1
AGREEMENT AND PLAN OF MERGER
AMONG
CORE LABORATORIES N.V.,
XXXX ACQUISITION, INC.,
XXXX OIL TOOLS, INC.
AND
THE STOCKHOLDERS OF
XXXX OIL TOOLS, INC.
JUNE 30, 1998
2
i
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.01 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 EFFECT OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 ARTICLES OF INCORPORATION; BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 ACQUISITION CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES . . . . . . . . . . . . . . . . 2
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . 4
1.08 NO FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.09 AGREEMENT TO VOTE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12 ACTIONS AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.13 STOCK TRANSFER BOOKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02 ORGANIZATIONAL DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.03 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.04 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.06 PERMITS; COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.07 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.09 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.12 POOLING; TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.13 AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 CERTAIN BUSINESS PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3
ii
2.15 ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.16 UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.17 CERTAIN AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.18 CONTRACTS AND COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.19 AFFILIATE INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.20 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.21 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.22 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.23 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.24 GOOD TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.25 CERTAIN SECURITIES LAW MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.26 AUTHORIZATION AND VALIDITY OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
3.01 ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.02 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.03 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.05 REPORTS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.07 POOLING; TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.08 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.02 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.03 REPLACEMENT OF PROMISSORY NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.02 NEGATIVE COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4
iii
ARTICLE VI
COVENANTS OF ACQUIROR
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.02 NEGATIVE COVENANTS OF ACQUIROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.03 PAYMENT TO LENDER OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.02 ACCESS AND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.04 AFFILIATES; POOLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.05 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.06 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.07 EMPLOYEES OF COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.08 TAX-FREE REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.09 INFORMATION FOR TAX RETURNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII
INDEMNIFICATION
8.01 IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.02 NO EXHAUSTION OF REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.03 DEFENSE OF THIRD PARTY CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.04 PAYMENT; ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.05 SATISFACTION OF CLAIMS FROM ESCROW SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.06 LIABILITY LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 34
8.07 SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX
CONDITIONS
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES . . . . . . . . . . . . . . . . . . 35
9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 36
5
iv
ARTICLE X
MISCELLANEOUS
10.01 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.02 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.03 WAIVER AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.05 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.06 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.07 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.08 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.09 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.10 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.11 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.12 MANDATORY MEDIATION; BINDING ARBITRATION; VENUE; ATTORNEYS' FEES . . . . . . . . . . . . . . . . . 42
EXHIBITS
--------
Exhibit A -- Escrow Agreement
Exhibit B -- Appointment of Personal Representatives
Exhibit C -- Form of Company Affiliates' Letter
Exhibit D -- Amendment to Employment Agreement - Xxxxx Xxxxxx
Exhibit D-1 -- Employment Agreement of H. Xxxx Xxxx, Xx.
Exhibit E -- Lease Agreement
Exhibit F -- Registration Rights Agreement
6
1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of June 30, 1998 by and among Core Laboratories N.V., a
Netherlands limited liability company ("Acquiror"), Xxxx Acquisition, Inc., a
Texas corporation with its principal place of business in Houston, Texas, and
an indirect wholly-owned subsidiary of Acquiror ("Acquisition Sub"), Xxxx Oil
Tools, Inc., a Texas 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 Texas Business Corporation Act (the
"TBCA"), will merge with and into the Company (the "Merger").
The Board of Directors of the Company has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of the
Company and is fair to, and in the best interests of, the Company and the
Shareholders and has approved and adopted this Agreement and the transactions
contemplated hereby, and recommended approval and adoption of this Agreement
and the Merger by the Shareholders.
This Agreement and the Merger have been approved and adopted by the
requisite vote of the Shareholders and of the shareholder of Acquisition Sub as
required by the TBCA.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
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:
7
2
ARTICLE I
THE MERGER
1.01 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the TBCA, at the Effective Time
(as defined in Section 1.02 of this Agreement), Acquisition Sub shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Acquisition Sub shall cease and the Company shall continue as the
surviving corporation of the Merger as a wholly-owned subsidiary of Core
Laboratories, Inc. and an indirect wholly-owned subsidiary of Acquiror (the
"Surviving Corporation"). The name of the Surviving Corporation shall be "Xxxx
Oil Tools, 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, the parties hereto shall cause the Merger to be
consummated by filing Articles of Merger with the Secretary of State of the
State of Texas, in such form as required by, and executed in accordance with
the relevant provisions of, the TBCA (the date and time of the completion of
such filing being the "Effective Time").
1.03 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the TBCA.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of Acquisition Sub and the Company shall vest
in the Surviving Corporation, and all debts, liabilities and duties of
Acquisition Sub and the Company shall become the debts, liabilities and duties
of the Surviving Corporation.
1.04 ARTICLES OF INCORPORATION; BYLAWS. At the Effective Time, the
Articles of Incorporation and the Bylaws of Acquisition Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the Bylaws of the Surviving Corporation, except that Article I of the
Articles of Incorporation thereof shall be amended to read "The name of the
corporation is Xxxx Oil Tools, Inc.", and the Bylaws shall be amended so as to
reflect that the name of the Surviving Corporation has been changed to Xxxx Oil
Tools, Inc.
1.05 DIRECTORS AND OFFICERS. The sole director of the Surviving
Corporation shall, from and after the Effective Time, be Xxxxx X. Xxxxxxx, and
the officers of the Surviving Corporation shall, from and after the Effective
Time, be:
NAME TITLE
---- -----
Xxxxx X. Xxxxxx President
Xxxxxxx X. Xxxxxxxx Treasurer
Xxxx X. Xxxxxx Secretary
in each case, until their respective successors are duly elected or appointed
and qualified or until their earlier resignation or removal in accordance with
the Surviving Corporation's Articles of Incorporation and Bylaws.
8
3
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 $1.00 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 1,365.8242 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 the
Shareholders, a stock certificate representing 227,684 Acquiror
Shares, which certificate shall be registered as follows: "Bankers
Trust Company, f/b/o the Former Shareholders of the Common Stock of
Xxxx Oil Tools, 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 H. Xxxx
Xxxx, Xx. (the "Shareholders' Representative"). The Shareholders will
appoint a Shareholders' Representative pursuant to, and he shall have
the rights and obligations set forth in, the Appointment of Personal
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' Representatives. The number
of Acquiror Shares each Shareholder shall be entitled to receive at
the
9
4
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 Common Stock upon the surrender of such Certificates in
accordance with the provisions of Section 1.07 of this Agreement. No
fractional shares of Acquiror Common Stock 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 Closing
Date for all its shareholders entitled to receive any securities,
rights or property of Acquiror (other than regular dividends), by
reason of the issuance of rights or options to purchase its
securities, stock dividends or distribution, or any stock split or
reverse stock split, or if there shall occur any capital
reorganization of Acquiror or reclassification of its capital stock or
such other similar transaction which will not be adequately reflected
in the number of Acquiror Shares which will constitute the Acquisition
Consideration, such number of Acquiror Shares shall be fairly and
proportionately adjusted to prevent dilution, and to fully and
completely carry out the intent of the parties as contemplated by this
Agreement.
(e) Each share of common stock, par value $.01 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 $.01 per share, of the Surviving Corporation.
10
5
1.07 PAYMENT FOR COMPANY STOCK; SURRENDER OF CERTIFICATES.
(a) Exchange Procedures. Promptly after the Effective
Time, Acquiror shall deliver to each record holder of Company Stock at the
Effective Time a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to Acquiror and shall be in such form and
contain such other provisions as the Company and Acquiror shall agree) (the
"Letter of Transmittal"). Upon surrender of a Certificate for cancellation to
the Acquiror, together with such Letter of Transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole Acquiror Shares that such holder
has the right to receive pursuant to the provisions of this Article I, less the
Escrow Shares attributable to such holder that will be issued and deposited
with the Escrow Agent for the account of such holder, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Stock that is not registered in the transfer records of
the Company, a certificate evidencing the proper number of Acquiror Shares may
be issued to the transferee if the Certificate evidencing the Company Stock
shall be surrendered to the Acquiror, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered for exchange in accordance
with the provisions of this Section 1.07(a), each Certificate theretofore
representing Converted Shares (other than shares of Company Stock to be
canceled pursuant to Section 1.06(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.
11
6
1.08 NO FRACTIONAL SHARES. Notwithstanding anything herein to the
contrary, no certificates or scrip evidencing fractional Acquiror Shares shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to any rights as
a shareholder of Acquiror.
1.09 AGREEMENT TO VOTE SHARES. At any meeting of the Shareholders
with respect to any of the following, and at any adjournment thereof, and with
respect to any consent solicited with respect to any of the following, each
Shareholder who is a party to this Agreement hereby agrees to vote such
Shareholder's Company Stock (i) in favor of approval of the Merger and any
matter which could reasonably be expected to facilitate the Merger and (ii)
against approval of any proposal made in opposition to or in competition with
the Merger, against any merger, consolidation, sale of assets, reorganization
or recapitalization with any party, against any liquidation or winding up of
the Company and against any other matter which would, or could reasonably be
expected to, prohibit or discourage the Merger.
1.10 WITHHOLDING. Acquiror (or any affiliate thereof) shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of Converted Shares such
amounts as Acquiror (or any affiliate thereof) is required to deduct and
withhold with respect to the making of such payment under the Code (as
hereinafter defined), or any other provision of federal, state, local or
foreign tax law. To the extent that amounts are so withheld by Acquiror, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the former holder of the Converted Shares in respect of which such
deduction and withholding was made by Acquiror.
1.11 CLOSING. The Closing shall take place at the offices of
Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx Xxxxxx, 0000 Xxxxx Xxxx Xxxxx, Xxxxxxx,
Xxxxx 00000-0000, at (a) 10:00 a.m., local time, on June 30, 1998, or (b) if
the conditions set forth in Article IX of this Agreement have not been
satisfied or waived on or before June 30, 1998, at 10:00 a.m., local time, on
the second business day following the date on which the conditions set forth in
Article IX of this Agreement have been satisfied or waived or (c) at such other
place, time and date as the parties hereto may agree. At the conclusion of the
Closing, the parties hereto shall cause the Articles of Merger to be filed with
the Secretary of State of the State of Texas.
1.12 ACTIONS AT CLOSING. At the Closing, (a) the Company 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 Texas the Articles of Merger.
12
7
1.13 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Stock thereafter on the records
of the Company.
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION. Acquiror and the
Company shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible. If, at
any time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company or Acquisition Sub,
such corporations shall direct their respective officers and directors to take
all such lawful and necessary action.
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 represents and warrants to Acquiror, as of the date hereof
and at the Closing Date, that:
2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Except as set
forth in Section 2.01 of the Company Disclosure Schedule (as hereinafter
defined), the Company is a corporation, and each of the Company's subsidiaries
(as such term in 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, 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 of the Company or another subsidiary of the
Company.
2.02 ORGANIZATIONAL DOCUMENTS. The Company has heretofore
furnished or made available to Acquiror complete and correct copies of the
Articles of Incorporation and the Bylaws (or equivalent organizational
documents), in each case as amended or restated to the date hereof, of the
Company and each of its subsidiaries. Neither the Company nor any of its
13
8
subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws (or equivalent organizational documents).
2.03 CAPITALIZATION.
(a) The authorized capital stock of the Company consists
of 100,000 shares of Common Stock, par value $1.00 per share, and 100,000
shares of Preferred Stock, par value $10.00 per share. As of the date of this
Agreement, 1,667 shares of Common Stock are issued and outstanding, and no
shares of Preferred Stock are issued and outstanding. As of the date of this
Agreement, there are 500 shares of Common Stock and 2,000 shares of Preferred
Stock held by the Company in its treasury, and no shares of Common Stock or
Preferred Stock are reserved for issuance. Each of the issued shares of
capital stock of, or other equity interests in, each of the Company and its
subsidiaries is duly authorized, validly issued and, in the case of shares of
capital stock, fully paid and nonassessable, and has not been issued in
violation of (nor are any of the authorized shares of capital stock of, or
other equity interests in, the Company or any of its subsidiaries subject to)
any preemptive or similar rights created by statute, the Articles of
Incorporation or Bylaws (or the equivalent organizational documents) of the
Company or any of its subsidiaries, or any agreement to which the Company or
any of its subsidiaries is a party or is bound, and all such issued shares or
other equity interests of 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 material funds to,
or to make any material investment in (in the form of a loan, capital
contribution or otherwise), or to provide any guarantee with respect to the
material obligations of, any subsidiary of the Company or any other person.
Except (i) as set forth in
14
9
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.
15
10
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 applicable Laws in effect as of
the date of this Agreement, or any judgment, order or decree applicable to the
Company or any of its subsidiaries or by or to which any of their respective
properties is bound or subject or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
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 Entity (as hereinafter defined), except (i) the filing of
Articles of Merger with the Secretary of State of the State of Texas, (ii) the
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the
"HSR Act"), (iii) where the failure to obtain such consents, licenses, permits,
waivers, approvals, authorizations or orders, or to make such filings or
notifications could not reasonably be expected to cause a Company Material
Adverse Effect or to prevent the Company from performing its obligations under
this Agreement and (iv) as disclosed in Section 2.05(b) of the Company
Disclosure Schedule.
2.06 PERMITS; COMPLIANCE. Except as disclosed in Section 2.06 of
the Company Disclosure Schedule, each of the Company and its subsidiaries is in
possession of all (i) franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, identification and
registration numbers, approvals and orders it reasonably believes are 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
16
11
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 July
31, 1997, from any Governmental Entity any written notice with respect to any
conflict with, default under or violation of, (i) any Law applicable to the
Company or any of its subsidiaries or by or to which any of their respective
properties is bound or subject, (ii) any judgment, order or decree applicable
to the Company or any of its subsidiaries or by or to which any of their
respective properties is bound or subject, or (iii) any of the Company Permits.
2.07 FINANCIAL STATEMENTS. The Company has provided Acquiror with
true, correct and complete copies of its audited consolidated balance sheet,
income statement and statement of cash flows for the years ended July 31, 1995,
1996 and 1997 and an unaudited consolidated balance sheet, income statement and
statement of cash flows for the nine months ended April 30, 1998 (collectively,
the "Company Financial Statements"). Each of the Company Financial Statements
(including, in each case, any related notes thereto) (a) has been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except (i) to the extent disclosed therein or required by changes in
GAAP, and (ii) as may be indicated in the notes thereto, and (b) fairly present
the consolidated financial position of the Company and its subsidiaries as of
the respective dates thereof and the consolidated results of operations and
cash flows for the periods indicated (subject, in the case of unaudited
consolidated financial statements for interim periods, to adjustments,
consisting only of normal, recurring accruals, necessary to present fairly such
results of operations and cash flows, and except for the absence of notes).
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 July 31, 1997 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,
17
12
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, performance awards (including, without limitation, the granting
of stock appreciation rights or restricted stock awards), stock purchase or
other employee benefit plan, or any increase in the compensation payable or to
become payable to any of the directors or officers of the Company or the
employees of the Company and its subsidiaries as a group; or (v) any other
Company Material Adverse Effect.
2.09 LITIGATION. Except as disclosed in Section 2.09 of the
Company Disclosure Schedule, there is no claim, action, suit, litigation,
proceeding, arbitration or investigation of any kind, at law or in equity
(including actions or proceedings seeking injunctive relief), pending or, to
the knowledge of the Company or any of the Shareholders, threatened against the
Company or any of its subsidiaries or any properties or rights of the Company
or any of its subsidiaries, and neither the Company nor any of its subsidiaries
is subject to any executory judgment, order, writ, injunction, decree or award
of any Governmental Entity, including without limitation any cease and desist
order and any consent decree, settlement agreement or other similar written
agreement with any Governmental Entity.
18
13
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, (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, (v) the most recent
actuarial report or valuation relating to a Benefit Plan subject to Title IV of
the Employee Retirement and Income Security Act of 1974, as amended ("ERISA"),
and (vi) 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 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 (whether qualified or nonqualified),
and any bonus or incentive compensation plan sponsored, maintained, or
contributed to by the Company or any of its subsidiaries for the benefit of any
of the present or former directors, officers, employees, agents, consultants,
or other similar representatives providing services to or for the Company or
any of its subsidiaries in connection with such services or any such plans
which have been so sponsored, maintained, or contributed to within six years
prior to the date of this Agreement; provided, however, that such term shall
not include (x) routine employment policies and procedures developed and
applied in the ordinary course of business and consistent with past practice,
including wage, vacation, holiday, and sick or other leave policies, (y)
workers compensation insurance, and (z) directors and officers liability
insurance.
(b) With respect to each Benefit Plan, no event has
occurred and there exists no condition or set of circumstances in connection
with which the Company or any of its subsidiaries could be subject to any
liability under the terms of such Benefit Plan, ERISA, the Code, or any other
applicable Law, other than any condition or set of circumstances that could not
reasonably be expected to have a Company Material Adverse Effect.
(c) Each Benefit Plan intended to be qualified under
section 401 of the Code (i) satisfies in form the requirements of such section
except to the extent amendments are not required by Law to be made until a date
after the Closing Date, (ii) has received a favorable determination letter from
the IRS regarding such qualified status, (iii) has not, since receipt of the
most recent favorable determination letter, been amended, and (iv) has not been
operated in a way that would adversely affect its qualified status.
19
14
(d) There has been no termination or partial termination
of any Benefit Plan within the meaning of section 411(d)(3) of the Code.
(e) There are no actions, suits, or claims pending (other
than routine claims for benefits) or, to the knowledge of the Company,
threatened against, or with respect to, any Benefit Plan or its assets that
could reasonably be expected to have a Company Material Adverse Effect.
(f) There is no matter pending (other than routine
qualification determination filings) with respect to any Benefit Plan before
the IRS, the United States Department of Labor, the Pension Benefit Guaranty
Corporation ("PBGC"), 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.
(h) With respect to each Benefit Plan, no event has
occurred and, to the knowledge of the Company or any of the Shareholders, there
exists no condition or set of circumstances in connection with which the
Company or any of its subsidiaries could be subject to any liability under the
terms of such Benefit Plans, ERISA, the Code or any other applicable Law.
(i) There are no collective bargaining or other labor
union contracts to which the Company or its subsidiaries is a party applicable
to persons employed by the Company or its subsidiaries and no collective
bargaining agreement is being negotiated by the Company or any of its
subsidiaries. There is no pending or, to the knowledge of the Company or the
Shareholders, threatened labor dispute, strike or work stoppage against the
Company or any of its subsidiaries. None of the Company, any of its
subsidiaries or any of their respective representatives or employees has
committed any unfair labor practice in connection with the operation of the
respective businesses of the Company or its subsidiaries that could reasonably
be expected to have a Company Material Adverse Effect, and there is no pending
or, to the knowledge of the Company or any of the Shareholders, threatened
charge or complaint against the Company or any of its subsidiaries by the
National Labor Relations Board or any comparable state agency.
(j) Section 2.10(j) of the Company Disclosure Schedule
contains true and correct (i) copies of all employment agreements to which the
Company or any of its subsidiaries is a party; (ii) listings of all officers of
the Company who have executed a non-competition agreement with the Company or
any of its subsidiaries; (iii) copies of all severance agreements, programs and
policies of the Company or any of its subsidiaries with or relating to its, or
any of its subsidiaries, employees; and (iv) summary descriptions of all plans,
programs, agreements and other arrangements of the Company or any of its
subsidiaries with or relating to its, or any of
20
15
its subsidiaries, employees. Except as set forth in Section 2.10(j) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
will owe a severance payment or similar obligation to any of their respective
employees, officers or directors as a result of the Merger or the other
transactions contemplated by this Agreement, and none of such persons will be
entitled to severance payments or other benefits as a result of the Merger or
the other transactions contemplated by this Agreement in the event of the
subsequent termination of their employment.
(k) No Benefit Plan provides retiree medical or retiree
life insurance benefits, and neither the Company nor any of its subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide
life insurance or medical benefits upon retirement or termination of employment
of employees, other than as required by the provisions of Sections 601 through
608 of ERISA and section 4980B of the Code.
(l) Neither the Company nor any corporation, trade,
business or entity under common control with the Company, within the meaning of
section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA ("Commonly
Controlled Entity") contributes to or has an obligation to contribute to, and
has not within six years prior to the date of this Agreement contributed to or
had an obligation to contribute to, a multi-employer plan within the meaning of
Section 3(37) of ERISA or a plan subject to Title IV of ERISA.
(m) Neither the Company nor any Commonly Controlled
Entity has maintained a Benefit Plan which provides for the purchase of common
stock of the Company.
(n) The Company has not taken any of the following or
other similar actions since July 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(j) of this Agreement.
(o) In connection with the consummation of the
transactions contemplated by this Agreement, no payments of money or other
property, acceleration of benefits, or provision of other rights have been or
will be made hereunder, under any agreement contemplated herein, or under any
Benefit Plans or any of the programs, agreements, policies, or other
arrangements described in Section 2.10(j) of the Company Disclosure Schedule
that would be reasonably likely to be nondeductible under section 280G of the
Code, whether or not some other subsequent action or event would be required to
cause such payment, acceleration, or provision to be triggered.
21
16
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 material respects, (iii) all Taxes required to be paid with
respect to the period covered by each such Tax Return have been timely paid in
full, (iv) all withholding Tax requirements imposed on or with respect to
Company or any of its subsidiaries have been satisfied in all material
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 Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to the
Company or any of its subsidiaries other than those disclosed (and to which are
attached true and complete copies of all audit or similar reports) in Section
2.11 of the Company Disclosure Schedule.
(c) The total amounts set up as liabilities for current
and deferred Taxes in the Company Financial Statements are sufficient to cover
the payment of all Taxes, whether or not assessed or disputed, which are, or
are hereafter found to be, or to have been, due by or with respect to the
Company and any of its subsidiaries up to and through the periods covered
thereby.
(d) Except for statutory liens for current Taxes not yet
due, no liens for Taxes exist upon any of the assets of the Company or any of
its subsidiaries.
(e) 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 will be redeemed, (ii) no extraordinary
distribution will be made with respect to Company Common Stock, and
(iii) none of the Company Common Stock will
22
17
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 intercorporate indebtedness existing
between the Company and the Acquiror or between the Company and
Acquisition Sub that was issued, acquired, or will be settled at a
discount.
(d) The Company is not an investment company as defined
in section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) The Company is not under the jurisdiction of a court
in a title 11 or similar case within the meaning of section
368(a)(3)(A) of the Code.
2.13 AFFILIATES. Section 2.13 of the Company Disclosure Schedule
identifies all persons who, to the knowledge of the Company, may be deemed to
be affiliates of the Company within the meaning of that term as used in Rule
144 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
relating to political activity, (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, or (iii) 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
full compliance with all laws, rules, regulations, orders, judgments, decrees
and other legal requirements, foreign and domestic, relating to the prevention
of pollution and the protection of the environment, including, without
limitation, all such legal requirements pertaining to human health and safety
(collectively, "Environmental Laws"). Except as set forth in Section 2.15 of
the Company Disclosure Schedule, there is no physical condition existing on any
property ever owned, operated, leased or used by the Company or any of its
subsidiaries nor are there any physical conditions existing on any other
property that may have been impacted by the operations of the Company or any of
its subsidiaries that could give rise to any remedial obligation under any
Environmental Laws or that could result in any liability to any third party
claiming damage to person or property as a result or consequence of such
physical conditions. Except as set forth in Section 2.15 of the
23
18
Company Disclosure Schedule, none of the Company or any of its subsidiaries has
caused or permitted its businesses, properties or assets to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose of,
transfer, produce, or process any Hazardous Substance (as defined below) except
in compliance with all Environmental Laws, and has not caused or permitted the
Release (as defined below) or arrangement for transport or disposal of any
Hazardous Substance on or off the site of any property of any of the Company or
any of its subsidiaries. Except as set forth in Section 2.15 of the Company
Disclosure Schedule, there are no underground storage tanks on, under, or about
any property of the Company or any of its subsidiaries, and to the knowledge of
the Company and the Shareholders, no underground storage tanks were previously
located on such properties. The Company does not know of, and has not received
any written or oral notice or other communications from any Governmental Entity
or other third party relating to Hazardous Substances or remediation thereof,
of possible liability of or enforcement against any person or entity pursuant
to any Environmental Law, other environmental conditions in connection with
properties of the Company or any of its subsidiaries, or any actual or
potential administrative or judicial proceedings in connection with any of the
foregoing. The term "Hazardous Substance" shall mean, without limitation, any
hazardous waste, as defined by 42 U.S.C. 6903(5), any hazardous substance, as
defined by 42 U.S.C. 9601(14), any pollutant or contaminant, as defined by 42
U.S.C. 9601(33), asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon, crude oil or derivatives thereof, petroleum products, and all
other toxic substances, hazardous materials or chemical substances regulated by
any Environmental Law. The term "Release" shall have the meaning set forth in
42 U.S.C. 9601(22).
2.16 UNDISCLOSED LIABILITIES. Except (i) as and to the extent of
the amounts specifically reflected or accrued for in the balance sheet dated as
of April 30, 1998, included in the Company Financial Statements, (ii) for
liabilities or obligations incurred in the ordinary course of business since
such balance sheet date, or (iii) as set forth in Section 2.16 of the Company
Disclosure Schedule, none of the Company or any of its subsidiaries has any
liabilities or obligations of any nature whether absolute, accrued, contingent
or otherwise, and whether due or to become due. Neither the Company nor any of
the Shareholders knows of any basis for the assertion against the Company or
any of its subsidiaries of any liability or obligation not excepted by the
preceding clauses (i) through (iii) of this Section.
2.17 CERTAIN AGREEMENTS. Except as set forth in Section 2.17 of
the Company Disclosure Schedule, none of the Company or any of its subsidiaries
is a party to, or bound by, any contract, 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
24
19
subsidiaries is a party or by which its or their property is bound that
involves consideration or other expenditure in excess of $25,000 or performance
over a period of more than six 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 involving
consideration or other expenditure in excess of $25,000 over the term of the
lease ("Material Leases"); (iii) a list of guarantees, or agreements to
indemnify or be contingently liable for, the payment or performance by any
person or business entity to which any of the Company or any of its
subsidiaries is a party ("Guarantees"); and (iv) a list of contracts or other
formal or informal understandings between the Company or any of its
subsidiaries and any of its officers, directors, employees, consultants, agents
or shareholders (or any of such shareholders' family members or affiliates)
("Affiliate Agreements"). True and complete copies of each Material Contract,
Material Lease, 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,
Material Leases, Guarantees and Affiliate Agreements constitutes the valid and
legally binding obligation of the parties thereto and is in full force and
effect without default on the part of the Company, and to the knowledge of the
Company and the Shareholders, any other party thereto.
2.19 AFFILIATE INTERESTS. None of the Shareholders nor any
employee, consultant, officer or director, or former shareholder, employee,
consultant, officer or director, of the Company or any of its subsidiaries has
any interest, direct or indirect, in any property, tangible, or intangible,
including, without limitation, patents, trade secrets, other confidential
business information, trademarks, service marks or trade names used in or
pertaining to the business of the Company or any of its subsidiaries, except
for the normal rights of a shareholder and as set forth in Section 2.19 of the
Company Disclosure Schedule.
2.20 INTELLECTUAL PROPERTY. The Company or one or more of its
subsidiaries own, or hold licenses under or otherwise have the right to use or
sublicense, all foreign and domestic patents, trademarks (common law and
registered), trademark registration applications, service marks (common law and
registered), service xxxx registration applications, trade names and
copyrights, copyright applications, trade secrets, know-how and other
proprietary information as it reasonably believes are necessary for the conduct
of the business of the Company and its subsidiaries as currently conducted. A
list of all such intellectual property is set forth in Section 2.20 of the
Company Disclosure Schedule. Neither the Company nor any of its subsidiaries
is currently in receipt of any notice of infringement or notice of conflict
with the asserted rights of others in any patents, trademarks, service marks,
trade names, trade secrets and copyrights owned or held by other persons,
except, in each case, for matters that could not reasonably be expected to have
a Company Material Adverse Effect. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate or breach the terms of or cause any cancellation of any material
license held by the Company or any of its subsidiaries under, any patent,
trademark, service xxxx, trade name, trade secret or copyright.
25
20
2.21 BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of the Shareholders.
2.22 INSURANCE. Section 2.22 of the Company Disclosure Schedule
sets forth a list of all policies of insurance currently in effect relating to
the business or operations of the Company and its subsidiaries (true and
complete copies of which have been furnished to Acquiror). Such insurance
policies are in full force and effect. The Company and each of its
subsidiaries are presently insured, and during each of the past five (5)
calendar years have been insured, against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured. Except as set forth in Section 2.22 of the Company Disclosure
Schedule, the policies of general liability, malpractice or professional
liability, fire, theft and other insurance maintained with respect to the
operations, assets or businesses of the Company and its subsidiaries provide
what the Company reasonably believes to be 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, to the knowledge of the Company, threatened.
2.23 PROPERTIES. Except as set forth in Section 2.23 of the
Company Disclosure Schedule, the Company and its subsidiaries have good and
marketable title, free and clear of all liens to all their material properties
and assets whether tangible or intangible, real, personal or mixed, reflected
in the Company Financial Statements as being owned by the Company and its
subsidiaries, as of the date thereof, other than (i) any properties or assets
that have been sold or otherwise disposed of in the ordinary course of business
since the date of such Company Financial Statements, (ii) liens disclosed in
the notes to such financial statements, (iii) statutory liens for current Taxes
not yet due and (iv) liens arising in the ordinary course of business. All
buildings, and all fixtures, equipment and other property and assets that are
material to its business on a consolidated basis, held under leases or
subleases by the Company or any of its subsidiaries are held under valid
instruments enforceable in accordance with their respective terms, subject to
applicable Laws of bankruptcy, insolvency or similar Laws relating to
creditors' rights generally and to general principles of equity (whether
applied in a proceeding in law or equity). All of the Company's and its
subsidiaries' equipment in regular use has been reasonably maintained and is in
serviceable condition, reasonable wear and tear excepted. Prior to the
Closing, the real property identified in Section 5.01(f) of the Company
Disclosure Schedule (the "Real Property") was transferred by the Company to
Silver Stone Properties, LLC and a
26
21
promissory note was issued from Silver Stone Properties, LLC to the Company in
the amount of the indebtedness encumbering such Real Property.
2.24 GOOD TITLE. Each of the Shareholders is the sole record and
beneficial owner of, and has good and valid title to, the number of shares of
Company Stock set forth opposite such Shareholder's name on Schedule 1.06(a) to
this Agreement, free and clear of all liens, claims, encumbrances, options,
voting trusts or agreements, proxies or other claims or charges of any nature
whatsoever (other than resulting from this Agreement).
2.25 CERTAIN SECURITIES LAW MATTERS.
(a) Each of the Shareholders, 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, 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 who has designated himself, herself
or itself, as the case may be, (i) as an "accredited investor" on the signature
page hereto is an "accredited investor" as defined in Rule 501 of Regulation D
promulgated pursuant to the Securities Act or (ii) as a "nonaccredited
investor" is not an "accredited investor" and, either alone or with his
purchaser representatives, has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement. 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). Each of the
Shareholders 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 or his purchaser representative, if any,
has also had an opportunity to ask questions of officers of Acquiror, which
questions were answered to such Shareholder's satisfaction. Each of the
Shareholders understands that such discussion was intended to describe certain
aspects of Acquiror's business and financial condition, properties, operations
and prospects, but were not a thorough or exhaustive description.
(b) Each of the Shareholders understands that the
Acquiror Shares may be "restricted securities" under the applicable federal
securities laws and that the Securities Act and the rules of the Commission
provide in substance that such Shareholder may dispose of the Acquiror Shares
only pursuant to an effective registration statement under the Securities Act
or an exemption therefrom, and each Shareholder further understands that,
except to the limited extent provided in the Registration Rights Agreement (as
hereinafter defined) and in this section
27
22
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 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:
(i) For so long as and to the extent necessary to permit
the Shareholders to sell the Acquiror Shares pursuant to Rules 144 or
145 promulgated under the Securities Act, Acquiror shall (a) use its
reasonable efforts to (x) file on a timely basis all reports, data and
other information required to be filed with the Commission by it
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (y) to furnish any Shareholder upon request a
written statement confirming that Acquiror has complied with such
reporting requirements during the twelve (12) months preceding any
proposed sale of the Acquiror Shares by any such Shareholder under
Rules 144 or 145, Acquiror has filed all reports, data and other
information required to be filed with the Commission by it under the
Exchange Act during the twelve (12) months preceding the date of this
Agreement.
(ii) 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 (x) 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 (y) 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 acknowledges and agrees that
such Shareholder is not relying upon Acquiror or the Company or their
respective officers, directors, employees or agents, as to the United States
federal income tax or any other tax consequences to such Shareholder of the
transactions contemplated by this Agreement. As to all such tax consequences,
such Shareholder hereby agrees and represents that such Shareholder has
28
23
consulted with such Shareholder's own legal and tax advisors to the extent that
such Shareholder has deemed such consultation necessary or appropriate, that
such Shareholder is making such Shareholder's own determination as to what the
tax consequences of the transactions contemplated hereby will be to such
Shareholder and that neither Acquiror nor the Company is making any
representation, express or implied, as to any such tax consequences.
2.26 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of the
Shareholders has the full power, legal right, capacity and authority to enter
into, execute and deliver this Agreement and to carry out and perform the
transactions contemplated hereby. This Agreement constitutes a valid and
binding obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company and the
Shareholders that:
3.01 ORGANIZATION AND QUALIFICATION. Acquiror is a limited
liability company duly organized, validly existing and in good standing under
the laws of The Netherlands and Acquisition Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Texas. Each of the Acquiror Companies has all requisite power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
other than where the failure to be so duly qualified and in good standing could
not reasonably be expected to have an Acquiror Material Adverse Effect. The
term "Acquiror Material Adverse Effect" as used in this Agreement shall mean
any change or effect that would be materially adverse to the financial
condition, results of operations, business or prospects of Acquiror and its
subsidiaries, taken as a whole, at the time of such change or effect.
29
24
3.02 CAPITALIZATION.
(a) The authorized capital stock of Acquiror consists of
(i) 100,000,000 Acquiror Shares, of which, as of May 31, 1998: (A) 24,884,167
are issued and outstanding, all of which are duly authorized, validly issued,
fully paid and nonassessable and were not issued in violation of any preemptive
or similar rights created by statute, Acquiror's Articles of Association or
Bylaws (or the equivalent organizational documents) (collectively, the
"Acquiror Organizational Documents") or 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, par value $.01 per
share, of which, as of the date hereof, 1,000 shares are issued and
outstanding. All of the issued and outstanding capital stock of Acquisition
Sub is owned by Core Laboratories, Inc., a wholly-owned subsidiary of Acquiror.
(b) The Acquiror Shares to be issued pursuant to the
Merger will be duly authorized, validly issued, fully paid and nonassessable.
(c) There are no voting trusts or other agreements or
understandings to which Acquiror or any of its subsidiaries is a party with
respect to the voting of the capital stock of Acquiror or any of its
subsidiaries.
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.
30
25
3.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming that all consents, licenses, permits,
waivers, approvals, authorizations, orders, filings and notifications
contemplated by the exceptions to Section 3.04(b) are obtained or made and
except as otherwise disclosed in Section 3.04(a) of the Disclosure Schedule
delivered by Acquiror to the Company contemporaneously with the execution and
delivery of this Agreement (the "Acquiror Disclosure Schedule"), the execution
and delivery of this Agreement by the Acquiror Companies does not, and
performance of their respective obligations hereunder, including the
consummation of the transactions contemplated hereby, will not (with or without
notice or lapse of time or both) (i) conflict with or violate the Acquiror
Organizational Documents or the Articles of Incorporation or Bylaws of
Acquisition Sub, (ii) conflict with or violate any Laws in effect as of the
date of this Agreement or any judgment, order or decree applicable to Acquiror
or any of Acquiror's subsidiaries or by or to which any of their properties is
bound or subject or (iii) result in any breach of or constitute a default
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
or encumbrance on any of the properties or assets of Acquiror or any of
Acquiror's subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Acquiror or any of Acquiror's subsidiaries is a party or by
or to which Acquiror or any of Acquiror's subsidiaries or any of their
respective properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Acquiror Companies does not, and the performance of this Agreement by the
Acquiror Companies, including the consummation of the transactions contemplated
hereby, will not require Acquiror or Acquisition Sub to obtain any consent,
license, permit, waiver approval, authorization or order of, or to make any
filing with or notification to, any Governmental Entities, except (i) for the
filing of Articles of Merger with the Secretary of State of the State of Texas,
(ii) the applicable requirements of the HSR Act, (iii) the applicable
requirements of the Exchange Act and the National Association of Securities
Dealers, Inc. (the "NASD"), (iv) where the failure to obtain such consents,
licenses, permits, waivers, approvals, authorizations or orders, or to make
such filings or notifications could not reasonably be expected to prevent
Acquiror or Acquisition Sub from performing their respective obligations under
this Agreement and (v) as disclosed in Section 3.04(b) of the Acquiror
Disclosure Schedule.
31
26
3.05 REPORTS; FINANCIAL STATEMENTS.
(a) Since December 31, 1997, 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. Acquiror has
provided the Shareholders with true and complete copies of all Acquiror SEC
Reports.
(b) Each of the historical consolidated financial
statements (including, in each case, any related notes thereto) contained in
the Acquiror SEC Reports (i) have been prepared in accordance with the
published rules and regulations of the Commission and GAAP applied on a
consistent basis throughout the periods involved (except (A) to the extent
disclosed therein or required by changes in GAAP, (B) as may be indicated in
the notes thereto and (C) in the case of the unaudited financial statements, as
permitted by the rules and regulations of the Commission) and (ii) fairly
present the consolidated financial position of Acquiror and its subsidiaries as
of the respective dates thereof and the consolidated results of operations and
cash flows for the periods indicated (subject, in the case of unaudited
consolidated financial statements for interim periods, to adjustments,
consisting only of normal, recurring accruals, necessary to present fairly such
results of operations and cash flows).
3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Acquiror SEC Reports filed prior to the date of this Agreement or as
contemplated by this Agreement, since December 31, 1997, Acquiror and its
subsidiaries have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice and there has not been any
Acquiror Material Adverse Effect.
3.07 POOLING; TAX MATTERS. Neither the Acquiror nor any of its
affiliates 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 Regulations of the Commission or (b)
the Merger from constituting a reorganization within the meaning of section
368(a) of the Code.
32
27
3.08 BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror.
ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.01 AFFIRMATIVE COVENANT. Each of the Shareholders covenants and
agrees that, prior to the Closing Date, such Shareholder will take all
commercially reasonable actions necessary to ensure that the Company complies
with Articles V and VII hereof.
4.02 NEGATIVE COVENANTS. Each of the Shareholders covenants and
agrees that, prior to the Effective Time, such Shareholder will not:
(a) take any action that reasonably could be expected to
result in (i) any of the representations and warranties of such
Shareholder and the Company set forth in Article II hereof becoming
untrue or (ii) any of the conditions set forth in Article IX hereof
not being satisfied; or
(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.
4.03 REPLACEMENT OF PROMISSORY NOTE. On or prior to six (6) months
after the Closing Date, the Shareholders shall repay the promissory note issued
in favor of the Company from Silver Stone Properties, LLC in connection with
the sale of the Real Property.
33
28
ARTICLE V
COVENANTS OF THE COMPANY
5.01 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by
Acquiror, the Company will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course
consistent with past practices;
(b) use all reasonable efforts to preserve substantially
intact its business organization, maintain its rights and franchises,
retain the services of its respective officers and key employees and
maintain its relationships with its respective customers and
suppliers;
(c) maintain and keep its properties and assets in as
good repair and condition as at present, ordinary wear and tear
excepted, and maintain supplies and inventories in quantities
consistent with its customary business practice;
(d) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained;
(e) ensure that the cash on hand at the Company shall not
be less than $580,646.18 and the aggregate outstanding balance of
long-term and short-term debt shall not be greater than $7,717,953.00.
(f) execute any additional documents and instruments
necessary to effectively transfer the Real Property described in
Section 5.01(f) of the Company Disclosure Schedule to Silver Stone
Properties, LLC and to evidence assumption of the underlying
indebtedness encumbering such Real Property;
(g) use its best efforts to ensure that the Shareholders'
Representative shall execute and deliver the Escrow Agreement; and
(h) execute a lease arrangement (the "Lease") covering
the Real Property, in substantially the form attached hereto as
Exhibit E.
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:
34
29
(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
(excluding payments made pursuant to agreements disclosed in Section
2.10(j) of the Company Disclosure Schedule) other than in the ordinary
course of business, (iii) grant any severance or termination pay
(other than pursuant to the normal severance practices of the Company
or its subsidiaries as in effect on the date of this Agreement) to, or
enter into any employment or severance agreement with, any director,
officer or employee; (iv) except as set forth in Section 2.10(a) of
the Company Disclosure Schedule, establish, adopt or enter into any
Benefit Plan or (v) except as may be required by applicable Law or as
set forth in Section 2.10(a) of the Company Disclosure Schedule,
amend, or take any other actions (including, without limitation, the
acceleration of vesting, waiving of performance criteria or the
adjustment of awards or any other actions permitted upon a "change in
control" (as defined in the respective plans) of the Company, with
respect to any of the Benefit Plans or any of the plans, programs,
agreements, policies or other arrangements described in Section
2.10(a) of this Agreement;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock or
other equity interests, except dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of
the Company;
(c) (i) except as described in Section 2.03(c) of the
Company Disclosure Schedule, redeem, purchase or otherwise acquire any
shares of its or any of its subsidiaries' capital stock or any
securities or obligations convertible into or exchangeable for any
shares of its or its subsidiaries' capital stock (other than any such
acquisition directly from any wholly owned subsidiary of the Company
in exchange for capital contributions or loans to such subsidiary), or
any options, warrants or conversion or other rights to acquire any
shares of its or its subsidiaries' capital stock or any such
securities or obligations; (ii) effect any reorganization or
recapitalization of the Company or any of its subsidiaries; or (iii)
split, combine or reclassify any of its or its subsidiaries' capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of
its or its subsidiaries' capital stock;
(d) (i) except as set forth in Section 2.03(a) hereof or
as described in Section 2.03(c) of the Company Disclosure Schedule,
issue (whether upon original issue or out of treasury), sell, grant,
award, deliver or limit the voting rights of any shares of any class
of its or its subsidiaries' capital stock, any securities convertible
into or exercisable or exchangeable for any such shares, or any
rights, warrants or options to acquire, any such shares; (ii) amend or
otherwise modify the terms of any such rights, warrants or options the
effect of which shall be to make such terms materially more
35
30
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), except that the Company may continue negotiations
with and, subject to the prior approval of Acquiror, consummate the
acquisition of Explosivos Tecnologicos Argentinos, S.A. presently
being negotiated;
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its assets or any
assets of any of its subsidiaries, except for pledges or dispositions
of assets in the ordinary course of business and consistent with past
practice;
(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to,
or that may reasonably be expected to lead to, any Competing
Transaction, or enter into discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to, or endorse, any Competing Transaction, or
authorize or permit any of the officers, directors, employees or
agents of the Company or any of its subsidiaries or any agent,
investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any of the Company's
subsidiaries to take any such action, and the Company shall promptly
notify Acquiror of all relevant terms of any such inquiries or
proposals received by the Company or any of its subsidiaries or by any
such officer, director, employee, agent, investment banker, financial
advisor, attorney, accountant or other representative relating to any
of such matters and if such inquiry or proposal is in writing, the
Company shall promptly deliver or cause to be delivered to Acquiror a
copy of such inquiry or proposal;
(h) release any third party from its obligations under
any existing standstill agreement or arrangement relating to a
Competing Transaction or otherwise under any confidentiality or other
similar agreement relating to information material to the Company or
any of its subsidiaries;
(i) propose to adopt any amendments to its Articles of
Incorporation or its Bylaws that would have an adverse effect on the
consummation of the transactions contemplated by this Agreement;
36
31
(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 July 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;
(l) enter into any material arrangement, agreement or
contract with any third party (other than customers in the ordinary
course of business); or
(m) agree in writing or otherwise to do any of the
foregoing.
ARTICLE VI
COVENANTS OF ACQUIROR
6.01 AFFIRMATIVE COVENANTS OF ACQUIROR. Acquiror hereby covenants
and agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by the Company and
the Shareholders, Acquiror will:
(a) use all reasonable efforts to preserve substantially
intact its business organization;
(b) maintain and keep its properties and assets in as
good repair and condition as at present, ordinary wear and tear
excepted, and maintain supplies and inventories in quantities
consistent with its customary business practice; and
(c) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained.
6.02 NEGATIVE COVENANTS OF ACQUIROR. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Company and the Shareholders, from the date of this Agreement until the
Effective Time, Acquiror will not do any of the following:
(a) amend any of the material terms or provisions of the
Acquiror Shares;
(b) knowingly take any action that would result in a
failure to maintain the listing of the Acquiror Shares on the Nasdaq
Stock Market or any other nationally recognized stock market;
37
32
(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.
6.03 PAYMENT TO LENDER OF THE COMPANY. All indebtedness of the
Company and its subsidiaries to the Company's lender in the amounts set forth
on Schedule 6.03 shall have been paid in full by Acquiror within ten (10) days
of Closing, and Acquiror shall undertake to have all liens released and
discharged and provide evidence of same to the Shareholders' Representative.
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) Acquiror shall, and shall cause its subsidiaries to,
(i) afford to the Company and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Company Representatives") access
during ordinary business hours, upon reasonable prior notice, to the
officers, employees,
38
33
accountants, agents, properties, offices and other facilities of
Acquiror and its subsidiaries and to the books and records thereof and
(ii) furnish promptly to the Company and the Company Representatives
such information concerning the business, properties, contracts,
records and personnel of Acquiror and its subsidiaries (including,
without limitation, financial, operating and other data and
information) as may be reasonably requested, from time to time, by the
Company or the Company Representatives.
(c) Notwithstanding the foregoing provisions of this
Section 7.02, neither party shall be required to grant access or
furnish information to the other party to the extent that such access
or the furnishing of such information is prohibited by Law or
contract. No investigation by the parties hereto made heretofore or
hereafter shall affect the representations and warranties of the
parties that are contained herein and each such representation and
warranty shall survive such investigation.
(d) Each party to this Agreement shall hold in confidence
and not disclose, except on a "need to know" basis to its respective
Acquiror Representatives or Company Representatives, as the case may
be, all nonpublic information received from the other party to this
Agreement ("Confidential Information") until such time as such
Confidential Information is otherwise publicly available and, if this
Agreement is terminated, each party will deliver to the other party
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 that such obligations
of the Acquiror Companies shall terminate at the Closing.
(e) In the event that a party, 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, the party agrees
(i) to notify the other party immediately of the existence, terms and
circumstances surrounding such request, (ii) to consult with the other
party 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 a party from being held in contempt
or subject to other penalty, to furnish only such portion of the
Confidential Information as the disclosing party 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.
39
34
7.03 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company and Acquiror shall each use, and shall
cause each of their respective subsidiaries to use, and each of the
Shareholders shall use all reasonable efforts promptly (i) to take, or cause to
be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the transactions contemplated by this Agreement, (ii) to
obtain from any Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained by the Company,
Acquiror or any of the Shareholders, respectively, or any of the Company's or
Acquiror's respective subsidiaries, in connection with the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, (iii) to make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under (A) the Securities Act and the Exchange Act and
the rules and regulations thereunder, and any other applicable federal or state
securities laws, (B) the HSR Act and (C) any other applicable Law; provided
that Acquiror and the Company shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the nonfiling party and its advisors prior to filing and, if
requested, shall accept all reasonable additions, deletions or changes
suggested in connection therewith. The Company and Acquiror shall furnish all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law in connection with the
transactions contemplated by this Agreement.
(b) Acquiror, the Company and each of the Shareholders
agree, and Acquiror and the Company shall cause each of their respective
subsidiaries, to cooperate and to use all reasonable efforts to contest and
resist any action, including legislative, administrative or judicial action,
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) (an
"Order") that is in effect and that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by this
Agreement, including, without limitation, by vigorously pursuing all available
avenues of administrative and judicial appeal and all available legislative
action. Acquiror, the Company and each of the Shareholders also agree to take
any and all reasonable actions, including, without 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.
40
35
(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 in
Section 2.13 of the Company Disclosure Schedule within five (5) days after the
execution hereof, (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 NASD 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
Company or Acquiror, as the case may be; provided that any expenses associated
with any fees associated with the HSR filing shall be split between Acquiror
and the Company. The Shareholders shall not charge the Company or any of its
subsidiaries, or cause the Company or any of its subsidiaries to pay or be
liable, for any costs or expenses incurred by any of the Shareholders in
connection with this Agreement or the
41
36
transactions contemplated hereby. Any such costs, expenses or fees not paid by
the Company prior to the Closing will become the obligation 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, 1999, Acquiror shall provide
employee benefit plans and arrangements to employees of the Company and its
subsidiaries that are similar to the employee benefit plans and arrangements of
Acquiror for similarly situated employees of the Acquiror as in effect
immediately prior to the Effective Time.
(b) The employees of Company and its subsidiaries shall
be credited for their actual years of service with the Company for purposes of
eligibility, vesting and benefit accrual under all benefit plans provided by
Acquiror in accordance with this Section 7.07, including, but not limited to,
vacation, severance, retirement and disability plans.
(c) 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, 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.
(d) 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.
(e) 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. Acquiror shall cause the Company to comply with all applicable
reporting requirements under section 367(a) of the Code and U.S. Treasury
Regulations issued thereunder.
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
42
37
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.
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"), 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, (b)
the breach of any covenant or agreement of the Company or any of the
Shareholders contained in or made pursuant to this Agreement or (c) any Release
of Hazardous Substances on any property currently or previously owned,
operated, leased, or used by Company or any of its subsidiaries or any
transport, disposal, or arrangement for transport or disposal of any Hazardous
Substances to or at any site located offsite the property currently owned or
leased by the Company. It is agreed among the parties hereto that the
obligations of the Shareholders to the Acquiror Indemnified Party pursuant to
this Section 8.01 be satisfied only pursuant to the Escrow Agreement and the
procedures set forth in Sections 8.04 and 8.05 hereof. As used in this Article
VIII, the term "Claim" shall include (i) all debts, liabilities and
obligations, (ii) all losses, damages, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys' fees and expenses), and (iii)
all demands, claims, actions, costs of investigation, causes of action,
proceedings, arbitrations, judgments, settlements and assessments, whether or
not ultimately determined to be valid.
8.02 NO EXHAUSTION OF REMEDIES. The Shareholders acknowledge that
their obligation under Section 8.01 of this Agreement is independent of the
obligations of the Company pursuant to this Agreement, and that the
Shareholders waive any right to require the Acquiror Indemnified Parties to (i)
proceed against the Company; or (ii) pursue any other remedy whatsoever in the
power of the Acquiror Indemnified Parties.
8.03 DEFENSE OF THIRD PARTY CLAIMS. The obligation of the
Shareholders to indemnify the Acquiror Indemnified Parties under this Article
VIII with respect to Claims relating to or arising from third parties (a "Third
Party Claim") shall be subject to the following terms and conditions:
(a) Notice and Defense. The Acquiror Indemnified Party
will give the other party or parties (whether one or more, the
"Indemnifying Party") prompt written notice (including all documents
and other nonprivileged information in the Acquiror
43
38
Indemnified Party's possession related thereto) of any such Third
Party Claim, and the Indemnifying Party may undertake the defense
thereof by representatives chosen by it upon written notice to the
Acquiror Indemnified Party provided within 20 days of receiving notice
of such Third Party Claim (or sooner if the nature of the Third Party
Claim so requires). Failure of the Acquiror Indemnified Party to give
such notice shall not affect the Indemnifying Party's duty or
obligations under this Article VIII, except to the extent the
Indemnifying Party is materially prejudiced thereby. The Acquiror
Indemnified Party shall make available to the Indemnifying Party or
its representatives all records and other materials required by the
Indemnifying Party and in the possession or under the control of the
Acquiror Indemnified Party, for the use of the Indemnifying Party and
its representatives in defending any such claim, and shall in other
respects give reasonable cooperation in such defense.
(b) Failure to Defend. If the Indemnifying Party, within
20 days after notice of any such Third Party Claim (or sooner if the
nature of any Third Party Claim so requires), fails to undertake the
defense of such Third Party Claim actively and in good faith, then the
Acquiror Indemnified Party shall have the right, but not the
obligation, 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 $100,000,
the Acquiror Indemnified Party shall have the right to defend,
compromise or settle such Third Party Claim (provided that the
Acquiror Indemnified Party shall not settle such Third Party Claim or
consent to any judgment without first obtaining the consent of the
Indemnifying Party, which shall not be unreasonably withheld), and
(ii) the Indemnifying Party shall not without the written consent of
the Acquiror Indemnified Party, settle or compromise any Third Party
Claim or consent to the entry of any judgment that does not include as
an unconditional term thereof the giving by the claimant or the
plaintiff to the Acquiror Indemnified Party of an unconditional
release from all liability in respect of such Third Party Claim.
8.04 PAYMENT; ARBITRATION. Upon the occurrence of a Claim for
which indemnification is believed to be due hereunder which is not a Third
Party Claim, 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
44
39
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
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, 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 June 30,
45
40
1998, with appropriate adjustment to take into account any stock split, reverse
stock split, stock dividend, recapitalization or other similar capital
adjustments with respect 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 in this Article VIII.
(c) The Shareholders' Representative shall have the power
and authority to make all decisions with regard to the settlement of Claims
brought pursuant to Section 8.01 of this Agreement from the Escrow Shares. If
the Shareholders' Representative is unable to carry out his duties as
Shareholders' Representative, then the Shareholder who held the next highest
number of shares of Company Stock immediately prior to the Effective Time,
shall be designated and appointed as the Shareholders' Representative, and
shall assume all of the powers and duties of the Shareholders' Representative
under the Agreement and the Escrow Agreement. If any successor Shareholders'
Representative becomes unable to carry out his duties as Shareholders'
Representative, his replacement shall be the Shareholder who 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 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, 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 $25,000. 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.
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.
46
41
ARTICLE IX
CONDITIONS
9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR COMPANIES.
The obligation of the Acquiror Companies to effect the transactions
contemplated hereby on the Closing Date shall be subject to the satisfaction at
or prior to the Closing Date of the following conditions, any or all of which
may be waived by Acquiror, in whole or in part, to the extent permitted by
applicable law:
(a) Each of the representations and warranties of the
Company and each of the Shareholders contained in this Agreement shall
be true and correct in all material respects (without duplication of
any materiality exception contained in any individual representation
and warranty) as of the date of this Agreement and as of the Closing
Date as though made again as of the Closing Date;
(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;
(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 Closing Date: (i) a copy of the resolutions of the Company's
Board of Directors authorizing the execution, delivery and performance
of this Agreement and the other documents contemplated hereby to which
it is a party and the consummation by the Company of the Merger; (ii)
a copy of the resolutions of the Company's shareholders authorizing
the execution, delivery and performance of this Agreement and the
other documents contemplated hereby to which it is a party and the
consummation by the Company of the Merger; (iii) a certified copy of
the Articles of Incorporation of the Company issued by the Secretary
of State; (iv) a copy of the Bylaws of the Company; and (v) the
incumbency of the officer or officers authorized to execute on behalf
of the Company this Agreement and the other documents contemplated
thereby to which it is a party;
(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 Closing Date: (i) a certified copy
of the Articles of Incorporation of the subsidiary issued by the
Secretary of State of the state of such subsidiary's incorporation;
and (ii) a copy of the Bylaws of such subsidiary;
(e) The resignations, effective at the Effective Time, of
each of directors and officers of the Company shall have been
delivered to Acquiror;
47
42
(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 Xxxxxx
Xxxxxxxx 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) H. Xxxx Xxxx, Xx. shall have duly executed and
delivered to Acquiror an employment agreement substantially in the
form of Exhibit D hereto, and Xxxxx X. Xxxxxx shall have executed and
delivered to Acquiror an amendment to his employment agreement in
substantially the form of Exhibit D-1 hereto;
(j) Acquiror shall have received the Escrow Agreement,
duly executed and delivered by the Shareholders' Representative and
the Escrow Agent;
(k) The waiting period under the HSR Act applicable to
the Merger shall have expired or been terminated;
(l) Title to the Real Property described in Section
5.01(f) of the Company Disclosure Schedule shall have been conveyed to
Silver Stone Properties, LLC and the promissory note evidencing the
indebtedness encumbering the Real Property shall be executed by Silver
Stone Properties, LLC and delivered to the Company;
(m) The Shareholders' Representative and each of the
Shareholders shall have executed and delivered the Appointment; and
(n) The Lease shall have been executed and delivered.
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:
48
43
(a) Each of the representations and warranties of
Acquiror contained in this Agreement shall be true and correct in all
material respects (without duplication of any materiality exception
contained in any individual representation and warranty) as of the
date of this Agreement and as of the Closing Date as though made again
as of the Closing Date;
(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;
(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 Closing Date:
(i) a copy of the resolutions of the Board of Directors of each of the
Acquiror Companies 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 certified copy of
the Articles of Incorporation (or equivalent organizational document)
of each of the Acquiror Companies issued by The Netherlands and the
Secretary of State of the State of Texas, as the case may be; (iv) a
copy of the Bylaws (or equivalent organizational document) of each of
the Acquiror Companies; and (v) the incumbency of the officer or
officers authorized to execute on behalf of each of the Acquiror
Companies this Agreement and the other documents contemplated thereby
to which it is a party;
(d) The Company shall have been advised in writing by
Xxxxxx & Xxxxxxx, 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;
(e) No court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger;
(f) The applicable waiting period under any applicable
competition Laws, Regulations or Orders of foreign Governmental
Entities, as set forth in Acquiror Disclosure Schedule or the Company
Disclosure Schedule, shall have expired or been terminated;
49
44
(g) The waiting period under the HSR Act applicable to
the Merger shall have expired or been terminated;
(h) The Surviving Corporation shall have executed and
delivered the employment agreement to H. Xxxx Xxxx, Xx. and shall have
executed an amendment to the employment agreement with Xxxxx X.
Xxxxxx;
(i) Acquiror shall have duly executed and delivered to
the Shareholders a Registration Rights Agreement, substantially in the
form of Exhibit F hereto (the "Registration Rights Agreement"); and
(j) Acquiror shall have duly executed and delivered to
Silver Stone Properties, LLC the Lease.
ARTICLE X
MISCELLANEOUS
10.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) by mutual consent of Acquiror and the Company;
(b) by either Acquiror or the Company if the Effective
Time has not occurred on or before September 30, 1998;
(c) by Acquiror, upon a breach of any covenant or
agreement on the part of the Company or any of the Shareholders set
forth in this Agreement, or if any representation or warranty of the
Company or any of the Shareholders shall have become untrue, in either
case such that the conditions set forth in Section 9.01(a) or Section
9.01(b) would not be satisfied (a "Terminating Company Breach");
provided that, if such Terminating Company Breach is curable by the
Company or any of the Shareholders, as the case may be, through the
exercise of reasonable efforts and for so long as the Company or such
Shareholder or Shareholders continue to exercise such reasonable
efforts, Acquiror may not terminate this Agreement under this Section
10.01(c);
(d) by the Company, upon breach of any covenant or
agreement on the part of Acquiror set forth in this Agreement, or if
any representation or warranty of Acquiror shall have become untrue,
in either case such that the conditions set forth in Section 9.02(a)
or Section 9.02(b) would not be satisfied (a "Terminating Acquiror
Breach"); provided that, if 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
50
45
(e) by either Acquiror or the Company, if there shall be
any Order which is final and nonappealable preventing the consummation
of the Merger, unless the party relying on such Order has not complied
with its obligations under Section 7.03(b).
10.02 EFFECT OF TERMINATION. In the event of any termination of
this Agreement pursuant to Section 10.01, the Shareholders, the Company,
Acquiror and Acquisition Sub shall have no obligation or liability to each
other except that (i) the provisions of Sections 7.02(d) and 7.06 shall
survive any such termination, and (ii) nothing herein and no termination
pursuant hereto will relieve any party from liability for any breach of this
Agreement.
10.03 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits thereof. This
Agreement may not be amended or supplemented at any time, except by an
instrument in writing signed on behalf of each party hereto. The waiver by any
party hereto of any condition or of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other condition or
subsequent breach.
10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the Schedules and Exhibits hereto) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both oral and
written, among the parties or any of them, with respect to the subject matter
hereof, and neither this nor any document delivered in connection with this
Agreement confers upon any person not a party hereto any rights or remedies
hereunder except as provided in Article VIII hereof.
10.05 ASSIGNMENT. This Agreement shall inure to the benefit of and
will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. This Agreement shall not be
assignable by any party hereto without the consent of the other parties hereto,
except that the parties hereto agree that the rights and obligations of the
Acquiror may be assigned to an affiliate of the Acquiror by written notice to
all other parties hereto.
10.06 CERTAIN DEFINITIONS. For the purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
person;
(b) "business day" means any day other than a day on
which banks in the State of Texas are authorized or obligated to be
closed;
(c) "Closing" shall mean a meeting, which shall be held
in accordance with Section 1.11 of this Agreement, of persons
interested in the transactions contemplated by
51
46
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) "Governmental Entity" means any foreign, federal,
national, republic, provincial, state, territorial, county, municipal
or city agency, department, commission, board, office, bureau, court,
tribunal or any other political entity, aggregation, or subdivision of
any of the foregoing;
(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
52
47
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 Nasdaq Stock 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: Xxxx Oil Tools, Inc.
0000 Xxxxx Xxx
Xxxx Xxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: H. Xxxx Xxxx, Xx.
with a copy (which shall
not constitute notice) to: Michener, Larimore, Swindle,
Whitaker, Flowers, Sawyer,
Xxxxxxxx & Chalk, L.L.P.
3500 City Center Tower II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
If to the Shareholders: Shareholders of Xxxx Oil Tools, Inc.
c/o H. Xxxx Xxxx, Xx.
0000 Xxxxx Xxx
Xxxx Xxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
53
48
with a copy (which shall
not constitute notice) to: Michener, Larimore, Swindle,
Whitaker, Flowers, Sawyer,
Xxxxxxxx & Chalk, L.L.P.
3500 City Center Tower II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
If to Acquiror: Core Laboratories N.V.
Xxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Telecopy: 011-31-20-627-9886
Attention: Xxxxxxx Xxxxxxxx
and Core Laboratories, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy (which shall
not constitute notice) to: Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: T. Xxxx Xxxxx
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.
54
49
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, 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.
10.12 MANDATORY MEDIATION; BINDING ARBITRATION; VENUE; ATTORNEYS'
FEES.
(a) Except as provided in Article VIII of this Agreement
for disputes relating to indemnification obligations:
(i) Before the institution of any litigation between any
persons relating to this 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
Agreement, such dispute shall be first submitted to mediation in
accordance with the provisions of the Commercial Mediation Rules of
the American Arbitration Association 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
Commercial Mediation Rules of the American Arbitration Association are
incorporated by reference. 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 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 Section 8.04 of this Agreement.
The parties agree to use the Houston, Texas office of the American
Arbitration Association, and the place of the arbitration shall be in
a city mutually
55
50
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 American Arbitration Association, 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 Xxxxxx County, Texas, and the state courts within Xxxxxx County,
Texas, shall have exclusive venue and jurisdiction of same.
56
51
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 Managing Director
By
Xxxxxxx Xxxxxxxx
Managing Director
XXXX ACQUISITION, INC.
By
Name:
Title:
XXXX OIL TOOLS, INC.
By
Name:
Title:
SHAREHOLDERS' REPRESENTATIVE:
By ____________________________________
H. Xxxx Xxxx, Xx.
57
52
Shareholders: NUMBER OF SHARES NON-ACCREDITED ACCREDITED
OF COMPANY INVESTOR INVESTOR
STOCK OWNED
(Please check one box)
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
58
1
EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement"), dated as of June 30, 1998,
is entered into by and among Core Laboratories N.V., a Netherlands limited
liability company ("Acquiror"); Xxxx Acquisition, Inc., a Texas corporation
with its principal place of business in Houston, Texas ("Acquisition Sub"),
Xxxx Oil Tools, Inc., a Texas corporation (the "Company"), H. Xxxx Xxxx, Xx.
(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 and the Shareholders
have entered into an Agreement and Plan of Merger, dated June 30, 1998 (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, $1.00 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 227,684 Acquiror
Shares, from which they may, subject to the terms and conditions of the Merger
Agreement and this Escrow Agreement, satisfy the Shareholders' obligations to
indemnify against Claims; and
WHEREAS, the Escrow Agent has agreed to act as the agent and custodian
for the Escrow Fund for the benefit of the parties to the Merger Agreement; and
WHEREAS, pursuant to the Merger Agreement, the Appointment and the
terms and conditions hereof, the Shareholders' Representative is authorized to
serve as the representative and agent hereunder for each of the Shareholders
with full power and authority to execute, deliver and act on each such
Shareholder's behalf hereunder in all respects;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements, provisions and covenants contained in this Escrow Agreement and the
Merger Agreement, the parties hereby agree as follows:
59
2
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 227,684 Acquiror Shares, which certificate shall be
registered as follows: "Bankers Trust Company f/b/o the Former Shareholders of
the Common Stock of Xxxx Oil Tools, Inc." All such Acquiror Shares hereby
initially delivered to, and initially deposited with, the Escrow Agent,
together with all subsequent stock dividends or distributions of other Acquiror
Shares received in respect of such shares while deposited hereunder, shall be
referred to herein as the "Escrow Shares."
(c) The respective number of Escrow Shares to be initially
deposited with the Escrow Agent by Acquiror for the account of each Shareholder
is set forth on Exhibit A hereto.
(d) The Shareholders' Representative shall deliver to the Escrow
Agent simultaneously herewith 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
exchanges with (including by reason or merger, consolidation or other business
combination
60
3
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, 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'
61
4
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
62
5
portion of such Claim amount is owed to an Acquiror Indemnified Party,
the Acquiror Indemnified Party shall be entitled to payment of such
Claim upon presentation of a Final Instruction signed by Acquiror and
accompanied by a copy of the arbitration order. Judgment upon the
award resulting from arbitration may be entered in any court having
jurisdiction for direct enforcement, or any application may be made to
a court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
(c) Promptly after resolution of a Claim as provided in clause (b)
above, the Escrow Agent shall satisfy such Claim by delivering to Acquiror the
amount of the Escrow Fund calculated in accordance with Section 8.05 of the
Merger Agreement 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, 00 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxx Xxxxxx.
ARTICLE 4
DISPOSITION OF ESCROW FUND
(a) The Escrow Fund held hereunder shall be released by the Escrow
Agent to Shareholders 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.
(b) At such later time as all Claims have been finally resolved
and the amount of all such Claims has been paid to Acquiror, the balance of the
Escrow Fund then held hereunder, if any, shall be disbursed to the
Shareholders. The Shareholders' Representative shall have no personal
liability as a result of any actions taken in such position to Acquiror,
Acquisition Sub or any of the Acquiror Indemnified Parties or to any
Shareholder in either case with respect to the disposition of the Escrow Shares
or any other action taken by him as the Shareholders' Representative, unless
such actions constitute gross negligence or willful misconduct.
63
6
(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
Indemnification of Escrow Agent. (a) The Escrow Agent shall have no
duties or responsibilities whatsoever with respect to the Escrow Fund except as
are specifically set forth herein. The Escrow Agent shall neither be
responsible for or under, nor chargeable with knowledge of the terms and
conditions of, any other agreement, instrument or document in connection
herewith. The Escrow Agent may conclusively rely upon, and shall be fully
protected from all liability, loss, cost, damage or expense in acting or
omitting to act pursuant to any written notice, instrument, request, consent,
certificate, document, letter, telegram, opinion, order, resolution or other
writing hereunder without being required to determine the authenticity of such
document, the correctness of any fact stated therein, the propriety of the
service thereof or the capacity, identity or authority of any party purporting
to sign or deliver such document. The Escrow Agent shall have no
responsibility for the contents of any such writing contemplated herein and may
rely without any liability upon the contents thereof.
(b) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or with the rights or powers conferred upon it hereunder, nor for action
taken or omitted by it in good faith, and in accordance with advice of counsel
(which counsel may be of the Escrow Agent's own choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts or
omissions of any kind except for its own willful misconduct or gross
negligence.
(c) Each of the Acquiror and Shareholder's Representative agrees
to jointly and severally indemnify the Escrow Agent and its employees,
directors, officers and agents and hold each harmless against any and all
liabilities incurred by it hereunder as a consequence of such party's action,
and the parties agree jointly and severally to indemnify the Escrow Agent and
hold it harmless against any claims, costs, payments, and expenses (including
the fees and expenses of counsel) and all liabilities incurred by it in
connection with the performance of its duties hereunder and them hereunder,
except in either case for claims, costs, payments and expenses (including the
fees and expenses of counsel) and liabilities incurred by the Escrow Agent
resulting from its own willful misconduct or gross negligence.
(d) The Escrow Agent may resign as such following the giving of 60
days' prior written notice to Acquiror and the Shareholders' Representative.
Similarly, the Escrow Agent may be removed and replaced following the giving of
60 days' prior written notice to the Escrow
64
7
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.
65
8
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.
Xxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Telecopy: 011-31-20-627-9886
Attention: Xxxxxxx Xxxxxxxx
and
Core Laboratories, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: T. Xxxx Xxxxx
66
9
(b) If to the Escrow Agent:
Bankers Trust Company
0 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxxx
(c) If to the Shareholders' Representative:
H. Xxxx Xxxx, Xx.
0000 Xxxxx Xxx
Xxxx Xxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Michener, Larimore, Swindle, Whitaker,
Flowers, Sawyer, Xxxxxxxx & Chalk, L.L.P.
3500 City Center Tower II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
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.
67
10
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
Compensation of Escrow Agent. The Escrow Agent shall be entitled to
payment from Acquiror for customary fees and expenses for all services rendered
by it hereunder in accordance with Exhibit C attached hereto (as such schedule
may be amended from time to time), payable on the closing date. The Escrow
Agent shall also be entitled to reimbursement on demand for all loss,
liability, damage or expenses paid or incurred by it in the administration of
its duties hereunder, including, but not limited to, all counsel, advisors' and
agents' fees and disbursements and all taxes or other governmental charges.
ARTICLE 11
TERM
This Escrow Agreement shall terminate on the later of (i) the
Distribution Date or (ii) the date on which all Claims, if any, asserted by
Acquiror pursuant to the terms of this Escrow Agreement and the Merger
Agreement shall have been conclusively resolved and paid pursuant to this
Escrow Agreement and the Merger Agreement. The rights of the Escrow Agent and
the obligations of the other parties hereto under Articles V and X shall
survive the termination thereof and the resignation or removal of the Escrow
Agent.
68
11
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,
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 "affiliate"
of Acquiror upon notice to all parties and, thereupon such assignee shall fully
assume and succeed to all of the assignors' rights, benefits, obligations,
duties and responsibilities hereunder.
Notwithstanding the foregoing, if the Shareholders' Representative is
unable to carry out his duties as Shareholders' Representative, then the
Shareholder who held the next highest number of shares of Company Stock
immediately prior to the Effective Time, 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 to
carry out his duties as Shareholders' Representative, his replacement shall be
the Shareholder who held next highest number of shares of Company Stock
immediately prior to the Effective Time.
69
12
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 required to be delivered to
Acquiror under Article 3 hereof. In the event that there are insufficient
funds remaining to pay any withholding obligations after distribution of the
Escrow Funds to Acquiror, such liability shall be the responsibility of the
Shareholders.
ARTICLE 17
SEVERABILITY
If any term, provision, covenant or restriction of this Escrow
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Escrow Agreement shall continue in full force and effect
and shall in no way be affected, impaired or invalidated unless such an
interpretation would materially alter the rights and privileges of any party
hereto or materially alter the terms of the transactions contemplated hereby.
ARTICLE 18
DESIGNEES FOR INSTRUCTIONS
Acquiror may, by notice to the Escrow Agent, designate one or more
persons who will execute notices and from whom the Escrow Agent may take
instructions hereunder. Such designations may be changed from time to time
upon notice to the Escrow Agent from Acquiror. The Escrow Agent will be
entitled to rely conclusively on any notices or instructions from any person so
designated by Acquiror.
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
70
13
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 Xxxxxx County,
Texas, and the state courts within Xxxxxx County, Texas, shall have exclusive
venue and jurisdiction of same.
71
14
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 Managing Director
By _____________________________________
Xxxxxxx Xxxxxxxx
Managing Director
XXXX ACQUISITION, INC.
By _____________________________________
Name:
Title:
XXXX OIL TOOLS, INC.
By _____________________________________
Name:
Title:
SHAREHOLDERS' REPRESENTATIVE:
________________________________________
BANKERS TRUST COMPANY, as Escrow Agent
By _____________________________________
Name:
Title:
72
15
Exhibit A to
Escrow Agreement
ESCROW SHARES OF SHAREHOLDERS
SHAREHOLDER ESCROW SHARES
Xxxxxxx X. Xxxx 68,291
Xxxxx Xx Xxxx 68,291
H. Xxxx Xxxx, Xx. 24,448
Xxxxxx Xxxx Xxxx 3,961
Xxxxxx Xxxx Xxxx, as Custodian for Xxxxxx Xxxxxxxx Xxxx 137
Xxxxxx Xxxx Xxxx, as Custodian for Xxxxxxx Xxxx Xxxx 137
H. D. Xxxx, III 3,961
Xxxxxx X. Xxxx 3,961
H. Xxxx Xxxx, Xx., as Custodian for Xxxx X. Xxxx 3,961
Xxxxxxx Xxxxx 3,961
Xxxxxx X. Xxxxx 3,961
Xxxxx X. Xxxxx 3,961
Xxxxxxx Xxxxx Xxxxx 3,961
Xxxxxxxx Xxxxxxxxxx 3,961
Xxxx O. Chron 3,961
Xxxxxxxx Xxxxxxxxxx, as Custodian for Xxxx X. Chron 3,961
Xxxxx X. Xxxxxx 22,809
--------------
Total 227,684
==============
73
16
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:
-----------------------------------
74
17
Exhibit C to
Escrow Agreement
BANKERS TRUST COMPANY
CORPORATE TRUST AND AGENCY SERVICES
SCHEDULE OF FEES FOR
CORE LABORATORIES & XXXX OIL TOOLS 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
75
PURCHASER REPRESENTATIVE CERTIFICATE
CORE LABORATORIES N.V.
Name of Purchaser:
-----------------------------------------------------
The following certificate requests information relating to the
identity, background and experience of the person(s) selected by the
prospective purchaser named above (the "Purchaser") in connection with such
Purchaser's acquisition of shares of capital stock (the "Shares") of Core
Laboratories N.V., a Netherlands limited liability company (the "Company"), as
more specifically described in the Agreement and Plan of Merger dated June 30,
1998 (including the exhibits and any supplements thereto, the "Agreement")
relating to the acquisition and merger of the capital stock of Xxxx Oil Tools,
Inc. by the Company for shares of the Company. Please complete each of the
items in the following certificate, attaching additional sheets if necessary.
If the answer to any question is "none" or "not applicable", so indicate.
1. Name of Purchaser Representative: H. XXXX XXXX, XX. Age: 51
Business Address: 0000 XXXXX XXX
XX. XXXXX, XXXXX 00000
Business Telephone No.: (000) 000-0000
2. Present occupation or position, indicating period of such practice or
employment and field of professional specialization, if any:
PRESIDENT, XXXX OIL TOOLS, INC., 1984 TO PRESENT; ATTORNEY - 1971 TO
PRESENT
3. List chronologically your principal occupation or employment during
the past five years, showing in each case the name, address and
principal business of any firm in which your occupation or employment
is or was carried on, your position and title and a description of
your duties and responsibilities:
PRESIDENT, XXXX OIL TOOLS, INC., 0000 XXXXX XXX, XX. XXXXX, XXXXX
00000 MANUFACTURER OF OILFIELD EQUIPMENT AND SUPPLIES
4. List any business education or other professional education,
indicating degrees received, if any:
BACHELOR OF ARTS, ABILENE CHRISTIAN COLLEGE
DOCTOR OF JURISPRUDENCE, THE UNIVERSITY OF TEXAS AT AUSTIN
76
5. Have you had prior experience in rendering advice with respect to
investments of this type:
YES
6. Describe the types of investment programs which you have previously
evaluated and whether the evaluations were made in connection with our
own investments or investments of your clients or others. If oil and
gas, specify the types of transactions (exploration, acquisition or
development programs, service industry, pipelines, etc.):
ACQUISITIONS OF OIL-RELATED BUSINESSES FOR XXXX OIL TOOLS, INC.
INVESTMENT PORTFOLIO FOR XXXXXXX AND XXXXX XXXX MERGER AND ACQUISITION
WORK FOR CLIENTS AS AN ATTORNEY
7. List any professional licenses or registrations (including bar
admissions, accounting certifications, and Securities and Exchange
Commission ("SEC") or state investment adviser or broker-dealer
registrations) held by you:
TEXAS STATE BAR
8. Describe generally any business, financial or investment experience
which would help you to evaluate the merits and risks of the
Purchaser's proposed investment in the Company:
ACQUISITIONS OF OIL-RELATED BUSINESSES FOR XXXX OIL TOOLS, INC.
INVESTMENT PORTFOLIO FOR XXXXXXX & XXXXX XXXX
MERGER AND ACQUISITION WORK FOR CLIENTS AS AN ATTORNEY
MANAGER OF INTERIM FINANCE INVESTMENT FUND
9. State how long you have known the Purchaser and in what capacity:
CHILDREN, GRANDCHILDREN, NIECES, NEPHEWS, MOTHER, AND FATHER
10. Do you believe that the Purchaser is able to bear the economic risk of
an investment in the Company:
YES
77
11. Do you (or any of your affiliates) have any material relationship with
the Company or any affiliates of the Company? (An "affiliate" of a
specified person is a person that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under
common control with, the specified person.)
NO
Has any such material relationship existed at any time during the
previous two years?
NO
Is any such material relationship mutually understood to be
contemplated for the future?
YES
If the answer is "Yes" to any of the above three questions, please
explain in detail the nature of the relationship and the amount of
compensation received or to be received as a result of the
relationship:
VICE PRESIDENT OF A SUBSIDIARY OF THE XXXX OIL TOOLS, INC., AT AN
ANNUAL SALARY OF $150,000; CONTEMPLATED FOR THE FUTURE
12. Are you an affiliate, director, officer or other employee of the
Company or of any affiliate of the Company?
NO
If the answer is "Yes" to the above question, please explain in detail
the nature of the relationship:
N/A
13. Are you (or will you be after the consummation of the Exchange Offer)
a beneficial owner of 10% or more of any class of equity securities of
the Company?
NO
14. In advising the Purchaser in connection with Purchaser's prospective
investment in the Company, will you be relying in part on the
Purchaser's own expertise in certain areas?
NO
78
15. In advising the Purchaser in connection with the Purchaser's
prospective investment in the Company, will you be relying in part on
the expertise of an additional purchaser representative or
representatives?
NO
If "Yes", give the name, address and business telephone number of such
additional representative or representatives:
N/A
I understand that the Company will be relying on the accuracy and
completeness of my responses to the foregoing questions and I hereby certify to
the Company as follows:
(i) The Purchaser has acknowledged in writing, during the course
of the acquisition and merger of Xxxx Oil Tools, Inc., that I
am to be his purchaser representative in connection with
evaluating the merits and risks of the Purchaser's prospective
investment in the Company;
(ii) I represent only the Purchaser and not the Company, and with
respect to such representation I have not been compensated by
any individual or entity other than the Purchaser;
(iii) Either (1) I am not an affiliate, director, officer or other
employee of the Company, or beneficial owner of ten percent or
more of any class of the equity securities or ten percent or
more of the equity interest in the issuer, or (2) one of the
following situations applies: (a) I am a relative of Purchaser
by blood, marriage or adoption and our relationship is not
more remote than first cousin; (b) Purchaser is a trust or
estate in which I and any persons related to me as specified
in (iii) (2)(a) above or (iii)(2)(c) below collectively have
more than 50 percent of the beneficial interest (excluding
contingent interest) or of which I serve as trustee, executor
or in any other similar capacity; or (c) Purchaser is a
corporation or other organization of which I and any other
persons related to me as specified in (iii)(2)(a) or
(iii)(2)(b) above collectively are the beneficial owners of
more than 50 percent of the equity securities (excluding
directors' qualifying shares) or equity interests:
(iv) The answers to the above questions numbered 1 through 15 are
complete and correct and may be relied upon by the Company in
determining whether the acquisition and Merger of Xxxx Oil
Tools, Inc. by the Company in connection with which I have
executed this questionnaire is exempt from registration under
the Securities Act of 1933, as amended, and state securities
laws:
79
(v) I have disclosed to the Purchaser in writing, prior to the
Purchaser's acknowledgment (described in (i) above) of me in
writing as his purchaser representative, in connection with
evaluation the merits and risks of his prospective investment
in the Shares, any material relationship between me or my
affiliates on the one hand and the Company or any of its
affiliates on the other hand, that now exists, that is
mutually understood to be contemplated or that has existed at
any time during the previous two years, and any compensation
received or to be received as a result of such relationship;
(vi) If Purchaser is a California or Texas resident, either (a)
Purchaser has a preexisting personal or business relationship
with the Company or any of its officers, directors or
controlling persons or (b) I am (i) a professional advisor,
(ii) unaffiliated with the Company and (iii) not compensated,
directly or indirectly, by the Company, any of its affiliates
or any of its selling agents;
(vii) If Purchaser is a Texas resident, I have no business
relationship with the Company;
(viii) I personally (or, if I have checked "Yes" in answer to
question 14 or 15 above, together with the Purchaser or the
additional purchaser representative or representatives
indicated above) have such knowledge of finance, securities
and investments, generally, and experience and skill in
investments based on actual participation that I am capable of
evaluating the merits and risks of the Purchaser's prospective
investment in the Company;
(ix) I have reviewed the Agreement and Plan of Merger dated June
30, 1998. I have had the opportunity to ask questions of and
receive answers from the Company concerning the Company, which
answers were satisfactory;
(x) In evaluating the suitability for the Purchaser of an
investment in the Company, I have relied solely on the
information in the Agreement and answers to questions with
respect thereto furnished to me by the Company; and
(xi) I will notify the Company immediately of any material change
in any statement made herein occurring prior to the closing
date for any purchase by the Purchaser of an interest in the
Company.
Dated: _____________________, 1998
--------------------------
H. XXXX XXXX, XX.,
PURCHASER REPRESENTATIVE
80
AFFILIATE'S AGREEMENT
Core Laboratories N.V.
Xxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
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 Xxxx Oil Tools, Inc., a Texas 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"), Xxxx Acquisition, Inc., a Texas corporation and a wholly owned
subsidiary of Acquiror, and the Company dated as of June 30, 1998 (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 Acquisition 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 Xxxxxx
Xxxxxxxx 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 not
make any sale, transfer or
81
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
30th day of June, 1998
CORE LABORATORIES N.V.
By:
Name:
Title:
82
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
OF
XXXXX X. XXXXXX
XXXX OIL TOOLS, INC., a Texas corporation (the "Company"), and XXXXX
X. XXXXXX, an individual (the "Employee"), hereby make this First Amendment
(this "Amendment"), dated as of June 30, 1998, to that certain Employment
Agreement of Xxxxx X. Xxxxxx (the "Agreement") dated as of the 7th day of
January, 1997, between the Company and Employee.
RECITALS:
WHEREAS, Employee and the Company have now determined that it is in
the best interests of both parties to clarify the original intent of the
parties with respect to certain provisions of the Agreement; and
WHEREAS, Employee desires to continue his employment with the Company,
upon the terms and conditions stated in the Agreement as amended by this
Amendment;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and covenants stated in this Agreement, and the
other and valuable consideration exchanged between the parties, the receipt and
sufficiency of which is hereby acknowledged, the Company and Employee agree to
amend the Agreement as follows:
1. DEFINITIONS. All terms not herein defined shall have the
respective meanings referred to in the Agreement.
2. DUTIES. Section 2 of the Agreement is hereby amended by
deleting it in its entirety and substituting in lieu thereof the following:
Employee is employed as President and shall have the authority and
perform the duties specified by the Company's Board of Directors from
time to time in its sole discretion. However, Employee understands
that he generally will be responsible for general management of all
Company operations and performing such other duties relating thereto
which a person with Employee's position could reasonably be expected
to perform (the "Employee's Duties"). The Company may, in its sole
discretion, change or reassign Employee's Duties under this Agreement
from time to time by written addendum to this Agreement.
3. EMPLOYMENT TERM. Section 3 of the Agreement is hereby amended
by deleting it in its entirety and substituting in lieu thereof the following:
The Company agrees to employ Employee for a term beginning on June 30,
1998, and continuing through June 30, 1999, unless renewed under this
Section 3 or earlier terminated under Section 8.
83
4. COVENANT NOT TO COMPETE; COVENANT OF NON-SOLICITATION. For
purposes of clarification and not with an intent to amend or modify Section 6
of the Agreement, the parties acknowledge that the Company has a sales or
distribution facility located in Houston, Texas, and that subsection (b)(i) is
intended to include Houston, Texas.
5. INTELLECTUAL PROPERTY. For purposes of clarification and not
with an intent to amend or modify Section 7 of the Agreement, the parties
acknowledge that (i) Employee's reservations under the First Patent Assignment
and Second Patent Assignment of his right to receive thirty percent (30%) of
all income, royalties, proceeds, damages and payments presently or hereafter
due with respect to the Intellectual Property or Future Intellectual Property
(the "Reservation") shall not apply with respect to Future Intellectual
Property conceived, reduced to practice, or otherwise acquired by Employee on
or after June 30, 1998; and (ii) the Reservation shall terminate in any case
with respect to any specific Intellectual Property or Future Intellectual
Property on the same date the last patent applicable to such Intellectual
Property or Future Intellectual Property terminates. The parties acknowledge
that the Reservation does not entitle Employee to any portion of any
consideration payable to the Company or its shareholders from any sale of all
or substantially all of the assets or stock of the Company. Except as herein
specifically provided, the parties expressly affirm their understanding that
Employee is entitled to the Reservation with respect to the Intellectual
Property and with respect to Future Intellectual Property listed on Attachment
No. 1, all of which were conceived, reduced to practice, or otherwise acquired
by Employee before June 30, 1998.
6. TERMINATION. Paragraph (b) of Section 8 of the Agreement is
hereby amended by adding the following sentence at the end thereof:
Notwithstanding anything herein to the contrary, however, the Company
shall continue the salary of Employee for twelve (12) months ("Salary
Continuation") after termination of this Agreement pursuant to this
Section.
7. CHANGE IN CONTROL. Section 9 of the Agreement is hereby
amended by deleting it in its entirety and substituting in lieu thereof the
following:
In the event of (a) a merger or acquisition of Core Laboratories N.V.,
or substantially all of Core Laboratories N.V. stock, assets or
operations or (b) Core Laboratories N.V. fails to ultimately control
at least a majority of the voting interests in the entity owning or
operating substantially all of the assets of the Company, Employee
shall be entitled, at any time within three (3) months after the
effective date of such merger or acquisition or change in control, as
the case may be, to resign without further obligation (including
obligations under Section 6) to the Company (or any successor) and
receive all benefits (other than Salary Continuation under Section
8(b)) accruing to Employee under this Agreement through the date of
resignation.
8. NOTICE. Section 12 of the Agreement is hereby amended by
deleting it in its entirety and substituting in lieu thereof the following:
84
Any notice required or permitted by this Agreement shall be in writing
and shall be sufficiently given if personally delivered or mailed by
certified or registered mail, return receipt requested, to the
following address (or to such other address as specified by written
notice timely given to the other party):
To Company: Xxxx Oil Tools, Inc.
Attn: Xxxxx X. Xxxxxxx, Sole Director
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
with copy to: Core Laboratories, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx
To Employee: Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xx Xxxx, Xxxxx 00000
with copy to: Xxxx X. Xxxxxxxx, Xx.
Michener, Larimore, Swindle, Whitaker,
Flowers, Sawyer, Xxxxxxxx & Chalk, L.L.P.
3500 City Center Tower II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
9. MISCELLANEOUS.
(a) Entire Agreement; Headings; Incorporation by
Reference. This Amendment, together with any exhibits, documents 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 herein, this
Amendment 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 Amendment. All
exhibits, documents and instruments referred to in this Amendment are
incorporated by reference for all purposes.
(b) Multiple Counterparts. This Amendment may be
executed in multiple counterparts, each of which shall constitute an original
and all of which shall constitute one document.
85
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused same to be duly delivered on their behalf on the day and year first
above written.
COMPANY: EMPLOYEE:
XXXX OIL TOOLS, INC. XXXXX X. XXXXXX
By
Name:
Title:
86
ATTACHMENT NO. 1
Intellectual Property whereby Xxxxx X. Xxxxxx retains 30% of all royalties due
to Xxxx Oil Tools, Inc., its successors, or assignees.
US PATENT GENERAL DESCRIPTION
--------- -------------------
5,775,426 StimGun Assembly
5,598,891 Powr*Perf System
5,511,617 Overbalanced Surge Valve (OBSV)
5,542,480 Split Strip Shotgun System
5,571,986 Safety Electrically Detonator System
US PATENT PENDING GENERAL DESCRIPTION
----------------- -------------------
Marathon StimTube Tool
Marathon Inflatable Severing Tool
08/724,691 High Shot Density Gun (18 spf System)
08/847,244 System for producing Extra Large Perforations (Super Hole)
08/108,903 Improved Downhole Charge Carrier
60/083,931 Clean Perf Liner Material
08/814,631 Disappearing Gun (FFGS)
NO PATENT APPLIED YET GENERAL DESCRIPTION
--------------------- -------------------
Marathon Uses of Propellant as Seismic Source
Marathon CIP on StimGun Assembly
Xxxx Safety Load Perforating System and Improved Shaped Charge
Xxxx Consumable Material for Downhole Tools
Xxxx Improved FFGS
Xxxx Inflatable Jet Cutter and Method of Cutting Pipe Downhole
Xxxx/Williger Method of Retaining Debris in a Downhole Perforating Gun and
Xxxx Improved Downward Shooting Xxxxxx for Clearing Obstructions in a Well
Xxxx Method and Apparatus for Firing a Percussion Detonator with an
Xxxx Improved Charge Case for Shaped Charge (ACuZinc)
Xxxx Multiple Detonating Cord Gun System/Bundled Det. Cord
87
EMPLOYMENT AGREEMENT
OF
H. XXXX XXXX, XX.
This Employment Agreement (the "Agreement"), dated as of the 30th day
of June, 1998, is made and entered into between XXXX OIL TOOLS, INC., a Texas
corporation (the "Company"), and H. XXXX XXXX, XX., an individual (the
"Employee").
RECITALS:
WHEREAS, the Company is entering into that certain Agreement and Plan
of Merger whereby Core Laboratories N.V. will acquire, through the merger (the
"Merger") of Xxxx Acquisition, Inc. with and into the Company, all of the
outstanding Common Stock of the Company; and
WHEREAS, as a condition to the Merger, the Company and Employee have
agreed to enter into this Agreement wherein Employee agrees following the
Merger to be employed by the Company on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and covenants stated in this Agreement, and the
other and valuable consideration exchanged between the parties, the receipt and
sufficiency of which is hereby acknowledged, the Company and Employee agree as
follows:
AGREEMENTS
1. EMPLOYMENT. The Company hereby agrees to employ Employee and
Employee accepts such employment upon the terms and conditions stated in this
Agreement. Employee agrees to provide full-time services for the Company and
perform the duties stated in Section 2 during the term of this Agreement.
Employee agrees to devote his best efforts to the business of the Company, and
shall perform his duties in a diligent, trustworthy and businesslike manner,
all for the purpose of advancing the business of the Company.
2. DUTIES. Employee is to be employed as Vice President -
Administration and General Counsel and shall have the authority and perform the
duties specified by the Company in its sole discretion. However, Employee
understands that he generally will be responsible for administrative and legal
matters (in consultation with Core Laboratories' general counsel) relating to
human resources, employee relations, and acquisitions matters, and performing
such other duties relating thereto which the President may assign or which a
person with Employee's position could reasonably be expected to perform (the
"Employee's Duties"). The Company may, in its sole discretion, change or
reassign Employee's Duties under this Agreement from time to time by written
addendum to this Agreement.
88
3. EMPLOYMENT TERM. The Company agrees to employ Employee for a
term beginning on June 30, 1998 (the "Effective Date") and continuing through
June 30, 1999, unless renewed under this Section 3 or earlier terminated under
Section 8.
Beginning with June 30, 1999, this Agreement shall be automatically
renewed on each anniversary of such date for successive additional one (1) year
terms upon such terms and conditions then in effect, unless either the Company
or Employee gives written notice of election not to renew at least thirty (30)
days prior to the applicable June 30.
4. SALARY AND BENEFITS.
(a) Base Salary. During the term of this Agreement, the
Company shall pay Employee an annual base salary of $150,000.00 beginning on
the Effective Date, pro rated for any period of less than 12 months (the "Base
Salary"). Such Base Salary shall be paid in bi-weekly installments (on
Friday), less all applicable federal income tax withholding, social security
and other salary deductions required by law or the policies of the Company.
(b) Bonus. During the term of this Agreement, in
addition to the Base Salary, the Company may pay Employee a bonus (the "Bonus")
from time to time in its sole discretion. The Bonus shall be in accordance
with the bonus plan for key employees, if any, adopted by the Board of
Directors of the Company from time to time in its sole discretion. If and to
the extent a Bonus is considered by the Board of Directors for Employee, it is
expected that any Bonus will be based not only on Employee's individual
performance and his relative position, service period and responsibilities with
the Company, but also on the performance and profitability of the Company. Any
Bonus paid shall be subject to all applicable federal income tax withholding,
social security and other salary deductions required by law or the policies of
the Company.
(c) Benefits. Employee shall be entitled to participate
in the employee benefit programs, if any, generally available to employees of
the Company, and to all normal perquisites provided to full-time employees of
the Company, including, without limitation, medical insurance, in accordance
with the policies of the Company in effect from time to time.
(d) Vacation; Holidays; Personal Days. Employee shall be
entitled to paid vacation, paid holidays and paid personal days in accordance
with the policies of the Company in effect from time to time.
(e) Expense Reimbursement. The Company shall reimburse
Employee for all reasonable out-of-pocket expenses incurred by Employee in
performing his duties under this Agreement, in accordance with the Company's
normal rules and procedures for expense reimbursement in effect from time to
time.
89
(f) Automobile Allowance. Employee shall be entitled to
continue to use the automobile currently leased by the Company for his use
until such current lease expires, after which time he shall be entitled to
receive the automobile allowance generally applicable to employees of similar
level within the Company.
(g) Benefits Not in Lieu of Compensation. No benefit or
perquisite provided to Employee under this Agreement shall be deemed to be in
lieu of Base Salary, Bonus or other compensation.
5. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Employee acknowledges that during his employment with
the Company he has been and will continue to be entrusted with and have access
to information concerning the Company and its business that is both Proprietary
Information and Confidential Information, and which the Company desires to be
kept secret. Employee agrees that this information is a valuable, special and
unique asset of the Company.
As used in this Agreement, the term "Proprietary Information"
means, without limitation, all information and know-how obtained by an employee
during the course of working for the Company. The term "Confidential
Information" means any information or know-how that is not known generally to
the public or to the Company's competitors and includes, without limitation,
customers, clients, plans, costs, prices, customer or client lists, mailing
lists, customer or client files, personnel files, computer records, financial
and marketing data, sales performance and data, projects, potential projects,
uses and applications of products and services, results of investigations,
studies or experiments, marketing tactics and strategy, and all apparatus,
products, processes, compositions, samples, formulas, computer programs,
computer hardware designs, and any other trade secrets.
(b) Employee agrees that keeping such information secret
is important to the Company and that such information has been disclosed to
Employee in trust and strict confidence. Employee agrees and covenants with
the Company not to disclose such information to any person, use, copy or permit
such information to be copied, either during or subsequent to the termination
of this Agreement, except as shall be necessary to promote the Company's
business during the term of this Agreement or with prior written consent from
the Company. Employee further agrees not to make use of such information for
his personal benefit or in any way inconsistent with his obligations to the
Company and agrees that the Company will suffer irreparable injury if such
information is disclosed. Employee agrees that the duty not to disclose under
this Section 5 is continuing, and shall survive the termination of this
Agreement.
(c) In the event of a breach or threatened breach of the
provisions of this Section 5, the Company shall be entitled to injunctive
relief, in addition to any other relief that may be awarded, restricting
Employee from disclosing any of the Proprietary Information or
90
Confidential Information. Employee acknowledges that such relief is necessary
in order to prevent immediate and irreparable injury and harm to the Company.
(d) At the termination of this Agreement, Employee shall
return to the Company all records, lists, files, computer disks, papers and
other documents which are in his possession, custody or control and which
relate, in any manner, to the Company or its business.
6. COVENANT NOT TO COMPETE; COVENANT OF NON-SOLICITATION.
(a) Employee agrees and covenants with the Company that,
during the term of his employment, he will not, directly or indirectly, for
himself or on behalf of any other person or entity, either as an employee,
employer, independent contractor, consultant, agent, principal, partner,
shareholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that in any
manner whatsoever is in competition with the business of the Company during the
term of his employment.
(b) Employee further agrees and covenants with the
Company that, beginning on the termination of his employment and continuing for
twenty-four (24) months thereafter (the "Restricted Period"), he will not,
directly or indirectly, for himself or on behalf of any other person or
entity, either as an employee, employer, independent contractor, consultant,
agent, principal, partner, shareholder, corporate officer, director, or in any
other individual or representative capacity, engage or participate in any
business that in any manner whatsoever is in competition with the business of
the Company during the term of his employment, in the geographic area (i)
within a two hundred (200) mile radius of each manufacturing, sales or
distribution facility of the Company throughout the World, and (ii) of the
Houston and Dallas/Fort Worth standard metropolitan statistical areas (as such
area is defined by the U.S. Census Bureau) (the "Restricted Territory"),
without obtaining the prior written consent of the Company; provided, however,
that Employee may invest in the securities of any enterprise (without otherwise
participating in the activities of such enterprise) if (x) such securities are
listed on any national or regional securities exchange or have been registered
under Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (y) Shareholder does not beneficially own (as defined by
Rule 13d-3 promulgated under the Exchange Act) in excess of 5% of the
outstanding capital stock of such enterprise.
(c) Employee agrees and covenants with the Company that,
beginning on the date of this Agreement and continuing throughout the
Restricted Period, he will not, directly or indirectly, call on, take away,
recruit, solicit or accept the business, patronage or services of, any
customer, client or employee of the Company, or any person that has been a
customer, client or employee of the Company during the term of this Agreement.
(d) Employee acknowledges that the restrictions included
in this Section 6, including those relating to geographic area, duration and
scope of activity, are reasonable and
91
agrees that such are necessary to protect the goodwill and other legitimate
business interests of the Company. However, in the event a court of competent
jurisdiction determines that any such restriction is unreasonable or
unenforceable, Employee agrees that such restrictions may be reformed to the
extent reasonably necessary to make the restrictions valid and enforceable, but
shall not be terminated. Notwithstanding, Employee represents to the Company
that enforcement of such restrictions as written would not be unduly burdensome
to him, and that he is willing and able to compete and gainfully conduct
business and be employed, as applicable, in other geographical areas and
perform other activities not covered by this Section 6. Employee agrees that
the restrictions under this Section 6 are continuing, and shall survive the
termination of this Agreement.
(e) In the event a breach or threatened breach of the
provisions of this Section 6, Employee shall be entitled to injunctive relief,
in addition to any other relief that may be awarded, restricting Employee from
violating the obligation not to compete or solicit. Employee acknowledges that
such relief is necessary in order to prevent immediate and irreparable injury
and harm to the Company.
7. INTELLECTUAL PROPERTY. Employee agrees to hold in trust and
for the benefit of the Company, and to disclose promptly and fully to the
Company, and hereby irrevocably grants, assigns, releases and quitclaims, for
himself and his heirs, executors, administrators and personal representatives,
to the Company all present and future right, title and interest, if any, in and
to any and all ideas, concepts, copyrightable works, patents, inventions,
trademarks and trade names, and any other developments conceived, made,
created, discovered or developed by Employee, solely or jointly with others,
during the term of this Agreement, whether during or outside of usual working
hours and whether or not on the Company's premises, that relate in any manner
to the business of the Company.
8. TERMINATION.
(a) This Agreement shall automatically terminate on the
death or permanent disability of Employee. A "permanent disability" shall be
deemed to occur when Employee is unable, by reason of illness, mental or
physical infirmity, to perform in all material respects the usual and customary
duties of his employment under this Agreement for a period of sixty (60)
consecutive business days, unless agreed otherwise in writing by the parties.
(b) Either the Company or Employee may terminate this
Agreement at any time, without cause, by giving the other party thirty (30)
days written notice of the intent to do so. The Company may elect, during such
thirty (30) day period, to relieve Employee of his regular duties under this
Agreement. Notwithstanding anything herein to the contrary, however, the
Company shall continue the salary of Employee until June 30, 1999 after
termination of this Agreement pursuant to this Section.
92
(c) Either the Company or Employee may terminate this
Agreement for cause immediately upon giving the other written notice. As used
in this Section 8, the term "cause" as to a termination by the Company or
Employee, as applicable, includes, but is not limited to, the following:
(1) as to a termination by the Company, if:
(i) in the opinion of the Company, Employee has
engaged in personal misconduct or a material breach of this
Agreement of such a serious nature as to render Employee's
continued employment detrimental to the business of the
Company, or that otherwise materially damages the business of
the Company;
(ii) Employee is convicted of a crime involving moral turpitude; or
(iii) Employee (i) engages in a conflict of
interest with the Company; (2) fails to follow reasonable
instructions or directions from any person authorized by the
Company to give such instructions or directions; or (3) fails
to perform the services required of him pursuant to this
Agreement; and
(2) as to a termination by Employee, if the Company
materially violates any provision of this Agreement.
(d) Any written notice of termination of Employee for
cause given pursuant to Section 8(c) shall state the alleged reason for
termination. Employee shall have thirty (30) days to appear before the Board
of Directors of the Company, or a committee thereof, to rebut, dispute or
explain the alleged reason for termination. If the Board of Directors (or a
committee thereof) determines, by a majority of the disinterested directors,
after having given Employee the opportunity to dispute the allegations, that a
reasonable ground for termination has occurred, the termination shall become
final.
(e) Any termination of Employee's employment under this
Agreement shall not release either the Company (or any successor) or Employee
from their respective obligations to the date of termination.
9. CHANGE IN CONTROL. Section 9 of the Agreement is hereby
amended by deleting it in its entirety and substituting in lieu thereof the
following:
In the event of (a) a merger or acquisition of Core Laboratories N.V.,
or substantially all of Core Laboratories N.V. stock, assets or
operations or (b) Core Laboratories N.V. fails to ultimately control
at least a majority of the voting interests in the entity owning or
operating substantially all of the assets of the Company, Employee
shall be entitled, at any time within three (3) months after
93
the effective date of such merger or acquisition or change in control, as the
case may be, to resign without further obligation (including obligations under
Section 6) to the Company (or any successor) and receive all benefits (other
than Salary Continuation under Section 8(b)) accruing to Employee under this
Agreement through the date of resignation.
10. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee
represents and warrants to the Company that:
(a) Employee has read, understands, has consulted with
legal counsel, if desired, and voluntarily and knowingly agrees to the terms
and conditions of this Agreement, including Section 14 providing for mandatory
mediation and binding arbitration of certain disputes relating to this
Agreement.
(b) Employee is free to enter into this Agreement and has
no contract, agreement, commitment, arrangement or understanding to or with any
third party which restrains or conflicts with this Agreement or Employee's
obligations hereunder, or which could prevent Employee from performing the
duties he has agreed to perform for the Company under this Agreement. To the
extent Employee is bound or obligated under any contract, agreement,
commitment, arrangement or understanding to or with any third party relating,
in any manner, to the duties he has agreed to perform under this Agreement,
Employee has given the Company a written list of such prior to signing this
Agreement.
11. INDEMNITY BY EMPLOYEE. Employee shall indemnify, defend and
hold harmless the Company, and its successors, assigns, parents, subsidiaries,
officers, directors, shareholders, employees, agents, attorneys and insurers
(collectively, the "Company Indemnified Parties") from and against any and all
loss, liability, damage, costs and expenses incurred in connection with
investigating and defending any claims or causes of action, and reasonable
attorneys' fees (collectively, the "Losses") that the Company or any of the
Company Indemnified Parties may incur or become subject to arising out of or
due to any inaccuracy of any representation by Employee or the material breach
by Employee of any warranty, representation, covenant or other agreement
included in this Agreement.
12. NOTICE. Any notice required or permitted by this Agreement
shall be in writing and shall be sufficient given if personally delivered or
mailed by certified or registered mail, return receipt requested, to the
following address (or to such other address as specified by written notice
timely given to the other party):
94
To Company: Xxxx Oil Tools, Inc.
Attn: Xxxxx X. Xxxxxxx, Sole Director
c/o 0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
and Core Laboratories, Inc.
Attn: Xxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
To Employee: H. Xxxx Xxxx
0000 Xxx Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
Copy to: Xxxxxx & Xxxxxx L.L.P.
Attn: T. Xxxx Xxxxx
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
13. MISCELLANEOUS.
(a) Assignability. This Agreement shall not be
assignable by either party without the prior written consent of the other.
(b) Waiver. Waiver by any party of the default or breach
of any provision of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent default or breach.
(c) Severability. If any provision of this Agreement is
held invalid or unenforceable by a court of final jurisdiction, it is the
parties' intent that all other provisions of this Agreement shall remain fully
valid, enforceable and binding on the parties.
(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 Agreement.
(e) Entire Agreement; Headings; Incorporation by
Reference. This Agreement, together with any exhibits, documents 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 herein, this
Agreement shall not be amended or modified except by an instrument in writing
signed by all parties. Headings
95
are for convenience of reference only and shall not affect the interpretation
or construction of this Agreement. All exhibits, documents and instruments
referred to in this Agreement are incorporated by reference for all purposes.
(f) Multiple Counterparts. This Agreement may be
executed in multiple counterparts, each of which shall constitute an original
and all of which shall constitute one document.
14. MANDATORY MEDIATION; BINDING ARBITRATION; GOVERNING LAW;
VENUE; ATTORNEYS' FEES.
(a) THE PARTIES AGREE THAT, EXCEPT AS PROVIDED OTHERWISE
IN SECTIONS 5(c) AND 6(e) FOR INJUNCTIVE RELIEF IN THE COMPANY'S SOLE
DISCRETION, ANY DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE BREACH
HEREOF, SHALL, IF NEGOTIATIONS AND OTHER DISCUSSIONS FAIL, BE FIRST SUBMITTED
TO MEDIATION IN ACCORDANCE WITH THE PROVISIONS OF THE COMMERCIAL MEDIATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION 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 COMMERCIAL MEDIATION RULES
OF THE AMERICAN ARBITRATION ASSOCIATION ARE INCORPORATED BY REFERENCE. THE
PARTIES AGREE TO CONDUCT THE MEDIATION IN FORT WORTH, TEXAS, OR ANOTHER
MUTUALLY AGREED UPON LOCATION.
(b) THE PARTIES AGREE THAT, EXCEPT AS PROVIDED OTHERWISE
IN SECTIONS 5(c) AND 6(e) FOR INJUNCTIVE RELIEF IN THE COMPANY'S SOLE
DISCRETION, ANY DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE BREACH
HEREOF, SHALL BE SUBJECT TO BINDING ARBITRATION, IF THE DISPUTE IS NOT RESOLVED
BY THE MEDIATION REQUIRED UNDER SUBSECTION (a) OF THIS SECTION 14, IN
ACCORDANCE WITH THE PROVISIONS OF THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION, AND THAT JUDGMENT ON THE AWARD RENDERED BY
THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. THE
COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION ARE
INCORPORATED BY REFERENCE. THE PARTIES AGREE TO CONDUCT THE ARBITRATION IN
FORT WORTH, TEXAS, OR ANOTHER MUTUALLY AGREED UPON LOCATION.
(c) Any dispute between the parties relating to this
Agreement shall be construed under and in accordance with the laws of the State
of Texas, and applicable federal law, and is fully performable in Tarrant
County, Texas.
(d) If either party appeals the decision of the
arbitrator(s), the parties agree that the United States District Court for the
Northern District of Texas, Fort Worth Division, and the state courts within
Tarrant County, Texas, shall have exclusive venue and jurisdiction of same.
(e) The prevailing party in any litigation in the courts
shall be entitled to recover from the other party reasonable attorneys' fees
and court costs incurred in same, in addition to any other relief that may be
awarded.
96
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused same to be duly delivered on their behalf on the day and year first
above written.
COMPANY: EMPLOYEE:
XXXX OIL TOOLS, INC.
By
Name: H. XXXX XXXX, XX.
Title:
97
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into effective as
of the 29th day of June, 1998, by and between SILVER STONE PROPERTIES, L.L.C.,
a Texas limited liability company ("Landlord"), and XXXX OIL TOOLS, INC., a
Texas corporation ("Tenant");
In consideration of the mutual covenants herein contained, the parties
agree as follows:
LEASE AND PREMISES. Landlord hereby rents exclusively to Tenant, and
Tenant hereby leases and rents from Landlord, the real property described in
Exhibit "A" hereto together with the buildings and other improvements located
thereon (the "Premises"), subject to the provisions of this Lease.
TERM. This Lease shall be for a term of one hundred twenty (120)
months commencing on June 29, 1998, and expiring on June 29, 2008; provided that
Tenant may, at its discretion, terminate this Lease by (i) giving Landlord
thirty (30) days' prior written notice of such termination and (ii) paying to
Landlord on such early termination date an amount equal to the net present value
of the remaining lease payments discounted at a discount rate of 8 1/2% per
annum.
RENT. As rental hereunder, Tenant shall pay to Landlord the sum of
$158,592 as the annual rental for the Premises, payable in advance in monthly
installments of $13,216 per month on the first day of each calendar month
beginning with July 1, 1998. In its discretion, Tenant shall be entitled to
set-off, withhold and deduct from any payment due and payable to Landlord under
this Lease the amount of any payment due and payable by Landlord (as Maker) to
Tenant (as Payee) under that certain Unsecured Promissory Note, of even date
herewith, between Landlord and Tenant (the "Note") which has not been paid in
accordance with the terms of such Note on or before the date any such payment is
due and payable under this Lease, and apply such set-off amount to reduce the
amount owing to Landlord hereunder. The exercise by Tenant in good faith of
such right of set-off, whether or not ultimately determined to be justified,
shall not constitute a default under this Lease.
USE. Tenant shall not use, occupy, or permit to be used or occupied
the Premises for any purpose that is illegal. Tenant shall use the Premises
solely for the same purposes for which Tenant's predecessor used the Premises.
LANDLORD TAXES. Landlord shall, at its sole cost and expense, pay all
real estate taxes, ad valorem taxes, or other taxes and assessments which may be
levied in lieu of real estate taxes, for the Premises during the term of this
Lease.
SECTION 6. TENANT TAXES. Tenant shall, at its sole cost and
expense, pay to Landlord (or directly to the taxing authority, if so notified by
Landlord) when due all ad valorem or other personal property taxes for personal
property used or located on the Premises during the term of this Lease.
98
SECTION 7. MAINTENANCE AND REPAIRS. During the term of this
Lease:
(a) Tenant shall, at its sole cost and expense, maintain in the
same order and condition as of the date hereof, including, but not limited to,
maintenance, repairs, and replacements, all portions of the Premises. Tenant
shall make such maintenance, repairs, and replacements at such times, in such
manner, and to such extent as is reasonably required to maintain the Premises
in such same order and condition, ordinary wear and tear excepted.
(b) Tenant shall, at its sole cost and expense, repair or replace
any damage or injury done to the Premises, or any portion thereof, caused by
any negligent, reckless, willful, or intentional act or omission of Tenant or
Tenant's agents, employees, subtenants, or invitees.
(c) Tenant shall keep the interior and exterior of the Premises,
in the same order and condition as of the date hereof, at Tenant's sole cost
and expense, and may not commit or allow any waste or damage to be committed by
Tenant's agents, employees, subtenants, or invitees in any portion of the
Premises. At the termination of this Lease, by lapse of time or otherwise,
Tenant shall deliver up the Premises to Landlord in the same condition as at
the date hereof, ordinary wear and tear excepted. Upon such termination of
this Lease, Landlord may immediately re-enter and resume possession of the
Premises.
(d) Landlord shall have no obligation to maintain, repair, or
replace any portion of the Premises.
SECTION 8. CASUALTY INSURANCE. During the term of this Lease:
(a) Tenant shall, at its sole cost and expense, maintain a policy
or policies of all risk casualty insurance (including, but not limited to,
coverage against fire, flood, and extended coverage) with the premiums thereon
fully paid on or before the due date (or with periodic installments timely paid
by their due date). The all risk casualty insurance shall be in such amount
no less than that currently maintained by Tenant or its predecessor as of the
date hereof.
(b) Tenant shall, at its sole cost and expense, maintain fire and
extended coverage insurance on all of its personal property, including
removable trade fixtures, located in the Premises.
(c) Tenant shall furnish Landlord (and its assignee or lender)
with proof of the insurance required by the preceding subsections within 10
days after requested by Landlord. If Tenant fails to maintain insurance as
required above, Landlord may (but shall not be obligated to) procure and
maintain such insurance and charge Tenant for the cost and expense of such
insurance. Each such insurance policy shall provide 30 days prior notice of
any material change, reduction in coverage, termination or cancellation to
Landlord (and its assignee or lender).
99
SECTION 9. LIABILITY INSURANCE. During the term of this Lease:
(a) Tenant shall, at its sole cost and expense, maintain a policy
or policies of commercial general liability insurance with the premiums thereon
fully paid on or before due date (or with periodic installments timely paid by
their due date). The liability insurance shall be in such amount no less than
that currently maintained by Tenant or its predecessor as of the date hereof.
(b) Each policy of liability insurance obtained by Tenant shall
name Landlord (or its assignee or lender, as their interests may appear) as
additional insureds and loss payees and shall provide 30 days prior notice of
any material change, reduction in coverage, termination or cancellation to
Landlord (and its assignee or lender). Tenant shall furnish Landlord (and its
assignee or lender) with proof of such insurance within 10 days after requested
by Landlord. If Tenant fails to maintain insurance as required above, Landlord
may (but shall not be obligated to) procure and maintain such insurance and
charge Tenant for the cost and expense of such insurance.
SECTION 10. INDEMNIFICATION.
(a) Tenant shall indemnify, defend, and hold harmless Landlord and
its predecessors, successors, assigns, officers, directors, stockholders,
members, managers, employees, subsidiaries, parents, affiliates, partners,
agents, attorneys, accountants, financial advisers, representatives, and
insurers (collectively, the "Indemnified Parties"), against and in respect of
any losses, damages (including incidental and consequential damages),
deficiencies, diminutions in value, liabilities, actions, suits, proceedings,
demands, assessments, judgments, fines, and reasonable costs and expenses
(including, but not limited to, attorney and expert witness fees) that occur
during the term of this Lease (collectively, the "Losses"), arising or
resulting, directly or indirectly, from or in connection with, (i) any injury
to or death of any person or damage to or loss of any property occurring on,
in, or about the Premises, or by reason of any other claim whatsoever of any
person arising out of or alleged to have arising, in whole or in part, out of
any act or omission of Tenant or any of Tenant's agents, employees, subtenants,
or invitees, or (ii) any breach by Tenant of the provisions of this Lease
(including, but not limited to, the failure to comply with any applicable legal
requirements as required hereby (including violations of environmental laws or
regulations by Tenant)).
(b) Landlord shall indemnify, defend, and hold harmless Tenant and
its predecessors, successors, assigns, officers, directors, stockholders,
members, managers, employees, subsidiaries, parents, affiliates, partners,
agents, attorneys, accountants, financial advisers, representatives, and
insurers (collectively, the "Indemnified Parties"), against and in respect of
any losses, damages (including incidental and consequential damages),
deficiencies, diminutions in value, liabilities, actions, suits, proceedings,
demands, assessments, judgments, fines, and reasonable costs and expenses
(including, but not limited to, attorney and expert witness fees)
(collectively, the "Losses"), arising or resulting, directly or indirectly,
from or in connection with, any environmental condition existing on or about
the Premises on or prior to the date
100
hereof, including without limitation those conditions reflected in Schedule
2.15 of the Company's Disclosure Schedule included in that certain Agreement
and Plan of Merger dated as of June 30, 1998 among Tenant, Core Laboratories
N.V. and the other parties signatory thereto.
(c) When any Indemnified Party believes it is entitled to
indemnification under the preceding subsections, it shall promptly give written
notice to the indemnifying party of the facts relied upon as the basis of the
claim for indemnification (including all documents with relating thereto);
provided, however, that the failure to give such notice shall not relieve the
indemnifying party from any liability for indemnification under this Lease,
except to the extent that the indemnifying party demonstrates that the defense
of the claim is materially prejudiced by the failure of the Indemnified Party
to give such notice.
(d) The provisions of this section shall survive the termination
of this Lease.
SECTION 11. ASSIGNMENT AND SUBLEASE. Without the prior written
consent of Landlord, which consent may not be unreasonably withheld, Tenant
shall not have the right to assign all or any part of Tenant's rights under
this Lease or to sublet any part of the Premises, except to another entity, the
majority of the voting interests of which are held by Tenant or an affiliate of
Tenant. Tenant agrees to cause all of its assignees and subtenants to be bound
by all provisions of this Lease. Any sublease must provide that upon the
termination of this Lease, the sublease may either be terminated or assumed by
Landlord, at the option of Landlord. In the event of an assumption, the
subtenant must attorn to Landlord, and Landlord and its lenders will be
entitled to all of the rights of the sublessor under the sublease. A copy of
each assignment or sublease, duly executed by the parties to such instrument,
must be delivered promptly to Landlord by Tenant. Each assignment or sublease
must contain the provisions required under this section and shall be in form
and substance satisfactory to Landlord.
SECTION 12. WAIVER OF SUBROGATION. Landlord and Tenant each
hereby release each other from any claim, by subrogation or otherwise, for any
damage to the Premises or any personal property located therein, by reason of
fire or the elements, regardless of cause, including the negligence of Landlord
or Tenant. This section applies only to the extent that it is permitted by
law, the damage is covered by insurance proceeds, and the release does not
adversely affect any insurance coverage. Landlord and Tenant shall notify the
insurance companies issuing the policies required hereby of this release and
will have the insurance policies endorsed, if necessary, to prevent
invalidation of the insurance coverage.
101
SECTION 13. TENANT IMPROVEMENTS, ALTERATIONS, ADDITIONS.
(a) Tenant may, at its sole cost and expense, install within the
Premises any fixtures, equipment, facilities, and other improvements
(collectively, the "Tenant Improvements") required by Tenant for the conduct of
Tenant's business on the Premises. However, without the prior written consent
of Landlord, which may not be unreasonably withheld, Tenant may not (i) permit
the Premises to be used for any purpose other than as provided in Section 4 of
this Lease, or (ii) make or allow to be made any alterations or physical
additions in or to the Premises which may effect the structural integrity of
any buildings or other improvements located thereon, or any part thereof.
(b) Any and all such alterations or physical additions in or to
the Premises by Tenant are to be made, at Tenant's sole cost and expense.
(c) All alterations, physical additions, or improvements (other
than movable equipment or furniture owned by Tenant, and items that can be
removed without substantial or with easily repairable damage to the Premises),
when made to the Premises by Tenant, will at once become the property of
Landlord and are to be surrendered to Landlord upon the termination of this
Lease, by lapse of time or otherwise.
(d) Tenant may not permit any mechanics', materialmen's or other
liens arising by virtue of Tenant's acts or omissions or those of its
contractors to remain undischarged against the Premises. Tenant agrees to
discharge the same (either by payment, by filing of the necessary bond or by
other means acceptable to Landlord), within 30 days after notice from Landlord
or promptly upon receipt by Tenant of written notice of the filing of any
affidavit alleging any such lien, any mechanics', materialmen's or other lien
which is allegedly fixed or placed against the Premises.
(e) Tenant shall pay all ad valorem or other personal property
taxes and increased insurance premiums, if any, attributable to Tenant
Improvements in the Premises.
SECTION 14. TENANT'S DEFAULT. If Tenant shall default in the
payment of rent, or if Tenant shall fail to perform any other obligation of
Tenant hereunder and if such failure shall continue for a period of thirty (30)
days (or, if such is not reasonably capable of being cured within said thirty
(30) day period, then such longer period of time as may be reasonably necessary
to cure the same, provided that Tenant commences to cure the same within said
thirty (30) day period and thereafter diligently prosecutes such curing to
completion) after written notice thereof from Landlord to Tenant, or if all or
any part of the leasehold interest of Tenant hereunder shall be taken by
execution of judgment or other process of law, or if Tenant shall be
adjudicated to be a bankrupt or file a voluntary petition in bankruptcy or make
a general assignment for the benefit of its creditors or any other voluntary or
involuntary proceedings are instituted by or against Tenant under any
bankruptcy or similar legal requirements, Landlord may terminate this Lease,
terminate Tenant's right to possession of the Premises without terminating this
Lease, re-enter the Premises and remove all persons therefrom, or pursue any
other remedies
102
now or hereafter available to Landlord. Landlord's remedies shall be
cumulative and Landlord's commencement of one remedy shall not preclude
commencement of another remedy.
SECTION 15. NON-WAIVER. Neither acceptance of rent by Landlord
nor failure by Landlord to complain of any default of Tenant shall constitute a
waiver of Landlord's rights hereunder. Waiver by Landlord of any default by
Tenant shall not constitute a waiver of any other or subsequent default. No
act or omission by Landlord or its employees, trustees or its agents shall be
deemed to be the acceptance of a surrender of the Premises and the Premises may
not be surrendered unless such surrender is accepted by Landlord in writing.
SECTION 16. SURRENDER. Upon the expiration or termination of
this Lease, Tenant shall peaceably surrender the Premises to Landlord and
Landlord shall have the right to re-enter and resume possession of the
Premises.
SECTION 17. EMINENT DOMAIN. If all or any material part of the
Premises shall be taken by condemnation or under threat of condemnation, either
Landlord or Tenant, at its option, may terminate this Lease. If Landlord or
Tenant does not so terminate this Lease, then this Lease shall continue in full
force and effect as to the remainder of the Premises not taken. Landlord shall
be entitled to any and all condemnation proceeds for the taking of the Premises
and damages to any remainder.
SECTION 18. NOTICES. All notices required or permitted hereunder
shall be in writing and may be given or served by depositing such notice with
the United States postal service, certified mail with return receipt requested,
postage prepaid, or by delivering same in person, addressed as follows:
To Landlord: Silver Stone Properties, L.L.C.
0000 Xxxxx Xxx
Xx. Xxxxx, Xxxxx 00000
Attn: H. Xxxx Xxxx, Xx.
To Tenant: Xxxx Oil Tools, Inc.
0000 Xxxxx Xxx
Xx. Xxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
With copy to: Core Laboratories, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, General Counsel
Notices so mailed shall be effective from and after five (5) postal delivery
days after being so mailed. Notices given in any other manner shall be
effective only if and when actually delivered at the address of the addressee.
103
SECTION 19. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 11 hereof, the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors, and assigns.
SECTION 20. ENTIRE AGREEMENT AND MODIFICATION. This Lease
constitutes the entire agreement relating to the subject matters hereof
between Landlord and Tenant and may be modified or amended only by a written
document duly executed by both Landlord and Tenant.
SECTION 21. TERMINOLOGY. The captions herein are for convenience
only and shall not modify or effect the provisions hereof. Wherever used
herein, each gender shall include each other gender, the singular shall include
the plural, and the plural shall include the singular.
SECTION 22. GOVERNING LAW AND SEVERABILITY. This Lease shall be
governed by and construed in accordance with the laws of the State of Texas.
If any provision hereof is invalid or unenforceable, then the remainder of this
Lease shall not be affected thereby and shall remain in full force and effect.
SECTION 23. ESTOPPEL CERTIFICATE OR THREE-PARTY AGREEMENT. Within
10 days after Landlord's request, Tenant must execute either an estoppel
certificate or a three-party agreement among Landlord, Tenant and any third
party designated by Landlord certifying as to such facts (if true) and agreeing
to such notice provisions and other matters as such third party may reasonably
require.
SECTION 24. AUTHORIZATION. Each party to this Lease represents
and warrants to the other that the execution and performance of this Lease has
been duly authorized by all necessary corporate action and in accordance with
all applicable legal requirements, and other contracts affecting such party,
and that this Lease constitutes the valid and binding obligation of such party,
enforceable in accordance with its terms. Each party to this Lease represents
and warrants to the other that it is a corporation duly organized, validly
existing, and in good standing under the legal requirements of the state of its
incorporation, and that it is duly qualified and in good standing as a foreign
corporation in each foreign jurisdiction where the nature of its business or
properties requires it to be so qualified.
SECTION 25. MULTIPLE COUNTERPARTS. This Lease may be executed
in multiple counterparts, each of which shall constitute an original and all of
which shall constitute one document. And further, a facsimile signature shall
be deemed an original.
WITNESS THE EXECUTION HEREOF, as of the date first set forth
hereinabove.
SILVER STONE PROPERTIES, L.L.C.
By
Name:
Title:
"Landlord"
104
XXXX OIL TOOLS, INC.
By
Name:
Title:
"Tenant"
105
EXHIBIT A
PREMISES
BEING a 122.10 acre tract of land out of the XXXXXXX COUNTY SCHOOL LAND SURVEY
XX. 0, XXXXXXXX XX. 000, in Xxxxxxx County, Texas, and being more particularly
described by metes and bounds as follows:
BEGINNING at a bridge spike found in the East line of said survey and in County
Road No. 1000, said point being by deed call South 00 degrees 24 minutes East,
3348.95 feet and South 00 degrees 12 minutes West, 2643.03 feet from the
Northeast corner of said survey;
THENCE South 00 degrees 19 minutes 34 seconds West, along said County Road
393.77 feet to a railroad spike found at a "T" intersection of said County Road
No. 1000 with County Road No. 916;
THENCE South 00 degrees 21 minutes 18 seconds West, continuing along said
County Road No. 1000, 2016.95 feet to a railroad spike set for corner at a "T"
intersection of said Xxxxxx Xxxx Xx. 0000 xxx Xxxxxx Xxxx Xx. 0000X;
THENCE South 89 degrees 30 minutes 40 seconds West, along said County Road No.
1000A, 702.44 feet to a 5/8 inch iron pin set for corner;
THENCE South departing from said County Road No. 1000A, 303.4 feet to a 5/8
inch iron pin found for corner;
THENCE North 89 degrees 12 minutes 00 seconds East, 702.00 feet to a railroad
spike found for xxxxxx xx xxxx Xxxxxx Xxxx Xx. 0000;
THENCE South 00 degrees 05 minutes 46 seconds West, along said County Road No.
1000, 1922.51 feet to a 5/8 inch pin found for corner in the Easterly line of
the Santa Fe Railroad right-of-way;
THENCE along said railroad right-of-way, North 39 degrees 13 minutes 58 seconds
West, 1141.03 feet to the beginning of a curve to the right having a radius of
2064.42 feet along said curve, 718.21 feet to the end of said curve and North
19 degrees 18 minutes 00 seconds West, 2732.50 feet to a 5/8 inch iron pin
found for corner;
THENCE North 69 degrees 37 minutes 32 seconds East, along a fence, 694.80 feet
to a 5/8 inch iron pin found for corner;
THENCE North 51 degrees 39 minutes 10 seconds East, along a fence, 361.79 feet
to a 5/8 inch iron pin found for corner;
THENCE North 69 degrees 56 minutes 45 seconds East, along a fence, 128.51 feet
to a 5/8 inch iron pin found for corner;
THENCE South 87 degrees 20 minutes 14 seconds East, 336.43 feet to a 5/8 inch
iron pin found for corner;
THENCE North 85 degrees 04 minutes 03 seconds East, along a fence, 602.97 feet
to the POINT OF BEGINNING and containing 122.10 acres of land, more or less.
106
COMMON STOCK
REGISTRATION RIGHTS AGREEMENT
This Common Stock Registration Rights Agreement ("Agreement"), dated as
of June 30, 1998, is made by and among Core Laboratories N.V., a Netherlands
limited liability company ("Company"), and those certain holders listed on the
signature page(s) hereto (individually a "Holder" and collectively the
"Holders"), who hereby agree as follows:
1. INTRODUCTION.
For purposes of this Agreement, the following terms shall have the
meanings ascribed to them below:
(i) "Common Stock" means the Company's common stock, par value
NLG 0.03 per share.
(ii) "Effective Date" means the date of the closing
transaction by the Company, Xxxx Acquisition, Inc., Xxxx Oil Tools,
Inc. and the stockholders of the Company, pursuant to the Agreement and
Plan of Merger, dated June 30, 1998.
(iii) "Holder's Shares" means the number of shares of Common
Stock specified opposite the Holder's respective names on the signature
page(s) of this Agreement.
2. PIGGYBACK REGISTRATION.
(a) Right to Piggyback. Whenever the Company proposes to register any
of its Common Stock for its own account under the Securities Act of 1933, as
amended (the "Securities Act") (other than pursuant to a registration statement
relating to warrants, options or shares of capital stock granted, to be granted,
sold or to be sold exclusively to employees or directors of the Company or a
registration statement filed pursuant to Rule 145 under the Securities Act), the
Company will give prompt written notice to the Holders of its intention to
effect a registration and will, subject to Section 2(b) below, include in such
registration Holder's Shares with respect to which the Company has received
written requests for inclusion therein within 15 days after the giving of notice
by the Company. All registrations requested pursuant to this Section 2(a) are
referred to herein as "Piggyback Registrations."
(b) Priority on Piggyback Registrations. If a Piggyback Registration
involves the registration of shares of Common Stock offered in a firm commitment
underwritten offering and the managing underwriter(s) for the offering advise
the Company in writing that in their opinion the number of shares of Common
Stock requested to be included in such registration exceeds the number of shares
of Common Stock which can be sold in such offering without materially affecting
the offering price of the shares of Common Stock to be included therein, the
Company
107
will so advise the Holders in writing and will include in such registration that
number of shares of Common Stock which the managing underwriter(s) have advised
the Company, in their opinion, will not materially affect the offering price of
the shares of Common Stock to be offered by the Company, such number of shares
to be included in such registration in accordance with the following priorities:
(i) first, the Common Stock and other securities, if any, that the Company
proposes to sell; (ii) second, the Common Stock and other securities, if any,
that First Britannia Mezzanine N.V. proposes to sell; (iii) third, the Common
Stock and securities, if any, that any person (other than the Holders) having
piggy-back registration rights granted prior to the date hereof proposes to
sell; and (iv), fourth, on a pro-rata basis, (A) the Holder's Shares requested
to be included in such registration pursuant to Section 2(a) above and (B) any
other Common Stock owned by persons other than the Holders having rights to
participate in an underwritten registered offering of Common Stock and who have
notified the Company of their intention to participate in such registration.
(c) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the Company will select a managing underwriter(s) of
nationally recognized standing.
3. REGISTRATION PROCEDURES.
Whenever the Holders have requested that any Holder's Shares be
registered pursuant to this Agreement, and subject to Section 2(b) above, the
Company will use its reasonable efforts to effect the registration of such
Holder's Shares and pursuant thereto the Company will:
(a) prepare and file with the Securities and Exchange
Commission ("Commission") under the Securities Act a registration
statement with respect to such Holder's shares, which registration
statement will state that the Holders of Holder's Shares covered
thereby and the holders of any other shares of Common Stock to be
included therein may sell such Shares under such registration
statement, and use its reasonable efforts to cause such registration
statement to become effective and to remain effective as provided
herein;
(b) prepare and file with the Commission such amendments and
supplements, if any, to such registration statement and the prospectus
used in connection therewith as may be necessary to (i) keep such
registration statement effective for a period which is the earlier of
(A) 90 days or (B) until the completion of the distribution under such
registration statement and (ii) comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Holder's Shares such number of
copies of such registration statement (including exhibits), each
amendment and supplement thereto, the
108
prospectus included in such registration statement (including each
preliminary prospectus) as such seller may reasonably request in order
to facilitate the disposition of such shares;
(d) use its reasonable efforts to register or qualify such
Holder's Shares under such securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions
of the Holder's Shares owned by such seller, provided that the Company
will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this subsection, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction;
(e) notify each seller of Holder's Shares at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, when it becomes aware of the happening of any event as
a result of which the prospectus included in such registration
statement (as then in effect) contains any untrue statement of a
material fact or omits any fact necessary to make the statements
therein not misleading in light of the circumstances then existing,
and, as promptly as practicable thereafter, prepare in sufficient
quantities a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Holder's Shares, such
prospectus will not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not
misleading in light of the circumstances then existing;
(f) enter into customary agreements relating to the
registration (including an underwriting agreement in customary form);
(g) subject to the execution of confidentiality agreements in
a form satisfactory to the Company, make reasonably available for
inspection by any seller of Holder's Shares, any underwriter
participating in any disposition pursuant to such registration
statement, the Representative Counsel (as hereinafter defined) and any
attorney, accountant or other agent retained by any such Representative
Counsel or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, Representative
Counsel, attorney, accountant or agent in connection with such
registration statement to the extent such information is reasonably
necessary to satisfy any of its obligations under applicable law;
109
(h) use reasonable efforts to obtain an appropriate opinion
from counsel for the Company and a cold comfort letter from the
Company's independent public accountants in customary form and covering
such matters of the type customarily covered by opinions of counsel and
cold comfort letters in similar registrations as the Holders of a
majority of the Holder's Shares covered by such registration statement
reasonably request; provided, however, that failure to provide such
opinion or letter, or the provision of any such opinion or letter in a
form not satisfactory to any Holder whose Holder's Shares are covered
by such registration statement shall not give rise to any action, at
law or in equity, for damages or injunctive or other relief , but
rather, shall only entitle such Holder to withdraw his Holder's shares
from such registration statement pursuant to Section 3(k) below;
(i) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(e), such
Holder will forthwith discontinue such Holder's disposition of Holder's
Shares pursuant to the registration statement covering such Holder's
shares until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such holder's
possession of the prospectus covering such Holder's Shares current at
the time of receipt of such notice. In the event the Company shall give
any such notice, the period mentioned in Section 3(b) shall be extended
by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of
any Holder's Shares and other shares of Common Stock covered by such
registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 3(e);
(j) in connection with the preparation and review pursuant to
this Agreement of any registration statement or prospectus or any
amendments or supplements thereto, the Holders of a majority of the
Holder's Shares included in such registration will choose one counsel
("Representative Counsel") who shall participate in the registration
process on their behalf, coordinate requests by sellers of Holder's
Shares for information from the Company and act as liaison between such
selling stockholders or their individual counsel, accountants and
agents and the Company; and
(k) if any Holder disapproves of the terms of any offering,
such Holder's sold remedy shall be to withdraw therefrom by written
notice to the Company and the underwriter (if any) and all other
participants in such offering, and the Holder's Shares so withdrawn
will also be withdrawn from registration.
110
4. REGISTRATION EXPENSES.
(a) Whether or not any registration pursuant to this Agreement shall
become effective, all expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, National Association of Securities Dealers' fees, fees and
expenses of compliance with state securities or blue sky laws, printing and
engraving expenses and fees and disbursements of counsel for the Company, the
Representative Counsel, the independent certified public accountants for the
Company, underwriters (excluding discounts and commissions) and other persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company; provided, however, that (i) if other
holders of Common Stock who have included shares in the registration statement
are required to pro-rate any Registration Expenses which are to be paid by the
Holders hereunder, then each Holder will also pro-rate such Registration
Expenses with such other holders and (ii) each seller of Holder's Shares shall
pay (A) any underwriting discounts and selling commissions applicable to
Holder's Shares sold by the Holders and (B) all fees and disbursements of
counsel for the Holders (other than the Representative Counsel); provided,
however, that the Company's obligation to pay the fees, expenses and
disbursements of Representative Counsel on the Piggyback Registrations shall be
limited to reasonable fees, expenses and disbursements.
(b) Notwithstanding anything herein to the contrary, each seller of
Holder's Shares shall pay the Registration Expenses to the extent required by
applicable law.
5. INDEMNIFICATION.
(a) Indemnification by the Company. The Company agrees to indemnify,
with respect to any registration statement filed by it, to the full extent
permitted by law, each Holder, its officers, directors and agents and each
person who controls such Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or contained in
any information with respect to such Holder furnished in writing to the Company
by such Holder expressly for use therein or by such Holder's failure to deliver
a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same.
(b) Indemnification by Holders. In connection with any registration
statement in which a Holder is participating, each such Holder will furnish to
the Company in writing such
111
information with respect to such Holder as the Company reasonably requests for
use in connection with any such registration statement or prospectus and agrees
to indemnify, to the fullest extent permitted by law, the Company, its directors
and officers and each person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be stated in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or necessary to make the statements therein (in
the case of a prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is caused by or
contained in any information with respect to such Holder so furnished in writing
by such Holder expressly for use therein and the Company does not know, at the
time such information is included in the registration statement, prospectus,
preliminary prospectus, amendment or supplement, that such information is false
or misleading.
(c) Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party under subsection (a) or (b) above of notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing for which such person will claim indemnification pursuant to
this Agreement, such indemnified party shall notify the indemnifying party in
writing of the commencement thereof or of such involvement, as the case may be,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than under
such subsection. in case any such action referred to under subsection (a) or (b)
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. The indemnifying party
shall not be required to indemnify the indemnified party with respect to any
amounts paid in settlement of any action, proceeding or investigation entered
into without the written consent of the indemnifying party.
(d) Contribution. If the indemnification provided for in this Section 5
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect or as a result of any losses, claims,
damages, liabilities or expenses (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits
112
received by the indemnifying party on the one hand and the indemnified party on
the other hand, the relative fault of the indemnifying party on the one hand and
of the indemnified party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense and
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 5(a) and (b) without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 5(d).
(e) Indemnification and Contribution of Underwriters. In connection
with any underwritten offering contemplated by this Section 5, the Company, with
respect to any registration statement filed by it, will agree to customary
provisions for indemnification and contribution in respect of losses, claims,
damages, liabilities and expenses of the underwriters by the Company.
6. PARTICIPATION IN UNDERWRITTEN REGISTERED OFFERINGS.
No person may participate in any underwritten offering hereunder unless
such person (a) agrees to sell such person's securities on the basis provided in
any underwriting arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
113
7. MISCELLANEOUS.
(a) Termination. This Agreement and all rights and obligations
hereunder with respect to any Holder's Shares (except for the indemnification
rights provided in Section 5 hereof which shall survive forever) will terminate
two years from the date of this Agreement.
(b) Waivers. Except as otherwise provided herein, the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
Holders of a majority of all of the Holder's Shares.
(c) Amendments. Except as otherwise provided herein, this Agreement may
be amended only with the written consent of the Company and the Holders of a
majority of all of the Holder's Shares.
(d) Subsequent Holders of Holder's Shares. This Agreement shall not be
assignable by the Holders.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all counterparts taken together will constitute one and the
same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(h) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement and the exhibits and schedules hereto will
be governed by the internal law, and not the law of conflicts, of Texas.
(i) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or
mailed by certified or registered mail, return receipt requested and postage
prepaid, to the recipient. Such notices, demands and other communications will
be sent to each of the Holders or subsequent holders of the Holder's Shares
114
as the case may be, at their respective addresses on the books of the Company,
and to the Company at the address indicated below:
If to Acquiror: Core Laboratories, N.V.
Xxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Telecopy: 011-31-20-627-9886
Attention: Xxxxxxx Xxxxxxxx
and Core Laboratories, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy (which
shall not constitute
notice) to: Xxxxxx & Xxxxxx, L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: T. Xxxx Xxxxx
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(j) Benefit of Agreement. No person not a party to this Agreement shall
have rights under this Agreement as a third party beneficiary or otherwise.
115
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Effective Date.
CORE LABORATORIES, N.V.
By
Name:
Title:
XXXXXXX X. XXXX
XXXXX XX XXXX
H. XXXX XXXX, XX.
XXXXXX XXXX XXXX
XXXXXX XXXX XXXX, as Custodian for
Xxxxxx Xxxxxxxx Xxxx
XXXXXX XXXX XXXX, as Custodian for
Xxxxxxx Xxxx Xxxx
H. D. XXXX, III
116
XXXXXX X. XXXX
H. XXX XXXX, XX., as Custodian for
Xxxx X. Xxxx
XXXXXXX XXXXX
XXXXXX X. XXXXX
XXXXX B. XXXXX
XXXXXXX XXXXX XXXXX, by Xxxxxx
Xxxxx as Legal Guardian
XXXXXXXX XXXXXXXXXX
XXXX O. CHRON
XXXXXXXX XXXXXXXXXX, as Custodian
for Xxxx X. Chron
XXXXX X. XXXXXX
117
HOLDERS HOLDER'S SHARES ESCROW
AS OF SHARES
EFFECTIVE DATE
Xxxxxxx X. Xxxx 614,621 68,291
Xxxxx Xx Xxxx 614,621 68,291
H. Xxxx Xxxx, Xx. 220,035 24,448
Xxxxxx Xxxx Xxxx 35,648 3,961
Xxxxxx Xxxx Xxxx, as Custodian for Xxxxxx Xxxxxxxx Xxxx 1,229 137
Xxxxxx Xxxx Xxxx, as Custodian for Xxxxxxx Xxxx Xxxx 1,229 137
H. D. Xxxx, III 35,648 3,961
Xxxxxx X. Xxxx 35,648 3,961
H. Xxxx Xxxx, Xx., as Custodian for Xxxx X. Xxxx 35,648 3,961
Xxxxxxx Xxxxx 35,648 3,961
Xxxxxx X. Xxxxx 35,648 3,961
Xxxxx X. Xxxxx 35,648 3,961
Xxxxxxx Xxxxx Xxxxx 35,648 3,961
Xxxxxxxx Xxxxxxxxxx 35,648 3,961
Xxxx O. Chron 35,648 3,961
Xxxxxxxx Xxxxxxxxxx, as Custodian for Xxxx X. Chron 35,648 3,961
Xxxxx X. Xxxxxx 205,284 22,809
--------- -------
Totals 2,049,147 227,684
========= =======
