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EXHIBIT 10.4
AGREEMENT AND PLAN OF MERGER
AMONG
CORE LABORATORIES N.V.,
CORE COLORADO ACQUISITION, INC.,
COHERENCE TECHNOLOGY COMPANY, INC.
AND
THE STOCKHOLDERS OF
COHERENCE TECHNOLOGY COMPANY, INC.
JUNE 9, 1999
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.01 THE MERGER ..............................................................................................2
1.02 EFFECTIVE TIME ..........................................................................................2
1.03 EFFECT OF THE MERGER ....................................................................................2
1.04 ARTICLES OF INCORPORATION; BYLAWS .......................................................................2
1.05 DIRECTORS AND OFFICERS ..................................................................................2
1.06 ACQUISITION CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES ....................................3
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES ....................................................5
1.08 NO FRACTIONAL SHARES ....................................................................................6
1.09 AGREEMENT TO VOTE SHARES ................................................................................6
1.10 WITHHOLDING .............................................................................................7
1.11 CLOSING .................................................................................................7
1.12 ACTIONS AT CLOSING ......................................................................................7
1.13 STOCK TRANSFER BOOKS ....................................................................................7
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION ..............................................................7
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES ............................................................8
2.02 ORGANIZATIONAL DOCUMENTS ................................................................................8
2.03 CAPITALIZATION ..........................................................................................9
2.04 AUTHORITY ..............................................................................................10
2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .............................................................10
2.06 PERMITS; COMPLIANCE ....................................................................................11
2.07 FINANCIAL STATEMENTS ...................................................................................12
2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS ...................................................................12
2.09 LITIGATION .............................................................................................13
2.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS ..................................................................13
2.11 TAXES ..................................................................................................16
2.12 POOLING; TAX MATTERS ...................................................................................17
2.13 AFFILIATES .............................................................................................18
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2.14 CERTAIN BUSINESS PRACTICES .............................................................................18
2.15 ENVIRONMENTAL ..........................................................................................18
2.16 UNDISCLOSED LIABILITIES ................................................................................19
2.17 CERTAIN AGREEMENTS .....................................................................................19
2.18 CONTRACTS AND COMMITMENTS ..............................................................................19
2.19 AFFILIATE INTERESTS ....................................................................................20
2.20 INTELLECTUAL PROPERTY ..................................................................................20
2.21 BP AMOCO AGREEMENT .....................................................................................21
2.22 BROKERS ................................................................................................22
2.23 INSURANCE ..............................................................................................22
2.24 PROPERTIES .............................................................................................22
2.25 GOOD TITLE .............................................................................................23
2.26 CERTAIN SECURITIES LAW MATTERS .........................................................................23
2.27 AUTHORIZATION AND VALIDITY OF AGREEMENT ................................................................25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
3.01 ORGANIZATION AND QUALIFICATION .........................................................................25
3.02 CAPITALIZATION .........................................................................................25
3.03 AUTHORITY ..............................................................................................26
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .............................................................26
3.05 REPORTS; FINANCIAL STATEMENTS ..........................................................................27
3.06 BROKERS ................................................................................................28
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT ...................................................................................28
4.02 NEGATIVE COVENANTS .....................................................................................28
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY ...................................................................29
5.02 NEGATIVE COVENANTS OF THE COMPANY ......................................................................30
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ARTICLE VI
COVENANTS OF ACQUIROR
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR ......................................................................33
6.02 NEGATIVE COVENANTS OF ACQUIROR .........................................................................33
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 NOTIFICATION OF CERTAIN MATTERS ........................................................................34
7.02 ACCESS AND INFORMATION .................................................................................34
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS ..................................................................35
7.04 AFFILIATES; POOLING ....................................................................................36
7.05 PUBLIC ANNOUNCEMENTS ...................................................................................37
7.06 EXPENSES ...............................................................................................37
7.07 EMPLOYEES OF COMPANY ...................................................................................37
7.08 TAX-FREE REORGANIZATION ................................................................................38
7.09 INFORMATION FOR TAX RETURNS ............................................................................38
7.10 NO HEDGING TRANSACTIONS ................................................................................38
7.11 TERMINATED LEASES ......................................................................................39
7.12 PULSONIC ACQUISITION ...................................................................................39
7.13 PULSONIC NIGERIA LIMITED................................................................................40
7.14 INDEMNIFICATION OF DIRECTORS AND OFFICERS...............................................................40
7.15 GUARANTEES..............................................................................................40
7.16 MORRIS SHARES...........................................................................................40
ARTICLE VIII
INDEMNIFICATION
8.01 IN GENERAL .............................................................................................41
8.02 NO EXHAUSTION OF REMEDIES ..............................................................................41
8.03 DEFENSE OF THIRD PARTY CLAIMS ..........................................................................42
8.04 PAYMENT; ARBITRATION ...................................................................................43
8.05 SATISFACTION OF CLAIMS FROM ESCROW SHARES ..............................................................44
8.06 LIABILITY LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES ......................................45
8.07 SUBROGATION ............................................................................................45
8.08 CLAIM OF FRAUD..........................................................................................45
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ARTICLE IX
CONDITIONS
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES ..........................................46
9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY .....................................................48
ARTICLE X
MISCELLANEOUS
10.01 TERMINATION ............................................................................................50
10.02 EFFECT OF TERMINATION ..................................................................................50
10.03 WAIVER AND AMENDMENT ...................................................................................51
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES ............................................................51
10.05 ASSIGNMENT .............................................................................................51
10.06 CERTAIN DEFINITIONS ....................................................................................51
10.07 NOTICES ................................................................................................53
10.08 GOVERNING LAW ..........................................................................................55
10.09 SEVERABILITY ...........................................................................................55
10.10 COUNTERPARTS ...........................................................................................55
10.11 HEADINGS ...............................................................................................55
EXHIBITS
Exhibit A -- Escrow Agreement
Exhibit B -- Appointment of Shareholders' Representative
Exhibit C -- Form of Company Affiliates' Letter
Exhibit D -- Form of Employment Contract
Exhibit E -- Form of Promissory Note
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of June 9, 1999 by and among Core Laboratories N.V., a
Netherlands limited liability company ("Acquiror"), Core Colorado Acquisition,
Inc., a Colorado corporation with its principal place of business in Houston,
Texas and a wholly owned subsidiary of Core ("Acquisition Sub"), Coherence
Technology Company, Inc., a Colorado corporation (the "Company"), and the
stockholders of the Company set forth on the signature pages hereto
(collectively, the "Shareholders"). Acquiror and Acquisition Sub are sometimes
collectively referred to herein as the "Acquiror Companies."
RECITALS
The Shareholders own, beneficially and of record, all of the
outstanding capital stock of the Company.
Acquisition Sub, upon the terms and subject to the conditions of this
Agreement and in accordance with the Colorado Business Corporation Act (the
"CBCA"), will merge with and into the Company (the "Merger").
The Board of Directors of the Company has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of the
Company and is fair to, and in the best interests of, the Company and the
Shareholders and has approved and adopted this Agreement and the transactions
contemplated hereby, and recommended approval and adoption of this Agreement and
the Merger by the Shareholders.
This Agreement and the Merger have been approved and adopted by the
requisite vote of the Shareholders and of the sole shareholder of Acquisition
Sub as required by the CBCA.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
The Merger is intended to be treated as a "pooling of interests" for
financial accounting purposes under United States generally accepted accounting
principles ("GAAP").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
1.01 THE MERGER . Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the CBCA, at the Effective Time
(as defined in Section 1.02 of this Agreement), Acquisition Sub shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Acquisition Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"). The name of
the Surviving Corporation shall be "Coherence Technology Company, Inc."
1.02 EFFECTIVE TIME . As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article IX of this
Agreement, but no earlier than July 1, 1999, the parties hereto shall cause the
Merger to be consummated by filing Articles of Merger with the Secretary of
State of the State of Colorado, in such form as required by, and executed in
accordance with the relevant provisions of, the CBCA (the date and time of the
effectiveness of such filing being the "Effective Time").
1.03 EFFECT OF THE MERGER . At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the CBCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property and assets of
Acquisition Sub and the Company shall vest in the Surviving Corporation, and all
obligations and liabilities of Acquisition Sub and the Company shall become the
obligations and liabilities of the Surviving Corporation.
1.04 ARTICLES OF INCORPORATION; BYLAWS . At the Effective Time, the
Articles of Incorporation and the Bylaws of the Surviving Corporation shall be
amended and restated to adopt the Articles of Incorporation and Bylaws of the
Acquisition Sub, as in effect immediately prior to the Effective Time, except
that Article I of the Articles of Incorporation thereof shall be amended to read
"The name of the corporation is Coherence Technology Company, Inc." and the
Bylaws shall be amended so as to reflect that the name of the Surviving
Corporation has been changed to Coherence Technology Company, Inc.
1.05 DIRECTORS AND OFFICERS . The directors of Acquisition Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Acquisition Sub immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
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1.06 ACQUISITION CONSIDERATION; CONVERSION AND CANCELLATION OF
SECURITIES . At the Effective Time, by virtue of the Merger and without any
action on the part of the Acquiror Companies, the Company or the holders of any
of the Company's securities:
(a) Subject to the other provisions of this Article I, each
share of the Company's common stock, par value $0.001 per share
("Company Stock"), issued and outstanding immediately prior to the
Effective Time (excluding any Company Stock described in Section
1.06(c) of this Agreement), shall be converted into 0.138915 shares of
duly authorized, validly issued, fully paid and nonassessable common
shares, par value NLG 0.03 per share ("Acquiror Shares"), of Acquiror
(the "Exchange Ratio"), subject to the escrow of a portion of such
shares pursuant to the terms and conditions set forth herein. At the
Effective Time, Acquiror will cause to be delivered to, and directly
deposited with, Bankers Trust Company or another national bank
acceptable to the Company and Acquiror (the "Escrow Agent"), in escrow
for the account and future potential benefit of certain Shareholders, a
stock certificate representing 10% of the Acquiror Shares, which
certificate shall be registered as follows: "Bankers Trust Company,
f/b/o Certain Former Shareholders of the Common Stock of Coherence
Technology Company, Inc." All such Acquiror Shares so delivered to the
Escrow Agent, together with all subsequent stock dividends or
distributions of other Acquiror Shares received in respect of such
shares while deposited with the Escrow Agent shall be referred to as
"Escrow Shares." A pro rata number of the Escrow Shares (determined on
the basis of the respective ownership interests of each Shareholder of
Company Stock immediately prior to the Effective Time, subject to
adjustments by the Escrow Agent to eliminate fractional shares) shall
be subtracted from the number of Acquiror Shares each Shareholder of
Company Stock at the Effective Time is entitled to receive pursuant to
the Merger. The Escrow Shares shall be held by the Escrow Agent
pursuant to the terms and conditions of an Escrow Agreement
substantially in the form attached hereto as Exhibit A (the "Escrow
Agreement") between Acquiror, Acquisition Sub, the Company and Dirk
McDermott (the "Shareholders' Representative"). The Shareholders will
appoint Dirk McDermott as a Shareholders' Representative pursuant to,
and he shall have the rights and obligations set forth in, the
Appointment of Shareholders' Representative, substantially in the form
attached hereto as Exhibit B (the "Appointment"). The Escrow Agreement
and the Appointment shall authorize the Shareholders' Representative to
control the disposition of such Escrow Shares pursuant to the terms of
the Escrow Agreement. The Shareholders' Representative shall have no
personal liability as a result of any actions taken in such position
(i) to Acquiror or Acquisition Sub, or (ii) to any holder of Company
Stock at the Effective Time, in either case with respect to the
disposition of the Escrow Shares or any other action taken by him as
the Shareholders' Representative, unless such actions constitute gross
negligence or willful misconduct by the Shareholders' Representative.
The number of Acquiror Shares each Shareholder shall
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be entitled to receive at the Effective Time and the number of Escrow
Shares attributable to such Shareholder shall be as set forth on
Schedule 1.06(a) to this Agreement.
(b) As a result of their conversion pursuant to Section
1.06(a) of this Agreement, all shares of Company Stock shall cease to
be outstanding and shall automatically be canceled and retired, and
each certificate ("Certificate") previously evidencing Company Stock
outstanding immediately prior to the Effective Time (other than any
Company Stock described in Section 1.06(c) of this Agreement)
("Converted Shares") shall thereafter represent that number of Acquiror
Shares determined pursuant to the Exchange Ratio, rounded up or down to
the nearest whole share (the "Acquisition Consideration"). The holders
of Certificates previously evidencing Converted Shares shall cease to
have any rights with respect to such Converted Shares except the right
to receive the Acquisition Consideration and as otherwise provided
herein or by applicable federal, state, foreign or local law, statute,
ordinance, rule or regulation (collectively, "Laws"). Such Certificates
previously evidencing Converted Shares shall be exchanged for
certificates evidencing whole shares of Acquiror Shares upon the
surrender of such Certificates in accordance with the provisions of
Section 1.07 of this Agreement. No fractional shares of Acquiror Shares
shall be issued.
(c) Notwithstanding any provision of this Agreement to the
contrary, each share of Company Stock held in the treasury of the
Company and each share of Company Stock or other capital stock of the
Company owned by Acquiror or any direct or indirect wholly owned
subsidiary of Acquiror or of the Company immediately prior to the
Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(d) In the event that on or after the date of this Agreement,
Acquiror shall establish a record date prior to the Effective Date for
all its shareholders entitled to receive any securities, rights or
property of Acquiror (other than regular dividends), by reason of the
issuance of rights or options to purchase its securities, stock
dividends or distribution, or any stock split or reverse stock split,
or if there shall occur any capital reorganization of Acquiror or
reclassification of its capital stock or such other similar transaction
which will not be adequately reflected in the number of Acquiror Shares
which will constitute the Acquisition Consideration, such number of
Acquiror Shares shall be fairly and proportionately adjusted to prevent
dilution, and to fully and completely carry out the intent of the
parties as contemplated by this Agreement.
(e) Each share of common stock, no par value per share, of
Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par
value $0.001 per share, of the Surviving Corporation.
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(f) Each option to purchase Company Stock outstanding
immediately prior to the Effective Time (collectively, the "Company
Options") (which include all outstanding options granted under the
Company's 1997 Stock Option Plan (the "1997 Stock Option Plan") and any
outstanding options granted to Patrick G. Keenan, Daniel S. Morris,
Devon K. Dowell, and Vasudhaven Sudhakar pursuant to their individual
Employee Stock Option Agreement ("Founders Options")), shall, without
further action on the part of any holder thereof (herein, an
"optionholder") except to the extent herein provided, be assumed by
Acquiror and become an option to purchase that number of Acquiror
Shares determined by multiplying the number of shares of Company Stock
subject to such Company Option immediately prior to the Effective Time
by the Exchange Ratio, at an exercise price per Acquiror Share equal to
the exercise price per share of such Company Option divided by the
Exchange Ratio. If the foregoing calculation results in an assumed
Company Option being exercisable for a fraction of an Acquiror Share,
then the number of Acquiror Shares subject to such option shall be
rounded down to the nearest whole number of shares, and the total
exercise price for the option will be reduced by the exercise price of
the fractional share. The term, exercisability, vesting schedule, and
all other terms and conditions of the Company Options shall otherwise
be unchanged by the provisions of this Section 1.06(f) and such options
shall operate in accordance with their terms. The 1997 Stock Option
Plan, each outstanding Company Option granted thereunder, and the
Founders Options shall be assumed as of the Effective Time by Acquiror
with such amendments thereto as may be required to reflect such
assumption by the Acquiror in accordance herewith as a result of the
Merger.
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES .
(a) Exchange Procedures. Promptly after the Effective Time,
Acquiror shall deliver to each record holder of Company Stock at the Effective
Time a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to Acquiror and shall be in such form and contain
such other provisions as the Company and Acquiror shall agree) (the "Letter of
Transmittal"). Upon surrender of a Certificate for cancellation to the Acquiror,
together with such Letter of Transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole Acquiror Shares that such holder has the right
to receive pursuant to the provisions of this Article I, less the Escrow Shares
attributable to such holder that will be issued and deposited with the Escrow
Agent for the account of such holder, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Stock
that is not registered in the transfer records of the Company, a certificate
evidencing the proper number of Acquiror Shares may be issued to the transferee
if the Certificate evidencing the Company Stock shall be surrendered to the
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Acquiror, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered for exchange in accordance with the provisions of this
Section 1.07(a), each Certificate theretofore representing Converted Shares
(other than shares of Company Stock to be canceled pursuant to Section 1.06(c)
of this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the Acquisition Consideration as set forth in
this Agreement. If any holder of Converted Shares shall be unable to surrender
such holder's Certificates because such Certificates have been lost or
destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
bond in form and substance and with surety reasonably satisfactory to Acquiror.
No interest shall be paid on any Acquisition Consideration payable to former
holders of Converted Shares.
(b) Distributions with Respect to Acquiror Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Acquiror Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the Acquiror
Shares evidenced thereby, and no Acquisition Consideration shall be paid to any
such holder until the holder of such Certificate shall surrender such
Certificate. Subject to applicable Laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates evidencing
whole Acquiror Shares issued in exchange therefor, without interest, (i)
promptly following the surrender of such Certificate, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole Acquiror Shares and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender payable with respect to such whole Acquiror Shares.
1.08 NO FRACTIONAL SHARES. Notwithstanding anything herein to the
contrary, no certificates or scrip evidencing fractional Acquiror Shares shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to any rights as a
shareholder of Acquiror.
1.09 AGREEMENT TO VOTE SHARES. At any meeting of the Shareholders with
respect to any of the following, and at any adjournment thereof, and with
respect to any consent solicited with respect to any of the following, each
Shareholder who is a party to this Agreement hereby agrees to vote such
Shareholder's Company Stock (i) in favor of approval of the Merger and any
matter which could reasonably be expected to facilitate the Merger and (ii)
against approval of any proposal made in opposition to or in competition with
the Merger, against any merger, consolidation, sale of assets, reorganization or
recapitalization with any party, against any liquidation or winding up of the
Company and against any other matter which would, or could reasonably be
expected to, prohibit or discourage the Merger.
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1.10 WITHHOLDING. Acquiror (or any affiliate thereof) shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of Converted Shares such amounts
as Acquiror (or any affiliate thereof) is required to deduct and withhold with
respect to the making of such payment under the Code (as hereinafter defined),
or any other provision of federal, state, local or foreign tax law. To the
extent that amounts are so withheld by Acquiror, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of the Converted Shares in respect of which such deduction and
withholding was made by Acquiror.
1.11 CLOSING. The Closing shall take place at the offices of Vinson &
Elkins L.L.P., 1001 Fannin Street, 3600 First City Tower, Houston, Texas
77002-6760, at (a) 10:00 a.m., local time, effective as of July 1, 1999, or (b)
if the conditions set forth in Article IX of this Agreement have not been
satisfied or waived on or before July 1, 1999, at 10:00 a.m., local time, on the
second business day following the date on which the conditions set forth in
Article IX of this Agreement have been satisfied or waived or (c) at such other
place, time and date as the parties hereto may agree. At the conclusion of the
Closing, the parties hereto shall cause the Articles of Merger to be filed with
the Secretary of State of the State of Colorado.
1.12 ACTIONS AT CLOSING. At the Closing, (a) the Company and the
Shareholders shall deliver to the Acquiror Companies the various certificates,
instruments and documents referred to in Section 9.01 of this Agreement, (b) the
Acquiror Companies shall deliver to the Company and the Shareholders the various
certificates, instruments and documents referred to in Section 9.02 of this
Agreement, and (c) the parties shall file with the Secretary of State of the
State of Colorado the Articles of Merger.
1.13 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of shares of Company Stock thereafter on the records of the
Company.
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION. Acquiror and the
Company shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible on or
after July 1, 1999. If, at any time after the Effective Time, any such further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company or
Acquisition Sub, such corporations shall direct their respective officers and
directors to take all such lawful and necessary action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and each of the Shareholders of the Company, jointly and
severally, hereby represent and warrant to Acquiror, as of the date hereof and
at the Closing Date, that:
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company is a
corporation whose ownership is represented solely by the Company Stock, and the
Company is duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation or organization. Except as set forth in
Section 2.01 of the Company Disclosure Schedule (as hereinafter defined), each
of the Company's subsidiaries (as such term is defined in Section 10.06 herein)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, and each of the
Company and its subsidiaries has all requisite power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing could not
reasonably be expected to have a Company Material Adverse Effect. The term
"Company Material Adverse Effect" as used in this Agreement shall mean any
change or effect that would be materially adverse to the financial condition,
results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole, at the time of such change or effect. Section
2.01 of the Disclosure Schedule delivered by the Company to Acquiror
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule") sets forth, as of the date of this Agreement and will as of the
Closing Date be amended or supplemented as necessary, a true and complete list
of all the Company's directly or indirectly owned subsidiaries, together with
the jurisdiction of incorporation or organization of each subsidiary and the
percentage of each subsidiary's outstanding capital stock or other equity
interests owned by the Company or another subsidiary of the Company.
2.02 ORGANIZATIONAL DOCUMENTS. The Company has heretofore furnished to
Acquiror complete and correct copies of the Articles of Incorporation and the
Bylaws (or equivalent organizational documents), in each case as amended or
restated to the date hereof, of the Company and each of its subsidiaries.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws (or equivalent
organizational documents).
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2.03 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, par value $0.001 per share. As of the date of
this Agreement, 1,239,790 shares of Common Stock are issued and outstanding. As
of the date of this Agreement, there are no shares of Common Stock held by the
Company in its treasury, and 284,560 shares of Common Stock are reserved for
issuance under existing stock option plans or agreements, including the Company
Options, of which options for 251,660 shares of Common Stock have been granted
and are outstanding. Each of the issued shares of capital stock of, or other
equity interests in, each of the Company and its subsidiaries is duly
authorized, validly issued and, in the case of shares of capital stock, fully
paid and nonassessable, and has not been issued in violation of (nor are any of
the authorized shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries subject to) any preemptive or similar rights
created by statute, the Articles of Incorporation or Bylaws (or the equivalent
organizational documents) of the Company or any of its subsidiaries, or except
as set forth in Section 2.03(a) of the Company Disclosure Schedule, any
agreement to which the Company or any of its subsidiaries is a party or is
bound, and, except as set forth in Section 2.03(a) of the Company Disclosure
Schedule, all such issued shares or other equity interests owned by the Company
or a subsidiary of the Company are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations on the Company's or
such subsidiaries' voting rights, charges or other encumbrances of any nature
whatsoever.
(b) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into or exchangeable or
exercisable for securities having the right to vote) on any matters on which
shareholders may vote ("Company Voting Debt") are issued or outstanding.
(c) Except as set forth in Section 2.03(c) of the Company
Disclosure Schedule, there are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which the Company or any of its subsidiaries is a party relating to the
issued or unissued capital stock or other equity interests of the Company or any
of its subsidiaries or obligating the Company or any of its subsidiaries to
grant, issue or sell any shares of capital stock, Company Voting Debt or other
equity interests of the Company or any of its subsidiaries. Except as set forth
in Section 2.03(c) of the Company Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries (i) to
repurchase, redeem or otherwise acquire any shares of capital stock or other
securities of the Company or the capital stock or other equity interests of any
subsidiary of the Company or (ii) (other than advances to wholly owned
subsidiaries in the ordinary course of business) to provide funds to, or to make
any investment in (in the form of a loan, capital
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15
contribution or otherwise), or to provide any guarantee with respect to the
obligations of, any subsidiary of the Company or any other person, including any
of the Shareholders. Except (i) as set forth in Section 2.03(c) of the Company
Disclosure Schedule or (ii) for subsidiaries of the Company set forth in Section
2.01 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries (x) directly or indirectly owns, (y) has agreed to purchase or
otherwise acquire or (z) holds any interest convertible into or exchangeable or
exercisable for, any capital stock or other equity interest of any corporation,
partnership, joint venture or other business association or entity. Except as
set forth in Section 2.03(c) of the Company Disclosure Schedule or for any
agreements, arrangements or commitments between the Company and its wholly owned
subsidiaries or between such wholly owned subsidiaries, there are no agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any person is or may be entitled to receive any payment based on, or
calculated in accordance with, the revenues or earnings of the Company or any of
its subsidiaries. Except as set forth in Section 2.03(c) of the Company
Disclosure Schedule, there are no voting trusts, proxies or other agreements or
understandings to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound with respect to the voting
of any shares of capital stock or other equity interests of the Company or any
of its subsidiaries.
2.04 AUTHORITY. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by each of the Acquiror Companies, constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.
2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated by the
exceptions to Section 2.05(b) are obtained or made and except as disclosed in
Section 2.05(a) of the Company Disclosure Schedule, the execution and delivery
of this Agreement by the Company does not, and the performance by the Company of
its obligations hereunder, including consummation of the transactions
contemplated hereby, will not (i) conflict with or violate the Articles of
Incorporation or Bylaws, or the equivalent organizational documents, in each
case as amended or restated, of the Company or any of its subsidiaries, (ii)
conflict with or violate any federal, state, foreign or local law, statute,
ordinance, rule or regulation (collectively, "Laws") in effect as of
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16
the date of this Agreement, or any judgment, order or decree applicable to the
Company or any of its subsidiaries or by or to which any of their respective
properties is bound or subject or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or require payment under, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by or to which the Company or any of its subsidiaries or any of their
respective properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance by the Company of its obligations
hereunder, including consummation of the transactions contemplated hereby, will
not, require the Company to obtain any consent, license, permit, waiver,
approval, authorization or order of, or to make any filing with or notification
to, any governmental or regulatory authority, federal, state, local or foreign
(collectively, "Governmental Entity"), except (i) the filing of Articles of
Merger with the Secretary of State of the State of Colorado, (ii) where the
failure to obtain such consents, licenses, permits, waivers, approvals,
authorizations or orders, or to make such filings or notifications could not
reasonably be expected to cause a Company Material Adverse Effect or to prevent
the Company from performing its obligations under this Agreement and (iii) as
disclosed in Section 2.05(b) of the Company Disclosure Schedule.
2.06 PERMITS; COMPLIANCE. Except as disclosed in Section 2.06 of the
Company Disclosure Schedule, each of the Company and its subsidiaries is in
possession of all (i) franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, identification and
registration numbers, approvals and orders necessary to own, lease and operate
its properties and to carry on its business as it is now being conducted
(collectively, the "Company Permits"). Section 2.06 of the Company Disclosure
Schedule sets forth a list of each of the Company Permits and the jurisdiction
issuing the same, all of which are in good standing and not subject to
meritorious challenge. Section 2.06 of the Company Disclosure Schedule also sets
forth, as of the date of this Agreement, all actions, proceedings,
investigations or surveys pending or, to the knowledge of the Company or the
Shareholders, threatened against the Company or any of its subsidiaries that
could reasonably be expected to result in the loss, suspension or revocation of
a Company Permit. Except as set forth in Section 2.06 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
in default under or in violation of , and none of them has received, since
December 31, 1998, from any Governmental Entity any written notice with respect
to any conflict with, default under or violation of, (i) any Law applicable to
the Company or any of its subsidiaries or by or to which any of their respective
properties is bound or subject, (ii) any judgment, order or decree
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applicable to the Company or any of its subsidiaries or by or to which any of
their respective properties is bound or subject, or (iii) any of the Company
Permits.
2.07 FINANCIAL STATEMENTS. The Company has provided Acquiror with
true, correct and complete copies of its audited consolidated balance sheet,
income statement and statement of cash flows for the fiscal years ended December
31, 1996, 1997, and 1998 and an unaudited consolidated balance sheet, income
statement and statement of cash flows for the three (3) months ended March 31,
1999 (collectively, the "Company Financial Statements"). Each of the Company
Financial Statements (including, in each case, any related notes thereto) (a)
has been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved in compliance with SEC reporting requirements
(except (i) to the extent disclosed therein or required by changes in GAAP, and
(ii) as may be indicated in the notes thereto), and (b) fairly present the
consolidated financial position of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows for the periods indicated (subject, in the case of unaudited consolidated
financial statements for interim periods, to adjustments, consisting only of
normal, recurring accruals, necessary to present fairly such results of
operations and cash flows, and except for the absence of notes to the financial
statements).
2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by
this Agreement or as set forth in Section 2.08 of the Company Disclosure
Schedule, since December 31, 1998, the Company and its subsidiaries have
conducted their respective businesses only in the ordinary course and in a
manner consistent with past practice and there has not been: (i) any damage,
destruction or loss with respect to any assets of the Company or any of its
subsidiaries that, whether or not covered by insurance, would constitute a
Company Material Adverse Effect; (ii) any change by the Company or its
subsidiaries in their significant accounting policies; (iii) except for
dividends by a wholly owned subsidiary of the Company to the Company or to
another wholly owned subsidiary of the Company, any declaration, setting aside
or payment of any dividends or distributions in respect of shares of Company
Stock or the shares of stock of, or other equity interests in, any subsidiary of
the Company or any redemption, purchase or other acquisition of any of the
Company's securities or any of the securities of any subsidiary of the Company;
(iv) any material increase in the benefits under, or the establishment or
amendment of, any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, performance awards (including, without limitation,
the granting of stock appreciation rights or restricted stock awards), stock
purchase or other employee benefit plan, or any increase in the compensation
payable or to become payable to any of the directors or officers of the Company
or the employees of the Company and its subsidiaries as a group; or (v) any
other Company Material Adverse Effect.
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2.09 LITIGATION. Except as disclosed in Section 2.09 of the Company
Disclosure Schedule, there is no claim, action, suit, litigation, proceeding,
arbitration or investigation of any kind, at law or in equity (including actions
or proceedings seeking injunctive relief), pending or, to the knowledge of the
Company or any of the Shareholders, threatened against the Company or any of its
subsidiaries or any properties or rights of the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries is subject to
any executory judgment, order, writ, injunction, decree or award of any
Governmental Entity, including without limitation any cease and desist order and
any consent decree, settlement agreement or other similar agreement with any
Governmental Entity.
2.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Each Benefit Plan (as hereinafter defined) is listed in
Section 2.10(a) of the Company's Disclosure Schedule. The Company has delivered
or made available to Acquiror a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service (the "IRS")
for each Benefit Plan for which a Form 5500 is required to be filed, (ii) such
Benefit Plan and all amendments thereto, (iii) each trust agreement, if any,
relating to such Benefit Plan, (iv) the most recent summary plan description for
each Benefit Plan for which a summary plan description is required, and (v) the
most recent determination letter, if any, issued by the IRS with respect to any
Benefit Plan qualified under section 401 of the Code. "Benefit Plans" shall mean
any employee pension benefit plan (whether or not insured), as defined in
Section 3(2) of Employee Retirement and Income Security Act of 1974, as amended
("ERISA"), any employee welfare benefit plan (whether or not insured) as defined
in Section 3(1) of ERISA, any plans that would be employee pension benefit plans
or employee welfare benefit plans if they were subject to ERISA, such as foreign
plans and plans for directors, any stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock, or other stock plan or
agreement (whether qualified or nonqualified), and any bonus, supplemental
income, deferred compensation or incentive compensation plan or agreement
sponsored, maintained, or contributed to by the Company or any of its
subsidiaries for the benefit of any of the present or former directors,
officers, employees, agents, consultants, or other similar representatives
providing services to or for the Company or any of its subsidiaries in
connection with such services or any such plans which have been so sponsored,
maintained, or contributed to within six years prior to the date of this
Agreement; provided, however, that such term shall not include (x) routine
employment policies and procedures developed and applied in the ordinary course
of business and consistent with past practice, including wage, vacation,
holiday, and sick or other leave policies, (y) workers compensation insurance,
and (z) directors and officers liability insurance.
(b) With respect to each Benefit Plan, no event has occurred
and there exists no condition or set of circumstances in connection with which
the Company or any of its
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subsidiaries could be subject to any liability under the terms of such Benefit
Plan, ERISA, the Code, or any other applicable Law.
(c) Each Benefit Plan intended to be qualified under section
401 of the Code (i) satisfies in form the requirements of such section except to
the extent amendments are not required by Law to be made until a date after the
Closing Date, (ii) has received a favorable determination letter from the IRS
regarding such qualified status, (iii) has not, since receipt of the most recent
favorable determination letter, been amended, except for amendments for which
the period for requesting a favorable determination letter has not expired, and
(iv) has not been operated in a way that would adversely affect its qualified
status.
(d) There has been no termination or partial termination of
any Benefit Plan within the meaning of section 411(d)(3) of the Code.
(e) There are no actions, suits, or claims pending (other than
routine claims for benefits) or, to the knowledge of the Company, threatened
against, or with respect to, any Benefit Plan or its assets.
(f) There is no matter pending (other than routine
qualification determination filings) with respect to any Benefit Plan before the
IRS, the United States Department of Labor or other governmental authority.
(g) All contributions required to be made to Benefit Plans
pursuant to their terms and the provisions of ERISA, the Code, or any other
applicable Law have been timely made, are current to the date of this Agreement
and will be current as of the Closing.
(h) There are no collective bargaining or other labor union
contracts to which the Company or its subsidiaries is a party applicable to
persons employed by the Company or its subsidiaries and no collective bargaining
agreement is being negotiated by the Company or any of its subsidiaries. There
is no pending or, to the knowledge of the Company or the Shareholders,
threatened labor dispute, strike or work stoppage against the Company or any of
its subsidiaries. None of the Company, any of its subsidiaries or any of their
respective representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of the Company or
its subsidiaries that could reasonably be expected to have a Company Material
Adverse Effect, and there is no pending or, to the knowledge of the Company or
any of the Shareholders, threatened charge or complaint against the Company or
any of its subsidiaries by the National Labor Relations Board or any comparable
state agency or any other governmental agency.
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(i) Section 2.10(i) of the Company Disclosure Schedule
contains true and correct (i) copies of all employment agreements to which the
Company or any of its subsidiaries is a party; (ii) listings of all officers of
the Company who have executed a non-competition agreement with the Company or
any of its subsidiaries; (iii) copies of all severance agreements, programs and
policies of the Company or any of its subsidiaries with or relating to its, or
any of its subsidiaries, employees; and (iv) summary descriptions of all plans,
programs, agreements and other arrangements of the Company or any of its
subsidiaries with or relating to its, or any of its subsidiaries, employees.
Except as set forth in Section 2.10(i) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries will owe a severance payment or
similar obligation to any of their respective employees, officers or directors
as a result of the Merger or the other transactions contemplated by this
Agreement, and none of such persons will be entitled to severance payments or
other benefits as a result of the Merger or the other transactions contemplated
by this Agreement in the event of the subsequent termination of their
employment.
(j) No Benefit Plan provides retiree medical or retiree life
insurance benefits, and neither the Company nor any of its subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide life
insurance or medical benefits upon retirement or termination of employment of
employees, other than as required by the provisions of Sections 601 through 608
of ERISA and section 4980B of the Code.
(k) Neither the Company nor any corporation, trade, business
or entity under common control with the Company, within the meaning of section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA ("Commonly
Controlled Entity"), contributes to or has an obligation to contribute to, and
has not within six years prior to the date of this Agreement contributed to or
had an obligation to contribute to, (i) a plan subject to Section 412 of the
Code or Section 302 of ERISA, (ii) a multi-employer plan within the meaning of
Section 3(37) of ERISA or (iii) a plan subject to Title IV of ERISA.
(l) Except as disclosed in Section 2.10(l) of the Company
Disclosure Schedule, neither the Company nor any Commonly Controlled Entity has
maintained a Benefit Plan which provides for the purchase of common stock of the
Company.
(m) The Company has not taken any of the following or other
similar actions since March 31, 1997; the acceleration of vesting, waiving of
performance criteria or the adjustment of awards or any other actions permitted
upon a change in control of the Company with respect to any of the Benefit Plans
or any of the plans, programs, agreements, policies or other arrangements
described in Section 2.10(i) of this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) require the Company to make a larger contribution to, or pay greater
benefits or provide other
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rights under, any Benefit Plan or any plan, program, agreement, policy or other
arrangement described in Section 2.10(i) of this Agreement than it otherwise
would, whether or not some other subsequent action or event would be required to
cause such payment or provision to be triggered, or (ii) create or give rise to
any additional vested rights or service credits under any Benefit Plan or any
plan, program, agreement, policy or other arrangement described in Section
2.10(i) of this Agreement.
(n) In connection with the consummation of the transactions
contemplated by this Agreement, no payments of money or other property,
acceleration of benefits, or provision of other rights have been or will be made
hereunder, under any agreement contemplated herein, or under any Benefit Plans
or any of the programs, agreements, policies, or other arrangements described in
Section 2.10(i) of the Company Disclosure Schedule that would be reasonably
likely to be nondeductible under section 280G of the Code, whether or not some
other subsequent action or event would be required to cause such payment,
acceleration, or provision to be triggered.
2.11 TAXES. Except as set forth in Section 2.11 of the Company
Disclosure Schedule,
(a) (i) All returns and reports of or with respect to any Tax
which is required to be filed with respect to the Company or any its
subsidiaries on or prior to the date hereof ("Tax Return") have been duly and
timely filed, (ii) all items of income, gain, loss, deduction and credit or
other items required to be included in each such Tax Return have been so
included and all information provided in each such Tax Return is true, correct
and complete in all respects (including, without limitation, documentation
relating to any reportable item of income, deduction, gain, loss or credit
maintained by the Company), (iii) all Taxes required to be paid with respect to
the period covered by each such Tax Return have been timely paid in full, (iv)
all withholding Tax requirements imposed on or with respect to the Company or
any of its subsidiaries have been satisfied in all respects, and (v) no penalty,
interest or other charge is or will become due with respect to the late filing
of any such Tax Return or late payment of any such Tax.
(b) There is no claim against the Company or any of its
subsidiaries for any amount of Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax Return of or
with respect to the Company or any of its subsidiaries other than those
disclosed (and to which are attached true and complete copies of all audit or
similar reports) in Section 2.11 of the Company Disclosure Schedule.
(c) The total amounts set up as liabilities for current and
deferred Taxes in the Company Financial Statements are sufficient to cover the
payment of all Taxes, whether or not
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assessed or disputed, which are, or are hereafter found to be, or to have been,
due by or with respect to the Company and any of its subsidiaries up to and
through the periods covered thereby.
(d) Except for statutory liens for current Taxes not yet due,
no liens for Taxes exist upon any of the assets of the Company or any of its
subsidiaries.
(e) None of the transactions contemplated by this Agreement
will result in any Tax liability or the recognition of any item of income or
gain to the Company or any of its subsidiaries.
(f) Neither the Company nor any of its subsidiaries has made
an election under section 341(f) of the Code.
2.12 POOLING; TAX MATTERS . None of the Company, its affiliates or the
Shareholders has taken or agreed to take any action that would prevent (a) the
Merger from being treated for financial accounting purposes as a "pooling of
interests" in accordance with GAAP and the rules, regulations and
interpretations (the "Regulations") of the Securities and Exchange Commission
(the "Commission") or (b) the Merger from constituting a reorganization within
the meaning of section 368(a) of the Code. Without limiting the generality of
the foregoing:
(a) Prior to and in connection with the Merger, (i) none of
the Company Common Stock has been or will be redeemed, (ii) no
extraordinary distribution has been or will be made with respect to
Company Common Stock, and (iii) none of the Company Common Stock has
been or will be acquired by any person related (as defined in Treas.
Reg. Section 1.368-1(e)(3) without regard to Section
1.368-1(e)(3)(i)(A)) to the Company.
(b) The Company and the Shareholders of the Company will each
pay their respective expenses, if any, incurred in connection with the
Merger.
(c) There is no intercompany indebtedness existing between the
Company and the Acquiror or between the Company and Acquisition Sub
that was issued, acquired, or will be settled at a discount.
(d) The Company is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) The Company is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of section 368(a)(3)(A) of
the Code.
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2.13 AFFILIATES. Section 2.13 of the Company Disclosure Schedule
identifies all persons who, to the knowledge of the Company, may be deemed to be
affiliates of the Company within the meaning of that term as used in Rule 145
promulgated pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), including, without limitation, all directors and executive officers of
the Company.
2.14 CERTAIN BUSINESS PRACTICES. None of the Company, any of its
subsidiaries or any directors, officers, agents or employees of the Company or
any of its subsidiaries (in their capacities as such) has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful purposes, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement or
arrangement or taken any other action in violation of Section 1128B(b) of the
Social Security Act, as amended, or (iv) made any other unlawful payment.
2.15 ENVIRONMENTAL. Except as set forth in Section 2.15 of the Company
Disclosure Schedule, the Company and each of its subsidiaries is in compliance
with all laws, rules, regulations, orders, judgments, decrees and other legal
requirements, foreign and domestic, relating to the prevention of pollution and
the protection of the environment, including, without limitation, all such legal
requirements pertaining to human health and safety (collectively, "Environmental
Laws"). Except as set forth in Section 2.15 of the Company Disclosure Schedule,
there is no physical condition existing on any property ever owned or operated
(as defined under 42 U.S.C. Section 9601(20) by the Company or any of its
subsidiaries nor are there any physical conditions existing on any other
property that may have been impacted by the operations of the Company or any of
its subsidiaries that could give rise to any remedial obligation under any
Environmental Laws or that could result in any liability to any third party
claiming damage to person or property as a result or consequence of such
physical conditions. Except as set forth in Section 2.15 of the Company
Disclosure Schedule, none of the Company or any of its subsidiaries (i) has
caused or permitted its businesses, properties or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce, or process any Hazardous Substance (as defined below) except in
compliance with all Environmental Laws, and (ii) has caused or permitted the
Release (as defined below) of any Hazardous Substance on or off the site of any
property of the Company or any of its subsidiaries that could give rise to any
liability. Except as set forth in Section 2.15 of the Company Disclosure
Schedule, there are no underground storage tanks on, under, or about any
property of the Company or any of its subsidiaries, and to the knowledge of the
Company and the Shareholders, no underground storage tanks were previously
located on such properties. The Company has not received any written or oral
notice or other communications from any Governmental Entity or other third party
relating to (i) Hazardous Substances or remediation
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24
thereof, (ii) alleged liability of or enforcement against any person or entity
pursuant to any Environmental Law, or (iii) any actual or planned administrative
or judicial proceedings in connection with any of the foregoing. The term
"Hazardous Substance" shall mean, without limitation, any hazardous waste, as
defined by 42 U.S.C. 6903(5), any hazardous substance, as defined by 42 U.S.C.
9601(14), any pollutant or contaminant, as defined by 42 U.S.C. 9601(33),
asbestos or asbestos-containing materials, polychlorinated biphenyls, radon,
crude oil or derivatives thereof, petroleum products, and all other toxic
substances, hazardous materials or chemical substances regulated by any
Environmental Law. The term "Release" shall have the meaning set forth in 42
U.S.C. 9601(22).
2.16 UNDISCLOSED LIABILITIES.
(a) Section 2.16(a) of the Company Disclosure Schedule lists
any and all liabilities or obligations and the amounts thereof of the Company or
any of its subsidiaries, of any nature whatsoever. Except as set forth in
Section 2.16(a) of the Company Disclosure Schedule, none of the Company or any
of its subsidiaries has any liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Neither the Company nor any of the Shareholders knows of any basis for the
assertion against the Company or any of its subsidiaries of any liability or
obligation not excepted by Section 2.16(a) of the Company Disclosure Schedule.
(b) Except as set forth on Section 2.16(b) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries owes, is
indebted to or has any liability or obligation of any nature, whether absolute,
accrued, contingent or otherwise, and whether due or to become due, to any of
the Shareholders, except for the rights of a shareholder set forth in the
Company's Articles of Incorporation or by law. Neither the Company nor any of
the Shareholders knows of any basis for the assertion against the Company or any
of its subsidiaries of any liability or obligation to any Shareholder.
2.17 CERTAIN AGREEMENTS. Except as set forth in Section 2.17 of the
Company Disclosure Schedule, none of the Company or any of its subsidiaries is a
party to, or bound by, any contract, agreement or organizational document which
purports to restrict, by virtue of a noncompetition, territorial exclusivity or
other provision covering such subject matter, the scope of the business or
operations of any of the Company or any of its subsidiaries geographically or
otherwise.
2.18 CONTRACTS AND COMMITMENTS. Section 2.18 of the Company Disclosure
Schedule sets forth (i) a list of each contract or commitment to which the
Company or any of its subsidiaries is a party or by which its or their property
is bound that involves consideration or other expenditure in excess of $10,000
or performance over a period of more than twelve (12)
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months or that is otherwise material to the business or operations of the
Company and its subsidiaries, taken as a whole ("Material Contracts"); (ii) a
list of all real or personal property leases to which any of the Company or any
of its subsidiaries is a party ("Leases"); (iii) a list of guarantees or
agreements to indemnify or be contingently liable for the payment or performance
by any person or business entity to which any of the Company or any of its
subsidiaries is a party other than Guarantees and agreements for indemnity
entered into in the ordinary course of business ("Guarantees"); and (iv) a list
of contracts or other formal or informal understandings between the Company or
any of its subsidiaries and any of its officers, directors, employees,
consultants, agents or shareholders (or any of such shareholders' family members
or affiliates) ("Affiliate Agreements"). True and complete copies of each
Material Contract, Leases, Guarantee and Affiliate Agreement has been furnished
to Acquiror prior to the date hereof. Except as specifically disclosed in
Section 2.18 of the Company Disclosure Schedule, each of the Material Contracts,
Leases, Guarantees and Affiliate Agreements constitutes the valid and legally
binding obligation of the parties thereto and is in full force and effect
without default on the part of the Company or any other party thereto.
2.19 AFFILIATE INTERESTS. None of the Shareholders nor any employee,
consultant, officer or director, or former shareholder, employee, consultant,
officer or director, of the Company or any of its subsidiaries has any interest,
direct or indirect, in any property, tangible, or intangible, including, without
limitation, patents, trade secrets, other confidential business information,
trademarks, service marks or trade names used in or pertaining to the business
of the Company or any of its subsidiaries, except for the normal rights of a
shareholder and as set forth in Section 2.19 of the Company Disclosure Schedule.
2.20 INTELLECTUAL PROPERTY. (a) Set forth on Schedule 2.20 is a
correct and complete description of all Intellectual Property Rights owned by or
registered in the name of the Company or any of its subsidiaries or to which the
Company or its subsidiaries has any rights. The Company or its subsidiaries owns
all rights, title and interest in and to such Intellectual Property Rights, free
and clear of any liens, encumbrances or any claims of any other party,
including, without limitation, any licensing, honoraria, use, royalty or similar
fees. Furthermore, the Company or its subsidiaries owns all Intellectual
Property Rights necessary or desirable for the conduct of its business and the
Intellectual Property Rights owned by the Company or its subsidiaries cover the
products and services offered by it in the conduct of its business. None of the
Intellectual Property Rights of the Company are invalid or unenforceable as
against third parties. No product or service offered or used by and no
Intellectual Property Right owned or used by the Company or its subsidiaries
infringes or has infringed any rights of any other person arising under the
intellectual property rights of any country. No person or entity has asserted
any such claim of infringement and neither the Company nor any of its
subsidiaries has received any written or oral notice of any claim of such
infringement or has a basis to believe that any such infringement exists or has
existed in the past. Neither the
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Company nor any of its subsidiaries is subject to any limitation on its use of
any such product, service or Intellectual Property Rights by way of any order,
decree of court, judgment or otherwise.
(b) The execution, delivery and performance of this Agreement
by the Company, and the consummation of the transactions contemplated hereby,
will not breach, violate, or conflict with any instrument or agreement governing
any Intellectual Property Rights that relate directly or indirectly to the
Company's or any of its subsidiaries' business, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any
Intellectual Property Rights used in or necessary for conduct of the business,
or in any way impair the right of Acquiror Companies to use, sell, license or
dispose of, or to bring any action for the infringement of, any Intellectual
Property Rights that relate directly or indirectly to the business or any
portion thereof. At Closing, Acquiror Companies will acquire or succeed to all
rights of the Company or any of its subsidiaries in any Intellectual Property
Rights currently used by or anticipated to be used by it in the conduct of its
business and Acquiror Companies will be able to exercise the Intellectual
Property Rights attendant to such products and services currently or anticipated
to be offered by the Company or any of its subsidiaries in the conduct of its
business to the same extent as prior to Closing. Furthermore, the Company and
its subsidiaries, if any, have no knowledge of any infringement by any other
person or any Intellectual Property Rights currently used by or anticipated to
be used by it in the conduct of its business. The Intellectual Property Rights
listed on Schedule 2.20 or used in or necessary to the conduct of the business
are not the subject of any pending litigation, arbitration, interference or
other proceeding. The Company and its subsidiaries, if any, have taken all
precautions that are necessary or appropriate to obtain, maintain, safeguard,
and protect its Intellectual Property Rights, including, where applicable,
maintaining the confidentiality of their trade secrets and confidential
information, registering and maintaining their trademarks and service marks,
filing and maintaining United States and foreign letters patent, and registering
copyrights and providing required copyright and other notices of Intellectual
Property Rights, and none of the registrations or patents were obtained through
inequitable conduct or fraud on the issuing agency. Except as set forth on
Schedule 2.20, all working requirements and all fees, annuities, royalties, and
other payment which are due on or before the Closing in connection with any
Intellectual Property Rights listed in Schedule 2.20 or used in or necessary to
the conduct of the business have been met or paid.
2.21 BP AMOCO AGREEMENT.
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(a) The Company has received the written consent from BP Amoco
("BP Amoco") to the assignment (or change of control of the Company) of a
license agreement entitled "License Agreement Between Amoco Corporation and
Coherence Technology Company for Seismic Coherency Software" (the "BP Amoco
License") to the Acquiror Companies under certain terms and conditions. The
terms of such consent or assignment must be mutually agreeable to BP Amoco and
to Acquiror Companies, in their sole discretion.
(b) Any costs, damages, liabilities, obligations or amounts
due (including attorney fees) in excess of $455,892.39 as of April 30, 1999
necessary to cure any defaults under the BP Amoco License and to obtain the
assignment or consent as set forth in (a) above shall be a claim against the
Escrow Shares, and such claim shall not be subject to the $75,000 threshold set
forth in Section 8.06.
2.22 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of the Shareholders.
2.23 INSURANCE. Section 2.23 of the Company Disclosure Schedule sets
forth a list of all policies of insurance currently in effect relating to the
business or operations of the Company and its subsidiaries (true and complete
copies of which have been furnished to Acquiror). Such insurance policies are in
full force and effect. The Company and each of its subsidiaries are presently
insured, and since its inception have been insured, against such risks as
companies engaged in the same or substantially similar business would, in
accordance with good business practice, customarily be insured. Except as set
forth in Section 2.23 of the Company Disclosure Schedule, the policies of
general liability, malpractice or professional liability, fire, theft and other
insurance maintained with respect to the operations, assets or businesses of the
Company and its subsidiaries provide adequate coverage against loss. The Company
or its subsidiaries have given in a timely manner to their insurers all notices
required to be given under such insurance policies with respect to all claims
and actions covered by insurance, and no insurer has denied coverage of any such
claims or actions or reserved it rights in respect of or rejected any of such
claims. None of the Company or any of its subsidiaries has received any notice
or other communication from any such insurer canceling or materially amending
any of such insurance policies, and no such cancellation is pending or
threatened. The execution of this Agreement and the consummation of the
transactions contemplated hereby will not cause such insurance policies to
lapse, terminate or be canceled and will not result in any party thereto having
the right to terminate or cancel such insurance policies.
2.24 PROPERTIES. Except as set forth in Section 2.24 of the Company
Disclosure Schedule, the Company and its subsidiaries have good and marketable
title, free and clear of all
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liens to all their properties and assets whether tangible or intangible, real,
personal or mixed, reflected in the Company Financial Statements as being owned
by the Company and its subsidiaries, as of the date thereof, other than (i) any
properties or assets that have been sold or otherwise disposed of in the
ordinary course of business since the date of such Company Financial Statements,
(ii) liens disclosed in the notes to such financial statements and (iii)
statutory liens for current Taxes not yet due. All buildings, and all fixtures,
equipment and other property and assets held under leases or subleases by the
Company or any of its subsidiaries, are held under valid instruments enforceable
in accordance with their respective terms, subject to applicable Laws of
bankruptcy, insolvency or similar Laws relating to creditors' rights generally
and to general principles of equity (whether applied in a proceeding in law or
equity). All of the Company's and its subsidiaries' equipment in regular use has
been reasonably maintained and is in serviceable condition, reasonable wear and
tear excepted.
2.25 GOOD TITLE. Each of the Shareholders is the sole record and
beneficial owner of, and has good and valid title to, the number of shares of
Company Stock set forth opposite such Shareholder's name on Schedule 1.06(a) to
this Agreement, free and clear of all liens, claims, encumbrances, options,
voting trusts or agreements, proxies or other claims or charges of any nature
whatsoever (other than resulting from this Agreement).
2.26 CERTAIN SECURITIES LAW MATTERS.
(a) Each of the Shareholders receiving Acquiror Shares, either
alone or with his purchaser representative as defined in Rule 501(h) under the
Securities Act, if any, has substantial experience in evaluating and investing
in private placement transactions so that such Shareholder is capable of
evaluating the merits and risks of its investment in the Acquiror Shares. Each
of the Shareholders receiving Acquiror Shares, by reason of such Shareholder's
business or financial experience, either alone or with his purchaser
representative as defined in Section 501(h) under the Securities Act, if any,
has the capacity to protect such Shareholder's own interests in connection with
the acquisition of the Acquiror Shares hereunder. Each of the Shareholders
receiving Acquiror Shares who has designated himself, herself or itself, as the
case may be, as an "accredited investor" on the signature page hereto is an
"accredited investor" as defined in Rule 501 of Regulation D promulgated
pursuant to the Securities Act. Acquiror has provided each of the Shareholders
or his purchaser representative, if any, with copies of the Acquiror SEC Reports
(as such term is defined in Section 3.05, as well as certain financial and other
information on the Acquiror). Each of the Shareholders receiving Acquiror Shares
or his purchaser representative, if any, is familiar with the business and
financial condition, properties, operations and prospects of Acquiror and has
had an opportunity to discuss Acquiror's business and financial condition,
properties, operations and prospects with Acquiror's management. Each of the
Shareholders receiving Acquiror Shares or his purchaser representative, if any,
has also had an opportunity to ask questions of officers of Acquiror, which
questions were answered to
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such Shareholder's satisfaction. Each of the Shareholders receiving Acquiror
Shares understands that such discussion was intended to describe certain aspects
of Acquiror's business and financial condition, properties, operations and
prospects, but were not a thorough or exhaustive description.
(b) Each of the Shareholders receiving Acquiror Shares
understands that the Acquiror Shares may be "restricted securities" under the
applicable federal securities laws and that the Securities Act and the rules of
the Commission provide in substance that such Shareholder may dispose of the
Acquiror Shares only pursuant to an effective registration statement under the
Securities Act or an exemption therefrom, and each Shareholder receiving
Acquiror Shares further understands that, and in this section below, Acquiror
has no obligation or intention to register the Acquiror Shares, or to take
action so as to permit sales pursuant to the Securities Act (including Rule 144)
thereunder which permits limited resales of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the issue, the resale occurring not
less than one (1) year after a party has purchased and paid for the security to
be sold, the sale being effected through a "broker's transaction" or in
transactions with a "market maker" and the number of shares being sold not
exceeding specified limitations. Accordingly, such Shareholder understands that
under the Commission's rules, such Shareholder may dispose of the Acquiror
Shares in transactions which are exempt from registration under the Securities
Act. As a consequence of all of the foregoing, each Shareholder who is receiving
Acquiror Shares understands that such Shareholder must bear the economic risk of
the investment in the Acquiror Shares for an indefinite period of time.
Notwithstanding the foregoing, Acquiror agrees that the legends set forth on the
certificates representing the Acquiror Shares shall be removed by delivery of
substitute certificates without such legend, if such legend is not required for
purposes of the Securities Act or this Agreement. It is agreed that such
restrictive legends and related stop orders will be removed if (i) Acquiror has
received either a written opinion of counsel, which such counsel and opinion
shall be reasonably satisfactory to Acquiror, or a "no action" letter obtained
from the Commission, to the effect that the Acquiror Shares subject thereto may
be transferred free of the restrictions imposed by Rules 144 or 145, or (ii) in
the event of a sale of the Acquiror Shares which has been registered under the
Securities Act or made in conformity with the provisions of Rules 144 or 145.
(c) Each of the Shareholders who is receiving Acquiror Shares
acknowledges and agrees that such Shareholder is not relying upon Acquiror or
the Company or their respective officers, directors, employees or agents as to
the merits of their investment decisions or any investigation of the Acquiror,
including, without limitation, as to the United States federal income tax or any
other tax consequences to such Shareholder of the transactions contemplated by
this Agreement. As to all such tax consequences, such Shareholder hereby agrees
and
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represents that such Shareholder has consulted with such Shareholder's own legal
and tax advisors to the extent that such Shareholder has deemed such
consultation necessary or appropriate, that such Shareholder is making such
Shareholder's own determination as to what the tax consequences of the
transactions contemplated hereby will be to such Shareholder and that neither
Acquiror nor the Company is making any representation, express or implied, as to
any such tax consequences.
2.27 AUTHORIZATION AND VALIDITY OF AGREEMENT . Each of the Shareholders
has the full power, legal right, capacity and authority to enter into, execute
and deliver this Agreement and to carry out and perform the transactions
contemplated hereby. This Agreement constitutes a valid and binding obligation
of such Shareholder, enforceable against such Shareholder in accordance with its
terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company and the
Shareholders that:
3.01 ORGANIZATION AND QUALIFICATION. Acquiror is a limited liability
company duly organized, validly existing and in good standing under the laws of
the Netherlands, and Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Colorado. Each of
the Acquiror Companies has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of the business conducted by it or the ownership or leasing
of its properties makes such qualification necessary, other than where the
failure to be so duly qualified and in good standing could not reasonably be
expected to have an Acquiror Material Adverse Effect. The term "Acquiror
Material Adverse Effect" as used in this Agreement shall mean any change or
effect that would be materially adverse to the financial condition, results of
operations, business or prospects of Acquiror and its subsidiaries, taken as a
whole, at the time of such change or effect.
3.02 CAPITALIZATION.
(a) The authorized capital stock of Acquiror consists of (i)
100,000,000 Acquiror Shares, of which, as of June 1, 1999 (A) 29,414,784 are
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights created by statute, Acquiror's Articles of
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Association or Bylaws (or the equivalent organizational documents) as amended or
restated (collectively, the "Acquiror Organizational Documents") or any
agreement to which Acquiror is a party or is bound; (B) no shares are held in
the treasury of Acquiror and (C) 1,785,000 shares are reserved for future
issuance pursuant to stock option plans of Acquiror and (ii) 3,000,000
Preference Shares, par value NLG 0.03, none of which were issued or outstanding.
The authorized capital stock of Acquisition Sub consists of 1,000 shares of
common stock, no par value per share, of which, as of the date hereof, 100
shares are issued and outstanding. All of the issued and outstanding capital
stock of Acquisition Sub is owned by Acquiror.
(b) The Acquiror Shares to be issued pursuant to the Merger
will be when issued duly authorized, validly issued, fully paid and
nonassessable. None of the Acquiror Shares to be issued will, when issued, (i)
have been issued in violation of (and shall not be subject to) any preemptive or
similar rights created by statute, the Acquiror Organizational Documents or any
agreement to which Acquiror is bound, including any options, warrants or other
rights, agreement, arrangements or commitments of any character to which
Acquiror is a party and (ii) be owned free and clear of all security interests,
liens, claims, pledges, agreements, limitations on Acquiror's voting rights,
charges or other encumbrances of any nature whatsoever.
3.03 AUTHORITY. Each of the Acquiror Companies has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Acquiror Companies
and the performance by each of the Acquiror Companies of its obligations
hereunder, including the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of either of the Acquiror Companies are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of the Acquiror Companies and, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes the legal, valid and
binding obligation of each of the Acquiror Companies enforceable against the
Acquiror Companies in accordance with its terms.
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated by the
exceptions to Section 3.04(b) are obtained or made and except as otherwise
disclosed in Section 3.04(a) of the Disclosure Schedule delivered by Acquiror to
the Company contemporaneously with the execution and delivery of this Agreement
(the "Acquiror Disclosure Schedule"), the execution and delivery of this
Agreement by the Acquiror Companies does not, and performance of their
respective obligations hereunder, including the consummation of the transactions
contemplated hereby, will
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not (i) conflict with or violate the Acquiror Organizational Documents or the
Articles of Incorporation or Bylaws of Acquisition Sub, as amended or restated,
(ii) conflict with or violate any Laws in effect as of the date of this
Agreement or any judgment, order or decree applicable to Acquiror or any of
Acquiror's subsidiaries or by or to which any of their properties is bound or
subject or (iii) result in any breach of or constitute a default under (or an
event that with or without notice or lapse of time or both would become a
default), or give to others any rights of termination, amendment, acceleration
or cancellation of, or require payment under, or result in the creation of a
lien or encumbrance on any of the properties or assets of Acquiror or any of
Acquiror's subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Acquiror or any of Acquiror's subsidiaries is a party or by
or to which Acquiror or any of Acquiror's subsidiaries or any of their
respective properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Acquiror Companies does not, and the performance of this Agreement by the
Acquiror Companies, including the consummation of the transactions contemplated
hereby, will not require Acquiror or Acquisition Sub to obtain any consent,
license, permit, waiver approval, authorization or order of, or to make any
filing with or notification to, any Governmental Entities, except (i) for the
filing of Articles of Merger with the Secretary of State of the State of
Colorado, (ii) the applicable requirements of the HSR Act or the Exchange Act,
(iii) the applicable requirements of the New York Stock Exchange ("NYSE"), (iv)
where the failure to obtain such consents, licenses, permits, waivers,
approvals, authorizations or orders, or to make such filings or notifications
could not reasonably be expected to have an Acquiror Material Adverse Effect or
prevent Acquiror or Acquisition Sub from performing their respective obligations
under this Agreement and (v) as disclosed in Section 3.04(b) of the Acquiror
Disclosure Schedule.
3.05 REPORTS; FINANCIAL STATEMENTS.
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(a) Since December 31, 1998, Acquiror has filed all forms,
reports, statements and other documents required to be filed with the
Commission, including without limitation (i) all Annual Reports on Form 10-K,
(ii) all Quarterly Reports on Form 10-Q, (iii) all proxy statements relating to
meetings of shareholders (whether annual or special), (iv) all Current Reports
on Form 8-K and (v) all other reports, schedules, registration statements or
other documents (collectively referred to as the "Acquiror SEC Reports"). The
Acquiror SEC Reports were prepared in all material respects in accordance with
the requirements of applicable Law (including the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
thereunder applicable to the Acquiror SEC Reports) and the Acquiror SEC Reports
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the historical consolidated financial statements
(including, in each case, any related notes thereto) contained in the Acquiror
SEC Reports (i) have been prepared in accordance with the published rules and
regulations of the Commission and GAAP applied on a consistent basis throughout
the periods involved (except (A) to the extent disclosed therein or required by
changes in GAAP, (B) as may be indicated in the notes thereto and (C) in the
case of the unaudited financial statements, as permitted by the rules and
regulations of the Commission) and (ii) fairly present the consolidated
financial position of Acquiror and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for the
periods indicated (subject, in the case of unaudited consolidated financial
statements for interim periods, to adjustments, consisting only of normal,
recurring accruals, necessary to present fairly such results of operations and
cash flows).
3.06 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror.
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT. Each of the Shareholders covenants and
agrees that, prior to the Closing Date, such Shareholder will take all
commercially reasonable actions necessary to ensure that the Company complies
with Articles V and VII hereof.
4.02 NEGATIVE COVENANTS. Each of the Shareholders covenants and agrees
that from the dated of this Agreement until the Effective Time, such Shareholder
will not:
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(a) take any action that reasonably could be expected to
result in (i) any of the representations and warranties of such
Shareholder and the Company set forth in Article II hereof becoming
untrue or (ii) any of the conditions set forth in Article IX hereof not
being satisfied; or
(b) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to, or
that may reasonably be expected to lead to, any Competing Transaction
(as hereinafter defined), or enter into discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to, or endorse, any Competing
Transaction, or authorize or permit any agent, investment banker,
financial advisor, attorney, accountant or other representative
retained by such Shareholder to take any such action, and such
Shareholder shall promptly notify Acquiror of all relevant terms of any
such inquiries or proposals received by such Shareholder or by any such
agent, investment banker, financial advisor, attorney, accountant or
other representative relating to any of such matters and if such
inquiry or proposal is in writing, such Shareholder shall promptly
deliver or cause to be delivered to Acquiror a copy of such inquiry or
proposal. For purposes of this Agreement, "Competing Transaction" shall
mean any merger, consolidation, share exchange, business combination or
similar transaction involving the Company or any of its subsidiaries or
the acquisition in any manner, directly or indirectly, of a material
interest in any voting securities of, or a material equity interest in
a substantial portion of the assets of, the Company or any of its
subsidiaries, other than the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY . The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Acquiror
(which consent shall not be unreasonably withheld), the Company will and will
cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course
consistent with past practices;
(b) use all reasonable efforts to preserve substantially
intact its business organization, maintain its rights and franchises,
retain the services of its respective
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officers and key employees and maintain its relationships with its
respective customers and suppliers;
(c) maintain and keep its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted,
and maintain supplies and inventories in quantities consistent with its
customary business practice;
(d) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained;
(e) ensure that the cash on hand at the Company shall not be
less than as reflected on the March 31, 1999 consolidated balance sheet
and the aggregate outstanding balance of long-term and short-term debt
(exceeding the promissory note pursuant to Section 7.17, if any) shall
not be greater than as reflected on the March 31, 1999 consolidated
balance sheet; and
(f) use its best efforts to ensure that the Shareholders'
Representative shall execute and deliver the Escrow Agreement prior to
the Closing Date.
5.02 NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Acquiror,
from the date of this Agreement until the Effective Time, the Company will not
do, and will not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation payable to or to become
payable to any director or executive officer; (ii) increase the
compensation payable or pay bonuses to employees of the Company other
than in the ordinary course of business, (iii) grant any severance or
termination pay (other than pursuant to the normal severance practices
of the Company or its subsidiaries as in effect on the date of this
Agreement) to, or enter into any employment or severance agreement
with, any director, officer or employee; (iv) except as set forth in
Section 2.10(a) of the Company Disclosure Schedule, establish, adopt or
enter into any Benefit Plan or (v) except as may be required by
applicable Law or as set forth in Section 2.10(a) of the Company
Disclosure Schedule, amend, or take any other actions (including,
without limitation, the acceleration of vesting, waiving of performance
criteria or the adjustment of awards or any other actions permitted
upon a "change in control" (as defined in the respective plans of the
Company), with respect to any of the Benefit Plans or any of the plans,
programs, agreements, policies or other arrangements described in
Section 2.10(a) of this Agreement;
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(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock or
other equity interests, except dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the
Company;
(c) (i) except as described in Section 2.03(c) of the Company
Disclosure Schedule, redeem, purchase or otherwise acquire any shares
of its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or
its subsidiaries' capital stock (other than any such acquisition
directly from any wholly owned subsidiary of the Company in exchange
for capital contributions or loans to such subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of its or
its subsidiaries' capital stock or any such securities or obligations;
(ii) effect any reorganization or recapitalization of the Company or
any of its subsidiaries; or (iii) split, combine or reclassify any of
its or its subsidiaries' capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its or its subsidiaries' capital stock;
(d) (i) except as set forth in Section 2.03(a) hereof or as
described in Section 2.03(c) of the Company Disclosure Schedule, issue
(whether upon original issue or out of treasury), sell, grant, award,
deliver or limit the voting rights of any shares of any class of its or
its subsidiaries' capital stock, any securities convertible into or
exercisable or exchangeable for any such shares, or any rights,
warrants or options to acquire, any such shares; (ii) amend or
otherwise modify the terms of any such rights, warrants or options the
effect of which shall be to make such terms materially more favorable
to the holders thereof; or (iii) take any action to accelerate the
vesting of any of the stock options;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any
other person (other than the purchase of assets from suppliers or
vendors in the ordinary course of business and consistent with past
practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its assets or any
assets of any of its subsidiaries, except for pledges or dispositions
of assets in the ordinary course of business and consistent with past
practice;
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(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to, or
that may reasonably be expected to lead to, any Competing Transaction,
or enter into discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction, or
agree to, or endorse, any Competing Transaction, or authorize or permit
any of the officers, directors, employees or agents of the Company or
any of its subsidiaries or any agent, investment banker, financial
advisor, attorney, accountant or other representative retained by the
Company or any of the Company's subsidiaries to take any such action,
and the Company shall promptly notify Acquiror or promptly provide
Acquiror with a copy of all relevant terms of any such inquiries or
proposals received by the Company or any of its subsidiaries or by any
such officer, director, employee, agent, investment banker, financial
advisor, attorney, accountant or other representative relating to any
of such matters and if such inquiry or proposal is in writing, the
Company shall promptly deliver or cause to be delivered to Acquiror a
copy of such inquiry or proposal (provided that nothing in this Section
5.02(i) shall prevent the Company or any such persons from taking any
such action if failure to do so would be reasonably likely to
constitute a breach of its fiduciary duty or a violation of law);
(h) release any third party from its obligations under any
existing standstill agreement or arrangement relating to a Competing
Transaction or otherwise under any confidentiality or other similar
agreement relating to information material to the Company or any of its
subsidiaries;
(i) propose to adopt any amendments to its Articles of
Incorporation or its Bylaws that would have an adverse effect on the
consummation of the transactions contemplated by this Agreement;
(j) (i) change any of its significant accounting policies or
(ii) make or rescind any express or deemed election relating to Taxes,
settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to Taxes, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year
ending December 31, 1997, except, in the case of clause (i) or clause
(ii), as may be required by Law or GAAP;
(k) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument or under any financing lease, whether pursuant to a
sale-and-leaseback transaction or otherwise, except in the ordinary
course of business consistent with past practice;
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(l) enter into any material arrangement, agreement or contract
with any third party (other than in the ordinary course of business);
or
(m) agree in writing or otherwise to do any of the foregoing.
ARTICLE VI
COVENANTS OF ACQUIROR
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR. Acquiror hereby covenants and
agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by the Company and the
Shareholders, Acquiror will:
(a) use all reasonable efforts to preserve substantially
intact its business organization;
(b) maintain and keep its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted,
and maintain supplies and inventories in quantities consistent with its
customary business practice; and
(c) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained.
6.02 NEGATIVE COVENANTS OF ACQUIROR. Except as expressly contemplated
by this Agreement or otherwise consented to in writing by the Company and the
Shareholders, from the date of this Agreement until the Effective Time, Acquiror
will not do any of the following:
(a) amend any of the material terms or provisions of the
Acquiror Shares;
(b) knowingly take any action that would result in a failure
to maintain the listing of the Acquiror Shares on the New York Stock
Exchange;
(c) propose to adopt any amendments to the Acquiror
Organizational Documents that would have an adverse effect on the
consummation of the transactions contemplated by this Agreement; or
(d) agree in writing or otherwise to do any of the foregoing.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 NOTIFICATION OF CERTAIN MATTERS. The Company and each of the
Shareholders shall give prompt notice to Acquiror, and Acquiror shall give
prompt notice to the Company, orally and in writing, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty of the party giving such notice contained
in this Agreement to be untrue or inaccurate at any time from the date hereof to
the Effective Time, (ii) any material failure of the party giving such notice to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by such person hereunder within the time specified therefor and
(iii) any change or event having, or which, insofar as can be reasonably
foreseen, could have, a material adverse effect on the financial condition,
results of operations, business or prospects of Acquiror or the Company.
7.02 ACCESS AND INFORMATION. Between the date hereof and the Closing
Date:
(a) The Company shall, and shall cause its subsidiaries to,
(i) afford to Acquiror and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Acquiror Representatives") access
during ordinary business hours and at other reasonable times, upon
reasonable prior notice, to the officers, employees, accountants,
agents, properties, offices and other facilities of the Company and its
subsidiaries and to the books and records thereof and (ii) furnish
promptly to Acquiror and the Acquiror Representatives such information
concerning the business, properties, contracts, records and personnel
of the Company and its subsidiaries (including, without limitation,
financial, operating and other data and information) as may be
reasonably requested, from time to time, by Acquiror or the Acquiror
Representatives.
(b) Notwithstanding the foregoing provisions of this Section
7.02, the Company shall not be required to grant access or furnish
information to the Acquiror Representatives to the extent that such
access or the furnishing of such information is prohibited by Law or
contract. No investigation by the Acquiror Representatives made
heretofore or hereafter shall affect the representations and warranties
of the Company that are contained herein and each such representation
and warranty shall survive such investigation.
(c) The Acquiror shall hold in confidence and not disclose,
except on a "need to know" basis to its respective Acquiror
Representatives, all nonpublic information received from the Company
("Confidential Information") until such time as such Confidential
Information is otherwise publicly available and, if this Agreement is
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terminated, Acquiror will deliver to the Company all documents, work
papers and other materials (including copies) obtained by such party or
on its behalf from another party as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution
hereof. The foregoing obligations of confidentiality and nondisclosure
shall be effective for a period of two (2) years after such
termination; provided, however, that such obligation shall terminate at
the Closing.
(d) In the event that the Acquiror, or anyone to whom it
supplies Confidential Information, receives a request to disclose all
or any part of the Confidential Information under the terms of a
subpoena or order issued by a Governmental Entity, Acquiror agrees (i)
to notify the Company immediately of the existence, terms and
circumstances surrounding such request, (ii) to consult with the
Company on the advisability of taking legally available steps to resist
or narrow such request, and (iii) if disclosure of such Confidential
Information is required to prevent Acquiror from being held in contempt
or subject to other penalty, to furnish only such portion of the
Confidential Information as the Acquiror is legally compelled to
disclose and to exercise its best efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to the
disclosed Confidential Information.
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company and Acquiror shall each use, and shall cause
each of their respective subsidiaries to use, and each of the Shareholders shall
use, all reasonable efforts promptly (i) to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (ii) to obtain from any
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained by the Company, Acquiror or any
of the Shareholders, respectively, or any of the Company's or Acquiror's
respective subsidiaries, in connection with the authorization, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, (iii) to make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under (A) the Securities Act and the Exchange Act and
the rules and regulations thereunder, and any other applicable federal or state
securities laws and (B) any other applicable Law; provided that Acquiror and the
Company shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the nonfiling
party and its advisors prior to filing and, if requested, shall accept all
reasonable additions, deletions or changes suggested in connection therewith.
The Company and Acquiror shall furnish all information required for any
application or other filing to be made pursuant to the rules and
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regulations of any applicable Law in connection with the transactions
contemplated by this Agreement.
(b) Acquiror, the Company and each of the Shareholders agree,
and Acquiror and the Company shall cause each of their respective subsidiaries,
to cooperate and to use all reasonable efforts to contest and resist any action,
including legislative, administrative or judicial action, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) (an "Order") that is in effect and
that restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement, including, without
limitation, by reasonably pursuing all available avenues of administrative and
judicial appeal and all available legislative action. Acquiror, the Company and
each of the Shareholders also agree to take any and all reasonable actions,
including, without limitation, the disposition of assets or the withdrawal from
doing business in particular jurisdictions, required by regulatory authorities
as a condition to the granting of any approvals required in order to permit the
consummation of the Merger or as may be required to avoid, lift, vacate or
reverse any legislative or judicial action that would otherwise cause any
condition to the Merger not to be satisfied; provided, however, that in no event
shall any party take, or be required to take, any action that could reasonably
be expected to have a Company Material Adverse Effect or an Acquiror Material
Adverse Effect.
(c) The Company, Acquiror and each of the Shareholders shall
each promptly give (or shall cause their respective subsidiaries to give) any
notices regarding the Merger, this Agreement or the transactions contemplated
hereby to third parties required by Law or by any contract, license, lease or
other agreement to which such person is a party or by which such person is
bound, and use (and cause its subsidiaries to use) all reasonable efforts to
obtain any third party consents (i) necessary, proper or advisable to consummate
the transactions contemplated by this Agreement, (ii) otherwise required under
any contracts, licenses, leases or other agreements in connection with the
consummation of the transactions contemplated by this Agreement or (iii)
required to prevent a Company Material Adverse Effect or an Acquiror Material
Adverse Effect, respectively, from occurring after the Effective Time.
(d) If any party shall fail to obtain any third party consent
described in subsection (c)(i) above, such party shall use all reasonable
efforts, and shall take any such actions reasonably requested by the other
parties, to limit the adverse effect upon the Company and Acquiror, their
respective subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time, from the
failure to obtain such consent.
7.04 AFFILIATES; POOLING. The Company shall use all reasonable efforts
to obtain and deliver to Acquiror an executed letter agreement, substantially in
the form of Exhibit C hereto (the "Company Affiliates' Letter"), from (i) each
person identified as an affiliate of the Company
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in Section 2.13 of the Company Disclosure Schedule on the Closing Date, (ii) any
person who may be deemed to have become an affiliate of the Company after the
date of this Agreement and on or prior to the Effective Time as soon as
practicable after such person attains such status and (iii) any person whose
agreement thereto may be deemed reasonably necessary by Acquiror to sustain the
Merger's status as a "pooling of interest" for financial accounting purposes (a
"Pooling Transaction").
7.05 PUBLIC ANNOUNCEMENTS. Acquiror and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger and shall not issue any
such press release or make any such public statement prior to such consultation;
provided, however, that a party may, without consulting with the other party,
issue such a press release or make such a public statement if required by
applicable Law or the rules of the NYSE or a national securities exchange if
such party has used commercially reasonable efforts to consult with the other
party but has been unable to do so in a timely manner.
7.06 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses. Notwithstanding the foregoing and subject to Article
VIII, the Shareholders shall not be responsible for the costs and expenses of
the Company in connection with this Agreement or the transactions of the Company
contemplated herein. Any such costs, expenses or fees of the Company not paid by
the Company prior to the Closing will continue to be the obligations of the
Surviving Corporation upon consummation of the Merger.
7.07 EMPLOYEES OF COMPANY.
(a) As soon as reasonably practicable after the Effective
Time, but in any event not later than January 1, 2000, Acquiror shall provide
employee benefit plans and arrangements to employees of the Company and its
subsidiaries that are substantially similar to the employee benefit plans and
arrangements of Acquiror for similarly situated employees of the Acquiror as
then in effect.
(b) The Company acknowledges that any benefits plans of the
Acquiror that may be provided to the employees of the Company after the
Effective Time may be substantially different from those provided such employees
of the Company prior to the Merger.
(c) The employees of Company and its subsidiaries shall be
credited for their actual years of service with the Company for purposes of
eligibility, vesting and benefit accrual under all benefit plans provided by
Acquiror in accordance with this Section 7.07, including, but
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not limited to, vacation, severance, retirement and disability plans, but
excluding any defined benefit plans.
(d) Such employee benefits under any medical plan provided by
Acquiror in accordance with this Section 7.07 shall not be subject to any
exclusions for any pre-existing conditions to the extent such exclusions did not
apply under the Company's medical plan, and credit shall be received for any
deductibles or out-of-pocket amounts previously paid by employees of the Company
and its subsidiaries for the current plan year under the medical plan maintained
by the Company.
(e) Nothing in this Agreement is intended to confer upon any
employee of the Company or its subsidiaries retained by Acquiror after Closing
("Retained Employees") any right to continued employment after evaluation by
Acquiror and its affiliates of their employment needs at any time after the
Closing.
(f) Notwithstanding any provision in this Agreement to the
contrary, Acquiror expressly reserves the right to amend, modify, or terminate
any benefit plan, program or policy established or maintained by Acquiror or any
of its affiliates (including, without limitation, the Company or its
subsidiaries) for the benefit of the Retained Employees.
7.08 TAX-FREE REORGANIZATION. Subject to the terms and conditions
hereof, Acquiror and the Company shall each use its best efforts to cause the
Merger to be treated as a reorganization within the meaning of section 368(a) of
the Code. After the Closing, Acquiror shall cause the Surviving Corporation to
comply with all applicable reporting requirements under section 367(a) of the
Code and U.S. Treasury Regulations issued thereunder.
7.09 INFORMATION FOR TAX RETURNS. From and after the Closing, the
Acquiror Companies shall cooperate with the Shareholders by providing and
granting access to the Shareholders, promptly upon request, to such records,
documents and other information regarding the Company and its subsidiaries as
the Shareholders may reasonably request from time to time, in connection with
the preparation or audit of any Tax Returns of any of the Company, its
subsidiaries or the Shareholders, and for audits, disputes, refund claims, or
litigation or other proceedings relating thereto or any other permissible
matter, it being understood that the Shareholders shall be entitled to make
copies of any such books, documents or information as shall be reasonably
necessary.
7.10 NO HEDGING TRANSACTIONS. The Shareholders acknowledge that the
entering into of or participation in hedging or other derivative transactions
that include Common Stock, or derivatives thereof, of the Acquiror may have an
effect in the overall market for Common Stock of the Acquiror and, further, that
Acquiror has a policy restricting executives and affiliates from
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engaging or participating in such transactions. Accordingly, the Shareholders
who become employees or affiliates of Acquiror agree that they will not, during
the time they are employees or affiliates of Acquiror, enter into any hedging or
similar transaction (whether through use of a forward contract, swap agreement,
option or other instrument) that in any way involves Common Stock of Acquiror or
any derivatives thereof without the prior written consent of Acquiror in its
sole discretion.
7.11 TERMINATED LEASES. Prior to the Closing, the Company shall take
all actions necessary to terminate and obtain a written release of any
obligation or liability as a result of such lease or the termination as required
herein, for the following leasehold interests: (i) facilities in Dallas, Texas
located at 3010 LBJ Freeway, Suite 600, Dallas, Texas, 75234, and (ii)
facilities known as the second floor offices in Houston, Texas located at 1155
Dairy Ashford, Suite 280, Houston, Texas, 77079 (collectively, the "Terminated
Leases").
7.12 PULSONIC ACQUISITION.
(a) At or simultaneously with the Closing, Acquiror shall
purchase the outstanding capital stock of CTC Pulsonic, Inc. held by
Hugh Stanfield, by causing Coherence Technology (Canada) Ltd., to
contribute its remaining debt obligation with respect to the Share
Purchase Agreement between and among Pulsonic Corporation (renamed CTC
Pulsonic, Inc.), the selling shareholders thereof, and the Company
dated October 10, 1997, together with all amendments thereto (the
"Pulsonic Agreement") to the Surviving Corporation. Upon receipt of
such debt, the Surviving Corporation shall contribute the debt up to
Acquiror who shall satisfy such debt by paying to Hugh Stanfield (and
the selling shareholders pursuant to the Pulsonic Agreement) (i)
$186,832.66 in cash or immediately available funds on the date of
execution of this Agreement, plus interest at 9% per annum from June 1,
1999 to the date of the wire transfer of funds to Hugh Stanfield and
(ii) issuance on the Closing Date of Acquiror Shares equivalent to US
$2,000,000 in value (such number of Acquiror Shares to be determined by
the average closing price for the three trading days immediately
preceding June 9, 1999 for Acquiror Shares) and subject to the same
restrictions on the Acquiror Shares to be issued pursuant to Article I
herein, except for any requirement to escrow shares.
(b) Prior to the Closing, Hugh Stanfield shall obtain a
written release on behalf of all of the selling shareholders of CTC
Pulsonic, Inc., f/k/a Pulsonic Corporation as defined in the Pulsonic
Agreement of any further obligations or liabilities to such selling
shareholders by the Company pursuant or related to the Pulsonic
Agreement (such release to be in a form acceptable to Acquiror in its
sole discretion).
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(c) The amendment to the Share Purchase Agreement to reflect
the above transaction shall be executed by the appropriate parties on
or before June 9, 1999.
7.13 PULSONIC NIGERIA LIMITED.
(a) At or simultaneously with the Closing, the Company shall
own 80% of the capital of Pulsonic Nigeria Limited free and clear of
all liens, claims and encumbrances.
(b) In order to acquire any non-company Pulsonic Nigeria
Limited capital as set forth in (a) above, the Company shall have
purchased the required capital at a total acquisition cost not to
exceed the sum of $40,000.
7.14 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Acquiror and the
Company agree that the indemnification obligations set forth in the Articles of
Incorporation and Bylaws of the Company, in each case as of the date of this
Agreement, shall survive the Merger and after the Effective Time any amendment,
repeal or other modification of the Articles of Incorporation or Bylaws shall
not adversely affect the rights thereunder of the individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company
or its subsidiaries.
7.15 GUARANTEES. As of the Closing, Acquiror and the Surviving
Corporation shall, jointly and severally, indemnify and hold harmless Alex
Cranberg and Susan Morrice from and against any liabilities, claims, demands,
judgments, losses, costs or expenses incurred (including reasonable attorneys
fees) that such individuals may sustain or incur as a result of the obligations
that result from or arise out of or relate to their personal guaranty after the
Closing Date with respect to the lease between the Company and CCA Financial
Inc. for certain computer equipment. It is the intent of Acquiror Companies to
replace such guarantees, if necessary, with the guaranty of the Acquiror
Companies.
7.16 MORRIS SHARES. Dan Morris agrees to sell immediately prior to
Closing all of his Company Stock to Acquiror for the cash equivalent of the
value of the number of Acquiror Shares that he would have been entitled to
receive pursuant to Article I, less 10% to be escrowed pursuant to the Escrow
Agreement. The value of the Acquiror Shares shall be determined based on the
average closing price per share of Acquiror Common Stock for the three trading
days immediately preceding May 31, 1999 multiplied by the number of Acquiror
Shares Mr. Morris would have been entitled to receive but for this Section 7.16.
Such cash shall be payable by check of the Acquiror or on the Acquiror's behalf
or in immediately available funds, at the option of Acquiror. Dan Morris shall
not be entitled to be issued shares of Acquiror pursuant to Article I of this
Agreement.
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7.17 WORKING CAPITAL ADVANCES. From and after the execution of this
Agreement until the earlier of: (i) the Effective Time, or (ii) the termination
of this Agreement, Acquiror shall provide Company with working capital as may be
reasonably required by Company to satisfy the Company's liabilities set forth in
Disclosure Schedule 2.16(a) or in the ordinary course of its business in
exchange for notes payable by Company, together with interest at an annual rate
of 8% and with a maturity date of July 31, 1999; provided that, any such notes
shall become immediately due and payable to Acquiror in the event of a
termination of this Agreement. The Note or Notes shall be substantially in the
form of Exhibit E attached hereto.
ARTICLE VIII
INDEMNIFICATION
8.01 IN GENERAL. Subject to the terms and conditions of this Article
VIII, the Shareholders agree, jointly and severally, to indemnify, defend and
hold harmless Acquiror and its directors, officers, employees, consultants,
affiliates and controlling persons (collectively, and including the Company and
its subsidiaries after the Effective Time, the "Acquiror Indemnified Parties" or
an "Acquiror Indemnified Party"), from and against all Claims asserted against,
resulting from, imposed upon or incurred by Acquiror or any other Acquiror
Indemnified Party, directly or indirectly, by reason of, arising out of, or
resulting from (a) the inaccuracy or breach of any representation or warranty of
the Company or any of the Shareholders contained in or made pursuant to this
Agreement or (b) the breach of any covenant or agreement of the Company or any
of the Shareholders contained in or made pursuant to this Agreement. As used in
this Article VIII, the term "Claim" shall include (i) all debts, liabilities and
obligations, (ii) all losses, damages, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys' fees and expenses), and (iii)
all demands, claims, actions, costs of investigation, causes of action,
proceedings, arbitrations, judgments, settlements and assessments, whether or
not ultimately determined to be valid.
8.02 NO EXHAUSTION OF REMEDIES. The Shareholders acknowledge that
their obligation under Section 8.01 of this Agreement is independent of the
obligations of the Company pursuant to this Agreement, and that the Shareholders
waive any right to require the Acquiror Indemnified Parties to (i) proceed
against the Company; or (ii) pursue any other remedy whatsoever in the power of
the Acquiror Indemnified Parties. It is agreed among the parties hereto that the
obligations of the Shareholders to the Acquiror Indemnified Parties pursuant to
Article VIII, including any indemnification claims or payments made pursuant
thereto, be satisfied solely through and pursuant to the Escrow Agreement and
this Article VIII which, notwithstanding anything herein to the contrary, shall
be the sole and exclusive right and remedy
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of the Acquiror Indemnified Parties with respect to such matters in clauses (a)
and (b) of Section 8.01, except for any claim of fraud.
8.03 DEFENSE OF THIRD PARTY CLAIMS. The obligation of the Shareholders
to indemnify the Acquiror Indemnified Parties under this Article VIII with
respect to Claims relating to or arising from third parties (a "Third Party
Claim") shall be subject to the following terms and conditions:
(a) Notice and Defense. The Acquiror Indemnified Party will
give the other party or parties (whether one or more, the "Indemnifying
Party") prompt written notice (including all documents and other
nonprivileged information in the Acquiror Indemnified Party's
possession related thereto) of any such Third Party Claim containing a
reasonable description of the nature of the Third Party Claim, an
estimate of the amount of damages attributable thereto to the extent
determinable and the basis of the Acquiror Indemnified Party's request
for indemnification under this Agreement, and the Indemnifying Party
may undertake the defense thereof by representatives chosen by it upon
written notice to the Acquiror Indemnified Party provided within 20
days of receiving notice of such Third Party Claim (or sooner if the
nature of the Third Party Claim so requires). Failure of the Acquiror
Indemnified Party to give such notice shall not affect the Indemnifying
Party's duty or obligations under this Article VIII, except to the
extent the Indemnifying Party is materially prejudiced thereby. The
Acquiror Indemnified Party shall make available to the Indemnifying
Party or its representatives all records and other materials required
by the Indemnifying Party and in the possession or under the control of
the Acquiror Indemnified Party, for the use of the Indemnifying Party
and its representatives in defending any such claim, and shall in other
respects give reasonable and prompt cooperation in such defense.
(b) Failure to Defend. If the Indemnifying Party, within 20
days after notice of any such Third Party Claim (or sooner if the
nature of any Third Party Claim so requires), fails to undertake the
defense of such Third Party Claim actively and in good faith, then the
Acquiror Indemnified Party will have the right to undertake the
defense, compromise or settlement of such Third Party Claim, or consent
to the entry of a judgment with respect thereto.
(c) Acquiror Indemnified Party's Rights. Anything in this
Article VIII to the contrary notwithstanding, (i) if there is a
reasonable probability that the Third Party Claim may adversely affect
the Acquiror Indemnified Party other than as a result of money damages
or other money payments in an aggregate amount of less than $75,000,
the Acquiror Indemnified Party shall have the right to defend,
compromise or settle such Third Party Claim (provided that the Acquiror
Indemnified Party shall not settle such
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Third Party Claim or consent to any judgment without first obtaining
the consent of the Indemnifying Party, which shall not be unreasonably
withheld), provided that, Acquiror agrees to discuss the status of such
matters with the Indemnifying Party at such times as the Indemnifying
Party may reasonably request, upon reasonable prior notice, and (ii)
the Indemnifying Party shall not without the written consent of the
Acquiror Indemnified Party, settle or compromise any Third Party Claim
or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff
to the Acquiror Indemnified Party of an unconditional release from all
liability in respect of such Third Party Claim.
8.04 PAYMENT; ARBITRATION. Upon the occurrence of a Claim (other than
a Third Party Claim) for which indemnification is believed to be due hereunder,
the Indemnified Party shall provide notice of such Claim to the Indemnifying
Party, stating in specific terms the circumstances giving rise to the Claim,
specifying the amount of the Claim and making a request for any payment then
believed due. Any Claim shall be conclusive against the Indemnifying Party in
all respects 30 days after receipt by the Indemnifying Party of such notice,
unless within such period the Indemnifying Party sends the Indemnified Party a
notice disputing the propriety of the Claim. Such notice of dispute shall
describe the basis for such objection and the amount of the Claim as to which
the Indemnifying Party does not believe should be subject to indemnification.
Upon receipt of any such notice of dispute, both the Indemnified Party and the
Indemnifying Party shall use all reasonable efforts to cooperate and arrive at a
mutually acceptable resolution of such dispute within the next 30 days. If a
mutually acceptable resolution cannot be reached between the Indemnified Party
and the Indemnifying Party with such 30-day period, either party may submit the
dispute for resolution by binding arbitration pursuant to the provisions of this
Section 8.04. If a party elects to submit such matter to arbitration, such party
shall provide notice to the other party of its election to do so, and the
parties shall attempt to appoint a single arbitrator. If the parties are unable
within 10 days after receipt of the notice to agree on a single arbitrator, then
each party shall appoint one arbitrator, and the two arbitrators so appointed
shall name a third arbitrator within a period of 10 days after their nomination.
If the two arbitrators fail to appoint a third arbitrator within such 10-day
period, a third arbitrator shall be appointed pursuant to the then existing
Commercial Arbitration Rules (the "Rules") of the American Arbitration
Association. In all respects, such panel and the arbitration proceeding shall be
governed by the Rules, and the place of arbitration shall be in a city mutually
selected by the Indemnifying Party and the Acquiror Indemnified Party (or, if no
city can be mutually agreed upon within 10 days, then in Houston, Texas). If it
is finally determined that all or a portion of such Claim amount is owed to the
Indemnified Party, then such Claim amount shall be satisfied in accordance with
Section 8.05 of this Agreement and the Acquiror Indemnified Party shall be
entitled to recovery of all expenses, including reasonable attorneys' fees,
incurred in connection with enforcing its rights under this Article VIII.
Judgment upon the award resulting from arbitration may be entered in any court
having jurisdiction for direct enforcement, or any
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application may be made to a court for a judicial acceptance of the award and an
order of enforcement, as the case may be.
8.05 SATISFACTION OF CLAIMS FROM ESCROW SHARES.
(a) After the Effective Time and except for any Claim for
fraud subject to Section 8.08 shall not be so limited, the indemnification
obligations of the Shareholders under Section 8.01 of this Agreement shall be
satisfied solely from payments of the Escrow Shares by delivery to the Acquiror
Indemnified Party entitled to indemnification hereunder.
(b) Pursuant to the provisions of the Escrow Agreement, if the
Shareholders are determined to owe a Claim amount pursuant to the procedures set
forth in Section 8.04, then the amount due the Acquiror Indemnified Party
hereunder shall be satisfied by the delivery to the Acquiror Indemnified Party
pursuant to the Escrow Agreement of Escrow Shares equal in value to the amount
of the Claim to be satisfied, and the Claim shall be deemed paid and satisfied
upon receipt by the Acquiror Indemnified Party of certificates representing such
number of Escrow Shares duly endorsed for transfer to the Indemnified Party. The
per share value of the Escrow Shares for purposes of this Article VIII and the
Escrow Agreement with respect to a particular Claim shall be the Market Value
(as defined herein) of the Escrow Shares. The "Market Value" of an Escrow Share
shall be the actual closing trading price at the end of business on the Closing
Date (regardless of the actual trading price for the Common Stock), with
appropriate adjustment to take into account any stock split, reverse stock
split, stock dividend, recapitalization, stock exchanges or other similar
capital adjustments with respect (including by reason of merger, consolidation
or other business combination involving Acquiror) to the Escrow Shares. The
Market Value of the Additional Corpus (as such term is defined in the Escrow
Agreement) shall be determined by mutual agreement of the Shareholders'
Representative and the Acquiror. In the event that such parties cannot in good
faith agree on the market value of the Additional Corpus, the matter shall be
settled by binding arbitration in accordance with the procedures set forth
herein, except for any claims of fraud.
(c) The Shareholders' Representative shall have the power and
authority to make all decisions with regard to the settlement of Claims brought
pursuant to Section 8.01 of this Agreement from the Escrow Shares. If the
Shareholders' Representative is unable or unwilling to carry out his duties as
Shareholders' Representative, then the Shareholder who beneficially held the
next highest number of shares of Company Stock immediately prior to the
Effective Time (unless such Shareholder is then employed or serves as a director
of Acquiror or its affiliates), shall be designated and appointed as the
Shareholders' Representative, and shall assume all of the powers and duties of
the Shareholders' Representative under the Agreement and the Escrow Agreement.
If any successor Shareholders' Representative becomes unable or unwilling to
carry out his duties as Shareholders' Representative, his replacement shall be
the
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Shareholder who beneficially held next highest number of shares of Company Stock
immediately prior to the Effective Time.
8.06 LIABILITY LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations, warranties, covenants and agreements of the Company and
the Shareholders in this Agreement or made pursuant hereto shall survive the
Closing, and any investigation thereof, until (a) in the event the transaction
is a pooling transaction, the first to occur of (i) the issuance of the first
audit report following the Closing Date of the consolidated financial statements
of Acquiror which includes the Surviving Corporation or (ii) the first
anniversary of the Closing Date, or (b) in the event the transaction is not a
pooling transaction, the second anniversary of the Closing Date and, the
Shareholders shall have no liability under this Article VIII unless written
notice of a Claim is provided within such period. After the Effective Time, the
Acquiror Indemnified Parties shall not be entitled to indemnification for Claims
from the Escrow Shares except to the extent the aggregate amount for all claims
exceeds $75,000. Once such threshold is satisfied, the Shareholders, subject to
the other limitations in this Article VIII, shall be liable for all Claims of
the Acquiror Indemnified Parties in excess thereof. After the Effective Time,
all Claims by the Acquiror Indemnified Parties pursuant to this Agreement shall
be limited to the Escrow Shares, except for any claim of fraud subject to
Section 8.08.
8.07 SUBROGATION. Upon payment in full of any Third Party Claim or
other Claim, the Indemnifying Party shall be subrogated to the extent of such
payment to the rights of the Acquiror Indemnified Parties against any person
with respect to the subject matter and to the extent only of the Third Party
Claim or other Claim.
8.08 CLAIM OF FRAUD. In the event that the Company is found to have
perpetrated a fraud that has caused damages to or has resulted in a loss by the
Acquiror Companies, each Shareholder shall be liable to the Acquiror Companies
for such damage or loss up to, in the aggregate, the amount of such
Shareholder's Acquiror Shares (including Escrow Shares), or the equivalent value
thereof, together with all accretions, dividends or stock splits; provided,
however, that (i) if such Shareholder had actual knowledge that such action by
the Company was fraudulent or false or (ii) such Shareholder perpetrated a fraud
with actual knowledge by the Shareholder that caused damages to or has resulted
in a loss by the Acquiror Companies, the liability of the Shareholder shall not
be limited as therein provided. The parties understand and agree that a loss or
claim by the Acquiror Indemnified Parties against a Shareholder based on a fraud
by such Shareholder, whether with or without actual knowledge, with respect to
the representations or warranties or matters set forth in Sections 2.25, 2.26 or
2.27 as it relates to such Shareholder is not limited as set forth in this
Section 8.08. The term "actual knowledge" of the Shareholder shall not include
mere reckless disregard and/or the mere failure to investigate the truth or
accuracy of a representation or warranty regarding the Company. It is not
intended
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that a Shareholder have liability to the Acquiror Indemnified Parties for fraud
related claims pursuant to this Section 8.08 in the absence of either (i) or
(ii) above.
ARTICLE IX
CONDITIONS
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES .
The obligation of the Acquiror Companies to effect the transactions contemplated
hereby on the Closing Date shall be subject to the satisfaction at or prior to
the Closing Date of the following conditions, any or all of which may be waived
by Acquiror, in whole or in part, to the extent permitted by applicable law:
(a) The representations and warranties of the Company and each
of the Shareholders contained in this Agreement shall be true and
correct in all material respects (without duplication of any
materiality exception contained in any individual representation and
warranty) as of the date of this Agreement and as of the Closing Date
as though made again as of the Closing Date. Acquiror shall have
received a certificate of the Chief Executive Officer and the Chief
Financial Officer of the Company, dated the Closing Date, to such
effect with respect to the representations and warranties of the
Company;
(b) The Company and each of the Shareholders shall have
performed or complied with all agreements and covenants required by
this Agreement to be performed or complied with by such person on or
prior to the Closing Date. Acquiror shall have received a certificate
of the Chief Executive Officer and the Chief Financial Officer of the
Company, dated the Closing Date, to such effect with respect to the
Company's performance and compliance;
(c) Acquiror shall have received a certificate of the
Secretary or Assistant Secretary (or other authorized corporate
officer) of the Company certifying as true, accurate and complete, as
of the date of the execution of this Agreement and again as of the
Closing Date: (i) a copy of the resolutions of the Company's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the other documents contemplated hereby to which it is a
party and the consummation by the Company of the Merger; (ii) a copy of
the resolutions of the Company's shareholders authorizing the
execution, delivery and performance of this Agreement and the other
documents contemplated hereby to which it is a party and the
consummation by the Company of the Merger; (iii) a certified copy of
the Articles of Incorporation of the Company issued by the Secretary of
State of Colorado; (iv) a copy of the Bylaws of the
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Company; and (v) the incumbency of the officer or officers authorized
to execute on behalf of the Company this Agreement and the other
documents contemplated thereby to which it is a party;
(d) Acquiror shall have received a certificate of the
Secretary or Assistant Secretary (or other authorized corporate
officer) of each subsidiary of the Company certifying as true, accurate
and complete, as of the date of this Agreement and again as of the
Closing Date: (i) a certified copy of the Articles of Incorporation of
the subsidiary issued by the Secretary of State of the state of such
subsidiary's incorporation (except for Pulsonic Nigeria Limited which
shall be a copy); and (ii) a copy of the Bylaws of such subsidiary;
(e) The resignations, effective at the Effective Time, of each
of the directors and officers of the Company shall have been delivered
to Acquiror;
(f) No court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger;
(g) The applicable waiting period under any applicable
competition Laws, Regulations or Orders of foreign Governmental
Entities, as set forth in the Acquiror Disclosure Schedule or the
Company Disclosure Schedule, shall have expired or been terminated;
(h) Acquiror shall have been advised in writing by Arthur
Andersen LLP as of the Closing Date to the effect that such firm knows
of no reason why the Merger cannot be treated for financial accounting
purposes as a pooling transaction;
(i) The Company shall have been advised in writing by Melton &
Melton, LLP as of the date of this Agreement and again as of the
Closing Date to the effect that such firm knows of no reason why the
Merger cannot be treated for financial accounting purposes as a pooling
transaction;
(j) Acquiror shall have received on the date of this Agreement
the Escrow Agreement, duly executed and delivered by the Shareholders'
Representative and the Escrow Agent;
(k) The Shareholders' Representative and each of the
Shareholders shall have executed and delivered the Appointment on the
date of this Agreement;
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(l) The Acquiror shall have received on the date of this
Agreement the written consent of BP Amoco to the assignment or change
of control of the BP Amoco License to Acquiror or its Affiliates on
terms acceptable to Acquiror in its sole discretion;
(m) The Acquiror shall have received on the date of this
Agreement the written release to the Terminated Lease on the Dallas
property and on the date of Closing the written release to the
Terminated Lease in Houston, Texas, both on terms acceptable to
Acquiror in its sole discretion;
(n) The Acquiror shall have received on the date of this
Agreement the written release to the Pulsonic Agreement on terms
acceptable to Acquiror in its sole discretion;
(o) The Acquiror shall have received on the date of this
Agreement proof of settlement with Paradigm Software for the Focus
software claim, such settlement not to exceed $35,000 cash, and receipt
of the written release of Paradigm Software for the Focus software
claim on terms acceptable to Acquiror in its sole discretion;
(p) The Acquiror shall have received on the date of this
Agreement proof of settlement with ACTC Technologies Inc. for the
buyout and release of any and all obligations of Pulsonic Technology
Corporation (and any successor) of the Agreement dated January 25,
1993, such settlement not to exceed $5,000 cash, and receipt of the
written release on terms acceptable to Acquiror in its sole discretion;
(q) The Company shall own 80% of Pulsonic Nigeria Limited;
and
(r) Employment Contracts of Patrick Keenan, Randall Keys and
Vasudhaven Sudhakar, substantially in the form of Exhibit D shall be
executed and delivered to Acquiror on the date of this Agreement.
9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company and the Shareholders to effect the transactions
contemplated hereby on the Closing Date shall be subject to the satisfaction at
or prior to the Closing Date of the following conditions, any or all of which
may be waived by the Company and the Shareholders, acting together, in whole or
in part, to the extent permitted by applicable Law:
(a) The representations and warranties of Acquiror contained in this
Agreement shall be true and correct in all material respects (without
duplication of any materiality exception contained in any individual
representation and warranty) as of the date of this Agreement and as of the
Closing Date as though made again as of the Closing Date. The Company shall have
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received a certificate of the President and the Chief Financial Officer of the
Acquiror (or the organizational equivalent), dated the Closing Date, to such
effect;
(b) The Acquiror Companies shall have performed or complied
with all agreements and covenants required by this Agreement to be
performed or complied with by each of them on or prior to the Closing
Date. The Company shall have received a certificate of the President
and the Chief Financial Officer of the Acquiror (or the organizational
equivalent), dated the Closing Date, to such effect;
(c) The Company and the Shareholders shall have received a
certificate of the Secretary or Assistant Secretary (or other
authorized corporate officer) of each of the Acquiror Companies
certifying as true, accurate and complete, as of the date of the
execution of this Agreement and again as of the Closing Date: (i) a
copy of the resolutions of the Board of Directors of each of the
Acquiror Companies (or the organizational equivalent) authorizing the
execution, delivery and performance of this Agreement and the other
documents contemplated hereby to which it is a party and the
consummation by the Company of the Merger; (ii) a copy of the
resolutions of Acquisition Sub's shareholder authorizing the execution,
delivery and performance of this Agreement and the other documents
contemplated hereby to which it is a party and the consummation by the
Company of the Merger; (iii) a copy of the Articles of Incorporation
(or equivalent organizational document) of Acquiror and a certified
copy of the Articles of Incorporation of the Acquisition Sub issued by
the Secretary of State of the State of Colorado; (iv) a copy of the
Bylaws (or equivalent organizational document) of each of the Acquiror
Companies; and (v) the incumbency of the officer or officers authorized
to execute on behalf of each of the Acquiror Companies this Agreement
and the other documents contemplated thereby to which it is a party;
(d) No court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger;
(e) The applicable waiting period under any applicable
competition Laws, Regulations or Orders of foreign Governmental
Entities, as set forth in Acquiror Disclosure Schedule or the Company
Disclosure Schedule, shall have expired or been terminated; and
(f) The Company shall have received on the date of this
Agreement the written consent of BP Amoco to the assignment or change
of control of the BP Amoco License to Acquiror or its Affiliates on
terms acceptable to Acquiror in its sole discretion.
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ARTICLE X
MISCELLANEOUS
10.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) by mutual consent of Acquiror and the Company and each of
the Shareholders;
(b) by either Acquiror or the Company or any of the
Shareholders if the Effective Time has not occurred on or before July
31, 1999;
(c) by Acquiror, upon a breach of any covenant or agreement on
the part of the Company or any of the Shareholders set forth in this
Agreement, or if any representation or warranty of the Company or any
of the Shareholders shall have become untrue, in either case such that
the conditions set forth in Section 9.01(a) or Section 9.01(b) would
not be satisfied (a "Terminating Company Breach"); provided that, if
such Terminating Company Breach is curable by the Company or any of the
Shareholders, as the case may be, through the exercise of reasonable
efforts and for so long as the Company or such Shareholder or
Shareholders continue to exercise such reasonable efforts, Acquiror may
not terminate this Agreement under this Section 10.01(c);
(d) by the Company or any of the Shareholders, upon breach of
any covenant or agreement on the part of Acquiror set forth in this
Agreement, or if any representation or warranty of Acquiror shall have
become untrue, in either case such that the conditions set forth in
Section 9.02(a) or Section 9.02(b) would not be satisfied (a
"Terminating Acquiror Breach"); provided that, if such Terminating
Acquiror Breach is curable by Acquiror through the exercise of its
reasonable efforts and for so long as Acquiror continues to exercise
such reasonable efforts, the Company may not terminate this Agreement
under this Section 10.02(d); or
(e) by either Acquiror or the Company or any of the
Shareholders, if there shall be any Order which is final and
nonappealable preventing the consummation of the Merger, unless the
party relying on such Order has not complied with its obligations under
Section 7.03(b).
10.02 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 10.01, the Shareholders, the Company, Acquiror and
Acquisition Sub shall
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have no obligation or liability to each other except that (i) the provisions of
Sections 7.02(c) and (d) and 7.06 shall survive any such termination, (ii)
nothing herein and no termination pursuant hereto will relieve any party from
liability for any breach of this Agreement, and (iii) any promissory note for
funds advanced to the Company pursuant to Section 7.17 shall immediately become
due and payable.
10.03 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits thereof. This
Agreement may not be amended or supplemented at any time, except by an
instrument in writing signed on behalf of each party hereto. The waiver by any
party hereto of any condition or of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other condition or
subsequent breach.
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the Schedules and Exhibits hereto) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both oral and
written, among the parties or any of them, with respect to the subject matter
hereof, and neither this nor any document delivered in connection with this
Agreement confers upon any person not a party hereto any rights or remedies
hereunder except as provided in Article I and Article VIII hereof.
10.05 ASSIGNMENT. This Agreement shall inure to the benefit of and
will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. This Agreement shall not be
assignable by any party hereto without the consent of the other parties hereto,
except that the parties hereto agree that the rights and obligations of the
Acquiror may be assigned to any direct or indirect wholly owned subsidiary of
the Acquiror by written notice to all other parties hereto, but no such
assignment shall in any way operate to enlarge, alter or change any obligation
of or due to the Company or the Shareholders or relieve Acquiror of its
obligations hereunder.
10.06 CERTAIN DEFINITIONS. For the purposes of this Agreement, unless
the context clearly indicates otherwise, the term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which
banks in The Netherlands or the State of Texas are authorized or
obligated to be closed;
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(c) "Closing" shall have the meaning set forth in Section 1.11
of this Agreement, of persons interested in the transactions
contemplated by this Agreement at which all documents deemed necessary
by the parties to this Agreement to evidence the fulfillment or waiver
of all conditions precedent to the consummation of the transactions
contemplated by the Agreement are executed and delivered;
(d) "Closing Date" shall mean the date of the Closing as
determined pursuant to Section 1.11 of this Agreement.
(e) "Competing Transaction" shall mean any proposal or offer
from any person or entity (other than Acquiror or an affiliate of
Acquiror) relating to any acquisition or purchase of all or (other than
in the ordinary course of business) any material portion of the assets
of, or any possible disposition or issuance of any Common Stock or any
capital stock or other equity interests in the Company or any of its
subsidiaries (or any rights or securities exercisable for or
convertible into Common Stock or any such capital stock or other equity
interests), or any merger or other business combination with, the
Company or any of its subsidiaries;
(f) "control" (including the terms "controlled," "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ownership of stock or as trustee or executor, by contract
or credit arrangement or otherwise;
(g) "Intellectual Property Rights" shall mean: (a) all
software, source code and object code, and modifications (including
software under development), ideas and discoveries and inventions
(whether or not patentable), trade secrets, information (confidential
or otherwise), technical data, techniques, processes, methods, plans,
designs, drawings, schematics, specifications, communications
protocols, test procedures, algorithms, technology, know-how, customer
lists, marketing and customer information, documentation, materials and
works of authorship which are the subject matter of copyright,
regardless of how embodied; (b) all intangible intellectual property
rights therein, including the right to make, sell, license or otherwise
distribute, and use, and any and all applications for United States or
foreign patents or issued patents; all trademarks, service marks, trade
names, or trade dress, and all pending or issued United States or
foreign registrations thereof; and copyrights and United States and
foreign applications and registrations thereof, including the rights to
copy, sell, license or otherwise distribute, display, publish and
create derivative works therefrom; (c) the BP Amoco License with BP
Amoco; and (d) contracts, agreements and licenses with third parties
pertaining to such matters.
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(h) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization, other entity or group (as defined in Section 13(d) of the
Exchange Act);
(i) "subsidiary" or "subsidiaries" of the Company, Acquiror or
any other person, means any corporation, partnership, joint venture or
other legal entity of which the Company, Acquiror or any such other
person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity;
(j) "Tax" or "Taxes" shall mean any and all taxes, charges,
fees, levies, assessments, duties or other amounts payable to any
federal, state, local or foreign taxing authority or agency, including,
without limitation, (i) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license,
payroll, withholding, disability, employment, social security, workers
compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (ii) customs,
duties, imposts, charges, levies or other similar assessments of any
kind, and (iii) interest, penalties and additions to tax imposed with
respect thereto; and
(k) "Trading Day" shall mean each business day on which the
New York Stock Exchange Market is open for trading.
10.07 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and (i) delivered in person or by courier, (ii) sent by
telecopy or facsimile transmission, or (iii) mailed, certified first class mail,
postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
If to the Company: Coherence Technology Company, Inc.
1155 Dairy Ashford, Suite 600
Houston, Texas 77079
Attention: Patrick Keenan
Telecopy: (281) 870-1088
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with a copy (which shall
not constitute notice) to: Baker & Botts, L.L.P.
910 Louisiana
Houston, Texas 77002-4995
Attention: Gene Oshman
Telecopy: (713) 229-1522
If to the Shareholders or
Shareholders' Representative:c/o Shareholders' Representative of
Coherence Technology Company, Inc.
c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
Attention: Dirk W. McDermott
Telecopy: (303) 623-3525
with a copy (which shall
not constitute notice) to: Baker & Botts, L.L.P.
910 Louisiana
Houston, Texas 77002-4995
Attention: Gene Oshman
As Counsel to the Company, but
not as Counsel to the Shareholders
Telecopy: (713) 229-1522
If to Acquiror
or Acquisition Sub: Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and Core Laboratories, Inc.
5295 Hollister Road
Houston, Texas 77040
Telecopy: (713) 744-6225
Attention: John D. Denson
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with a copy (which shall
not constitute notice) to: Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Telecopy: (713) 615-5531
Attention: T. Mark Kelly
or to such other address as the parties hereto shall have furnished to the other
parties hereto by notice given in accordance with this Section 10.07. Such
notices shall be effective (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by telecopy or facsimile
transmission, when the sender receives telecopier confirmation that such notice
was received at the telecopier number of the addressee, or (iii) if mailed, upon
the earlier of five (5) business days after deposit in the mail and the date of
delivery as shown by the return receipt therefor.
10.08 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive law of the State of Texas, without giving
effect to the principles of conflicts of law thereof.
10.09 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term,
provision, covenant or restriction is invalid, void or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, by original or facsimile signatures, each of which shall be an
original, but all of which together shall constitute one and the same agreement.
10.11 HEADINGS. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
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IN WITNESS WHEREOF, the Company and each of the Acquiror Companies have
each caused this Agreement to be executed on its behalf by its officer thereunto
duly authorized, and each of the Shareholders has executed this Agreement, all
as of the date first above written.
CORE LABORATORIES N.V.
BY: CORE LABORATORIES INTERNATIONAL
B.V., its Sole Managing Director
By: /s/ Jacobus Schouten
--------------------
Jacobus Schouten
Managing Director
CORE COLORADO ACQUISITION, INC.
By: /s/ David M. Demshur
--------------------
Name: David M. Demshur
Title: President
COHERENCE TECHNOLOGY COMPANY, INC.
By: /s/ Patrick G. Keenan
---------------------
Name: Patrick G. Keenan
Title: Chief Executive Officer
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NUMBER OF
SHARES NON-ACCREDITED ACCREDITED
OF COMPANY INVESTOR INVESTOR
STOCK
SHAREHOLDERS OWNED
(Please check one box)
/s/ Alexis M. Cranberg 427,510 [ ] [X]
- ----------------------
Alexis M. Cranberg
McDermott & Associates, L.L.C. 364,600 [ ] [X]
By: /s/ Dirk W. McDermott
---------------------
Name: Dirk W. McDermott
Title: President
Altira Technology Fund I, L.L.C. 169,960 [ ] [X]
By: /s/ Dirk W. McDermott
---------------------
Name: Dirk W. McDermott
Title: President
/s/ Randall D. Keys 152,300 [ ] [X]
- -------------------
James R. Newell
by Randall D. Keys, Attorney-in-Fact
R. Chaney & Partners II, L.P. 100,000 [ ] [X]
By: /s/ Curtis Harrell
------------------
Name: Curtis Harrell
Title: E.V.P. - R. Chaney & Co.
/s/ Patrick G. Keenan 13,420 [ ] [X]
- ---------------------
Patrick G. Keenan
/s/ Daniel S. Morris 12,000 [X] [ ]
- --------------------
Daniel S. Morris
-57-
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EXHIBIT A
ESCROW AGREEMENT
-58-
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ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement"), dated as of June 9, 1999,
is entered into by and among Core Laboratories N.V., a Netherlands limited
liability company ("Acquiror"); Core Colorado Acquisition, Inc., a Colorado
corporation with its principal place of business in Houston, Texas and a wholly
owned subsidiary of Core ("Acquisition Sub"), Coherence Technology Company,
Inc., a Colorado corporation (the "Company"), Dirk McDermott (the "Shareholders'
Representative") and Bankers Trust Company, as escrow agent ("Escrow Agent").
Defined terms used but not otherwise defined herein shall have the meanings set
forth in the Merger Agreement (as defined below).
WHEREAS, Acquiror, Acquisition Sub, the Company, the Shareholders of
the Company and the Shareholder's Representative have entered into an Agreement
and Plan of Merger, dated June 9, 1999 (the "Merger Agreement"), pursuant to
which Acquisition Sub is merging with and into the Company with the Company as
the surviving corporation of such merger (the "Merger"), with the result that
the surviving corporation will become a wholly-owned subsidiary of Acquiror and
all of the outstanding shares of common stock, $0.001 par value of the Company
(the "Company Stock") will be converted into Acquiror Shares; and
WHEREAS, pursuant to the Merger Agreement, the Company and the
Shareholders have made certain representations, warranties, covenants and
agreements to and with Acquiror and the Shareholders have agreed to indemnify,
defend and hold harmless the Acquiror Indemnified Parties against Claims under
Article VIII of the Merger Agreement; and
WHEREAS, the parties to the Merger Agreement have agreed to establish
an escrow fund (the "Escrow Fund"), initially consisting of 17,055 Acquiror
Shares and cash in the amount of $2,616.34, from which they may, subject to the
terms and conditions of the Merger Agreement and this Escrow Agreement, satisfy
the Shareholders' obligations to indemnify against Claims; and
WHEREAS, the Escrow Agent has agreed to act as the agent and custodian
for the Escrow Fund for the benefit of the parties to the Merger Agreement; and
WHEREAS, pursuant to the Merger Agreement, the Appointment and the
terms and conditions hereof, the Shareholders' Representative is authorized to
serve as the representative and agent hereunder for each of the Shareholders
with full power and authority to execute, deliver and act on each such
Shareholder's behalf hereunder in all respects;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements, provisions and covenants contained in this Escrow Agreement and the
Merger Agreement, the parties hereby agree as follows:
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ARTICLE 1
ESTABLISHMENT OF ESCROW
(a) Acquiror, Acquisition Sub, the Company and the Shareholders'
Representative each hereby appoint the Escrow Agent to act as agent and
custodian for the Escrow Fund for their respective benefit pursuant to the terms
of this Escrow Agreement, and the Escrow Agent hereby accepts such appointment
pursuant to such terms.
(b) Pursuant to the terms of Section 1.06 of the Merger Agreement,
Acquiror will cause to be delivered to, and directly deposited with, the Escrow
Agent for the account and future potential benefit of the Shareholders a stock
certificate representing 17,055 Acquiror Shares, which certificate shall be
registered as follows: "Bankers Trust Company f/b/o Certain Former Shareholders
of the Common Stock of Coherence Technology Company, Inc." and cash in the
amount of $2,616.34 by wire transfer pursuant to the instructions set forth on
Exhibit D, which cash shall be for the benefit of Dan Morris, a former
Shareholder of Coherence Technology Company, Inc. All such Acquiror Shares
hereby initially delivered to, and initially deposited with, the Escrow Agent,
together with all subsequent stock dividends or distributions of other Acquiror
Shares received in respect of such shares while deposited hereunder, together
with the cash deposited for the benefit of Dan Morris, shall be referred to
herein as the "Escrow Shares."
(c) The respective number of Escrow Shares to be initially deposited
with the Escrow Agent by Acquiror for the account of each Shareholder is set
forth on Exhibit A hereto.
(d) The Shareholders' Representative shall deliver to the Escrow Agent
simultaneously herewith four stock powers duly executed and endorsed in blank in
the form attached as Exhibit B with respect to each stock certificates
representing the Escrow Shares, and the Escrow Agent hereby acknowledges receipt
of the stock certificates representing the Escrow Shares and such executed stock
powers. The Shareholders' Representative agrees to execute in the future such
additional stock powers as may be required or requested by Acquiror or the
Escrow Agent to transfer any Escrow Shares required in accordance with the
provisions of the Merger Agreement and this Escrow Agreement.
(e) The Escrow Shares shall be retained, managed and disbursed by the
Escrow Agent subject to the terms and conditions of this Escrow Agreement and
Article VIII of the Merger Agreement. Each Shareholder shall have the full and
unencumbered right to vote all Escrow Shares held for his account in the Escrow
Fund on matters submitted to a vote of Acquiror's shareholders.
(f) All cash dividends and cash distributions on Escrow Shares, when
and if distributed by Acquiror, and all additional Acquiror Shares, property or
other securities, issued on or with respect to the Escrow Shares ("Additional
Corpus"), including as a result of stock splits, stock dividends or other
similar capital adjustments to, or recapitalizations on, or share
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exchanges with (including by reason or merger, consolidation or other business
combination involving Acquiror), the Acquiror Shares, or other securities, shall
be retained in the Escrow Fund for the respective account of the Shareholders
subject to the terms hereof.
ARTICLE 2
CLAIMS AGAINST ESCROW SHARES
(a) If Acquiror is entitled to indemnification from the Shareholders
against a Claim pursuant to Section 8.01 (or any other section) of the Merger
Agreement, then such Claim shall be satisfied by the Escrow Agent's delivery to
Acquiror of the requisite number of Escrow Shares (determined in accordance with
Article VIII of the Merger Agreement). Any Claim by Acquiror against the
Shareholders shall be deemed to be paid and satisfied upon receipt by Acquiror
from the Escrow Agent of stock certificates representing the requisite number of
Escrow Shares (accompanied by stock powers duly executed and endorsed in blank
covering such shares in accordance with Article 3 of this Escrow Agreement) and
any Additional Corpus allocable to such Escrow Shares. As used in this Escrow
Agreement, the term "Claim" shall have the same meaning as set forth in Section
8.01 of the Merger Agreement as it shall apply to any claim for indemnification
asserted by Acquiror against the Shareholders pursuant to Section 8.01 (or any
other section) of the Merger Agreement. As used in this Escrow Agreement with
respect to entitlement to indemnification under the Merger Agreement, the term
"Acquiror" shall include all parties included in the definition of "Acquiror
Indemnified Parties" as set forth in Section 8.01 of the Merger Agreement.
(b) The delivery to Acquiror of Escrow Shares and Additional Corpus, if
any, applicable to such Escrow Shares, in satisfaction of an indemnification
claim hereunder shall be taken from the accounts of each Shareholder in the
Escrow Fund as nearly as practical on a pro rata basis based on the initial
ownership interest in all Escrow Shares initially deposited hereunder.
ARTICLE 3
PROCEDURE FOR CHARGE TO ESCROW
(a) Any Claim under the indemnification provisions of the Merger
Agreement to be satisfied under this Escrow Agreement shall be made by Acquiror
by notice to the Escrow Agent and the Shareholders' Representative, stating in
specific terms the circumstances giving rise to the Claim, the basis for
indemnification, specifying the amount of the Claim and making a request for any
payment then believed due. A Claim shall be deemed to be finally resolved and
appropriate for payment by the Escrow Agent when the conditions specified in
clause (b) below have been met with respect thereto.
(b) For purposes of this Escrow Agreement, a "Final Instruction" shall
mean a written notice given to the Escrow Agent directing the disbursement from
the Escrow Fund of the amount of the Claim, and shall be signed both by Acquiror
and by the Shareholders'
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Representative except as otherwise provided in clause (ii) or (iii) below. A
Final Instruction shall be delivered to the Escrow Agent under the following
circumstances, and accompanied by the indicated documentation:
(i) If the Shareholders' Representative disputes either the
validity, amount or calculation of the Claim, the Shareholders'
Representative shall give written notice of such dispute to Acquiror,
with a copy to the Escrow Agent, within 30 days after the delivery of
notice of the Claim by Acquiror. Such notice shall set forth the
reasons and basis for disputing such Claim and the amount in dispute.
In such circumstances, no Final Instruction may be given to the Escrow
Agent except as provided in clause (iii) below.
(ii) If the Shareholders' Representative fails to respond to
the Claim within 30 days after the delivery to the Shareholders'
Representative and the Escrow Agent of the notice of the Claim, or if
the Shareholders' Representative notifies the Escrow Agent that there
is no dispute with respect to the Claim, Acquiror shall have the right
to deliver to the Escrow Agent a Final Instruction, signed only by
Acquiror, with respect to the Claim.
(iii) In the case of a dispute, the Escrow Agent shall not
disburse any of the Escrow Fund in connection with the disputed amount
of such Claim until such time as the Escrow Agent receives a Final
Instruction with respect to such disputed Claim as set forth below.
Upon receipt of such notice of dispute by Acquiror, both Acquiror and
the Shareholders' Representative shall use all reasonable efforts to
cooperate and arrive at a mutually acceptable resolution of such
dispute within the next 30 days. If the Shareholders' Representative
and the Acquiror reach an agreement with respect to such dispute, the
Shareholders' Representative and the Acquiror shall give to the Escrow
Agent a Final Instruction, signed by both the Shareholders'
Representative and the Acquiror, with respect to the Claim. If a
mutually acceptable resolution cannot be reached between Acquiror and
the Shareholders' Representative within such 30-day period, either
party may submit the dispute for resolution by binding arbitration
pursuant to the provisions of this Article 3. If a party elects to
submit such matter to arbitration, such party shall provide notice to
the other party of its election to do so, and the parties shall attempt
to appoint a single arbitrator. If the parties are unable within 10
days after receipt of the notice to agree on a single arbitrator, then
each party shall appoint one arbitrator, and the two arbitrators so
appointed shall name a third arbitrator within a period of 10 days of
their nomination. If the two arbitrators fail to appoint a third
arbitrator within such 10-day period, a third arbitrator shall be
appointed pursuant to the then existing Commercial Arbitration Rules
(the "Rules") of the American Arbitration Association ("AAA"). In all
respects, such panel and the arbitration proceeding shall be governed
by the Rules, and the place of arbitration shall be in a city mutually
selected by Acquiror and the Shareholders' Representative (or, if no
city can be mutually agreed upon within 10 days, then in Houston,
Texas). If it is finally determined that all or a portion of such Claim
amount is owed to an Acquiror Indemnified Party, the Acquiror
Indemnified
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Party shall be entitled to payment of such Claim upon presentation of a
Final Instruction signed by Acquiror and accompanied by a copy of the
arbitration order. Judgment upon the award resulting from arbitration
may be entered in any court having jurisdiction for direct enforcement,
or any application may be made to a court for a judicial acceptance of
the award and an order of enforcement, as the case may be.
(c) Promptly after resolution of a Claim as provided in clause (b)
above, the Escrow Agent shall satisfy such Claim by delivering to Acquiror the
amount of the Escrow Fund calculated in accordance with Section 8.05 of the
Merger Agreement or, if the value of the Escrow Fund held hereunder is less than
the amount of such Claim, by delivering to Acquiror all of the Escrow Fund then
held hereunder. Any Escrow Shares delivered to Acquiror in satisfaction of a
Claim hereunder shall be accompanied by duly executed blank stock powers (in the
form attached as Exhibit B) therefor and any such Escrow Shares so delivered
shall be free and clear of any interest of the Shareholders or Escrow Agent
therein. If the amount of the Escrow Shares to be delivered to Acquiror is not
available in that specified certificate denomination then the Escrow Agent
should request the necessary denomination from the stock transfer agent at the
following address: American Stock Transfer & Trust Company, 40 Wall Street, New
York, NY 10005, Attention: Jennifer Donnovan.
ARTICLE 4
DISPOSITION OF ESCROW FUND
(a) The Escrow Fund held hereunder shall be released by the Escrow
Agent to Shareholders' Representative, on the first to occur of (i) the issuance
of the first audit report following the Closing Date of the consolidated
financial statements of Acquiror which includes the Surviving Corporation and
(ii) the first anniversary of the Closing Date. The date the event described in
either of the preceding clauses (i) and (ii) occurs is referred to herein as the
"Distribution Date." Notwithstanding any other provision hereof, if on the
Distribution Date any unresolved Claim is then pending hereunder, only the
amount of the Escrow Fund having a value in excess of the value required to
satisfy such Claim (Escrow Shares being valued for such purpose in accordance
with Article VIII of the Merger Agreement) as determined in good faith by
Acquiror shall be released to the Shareholders Representative.
(b) At such later time as all Claims have been finally resolved and the
amount of all such Claims has been paid to Acquiror, the balance of the Escrow
Fund then held hereunder, if any, shall be disbursed to the Shareholders'
Representative. The Shareholders' Representative shall have no personal
liability as a result of any actions taken in such position to Acquiror,
Acquisition Sub or any of the Acquiror Indemnified Parties or to any Shareholder
in either case with respect to the disposition of the Escrow Shares or any other
action taken by him as the Shareholders' Representative, unless such actions
constitute gross negligence or willful misconduct.
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(c) The escrow established by this Escrow Agreement shall continue in
effect until release of the entire Escrow Fund pursuant to the provisions
hereof.
(d) No fractional Acquiror Shares shall be delivered at any time by the
Escrow Agent and the Escrow Agent shall be authorized to adjust shares between
the accounts of the Shareholders to eliminate fractional shares.
ARTICLE 5
PROVISIONS RELATING TO THE ESCROW AGENT
(a) The Escrow Agent shall have no duties or responsibilities
whatsoever with respect to the Escrow Fund except as are specifically set forth
herein. The Escrow Agent shall neither be responsible for or under, nor
chargeable with knowledge of the terms and conditions of, any other agreement,
instrument or document in connection herewith other than Article VIII of the
Merger Agreement, which is incorporated herein by reference. The Escrow Agent
may conclusively rely upon, and shall be fully protected from all liability,
loss, cost, damage or expense in acting or omitting to act pursuant to any
written notice, instrument, request, consent, certificate, document, letter,
telegram, opinion, order, resolution or other writing hereunder without being
required to determine the authenticity of such document, the correctness of any
fact stated therein, the propriety of the service thereof or the capacity,
identity or authority of any party purporting to sign or deliver such document.
The Escrow Agent shall have no responsibility for the contents of any such
writing contemplated herein and may rely without any liability upon the contents
thereof.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or with the rights or powers conferred upon it hereunder, nor for action
taken or omitted by it in good faith, and in accordance with advice of counsel
(which counsel may be of the Escrow Agent's own choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts or omissions
of any kind except for its own willful misconduct or gross negligence.
(c) Each of the Acquiror and Shareholder's Representative agrees to
jointly and severally indemnify the Escrow Agent and its employees, directors,
officers and agents and hold each harmless against any and all liabilities
incurred by it hereunder as a consequence of such party's action, and the
parties agree jointly and severally to indemnify the Escrow Agent and hold it
harmless against any claims, costs, payments, and expenses (including the fees
and expenses of counsel) and all liabilities incurred by it in connection with
the performance of its duties hereunder and them hereunder, except in either
case for claims, costs, payments and expenses (including the fees and expenses
of counsel) and liabilities incurred by the Escrow Agent resulting from its own
willful misconduct or gross negligence.
(d) The Escrow Agent may resign as such following the giving of 60
days' prior written notice to Acquiror and the Shareholders' Representative.
Similarly, the Escrow Agent
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may be removed and replaced following the giving of 60 days' prior written
notice to the Escrow Agent jointly by Acquiror and the Shareholders'
Representative. In either event, the duties of the Escrow Agent shall terminate
60 days after the date of such notice (or at such earlier date as may be
mutually agreeable), except for its obligations to hold and deliver the Escrow
Fund to the successor Escrow Agent; and the Escrow Agent shall then deliver the
balance of the Escrow Fund then in its possession to such a successor Escrow
Agent as shall be appointed by Acquiror and the Shareholders' Representative as
evidenced by a written notice filed with the Escrow Agent. If Acquiror and the
Shareholders' Representative are unable to agree upon a successor Escrow Agent
by the effective date of such resignation or removal, the then acting Escrow
Agent may petition any court of competent jurisdiction for the appointment of a
successor Escrow Agent or other appropriate relief; and any such resulting
appointment shall be binding upon all of the parties hereto. Upon acknowledgment
by any successor Escrow Agent of the receipt of the then remaining balance of
the Escrow Fund, the then acting Escrow Agent shall be fully released and
relieved of all duties, responsibilities and obligations under this Escrow
Agreement.
(e) The Escrow Agent shall not be bound in any way by any agreement,
other than this Escrow Agreement. A copy of the Merger Agreement, together with
the Schedules and Exhibits thereto, has been provided to the Escrow Agent in
connection with the execution of this Escrow Agreement and the Escrow Agent
understands that the terms of the Shareholders' indemnification obligations are
set forth in Article VIII of the Merger Agreement. The Merger Agreement forms an
integral part of this Escrow Agreement and, therefore, Article VIII thereof is
hereby incorporated by reference herein.
(f) The Escrow Agent shall be under no duty to institute or defend any
arbitration or legal proceeding with respect to the Escrow Fund or under this
Escrow Agreement and none of the costs or expenses or any such proceeding shall
be borne by the Escrow Agent. The costs and expenses of any such proceeding
shall be borne as decided by the arbitrators or court and shall be direct
obligations of Acquiror or the Shareholders' Representative, as the case may be,
and shall not be satisfied in any way by the Escrow Fund.
ARTICLE 6
SECURITY INTEREST
The Shareholders' Representative hereby grants to Acquiror, in the name
of and on behalf of the Shareholders, a first priority security interest in each
of the Shareholder's respective rights, title to and interest in the Escrow Fund
held under this Escrow Agreement, for the purpose of securing, or partially
securing, each and all of their indemnification obligations to Acquiror pursuant
to Article VIII of the Merger Agreement. The Shareholders' Representative agrees
to execute and deliver any such further instruments as Acquiror or Escrow Agent
may request from time to time evidencing such security interest.
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ARTICLE 7
NOTICES
All notices, requests, demands, claims and other communications which
are required to be or may be given under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given if (i) delivered in person
or by courier, (ii) sent by telecopy or facsimile transmission, answer back
requested, or (iii) mailed, by registered or certified mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
(a) If to Acquiror:
Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Telecopy: 011-31-20-627-9886
Attention: Jacobus Schouten
and
Core Laboratories, Inc.
5295 Hollister Road
Houston, Texas 77040
Telecopy: (713) 744-6225
Attention: John D. Denson
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Telecopy: (713) 615-5531
Attention: T. Mark Kelly
(b) If to the Escrow Agent:
Bankers Trust Company
4 Albany Street
New York, NY 10006
Telecopy: (212) 250-6392
Attention: Tom Hacker
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(c) If to the Shareholders' Representative:
c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
Telecopy: (303) 623-3525
Attention: Dirk W. McDermott
or to such other address as any party shall have furnished to the other
by notice given in accordance with this Article 7. Such notices shall
be effective, (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by telecopy or
facsimile transmission, when the answer back is received, or (iii) if
mailed, upon the earlier of five business days after deposit in the
mail and the date of delivery as shown by the return receipt therefor.
ARTICLE 8
BINDING EFFECT; OTHER INTERESTS
This Escrow Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns. Nothing herein is intended or
shall be construed to give any other person (including, without
limitation, any creditors of Escrow Agent, Acquiror, the Company or the
Shareholders' Representative) any right, remedy or claim under, in or
with respect to this Escrow Agreement or the Escrow Fund held
hereunder. The Escrow Agent shall not have a lien or adverse claim
upon, or any other right whatsoever to payment from, the Escrow Fund
(or dividends or distributions paid thereon) for or on account of any
right to payment or reimbursement hereunder or otherwise.
ARTICLE 9
GOVERNING LAW
This Escrow Agreement shall be construed and enforced in
accordance with the laws of the State of Texas, excluding any choice of
law rules that may direct the application of the laws of another
jurisdiction.
ARTICLE 10
COMPENSATION; EXPENSES
The Escrow Agent shall be entitled to payment from Acquiror
for customary fees and expenses for all services rendered by it
hereunder in accordance with Exhibit C attached hereto (as such
schedule may be amended from time to time), payable on the closing
date. The Escrow Agent shall also be entitled to reimbursement on
demand for all loss, liability, damage or expenses paid or incurred by
it in the administration of its
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duties hereunder, including, but not limited to, all counsel, advisors'
and agents' fees and disbursements and all taxes or other governmental
charges, such amounts to be shared equally between the Acquiror and the
Shareholders' Representative.
ARTICLE 11
TERM
This Escrow Agreement shall terminate on the later of (i) the
Distribution Date or (ii) the date on which all Claims, if any,
asserted by Acquiror pursuant to the terms of this Escrow Agreement and
the Merger Agreement shall have been conclusively resolved and paid
pursuant to this Escrow Agreement and the Merger Agreement. The rights
of the Escrow Agent and the obligations of the other parties hereto
under Articles 5 and 10 shall survive the termination thereof and the
resignation or removal of the Escrow Agent.
ARTICLE 12
AMENDMENT AND MODIFICATION
Acquiror, Shareholders' Representative and the Escrow Agent
may amend, modify and/or supplement this Escrow Agreement as they may
mutually agree in writing.
ARTICLE 13
COUNTERPARTS
This Escrow Agreement may be executed in two or more
counterparts or by facsimile, each of which shall be deemed an
original, but all of which together shall constitute but one and the
same instrument.
ARTICLE 14
HEADINGS
The headings used in this Escrow Agreement are for convenience
only and shall not affect the construction hereof.
ARTICLE 15
ASSIGNABILITY
Neither this Escrow Agreement nor any interest herein or in
the Escrow Fund may be assigned or transferred, voluntarily or by
operation of law, by Acquiror, the Shareholders' Representative or the
Escrow Agent, except pursuant to the laws of descent and distribution;
provided, however, that Acquiror may assign this Escrow Agreement and
any or all interest herein to any direct or indirect wholly owned
subsidiary of Acquiror upon notice to all parties and, thereupon such
assignee shall fully assume and
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succeed to all of the assignors' rights, benefits, obligations, duties
and responsibilities hereunder.
Notwithstanding the foregoing, if the Shareholders'
Representative is unable or unwilling to carry out his duties as
Shareholders' Representative, then the Shareholder who beneficially
held the next highest number of shares of Company Stock immediately
prior to the Effective Time (unless such Shareholder is then employed
or serves as a director of Acquiror or its affiliates), shall be
designated and appointed as the Shareholders' Representative, and shall
assume all of the powers and duties of the Shareholders' Representative
under the Merger Agreement and the Escrow Agreement. If any successor
Shareholders' Representative becomes unable or unwilling to carry out
his duties as Shareholders' Representative, his replacement shall be
the Shareholder who beneficially held next highest number of shares of
Company Stock immediately prior to the Effective Time.
ARTICLE 16
TAX WITHHOLDING
Notwithstanding anything to the contrary set forth herein, the
Escrow Agent is authorized to withhold from any proposed distribution
to the Shareholders from the Escrow Fund such amount as is necessary
for the purpose of complying with the Escrow Agent's obligations under
federal, state or local tax provisions; provided, however, that such
withholding shall not reduce the amount of the Escrow Fund which may
otherwise be required to be delivered to Acquiror under Article 3
hereof. In the event that there are insufficient funds remaining to pay
any withholding obligations after distribution of the Escrow Funds to
Acquiror, such liability shall be the responsibility of the
Shareholders.
ARTICLE 17
SEVERABILITY
If any term, provision, covenant or restriction of this Escrow
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provision, covenants
and restrictions of this Escrow Agreement shall continue in full force
and effect and shall in no way be affected, impaired or invalidated
unless such an interpretation would materially alter the rights and
privileges of any party hereto or materially alter the terms of the
transactions contemplated hereby.
ARTICLE 18
DESIGNEES FOR INSTRUCTIONS
Acquiror may, by notice to the Escrow Agent, designate one or
more persons who will execute notices and from whom the Escrow Agent
may take instructions hereunder. Such designations may be changed from
time to time upon notice to the Escrow Agent
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from Acquiror. The Escrow Agent will be entitled to rely conclusively
on any notices or instructions from any person so designated by
Acquiror.
ARTICLE 19
MEDIATION AND ARBITRATION
(a) Except as provided in Article 3 of this Escrow Agreement
for disputes relating to claims against the Escrow Fund:
(i) Before the institution of any litigation between any
persons relating to this Escrow Agreement, including any dispute over
the application or interpretation of any provision hereof, if
negotiations and other discussions fail, at the election of any party
to this Escrow Agreement, such dispute shall be first submitted to
mediation in accordance with the provisions of the Commercial Mediation
Rules of the AAA before resorting to arbitration. The parties agree to
conduct the mediation in good faith and make reasonable efforts to
resolve their dispute by mediation. The place of the mediation shall be
in a city mutually selected by the parties (or, if no city can be
mutually agreed upon within ten (10) days, then in Houston, Texas).
(ii) If the dispute is not resolved by the mediation required
under the preceding subsection, such dispute shall, at the election of
any party to this Escrow Agreement, be subject to binding arbitration
in accordance with the provisions of the Rules, and judgment on the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration shall be heard before a panel of
three (3) arbitrators selected in accordance with the procedures
therefor set forth in Article 3 of this Escrow Agreement. The parties
agree to use the Houston, Texas office of the AAA and the place of
arbitration shall be in a city mutually selected by the parties (or, if
no city can be mutually agreed upon within ten (10) days, then in
Houston, Texas).
(iii) The prevailing party in any mediation, arbitration or
litigation shall be entitled to recover from the other party reasonable
attorneys' fees, court costs and the administrative costs, fees and
expenses of the AAA, each as applicable, incurred in the same, in
addition to any other relief that may be awarded.
(b) If either party appeals the decision of the arbitrators, the
parties agree that the United States Judicial District including Harris County,
Texas, and the state courts within Harris County, Texas, shall have exclusive
venue and jurisdiction of same.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Escrow Agreement as of the day and year first above written.
CORE LABORATORIES N.V.
BY: CORE LABORATORIES INTERNATIONAL
B.V., its Sole Managing Director
By:
----------------------------------------
Jacobus Schouten
Managing Director
CORE COLORADO ACQUISITION, INC.
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
COHERENCE TECHNOLOGY COMPANY, INC.
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SHAREHOLDERS' REPRESENTATIVE:
By:
----------------------------------------
Name: Dirk W. McDermott
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BANKERS TRUST COMPANY, as Escrow Agent
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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Exhibit A to
Escrow Agreement
ESCROW SHARES OF SHAREHOLDERS
SHAREHOLDER ESCROW AGREEMENT
Alexis M. Cranberg 5,939
McDermott & Associates, L.L.C. 5,065
Altira Technology Fund I, L.L.C. 2,361
James R. Newell 2,115
R. Chaney & Partners II, L.P. 1,389
Patrick G. Keenan 186
-------------------
Total 17,055
===================
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Exhibit B to
Escrow Agreement
CORE LABORATORIES N.V.
COMMON STOCK
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________ __________________ (______) shares of the Common Stock of
Core Laboratories N.V., standing in my(our) name(s) on the books of said
Corporation represented by Certificate(s) No(s). _________ herewith, and do
hereby irrevocably constitute and appoint Bankers Trust Company attorney to
transfer the said stock on the books of said Corporation with full power of
substitution in the premises.
Dated:
----------------------
*By:
------------------------------------
*By:
------------------------------------
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Exhibit C to
Escrow Agreement
BANKERS TRUST COMPANY
CORPORATE TRUST AND AGENCY SERVICES
SCHEDULE OF FEES FOR
CORE LABORATORIES & COHERENCE TECHNOLOGY COMPANY ESCROW
A. Annual Administration Fee: $4,000
(Payable at closing and each subsequent anniversary)
These fees cover the review and execution of the Escrow Agreement,
establishment of the appropriate custody account, the receipt and
distribution of the Escrowed Shares, and all normal administrative time
spent coordinating with other members of the working group.
Note: The fees set forth in this schedule are subject to review of
documentation. The fees are also subject to change should circumstances warrant.
Out-of-pocket expenses and disbursements, including counsel fees, incurred in
the performance of our duties will be added to the billed fees. Fees for any
services not covered in this or related schedules will be based upon our
appraisal of the services rendered.
We may place orders to buy/sell financial instruments with outside
broker-dealers that we select, as well as with BT or its affiliates. These
transactions (for which normal and customary spreads or other compensation may
be earned by such broker-dealers, including BT or its affiliates, in addition to
the charges quoted above) will be executed on a riskless principal basis solely
for your account(s) and without recourse to us or our affiliates. If you choose
to invest in any mutual fund, BT and/or our affiliates may earn investment
management fees and other service fees/expenses associated with these funds as
disclosed in the mutual fund prospectus provided to you, in addition to the
charges quoted above. Likewise, BT has entered into agreements with certain
mutual funds or their agents to provide shareholder services to those funds. For
providing these shareholder services, BT is paid a fee by these mutual funds
that calculated on an annual basis does not exceed 25 basis points of the amount
of your investment in these mutual funds. In addition, if you choose to use
other services provided by BT or its affiliates, Corporate Trust or other BT
affiliates may be allocated a portion of the fees earned. We will provide
periodic account statements describing transactions executed for your
account(s). Trade confirms will be available upon your request at no additional
charge. If a transaction should fail to close for reasons beyond our control, we
reserve the right to charge our acceptance fee plus reimbursement for legal fees
incurred.
Shares of mutual funds are not deposits or obligations of, or guaranteed by,
Bankers Trust Company or any of its affiliates and are not insured by the
Federal Deposit Insurance Corporation or any other agency of the U.S.
JUNE, 1998
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Exhibit D to
Escrow Agreement
ABA # 021001033
Acct # 01419647
Ref: Core Laboratories
Elizabeth Eukers/Environmental Escrow
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EXHIBIT B
APPOINTMENT OF
SHAREHOLDERS' REPRESENTATIVE
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APPOINTMENT OF SHAREHOLDERS' REPRESENTATIVE
This Appointment of Shareholders' Representative, dated as of June 9,
1999 (the "Appointment"), is made and entered into by and among Dirk W.
McDermott, as the agent and attorney-in-fact (the "Shareholders'
Representative"), and the persons listed under the heading "Shareholders" on the
signature page of this Appointment, as the principals (individually, a
"Shareholder", and collectively, the "Shareholders"). This is the Appointment
required by Section 1.06(a) of that certain Agreement and Plan of Merger, dated
as of this date (the "Merger Agreement"), entered into by and among Core
Laboratories N.V., a Netherlands limited liability company ("Acquiror"), Core
Colorado Acquisition, Inc. a Colorado corporation ("Acquisition Sub"), Coherence
Technology Company, Inc., a Colorado corporation (the "Company"), and the
Shareholders of Coherence Technology Company, Inc. Capitalized terms used but
not defined in this Appointment shall have the meanings given to them in the
Merger Agreement or in the Escrow Agreement. This Appointment is subject to the
terms and conditions of the Merger Agreement, the Escrow Agreement, and the
other transaction documents referenced in the Merger Agreement, each of which is
hereby incorporated by reference.
RECITALS
WHEREAS, the Shareholders collectively are the legal and beneficial
owners and holders of record of all of the issued and outstanding Company Common
Stock; and
WHEREAS, pursuant to the Merger Agreement, Acquisition Sub will be
merged with and into the Company, with the Company as the Surviving Corporation
of the Merger, and the Company Stock of each Shareholder will be converted into
Acquiror Shares based on the Exchange Ratio, and certain of the Acquiror Shares
of each Shareholder will be deposited into escrow, upon the terms and subject to
the conditions of the Merger Agreement and Escrow Agreement; and
WHEREAS, each of the Shareholders desires to appoint Shareholders'
Representative as his agent and attorney-in-fact for the specific purposes set
forth herein in connection with the performance of the Escrow Agreement and
provisions of the Merger Agreement specifically relating thereto; and
WHEREAS, the parties acknowledge that Acquiror will be relying upon
this Appointment in entering into the Merger Agreement and Escrow Agreement, and
in consummating the Merger, and consent to such reliance.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants stated in this Agreement, and the
other good and valuable consideration exchanged between the parties, the receipt
and sufficiency of which is hereby acknowledged, the parties intending to be
legally bound agree as follows:
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AGREEMENTS
1. APPOINTMENT. Each of the Shareholders hereby irrevocably makes,
constitutes, and appoints Shareholders' Representative as his agent and true and
lawful attorney-in-fact, for him, and in his name, place, and stead, to do any
and all of the following:
a. To execute, amend, deliver, acknowledge, file, certify,
waive, and perform pursuant to the terms of the Escrow Agreement, and to take
and perform all other acts and execute and deliver all other documents that are
necessary or advisable to give effect to and fully perform the Escrow Agreement,
as Shareholders' Representative determines in his sole discretion to be in the
best interests of the Shareholders;
b. To give and receive all notices and other communications,
whether written and oral, on such Shareholder's behalf with respect to the
Escrow Agreement;
c. To act and perform, or not act or perform, as Shareholders'
Representative determines in his sole discretion to be in the best interests of
the Shareholders, with respect to any notices or other communications, whether
written or oral, received with respect to the Agreement;
d. To control the disposition of the Escrow Funds of each
Shareholder in accordance with the terms of the Escrow Agreement, including, but
not limited to, paying or otherwise settling all Claims against such Escrow
Funds;
e. To execute, amend, deliver, acknowledge, file, certify,
waive, and perform all instruments, certificates, and other documents required
by or necessary or advisable to perform under this Appointment;
f. To take, or not take, such other actions relating to the
foregoing which a person with the authority granted to Shareholders'
Representative hereunder could reasonably be expected to perform, or not
perform, as the case may be; and
g. With respect to any claims for indemnification by the
Acquiror Indemnification Parties under the Escrow Agreement, to adjust and upon
release of the Escrow Funds to reallocate the Escrow Funds between the accounts
of the Shareholders to reflect, as nearly as practicable and as determined in
good faith by the Shareholders' Representative, (i) a pro rata reduction of the
Shareholders' accounts in satisfaction of claims arising out of a breach by the
Company (in the event that previous reductions in such accounts were not
effected on a pro rata basis) and/or (ii) an individual reduction of the account
or accounts of any Shareholder or Shareholders with respect to claims arising
out of a breach attributable to such Shareholder or Shareholders to the extent
that any other Shareholders' account has been reduced in respect to
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such breach. It is understood and agreed that Dan Morris shall be entitled, if
at all, to receive his share of the Escrow Funds only in cash.
In performing under this Appointment, every act and performance, or
failure to act and perform, shall be with the same effect as if the Shareholders
were acting and performing, or not doing so, personally for themselves and in
their own names, and each Shareholder hereby agrees to be bound by and ratifies
and confirms as his own act all the Shareholders' Representative shall do, or
cause to be done, under this Appointment. Further, every act and performance, or
failure to act and perform, by Shareholders' Representative shall be conclusive
evidence of his determination that such act and performance, or refusal to do
so, was in the best interests of the Shareholders.
2. LIMITATION OF LIABILITY. Notwithstanding any provision in this
Appointment to the contrary, the Shareholders' Representative shall have no
personal liability to any of the Shareholders, Acquiror, Acquisition Sub, or any
other person, as a result of any actions taken, or not taken, under this
Appointment, unless such actions constitute gross negligence or willful
misconduct by the Shareholders' Representative.
3. REVIEW OF TRANSACTION DOCUMENTS. Each of the Shareholders represents
and warrants to the Shareholders' Representative that he has read the Merger
Agreement, the Escrow Agreement, and the other transaction documents referenced
in the Merger Agreement by which he is bound, and understands his rights,
liabilities, and obligations thereunder. Each of the Shareholders agrees that,
as to each liability or obligation of his under the Escrow Agreement, he will
promptly perform all actions requested by the Shareholders' Representative with
respect thereto (including, but not limited to, making payment of or otherwise
settling any indemnification obligation under Article VIII of the Merger
Agreement).
4. COMPENSATION. The Shareholders' Representative shall not be entitled
to any compensation for performing under this Appointment.
5. IRREVOCABLE; TERMINATION.
a. The death or incapacity of any Shareholder shall not
terminate this Appointment. This Appointment is irrevocable and subject only to
termination pursuant to the following subsection. The appointment of
Shareholders' Representative is coupled with an interest in that Shareholders'
Representative is also a beneficial Shareholder, and thereby has a present,
legal and beneficial interest in the Company Stock.
b. This Appointment shall become effective at the Effective
Date and shall terminate, without any notice or further action on the part of
any party hereto, upon the natural expiration, or earlier termination, of the
Escrow Agreement or with respect to any particular Shareholders at such earlier
time as that Shareholder no longer holds any Escrow Shares or
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Additional Corpus (the "Termination Date"). From and after the Termination Date,
the Shareholders' Representative shall have no further liability or obligation
with respect to the Shareholders or Shareholder, as the case may be, under this
Appointment (except for any liability or obligation accruing prior to the
Termination Date).
6. SUBSTITUTE SHAREHOLDERS' REPRESENTATIVE. In the event the
Shareholders' Representative dies or earlier resigns from this Appointment or is
otherwise unable or unwilling to carry out his duties as the Shareholders'
Representative, then the Shareholder who beneficially held the next highest
number of shares of Company Stock immediately prior to the Effective Time
(unless such Shareholder is then employed or serves as a director of Acquiror or
its affiliates), shall be designated and appointed as the Shareholders'
Representative, and shall assume all of the powers and duties of the
Shareholders' Representative under this Appointment. If any successor
Shareholders' Representative becomes unable or unwilling to carry out his duties
as Shareholders' Representative, his replacement shall be the Shareholder who
beneficially held next highest number of shares of Company Stock immediately
prior to the Effective Time. Any successor Shareholders' Representative shall
perform subject to the terms and conditions of this Appointment as then in
effect and have the identical duties and functions of the Shareholders'
Representative hereunder.
7. INDEMNIFICATION OF SHAREHOLDERS' REPRESENTATIVE. The Shareholders,
jointly and severally, agree to indemnify and hold the Shareholders'
Representative harmless from and against any loss, liability, damage, cost, or
expense (including, but not limited to, legal fees and expenses) incurred by him
arising out of or in connection with the Shareholders' Representative's
performance under this Appointment.
8. NOTICES. Any notice required or permitted by this Appointment shall
be in writing and shall be sufficiently given if personally delivered, mailed by
certified or registered mail, return receipt requested, facsimile or sent by
Federal Express (or other guaranteed and receipted delivery service) to the
Shareholders' Representative at c/o Altira Group, L.L.C., 1625 Broadway, Suite
2150, Denver, Colorado 80202-4725, Telecopy: (303) 623-3525, Attention: Dirk W.
McDermott, and to each Shareholder at the address listed for him on the
signature page of this Appointment, (or such other addresses as specified by
written notice timely given to the other parties). Any notice given in
accordance with this section is effective three (3) business days after the date
on which the same was delivered or deposited, as applicable for the notice
procedure used.
9. MISCELLANEOUS.
a. ASSIGNABILITY; BINDING EFFECT. This Appointment is
personal to the Shareholders' Representative and the Shareholders. Except as
otherwise herein, no party may assign or delegate any rights or obligations
under this Appointment without the prior written
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consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
b. WAIVER. There can be no waiver of any term, provision, or
condition of this Appointment which is not in writing signed by the party
against whom the waiver is sought to be enforced. Waiver by any party of the
default or breach of any provision of this Appointment by another shall not
operate or be construed as a waiver of any subsequent default or breach.
c. SEVERABILITY. If any one or more of the provisions of this
Appointment for any reason is held to be illegal, invalid, or unenforceable, the
illegality, invalidity, or unenforceability will not affect, impair, or
invalidate any other provision of this Appointment, which will be construed as
if the illegal, invalid, or unenforceable provision had not been contained in
the Appointment and, in lieu thereof, there will be added automatically as a
part of this Appointment a provision as similar in terms to the illegal,
invalid, or enforceable provision as possible and be legal, valid, and
enforceable.
d. FURTHER ASSURANCES. The parties agree to take such further
actions, including the execution and delivery of any documents, as may be
required, necessary, or desirable for the performance of this Appointment.
e. ENTIRE AGREEMENT; HEADINGS; INCORPORATION BY REFERENCE.
This Appointment, together with the other documents, exhibits, schedules, and
instruments referred to herein, constitutes the entire agreement between the
parties relating to the subject matter hereof, and supersedes all previous
agreements, written or oral. Except as provided otherwise in this Appointment,
this Appointment shall not be amended or modified except by an instrument in
writing signed by all parties. Headings are for convenience of reference only
and shall not affect the interpretation or construction of this Appointment. All
exhibits, schedules, documents, and instruments referred to in this Appointment
are incorporated by reference for all purposes.
f. GOVERNING LAW: ATTORNEY'S FEES. Any dispute between the
parties relating to this Appointment shall be construed under and in accordance
with the laws of the State of Texas, and applicable federal law, and is fully
performable in Houston, Texas. The prevailing party in any litigation shall be
entitled to recover from the other party reasonable attorney's fees and court
costs incurred in the same, in addition to any other relief that may be awarded.
g. MULTIPLE COUNTERPARTS. This Appointment may be executed in
multiple counterparts, each of which shall constitute an original and all of
which shall constitute one document; and furthermore, a facsimile signature
shall be deemed an original.
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IN WITNESS WHEREOF, the parties have executed this Appointment and
caused the same to be duly delivered on their behalf on the date first written
above.
[signatures on following page]
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SHAREHOLDERS' REPRESENTATIVE
------------------------------------------
Dirk W. McDermott
Address: c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
SHAREHOLDERS
------------------------------------------
Alexis M. Cranberg
511 - 16th Street, No. 300
Denver, Colorado 80202
McDermott & Associates, L.L.C.
------------------------------------------
Dirk W. McDermott
c/o Altira Group, L.L.C.
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
Altira Technology Fund I, L.L.C.
------------------------------------------
Dirk W. McDermott
1625 Broadway, Suite 2150
Denver, Colorado 80202-4725
R. Chaney & Partners II, L.P.
------------------------------------------
Jason E. Whitley, Executive Vice President
c/o R. Chaney & Co., Inc.
909 Fannin, Suite 1275
Houston, Texas 77010-1006
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------------------------------------------
James R. Newell
2165 South Parfet Court
Lakewood, Colorado 80227
------------------------------------------
Patrick G. Keenan
707 St. Ives Court
Houston, Texas 77079
------------------------------------------
Daniel S. Morris
2332 North Boulevard
Houston, Texas 77098
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EXHIBIT C
FORM OF COMPANY AFFILIATES' LETTER
92
AFFILIATE'S AGREEMENT
Core Laboratories N.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Ladies and Gentlemen:
The undersigned has been advised that as of the date of the Acquisition
Agreement (as defined below), the undersigned may have been deemed to be an
"affiliate" of Coherence Technology Company, Inc., a Colorado corporation (the
"Company"), as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act").
Pursuant to the terms of that certain Agreement and Plan of Merger by
and among Core Laboratories N.V., a Netherlands limited liability company (the
"Acquiror"), Core Colorado Acquisition, Inc., a Colorado corporation and a
wholly owned subsidiary of Acquiror, and the Company dated as of June 9, 1999
(the "Merger Agreement"), the undersigned received common shares, par value 0.03
Dutch guilders per share, of Acquiror ("Acquiror Shares").
The undersigned understands that the Merger (as defined in the Merger
Agreement) will be treated for financial accounting purposes as a "pooling of
interests" in accordance with United States generally accepted accounting
principles and that the staff of the SEC has issued certain guidelines that
should be followed to ensure the pooling of the entities.
In consideration of the agreements contained herein, Acquiror's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby represents, warrants and agrees
that (i) the undersigned has not made any sale, transfer or other disposition of
Acquiror Shares during the period commencing 30 days before the Closing (as
defined in the Merger Agreement) and (ii) the undersigned will not make any
sale, transfer or other disposition of Acquiror Shares from the Closing until
such time as financial statements that include at least 30 days of combined
operations of Acquiror and the Company after the Closing shall have been
publicly reported, unless the undersigned shall have delivered to Acquiror prior
to any such sale, transfer or other disposition, a written opinion from Arthur
Andersen LLP, independent public accountants for Acquiror, or a written
no-action letter from the accounting staff of the SEC, in either case in form
and substance reasonably satisfactory to Acquiror, to the effect that such sale,
transfer or other disposition will not cause the Merger not to be treated as a
"pooling of interests" for financial accounting purposes in accordance with
United States generally accepted accounting principles and the rules,
regulations and interpretations of the SEC and (iii) the undersigned will
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not make any sale, transfer or other disposition of any Acquiror Shares received
by the undersigned pursuant to the Merger in violation of the Securities Act or
the Rules and Regulations.
The undersigned also understands and agrees that stop transfer
instructions will be given to Acquiror's transfer agent with respect to the
Acquiror Shares received by the undersigned pursuant to the Merger and that
there will be placed on the certificates representing such Acquiror Shares, or
any substitutions therefor, a legend stating in substance as follows:
"These shares may only be transferred in accordance with the terms of
an Affiliate's Agreement between the original holder of such shares and
Core Laboratories N.V., a copy of which agreement is on file at the
principal offices of Core Laboratories N.V."
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By:
-----------------------------------
Address:
ACCEPTED this
____ day of ___________________, 1999
CORE LABORATORIES N.V.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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EXHIBIT D
FORM OF EMPLOYMENT CONTRACT
95
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of July 1, 1999 (the "Effective Date") by and between Core
Laboratories, Inc., a Delaware corporation ("Company"), and _______________
("Employee").
R E C I T A L S :
A. The Company is a corporation duly organized under the laws of the
State of Delaware.
B. Employee has sold his shares in Coherence Technology Company, Inc.
to Company's parent company, Core Laboratories N.V., and has benefited as a
shareholder from the acquisition by Company's parent company of all of the
outstanding capital stock of Coherence Technology Company, Inc. pursuant to the
Agreement and Plan of Merger dated June 9, 1999 among Core Laboratories N.V.,
Core Colorado Acquisition, Inc., Coherence Technology Company, Inc. and the
stockholders of Coherence Technology Company, Inc. (the "Merger Agreement").
C. The Company desires to employ Employee, and Employee desires to be
employed by the Company, to provide services for the Company and Company's
customers pursuant to the provisions of this Agreement.
A G R E E M E N T S :
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements in this Agreement, the parties do agree and
covenant as follows, intending to be legally bound:
1. EMPLOYMENT.
1.1. Engagement. The Company employs Employee, and Employee accepts
employment with Company, as _______________ of the CTC Division (and in such
other positions to which Employee may be assigned by Company) to render services
to Company and to the customers of Company, as determined by the Board of
Directors of Company (the "Board") and the appropriate authorized officers and
agents of Company. Employee shall maintain regular full-time office/work hours
in accordance with Company policies. Except as may be otherwise provided for in
this Agreement, during the term of this Agreement, Employee shall not, without
the prior written consent of Company, render compensable services except as an
employee of Company or directly or indirectly engage in any business activity
that competes with the business of Company, that duplicates a service provided
by Company, or that is adverse to the business of Company.
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1.2. Right to Fees. Any and all Service Fees generated during the term
of this Agreement shall belong to Company. "Service Fees" shall include, but not
be limited to, fees or remuneration generated by the provision of services by
Employee in Employee's capacity as an employee of Company. It is specifically
understood and agreed that Employee shall have no right or claim to any portion
of Service Fees, except as otherwise provided in this Agreement or by policies
adopted by the Board or the authorized officers of Company.
1.3. Customer Agreements. From time to time Company may enter into
agreements with customers or suppliers that may require Company and/or Employee
to engage in certain activities. Employee will fully cooperate in such
activities and will comply with any and all requirements of any customer or
supplier agreement to which Company becomes a party. Employee shall have no
authority to, and shall not, execute agreements binding Company unless Employee
is a duly authorized officer or agent of Company acting as authorized.
1.4. Records of Company. During the term of this Agreement or any time
thereafter, Employee shall not induce, solicit, or encourage any customer who
has received or is receiving products or services from Company to seek such
products or services from another source, including Employee. All business,
financial, or other records, papers, and documents generated by Employee,
Company, or employees or agents of Company shall belong to Company, and Employee
shall have no right to keep or retain such records, papers, or documents after
this Agreement is terminated.
2. DUTIES.
2.1. Professional Duties. Employee shall provide services exclusively
for Company at facilities used by Company or at other locations as Company
determines. Employee shall not render compensable services except as an employee
of Company. Employee agrees to use Employee's best efforts in performing
Employee's duties. Employee's essential duties shall also include without
limitation:
2.1.1. Keeping and maintaining, or causing to be kept and
maintained, appropriate records, reports, claims, and
correspondence necessary and appropriate in
connection with all services rendered by Employee
under this Agreement, all of which records, reports,
claims, and correspondence shall belong to Company;
2.1.2. Promoting the business of Company;
2.1.3. Attending to the administrative duties of the
business of Company;
2.1.4. Performing all acts reasonably necessary to maintain
and improve Employee's skills;
2.1.5. Assisting Company in fulfilling its contractual
obligations, if any; and
2.1.6. Providing services to customers of Company in
accordance with standards and policies adopted by
Company from time to time.
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3. COMPENSATION.
3.1. Base Salary. The monthly base salary of Employee shall
be__________________ and ___/100 Dollars ($_______) during the first year of
this Agreement. After the first year of this Agreement, the base salary of
Employee may be adjusted by Company at its discretion. The base salary shall be
payable in accordance with Company's schedule and policies.
3.2. Employment Taxes. Company shall withhold on behalf of Employee
appropriate employment taxes.
3.3. Leave Time. Employee shall be entitled to vacation and other leave
time in accordance with Company's policies. Paid vacation and leave time shall
not increase the base salary or other compensation of Employee under this
Agreement. Employee shall schedule vacation and leave time with reasonable
notice to Company.
3.4. Other Benefits. Company may provide and make available to Employee
other benefits of employment as determined by the Board, such as health, group
disability, and group life insurance. Company does not guarantee or make any
warranties regarding the insurability of Employee.
4. TERM AND TERMINATION.
4.1. Term. The initial term of this Agreement shall commence on the
Effective Date and shall continue for a period of one year, unless sooner
terminated in accordance with the terms of this Agreement.
4.2. Termination For Cause.
4.2.1. By Company. Company may terminate this Agreement
immediately upon notice to Employee for any of the following reasons, which
shall be deemed to be "cause":
4.2.1.1. Employee's failure or refusal to perform the duties
required under this Agreement or to comply with the policies, standards, and
regulations of Company that may be established from time to time, that apply to
all Company employees;
4.2.1.2. Employee's conviction in a court of competent
jurisdiction of any felony offense or of any misdemeanor offense involving moral
turpitude;
4.2.1.3. The commission by Employee of (i) any criminal
offense other than minor traffic violations, (ii) any public or private conduct
that offends decency or morality, causes Employee to be held in public ridicule
or scorn, or causes a public scandal, or (iii) any conduct that may harm the
reputation or operations of Company or that is detrimental to the interests of
Company;
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4.2.1.4. Employee, for reasons other than illness, disability,
family emergency, vacation scheduled in advance with reasonable notice to
Company, or holidays, devotes less than Employee's full time to Employee's
duties under this Agreement;
4.2.1.5. Employee takes any action, fails to take any action,
engages in any activity, the result of which is contrary to the interest of
Company, or in any way violates Company's ethics policy.
4.2.2. By Employee. Employee may terminate this Agreement
immediately upon written notice to Company, which notice shall describe the
reason for termination, for either of the following reasons:
4.2.2.1. Company dissolves;
4.2.2.2. Company materially fails to perform
its duties under this Agreement and such failure continues for thirty (30) days
after receipt of written notice.
4.3. Termination Without Cause. After the initial term, this Agreement
may be terminated immediately by Employee or Company without cause. In the event
of notice by either party of termination without cause, Company may limit
Employee's activities during the notice period or Company may impose any other
restrictions it deems necessary and reasonable.
4.4. Termination upon Death or Disability. This Agreement shall
automatically terminate upon Employee's death. Any salary, bonus, or fringe
benefits due at the time of death shall be paid on a pro rata basis. This
Agreement shall also be deemed to terminate upon the commencement date of
Employee's disability that does or is expected to continue for ninety (90) days.
For purposes of this Agreement, the term "disability" means a documented illness
or incapacity that keeps or is expected to keep Employee from resuming
Employee's full-time duties for at least ninety (90) days; provided, however,
that such ninety (90) day period shall not be deemed to be broken if Employee
returns to work for no more than three consecutive working days during any given
attempt to resume his or her regular work schedule.
4.5. Effect of Termination. Upon any termination of this Agreement,
Company shall pay Employee the compensation due through the date of termination
as full and final satisfaction of the terms of this Agreement, and Employee
shall have no further claims against Company for compensation.
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5. OUTSIDE ACTIVITIES AND NONCOMPETITION.
5.1. Covenant Not to Compete. Employee recognizes that Company's
decision to enter into this Agreement is induced primarily because of the
covenants and assurances made by Employee in this Agreement, that such covenants
and assurances are a precondition to Employee's right to receive payments from
Company's parent company in the form of stock in exchange for his shares in
Coherence Technology Company, Inc., that Employee's covenant not to compete is
necessary to ensure the continuation of the business of Company and the
reputation of Company and the receipt and enjoyment of the benefits of the
purchase of Coherence Technology Company, Inc., and that irrevocable harm and
damage will be done to Company if Employee competes with Company. Therefore,
Employee agrees that for a period of _____ years following the Effective Date or
for a period of _____ year after the termination for any reason of Employee's
employment with Company, whichever period is greater, Employee shall not,
directly or indirectly, as an employee, employer, contractor, consultant, agent,
principal, shareholder, corporate officer, director, or in any other individual
or representative capacity, engage or participate in any business or enterprise
within Texas, Louisiana, Oklahoma, or Colorado (the "Noncompetition Territory")
that is in competition in any manner whatsoever with the business of Company or
any affiliate of Company (including, without limitation, Core Laboratories N.V.
and its subsidiaries) without the prior written permission of Company. The
parties mutually acknowledge all of the following:
(a) Employee's covenant not to compete is reasonable and is
given as consideration for a portion of Employee's compensation and for
a portion of the sales price for the shares of Coherence Technology
Company, Inc.
(b) In exchange for Employee's covenants to Company in this
Agreement, Company is furnishing to Employee, in addition to Employee's
compensation, valuable consideration, including without limitation:
(i) full access to an established customer base;
(ii) the availability of expensive operating
equipment, office equipment, and a trained and
adequate staff; and
(iii) specialized training, as necessary, to provide
services according to Company's standards.
(c) If Employee should render services within the
Noncompetition Territory in competition with the business of Company,
it would cause economic harm and loss of goodwill to Company resulting
in immediate and irreparable loss, injuries, and damage to Company.
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Neither the public in general nor any customers will be
adversely affected by the enforcement of the noncompetition
covenant, in that other similar providers of similar services
are readily available within the restricted area.
5.2. Ancillary Agreement. This covenant not to compete shall be
construed as an agreement ancillary to the other provisions of this Agreement
and to the Merger Agreement, and the existence of any claim or cause of action
of Employee against Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Company of this covenant.
Without limiting other possible remedies to Company for breach of this covenant,
Employee agrees that injunctive or other equitable relief will be available to
enforce the covenants of this provision, such relief to be without the necessity
of posting a bond, cash or otherwise.
5.3. Enforcement. Company and Employee further agree that if any
restriction in this Article is held by any court to be unenforceable or
unreasonable, a lesser restriction will be enforced in its place and the
remaining restrictions in this Agreement will be enforced independently of each
other. Employee agrees to pay any attorney's fees, court costs, and expenses
incurred by Company if Company chooses, in its sole discretion, to enforce any
provision under this Article and Company prevails.
5.4. Survival. The provisions of this Article shall survive the
termination of this Agreement.
6. CONFIDENTIALITY OF INFORMATION.
Employee agrees to keep confidential and not to use or to disclose to
others during the term of this Agreement and for any time thereafter, except as
expressly consented to in writing by Company or as required by law, any secrets
or confidential technology, proprietary information, or trade secrets of
Company, or any matter or thing ascertained by Employee through Employee's
affiliation with Company, the use or disclosure of which matter or thing might
reasonably be construed to be contrary to the best interest of Company. Employee
further agrees that should Employee leave the employment of Company, Employee
will neither take nor retain, without prior written authorization from Company,
any papers, fee books, files, other documents, copies thereof, or other
confidential information of any kind belonging to Company pertaining to
Company's business, sales, financial condition, services, or products. Without
limiting other possible remedies to Company for the breach of this covenant,
Employee agrees that injunctive or other equitable relief shall be available to
enforce this covenant, such relief to be without the necessity of posting a
bond, cash, or otherwise. Employee further agrees that if any restriction in
this paragraph is held by any court to be unenforceable or unreasonable, a
lesser restriction shall be enforced in its place and the remaining restrictions
in this paragraph shall be enforced independently of each other.
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7. MISCELLANEOUS.
7.1. Assignability. Company may assign this Agreement to a successor
business upon notice to Employee. Otherwise, neither party may assign its rights
or duties under this Agreement without the prior written consent of the other
party.
7.2. Notice. Any notice, demand, or communication required, permitted,
or desired to be given under this Agreement shall be deemed effectively given
when personally delivered or mailed by prepaid certified mail, return receipt
requested, addressed to the party at the primary business address of Company,
or, if appropriate, at the residence of Employee on file with Company, or to
another address and to the attention of another person or officer that either
party may designate by written notice.
7.3. Enforceability. Should any provision of this Agreement be held
invalid, unenforceable, or unconstitutional by any governmental body or court of
competent jurisdiction, that holding shall not diminish the validity or
enforceability of any other provision of this Agreement.
7.4. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Texas, and venue for any cause of
action arising under this Agreement shall lie in Harris County.
7.5. Construction. Common nouns and pronouns and all other terms shall
be deemed to refer to the masculine, feminine, neuter, and singular and/or
plural, as the identity of the person or persons, firm, or association may
require in the context.
7.6. Binding Effect. The provisions of this Agreement shall inure to
the benefit of and shall be binding upon the heirs, personal representatives,
successors, assigns, estates, and legatees of each of the parties.
7.7. Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or another
provision.
7.8. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement in effect between the parties pertaining to the employment
relationship between Company and Employee and supersedes all prior or
contemporaneous agreements, understandings, or negotiations of the parties and,
in particular, supersedes and replaces that certain ____________________ dated
__________. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES. This Agreement shall not be modified, amended, or supplemented
except in a written instrument executed by both parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate originals effective as of the Effective Date.
COMPANY:
CORE LABORATORIES, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EMPLOYEE:
--------------------------------------
(Name)
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EXHIBIT E
FORM OF PROMISSORY NOTE
104
PROMISSORY NOTE
Houston, Texas June 9, 1999
Coherence Technology Company, Inc. (hereinafter called "Maker"), For
Value Received, promises and agrees to pay on the earlier to occur of: (i) July
31, 1999 and (ii) the date on which that certain Agreement and Plan of Merger
dated as of June 9, 1999 among Core Laboratories N.V., Core Colorado
Acquisition, Inc., Maker and all of the shareholders of Maker terminates, (the
"Maturity Date") unto the order of Core Laboratories N.V. (hereinafter called
"Lender"), at its offices in Houston, Harris County, Texas, in lawful money of
the United States of America, such sums as the Lender may loan or advance to or
for the benefit of Maker up to a maximum of $1,500,000.00 principal on or after
the date hereof in accordance with the terms hereof, together with interest on
the unpaid principal balance outstanding from time to time hereon computed from
the date of each advance until the Maturity Date at the rate of eight percent
(8%) per annum. All past due principal and interest shall bear interest until
paid at an interest rate which is four percent (4%) per annum in excess of the
pre-maturity rate specified in the immediately preceding sentence (but in no
event to exceed the maximum rate of nonusurious interest allowed by law as of
the date hereof). Interest shall be calculated on a per annum basis of 360 days
unless such calculation would result in a usurious rate, in which event,
interest shall be calculated on a full calendar year basis.
INTEREST and PRINCIPAL on this note shall be due and payable in full on
the Maturity Date.
PAYMENT of this note before the Maturity Date may be made at any time
or from time to time, in whole or in part, without penalty or premium. Any such
payment shall be applied first to accrued interest and second to principal.
THE UNPAID PRINCIPAL BALANCE of this note at any time shall be the
total amounts lent or advanced hereunder by the Lender, less the amount of
payments or prepayments of principal made hereon by or for the account of Maker.
It is contemplated that by reason of prepayments hereon there may be times when
no indebtedness is owing hereunder; but notwithstanding such occurrences, this
note shall remain valid and shall be in full force and effect as to loans or
advances made pursuant to and under the terms of this note subsequent to each
occurrence. All loans or advances and all payments or prepayments made hereunder
on account of principal or interest may be endorsed by the holder hereof on the
Schedule attached hereto and made a part hereof for all purposes. Additional
Schedule pages may be attached hereto from time to time by the holder hereof if
more space is necessary.
ADVANCES hereunder may be made by the holder hereof (i) pursuant to the
terms of any written agreement executed in connection herewith between Maker and
Lender, or (ii) at the oral or written request of any officer or agent of Maker,
who shall be deemed by virtue of making such request to be acting under the
authority of the Board of Directors of Maker for purposes of such
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request. Maker covenants and agrees to furnish to the holder hereof written
confirmation of any such oral request within two (2) days of the resulting loan
or advance, but any such loan or advance shall be deemed to be made under and
entitled to the benefits of this note irrespective of any failure by Maker to
furnish such written confirmation. Any loan or advance shall be conclusively
presumed to have been made under the terms of this note to or for the benefit of
Maker when made pursuant to the terms of any written agreement executed in
connection herewith between Maker and Lender, or in accordance with such
requests and directions.
MAKER covenants and agrees that all proceeds from advances hereunder
shall be used solely for the purposes set forth in the Agreement and Plan of
Merger dated June 9, 1999.
IF ANY principal and/or interest on this note is not paid when due; or
if Maker or any drawer, acceptor, endorser, guarantor, surety, accommodation
party or other person liable upon or for payment of this note (each hereinafter
called an "other liable party"), shall die, or become insolvent (however such
insolvency may be evidenced); or if Maker or any co-partnership of which Maker
is a member shall suspend the transaction of his, its or their usual business,
or be expelled from or suspended by any stock or securities exchange or other
exchange; or if any proceeding, procedure or remedy supplementary to or in
enforcement of judgment shall be resorted to or commenced against, or with
respect to any property of, Maker or any such co-partnership or other liable
party; or if a petition in bankruptcy or for any relief under any law relating
to the relief of debtors, re-adjustment of indebtedness, re-organization,
composition or arrangement shall be filed, or any proceedings shall be
instituted under any such law, by or against Maker or any such co- partnership
or other liable party; or if any governmental authority or any court at the
instance thereof shall take possession of any substantial part of the property
of, or assume control over the affairs or operations of, or a receiver shall be
appointed of the property of, or a writ or order of attachment or garnishment
shall be issued or made against any of the property of, Maker or any such
co-partnership or other liable party; or if any indebtedness of Maker or of any
such co-partnership or of other liable party for borrowed money shall become due
and payable by acceleration of maturity thereof; or if Maker or any such
co-partnership or other liable party ceases to generally pay his or its debts as
they become due; or if Maker (if a corporation) shall be dissolved or be a party
to any merger or consolidation without the written consent of Lender; or if
Maker or other liable party fails to furnish financial information requested by
Lender; or if a default occurs under any instrument now or hereafter executed in
connection with or as security for this note; thereupon, at the option of
Lender, this note and any and all other indebtedness of Maker to Lender shall
become and be due and payable forthwith without demand, notice of nonpayment,
presentment, protest or notice of dishonor, notice of intent to accelerate the
maturity hereof or notice of the acceleration of the maturity hereof, all of
which are hereby expressly waived by Maker and each other liable party.
IF THIS NOTE is not paid at maturity whether by acceleration or
otherwise and is placed in the hands of an attorney for collection, or suit is
filed hereon, or proceedings are had in probate, bankruptcy, receivership,
re-organization, arrangement or other legal proceedings for collection hereof,
Maker and each other liable party agree to pay Lender a reasonable amount as
attorney's fees which is agreed to be an additional amount equal to ten percent
of the unpaid principal and interest hereof. Maker and each other liable party
are and shall be directly and primarily, jointly and sev-
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erally, liable for the payment of all sums called for hereunder, and Maker and
each other liable party hereby expressly waive demand, notice of nonpayment,
presentment, protest, notice of dishonor, bringing of suit and diligence in
taking any action to collect any sums owing hereon and in the handling of any
security, and Maker and each other liable party hereby agree to any and all
renewals, extensions for any period, rearrangements and/or partial prepayments
hereon and to any release or substitution of security, in whole or in part, with
or without notice, before or after maturity. Maker and each other liable party
also waive, to the full extent permitted by law, all right to plead any statute
of limitation as a defense to any action hereunder.
IT IS the intention of Maker and Lender to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law (including the laws of the State of Texas
and the laws of the United States of America), then, in that event,
notwithstanding anything to the contrary herein or in any agreement entered into
in connection with or as security for this note, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under applicable
law that is taken, reserved, contracted for, charged or received under this note
or under any of the other aforesaid agreements or otherwise in connection with
this note shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be cancelled automatically and,
if theretofore paid, shall be credited on the note by the holder hereof (or, to
the extent that this note shall have been or would thereby be paid in full,
refunded to the Maker); and (ii) in the event that maturity of this note is
accelerated by reason of an election by the holder hereof resulting from any
default hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the maximum amount allowed by applicable law, and excess interest, if
any, provided for in this note or otherwise shall be cancelled automatically as
of the date of such acceleration or prepayment and, if theretofore paid, shall
be credited on this note (or, to the extent that this note shall have been or
would thereby be paid in full, refunded to the Maker).
THIS NOTE has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas.
COHERENCE TECHNOLOGY COMPANY, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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SCHEDULE
OF
ADVANCES OF PRINCIPAL
TOTAL PRINCIPAL
BALANCE OF
OUTSTANDING
DATE AMOUNT OF ADVANCE UNDER NOTE NOTATION MADE BY
- ----------------------- ------------------------------- ----------------------- -----------------------
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