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STOCK PURCHASE AGREEMENT
among
3-D GEOPHYSICAL, INC.,
3-D GEOPHYSICAL OF CANADA, INC.,
C. XXXXX XXXXXXXXX
and
XXXXX X. XXXXXXXXX
Dated as of December 10, 1996
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TABLE OF CONTENTS
Page
ARTICLE I Certain Definitions.................................................................... 1
ARTICLE II Purchase and Sale...................................................................... 4
2.1 Purchase and Sale of Company Shares.................................................... 4
ARTICLE III Closing................................................................................ 6
3.1 Closing Date........................................................................... 6
3.2 Certain Actions at Closing............................................................. 6
ARTICLE IV Representations and Warranties of Sellers.............................................. 7
4.1 Organization and Good Standing......................................................... 7
4.2 Capitalization...........................................................................8
4.3 Ownership of Shares.................................................................... 8
4.4 Authorization.......................................................................... 8
4.5 No Conflict; Transactions with Certain Persons......................................... 9
4.6 Financial Statements; Undisclosed Liabilities; Receivables;
Supplies............................................................................... 9
4.7 Taxes.................................................................................. 10
4.8 Title to Properties; Absence of Encumbrances........................................... 12
4.9 Intellectual Property.................................................................. 12
4.10 Contracts and Agreements.............................................................. 13
4.11 Insurance.............................................................................. 15
4.12 Litigation............................................................................. 15
4.13 Condition of Assets.................................................................... 15
4.14 Compliance with Law.................................................................... 15
4.15 Employees.............................................................................. 16
4.16 Employee Benefit Plans................................................................. 17
4.17 Environmental Matters.................................................................. 18
4.18 Powers of Attorney..................................................................... 20
4.19 Officers and Directors................................................................. 20
4.20 Bank Accounts............................................................... 20
4.21 Absence of Certain Changes............................................................. 20
4.22 Books and Records...................................................................... 22
4.23 Absence of Certain Business Practices.................................................. 22
4.24 Customer Relationships................................................................. 22
4.25 No Broker or Finder.................................................................... 22
4.26 Securities Laws........................................................................ 22
4.27 Disclosure Schedule.................................................................... 24
4.28 Residency.............................................................................. 24
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ARTICLE V Representations and Warranties of 3-D and Buyer........................................ 24
5.1 Organization and Good Standing......................................................... 24
5.2 Capitalization......................................................................... 24
5.3 Ownership of Shares.................................................................... 24
5.4 Authorization.......................................................................... 25
5.5 No Conflicts........................................................................... 25
5.6 Financial Condition; Etc............................................................... 25
5.7 Litigation............................................................................. 26
5.8 No Broker or Finder.................................................................... 26
ARTICLE VI Covenants of Sellers................................................................... 26
6.1 Normal Course.......................................................................... 26
6.2 Negative Covenants..................................................................... 27
6.3 Certain Filings........................................................................ 27
6.4 Best Efforts to Satisfy Conditions..................................................... 27
6.5 Delivery of Financial Statements....................................................... 27
6.6 Resignation of Officers and Directors.................................................. 27
6.7 Further Assurances..................................................................... 27
ARTICLE VII Covenants of 3-D and Buyer............................................................. 28
7.1 Certain Filings........................................................................ 28
7.2 Best Efforts to Satisfy Conditions..................................................... 28
7.3 7.3 Amendments to Registration Statement........................................ 28
7.4 Further Assurances..................................................................... 28
ARTICLE VIII Conditions Precedent to Obligations of 3-D and Buyer................................... 28
8.1 Representations and Warranties......................................................... 28
8.2 Compliance with Covenants.............................................................. 29
8.3 Lack of Adverse Change................................................................. 29
8.4 Update Certificate..................................................................... 29
8.5 Legal Opinion.......................................................................... 29
8.6 Regulatory Approvals................................................................... 29
8.7 Consents of Third Parties to Contracts................................................. 29
8.8 No Violation of Orders................................................................. 30
8.9 Employment Agreement................................................................... 30
8.10 Acquisition of J.R.S................................................................... 30
8.11 Other Closing Matters.................................................................. 30
ARTICLE IX Conditions Precedent to Obligations of Sellers......................................... 30
9.1 Representations and Warranties......................................................... 30
9.2 Compliance with Covenants.............................................................. 30
9.3 Update Certificate..................................................................... 30
9.4 Legal Opinion.......................................................................... 31
9.5 Regulatory Approvals................................................................... 31
9.6 No Violation of Orders................................................................. 31
9.7 Other Agreements....................................................................... 31
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ARTICLE X Termination of Agreement............................................................... 31
10.1 Mutual Consent......................................................................... 31
10.2 Transaction Date....................................................................... 31
ARTICLE XI Indemnification........................................................................ 31
11.1 Survival of Representations, Warranties and Covenants.................................. 32
11.2 Indemnification by Sellers............................................................. 32
11.3 Indemnification by 3-D and Buyer....................................................... 32
11.4 Assumption of Defense.................................................................. 32
11.5 Non-Assumption of Defense.............................................................. 33
11.6 Indemnified Party's Cooperation as to Proceedings...................................... 33
11.7 General Limitations on Indemnification................................................. 34
ARTICLE XII Miscellaneous.......................................................................... 34
12.1 Expenses............................................................................... 34
12.2 Entirety of Agreement.................................................................. 34
12.3 Notices................................................................................ 34
12.4 Amendment.............................................................................. 35
12.5 Nonwaiver.............................................................................. 35
12.6 Counterparts........................................................................... 35
12.7 Assignment; Binding Nature; No Beneficiaries........................................... 35
12.8 Headings............................................................................... 35
12.9 Governing Law; Consent to Jurisdiction................................................. 35
12.10 Specific Performance................................................................... 36
12.11 Construction........................................................................... 36
12.12 Public Announcements................................................................... 36
12.13 Remedies Cumulative.................................................................... 36
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Schedules
IV Disclosure Schedule
Exhibits
A Description of rights, privileges, restrictions and
conditions of Terms of Buyer's Shares
B Form of Employment Agreement for C. Xxxxx Xxxxxxxxx
C Interim Balance Sheet
D Support Agreement
E Share Exchange Agreement
F List of Equipment
G Major Customers
H List of New Officers and Directors
I Legal Opinion of Sellers' Counsel
J-1 Legal Opinion of Buyer's United States Counsel
J-2 Legal Opinion of Buyer's Canadian Counsel
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of
December 10, 1996, by and among 3-D Geophysical, Inc., a Delaware corporation
("3-D"), 3-D Geophysical of Canada, Inc., a Canadian corporation ("Buyer"), C.
Xxxxx Xxxxxxxxx ("DS") and Xxxxx X. Xxxxxxxxx ("PS") (DS and PS being sometimes
referred to individually as a "Seller" and collectively as "Sellers").
RECITALS
WHEREAS, DS owns 10 shares of Company Class A Stock;
WHEREAS, PS owns 10 shares of Company Class A Stock;
WHEREAS, Buyer desires to purchase all of the issued and
outstanding capital stock of Company and Sellers desire to sell the same, on the
terms and conditions hereinafter contained;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
Certain Definitions
"Act" means the United States Securities Act of 1933, as
amended.
"Affiliated Person(s)" has the meaning set forth in Section
4.5(b).
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Business Day" means any day that is not a Saturday or Sunday
or a legal holiday on which banks are authorized or required by law to be closed
in Calgary, Canada or New York, New York.
"Buyer" has the meaning set forth in the preamble to this
Agreement.
"Buyer's Shares" means the exchangeable non-voting shares in
the capital of Buyer having substantially the rights, privileges, restrictions
and conditions set forth on Exhibit A attached hereto to be issued to Sellers
pursuant to Section 2.1.
"Closing" has the meaning set forth in Section 3.1.
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"Closing Date" has the meaning set forth in Section 3.1.
"Code" has the meaning set forth in Section 4.7(c)(x).
"Company" means Siegfried & Siegfried Resource Consultants
Ltd., an Alberta corporation.
"Company Class A Stock" has the meaning set forth in Section
4.2(a).
"Company Shares" has the meaning set forth in Section 4.2(a).
"Contracts" has the meaning set forth in Section 4.10(b).
"Common Stock" means the shares of common stock, par value
0.01 per share, of 3-D.
"Common Stock Market Price" has the meaning set forth in
Section 2.1(b).
"Disclosure Schedule" has the meaning set forth in the
preamble to Article IV.
"Dollars" or "$" means Canadian dollars, unless otherwise
specified.
"Employee Benefit Plan(s)" has the meaning set forth in
Section 4.16(a).
"Employees" has the meaning set forth in Section 4.4(b).
"Employment Agreement" means the employment agreement between
J.R.S. and DS in substantially the form attached hereto as Exhibit B to be
entered into by J.R.S. and DS at the Closing.
"Encumbrance" means any lien, pledge, mortgage, security
interest, charge, restriction, adverse claim or other encumbrance of any kind or
nature whatsoever.
"Environment" has the meaning set forth in Section 4.17(i).
"Environmental Laws" has the meaning set forth in Section
4.17(i).
"Environmental Permits" has the meaning set forth in Section
4.17(i).
"Equipment" has the meaning set forth in Section 4.1(c).
"Financial Statements" means the balance sheet and statements
of earnings, shareholders' equity and cash flows of Company as of, and for the
fiscal year ended, November 30 in each of the years 1993 through 1995 and as of,
and for the ten months ended, September 30, 1996.
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"GAAP" means Canadian generally accepted accounting
principles.
"Hazardous Substance(s)" has the meaning set forth in Section
4.17(i).
"Indemnification Obligations" means the indemnification
obligations of Sellers or Buyer under Article XI.
"Intellectual Property" means all patents and patent
applications, all trademarks, trade names, business names, brand names, service
marks and copyrights, all applications for registration of such trademarks,
trade names, business names, brand names, service marks and copyrights, all
common law trade names and all common law or statutory trade secrets, including
know-how, inventions, designs, processes and computer programs (including source
codes).
"Interim Balance Sheet" means the balance sheet of Company as
of September 30, 1996, a copy of which is attached hereto as Exhibit C.
"J.R.S." means J.R.S. Exploration Company Limited, an Alberta
corporation.
"Loss(es)", in respect of any matter, means any loss,
liability, cost, expense, judgment, settlement or other damage arising directly
or indirectly as a result of or in connection with such matter, including
reasonable attorneys', consultants' and other advisors' fees and expenses,
reasonable costs of investigating or defending any claim, action, suit or
proceeding or of avoiding the same or the imposition of any judgment or
settlement, and reasonable costs of enforcing any Indemnification Obligations.
"Major Customers" has the meaning set forth in Section 4.24.
"Material Adverse Effect" means any material adverse effect on
the business, operations, assets, condition (financial or otherwise),
liabilities, results of operations or prospects of Company.
"Parent Common Stock" means the shares of Common Stock
issuable in accordance with the share provisions attaching to the Buyer's
Shares.
"Permitted Encumbrances" has the meaning set forth in Section
4.8(c).
"Person" means an individual, partnership, venture,
unincorporated association, organization, syndicate, corporation, trust and
trustee, executor, administrator or other legal or personal representative or
any government or any agency or political subdivision thereof.
"Pre-Closing Period" means all taxable periods ending on or
before the Closing Date and the portion ending on or before the Closing Date of
any taxable period that includes (but does not end on) the Closing Date.
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"Prospectus" has the meaning set forth in Section 4.26(b).
"Public Offering" means the underwritten public offering of
Common Stock by the Company that is contemplated by the Registration Statement.
"Registration Statement" means 3-D's registration statement on
Form S-1 filed with the SEC on October 8, 1996 (Registration No. 333-13665),
including all amendments thereto.
"SEC" means the United States Securities and Exchange
Commission.
"Share Exchange Agreement" means the Share Exchange Agreement
among 3-D and the Buyer in substantially the form attached hereto as Exhibit D
to be entered into by 3-D and the Buyer at the Closing.
"Support Agreement" means the Support Agreement between 3-D
and Buyer in substantially the form attached hereto as Exhibit E to be entered
into by 3-D and Buyer at the Closing.
"Tax(es)" means all federal, provincial, local, foreign and
other taxes, assessments or other governmental charges, including without
limitation, income, estimated income, gross receipts, business, capital,
occupation, franchise, property, value added, goods and services, sales, use,
transfer, excise, employment, payroll and withholding taxes, including interest,
penalties and additions in connection therewith.
"United States" or "U.S." means the United States of America.
ARTICLE II
Purchase and Sale
2.1 Purchase and Sale of Company Shares. (a) Subject to and
upon the terms and conditions hereinafter set forth, at the Closing, and in
reliance upon the representations and warranties of each other contained in this
Agreement or made pursuant hereto:
(i) DS shall sell, convey, assign, transfer and deliver to
Buyer (a) 5 shares of Company Class A Stock, free and clear of any and all
Encumbrances, and Buyer shall purchase the same for a number of Buyer's Shares
determined pursuant to Section 2.1(b), and (b) 5 shares of Company Class A
Stock, free and clear of any and all Encumbrances, and Buyer shall purchase the
same for $75,000 in cash;
(ii) PS shall sell, convey, assign, transfer and deliver to
Buyer (a) 5 shares of Company Class A Stock, free and clear of any and all
Encumbrances, and Buyer shall purchase the same for a number of Buyer's Shares
determined pursuant to Section 2.1(b),
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and (b) 5 shares of Company Class A Stock, free and clear of any and all
Encumbrances, and Buyer shall purchase the same for $75,000 in cash;
(b) The number of Buyer's Shares to be delivered to DS
pursuant to Section 2.1(a)(i) shall equal the result obtained by multiplying
$150,000 by 50% and by dividing the product so obtained by the Common Stock
Market Price and the number of Buyer's Shares to be delivered to PS pursuant to
Section 2.1(a)(ii) shall equal the result obtained by multiplying $150,000 by
50% and by dividing the product so obtained by the Common Stock Market Price;
provided, however, that in no event shall Buyer issue any fractional share and
any such fraction shall be rounded up to the nearest whole number. The Common
Stock Market Price means the equivalent in Canadian dollars as provided below of
the average closing price (in U.S. dollars) of one share of Common Stock on the
NASDAQ National Market for the three consecutive Business Days ending on the
Business Day immediately prior to the Closing Date, as reported by The Wall
Street Journal (provided, however, that if such average is less than $8.00
(U.S.) or more than $10.00 (U.S.), such average shall be deemed to be $8.00
(U.S.) or $10.00 (U.S.), respectively for purposes of determining the Common
Stock Market Price), which average (or deemed average) shall be translated into
Canadian dollars at the exchange rate therefor as reported by The Wall Street
Journal on the last Business Day immediately prior to the Closing Date.
(c) Each of DS and PS and the Buyer shall elect jointly under
subsection 85(1) of the Income Tax Act (Canada) in respect of the purchase and
sale of shares provided for in this Section 2.1 and shall specify therein as
each Seller's proceeds of disposition of the Company Shares, as the case may be,
and Buyer's cost of such shares shall be such amount as such Seller determines,
subject to the several limitations of said section 85. Such election shall be
made in the manner and filed within the time provided by said section 85.
ARTICLE III
Closing
3.1 Closing Date. Subject to the fulfillment or waiver of the
conditions precedent set forth in Articles VIII and IX, the closing of the
transactions contemplated hereby (the "Closing") shall be held on January 7,
1997 at 10:00 a.m., prevailing local time, at the offices of Beaumont Church,
AGT Tower, 0000-000 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxx, or at such other time or
other place as may be agreed to by Buyer and Sellers. The date on which the
Closing occurs is herein referred to as the "Closing Date"; provided, however,
that, subject to Section 10.2, if any condition to a party's obligation
hereunder to close shall not have been satisfied (or waived by the party
entitled to waive it) on the day prior to the date determined by Buyer and
Sellers to be the Closing Date, then the party whose obligation to close is
subject to a condition not satisfied or waived may postpone the Closing, from
time to time, by giving notice to the other parties, until the condition has
been met. For accounting purposes, the parties agree that the Closing shall be
deemed to have occurred at 12:01 A.M., local time, in Calgary, Canada on
December 31, 1996.
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3.2 Certain Actions at Closing. (a) At the Closing:
(i) DS shall deliver to Buyer one or more certificates
representing in the aggregate 10 shares of Company Class A Stock, duly
endorsed in blank or accompanied by duly executed stock transfer
powers, and Buyer shall duly issue and deliver to DS one or more
certificates registered in DS's name representing an aggregate of the
number of Buyer's Shares determined pursuant to the provisions of
Section 2.1(b) and $75,000 in cash, payable by certified or official
bank check payable to the order of C. Xxxxx Xxxxxxxx;
(ii) PS shall deliver to Buyer one or more certificates
representing in the aggregate 10 shares of Company Class A Stock, duly
endorsed in blank or accompanied by duly executed stock transfer
powers, and Buyer shall duly issue and deliver to PS one or more
certificates registered in PS's name representing an aggregate of the
number of Buyer's Shares determined pursuant to the provisions of
Section 2.1(b) and $75,000 in cash, payable by certified or official
bank check payable to the order of Xxxxx X. Xxxxxxxxx;
(iii) 3-D and Buyer shall execute and deliver the Support
Agreement and the Share Exchange Agreement;
(iv) DS shall execute and deliver the Employment
Agreement;
(v) Sellers shall execute and/or deliver to Buyer
each other document, certificate or other instrument required to be
executed and/or delivered by Sellers under this Agreement at or prior
to the Closing;
(vi) 3-D and Buyer shall execute and/or deliver to
Sellers each other document, certificate or other instrument required
to be executed and/or delivered by 3-D or Buyer under this Agreement at
or prior to the Closing; and
(vii) Sellers shall cause Company to deliver to Buyer
its minute book, share certificate book, stock register, stock transfer
records, books of account, accounting records and all other corporate
records and documents.
(b) Sellers shall be liable for and shall pay all Taxes,
direct or indirect, if any, attributable to the transfer of the Company Shares,
and, in connection therewith, shall affix any necessary transfer stamps to the
stock certificates (or stock transfer powers) evidencing such shares.
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ARTICLE IV
Representations and Warranties of Sellers
Sellers, jointly and severally, hereby represent and warrant
to the Buyer that, except as set forth in the disclosure schedule accompanying
this Agreement (the "Disclosure Schedule"), each of the statements contained in
this Article IV is true, correct and complete. The Disclosure Schedule will be
arranged in sections corresponding to the Sections of this Article IV.
4.1 Organization and Good Standing.
(a) Company is a corporation duly organized, validly existing
and in good standing under the laws of the Province of Alberta. Company has full
corporate power and authority to own its properties and to carry on its business
as it is now being conducted and as it is proposed to be conducted. Company is
duly qualified to transact business and is in good standing in each jurisdiction
wherein the nature of the business done or the property owned, leased or
operated by it requires such qualification. Copies of the constating documents
and by-laws of Company and all amendments thereto have been delivered to Buyer
and are true and complete. The corporate minutes, corporate records and stock
register and transfer records of Company have been made available to Buyer and
are true and complete. Such corporate minutes reflect all actions taken by the
Board of Directors (or any committee thereof) and shareholders of Company.
(b) The business carried on by Company has been conducted by
Company directly, and not through any Affiliated Person, or any shareholder,
officer, director or employee of any Affiliated Person, or through any other
Person. Company has no subsidiaries and is not a party to, directly or
indirectly, or under any obligation to enter into, any joint venture,
partnership or other profit sharing arrangement.
(c) Company owns the seismic data acquisition equipment listed
on Exhibit F attached hereto (the "Equipment"), which it leases to J.R.S., and
owns no other assets, conducts no other operations, carries on no other business
and provides no other services. Company is not a party to, directly or
indirectly, or under any obligation to enter into, any joint venture,
partnership or other profit sharing arrangement.
(d) Each Seller has full legal capacity to enter into and
carry out his or her obligations under this Agreement and is not under any
prohibition or restriction, contractual, statutory or otherwise, against doing
so.
4.2 Capitalization. (a) Company's authorized capital stock
consists solely of an unlimited number of shares of Class A Voting Common Stock
("Company Class A Stock") and an unlimited number of shares of Class B
Non-Voting Common Stock ("Company Class B Common Stock"), of which twenty shares
(and no more) of Company Class A Stock and no shares of Company Class B Stock
(collectively, "Company Shares") are validly issued and outstanding, fully paid
and non-assessable.
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(b) There are no outstanding or authorized options, warrants,
purchase agreements, subscription rights, conversion rights, exchange rights or
other securities, contracts or commitments that could require Company to issue,
sell or otherwise cause to become outstanding any of its authorized but unissued
shares of capital stock or to create, authorize, issue, sell or otherwise cause
to become outstanding any new class of capital stock. None of the issued and
outstanding shares of capital stock of Company has been issued in violation of
any rights of any Person or in violation of the prospectus or registration
requirements of any Canadian or United States securities law.
4.3 Ownership of Shares. (a) DS owns beneficially and of
record, and has good, valid and marketable title to and the right to transfer to
Buyer, 10 shares of Company Class A Stock and PS owns beneficially and of
record, and has good, valid and marketable title to and the right to transfer to
Buyer, 10 shares of Company Class A Stock, free and clear of any and all
Encumbrances.
(b) No person other than DS and PS owns any shares of capital
stock of the Company. Xxxx Xxx Xxxxxxxxx and Xxxx Xxx Xxxxxxxxx no longer hold
any right, title to, or interest in 2 shares of Class B Non-Voting Common Stock
of the Company, said shares having been subscribed for and exchanged by the
Company in exchange for good and sufficient consideration.
(c) No person other than Buyer has any written or oral
agreement or option to or any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option for the purchase or
acquisition from either Seller of any of the shares of capital stock of Company.
4.4 Authorization. (a) This Agreement has been duly executed
and delivered by each Seller and constitutes a legal, valid and binding
obligation of each Seller, enforceable against him or her in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other laws affecting the rights of creditors generally
and by general principles of equity.
(b) At the Closing, the Employment Agreement shall be duly
executed and delivered by DS (the "Employee") and will constitute a legal,
valid, binding and enforceable obligation of the Employee.
4.5 No Conflict; Transactions with Certain Persons.
(a) Except as set forth in Section 4.5(a) of the Disclosure
Schedule, the execution and delivery of this Agreement by either of Sellers, nor
the consummation of the transactions contemplated hereby, will (i) conflict with
or violate the constating documents or by-laws or resolutions of the directors
or shareholders of Company, or (ii) conflict with, violate, result in the breach
of any term of, constitute a default under, require the consent or approval of
or any notice to or filing with any third party or governmental authority under,
or create an Encumbrance on any of the shares of capital stock or the assets of
Company under, any note, mortgage, deed of trust or other agreement or
instrument to which either of Sellers or Company is a party or by which either
of Sellers or Company is bound, or either
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law, order, rule, regulation, decree, writ, injunction, license, approval,
authorization, franchise or permit of any governmental body having jurisdiction
over either of Sellers or Company or their respective properties.
(b) Except as described in Section 4.5(b) of the Disclosure
Schedule, (i) Company has not at any time since July 1, 1990, directly or
indirectly, purchased, leased or otherwise acquired any property or obtained any
services from, or sold, leased or otherwise disposed of any property or
furnished any services to (except in each case with respect to remuneration for
services rendered as a director, officer or employee of Company), in the
ordinary course of business or otherwise, either Seller, any member of the
immediate family of either Seller or any other Person (other than Company) that,
directly or indirectly, alone or together with others, controls, is controlled
by or is under common control with Company or either Seller or any member of the
immediate family of either Seller (the Persons listed in this clause (i) being
referred to herein collectively as "Affiliated Persons" and individually as an
"Affiliated Person"); (ii) Company does not owe any amount to any Affiliated
Person; and (iii) no Affiliated Person owes any amount to Company and no part of
the property or assets of any Affiliated Person is used by Company in the
conduct or operation of its business, except for the property referred to in
Section 4.5(b)(i).
4.6 Financial Statements; Undisclosed Liabilities;
Receivables; Supplies.
(a) The Financial Statements, complete and correct copies of
which have been delivered to Buyer, fairly present the financial condition of
Company as at their respective dates and the results of operations and cash
flows of Company for the periods covered thereby. The Financial Statements have
been prepared from the books and records of Company in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby.
(b) Except as and to the extent reflected or reserved against
on the Interim Balance Sheet or as set forth in Section 4.6(b) of the Disclosure
Schedule, as of the date of the Interim Balance Sheet, Company had no
liabilities, debts or obligations (whether absolute, accrued, contingent or
otherwise) of any nature that would be required as of such date to have been
included on a balance sheet prepared in accordance with GAAP. Since the date of
the Interim Balance Sheet, Company has incurred no expenditures, debts or
obligations (whether absolute, accrued, contingent or otherwise) except as set
forth in Section 4.9(b) of the Disclosure Schedule, and there has been no
material adverse change in the business, operations, assets, condition
(financial or otherwise), liabilities, results of operations or prospects of
Company, and no event has occurred which is reasonably likely to result in a
Material Adverse Effect.
(c) Except as set forth in Section 4.6(c) of the Disclosure
Schedule, all receivables of Company (including accounts receivable, loans
receivable and advances) which are reflected on the Interim Balance Sheet, and
all such receivables which arise thereafter and prior to the Closing, have
arisen or will have arisen only from bona fide transactions in the ordinary
course of business and such receivables (i) shall be fully collectible at the
aggregate recorded amounts thereof (except to the extent of appropriate reserves
therefor
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established in accordance with GAAP), and (ii) are not and will not be subject
to defense, counterclaim or offset.
(d) All items of supplies and other consumables reflected on
the Interim Balance Sheet, and all such items of supplies and other consumables
that are acquired thereafter and prior to the Closing, are or will be useable in
the ordinary course of business. Company has and will through the Closing
maintain a sufficient but not an excessive quantity of each type of such
supplies and other consumables in order to meet the normal requirements of its
business and operations.
4.7 Taxes.
(a) Company has timely filed with the appropriate taxing
authorities all returns and reports in respect of Taxes ("Returns") required to
be filed by it (taking into account any extension of time to file). The
information on such Returns is complete and accurate in all respects. Company
has paid on a timely basis all Taxes (whether or not shown on any Return) due
and payable, except for Taxes which Company, in good faith, represents are not
due and payable because they are being diligently contested by appropriate
proceedings and for which the Company has set aside on its books reserves to the
extent required by GAAP; there are no such Taxes being contested at the date of
this Agreement and such Taxes shall not aggregate in excess of $10,000. There
are no liens for Taxes (other than for current Taxes not yet due and payable)
upon the assets of Company.
(b) No unpaid (or unreserved in accordance with GAAP)
deficiencies for Taxes have been claimed, proposed or assessed by any taxing or
other governmental authority with respect to Company for any Pre-Closing Period,
and there are no pending or threatened audits, investigations or claims or
issued and outstanding assessments for or relating to any liability in respect
of Taxes of Company. Company has not requested any extension of time within
which to file any currently unfiled returns in respect of any Taxes and no
extension of a statute of limitations relating to any Taxes is in effect with
respect to Company. All taxation years of Company up to and including [November
30, 1991] are considered closed by Canadian federal and provincial tax
authorities for purposes of all Taxes.
(c) (i) Company has made or will make provision for all Taxes
payable by it with respect to any Pre-Closing Period which are not payable prior
to the Closing Date; (ii) the provisions for Taxes with respect to Company for
the Pre-Closing Period (excluding any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) are adequate to cover
all Taxes with respect to such period; (iii) Company has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, shareholder or other
third party; (iv) all material elections with respect to Taxes affecting Company
as of the date hereof are set forth in Section 4.7(c)(iv) of the Disclosure
Schedule; (v) Company has no net capital losses, non-capital losses or other
loss carryovers, tax credits or other favorable tax attributes; (vi) there are
no advance tax rulings in respect of any Tax pending between Company and any
taxing authority; (vii) Company does not own any interest in real
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property in the State of New York; (viii) the taxation year end for Company is
[November 30th] and Company has never been a member of an affiliated group or
filed or been included in a combined, consolidated or unitary return of any
Person; (ix) Company is not currently under any contractual obligation to
indemnify any Person with respect to Taxes or is a party to any tax sharing
agreement or any other agreement providing for payments by Company with respect
to Taxes; (x) Company has not made an election pursuant to Section 897(i) of the
United States Internal Revenue Code of 1986, as amended (the "Code"), to be
treated as a domestic corporation; (xi) Company is not a party to any joint
venture, partnership or other arrangement or contract which could be treated as
a partnership for United States or Canadian income tax purposes; (xii) Company
has not entered into any sale leaseback or any leveraged lease transaction that
fails to satisfy the requirements of U.S. Revenue Procedure 75-21 (or similar
provisions of foreign law); (xiii) Company, as of the Closing Date, will not be
required, as a result of a change in method of accounting for any portion of the
Pre-Closing Period, to include any adjustment under Section 481 of the Code (or
any corresponding provision of foreign law) in taxable income for any period
after the Closing Date; (xiv) Company is not a party to any agreement, contract,
arrangement or plan that would result after the Closing (taking into account the
transactions contemplated by this Agreement), separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code; and (xv) the Disclosure Schedule contains a list of all
jurisdictions to which any Tax is properly payable by Company.
4.8 Title to Properties; Absence of Encumbrances.
(a) The Disclosure Schedule contains a complete and accurate
list by address of all real property owned, leased or used by Company,
indicating the nature of Company's interest therein. No condemnation,
expropriation, eminent domain or similar proceeding affecting all or any
material portion of any such real property is pending or, to the best knowledge
of Sellers or Company, threatened.
(b) Except as set forth in Section 4.8(b) of the Disclosure
Schedule, Company has good title to all of the material properties and assets,
real and personal, tangible and intangible, it owns or purports to own,
including the Equipment and those properties and assets reflected on its books
and records and on the Interim Balance Sheet (except for supplies and other
consumables utilized in the ordinary course of business and accounts receivable
collected after the date of the Interim Balance Sheet), free and clear of all
Encumbrances, except for Permitted Encumbrances. The Company has a valid
leasehold, license or other interest in all of the other material assets, real
or personal, tangible or intangible, which are used in the operation of its
business, free and clear of all Encumbrances, except for Permitted Encumbrances.
(c) "Permitted Encumbrances" means: (i) liens for Taxes not
yet due and payable or which are being diligently contested in good faith by
appropriate proceedings and as to which appropriate reserves (to the extent
required by GAAP) have been established in Company's books and records; (ii)
mechanics', materialmen's, carriers', warehousemen's, landlord's and similar
liens securing obligations not yet delinquent or which are being
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diligently contested in good faith by appropriate proceedings and as to which
appropriate reserves (to the extent required by GAAP) have been established in
Company's books and records; (iii) such imperfections of title, easements,
encroachments and Encumbrances as do not detract from the value or interfere
with the present use of the properties or assets subject thereto or affected
thereby; (iv) Encumbrances on personal property taken by or granted to a Person
who, by making advances or incurring an obligation gives value to enable Company
to acquire rights in or the use of such property, provided that the Encumbrance
does not extend to or cover any other property and the total cost to Company
that would be required to discharge such Encumbrance in full does not exceed the
value so given by such Person to Company; (v) Encumbrances, if any, noted in the
Financial Statements. None of such property leased by Company is subject to any
sublease, sublicense or other agreement granting to any other Person any right
to the use, occupancy or enjoyment of such property or any portion thereof.
(d) Except for the Equipment, Company does not own or lease
any property or assets, conduct any operation, carry on any business or provide
any services in the United States.
4.9 Intellectual Property.
(a) The Disclosure Schedule contains a complete and accurate
list and brief description of all patents and patent applications, all
registrations and applications for registration of trademarks, trade names,
business names, brand names, service marks, copyrights and common-law trademarks
owned or used by Company.
(b) All Intellectual Property used by Company in the operation
of its business is either (i) owned by Company free and clear of all
Encumbrances, other than Permitted Encumbrances, or (ii) subject to a right of
use by Company pursuant to a license or other agreement. No third party has been
granted by Company the right to use any Intellectual Property owned or used by
Company. To the best knowledge of Sellers or Company, no third party is
infringing upon or misappropriating any Intellectual Property used by Company in
the operation of its business and no activity in which Company is engaged
violates or infringes upon any intellectual property or other proprietary rights
of any third party. There is no legal action by any Person pending or, to the
best knowledge of Sellers or Company, threatened against Company with respect to
such matters, and no written claim with respect to such matters has been
received by Company since July 1, 1990.
4.10 Contracts and Agreements.
(a) Set forth in the Disclosure Schedule is a true and
complete list of each of the following contracts and agreements to which Company
is a party or by which Company or its properties are bound:
(i) each agreement providing for compensation in respect of
services performed by employees of Company;
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(ii) each management, service, consulting, retainer or other
similar type of agreement under which services are provided by any
other Person to Company;
(iii) each agreement that restricts the operation of the
business of Company as presently conducted and each agreement that
restricts the ability of Company to solicit customers or employees;
(iv) each agreement with an Affiliated Person;
(v) each operating lease (as lessor, lessee, sublessor or
sublessee) of any real property;
(vi) each operating lease (as lessor, lessee, sublessor or
sublessee) of any tangible personal property (except for leases calling
for payments of less than $10,000 per year and having a term of less
than two (2) years);
(vii) each license (as licensor, licensee, sublicensor or
sublicensee) of any Intellectual Property (other than customary,
non-negotiated licenses of computer software);
(viii) each agreement under which services are provided by
Company to any customer;
(ix) each written agreement for the purchase of supplies or
products which calls for performance by Company over a period of more
than two (2) months or with respect to which there exists an aggregate
future liability of Company in excess of $20,000;
(x) each agreement under which any money has been or may be
borrowed or loaned or any note, bond, indenture or other evidence of
indebtedness has been issued or assumed (other than those under which
there remain no ongoing obligations of Company), and each guaranty of
any evidence of indebtedness or other obligation, or of the net worth,
of any Person (other than endorsements for the purpose of collection in
the ordinary course of business);
(xi) each mortgage agreement, deed of trust, security
agreement, purchase money agreement, conditional sales contract or
capital lease (other than any purchase money agreement, conditional
sales contract or capital lease evidencing Encumbrances solely on
tangible personal property under which there exists an aggregate future
liability of Company not in excess of $30,000 per agreement, contract
or lease);
(xii) each partnership, joint venture or similar agreement;
(xiii) each agreement containing restrictions with respect to
the payment of dividends or other distributions in respect of Company's
capital stock;
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(xiv) each agreement to make unpaid capital expenditures in
excess of $10,000; and
(xv) each other agreement having an indefinite term or a
term of more than one (1) year (other than those that are terminable at
will or upon not more than thirty (30) days' notice by Company without
penalty) or requiring payments by Company of more than $10,000 per
year.
A complete and correct copy of each written agreement, lease, license, mortgage,
deed of trust, instrument, contract or other type of document required to be
disclosed pursuant to this Section 4.10(a) has been delivered to 3-D.
(b) Each material agreement, lease, license, mortgage, deed
of trust, instrument, contract or other type of document required to be
delivered pursuant to Section 4.10(a) to which Company is a party or by which
Company or its properties is bound (collectively, the "Contracts") is legal,
valid, binding and in full force and effect and is enforceable by Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and by general principles of equity. Except as set forth in
Section 4.10(b) of the Disclosure Schedule, Company is not (with or without the
lapse of time or the giving of notice, or both) in material breach of or in
material default under any of the Contracts, and, to the best knowledge of
Sellers or Company, no other party to any of the Contracts is (with or without
the lapse of time or the giving of notice, or both) in material breach of or in
material default under any of the Contracts.
4.11 Insurance. All insurance policies currently maintained
by Company are accurately listed and described in the Disclosure Schedule. Each
such insurance policy is in full force and effect (free from any presently
exercisable right of termination on the part of the insurance company issuing
such policy prior to the expiration of the term of such policy) and all premiums
due and payable in respect thereof have been paid. Company has not received
notice of cancellation or non-renewal of any such policy. The transactions
contemplated by this Agreement will not give rise to a right of termination of
any such policy by the insurance company issuing the same prior to the
expiration of the term of such policy.
4.12 Litigation. Except as set forth in Section 4.12 of the
Disclosure Schedule, no lawsuit, governmental investigation or legal,
administrative or arbitration action or proceeding is pending or, to the best
knowledge of Sellers or Company, threatened against either of Sellers or Company
or any director, officer or employee of Company, in his or her capacity as such,
(i) which questions the validity of this Agreement or seeks to prohibit, enjoin
or otherwise challenge the consummation of the transactions contemplated hereby,
or (ii) which, if decided adversely to such Person, is reasonably likely to
result in a Material Adverse Effect. Company is not specifically identified as a
party subject to any restrictions or limitations under any judgment, order or
decree of any court, administrative agency or other governmental authority.
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4.13 Condition of Assets. The properties and assets, including
the Equipment and other supplies and other consumables, owned, leased or used by
Company in the operation of its business are in good operating condition and
repair, are suitable for the purposes for which they are used, are adequate and
sufficient for Company's current and reasonably foreseeable operations and are
directly related to the business of Company.
4.14 Compliance with Law. Except with respect to environmental
matters, which are covered by Section 4.17, (a) Company is in compliance in all
material respects with all applicable laws, statutes, rules, ordinances,
regulations, orders and decrees governing the operation of its business and all
of its governmental licenses, approvals, authorizations, franchises and permits.
Company has not received since July 1, 1990 any written notice of any violation
of any such law, statute, rule, ordinance, regulation, order, decree, license,
approval, authorization, franchise or permit. No written claim has been made or
legal action commenced against Company since July 1, 1990 that alleges any
violation of any laws, regulations or contract provisions relating to the
pricing of contracts with the Canadian or United States federal government or
any provincial, state or local government, or any agency of any thereof. Company
has not engaged in any fraudulent practices in connection with any bid or
contract for services to be performed for any governmental entity.
(b) Except with respect to environmental matters, which are
covered by Section 4.17, Company has all governmental licenses, approvals,
authorizations, franchises and permits necessary to conduct its business as
currently conducted; such governmental licenses, approvals, authorizations,
franchises and permits are in full force and effect; and no proceeding is
pending or, to the best knowledge of Sellers or Company, threatened seeking the
revocation or limitation of any such governmental license, approval,
authorization, franchise or permit. All governmental licenses, approvals,
authorizations, franchises and permits necessary for the ownership or operation
of its properties or assets, the provision of its services or the conduct of its
business by Company are listed in Section 4.14(b) of the Disclosure Schedule.
4.15 Employees.
(a) Other than DS and PS, Company has as of the date hereof
no employees.
(b) Company is in compliance in all material respects with
all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours.
(c) Company is not engaged in any unfair labor practice.
(d) No collective bargaining agreement with respect to the
business of Company is currently in effect or being negotiated. Company has no
obligation to negotiate any such collective bargaining agreement, and, to the
best knowledge of Sellers or Company,
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there is no indication that the employees of Company desire to be covered by a
collective bargaining agreement.
(e) There are no strikes, slowdowns or work stoppages pending
or, to the best knowledge of Sellers or Company, threatened with respect to the
employees of Company, nor has any such strike, slowdown or work stoppage
occurred or, to the best knowledge of Sellers or Company, been threatened since
July 1, 1990.
(f) Since July 1, 1990, Company has received no notice of the
intent of any government, body or agency responsible for the enforcement of
labor or employment laws to conduct an investigation of Company, and, to the
best knowledge of Sellers or Company, no such investigation is in progress.
(g) No notice has been received by Company of any complaint
filed by any of the employees against Company claiming that Company has violated
any applicable employment standards or human rights legislation or any
complaints or proceedings of any kind involving Company or, to the best
knowledge of Sellers or Company, any of the employees of Company before any
labor relations board. There are no outstanding orders or charges against
Company under any occupational health or safety legislation. All levies,
assessments and penalties made against Company pursuant to all applicable
workers compensation legislation have been paid by Company and Company has never
been reassessed under any such legislation.
4.16 Employee Benefit Plans.
(a) Section 4.16 of the Disclosure Schedule identifies each
retirement, pension, bonus, stock purchase, profit sharing, stock option,
deferred compensation, severance or termination pay, insurance, medical,
hospital, dental, vision care, drug, sick leave, disability, salary
contributions, legal benefits, unemployment benefits, vacation, incentive or
other compensation plan or arrangement or other employee benefit that is
maintained or otherwise contributed to, or required to be contributed to, by
Company for the benefit of employees or former employees of Company (the
"Employee Benefit Plans") and a true and complete copy of each Employee Benefit
Plan has been furnished to Buyer. Each Employee Benefit Plan has been maintained
in compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations that are applicable to such Employee
Benefit Plan. Sellers have delivered to Buyer the actuarial valuations, if any,
prepared for each Employee Benefit Plan. Except as described in Section 4.16 of
the Disclosure Schedule:
(i) all contributions to, and payments from, each Employee
Benefit Plan that may have been required to be made in accordance with
the terms of any such Employee Benefit Plan, or with the recommendation
of the actuary for such Employee Benefit Plan, and, where applicable,
the laws of the jurisdictions that govern such Employee Benefit Plan,
have been made in a timely manner;
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(ii) all material reports, returns and similar documents
(including applications for approval of contributions) with respect to
any Employee Benefit Plan required to be filed with any governmental
agency or distributed to any Employee Benefit Plan participant have
been duly filed on a timely basis or distributed;
(iii) there are no pending investigations by any governmental
or regulatory agency or authority involving or relating to an Employee
Benefit Plan, no threatened or pending claims (except for claims for
benefits payable in the normal operation of the Employee Benefit
Plans), suits or proceedings against any Employee Benefit Plan or
asserting any rights or claims to benefits under any Employee Benefit
Plan that could give rise to a liability nor, to the best knowledge of
Sellers or Company, are there any facts that could give rise to any
liability in the event of such investigation, claim, suit or
proceeding;
(iv) no notice has been received by either Seller or Company
of any complaints or other proceedings of any kind involving Company
or, to the best knowledge of Sellers or Company, any of the employees
of Company before any pension board or committee relating to any
Employee Benefit Plan or to Company; and
(v) the assets of each Employee Benefit Plan are at least
equal to the liabilities of such Employee Benefit Plan based on the
actuarial assumptions utilized in the most recent valuation performed
by the actuary for such Employee Benefit Plan, and neither 3-D, Buyer
nor any of their respective affiliates (other than Company) will incur
any liability with respect to any Employee Benefit Plan as a result of
the transactions contemplated by this Agreement.
(b) The Disclosure Schedule also sets forth a summary, in
reasonable detail, of the Employee Benefit Plans that cover the employees of
Company.
4.17 Environmental Matters.
(a) Company has all Environmental Permits that are required
for the lawful operation of its business, and all Environmental Permits
possessed by Company are listed in Section 4.17(a) of the Disclosure Schedule.
Each such Environmental Permit is valid, subsisting and in good standing and
Company is not in default or in breach of any such Environmental Permit and no
proceeding is pending or threatened and no grounds exist to revoke or limit any
such Environmental Permit. Company (i) is in compliance with all terms and
conditions of its Environmental Permits and is in compliance with and not in
default under any applicable Environmental Law, and (ii) has not received since
July 1, 1990 written notice of any violation by or claim under any Environmental
Law.
(b) There have been no Releases by Company of any Hazardous
Substances (i) into, on, around, from or under any of the properties or assets
owned or operated (or formerly owned or operated) by Company, or (ii) into, on,
around, from or under any other properties, including landfills, in which
Hazardous Substances have been Released or
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properties on or under which Company has performed services, in any case in such
a way as to create any material unpaid liability (including the costs of
required remediation) of Company under any applicable Environmental Law.
(c) No property has been used at any time by Company as a
"landfill" or as a treatment, storage or disposal facility for any Hazardous
Substance.
(d) Company has never received any notice of, or has been
prosecuted for, non-compliance with any Environmental Law nor has Company
settled any allegation of non-compliance prior to prosecution. There are no
notices, orders or directions relating to environmental matters requiring, or
notifying Company that it is or may be responsible for, any containment,
clean-up or remediation or corrective action of any work, repairs, construction
or capital expenditures to be made under any Environmental Law with respect to
the business of Company or any of the properties or assets owned, operated or
occupied (or formerly owned, operated or occupied) by Company.
(e) There are no Hazardous Substances located at, on or under
any of the properties or assets owned, operated or occupied (or formerly owned,
operated or occupied) by Company except those being used, stored and handled in
compliance with Environmental Laws.
(f) Sellers have delivered to Buyer true and complete copies
of all environmental audits, evaluations, assessments, studies and tests
relating to the business or the properties or assets of Company or their use
which are or with reasonable effort could be within the possession or control of
either Seller.
(g) There is no asbestos or asbestos-containing material or
PCBs contained in any of the buildings or structures owned or leased by Company,
except for asbestos or asbestos-containing material the present form, amount and
location of which does not create any unpaid material liability (including the
costs of required remediation) of Company under any applicable Environmental Law
(regardless of whether subsequent occurrences could expose or change the form or
location of, or cause the Release of, such substances). No written claims have
been made, and no suits or proceedings are pending or threatened, by any
employee against Company that are premised on exposure to asbestos or
asbestos-containing material or PCBs.
(h) No underground storage tanks, abandoned xxxxx or landfills
are or have been located on any real property owned, operated or occupied by
Company.
(i) For purposes of this Agreement, the capitalized terms
defined below shall have the meanings ascribed to them below.
(i) "Environment" means all air, surface water,
groundwater, drinking water or land, including land surface or
subsurface.
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(ii) "Environmental Laws" means any and all federal,
provincial, municipal or local laws, statutes, ordinances, by-laws and
regulations, and orders, directives and decisions rendered by, and
policies, instructions, guidelines and similar guidance of, any
ministry, department or administrative or regulatory agency relating to
the protection of the Environment, occupational health and safety or
the manufacture, processing, distribution, use, treatment, storage,
disposal, discharge, packaging, transport, handling, containment,
clean-up or other remediation or corrective action of any Hazardous
Substances.
(iii) "Environmental Permits" means all approvals, consents,
permits, licenses, registrations, certificates and other authorizations
required by any applicable Environmental Law relating to: (A) pollution
or the protection of the Environment, occupational health or safety,
including without limitation those relating to the emission, Release or
discharge of any Hazardous Substances into the Environment, (B) the
manufacture, processing, distribution, use, treatment, storage,
disposal, generation, packaging, transport or handling of Hazardous
Substances, or (C) the containment, cleanup or other remediation of
Hazardous Substances from any real property.
(iv) "Hazardous Substance(s)" means, without limitation, any
flammable explosives, radioactive materials, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products
(including but not limited to waste petroleum and petroleum products),
methane, hazardous materials, hazardous wastes, pollutants,
contaminants, chemicals and hazardous, industrial or toxic substances
or wastes.
(v) "Release" means any past or present spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of a Hazardous Substance into the
Environment.
4.18 Powers of Attorney. There are no outstanding powers of
attorney to act in the place and stead of Company.
4.19 Officers and Directors. Section 4.19 of the Disclosure
Schedule sets forth all of the officers and directors of Company and, with
respect to each such officer, all offices held by such Person.
4.20 Bank Accounts. Section 4.20 of the Disclosure Schedule
sets forth the name of each bank in which Company has an account, lock box or
safe deposit box, the number of each such account, lock box and safe deposit
box, and the names of all Persons authorized to draw thereon or have access
thereto.
4.21 Absence of Certain Changes. Since November 30, 1995,
Company has operated its business in the ordinary course consistent with past
practice. Without limiting the generality of the immediately preceding sentence,
since that date, Company has not:
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(i) amended or otherwise modified its constating documents or
by- laws (or similar organizational documents);
(ii) issued or sold or authorized for issuance or sale, or
granted any options or made other agreements of the type referred to in
Section 4.2(e) with respect to, any shares of its capital stock or any
other of its securities, or altered any term of any of its outstanding
securities or made any change in its outstanding shares of capital
stock or other ownership interests or its capitalization, whether by
reason of a reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, stock dividend or
otherwise;
(iii) except as disclosed in Section 4.21 of the Disclosure
Schedule, mortgaged, pledged or granted any security interest in any of
its assets, except security interests solely in tangible personal
property granted pursuant to any purchase money agreement, conditional
sales contract or capital lease under which there exists an aggregate
future liability not in excess of $30,000 per agreement, contract or
lease (which amount was not more than the purchase price for such
personal property and which security interest does not extend to any
other item or items of personal property);
(iv) declared, set aside, made or paid any dividend or other
distribution to any shareholder with respect to its capital stock;
(v) redeemed, purchased or otherwise acquired, directly or
indirectly, any capital stock;
(vi) increased the compensation of any of its employees;
(vii) adopted or (except as otherwise required by law) amended
any Employee Benefit Plan or entered into any collective bargaining
agreement;
(viii) terminated or modified any Contract, or received any
written notice of termination of any Contract, except for terminations
of Contracts upon their expiration during such period in accordance
with their terms and terminations or modifications that have not had
and are not reasonably likely to result in a Material Adverse Effect;
(ix) incurred or assumed any indebtedness for borrowed money
or guaranteed any obligation or the net worth of any Person, except for
endorsements of negotiable instruments for collection in the ordinary
course of business;
(x) discharged or satisfied any Encumbrance other than those
then required to be discharged or satisfied in accordance with their
original terms;
(xi) paid any material obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except
for any current
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liabilities, and the current portion of any long term liabilities,
shown on the Financial Statements or the Interim Balance Sheet (or not
required as of the date thereof to be shown thereon in accordance with
GAAP) or incurred since the date of the Interim Balance Sheet in the
ordinary course of business consistent with past practice;
(xii) sold, transferred, leased to others or otherwise
disposed of any material asset except in the ordinary course of
business consistent with past practice;
(xiii) cancelled or compromised any material debt or claim;
(xiv) suffered any damage or destruction to or loss of any of
its tangible assets (whether or not covered by insurance) which has had
or is reasonably likely to result in a Material Adverse Effect;
(xv) lost the employment services of any key employee;
(xvi) made any loan or advance to any Person other than travel
and other similar routine advances in the ordinary course of business
consistent with past practice, or acquired any capital stock or other
securities of any other corporation or any ownership interest in any
other business enterprise;
(xvii) made any capital expenditures or capital additions or
betterments in amounts which exceeded $50,000 in the aggregate, except
as contemplated in capital budgets in effect on the date of this
Agreement;
(xviii) changed its method of accounting or the accounting
principles or practices utilized in the preparation of the Financial
Statements, other than as required by GAAP;
(xix) instituted or settled any litigation or any legal,
administrative or arbitration action or proceeding before any court or
governmental body relating to it or its property;
(xx) suffered any incident or event which, individually or in
the aggregate, has had or is reasonably likely to result in a Material
Adverse Effect;
(xxi) committed to provide services for an indefinite period
or a period of more than two (2) months; or
(xxii) entered into any commitment to do any of the foregoing.
4.22 Books and Records. All accounts, books, ledgers and
official and other records prepared and kept by Company have been truthfully and
properly kept and completed in all respects, and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein.
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4.23 Absence of Certain Business Practices. Neither Company
nor any of its officers, employees or authorized agents, or any other Person
acting on behalf of any of them has, directly or indirectly, since July 1, 1990,
given or agreed to give any gift or similar benefit to any governmental
employee, domestic or foreign, who is or may be in a position to help or hinder
the business of Company (or assist it in connection with any actual or proposed
transaction) which could (i) subject Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, domestic or foreign,
or (ii) if not continued in the future, result in a Material Adverse Effect.
4.24 Customer Relationships. Company's major customers in the
first nine months of 1996 and in 1995, 1994 and 1993 are listed on Exhibit G
(collectively, the "Major Customers"). Company has no reason to believe that its
relations with the Major Customers will be reduced in the future.
4.25 No Broker or Finder. No broker or finder has been engaged
by either Seller or Company in connection with the transactions contemplated by
this Agreement, and no commission, finder's fees or other similar compensation
or remuneration is payable to any Person as a result of either Seller's or
Company's actions in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
4.26 Securities Laws.
(a) Each Seller understands that (i) the Buyer's Shares he or
she may acquire pursuant to this Agreement and the Parent Common Stock he or she
may acquire in accordance with the share provisions attaching to the Buyer's
Shares or in accordance with the provisions of the Share Exchange Agreement will
not be registered under the Act and may not be sold or otherwise disposed of
unless they are so registered or are sold or otherwise disposed of in a
transaction that is exempt from such registration, (ii) such securities may have
to be held for at least two years before any of them may be sold and at least
three years before they may be sold without significant restrictions, and (iii)
the certificates representing such Buyer's Shares and such shares of Parent
Common Stock will bear legends identical with or similar to the following:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
REGISTRATION (OR IN COMPLIANCE WITH AN EXEMPTION FROM SUCH REGISTRATION) UNDER
SUCH ACT AND SUCH APPLICABLE STATE SECURITIES LAWS."
(b) Each Seller acknowledges that (i) he or she has received
and read carefully the Registration Statement, including 3-D's preliminary
prospectus dated October 8, 1996 forming a part thereof that describes 3-D, the
Parent Common Stock and containing certain other relevant information (the
"Prospectus"); (ii) he or she has been given the opportunity to ask questions of
and obtain relevant documents from 3-D concerning 3-D and
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Buyer; and (iii) all of their questions and requests for information and
documents have been answered to such Seller's complete satisfaction.
(c) Each Seller has evaluated the merits and risks of an
investment in the Buyer's Shares to be issued at the Closing hereunder and the
shares of Parent Common Stock issuable in accordance with the share provisions
attaching to the Buyer's Shares or in accordance with the provisions of the
Share Exchange Agreement, and has affirmatively decided to make such investment
based solely on such evaluation, the representations, warranties and covenants
of 3-D and Buyer contained in this Agreement (or in any schedule, certificate or
other document delivered by 3-D or Buyer pursuant hereto) and the information
contained in the Prospectus and Registration Statement.
(d) Sellers are not affiliated, directly or indirectly, with a
member broker-dealer firm of the National Association of Securities Dealers,
Inc. ("NASD") as employees, officers, directors, partners or shareholders or as
relatives or members of the same household of an employee, director, partner or
shareholder of an NASD member broker-dealer firm.
(e) Any Buyer's Shares a Seller acquires pursuant to this
Agreement and any shares of Parent Common Stock a Seller acquires in accordance
with the share provisions attaching to the Buyer's Shares or in accordance with
the provisions of the Share Exchange Agreement will be for his or her own
account for investment and not with any view to the distribution thereof, and no
Seller will sell, assign, transfer or otherwise dispose of any of such
securities, or any interest therein, in violation of the registration
requirements of the Act, or the state securities or blue sky law of any State of
the United States, or in violation of the prospectus or registration
requirements of the securities legislation of any province or territory of
Canada, and no Seller has any present plan or intention to sell, exchange or
otherwise dispose of any of such securities, or any interest therein, in
violation of such registration requirements.
(f) Sellers acknowledge to 3-D and Buyer that Xxxxxxx Xxxxx,
an independent firm of chartered accountants, is acting on behalf of Sellers as
Seller's representative in connection with evaluating the merits and risks of
the Sellers receiving Buyer's Shares and Parent Common Stock pursuant hereto.
Sellers also acknowledge that 3-D and Buyer will rely on this acknowledgement in
establishing that the transactions contemplated by this Agreement are exempt
from the registration requirements of the Act.
4.27 Disclosure Schedule. Each of the statements contained in
the Disclosure Schedule is true and complete.
4.28 Residency. Each Seller is a resident of Canada for
purposes of the Income Tax Act (Canada). PS is a citizen of Canada and DS is a
citizen of the United States and Canada.
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ARTICLE V
Representations and Warranties of 3-D and Buyer
3-D and Buyer each represents and warrants to Sellers as follows:
5.1 Organization and Good Standing. 3-D is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to enter into and carry out
its obligations under this Agreement, the Support Agreement and the Share
Exchange Agreement. Buyer is a corporation duly organized, validly existing and
in good standing under the laws of Canada and has full corporate power and
authority to enter into and carry out its obligations under this Agreement, the
Escrow Agreement, the Support Agreement and the Share Exchange Agreement.
5.2 Capitalization. As of the date of this Agreement, 3-D's
authorized capital stock consists solely of 25,000,000 shares of Common Stock,
par value $.01 per share ("Common Stock"), of which 7,600,000 shares are issued
and outstanding, and 1,000,000 shares of preferred stock, par value $.01 per
share, issuable in series, of which none is issued and outstanding. Buyer's
authorized capital stock consists solely of an unlimited number of common
shares, of which 100 shares are issued and outstanding and owned by 3-D. All of
the issued and outstanding common shares of Buyer and all of the issued and
outstanding shares of Parent Common Stock have been duly authorized and are
validly issued and outstanding, fully paid and non-assessable. At or prior to
the Closing, Buyer shall amend its share capital to create a new class of
exchangeable non-voting shares having substantially the rights, privileges,
restrictions and conditions set forth on Exhibit A attached hereto so that
Buyer's authorized capital stock at the Closing shall be an unlimited number of
common shares and an unlimited number of exchangeable non-voting shares. At the
Closing, Buyer shall issue the Buyer's Shares to Sellers pursuant to Section
2.1.
5.3 Ownership of Shares. All of the Buyer's Shares issuable by
Buyer pursuant to Section 2.1 shall be, upon issuance, (a) duly authorized,
validly issued, fully paid and non-assessable, and (b) free and clear of all
Encumbrances placed thereon by Buyer (other than any Encumbrances arising under
this Agreement), and shall have substantially the rights, privileges,
restrictions and conditions described in Exhibit A attached hereto. All shares
of Parent Common Stock issuable in accordance with the share provisions of
Buyer's Shares shall be, upon issuance in accordance with the share provisions
of Buyer's Shares, (a) duly authorized, validly issued, fully paid and
non-assessable, and (b) free and clear of all Encumbrances placed thereon by 3-D
or Buyer (other than any Encumbrances arising under this Agreement).
5.4 Authorization. The execution and delivery of this
Agreement, the Support Agreement and the Share Exchange Agreement by 3-D and by
Buyer have been duly authorized by all necessary corporate action required on
the part of 3-D and Buyer. This Agreement has been duly executed and delivered
by 3-D and Buyer and constitutes a legal, valid and binding obligation of 3-D
and Buyer, enforceable against 3-D and Buyer in
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accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other laws affecting the rights
of creditors generally and by general principles of equity. At the Closing, 3-D
and Buyer will duly execute and deliver the Support Agreement and the Share
Exchange Agreement and each such agreement will constitute a legal, valid and
binding obligation of 3-D and Buyer, enforceable against 3-D and Buyer in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other laws affecting the rights
of creditors generally and by general principles of equity. At the Closing, the
Employment Agreement shall be duly executed and delivered by J.R.S. and will
constitute a legal, valid and binding obligation of J.R.S., enforceable against
J.R.S. in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or other laws affecting
the rights of creditors generally and by general principles of equity.
5.5 No Conflicts. Neither the execution and delivery by 3-D or
Buyer of this Agreement, the Support Agreement or the Share Exchange Agreement
nor the consummation by 3-D or Buyer of the transactions contemplated hereby or
thereby will (i) conflict with or violate the certificate of incorporation or
by-laws (or other organizational document) of 3-D or Buyer, or (ii) conflict
with, violate, result in the breach of any term of, constitute a default under
or require the consent of or any notice to or filing with any Person under, any
note, mortgage, deed of trust or other agreement or instrument to which 3-D or
Buyer is a party or by which 3-D or Buyer is bound, or any law, order, rule,
regulation, decree, writ or injunction of any governmental body having
jurisdiction over 3-D or Buyer or their respective properties (except where such
conflict, violation, breach or default, or the failure to obtain such consent,
give such notice or make such filing, would not impair the ability of 3-D or
Buyer to consummate the transactions contemplated hereby), except for any
filings with, and exemption orders required to be obtained from, the applicable
provincial securities regulatory authorities in connection with the issuance of
either Buyer's Shares or Parent Common Stock to either Seller.
5.6 Financial Condition; Etc. 3-D has delivered to each Seller
a true, correct and complete copy of the Registration Statement, including the
Prospectus. The financial statements of 3-D contained in the Prospectus, as
described therein, fairly present the financial condition of 3-D as of their
respective dates and the results of operations and cash flows of 3-D for the
periods covered thereby. Such financial statements have been prepared from the
books and records of 3-D and its subsidiaries in accordance with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby. Since June 30, 1996, there has been no
material adverse change in the business or financial condition of 3-D and its
subsidiaries, taken as a whole. As of its date, the Registration Statement,
including the Prospectus, complied as to form in all material respects with all
applicable requirements of the Act and the rules and regulations of the SEC
thereunder, and the Prospectus did not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Buyer was incorporated on November 27, 1996, has conducted no
business or operations and has no material assets or liabilities. Each amendment
or supplement to the Registration Statement and Prospectus delivered to Sellers
pursuant to Section 7.3 will, as of its respective date, comply as to form
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in all material respects with all applicable requirements of the Act and the
rules and regulations of the SEC thereunder, and no amended or supplemented
prospectus included therein will include an untrue statement of a material fact
or will omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5.7 Litigation. No lawsuit, governmental investigation or
legal, administrative or arbitration action or proceeding is pending or, to the
best knowledge of 3-D or Buyer, threatened against 3-D or Buyer, or any
director, officer or employee of 3-D or Buyer
5.8 No Broker or Finder. No broker or finder has been engaged
by 3-D or Buyer in connection with the transactions contemplated by this
Agreement, and no commission, finder's fees or other similar compensation or
remuneration is payable to any Person as a result of 3-D's or Buyer's actions in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for remuneration that will be
paid by 3-D.
ARTICLE VI
Covenants of Sellers
Sellers, jointly and severally, hereby covenant and agree as
follows:
6.1 Normal Course. From the date hereof until the Closing,
Company will: (i) maintain its corporate existence in good standing; (ii)
maintain or cause to be maintained the Equipment in good operation and repair
and maintain the general character of its business; (iii) use all reasonable
efforts to maintain in effect all of its presently existing insurance coverage
(or substantially equivalent insurance coverage), preserve its business
organization substantially intact, keep the services of its present principal
employees and preserve its present business relationships with its material
suppliers and customers; (iv) permit 3-D, its accountants, its legal counsel and
its other representatives full access to its management, minute books, share
certificate book and stock transfer records, books of account, accounting
records and other books and records, contracts, agreements, properties and
operations at all reasonable times and upon reasonable notice; and (v) in all
respects conduct its business in the usual and ordinary manner consistent with
past practice and perform in all material respects all agreements or other
obligations with banks, customers, suppliers, employees and others.
6.2 Negative Covenants. From the date of this Agreement until
the Closing, Company will not (without the prior written consent of 3-D) (i)
take any action or suffer any situation to exist that would be required to be
disclosed pursuant to Section 4.21
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had such action been taken or such situation existed between November 30, 1995
and the date of this Agreement, or (ii) make any election with respect to Taxes.
6.3 Certain Filings. Each Seller agrees to make or cause to be
made all filings with regulatory authorities that are required to be made,
respectively, by either Seller or by Company to carry out the transactions
contemplated by this Agreement. Each Seller agrees to assist and to cause
Company to assist 3-D and Buyer in making all such filings, applications and
notices as may be necessary or desirable in order to obtain the authorization,
approval or consent of any governmental entity which may be reasonably required
or which 3-D or Buyer may reasonably request in connection with the consummation
of the transactions contemplated hereby including, without limitation, as may be
required under the Investment Canada Act, the Competition Act (Canada) and any
applicable Canadian securities legislation.
6.4 Best Efforts to Satisfy Conditions. Each Seller agrees to
use his best efforts to satisfy the conditions set forth in Articles VIII and IX
that are within the control of such Seller. The Employee agrees to enter into
the Employment Agreement at or prior to the Closing.
6.5 Delivery of Financial Statements. Sellers shall cause
Company to deliver to Buyer at least five (5) days prior to the Closing
financial statements for the three fiscal years ended December 31, 1995
certified by independent accountants reasonably acceptable to 3-D.
6.6 Resignation of Officers and Directors. At the Closing,
Sellers shall (a) cause each of the officers and directors of Company to deliver
written resignations and general releases, (b) cause to be duly elected as
officers and directors of Company the individuals listed in Part I of Exhibit H
attached hereto, and (c) cause to be designated as authorized signatories of
Company's bank accounts the individuals listed in Part II of said Exhibit H.
6.7 Further Assurances. Each Seller agrees to execute and
deliver, and to cause Company to execute and deliver, such additional documents
and instruments, and to perform such additional acts, as 3-D or Buyer may
reasonably request to effectuate or carry out and perform all the terms,
provisions and conditions of this Agreement and the transactions contemplated
hereby and to effectuate the intent and purposes hereof and to put Buyer and 3-D
in full operating control of Company.
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ARTICLE VII
Covenants of 3-D and Buyer
3-D and Buyer hereby covenant and agree as follows:
7.1 Certain Filings. 3-D and Buyer agree to make or cause to
be made all filings with regulatory authorities that are required to be made by
3-D and Buyer or their respective affiliates to carry out the transactions
contemplated by this Agreement, the Support Agreement and the Share Exchange
Agreement.
7.2 Best Efforts to Satisfy Conditions. 3-D and Buyer agree to
use their respective best efforts to satisfy the conditions set forth in
Articles VIII and IX hereof that are within their control. Buyer shall cause
J.R.S. to enter into the Employment Agreement at the Closing.
7.3 Amendments to Registration Statement. 3-D will as promptly
as practicable after the filing thereof with the SEC provide to each Seller each
amendment or supplement to the Registration Statement and Prospectus filed by
3-D with the SEC.
7.4 Further Assurances. 3-D and Buyer agree to execute and
deliver such additional documents and instruments, and to perform such
additional acts, as Sellers may reasonably request to effectuate or carry out
and perform all the terms, provisions and conditions of this Agreement, the
Support Agreement and the Share Exchange Agreement and the transactions
contemplated hereby and thereby, and to effectuate the intent and purposes
hereof and thereof.
ARTICLE VIII
Conditions Precedent to Obligations of 3-D and Buyer
The obligations of 3-D and Buyer under Article II shall be
subject to the consummation of the Public Offering and to the satisfaction at or
prior to the Closing of the following additional conditions, any one or more of
which may be waived by 3-D and Buyer:
8.1 Representations and Warranties. Each and every
representation and warranty of Sellers contained in this Agreement, any Schedule
or any certificate delivered pursuant hereto shall be true and accurate as of
the date when made, shall be deemed repeated at the time of the Closing and
shall then be true and accurate in all material respects.
8.2 Compliance with Covenants. Sellers shall have performed
and observed in all material respects all covenants and agreements to be
performed or observed by Sellers under this Agreement at or before the Closing.
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8.3 Lack of Adverse Change. Since the date of the Interim
Balance Sheet, there shall not have occurred any incident or event which,
individually or in the aggregate, has had or is reasonably likely to result in a
Material Adverse Effect.
8.4 Update Certificate. Buyer shall have received a favorable
certificate, dated the Closing Date, signed by Sellers as to the matters set
forth in Sections 8.1, 8.2 and 8.3.
8.5 Legal Opinion. Buyer shall have received the opinion of
Beaumont Church, counsel to Sellers, dated the Closing Date, substantially in
the form attached hereto as Exhibit I.
8.6 Regulatory Approvals. All material approvals and consents
of regulatory authorities required to carry out the transactions contemplated by
this Agreement shall have been received. Without limiting the generality of the
foregoing,
(a) all necessary orders shall have been obtained from all
Canadian securities regulatory authorities in connection with the issuance by
Buyer of the Buyer's Shares and all shares of Parent Common Stock issuable in
accordance with the share provisions of the Buyer's Shares or in accordance with
the Share Exchange Agreement,
(b) all parties hereto shall have filed all such notices and
information (if any) required under the Competition Act (Canada) and the
applicable waiting periods and any extensions thereof shall have expired or the
parties shall have received an Advance Ruling Certificate pursuant thereto
setting out that the Director is satisfied he would not have sufficient grounds
on which to apply for an order under section 92 of such Act in respect of the
transactions contemplated hereby, or the Director or his representative shall
have advised the Buyer (on terms and in a form satisfactory to Buyer and 3-D)
that the Director does not currently intend to make an application under section
92 of such Act in respect of the transactions contemplated hereby and neither
the Director nor any of his representatives shall have rescinded or amended such
advice, and
(c) the transactions contemplated hereby shall have received
the allowance or approval or deemed allowance or approval by the responsible
Minister under the Investment Canada Act in respect of the transactions
contemplated hereby, to the extent such allowance or approval is required, on
terms and conditions satisfactory to Buyer and 3-D.
8.7 Consents of Third Parties to Contracts. All consents from
third parties to any Contracts or from any governmental authority with respect
to any license, approval, authorization, franchise or permit that are required
to be listed in the Disclosure Schedule in order to avoid a misrepresentation
under Section 4.5(a) shall have been obtained in writing.
8.8 No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, nor any statute, rule, regulation, decree or executive order
promulgated or enacted by any governmental or regulatory authority that declares
this Agreement invalid or unenforceable in any material
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respect or that prevents the consummation of the transactions contemplated
hereby or which imposes restrictions on 3-D's or Buyer's right or ability to
operate the business of Company shall be in effect; and no action or proceeding
before any court or regulatory authority shall have been instituted or
threatened in writing by any governmental or regulatory authority, or by any
other Person (other than 3-D, Buyer or any of their respective affiliates),
which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement or which seeks to impose restrictions on 3-D's
or Buyer's right or ability to operate the business of Company, and which in any
such case has a reasonable likelihood of success in the reasonable opinion of
counsel to 3-D.
8.9 Employment Agreement. The Employee shall have entered into
the Employment Agreement.
8.10 Acquisition of J.R.S. The acquisition of J.R.S. shall be
consummated.
8.11 Other Closing Matters. 3-D and Buyer shall have received
such other supporting information in confirmation of the representations,
warranties, covenants and agreements of Sellers and the satisfaction of the
conditions to 3-D's and Buyer's obligation to close hereunder as 3-D or Buyer or
their counsel may reasonably request.
ARTICLE IX
Conditions Precedent to Obligations of Sellers
The obligations of Sellers under Article II shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by a majority in interest of the Sellers:
9.1 Representations and Warranties. Each and every
representation and warranty of 3-D and Buyer contained in this Agreement, any
Schedule or any certificate delivered pursuant hereto shall be true and accurate
as of the date when made, shall be deemed repeated at the time of the Closing
and shall then be true and accurate in all material respects.
9.2 Compliance with Covenants. 3-D and Buyer shall have
performed and observed in all material respects all covenants and agreements to
be performed or observed by them under this Agreement at or before the Closing.
9.3 Update Certificate. Sellers shall have received a
favorable certificate, dated the Closing Date, signed by Buyer as to the matters
set forth in Sections 9.1 and 9.2.
9.4 Legal Opinion. Sellers shall have received the favorable
opinion of Kramer, Levin, Naftalis & Xxxxxxx, United States counsel to 3-D and
Buyer, dated the Closing Date, substantially in the form attached hereto as
Exhibit J-1 and of Xxxxxx, Xxxx &
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Xxxx, Canadian counsel to 3-D and Buyer, dated the Closing Date, substantially
in the form attached hereto as Exhibit J-2.
9.5 Regulatory Approvals. All material approvals and consents
of regulatory authorities required to carry out the transactions contemplated by
this Agreement, the Escrow Agreement, the Support Agreement and the Share
Exchange Agreement shall have been received.
9.6 No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, nor any statute, rule, regulation, decree or executive order
promulgated or enacted by any governmental or regulatory authority, that
declares this Agreement invalid or unenforceable in any material respect or that
prevents the consummation of the transactions contemplated hereby shall be in
effect.
9.7 Other Agreements. 3-D and Buyer shall have entered into
the Support Agreement and the Share Exchange Agreement. Buyer shall have amended
its share capital to create a new class of exchangeable non-voting shares having
substantially the rights, privileges, restrictions and conditions set forth on
Exhibit A attached hereto, and Buyer shall have issued the Buyer's Shares to
Sellers pursuant to Section 2.1. J.R.S. shall have entered into the Employment
Agreement.
ARTICLE X
Termination of Agreement
This Agreement may be terminated:
10.1 Mutual Consent. At any time prior to the Closing, by
mutual consent of 3-D, Buyer and Sellers.
10.2 Transaction Date. By 3-D, Buyer or Sellers if the Closing
shall not have been consummated by January 31, 1997 unless such failure of
consummation shall be due to a material breach of any representation or
warranty, or the nonfulfillment in a material respect, and failure to cure such
nonfulfillment, of any covenant or agreement contained herein on the part of the
party or parties seeking to terminate.
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ARTICLE XI
Indemnification
11.1 Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the parties contained in this
Agreement, any Schedule or any certificate delivered pursuant hereto shall
survive the Closing. Each party hereto shall be entitled to rely on any such
representation or warranty regardless of any inquiry or investigation made by on
behalf of such party.
11.2 Indemnification by Sellers. Sellers shall jointly and
severally indemnify and hold harmless 3-D, Buyer, Company, J.R.S. and their
respective directors, officers and employees from and against any Loss incurred
or suffered by such Person as a result of, arising from or in connection with:
(i) a breach by a Seller of any representation or warranty
made by such Seller in this Agreement or in any Schedule or certificate
delivered pursuant hereto;
(ii) a failure by a Seller to perform or comply with any
covenant or agreement on the part of such Seller contained herein,
including any covenant contained in Article VI; and
(iii) any claim by or on behalf of Xxxx Xxx Xxxxxxxxx or Xxxx
Xxx Xxxxxxxxx with respect to or arising out of the ownership,
transfer, exchange of or subscription for shares of Class B Non-Voting
Common Stock of the Company.
The amount paid pursuant to the preceding sentence shall be paid to Buyer or, at
Buyer's election, to Company and shall be the amount required to put Buyer,
Company or J.R.S., as the case may be, in the after tax position it would have
been in had such representation, warranty, covenant or agreement not been
breached. Any payment made by a Seller to Buyer under this Section 11.2 shall be
treated as a reduction in the aggregate consideration received by such Seller
from Buyer pursuant to this Agreement. Any such payment made by a Seller to
Company shall be treated as a capital contribution to Company.
11.3 Indemnification by 3-D and Buyer. 3-D and Buyer shall
jointly and severally indemnify and hold harmless each Seller from and against
any Loss incurred or suffered by such Seller as a result of, arising from or in
connection with:
(i) a breach by 3-D or Buyer of any representation or warranty
made by 3- D or Buyer in this Agreement or in any Schedule or
certificate delivered pursuant hereto or in the Support Agreement or
the Share Exchange Agreement; and
(ii) a failure by 3-D or Buyer to perform or comply with any
covenant or agreement on the part of 3-D or Buyer contained herein,
including any covenant
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contained in Article VII, or in the Support Agreement or the Share
Exchange Agreement.
11.4 Assumption of Defense. An indemnified party shall
promptly give notice to each indemnifying party after obtaining knowledge of any
matter as to which recovery may be sought against such indemnifying party
because of the indemnity set forth above, and, if such indemnity shall arise
from the claim of a third party, shall permit such indemnifying party to assume
the defense of any such claim or any litigation resulting from such claim;
provided, however, that failure promptly to give any such notice shall not
affect the indemnification provided under this Article XI except to the extent
such indemnifying party shall have been prejudiced as a result of such failure.
Notwithstanding the foregoing, an indemnifying party may not assume the defense
of any such third-party claim if it does not demonstrate to the reasonable
satisfaction of the indemnified party that it has adequate financial resources
to defend such claim and pay any and all Losses that may result therefrom, or if
the claim (i) is reasonably likely to result in imprisonment of the indemnified
party, (ii) is reasonably likely to result in a criminal penalty or fine against
the indemnified party the consequences of which would be reasonably likely to
have a material adverse effect on the indemnified party unrelated to the size of
such penalty or fine, or (iii) is reasonably likely to result in an equitable
remedy which would materially impair the indemnified party's ability to exercise
its rights under this Agreement, or impair 3-D's or Buyer's right or ability to
operate Company. If an indemnifying party assumes the defense of such third
party claim, such indemnifying party shall agree prior thereto in writing that
it is liable under this Article XI to indemnify the indemnified party in
accordance with the terms contained herein in respect of such claim, shall
conduct such defense diligently, shall have full and complete control over the
conduct of such proceeding on behalf of the indemnified party and shall, in his
or her or its sole discretion, have the right to decide all matters of
procedure, strategy, substance and settlement relating to such proceeding;
provided, however, that any counsel chosen by such indemnifying party to conduct
such defense shall be reasonably satisfactory to the indemnified party. The
indemnified party may participate in such proceeding and retain separate co-
counsel at its sole cost and expense, and the indemnifying party will not
without the written consent of the indemnified party consent to the entry of any
judgment or enter into any settlement with respect to the matter which does not
include a provision whereby the plaintiff or the claimant in the matter releases
the indemnified party from all liability with respect thereto. Failure by an
indemnifying party to notify the indemnified party of its election to defend any
such claim or action by a third party within thirty (30) days after notice
thereof shall have been given to such indemnifying party by the indemnified
party shall be deemed a waiver by such indemnifying party of its right to defend
such claim or action.
11.5 Non-Assumption of Defense. If no indemnifying party is
permitted or elects to assume the defense of any such claim by a third party or
litigation resulting therefrom, the indemnified party shall diligently defend
against such claim or litigation in such manner as it may deem appropriate and,
in such event, the indemnifying party or parties shall promptly reimburse the
indemnified party for all reasonable out-of-pocket costs and expenses, legal or
otherwise, incurred by the indemnified party and its affiliates in connection
with the defense against such claim or litigation, as such costs and expenses
are
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incurred. Any counsel chosen by such indemnified party to conduct such defense
must be reasonably satisfactory to the indemnifying party or parties, and only
one counsel shall be retained to represent all indemnified parties in an action
(except that if litigation is pending in more than one jurisdiction with respect
to an action, one such counsel may be retained in each jurisdiction in which
such litigation is pending).
11.6 Indemnified Party's Cooperation as to Proceedings. The
indemnified party will cooperate in all reasonable respects with any
indemnifying party in the conduct of any proceeding as to which such
indemnifying party assumes the defense. For the cooperation of the indemnified
party pursuant to this Section 11.6, the indemnifying party or parties shall
promptly reimburse the indemnified party for all reasonable out-of-pocket costs
and expenses, legal or otherwise, incurred by the indemnified party or its
affiliates in connection therewith, as such costs and expenses are incurred.
11.7 General Limitations on Indemnification.
(a) An indemnifying party shall not be liable to nor required
to indemnify or hold an indemnified party harmless with respect to any Loss to
the extent such Loss is recoverable under insurance policies maintained by the
indemnified party or its affiliates.
(b) If any Loss indemnified against under this Article XI
shall result (after giving effect to any differences in the timing of
recognition, payment and deductibility) in a direct or indirect Tax savings to
the indemnified party or its affiliates, then the Indemnification Obligations to
which such indemnified party shall be entitled hereunder shall be reduced by the
amount of such Tax savings.
ARTICLE XII
Miscellaneous
12.1 Expenses. Whether or not the transactions contemplated
hereby are consummated, each party hereto shall pay all costs and expenses
incurred by such party in respect of the transactions contemplated hereby.
12.2 Entirety of Agreement. This Agreement (including the
Disclosure Schedule and all other Schedules and Exhibits hereto), together with
the other documents and certificates delivered hereunder, state the entire
agreement of the parties, merge all prior negotiations, agreements and
understandings, if any, and state in full all representations, warranties,
covenants and agreements which have induced this Agreement. Each party agrees
that in dealing with third parties no contrary representations will be made.
12.3 Notices. All notices and demands of any kind which any
party hereto may be required or desire to serve upon another party under the
terms of this Agreement shall be in writing and shall be served upon such other
party: (a) by personal service upon such other party at such other party's
address set forth on the signature pages of this
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Agreement; or (b) by mailing a copy thereof by certified or registered mail,
postage prepaid, with return receipt requested, addressed to such other party at
the address of such other party set forth on the signature pages of this
Agreement; or (c) by sending a copy thereof by Federal Express or equivalent
courier service, addressed to such other party at the address of such other
party set forth on the signature pages of this Agreement; or (d) by sending a
copy thereof by facsimile to such other party at the facsimile number, if any,
of such other party set forth on the signature pages of this Agreement.
In case of service by Federal Express or equivalent courier
service or by facsimile or by personal service, such service shall be deemed
complete upon receipt. In the case of service by mail, such service shall be
deemed complete on the fifth Business Day after mailing. The addresses and
facsimile numbers to which, and persons to whose attention, notices and demands
shall be delivered or sent may be changed from time to time by notice served, as
hereinabove provided, by any party upon the other party.
12.4 Amendment. This Agreement may be modified or amended only
by an instrument in writing, duly executed by all of the parties hereto.
12.5 Nonwaiver. No waiver by any party of any term, provision,
covenant, representation or warranty contained in this Agreement (or any breach
thereof) shall be effective unless it is in writing executed by the party
against which such waiver is to be enforced; no waiver shall be deemed or
construed as a further or continuing waiver of any such term, provision,
covenant, representation or warranty (or breach) on any other occasion or as a
waiver of any other term, provision, covenant, representation or warranty (or of
the breach of any other term, provision, covenant, representation or warranty)
contained in this Agreement on the same or any other occasion.
12.6 Counterparts. For the convenience of the parties, any
number of counterparts hereof may be executed, each such executed counterpart
shall be deemed an original and all such counterparts together shall constitute
one and the same instrument.
12.7 Assignment; Binding Nature; No Beneficiaries. This
Agreement may not be assigned by any party hereto without the written consent of
the other parties; provided, however, that Buyer may assign its rights hereunder
to any affiliate of 3-D which assumes the obligations of Buyer hereunder, but no
such assignment shall relieve Buyer or 3-D of any such obligations. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the parties hereto and their respective heirs,
personal representatives, legatees, successors and permitted assigns. Except as
otherwise expressly provided in Article XI, this Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective heirs, personal representatives, legatees, successors and permitted
assigns.
12.8 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
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12.9 Governing Law; Consent to Jurisdiction.
(a) This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and to be entirely performed therein. In the event of any
controversy or claim arising out of or relating to this Agreement or the breach
or alleged breach hereof, each of the parties hereto irrevocably (i) submits to
the non-exclusive jurisdiction of the U.S. District Court for the Southern
District of New York (or, if such court does not have jurisdiction, the courts
of the State of New York), (ii) waives any objection which it may have at any
time to the laying of venue of any action or proceeding brought in any such
court, (iii) waives any claim that such action or proceeding has been brought in
an inconvenient forum, and (iv) agrees that service of process or of any other
papers upon such party by registered mail at the address to which notices are
required to be sent to such party under Section 12.3 shall be deemed good,
proper and effective service upon such party.
[(b) Each Seller hereby irrevocably appoints and designates
the law firm of Beaumont Church as his or her true and lawful agent and attorney
for receipt of service of process in any action or proceeding brought by 3-D or
Buyer arising out of or relating to this Agreement, or the breach or alleged
breach hereof. Such service may be effected in person on such firm or by
registered or certified mail addressed to Beaumont Church, 2200 AGT Tower 000
0xx Xxxxxx X.X. Xxxxxxx, Xxxxxxx X0X 0X0, Attention: Xxxxx M.B. Xxxxx, Esq.]
12.10 Specific Performance. Each of the parties hereto
acknowledges and agrees that the others would be damaged irreparably in the
event any of the covenants contained in this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the parties hereto agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the covenants contained in this
Agreement and to enforce specifically this Agreement and the covenants contained
herein, in addition to any other remedy to which such other parties may be
entitled at law or in equity.
12.11 Construction. In this Agreement (i) words denoting the
singular include the plural and vice versa, (ii) "it" or "its" or words denoting
any gender include all genders, (iii) the word "including" shall mean "including
without limitation", whether or not expressed, (iv) any reference to a statute
shall mean the statute and any regulations thereunder in force as of the date of
this Agreement or the Closing Date, as applicable, unless otherwise expressly
provided, (v) any reference herein to a Section, Article, Schedule or Exhibit
refers to a Section or Article of or a Schedule or Exhibit to this Agreement,
unless otherwise stated, (vi) when calculating the period of time within or
following which any act is to be done or steps taken, the date which is the
reference day in calculating such period shall be excluded and if the last day
of such period is not a Business Day, then the period shall end on the next day
which is a Business Day, (vii) any reference to a party's "best efforts" or
"reasonable efforts" shall not include any obligation of such party to pay, or
guarantee the payment of, money or other consideration to any third party or to
agree to the
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imposition on such party or its affiliates of any conditions reasonably
considered by such party to be materially burdensome to such party or its
affiliates, and (viii) except as otherwise expressly provided herein, all dollar
amounts are expressed in Canadian funds.
12.12 Public Announcements. Subject to the next succeeding
sentence, each of the parties agrees that after the signing of this Agreement
such party shall not make any press release or public announcement concerning
this Agreement or the transactions contemplated hereby without the prior written
approval of the parties hereto; provided, however, that 3-D may describe this
Agreement and the transactions contemplated hereby in the Registration Statement
and Prospectus and any press release it is required to make under applicable
United States securities laws.
12.13 Remedies Cumulative. The remedies provided for or
permitted by this Agreement shall be cumulative and the exercise by any party of
any remedy provided for herein shall not preclude the assertion or exercise by
such party of any other right or remedy provided for herein.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
Address: 3-D GEOPHYSICAL, INC.
0000 Xxxxx Xxxxx Xxx
Building H /s/ XXXXXX X. XXXXX
Xxxxxxxxx, Xxxxxxxx 00000 By______________________
Attention: Xxxxxx X. Xxxxx, Name: Xxxxxx X. Xxxxx
Chief Financial Officer Title: Vice President
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxx, Esq. 3-D GEOPHYSICAL OF
Kramer, Levin, Naftalis CANADA, INC.
& Xxxxxxx
000 Xxxxx Xxxxxx /s/ XXXXXX X. XXXXX
Xxx Xxxx, Xxx Xxxx 00000 By______________________
Facsimile No.: (000) 000-0000
Xxxxxx X. Xxxxx
Name:___________________
Vice President
Title:________________
Address:
/s/ C. XXXXX XXXXXXXXX
with a copy to: ________________________
C. Xxxxx Xxxxxxxxx
Xxxxx M.D. Xxxxx, Esq.
Beaumont Church
2200 AGT Tower
000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0 XXXXXX
Facsimile No.: (000) 000-0000
/s/ XXXXX X. XXXXXXXXX
Address: ________________________
Xxxxx X. Xxxxxxxxx
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with a copy to:
Xxxxx M.D. Xxxxx, Esq.
Beaumont Church
2200 AGT Tower
000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0 XXXXXX
Facsimile No.: (000) 000-0000
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Exhibit B
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of [January __, 1997
]between J.R.S. Exploration Company Limited, an Alberta corporation (the
"Company"), and X.X. Xxxxxxxxx (the "Employee").
WHEREAS, the Company desires to employ the Employee on the
terms and conditions provided in this Agreement; and
WHEREAS, the Employee desires to accept such employment and to render
services to the Company on the terms and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Company and the Employee hereby agree as follows:
Section 1. Engagement. The Company hereby employs the Employee as its
Sales Manager and Operations Supervisor, and the Employee hereby accepts such
employment, upon and subject to the terms and conditions hereinafter set forth.
Section 2. Term. Unless sooner terminated as provided in this
Agreement, the term of the Employee's employment under this Agreement shall
commence on the date (the "Effective Date") that the Company is sold to 3-D
Geophysical, Inc., a Delaware corporation ("3-D"), and shall end on the third
anniversary thereof (the "Term"). On or before the second anniversary of the
46
Effective Date, 3-D will notify the Employee in writing whether or not 3-D
elects to extend the Term for one additional year. If 3-D so notifies the
Employee that it elects to extend the Term, the Term will end on the fourth
anniversary of the Effective Date.
Section 3. Duties and Services.
3.1 The Employee shall render services to the Company as its Sales
Manager and Operations Supervisor and shall perform such other duties and
responsibilities as may be assigned to the Employee from time to time by the
President of the Company or the Board of Directors of the Company (the
"Directors") and shall abide by the practices and policies of the Company
governing the conduct of employees. However, any assignments presented to the
Employee for continuous work outside of Canada for a duration of two weeks or
longer may be accepted or rejected in the discretion of the Employee.
3.2 During the Term, the Employee shall devote such energy and time
(exclusive of normal holidays and vacation periods and periods of sickness and
disability) as are reasonably necessary to perform the Employee's duties as
defined herein and shall promptly and faithfully perform all the duties which
pertain to the Employee's employment.
Section 4. Compensation.
4.1 Annual Compensation. In consideration of all of the services to be
rendered by the Employee hereunder and the
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covenants of Employee herein, the Company agrees to pay to the Employee, and the
Employee agrees to accept, a salary at the annual rate of $100,000.00
(Canadian).
4.2 Bonus Pool. 3-D intends to create a bonus plan based upon the
earnings of 3-D to provide incentives for certain employees of 3-D and its
subsidiaries, including the Company. The Employee shall be entitled to
participate in such plan on such terms as may be determined by the Compensation
Committee of the Board of Directors of 3-D, in its discretion. Nothing in this
Agreement shall require 3-D to pay any such bonus.
Section 5. Expenses and Reimbursement. The Employee shall be reimbursed
by the Company for reasonable and necessary out-of-pocket expenses incurred by
the Employee in performing his duties hereunder, provided such expenses are
approved in accordance with the procedures of the Company then in effect and are
presented for reimbursement in accordance with the Company's policies and
practices then in effect.
Section 6. Benefits. During the Term, the Company agrees to provide the
Employee, in addition to and not in limitation of the compensation set forth in
Section 4, the following benefits, which shall be determined in the sole
discretion of the Directors (or a duly constituted committee thereof):
(a) The Employee shall be entitled, subject to qualification
requirements, to participate in any and all group insurance plans, group health
or medical insurance plans and
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group accidental and disability insurance plans made generally available to the
senior executive employees of the Company.
(b) The Employee shall be entitled to participate in 3-D's pension,
profit-sharing, stock option, stock purchase and other employee benefit programs
made generally available to the senior executive employees of the Company.
(c) The Employee shall be entitled to four weeks annual paid vacation,
as well as sick leave and holidays in accordance with the Company's policies for
senior executive employees generally.
(d) During the term of employment under this Agreement, the Company
shall pay the Employee, on a monthly basis, an amount equal to $650 (Canadian)
per month as a non-accountable allowance for lease payments, insurance and other
expenses of an automobile leased by the Employee.
(e) As further consideration of the services to be rendered by the
Employee, on the Effective Date the Employee shall be granted an option (the
"Option"), pursuant to the 3-D's 1995 Long-Term Incentive Compensation Plan (the
"Plan"), to purchase 15,000 shares of the Common Stock, par value $.01 per
share, of 3-D (the "Common Stock") at a per share exercise price equal to the
closing price of one share of Common Stock on the NASDAQ National Market on the
Effective Date, as reported by The Wall Street Journal. The Option shall vest
in four cumulative annual installments of 3,750 shares each, commencing on the
first
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anniversary of the Effective Date. The terms of the Option shall be governed by
the Plan, as well as the terms of the option agreement entered into pursuant to
the terms of the Plan.
Section 7. Termination. Subject to the provisions of
Section 8, which shall survive the termination of this Agreement,
this Agreement shall terminate upon:
(a) The death of the Employee;
(b) Illness, disability or incapacity that prevents the Employee from
performing his duties hereunder for one hundred twenty (120) consecutive days,
or for any one hundred twenty (120) days within any twelve (12) month period,
and the provision of written notice to the Employee by the Company of such
election to terminate; or
(c) Upon written notice for Cause, which shall include, without
limitation, (i) the failure of the Employee to observe or perform any material
term of this Agreement for twenty (20) days after written notice thereof
specifying such failure; (ii) any act of illegality, dishonesty, moral turpitude
or fraud in connection with the Employee's employment; or (iii) the commission
by the Employee of any serious indictable offense.
Section 8. Restrictive Covenants. In consideration of the
undertakings of the Company set forth herein, the Employee agrees
as follows:
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8.1 Covenant Not to Compete. The Employee will not in any way, directly
or indirectly, as an agent, employee, officer, director, stockholder, partner or
otherwise of any corporation, partnership or other venture or enterprise compete
with the Company, 3-D or any of their respective subsidiaries in the provision
of seismic data acquisition or analysis services or any services related thereto
(a "Competing Business"), during the Term.
8.2 Non-Solicitation Covenant. During the Term and for a period of one
(1) year after the termination of this Agreement for any reason whatsoever, the
Employee shall not solicit, sell to or contract with, on behalf of the Employee
or on behalf of any Competing Business, any person or entity to which the
Company or any subsidiary of the Company shall have provided seismic data
acquisition or analysis services at any time during the Term.
8.3 Covenant Not to Solicit Employees of the Company. During the Term
and for a period of one (1) year after the termination of this Agreement for any
reason whatsoever, the Employee shall not solicit for employment any sales,
engineering or other technical or management employee who was employed by the
Company or any of its subsidiaries during the Term.
8.4 Non-Disclosure Covenant. The Employee recognizes and acknowledges
that, in the course of his employment, the Employee will have access to trade
secrets and other confidential or proprietary information of the Company, 3-D
and their respective
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subsidiaries, including, but not limited to, information concerning seismic
data, marketing strategy, technology, techniques and know-how, customer
specifications and customer lists, cost figures, budgets, sales forecasts and
business plans. The Employee agrees that the disclosure of any such trade
secrets or information could be harmful to the interests of the Company, 3-D or
such subsidiaries and that, during the Employee's employment by the Company or
its subsidiaries, the Employee will take appropriate caution to safeguard such
trade secrets and information, and will not during the Term or thereafter use,
disclose, divulge or publish any such trade secrets or information except as
required by law or as the Employee's duties during the Employee's employment by
the Company or its subsidiaries may require or as the Company may in writing
specifically consent.
8.5 Proprietary Information. The Employee recognizes and acknowledges
that all documents, manuals, letters, notebooks, reports, records, computer
programs or data banks and other evidences of trade secrets and other
confidential or proprietary information of the Company, 3-D and their respective
subsidiaries, including copies thereof, whether prepared by the Employee or
others, are the sole property of and belong exclusively to the Company, 3-D and
their respective subsidiaries, and agrees that, during the Employee's employment
by the Company or its subsidiaries, the Employee will under no circumstances
remove any such material for use outside of his offices except in connection
with the business of the Company
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during the course of the Employee's employment. In the event of the termination
of this Agreement for any reason whatsoever, the Employee shall immediately
return to the Company any and all documents, manuals, letters, notebooks,
records, computer programs or data banks or other evidence of trade secrets and
other confidential or proprietary information of the Company, 3-D and their
respective subsidiaries, including copies thereof, which are the property of the
Company, 3-D or any of their respective subsidiaries.
8.6 Remedies. The Employee further agrees that in the event of a breach
or threatened breach of any of the covenants contained in this Section 8, the
Company's remedy at law is likely to be inadequate and that accordingly the
Company will be entitled to obtain an injunction or other equitable relief with
regard thereto without proving damages or that damages would not constitute an
adequate remedy. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 8 is invalid or
unenforceable, the parties hereto agree that the court making the determination
of invalidity or unenforceability shall have the power to, and is hereby
directed to, reduce the scope, duration or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid and unenforceable
term or provision, and this Agreement shall be enforceable as so modified.
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8.7 Survival. The provisions of this Section 8 shall
survive the Term.
9. Miscellaneous Provisions.
9.1 Notices. All notices and demands of any kind which any party hereto
may be required or desire to serve upon another party under the terms of this
Agreement shall be in writing and shall be served upon such other party: (a) by
personal service upon such other party at such other party's address set forth
below in this Section 9.1; or (b) by mailing a copy thereof by certified or
registered mail, postage prepaid, with return receipt requested, addressed to
such other party at the address of such other party set forth below in this
Section 9.1; or (c) by sending a copy thereof by Federal Express or equivalent
courier service, addressed to such other party at the address of such other
party set forth below in this Section 9.1; or (d) by sending a copy thereof by
facsimile to such other party at the facsimile number, if any, of such other
party set forth below in this Section 9.1.
In case of service by Federal Express or equivalent courier
service or by facsimile or by personal service, such service shall be deemed
complete upon receipt. In the case of service by mail, such service shall be
deemed complete upon reasonable proof of receipt. The address and facsimile
number to which, and person to whose attention, notices and demands shall be
delivered or sent may be changed from time to time by notice
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served, as hereinabove provided, by any party upon the other party.
The current addresses and facsimile numbers of the parties are:
If to the Employee:
X.X. Xxxxxxxxx
c/o J.R.S. Exploration Company Limited
0000 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X000
Telecopier No.: (000) 000-0000
If to the Company:
J.R.S. Exploration Company Limited
0000 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X000
Telecopier No.: (000) 000-0000
Attention: Chief Financial Officer
with copies to:
3-D Geophysical, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Chairman
-and-
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
9.2 Entire Agreement; Amendment. This Agreement contains the entire
agreement between the parties, merges all prior negotiations, agreements and
understandings, if any, and states in full all representations, warranties and
agreements which have induced this Agreement. Each party agrees that in dealing
with
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third parties no contrary representations will be made. This Agreement may
not be amended, modified or otherwise changed orally but only by an agreement in
writing signed by the party against whom enforcement of any amendment,
modification or change is sought.
9.3 Assignment; Binding Nature; Assumption. This Agreement shall inure
to the benefit of and be enforceable by, and may be assigned by the Company to,
any purchaser of all or substantially all of the Company's business or assets,
any successor to the Company or any assignee thereof (whether direct or
indirect, by purchase, merger, consolidation or otherwise). The Company will
require any such purchaser, successor or assignee to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such purchase, succession or
assignment had taken place. This Agreement may not be assigned by the Employee
without the prior written consent of the Company.
9.4 Nonwaiver. No waiver by any party of any term, provision or
covenant contained in this Agreement (or any breach thereof) shall be effective
unless it is in writing executed by the party against which such waiver is to be
enforced; no waiver shall be deemed or construed as a further or continuing
waiver of any such term, provision or covenant (or breach) on any other
occasion or as a waiver of any other term, provision or covenant (or of the
breach of any other term, provision or covenant) contained in this Agreement on
the same or any other occasion.
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9.5 Remedies. The remedies provided for or permitted by this Agreement
shall be cumulative and the exercise by any party of any remedy provided for
herein or otherwise available shall not preclude the assertion or exercise by
such party of any other right or remedy provided for herein or otherwise
available.
9.6 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
9.7 Construction. In this Agreement (i) words denoting the singular
include the plural and vice versa, (ii) "it" or "its" or words denoting any
gender include all genders, (iii) any reference herein to a Section refers to a
Section of the Agreement, unless otherwise stated, (iv) when calculating the
period of time within or following which any act is to be done or steps taken,
the date which is the reference day in calculating such period shall be excluded
and if the last day of such period is not a business day, then the period shall
end on the next day which is a business day, and (v) all dollar amounts are
expressed in Canadian funds.
9.8 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Province of Alberta applicable
to contracts made and to be entirely performed therein.
9.9 Counterparts. For the convenience of the parties, any number of
counterparts hereof may be executed, each such executed
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counterpart shall be deemed an original and all such counterparts together shall
constitute one and the same instrument.
9.10 Termination of Existing Employment Agreement. On the Effective
Date, the employment agreement dated [__________ __, 19__] between the Company
and the Employee shall automatically terminate and be of no further force or
effect and the Employee shall not be entitled to any further payment pursuant
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date and year first written above.
J.R.S. EXPLORATION COMPANY LIMITED
By
----------------------------
Name:
Title:
EMPLOYEE:
------------------------------
X.X. Xxxxxxxxx
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