives any
prohibition in any agreement(s) it has with its past, present or
future customers, prime contractors, subcontractors, vendors or
associates that would prohibit Alney A. Baham, or his employer by
virtue of Mr. Baham's relationship with the employer, from going
to work for them, being retained by them as a consultant, or
supporting them in any capacity. [Our only condition to this
waiver is that Mr. Baham assure both you and us that he is no
longer an employee of Geodynamics at the time he commences his
engagement with you. We currently expect that Mr. Baham will
cease to be an employee of Geodynamics no later than April 19,
1995.]1
1 Geodynamics will reissue this letter without the bracketed
language after the Effective Date or the termination of Mr.
Baham's employment, whichever occurs first.
AMENDMENT TO AGREEMENT
This Amendment To Agreement (the "Agreement") is made as of
the 19th day of April, 1995 between Geodynamics Corporation, a
California corporation ("Geodynamics") and Alney A. Baham
("Baham") (collectively "the Parties") with reference to the
following facts.
A. Baham and Geodynamics entered into an Agreement as of
April 5, 1995, which Agreement was to be effective only upon
approval by the Geodynamics' Board of Directors (the "Board").
B. On April 19, 1995, Geodynamics' Board approved the
Agreement signed as of the same date subject only to Baham's
willingness to modify subparagraph 4 (c) (4) of the Agreement.
C. Baham has consented to the amendment requested by the
Geodynamics' Board.
Accordingly, in consideration of the foregoing premises and
the agreements contained herein and in the Agreement, Geodynamics
and Baham agree as follows:
1. Paragraph 1 of the Agreement shall be deleted and the
following substituted in its place:
"1. Effective Date. The term "Effective Date" as used
in this Agreement shall mean April 19, 1995."
2. Subparagraph 4 (d) (4) of the Agreement shall be
amended to delete the words "or to influence any decision of the
Board (other than as set forth in Section 5 below)".
3. Subparagraph 6 (a) of the Agreement shall be amended to
delete the first sentence thereof consisting of the words
"Attached hereto as Exhibit B is a copy of the press release to
be issued by the Parties on the Effective Date." Exhibit B is
also deleted from the Agreement and no press release shall be
issued.
4. This amendment constitutes the entire agreement among
the parties to amend the Agreement and supersedes all prior and
contemporaneous agreements, representations, warranties,
statements and understandings, whether oral or written, with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the day and year first written above.
GEODYNAMICS CORPORATION
By: /s/
David P. Nelson
Chief Financial Officer
/s/
ALNEY A. BAHAM
AGREEMENT
This Agreement is made as of the 5th day of April, 1995
between Geodynamics Corporation, a California corporation
("Geodynamics") and Alney A. Baham ("Baham") (collectively "the
Parties") with reference to the following facts:
A. Baham is an employee of Geodynamics, most recently as a
Senior Systems Engineer in Valley Forge, Pennsylvania, He has
been suspended without pay since January 1, 1995.
B. Baham, on behalf of himself, members of his family and
his self-directed pension plan, is the beneficial owner of
34,900 shares of the Common Stock of Geodynamics (the
"Geodynamics Stock") and is the holder of options to purchase
approximately 9,100 additional shares of Geodynamics' Stock.
C. From mid-1994 through the date of the Geodynamics
Annual Meeting of Shareholders held on February 16, 195 (the
"annual Meeting"), Baham conducted various proxy solicitations to
the shareholders of Geodynamics including the presentation of an
opposing slate of nominees for election to the Geodynamics Board
of Directors (the "Board") at the Annual Meeting. In connection
therewith, Geodynamics instituted legal proceedings against Baham
and the other members of the opposing slate alleging, among other
things, false and misleading solicitation materials. Baham
contends that the election is null and void because Geodynamics
made false and misleading statements in its proxy solicitation
materials. Geodynamics and Baham each deny the allegations of
wrongdoing made by the other.
D. Geodynamics has raised objections concerning the voting
of certain late proxies by Baham at the Annual Meeting, which
objections the Inspector of Elections sustained. Baham has
informed the Company that he believes the Inspector acted
incorrectly.
E. Geodynamics and Baham wish to resolve the various
disputes which have arisen between them and to establish the
guidelines respecting Baham's continued ownership of Geodynamics
Stock and the continued relationship between Baham and
Geodynamics.
F. This settlement is the compromise of a disputed claim
and neither the payment nor this Agreement is to be construed as
an admission of liability on the part of any of the settling
parties. In settling this matter, it is the desire of the
parties to terminate the lawsuit between them and buy their
peace.
Accordingly, in consideration of the foregoing premises and
the agreements contained herein, Geodynamics and Baham agree as
follows:
1. Effective Date. Geodynamics shall be bound by the
Agreement only if it and the Settlement Agreement of this same
date are approved by a majority of the members of the Board of
Geodynamics. The date Geodynamics' Board of Directors approves
this Agreement shall be referred to as the "Effective Date." If
no such approval is given, this Agreement shall be null and void.
2. Election of Directors. The parties acknowledge
that Geodynamics has secured the resignations of Richard Smith
and Frederick Evans, two of the six management nominees elected
at the Annual Meeting, and has appointed Bruce Gordon and Will
Stackouse, two members of the slate of nominees proposed by Baham
at the Annual Meeting, to fill the vacancies created by those
resignations. Geodynamics will use its best efforts to cause
Messrs. Edleson, Gordon, and Stackhouse to be renominated and
reelected to the Board at the 1995 Annual Meeting of Shareholders
provided, however, that these directors may be identified as the
last three candidates on the management slate if cumulative
voting is employed. Baham hereby waives all of his rights to
challenge the results of the election of directors at the Annual
Meeting and agrees that he will not encourage or support any
other shareholder making such a challenge.
3. Dismissal of Lawsuit; General Releases.
(a) As soon as practicable following the
Effective Date, Geodynamics shall dismiss with prejudice, and
not reinstitute in any form, as to Baham and the other members of
his slate the lawsuit currently pending in the United States
District Court for the Central District of California, (Case No.
CV-94-8335 LGB) entitled Geodynamics Corporation vs. Alney A.
Baham, et al, (the "Lawsuit"). Prior to filing a request for
dismissal, Geodynamics shall execute and file a stipulation and
order seeking to vacate the existing preliminary injunction and
temporary restraining order issued in the Lawsuit.
(b) In consideration of the foregoing dismissal
of the Lawsuit and the other agreements contained herein,
Geodynamics, on the one hand, and Baham and Baham's spouse (by
execution of a joinder concurrently herewith), on the other hand,
on behalf of themselves, their successors, assigns, agents,
heirs, administrators and representatives, each fully and forever
release and discharge the other(s) of them and their respective
officers, directors, employed, attorneys, agents, insurers, and
affiliates from any and all cause or causes of actions, actions,
judgments, liens, indebtedness, damages, losses, claims,
liabilities, and demands of whatsoever kind or character, known
or unknown, suspected to exist or not suspected to exist,
anticipated or not anticipated, whether or not heretofore brought
before any state or federal court or before any state or federal
agency or other governmental entity, whether statutory or common
law ("Claims") to the Effective Date, including without
limitation on the generality of the foregoing, any and all
claims, demands or causes of action attributable to, connected
with or incidental to the annual Meeting, the election of
directors at the Annual Meeting, the solicitation of proxies, the
Lawsuit or otherwise.
(c) IT IS EXPRESSLY UNDERSTOOD that California
Civil Code Section 1542 provides as follows:
A general release does not extend to
claims which the creditor does not know or
suspect to exist in his favor at the time of
executing the release, which if known by him
must have materially affected his settlement
with the debtor.
THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY
EXPRESSLY WAIVED BY EACH OF THE PARTIES HERETO to the fullest
extent that a party may waive all such rights and benefits, if
any, of such provisions pertaining to the matters released
herein. In addition, each of the parties hereto hereby waives
any similar provision in any other jurisdiction, if in any way
applicable, and each of the parties hereto acknowledges that
these waivers are an essential and material term of this
Agreement. In connection with such waiver, each of the parties
hereto acknowledges that such party has been advised of and has
considered the possibility that such party may not now fully know
the number or magnitude of all the Claims that such party may
have against any other party hereto with respect to the matters
released herein, and that such party may hereafter discover
Claims presently unknown or unsuspected, or facts in addition to
or different from those that such party now knows or believes to
be true, with respect to the matters released herein.
Nevertheless, it is each of the parties' intention, through this
release, fully, finally, and forever to settle and release all
such matters, and all Claims relative thereto, which may exist,
or hereto have existed against the other, and each agrees that
this release is such a full and final release. In furtherance of
such intention, the release herein given shall be and remain in
effect as a full and complete release of such additional or
different Claims or facts relative thereto notwithstanding the
discovery by such part of the existence of any additional or
different Claims or facts relating to the Claims.
4. Agreements Respecting Geodynamics Stock and Future
Relationships. With respect to the continuing relationship of
Baham with Geodynamics and in consideration of the dismissal of
the lawsuit and the other agreements herein, the parties agree as
follows:
(a) Irrevocable Proxy and Option. Baham hereby
grants Geodynamics an option (the "Option") to purchase all
shares of Geodynamics Stock beneficially owned by Baham, whether
now owned or hereafter acquired and whether owned of record by
Baham, members of his family, his self-directed pension trust, or
any affiliate of the foregoing (the "Option Shares"), for the
period commencing the date hereof and ending on March 1, 2000
(the "Option Period") at an exercise price of the greater of
$10.00 over the fair market value of each share or two times the
fair market value of each share on the date Geodynamics exercises
that option. For purposes of this subparagraph and subparagraph
4 (c), fair market value shall mean the average of bid and ask on
the NASDAQ system. In connection with the grant of the Option
and to secure his obligations under subparagraph (d) below,
concurrently herewith, Baham shall execute and deliver to
Geodynamics an irrevocable proxy, in the form attached hereto as
Exhibit A, to vote all the Option Shares during the Option
Period.
(b) Options. The parties acknowledge that all
options to purchase shares of Geodynamics Stock currently held by
Baham are hereby deemed expired on the Effective Date.
(c) Right of First Refusal. If, at any time
prior to March 1, 2000, Baham proposes to sell or offer for sale
any shares of Geodynamics Stock then owned by him, including
shares issued upon exercise of options (the "Shares"), he shall
first offer the Shares for purchase by Geodynamics and shall
advise Geodynamics as to the number of Shares being offered and
the price proposed for such Shares. For a period of two (2)
business days thereafter, or, in the case of a private sale of
the Shares, for a period of five (5) business days, Geodynamics
may accept such offer on the terms provided and either purchase
or cause another person designated by it to purchase the Shares
at the purchase price by company check or by certified check. If
Geodynamics does not elect to purchase the Shares, Baham may sell
the Shares in the market or consummate the private transaction.
However, if the sale were to be at fair market value, and if the
price has decreased from the time Baham first notified
Geodynamics of the option to buy, Geodynamics shall pay Baham the
difference between the price he receives for his Shares and the
fair market value at the time he gave notice to the Company,
provided Baham consummates the sale within two days of receiving
notice from Geodynamics of its decision not to by the Shares. If
Baham does not sell the Shares within two days, then Baham shall
be free to sell such Shares at any time within 90 days thereafter
so long as the price at which such Shares are sold is not less
than the price offered to Geodynamics. Should the offering price
be reduced or should the shares not be sold within such 90-day
period, then Baham shall follow the foregoing procedure in
connection with any subsequent offer to sell the Shares.
(d) No Further Proxy Contest; Etc. Until March
1, 2000, Baham shall not purchase or otherwise acquire any
additional shares of Geodynamics' Stock. In addition, until such
date, Baham shall not, alone or with others, without the prior
written consent of the Board specifically expressed in a
resolution adopted by a majority of the members of the Board:
(1) submit any proposal for the vote of
shareholders of Geodynamics, seek the consent of Geodynamics'
shareholders to any action, or seek to influence the vote of
Geodynamics shareholders on any election of directors or other
proposal submitted by management or others;
(2) with respect to securities of
Geodynamics, become a member of any "group" within the meaning of
Section 13 (d) (3) of the Securities Exchange Act of 1934, as
amended;
(3) induce or attempt to induce, directly or
indirectly, any other person to initiate or support any tender or
exchange offer for Geodynamics Stock or any proposal for change
of control of Geodynamics, whether in connection with a proxy
contest or otherwise, or to offer or seek to cause any third
party to offer to purchase the stock or substantially all of the
assets of Geodynamics, whether by merger, tender offer or
otherwise;
(4) attempt to obtain election or
appointment to the Board or to influence any decision of the
Board (other than as set forth in Section 5 below);
(5) take any action inconsistent with the
foregoing; or
(6) seek employment with Geodynamics or any
current subsidiary or affiliate of Geodynamics.
5. Baham Expenses. Without in any way limiting the
scope of subparagraph 3 (b) of this Agreement, Geodynamics agrees
that, at the first meeting of the Board after the Effective Date,
Geodynamics will place on the agenda a request by Baham to
reimburse him for his expenses in conducting the proxy contest
with respect to the Annual Meeting as compensation for what Baham
views as services rendered to all shareholders and efforts to
increase shareholder value. Baham will be entitled to make a
presentation to the Board at that time and to contact any person
(if such person is willing) before that meeting to campaign in
favor of his request. The parties acknowledge that this
Agreement does not create, and shall not be construed as
creating, any legal obligation by Geodynamics with respect to
such proposal and that Geodynamics has made no representations or
warranties concerning the likelihood that such request will be
honored. In the event reimbursement is denied by the Board,
Baham will take no further action to seek reimbursement and, in
particular, agrees that he will not institute any legal action
against Geodynamics with respect thereto and will not seek to
have the issue of reimbursement reconsidered by the Board. In the
event that Geodynamics expands its Board of Directors beyond
seven persons prior to the Board meeting at which this matter is
considered, Geodynamics will delegate the authority to vote on
the Baham proposal to a special committee composed of the seven
directors serving on the Board immediately following the
resignations and appointments referred to in paragraph 2 of this
Agreement.
6. Miscellaneous.
(a) Announcement; Non-Disclosure. Attached
hereto as Exhibit B is a copy of the press release to be issued
by the Parties on the Effective Date. Except as required to
comply with the law, to consult with their financial and tax
advisors, or to meet their contractual obligations, each party
agrees to keep the terms of this Agreement confidential and
agrees not to make, nor case to be made, any other news release,
disclosure or public announcement pertaining to this Agreement or
the subject matter hereof without the prior written approval of
the other party.
(b) Equitable Remedies. Each of the parties
hereto acknowledges that the remedy at law for any breach, or
threatened breach, of the provisions of this Agreement will be
inadequate and, accordingly, each of them covenants and agrees
that, with respect to any such breach or threatened breach, the
non-breaching party, in addition to any other rights or remedies
that it may have and regardless of whether such other rights or
remedies have been previously exercised, will be entitled to such
equitable and injunctive relief as may be available.
(c) Arbitration. Except with respect to any
application by Geodynamics or Baham for injunctive or other non-
monetary equitable relief pursuant to paragraph 6 (b) of this
Agreement, any controversy, dispute, or claim between the parties
to this Agreement or any party released pursuant to it, including
any claim arising out of, in connection with, or in relation to
the interpretation, performance or breach of this Agreement shall
be settled by arbitration before a single arbitrator conducted in
Los Angeles, California, in accordance with the most applicable
then existing rules of the American Arbitration Association, and
judgment upon any award rendered by the arbitrator(s) may be
entered by any state or federal court having jurisdiction
thereof. Such arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its nature. In the
event the parties are unable to agree upon an arbitrator, the
parties shall select a single arbitrator by striking alternately
(the first to strike being chosen by lot) from a list of seven
arbitrators designated by the American Arbitration Association;
four shall be retired judges of the Superior or Appellate Courts
resident in Los Angeles or Orange Counties selected from the
"Independent List" of retired judges and three shall be members
of the National Academy of Arbitrators resident within Los
Angeles or Orange Counties, California. In the event of any such
arbitration, the fees of the arbitrator and any costs associated
with the arbitration shall be divided equally between the
parties. The prevailing party shall be awarded reasonable
attorney's fees as part of the arbitration award.
(d) Entire Agreement. This Agreement constitutes
the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, warranties,
statements and understandings, whether oral or written, with
respect to the subject matter hereof.
(e) Notices. All notices, demands, elections, or
requests provided for or permitted to be given pursuant to this
Agreement must be in writing. All notices, demands, elections,
and requests shall be deemed to have been duly given on the date
delivered personally or on the date of receipt if sent by
overnight delivery services, facsimile transmission, or
registered or certified U.S. Mail with return receipt requested,
to the following addresses, or such other addresses as may be
subsequently designated in writing and delivered to the other
parties hereto:
To Geodynamics:
Geodynamics Corporation
21171 Western Avenue, Suite 110
Torrance, California 90501
Attention: Robert L. Paulson,
Chief Executive Officer
Fax: (310) 781-3615
with copies to:
Joseph E. Nida, Esq.
Nida & Maloney
801 Garden Street, Suite 201
Santa Barbara, California 93101
Fax: (805) 568-1955
and
Alexander F. Wiles, Esq.
Irell & Manella
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Fax: (310) 203-7199
To Baham:
Mr. Alney A. Baham
19502 Georgina Avenue
Cerritos, California 90703
Fax: (310) 860-3341
with a copy to:
Mitchell Albert, Esq.
Haight, Brown & Bonesteel
1620 26th Street
Santa Monica, California, 90404
Fax: (310) 829-5117
(f) Governing Law; Attorneys' Fees. This
Agreement and the rights and obligations of the parties
hereunder, shall be interpreted, construed, and enforced in
accordance with the laws of the State of California without
regard to principles of law (such as "conflicts of laws") that
might make the law of some other jurisdiction applicable. In the
event any legal action or arbitration is instituted to construe
or enforce this Agreement or the rights or obligations of any
party, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and expenses incurred in such legal
action. Attorneys' fees incurred in enforcing any judgment in
respect of this Agreement are recoverable as a separate item.
The preceding sentence is intended to be severable from the other
provisions of this Agreement and to survive any judgment and, to
the maximum extent permitted by law, shall not be deemed merged
into any such judgment.
(g) Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
(h) Amendments, Supplements. This Agreement may
not be amended or modified except in a writing signed by
Geodynamics and Baham and expressly stating that it is intended
to amend this Agreement, except for the addresses to which
communications may be sent, which any party may change in
accordance with the terms of this Agreement.
(i) No Third Party Beneficiaries. Nothing
contained in this Agreement is intended to and nothing contained
herein shall be interpreted to confer on any party not a party
hereto or a successor or assign thereof the rights of a third
party beneficiary.
(j) Captions. All section titles or captions
contained in this Agreement or in any schedule or exhibit annexed
hereto or referred to herein are for convenience only, shall not
be deemed a part of this Agreement and shall not affect the
meaning or interpretation of this Agreement. All references
herein to sections shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require.
(k) Severability. If any provision of this
Agreement or the application thereof to any person or
circumstances shall be held to be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent
permitted by law.
(l) Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
(m) No Representations; Counsel. Baham
represents that he has secured the advice of counsel prior to
executing this Agreement and acknowledges that no representations
or warranties have been made by him by Geodynamics to induce him
to enter into this Agreement other than those set forth in
writing in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
GEODYNAMICS CORPORATION
("Geodynamics")
By: /s/
Robert L. Paulson
Chairman of the Board and
Chief Executive Officer
/s/
ALNEY A. BAHAM
CONSENT OF SPOUSE
The undersigned, Julia H. Baham, spouse of Alney A. Baham,
hereby consents to the execution of the foregoing Agreement by
Alney Baham, waives and relinquishes any rights she might
otherwise have in the subject matter thereof, by her community
property interest, if any, or otherwise, and expressly joins in
an reiterates the general release set forth in Section 3 of the
Settlement Agreement and the irrevocable prosy and limitations on
shareholder activity contained in Section 4 of the Agreement.
Dated: April 5th, 1995
/s/
Julia H. Baham
Exhibit A
IRREVOCABLE PROXY
(coupled with an interest)
The undersigned, Alney A. Baham, as the beneficial owner of
34,900 shares of Common Stock (the Shares ) of Geodynamics
Corporation, a California corporation (the Company ) owned by
himself, members of his family, and his self-directed pension
plan, hereby revokes any and all previous proxies granted with
respect to the Shares and grants to the Company as irrevocable
proxy to vote the Shares,, together with any additional shares of
Geodynamics Common Stock here after required by any of them (all
such additional shares being included within the terms Shares
herein), with all power to attend any and all meetings of the
shareholders of the Company and to represent, vote, execute
consents and waivers, and otherwise to act for the undersigned in
the same manner and with the same effect as if the undersigned
were personally present at any such meeting and voting such
shares or personally acting on any matters submitted to
shareholders for approval or consent. Certain of the Shares
owned beneficially by Baham are owned of record by persons, firms
or entities other than Baham individually. Baham agrees to take
all action required in order to cause the record owners of all
Shares to vote such Shares, through the execution of proxies or
otherwise, in accordance with the instructions received by him
from the Company, including without limitation any recommendation
of a majority of the Board of Directors of the Company in any
proxy or consent solicitation.
The undersigned authorizes any officer of the Company to act
on the Company s behalf with respect to the proxy granted
hereunder and further authorizes the Company to substitute any
other person to act hereunder, to revoke any such substitution,
and to file this proxy and any substitution or revocation with
the Secretary of the Company.
This proxy is being made in connection with the grant by the
undersigned to the Company of an option to purchase the Shares
set forth in that certain Agreement or even date herewith between
the Company and the undersigned and is irrevocable in accordance
with such Agreement until March 1, 2000, or until the option is
exercised in full or the Shares are otherwise sold in accordance
with the Agreement.
The undersigned acknowledges that the remedy at law for any
breach, or threatened breach, of the provisions hereof will be
inadequate and, accordingly, covenants and agrees that in
addition to any other rights or remedies that the Company may
have with respect to any such breach or threatened breach, and
regardless of whether such other rights or remedies have been
previously exercised, the Company will be entitled to such
equitable and injunctive relief as may be available.
In the event any legal action or arbitration is instituted
to construe or enforce this Proxy or the rights or obligations of
any party, the prevailing party shall be entitled to reasonable
attorneys fees, costs and expenses incurred in such legal
action.
Dated: April 5th , 1995
/s/ Alney A. Baham
Alney A. Baham
CONSENT OF SPOUSE
The undersigned, Julia H. Baham, spouse of Alney A. Baham
hereby consents to the execution of the foregoing Irrevocable
Proxy by Alney A. Baham, waives and relinquishes any rights she
might otherwise have in the subject matter thereof, by her
community property interest, if any, or otherwise.
Dated: April 5th, 1995
/s/ Julia H. Baham
Julia H. Baham
Exhibit B
Press Release
Draft
April , 1995
Press Release
Geodynamics Corporation and Alney A. Baham today announced
they had reached a settlement of their ongoing disputes. The
settlement resolves any possible challenge by Mr. Baham to the
results of the election of members of Geodynamics Board of
Directors at the Company s Annual Meeting of Shareholders held on
February 16, 1995. As previously reported, Geodynamics Board
now consists of Thomas R. LaFehr, Robert L. Paulson, W. Richard
Ellis and Donald L. Haas, each of whom was a management nominee,
and Michael E. Edleson, Bruce J. Gordon, and Will Stackhouse,
each of whom was a member of Mr. Baham s slate.
Pursuant to the settlement, Geodynamics will dismiss the
lawsuit against Mr. Baham and his slate of nominees relating to
the Annual Meeting and has agreed to re-nominate the directors
from Mr. Baham s slate at the next Annual Meeting of
Shareholders. Geodynamics also announced that, pursuant to the
settlement, Mr. Baham had agreed to support the new Board and had
given the Company a general release from all claims. The other
terms of the settlement are confidential.
In announcing the settlement, Robert Paulson, Chief
Executive Officer of the Company, said that he looks forward to
working with the new Board, including the new members from Mr.
Baham s slate, and wishes Mr. Baham well in his future endeavors.
Mr. Baham stated that he has confidence in the new Board, intends
to remain a shareholder of Geodynamics, and wishes the new Board
well in its efforts to maximize shareholder value.
CONFIRMATION AGREEMENT
THIS CONFIRMATION AGREEMENT (the "Confirmation Agreement")
is made and entered into on the date hereinafter set forth by and
between GEODYNAMICS CORPORATION, a California corporation
("Geodynamics") and ALNEY A. BAHAM ("Baham") with respect to the
following facts:
A. Geodynamics and Baham are parties to two agreements
dated April 5, 1995, one entitled, "Settlement Agreement" and one
entitled, "Agreement" (collectively the "Agreements").
B. In accordance with the terms of the Agreement, Baham
presented to Geodynamics' Board of Directors (the "Board") on May
22, 1995 a request for reimbursement of expenses beyond the
payments made in accordance with the Agreements.
C. The Board deliberated and has proposed to Baham a
response to his request for reimbursement of certain proxy
related expenses, which has been accepted by Baham, and the
parties wish to enter into this Confirmation Agreement to reflect
the subsequent agreement of the parties to amend the Agreements.
In consideration of the foregoing premises and the
agreements contained herein, Geodynamics and Baham agree as
follows:
1. Ratification of Agreements and Releases. Each
party does hereby ratify and confirm the Agreements, and each
party agrees that the other party has acted in good faith and has
fully complied with all of the terms of the Agreements. In
addition, each party does hereby ratify and confirm all releases
previously granted under the Agreements.
2. Options. In consideration of the foregoing and in
consideration for Baham's efforts to enhance shareholder value,
Geodynamics hereby grants to Baham two 5-year stock options (the
"Options") in the forms attached hereto as Exhibits A-1 and A-2,
respectively. Options (or securities to be issued upon exercise
of the Options) are not being registered under the Securities Act
of 1933 (the "Act") on the grounds that the sale thereof is
exempt under the applicable provisions of the Act as not
involving any public offering, and Geodynamics' reliance on such
exemption is predicated in part on Baham's representation that he
is acquiring the securities for investment for his own account,
with no present intention of dividing his participation with
others or reselling or otherwise distributing the same. It is
Baham's understanding that, in the view of the Securities and
Exchange Commission (the "SEC"), the statutory basis for such
exemption would not be present if, notwithstanding Baham's
representation, he had in mind merely acquiring the securities
for resale on the occurrence or nonoccurrence of some
predetermined event such as, for example, the expiration of a
holding period under the Internal Revenue Code, or a market rise,
or if the market does not rise, or for any other fixed or
determinable period in the future. Baham hereby represents to
Geodynamics that he does not intend to dispose of his beneficial
interest in all or any part of the Options issued to him or the
securities. Further, Baham agrees that he will not transfer, by
way of gift or otherwise, sell, pledge or encumber said
securities unless he obtains at his own expense a "no action"
letter from the SEC or an opinion of counsel satisfactory to
Geodynamics that the transfer of the securities does not violate
the Act.
3. Employee Stock Options. Section 2(a)(4) of the
Settlement Agreement is terminated and canceled and, in lieu
thereof, Baham is granted the right to exercise the ten thousand
three hundred (10,300) employee stock options ("Employee
Options") held by him in accordance with their existing terms
(except for the termination of the right to exercise on
termination of employment) for the same period of time as the
Options. The payment specified in Section 2(a)(4) of the
Settlement Agreement will not be made to Baham. Section 4(d) of
the Agreement shall not apply to the exercise of the Employee
Options or to the Options granted herewith. Further, it is
agreed that notwithstanding the provisions of Section 4(d) of the
Agreement in the event Baham sells or transfers any shares now or
hereafter owned by him to persons other than members of his
immediate family or any affiliate thereof, he may purchase
additional shares so long as he does not own more shares than he
owned upon the date of the Agreement plus ten thousand three
hundred (10,300) shares subject to the Employee Options and the
Options. Baham acknowledges that the Employee options will no
longer be subject to treatment for income tax purposes as
"Incentive Stock Options."
4. Disclosure. Paragraph 6(a) of the Settlement
Agreement and paragraph 6(a) of the Agreement are hereby deleted.
It is hereby acknowledged by Baham that Geodynamics is required
to file the Settlement Agreement, the amendments thereto and this
Confirmation Agreement with the SEC, and to describe those
agreements in the Form 10-K to be filed with the SEC.
5. Counsel. Baham represents that he has consulted
with his counsel prior to executing this Confirmation Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Confirmation Agreement as of August 15, 1995.
GEODYNAMICS:
GEODYNAMICS CORPORATION
By: /s/ Joanne M. Dunlap
Title: Vice President
BAHAM:
/s/ Alney A. Baham
ALNEY A. BAHAM
I join in the foregoing.
August 15, 1995
/s/ JULIA BAHAM
Exhibit A-1
GEODYNAMICS CORPORATION
ALNEY A. BAHAM $8.00 STOCK PURCHASE OPTION
THIS $8.00 STOCK PURCHASE OPTION (the "Option") is made and
entered into at Torrance, California on the date hereinafter set
forth by and between GEODYNAMICS CORPORATION, a California
Corporation, hereinafter called the "Company" and ALNEY A. BAHAM,
hereinafter called "Baham".
WHEREAS:
A. Baham is a shareholder in the Company; and
B. Baham and the Company have entered into a Confirmation
Agreement of even date, which requires the issuance of stock
options to Baham.
NOW, THEREFORE, in consideration of the premises, it is
agreed as follows:
1. GRANT OF OPTION. Subject to the conditions set
forth herein, the Company hereby grants to Baham the non-
assignable right, privilege and option to purchase ten thousand
(10,000) shares (the "Option Shares") of its Common Stock at
EIGHT DOLLARS ($8.00) per share (the "Option Price"), in the
manner hereinafter provided.
2. TIME OF EXERCISE OF OPTION. This Option may be
exercised by Baham for the five (5) year period commencing upon
its execution date.
3. METHOD OF EXERCISE. Stock purchased under this
Option shall, at the time of purchase, be paid for in full. To
the extent that the right to purchase shares has accrued
thereunder, this Option may be exercised, from time to time, by
written notice to the Company stating the number of shares with
respect to which this Option is being exercised and the time of
delivery thereof, which shall be at least fifteen (15) days after
the giving of such notice, unless an earlier date shall have been
mutually agreed upon. At the time specified in such notice, the
Company shall, without transfer or issue tax to Baham, deliver to
him at the main office of the Company, or at such other place as
shall be mutually acceptable, a certificate or certificates for
such shares, against the payment of the Option Price, in full,
for the number of shares to be delivered, by certified or bank
cashier's check, or the equivalent thereof acceptable to the
Company. Provided, however, that the time of such delivery may
be postponed by the Company for such period as may be required
for it, with reasonable diligence, to comply with any
requirements of any state or federal agency or any securities
exchange. Provided, further, that in the event that the
California Commissioner of Corporations has imposed an escrow
upon the stock of the Company, said shares shall be delivered to
the escrow holder previously designated by said Commissioner of
Corporations, rather than to Baham. If Baham fails to accept
delivery of and pay for all or any part of the number of shares
specified in the notice given by Baham, upon tender and delivery
of said shares, Baham's right to exercise this Option with
respect to such undelivered shares shall be terminated.
4. RECLASSIFICATION, CONSOLIDATION OR MERGER. If,
and to the extent that the number of issued shares of Common
Stock of the Company shall be increased or reduced by a change in
par value, split-up, reclassification, distribution of a dividend
payable in stock, or the like (but not dividends payable in
cash), the number of Option Shares subject to this Option, and
the Option Price therefor, shall be proportionately adjusted. If
the Company is reorganized or consolidated, or merged with
another corporation, Baham shall be entitled to receive options
covering shares of such reorganized, consolidated or merged
Company in the same proportion, at an equivalent price, and
subject to the same conditions. For purposes of the preceding
sentence, the excess of the aggregate fair market value of the
shares subject to this Option immediately after the
reorganization, consolidation, or merger over the aggregate
Option Price of such shares, shall not be more than the excess of
the aggregate fair market value of all shares subject to this
Option immediately before such reorganization, consolidation, or
merger over the aggregate Option Price of such shares, and the
new option or the assumption of the old option shall not give
Baham additional benefits which he did not have under the old
option.
5. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option
is non-transferable by Baham, and is exercisable only by him, and
Baham shall have no rights as a shareholder of shares subject to
this Option until payment of the Option Price and the delivery of
such shares as herein provided. Provided, however, that this
Option may be exercisable by Baham's executor or personal
representative within six (6) months after his death.
6. RESTRICTIONS ON ISSUANCE OF SHARES. The Company
shall not be obligated to sell and issue any shares pursuant to
this Option, unless permission to issue said shares has first
been obtained from the Commissioner of Corporations of the State
of California, and, further, unless the shares with respect to
which this Option is being exercised are, at the time,
effectively registered, or exempt from registration, under the
Securities Act of 1933, as amended.
7. REGISTRATION.
(a) Definitions. As used in this Section 7:
(i) The terms "register," "registered" and
"registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the
Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering by the Securities and
Exchange Commission ("SEC") of the effectiveness of such
registration statement; and
(ii) The term "Registrable Securities" means
(a) the Common Stock issued or issuable upon exercise of the
Option or issued or issuable upon exercise of a like option
issued to Baham on the date hereof and (b) any Common Stock
which Baham shall be entitled to receive, or shall have
received, because of Baham's ownership of such securities,
such as additional securities received upon stock splits,
recapitalizations and the like.
(b) Demand Registration.
(i) Upon the written demand of Baham, the
Company shall prepare and file a registration statement
under the Securities Act covering an offering of such number
of shares of Common Stock comprising the Registrable
Securities as shall have been requested by Baham in such
demand, and shall cause such registration statement to
become effective, all in accordance with the provisions of
this Agreement; provided that (i) the Company shall be
obligated to effect registration pursuant to this Section
7(b)(i) no more than one time and (ii) no demand shall be
made at any time that the Company is not eligible to
register securities on From S-3 promulgated by the SEC (or
any comparable successor form) and the Company shall only be
required to effect a registration if at the time of
effectiveness thereof, the Company continues to be eligible
to use such From S-3.
(ii) Whenever the Company shall have
received a demand to effect registration pursuant to Section
7(b)(i), the Company may give notice of such proposed
registration to other holders of unregistered securities of
the Company. Subject to such conditions as the Company may
impose, any such holder may request that all of such
holder's unregistered securities, or any portion thereof
designated by such holder, be included in the offering.
(iii) The Company shall proceed as
expeditiously as possible after receipt of a demand pursuant
to Section 7(b)(i) to file a registration statement and use
its best efforts to effect, within 120 days after the giving
of such written demand (or, in the case of a demand made
within 60 days prior to the end of the Company's then fiscal
year, within 210 days after the giving of such written
demand) the registration of an offering under the Securities
Act. Such offering shall include:
(A) the Registrable Securities
specified in the demand given pursuant to Section 7(b)(i);
and
(B) all other shares of Common Stock
that the holders thereof have requested be included in the
offering pursuant to Section 7(b)(ii);
all to the extent required to permit the respective holders
to dispose of such securities in compliance with applicable
law. The Company shall have the right to include in such
offering authorized but unissued shares of its Common Stock,
except as, and to the extent that, in the opinion of the
managing underwriter, such inclusion would adversely affect
the amount of, or price at which, the Registrable Securities
otherwise included therein can be sold. Should the Company
chose to distribute its securities through such
underwriting, it shall (together with Baham) enter into an
underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company. Notwithstanding any other provision of this
Section 7(b), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the securities to be
included in the registration and underwriting for the
account of the Company or other holders, as the Company
shall determine, to an amount not less than 10% of the total
number of shares included in such offering. Should the
Company chose not to distribute its securities through such
underwriting, Baham, with the consent of the Company (which
shall not be unreasonably withheld), shall select the
representative, if any, of the underwriters to be engaged in
connection with any such registration. Any such underwriter
shall be a member firm of the New York Stock Exchange with a
net capital of at least $15,000,000.
(c) Piggyback Registration.
(i) Notice of Registration. If, at any time
or from time to time, the Company shall determine to
register any of its securities for its own account in
connection with an offering of its securities to the general
public for cash on a form which would permit the
registration of Registrable Securities, the Company will,
subject to the further provisions of this Section 7:
(A) promptly give to Baham written
notice thereof; and
(B) subject to clause (ii) below,
use its reasonable efforts to include in such
registration (and any related qualification under blue
sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities
specified in a written request or requests, made on or
prior to the later of (1) ten days after such notice
from the Company or (2) ten days before the initial
filing of the registration statement which is the
subject of such notice.
(ii) Underwriting. If the registration of
which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so
advise Baham as a part of the written notice given pursuant
to Section 7(c)(i)(A). In such event, the right of Baham to
registration pursuant to this Section 7(c) shall be
conditioned upon Baham's participation in such underwriting
and the inclusion of Baham's Registrable Securities in the
underwriting to the extent provided herein. Should Baham
propose to distribute his securities through such
underwriting, he shall (together with the Company) enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company. Notwithstanding any other provision of this
Section 7(c), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit or eliminate the
Registrable Securities to be included in the registration
and underwriting. In any underwritten public offering in
which Baham participates pursuant to this Agreement, Baham
agrees that he will consent to any lockup of securities
demanded by the underwriter in connection with any such
registration provided all other selling shareholders agree
to like restrictions. In any underwritten public offering
in which Baham does not participate pursuant to this
Agreement, Baham agrees that he will consent to any lockup
of securities demanded by the underwriter, not in excess of
120 days in the aggregate for any one offering, in
connection with any such registration provided all selling
shareholders, if any, and all officers and directors of the
Company not participating in such public offering agree to
like restrictions.
(d) Expenses of Registration. Subject to any
state blue sky laws requiring otherwise, all expenses
incurred in connection with any registration, qualification
or compliance pursuant to this Section 7 with respect to
Registrable Securities, including without limitation, all
underwriting spreads, legal, accounting, registration,
filing and qualification fees, and printing expenses with
respect to or allocable to Registrable Securities, shall be
borne by the Company.
(e) Registration Procedure. Upon receipt of any
notice from the Company, at any time when a prospectus is
required to be delivered under the Securities Act, of the
happening of any event of which it is aware as a result of
which the prospectus contains an untrue statement of a
material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, Baham will forthwith discontinue
distribution of the Registrable Securities pursuant to the
registration statement until Baham's receipt of the copies
of any supplemented or amended prospectus.
(f) Indemnification. If and whenever Registrable
Securities of Baham are included in a registered offering,
Baham will indemnify the Company, each of its directors and
officers who sign such registration statement, each
underwriter, if any, of the Company's securities covered by
such a registration statement and each person who controls
the Company within the meaning of the Securities Act,
against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on (A)
any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement,
prospectus, offering circular or other document, or (B) any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Company, such directors, officers, persons or underwriters
for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement,
prospectus, offering circular or other registration
statement, prospectus, offering circular or other document
in reliance upon and in conformity with information
furnished to the Company by an instrument duly executed by
Baham and stated to be specifically for use therein.
(g) Information by Baham. Baham shall furnish in
writing to the Company such information regarding him and
the distribution proposed by him as the Company may request
in writing and as shall be required in connection with any
registration, qualification or compliance referred to in
this Section 7.
(h) Sale Without Registration. At the time of
any transfer of any Registrable Securities which shall not
be registered under the Securities Act the Company may
require, as a condition of allowing such transfer, that
Baham or transferee furnish to the Company: (i) such
information as is reasonably necessary in order to establish
that such transfer may be made without registration under
the Securities Act; and (ii) at the expense of Baham or
transferee, an opinion of counsel, satisfactory in form and
substance to the Company, to the effect that such transfer
may be made without registration under such Act.
(j) Termination of Rights and Transfer
Restrictions. The conditions precedent imposed by
Section 7(h) upon the transferability of the Registrable
Securities, and the registration obligations of the Company
imposed by this Section 7, shall cease and terminate as to
any particular Registrable Securities when such securities
shall have been (i) effectively registered under the
Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth
in the applicable registration statement in such manner as
to cause them to have been "distributed" under the
Securities Act, (ii) at such time as such Registrable
Securities are transferred by Baham or (iii) at such time as
an opinion of counsel (which opinion and counsel shall be
satisfactory to the Company and Baham) shall have been
rendered to the Company and Baham to the effect that such
conditions are not required to establish compliance with the
Securities Act.
8. BINDING EFFECT. This Option shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
(Signatures on next page)
IN WITNESS WHEREOF, the parties have caused this Option to
be executed this 15th day of August, 1995.
"Company"
GEODYNAMICS CORPORATION
By: /s/ Joanne M. Dunlap
Title: Vice President
"Baham"
/s/ Alney A. Baham
ALNEY A. BAHAM
Exhibit A-2
GEODYNAMICS CORPORATION
ALNEY A. BAHAM $10.00 STOCK PURCHASE OPTION
THIS $10.00 STOCK PURCHASE OPTION (the "Option") is made and
entered into at Torrance, California on the date hereinafter set
forth by and between GEODYNAMICS CORPORATION, a California
Corporation, hereinafter called the "Company" and ALNEY A. BAHAM,
hereinafter called "Baham".
WHEREAS:
A. Baham is a shareholder in the Company; and
B. Baham and the Company have entered into a Confirmation
Agreement of even date, which requires the issuance of stock
options to Baham.
NOW, THEREFORE, in consideration of the premises, it is
agreed as follows:
1. GRANT OF OPTION. Subject to the conditions set
forth herein, the Company hereby grants to Baham the non-
assignable right, privilege and option to purchase ten thousand
(10,000) shares (the "Option Shares") of its Common Stock at TEN
DOLLARS ($10.00) per share (the "Option Price"), in the manner
hereinafter provided.
2. TIME OF EXERCISE OF OPTION. This Option may be
exercised by Baham or his estate for the five (5) year period
commencing upon its execution date.
3. METHOD OF EXERCISE. Stock purchased under this
Option shall, at the time of purchase, be paid for in full. This
Option may be exercised, from time to time, by written notice to
the Company stating the number of shares with respect to which
this Option is being exercised and the time of delivery thereof,
which shall be at least fifteen (15) days after the giving of
such notice, unless an earlier date shall have been mutually
agreed upon. At the time specified in such notice, the Company
shall, without transfer or issue tax to Baham, deliver to him at
the main office of the Company, or at such other place as shall
be mutually acceptable, a certificate or certificates for such
shares, against the payment of the Option Price, in full, for the
number of shares to be delivered, by certified or bank cashier's
check, or the equivalent thereof acceptable to the Company.
Provided, however, that the time of such delivery may be
postponed by the Company for such period as may be required for
it, with reasonable diligence, to comply with any requirements of
any state or federal agency or any securities exchange.
Provided, further, that in the event that the California
Commissioner of Corporations has imposed an escrow upon the stock
of the Company, said shares shall be delivered to the escrow
holder previously designated by said Commissioner of
Corporations, rather than to Baham. If Baham fails to accept
delivery of and pay for all or any part of the number of shares
specified in the notice given by Baham, upon tender and delivery
of said shares, Baham's right to exercise this Option with
respect to such undelivered shares shall be terminated.
4. RECLASSIFICATION, CONSOLIDATION OR MERGER. If,
and to the extent that the number of issued shares of Common
Stock of the Company shall be increased or reduced by a change in
par value, split-up, reclassification, distribution of a dividend
payable in stock, or the like (but not dividends payable in
cash), the number of Option Shares subject to this Option, and
the Option Price therefor, shall be proportionately adjusted. If
the Company is reorganized or consolidated, or merged with
another corporation, Baham shall be entitled to receive options
covering shares of such reorganized, consolidated or merged
Company in the same proportion, at an equivalent price, and
subject to the same conditions. For purposes of the preceding
sentence, the excess of the aggregate fair market value of the
shares subject to this Option immediately after the
reorganization, consolidation, or merger over the aggregate
Option Price of such shares, shall not be more than the excess of
the aggregate fair market value of all shares subject to this
Option immediately before such reorganization, consolidation, or
merger over the aggregate Option Price of such shares, and the
new option or the assumption of the old option shall not give
Baham additional benefits which he did not have under the old
option.
5. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option
is non-transferable by Baham, and is exercisable only by him, and
Baham shall have no rights as a shareholder of shares subject to
this Option until payment of the Option Price and the delivery of
such shares as herein provided. Provided, however, that this
Option may be exercisable by Baham's executor or personal
representative.
6. RESTRICTIONS ON ISSUANCE OF SHARES. The Company
shall not be obligated to sell and issue any shares pursuant to
this Option, unless permission to issue said shares has first
been obtained from the Commissioner of Corporations of the State
of California, and, further, unless the shares with respect to
which this Option is being exercised are, at the time,
effectively registered, or exempt from registration, under the
Securities Act of 1933, as amended.
7. REGISTRATION.
(a) Definitions. As used in this Section 7:
(i) The terms "register," "registered" and
"registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the
Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering by the Securities and
Exchange Commission ("SEC") of the effectiveness of such
registration statement; and
(ii) The term "Registrable Securities" means
(a) the Common Stock issued or issuable upon exercise of the
Option or issued or issuable upon exercise of a like option
issued to Baham on the date hereof and (b) any Common Stock
which Baham shall be entitled to receive, or shall have
received, because of Baham's ownership of such securities,
such as additional securities received upon stock splits,
recapitalizations and the like.
(b) Demand Registration.
(i) Upon the written demand of Baham, the
Company shall prepare and file a registration statement
under the Securities Act covering an offering of such number
of shares of Common Stock comprising the Registrable
Securities as shall have been requested by Baham in such
demand, and shall cause such registration statement to
become effective, all in accordance with the provisions of
this Agreement; provided that (i) the Company shall be
obligated to effect registration pursuant to this Section
7(b)(i) no more than one time and (ii) no demand shall be
made at any time that the Company is not eligible to
register securities on From S-3 promulgated by the SEC (or
any comparable successor form) and the Company shall only be
required to effect a registration if at the time of
effectiveness thereof, the Company continues to be eligible
to use such From S-3.
(ii) Whenever the Company shall have
received a demand to effect registration pursuant to Section
7(b)(i), the Company may give notice of such proposed
registration to other holders of unregistered securities of
the Company. Subject to such conditions as the Company may
impose, any such holder may request that all of such
holder's unregistered securities, or any portion thereof
designated by such holder, be included in the offering.
(iii) The Company shall proceed as
expeditiously as possible after receipt of a demand pursuant
to Section 7(b)(i) to file a registration statement and use
its best efforts to effect, within 120 days after the giving
of such written demand (or, in the case of a demand made
within 60 days prior to the end of the Company's then fiscal
year, within 210 days after the giving of such written
demand) the registration of an offering under the Securities
Act. Such offering shall include:
(A) the Registrable Securities
specified in the demand given pursuant to Section 7(b)(i);
and
(B) all other shares of Common Stock
that the holders thereof have requested be included in the
offering pursuant to Section 7(b)(ii);
all to the extent required to permit the respective holders
to dispose of such securities in compliance with applicable
law. The Company shall have the right to include in such
offering authorized but unissued shares of its Common Stock,
except as, and to the extent that, in the opinion of the
managing underwriter, such inclusion would adversely affect
the amount of, or price at which, the Registrable Securities
otherwise included therein can be sold. Should the Company
chose to distribute its securities through such
underwriting, it shall (together with Baham) enter into an
underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company. Notwithstanding any other provision of this
Section 7(b), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the securities to be
included in the registration and underwriting for the
account of the Company or other holders, as the Company
shall determine, to an amount not less than 10% of the total
number of shares included in such offering. Should the
Company chose not to distribute its securities through such
underwriting, Baham, with the consent of the Company (which
shall not be unreasonably withheld), shall select the
representative, if any, of the underwriters to be engaged in
connection with any such registration. Any such underwriter
shall be a member firm of the New York Stock Exchange with a
net capital of at least $15,000,000.
(c) Piggyback Registration.
(i) Notice of Registration. If, at any time
or from time to time, the Company shall determine to
register any of its securities for its own account in
connection with an offering of its securities to the general
public for cash on a form which would permit the
registration of Registrable Securities, the Company will,
subject to the further provisions of this Section 7:
(A) promptly give to Baham written
notice thereof; and
(B) subject to clause (ii) below,
use its reasonable efforts to include in such
registration (and any related qualification under blue
sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities
specified in a written request or requests, made on or
prior to the later of (1) ten days after such notice
from the Company or (2) ten days before the initial
filing of the registration statement which is the
subject of such notice.
(ii) Underwriting. If the registration of
which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so
advise Baham as a part of the written notice given pursuant
to Section 7(c)(i)(A). In such event, the right of Baham to
registration pursuant to this Section 7(c) shall be
conditioned upon Baham's participation in such underwriting
and the inclusion of Baham's Registrable Securities in the
underwriting to the extent provided herein. Should Baham
propose to distribute his securities through such
underwriting, he shall (together with the Company) enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company. Notwithstanding any other provision of this
Section 7(c), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit or eliminate the
Registrable Securities to be included in the registration
and underwriting. In any underwritten public offering in
which Baham participates pursuant to this Agreement, Baham
agrees that he will consent to any lockup of securities
demanded by the underwriter in connection with any such
registration provided all other selling shareholders agree
to like restrictions. In any underwritten public offering
in which Baham does not participate pursuant to this
Agreement, Baham agrees that he will consent to any lockup
of securities demanded by the underwriter, not in excess of
120 days in the aggregate for any one offering, in
connection with any such registration provided all selling
shareholders, if any, and all officers and directors of the
Company not participating in such public offering agree to
like restrictions.
(d) Expenses of Registration. Subject to any
state blue sky laws requiring otherwise, all expenses
incurred in connection with any registration, qualification
or compliance pursuant to this Section 7 with respect to
Registrable Securities, including without limitation, all
underwriting spreads, registration, legal, accounting,
filing and qualification fees, and printing expenses with
respect to or allocable to Registrable Securities, shall be
borne by the Company.
(e) Registration Procedure. Upon receipt of any
notice from the Company, at any time when a prospectus is
required to be delivered under the Securities Act, of the
happening of any event of which it is aware as a result of
which the prospectus contains an untrue statement of a
material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, Baham will forthwith discontinue
distribution of the Registrable Securities pursuant to the
registration statement until Baham's receipt of the copies
of any supplemented or amended prospectus.
(f) Indemnification. If and whenever Registrable
Securities of Baham are included in a registered offering,
Baham will indemnify the Company, each of its directors and
officers who sign such registration statement, each
underwriter, if any, of the Company's securities covered by
such a registration statement and each person who controls
the Company within the meaning of the Securities Act,
against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on (A)
any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement,
prospectus, offering circular or other document, or (B) any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Company, such directors, officers, persons or underwriters
for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement,
prospectus, offering circular or other registration
statement, prospectus, offering circular or other document
in reliance upon and in conformity with information
furnished to the Company by an instrument duly executed by
Baham and stated to be specifically for use therein.
(g) Information by Baham. Baham shall furnish in
writing to the Company such information regarding him and
the distribution proposed by him as the Company may request
in writing and as shall be required in connection with any
registration, qualification or compliance referred to in
this Section 7.
(h) Sale Without Registration. At the time of
any transfer of any Registrable Securities which shall not
be registered under the Securities Act the Company may
require, as a condition of allowing such transfer, that
Baham or transferee furnish to the Company: (i) such
information as is reasonably necessary in order to establish
that such transfer may be made without registration under
the Securities Act; and (ii) at the expense of Baham or
transferee, an opinion of counsel, satisfactory in form and
substance to the Company, to the effect that such transfer
may be made without registration under such Act.
(j) Termination of Rights and Transfer
Restrictions. The conditions precedent imposed by
Section 7(h) upon the transferability of the Registrable
Securities, and the registration obligations of the Company
imposed by this Section 7, shall cease and terminate as to
any particular Registrable Securities when such securities
shall have been (i) effectively registered under the
Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth
in the applicable registration statement in such manner as
to cause them to have been "distributed" under the
Securities Act, (ii) at such time as such Registrable
Securities are transferred by Baham or (iii) at such time as
an opinion of counsel (which opinion and counsel shall be
satisfactory to the Company and Baham) shall have been
rendered to the Company and Baham to the effect that such
conditions are not required to establish compliance with the
Securities Act.
8. BINDING EFFECT. This Option shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
(Signatures on next page)
IN WITNESS WHEREOF, the parties have caused this Option to
be executed this 15th day of August, 1995.
"Company"
GEODYNAMICS CORPORATION
By: /s/ Joanne M. Dunlap
Title: Vice President
"Baham"
/s/ Alney A. Baham
ALNEY A. BAHAM
SETTLEMENT AGREEMENT
By and Between
GEODYNAMICS CORPORATION
("Geodynamics")
and
ROBERT L. PAULSON
("Employee")
Table of Contents
Page
1. RESIGNATION OF EMPLOYMENT 1
2. FRINGE BENEFITS 1
3. RELEASE BY EMPLOYEE 2
4. SETTLEMENT PAYMENT TERMS 2
5. EXERCISE OF STOCK OPTIONS 3
6. ADEA RELEASE 3
7. BREACH OF AGREEMENT 3
8. NO THIRD PARTY RIGHTS 4
9. ENTIRE AGREEMENT 4
10. ABSENCE OF WARRANTIES AND REPRESENTATIONS 4
11. CALIFORNIA LAW 4
12. ATTORNEYS' FEES 4
13. RETURN OF PROPERTY 4
14. NO DISPARAGEMENT/COOPERATION 4
15. CONFIDENTIALITY 4
16. ARBITRATION 5
17. INJUNCTIVE RELIEF 5
18. INDEPENDENT COUNSEL 5
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Agreement") is made and
entered into on the date hereinafter set forth by and between
GEODYNAMICS CORPORATION ("Geodynamics") and ROBERT L. PAULSON
(the "Employee").
WHEREAS:
A. The Employee is an employee of Geodynamics;
B. The Employee has certain claims for libel, slander,
defamation and discrimination and he has threatened to file suit
against Geodynamics related to actions taken by the Board of
Directors of Geodynamics (the "Board") at its April 19, 1995
Board meeting (the "April 19 Events");
C. In consideration of the terms of this Agreement, the
Employee has advised Geodynamics that he desires to resign
effective as of May 22, 1995 (the Resignation Date"); and
D. Geodynamics and the Employee wish to confirm the
Employee's resignation effective as of the Resignation Date, and
to set forth in this Agreement the responsibilities and rights of
the parties in respect to the termination of the Employee's
employment.
NOW, THEREFORE, in consideration of the premises and
promises, warranties and representations herein contained, it is
agreed as follows:
1. RESIGNATION OF EMPLOYMENT. As of the Resignation Date,
the Employee resigns, and confirms his resignation, as an officer
and Director of Geodynamics, as a Director of Geodynamics
Services Corp., as a Director of Erdas, Inc., and as a Director
of LaFehr & Chan Technologies, Inc. All compensation and fringe
benefits will cease to be provided by Geodynamics to the Employee
as of the Resignation Date.
2. FRINGE BENEFITS. The Employee shall be entitled to
continue his health and dental insurance benefits at his expense
under the terms of the Consolidated Omnibus Reconciliation Act of
1986 ("COBRA") in accordance with COBRA premium rates then in
effect for up to eighteen (18) months for the Employee and thirty-
six (36) months for the Employee's dependents from the
Resignation Date.
In consideration of this Agreement, the Employee agrees that
he will not receive a bonus or contribution to the Geodynamics
Profit Sharing Plan for the current fiscal year, all in
accordance with applicable law. The Employee will receive a
contribution to Geodynamics' Money Purchase Pension Plan up to
the Resignation Date in accordance with that Plan. The Employee
will be paid for any accrued but unused vacation time up to the
Resignation Date. The Employee agrees that he has no further
claims for any compensation or damages owed to him by
Geodynamics.
3. RELEASE BY EMPLOYEE. In consideration of the execution
of this Agreement by Geodynamics, the Employee hereby releases
Geodynamics, its officers, directors, employees, shareholders and
agents or insurers, from and against any and all claims of any
nature, whether known or unknown, directly or indirectly related
to his employment and resignation of his employment, or claims
for further compensation or damages. The Employee agrees that
the release shall also apply to those types of claims set forth
in Section 1542 of the California Civil Code, which provides:
"A general release does not extend to
claims which the creditor does not know or
suspect to exist in his favor at the time of
executing the release, which if known by him,
must have materially affected his settlement
with the debtor."
The Employee further agrees that this release shall
also specifically apply to any claims with respect to his
employment, termination of his employment, or of unlawful
termination or breach of his employment contract and loss of any
and all salary, benefits or other damages tangible or intangible
relating thereto.
4. SETTLEMENT PAYMENT TERMS. In consideration of a one-
time payment of ONE HUNDRED SIXTY ONE THOUSAND DOLLARS ($161,000)
paid by Geodynamics to the Employee, payable at the execution of
this Agreement, as a structured, non-taxable payment and in
settlement of the claims and personal injury related to the April
19th Events, the Employee will grant to Geodynamics the release
set forth in Section 3 above.
These payments are made to the Employee to compensate the
Employee fully and complete for alleged personal injuries,
including pain and suffering, emotional distress, anxiety or
trauma, and any physical manifestation thereof, bodily injury,
injury to reputation and personal injury. As such, pursuant to
applicable federal, state and local tax laws, such sum is not
taxable as income and is to be paid free from withholding and/or
deduction of income or other employment-related taxes.
Accordingly, Geodynamics will pay such sum to the Employee
without deduction or withholding of such items; provided,
however, that if it is determined that this sum or any part
thereof should be treated as taxable income, the Employee agrees
to pay all taxes and any costs, assessments, interest, penalties,
damages or other losses to which he is or may be subject by
reason of a characterization of the aforesaid sum as non-taxable
damages as opposed to taxable income. The Employee indemnifies
and holds harmless Geodynamics from any and all liabilities which
may arise to the Employee or Geodynamics concerning or relating,
in any manner, to any obligations related to moneys received by
the Employee hereunder.
5. EXERCISE OF STOCK OPTIONS. The Employee is
concurrently exercising his remaining stock option for fifteen
thousand (15,000) shares of Geodynamics' common stock at a price
of TWO DOLLARS ($2.00) per share, and Geodynamics will cause the
issuance of such shares upon the execution of this Agreement, and
the Employee agrees that the THIRTY THOUSAND DOLLAR ($30,000)
strike price will be reduced from the payment due the Employee in
Paragraph 4 above.
6. ADEA RELEASE. The Employee agrees and expressly
acknowledges that this Agreement includes a waiver and release of
all claims which the Employee has or may have under the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C.
621, et seq. ("ADEA"). The following terms and conditions apply
to and are part of the waiver and release of ADEA claims under
this Agreement:
(a) The waiver and release of claims under ADEA
contained in this Agreement do not cover rights or claims
that may arise after the date on which the Employee signs
this Agreement.
(b) This Agreement involves consideration in addition
to anything of value to which the Employee is already
entitled.
(c) The Employee is advised to consult, and has in
fact consulted, an attorney before signing this Agreement.
(d) The Employee is granted, twenty-one (21) days
after he is presented with this Agreement, to decide whether
or not to sign this Agreement. If he executes this
Agreement prior to the expiration of such period, he does so
voluntarily and upon advice of counsel.
(e) The Employee will have the right to revoke the
waiver and release of claims under ADEA within seven (7)
days of signing this Agreement. Revocation must be made by
giving written notice to Joseph E. Nida, Esq., 801 Garden
Street, Suite 201, Santa Barbara, California 93101. For
revocation to be effective, written notice must actually be
received no later than the seventh (7th) calendar day after
the Employee signs this Agreement.
(f) This paragraph 6 and Geodynamics' obligation to
pay money to the Employee under Paragraph 4 above shall be
effective upon the later of the Resignation Date or the date
the revocation period expires without this paragraph having
been revoked. The remaining provisions of this Agreement
shall be effective upon the Resignation Date.
7. BREACH OF AGREEMENT. In the event that Geodynamics
finds that the Employee is in breach of any provision of this
Agreement, Geodynamics may give the Employee ten (10) days'
written notice of such breach. Should the Employee not cure any
such breaches within ten (10) days of the date of such notice,
Geodynamics may terminate the payment provided in Paragraph 4.
hereof. The Employee agrees that any such termination will not
affect the continued validity of the release provided for in
Paragraph 3. hereof.
8. NO THIRD PARTY RIGHTS. The parties warrant and
represent that they are authorized to enter into this Agreement
and that no third parties, other than the parties hereto, have
any interest in any of the claims released hereby.
9. ENTIRE AGREEMENT. This Agreement contains the entire
settlement understanding of the parties and cannot be altered or
amended except by a writing duly executed by all parties hereto.
This Agreement shall be binding upon and inure to the benefit of
the successors, assigns, and personal representatives of the
parties.
10. ABSENCE OF WARRANTIES AND REPRESENTATIONS. Each
party acknowledges that they have signed this Agreement without
having relied upon or being induced by any agreement, warranty or
representation of fact or opinion of any person not expressly set
forth herein. All representations and warranties of either party
contained herein shall survive its signing and delivery.
11. CALIFORNIA LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of
California.
12. ATTORNEYS' FEES. In the event of any controversy,
claim or dispute between the parties hereto, arising out of or in
any manner relating to this Agreement, including an attempt to
rescind or set aside, the prevailing party in any action brought
to settle such controversy, claim or dispute, shall be entitled
to recover reasonable attorney's fees and costs of suit.
13. RETURN OF PROPERTY. The Employee represents and
warrants that he has returned to Geodynamics all property,
documents, files, papers and materials of any kind that are the
property of Geodynamics, or that related in any way to the
business of Geodynamics, as well as any copies and/or facsimiles
of the same, and that he has not retained in his possession or
control any reproduction, copies or facsimiles that are the
property of Geodynamics or that related in any way to the
business of Geodynamics.
14. NO DISPARAGEMENT/COOPERATION. Neither party hereto
will make disparaging comments regarding the other party. In
addition, the Employee shall cooperate with Geodynamics in
respect to any questions from Geodynamics or its officers or
directors with respect to the Employee's activities during the
tenure of his employment with Geodynamics.
15. CONFIDENTIALITY. Except as to the Internal Revenue
Service, the California State Franchise Tax Board and other
taxing authorities, the terms of this Agreement shall be kept
confidential, and no party, representative, attorney or family
member shall reveal its contents, or characterize its contents,
to any third party except as required by law or except as
necessary to comply with law.
16. ARBITRATION. Any controversy between the parties
regarding the construction or application of this Agreement, and
any claim arising out of this Agreement or its breach, shall be
submitted to arbitration in Torrance, California, upon the
written request of one party after service of that request on the
other party.
The parties shall each appoint one person to hear the
dispute. If these two arbitrators cannot agree, the two
arbitrators shall choose a third impartial arbitrator whose
decision shall be final and conclusive on both parties. The cost
or arbitration shall be borne by the losing party. The
arbitrator is also authorized to award attorney's fees to the
prevailing party.
17. INJUNCTIVE RELIEF. In the event of breach of this
Agreement, either party may seek injunctive relief in enforcing
the terms of this Agreement, in addition to all other remedies to
which it may be entitled.
18. INDEPENDENT COUNSEL. The Employee represents that,
prior to the execution of this Agreement, he was advised to seek
independent counsel. Each party to this Agreement shall bear
their own attorney's fees and costs, and other expenses in
connection with the negotiation and preparation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this 5th day of July, 1995.
"Geodynamics"
GEODYNAMICS CORPORATION
By: /s/ Joanne M. Dunlap
Title: Vice President
"Employee"
/s/ Robert L. Paulson
ROBERT L. PAULSON
AMENDED AND RESTATED AGREEMENT
between
GEODYNAMICS CORPORATION,
a California corporation
and
WILLIAM W. STRONG
and
MASON HILL ASSET MANAGEMENT, INC.,
a New York corporation
Table of Contents
Page
1. Effective Date 1
2. Dismissal of Lawsuit; General Release 2
3. Strong Stock Option 3
4. Representation of Strong 3
5. Miscellaneous 3
(a) Non-Disclosure 3
(b) Equitable Remedies 3
(c) Entire Agreement 4
(d) Notices 4
(e) Governing Law 5
(f) Successors and Assigns 5
(g) Amendments; Supplements 5
(h) No Third Party Beneficiaries 5
(i) Captions 5
(j) Severability 5
(k) Counterparts 5
Exhibit A - William W. Strong Stock Purchase Option
AMENDED AND RESTATED AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (the "Amendment") is
made as of the 30th day of June, 1995 between GEODYNAMICS
CORPORATION, a California corporation ("Geodynamics"), on the one
hand, and WILLIAM STRONG ("Strong") and MASON HILL ASSET
MANAGEMENT, INC., a New York corporation ("Mason Hill"), on the
other hand, with reference to the following facts:
A. Strong, on behalf of himself, members of his family and
certain retirement accounts for his benefit, is the beneficial
owner of approximately six thousand five hundred (6,500) shares
of the Common Stock of Geodynamics. In addition, through his
stock ownership and as an officer and/or director of the
respective general partner of two partnerships (Greylock Fund and
Equinox Partners) which own shares of Common Stock of
Geodynamics, Strong is the beneficial owner of an additional
approximately seventeen thousand nine hundred seventy five
(17,975) shares of the Common Stock of Geodynamics.
B. Mason Hill, of which Strong is the President and sole
shareholder, is investment adviser to various clients who own, in
the aggregate, approximately two hundred eight thousand three
hundred thirty three (208,333) shares of the Common Stock of
Geodynamics (all such present and future accounts are
collectively referred to as "Client Accounts"). The term
"Shares" shall refer to the shares of Geodynamics stock owned by
Strong, partnerships of which he is a general partner and in
Mason Hill's Client Accounts.
C. Strong and Mason Hill have incurred certain expenses in
connection with various matters arising out of Geodynamics' 1994
Annual Meeting of Shareholders held on February 16, 1995 (the
"Annual Meeting") and related litigation (the "Strong Expenses").
D. Geodynamics, Strong and Mason Hill wish to resolve
various disputes which have arisen between them, to provide for
the reimbursement of the Strong Expenses by Geodynamics and to
establish the guidelines with respect to the continued support of
management of Geodynamics by Strong, Mason Hill and Mason Hill's
and/or Strong's present and future clients. This settlement is a
compromise of a disputed claim and neither the payment hereunder
nor this Amendment is to be construed as an admission of
liability on the part of any of the settling parties.
E. The parties were parties to an Agreement dated April
11, 1995 (the "Old Agreement"), and the Old Agreement was not
approved by Geodynamics and, therefore, the parties hereto wish
to amend and restate the Old Agreement in its entirety.
Accordingly, in consideration of the foregoing premises and
the agreements contained herein, Geodynamics, Strong and Mason
Hill agree as follows:
1. Effective Date; Amendment and Restatement. The
Old Agreement is hereby canceled, amended and restated in its
entirety. This Amendment will be effective upon its execution
(the "Effective Date").
2. Dismissal of Lawsuit; General Release.
(a) As soon as practicable following the
Effective Date, Geodynamics shall dismiss with prejudice its
claims against Strong and Mason Hill in the suit currently
pending in the United States District Court for the Central
District of California (Case No. CV-94-8335 LGB) entitled
Geodynamics Corporation v. Alney A. Baham, et al (the
"Lawsuit").
(b) In consideration of the foregoing dismissal
and the other agreements contained herein, Geodynamics, on
the one hand, and Strong and Mason Hill, on the other hand,
each fully and forever release and discharge the other(s) of
them and their respective officers, directors, employees,
attorneys, agents, Client Accounts and affiliates from any
and all claims, demands, actions, suits, causes of action,
obligations, controversies, debts, costs, expenses,
accounts, damages, judgments, losses, injuries and
liabilities, of whatever kind or nature, in law, equity or
otherwise, present and future, whether known or unknown,
suspected or unsuspected, contingent or fixed ("Claims")
arising out of or in connection with any matter or cause
whatsoever related to Geodynamics through the Effective
Date, including all matters arising out of the Annual
Meeting, the Lawsuit or otherwise.
IT IS EXPRESSLY UNDERSTOOD that California Civil Code
Section 1542 provides as follows:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor.
THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY
EXPRESSLY WAIVED BY EACH OF THE PARTIES HERETO to the fullest
extent that it may waive all such rights and benefits, if any, of
such provisions pertaining to the matters released herein. In
addition, each of the parties hereto hereby waives any similar
provision in any other jurisdiction, if in any way applicable,
and each of the parties hereto acknowledges that these waivers
are an essential and material term of this Amendment. In
connection with such waiver, each of the parties hereto
acknowledges that it or he has been advised of and has considered
the possibility that it or he may not now fully know the number
or magnitude of all the Claims that it or he may have against any
other party hereto with respect to the matters released herein,
and that it or he may hereafter discover Claims presently unknown
or unsuspected, or facts in addition to or different from those
that it or he now knows or believes to be true, with respect to
the matters released herein. Nevertheless, it is each of the
parties' intention, through this release, fully, finally and
forever to settle and release all such matters, and all Claims
relative thereto, which may exist or heretofore have existed
against the other, and agrees that this release is such a full
and final release. In furtherance of such intention, the release
herein given shall be and remain in effect as a full and complete
release of such additional different Claims or facts relative
thereto, notwithstanding the discovery by it of the existence of
any additional or different Claims or facts relating to the
Claims.
3. Strong Stock Option. In consideration of this
Amendment, Geodynamics will issue to Strong a stock option for
twenty thousand (20,000) shares of the Common Stock of
Geodynamics (the "Option") at the closing bid price on Tuesday,
May 23, 1995, with a two (2) year term, in the form attached
hereto as Exhibit A.
4. Representation of Strong. In consideration of the
issuance of the Option to Strong (and the subsequent issuance of
the Shares pursuant to the Option), Strong represents that he is
an "accredited investor" within the meaning of Regulation D under
the 1933 Act, and is acquiring the stock described in Section 3.
above for investment for his own account, and not with a view to
distribution subject, nevertheless, to any requirement of law
that the disposition of his property shall at all times be within
his control. Strong has such knowledge and experience in
financial and business matters that he is capable of evaluating
the merits and risks of the purchase of the stock subject to the
Option. Strong is aware that he may be required to bear the
economic risk of an investment in the stock for an indefinite
period, and he is able to bear such risk for an indefinite
period. Strong acknowledges that (a) the Option and the Shares
to be acquired by him upon the exercise of the Option are not
being registered under the 1933 Act on the grounds that the
issuance of such stock is exempt from registration under Section
4(2) of the 1933 Act as not involving any public offering and (b)
Geodynamics' reliance on such exemption is predicated in part on
the representations made to Geodynamics by Strong in this Section
4.
5. Miscellaneous.
(a) Non-Disclosure. Except as required by
applicable provisions of the federal securities laws, each
party agrees not to make, nor cause to be made, any other
news release or other public announcement pertaining to this
Amendment or the subject matter hereof without the prior
written approval of the other party. Notwithstanding the
foregoing, Strong and Mason Hill acknowledge that this
Amendment may be required to be filed with the Securities
and Exchange Commission and NASDAQ in connection with
Geodynamics' public disclosure obligations, and Geodynamics
acknowledges that Strong and Mason Hill may disclose all or
part of this Amendment to Client Accounts, governmental
agencies or prospective directors of Geodynamics.
(b) Equitable Remedies. Each of the parties
hereto acknowledges that the remedy at law for any breach,
or threatened breach, of the provisions of this Amendment
will be inadequate and, accordingly, each of them covenants
and agrees that, with respect to any such breach or
threatened breach, the non-breaching party, in addition to
any other rights or remedies that it may have and regardless
of whether such other rights or remedies have been
previously exercised, will be entitled to such equitable and
injunctive relief as may be available.
(c) Entire Agreement. This Agreement constitutes
the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, warranties,
statements and understandings, whether oral or written, with
respect to the subject matter hereof.
(d) Notices. All notices, demands, elections or
requests provided for or permitted to be given pursuant to
this Amendment must be in writing. All notices, demands,
elections and requests shall be deemed to have been duly
given on the date delivered personally or on the date of
receipt if sent by overnight delivery services, facsimile
transmission or registered or certified U.S. mail with
return receipt requested, to the following addresses, or
such other addresses as may be subsequently designated in
writing and delivered to the other parties hereto:
To Geodynamics: Geodynamics Corporation
21171 Western Avenue, Suite 110
Torrance, CA 90501
Fax: 310-781-3681
Attention: Bruce J. Gordon,
Chief Executive Officer
and President
with copies to: Joseph E. Nida, Esq.
Nida & Maloney
801 Garden Street, Suite 201
Santa Barbara, CA 93101
Fax: 805-568-1955
To Strong and
Mason Hill: Mr. William Strong
Mason Hill Asset Management, Inc.
477 Madison Avenue, 8th Floor
New York, NY 10022
Fax: 212-832-2215
with a copy to: Law Offices of Hardy L. Thomas,
A Professional Corporation
420 Boyd Street
Los Angeles, CA 90013
Fax: 213-620-0687
(e) Governing Law. This Amendment and the rights
and obligations of the parties hereunder, shall be
interpreted, construed and enforced in accordance with the
laws of the State of California without regard to principles
of law (such as "conflicts of laws") that might make the law
of some other jurisdiction applicable.
(f) Successors and Assigns. This Amendment shall
be binding upon and inure to the benefit of the parties and
their respective successors and assigns. This Amendment
specifically does not bind Mason Hill's clients or any
transferee of any of the stock owned or controlled by any of
the parties hereto.
(g) Amendments; Supplements. This Amendment may
not be amended or modified, except in a writing signed by
all parties and expressly stating that it is intended to
amend this Amendment, except for the addresses to which
communications may be sent, which any party may change in
accordance with the terms of this Amendment.
(h) No Third Party Beneficiaries. Nothing
contained in this Amendment is intended to and nothing
contained herein shall be interpreted to confer on any party
not a party hereto or a successor or assign thereof the
rights of a third party beneficiary.
(i) Captions. All section titles or captions
contained in this Amendment or in any schedule or exhibit
annexed hereto or referred to herein are for convenience
only, shall not be deemed a part of this Amendment and shall
not affect the meaning or interpretation of this Amendment.
All references herein to sections shall be deemed references
to such parts of this Amendment, unless the context shall
otherwise require.
(j) Severability. If any provision of this
Amendment or the application thereof to any person or
circumstances shall be held to be invalid or unenforceable
to any extent, the remainder of this Amendment and the
application of such provision to other persons or
circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
(k) Counterparts. This Amendment may be executed
in any number of counterparts, each of which shall be deemed
an original, but all of which together shall constitute one
and the same instrument.
(Signatures on next page)
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the day and year first above written.
GEODYNAMICS:
GEODYNAMICS CORPORATION
By: /s/ Bruce J. Gordon
Bruce J. Gordon,
Chief Executive Officer and
President
STRONG:
/s/ William W. Strong
WILLIAM W. STRONG
MASON HILL ASSET
MANAGEMENT, INC.
By: /s/ William W. Strong
William W. Strong,
President
Exhibit A
GEODYNAMICS CORPORATION
WILLIAM W. STRONG STOCK PURCHASE OPTION
This Stock Purchase Option (the "Option") is made and
entered into at Torrance, California on the date hereinafter set
forth by and between GEODYNAMICS CORPORATION, a California
Corporation, hereinafter called the "Company" and WILLIAM W.
STRONG, hereinafter called "Strong".
WHEREAS:
A. Strong is a shareholder in the Company; and
B. Strong and the Company have entered into an Amended and
Restated Agreement of even date, which requires the issuance of a
stock option to Strong.
NOW, THEREFORE, in consideration of the premises, it is
agreed as follows:
1. GRANT OF OPTION. Subject to the conditions set
forth herein, the Company hereby grants to Strong the non-
assignable right, privilege and option to purchase twenty
thousand (20,000) shares (the "Option Shares") of its Common
Stock at EIGHT AND 75/100THS DOLLARS ($8.75) per share (the
"Option Price"), in the manner hereinafter provided.
2. TIME OF EXERCISE OF OPTION. This Option may be
exercised by Strong for the two (2) year period commencing upon
its execution date.
3. METHOD OF EXERCISE. Stock purchased under this
Option shall, at the time of purchase, be paid for in full. To
the extent that the right to purchase shares has accrued
thereunder, this Option may be exercised, from time to time, by
written notice to the Company stating the number of shares with
respect to which this Option is being exercised and the time of
delivery thereof, which shall be at least fifteen (15) days after
the giving of such notice, unless an earlier date shall have been
mutually agreed upon. At the time specified in such notice, the
Company shall, without transfer or issue tax to Strong, deliver
to him at the main office of the Company, or at such other place
as shall be mutually acceptable, a certificate or certificates
for such shares, against the payment of the Option Price, in
full, for the number of shares to be delivered, by certified or
bank cashier's check, or the equivalent thereof acceptable to the
Company. Provided, however, that the time of such delivery may
be postponed by the Company for such period as may be required
for it, with reasonable diligence, to comply with any
requirements of any state or federal agency or any securities
exchange. Provided, further, that in the event that the
California Commissioner of Corporations has imposed an escrow
upon the stock of the Company, said shares shall be delivered to
the escrow holder previously designated by said Commissioner of
Corporations, rather than to Strong. If Strong fails to accept
delivery of and pay for all or any part of the number of shares
specified in the notice given by Strong, upon tender and delivery
of said shares, Strong's right to exercise this Option with
respect to such undelivered shares shall be terminated.
4. RECLASSIFICATION, CONSOLIDATION OR MERGER. If,
and to the extent that the number of issued shares of Common
Stock of the Company shall be increased or reduced by a change in
par value, split-up, reclassification, distribution of a dividend
payable in stock, or the like (but not dividends payable in
cash), the number of Option Shares subject to this Option, and
the Option Price therefor, shall be proportionately adjusted. If
the Company is reorganized or consolidated, or merged with
another corporation, Strong shall be entitled to receive options
covering shares of such reorganized, consolidated or merged
Company in the same proportion, at an equivalent price, and
subject to the same conditions.
5. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option
is non-transferable by Strong, and is exercisable only by him,
and Strong shall have no rights as a shareholder of shares
subject to this Option until payment of the Option Price and the
delivery of such shares as herein provided. Provided, however,
that this Option may be exercisable by Strong's executor or
personal representative within six (6) months after his death.
6. RESTRICTIONS ON ISSUANCE OF SHARES. The Company
shall not be obligated to sell and issue any shares pursuant to
this Option, unless permission to issue said shares has first
been obtained from the Commissioner of Corporations of the State
of California, and, further, unless the shares with respect to
which this Option is being exercised are, at the time,
effectively registered, or exempt from registration, under the
Securities Act of 1933, as amended.
7. REGISTRATION.
(a) Definitions. As used in this Section 7:
(i) The terms "register," "registered" and
"registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the
Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering by the Securities and
Exchange Commission ("SEC") of the effectiveness of such
registration statement; and
(ii) The term "Registrable Securities" means
(a) the Common Stock issued or issuable upon exercise of the
Option and (b) any Common Stock which Strong shall be
entitled to receive, or shall have received, because of
Strong's ownership of such securities, such as additional
securities received upon stock splits, recapitalizations and
the like.
(b) Demand Registration.
(i) Upon the written demand of Strong, the
Company shall prepare and file a registration statement
under the Securities Act covering an offering of such number
of shares of Common Stock comprising the Registrable
Securities as shall have been requested by Strong in such
demand, and shall cause such registration statement to
become effective, all in accordance with the provisions of
this Agreement; provided that (i) the Company shall be
obligated to effect registration pursuant to this Section
7(b)(i) no more than one time and (ii) no demand shall be
made at any time that the Company is not eligible to
register securities on From S-3 promulgated by the SEC (or
any comparable successor form) and the Company shall only be
required to effect a registration if at the time of
effectiveness thereof, the Company continues to be eligible
to use such From S-3.
(ii) Whenever the Company shall have
received a demand to effect registration pursuant to Section
7(b)(i), the Company may give notice of such proposed
registration to other holders of unregistered securities of
the Company. Subject to such conditions as the Company may
impose, any such holder may request that all of such
holder's unregistered securities, or any portion thereof
designated by such holder, be included in the offering.
(iii) The Company shall proceed as
expeditiously as possible after receipt of a demand pursuant
to Section 7(b)(i) to file a registration statement and use
its best efforts to effect, within 120 days after the giving
of such written demand (or, in the case of a demand made
within 60 days prior to the end of the Company's then fiscal
year, within 210 days after the giving of such written
demand) the registration of an offering under the Securities
Act. Such offering shall include:
(A) the Registrable Securities
specified in the demand given pursuant to Section 7(b)(i);
and
(B) all other shares of Common Stock
that the holders thereof have requested be included in the
offering pursuant to Section 7(b)(ii);
all to the extent required to permit the respective holders
to dispose of such securities in compliance with applicable
law. The Company shall have the right to include in such
offering authorized but unissued shares of its Common Stock,
except as, and to the extent that, in the opinion of the
managing underwriter, such inclusion would adversely affect
the amount of, or price at which, the Registrable Securities
otherwise included therein can be sold. Should the Company
chose to distribute its securities through such
underwriting, it shall (together with Strong) enter into an
underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company. Notwithstanding any other provision of this
Section 7(b), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the securities to be
included in the registration and underwriting for the
account of the Company or other holders, as the Company
shall determine, to an amount not less than 10% of the total
number of shares included in such offering. Should the
Company chose not to distribute its securities through such
underwriting, Strong, with the consent of the Company (which
shall not be unreasonably withheld), shall select the
representative, if any, of the underwriters to be engaged in
connection with any such registration. Any such underwriter
shall be a member firm of the New York Stock Exchange with a
net capital of at least $15,000,000.
(c) Piggyback Registration.
(i) Notice of Registration. If, at any time
or from time to time, the Company shall determine to
register any of its securities for its own account in
connection with an offering of its securities to the general
public for cash on a form which would permit the
registration of Registrable Securities, the Company will,
subject to the further provisions of this Section 7:
(A) promptly give to Strong
written notice thereof; and
(B) subject to clause (ii) below,
use its reasonable efforts to include in such
registration (and any related qualification under blue
sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities
specified in a written request or requests, made on or
prior to the later of (1) ten days after such notice
from the Company or (2) ten days before the initial
filing of the registration statement which is the
subject of such notice.
(ii) Underwriting. If the registration of
which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so
advise Strong as a part of the written notice given pursuant
to Section 7(c)(i)(A). In such event, the right of Strong
to registration pursuant to this Section 7(c) shall be
conditioned upon Strong's participation in such underwriting
and the inclusion of Strong's Registrable Securities in the
underwriting to the extent provided herein. Should Strong
propose to distribute his securities through such
underwriting, he shall (together with the Company) enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company. Notwithstanding any other provision of this
Section 7(c), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit or eliminate the
Registrable Securities to be included in the registration
and underwriting. In any underwritten public offering in
which Strong participates pursuant to this Agreement, Strong
agrees that he will consent to any lockup of securities
demanded by the underwriter in connection with any such
registration provided all other selling shareholders agree
to like restrictions. In any underwritten public offering
in which Strong does not participate pursuant to this
Agreement, Strong agrees that he will consent to any lockup
of securities demanded by the underwriter, not in excess of
120 days in the aggregate for any one offering, in
connection with any such registration provided all selling
shareholders, if any, and all officers and directors of the
Company not participating in such public offering agree to
like restrictions.
(d) Expenses of Registration. Subject to any
state blue sky laws requiring otherwise, all expenses
incurred in connection with any registration, qualification
or compliance pursuant to this Section 7 with respect to
Registrable Securities, including without limitation, all
underwriting spreads, legal, accounting, registration,
filing and qualification fees, and printing expenses with
respect to or allocable to Registrable Securities, shall be
borne by the Company.
(e) Registration Procedure. Upon receipt of any
notice from the Company, at any time when a prospectus is
required to be delivered under the Securities Act, of the
happening of any event of which it is aware as a result of
which the prospectus contains an untrue statement of a
material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, Strong will forthwith discontinue
distribution of the Registrable Securities pursuant to the
registration statement until Strong's receipt of the copies
of any supplemented or amended prospectus.
(f) Indemnification. If and whenever Registrable
Securities of Strong are included in a registered offering,
Strong will indemnify the Company, each of its directors and
officers who sign such registration statement, each
underwriter, if any, of the Company's securities covered by
such a registration statement and each person who controls
the Company within the meaning of the Securities Act,
against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on (A)
any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement,
prospectus, offering circular or other document, or (B) any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Company, such directors, officers, persons or underwriters
for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement,
prospectus, offering circular or other registration
statement, prospectus, offering circular or other document
in reliance upon and in conformity with information
furnished to the Company by an instrument duly executed by
Strong and stated to be specifically for use therein.
(g) Information by Strong. Strong shall furnish
in writing to the Company such information regarding him and
the distribution proposed by him as the Company may request
in writing and as shall be required in connection with any
registration, qualification or compliance referred to in
this Section 7.
(h) Sale Without Registration. At the time of
any transfer of any Registrable Securities which shall not
be registered under the Securities Act the Company may
require, as a condition of allowing such transfer, that
Strong or transferee furnish to the Company: (i) such
information as is reasonably necessary in order to establish
that such transfer may be made without registration under
the Securities Act; and (ii) at the expense of Strong or
transferee, an opinion of counsel, satisfactory in form and
substance to the Company, to the effect that such transfer
may be made without registration under such Act.
(j) Termination of Rights and Transfer
Restrictions. The conditions precedent imposed by
Section 7(h) upon the transferability of the Registrable
Securities, and the registration obligations of the Company
imposed by this Section 7, shall cease and terminate as to
any particular Registrable Securities when such securities
shall have been (i) effectively registered under the
Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth
in the applicable registration statement in such manner as
to cause them to have been "distributed" under the
Securities Act, (ii) at such time as such Registrable
Securities are transferred by Strong or (iii) at such time
as an opinion of counsel (which opinion and counsel shall be
satisfactory to the Company and Strong) shall have been
rendered to the Company and Strong to the effect that such
conditions are not required to establish compliance with the
Securities Act.
8. BINDING EFFECT. This Option shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
(Signatures on next page)
IN WITNESS WHEREOF, the parties have caused this Option to
be executed this 30th day of June, 1995.
"Company"
GEODYNAMICS CORPORATION
By:_______________________________
Title:_____________________________
"Strong"
/s/ William W. Strong
WILLIAM W. STRONG
EMPLOYMENT AGREEMENT
By and Between
BRUCE J. GORDON
("Employee")
and
GEODYNAMICS CORPORATION,
a California corporation
("Corporation")
Table of Contents
Page
1. EMPLOYMENT 1
1.1 Position and Duties 1
2. TERM 1
3. COMPENSATION 1
3.1 Amount of Salary 1
3.2 Bonuses 1
3.2.1 Signing Bonus 1
3.2.2 Cash Distribution Bonus 1
3.2.3 Operations Bonus 2
3.2.4 Special Performance Bonus 2
3.2.5 Other Bonus Terms 2
3.3 Reimbursements 3
3.4 Supplemental Employee Retirement Plan 3
3.5 Fringe Benefits 3
3.6 Compensated Leave 3
4. STOCK OPTIONS 3
4.1 Short-Term Options 3
4.2 Two Long-Term Options 3
4.3 Directors Options 4
5. NO COMPETITION DURING EMPLOYMENT 4
5.1 Other Services 4
5.2 Competition 4
5.3 Solicitation 4
5.4 Competing Enterprise 4
5.5 Other Activities 4
5.6 Payments 5
6. BUSINESS DISCLOSURES 5
7. TERMINATION OF AGREEMENT 5
7.1 Grounds 5
7.1.1 Expiration of Term 5
7.1.2 Mutual Agreement 5
7.1.3 Without Cause 5
7.1.4 Death 5
7.1.5 Disability 5
7.1.6 For Cause 5
7.2 Effect of a Termination on Compensation
or Stock Options 6
8. MISCELLANEOUS 6
8.1 Notices 6
8.2 Partial Invalidity 6
8.3 Waiver 6
8.4 Assignment; Effect on Agreement 6
8.5 Arbitration 6
8.6 Governing Law 6
8.7 Entire Agreement 7
8.8 Counsel 7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into at Torrance, California on the date hereinafter set
forth by and between BRUCE J. GORDON (hereinafter referred to as
the "Employee") and GEODYNAMICS CORPORATION, a California
corporation (hereinafter referred to as the "Corporation").
The parties hereto, intending to be legally bound, do hereby
agree as follows:
1. EMPLOYMENT.
1.1 Position and Duties. The Corporation does hereby
employ the Employee, and the Employee hereby accepts such
employment as the President and Chief Executive Officer of the
Corporation, upon the terms and provisions set forth in this
Agreement. The Employee shall perform all duties expected from
the President and Chief Executive Officer and shall observe and
comply with the Corporation's rules and regulations regarding the
performance of his duties and shall carry out and perform all
orders, directions and policies stated to him by the Corporation
periodically, either orally or in writing. The Employee shall
carry out the duties assigned to him in a trustworthy,
businesslike and loyal manner. The Employee acknowledges that he
has received and read the Corporation's Employee Manual (the
"Employee Manual") and agrees to be bound thereby.
2. TERM. This Agreement shall commence as of April 19,
1995 (the "Effective Date"), and shall continue until December
31, 1996, unless sooner terminated as herein provided (the
"Termination Date").
3. COMPENSATION.
3.1 Amount of Salary. The Corporation shall pay to
the Employee a monthly salary of EIGHT THOUSAND DOLLARS ($8,000)
per month, payable bi-weekly. The Employee's salary will be
adjusted by the mutual agreement of the parties hereto effective
as of June 1, 1996. If this Agreement is terminated for any
reason, the Employee will receive a minimum payment under this
Section 3.1 of NINETY SIX THOUSAND DOLLARS ($96,000), net of
salary payments paid to the Employee through the Termination
Date.
3.2 Bonuses. The Employee will be paid the following
bonuses:
3.2.1 Signing Bonus. A THIRTY THOUSAND
DOLLAR ($30,000) signing bonus, receipt of which is hereby
acknowledged.
3.2.2 Cash Distribution Bonus. An amount
equal to one-half percent (0.5%) of all cash distributed by
the Corporation to its shareholders, whether as dividends,
stock repurchases (including any stock repurchased from
Robert L. Paulson) and all cash received by shareholders
upon a disposition or acquisition of the Corporation, from
the Effective Date to the Termination Date. This bonus may
not exceed FORTY THOUSAND DOLLARS ($40,000).
3.2.3 Operations Bonus. For the fiscal
year, 1996, a bonus equal to six percent (6%) of the sum of
the following:
Income from operations
Plus interest income
Plus $600,000
Less 10% of Total Assets
Total assets shall be equal to the average of the total
assets on the following dates: the end of fiscal
year 1995 and the end of each fiscal quarterly accounting periods
for each fiscal quarter of fiscal year 1996.
This bonus may not exceed EIGHTY THOUSAND DOLLARS ($80,000).
3.2.4 Special Performance Bonus. A
Special Performance Bonus will be paid to the Employee,
which shall be established by the Board of Directors of the
Corporation (the "Board"), in its absolute discretion, based
upon exceptional performance by the Employee or if the
Employee has concluded a Change of Control. As used in this
Agreement, "Change in Control" shall mean any of the
following: the sale or merger of the Corporation when the
existing Directors of the Board do not constitute a majority
of the Board, where there has been a sale of substantially
all of the assets of the Corporation or a majority of the
shares of the Corporation are now owned by one party, or one
party and the affiliates thereof.
3.2.5 Other Bonus Terms. Any bonus
described in Sections 3.3.2 and 3.3.3 hereof will be
computed in accordance with generally accepted accounting
principles uniformly applied.
Any dispute over the computation or amount of the
foregoing bonuses shall be resolved by the Corporation's
certified public accountants, which decision will be binding upon
both parties hereto.
With the exception of the Signing Bonus described in
Section 3.2.1 above, all bonuses will be payable within sixty
(60) days of the Termination Date (except for the Operations
Bonus described in Section 3.2.3 hereof, which would be payable
within sixty (60) days of December 31, 1996). If the Employee's
employment terminates for any reason, prior to the end of fiscal
year 1996, the Operations Bonus described in Section 3.2.3 hereof
will be prorated by the number of weeks worked in fiscal year
1996 over fifty-two (52) weeks.
3.3 Reimbursements. The Employee shall be reimbursed
by the Corporation only for amounts actually expended by the
Employee in the course of performing duties for the Corporation
in accordance with the Employee Manual.
3.4 Supplemental Employee Retirement Plan. The
Corporation shall pay to the Employee, as an unfunded form of
deferred compensation, up to the sum of ONE HUNDRED THOUSAND
DOLLARS ($100,000), payable at the rate of TWO THOUSAND DOLLARS
($2,000) per month, payable on the first day of each month
commencing on the later of (i) April 1, 1996 or (ii) one (1)
month following the earlier of the Termination Date, but no
earlier than April 1, 1996, with the final payment in June, 2000.
3.5 Fringe Benefits. The Corporation agrees that the
Employee shall also be entitled to life insurance, health and
medical insurance and other fringe benefits available to senior
management of the Corporation. In addition, the Employee will be
provided a company car (and gas, insurance and maintenance) and
reimbursement for accommodations and lodging in Torrance,
California, as well as for equipment and expenses for his home
office.
3.6 Compensated Leave. The Employee will be entitled
to seven (7) paid holidays, and vacation and sick leave in
accordance with the Employee Manual.
4. STOCK OPTIONS. The Employee shall be entitled to the
following stock options:
4.1 Short-Term Options. An option will be issued to
the Employee for fifteen thousand (15,000) shares with a fair
market value exercise price set to be EIGHT DOLLARS ($8.00). All
options shall expire in 1997 as follows: three thousand (3,000)
expire on each of January 2, March 31, June 30, September 30 and
December 31, 1997. The options are exercisable once the Employee
leaves the position of Chief Executive Officer of the
Corporation, or if there is a Change of Control. The options
expiring during the Employee's employment hereunder are
unexercisable.
4.2 Two Long-Term Options.
4.2.1 An option will be issued to the
Employee for thirty thousand (30,000) shares with an initial
exercise price of TEN DOLLARS ($10.00) (increasing $0.50 on
each anniversary), expiring in ten (10) years. Fifteen
thousand (15,000) shares shall be exercisable immediately
and fully vested. If the Employee is still the Chief
Executive Officer of the Corporation, fifteen thousand
(15,000) shares shall be exercisable on or after December
31, 1995. There shall be no acceleration.
4.2.2 In addition, the Employee shall be
entitled to another option for fifteen thousand (15,000)
shares with a fixed exercise price of TWELVE DOLLARS
($12.00), expiring in five (5) years, and shall be
exercisable on or after June 1, 1996 or exercisable
immediately upon a Change of Control.
4.3 Directors Options. The Employee will have already
been granted the full allotment of shares from the Director's
Stock Option Plan effective February 17, 1995. The first twenty
percent (20%) of those options, for the first year of service,
will be surrendered. As long as the Employee returns to the
Board as an outside director by the next "vesting date" (June 1,
1996), the Employee will retain the other eighty percent (80%) of
the options granted, which will become exercisable ("vest") on
the normal schedule. (If after June 1, 1996, but before June 1,
1997, then the Employee will retain the remaining sixty percent
(60%), etc.). Should there be a Change of Control, then all the
remaining eighty percent (80%) (or 60%) reverts to the Employee
and is exercisable immediately.
5. NO COMPETITION DURING EMPLOYMENT. The Employee agrees
that, during the term of this Agreement, he diligently shall
devote his time and efforts to the duties and responsibilities as
set forth herein, and without prior express written authorization
of the Board, the Employee shall not, directly or indirectly,
either alone or in concert with others, during the term of this
Agreement:
5.1 Other Services. Perform or render any services of
a business, professional or commercial nature relating to service
or products similar to those of the Corporation, to or for the
benefit of any other person or firm, whether for compensation or
otherwise, except for personal investments and except for his
services as a Director of the Rancho Santa Fe Community Services
District and for other activities approved by the Corporation;
5.2 Competition. Engage in any activity directly or
indirectly in competition with or adverse to the Corporation.
5.3 Solicitation. Engage in any activity for purposes
of influencing or attempting to influence the Corporation's
customers, either directly or indirectly, to conduct business
with any business enterprise in competition with the Corporation;
5.4 Competing Enterprise. Undertake or participate in
any planning for or organization of any business activity that is
or will be in competition with the Corporation in any field(s) or
area(s) in which the Employee has worked or with which the
Employee has come into contact, or of which the Employee has
gained knowledge during the term of his employment under this
Agreement.
5.5 Other Activities. Engage in any other business
activity that would materially interfere with the performance of
any of the Employee's obligations and duties under this
Agreement; or
5.6 Payments. The Employee will not accept, directly
or indirectly, any payments or gifts from any supplier, customer
or other party involved with the Corporation.
6. BUSINESS DISCLOSURES. All processes, inventions,
patents, copyrights, trademarks and other intangible rights that
may be conceived or developed by the Employee, either alone or
with others, during the term of the Employee's employment,
whether or not conceived or developed during the Employee's
working hours and with respect to which the equipment, supplies,
facilities or trade secret information of the Corporation or that
relate to the business of the Corporation or to the Corporation's
actual or demonstrably anticipated research and development, or
that result from any work performed by the Employee for the
Corporation, shall be the sole property of the Corporation. The
Employee shall disclose to the Corporation all such matters
conceived during the term of this Agreement, whether or not the
property of the Corporation under the terms of the preceding
sentence, provided that such disclosure shall be received by the
Corporation in confidence. The Employee shall execute all
documents, including patent applications and assignments,
required by the Corporation to establish the Corporation's rights
under this section.
7. TERMINATION OF AGREEMENT.
7.1 Grounds. This Agreement shall terminate upon the
occurrence of any of the following events:
7.1.1 Expiration of Term. Upon
expiration of the term specified in paragraph 2 hereof.
7.1.2 Mutual Agreement. Whenever the
Corporation and the Employee mutually agree in writing to
termination.
7.1.3 Without Cause. By either party on
ninety (90) days' prior written notice.
7.1.4 Death. Upon the death of the
Employee.
7.1.5 Disability. In the event that the
Employee is unable to perform his assigned duties and
responsibilities due to illness, physical or mental
disability or any other reason, and if such disability
continues for a period of three (3) consecutive months after
all available sick leave has been utilized, the Corporation
may terminate this Agreement upon ten (10) days' written
notice.
7.1.6 For Cause. This Agreement may be
immediately terminated by the Corporation for the following
causes: the Employee's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated
duties, willful violation of any criminal law (other than
traffic violations or similar offenses) or a material breach
of any provision of this Agreement.
7.2 Effect of a Termination on Compensation or Stock
Options. Unless the Employee voluntarily terminates his
employment in accordance with Section 7.1.3 hereof or his
employment is terminated for cause in accordance with Section
7.1.6 hereof, all compensation provided hereunder will be payable
to his successor in interest, Bruce J. Gordon and Janet M.
Gordon, Trustees U/A the Gordon Family Trust dated 12-12-89 (the
"Trust"). The Trust may exercise any stock options granted the
Employee in accordance with their terms.
8. MISCELLANEOUS.
8.1 Notices. Any notice required to be given pursuant
to this Agreement shall be effective only if in writing and
delivered personally or by mail. If given by mail, such notice
must be sent by registered or certified mail, postage prepaid,
mailed to the parties at the addresses set forth on the signature
page hereof, or at such other addresses as the parties may
designate from time to time by written notice. Mailed notices
shall be deemed received two (2) business days after the date of
deposit in the mail
8.2 Partial Invalidity. If any term or provision of
this Agreement or the application thereof to any person or
circumstance shall be held to be invalid or unenforceable to any
extent, the remainder of this Agreement or application of such
term or provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected
thereby and each term and provision of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
8.3 Waiver. No waiver of any right hereunder shall be
effective for any purpose, unless in writing, signed by the party
hereto possessing said right, nor shall any such waiver be
construed to be a waiver of any subsequent right, term or
provision of this Agreement.
8.4 Assignment; Effect on Agreement. It is hereby
acknowledged and agreed that the Employee's rights and
obligations under this Agreement are personal in nature and shall
not be assigned or delegated. This Agreement shall be binding on
and inure to the benefit of the heirs, personal representatives,
successors and assigns of the parties subject, however, to the
restrictions on assignment and delegation contained herein.
8.5 Arbitration. All disputes regarding the
interpretation or enforcement of this Agreement shall be subject
to arbitration in Torrance, California before one (1) arbitrator
selected in accordance with the rules of the American Arbitration
Association.
8.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California and shall be subject to the jurisdiction of the State
Courts located in Los Angeles, California or the Federal Court
for the Central District of California.
8.7 Entire Agreement. This Agreement contains the
entire agreement and understanding between the parties and
supersedes all prior agreements and understandings, oral or
written. No modification, termination or attempted waiver shall
be valid, unless in writing and signed by both parties. There
are no other inducements to the Employee entering into this
Agreement.
8.8 Counsel. This Agreement was prepared by the
Corporation's counsel, and the Employee acknowledges that he was
advised to seek independent counsel prior to executing this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 14th day of June, 1995.
CORPORATION
GEODYNAMICS CORPORATION,
a California corporation
By: /s/
Title:____________________________________
Address:
21171 Western Avenue, Suite 110
Torrance, CA 90501
EMPLOYEE
/s/ Bruce J. Gordon
BRUCE J. GORDON
Address:
P.O. Box 3644
Rancho Santa Fe, CA 92067
GEODYNAMICS CORPORATION
BRUCE J. GORDON (SHORT-TERM) STOCK PURCHASE OPTION
THIS (SHORT-TERM) STOCK PURCHASE OPTION (the "Option") is
made and entered into at Torrance, California on the date
hereinafter set forth by and between GEODYNAMICS CORPORATION, a
California Corporation, hereinafter called the "Company", and
BRUCE J. GORDON, hereinafter called "Gordon".
WHEREAS:
A. Gordon is the President and Chief Executive Officer of
the Company; and
B. The Company wishes to grant to Gordon this option to
purchase stock in the Company in accordance with Section 4.1 of
his Employment Agreement with the Company (the "Employment
Agreement").
NOW, THEREFORE, in consideration of the premises, it is
agreed as follows:
1. GRANT OF OPTION. Subject to the conditions set
forth herein, the Company hereby grants to Gordon the right,
privilege and option to purchase fifteen thousand (15,000) shares
(the "Option Shares") of its Common Stock at EIGHT DOLLARS
($8.00) per share (the "Option Price"), in the manner hereinafter
provided.
2. TIME OF EXERCISE OF OPTION. This Option may be
exercised by Gordon only if he is no longer acting as President
or Chief Executive Officer of the Company, or immediately, should
there be a "change of control" of the Company, which shall mean:
(i) the direct or indirect sale or exchange of substantially all
of the stock of the Company; or (ii) a merger in which the
shareholders of the stock of the Company do not retain at least a
majority of the beneficial interest in the voting stock of the
Company, or (iii) a sale or exchange of all or substantially all
of the assets of the Company, then this Option may be exercised
in full by Gordon.
3. METHOD OF EXERCISE. Stock purchased under this
Option shall, at the time of purchase, be paid for in full. To
the extent that the right to purchase shares has accrued
thereunder, this Option may be exercised, from time to time, by
written notice to the Company stating the number of shares with
respect to which this Option is being exercised and the time of
delivery thereof, which shall be at least fifteen (15) days after
the giving of such notice, unless an earlier date shall have been
mutually agreed upon. At the time specified in such notice, the
Company shall, without transfer or issue tax to Gordon, deliver
to him at the main office of the Company, or at such other place
as shall be mutually acceptable, a certificate or certificates
for such shares, against the payment of the Option Price, in
full, for the number of shares to be delivered, by certified or
bank cashier's check, or the equivalent thereof acceptable to the
Company. Provided, however, that the time of such delivery may
be postponed by the Company for such period as may be required
for it, with reasonable diligence, to comply with any
requirements of any state or federal agency or any securities
exchange. Provided, further, that in the event that the
California Commissioner of Corporations has imposed an escrow
upon the stock of the Company, said shares shall be delivered to
the escrow holder previously designated by said Commissioner of
Corporations, rather than to Gordon. If Gordon fails to accept
delivery of and pay for all or any part of the number of shares
specified in the notice given by Gordon, upon tender and delivery
of said shares, Gordon's right to exercise this Option with
respect to such undelivered shares shall be terminated.
4. TERMINATION OF OPTION. Except as herein otherwise
stated, this Option, to the extent not theretofore exercised,
shall terminate forthwith as follows:
3,000 shares January 2, 1996
3,000 shares March 31, 1996
3,000 shares June 30, 1996
3,000 shares September 30, 1996
3,000 shares December 31, 1996
Total: 15,000 shares
5. RECLASSIFICATION, CONSOLIDATION OR MERGER. If,
and to the extent that the number of issued shares of Common
Stock of the Company shall be increased or reduced by a change in
par value, split-up, reclassification, distribution of a dividend
payable in stock, or the like (but not dividends payable in
cash), the number of Option Shares subject to this Option, and
the Option Price therefor, shall be proportionately adjusted. If
the Company is reorganized or consolidated, or merged with
another corporation, Gordon shall be entitled to receive options
covering shares of such reorganized, consolidated or merged
Company in the same proportion, at an equivalent price, and
subject to the same conditions. For purposes of the preceding
sentence, the excess of the aggregate fair market value of the
shares subject to this Option immediately after the
reorganization, consolidation, or merger over the aggregate
Option Price of such shares, shall not be more than the excess of
the aggregate fair market value of all shares subject to this
Option immediately before such reorganization, consolidation, or
merger over the aggregate Option Price of such shares, and the
new option or the assumption of the old option shall not give
Gordon additional benefits which he did not have under the old
option.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option
is non-transferable by Gordon, and is exercisable only by him,
and Gordon shall have no rights as a shareholder of shares
subject to this Option until payment of the Option Price and the
delivery of such shares as herein provided. Provided, however,
that this Option may be exercisable by Gordon's executor or
personal representative within six (6) months after his death.
7. RESTRICTIONS ON ISSUANCE OF SHARES. The Company
shall not be obligated to sell and issue any shares pursuant to
this Option, unless permission to issue said shares has first
been obtained from the Commissioner of Corporations of the State
of California, and, further, unless the shares with respect to
which this Option is being exercised are, at the time,
effectively registered, or exempt from registration, under the
Securities Act of 1933, as amended.
8. BINDING EFFECT. This Option shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
IN WITNESS WHEREOF, the parties have caused this Option to
be executed this 14th day of June, 1995.
COMPANY:
GEODYNAMICS CORPORATION
By:_________________________________
Title:_______________________________
GORDON:
/s/ Bruce J. Gordon
BRUCE J. GORDON
GEODYNAMICS CORPORATION
BRUCE J. GORDON (LONG-TERM 15,000 SHARE) STOCK PURCHASE OPTION
THIS (LONG-TERM 15,000 SHARE) STOCK PURCHASE OPTION (the
"Option") is made and entered into at Torrance, California on the
date hereinafter set forth by and between GEODYNAMICS
CORPORATION, a California Corporation, hereinafter called the
"Company" and BRUCE J. GORDON, hereinafter called "Gordon".
WHEREAS:
A. Gordon is the President and Chief Executive Officer of
the Company; and
B. The Company wishes to grant to Gordon this option to
purchase stock in the Company in accordance with Section 4.2.2 of
his Employment Agreement with the Company (the "Employment
Agreement").
NOW, THEREFORE, in consideration of the premises, it is
agreed as follows:
1. GRANT OF OPTION. Subject to the conditions set
forth herein, the Company hereby grants to Gordon the right,
privilege and option to purchase fifteen thousand (15,000) shares
(the "Option Shares") of its Common Stock at TWELVE DOLLARS
($12.00) per share (the "Option Price"), in the manner
hereinafter provided.
2. TIME OF EXERCISE OF OPTION. This Option may be
exercised by Gordon on or after June 1, 1996 or immediately,
should there be a "change of control" of the Company, which shall
mean: (i) the direct or indirect sale or exchange of
substantially all of the stock of the Company; or (ii) a merger
in which the shareholders of the stock of the Company do not
retain at least a majority of the beneficial interest in the
voting stock of the Company, or (iii) a sale or exchange of all
or substantially all of the assets of the Company, then this
Option may be exercised in full by Gordon.
3. METHOD OF EXERCISE. Stock purchased under this
Option shall, at the time of purchase, be paid for in full. To
the extent that the right to purchase shares has accrued
thereunder, this Option may be exercised, from time to time, by
written notice to the Company stating the number of shares with
respect to which this Option is being exercised and the time of
delivery thereof, which shall be at least fifteen (15) days after
the giving of such notice, unless an earlier date shall have been
mutually agreed upon. At the time specified in such notice, the
Company shall, without transfer or issue tax to Gordon, deliver
to him at the main office of the Company, or at such other place
as shall be mutually acceptable, a certificate or certificates
for such shares, against the payment of the Option Price, in
full, for the number of shares to be delivered, by certified or
bank cashier's check, or the equivalent thereof acceptable to the
Company. Provided, however, that the time of such delivery may
be postponed by the Company for such period as may be required
for it, with reasonable diligence, to comply with any
requirements of any state or federal agency or any securities
exchange. Provided, further, that in the event that the
California Commissioner of Corporations has imposed an escrow
upon the stock of the Company, said shares shall be delivered to
the escrow holder previously designated by said Commissioner of
Corporations, rather than to Gordon. If Gordon fails to accept
delivery of and pay for all or any part of the number of shares
specified in the notice given by Gordon, upon tender and delivery
of said shares, Gordon's right to exercise this Option with
respect to such undelivered shares shall be terminated.
4. TERMINATION OF OPTION. Except as herein otherwise
stated, this Option, to the extent not theretofore exercised,
shall terminate five (5) years from the date of the effective
date of the Employment Agreement.
5. RECLASSIFICATION, CONSOLIDATION OR MERGER. If,
and to the extent that the number of issued shares of Common
Stock of the Company shall be increased or reduced by a change in
par value, split-up, reclassification, distribution of a dividend
payable in stock, or the like (but not dividends payable in
cash), the number of Option Shares subject to this Option, and
the Option Price therefor, shall be proportionately adjusted. If
the Company is reorganized or consolidated, or merged with
another corporation, Gordon shall be entitled to receive options
covering shares of such reorganized, consolidated or merged
Company in the same proportion, at an equivalent price, and
subject to the same conditions. For purposes of the preceding
sentence, the excess of the aggregate fair market value of the
shares subject to this Option immediately after the
reorganization, consolidation, or merger over the aggregate
Option Price of such shares, shall not be more than the excess of
the aggregate fair market value of all shares subject to this
Option immediately before such reorganization, consolidation, or
merger over the aggregate Option Price of such shares, and the
new option or the assumption of the old option shall not give
Gordon additional benefits which he did not have under the old
option.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option
is non-transferable by Gordon, and is exercisable only by him,
and Gordon shall have no rights as a shareholder of shares
subject to this Option until payment of the Option Price and the
delivery of such shares as herein provided. Provided, however,
that this Option may be exercisable by Gordon's executor or
personal representative within six (6) months after his death.
7. RESTRICTIONS ON ISSUANCE OF SHARES. The Company
shall not be obligated to sell and issue any shares pursuant to
this Option, unless permission to issue said shares has first
been obtained from the Commissioner of Corporations of the State
of California, and, further, unless the shares with respect to
which this Option is being exercised are, at the time,
effectively registered, or exempt from registration, under the
Securities Act of 1933, as amended.
8. BINDING EFFECT. This Option shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
IN WITNESS WHEREOF, the parties have caused this Option to
be executed this 14th day of June, 1995.
COMPANY:
GEODYNAMICS CORPORATION
By:_________________________________
Title:_______________________________
GORDON:
/s/ Bruce J. Gordon
BRUCE J. GORDON
GEODYNAMICS CORPORATION
BRUCE J. GORDON (LONG-TERM 30,000 SHARE) STOCK PURCHASE OPTION
THIS (LONG-TERM 30,000 SHARE) STOCK PURCHASE OPTION (the
"Option") is made and entered into at Torrance, California on the
date hereinafter set forth by and between GEODYNAMICS
CORPORATION, a California Corporation, hereinafter called the
"Company" and BRUCE J. GORDON, hereinafter called "Gordon").
WHEREAS:
A. Gordon is the President and Chief Executive Officer of
the Company; and
B. The Company wishes to grant to Gordon this option to
purchase stock in the Company in accordance with Section 4.2.1 of
Gordon's Employment Agreement with the Company (the "Employment
Agreement").
NOW, THEREFORE, in consideration of the premises, it is
agreed as follows:
1. GRANT OF OPTION. Subject to the conditions set
forth herein, the Company hereby grants to Gordon the right,
privilege and option to purchase thirty thousand (30,000) shares
(the "Option Shares") of its Common Stock at TEN DOLLARS ($10.00)
per share, which shall be increased by fifty cents ($0.50) per
share each anniversary of the effective date of the Employment
Agreement (the "Option Price"), in the manner hereinafter
provided.
2. TIME OF EXERCISE OF OPTION. This Option may be
exercised by Gordon as follows:
A. Fifteen thousand (15,000) shares shall be
immediately exercisable; and
B. The balance of fifteen thousand (15,000)
shares shall be exercisable if Gordon is still the Chief
Executive Officer of the Company on December 31, 1995 (which may
not be accelerated).
3. METHOD OF EXERCISE. Stock purchased under this
Option shall, at the time of purchase, be paid for in full. To
the extent that the right to purchase shares has accrued
thereunder, this Option may be exercised, from time to time, by
written notice to the Company stating the number of shares with
respect to which this Option is being exercised and the time of
delivery thereof, which shall be at least fifteen (15) days after
the giving of such notice, unless an earlier date shall have been
mutually agreed upon. At the time specified in such notice, the
Company shall, without transfer or issue tax to Gordon, deliver
to him at the main office of the Company, or at such other place
as shall be mutually acceptable, a certificate or certificates
for such shares, against the payment of the Option Price, in
full, for the number of shares to be delivered, by certified or
bank cashier's check, or the equivalent thereof acceptable to the
Company. Provided, however, that the time of such delivery may
be postponed by the Company for such period as may be required
for it, with reasonable diligence, to comply with any
requirements of any state or federal agency or any securities
exchange. Provided, further, that in the event that the
California Commissioner of Corporations has imposed an escrow
upon the stock of the Company, said shares shall be delivered to
the escrow holder previously designated by said Commissioner of
Corporations, rather than to Gordon. If Gordon fails to accept
delivery of and pay for all or any part of the number of shares
specified in the notice given by Gordon, upon tender and delivery
of said shares, Gordon's right to exercise this Option with
respect to such undelivered shares shall be terminated.
4. TERMINATION OF OPTION. Except as herein otherwise
stated, this Option, to the extent not theretofore exercised,
shall terminate ten (10) years from the effective date of the
Employment Agreement.
5. RECLASSIFICATION, CONSOLIDATION OR MERGER. If,
and to the extent that the number of issued shares of Common
Stock of the Company shall be increased or reduced by a change in
par value, split-up, reclassification, distribution of a dividend
payable in stock, or the like (but not dividends payable in
cash), the number of Option Shares subject to this Option, and
the Option Price therefor, shall be proportionately adjusted. If
the Company is reorganized or consolidated, or merged with
another corporation, Gordon shall be entitled to receive options
covering shares of such reorganized, consolidated or merged
Company in the same proportion, at an equivalent price, and
subject to the same conditions. For purposes of the preceding
sentence, the excess of the aggregate fair market value of the
shares subject to this Option immediately after the
reorganization, consolidation, or merger over the aggregate
Option Price of such shares, shall not be more than the excess of
the aggregate fair market value of all shares subject to this
Option immediately before such reorganization, consolidation, or
merger over the aggregate Option Price of such shares, and the
new option or the assumption of the old option shall not give
Gordon additional benefits which he did not have under the old
option.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option
is non-transferable by Gordon, and is exercisable only by him,
and Gordon shall have no rights as a shareholder of shares
subject to this Option until payment of the Option Price and the
delivery of such shares as herein provided. Provided, however,
that this Option may be exercisable by Gordon's executor or
personal representative within six (6) months after his death.
7. RESTRICTIONS ON ISSUANCE OF SHARES. The Company
shall not be obligated to sell and issue any shares pursuant to
this Option, unless permission to issue said shares has first
been obtained from the Commissioner of Corporations of the State
of California, and, further, unless the shares with respect to
which this Option is being exercised are, at the time,
effectively registered, or exempt from registration, under the
Securities Act of 1933, as amended.
8. BINDING EFFECT. This Option shall be binding upon
the heirs, executors, administrators and successors of the
parties hereto.
IN WITNESS WHEREOF, the parties have caused this Option to
be executed this 14th day of June, 1995.
"Company"
GEODYNAMICS CORPORATION
By:_________________________________
Title:_______________________________
GORDON:
/s/ Bruce J. Gordon
BRUCE J. GORDON
UNFUNDED SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
THIS UNFUNDED SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN (the
"Agreement") is made and entered into on the date hereinafter set
forth by and between GEODYNAMICS CORPORATION, a California
corporation ("Geodynamics") and BRUCE J. GORDON ("Gordon").
WHEREAS:
A. Geodynamics and Gordon have entered into an Employment
Agreement (the "Employment Agreement") which, among other things,
provides that Gordon will be granted an Unfunded Supplemental
Employee Retirement Plan ("SERP") as a consideration to induce
Gordon to accept the role of President and Chief Executive
Officer of Geodynamics; and
B. The parties hereto wish to set forth the terms of the
SERP in this Agreement.
NOW, THEREFORE, in consideration of the premises and
promises, warranties and representations herein contained, it is
agreed as follows:
1. Unfunded Deferred Compensation. In consideration
of Gordon's acceptance of employment with Geodynamics,
Geodynamics hereby agrees that Gordon shall receive up to ONE
HUNDRED THOUSAND DOLLARS ($100,000) in deferred compensation,
payable at the rate of TWO THOUSAND DOLLARS ($2,000) per month,
payable on the first day of each month commencing on the later of
(i) April 1, 1996 or (ii) one month following the termination of
the Employment Agreement, but no earlier than April 1, 1996, with
the final payment due in June, 2000.
2. Effect of a Termination on Compensation. Unless
Gordon voluntarily terminates his employment in accordance with
Section 7.1.3 of the Employment Agreement, or his employment is
terminated for cause in accordance with Section 7.1.6 of the
Employment Agreement, all compensation provided hereunder will be
payable to his successor in interest, Bruce J. Gordon and Janet
M. Gordon, Trustees U/A the Gordon Family Trust dated 12-12-89
(the "Trust").
3. Miscellaneous.
3.1 Notices. Any notice required to be given pursuant
to this Agreement shall be effective only if in writing and
delivered personally or by mail. If given by mail, such notice
must be sent by registered or certified mail, postage prepaid,
mailed to the parties at the addresses set forth on the signature
page hereof, or at such other addresses as the parties may
designate from time to time by written notice. Mailed notices
shall be deemed received two (2) business days after the date of
deposit in the mail.
3.2 Partial Invalidity. If any term or provision of
this Agreement or the application thereof to any person or
circumstance shall be held to be invalid or unenforceable to any
extent, the remainder of this Agreement or application of such
term or provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected
thereby and each term and provision of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
3.3 Waiver. No waiver of any right hereunder shall be
effective for any purpose, unless in writing, signed by the party
hereto possessing said right, nor shall any such waiver be
construed to be a waiver of any subsequent right, term or
provision of this Agreement.
3.4 Assignment; Effect on Agreement. It is hereby
acknowledged and agreed that Gordon's rights and obligations
under this Agreement are personal in nature and shall not be
assigned or delegated. This Agreement shall be binding on and
inure to the benefit of the heirs, personal representatives,
successors and assigns of the parties subject, however, to the
restrictions on assignment and delegation contained herein.
3.5 Arbitration. All disputes regarding the
interpretation or enforcement of this Agreement shall be subject
to arbitration in Torrance, California before one (1) arbitrator
selected in accordance with the rules of the American Arbitration
Association.
3.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California and shall be subject to the jurisdiction of the State
Courts located in Los Angeles, California or the Federal Court
for the Central District of California.
3.7 Entire Agreement. This Agreement contains the
entire agreement and understanding between the parties and
supersedes all prior agreements and understandings, oral or
written. No modification, termination or attempted waiver shall
be valid, unless in writing and signed by both parties. There
are no other inducements to Gordon entering into this Agreement.
3.8 Counsel. This Agreement was prepared by
Geodynamics' counsel, and Gordon acknowledges that he was advised
to seek independent counsel prior to executing this Agreement.
(Signatures on next page)
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 14th day of June, 1995.
GEODYNAMICS:
GEODYNAMICS CORPORATION,
a California corporation
By:______________________________________
Title:____________________________________
Address:
21171 Western Avenue, Suite 110
Torrance, CA 90501
GORDON:
/s/ Bruce J. Gordon
BRUCE J. GORDON
Address:
P.O. Box 3644
Rancho Santa Fe, CA 92067
EMPLOYEE RETENTION AGREEMENT
By and Between
GEODYNAMICS CORPORATION,
a California corporation
("Corporation")
and
JOANNE M. DUNLAP
("Employee")
Table of Contents
1. CERTAIN DEFINITIONS 1
2. EMPLOYMENT PERIOD 2
3. TERMS OF EMPLOYMENT 2
(a) Position and Duties 2
(b) Compensation 3
(i) Base Salary 3
(ii) Change in Control Bonus 3
(iii) Annual Bonus 3
(iv) Incentive, Savings and Retirement Plans 3
(v) Welfare Benefit Plans 4
(vi) Expenses 4
(vii) Fringe Benefits 4
(viii)Office and Support Staff 4
(ix) Vacation 5
(x) Indemnity Agreement 5
(c) Payment in Lieu of Retaining Employee 5
4. TERMINATION 5
(a) Death or Disability 5
(b) Cause 5
(c) Notice of Termination 6
(d) Date of Termination 6
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6
(a) Death 6
(b) Disability 7
(c) Cause 7
(d) Other Than for Cause, Death or Disability 7
6. NON-EXCLUSIVITY OF RIGHTS 7
7. FULL SETTLEMENT 8
8. ENFORCEMENT OF RIGHTS 8
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8
10. CONFIDENTIAL INFORMATION 10
11. SUCCESSORS 11
12. MISCELLANEOUS 11
EMPLOYEE RETENTION AGREEMENT
THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and
between GEODYNAMICS CORPORATION, a California corporation (the
"Company") and JOANNE M. DUNLAP (the "Employee"), is entered into
on the date hereinafter set forth.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the
continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change in Control (as
hereinafter defined) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Employee
by virtue of the personal uncertainties and risks created by a
pending or threatened Change in Control, to encourage the
Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending change in control,
and to provide the Employee with compensation arrangements upon a
Change in Control which provide the Employee with individual
financial security and which are competitive with those of other
corporations. In order to accomplish these objectives, the Board
has caused the Company to enter into this Agreement. Should a
Change of Control occur because of a Management Buyout (as
hereinafter defined), then this Agreement will have no force or
effect. This Agreement will automatically expire on May 1, 1996
if no Change in Control occurs by that time.
1. CERTAIN DEFINITIONS
(a) The "Effective Date" shall be the first date
during the "Change in Control Period" (as defined in Section
1(b) below) on which a Change in Control occurs. Anything
in this Agreement to the contrary notwithstanding, if the
Employee's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and it is
reasonably demonstrated that such termination was at the
request of a third party who has taken steps reasonably
calculated to effect a Change in Control or otherwise arose
in connection with or in anticipation of a Change in
Control, then for all purposes of this Agreement, the
Effective Date shall mean the date immediately prior to the
date of such termination.
(b) The "Change in Control Period" is the period
commencing on the Effective Date and ending on the first
anniversary of such date.
(c) A "Change in Control" shall occur or be deemed to
have occurred only if any of the following events occur:
(i) any "person", as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, or any corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of
stock of the Company) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
twenty percent (20%) or more of the combined voting power of
the Company's then outstanding securities (other than as a
result of acquisitions of such securities from the Company);
(ii) individuals who, as of the date hereof, constitute the
Board (as of the date hereof, the "Incumbent Board") cease
for any reason to constitute at least a majority of the
Board, provided that any person becoming a director
subsequent to the date hereof whose election or nomination
for election by the Company's shareholders was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes
of this Agreement, considered as though such person were a
member of the Incumbent Board; (iii) the stockholders of
the Company approve a merger or consolidation of the Company
with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "Person" (as hereinafter defined)
acquires more than twenty percent (20%) of the combined
voting power of the Company's then outstanding securities;
or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets.
(d) A "Management Buyout" shall occur when there has
been a Change of Control in which the Employee shall hold a
significant financial interest or management position.
2. EMPLOYMENT PERIOD
The Company hereby agrees to continue the Employee in
its employ and, subject to Section 5(d) hereof, the Employee
hereby agrees to remain in the employ of the Company, for the
period commencing on the Effective Date and ending on the first
anniversary of such date (the "Employment Period").
3. TERMS OF EMPLOYMENT
(a) Position and Duties
(i) During the Employment Period: (A) the
Employee's position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the ninety (90)
day period immediately preceding the Effective Date and (B)
the Employee's services shall be performed at the location
where the Employee was employed immediately preceding the
Effective Date, or any office or location less than fifteen
(15) miles from such location and less than ten (10) miles
in commuting distance further than the Employee's commuting
distance to the location at which the Employee performed
such services prior to the Change in Control.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Employee
is entitled, the Employee agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and to use the
Employee's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment
Period, it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable
boards or committees; (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions; and (C)
manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Employees' responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have
been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Employee's
responsibilities to the Company.
(b) Compensation
(i) Base Salary. During the Employment Period,
the Employee shall receive an annual base salary (the "Base
Salary"), payable biweekly, at a weekly rate at least equal
to the highest weekly Base Salary paid or payable to the
Employee by the Company during the twelve (12) month period
immediately preceding the month in which the Effective Date
occurs, with an annual increase in salary consistent with
the increases, if any, received for current periods over the
previous annual calendar twelve (12) months.
(ii) Change in Control Bonus. Upon the
Effective Date, Employee will be paid in cash a bonus equal
to Forty-Five Thousand Dollars ($45,000). All applicable
taxes and other payments will be withheld from that sum.
(iii) Annual Bonus. In addition to Base
Salary, the Employee shall be awarded, during the Employment
Period, an annual bonus (an "Annual Bonus") at least equal
to the guaranteed bonus to which the Employee is entitled
under any contractual arrangements between the Employee and
the Company as of the date hereof, or not less than the sum
of the bonus of the most recent past Annual Bonus received
by the Employee.
(iv) Incentive, Savings and Retirement Plans.
In addition to Base Salary and Annual Bonuses payable as
hereinabove provided, the Employee shall be entitled to
receive cash sales incentives and to participate during the
Employment Period in all other incentive, savings and
retirement plans, practices, policies and programs
applicable to other key employees of the Company and its
subsidiaries (including the Company's employee benefit
plans, in each case providing benefits which are the
economic equivalent to those in effect or as subsequently
amended). Such plans, practices, policies and programs, in
the aggregate, shall provide the Employee with compensation,
benefits and reward opportunities at least as favorable as
the most favorable of such compensation, benefits and reward
opportunities provided by the Company for the Employee under
such plans, practices, policies and programs as in effect at
any time during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the
Employee, as provided at any time thereafter with respect to
other key employees of the Company.
(v) Welfare Benefit Plans. During the
Employment Period, the Employee and/or the Employee's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs
provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as
favorable as the most favorable of such plans, practices,
policies and programs in effect at any time during the
ninety (90) day period immediately preceding the Effective
Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with
respect to other key employees of the Company.
(vi) Expenses. During the Employment Period,
the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Employee in accordance with the most favorable policies,
practices and procedures of the Company in effect at any
time during the ninety (90) day period immediately preceding
the Effective Date or, if more favorable to the Employee, as
in effect at any time thereafter with respect to other key
employees of the Company.
(vii) Fringe Benefits. During the Employment
Period, the Employee shall be entitled to fringe benefits
and perquisites in accordance with the most favorable plans,
practices, programs and policies of the Company in effect at
any time during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect
to other key employees of the Company, but not less in
dollar value than the Employee's present fringe package.
(viii) Office and Support Staff. During the
Employment Period, the Employee shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided
to the Employee by the Company at any time during the one
hundred eighty (180) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as
provided at any time thereafter with respect to other key
employees of the Company.
(ix) Vacation. During the Employment Period,
the Employee shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs
and practices of the Company as in effect at any time during
the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in
effect at any time thereafter with respect to other key
employees of the Company, and will pay all fees or costs
incurred to protect and uphold all aspects of said
agreement.
(x) Indemnity Agreement. During the Employment
Period, the Company shall keep in full force and effect, and
shall not purport to amend or terminate, any existing
indemnity agreement between the Employee and the Company.
(c) Payment in Lieu of Retaining Employee. In lieu of
retaining the Employee during the Employment Period (or
portion thereof), the Company may pay to the Employee an
amount equal to sixty-five percent (65%) of (b)(i) above for
a period of twelve (12) months to be paid on the date of
termination of employment. This payment is in excess of the
amount due under the severance pay policy of the Company.
4. TERMINATION
(a) Death or Disability. This Agreement shall
terminate automatically upon the Employee's death. If as a
result of incapacity due to physical or mental illness, the
Employee shall have been absent from the full-time
performance of the Employee's duties with the Company for
six (6) consecutive months, and within thirty (30) days
after written notice of termination is given to the
Employee, the Employee shall not have returned to the full-
time performance of the Employee's duties, the Employee's
employment may be terminated for "Disability" (as
hereinafter defined). Any termination for Disability under
this Agreement shall not affect any rights the Employee may
otherwise have. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant
to the definition of "Disability" set forth below), it may
give the Employee written notice of its intention to
terminate the Employee's employment. In such event, the
Employee's employment with the Company shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Employee (the "Disability Effective Date"),
provided, that, within the thirty (30) days after such
receipt, the Employee shall not have returned to full-time
performance of the Employee's duties.
(b) Cause. The Company may terminate the Employee's
employment for "Cause." For purposes of this Agreement,
"Cause" shall mean termination (A) upon the Employee's
willful and continued failure to substantially perform the
Employee's with the Company up to his or her normal skill
level (performance of the past) (other than any such failure
resulting from the Employee's incapacity due to physical or
mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by the
Employee, provided that a written demand for substantial
performance has been delivered to the Employee by the
Company specifically identifying the manner in which the
Company believes that the Employee has not substantially
performed the Employee's duties and the Employee has not
cured such failure within ninety (90) days after such
demand; (B) the Employee's willful violation of any material
provision of any confidentiality, nondisclosure, assignment
of invention, noncompetition or similar agreement entered
into by the Employee in connection with the Employee's
employment by the Company. For purposes of this paragraph,
no act or failure to act on the Employee's part shall be
deemed "willful" unless done by the Employee not in good
faith and without the Employee's reasonable belief that the
Employee's action was in the best interest of the Company;
or (C) other than specifically identified herein, no other
termination is without full compensation within the
Employee's Employment Agreements for the life of the same
without contest.
(c) Notice of Termination. Any termination by the
Company for Cause or by the Employee for any reason shall be
communicated by Notice of Termination (as hereinafter
defined) to the other party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the
provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice specifies the termination date (which date shall be
not more than fifteen (15) days after the giving of such
notice.
(d) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be; provided,
however, that (i) if the Employee's employment is terminated
by the Company other than for Cause or Disability, the Date
of Termination shall be the date on which the Company
notifies the Employee of such termination and (ii) if the
Employee's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of
death of the Employee or the Disability Effective Date, as
the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) Death. If the Employee's employment is terminated
by reason of the Employee's death, this Agreement shall
terminate without further obligation to the Employee's legal
representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by
the Employee as of the Date of Termination. All such
Accrued Obligations shall be paid to the Employee's estate
or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the
Employee's family shall be entitled to receive benefits at
least equal to the most favorable benefits provided by the
Company to surviving families of employees of the Company
under such plans, programs, practices and policies relating
to family death benefits, if any, in accordance with the
most favorable plans, programs, practices and policies of
the Company in effect at any time during the ninety (90) day
period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as
in effect on the date of the Employee's death with respect
to other key employees of the Company and their families.
(b) Disability. If the Employee's employment is
terminated by reason of the Employee's Disability, this
Agreement shall terminate without further obligations to the
Employee, other than those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of
Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to
the Employee in a lump sum in cash within thirty (30) days
of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Employee shall be
entitled, after the Disability Effective Date, to receive
disability and other benefits at least equal to the most
favorable of those provided by the Company to disabled
employees and/or their families in accordance with such
plans, programs, practices and policies relating to
disability, if any, in accordance with the most favorable
plans, programs, practices and policies of the Company in
effect at any time during the ninety (90) day period
immediately preceding the Effective Date or, if more
favorable to the Employee and/or Employee's family, as in
effect at any time thereafter with respect to other key
employees of the Company and their families.
(c) Cause. If the Employee's employment shall be
terminated for Cause, this Agreement shall terminate without
further obligations to the Employee, other than the
obligation to pay those obligations accrued or earned and
vested (if applicable) by the Employee through the Date of
Termination, plus the amount of any accrued vacation pay and
any compensation previously deferred by the Employee
(together with accrued interest thereon).
(d) Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate
the Employee's employment other than for Cause, Disability
or death, or if the Employee shall terminate his or her
employment for any reason, the payment described in
Paragraph 3(c) shall be made.
6. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the
Employee's continuing or future participation in any benefit,
bonus, stock option, stock purchase incentive or other plans,
programs, policies or practices, provided by the Company or any
of its subsidiaries and for which the Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as
the Employee may have under any stock option or other agreements
with the Company or any of its subsidiaries. Amounts which are
vested benefits or which the Employee is otherwise entitled to
receive under any plan, policy, practice or program of the
Company, or any of its subsidiaries, at or subsequent to the Date
of Termination, shall be payable in accordance with such plan,
policy, practice or program.
7. FULL SETTLEMENT
The Company's obligation to make the payments provided
for in this Agreement, and otherwise to perform its obligations
hereunder, shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Employee or others. In no event
shall the Employee be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to
the Employee under any of the provisions of this Agreement.
8. ENFORCEMENT OF RIGHTS
(a) Any dispute or controversy between the Company and
the Employee which the parties are unable to resolve by
negotiation shall be settled exclusively by arbitration,
conducted before a panel of one (1) arbitrator in Los
Angeles, California, or at the direction of the Employee, in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
(b) The Company shall pay to the Employee all legal
fees and expenses incurred by the Employee as a result of
any dispute under this Agreement (including all such fees
and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable
to the application of Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") to any payment or
benefit provided hereunder).
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment (within the meaning of Section 380G(b)(2) of the
Code) or distribution by the Company to or for the benefit
of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or
penalties to the Employee, with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to
receive an additional payment under this Agreement (a "Gross-
Up Payment") in an amount such that after payment by the
Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, the Employee retains
an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by AA and Co.
(the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and to the
Employee within thirty (30) business days of the Date of
Termination, if applicable, or such earlier time as is
requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be
paid to the Employee within five (5) days of the receipt of
the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that failure to
report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of
negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) below, and the Employee
thereafter is required to make payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Employee.
(c) The Employee shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten (10) business days
after the Employee knows of such claim and shall appraise
the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing, from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in
order to effectively contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim.
Provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 9(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Employee to pay the tax claimed and sue for refund or
contest the claim in any permissible manner, and the
Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and sue for
refund, the Company shall advance the amount of such payment
to the Employee, on an interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest
or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment
of taxes for the taxable year of the Employee with respect
to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c) above, the
Employee becomes entitled to receive any refund with respect
to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Employee of an
amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be
entitled to any refund with respect to such claim, and the
Company does not notify the Employee in writing of its
intent to contest such denial or refund prior to the
expiration of sixty (60) days after such determination, then
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. CONFIDENTIAL INFORMATION
The Employee shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, or any of its
subsidiaries, and their respective businesses, which shall have
been obtained by the Employee during the Employee's employment by
the Company, or any of its subsidiaries, and which shall not be
or become public knowledge (other than by acts by the Employee or
his or her representatives in violation of this Agreement).
After termination of the Employee's employment with the Company,
the Employee shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by
it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee under the
Agreement.
11. SUCCESSORS
(a) This Agreement is personal to the Employee and,
without the prior written consent of the Company, shall not
be assignable by the Employee otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Employee's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such successor had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law or otherwise.
12. MISCELLANEOUS
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of California,
without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Employee: Joanne M. Dunlap
31991 Via Oso
Coto de Casa, CA 92679
If to the Company: Geodynamics Corporation
21171 Western Avenue, Suite 110
Torrance, CA 90501
Attention: President
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement or
any other agreements by and between the Company and the
Employee.
(d) The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Employee's failure to insist upon strict
compliance with any provision hereof shall not be deemed to
be a waiver of such provision or any other provision
thereof.
(f) This Agreement contains the entire understanding
of the Company and the Employee with respect to the subject
matter hereof, and the Employee waives any severance
benefits (but not pension benefits) that he or she might
otherwise be entitled to under other Company employee plans,
excluding such provisions as may be contained in the form of
Severance Agreement as may be in effect between the Employee
and the Company.
(g) The Employee and the Company acknowledge that,
except as provided by any other agreement between the
Employee and the Company, the employment of the Employee by
the Company is "at will", and, prior to the Effective Date,
may be terminated by either the Employee or the Company at
any time. Upon a termination of the Employee's employment
or upon the Employee's ceasing to be an officer of the
Company, in each case, prior to the Effective Date, there
shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Employee has hereunto set his or her
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed
in its name on its behalf all, as of the 10th day of
August, 1995.
(Signatures on next page)
EMPLOYEE:
/s/ Joanne M. Dunlap
JOANNE M. DUNLAP
COMPANY:
GEODYNAMICS CORPORATION,
a California corporation
By:___________________________________
Title:_________________________________
ATTEST:
_____________________________
EMPLOYEE RETENTION AGREEMENT
By and Between
GEODYNAMICS CORPORATION,
a California corporation
("Corporation")
and
DAVID P. NELSON
("Employee")
Table of Contents
1. CERTAIN DEFINITIONS 1
2. EMPLOYMENT PERIOD 2
3. TERMS OF EMPLOYMENT 2
(a) Position and Duties 2
(b) Compensation 3
(i) Base Salary 3
(ii) Change in Control Bonus 3
(iii) Annual Bonus 3
(iv) Incentive, Savings and Retirement Plans 3
(v) Welfare Benefit Plans 4
(vi) Expenses 4
(vii) Fringe Benefits 4
(viii)Office and Support Staff 4
(ix) Vacation 5
(x) Indemnity Agreement 5
(c) Payment in Lieu of Retaining Employee 5
4. TERMINATION 5
(a) Death or Disability 5
(b) Cause 5
(c) Notice of Termination 6
(d) Date of Termination 6
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6
(a) Death 6
(b) Disability 7
(c) Cause 7
(d) Other Than for Cause, Death or Disability 7
6. NON-EXCLUSIVITY OF RIGHTS 7
7. FULL SETTLEMENT 8
8. ENFORCEMENT OF RIGHTS 8
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8
10. CONFIDENTIAL INFORMATION 10
11. SUCCESSORS 11
12. MISCELLANEOUS 11
EMPLOYEE RETENTION AGREEMENT
THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and
between GEODYNAMICS CORPORATION, a California corporation (the
"Company") and DAVID P. NELSON (the "Employee"), is entered into
on the date hereinafter set forth.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the
continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change in Control (as
hereinafter defined) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Employee
by virtue of the personal uncertainties and risks created by a
pending or threatened Change in Control, to encourage the
Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending change in control,
and to provide the Employee with compensation arrangements upon a
Change in Control which provide the Employee with individual
financial security and which are competitive with those of other
corporations. In order to accomplish these objectives, the Board
has caused the Company to enter into this Agreement. Should a
Change of Control occur because of a Management Buyout (as
hereinafter defined), then this Agreement will have no force or
effect. This Agreement will automatically expire on May 1, 1996
if no Change in Control occurs by that time.
1. CERTAIN DEFINITIONS
(a) The "Effective Date" shall be the first date
during the "Change in Control Period" (as defined in Section
1(b) below) on which a Change in Control occurs. Anything
in this Agreement to the contrary notwithstanding, if the
Employee's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and it is
reasonably demonstrated that such termination was at the
request of a third party who has taken steps reasonably
calculated to effect a Change in Control or otherwise arose
in connection with or in anticipation of a Change in
Control, then for all purposes of this Agreement, the
Effective Date shall mean the date immediately prior to the
date of such termination.
(b) The "Change in Control Period" is the period
commencing on the Effective Date and ending on the first
anniversary of such date.
(c) A "Change in Control" shall occur or be deemed to
have occurred only if any of the following events occur:
(i) any "person", as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, or any corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of
stock of the Company) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
twenty percent (20%) or more of the combined voting power of
the Company's then outstanding securities (other than as a
result of acquisitions of such securities from the Company);
(ii) individuals who, as of the date hereof, constitute the
Board (as of the date hereof, the "Incumbent Board") cease
for any reason to constitute at least a majority of the
Board, provided that any person becoming a director
subsequent to the date hereof whose election or nomination
for election by the Company's shareholders was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes
of this Agreement, considered as though such person were a
member of the Incumbent Board; (iii) the stockholders of
the Company approve a merger or consolidation of the Company
with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "Person" (as hereinafter defined)
acquires more than twenty percent (20%) of the combined
voting power of the Company's then outstanding securities;
or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets.
(d) A "Management Buyout" shall occur when there has
been a Change of Control in which the Employee shall hold a
significant financial interest or management position.
2. EMPLOYMENT PERIOD
The Company hereby agrees to continue the Employee in
its employ and, subject to Section 5(d) hereof, the Employee
hereby agrees to remain in the employ of the Company, for the
period commencing on the Effective Date and ending on the first
anniversary of such date (the "Employment Period").
3. TERMS OF EMPLOYMENT
(a) Position and Duties
(i) During the Employment Period: (A) the
Employee's position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the ninety (90)
day period immediately preceding the Effective Date and (B)
the Employee's services shall be performed at the location
where the Employee was employed immediately preceding the
Effective Date, or any office or location less than fifteen
(15) miles from such location and less than ten (10) miles
in commuting distance further than the Employee's commuting
distance to the location at which the Employee performed
such services prior to the Change in Control.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Employee
is entitled, the Employee agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and to use the
Employee's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment
Period, it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable
boards or committees; (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions; and (C)
manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Employees' responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have
been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Employee's
responsibilities to the Company.
(b) Compensation
(i) Base Salary. During the Employment Period,
the Employee shall receive an annual base salary (the "Base
Salary"), payable biweekly, at a weekly rate at least equal
to the highest weekly Base Salary paid or payable to the
Employee by the Company during the twelve (12) month period
immediately preceding the month in which the Effective Date
occurs, with an annual increase in salary consistent with
the increases, if any, received for current periods over the
previous annual calendar twelve (12) months.
(ii) Change in Control Bonus. Upon the
Effective Date, Employee will be paid in cash a bonus equal
to Seventy Thousand Dollars ($70,000). All applicable taxes
and other payments will be withheld from that sum.
(iii) Annual Bonus. In addition to Base
Salary, the Employee shall be awarded, during the Employment
Period, an annual bonus (an "Annual Bonus") at least equal
to the guaranteed bonus to which the Employee is entitled
under any contractual arrangements between the Employee and
the Company as of the date hereof, or not less than the sum
of the bonus of the most recent past Annual Bonus received
by the Employee.
(iv) Incentive, Savings and Retirement Plans.
In addition to Base Salary and Annual Bonuses payable as
hereinabove provided, the Employee shall be entitled to
receive cash sales incentives and to participate during the
Employment Period in all other incentive, savings and
retirement plans, practices, policies and programs
applicable to other key employees of the Company and its
subsidiaries (including the Company's employee benefit
plans, in each case providing benefits which are the
economic equivalent to those in effect or as subsequently
amended). Such plans, practices, policies and programs, in
the aggregate, shall provide the Employee with compensation,
benefits and reward opportunities at least as favorable as
the most favorable of such compensation, benefits and reward
opportunities provided by the Company for the Employee under
such plans, practices, policies and programs as in effect at
any time during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the
Employee, as provided at any time thereafter with respect to
other key employees of the Company.
(v) Welfare Benefit Plans. During the
Employment Period, the Employee and/or the Employee's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs
provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as
favorable as the most favorable of such plans, practices,
policies and programs in effect at any time during the
ninety (90) day period immediately preceding the Effective
Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with
respect to other key employees of the Company.
(vi) Expenses. During the Employment Period,
the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Employee in accordance with the most favorable policies,
practices and procedures of the Company in effect at any
time during the ninety (90) day period immediately preceding
the Effective Date or, if more favorable to the Employee, as
in effect at any time thereafter with respect to other key
employees of the Company.
(vii) Fringe Benefits. During the Employment
Period, the Employee shall be entitled to fringe benefits
and perquisites in accordance with the most favorable plans,
practices, programs and policies of the Company in effect at
any time during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect
to other key employees of the Company, but not less in
dollar value than the Employee's present fringe package.
(viii) Office and Support Staff. During the
Employment Period, the Employee shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided
to the Employee by the Company at any time during the one
hundred eighty (180) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as
provided at any time thereafter with respect to other key
employees of the Company.
(ix) Vacation. During the Employment Period,
the Employee shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs
and practices of the Company as in effect at any time during
the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in
effect at any time thereafter with respect to other key
employees of the Company, and will pay all fees or costs
incurred to protect and uphold all aspects of said
agreement.
(x) Indemnity Agreement. During the Employment
Period, the Company shall keep in full force and effect, and
shall not purport to amend or terminate, any existing
indemnity agreement between the Employee and the Company.
(c) Payment in Lieu of Retaining Employee. In lieu of
retaining the Employee during the Employment Period (or
portion thereof), the Company may pay to the Employee an
amount equal to seventy-five percent (75%) of (b)(i) above
for a period of twelve (12) months to be paid on the date of
termination of employment. This payment is in excess of the
amount due under the severance pay policy of the Company.
4. TERMINATION
(a) Death or Disability. This Agreement shall
terminate automatically upon the Employee's death. If as a
result of incapacity due to physical or mental illness, the
Employee shall have been absent from the full-time
performance of the Employee's duties with the Company for
six (6) consecutive months, and within thirty (30) days
after written notice of termination is given to the
Employee, the Employee shall not have returned to the full-
time performance of the Employee's duties, the Employee's
employment may be terminated for "Disability" (as
hereinafter defined). Any termination for Disability under
this Agreement shall not affect any rights the Employee may
otherwise have. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant
to the definition of "Disability" set forth below), it may
give the Employee written notice of its intention to
terminate the Employee's employment. In such event, the
Employee's employment with the Company shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Employee (the "Disability Effective Date"),
provided, that, within the thirty (30) days after such
receipt, the Employee shall not have returned to full-time
performance of the Employee's duties.
(b) Cause. The Company may terminate the Employee's
employment for "Cause." For purposes of this Agreement,
"Cause" shall mean termination (A) upon the Employee's
willful and continued failure to substantially perform the
Employee's with the Company up to his or her normal skill
level (performance of the past) (other than any such failure
resulting from the Employee's incapacity due to physical or
mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by the
Employee, provided that a written demand for substantial
performance has been delivered to the Employee by the
Company specifically identifying the manner in which the
Company believes that the Employee has not substantially
performed the Employee's duties and the Employee has not
cured such failure within ninety (90) days after such
demand; (B) the Employee's willful violation of any material
provision of any confidentiality, nondisclosure, assignment
of invention, noncompetition or similar agreement entered
into by the Employee in connection with the Employee's
employment by the Company. For purposes of this paragraph,
no act or failure to act on the Employee's part shall be
deemed "willful" unless done by the Employee not in good
faith and without the Employee's reasonable belief that the
Employee's action was in the best interest of the Company;
or (C) other than specifically identified herein, no other
termination is without full compensation within the
Employee's Employment Agreements for the life of the same
without contest.
(c) Notice of Termination. Any termination by the
Company for Cause or by the Employee for any reason shall be
communicated by Notice of Termination (as hereinafter
defined) to the other party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the
provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice specifies the termination date (which date shall be
not more than fifteen (15) days after the giving of such
notice.
(d) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be; provided,
however, that (i) if the Employee's employment is terminated
by the Company other than for Cause or Disability, the Date
of Termination shall be the date on which the Company
notifies the Employee of such termination and (ii) if the
Employee's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of
death of the Employee or the Disability Effective Date, as
the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) Death. If the Employee's employment is terminated
by reason of the Employee's death, this Agreement shall
terminate without further obligation to the Employee's legal
representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by
the Employee as of the Date of Termination. All such
Accrued Obligations shall be paid to the Employee's estate
or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the
Employee's family shall be entitled to receive benefits at
least equal to the most favorable benefits provided by the
Company to surviving families of employees of the Company
under such plans, programs, practices and policies relating
to family death benefits, if any, in accordance with the
most favorable plans, programs, practices and policies of
the Company in effect at any time during the ninety (90) day
period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as
in effect on the date of the Employee's death with respect
to other key employees of the Company and their families.
(b) Disability. If the Employee's employment is
terminated by reason of the Employee's Disability, this
Agreement shall terminate without further obligations to the
Employee, other than those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of
Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to
the Employee in a lump sum in cash within thirty (30) days
of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Employee shall be
entitled, after the Disability Effective Date, to receive
disability and other benefits at least equal to the most
favorable of those provided by the Company to disabled
employees and/or their families in accordance with such
plans, programs, practices and policies relating to
disability, if any, in accordance with the most favorable
plans, programs, practices and policies of the Company in
effect at any time during the ninety (90) day period
immediately preceding the Effective Date or, if more
favorable to the Employee and/or Employee's family, as in
effect at any time thereafter with respect to other key
employees of the Company and their families.
(c) Cause. If the Employee's employment shall be
terminated for Cause, this Agreement shall terminate without
further obligations to the Employee, other than the
obligation to pay those obligations accrued or earned and
vested (if applicable) by the Employee through the Date of
Termination, plus the amount of any accrued vacation pay and
any compensation previously deferred by the Employee
(together with accrued interest thereon).
(d) Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate
the Employee's employment other than for Cause, Disability
or death, or if the Employee shall terminate his or her
employment for any reason, the payment described in
Paragraph 3(c) shall be made.
6. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the
Employee's continuing or future participation in any benefit,
bonus, stock option, stock purchase incentive or other plans,
programs, policies or practices, provided by the Company or any
of its subsidiaries and for which the Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as
the Employee may have under any stock option or other agreements
with the Company or any of its subsidiaries. Amounts which are
vested benefits or which the Employee is otherwise entitled to
receive under any plan, policy, practice or program of the
Company, or any of its subsidiaries, at or subsequent to the Date
of Termination, shall be payable in accordance with such plan,
policy, practice or program.
7. FULL SETTLEMENT
The Company's obligation to make the payments provided
for in this Agreement, and otherwise to perform its obligations
hereunder, shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Employee or others. In no event
shall the Employee be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to
the Employee under any of the provisions of this Agreement.
8. ENFORCEMENT OF RIGHTS
(a) Any dispute or controversy between the Company and
the Employee which the parties are unable to resolve by
negotiation shall be settled exclusively by arbitration,
conducted before a panel of one (1) arbitrator in Los
Angeles, California, or at the direction of the Employee, in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
(b) The Company shall pay to the Employee all legal
fees and expenses incurred by the Employee as a result of
any dispute under this Agreement (including all such fees
and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable
to the application of Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") to any payment or
benefit provided hereunder).
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment (within the meaning of Section 380G(b)(2) of the
Code) or distribution by the Company to or for the benefit
of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or
penalties to the Employee, with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to
receive an additional payment under this Agreement (a "Gross-
Up Payment") in an amount such that after payment by the
Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, the Employee retains
an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by AA and Co.
(the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and to the
Employee within thirty (30) business days of the Date of
Termination, if applicable, or such earlier time as is
requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be
paid to the Employee within five (5) days of the receipt of
the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that failure to
report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of
negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) below, and the Employee
thereafter is required to make payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Employee.
(c) The Employee shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten (10) business days
after the Employee knows of such claim and shall appraise
the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing, from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in
order to effectively contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim.
Provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 9(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Employee to pay the tax claimed and sue for refund or
contest the claim in any permissible manner, and the
Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and sue for
refund, the Company shall advance the amount of such payment
to the Employee, on an interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest
or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment
of taxes for the taxable year of the Employee with respect
to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c) above, the
Employee becomes entitled to receive any refund with respect
to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Employee of an
amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be
entitled to any refund with respect to such claim, and the
Company does not notify the Employee in writing of its
intent to contest such denial or refund prior to the
expiration of sixty (60) days after such determination, then
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. CONFIDENTIAL INFORMATION
The Employee shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, or any of its
subsidiaries, and their respective businesses, which shall have
been obtained by the Employee during the Employee's employment by
the Company, or any of its subsidiaries, and which shall not be
or become public knowledge (other than by acts by the Employee or
his or her representatives in violation of this Agreement).
After termination of the Employee's employment with the Company,
the Employee shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by
it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee under the
Agreement.
11. SUCCESSORS
(a) This Agreement is personal to the Employee and,
without the prior written consent of the Company, shall not
be assignable by the Employee otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Employee's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such successor had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law or otherwise.
12. MISCELLANEOUS
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of California,
without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Employee: David P. Nelson
5626 Seaside Heights
Rancho Palos Verdes, CA 90275
If to the Company: Geodynamics Corporation
21171 Western Avenue, Suite 110
Torrance, CA 90501
Attention: President
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement or
any other agreements by and between the Company and the
Employee.
(d) The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Employee's failure to insist upon strict
compliance with any provision hereof shall not be deemed to
be a waiver of such provision or any other provision
thereof.
(f) This Agreement contains the entire understanding
of the Company and the Employee with respect to the subject
matter hereof, and the Employee waives any severance
benefits (but not pension benefits) that he or she might
otherwise be entitled to under other Company employee plans,
excluding such provisions as may be contained in the form of
Severance Agreement as may be in effect between the Employee
and the Company.
(g) The Employee and the Company acknowledge that,
except as provided by any other agreement between the
Employee and the Company, the employment of the Employee by
the Company is "at will", and, prior to the Effective Date,
may be terminated by either the Employee or the Company at
any time. Upon a termination of the Employee's employment
or upon the Employee's ceasing to be an officer of the
Company, in each case, prior to the Effective Date, there
shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Employee has hereunto set his or her
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed
in its name on its behalf all, as of the 10th day of
August, 1995.
(Signatures on next page)
EMPLOYEE:
/s/ David P. Nelson
DAVID P. NELSON
COMPANY:
GEODYNAMICS CORPORATION,
a California corporation
By:___________________________________
Title:_________________________________
ATTEST:
_____________________________
EMPLOYEE RETENTION AGREEMENT
By and Between
GEODYNAMICS CORPORATION,
a California corporation
("Corporation")
and
PAUL HENRIKSON
("Employee")
Table of Contents
1. CERTAIN DEFINITIONS 1
2. EMPLOYMENT PERIOD 2
3. TERMS OF EMPLOYMENT 2
(a) Position and Duties 2
(b) Compensation 3
(i) Base Salary 3
(ii) Incentive, Savings and Retirement Plans 3
(iii) Welfare Benefit Plans 4
(iv) Expenses 4
(v) Fringe Benefits 4
(vi) Office and Support Staff 4
(vii) Vacation 4
(viii) Indemnity Agreement 4
(c) Payment in Lieu of Retaining Employee 5
4. TERMINATION 5
(a) Death or Disability 5
(b) Cause 5
(c) Notice of Termination 6
(d) Date of Termination 6
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6
(a) Death 6
(b) Disability 6
(c) Cause 7
(d) Other Than for Cause, Death or Disability 7
6. NON-EXCLUSIVITY OF RIGHTS 7
7. FULL SETTLEMENT 7
8. ENFORCEMENT OF RIGHTS 8
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8
10. CONFIDENTIAL INFORMATION 10
11. SUCCESSORS 11
12. MISCELLANEOUS 11
EMPLOYEE RETENTION AGREEMENT
THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and
between GEODYNAMICS CORPORATION, a California corporation (the
"Company") and PAUL HENRIKSON (the "Employee"), is entered into
on the date hereinafter set forth.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the
continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change in Control (as
hereinafter defined) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Employee
by virtue of the personal uncertainties and risks created by a
pending or threatened Change in Control, to encourage the
Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending change in control,
and to provide the Employee with compensation arrangements upon a
Change in Control which provide the Employee with individual
financial security and which are competitive with those of other
corporations. In order to accomplish these objectives, the Board
has caused the Company to enter into this Agreement. Should a
Change of Control occur because of a Management Buyout (as
hereinafter defined), then this Agreement will have no force or
effect. This Agreement will automatically expire on May 1, 1996
if no Change in Control occurs by that time.
1. CERTAIN DEFINITIONS
(a) The "Effective Date" shall be the first date
during the "Change in Control Period" (as defined in Section
1(b) below) on which a Change in Control occurs. Anything
in this Agreement to the contrary notwithstanding, if the
Employee's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and it is
reasonably demonstrated that such termination was at the
request of a third party who has taken steps reasonably
calculated to effect a Change in Control or otherwise arose
in connection with or in anticipation of a Change in
Control, then for all purposes of this Agreement, the
Effective Date shall mean the date immediately prior to the
date of such termination.
(b) The "Change in Control Period" is the period
commencing on the Effective Date and ending on the first
anniversary of such date.
(c) A "Change in Control" shall occur or be deemed to
have occurred only if any of the following events occur:
(i) any "person", as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, or any corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of
stock of the Company) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
twenty percent (20%) or more of the combined voting power of
the Company's then outstanding securities (other than as a
result of acquisitions of such securities from the Company);
(ii) individuals who, as of the date hereof, constitute the
Board (as of the date hereof, the "Incumbent Board") cease
for any reason to constitute at least a majority of the
Board, provided that any person becoming a director
subsequent to the date hereof whose election or nomination
for election by the Company's shareholders was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes
of this Agreement, considered as though such person were a
member of the Incumbent Board; (iii) the stockholders of
the Company approve a merger or consolidation of the Company
with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "Person" (as hereinafter defined)
acquires more than twenty percent (20%) of the combined
voting power of the Company's then outstanding securities;
or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets.
(d) A "Management Buyout" shall occur when there has
been a Change of Control in which the Employee shall hold a
significant financial interest or management position.
2. EMPLOYMENT PERIOD
The Company hereby agrees to continue the Employee in
its employ and, subject to Section 5(d) hereof, the Employee
hereby agrees to remain in the employ of the Company, for the
period commencing on the Effective Date and ending on the first
anniversary of such date (the "Employment Period").
3. TERMS OF EMPLOYMENT
(a) Position and Duties
(i) During the Employment Period: (A) the
Employee's position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the ninety (90)
day period immediately preceding the Effective Date and (B)
the Employee's services shall be performed at the location
where the Employee was employed immediately preceding the
Effective Date, or any office or location less than fifteen
(15) miles from such location and less than ten (10) miles
in commuting distance further than the Employee's commuting
distance to the location at which the Employee performed
such services prior to the Change in Control.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Employee
is entitled, the Employee agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and to use the
Employee's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment
Period, it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable
boards or committees; (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions; and (C)
manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Employees' responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have
been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Employee's
responsibilities to the Company.
(b) Compensation
(i) Base Salary. During the Employment Period,
the Employee shall receive an annual base salary (the "Base
Salary"), payable biweekly, at a weekly rate at least equal
to the highest weekly Base Salary paid or payable to the
Employee by the Company during the twelve (12) month period
immediately preceding the month in which the Effective Date
occurs, with an annual increase in salary consistent with
the increases, if any, received for current periods over the
previous annual calendar twelve (12) months.
(ii) Incentive, Savings and Retirement Plans.
In addition to Base Salary payable as hereinabove provided,
the Employee shall be entitled to receive cash sales
incentives and to participate during the Employment Period
in all other incentive, savings and retirement plans,
practices, policies and programs applicable to other key
employees of the Company and its subsidiaries (including the
Company's employee benefit plans, in each case providing
benefits which are the economic equivalent to those in
effect or as subsequently amended). Such plans, practices,
policies and programs, in the aggregate, shall provide the
Employee with compensation, benefits and reward
opportunities at least as favorable as the most favorable of
such compensation, benefits and reward opportunities
provided by the Company for the Employee under such plans,
practices, policies and programs as in effect at any time
during the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as
provided at any time thereafter with respect to other key
employees of the Company.
(iii) Welfare Benefit Plans. During the
Employment Period, the Employee and/or the Employee's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs
provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as
favorable as the most favorable of such plans, practices,
policies and programs in effect at any time during the
ninety (90) day period immediately preceding the Effective
Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with
respect to other key employees of the Company.
(iv) Expenses. During the Employment Period,
the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Employee in accordance with the most favorable policies,
practices and procedures of the Company in effect at any
time during the ninety (90) day period immediately preceding
the Effective Date or, if more favorable to the Employee, as
in effect at any time thereafter with respect to other key
employees of the Company.
(v) Fringe Benefits. During the Employment
Period, the Employee shall be entitled to fringe benefits
and perquisites in accordance with the most favorable plans,
practices, programs and policies of the Company in effect at
any time during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect
to other key employees of the Company, but not less in
dollar value than the Employee's present fringe package.
(vi) Office and Support Staff. During the
Employment Period, the Employee shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided
to the Employee by the Company at any time during the one
hundred eighty (180) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as
provided at any time thereafter with respect to other key
employees of the Company.
(vii) Vacation. During the Employment Period,
the Employee shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs
and practices of the Company as in effect at any time during
the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in
effect at any time thereafter with respect to other key
employees of the Company, and will pay all fees or costs
incurred to protect and uphold all aspects of said
agreement.
(viii) Indemnity Agreement. During the
Employment Period, the Company shall keep in full force and
effect, and shall not purport to amend or terminate, any
existing indemnity agreement between the Employee and the
Company.
(c) Payment in Lieu of Retaining Employee. In lieu of
retaining the Employee during the Employment Period (or
portion thereof), the Company may pay to the Employee an
amount equal to seventy-five percent (75%) of (b)(i) above
for a period of twelve (12) months to be paid on the date of
termination of employment. This payment is in excess of the
amount due under the severance pay policy of the Company.
4. TERMINATION
(a) Death or Disability. This Agreement shall
terminate automatically upon the Employee's death. If as a
result of incapacity due to physical or mental illness, the
Employee shall have been absent from the full-time
performance of the Employee's duties with the Company for
six (6) consecutive months, and within thirty (30) days
after written notice of termination is given to the
Employee, the Employee shall not have returned to the full-
time performance of the Employee's duties, the Employee's
employment may be terminated for "Disability" (as
hereinafter defined). Any termination for Disability under
this Agreement shall not affect any rights the Employee may
otherwise have. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant
to the definition of "Disability" set forth below), it may
give the Employee written notice of its intention to
terminate the Employee's employment. In such event, the
Employee's employment with the Company shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Employee (the "Disability Effective Date"),
provided, that, within the thirty (30) days after such
receipt, the Employee shall not have returned to full-time
performance of the Employee's duties.
(b) Cause. The Company may terminate the Employee's
employment for "Cause." For purposes of this Agreement,
"Cause" shall mean termination (A) upon the Employee's
willful and continued failure to substantially perform the
Employee's with the Company up to his or her normal skill
level (performance of the past) (other than any such failure
resulting from the Employee's incapacity due to physical or
mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by the
Employee, provided that a written demand for substantial
performance has been delivered to the Employee by the
Company specifically identifying the manner in which the
Company believes that the Employee has not substantially
performed the Employee's duties and the Employee has not
cured such failure within ninety (90) days after such
demand; (B) the Employee's willful violation of any material
provision of any confidentiality, nondisclosure, assignment
of invention, noncompetition or similar agreement entered
into by the Employee in connection with the Employee's
employment by the Company. For purposes of this paragraph,
no act or failure to act on the Employee's part shall be
deemed "willful" unless done by the Employee not in good
faith and without the Employee's reasonable belief that the
Employee's action was in the best interest of the Company;
or (C) other than specifically identified herein, no other
termination is without full compensation within the
Employee's Employment Agreements for the life of the same
without contest.
(c) Notice of Termination. Any termination by the
Company for Cause or by the Employee for any reason shall be
communicated by Notice of Termination (as hereinafter
defined) to the other party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the
provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice specifies the termination date (which date shall be
not more than fifteen (15) days after the giving of such
notice.
(d) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be; provided,
however, that (i) if the Employee's employment is terminated
by the Company other than for Cause or Disability, the Date
of Termination shall be the date on which the Company
notifies the Employee of such termination and (ii) if the
Employee's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of
death of the Employee or the Disability Effective Date, as
the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) Death. If the Employee's employment is terminated
by reason of the Employee's death, this Agreement shall
terminate without further obligation to the Employee's legal
representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by
the Employee as of the Date of Termination. All such
Accrued Obligations shall be paid to the Employee's estate
or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the
Employee's family shall be entitled to receive benefits at
least equal to the most favorable benefits provided by the
Company to surviving families of employees of the Company
under such plans, programs, practices and policies relating
to family death benefits, if any, in accordance with the
most favorable plans, programs, practices and policies of
the Company in effect at any time during the ninety (90) day
period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as
in effect on the date of the Employee's death with respect
to other key employees of the Company and their families.
(b) Disability. If the Employee's employment is
terminated by reason of the Employee's Disability, this
Agreement shall terminate without further obligations to the
Employee, other than those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of
Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to
the Employee in a lump sum in cash within thirty (30) days
of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Employee shall be
entitled, after the Disability Effective Date, to receive
disability and other benefits at least equal to the most
favorable of those provided by the Company to disabled
employees and/or their families in accordance with such
plans, programs, practices and policies relating to
disability, if any, in accordance with the most favorable
plans, programs, practices and policies of the Company in
effect at any time during the ninety (90) day period
immediately preceding the Effective Date or, if more
favorable to the Employee and/or Employee's family, as in
effect at any time thereafter with respect to other key
employees of the Company and their families.
(c) Cause. If the Employee's employment shall be
terminated for Cause, this Agreement shall terminate without
further obligations to the Employee, other than the
obligation to pay those obligations accrued or earned and
vested (if applicable) by the Employee through the Date of
Termination, plus the amount of any accrued vacation pay and
any compensation previously deferred by the Employee
(together with accrued interest thereon).
(d) Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate
the Employee's employment other than for Cause, Disability
or death, or if the Employee shall terminate his or her
employment for any reason, the payment described in
Paragraph 3(c) shall be made.
6. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the
Employee's continuing or future participation in any benefit,
bonus, stock option, stock purchase incentive or other plans,
programs, policies or practices, provided by the Company or any
of its subsidiaries and for which the Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as
the Employee may have under any stock option or other agreements
with the Company or any of its subsidiaries. Amounts which are
vested benefits or which the Employee is otherwise entitled to
receive under any plan, policy, practice or program of the
Company, or any of its subsidiaries, at or subsequent to the Date
of Termination, shall be payable in accordance with such plan,
policy, practice or program.
7. FULL SETTLEMENT
The Company's obligation to make the payments provided
for in this Agreement, and otherwise to perform its obligations
hereunder, shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Employee or others. In no event
shall the Employee be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to
the Employee under any of the provisions of this Agreement.
8. ENFORCEMENT OF RIGHTS
(a) Any dispute or controversy between the Company and
the Employee which the parties are unable to resolve by
negotiation shall be settled exclusively by arbitration,
conducted before a panel of one (1) arbitrator in Los
Angeles, California, or at the direction of the Employee, in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
(b) The Company shall pay to the Employee all legal
fees and expenses incurred by the Employee as a result of
any dispute under this Agreement (including all such fees
and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable
to the application of Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") to any payment or
benefit provided hereunder).
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment (within the meaning of Section 380G(b)(2) of the
Code) or distribution by the Company to or for the benefit
of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or
penalties to the Employee, with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to
receive an additional payment under this Agreement (a "Gross-
Up Payment") in an amount such that after payment by the
Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, the Employee retains
an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by AA and Co.
(the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and to the
Employee within thirty (30) business days of the Date of
Termination, if applicable, or such earlier time as is
requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be
paid to the Employee within five (5) days of the receipt of
the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that failure to
report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of
negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) below, and the Employee
thereafter is required to make payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Employee.
(c) The Employee shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten (10) business days
after the Employee knows of such claim and shall appraise
the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing, from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in
order to effectively contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim.
Provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 9(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Employee to pay the tax claimed and sue for refund or
contest the claim in any permissible manner, and the
Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and sue for
refund, the Company shall advance the amount of such payment
to the Employee, on an interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest
or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment
of taxes for the taxable year of the Employee with respect
to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c) above, the
Employee becomes entitled to receive any refund with respect
to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Employee of an
amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be
entitled to any refund with respect to such claim, and the
Company does not notify the Employee in writing of its
intent to contest such denial or refund prior to the
expiration of sixty (60) days after such determination, then
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. CONFIDENTIAL INFORMATION
The Employee shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, or any of its
subsidiaries, and their respective businesses, which shall have
been obtained by the Employee during the Employee's employment by
the Company, or any of its subsidiaries, and which shall not be
or become public knowledge (other than by acts by the Employee or
his or her representatives in violation of this Agreement).
After termination of the Employee's employment with the Company,
the Employee shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by
it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee under the
Agreement.
11. SUCCESSORS
(a) This Agreement is personal to the Employee and,
without the prior written consent of the Company, shall not
be assignable by the Employee otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Employee's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such successor had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law or otherwise.
12. MISCELLANEOUS
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of California,
without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Employee: Paul Henrikson
32404 Sea Raven Drive
Rancho Palo Verdes, CA 90274
If to the Company: Geodynamics Corporation
21171 Western Avenue, Suite 110
Torrance, CA 90501
Attention: President
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement or
any other agreements by and between the Company and the
Employee.
(d) The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Employee's failure to insist upon strict
compliance with any provision hereof shall not be deemed to
be a waiver of such provision or any other provision
thereof.
(f) This Agreement contains the entire understanding
of the Company and the Employee with respect to the subject
matter hereof, and the Employee waives any severance
benefits (but not pension benefits) that he or she might
otherwise be entitled to under other Company employee plans,
excluding such provisions as may be contained in the form of
Severance Agreement as may be in effect between the Employee
and the Company.
(g) The Employee and the Company acknowledge that,
except as provided by any other agreement between the
Employee and the Company, the employment of the Employee by
the Company is "at will", and, prior to the Effective Date,
may be terminated by either the Employee or the Company at
any time. Upon a termination of the Employee's employment
or upon the Employee's ceasing to be an officer of the
Company, in each case, prior to the Effective Date, there
shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Employee has hereunto set his or her
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed
in its name on its behalf all, as of the 10th day of
August, 1995.
(Signatures on next page)
EMPLOYEE:
/s/ Paul Henrikson
PAUL HENRIKSON
COMPANY:
GEODYNAMICS CORPORATION,
a California corporation
By:___________________________________
Title:_________________________________
ATTEST:
_____________________________
EMPLOYEE RETENTION AGREEMENT
By and Between
GEODYNAMICS CORPORATION,
a California corporation
("Corporation")
and
CAROLYN MIHARA
("Employee")
Table of Contents
1. CERTAIN DEFINITIONS 1
2. EMPLOYMENT PERIOD 2
3. TERMS OF EMPLOYMENT 2
(a) Position and Duties 2
(b) Compensation 3
(i) Base Salary 3
(ii) Change in Control Bonus 3
(iii) Annual Bonus 3
(iv) Incentive, Savings and Retirement Plans 3
(v) Welfare Benefit Plans 4
(vi) Expenses 4
(vii) Fringe Benefits 4
(viii)Office and Support Staff 4
(ix) Vacation 5
(x) Indemnity Agreement 5
4. TERMINATION 5
(a) Death or Disability 5
(b) Cause 5
(c) Notice of Termination 6
(d) Date of Termination 6
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6
(a) Death 6
(b) Disability 6
(c) Cause 7
(d) Other Than for Cause, Death or Disability 7
6. NON-EXCLUSIVITY OF RIGHTS 7
7. FULL SETTLEMENT 7
8. ENFORCEMENT OF RIGHTS 8
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8
10. CONFIDENTIAL INFORMATION 10
11. SUCCESSORS 11
12. MISCELLANEOUS 11
EMPLOYEE RETENTION AGREEMENT
THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and
between GEODYNAMICS CORPORATION, a California corporation (the
"Company") and CAROLYN MIHARA (the "Employee"), is entered into
on the date hereinafter set forth.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the
continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change in Control (as
hereinafter defined) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Employee
by virtue of the personal uncertainties and risks created by a
pending or threatened Change in Control, to encourage the
Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending change in control,
and to provide the Employee with compensation arrangements upon a
Change in Control which provide the Employee with individual
financial security and which are competitive with those of other
corporations. In order to accomplish these objectives, the Board
has caused the Company to enter into this Agreement. Should a
Change of Control occur because of a Management Buyout (as
hereinafter defined), then this Agreement will have no force or
effect. This Agreement will automatically expire on May 1, 1996
if no Change in Control occurs by that time.
1. CERTAIN DEFINITIONS
(a) The "Effective Date" shall be the first date
during the "Change in Control Period" (as defined in Section
1(b) below) on which a Change in Control occurs. Anything
in this Agreement to the contrary notwithstanding, if the
Employee's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and it is
reasonably demonstrated that such termination was at the
request of a third party who has taken steps reasonably
calculated to effect a Change in Control or otherwise arose
in connection with or in anticipation of a Change in
Control, then for all purposes of this Agreement, the
Effective Date shall mean the date immediately prior to the
date of such termination.
(b) The "Change in Control Period" is the period
commencing on the Effective Date and ending on the first
anniversary of such date.
(c) A "Change in Control" shall occur or be deemed to
have occurred only if any of the following events occur:
(i) any "person", as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, or any corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of
stock of the Company) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
twenty percent (20%) or more of the combined voting power of
the Company's then outstanding securities (other than as a
result of acquisitions of such securities from the Company);
(ii) individuals who, as of the date hereof, constitute the
Board (as of the date hereof, the "Incumbent Board") cease
for any reason to constitute at least a majority of the
Board, provided that any person becoming a director
subsequent to the date hereof whose election or nomination
for election by the Company's shareholders was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes
of this Agreement, considered as though such person were a
member of the Incumbent Board; (iii) the stockholders of
the Company approve a merger or consolidation of the Company
with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "Person" (as hereinafter defined)
acquires more than twenty percent (20%) of the combined
voting power of the Company's then outstanding securities;
or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets.
(d) A "Management Buyout" shall occur when there has
been a Change of Control in which the Employee shall hold a
significant financial interest or management position.
2. EMPLOYMENT PERIOD
The Company hereby agrees to continue the Employee in
its employ and, subject to Section 5(d) hereof, the Employee
hereby agrees to remain in the employ of the Company, for the
period commencing on the Effective Date and ending on the first
anniversary of such date (the "Employment Period").
3. TERMS OF EMPLOYMENT
(a) Position and Duties
(i) During the Employment Period: (A) the
Employee's position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the ninety (90)
day period immediately preceding the Effective Date and (B)
the Employee's services shall be performed at the location
where the Employee was employed immediately preceding the
Effective Date, or any office or location less than fifteen
(15) miles from such location and less than ten (10) miles
in commuting distance further than the Employee's commuting
distance to the location at which the Employee performed
such services prior to the Change in Control.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Employee
is entitled, the Employee agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and to use the
Employee's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment
Period, it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable
boards or committees; (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions; and (C)
manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Employees' responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have
been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Employee's
responsibilities to the Company.
(b) Compensation
(i) Base Salary. During the Employment Period,
the Employee shall receive an annual base salary (the "Base
Salary"), payable biweekly, at a weekly rate at least equal
to the highest weekly Base Salary paid or payable to the
Employee by the Company during the twelve (12) month period
immediately preceding the month in which the Effective Date
occurs, with an annual increase in salary consistent with
the increases, if any, received for current periods over the
previous annual calendar twelve (12) months.
(ii) Change in Control Bonus. Upon the
Effective Date, Employee will be paid in cash a bonus equal
to Fifty Thousand Dollars ($50,000). All applicable taxes
and other payments will be withheld from that sum.
(iii) Annual Bonus. In addition to Base
Salary, the Employee shall be awarded, during the Employment
Period, an annual bonus (an "Annual Bonus") at least equal
to the guaranteed bonus to which the Employee is entitled
under any contractual arrangements between the Employee and
the Company as of the date hereof, or not less than the sum
of the bonus of the most recent past Annual Bonus received
by the Employee.
(iv) Incentive, Savings and Retirement Plans.
In addition to Base Salary and Annual Bonuses payable as
hereinabove provided, the Employee shall be entitled to
receive cash sales incentives and to participate during the
Employment Period in all other incentive, savings and
retirement plans, practices, policies and programs
applicable to other key employees of the Company and its
subsidiaries (including the Company's employee benefit
plans, in each case providing benefits which are the
economic equivalent to those in effect or as subsequently
amended). Such plans, practices, policies and programs, in
the aggregate, shall provide the Employee with compensation,
benefits and reward opportunities at least as favorable as
the most favorable of such compensation, benefits and reward
opportunities provided by the Company for the Employee under
such plans, practices, policies and programs as in effect at
any time during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the
Employee, as provided at any time thereafter with respect to
other key employees of the Company.
(v) Welfare Benefit Plans. During the
Employment Period, the Employee and/or the Employee's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs
provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as
favorable as the most favorable of such plans, practices,
policies and programs in effect at any time during the
ninety (90) day period immediately preceding the Effective
Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with
respect to other key employees of the Company.
(vi) Expenses. During the Employment Period,
the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Employee in accordance with the most favorable policies,
practices and procedures of the Company in effect at any
time during the ninety (90) day period immediately preceding
the Effective Date or, if more favorable to the Employee, as
in effect at any time thereafter with respect to other key
employees of the Company.
(vii) Fringe Benefits. During the Employment
Period, the Employee shall be entitled to fringe benefits
and perquisites in accordance with the most favorable plans,
practices, programs and policies of the Company in effect at
any time during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect
to other key employees of the Company, but not less in
dollar value than the Employee's present fringe package.
(viii) Office and Support Staff. During the
Employment Period, the Employee shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided
to the Employee by the Company at any time during the one
hundred eighty (180) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as
provided at any time thereafter with respect to other key
employees of the Company.
(ix) Vacation. During the Employment Period,
the Employee shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs
and practices of the Company as in effect at any time during
the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in
effect at any time thereafter with respect to other key
employees of the Company, and will pay all fees or costs
incurred to protect and uphold all aspects of said
agreement.
(x) Indemnity Agreement. During the Employment
Period, the Company shall keep in full force and effect, and
shall not purport to amend or terminate, any existing
indemnity agreement between the Employee and the Company.
4. TERMINATION
(a) Death or Disability. This Agreement shall
terminate automatically upon the Employee's death. If as a
result of incapacity due to physical or mental illness, the
Employee shall have been absent from the full-time
performance of the Employee's duties with the Company for
six (6) consecutive months, and within thirty (30) days
after written notice of termination is given to the
Employee, the Employee shall not have returned to the full-
time performance of the Employee's duties, the Employee's
employment may be terminated for "Disability" (as
hereinafter defined). Any termination for Disability under
this Agreement shall not affect any rights the Employee may
otherwise have. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant
to the definition of "Disability" set forth below), it may
give the Employee written notice of its intention to
terminate the Employee's employment. In such event, the
Employee's employment with the Company shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Employee (the "Disability Effective Date"),
provided, that, within the thirty (30) days after such
receipt, the Employee shall not have returned to full-time
performance of the Employee's duties.
(b) Cause. The Company may terminate the Employee's
employment for "Cause." For purposes of this Agreement,
"Cause" shall mean termination (A) upon the Employee's
willful and continued failure to substantially perform the
Employee's with the Company up to his or her normal skill
level (performance of the past) (other than any such failure
resulting from the Employee's incapacity due to physical or
mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by the
Employee, provided that a written demand for substantial
performance has been delivered to the Employee by the
Company specifically identifying the manner in which the
Company believes that the Employee has not substantially
performed the Employee's duties and the Employee has not
cured such failure within ninety (90) days after such
demand; (B) the Employee's willful violation of any material
provision of any confidentiality, nondisclosure, assignment
of invention, noncompetition or similar agreement entered
into by the Employee in connection with the Employee's
employment by the Company. For purposes of this paragraph,
no act or failure to act on the Employee's part shall be
deemed "willful" unless done by the Employee not in good
faith and without the Employee's reasonable belief that the
Employee's action was in the best interest of the Company;
or (C) other than specifically identified herein, no other
termination is without full compensation within the
Employee's Employment Agreements for the life of the same
without contest.
(c) Notice of Termination. Any termination by the
Company for Cause or by the Employee for any reason shall be
communicated by Notice of Termination (as hereinafter
defined) to the other party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the
provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice specifies the termination date (which date shall be
not more than fifteen (15) days after the giving of such
notice.
(d) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be; provided,
however, that (i) if the Employee's employment is terminated
by the Company other than for Cause or Disability, the Date
of Termination shall be the date on which the Company
notifies the Employee of such termination and (ii) if the
Employee's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of
death of the Employee or the Disability Effective Date, as
the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) Death. If the Employee's employment is terminated
by reason of the Employee's death, this Agreement shall
terminate without further obligation to the Employee's legal
representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by
the Employee as of the Date of Termination. All such
Accrued Obligations shall be paid to the Employee's estate
or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the
Employee's family shall be entitled to receive benefits at
least equal to the most favorable benefits provided by the
Company to surviving families of employees of the Company
under such plans, programs, practices and policies relating
to family death benefits, if any, in accordance with the
most favorable plans, programs, practices and policies of
the Company in effect at any time during the ninety (90) day
period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as
in effect on the date of the Employee's death with respect
to other key employees of the Company and their families.
(b) Disability. If the Employee's employment is
terminated by reason of the Employee's Disability, this
Agreement shall terminate without further obligations to the
Employee, other than those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of
Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to
the Employee in a lump sum in cash within thirty (30) days
of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Employee shall be
entitled, after the Disability Effective Date, to receive
disability and other benefits at least equal to the most
favorable of those provided by the Company to disabled
employees and/or their families in accordance with such
plans, programs, practices and policies relating to
disability, if any, in accordance with the most favorable
plans, programs, practices and policies of the Company in
effect at any time during the ninety (90) day period
immediately preceding the Effective Date or, if more
favorable to the Employee and/or Employee's family, as in
effect at any time thereafter with respect to other key
employees of the Company and their families.
(c) Cause. If the Employee's employment shall be
terminated for Cause, this Agreement shall terminate without
further obligations to the Employee, other than the
obligation to pay those obligations accrued or earned and
vested (if applicable) by the Employee through the Date of
Termination, plus the amount of any accrued vacation pay and
any compensation previously deferred by the Employee
(together with accrued interest thereon).
(d) Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate
the Employee's employment other than for Cause, Disability
or death, or if the Employee shall terminate his or her
employment for any reason, the payment described in
Paragraph 3(c) shall be made.
6. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the
Employee's continuing or future participation in any benefit,
bonus, stock option, stock purchase incentive or other plans,
programs, policies or practices, provided by the Company or any
of its subsidiaries and for which the Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as
the Employee may have under any stock option or other agreements
with the Company or any of its subsidiaries. Amounts which are
vested benefits or which the Employee is otherwise entitled to
receive under any plan, policy, practice or program of the
Company, or any of its subsidiaries, at or subsequent to the Date
of Termination, shall be payable in accordance with such plan,
policy, practice or program.
7. FULL SETTLEMENT
The Company's obligation to make the payments provided
for in this Agreement, and otherwise to perform its obligations
hereunder, shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Employee or others. In no event
shall the Employee be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to
the Employee under any of the provisions of this Agreement.
8. ENFORCEMENT OF RIGHTS
(a) Any dispute or controversy between the Company and
the Employee which the parties are unable to resolve by
negotiation shall be settled exclusively by arbitration,
conducted before a panel of one (1) arbitrator in Los
Angeles, California, or at the direction of the Employee, in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
(b) The Company shall pay to the Employee all legal
fees and expenses incurred by the Employee as a result of
any dispute under this Agreement (including all such fees
and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable
to the application of Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") to any payment or
benefit provided hereunder).
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment (within the meaning of Section 380G(b)(2) of the
Code) or distribution by the Company to or for the benefit
of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or
penalties to the Employee, with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to
receive an additional payment under this Agreement (a "Gross-
Up Payment") in an amount such that after payment by the
Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, the Employee retains
an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by AA and Co.
(the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and to the
Employee within thirty (30) business days of the Date of
Termination, if applicable, or such earlier time as is
requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be
paid to the Employee within five (5) days of the receipt of
the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that failure to
report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of
negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) below, and the Employee
thereafter is required to make payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Employee.
(c) The Employee shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten (10) business days
after the Employee knows of such claim and shall appraise
the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing, from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in
order to effectively contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim.
Provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 9(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Employee to pay the tax claimed and sue for refund or
contest the claim in any permissible manner, and the
Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and sue for
refund, the Company shall advance the amount of such payment
to the Employee, on an interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest
or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment
of taxes for the taxable year of the Employee with respect
to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c) above, the
Employee becomes entitled to receive any refund with respect
to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Employee of an
amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be
entitled to any refund with respect to such claim, and the
Company does not notify the Employee in writing of its
intent to contest such denial or refund prior to the
expiration of sixty (60) days after such determination, then
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. CONFIDENTIAL INFORMATION
The Employee shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, or any of its
subsidiaries, and their respective businesses, which shall have
been obtained by the Employee during the Employee's employment by
the Company, or any of its subsidiaries, and which shall not be
or become public knowledge (other than by acts by the Employee or
his or her representatives in violation of this Agreement).
After termination of the Employee's employment with the Company,
the Employee shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by
it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee under the
Agreement.
11. SUCCESSORS
(a) This Agreement is personal to the Employee and,
without the prior written consent of the Company, shall not
be assignable by the Employee otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Employee's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such successor had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law or otherwise.
12. MISCELLANEOUS
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of California,
without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Employee: Carolyn Mihara
2414-A Nelson Avenue
Redondo Beach, CA 90278
If to the Company: Geodynamics Corporation
21171 Western Avenue, Suite 110
Torrance, CA 90501
Attention: President
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement or
any other agreements by and between the Company and the
Employee.
(d) The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Employee's failure to insist upon strict
compliance with any provision hereof shall not be deemed to
be a waiver of such provision or any other provision
thereof.
(f) This Agreement contains the entire understanding
of the Company and the Employee with respect to the subject
matter hereof, and the Employee waives any severance
benefits (but not pension benefits) that he or she might
otherwise be entitled to under other Company employee plans,
excluding such provisions as may be contained in the form of
Severance Agreement as may be in effect between the Employee
and the Company.
(g) The Employee and the Company acknowledge that,
except as provided by any other agreement between the
Employee and the Company, the employment of the Employee by
the Company is "at will", and, prior to the Effective Date,
may be terminated by either the Employee or the Company at
any time. Upon a termination of the Employee's employment
or upon the Employee's ceasing to be an officer of the
Company, in each case, prior to the Effective Date, there
shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Employee has hereunto set his or her
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed
in its name on its behalf all, as of the 10th day of
August, 1995.
(Signatures on next page)
EMPLOYEE:
/s/ Carolyn Mihara
CAROLYN MIHARA
COMPANY:
GEODYNAMICS CORPORATION,
a California corporation
By:___________________________________
Title:_________________________________
ATTEST:
_____________________________
GEODYNAMICS CORPORATION
DIRECTORS' STOCK OPTION PLAN
April 19, 1995
PURPOSE OF THE PLAN
The purpose of the Directors' Stock Option Plan (the "Plan")
of Geodynamics Corporation ("Geodynamics") is to provide an
incentive which will attract and retain the best available
persons to serve on the Board of Directors of Geodynamics and
will provide additional incentives to such persons to further the
success of Geodynamics. Under the Plan, directors of Geodynamics
(the "Directors") will receive a grant of options to purchase
common stock of Geodynamics (the "Options") in lieu of an annual
retainer for a projected five-year period of service as a
Director.
PERSONS ELIGIBLE
Only Directors who are not full-time employees of
Geodynamics are eligible to participate in the Plan.
FORM OF OPTION
The form of Option attached to this Plan is hereby
incorporated herein by reference, and the Plan shall be subject
to all requirements set forth therein.
PRICE AND NUMBER OF OPTIONS
The terms of the Option are set as a formula plan. The
exercise price of the Options has been initially established as
$5 per share, The exercise price so established shall remain in
effect until it is changed by the Board of Directors as provided
herein to maintain an exercise price between 50% and 75% of the
price of the stock at grant. The number of Options will be
established along with the exercise price so as to compensate
Directors in an amount equal to that portion of the Director's
fees otherwise payable. The Director may only receive one such
grant within any five-board-year period. The formula for the
total number of options in the grant is based on the fair-market
value of the shares on the commencement date:
Annual Compensation Amount = (Fair Market Value - Exercise
Price)(# of Options)(0.20)
Non-retainer fees, expenses of Directors for travel and related
items shall not be subject to this Plan and shall be payable in
cash.
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-02-1995
<PERIOD-END> JUN-02-1995
<CASH> 2,310
<SECURITIES> 5,862
<RECEIVABLES> 14,524
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,050
<PP&E> 28,098
<DEPRECIATION> (16,615)
<TOTAL-ASSETS> 40,640
<CURRENT-LIABILITIES> 8,312
<BONDS> 0
<COMMON> 11,910
0
0
<OTHER-SE> 18,544
<TOTAL-LIABILITY-AND-EQUITY> 40,640
<SALES> 60,770
<TOTAL-REVENUES> 60,306
<CGS> 55,017
<TOTAL-COSTS> 55,035
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 3,145
<INCOME-TAX> 1,227
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<NET-INCOME> 1,918
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