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AGREEMENT AND PLAN OF MERGER
AND EXCHANGE AGREEMENT
among
PETROLEUM GEO-SERVICES ASA,
VERITAS DGC INC.,
VENUS I,
VENUS HOLDCO INC.
and
VENUS MERGERCO INC.
Dated as of November 26, 2001
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TABLE OF CONTENTS
ARTICLE 1 THE MERGER..............................................................................................1
Section 1.1 The Merger...................................................................................1
Section 1.2 The Closing..................................................................................2
Section 1.3 Effective Time...............................................................................2
ARTICLE 2 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION AND MEMORANDUM AND
ARTICLES OF ASSOCIATION OF CAYMANCO..........................................................2
Section 2.1 Certificate of Incorporation and Bylaws of the Surviving Corporation.........................2
Section 2.2 Memorandum of Association and Articles of Association of Caymanco............................3
ARTICLE 3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION AND CAYMANCO.......................................3
Section 3.1 Directors of Surviving Corporation...........................................................3
Section 3.2 Officers of Surviving Corporation............................................................3
Section 3.3 Board of Directors and Officers of Caymanco..................................................3
ARTICLE 4 CONVERSION OF VERITAS COMMON STOCK......................................................................4
Section 4.1 Certain Definitions..........................................................................4
Section 4.2 Conversion of Veritas Stock..................................................................4
Section 4.3 Exchange of Certificates Representing Veritas Common Stock...................................6
Section 4.4 Adjustment of Merger Ratio...................................................................8
ARTICLE 5 THE EXCHANGE OFFER......................................................................................8
Section 5.1 The Exchange Offer...........................................................................8
Section 5.2 PGS Action..................................................................................11
Section 5.3 Cooperation by PGS..........................................................................11
Section 5.4 Mandatory Bid for and Redemption of Remaining PGS Shares....................................11
Section 5.5 PGS Options.................................................................................11
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF VERITAS, CAYMANCO, VERITAS HOLDCO AND VERITAS MERGER SUB.............12
Section 6.1 Existence; Good Standing; Corporate Authority...............................................12
Section 6.2 Authorization, Validity and Effect of Agreements............................................13
Section 6.3 Capitalization..............................................................................13
Section 6.4 Certain Information Regarding Subsidiaries..................................................14
Section 6.5 No Violation of Law.........................................................................14
Section 6.6 No Conflict.................................................................................15
Section 6.7 SEC Documents...............................................................................16
Section 6.8 Litigation..................................................................................17
Section 6.9 Absence of Certain Changes..................................................................17
Section 6.10 Taxes.......................................................................................17
Section 6.11 Employee Benefit Plans......................................................................19
Section 6.12 Labor Matters...............................................................................20
Section 6.13 Environmental Matters.......................................................................20
Section 6.14 Intellectual Property.......................................................................21
(i)
Section 6.15 Insurance...................................................................................22
Section 6.16 Leases......................................................................................22
Section 6.17 No Brokers..................................................................................23
Section 6.18 Opinion of Financial Advisor................................................................23
Section 6.19 PGS Share Ownership.........................................................................23
Section 6.20 Vote Required...............................................................................23
Section 6.21 Real and Personal Property..................................................................24
Section 6.22 Certain Contracts...........................................................................24
Section 6.23 Amendment to the Veritas Rights Agreement...................................................25
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PGS..................................................................25
Section 7.1 Existence; Good Standing; Corporate Authority...............................................25
Section 7.2 Authorization, Validity and Effect of Agreements............................................25
Section 7.3 Capitalization..............................................................................25
Section 7.4 Certain Information Regarding Subsidiaries..................................................26
Section 7.5 No Violation of Law.........................................................................26
Section 7.6 No Conflict.................................................................................26
Section 7.7 SEC Documents...............................................................................27
Section 7.8 Litigation..................................................................................28
Section 7.9 Absence of Certain Changes..................................................................28
Section 7.10 Taxes.......................................................................................28
Section 7.11 Employee Benefit Plans......................................................................30
Section 7.12 Labor Matters...............................................................................31
Section 7.13 Environmental Matters.......................................................................31
Section 7.14 Intellectual Property.......................................................................32
Section 7.15 Insurance...................................................................................33
Section 7.16 Leases......................................................................................33
Section 7.17 No Brokers..................................................................................34
Section 7.18 Opinion of Financial Advisor................................................................34
Section 7.19 Veritas Stock Ownership.....................................................................34
Section 7.20 Real and Personal Property..................................................................34
Section 7.21 Certain Contracts...........................................................................34
ARTICLE 8 COVENANTS..............................................................................................35
Section 8.1 Conduct of Businesses.......................................................................35
Section 8.2 No Solicitation by Veritas..................................................................38
Section 8.3 No Solicitation by PGS......................................................................40
Section 8.4 Meetings of Stockholders; Exchange Offer....................................................41
Section 8.5 Filings; Commercially Reasonable Best Efforts...............................................42
Section 8.6 Inspection..................................................................................44
Section 8.7 Publicity...................................................................................44
Section 8.8 Registration Statement......................................................................45
Section 8.9 Listing Application.........................................................................46
Section 8.10 Letters of Accountants......................................................................46
Section 8.11 Agreements of Rule 145 Affiliates...........................................................46
Section 8.12 Expenses....................................................................................46
Section 8.13 Indemnification and Insurance...............................................................47
Section 8.14 Employee Matters............................................................................48
(ii)
Section 8.15 Rights Agreements...........................................................................49
Section 8.16 Veritas Exchangeable Shares.................................................................49
Section 8.17 Delivery of Caymanco Shares.................................................................50
Section 8.18 Rule 16b-3 Approval.........................................................................50
Section 8.19 Conduct of Business of Caymanco, Caymanco Sub, Veritas Holdco and Veritas Merger Sub........50
Section 8.20 Reorganization..............................................................................50
Section 8.21 Proceeds from Sale of Atlantis Subsidiary...................................................50
Section 8.22 Listing of Caymanco Shares on OSE and Toronto Stock Exchange................................51
ARTICLE 9 CONDITIONS.............................................................................................51
Section 9.1 Conditions to Each Party's Obligation to Effect the Merger..................................51
Section 9.2 Conditions to Obligation of Veritas to Effect the Merger....................................52
Section 9.3 Conditions to Obligation of PGS to Effect the Merger........................................53
Section 9.4 Exchange Offer Closing......................................................................54
ARTICLE 10 TERMINATION...........................................................................................54
Section 10.1 Termination by Mutual Consent...............................................................54
Section 10.2 Termination by PGS or Veritas...............................................................54
Section 10.3 Termination by Veritas......................................................................55
Section 10.4 Termination by PGS..........................................................................56
Section 10.5 Effect of Termination.......................................................................57
Section 10.6 Extension; Waiver...........................................................................58
ARTICLE 11 GENERAL PROVISIONS....................................................................................58
Section 11.1 Nonsurvival of Representations, Warranties and Agreements...................................58
Section 11.2 Notices.....................................................................................58
Section 11.3 Assignment; Binding Effect; Benefit.........................................................60
Section 11.4 Entire Agreement............................................................................60
Section 11.5 Amendments..................................................................................60
Section 11.6 Governing Law...............................................................................60
Section 11.7 Counterparts................................................................................61
Section 11.8 Headings....................................................................................61
Section 11.9 Interpretation..............................................................................61
Section 11.10 Waivers.....................................................................................62
Section 11.11 Incorporation of Disclosure Letters and Exhibits............................................62
Section 11.12 Severability................................................................................62
Section 11.13 Enforcement of Agreement....................................................................62
Exhibit A - Form of Certificate of Incorporation of the Surviving Corporation
Exhibit B - Form of Memorandum of Association of Caymanco
Exhibit C - Form of Articles of Association of Caymanco
Exhibit D - Summary of Terms for Caymanco Rights Agreement
Exhibit E - Conditions of Exchange Offer
(iii)
GLOSSARY OF DEFINED TERMS
Defined Terms Where Defined
------------- -------------
Action..............................................................................................Section 8.13(a)
Affected Employee.................................................................................. Section 8.14(b)
Agreement..................................................................................................Preamble
Antitrust Laws.......................................................................................Section 8.5(c)
Caymanco...................................................................................................Preamble
Caymanco Material Adverse Effect....................................................................Section 11.9(c)
Caymanco Rights Agreement............................................................................Section 8.1(c)
Caymanco Share Price.................................................................................Section 5.1(g)
Caymanco Shares......................................................................................Section 4.1(c)
Caymanco Special Voting Stock.......................................................................Section 4.2(c)
Caymanco Sub.........................................................................................Section 6.4(b)
Certificate..........................................................................................Section 4.2(b)
Certificate of Merger...................................................................................Section 1.3
Certificates.........................................................................................Section 4.3(b)
Closing.................................................................................................Section 1.2
Closing Date............................................................................................Section 1.2
Confidentiality Agreement............................................................................Section 8.2(a)
Cutoff Date..........................................................................................Section 8.3(d)
Section 8.2(d)
Delaware Courts........................................................................................Section 11.6
DGCL....................................................................................................Section 1.1
Distribution Date......................................................................................Section 6.23
Effective Time..........................................................................................Section 1.3
Enforceability Exceptions...............................................................................Section 6.2
Environmental Laws..................................................................................Section 6.13(a)
ERISA...............................................................................................Section 6.11(a)
ERS Special Voting Stock.............................................................................Section 4.2(c)
Exchange Act.........................................................................................Section 5.1(f)
Exchange Agent.......................................................................................Section 4.3(a)
Exchange Fund........................................................................................Section 4.3(a)
Exchange Offer.............................................................................................Recitals
Exchange Offer Closing..................................................................................Section 1.3
Exchange Offer Documents.............................................................................Section 5.1(h)
Exchange Offer Prospectus............................................................................Section 5.1(h)
Exchange Ratio.......................................................................................Section 5.1(a)
Existing PGS Employment Agreements...................................................................Section 9.2(e)
Form S-4.............................................................................................Section 5.1(h)
HSR Act..............................................................................................Section 6.6(b)
Indemnified Parties.................................................................................Section 8.13(a)
Indemnified Party...................................................................................Section 8.13(a)
Intercompany Transactions............................................................................Section 8.1(h)
IRS.................................................................................................Section 6.10(c)
Letter of Transmittal................................................................................Section 4.3(b)
(iv)
Liens................................................................................................Section 6.4(a)
Material Adverse Effect.............................................................................Section 11.9(c)
Merger.....................................................................................................Recitals
Merger Ratio.........................................................................................Section 4.2(b)
▇▇▇▇▇▇▇ ▇▇▇▇▇..........................................................................................Section 7.17
Minimum Condition....................................................................................Section 5.1(c)
Non-U.S. Antitrust Laws...........................................................................Section 8.5(a)(i)
Norwegian Exchange Act...............................................................................Section 5.2(b)
Norwegian Shipping Tax Provisions.......................................................................Section 6.7
NYMEX...............................................................................................Section 11.9(c)
NYSE.................................................................................................Section 5.1(g)
OSE..................................................................................................Section 5.1(h)
PGS........................................................................................................Preamble
PGS Acquisition Proposal.............................................................................Section 8.3(a)
PGS ADSs...................................................................................................Recitals
PGS Benefit Plans...................................................................................Section 7.11(a)
PGS De Minimus Benefit Plan.........................................................................Section 7.11(a)
PGS Disclosure Letter....................................................................................Article 7
PGS Intellectual Property..............................................................................Section 7.14
PGS Material Adverse Effect.........................................................................Section 11.9(c)
PGS Material Contracts.................................................................................Section 7.21
PGS Options..........................................................................................Section 5.5(a)
PGS Permits.............................................................................................Section 7.5
PGS Reports.............................................................................................Section 7.7
PGS Shares.................................................................................................Recitals
PGS Stock Option Plans...............................................................................Section 5.5(a)
PGS Superior Proposal................................................................................Section 8.3(a)
Proxy Statement/Prospectus...........................................................................Section 8.8(a)
Regulatory Filings...................................................................................Section 6.6(b)
Replacement Employment Agreements....................................................................Section 9.2(e)
Required Jurisdictions..........................................................................Section 9.1(b)(ii)
Rule 145 Affiliates....................................................................................Section 8.11
Rule 16b-3.............................................................................................Section 8.18
Schedule 14D-9.......................................................................................Section 5.2(b)
Schedule TO..........................................................................................Section 5.1(h)
SEC..............................................................................................Section 4.2(e)(ii)
Securities Act.......................................................................................Section 4.3(d)
Securities Trading Act...............................................................................Section 5.1(h)
SFAS....................................................................................................Section 6.7
Significant Subsidiary...............................................................................Section 6.4(a)
Special Voting Stock................................................................................Section 4.2(c)
Stock Acquisition Date.................................................................................Section 6.23
Subsidiary..........................................................................................Section 11.9(d)
Surviving Corporation...................................................................................Section 1.1
Tax Returns.........................................................................................Section 6.10(a)
Termination Date....................................................................................Section 10.2(a)
(v)
Third Party Provisions.................................................................................Section 11.3
Trustees.............................................................................................Section 4.2(c)
Veritas....................................................................................................Preamble
Veritas Acquisition Proposal.........................................................................Section 8.2(a)
Veritas Benefit Plans...............................................................................Section 6.11(a)
Veritas Common Stock.................................................................................Section 4.1(a)
Veritas De Minimus Benefit Plan.....................................................................Section 6.11(a)
Veritas Disclosure Letter.................................................................................Article 6
Veritas Energy.......................................................................................Section 4.1(b)
Veritas Exchangeable Shares..........................................................................Section 4.1(b)
Veritas Holdco.............................................................................................Preamble
Veritas Holdco Common Stock..........................................................................Section 4.1(d)
Veritas Intellectual Property..........................................................................Section 6.14
Veritas Material Adverse Effect.....................................................................Section 11.9(c)
Veritas Material Contracts.............................................................................Section 6.22
Veritas Merger Sub.........................................................................................Preamble
Veritas Options...................................................................................Section 4.2(e)(i)
Veritas Permits.........................................................................................Section 6.5
Veritas Preferred Stock..............................................................................Section 6.3(a)
Veritas Reports.........................................................................................Section 6.7
Veritas Right........................................................................................Section 6.3(a)
Veritas Rights Agreement.............................................................................Section 6.3(a)
Veritas Special Meeting.............................................................................Section 8.4(a)
Veritas Special Voting Stock.........................................................................Section 4.2(c)
Veritas Stock Option Plans........................................................................Section 4.2(e)(i)
Veritas Superior Proposal............................................................................Section 8.2(a)
Vessel..............................................................................................Section 6.16(a)
(vi)
AGREEMENT AND PLAN OF MERGER
AND EXCHANGE AGREEMENT
THIS AGREEMENT AND PLAN OF MERGER AND EXCHANGE AGREEMENT (this
"Agreement") dated as of November 26, 2001 is among Petroleum Geo-Services ASA,
a Norwegian public limited liability company ("PGS"), Veritas DGC Inc., a
Delaware corporation ("Veritas"), Venus I, a Cayman Islands exempted company and
a direct, wholly owned subsidiary of Veritas ("Caymanco"), Venus Holdco Inc., a
Delaware corporation and an indirect, wholly owned subsidiary of Caymanco
("Veritas Holdco"), and Venus Mergerco Inc., a
Delaware corporation and a
direct, wholly owned subsidiary of Veritas Holdco ("Veritas Merger Sub").
RECITALS
WHEREAS, PGS and Veritas have each determined to engage in a
strategic business combination with the other, to be effected through the
Exchange Offer and the Merger (as each such term is defined below), in each case
upon the terms and subject to the conditions set forth herein;
WHEREAS, the parties hereto desire that Caymanco make an offer
(the "Exchange Offer") to issue Caymanco Shares in exchange for all the issued
and outstanding ordinary shares, nominal value NOK 5 per share, of PGS ("PGS
Shares") and all issued and outstanding American Depositary Shares representing
such PGS Shares ("PGS ADSs");
WHEREAS, the parties hereto desire, immediately following the
consummation of the Exchange Offer, to merge Veritas Merger Sub with and into
Veritas (the "Merger"), with Veritas surviving as a direct, wholly owned
subsidiary of Veritas Holdco and an indirect, wholly owned subsidiary of
Caymanco, pursuant to which shares of Veritas Common Stock will be converted
into Caymanco Shares;
WHEREAS, the Boards of Directors of each of PGS, Caymanco and
Veritas have determined the Merger and the Exchange Offer to be advisable and in
the best interests of their respective corporations, stockholders and
shareholders and to be consistent with, and in furtherance of, their respective
business strategies and goals, and by resolutions duly adopted, have approved
and adopted this Agreement;
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time, Veritas Merger Sub shall be
merged with and into Veritas in accordance with this Agreement, and the separate
corporate existence of Veritas Merger Sub shall thereupon cease. Veritas shall
be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation"). The Merger shall have
the effects specified in the
Delaware General Corporation Law (the "DGCL").
Section 1.2 The Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the Merger (the "Closing") shall
take place (a) at the offices of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, at 9:00 a.m., local time, on the first business day
immediately following the day on which the last to be fulfilled or waived of the
conditions set forth in Article 9 (other than the conditions that by their terms
are capable of being satisfied only on the Closing Date) shall be fulfilled or
waived in accordance herewith or (b) at such other time, date or place as PGS
and Veritas may agree; provided, however, that in no event shall the Closing
occur prior to April 1, 2002. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
Section 1.3 Effective Time. If all the conditions to the
Merger set forth in Article 9 shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated as provided in
Article 10, PGS, Caymanco, Veritas Holdco, Veritas Merger Sub and Veritas,
acting together, shall cause a certificate of merger (the "Certificate of
Merger") meeting the requirements of Section 251 of the DGCL to be properly
executed and filed in accordance with such Section on the Closing Date. The
Merger shall become effective at the time of filing of the Certificate of Merger
with the Secretary of State of the State of
Delaware in accordance with the
DGCL, or at such later time that the parties hereto shall have agreed upon and
designated in the Certificate of Merger as the effective time of the Merger (the
"Effective Time"); provided, however, that the Effective Time shall occur
immediately following the time of acceptance of PGS Shares and PGS ADSs
following the expiration date of the Exchange Offer (the "Exchange Offer
Closing").
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION AND MEMORANDUM
AND ARTICLES OF ASSOCIATION OF CAYMANCO
Section 2.1 Certificate of Incorporation and Bylaws of the
Surviving Corporation.
(a) The Certificate of Incorporation of Veritas, as in effect
immediately prior to the Effective Time, shall be amended at the Effective Time
to read in its entirety as set forth in Exhibit A attached hereto; and, as so
amended, that Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
in accordance with the provisions thereof and applicable law.
(b) The Bylaws of Veritas, as in effect immediately prior to
the Effective Time, shall be amended at the Effective Time to read in their
entirety as the Bylaws of Veritas Merger Sub, as in effect immediately prior to
the Effective Time, provided that such amended Bylaws shall provide that the
name of Veritas is "Veritas DGC Inc."; and, as so amended, those Bylaws shall be
the Bylaws of the Surviving Corporation until thereafter changed or amended in
2
accordance with the provisions thereof and the provisions of the Certificate of
Incorporation of the Surviving Corporation and applicable law.
Section 2.2 Memorandum of Association and Articles of
Association of Caymanco.
(a) The Memorandum of Association of Caymanco shall be amended
and restated prior to the Exchange Offer Closing to read in its entirety as of
the Exchange Offer Closing substantially as set forth in Exhibit B attached
hereto.
(b) The Articles of Association of Caymanco shall be amended
and restated prior to the Exchange Offer Closing to read in their entirety as of
the Exchange Offer Closing substantially as set forth in Exhibit C attached
hereto.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION AND CAYMANCO
Section 3.1 Directors of Surviving Corporation. The directors
of Veritas Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation as of the Effective Time, until their
successors shall be elected and qualified or their earlier death, resignation or
removal in accordance with the certificate of incorporation and bylaws of the
Surviving Corporation.
Section 3.2 Officers of Surviving Corporation. The officers of
Veritas immediately prior to the Effective Time shall be the officers of the
Surviving Corporation as of the Effective Time, until their successors shall be
elected and qualified or their earlier death, resignation or removal in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation.
Section 3.3 Board of Directors and Officers of Caymanco.
(a) Caymanco will take such action as may be necessary to
cause, as of the Exchange Offer Closing, the membership of the Board of
Directors of Caymanco to consist of four persons designated by PGS, four persons
designated by Veritas and two additional persons designated by mutual agreement
of PGS and Veritas, with such persons being allocated by PGS or Veritas as
nearly as practicable on a proportionate basis to each of the three classes into
which the Board of Directors of Caymanco is divided in accordance with
Caymanco's Articles of Association. Additionally, four of the persons designated
by each of PGS and Veritas shall be persons currently serving as members of the
Board of Directors of PGS and Veritas, respectively, and the remaining persons
designated by PGS and Veritas by mutual agreement shall be persons not currently
a member of the Board of Directors of either PGS or Veritas. From and after the
Exchange Offer Closing, each person so designated shall serve as a director of
Caymanco until such person's successor shall be elected and qualified or such
person's earlier death, resignation or removal in accordance with the Memorandum
of Association and the Articles of Association of Caymanco. Directors of
Caymanco not continuing after the Exchange Offer Closing shall resign from the
Board of Directors of Caymanco with effect from the Exchange Offer Closing.
3
Additionally, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall be the Chairman of the Board of Caymanco
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be the Vice Chairman of the Board of Caymanco.
(b) Prior to the Exchange Offer Closing, Caymanco shall
appoint ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the Co-Chief Executive Officers
of Caymanco. The Board of Directors of Caymanco shall appoint such additional
persons as officers as shall be mutually agreed upon by PGS and Veritas, and
each such officer shall thereafter serve until such officer's successor shall be
appointed or such officer's earlier death, resignation or removal in accordance
with the Memorandum of Association and the Articles of Association of Caymanco.
If any such person is unable or unwilling to serve as an officer of Caymanco,
then a substitute officer shall be selected by mutual agreement of PGS and
Veritas. ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall have primary responsibility for Caymanco's
floating production, storage and offloading and production operations and each
subordinate officer assigned operating responsibilities in such operations shall
report to ▇▇. ▇▇▇▇▇▇▇▇▇▇ or another officer designated by him. ▇▇. ▇▇▇▇▇▇ shall
have primary responsibility for Caymanco's geophysical operations and each
subordinate officer assigned operating responsibilities in such operations shall
report to ▇▇. ▇▇▇▇▇▇ or another officer designated by him. All remaining
officers of Caymanco not so assigned, including, but not limited to, the chief
financial officer of Caymanco, shall report jointly to Messrs. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇.
ARTICLE 4
CONVERSION OF VERITAS COMMON STOCK
Section 4.1 Certain Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:
(a) "Veritas Common Stock" shall mean the common stock, par
value $0.01 per share, of Veritas.
(b) "Veritas Exchangeable Shares" shall mean the Exchangeable
Shares and the Class A Exchangeable Shares Series 1 of Veritas Energy
Services, Inc., an Alberta corporation ("Veritas Energy"), all of the
other capital stock of which is owned solely by Veritas at the date of
this Agreement.
(c) "Caymanco Shares" shall mean the ordinary shares, par
value $0.01 per share, of Caymanco.
(d) "Veritas Holdco Common Stock" shall mean the common stock,
par value $0.01 per share, of Veritas Holdco.
Section 4.2 Conversion of Veritas Stock.
(a) At the Effective Time, each share of common stock, par
value $0.01 per share, of Veritas Merger Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one fully
paid and non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
4
(b) At the Effective Time, each share of Veritas Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Veritas Common Stock to be canceled without payment of any
consideration therefor pursuant to Section 4.2(d)) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive one Caymanco Share (the "Merger Ratio"), and all such
Caymanco Shares so issued shall be transferred by Veritas Holdco pursuant to the
Merger as set forth herein; and each such share of Veritas Common Stock (other
than shares of Veritas Common Stock to be canceled without payment of any
consideration therefor pursuant to Section 4.2(d)) shall cease to be outstanding
and shall be canceled and retired and shall cease to exist, and each holder of a
certificate (a "Certificate") representing any shares of Veritas Common Stock
(other than shares of Veritas Common Stock to be canceled without payment of any
consideration therefor pursuant to Section 4.2(d)) shall thereafter cease to
have any rights with respect to such shares of Veritas Common Stock, except the
right to receive, without interest, a certificate for Caymanco Shares in
accordance with Section 4.3(b) upon the surrender of such Certificate.
(c) At the Effective Time, each ordinary share, par value
$0.01 per share, of Veritas designated "Special Voting Stock," and each ordinary
share, par value $0.01 per share, of Veritas designated "ERS Special Voting
Stock" (collectively, the "Veritas Special Voting Stock"), issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holders thereof, be converted
into the right to receive one ordinary share, par value $0.01 per share, of
Caymanco designated "Special Voting Stock, Series 1" and one ordinary share, par
value $0.01 per share, of Caymanco designated "Special Voting Stock, Series 2"
(collectively, "Caymanco Special Voting Stock"), respectively, such Caymanco
Special Voting Stock to have such terms and provisions as are set forth in
Articles 4.2 and 4.3 of the Articles of Association of Caymanco set forth in
Exhibit C attached hereto. Veritas Holdco shall deliver to the holders of shares
of Veritas Special Voting Stock, upon delivery by such holders of certificates
formerly representing such shares, certificates representing shares of Caymanco
Special Voting Stock into which such shares of Veritas Special Voting Stock were
converted pursuant to this Section 4.2(c). Caymanco and Veritas shall, and
Veritas shall cause Veritas Energy and the Trustees (as defined below) to, enter
into such agreements and other documents with respect to the Veritas
Exchangeable Shares such that each Veritas Exchangeable Share shall be
exchangeable for one Caymanco Share and shall otherwise have the same terms and
provisions as were applicable immediately prior to the Effective Time. Caymanco
shall take all corporate action necessary to reserve for issuance that number of
Caymanco Shares equal to the number of Caymanco Shares issuable upon exchange or
retraction of the Veritas Exchangeable Shares outstanding as of the Effective
Time. For purposes hereof, the term "Trustees" means CIBC Mellon Trust Company,
as successor trustee to The R-M Trust Company under the Voting and Trust
Agreement, dated as of August 30, 1996, with Veritas and Veritas Energy, and
CIBC Mellon Trust Company, as trustee under the Voting and Trust Agreement,
dated as of September 30, 1999, with Veritas and Veritas Energy.
(d) Each share of Veritas Common Stock issued and held in
Veritas' treasury, and each share of Veritas Common Stock owned by Caymanco,
PGS, Veritas Holdco, Veritas Merger Sub or any other wholly owned Subsidiary of
Caymanco, PGS or Veritas shall, at the Effective Time and by virtue of the
Merger, cease to be outstanding and shall be canceled and retired without
payment of any consideration therefor, and no shares in the capital of Caymanco
or other consideration shall be delivered in exchange therefor.
5
(e) (i) All options outstanding at the Effective Time
(individually, a "Veritas Option" and collectively, the "Veritas Options") under
the Veritas 1992 Non-Employee Director Stock Option Plan, the Veritas 1992
Employee Nonqualified Stock Option Plan, the Veritas 1997 Employee Stock
Purchase Plan, the 2001 Key Employee Nonqualified Stock Option Plan and the 2001
Key Employee Restricted Stock Plan, including any amendments thereto approved by
Veritas stockholders at its 2001 annual meeting of stockholders (collectively,
the "Veritas Stock Option Plans") shall remain outstanding following the
Effective Time. At the Effective Time, Veritas Options shall, by virtue of the
Merger and without any further action on the part of Veritas or the holder of
any Veritas Option, be assumed by Caymanco in such manner that Caymanco (1) is a
corporation "assuming a stock option in a transaction to which Section 424(a)
applies" within the meaning of Section 424 of the Code or (2) to the extent that
Section 424 of the Code does not apply to any Veritas Option, would be such a
corporation were Section 424 of the Code applicable to such option. Each Veritas
Option assumed by Caymanco shall be exercisable upon the same terms and
conditions as under the applicable Veritas Stock Option Plan and the applicable
option agreement issued thereunder, except that (i) each Veritas Option shall
cease to represent a right to acquire shares of Veritas Common Stock and shall
be exercisable for that number of Caymanco Shares equal to the number of shares
of Veritas Common Stock subject to such Veritas Option immediately prior to the
Effective Time, and (ii) the option price per Caymanco Share shall be an amount
equal to the option price per share of Veritas Common Stock subject to such
Veritas Option in effect immediately prior to the Effective Time. Without
limiting the foregoing, effective at the Effective Time, Caymanco shall assume
the Veritas Stock Option Plans for purposes of employing such plans to make
grants of stock options and other awards based on Caymanco Shares following the
Effective Time.
(ii) Caymanco shall take all corporate action necessary to
reserve for issuance the number of Caymanco Shares required to be delivered upon
exercise of the Veritas Options at and after the Effective Time. Following the
Effective Time, Caymanco shall file with the Securities and Exchange Commission
(the "SEC") a Registration Statement on Form S-8 (or a post-effective amendment
on Form S-8 with respect to the Form S-4 or such other appropriate form)
covering all such Caymanco Shares and shall cause such registration statement to
remain effective for as long as there are outstanding any options under the
Veritas Stock Option Plans.
Section 4.3 Exchange of Certificates Representing Veritas
Common Stock.
(a) As of the Effective Time, Veritas Holdco shall deposit, or
shall cause to be deposited, with an exchange agent selected by Caymanco, which
shall be Caymanco's transfer agent for Caymanco Shares or such other party
reasonably satisfactory to PGS (the "Exchange Agent"), for the benefit of the
holders of shares of Veritas Common Stock, for exchange in accordance with this
Article 4, certificates representing the Caymanco Shares to be issued pursuant
to Section 4.2 and delivered pursuant to this Section 4.3 in exchange for
outstanding shares of Veritas Common Stock (such certificates for Caymanco
Shares, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").
(b) Promptly after the Effective Time, Veritas Holdco shall
cause the Exchange Agent to mail to each holder of record of one or more
certificates ("Certificates") that immediately prior to the Effective Time
represented shares of Veritas Common Stock (other than
6
to holders of Veritas Common Stock that, pursuant to Section 4.2(d), are
canceled without payment of any consideration therefor): (A) a letter of
transmittal (the "Letter of Transmittal"), which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Caymanco may reasonably specify and
(B) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing Caymanco Shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Certificate shall be entitled to receive in exchange
therefor (x) a certificate representing that number of Caymanco Shares and (y) a
check representing the amount of unpaid dividends and distributions, if any,
which such holder has the right to receive pursuant to the provisions of this
Article 4, after giving effect to any required withholding tax, and the
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on unpaid dividends and distributions, if any, payable to holders of
Certificates. In the event of a transfer of ownership of Veritas Common Stock
which is not registered in the transfer records of Veritas, a certificate
representing the proper number of Caymanco Shares may be issued to such a
transferee if the Certificate representing such Veritas Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time with
respect to Caymanco Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the Caymanco
Shares represented by such Certificate as a result of the conversion provided in
Section 4.2(b) until such Certificate is surrendered as provided herein. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing Caymanco
Shares represented by such Certificate, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore payable and not paid with respect to
such Caymanco Shares, less the amount of any withholding taxes which may be
required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such Caymanco Shares, less the amount of any withholding taxes which
may be required thereon.
(d) At or after the Effective Time, the Surviving Corporation
shall pay from funds on hand at the Effective Time any dividends or make other
distributions with a record date prior to the Effective Time that may have been
declared or made by Veritas on shares of Veritas Common Stock which remain
unpaid at the Effective Time, and after the Effective Time, there shall be no
transfers on the stock transfer books of Veritas of the shares of Veritas Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation, the
presented Certificates shall be canceled and exchanged for certificates for
Caymanco Shares deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article 4. Certificates
surrendered for exchange by any person constituting an "affiliate" of Veritas
for purposes of Rule 145(c) under the Securities Act of 1933, as amended (the
"Securities Act"),
7
shall not be exchanged until Caymanco has received a written agreement from such
person as provided in Section 8.11.
(e) Any portion of the Exchange Fund that remains
undistributed to the former stockholders of Veritas one year after the Effective
Time shall be delivered to Veritas Holdco. Any former stockholders of Veritas
who have not theretofore complied with this Article 4 shall thereafter look only
to Veritas Holdco for delivery of certificates representing their Caymanco
Shares and to Caymanco for unpaid dividends and distributions on the Caymanco
Shares deliverable to such former stockholder pursuant to this Agreement.
(f) None of PGS, Caymanco, Veritas Holdco, the Surviving
Corporation, the Exchange Agent or any other person shall be liable to any
person for any portion of the Exchange Fund properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation on a case-by-case basis at its sole discretion, the
posting by such person of a bond or other security in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Caymanco Shares
and unpaid dividends and distributions on Caymanco Shares as provided in Section
4.3(c), deliverable in respect thereof pursuant to this Agreement.
Section 4.4 Adjustment of Merger Ratio. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time,
Veritas changes the number of shares of Veritas Common Stock, PGS changes the
number of PGS Shares, or Caymanco changes the number of Caymanco Shares issued
and outstanding as a result of a stock split, reverse stock split, stock
dividend, recapitalization or other similar transaction, the Merger Ratio and
other items dependent thereon shall be appropriately and equitably adjusted.
ARTICLE 5
THE EXCHANGE OFFER
Section 5.1 The Exchange Offer.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, Caymanco shall make the Exchange Offer by offering 0.47 Caymanco
Shares in exchange for each PGS Share and each PGS ADS (the ratio of such
exchange being hereinafter referred to as the "Exchange Ratio").
(b) The obligation of Caymanco to commence (within the meaning
of Rule 14d-2 under the Exchange Act) the Exchange Offer shall be subject to the
fulfillment at or prior to such commencement of the following conditions:
8
(i) this Agreement shall not have been terminated in
accordance with Article 10;
(ii) none of the events set forth in Section
9.1(b)(ii) or (v) or Section 9.1(c) of this Agreement shall
have occurred and be continuing; and
(iii) such governmental, regulatory and stock
exchange approvals as may be required in order to make the
Exchange Offer in any jurisdiction, including, but not limited
to, the Kingdom of Norway, shall have been obtained.
(c) The Exchange Offer shall be conditioned upon, among other
things, that number of PGS Shares and PGS ADSs that would represent more than
90% of the PGS Shares outstanding as of the expiration of the Exchange Offer
(the "Minimum Condition") being properly tendered in accordance with the terms
of the Exchange Offer prior to the expiration date of the Exchange Offer (as it
may be extended in accordance with the provisions of this Section 5.1) and not
withdrawn. Caymanco's obligation to accept for exchange, and to issue Caymanco
Shares in exchange for, PGS Shares and PGS ADSs pursuant to the Exchange Offer
will be subject to the further conditions set forth in Exhibit E hereto.
(d) Caymanco will waive conditions to the Exchange Offer, if
at all, only as follows:
(i) the Minimum Condition and those conditions set
forth in clauses (a) through (i) of Exhibit E hereto will be
waived only at the direction of both PGS and Veritas; provided
that Veritas shall be obligated to direct the waiver of the
Minimum Condition at the request of PGS to the extent that
there shall have been arranged by Caymanco or Veritas
committed financing sources, in addition to the Veritas
financings contemplated by Section 9.3(c), in an amount not to
exceed $30 million to provide for the purchase for cash of
that number of PGS Shares or PGS ADSs representing the
difference between (x) 90% of such shares and (y) the actual
number of such shares tendered pursuant to the Exchange Offer;
provided, however, that the aggregate amount of cash paid for
PGS Shares and PGS ADSs not accepted for exchange pursuant to
the Exchange Offer shall not exceed $110 million;
(ii) the conditions set forth in clauses (j) through
(n) of Exhibit E hereto will be waived if the comparable
conditions in Section 9.2(a) through Section 9.2(e) of this
Agreement shall have been irrevocably waived by Veritas; and
(iii) the conditions set forth in clauses (o) through
(q) of Exhibit E hereto will be waived if the comparable
conditions in Section 9.3(a) through Section 9.3(c) of this
Agreement shall have been irrevocably waived by PGS.
(e) In addition, except as otherwise contemplated hereby,
Caymanco shall not make any change or amendment in the terms of the Exchange
Offer without the consent of PGS and Veritas, including but not limited to any
change or amendment to (i) the Minimum
9
Condition, (ii) the Exchange Ratio, (iii) the form of consideration payable in
the Exchange Offer or (iv) the conditions to the Exchange Offer.
(f) Caymanco shall, upon the direction of PGS and Veritas, (i)
extend the Exchange Offer from time to time for up to 20 business days for each
such extension, if at the then scheduled expiration of the Exchange Offer any of
the conditions of the Exchange Offer shall not be satisfied or waived, or (ii)
extend the Exchange Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof or any other
governmental or regulatory authority or securities exchange having jurisdiction
over the Exchange Offer; provided, that Caymanco shall, upon the direction of
PGS only, extend the Exchange Offer one or more times if the Minimum Condition
has not been satisfied at such expiration date; provided, however, that in no
event shall Caymanco be required or permitted to extend the Exchange Offer
beyond the Termination Date. Upon the direction of PGS and Veritas, Caymanco
shall provide a "subsequent offering period" (as contemplated by Rule 14d-11
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
not less than three business days following its acceptance for exchange of PGS
Shares or PGS ADSs in the Exchange Offer. Subject to the terms and conditions of
the Exchange Offer, Caymanco shall accept for exchange, as promptly as
practicable after expiration of the Exchange Offer, all PGS Shares validly
tendered in the Exchange Offer and not withdrawn.
(g) No fractional Caymanco Shares shall be issued in
connection with the exchange of PGS Shares and PGS ADSs for Caymanco Shares
pursuant to the Exchange Offer. In lieu of the issuance of any fractional
Caymanco Shares pursuant to this Section 5.1, cash adjustments will be paid to
tendering shareholders in respect of any fractional Caymanco Shares that would
otherwise be issuable in the Exchange Offer, and the amount of such cash
adjustment shall be equal to such fractional proportion of the Caymanco Share
Price. "Caymanco Share Price" shall mean the product of the average of the per
share closing prices of the Veritas Common Stock as reported on the consolidated
transaction reporting system for securities traded on the New York Stock
Exchange, Inc. ("NYSE") (as reported in the New York City edition of The Wall
Street Journal or, if not reported thereby, another authoritative source) for
the 20 consecutive trading days ending on the fifth trading day prior to the
Closing Date, appropriately adjusted for any stock splits, reverse stock splits,
stock dividends, recapitalizations or other similar transactions.
(h) As soon as practicable after the date hereof, Caymanco
shall file with the SEC a Registration Statement on Form S-4 or Form F-4, as
appropriate (the "Form S-4"), under the Securities Act to register the offer and
sale of the Caymanco Shares issuable in the Exchange Offer and in the Merger, a
portion of which Form S-4 shall serve as the prospectus for the Exchange Offer
(the "Exchange Offer Prospectus"). As soon as practicable on the date of
commencement of the Exchange Offer, Caymanco shall file with the SEC its Tender
Offer Statement on Schedule TO (as amended and supplemented from time to time,
the "Schedule TO") with respect to the Exchange Offer and the other transactions
contemplated thereby. The Schedule TO shall contain or shall incorporate by
reference all or part of the Exchange Offer Prospectus and forms of the related
letter of transmittal and any related documents (the Schedule TO, the Exchange
Offer Prospectus and such other documents, as amended and supplemented from time
to time, being referred to herein collectively as the "Exchange Offer
Documents"). Caymanco shall file the Exchange Offer Prospectus and other
applicable Exchange Offer
10
Documents with the Oslo Stock Exchange (the "OSE") pursuant to, and shall
otherwise comply with its obligations under, the Norwegian Securities Trading
Act of 1997 No. 79 and the rules and regulations thereunder (collectively, the
"Securities Trading Act"). The parties to this Agreement will cause the Schedule
TO, the Exchange Offer Prospectus and the Form S-4 to comply as to form in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act, the Securities Trading Act and the rules and regulations
thereunder.
Section 5.2 PGS Action.
(a) PGS hereby approves of and consents to the Exchange Offer
and represents that the PGS Board of Directors, at a meeting duly called and
held, has authorized this Agreement and resolved to recommend that the
shareholders of PGS accept the Exchange Offer and exchange their PGS Shares and
PGS ADSs pursuant thereto.
(b) As soon as practicable on the date of commencement of the
Exchange Offer, PGS shall file with the SEC its Solicitation/Recommendation
Statement on Schedule 14D-9 (as amended and supplemented from time to time, the
"Schedule 14D-9") containing, subject to Section 8.4(c), the recommendation of
the PGS Board of Directors described in Section 5.2(a) and shall disseminate the
Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act and any other applicable law. PGS shall file the Schedule 14D-9
with the OSE pursuant to, and shall otherwise comply with its obligations under,
the Securities Trading Act and the Norwegian Stock Exchange Act of 2000 No. 80
(the "Norwegian Exchange Act"). The Schedule 14D-9 shall comply as to form in
all material respects with the requirements of the Exchange Act, the Securities
Trading Act, the Norwegian Exchange Act and the rules and regulations
thereunder.
Section 5.3 Cooperation by PGS. To the extent reasonably
requested by Caymanco, PGS shall cooperate with Caymanco so as to facilitate the
prompt distribution of the Exchange Offer Prospectus or other appropriate
Exchange Offer Documents to all record holders of PGS Shares and PGS ADSs. PGS
shall furnish Caymanco with such information and such assistance as may be
required by Caymanco or its agents in conducting the Exchange Offer.
Section 5.4 Mandatory Bid for and Redemption of Remaining PGS
Shares. Promptly following the Exchange Offer Closing, Caymanco shall take all
action necessary to comply with the mandatory bid requirements of Norwegian law
and PGS' articles of association. If Caymanco acquires, pursuant to the Exchange
Offer or otherwise, more than 90% of the outstanding PGS Shares, then Caymanco
shall also take all actions that may be required under Norwegian law to acquire
the remaining PGS Shares through a compulsory acquisition pursuant to the
Norwegian Public Limited Companies Act of 1997 No. 45.
Section 5.5 PGS Options.
(a) (i) All options outstanding at the Effective Time
(individually, a "PGS Option" and collectively, the "PGS Options") then
outstanding under PGS' Non-Employee Director Stock Options Plan, 2000-Incentive
Share Option Plan, 1999-Incentive Share Option Plan, as amended, and
1998/1-Incentive Share Option Plan, as amended (collectively, the "PGS Stock
Option Plans"), shall remain outstanding following the Effective Time. Caymanco
shall
11
offer to assume, effective as of the Effective Time, from holders of outstanding
PGS Options their PGS Options and any rights under such PGS Options, and
Caymanco shall assume any tendered PGS Option in such manner that Caymanco (i)
is a corporation "assuming a stock option in a transaction to which Section
424(a) applies" within the meaning of Section 424 of the Code or (ii) to the
extent that Section 424 of the Code does not apply to any PGS Option, would be
such a corporation were Section 424 of the Code applicable to such PGS Option.
Each PGS Option assumed by Caymanco shall be exercisable upon the same terms and
conditions as under the applicable PGS Stock Option Plan and the applicable
option agreement issued thereunder, except that (i) each PGS Option shall cease
to represent a right to acquire PGS Shares and shall be exercisable for that
whole number of Caymanco Shares (rounded down to the next whole share) into
which the number of PGS Shares subject to such PGS Option immediately prior to
the Effective Time could be exchanged under the Exchange Offer, and (ii) the
option price per Caymanco Share shall be an amount equal to the option price per
PGS Share subject to such PGS Option in effect immediately prior to the
Effective Time divided by the Exchange Ratio (the price per share, as so
determined, being rounded up to the next full cent).
(b) Caymanco shall take all corporate action necessary to
reserve for issuance the number of Caymanco Shares required to be delivered upon
exercise of PGS Options at and after the Effective Time. Following the Effective
Time, Caymanco shall file with the SEC a Registration Statement on Form S-8 (or
a post-effective amendment on Form S-8 with respect to the Form S-4 or such
other appropriate form) covering all such Caymanco Shares and shall cause such
registration statement to remain effective for as long as there are outstanding
any options under the PGS Stock Option Plans.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF VERITAS, CAYMANCO, VERITAS
HOLDCO AND VERITAS MERGER SUB
Except as set forth in the disclosure letter delivered to PGS
concurrently with the execution hereof (the "Veritas Disclosure Letter"),
Veritas, Caymanco, Veritas Holdco and Veritas Merger Sub, jointly and severally,
represent and warrant to PGS that:
Section 6.1 Existence; Good Standing; Corporate Authority.
Each of Veritas, Veritas Holdco and Veritas Merger Sub is a corporation, and
Caymanco is an exempted company, duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Veritas is
duly qualified to do business as a foreign corporation and, to the extent such
concept or similar concept exists in the relevant jurisdiction, is in good
standing under the laws of any jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have, individually or in the aggregate, a Veritas Material
Adverse Effect. Veritas has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as now conducted.
The copies of Veritas' certificate of incorporation and bylaws and Caymanco's
Memorandum of Association and Articles of Association previously made available
to PGS are true and correct and contain all amendments as of the date hereof.
12
Section 6.2 Authorization, Validity and Effect of Agreements.
Each of Veritas, Caymanco, Veritas Holdco and Veritas Merger Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and all other agreements and documents contemplated hereby to which it is a
party. The consummation by each of Veritas, Caymanco, Veritas Holdco and Veritas
Merger Sub of the transactions contemplated hereby, including the issuance by
Caymanco and the delivery by Veritas Holdco of Caymanco Shares pursuant to the
Merger and the issuance by Caymanco of Caymanco Shares pursuant to the Exchange
Offer, has been duly authorized by all requisite corporate action on behalf of
such party, other than the approvals referred to in Section 6.20. This Agreement
constitutes the valid and legally binding obligation of each of Veritas,
Caymanco, Veritas Holdco and Veritas Merger Sub, enforceable against such party
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
and general principles of equity (the "Enforceability Exceptions"). Veritas has
taken all action necessary to render the restrictions set forth in Section 203
of the DGCL inapplicable to this Agreement and the transactions contemplated
hereby.
Section 6.3 Capitalization.
(a) The authorized capital stock of Veritas consists of
40,000,000 shares of Veritas Common Stock and 1,000,000 shares of preferred
stock, par value $0.01 per share, of Veritas ("Veritas Preferred Stock"). As of
November 23, 2001, there were (i) 30,955,556 shares of Veritas Common Stock
issued and outstanding, (ii) 1,484,914 shares of Veritas Common Stock issuable
upon exchange or retraction of the 1,484,914 Veritas Exchangeable Shares issued
and outstanding, (iii) two shares of Veritas Special Voting Stock issued and
outstanding and (iv) no shares of Veritas Preferred Stock issued and
outstanding. As of November 23, 2001, there were 1,953,738 shares of Veritas
Common Stock issuable upon exercise of outstanding Veritas Options. All such
issued and outstanding shares of Veritas Common Stock and Veritas Exchangeable
Shares are duly authorized, validly issued, fully paid, nonassessable and free
of preemptive rights. Each Veritas Exchangeable Share is exchangeable, at the
option of the holder, into one share of Veritas Common Stock. One right to
purchase one one-thousandth (1/1,000th) of a share of Veritas Preferred Stock -
Junior Participating Series A, par value $0.01 per share (each, a "Veritas
Right"), issued pursuant to the Rights Agreement dated as of May 27, 1997 (the
"Veritas Rights Agreement"), as amended, between Veritas and ChaseMellon
Shareholder Services, L.L.C. is associated with and attached to each outstanding
share of Veritas Common Stock. As of the date of this Agreement, except as set
forth in this Section 6.3(a), there are no outstanding shares of capital stock
and there are no options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate Veritas or
any of its Subsidiaries to issue, transfer or sell any shares of capital stock
or other voting securities of Veritas or any of its Subsidiaries. Other than the
Veritas Exchangeable Shares, Veritas has no outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Veritas on any matter.
(b) The authorized share capital of Caymanco consists of
50,000 shares of $1.00 par value per share, and, as of the date of this
Agreement, there are two shares issued and outstanding and no shares issuable
upon exercise of outstanding Caymanco options. All such issued and outstanding
shares (i) are duly authorized, validly issued, fully paid, nonassessable
13
and free of preemptive rights, (ii) are owned directly by Veritas and (iii) will
be repurchased by Caymanco immediately prior to the Effective Time. The Caymanco
Shares to be issued in connection with the Merger and the Exchange Offer, when
issued in accordance with this Agreement, will be validly issued, fully paid and
nonassessable and free of preemptive rights. As of the date of this Agreement,
except as set forth in Article 4 or 5 of this Agreement or this Section 6.3(b),
there are no outstanding shares and there are no options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
which obligate Caymanco or any of its Subsidiaries to issue, transfer or sell
any shares or other voting securities of Caymanco or any of its Subsidiaries.
Caymanco has no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders of
Caymanco on any matter.
Section 6.4 Certain Information Regarding Subsidiaries.
(a) For purposes of this Agreement, "Significant Subsidiary"
shall mean significant subsidiary as defined in Rule 1-02 of Regulation S-X of
the Exchange Act. Each of Veritas' Significant Subsidiaries is a corporation or
other legal entity duly organized, validly existing and, to the extent such
concept or similar concept exists in the relevant jurisdiction, in good standing
under the laws of its jurisdiction of incorporation or organization, has the
corporate or other entity power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and, to the extent such concept or similar concept
exists in the relevant jurisdiction, in good standing in each jurisdiction in
which the ownership, operation or lease of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not have a Veritas
Material Adverse Effect. All of the outstanding shares of capital stock of, or
other ownership interests in, each of Veritas' Significant Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and, except for
directors' qualifying shares, are owned, directly or indirectly, by Veritas free
and clear of all mortgages, deeds of trust, liens, security interests, leases,
pledges, conditional sales contracts, charges, privileges, easements, rights of
way, reservations, options, rights of first refusal and claims or other
encumbrances ("Liens").
(b) All of the outstanding shares of capital stock of Veritas
Merger Sub are owned directly by Veritas Holdco; all of the outstanding shares
of capital stock of Veritas Holdco are owned directly by ▇▇▇▇▇ ▇▇, a direct,
wholly owned subsidiary of Caymanco ("Caymanco Sub"); and all of the outstanding
share capital of Caymanco Sub are owned directly by Caymanco. Each of Caymanco,
Caymanco Sub, Veritas Holdco and Veritas Merger Sub was incorporated solely for
the purpose of engaging in the transactions contemplated hereby and have not
engaged in any activities other than in connection with the transactions
contemplated by this Agreement.
Section 6.5 No Violation of Law. Neither Veritas nor any of
its Subsidiaries is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which Veritas or any of its Subsidiaries or any of their
respective properties or assets is subject (including, without limitation, the
U.S. Foreign Corrupt Practices Act), except as would not have, individually or
in the aggregate, a
14
Veritas Material Adverse Effect. Veritas and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
governmental authorities necessary for the lawful conduct of their respective
businesses (the "Veritas Permits"), and have made all necessary filings required
under any federal, state, local or foreign law, regulation or rule, except where
the failure so to hold or file would not have a Veritas Material Adverse Effect.
Veritas and its Subsidiaries are in compliance with the terms of the Veritas
Permits, except where the failure so to comply would not have a Veritas Material
Adverse Effect. To the knowledge of Veritas, no investigation by any
governmental authority with respect to Veritas or any of its Subsidiaries is
pending or threatened, other than those the outcome of which would not have a
Veritas Material Adverse Effect.
Section 6.6 No Conflict.
(a) Neither the execution and delivery by Veritas, Caymanco,
Veritas Holdco or Veritas Merger Sub of this Agreement nor the consummation by
Veritas, Caymanco, Veritas Holdco or Veritas Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will: (i) subject to the
approvals referred to in Section 6.20, conflict with or result in a breach of
any provisions of the certificate of incorporation or bylaws or similar
organizational documents of Veritas or any of its Subsidiaries; (ii) violate, or
conflict with, or result in a breach of any of the terms or provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of Veritas or its Subsidiaries under, or result in
being declared void, voidable, or without further binding effect, or otherwise
result in a detriment to Veritas or any of its Subsidiaries under, any of the
terms, conditions or provisions of, any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, lease, contract, agreement, joint venture or
other instrument or obligation to which Veritas or any of its Subsidiaries is a
party, or by which Veritas or any of its Subsidiaries or any of their properties
is bound or affected; or (iii) subject to the filings and other matters referred
to in Section 6.6(b), contravene or conflict with or constitute a violation of
any provision of any law, rule, regulation, judgment, order or decree binding
upon or applicable to Veritas or any of its Subsidiaries or any of the
properties of Veritas or any of its Subsidiaries, except, in the case of matters
described in clause (ii) or (iii), as would not have, individually or in the
aggregate, a Veritas Material Adverse Effect.
(b) Neither the execution and delivery by Veritas, Caymanco,
Veritas Holdco or Veritas Merger Sub of this Agreement nor the consummation by
Veritas, Caymanco, Veritas Holdco or Veritas Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval, qualification or authorization of, or filing or registration
with, any court or governmental or regulatory authority, other than (i) the
filings relating to the Merger provided for in Article 1, (ii) the filing of a
listing application with the NYSE pursuant to Section 8.9, (iii) filings
required under the U.S. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Exchange Act, the Securities Act, the Securities
Trading Act, the Norwegian Exchange Act or applicable state securities and "Blue
Sky" laws, and applicable non-U.S. competition, antitrust or premerger
notification laws, (iv) filing of the amended and restated Memorandum of
Association and Articles of Association of Caymanco with the Registrar of
Companies of the Cayman Islands and (v) any filings with and
15
approvals (or confirmation of no action) from the Norwegian Ministry of Industry
under the Norwegian Acquisition Control Act 1994 ((i), (ii), (iii), (iv) and
(v), collectively, the "Regulatory Filings"), except for any consent, approval,
qualification or authorization the failure of which to obtain and for any filing
or registration the failure of which to make would not have a Veritas Material
Adverse Effect.
(c) Neither Veritas nor any of its Subsidiaries is in
violation of its certificate of incorporation or by-laws or similar
organizational documents or in default in the performance or observance of any
of the terms, conditions or provisions of, any note, bond, mortgage, indenture
or other instrument or agreement (including capital leases) evidencing
indebtedness of Veritas or any of its Subsidiaries.
Section 6.7 SEC Documents. Veritas has filed with the SEC all
documents required to be so filed by it since January 1, 2001, pursuant to
Sections 13(a), 14(a) and 15(d) of the Exchange Act, and Veritas has made
available to PGS each registration statement, report, proxy statement or
information statement (other than preliminary materials) it has so filed with
the SEC, each in the form (including exhibits, documents incorporated by
reference and any amendments thereto) filed with the SEC, and Veritas has filed
with the applicable Canadian securities regulatory authorities all documents
required to be filed by Veritas under applicable Canadian securities laws
(collectively, the "Veritas Reports"). As of its date, each Veritas Report (i)
complied in all material respects in accordance with the applicable requirements
of the Securities Act, the Exchange Act and the rules and regulations thereunder
and applicable Canadian securities laws and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC or
applicable Canadian securities regulatory authorities prior to the date hereof.
Each of the consolidated balance sheets included in or incorporated by reference
into the Veritas Reports filed in the U.S. under the Securities Act or the
Exchange Act (including the related notes and schedules) fairly presents in all
material respects the consolidated financial position of Veritas and its
Subsidiaries as of its date, and each of the consolidated statements of
operations, cash flows and changes in stockholders' equity included in or
incorporated by reference into the Veritas Reports (including any related notes
and schedules) fairly presents in all material respects the results of
operations, cash flows or changes in stockholders' equity, as the case may be,
of Veritas and its Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to (x) such exceptions as may be permitted by
Form 10-Q of the SEC and (y) normal year-end audit adjustments), in each case in
accordance with U.S. generally accepted accounting principles consistently
applied during the periods involved, except as may be noted therein. Except as
reflected in such financial statements, including all notes thereto, and except
for liabilities incurred in connection with this Agreement or the transactions
contemplated hereby neither Veritas nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on, or reserved against in,
a balance sheet of Veritas or in the notes thereto prepared in accordance with
U.S. generally accepted accounting principles consistently applied, other than
(i) liabilities and obligations arising in the ordinary course of business since
the date of such financial statements and (ii) liabilities or obligations which
would not have, individually or in the aggregate, a Veritas Material Adverse
Effect. Each consolidated balance sheet of Veritas included or incorporated by
16
reference into the Veritas Reports does not reflect a deferred tax liability for
unremitted earnings of Veritas' Subsidiaries which are subject to the Norwegian
Shipping Tax Provisions (Norwegian Tax Act Sections 8-10 to 8-20) (the
"Norwegian Shipping Tax Provisions") because such unremitted earnings are
properly treated as permanently reinvested in accordance with U.S. APB 23
requirements for reporting of deferred taxes under U.S. Statement of Financial
Accounting Standards ("SFAS")109.
Section 6.8 Litigation. There are no actions, suits or
proceedings pending against Veritas or any of its Subsidiaries or, to the
knowledge of Veritas, threatened against Veritas or any of its Subsidiaries, at
law or in equity, or before or by any federal, state or foreign commission,
board, bureau, agency or instrumentality, that would have, individually or in
the aggregate, a Veritas Material Adverse Effect. There are no outstanding
judgments, decrees, fines, injunctions, awards or orders against Veritas or any
of its Subsidiaries that would have, individually or in the aggregate, a Veritas
Material Adverse Effect.
Section 6.9 Absence of Certain Changes. Since December 31,
2000, there has not been (i) any loss or interference with the business of
Veritas or any of its Subsidiaries (or, after the Exchange Offer Closing, by
Caymanco) from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, or any other event or occurrence that has had or would have a Veritas
Material Adverse Effect, (ii) any material change by Veritas or any of its
Subsidiaries in its accounting methods, principles or practices or its tax
methods, practices or elections, (iii) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of Veritas (or,
after the Exchange Offer Closing, by Caymanco) or any redemption, purchase or
other acquisition of any of its securities, or (iv) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan, except in the ordinary course of business.
Section 6.10 Taxes.
(a) Each of Veritas, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or was a member has (i) properly filed (or there has been filed on its
behalf) on a timely basis with appropriate governmental authorities all tax
returns, claims for refund, statements, information, reports, declarations,
estimates, self-assessments and forms, including schedules and attachments
thereto, and including amendments thereof (collectively, "Tax Returns"),
required to be filed by or with respect to it on or prior to the date hereof,
and each of such Tax Returns is complete and accurate, except to the extent that
any failure to file or any incompleteness or inaccuracy in any filed Tax Return
would not have, individually or in the aggregate, a Veritas Material Adverse
Effect, and (ii) properly paid or deposited in full on a timely basis or made
adequate provisions reflected in the financial statements contained in the
Veritas Reports in accordance with generally accepted accounting principles (or
there has been paid or deposited or adequate provision has been made on its
behalf) for the payment of all taxes required to be paid by it, except to the
extent that any failure to pay or deposit or make adequate provision for the
payment of such taxes would not have, individually or in the aggregate, a
Veritas Material Adverse Effect.
17
(b) (i) Except to the extent being contested in good faith and
disclosed in the Veritas Disclosure Letter, all material deficiencies asserted
as a result of any examinations of Veritas and its Subsidiaries or, to the
knowledge of Veritas, any examinations of any other persons with respect to
taxes for which Veritas or any of its Subsidiaries may have liability, by
contract or otherwise, by any taxing authority have been paid, fully settled or
adequately provided for in the financial statements contained in the Veritas
Reports; (ii) except as adequately provided for in the Veritas Reports, no tax
audits or other administrative proceedings or court proceedings are presently
pending with regard to any taxes for which Veritas or any of its Subsidiaries
would be liable that would have, individually or in the aggregate, a Veritas
Material Adverse Effect, and no material deficiency for any such taxes has been
proposed, asserted or assessed pursuant to such examination against Veritas or
any of its Subsidiaries or, to the knowledge of Veritas, against any other
persons with respect to taxes for which Veritas or any of its Subsidiaries may
have liability, by contract or otherwise, by any taxing authority with respect
to any period; (iii) as of the date hereof, neither Veritas nor any of its
Subsidiaries has granted any requests, agreements, consents or waivers to
extend, or has otherwise caused to be extended, the statutory period of
limitations applicable to the assessment of any taxes with respect to any tax
returns of Veritas or any of its Subsidiaries; and (iv) neither Veritas nor any
of its Subsidiaries is a party to, is bound by or has any obligation under any
tax sharing, allocation, indemnity, reimbursement or make-whole agreement or any
similar agreement or arrangement. Neither Veritas nor any of its Subsidiaries
has any liability for taxes under Treas. Reg. Section 1.1502-6 or any similar
provision of state, local, foreign or other tax law, except for taxes of the
affiliated group of which Veritas is the common parent, within the meaning of
Section 1504(a)(1) of the Code or any similar provision of state, local, foreign
or other tax law. Caymanco Sub is and throughout its existence has always been a
disregarded entity for U.S. federal income tax purposes.
(c) Neither Veritas nor any of its Subsidiaries has executed
or entered into (or prior to the close of business on the Closing Date will
execute or enter into) with the Internal Revenue Service (the "IRS") or any
other taxing authority (i) any agreement or other document extending or having
the effect of extending the period for assessments or collection of any taxes
for which Veritas or any of its Subsidiaries would be liable or (ii) a closing
agreement pursuant to Section 7121 of the Code, or any predecessor provision
thereof or any similar provision of state, local, foreign or other tax law, that
relates to the assets or operations of Veritas or any of its Subsidiaries.
(d) There are no Liens on any of the assets of Veritas or any
of its Subsidiaries that arose in connection with the failure or alleged failure
to pay any tax other than for taxes which are not yet delinquent.
(e) For purposes of this Agreement, "tax" or "taxes" means all
net income, gross income, gross receipts, sales, use, goods and services,
value-added, ad valorem, transfer, registration, accumulated earnings, personal
holding company, corporation, excess profits, franchise, profits, license,
withholding (including, but not limited to, withholding under Sections 1441,
1442, 1445 and 1446 of the Code), payroll, employment, excise, severance, stamp,
occupation, premium, property, disability, capital stock, capital gains or
windfall profits taxes, customs duties, alternative or add-on minimum, estimated
or other taxes or governmental fees, assessments or charges of any kind
whatsoever, including any transferee or contractual liability
18
in respect of, or measured by reference to, any of the foregoing, excluding any
such taxes, fees, assessments or charges relating to environmental matters,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority and any expenses incurred in connection
with the determination, settlement or litigation of any liability for any of the
foregoing.
Section 6.11 Employee Benefit Plans.
(a) For purposes of this Section 6.11, all references to
"Veritas" shall be deemed to refer to Veritas and any trade or business, whether
or not incorporated, that together with Veritas would be deemed or treated as a
"single employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 414 of the Code.
Section 6.11 of the Veritas Disclosure Letter contains a list of all Veritas
Benefit Plans, except for any Veritas De Minimus Benefit Plan. The term "Veritas
Benefit Plans" means all employee benefit plans and other benefit arrangements,
including all "employee benefit plans" as defined in Section 3(3) of ERISA,
whether or not U.S.-based plans, and all other employee benefit, bonus,
incentive, deferred compensation, stock option (or other equity-based),
severance, employment, change in control, welfare (including post-retirement
medical and life insurance) and fringe benefit plans or agreements, whether or
not subject to ERISA or U.S.-based and whether written or oral, sponsored,
maintained or contributed to or required to be contributed to by Veritas, to
which Veritas is a party or is required to provide benefits under applicable
law, or in which any person who is currently or has been an employee or director
of Veritas is a participant, or with respect to which Veritas may have any
liability, contingent or otherwise. A Veritas Benefit Plan shall be deemed to be
a "Veritas De Minimus Benefit Plan" if the relevant Veritas Benefit Plan is a
non-U.S. based plan and either (A) is required by applicable law or regulation
or (B) (1) currently has aggregate accrued and unpaid benefit liabilities or
assets of $50,000 or less or (2) is reasonably expected to cost in the aggregate
$50,000 or less per annum to maintain. Except with respect to any Veritas De
Minimus Benefit Plan, Veritas will provide PGS, within 30 days after the date
hereof, with true and complete copies of the Veritas Benefit Plans or written
descriptions of all non-written agreements relating to the Veritas Benefit Plans
and, if applicable, the most recent trust agreements, Forms 5500, summary plan
descriptions, funding statements, annual reports and actuarial reports, if
applicable, for each such plan. Veritas has no contract, commitment, obligation
or intention, whether legally binding or not, to establish or adopt any new or
additional plans or other arrangements that would constitute Veritas Benefit
Plans if adopted, or to increase materially the benefits under any existing
Veritas Benefit Plan.
(b) Except for such matters as, individually or in the
aggregate, do not and will not have a Veritas Material Adverse Effect: all
applicable reporting and disclosure requirements have been met with respect to
Veritas Benefit Plans; to the extent applicable, Veritas Benefit Plans comply
with the requirements of applicable laws, rules and regulations, including
without limitation, ERISA and the Code, and any Veritas Benefit Plan intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS; Veritas Benefit Plans have been maintained
and operated in accordance with their terms, and, to the knowledge of Veritas,
there are no breaches of fiduciary duty in connection with Veritas Benefit
Plans; there are no pending, or to the knowledge of Veritas, threatened claims
against or otherwise involving any Veritas Benefit Plan, and no suit, action or
other litigation
19
(excluding claims for benefits incurred in the ordinary course of Veritas
Benefit Plan activities) has been brought against or with respect to any such
Veritas Benefit Plan; all contributions required to be made as of the date
hereof to Veritas Benefit Plans have been made or provided for.
(c) Neither Veritas nor any entity that has at any time during
the six-year period ending on the Effective Time been required to be treated as
a single employer together with Veritas under Section 414 of the Code has at any
time within six years prior to the Effective Time maintained, contributed to, or
had an obligation to contribute to, a "multiemployer plan" within the meaning of
Section 3(37) of ERISA, an "employee pension benefit plan," as defined in
Section 3(2) of ERISA that is subject to the requirements of Title IV of ERISA
or Section 412 of the Code, or a voluntary employee's beneficiary association
within the meaning of Section 501(c)(9) of the Code.
(d) The execution of, and performance of the transactions
contemplated by, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent event or events) constitute an event under any
benefit plan, policy, arrangement or agreement or any trust or loan (in
connection therewith) that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any employee of Veritas. Veritas will provide PGS, within 30 days after the
date hereof, with a copy of any such benefit plans, policies, arrangements or
agreements and underlying data from which reasonable estimates of the cost of
providing any such benefits can be derived. Veritas has not made, and is not
obligated to make, any payments in connection with the transactions contemplated
by this Agreement that could reasonably be expected to be non-deductible under
Section 280G of the Code.
(e) No Veritas Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of Veritas for periods extending beyond their
retirement or other termination of service other than (i) coverage mandated by
applicable law, (ii) death benefits under any "pension plan" or (iii) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary).
Section 6.12 Labor Matters. Except as would not have a Veritas
Material Adverse Effect, (i) neither Veritas nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization and (ii) to
the knowledge of Veritas, there are no organizational efforts with respect to
the formation of a collective bargaining unit presently being made or threatened
involving employees of Veritas or any of its Subsidiaries.
Section 6.13 Environmental Matters. Except as would not have,
individually or in the aggregate, a Veritas Material Adverse Effect:
(a) Veritas and its Subsidiaries are, and at all times have
been, in compliance with all limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations contained in or
imposed under any law, ordinance, rule or regulation related to (i) the
control or reporting of any potential pollutant or protection of the
environment,
20
(ii) solid, gaseous or liquid waste generation, handling, treatment,
storage, transportation or disposal, or (iii) the regulation of or
exposure to substances that are hazardous, toxic or otherwise alleged
to be harmful ("Environmental Laws");
(b) there are not any past or present facts, conditions or
circumstances at, or arising out of, any current or former businesses,
assets or properties (whether owned or leased) of Veritas or any
Subsidiary of Veritas, including but not limited to on-site or off-site
disposal or release of any chemical substance, product or waste, that
would give rise to (i) liabilities or obligations for any cleanup,
remediation, removal or other corrective action under any Environmental
Law or (ii) liabilities or claims for personal injury, property damage,
or damage to natural resources;
(c) neither Veritas nor any of its Subsidiaries has (i)
received any notice of noncompliance with, violation of, or liability
or potential liability under any Environmental Law or (ii) entered into
any consent decree or order or is subject to any order of any court or
governmental authority or tribunal under any Environmental Law or
relating to the cleanup of any hazardous materials contamination;
(d) Veritas and its Subsidiaries have in full force and effect
all environmental permits, licenses, approvals and other authorizations
required to conduct their operations and are operating in compliance
thereunder, and neither Veritas nor any of its Subsidiaries knows of
any reason why it would not be able to renew any of the permits,
licenses, or other authorizations required pursuant to any
Environmental Laws to operate and use any of its assets for their
current purposes and uses;
(e) there are no obligations, undertakings or liabilities
arising out of or relating to Environmental Laws that Veritas or any of
its Subsidiaries has agreed to, assumed or retained, by contract or
otherwise;
(f) there are no existing or, to the knowledge of Veritas,
proposed requirements under Environmental Laws that will require
Veritas or any of its Subsidiaries to make capital improvements to its
assets or properties or make other expenditures in the future to remain
in compliance with Environmental Laws; and
(g) Veritas has made available for inspection and review by
PGS copies of all environmental audits, assessments or other
evaluations of Veritas or any of its Subsidiaries or any of their
assets or properties that are in the possession of Veritas or its
Subsidiaries.
Section 6.14 Intellectual Property. Veritas and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, patent applications, trademarks and service marks (including the
registrations and applications therefor), trade names, copyrights and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trade secrets and all other
proprietary information and the goodwill associated therewith (collectively, the
"Veritas Intellectual Property") that are used or held for use in connection
with their respective businesses as currently being conducted, except where the
failure to own or possess such licenses and other
21
rights would not have, individually or in the aggregate, a Veritas Material
Adverse Effect, and there are no assertions or claims challenging the validity,
ownership or enforceability of any of the foregoing which would have,
individually or in the aggregate, a Veritas Material Adverse Effect. Veritas
Intellectual Property is owned or licensed by Veritas or its Subsidiaries free
and clear of any Liens. Neither Veritas nor its Subsidiaries has granted to any
other person any license to use any Veritas Intellectual Property. The conduct
of Veritas' and its Subsidiaries' respective businesses as currently conducted
does not conflict with any intellectual property rights of others in any way
that would have, individually or in the aggregate, a Veritas Material Adverse
Effect. There is no infringement of any proprietary right owned by or licensed
by or to Veritas or any of its Subsidiaries that would have, individually or in
the aggregate, a Veritas Material Adverse Effect. Veritas and its Subsidiaries
have taken reasonable precautions to protect their rights in the Veritas
Intellectual Property and to maintain the confidentiality of their trade
secrets, know-how and other confidential intellectual property. All employees of
Veritas and its Subsidiaries have executed confidentiality agreements and agreed
to assign to Veritas and its Subsidiaries inventions and other intellectual
property conceived, developed or created in the course of their employment,
except for such failures to do so that would not have, individually or in the
aggregate, a Veritas Material Adverse Effect.
Section 6.15 Insurance. Veritas and each of its Subsidiaries
have policies of insurance and bonds of the type and in amounts customarily
carried by persons conducting businesses or owning assets similar to those of
Veritas and its Subsidiaries. There is no material claim pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds, except questioned,
denied or disputed claims the failure to provide coverage for which would not
have, individually or in the aggregate, a Veritas Material Adverse Effect.
Except as would not have, individually or in the aggregate, a Veritas Material
Adverse Effect, (a) all premiums due and payable under all such policies and
bonds have been paid, (b) Veritas and its Subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds
and (c) to the knowledge of Veritas, there is no threatened termination of, or
material premium increase with respect to, any of such policies.
Section 6.16 Leases.
(a) No vessel or asset forming part of the topside of a vessel
(a "Vessel") that is reflected in the financial statements contained in the
Veritas Reports is or has been, within the last 10 years, subject to a lease,
similar agreement or ancillary agreement related thereto pursuant to which
Veritas or any of its Subsidiaries agrees or has agreed that another person is
treated as the owner of such Vessel for tax purposes, and with respect to which
Veritas or any of its Subsidiaries has, pursuant to the terms of such agreement,
agreed to pay, reimburse or indemnify for taxes or hypothetical taxes of any
person that is a party to such agreement or adjust lease payments or other
amounts paid to such person to compensate for taxes or hypothetical taxes
calculated with respect to such person, including any defeasance of the
obligations thereunder. Each Vessel required pursuant to this Section 6.16 to be
listed in the Veritas Disclosure Letter is leased to a company duly incorporated
under the laws of the United Kingdom. The treatment of any Vessels listed in the
Veritas Disclosure Letter as owned by or belonging to another person for the
purposes of the United Kingdom Capital Allowances ▇▇▇ ▇▇▇▇ or the United Kingdom
Capital Allowances ▇▇▇ ▇▇▇▇, whichever is applicable, is and has been in
accordance with
22
applicable United Kingdom law. Neither Veritas nor any of its Subsidiaries has
received a claim, demand or request for indemnification, reimbursement, increase
in lease payments with respect to, or increase in collateral or support in
connection with, any leases, similar agreements or ancillary agreements related
thereto with respect to Vessels for which disclosure is made pursuant to the
first sentence of this Section 6.16(a), including any agreements for the
defeasance of obligations thereunder, related to taxes or hypothetical taxes of
any person that is a party to such agreement.
(b) All Veritas Subsidiaries that are, or have been within the
last 10 years, lessees of Vessels that are required pursuant to this Section
6.16 to be disclosed in the Veritas Disclosure Letter have never been a resident
of, nor had a permanent establishment or branch or agency in, any country other
than the country of their incorporation, and are not subject to material tax
imposed by any country other than the country of their incorporation on any of
their current or accumulated profits. Each Veritas Subsidiary that is assessed
under the Norwegian Shipping Tax Provisions is qualified for, and operated in
accordance with, the Norwegian Shipping Tax Provisions, and Veritas and its
Subsidiaries have taken no action or not failed to take action which would be
likely to jeopardize such qualification or would be likely to result in the
imposition of taxes in amounts that materially exceed the amounts shown in the
financial statements contained in the Veritas Reports. The Norwegian tax
authorities have reviewed the Tax Returns of Veritas and each Veritas Subsidiary
that is included within the Norwegian Shipping Tax Provisions up through the tax
year ended December 31, 2000, and have not proposed, asserted or assessed any
taxes in excess of the taxes shown on such Tax Returns, except to the extent
that any failure to have paid such taxes would not have, individually or in the
aggregate, a Veritas Material Adverse Effect.
Section 6.17 No Brokers. Veritas has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Caymanco, Veritas or PGS to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Veritas has retained Evercore Group Inc. as its
financial advisor, the arrangements with which have been disclosed in writing to
PGS prior to the date hereof.
Section 6.18 Opinion of Financial Advisor. The Board of
Directors of Veritas has received the opinion of Evercore Group Inc. to the
effect that, as of the date thereof, the Merger Ratio and the Exchange Ratio are
fair, from a financial point of view, to the holders of Veritas Common Stock.
Section 6.19 PGS Share Ownership. Neither Veritas nor any of
its Subsidiaries owns any share capital of PGS or any other securities
convertible into or otherwise exercisable to acquire share capital of PGS,
including PGS ADSs.
Section 6.20 Vote Required. The affirmative vote of the
holders of at least a majority of the votes attached to the outstanding shares
of Veritas Common Stock and Veritas Special Voting Stock, voting together as a
single class, is the only vote of the holders of any class or series of Veritas
capital stock necessary to adopt this Agreement and to approve the Merger and
the transactions contemplated hereby.
23
Section 6.21 Real and Personal Property. Veritas and its
Subsidiaries have indefeasible title to all real property and good and
marketable title to all personal property owned by them, in each case free and
clear of all Liens, except such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by Veritas and its Subsidiaries.
Section 6.22 Certain Contracts. Other than as listed on an
exhibit index included in, or otherwise filed as an exhibit to or as part of, a
Veritas Report, neither Veritas nor any of its Subsidiaries is a party to or
bound by (i) any "material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC), (ii) any non-competition agreement or any other
agreement or obligation that purports to limit in any material respect the
manner in which, or the localities in which, all or any material portion of the
current business of Veritas and its Subsidiaries, taken as a whole, is
conducted, (iii) any contract or other agreement that involves, or may involve,
aggregate payments by any party thereto of $10,000,000 or more, which are to be
performed in whole or in part after the Effective Time, (iv) any contract or
other agreement that would prohibit or materially delay the consummation of the
Merger or the Exchange Offer or any of the transactions contemplated by this
Agreement, (v) any standstill agreements that do not expire within six months of
the date hereof that would limit or prohibit Caymanco or Veritas from acquiring
any interest in or the assets of any third party or (vi) any contract or
agreement for the borrowing of money containing covenants or provisions that
would be violated or that would result in a default of such contract or
agreement in the event the Merger and the Exchange Offer or the transactions
contemplated by this Agreement were consummated (all contracts or agreements of
the types described in clauses (i) through (vi) being referred to herein as
"Veritas Material Contracts"). Veritas has delivered to PGS, or provided to PGS
for review, prior to the execution of this Agreement, complete and correct
copies of all Veritas Material Contracts not filed as exhibits to any of the
Veritas Reports filed prior to the date of this Agreement except for (1)
contracts containing competitively sensitive information as to which access, use
and treatment are subject to applicable law, (2) contracts containing
information that Veritas reasonably believes it may not provide to PGS by reason
of applicable law, rules or regulations, or (3) contracts that Veritas or any
Subsidiary is required to keep confidential by reason of contract, agreement or
understanding with third parties. Each Veritas Material Contract is valid and
binding (subject to the Enforceability Exceptions) on Veritas (or, to the extent
a Subsidiary of Veritas is a party, such Subsidiary) and, to the knowledge of
Veritas, on the other parties to such contracts, and is in full force and
effect, and Veritas and each Subsidiary of Veritas have performed all
obligations required to be performed by them to date under each Veritas Material
Contract, except where such failure to be binding or in full force and effect or
such failure to perform, individually or in the aggregate, would not have a
Veritas Material Adverse Effect. Neither Veritas nor any Subsidiary of Veritas
(i) knows of, or has received written notice of, any breach of or violation or
default under (nor, to the knowledge of Veritas, does there exist any condition
which with the passage of time or the giving of notice or both would result in
such a violation or default under) any Veritas Material Contract, other than
such breaches, violations or defaults as would not have a Veritas Material
Adverse Effect, or (ii) knows of, has received written notice of or has engaged
in substantive discussions regarding the desire of the other party or parties to
any such Veritas Material Contract to cancel, terminate or repudiate such
contract.
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Section 6.23 Amendment to the Veritas Rights Agreement.
Veritas has amended or taken other action under the Veritas Rights Agreement so
that none of the execution and delivery of this Agreement, the conversion of
shares of Veritas Common Stock into the right to receive Caymanco Shares in
accordance with Article 4 of this Agreement or the consummation of the Merger
and the Exchange Offer or any other transaction contemplated by this Agreement
will cause (i) any Veritas Right to become exercisable under the Veritas Rights
Agreement, (ii) Caymanco, PGS or any of their respective shareholders or
Subsidiaries to be deemed an "Acquiring Person" (as defined in the Veritas
Rights Agreement), (iii) any such event to be an event requiring an adjustment
of the purchase price of the Veritas Rights under Section 11(a)(ii) of the
Veritas Rights Agreement, (iv) Section 13 of the Veritas Rights Agreement to be
or become applicable to any such event; or (v) a "Stock Acquisition Date" or a
"Distribution Date" (each as defined in the Veritas Rights Agreement) to occur
upon any such event, and so that the Veritas Rights will expire immediately
prior to the Effective Time. Veritas has delivered to PGS a true and complete
copy of the Veritas Rights Agreement, as amended to date.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PGS
Except as set forth in the disclosure letter delivered to
Veritas concurrently with the execution hereof (the "PGS Disclosure Letter"),
PGS represents and warrants to Veritas, Caymanco, Veritas Holdco and Veritas
Merger Sub that:
Section 7.1 Existence; Good Standing; Corporate Authority. PGS
is a public limited liability company duly incorporated, validly existing and in
good standing under the laws of the Kingdom of Norway. PGS is duly qualified to
do business as a foreign corporation and, to the extent such concept or similar
concept exists in the relevant jurisdiction, is in good standing under the laws
of any jurisdiction in which the character of the properties owned or leased by
it therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified would not have,
individually or in the aggregate, a PGS Material Adverse Effect. PGS has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as now conducted. The copy of PGS' articles of
association previously made available to Veritas is true and correct and
contains all amendments as of the date hereof.
Section 7.2 Authorization, Validity and Effect of Agreements.
PGS has the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements and documents contemplated hereby to which it
is a party. The consummation by PGS of the transactions contemplated hereby has
been duly authorized by all requisite corporate action on behalf of PGS. This
Agreement constitutes the valid and legally binding obligation of PGS,
enforceable against it in accordance with its terms, subject to the
Enforceability Exceptions.
Section 7.3 Capitalization. As of the date hereof, the issued
and outstanding share capital of PGS consists of 103,345,987 PGS Shares, and
there were 8,964,404 PGS Shares issuable upon exercise of outstanding PGS
options. All such issued and outstanding PGS Shares are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. As
25
of the date of this Agreement, except as set forth in this Section 7.3, there
are no outstanding shares of capital stock and there are no options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate PGS or any of its Subsidiaries to issue, transfer or
sell any shares of capital stock or other voting securities of PGS or any of its
Subsidiaries. PGS has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of PGS on any matter.
Section 7.4 Certain Information Regarding Subsidiaries. Each
of PGS' Significant Subsidiaries is a corporation or other legal entity duly
organized, validly existing and, to the extent such concept or similar concept
exists in the relevant jurisdiction, in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate or other entity
power and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and,
to the extent such concept or similar concept exists in the relevant
jurisdiction, in good standing in each jurisdiction in which the ownership,
operation or lease of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not have a PGS Material Adverse Effect. All of
the outstanding shares of capital stock of, or other ownership interests in,
each of PGS' Significant Subsidiaries are duly authorized, validly issued, fully
paid and nonassessable, and, except for directors' qualifying shares, are owned,
directly or indirectly, by PGS free and clear of all Liens.
Section 7.5 No Violation of Law. Neither PGS nor any of its
Subsidiaries is in violation of any order of any court, governmental authority
or arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which PGS or any of its Subsidiaries or any of their respective
properties or assets is subject (including, without limitation, the U.S. Foreign
Corrupt Practices Act), except as would not have, individually or in the
aggregate, a PGS Material Adverse Effect. PGS and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders, franchises and approvals of
all governmental authorities necessary for the lawful conduct of their
respective businesses (the "PGS Permits"), and have made all necessary filings
required under any federal, state, local or foreign law, regulation or rule,
except where the failure so to hold or file would not have a PGS Material
Adverse Effect. PGS and its Subsidiaries are in compliance with the terms of the
PGS Permits, except where the failure so to comply would not have a PGS Material
Adverse Effect. To the knowledge of PGS, no investigation by any governmental
authority with respect to PGS or any of its Subsidiaries is pending or
threatened, other than those the outcome of which would not have a PGS Material
Adverse Effect.
Section 7.6 No Conflict.
(a) Neither the execution and delivery by PGS of this
Agreement nor the consummation by PGS of the transactions contemplated hereby in
accordance with the terms hereof will: (i) conflict with or result in a breach
of any provisions of the articles of association of PGS or the certificate of
incorporation or bylaws or similar organizational documents of any Subsidiary of
PGS; (ii) violate, or conflict with, or result in a breach of any of the terms
or provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or
26
cancellation of, or give rise to a right of purchase under, or accelerate the
performance required by, or result in the creation of any Lien upon any of the
properties of PGS or its Subsidiaries under, or result in being declared void,
voidable, or without further binding effect, or otherwise result in a detriment
to PGS or any of its Subsidiaries, under any of the terms, conditions or
provisions of, any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement, joint venture or other instrument
or obligation to which PGS or any of its Subsidiaries is a party, or by which
PGS or any of its Subsidiaries or any of their properties is bound or affected;
or (iii) subject to the filings and other matters referred to in Section 7.6(b),
contravene or conflict with or constitute a violation of any provision of any
law, rule, regulation, judgment, order or decree binding upon or applicable to
PGS or any of its Subsidiaries or any of the properties of PGS or any of its
Subsidiaries, except, in the case of matters described in clause (ii) or (iii),
as would not have, individually or in the aggregate, a PGS Material Adverse
Effect.
(b) Neither the execution and delivery by PGS of this
Agreement nor the consummation by PGS of the transactions contemplated hereby in
accordance with the terms hereof will require any consent, approval,
qualification or authorization of, or filing or registration with, any court or
governmental or regulatory authority, other than Regulatory Filings, except for
any consent, approval, qualification or authorization the failure of which to
obtain and for any filing or registration the failure of which to make would not
have a PGS Material Adverse Effect.
(c) Neither PGS nor any of its Subsidiaries is in violation of
its articles of association or similar organizational documents or in default in
the performance or observance of any of the terms, conditions or provisions of,
any note, bond, mortgage, indenture or other instrument or agreement (including
capital leases) evidencing indebtedness of PGS or any of its Subsidiaries.
Section 7.7 SEC Documents. PGS has filed with the SEC all
documents required to be so filed by it since January 1, 2001, pursuant to
Sections 13(a) and 15(d) of the Exchange Act, and PGS has made available to
Veritas each registration statement and report it has so filed with the SEC,
each in the form (including exhibits, documents incorporated by reference and
any amendments thereto) filed with the SEC, and PGS has filed with the OSE all
documents required to be filed by PGS under the Securities Trading Act or the
Norwegian Exchange Act (collectively, the "PGS Reports"). As of its date, each
PGS Report (i) complied in all material respects in accordance with the
applicable requirements of the Securities Act, the Exchange Act, the Securities
Trading Act or the Norwegian Exchange Act, as applicable, and the respective
rules and regulations thereunder and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC or
OSE prior to the date hereof. Each of the consolidated balance sheets included
in or incorporated by reference into the PGS Reports filed in the U.S. under the
Securities Act or the Exchange Act (including the related notes and schedules)
fairly presents in all material respects the consolidated financial position of
PGS and its Subsidiaries as of its date and each of the consolidated statements
of operations, cash flows and changes in shareholders' equity included in or
incorporated by reference into the PGS Reports (including any related notes and
schedules) fairly presents in all material respects the results of operations,
cash flows or changes in
27
shareholders' equity, as the case may be, of PGS and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to (x)
such exceptions as may be permitted by the rules and regulations of the SEC and
(y) normal year-end audit adjustments), in each case in accordance with U.S.
generally accepted accounting principles consistently applied during the periods
involved, except as may be noted therein. Except as reflected in such financial
statements, including all notes thereto, and except for liabilities incurred in
connection with this Agreement or the transactions contemplated hereby neither
PGS nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of PGS or in the notes
thereto prepared in accordance with U.S. generally accepted accounting
principles consistently applied, other than (i) liabilities and obligations
arising in the ordinary course of business since the date of such financial
statements and (ii) liabilities or obligations which would not have,
individually or in the aggregate, a PGS Material Adverse Effect. Each
consolidated balance sheet of PGS included or incorporated by reference into the
PGS Reports does not reflect a deferred tax liability for unremitted earnings of
PGS' Subsidiaries (other than Hara Skip A/S) which are subject to the Norwegian
Shipping Tax Provisions because such unremitted earnings are properly treated as
permanently reinvested in accordance with U.S. APB 23 requirements for reporting
of deferred taxes under U.S. SFAS 109.
Section 7.8 Litigation. There are no actions, suits or
proceedings pending against PGS or any of its Subsidiaries or, to the knowledge
of PGS, threatened against PGS or any of its Subsidiaries, at law or in equity,
or before or by any federal, state or foreign commission, board, bureau, agency
or instrumentality, that would have, individually or in the aggregate, a PGS
Material Adverse Effect. There are no outstanding judgments, decrees, fines,
injunctions, awards or orders against PGS or any of its Subsidiaries that would
have, individually or in the aggregate, a PGS Material Adverse Effect.
Section 7.9 Absence of Certain Changes. Since December 31,
2000, there has not been (i) any loss or interference with the business of PGS
or any of its Subsidiaries from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, or any other event or occurrence that has
had or would have a PGS Material Adverse Effect, (ii) any material change by PGS
or any of its Subsidiaries in its accounting methods, principles or practices or
its tax methods, practices or elections, (iii) any declaration, setting aside or
payment of any dividend or distribution in respect of any capital stock of PGS
or any redemption, purchase or other acquisition of any of its securities, or
(iv) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, except in the ordinary course of
business.
Section 7.10 Taxes.
(a) Each of PGS, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or was a member has (i) properly filed (or there has been filed on its
behalf) on a timely basis with appropriate governmental authorities all Tax
Returns required to be filed by or with respect to it on or prior to the date
hereof, and each of such Tax Returns is complete and accurate, except to the
extent that any failure to file or any incompleteness or inaccuracy in any filed
Tax Return would not have, individually or in the
28
aggregate, a PGS Material Adverse Effect, and (ii) properly paid or deposited in
full on a timely basis or made adequate provisions reflected in the financial
statements contained in the PGS Reports in accordance with generally accepted
accounting principles (or there has been paid or deposited or adequate provision
has been made on its behalf) for the payment of all taxes required to be paid by
it, except to the extent that any failure to pay or deposit or make adequate
provision for the payment of such taxes would not have, individually or in the
aggregate, a PGS Material Adverse Effect.
(b) (i) Except to the extent being contested in good faith and
disclosed in the PGS Disclosure Letter, all material deficiencies asserted as a
result of any examinations of PGS and its Subsidiaries or, to the knowledge of
PGS, any examinations of any other persons with respect to taxes for which PGS
or any of its Subsidiaries may have liability, by contract or otherwise, by any
taxing authority have been paid, fully settled or adequately provided for in the
financial statements contained in the PGS Reports; (ii) except as adequately
provided for in the PGS Reports, no tax audits or other administrative
proceedings or court proceedings are presently pending with regard to any taxes
for which PGS or any of its Subsidiaries would be liable that would have,
individually or in the aggregate, a PGS Material Adverse Effect, and no material
deficiency for any such taxes has been proposed, asserted or assessed pursuant
to such examination against PGS or any of its Subsidiaries or, to the knowledge
of PGS, against any other persons with respect to taxes for which PGS or any of
its Subsidiaries may have liability, by contract or otherwise, by any taxing
authority with respect to any period; (iii) as of the date hereof, neither PGS
nor any of its Subsidiaries has granted any requests, agreements, consents or
waivers to extend, or has otherwise caused to be extended, the statutory period
of limitations applicable to the assessment of any taxes with respect to any tax
returns of PGS or any of its Subsidiaries; and (iv) neither PGS nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any tax
sharing, allocation, indemnity, reimbursement or make-whole agreement or any
similar agreement or arrangement. Neither PGS nor any of its Subsidiaries has
any liability for taxes under Treas. Reg. Section 1.1502-6 or any similar
provision of state, local, foreign or other tax law, except for taxes of the
affiliated group of which PGS is the common parent, within the meaning of
Section 1504(a)(1) of the Code or any similar provision of state, local,
foreign or other tax law.
(c) Neither PGS nor any of its Subsidiaries has executed or
entered into (or prior to the close of business on the Closing Date will execute
or enter into) with the IRS or any other taxing authority (i) any agreement or
other document extending or having the effect of extending the period for
assessments or collection of any taxes for which PGS or any of its Subsidiaries
would be liable or (ii) a closing agreement pursuant to Section 7121 of the
Code, or any predecessor provision thereof or any similar provision of state,
local, foreign or other tax law, that relates to the assets or operations of PGS
or any of its Subsidiaries.
(d) There are no Liens on any of the assets of PGS or any of
its Subsidiaries that arose in connection with the failure or alleged failure to
pay any tax other than for taxes which are not yet delinquent.
29
Section 7.11 Employee Benefit Plans.
(a) For purposes of this Section 7.11, all references to "PGS"
shall be deemed to refer to PGS and any trade or business, whether or not
incorporated, that together with PGS would be deemed or treated as a "single
employer" within the meaning of Section 4001 of ERISA, or Section 414 of the
Code. Section 7.11 of the PGS Disclosure Letter contains a list of all PGS
Benefit Plans, except for any PGS De Minimus Benefit Plan. The term "PGS Benefit
Plans" means all employee benefit plans and other benefit arrangements,
including all "employee benefit plans" as defined in Section 3(3) of ERISA,
whether or not U.S.-based plans, and all other employee benefit, bonus,
incentive, deferred compensation, stock option (or other equity-based),
severance, employment, change in control, welfare (including post-retirement
medical and life insurance) and fringe benefit plans or agreements, whether or
not subject to ERISA or U.S.-based and whether written or oral, sponsored,
maintained or contributed to or required to be contributed to by PGS, to which
PGS is a party or is required to provide benefits under applicable law, or in
which any person who is currently or has been an employee or director of PGS is
a participant, or with respect to which PGS may have any liability, contingent
or otherwise. A PGS Benefit Plan shall be deemed to be a "PGS De Minimus Benefit
Plan" if the relevant PGS Benefit Plan is a non-U.S. based plan and either (A)
is required by applicable law or regulation or (B) (1) currently has aggregate
accrued and unpaid benefit liabilities or assets of $50,000 or less or (2) is
reasonably expected to cost in the aggregate $50,000 or less per annum to
maintain. Except with respect to any PGS De Minimus Benefit Plan, PGS will
provide Veritas, within 30 days after the date hereof, with true and complete
copies of the PGS Benefit Plans or written descriptions of all non-written
agreements relating to the PGS Benefit Plans and, if applicable, the most recent
trust agreements, Forms 5500, summary plan descriptions, funding statements,
annual reports and actuarial reports, if applicable, for each such plan. PGS has
no contract, commitment, obligation or intention, whether legally binding or
not, to establish or adopt any new or additional plans or other arrangements
that would constitute PGS Benefit Plans if adopted, or to increase materially
the benefits under any existing PGS Benefit Plan.
(b) Except for such matters as, individually or in the
aggregate, do not and will not have a PGS Material Adverse Effect: all
applicable reporting and disclosure requirements have been met with respect to
PGS Benefit Plans; to the extent applicable, PGS Benefit Plans comply with the
requirements of applicable laws, rules and regulations, including without
limitation, ERISA and the Code, and any PGS Benefit Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS; PGS Benefit Plans have been maintained and
operated in accordance with their terms, and, to the knowledge of PGS, there are
no breaches of fiduciary duty in connection with PGS Benefit Plans; there are no
pending, or to the knowledge of PGS, threatened claims against or otherwise
involving any PGS Benefit Plan, and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of PGS Benefit
Plan activities) has been brought against or with respect to any such PGS
Benefit Plan; all contributions required to be made as of the date hereof to PGS
Benefit Plans have been made or provided for.
(c) Neither PGS nor any entity that has at any time during the
six-year period ending on the Effective Time been required to be treated as a
single employer together with PGS under Section 414 of the Code has at any time
within six years prior to the Effective Time maintained, contributed to, or had
an obligation to contribute to, a "multiemployer plan" within
30
the meaning of Section 3(37) of ERISA, an "employee pension benefit plan," as
defined in Section 3(2) of ERISA that is subject to the requirements of Title IV
of ERISA or Section 412 of the Code, or a voluntary employee's beneficiary
association within the meaning of Section 501(c)(9) of the Code.
(d) The execution of, and performance of the transactions
contemplated by, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent event or events) constitute an event under any
benefit plan, policy, arrangement or agreement or any trust or loan (in
connection therewith) that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any employee of PGS. PGS will provide Veritas, within 30 days after the date
hereof, with a copy of any such benefit plans, policies, arrangements or
agreements and underlying data from which reasonable estimates of the cost of
providing any such benefits can be derived. PGS has not made, and is not
obligated to make, any payments in connection with the transactions contemplated
by this Agreement that could reasonably be expected to be non-deductible under
Section 280G of the Code.
(e) No PGS Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of PGS for periods extending beyond their
retirement or other termination of service other than (i) coverage mandated by
applicable law, (ii) death benefits under any "pension plan" or (iii) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary).
Section 7.12 Labor Matters. Except as would not have a PGS
Material Adverse Effect, (i) neither PGS nor any of its Subsidiaries is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization and (ii) to
the knowledge of PGS, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of PGS or any of its Subsidiaries.
Section 7.13 Environmental Matters. Except as would not have,
individually or in the aggregate, a PGS Material Adverse Effect:
(a) PGS and its Subsidiaries are, and at all times have been,
in compliance with all limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations contained in or
imposed under Environmental Laws;
(b) there are not any past or present facts, conditions or
circumstances at, or arising out of, any current or former businesses,
assets or properties (whether owned or leased) of PGS or any Subsidiary
of PGS, including but not limited to on-site or off-site disposal or
release of any chemical substance, product or waste, that would give
rise to (i) liabilities or obligations for any cleanup, remediation,
removal or other corrective action under any Environmental Law or (ii)
liabilities or claims for personal injury, property damage, or damage
to natural resources;
(c) neither PGS nor any of its Subsidiaries has (i) received
any notice of noncompliance with, violation of, or liability or
potential liability under any
31
Environmental Law or (ii) entered into any consent decree or order or
is subject to any order of any court or governmental authority or
tribunal under any Environmental Law or relating to the cleanup of any
hazardous materials contamination;
(d) PGS and its Subsidiaries have in full force and effect all
environmental permits, licenses, approvals and other authorizations
required to conduct their operations and are operating in compliance
thereunder, and neither PGS nor any of its Subsidiaries knows of any
reason why it would not be able to renew any of the permits, licenses,
or other authorizations required pursuant to any Environmental Laws to
operate and use any of its assets for their current purposes and uses;
(e) there are no obligations, undertakings or liabilities
arising out of or relating to Environmental Laws that PGS or any of its
Subsidiaries has agreed to, assumed or retained, by contract or
otherwise;
(f) there are no existing or, to the knowledge of PGS,
proposed requirements under Environmental Laws that will require PGS or
any of its Subsidiaries to make capital improvements to its assets or
properties or make other expenditures in the future to remain in
compliance with Environmental Laws; and
(g) PGS has made available for inspection and review by
Veritas copies of all environmental audits, assessments or other
evaluations of PGS or any of its Subsidiaries or any of their assets or
properties that are in the possession of PGS or its Subsidiaries.
Section 7.14 Intellectual Property. PGS and its Subsidiaries
own or possess adequate licenses or other valid rights to use all patents,
patent applications, trademarks and service marks (including the registrations
and applications therefor), trade names, copyrights and know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trade secrets and all other
proprietary information and the goodwill associated therewith (collectively, the
"PGS Intellectual Property") that are used or held for use in connection with
their respective businesses as currently being conducted, except where the
failure to own or possess such licenses and other rights would not have,
individually or in the aggregate, a PGS Material Adverse Effect, and there are
no assertions or claims challenging the validity, ownership or enforceability of
any of the foregoing which would have, individually or in the aggregate, a PGS
Material Adverse Effect. PGS Intellectual Property is owned or licensed by PGS
or its Subsidiaries free and clear of any Liens. Neither PGS nor its
Subsidiaries has granted to any other person any license to use any PGS
Intellectual Property. The conduct of PGS' and its Subsidiaries' respective
businesses as currently conducted does not conflict with any intellectual
property rights of others in any way that would have, individually or in the
aggregate, a PGS Material Adverse Effect. There is no infringement of any
proprietary right owned by or licensed by or to PGS or any of its Subsidiaries
that would have, individually or in the aggregate, a PGS Material Adverse
Effect. PGS and its Subsidiaries have taken reasonable precautions to protect
their rights in the PGS Intellectual Property and to maintain the
confidentiality of their trade secrets, know-how and other confidential
intellectual property. All employees of PGS and its Subsidiaries have executed
confidentiality agreements and agreed to assign to PGS and its Subsidiaries
inventions and other intellectual property
32
conceived, developed or created in the course of their employment, except for
such failures to do so that would not have, individually or in the aggregate, a
PGS Material Adverse Effect.
Section 7.15 Insurance. PGS and each of its Subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of PGS and
its Subsidiaries. There is no material claim pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds, except questioned, denied or disputed
claims the failure to provide coverage for which would not have, individually or
in the aggregate, a PGS Material Adverse Effect. Except as would not have,
individually or in the aggregate, a PGS Material Adverse Effect, (a) all
premiums due and payable under all such policies and bonds have been paid, (b)
PGS and its Subsidiaries are otherwise in compliance in all material respects
with the terms of such policies and bonds and (c) to the knowledge of PGS, there
is no threatened termination of, or material premium increase with respect to,
any of such policies.
Section 7.16 Leases.
(a) No Vessel that is reflected in the financial statements
contained in the PGS Reports is or has been, within the last 10 years, subject
to a lease, similar agreement or ancillary agreement related thereto pursuant to
which PGS or any of its Subsidiaries agrees or has agreed that another person is
treated as the owner of such Vessel for tax purposes, and with respect to which
PGS or any of its Subsidiaries has, pursuant to the terms of such agreement,
agreed to pay, reimburse or indemnify for taxes or hypothetical taxes of any
person that is a party to such agreement or adjust lease payments or other
amounts paid to such person to compensate for taxes or hypothetical taxes
calculated with respect to such person, including any defeasance of the
obligations thereunder. Each Vessel required pursuant to this Section 7.16 to be
listed in the PGS Disclosure Letter is leased to either PGS Shipping (Isle of
Man) Limited or Seckford Finance B.V., and is subleased to a company duly
incorporated under the laws of the United Kingdom. The treatment of any Vessels
listed in the PGS Disclosure Letter as owned by or belonging to another person
for the purposes of the United Kingdom Capital Allowances ▇▇▇ ▇▇▇▇ or the United
Kingdom Capital Allowances ▇▇▇ ▇▇▇▇, whichever is applicable, is and has been in
accordance with applicable United Kingdom law. Neither PGS nor any of its
Subsidiaries has received a claim, demand or request for indemnification,
reimbursement, increase in lease payments with respect to, or increase in
collateral or support in connection with, any leases, similar agreements or
ancillary agreements related thereto with respect to Vessels for which
disclosure is made pursuant to the first sentence of this Section 7.16(a),
including any agreements for the defeasance of obligations thereunder, related
to taxes or hypothetical taxes of any person that is a party to such agreement.
(b) PGS Shipping (Isle of Man) Limited and all other PGS
Subsidiaries that are, or have been within the last 10 years, lessees of Vessels
that are required pursuant to this Section 7.16 to be disclosed in the PGS
Disclosure Letter have never been a resident of, nor had a permanent
establishment or branch or agency in, any country other than the country of
their incorporation, and are not subject to material tax imposed by any country
other than the country of their incorporation on any of their current or
accumulated profits. Each PGS Subsidiary that is assessed under the Norwegian
Shipping Tax Provisions is qualified for, and operated in
33
accordance with, the Norwegian Shipping Tax Provisions, and PGS and its
Subsidiaries have taken no action or not failed to take action which would be
likely to jeopardize such qualification or would be likely to result in the
imposition of taxes in amounts that materially exceed the amounts shown in the
financial statements contained in the PGS Reports. The Norwegian tax authorities
have reviewed the Tax Returns of PGS and each PGS Subsidiary that is included
within the Norwegian Shipping Tax Provisions up through the tax year ended
December 31, 2000, and have not proposed, asserted or assessed any taxes in
excess of the taxes shown on such Tax Returns, except to the extent that any
failure to have paid such taxes would not have, individually or in the
aggregate, a PGS Material Adverse Effect. The amount that, if distributed as a
return of paid-in capital or fully-taxed equity or as repayment of debt from PGS
Shipping A/S to PGS or any of its Subsidiaries, would not result in the
imposition of Norwegian tax, exceeds U.S. $300 million.
Section 7.17 No Brokers. PGS has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Caymanco, Veritas or PGS to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that PGS has retained ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and ABG Sundal ▇▇▇▇▇▇▇ as its financial
advisors, the arrangements with which have been disclosed in writing to Veritas
prior to the date hereof.
Section 7.18 Opinion of Financial Advisor. The Board of
Directors of PGS has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that,
as of the date thereof, the effective exchange ratio of 2.13 PGS Shares or PGS
ADSs for each share of Veritas Common Stock pursuant to the Merger and the
Exchange Offer is fair, from a financial point of view, to the holders of PGS
Shares and PGS ADSs.
Section 7.19 Veritas Stock Ownership. Neither PGS nor any of
its Subsidiaries owns any shares of capital stock of Veritas or any other
securities convertible into or otherwise exercisable to acquire capital stock of
Veritas.
Section 7.20 Real and Personal Property. PGS and its
Subsidiaries have indefeasible title to all real property and good and
marketable title to all personal property owned by them, in each case free and
clear of all Liens, except such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by PGS and its Subsidiaries.
Section 7.21 Certain Contracts. Other than as listed on an
exhibit index included in, or otherwise filed as an exhibit to or as part of, a
PGS Report, neither PGS nor any of its Subsidiaries is a party to or bound by
(i) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC), (ii) any non-competition agreement or any other
agreement or obligation that purports to limit in any material respect the
manner in which, or the localities in which, all or any material portion of the
current business of PGS and its Subsidiaries, taken as a whole, is conducted,
(iii) any contract or other agreement that involves, or may involve, aggregate
payments by any party thereto of $20,000,000 or more, which are to be performed
in whole or in part after the Effective Time, (iv) any contract or other
agreement that
34
would prohibit or materially delay the consummation of the Merger or the
Exchange Offer or any of the transactions contemplated by this Agreement, (v)
any standstill agreements that do not expire within six months of the date
hereof that would limit or prohibit PGS from acquiring any interest in or the
assets of any third party or (vi) any contract or agreement for the borrowing of
money containing covenants or provisions that would be violated or that would
result in a default of such contract or agreement in the event the Merger and
the Exchange Offer or the transactions contemplated by this Agreement were
consummated (all contracts or agreements of the types described in clauses (i)
through (vi) being referred to herein as "PGS Material Contracts"). PGS has
delivered to Veritas, or provided to Veritas for review, prior to the execution
of this Agreement, complete and correct copies of all PGS Material Contracts not
filed as exhibits to any of the PGS Reports filed prior to the date of this
Agreement except for (1) contracts containing competitively sensitive
information as to which access, use and treatment are subject to applicable law,
(2) contracts containing information that PGS reasonably believes it may not
provide to Veritas by reason of applicable law, rules or regulations, or (3)
contracts that PGS or any Subsidiary is required to keep confidential by reason
of contract, agreement or understanding with third parties. Each PGS Material
Contract is valid and binding (subject to the Enforceability Exceptions) on PGS
(or, to the extent a Subsidiary of PGS is a party, such Subsidiary) and, to the
knowledge of PGS, on the other parties to such contracts, and is in full force
and effect, and PGS and each Subsidiary of PGS have performed all obligations
required to be performed by them to date under each PGS Material Contract,
except where such failure to be binding or in full force and effect or such
failure to perform, individually or in the aggregate, would not have a PGS
Material Adverse Effect. Neither PGS nor any Subsidiary of PGS (i) knows of, or
has received written notice of, any breach of or violation or default under
(nor, to the knowledge of PGS, does there exist any condition which with the
passage of time or the giving of notice or both would result in such a violation
or default under) any PGS Material Contract, other than such breaches,
violations or defaults as would not have a PGS Material Adverse Effect, or (ii)
knows of, has received written notice of or has engaged in substantive
discussions regarding the desire of the other party or parties to any such PGS
Material Contract to cancel, terminate or repudiate such contract.
ARTICLE 8
COVENANTS
Section 8.1 Conduct of Businesses. Prior to the Effective
Time, except as set forth in the Veritas Disclosure Letter or the PGS Disclosure
Letter, respectively, or as expressly contemplated by any other provision or
condition (including Section 5.1(d)) of this Agreement, or as required by
applicable law (provided that the party proposing to take such action has
provided the other party with advance notice of the proposed action to the
extent practicable), unless PGS or Veritas, respectively, has consented in
writing thereto, each of Veritas, PGS and, to the extent applicable, Caymanco:
(a) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
35
(b) shall use commercially reasonable best efforts, and shall
cause each of its Subsidiaries to use commercially reasonable best
efforts, to preserve intact their business organizations and goodwill
(except that any of its Subsidiaries may be merged with or into, or be
consolidated with, any of its Subsidiaries or may be liquidated into it
or any of its Subsidiaries), keep available the services of their
respective officers and employees and maintain satisfactory
relationships with those persons having business relationships with
them;
(c) shall not amend its articles of association (PGS), its
certificate of incorporation or bylaws (Veritas), or its memorandum of
association or articles of association (Caymanco); provided, however,
that PGS may amend its articles of association to increase its share
capital in connection with transactions permitted by Section 8.1(f) and
Caymanco may amend its articles of association in connection with the
adoption of a Shareholder Rights Plan of a customary form with terms
consistent with those described in Exhibit D attached hereto (the
"Caymanco Rights Agreement");
(d) shall promptly notify the other of any material change in
its condition (financial or otherwise) or business or any termination,
cancellation, repudiation or material breach of any Veritas Material
Contract or PGS Material Contract, as the case may be (or
communications indicating that the same may be contemplated), or any
material litigation or material governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), or the breach in any material respect of any
representation or warranty made by it herein;
(e) shall promptly deliver to the other true and correct
copies of any report, statement or schedule filed subsequent to the
date of this Agreement with the SEC or any governmental or regulatory
authority that administers the securities laws of the Kingdom of Norway
or of Canada or any stock exchange (including the NYSE, the OSE and the
Toronto Stock Exchange);
(f) shall not (i) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on
the date hereof and disclosed pursuant to this Agreement or pursuant to
the exercise of awards granted after the date hereof and expressly
permitted under this Agreement, issue any shares of its capital stock
or share capital, effect any stock split or otherwise change its
capitalization as it existed on the date hereof, (ii) grant, confer or
award any option, warrant, conversion right or other right not existing
on the date hereof to acquire any shares of its capital stock or share
capital, (iii) increase any compensation or enter into or amend any
employment agreement or with any of its former, present or future
employees, officers or directors, except with new employees consistent
with past practice, or (iv) adopt any new employee benefit plan or
arrangement (including any stock option, stock benefit or stock
purchase plan) or amend any existing employee benefit plan in any
material respect, except for changes which are less favorable to
participants in such plans;
(g) shall not (i) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of
its capital stock or share capital or (ii) redeem, purchase or
otherwise acquire any shares of its capital stock or share capital
36
or capital stock or share capital of any of its Subsidiaries, or make
any commitment for any such action; provided that Caymanco shall
repurchase the shares of its capital held by Veritas immediately prior
to the Effective Time;
(h) shall not, and shall not permit any of its Subsidiaries
to, sell, lease or otherwise dispose of any of its assets (including
capital stock or share capital of Subsidiaries) which, individually or
in the aggregate, are material to it and its Subsidiaries as a whole
except (i) in the ordinary course of business, (ii) in connection with
transactions with entities directly or indirectly wholly owned by it
("Intercompany Transactions") or (iii) in the case of PGS, the sale of
PGS' interest in its Atlantis Subsidiary;
(i) shall not, and shall not permit any of its Subsidiaries
to, except pursuant to contractual commitments in effect on the date
hereof and disclosed in the Veritas Disclosure Letter or the PGS
Disclosure Letter, as the case may be, acquire or agree to acquire by
merging or consolidating with, or by purchasing an equity interest in
or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof;
(j) shall not, except as may be required as a result of a
change in law or in generally accepted accounting principles, change
any of the accounting principles or practices used by it;
(k) shall, and shall cause any of its Subsidiaries to, use
commercially reasonable efforts to maintain with financially
responsible insurance companies insurance in such amounts and against
such risks and losses as are customary for such party;
(l) shall not, and shall not permit any of its Subsidiaries
to, (i) make or rescind any express or deemed election relating to
taxes including elections for any and all joint ventures, partnerships,
limited liability companies, working interests or other investments
where it has the capacity to make such binding election (except an
initial election for an entity under Treas. Reg. Section 301.7701-3),
(ii) settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to taxes, or (iii) change any of its methods of reporting income or
deductions for federal income tax purposes from those expected to be
employed in the preparation of its federal income tax return for the
most recent taxable year for which a return has been filed, except in
any such case as may be required by applicable law or except as would
not have a Material Adverse Effect;
(m) shall not, nor shall it permit any of its Subsidiaries to,
(i) incur any indebtedness for borrowed money (except for (w)
Intercompany Transactions, (x) working capital under existing credit
facilities, (y) refinancings of existing debt and (z) other immaterial
borrowings that, in the case of (y) or (z), permit prepayment of such
new debt without payment of any makewhole or other premium or penalty
in the event of redemption or repayment before stated maturity (other
than LIBOR breakage costs)) or guarantee any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire any debt
securities of such party or any of its Subsidiaries or guarantee any
37
debt securities of others, (ii) except in the ordinary course of
business, enter into any material lease (whether such lease is an
operating or capital lease) or create any material Liens on its
property or that of its Subsidiaries in connection with any
indebtedness thereof, or (iii) enter into any interest rate swap, cap,
collar or similar agreements;
(n) except as set forth in the budgets of Veritas and PGS as
described in the Veritas Disclosure Letter or the PGS Disclosure
Letter, respectively, not make any capital expenditures in excess of $5
million individually or $20 million in the aggregate, or enter into any
binding commitment or contract to make such expenditures;
(o) shall not, and shall cause its Subsidiaries not to,
purchase any PGS Shares, PGS ADSs, Caymanco Shares or shares of Veritas
Common Stock or Veritas Exchangeable Shares, except as contemplated by
Section 5.4 or Section 8.17 of this Agreement;
(p) subject to Section 8.5, shall not take any action that
would delay materially (but in any event by more than 10 business days)
or adversely affect the ability of any of the parties hereto to obtain
any consent, authorization, order or approval of any governmental
commission, board or other regulatory body or the expiration of any
applicable waiting period required to consummate the transactions
consummated by this Agreement;
(q) shall not, and shall not permit any of its Subsidiaries
to, enter into any agreement that would permit any third party to have
any access to seismic data, including all library data, owned and/or
developed by the other party or its affiliates;
(r) unless, in the good faith opinion of its board of
directors after consultation with its outside counsel the following
would be inconsistent with its fiduciary duties, shall not, except in
connection with a transaction permitted by this Section 8.1, terminate,
amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its respective Subsidiaries
is a party; and during such period shall enforce, to the fullest extent
permitted under applicable law, the provisions of such agreement,
including by obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof
in any court of the United States of America or any state having
jurisdiction; and
(s) shall not (i) agree in writing or otherwise to take any of
the foregoing actions or (ii) permit any of its Subsidiaries to agree
in writing or otherwise to take any of the foregoing actions that refer
to Subsidiaries.
Section 8.2 No Solicitation by Veritas.
(a) Veritas agrees that (i) neither it nor any of its
Subsidiaries shall, and it shall not authorize or permit any of its officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, and on becoming aware of it will stop such person from
continuing to, directly or indirectly, solicit, initiate or encourage (including
by way of furnishing nonpublic information), or take any action designed to
facilitate, directly or indirectly, any inquiry,
38
proposal or offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a tender or exchange offer, merger, consolidation,
business combination, purchase or similar transaction or series of transactions
(other than the transactions contemplated by this Agreement) involving,
individually or in the aggregate, 15% or more of the assets, net revenues or net
income of Veritas and its Subsidiaries on a consolidated basis or 15% or more of
any class of capital stock of Veritas (any such proposal, offer or transaction
being hereinafter referred to as a "Veritas Acquisition Proposal"), or cooperate
with or assist, participate or engage in any discussions or negotiations
concerning a Veritas Acquisition Proposal; and (ii) it will immediately cease
and cause to be terminated any existing negotiations with any parties conducted
heretofore with respect to any of the foregoing; provided that nothing contained
in this Agreement shall prevent Veritas or its Board of Directors from (A)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to a
Veritas Acquisition Proposal or (B) prior to the Cutoff Date (as defined
herein), providing information (pursuant to a confidentiality agreement in
reasonably customary form with terms at least as favorable to Veritas as the
Confidentiality Agreement dated September 20, 2001, between Veritas and PGS (the
"Confidentiality Agreement") and which does not contain terms that prevent
Veritas from complying with its obligations under this Section 8.2) to or
engaging in any negotiations or discussions with any person or entity who has
made an unsolicited bona fide written Veritas Acquisition Proposal with respect
to all the outstanding capital stock of Veritas or all or substantially all the
assets of Veritas that, in the good faith judgment of the Board of Directors of
Veritas, taking into account (a) the likelihood and timing of consummation, (b)
the availability and timing of financing, (c) any amendments to or modifications
of this Agreement that PGS has offered or proposed at the time of determination,
and (d) any other factors that the Board of Directors may in good faith believe
are advisable to be taken into account and based on the advice of a financial
advisor of recognized national reputation, a written summary of which shall be
promptly provided to PGS, is superior to the Merger (a "Veritas Superior
Proposal"), to the extent that the Board of Directors of Veritas, after
consultation with its outside legal counsel, determines that the failure to do
so would be inconsistent with its fiduciary obligations.
(b) Prior to taking any action referred to in Section 8.2(a),
if Veritas intends to participate in any such discussions or negotiations or
provide any such information to any such third party, Veritas shall give prompt
prior oral and written notice to PGS of each such action. Veritas will
immediately notify PGS orally and in writing of any such requests for such
information or the receipt of any Veritas Acquisition Proposal or any inquiry
with respect to or that could lead to a Veritas Acquisition Proposal, including
the identity of the person or group engaging in such discussions or
negotiations, requesting such information or making such Veritas Acquisition
Proposal, and the material terms and conditions of any Veritas Acquisition
Proposal. Veritas will (i) keep PGS fully informed of the status and details
(including any changes or proposed changes to such status or details) on a
timely basis of any such requests, Veritas Acquisition Proposals or inquiries
and (ii) provide to PGS as soon as practicable after receipt or delivery thereof
with copies of all correspondence and other written material sent or provided to
Veritas from any third party in connection with any Veritas Acquisition Proposal
or sent or provided by Veritas to any third party in connection with any Veritas
Acquisition Proposal. Any written notice under this Section 8.2 shall be given
by facsimile with receipt electronically confirmed or by personal delivery.
39
(c) Nothing in this Section 8.2 shall permit Veritas to enter
into any agreement with respect to a Veritas Acquisition Proposal during the
term of this Agreement, it being agreed that during the term of this Agreement
(except pursuant to Section 10.3(c)), Veritas shall not enter into any agreement
with any person that provides for, or in any way facilitates, a Veritas
Acquisition Proposal, other than a confidentiality agreement in reasonably
customary form with terms at least as favorable to Veritas as the
Confidentiality Agreement and which does not contain terms that prevent Veritas
from complying with its obligations under this Section 8.2.
(d) For purposes hereof, the "Cutoff Date," when used with
respect to Veritas, means the date the condition set forth in Section 9.1(a)(i)
is satisfied.
Section 8.3 No Solicitation by PGS.
(a) PGS agrees that (other than in connection with the
Exchange Offer or for the specified matters in the PGS Disclosure Letter) (i)
neither it nor any of its Subsidiaries shall, and it shall not authorize or
permit any of its officers, directors, employees, agents or representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) to, and on becoming aware of it will
stop such person from continuing to, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing nonpublic information), or take any
action designed to facilitate, directly or indirectly, any inquiry, proposal or
offer (including, without limitation, any proposal or offer to its shareholders)
with respect to a tender or exchange offer, merger, consolidation, business
combination, purchase or similar transaction or series of transactions (other
than the transactions contemplated by this Agreement) involving, individually or
in the aggregate, 15% or more of the assets, net revenues or net income of PGS
and its Subsidiaries on a consolidated basis or 15% or more of the PGS Shares
and PGS ADSs, taken together (any such proposal, offer or transaction being
hereinafter referred to as a "PGS Acquisition Proposal"), or cooperate with or
assist, participate or engage in any discussions or negotiations concerning a
PGS Acquisition Proposal; and (ii) it will immediately cease and cause to be
terminated any existing negotiations with any parties conducted heretofore with
respect to any of the foregoing; provided that nothing contained in this
Agreement shall prevent PGS or its Board of Directors from (A) complying with
Rule 14e-2 promulgated under the Exchange Act and applicable Norwegian law with
regard to a PGS Acquisition Proposal or (B) prior to the Cutoff Date (as defined
herein), providing information (pursuant to a confidentiality agreement in
reasonably customary form with terms at least as favorable to PGS as the
Confidentiality Agreement and which does not contain terms that prevent PGS from
complying with its obligations under this Section 8.3) to or engaging in any
negotiations or discussions with any person or entity who has made an
unsolicited bona fide written PGS Acquisition Proposal with respect to all the
outstanding PGS Shares and PGS ADSs, taken together, or all or substantially all
the assets of PGS that, in the good faith judgment of the Board of Directors of
PGS, taking into account (a) the likelihood and timing of consummation, (b) the
availability and timing of financing, (c) any amendments to or modifications of
this Agreement that Veritas has offered or proposed at the time of
determination, and (d) any other factors that the Board of Directors may in good
faith believe are advisable to be taken into account and based on the advice of
a financial advisor of recognized national reputation, a written summary of
which shall be promptly provided to Veritas, is superior to the Exchange Offer
(a "PGS Superior Proposal"), to the extent that the Board of Directors of PGS,
after consultation with its outside legal counsel, determines that the failure
40
to do so would be inconsistent with its obligations under Norwegian law relating
to directors' responsibilities.
(b) Prior to taking any action referred to in Section 8.3(a),
if PGS intends to participate in any such discussions or negotiations or provide
any such information to any such third party, PGS shall give prompt prior oral
and written notice to Veritas of each such action. PGS will immediately notify
Veritas orally and in writing of any such requests for such information or the
receipt of any PGS Acquisition Proposal or any inquiry with respect to or that
could lead to a PGS Acquisition Proposal, including the identity of the person
or group engaging in such discussions or negotiations, requesting such
information or making such PGS Acquisition Proposal, and the material terms and
conditions of any PGS Acquisition Proposal. PGS will (i) keep Veritas fully
informed of the status and details (including any changes or proposed changes to
such status or details) on a timely basis of any such requests, PGS Acquisition
Proposals or inquiries and (ii) provide to Veritas as soon as practicable after
receipt or delivery thereof with copies of all correspondence and other written
material sent or provided to PGS from any third party in connection with any PGS
Acquisition Proposal or sent or provided by PGS to any third party in connection
with any PGS Acquisition Proposal. Any written notice under this Section 8.3
shall be given by facsimile with receipt confirmed or personal delivery.
(c) Nothing in this Section 8.3 shall permit PGS to enter into
any agreement with respect to a PGS Acquisition Proposal during the term of this
Agreement, it being agreed that during the term of this Agreement (except
pursuant to Section 10.4(c)), PGS shall not enter into any agreement with any
person that provides for, or in any way facilitates, a PGS Acquisition Proposal,
other than a confidentiality agreement in reasonably customary form with terms
at least as favorable to PGS as the Confidentiality Agreement and which does not
contain terms that prevent PGS from complying with its obligations under this
Section 8.3.
(d) For purposes hereof, the "Cutoff Date," when used with
respect to PGS, means the date the condition set forth in Section 9.1(a)(ii) is
satisfied.
Section 8.4 Meetings of Stockholders; Exchange Offer.
(a) Veritas will take all action necessary in accordance with
applicable law and its certificate of incorporation and bylaws to convene a
special meeting of its stockholders (the "Veritas Special Meeting") as promptly
as practicable to consider and vote upon the adoption of this Agreement.
Notwithstanding any other provision of this Agreement, unless this Agreement is
terminated in accordance with the terms hereof, Veritas shall submit this
Agreement to its stockholders whether or not the Board of Directors of Veritas
withdraws, modifies or changes its recommendation and declaration regarding this
Agreement or the Merger.
(b) Veritas, through its Board of Directors, shall recommend
approval of the matters described in paragraph (a) above and use best efforts to
solicit from its stockholders proxies in favor of such matters; provided,
however, that the Board of Directors of Veritas may, at any time prior to the
Cutoff Date that applies to Veritas, upon five business days' prior written
notice to PGS, withdraw, modify or change any recommendation and declaration
regarding such
41
matters or recommend and declare advisable any Veritas Superior Proposal, if in
the good faith opinion of the Board of Directors of Veritas after consultation
with its outside legal counsel the failure to so withdraw, modify or change its
recommendation and declaration or to so recommend and declare advisable any
Veritas Superior Proposal would be inconsistent with its fiduciary obligations.
(c) PGS, through its Board of Directors, shall recommend that
its shareholders accept the Exchange Offer and tender their PGS Shares and PGS
ADSs, as applicable, pursuant to the Exchange Offer and shall use its best
efforts to cooperate with Caymanco in the solicitation of tenders of PGS Shares
and PGS ADSs pursuant to the Exchange Offer; provided, however, that the Board
of Directors of PGS may at any time prior to the Cutoff Date that applies to
PGS, upon five business days' prior written notice to Veritas, withdraw, modify
or change such recommendation or recommend and declare advisable any PGS
Superior Proposal if in the good faith opinion of such Board of Directors after
consultation with its outside legal counsel the failure to so withdraw, modify
or change its recommendation or to so recommend and declare advisable any PGS
Superior Proposal would be inconsistent with its obligations under Norwegian law
relating to directors' responsibilities.
(d) PGS, Caymanco and Veritas shall coordinate and cooperate
with respect to the timing of Exchange Offer and the Veritas Special Meeting and
shall use commercially reasonable best efforts to make the initial scheduled
expiration date of the Exchange Offer and the Veritas Special Meeting to occur
on the same date.
Section 8.5 Filings; Commercially Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided,
Caymanco, PGS and Veritas shall:
(i) make their respective required filings under the
HSR Act and any applicable non-U.S. competition, antitrust or
premerger notification laws ("Non-U.S. Antitrust Laws") to be
made pursuant to Section 9.1(b) (and shall share equally all
filing fees incident thereto), which filings shall be made
promptly, and which filings as required under the HSR Act
shall be made in not more than 15 business days from the date
hereof, and thereafter shall promptly make any other required
submissions under the HSR Act or other such laws;
(ii) use commercially reasonable best efforts to
cooperate with one another in (a) determining which filings
are required to be made prior to the Effective Time with, and
which consents, approvals, permits or authorizations are
required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States,
the several states, and non-U.S. jurisdictions in connection
with the execution and delivery of this Agreement and the
consummation of the Merger, the Exchange Offer and the
transactions contemplated hereby; and (b) timely making all
such filings and timely seeking all such consents, approvals,
permits or authorizations other than any such filings,
consents, approvals, permits and authorizations that would
cause a PGS Material Adverse Effect or a Veritas Material
Adverse Effect;
42
(iii) promptly notify each other of any communication
concerning this Agreement or the transactions contemplated by
this Agreement to that party from any governmental or
regulatory authority and permit the other party to review in
advance any proposed communication concerning this Agreement
or the transactions contemplated by this Agreement to any
governmental or regulatory authority;
(iv) not agree to participate in any meeting or
discussion with any governmental or regulatory authority in
respect of any filings, investigation or other inquiry
concerning this Agreement or the transactions contemplated by
this Agreement unless it consults with the other party in
advance and, to the extent permitted by such governmental or
regulatory authority, gives the other party the opportunity to
attend and participate thereat;
(v) furnish the other party with copies of all
correspondence, filings and communications (and memoranda
setting forth the substance thereof) between them and their
affiliates and their respective representatives on the one
hand, and any governmental or regulatory authority or members
or their respective staffs on the other hand, with respect to
this Agreement and the transactions contemplated by this
Agreement; and
(vi) furnish the other party with such necessary
information and reasonable assistance as such other party and
its affiliates may reasonably request in connection with their
preparation of necessary filings, registrations or submissions
of information to any governmental or regulatory authorities,
including, without limitation, any filings necessary or
appropriate under the provisions of the HSR Act or any
applicable Non-U.S. Antitrust Laws.
(b) Without limiting Section 8.5(a), but subject to Section
8.5(c), Caymanco, PGS and Veritas shall each use commercially reasonable best
efforts to:
(i) avoid the entry of, or have vacated, terminated
or modified, any decree, order or judgment that would
restrain, prevent or delay the Closing; and
(ii) take any and all steps necessary to obtain any
consents or eliminate any impediments to the Merger or the
Exchange Offer.
(c) Nothing in this Agreement shall require PGS, Veritas or
any of their respective Subsidiaries to dispose of any of its assets or to limit
its freedom of action with respect to any of its assets or businesses, whether
prior to or after the Effective Time, or to commit or agree to any of the
foregoing, to obtain any consents, approvals, permits or authorizations or to
remove any impediments to the Merger or the Exchange Offer relating to the HSR
Act, Non-U.S. Antitrust Laws or other antitrust, competition or premerger
notification, trade regulation law, regulation or order ("Antitrust Laws") or to
avoid the entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other order in any suit or proceeding relating to the
Antitrust Laws, other than dispositions, limitations or consents, commitments or
agreements that in each such case may be conditioned upon the consummation
43
of the Merger, the Exchange Offer and the transactions contemplated by this
Agreement and that in each such case do not and would not, individually or in
the aggregate, have a Caymanco Material Adverse Effect.
(d) In addition to any other specific obligations of Veritas
and PGS provided for herein with respect to the Exchange Offer, the Merger and
the other transactions contemplated hereby, but subject in all respects to
Section 8.2, Section 8.3, Section 8.4, Section 8.5(c), Article 9, Article 10 and
any other condition or limitation expressly provided for herein with respect
thereto, Veritas and PGS both agree to use their commercially reasonable efforts
to assist Caymanco in making the Exchange Offer and to take all other actions
that are necessary to facilitate the Exchange Offer and the Merger and their
consummation.
Section 8.6 Inspection. From the date hereof to the Effective
Time, each of Veritas, PGS and Caymanco shall allow all designated officers,
attorneys, accountants and other representatives of PGS, Caymanco or Veritas, as
the case may be, access at all reasonable times upon reasonable notice to the
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles and financial position,
or otherwise pertaining to the business and affairs of PGS, Caymanco and Veritas
and their respective Subsidiaries, including inspection of such properties;
provided that no investigation pursuant to this Section 8.6 shall affect,
abrogate or waive any representation or warranty given by any party hereunder,
and provided further that notwithstanding the provision of information or
investigation by any party, no party shall be deemed to make any representation
or warranty except as expressly set forth in this Agreement. Notwithstanding the
foregoing, except as set forth in Section 8.6 of the Veritas Disclosure Letter
or the PGS Disclosure Letter, no party shall be required to provide any
information which it reasonably believes it may not provide to the other party
by reason of (1) applicable law governing the access, use and treatment of
competitively sensitive information, (2) applicable law, rules or regulations,
(3) confidentiality restrictions imposed by contract, agreement or understanding
with third parties if such party has used commercially reasonable best efforts
to obtain the consent of such third party to such disclosure or (4)
attorney/client privilege. The parties hereto shall make reasonable and
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. If any agreements or documents are
not provided by a party pursuant to this Section 8.6 on the basis that the
information therein is protected by attorney-client privilege, such party shall
provide the other parties with a list of all such agreements and documents. Each
of PGS, Caymanco and Veritas agrees that it will not, and will cause its
respective representatives not to, use any information obtained pursuant to this
Section 8.6 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. All non-public information obtained pursuant to
this Section 8.6 shall be governed by the Confidentiality Agreement.
Section 8.7 Publicity. The parties will consult with each
other and will mutually agree upon any press releases or public announcements
pertaining to this Agreement or the transactions contemplated hereby and shall
not issue any such press releases or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make
such public
44
announcement shall use commercially reasonable best efforts to consult in good
faith with the other party before issuing any such press releases or making any
such public announcements.
Section 8.8 Registration Statement.
(a) Each of PGS, Caymanco and Veritas shall cooperate and
promptly prepare and Caymanco shall file with the SEC as soon as practicable the
Form S-4 under the Securities Act, with respect to the Caymanco Shares issuable
in the Exchange Offer and the Merger, portions of which Registration Statement
shall also serve as the proxy statement with respect to the Veritas Special
Meeting (the "Proxy Statement/Prospectus") and the Exchange Offer Prospectus.
The respective parties will cause the Proxy Statement/Prospectus, the Exchange
Offer Prospectus and the Form S-4 to comply as to form in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the
rules and regulations thereunder. Caymanco shall use commercially reasonable
best efforts, and PGS and Veritas will cooperate with Caymanco, to have the Form
S-4 declared effective by the SEC as promptly as practicable and to have the
Proxy Statement/Prospectus and the Exchange Offer Prospectus also made available
for use in the Kingdom of Norway and Canada. Caymanco shall use commercially
reasonable best efforts to obtain, prior to the effective date of the Form S-4,
all necessary foreign, state securities law or "Blue Sky" permits or approvals
required to carry out the transactions contemplated by this Agreement and the
parties will share equally all expenses incident thereto (including all SEC and
other filing fees and all printing and mailing expenses associated with the Form
S-4, the Proxy Statement/Prospectus and the Exchange Offer). Caymanco will
advise PGS and Veritas, promptly after receiving notice thereof, of the time
when the Form S-4 has become effective or any supplement or amendment has been
filed with the SEC, the issuance of any stop order or similar order, the
suspension of the qualification of the Caymanco Shares issuable in connection
with the Merger or the Exchange Offer for offering or sale in any jurisdiction,
or any request by the SEC or any governmental or regulatory authority or
securities exchange administering the securities laws in the Kingdom of Norway
or in Canada for amendment of the Proxy Statement/Prospectus or the Form S-4 or
comments thereon and responses thereto or requests by the SEC or any such
authority or exchange for additional information.
(b) Each of Veritas and PGS will use commercially reasonable
best efforts to cause the Proxy Statement/Prospectus and the Exchange Offer
Prospectus, respectively, to be mailed to its stockholders and shareholders,
respectively, as promptly as practicable after the Form S-4 is declared
effective under the Securities Act and any and all approvals required in the
Kingdom of Norway and in Canada are obtained.
(c) Each of PGS, Caymanco and Veritas agrees that the
information provided by it for inclusion in the Proxy Statement/Prospectus and
the Exchange Offer Prospectus and each amendment or supplement thereto, at the
time of commencement of the Exchange Offer or mailing of the Proxy
Statement/Prospectus, at the expiration time of the Exchange Offer and at the
time of the Veritas Special Meeting, or, in the case of information provided by
it for inclusion in the Form S-4 or any amendment or supplement thereto, at the
time it is filed or becomes effective, (i) will not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
45
the circumstances under which they were made, not misleading, and (ii) will
comply as to form in all material respects with the provisions of the Securities
Act and the Exchange Act.
Section 8.9 Listing Application. Caymanco shall promptly
prepare and submit to the NYSE and, subject to Section 8.22, the OSE and the
Toronto Stock Exchange, a listing application covering the Caymanco Shares
issuable in connection with the transactions contemplated hereby (with Veritas
and PGS sharing equally in all fees and expenses relating thereto) and shall use
commercially reasonable best efforts to obtain, prior to the earlier of the
expiration time of the Exchange Offer or the Effective Time, approval for the
listing of such Caymanco Shares, subject to official notice of issuance.
Section 8.10 Letters of Accountants.
(a) Veritas shall use commercially reasonable best efforts to
cause to be delivered to PGS and Caymanco "comfort" letters of
PricewaterhouseCoopers LLP, Veritas' independent public accountants, dated the
effective date of the Form S-4 and the Closing Date, respectively, and addressed
to PGS and Caymanco with regard to certain financial information regarding
Veritas included in the Form S-4, in form reasonably satisfactory to PGS and
Caymanco and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
(b) PGS shall use commercially reasonable best efforts to
cause to be delivered to Veritas and Caymanco "comfort" letters of
PricewaterhouseCoopers LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, PGS' independent public
accountants, dated the effective date of the Form S-4 and the Closing Date,
respectively, and addressed to Veritas with regard to certain financial
information regarding PGS included in the Form S-4, in form reasonably
satisfactory to Veritas and customary in scope and substance for "comfort"
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
Section 8.11 Agreements of Rule 145 Affiliates. Prior to the
Effective Time, Veritas shall cause to be prepared and delivered to PGS and
Caymanco a list identifying all persons who, at the time of the Veritas Special
Meeting, Veritas believes may be deemed to be "affiliates" of Veritas, as that
term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the
"Rule 145 Affiliates"). Caymanco shall be entitled to place restrictive legends
on any Caymanco Shares received by such Rule 145 Affiliates. Veritas shall use
commercially reasonable best efforts to cause each person who is identified as a
Rule 145 Affiliate in such list to deliver to Caymanco, at or prior to the
Effective Time, a written agreement, in the form to be approved by the parties
hereto, that such Rule 145 Affiliate will not sell, pledge, transfer or
otherwise dispose of any Caymanco Shares issued to such Rule 145 Affiliate
pursuant to the Merger, except pursuant to an effective registration statement
or in compliance with Rule 145 or an exemption from the registration
requirements of the Securities Act.
Section 8.12 Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except as expressly provided herein or as otherwise agreed in
writing by the parties.
46
Section 8.13 Indemnification and Insurance.
(a) From and after the Effective Time, Caymanco shall
indemnify, defend and hold harmless to the fullest extent permitted under
applicable law each person who is now, or has been at any time prior to the date
hereof, an officer or director of Veritas or PGS (or any Subsidiary or division
thereof) and each person who served at the request of Veritas or PGS as a
director, officer, trustee or fiduciary of another corporation, partnership,
joint venture, trust, pension or other employee benefit plan or enterprise
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), (i) Caymanco shall pay,
as incurred, the fees and expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to Caymanco, in advance of the
final disposition of any such Action to the fullest extent permitted by
applicable law, and, if required, upon receipt of any undertaking required by
applicable law, and (ii) Caymanco will cooperate in the defense of any such
matter; provided, however, Caymanco shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld or delayed), and provided further, that Caymanco shall not be obligated
pursuant to this Section 8.13 to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action, unless, in the good
faith judgment of any of the Indemnified Parties, there is or may be a conflict
of interests between two or more of such Indemnified Parties, in which case
there may be separate counsel for each similarly situated group.
(b) The parties agree that the rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, in the certificate of incorporation and bylaws or similar
organizational documents of Veritas and its Subsidiaries or in the articles of
association, certificate of incorporation and bylaws or similar organizational
documents of PGS and its Subsidiaries, as the case may be, with respect to
matters occurring through the Effective Time, shall survive the Merger and the
Exchange Offer and shall continue in full force and effect for a period of six
years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Action pending or asserted or claim made
within such period shall continue until the disposition of such Action or
resolution of such claim.
(c) For a period of six years after the Effective Time,
Caymanco shall cause to be maintained officers' and directors' liability
insurance covering the Indemnified Parties who now are, or at any time prior to
the date hereof were, covered by Veritas' and PGS' existing officers' and
directors' liability insurance policies on terms substantially no less
advantageous to the Indemnified Parties than such existing insurance.
(d) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
certificate of incorporation or bylaws or similar organizational documents of
Veritas or any of its Subsidiaries or in the articles of association,
certificate of incorporation and bylaws or similar organizational documents of
PGS and its Subsidiaries, as the case may be, under applicable law or otherwise.
The provisions of
47
this Section 8.13 shall survive the consummation of the Merger and Exchange
Offer and expressly are intended to benefit each of the Indemnified Parties.
(e) In the event Caymanco or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Caymanco shall assume the obligations set forth in
this Section 8.13.
Section 8.14 Employee Matters.
(a) At the Effective Time, Caymanco will continue, and will
cause the Surviving Corporation, PGS and their Subsidiaries to continue, the
employment of all of the employees of Veritas, PGS and their Subsidiaries
initially at the same salaries and wages of such employees immediately prior to
the Effective Time. Nothing in this Agreement shall be considered a contract
between Caymanco, the Surviving Corporation, PGS and their Subsidiaries and any
employee or consideration for, or inducement with respect to, any employee's
continued employment and, without limitation, all such employees are and will
continue to be considered to be employees at will pursuant to the applicable
employment at will laws or doctrines, subject to any express written agreement
to the contrary with such employee, and Caymanco, the Surviving Corporation, PGS
and their Subsidiaries will have the right, in their discretion and subject to
this Section 8.14, to alter the salaries, wages and terms of employment of such
employees at any time after the Effective Time.
(b) With respect to each employee of PGS, Veritas and their
Subsidiaries ("Affected Employee"), Caymanco shall deem, and shall cause the
Surviving Corporation, PGS and all other Caymanco Subsidiaries to deem, the
period of employment with PGS, Veritas and their Subsidiaries prior to the
Effective Time to have been employment and service with Caymanco and its
Subsidiaries for purposes of determining the Affected Employee's eligibility to
join and vesting (but not benefit accrual for any purpose other than vacation
pay, sick leave and life insurance) under all employee benefit plans, programs,
policies or similar employment related arrangements of Caymanco and its
Subsidiaries in which the Affected Employee is eligible to participate. Caymanco
shall offer, and shall cause all Caymanco Subsidiaries to offer at the Effective
Time to each Affected Employee coverage under a group health plan (as defined in
Section 5000(b)(1) of the Code) which credits such Affected Employee towards the
deductibles, coinsurance and maximum out-of-pocket provisions imposed under such
group health plan, for the calendar year during which the Effective Time occurs,
with any applicable expenses already incurred during such year under the
respective group health plans of PGS, Veritas and their Subsidiaries.
(c) Veritas and PGS agree to cooperate in good faith to (i)
establish a process to promptly integrate compensation and benefit plans
following the Effective Time, (ii) establish severance pay policies for the
Affected Employees who are impacted by the Merger or the Exchange Offer, with
terms that are consistently applicable to all similarly situated employees and
(iii) take appropriate and substantially consistent actions to retain key
employees and provide for a smooth transition.
48
(d) Except with respect to offers of employment to prospective
new employees in the ordinary course of business consistent with past practices
and other than statements that merely repeat or summarize the effects of this
Agreement or the terms of agreements identified in the Veritas Disclosure Letter
or the PGS Disclosure Letter, Veritas and PGS agree that they will not make, or
permit their Subsidiaries to make, any representations or promises, oral or
written, to their employees concerning continued employment following the
Effective Time, or the terms and conditions of that employment or benefits
offered, other than with the express mutual consent of both Veritas and PGS.
(e) Caymanco agrees to assume effective as of the Effective
Time the obligations of PGS under the Replacement Employment Agreements and of
Veritas under the employment contracts listed in Section 6.11 of the Veritas
Disclosure Letter.
(f) Caymanco agrees that the employees of PGS and its
Subsidiaries shall become eligible to participate in the Veritas 1997 Employee
Stock Purchase Plan effective as soon as practicable following the Effective
Time.
(g) Veritas and PGS agree to cooperate in good faith to design
and establish and, prior to the Exchange Offer Closing, Caymanco shall adopt,
and Veritas shall approve, a plan or plans for providing equity based awards
(including stock options, restricted stock and stock appreciation rights) and
performance bonus awards, covering a number of Caymanco Shares equal to the
difference between 3,500,000 and the number of shares (rounded up to the next
100,000 shares) available for awards of options at the Effective Time under the
Veritas Stock Option Plans, other than the Veritas 1997 Employee Stock Purchase
Plan, assumed by Caymanco pursuant to Section 4.2(e).
Section 8.15 Rights Agreements.
(a) Except for actions contemplated by this Agreement that are
taken by Veritas simultaneously with its entering into a binding definitive
agreement pursuant to Section 10.3(c), neither the Board of Directors of Veritas
nor Veritas shall take any other action to (i) terminate the Veritas Rights
Agreement, (ii) redeem the Veritas Rights, (iii) amend the Veritas Rights
Agreement in a manner adverse to PGS, or (iv) cause any person not to be or
become an "Acquiring Person" (as defined in the Veritas Rights Agreement).
(b) Caymanco may adopt the Caymanco Rights Agreement.
Section 8.16 Veritas Exchangeable Shares. Caymanco
acknowledges that the Veritas Exchangeable Shares are exchangeable for shares of
Veritas Common Stock on a one-for-one basis. Caymanco shall take all such
actions as are necessary or desirable to ensure that after the Effective Time,
the Veritas Exchangeable Shares are exchangeable for Caymanco Shares on terms
equivalent to the conversion of shares of Veritas Common Stock for Caymanco
Shares pursuant to Section 4.2(b) hereof, including, without limitation,
entering into supplemental agreements pursuant to which Caymanco becomes bound
by the terms and provisions of (i) the Support Agreement between Veritas and
Veritas Energy dated August 30, 1996, (ii) the Voting and Exchange Trust
Agreement among Veritas, Veritas Energy and CIBC Mellon Trust Company, as
successor trustee to The R-M Trust Company, dated August 30, 1996,
49
(iii) the Support Agreement between Veritas and Veritas Energy
dated September 30, 1999, and (iv) the Voting and Exchange Trust Agreement among
Veritas, Veritas Energy and CIBC Mellon Trust Company dated September 30, 1999.
Section 8.17 Delivery of Caymanco Shares. Prior to the Merger,
Veritas Holdco may purchase from Caymanco or Caymanco Sub, and Caymanco or
Caymanco Sub may sell to Veritas Holdco, all or a portion of that number of
Caymanco Shares that Veritas Holdco is required to deliver pursuant to Section
4.3(a). Any such sale of Caymanco Shares will be in exchange for such
consideration as is mutually agreed by Veritas and PGS. If Veritas Holdco
purchases fewer than all such Caymanco Shares from Caymanco or Caymanco Sub,
Caymanco or Caymanco Sub will otherwise contribute, transfer or provide to
Veritas Holdco the remaining required Caymanco Shares. Caymanco or Caymanco Sub
will also contribute, transfer or provide to Veritas Holdco any shares of
Caymanco Special Voting Stock that Veritas Holdco is required to deliver
pursuant to Section 4.2(c).
Section 8.18 Rule 16b-3 Approval. Caymanco agrees that the
Caymanco Board of Directors or the Compensation Committee of the Caymanco Board
of Directors shall at or prior to the Exchange Offer Closing adopt resolutions
specifically approving, for purposes of Rule 16b-3 ("Rule 16b-3") under the
Exchange Act, (a) the receipt, pursuant to Section 4.2, of Caymanco Shares and
of options to acquire Caymanco Shares by executive officers or directors of
Veritas who will become executive officers or directors of Caymanco subject to
Rule 16b-3 and (b) the receipt, pursuant to the Exchange Offer, of Caymanco
Shares and of options to acquire Caymanco Shares by executive officers or
directors of PGS who will become executive officers or directors of Caymanco
subject to Rule 16b-3.
Section 8.19 Conduct of Business of Caymanco, Caymanco Sub,
Veritas Holdco and Veritas Merger Sub. Prior to the Effective Time, Caymanco,
Caymanco Sub, Veritas Holdco and Veritas Merger Sub will not take any action,
and Veritas will not permit any such company to take any action, except as
contemplated by any other provision or condition of this Agreement, or as
required by applicable law, or as is mutually agreed by Veritas and PGS in order
to pursue the desired tax treatment of such entities. Veritas shall cause each
of such companies to perform all of its obligations under this Agreement.
Section 8.20 Reorganization. None of the parties hereto (nor
any of their respective Subsidiaries) will take any action or fail to take any
action, except as contemplated by Section 5.1(d), that would be likely to (a)
cause the Merger not to qualify as a reorganization described in Section 368(a)
of the Code or (b) cause the holders of Veritas Common Stock (other than any
holder who, immediately after the Merger, is a "five-percent transferee
shareholder" as to Caymanco within the meaning of Treas. Reg. Section
1.367(a)-3(c)(5)) not to qualify for an exception to Section 367(a)(1) of the
Code with respect to the Merger. Notwithstanding the preceding sentence but
subject to Section 8.21, the parties acknowledge that PGS may structure the sale
of its Atlantis Subsidiary, and the use of the proceeds from such sale, in any
manner which PGS in its sole discretion believes to be appropriate.
Section 8.21 Proceeds from Sale of Atlantis Subsidiary. If
requested in good faith and in writing by Veritas for the purpose of obtaining a
legal opinion as to, or otherwise supporting the conclusion regarding, the
qualification of the Merger as a reorganization as
50
described in Section 8.20, then PGS shall apply the net proceeds received from
the sale of its Atlantis Subsidiary to repay indebtedness unless PGS determines
in its reasonable discretion that such application would be commercially
disadvantageous to PGS.
Section 8.22 Listing of Caymanco Shares on OSE and Toronto
Stock Exchange. Caymanco, PGS and Veritas shall each use, and Veritas shall
cause Caymanco to use, commercially reasonable efforts to list the Caymanco
Shares for trading on the OSE and the Toronto Stock Exchange, provided that the
parties will not be required to enter into arrangements that they believe to be
materially disadvantageous to Caymanco; provided further that neither of such
listings shall be a condition to closing of the Merger or the Exchange Offer.
ARTICLE 9
CONDITIONS
Section 9.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) This Agreement, the Merger and the transactions
contemplated hereby shall have been adopted and approved by the
affirmative vote of holders of a majority of the votes attached to the
outstanding shares of Veritas Common Stock and Veritas Special Voting
Stock, voting together as a single class, entitled to vote thereon; and
(ii) The Exchange Offer Closing shall have occurred in
accordance with this Agreement.
(b) (i) The waiting period applicable to the consummation of
the Merger and the Exchange Offer under the HSR Act shall have expired
or been terminated;
(ii) there shall not be pending or threatened in writing
any governmental claim, proceeding or action by an agency of the
government of the United States, of the United Kingdom, of the Kingdom
of Norway, of Brazil, of Canada or of the European Union (the "Required
Jurisdictions") seeking to restrain, prohibit or rescind any
transaction contemplated by this Agreement as an actual or threatened
violation of any Antitrust Law, as applicable, or seeking to penalize a
party for completing any such transaction, and there shall not have
been a final or preliminary administrative order denying approval of or
prohibiting the Merger or the Exchange Offer issued by any such agency
of a Required Jurisdiction;
(iii) in the event of any review by the U.K. Office of
Fair Trading or, if applicable, the U.K. Secretary of State for Trade
and Industry, indications reasonably satisfactory to each of Veritas
and PGS that neither the Merger nor the Exchange Offer will be referred
to the Competition Commission shall have been received;
51
(iv) any mandatory waiting period under any other
Antitrust Law shall have expired or been terminated where the failure
to observe such period is reasonably likely to have a Caymanco Material
Adverse Effect; and
(v) there shall not have been a final or preliminary
administrative order denying approval of or prohibiting the Merger or
the Exchange Offer issued by a governmental authority with jurisdiction
to enforce applicable Non-U.S. Antitrust Laws (other than authorities
from the Required Jurisdictions), which order is reasonably likely to
have a Caymanco Material Adverse Effect.
(c) None of the parties hereto shall be subject to any decree,
order or injunction of a court of competent jurisdiction, U.S. or
non-U.S., which prohibits the consummation of the Merger or the
Exchange Offer; provided, however, that, prior to invoking this
condition, each party agrees to comply with Section 8.5, and with
respect to other matters not covered by Section 8.5, to use
commercially reasonable best efforts to have any such decree, order or
injunction lifted or vacated; and no statute, rule or regulation shall
have been enacted by any governmental authority which prohibits or
makes unlawful the consummation of the Merger or the Exchange Offer.
(d) The Form S-4 shall have become effective with the SEC and
no stop order with respect thereto shall be in effect, and all required
Norwegian and Canadian governmental, regulatory or stock exchange
approvals of the Form S-4, the Proxy Statement/Prospectus or the
Exchange Offer Prospectus shall have been obtained and remain in
effect.
(e) The Caymanco Shares to be issued and delivered pursuant to
the Merger and the Exchange Offer shall have been authorized for
listing on the NYSE, subject to official notice of issuance.
Section 9.2 Conditions to Obligation of Veritas to Effect the
Merger. The obligation of Veritas to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) PGS shall have performed, in all material respects, its
covenants and agreements contained in this Agreement required to be
performed on or prior to the Closing Date, and the representations and
warranties of PGS contained in this Agreement (i) that are qualified as
to materiality or PGS Material Adverse Effect shall be true and correct
in all respects as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case as of such earlier date), and (ii) that are not so qualified
shall be true and correct in all respects as of the Closing Date,
except to the extent such representations and warranties expressly
relate to an earlier date (in which case as of such earlier date),
except for such breaches of representations and inaccuracies in
warranties in this clause (ii) that do not and would not have,
individually or in the aggregate, a PGS Material Adverse Effect, and
Veritas shall have received a certificate of PGS executed on its behalf
by its President or one of its Vice Presidents, dated the Closing Date,
certifying to such effect.
52
(b) At any time after the date of this Agreement, there shall
not have been any event or occurrence, or series of events or
occurrences, that has had or would have, individually or in the
aggregate with all other events or occurrences since the date of this
Agreement, a PGS Material Adverse Effect.
(c) PGS shall have in effect one or more definitive credit
agreements (and no breach or default shall exist with respect thereto)
or shall have received one or more binding commitment letters which
agreements and commitments together provide for a maximum aggregate
credit capacity of $430 million.
(d) PGS shall have consummated the sale of its Atlantis
Subsidiary for an amount set forth in Section 9.2(d) of the PGS
Disclosure Letter.
(e) PGS shall have entered into new employment agreements (the
"Replacement Employment Agreements") in substantially the form
previously provided to Veritas with at least 15 of the active employees
of PGS and its Subsidiaries identified on Section 9.2(e) of the PGS
Disclosure Schedule, of which at least three of such Replacement
Employment Agreements shall be with Messrs. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇, in exchange for which such employees shall agree to release PGS
and its Subsidiaries from any and all obligations under the existing
employment agreements identified on Section 9.2(e) of the PGS
Disclosure Schedule ("Existing PGS Employment Agreements") and the
liabilities reasonably expected to be incurred by PGS and its
Subsidiaries under any of the Existing PGS Employment Agreements that
remain in effect as of the Effective Time shall not exceed $5 million.
Section 9.3 Conditions to Obligation of PGS to Effect the
Merger. The obligations of PGS to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Veritas, Caymanco, Veritas Holdco and Veritas Merger Sub
shall have performed, in all material respects, their covenants and
agreements contained in this Agreement required to be performed on or
prior to the Closing Date, and the representations and warranties of
Veritas, Caymanco, Veritas Holdco and Veritas Merger Sub contained in
this Agreement (i) that are qualified as to materiality or Veritas
Material Adverse Effect shall be true and correct in all respects as of
the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case as of
such earlier date), and (ii) that are not so qualified shall be true
and correct in all respects as of the Closing Date, except to the
extent such representations and warranties expressly relate to an
earlier date (in which case as of such earlier date), except for such
breaches of representations and inaccuracies in warranties in this
clause (ii) that do not and would not have, individually or in the
aggregate, a Veritas Material Adverse Effect, and PGS shall have
received a certificate of each of Veritas, Caymanco, Veritas Holdco and
Veritas Merger Sub, executed on its behalf by its President or one of
its Vice Presidents, dated the Closing Date, certifying to such effect.
(b) At any time after the date of this Agreement, there shall
not have been any event or occurrence, or series of events or
occurrences, that has had or would have,
53
individually or in the aggregate with all other events or occurrences
since the date of this Agreement, a Veritas Material Adverse Effect.
(c) Veritas shall have in effect one or more definitive credit
agreements (and no breach or default shall exist with respect thereto)
or shall have received one or more binding commitment letters which
agreements and commitments together provide for a maximum aggregate
credit capacity of $235 million.
Section 9.4 Exchange Offer Closing. Each of the conditions to
the Merger set forth in Section 9.1, Section 9.2 and Section 9.3 shall be deemed
to be satisfied or irrevocably waived by the parties upon the Exchange Offer
Closing.
ARTICLE 10
TERMINATION
Section 10.1 Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Effective Time by the mutual written
consent of Caymanco, Veritas and PGS.
Section 10.2 Termination by PGS or Veritas. This Agreement may
be terminated at any time prior to the Effective Time by action of the Board of
Directors of PGS or of Veritas if:
(a) the Merger shall not have been consummated by June 30,
2002 (such date, as it may be extended under clause (i) of this
paragraph, the "Termination Date"); provided, however, that (i) each of
PGS and Veritas shall have the option, in its sole discretion, to
extend the Termination Date for an additional period of time not to
exceed 30 days if the condition set forth in Section 9.1(a) has been
satisfied, all other conditions to consummation of the Merger are
satisfied or capable of then being satisfied and the sole reason that
the Merger has not been consummated by such date is that the condition
set forth in Section 9.1(b) or Section 9.1(c) has not been satisfied
due to the failure to obtain the necessary consents and approvals under
applicable laws, the pendency or threat of a governmental claim,
proceeding or action or a decree, order or injunction of a governmental
authority or court of competent jurisdiction shall be in effect and PGS
or Veritas are still attempting to obtain such necessary consents and
approvals under applicable laws, or are contesting (x) the refusal of
the relevant governmental authority to give such consents or approvals,
(y) any such pending governmental claim, proceeding or action or (z)
the entry of any such decree, order or injunction, in court or through
other applicable proceedings, and (ii) the right to terminate this
Agreement pursuant to this clause (a) shall not be available to any
party whose failure to perform or observe in any material respect any
of its obligations under this Agreement in any manner shall have been
the cause of, or resulted in, the failure of the Merger to occur on or
before such date;
(b) the Veritas Special Meeting (including adjournments and
postponements) for the purpose of obtaining the approvals required by
Section 9.1(a)(i) shall have been held and such stockholder approvals
shall not have been obtained;
54
(c) the Exchange Offer shall have expired or been terminated
in accordance with this Agreement without Caymanco having accepted for
exchange any PGS Shares or PGS ADSs pursuant to the Exchange Offer
because the Minimum Condition has not been satisfied; or
(d) a United States federal, state or non-U.S. court of
competent jurisdiction or United States federal, state, or non-U.S.
governmental, regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable;
provided, however, that the party seeking to terminate this Agreement
pursuant to this clause (d) shall have complied with Section 8.5 and,
with respect to other matters not covered by Section 8.5, shall have
used commercially reasonable best efforts to remove such injunction,
order or decree.
Section 10.3 Termination by Veritas. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of Veritas, after consultation with its outside legal advisors, if
(a) (i) there has been a breach by PGS of any representation,
warranty, covenant or agreement set forth in this Agreement or if any
representation or warranty of PGS shall have become untrue, in either
case such that the conditions set forth in Section 9.2(a) would not be
satisfied and (ii) such breach is not curable, or, if curable, is not
cured within 30 days after written notice of such breach is given to
PGS by Veritas; provided, however, that the right to terminate this
Agreement pursuant to this Section 10.3(a) shall not be available to
Veritas if it, at such time, is in breach of any representation,
warranty, covenant or agreement set forth in this Agreement such that
the condition set forth in Section 9.3(a) shall not be satisfied;
(b) the Board of Directors of PGS shall have withdrawn or
materially modified, in a manner adverse to Veritas, its approval or
recommendation of the Exchange Offer or recommended a PGS Acquisition
Proposal, or resolved to do so; or
(c) prior to the Cutoff Date applicable to Veritas, (i) the
Board of Directors of Veritas has received a Veritas Superior Proposal,
(ii) in light of such Veritas Superior Proposal the Board of Directors
of Veritas shall have determined in good faith, (A) after consultation
with its outside legal advisors, that proceeding with the Merger would
be inconsistent with its fiduciary obligations and (B) that there is a
substantial likelihood that the adoption by Veritas' stockholders of
this Agreement will not be obtained by reason of the existence of such
Veritas Superior Proposal, (iii) Veritas has complied in all material
respects with Section 8.2, (iv) Veritas has previously paid the amount
provided for under Section 10.5(c), (v) the Board of Directors of
Veritas concurrently approves, and Veritas concurrently enters into, a
binding definitive written agreement providing for the implementation
of such Veritas Superior Proposal and (vi) PGS is not at such time
entitled to terminate this Agreement pursuant to Section 10.4(a);
provided that Veritas may not effect such termination pursuant to this
Section 10.3(c) unless and until (i) PGS receives at least ten business
days' prior written notice from Veritas of its intention to
55
effect such termination pursuant to this Section 10.3(c); and (ii)
during such ten business day period, Veritas shall, and shall cause its
respective financial and legal advisors to, consider any adjustment in
the terms and conditions of this Agreement that PGS may propose.
Section 10.4 Termination by PGS. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of PGS, after consultation with its outside legal advisors, if:
(a) (i) there has been a breach by Veritas, Caymanco, Veritas
Holdco or Veritas Merger Sub of any representation, warranty, covenant
or agreement set forth in this Agreement or if any representation or
warranty of Veritas, Caymanco, Veritas Holdco or Veritas Merger Sub
shall have become untrue, in either case such that the conditions set
forth in Section 9.3(a) would not be satisfied and (ii) such breach is
not curable, or, if curable, is not cured within 30 days after written
notice of such breach is given to Veritas by PGS; provided, however,
that the right to terminate this Agreement pursuant to this Section
10.4(a) shall not be available to PGS if it, at such time, is in breach
of any representation, warranty, covenant or agreement set forth in
this Agreement such that the conditions set forth in Section 9.2(a)
shall not be satisfied;
(b) the Board of Directors of Veritas shall have withdrawn or
materially modified, in a manner adverse to PGS, its approval or
recommendation of the Merger or recommended a Veritas Acquisition
Proposal, or resolved to do so; or
(c) prior to the Cutoff Date applicable to PGS, (i) the Board
of Directors of PGS has received a PGS Superior Proposal, (ii) in light
of such PGS Superior Proposal the Board of Directors of PGS shall have
determined in good faith, (A) after consultation with its outside legal
advisors, that proceeding with the Exchange Offer or the Merger would
be inconsistent with its obligations under Norwegian law and (B) that
there is a substantial likelihood that the Minimum Condition relating
to the Exchange Offer will not be obtained by reason of the existence
of such PGS Superior Proposal, (iii) PGS has complied in all material
respects with Section 8.3, (iv) PGS has previously paid the amount
provided for under Section 10.5(c), (v) the Board of Directors of PGS
concurrently approves, and PGS concurrently enters into, a binding
definitive written agreement providing for the implementation of such
PGS Superior Proposal and (vi) Veritas is not at such time entitled to
terminate this Agreement pursuant to Section 10.3(a); provided that PGS
may not effect such termination pursuant to this Section 10.4(c) unless
and until (i) Veritas receives at least ten business days' prior
written notice from PGS of its intention to effect such termination
pursuant to this Section 10.4(c); and (ii) during such ten business day
period, PGS shall, and shall cause its respective financial and legal
advisors to, consider any adjustment in the terms and conditions of
this Agreement that Veritas may propose.
56
Section 10.5 Effect of Termination.
(a) If this Agreement is terminated:
(i) by Veritas or PGS pursuant to Section 10.2(b)
[failure to obtain Veritas stockholder approval] after the
public announcement of a Veritas Acquisition Proposal; or
(ii) by PGS pursuant to Section 10.4(b) [withdrawal
of Veritas recommendation to stockholders]; or
(iii) by Veritas pursuant to Section 10.3(c)
[fiduciary out];
and, in any event, Veritas enters into an agreement with respect to a Veritas
Acquisition Proposal on or prior to 12 months after such termination, which
Veritas Acquisition Proposal is subsequently consummated, or is a party to or
subject to a consummated Veritas Acquisition Proposal on or prior to 12 months
after such termination, then Veritas shall pay PGS a fee of $20 million (less
any amounts previously paid by Veritas pursuant to Section 10.3(c)(iv) or
Section 10.5(c)) at the time of such consummation in cash by wire transfer to an
account designated by PGS.
(b) If this Agreement is terminated:
(i) by Veritas or PGS pursuant to Section 10.2(c)
[failure to obtain the Minimum Condition] after the public
announcement of a PGS Acquisition Proposal; or
(ii) by Veritas pursuant to Section 10.3(b)
[withdrawal of PGS recommendation to shareholders]; or
(iii) by PGS pursuant to Section 10.4(c) [fiduciary
out];
and, in any event, PGS enters into an agreement with respect to a PGS
Acquisition Proposal on or prior to 12 months after such termination, which PGS
Acquisition Proposal is subsequently consummated, or is a party to or subject to
a consummated PGS Acquisition Proposal on or prior to 12 months after such
termination, then PGS shall pay Veritas a fee of $20 million (less any amounts
previously paid by PGS pursuant to Section 10.4(c)(iv) or Section 10.5(c)) at
the time of such consummation in cash by wire transfer to an account designated
by Veritas.
(c) If this Agreement is terminated by Veritas or PGS pursuant
to Section 10.2(b) after the public announcement of a Veritas Acquisition
Proposal (whether or not the Veritas Acquisition Proposal is still pending or
has been consummated), by PGS pursuant to Section 10.4(b) or by Veritas pursuant
to Section 10.3(c), then Veritas shall pay PGS $7.5 million at the time of such
termination to reimburse it for its costs and expenses incurred in connection
with this transaction. If this Agreement is terminated by Veritas or PGS
pursuant to Section 10.2(c) after the public announcement of a PGS Acquisition
Proposal (whether or not the PGS Acquisition Proposal is still pending or has
been consummated), by Veritas pursuant to Section 10.3(b) or by PGS pursuant to
Section 10.4(c), then PGS shall pay Veritas $7.5 million
57
at the time of such termination to reimburse it for its costs and expenses
incurred in connection with this transaction.
(d) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 10, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 10.5, Section 8.6 and Section 8.12 and except for the provisions
of Section 11.2, Section 11.3, Section 11.4, Section 11.6, Section 11.8, Section
11.9, Section 11.11, Section 11.12, and Section 11.13, provided that nothing
herein shall relieve any party from any liability for any willful and material
breach by such party of any of its representations, warranties, covenants or
agreements set forth in this Agreement and all rights and remedies of such
nonbreaching party under this Agreement in the case of such a willful and
material breach, at law or in equity, shall be preserved.
Section 10.6 Extension; Waiver. At any time prior to the
Effective Time, each party may by action taken by its Board of Directors, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 11
GENERAL PROVISIONS
Section 11.1 Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Merger; provided, however, that the agreements contained in Article 4 and in
Section 3.3, Section 8.11, Section 8.12, Section 8.13, Section 8.14 and Section
8.15(a) and this Article 11 and the written agreements of the Rule 145
Affiliates delivered pursuant to Section 8.11 of this Agreement shall survive
the Merger. The Confidentiality Agreement shall survive any termination of this
Agreement, and the provisions of the Confidentiality Agreement shall apply to
all information and material delivered by any party hereunder.
Section 11.2 Notices. Except as otherwise provided herein, any
notice required to be given hereunder shall be sufficient if in writing, and
sent by facsimile transmission or by courier service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
58
(a) if to PGS:
Petroleum Geo-Services ASA
▇▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Veritas:
Veritas DGC Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. Still, Esq.
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Caymanco, Veritas Holdco or Veritas Merger Sub:
c/o Veritas DGC Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
59
with a copy to:
▇▇▇▇▇▇▇ ▇. Still, Esq.
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 11.3 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Section 3.3, Article 4 and Section 8.13 and except as provided in any
agreements delivered pursuant hereto (collectively, the "Third Party
Provisions"), nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. The Third Party
Provisions may be enforced by the beneficiaries thereof.
Section 11.4 Entire Agreement. This Agreement, the exhibits to
this Agreement, the Veritas Disclosure Letter, the PGS Disclosure Letter, the
Confidentiality Agreement and any documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto. During the term
of this Agreement, no party thereto shall terminate the Confidentiality
Agreement.
Section 11.5 Amendments. This Agreement may be amended by the
parties hereto, by action taken or authorized by their Boards of Directors, at
any time before or after approval of matters presented in connection with the
Merger by the stockholders of Veritas, but after any such stockholder approval,
no amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 11.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware without
regard to its rules of conflict of laws. Each of Veritas, PGS and Caymanco
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of
Delaware and of the United States of
America located in the State of
Delaware (the "
Delaware Courts") for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby
60
(and agrees not to commence any litigation relating thereto except in such
courts), waives any objection to the laying of venue of any such litigation in
the Delaware Courts and agrees not to plead or claim in any Delaware Court that
such litigation brought therein has been brought in an inconvenient forum.
Section 11.7 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 11.8 Headings. Headings of the Articles and Sections
of this Agreement are for the convenience of the parties only, and shall be
given no substantive or interpretative effect whatsoever.
Section 11.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing
the singular number shall include the plural and vice versa, and words
denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and vice
versa.
(b) The phrase "to the knowledge of" and similar phrases
relating to the knowledge of Veritas or PGS, as the case may be, shall
mean the actual knowledge of its executive officers and its officers in
charge of each of the geophysical, production, geophysical technology,
reservoir technology and marine technology parts of its business, in
the case of PGS, and its executive officers and its officers in charge
of each of the land acquisition, marine acquisition, data processing
and interpretation and research and development parts of its business,
in the case of Veritas.
(c) "Material Adverse Effect" with respect to PGS, Veritas or
Caymanco shall mean a material adverse effect on or change in (a) the
business, assets, conditions (financial or otherwise) or operations of
a party (including the Surviving Corporation when used with respect to
Veritas) and its Subsidiaries on a consolidated basis, except for such
changes or effects in general economic, financial or capital market,
regulatory or political conditions or changes that affect generally the
industries in which the parties operate or changes arising out of the
announcement of this Agreement, or (b) the ability of a party to
consummate the transactions contemplated by this Agreement or fulfill
the conditions to Closing; provided, however, that a Material Adverse
Effect will be deemed to have occurred from and after the date of this
Agreement if (i) the settlement price for the New York Mercantile
Exchange ("NYMEX") Natural Gas Futures Contract for delivery 12 months
following the month in which the relevant date of determination occurs
(as reported in the New York City edition of The Wall Street
61
Journal or, if not reported thereby, another authoritative source)
falls below $2.25 per MMBtu for 20 consecutive trading days or (ii) the
settlement price for the NYMEX Light Sweet Crude Oil Futures Contract
for delivery 12 months following the month in which the relevant date
of determination occurs (as reported in the New York City edition of
The Wall Street Journal or, if not reported thereby, another
authoritative source) falls below $12.50 per barrel for 20 consecutive
trading days. "PGS Material Adverse Effect" and "Veritas Material
Adverse Effect" mean a Material Adverse Effect with respect to PGS
(and, after the Exchange Offer Closing, Caymanco, as well) and Veritas,
respectively. "Caymanco Material Adverse Effect" means a Material
Adverse Effect with respect to Caymanco and its Subsidiaries on a
consolidated basis as would be constituted after the Effective Time
assuming that no divestiture of assets or businesses of either PGS or
Veritas or their respective Subsidiaries was required in connection
with the Merger and the Exchange Offer. For purposes hereof, a PGS
Material Adverse Effect will be deemed to have occurred from and after
the date of this Agreement if the amount of cash, collateral or
security that PGS or any of its Subsidiaries is required to provide or
make available to any person with respect to agreements to which PGS or
any of its Subsidiaries is a party in the event of a downgrade of PGS'
senior debt rating by each of Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and by ▇▇▇▇▇'▇ Investors
Service, Inc. exceeds(pound)50 million in the aggregate.
(d) The term "Subsidiary," when used with respect to any
party, means any corporation or other organization (including a limited
liability company and/or exempted company), whether incorporated or
unincorporated, of which such party directly or indirectly owns or
controls at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect
to such corporation or other organization or any organization of which
such party is a general partner.
Section 11.10 Waivers. Except as provided in this Agreement,
no action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
Section 11.11 Incorporation of Disclosure Letters and
Exhibits. The Veritas Disclosure Letter, the PGS Disclosure Letter and all
exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
Section 11.12 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 11.13 Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were
62
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
63
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
PETROLEUM GEO-SERVICES ASA
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chairman of the Board
VERITAS DGC INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer
VENUS I
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Sole Director
VENUS HOLDCO INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
VENUS MERGERCO INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Exhibit A
FORM OF CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION
CERTIFICATE OF INCORPORATION
OF
VERITAS DGC INC.
FIRST: The name of the corporation is Veritas DGC Inc.
SECOND: The address of the corporation's registered office in
the State of Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ in the City of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "DGCL").
FOURTH: The total number of shares of all classes of stock
which the corporation shall have authority to issue is 1,000 shares of common
stock, par value $0.01 per share.
FIFTH: The number of directors of the corporation shall be as
from time to time specified in, or determined in the manner provided in, the
Bylaws. Election of directors need not be by written ballot unless the bylaws so
provide.
SIXTH: In furtherance of, and not in limitation of, the powers
conferred by statute, the Board of Directors is expressly authorized to make,
adopt, amend, alter or repeal the bylaws of the corporation.
SEVENTH: No director of the corporation shall be personally
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omission not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit. If the
DGCL is amended after the date of filing of this certificate of incorporation to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the DGCL as amended. Any repeal or
modification of this Article shall not adversely affect any limitation on the
liability of a director existing at the time of such repeal or modification.
EIGHTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this corporation
under Section 291 of the DGCL or on the application of trustees in dissolution
or of any receiver or receivers appointed for this corporation under Section 279
of the DGCL order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
2
Exhibit B
FORM OF MEMORANDUM OF ASSOCIATION OF CAYMANCO
THE COMPANIES LAW (2001 Second Revision)
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
__________
Amended and Restated by Special Resolution Dated ___, 2002
1. The name of the company is _________________ (the
"Company").
2. The Registered Office of the Company shall be situated at
the offices of ____________, Grand Cayman, Cayman Islands, or at such other
place as the Board of Directors may from time to time determine.
3. The objects for which the Company is established are
unrestricted and the Company shall have full power and authority to carry out
any objective not prohibited by any law as provided by Section 7(4) of the
Companies Law (2001 Second Revision), as may be amended, modified or re-enacted
from time to time (the "Companies Law").
4. Except as prohibited or limited by the Companies Law, the
Company shall have full power and authority to carry out any object and shall
have and be capable of from time to time and at all times exercising any and all
of the powers at any time or from time to time exercisable by a natural person
or body corporate in doing in any part of the world whether as principal, agent,
contractor, or otherwise whatever may be considered by it necessary or desirable
for the attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereof, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company all irrespective of any
question of corporate benefit as provided by Section 27(2) of the Companies Law.
5. The liability of each member is limited to the amount, if
any, from time to time unpaid on such member's shares.
6. The share capital of the Company is US$______, divided into
______ Ordinary Shares of a nominal or par value of US$0.01 per share (including
one Ordinary Share designated "Special Voting Stock, Series 1" and one Ordinary
Share designated "Special Voting
-1-
Stock, Series 2") and ______ shares of a nominal or par value of US$0.01 per
share, which may be designated and created as shares of any other classes or
series of shares with the respective rights and restrictions determined upon the
creation thereof by action of the Board of Directors and/or as expressly
provided for in the Articles of Association of the Company, with power for the
Company insofar as is permitted by law, to redeem, call or purchase any of its
shares and to increase or reduce the said capital subject to the provisions of
the Companies Law and the Articles of Association and to issue any part of its
capital, whether original, redeemed, called or increased with or without any
preference, priority or special privilege or subject to any postponement of
rights or to any conditions or restrictions and so that, unless the conditions
of issue shall otherwise expressly declare, every issue of shares whether
declared to be ordinary, preference or otherwise shall be subject to the powers
hereinabove contained.
7. The Company may exercise the power contained in Section 226
of the Companies Law to deregister in the Cayman Islands and be registered by
way of continuation in some other jurisdiction.
8. Nothing in the preceding sections shall be deemed to permit
the Company to carry on the business of a Bank or Trust Company without being
licensed in that behalf under the provisions of the Banks & Trust Companies Law
(2001 Revision) as may be amended, modified or re-enacted from time to time, or
to carry on Insurance Business from within the Cayman Islands or the business of
an Insurance Manager, Agent, Sub-agent or Broker without being licensed in that
behalf under the provisions of the Insurance Law (2001 Revision) as may be
amended, modified or re-enacted from time to time, or to carry on the business
of Company Management without being licensed in that behalf under the provisions
of the Companies Management Law (2001 Revision) as may be amended, modified or
re-enacted from time to time.
9. The Company will not trade in the Cayman Islands with any
person, firm or company except in furtherance of the business of the Company
carried on outside the Cayman Islands; provided that nothing in this section
shall be construed as to prevent the Company from effecting and concluding
contracts in the Cayman Islands, and exercising in the Cayman Islands all of its
powers necessary for the carrying on of its business outside the Cayman Islands.
-2-
Exhibit C
FORM OF ARTICLES OF ASSOCIATION OF CAYMANCO
THE COMPANIES LAW (2001 Second Revision)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
__________
TABLE OF CONTENTS
Page No.
--------
I. INTERPRETATION.................................................................................................1
II. CERTIFICATES FOR SHARES.......................................................................................2
III. ISSUE OF SHARES..............................................................................................2
IV. ORDINARY SHARES...............................................................................................3
V. OTHER CLASSES OR SERIES OF SHARES..............................................................................5
VI. VARIATION OF RIGHTS OF SHARES.................................................................................6
VII. REDEMPTION AND REPURCHASE....................................................................................6
VIII. TRANSFER OF SHARES..........................................................................................6
IX. NONRECOGNITION OF TRUSTS......................................................................................7
X. LIEN ON SHARES.................................................................................................7
XI. CALL ON SHARES................................................................................................8
XII. FORFEITURE OF SHARES.........................................................................................9
XIII. TRANSMISSION OF SHARES ON DEATH OR BANKRUPTCY..............................................................10
XIV. AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF LOCATION OF REGISTERED OFFICE AND ALTERATION OF CAPITAL...10
XV. CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE............................................................11
XVI. VOTING......................................................................................................12
XVII. GENERAL MEETINGS...........................................................................................12
XVIII. NOTICE OF GENERAL MEETINGS................................................................................13
XIX. PROCEEDINGS AT GENERAL MEETINGS.............................................................................13
XX. PROXIES......................................................................................................16
XXI. DIRECTORS...................................................................................................17
XXII. POWERS AND DUTIES OF DIRECTORS.............................................................................20
i
XXIII. COMMITTEES................................................................................................21
XXIV. PROCEEDINGS OF DIRECTORS...................................................................................22
XXV. VACATION OF OFFICE OF DIRECTOR..............................................................................23
XXVI. CERTAIN BUSINESS COMBINATIONS..............................................................................23
XXVII. BUSINESS COMBINATIONS WITH INTERESTED MEMBERS.............................................................24
XXVIII. SEAL.....................................................................................................28
XXIX. OFFICERS...................................................................................................28
XXX. DIVIDENDS AND RESERVES......................................................................................29
XXXI. CAPITALIZATION.............................................................................................30
XXXII. AUDIT.....................................................................................................30
XXXIII. NOTICES..................................................................................................30
XXXIV. LIMITATION OF LIABILITY AND INDEMNITY.....................................................................31
XXXV. BOOKS AND RECORDS..........................................................................................32
XXXVI. WINDING UP................................................................................................32
XXXVII. DEREGISTRATION...........................................................................................33
XXXVIII. FISCAL YEAR.............................................................................................33
XXXIX. AMENDMENTS OF ARTICLES....................................................................................33
ii
I. INTERPRETATION
1.1 The Regulations or Articles contained or incorporated in Table "A"
Regulations For Management of a Company Limited by Shares in the First Schedule
to the Statute shall not apply to this Company, and the following Articles shall
be the Articles of Association of the Company. The following terms shall have
the following meanings wherever they appear herein, and such meanings shall be
equally applicable to both the singular and plural forms of the terms herein
defined.
"Articles" means these Articles of Association, as originally framed or
as from time to time altered by Special Resolution.
"Board of Directors" means the board of directors of the Company.
"Company" means _____ , a Cayman Islands exempted company limited by
shares. Where agreement, consent or other action of the Company is provided for
herein, such action shall not require approval of the Members, except as
expressly required by the Statute or these Articles.
"Directors" means the directors of the Company as of the applicable
date.
"dividend" includes bonus.
"holder," in relation to any shares, means the Member whose name is
entered in the Register as the holder of such shares.
"Member" has the meaning ascribed to it in Section 38 of the Statute.
"Memorandum" means the memorandum of association of the Company, as may
be amended from time to time.
"Month" means calendar month.
"Ordinary Resolution" means a resolution passed by a majority of such
Members as, being entitled to do so, vote in person or by proxy at any general
meeting of the Company at which the required quorum is present in person or by
proxy.
"Ordinary Shares" has the meaning ascribed to it in Article 3.1.
"Paid-up" means fully paid, paid-up and/or credited as fully paid or
paid-up.
"person" means any individual, corporation, partnership, unincorporated
association or other legal entity.
"Register" means the Register of Members of the Company as maintained
in accordance with Section 40 of the Statute.
"Registered Office" means the registered office of the Company
maintained in accordance with Section 50 and Section 51 of the Statute, and as
may be relocated from time to time.
1
"Secretary" means the secretary of the Company and includes an
Assistant Secretary and any person appointed to perform the duties of Secretary
of the Company.
"shares" means any Ordinary Shares or other shares issued in the
capital of the Company.
"shares generally entitled to vote" means any share which entitles the
holder to attend and vote at all general meetings of the Company and excludes
(a) any share where the right to vote at general meetings of the Company is
conditional on the Company being in default of an obligation with respect to a
right attaching to the class or series of share to which that share belongs
and/or (b) any share where the right to vote relates solely to such a class or
series of shares (other than the Ordinary Shares).
"Special Resolution" has the same meaning as in the Statute.
"Special Voting Stock, Series 1" has the meaning ascribed to it in
Article 4.2.
"Special Voting Stock, Series 2" has the meaning ascribed to it in
Article 4.3.
"Statute" means the Companies Law (2001 Second Revision) of the Cayman
Islands, as amended, and every statutory modification or re-enactment thereof
for the time being in force.
"written" and "in writing" includes all modes of representing or
reproducing words in visible form.
Words importing the singular number shall also include the plural
number and vice-versa.
Words importing the masculine gender shall also include the feminine
gender.
II. CERTIFICATES FOR SHARES
2.1 Unless otherwise provided by resolution of the Board of Directors,
shares shall be represented by certificates that shall be in such form as is
approved by the Board of Directors.
2.2 The Board of Directors shall have authority to make such rules and
regulations as it may deem expedient concerning the issue, transfer (in addition
to or in lieu of those set forth in Article VIII) and registration of shares,
including without limitation, such rules and regulations as may be deemed
expedient concerning the issue of certificates in lieu of certificates claimed
to have been lost, destroyed, stolen or mutilated.
III. ISSUE OF SHARES
The authorized share capital of the Company as of the date of adoption
of these Articles is US$______ divided into ______ Ordinary Shares of a nominal
or par value of US$0.01 per share (including one Ordinary Share designated
"Special Voting Stock, Series 1" and one Ordinary Share designated "Special
Voting Stock, Series 2"), with the rights as set out in these Articles and the
Memorandum ("Ordinary Shares"), and ______ shares of a nominal or par value of
US$0.01 per share which may be designated and created as shares of any other
classes or series of shares with the
2
respective rights and restrictions determined upon the creation thereof by
action of the Board of Directors. Notwithstanding the foregoing, the authorized
share capital of the Company may be increased by Ordinary Resolution.
3.1 Subject to the provisions of these Articles, all unissued shares
for the time being in the capital of the Company shall be at the disposal of the
Board of Directors, and the Board of Directors may designate, re-designate,
allot, grant options over or otherwise dispose of them to such persons, on such
terms and conditions and at such times as they deem proper.
3.2 No holder of Ordinary Shares or any other shares (unless such right
is expressly conferred on the holders of such shares) shall, by reason of such
holding, have any preemptive or preferential right to subscribe to or purchase
any shares or any notes, debentures, bonds or other securities of the Company,
whether or not the issuance of any such shares, notes, debentures, bonds or
other securities would adversely affect the dividend, voting or any other rights
of such holder.
3.3 The Company may, insofar as may be permitted by law, pay a
commission to any person in consideration of such person or any other person
subscribing or agreeing to subscribe whether absolutely or conditionally for any
shares. Such commissions may be satisfied by the payment of cash or the lodgment
of fully or partly paid-up shares or partly in one way and partly in the other.
The Company may also on any issue of shares pay such brokerage as may be lawful.
3.4 The Directors may issue fractions of a share of any class or series
of shares, and, if so issued, a fraction of a share (calculated to three decimal
points) shall be subject to and carry the corresponding fraction of liabilities
(whether with respect to any unpaid amount thereon, contribution, calls or
otherwise), limitations, preferences, privileges, qualifications, restrictions,
rights (including, without limitation, voting and participation rights) and
other attributes of a whole share of the same class or series of shares. If more
than one fraction of a share of the same class or series is issued to or
acquired by the same member such fractions shall be accumulated. For the
avoidance of doubt, in these Articles the expression "share" shall include a
fraction of a share.
3.5 Any shares which have been redeemed or otherwise repurchased by the
Company shall have the status of authorized but unissued shares and may be
subsequently issued in accordance with the Memorandum and these Articles.
3.6 The Board of Directors shall have the fullest powers permitted by
law to pay all or any monies in respect of the redemption or purchase of any
shares out of the Company's share capital and share premium account.
IV. ORDINARY SHARES
4.1 The Board of Directors may allot, issue or grant any option, right,
warrant or other security exercisable for, convertible into or exchangeable for,
or otherwise dispose of, any shares or securities of the Company at such times
and on such terms as it deems proper. Upon approval of the Board of Directors,
such number of Ordinary Shares, or other shares or securities of the Company, as
may be required for such purpose shall be reserved for issuance in connection
with any option, right, warrant or other security of the Company or any other
person that is exercisable for,
3
convertible into, exchangeable for or otherwise issuable in respect of such
Ordinary Shares or other shares or securities of the Company. Notwithstanding
the generality of the foregoing, the Board of Directors is expressly authorized
and empowered to implement or effect at its sole discretion the issuance of a
preferred share purchase right to be attached to each issued Ordinary Share with
such terms and for such purposes, including the influencing of takeovers, as may
be described in a rights agreement between the Company and a rights agent.
4.2 Special Voting Stock, Series 1 designated. The series of Ordinary
Shares, consisting of one such share, designated as "Special Voting Stock,
Series 1", shall have the following rights and restrictions. Each outstanding
share of Special Voting Stock, Series 1 shall be entitled at any relevant date
to the number of votes determined by the Board of Directors in accordance with
the "Plan of Arrangement" (as that term is defined in that certain Combination
Agreement dated as of May 10, 1996 (hereinafter referred to as the "VESI
Combination Agreement"), by and between Veritas DGC Inc. (formerly named Digicon
Inc.) ("Veritas") and Veritas Energy Services Inc. ("VESI")) attached hereto as
Exhibit A to these Articles, on all matters presented to the Members. No
dividend or distribution of assets shall be paid to the holders of Special
Voting Stock, Series 1. The Special Voting Stock, Series 1 is not convertible
into any other class or series of the share capital of the Company or into cash,
property or other rights, and may not be redeemed. Any shares of Special Voting
Stock, Series 1 purchased or otherwise acquired by the Company shall be deemed
retired and shall be canceled and may not thereafter be reissued or otherwise
disposed of by the Company. So long as any "VESI Exchangeable Shares" (i.e.,
"Exchangeable Shares," as that term is defined in the VESI Combination
Agreement) shall be outstanding, the number of shares comprising the Special
Voting Stock, Series 1 shall not be increased or decreased and no other term of
the Special Voting Stock, Series 1 shall be amended, except upon the unanimous
approval of the holders of the issued Ordinary Shares.
4.3 Special Voting Stock, Series 2 designated. The series of Ordinary
Shares, consisting of one such share, designated as "Special Voting Stock,
Series 2", shall have the following rights and restrictions. Each outstanding
share of Special Voting Stock, Series 2 shall be entitled at any relevant date
to the number of votes determined by the Board of Directors in accordance with
the "Plan of Arrangement" (as that term is defined in that certain Amended and
Restated Combination Agreement dated as of March 10, 1999 (hereinafter referred
to as the "ERS Combination Agreement") by and between Veritas and Enertec
Resource Services Inc. ("ERS")) attached hereto as Exhibit B to these Articles,
on all matters presented to the Members. No dividend or distribution of assets
shall be paid to the holders of Special Voting Stock, Series 2. The Special
Voting Stock, Series 2 is not convertible into any other class or series of the
share capital of the Company or into cash, property or other rights, and may not
be redeemed. Any shares of Special Voting Stock, Series 2 purchased or otherwise
acquired by the Company shall be deemed retired and shall be canceled and may
not thereafter be reissued or otherwise disposed of by the Company. So long as
any "ERS Exchangeable Shares" (i.e., "Exchangeable Shares," as that term is
defined in the ERS Combination Agreement) shall be outstanding, the number of
shares comprising the Special Voting Stock, Series 2 shall not be increased or
decreased and no other term of the Special Voting Stock, Series 2 shall be
amended, except upon the unanimous approval of the holders of the issued
Ordinary Shares.
4.4 Subject to the provisions of applicable law and any rights granted
to any series or class of shares other than Ordinary Shares, the holders of
Ordinary Shares shall have and possess the
4
exclusive right to notice of general meetings of the Company and the exclusive
power to vote on resolutions put to general meetings of the Company.
V. OTHER CLASSES OR SERIES OF SHARES
5.1 The Board of Directors is authorized, without obtaining any vote or
consent of the holders of any class or series of shares unless expressly
provided by the terms of issue of a class or series, subject to any limitations
prescribed by law, to provide from time to time for the issuance of other
classes or series of shares and, in accordance with applicable procedures of the
Statute, to establish the characteristics of each class or series including,
without limitation, the following:
(a) the number of shares of that class or series, which may
subsequently be increased or decreased (but not below the number of shares of
that class or series then in issue) by resolution of the Board of Directors, and
the distinctive designation thereof;
(b) the voting powers, full or limited, if any, of the shares
of that class or series, including without limitation, the authority to confer
multiple votes per share, voting rights as to specified matters or issues such
as mergers, consolidations or sales of assets, or voting rights to be exercised
either together with holders of Ordinary Shares as a single class, or
independently as a separate class;
(c) the rights in respect of dividends, if any, on the shares
of that class or series; the rate at which such dividends shall be payable
and/or cumulate, which rate may be determined on factors external to the Company
and which dividends may be payable in cash, shares of capital or other
securities or property of the Company; whether dividends shall be cumulative
and, if so, from which date or dates; the relative rights or priority, if any,
of payment of dividends on shares of that class or series; and any limitation,
restrictions or conditions on the payment of dividends;
(d) the relative amounts, and the relative rights or priority,
if any, of payment in respect of shares of that class or series, which the
holder of the shares of that class or series shall be entitled to receive upon
any liquidation, dissolution or winding up of the Company;
(e) any redemption, repurchase, retirement and sinking fund
rights, preferences and limitations of that class or series, the amount payable
on shares of that class or series in the event of such redemption, repurchase or
retirement, the terms and conditions of any sinking fund, the manner of creating
such fund or funds and whether any of the foregoing shall be cumulative or
non-cumulative;
(f) the terms, if any, upon which the shares of that class or
series shall be convertible into or exchangeable for shares of any other
classes, series, or other securities, whether or not issued by the Company;
(g) the restrictions, limitations and conditions, if any, upon
issuance of indebtedness of the Company so long as any shares of that class or
series are in issue; and
(h) any other preferences and relative, participating,
optional or other rights and limitations not inconsistent with applicable law.
5
VI. VARIATION OF RIGHTS OF SHARES
6.1 (a) If at any time the share capital of the Company is divided
into different classes or series of shares, the rights attached to any class or
series (unless otherwise provided by the terms of issue of the shares of that
class) may, whether or not the Company is being wound-up, be varied and amended
with the consent in writing of the holders of all of the issued shares of that
class or series, or with the sanction of a Special Resolution passed at a
separate general meeting of the holders of such class or series.
(b) The provisions of these Articles relating to general
meetings of the Company shall apply to every such separate general meeting of
the holders of one class or series of shares (unless otherwise expressly
provided by the terms of issue of the shares of that class or series).
(c) Separate general meetings of the holders of a class or
series of shares or the seeking of a consent of the holders of a class or series
of shares may only be called at the direction of the Board of Directors (unless
otherwise expressly provided by the terms of issue of the shares of that class
or series). Nothing in this Article VI gives any Member or group of Members the
right to call a class or series meeting or demand a class or series vote or
consent.
6.2 The rights conferred upon the holders of the shares of any class or
series issued with preferred or other rights shall not, unless otherwise
expressly provided by the terms of issue of the shares of that class or series,
be deemed to be varied by the creation or issue of further shares ranking in any
respect prior to or pari passu therewith. The rights of the holders of Ordinary
Shares shall not be deemed to be varied by the creation or issue of shares with
preferred or other rights, which may be effected by the Board of Directors as
provided in these Articles without any vote or consent of the holders of
Ordinary Shares.
VII. REDEMPTION AND REPURCHASE
7.1 The Ordinary Shares are not redeemable by the Company or the
holder. Subject as set out herein, the Company is authorized to purchase any
issued Ordinary Shares in such circumstances and on such terms as shall be
agreed by the Company and the holder thereof, subject always to the laws of the
Cayman Islands, and the Company may deduct from the price for such shares the
aggregate amount of any outstanding debts, liabilities and engagements to or
with the Company (whether presently payable or not) by the holder of such
shares, either alone or jointly with any other person, whether a Member or not.
Without limiting the foregoing, the Company may, from time to time, upon the
agreement of a Member, purchase all or part of the Ordinary Shares of any such
Member, whether or not the Company has made a similar offer to all or any of the
other Members.
VIII. TRANSFER OF SHARES
8.1 Transfers of shares shall be registered on the records maintained
by or on behalf of the Company for such purpose upon (i) surrender to the
Company or its transfer agent of a certificate or certificates representing the
shares requested to be transferred, the transfer provisions on the certificate
or certificates being duly completed or on a separate accompanying transfer in
such form
6
as the Board of Directors approves, together with such evidence of the payment
of transfer taxes and compliance with other provisions of law as the Company or
its transfer agent may require, or (ii) if shares are not represented by
certificates, upon compliance with such transfer procedures as may be approved
by the Board of Directors or prescribed by applicable law.
8.2 Subject to the rules of any stock exchange on which the shares in
question may be listed and except as otherwise expressly provided by the terms
of issue of the shares of any class or series, the Board of Directors may, in
its absolute discretion and without assigning any reason therefore, decline to
register any transfer of any share. The registration of transfers may be
suspended at such times and for such periods as the Board of Directors may from
time to time determine provided always that such registration shall not be
suspended for more than 30 days in any year.
IX. NONRECOGNITION OF TRUSTS
9.1 The Company shall be entitled to treat the holder of record of any
share as the holder in fact thereof and accordingly shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other notice
thereof, except as expressly provided by law. The Company shall not be required
to recognize any person as holding any share upon any trust, and the Company
shall not be bound by or be compelled in any way to recognize (even when having
notice thereof) any equitable, contingent, future or partial interest in any
share, any interest in any fractional part of a share (subject to Section 3.5),
or (except only as is otherwise provided by these Articles or the Statute) any
other rights in respect of any share except an absolute right to the entirety
thereof in the registered holder.
X. LIEN ON SHARES
10.1 The Company shall have a first and paramount lien and charge on
all shares (not being a fully paid share) registered in the name of a Member
(whether solely or jointly with others) for all debts, liabilities or
engagements to or with the Company (whether presently payable or not) by such
Member or his estate, either alone or jointly with any other person, whether a
Member or not, but the Board of Directors may at any time declare any share to
be wholly or in part exempt from the provisions of this Article X. The
registration of a transfer of any such share shall operate as a waiver of the
Company's lien (if any) thereon. The Company's lien (if any) on a share shall
extend to all dividends, redemptions or other monies payable in respect thereof.
10.2 The Company may sell, in such manner as the Board of Directors
deems fit, any shares on which the Company has a lien, except as set forth in
this Article X. Unless otherwise permitted in the instrument creating such lien,
no such sale shall be made unless a sum in respect of which the lien exists is
presently payable. Unless otherwise permitted in the instrument creating such
lien, no such sale shall be made until the expiration of 14 days after a notice
in writing, stating and demanding payment of such part of the amount in respect
of which the lien exists as is presently payable, has been given to the holder
or holders for the time being of the shares, or the person, of which the Company
has notice, entitled thereto by reason of his death or bankruptcy.
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10.3 To give effect to any such sale, the Board of Directors may
authorize some person to transfer the shares sold to the purchaser thereof. The
purchaser shall be registered as the holder of the shares included in any such
transfer, and he shall not be bound to see to the application of the purchase
money, nor shall his title to the shares be affected by any irregularity or
invalidity in the proceedings in reference to the sale.
10.4 The proceeds of the sale of such shares shall be received by the
Company and applied in payment of such part of the amount in respect of which
the lien exists as is presently payable, and the residue, if any, shall (subject
to a like lien for sums not presently payable as existed upon the shares before
the sale) be paid to the person entitled to the shares at the date of the sale.
XI. CALL ON SHARES
11.1 (a) The Board of Directors may from time to time make calls
upon the Members in respect of any monies unpaid on their shares (whether on
account of the nominal value of the shares or by way of premium or otherwise)
and not by the conditions of allotment thereof made payable at fixed terms; and
each Member shall, subject to receiving at least 14 days' notice (or some
shorter period of notice as may have been authorized by the terms on issue of
the shares) specifying the time or times of payment, pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Board of Directors may determine. A call may be made
payable by installments.
(b) A call shall be deemed to have been made at the time when
the resolution of the Board of Directors authorizing such call was passed unless
otherwise provided by the Board of Directors.
(c) The joint holders of a share shall be jointly and
severally liable to pay all calls in respect thereof.
11.2 If a sum called in respect of a share is not paid before or on the
day appointed for payment thereof, the persons from whom the sum is due shall
pay interest on the sum from the day appointed for payment thereof to the time
of actual payment at such rate not exceeding fifteen percent (15%) per annum as
the Board of Directors may determine, but the Board of Directors shall be at
liberty to waive payment of such interest either wholly or in part.
11.3 Any sum which by the terms of a share becomes payable on allotment
or at any fixed date, whether on account of the nonfinal value of the share or
by way of premium or otherwise, shall for the purposes of these Articles be
deemed to be a call duly made, notified and payable on the date on which by the
terms of issue the same becomes payable, and in the case of nonpayment, all the
relevant provisions of these Articles as to payment of interest, forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.
11.4 The Board of Directors may, on the issue of shares, differentiate
between the holders as to the amount of calls or interest to be paid and the
times of payment.
11.5 (a) The Board of Directors may, if it thinks fit, receive from
any Member willing to advance the same, all or any part of the monies uncalled
and unpaid upon any shares held by him,
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and upon all or any of the monies so advanced may (until the same would but for
such advances, become payable) pay interest at such rate as may be agreed upon
between the Company and the Member paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the
Member paying such sum to any portion of a dividend declared in respect of any
period prior to the date upon which such sum would, but for such payment, become
presently payable.
XII. FORFEITURE OF SHARES
12.1 (a) If a Member fails to pay any call or installment of a call
or to make any payment required by the terms of issue on the day appointed for
payment thereof, the Board of Directors may, at any time thereafter during such
time as any part of the call, installment or payment remains unpaid, give notice
requiring payment of so much of the call, installment or payment as is unpaid,
together with any interest which may have accrued and all expenses that have
been incurred by the Company by reason of such nonpayment. Such notice shall
name a day (not earlier than the expiration of 14 days, or such shorter period
of notice as may have been authorized by the terms on issue of the shares, from
the date of giving of the notice) on or before which the payment required by the
notice is to be made and shall state that, in the event of nonpayment at or
before the time appointed, the shares in respect of which such notice was given
will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are
not complied with, any share in respect of which the notice has been given may
at any time thereafter, before the payment required by the notice has been made,
be forfeited by a resolution of the Board of Directors to that effect. Such
forfeiture shall include all dividends declared in respect of the forfeited
share and not actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on
such terms and in such manner as the Board of Directors deems fit, and at any
time before a sale or disposition the forfeiture may be canceled on such terms
as the Board of Directors thinks fit.
12.2 A person whose shares have been forfeited shall cease to be a
Member in respect of the forfeited shares, but shall, notwithstanding, remain
liable to pay to the Company all monies which, at the date of forfeiture, were
payable by him to the Company in respect of the shares together with interest
thereon, but his liability shall cease if and when the Company shall have
received payment in full of all monies whenever payable in respect of the
shares.
12.3 A certificate in writing under the hand of the President or any
Vice President and the Secretary of the Company that a share in the Company has
been duly forfeited on a date stated in the declaration shall be conclusive
evidence of the fact therein stated as against all persons claiming to be
entitled to the share. The Company may receive the consideration given for the
share on any sale or disposition thereof and may execute a transfer of the share
in favor of the person to whom the share is sold or disposed of, and that person
shall thereupon be registered as the holder of the share and shall not be bound
to see to the application of the purchase money, if any, nor shall that person's
title to the share be affected by any irregularity or invalidity in the
proceedings in reference to the forfeiture, sale or disposal of the share.
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12.4 Unless otherwise determined by the Board of Directors, the
provisions of these Articles as to forfeiture shall apply in the case of
nonpayment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium as if the same had been payable by virtue of a call duly made and
notified.
XIII. TRANSMISSION OF SHARES ON DEATH OR BANKRUPTCY
13.1 In case of the death of a Member who is a natural person, the
survivor or survivors, where the deceased was a joint holder, and the legal
personal representatives of the deceased, where he was a sole holder, shall be
the only persons recognized by the Company as having any title to his interest
in the shares, but nothing herein contained shall release the estate of any such
deceased holder from any liability in respect of any shares which had been held
by him solely or jointly with other persons.
13.2 (a) Any person becoming entitled to a share in consequence of
the death or bankruptcy of a Member (or in any other way than by transfer) may,
upon such evidence being produced as may from time to time be required by the
Board of Directors and subject as hereinafter provided, elect either to be
registered himself as holder of the share or to make such transfer of the share
to such other person nominated by him as the deceased or bankrupt person could
have made and to have such person registered as the transferee thereof, but the
Board of Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy, as the case may be.
(b) If the person so becoming entitled shall elect to be
registered himself as holder he shall deliver or send to the Company a notice in
writing signed by him stating that he so elects.
13.3 A person becoming entitled to a share by reason of the death or
bankruptcy of the holder (or in any other case than by transfer) shall be
entitled to the same dividends and other advantages to which he would be
entitled if he were the registered holder of the share, except that he shall
not, before being registered as a Member in respect of the share, be entitled in
respect of it to exercise any right conferred by membership in relation to
meetings of the Company; provided, however, that the Board of Directors may at
any time give notice requiring any such person to elect either to be registered
himself or to transfer the share and if the notice is not complied with within
90 days the Board of Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements
of the notice have been complied with.
XIV. AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE AND ALTERATION OF CAPITAL
14.1 (a) Subject to and insofar as permitted by the provisions of the
Statute, the Company may from time to time by Special Resolution alter or amend
the Memorandum and, without restricting the generality of the foregoing, the
Company may by Ordinary Resolution:
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(i) increase the share capital by such sum to be
divided into shares of such amount or without nominal or par value as the
resolution shall prescribe;
(ii) consolidate all or any of its share capital into
shares of larger amount than its existing shares;
(iii) by subdivision of all of its existing shares or
any class or series of shares, divide the whole or any part of its share capital
into shares of smaller amount than is fixed by the Memorandum; or
(iv) cancel any shares which at the date of the
passing of the resolution have not been taken or agreed to be taken by any
person or reserved for issue by the Board of Directors.
(b) All new shares created hereunder shall be subject to the
same provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statute, the Company may
by Special Resolution reduce its share capital or any capital redemption reserve
fund.
14.2 Subject to the provisions of the Statute, the Company may by
Special Resolution change its name.
14.3 Subject to the provisions of the Statute, the Board of Directors
may change the location of the Company's registered office.
XV. CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
15.1 For the purpose of determining Members entitled to notice of or to
vote at any general meeting of the Company or any adjournment thereof, or
Members entitled to receive payment of any dividend or other distribution or
allotment of any rights of the Members entitled to exercise any rights in
respect of any charge, change, conversion or exchange of shares or for the
purpose of any other lawful action, the Board of Directors may provide that the
Register shall be closed for transfers for a stated period.
15.2 In lieu of or apart from closing the Register, the Board of
Directors may fix in advance a date as the record date for any such
determination of Members entitled to notice of or to vote at a general meeting
of the Company. For the purpose of determining the Members entitled to receive
payment of any dividend or other distribution or allotment of any rights of the
Members entitled to exercise any rights in respect of any charge, change,
conversion or exchange of shares, or for the purpose of any other lawful action,
the Board of Directors may, at or within 90 days prior to the date of
declaration of such dividend or other action, fix a subsequent date no later
than the date of declaration as the record date for such determination.
15.3 If the Register is not so closed and no record date is fixed for
the determination of Members entitled to notice of or to vote at a general
meeting of the Company, the date preceding the
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day on which notice of the meeting is given or if notice is waived, at the close
of business on the day preceding the day on which the meeting is held shall be
the record date for such determination of Members. When a determination for
Members entitled to vote at any general meeting of the Company has been made as
provided in this Article XV, such determination shall apply to any adjournment
thereof; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
15.4 If the Register is not so closed and no record date is fixed for
the determination of Members entitled to receive payment of any dividend or
other distribution or allotment of any rights of the Members entitled to
exercise any rights in respect of any charge, change, conversion or exchange of
shares, or for the purpose of any other lawful action (other than as specified
in Section 15.3), the record date for determining the Members for any such
purpose shall be the close of business on the day in which the Board of
Directors adopts the resolution relating thereto.
XVI. VOTING
16.1 Subject to the rights of holders of any class or series of shares
(including those rights attaching to the Special Voting Stock, Series 1 and
Special Voting Stock, Series 2 as set forth in Articles 4.2 and 4.3 hereof):
(a) at each election for Directors at a general meeting of the
Company the Directors shall be elected by a plurality of the votes cast in
person or by proxy at that general meeting and each Member holding Ordinary
Shares shall have the right to vote, in person or by proxy, the number of
Ordinary Shares registered in his name in the Register for as many persons as
there are Directors to be elected and for whose election he has a right to vote.
Cumulative voting, for the election of Directors, is expressly prohibited.
Election of Directors need not be by ballot; and
(b) on all matters coming before the Members at a general
meeting of the Company, other than the election of Directors, each Member
holding Ordinary Shares shall have the right to vote, in person or by proxy, one
vote for each issued Ordinary Share registered in his name in the Register.
XVII. GENERAL MEETINGS
17.1 (a) The Company may in each year of its existence hold a
general meeting of the Company as its annual general meeting. The annual general
meeting may be held on such date and at such time and place as the Board of
Directors may appoint. At each annual general meeting, elections may be held for
Directors whose terms have expired and such other business may be transacted as
may properly be brought before such meeting.
(b) At each annual general meeting of the Company, the
Directors to be elected at that meeting may be elected by single resolution for
the applicable term or until their respective successors have been elected.
17.2 (a) Except as otherwise required by law, and subject to the
rights of any class or series of shares having a preference over the Ordinary
Shares as to dividends or to elect Directors
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in specified circumstances, extraordinary general meetings of the Company may be
called only by resolution of the Board of Directors, approved by at least a
majority of the entire Board of Directors.
(b) Any action required or permitted to be taken by the
Members whether pursuant to these Articles or by law, must be taken at a duly
called annual or extraordinary general meeting of the Company unless the written
consent or approval of all holders of issued shares generally entitled to vote
has been obtained with respect to such action.
17.3 Subject to the provisions of applicable law, no Member shall have
any right to requisition a general meeting of the Company.
XVIII. NOTICE OF GENERAL MEETINGS
18.1 Written notice of each general meeting of the Company stating the
place, date and time of the meeting shall be given not less than 10 (or such
greater number of days as may be required by the Statute) nor more than 60 days
before the date of the meeting to each Member entitled to vote at such meeting.
The notice of each general meeting of the Company shall state the purpose or
purposes for which the meeting is called. The business at an annual general
meeting of the Company shall be limited in the manner set out in Section
19.2(c). No business shall be transacted at any extraordinary general meeting of
the Company except as stated in the notice.
18.2 The accidental omission to give notice of a general meeting of the
Company to, or the nonreceipt of notice of such a meeting by, any person
entitled to receive notice shall not invalidate the proceedings of that meeting.
XIX. PROCEEDINGS AT GENERAL MEETINGS
19.1 No business shall be transacted at any general meeting of the
Company unless a quorum of Members is present at the time when the meeting
proceeds to business. At a general meeting of the Company to:
(a) consider or adopt a Special Resolution to amend, vary,
suspend the operation of or disapply Sections 17, 19, 21.1, 26 or 27 (other than
a Special Resolution referred to in Section 19.1(b)), one or more Members
present in person or by proxy holding at least 95 percent of the issued shares
entitled to vote at such meeting shall be a quorum unless:
(i) a majority of the Board of Directors has at, or
at any time prior to, the meeting recommended to the Members entitled to vote at
such meeting, to vote in favor of such Special Resolution; and
(ii) in the case of a Special Resolution to amend,
vary, suspend the operation of or disapply Section 27 (other than a Special
Resolution referred to in Section 19.1(b)), such Board of Directors'
recommendation is made at a time where a majority of the Board of Directors then
in office (but not less than one) were Directors prior to any person becoming an
Interested Member (as defined in Section 27) during the previous three years or
were recommended for election or elected to succeed such Directors by a majority
of such Directors, in which case one
13
or more Members present in person or by proxy holding at least a majority of the
issued shares entitled to vote at such meeting shall be a quorum;
(b) consider or adopt a Special Resolution to delete Section
27 on the conditions that (i) such resolution shall not be effective until 12
months after the passing of such resolution and (ii) the restriction in Section
27 shall otherwise continue to apply to any Business Combination between the
Company and any person who became an Interested Member on or prior to the
passing of such resolution, one or more Members present in person or by proxy
holding at least a majority of the issued shares entitled to vote at such
meeting shall be a quorum; and
(c) consider or adopt any other resolution or to take any
other action, one or more Members present in person or by proxy holding at least
a majority of the issued shares generally entitled to vote at such meeting shall
be a quorum.
The Members present at a duly constituted general meeting of
the Company may continue to transact business until adjournment, despite the
withdrawal of such Members as leave less than a quorum.
19.2 (a) Subject to the rights of holders of any class of shares to
the contrary, nominations for election of Directors at any general meeting of
the Company may be made either by the Board of Directors or by any Member
entitled to vote for the election of Directors who gives advance notice as
hereafter provided. Any such Member may nominate persons for election as
Directors only if written notice of such Member's intent to make such nomination
is transmitted to, and received by, the Secretary at the principal executive
offices of the Company not later than (i) in the case of an annual general
meeting of the Company, not less than 90 days prior to the anniversary of the
date of the immediately preceding annual general meeting that was specified in
the initial formal notice of such meeting (but if the date of the forthcoming
annual general meeting is more than 30 days before or after such anniversary
date, such written notice must instead be received by the Secretary by the close
of business on the 10th day following the date on which the Company first makes
public disclosure of the meeting date) and (ii) in the case of an extraordinary
general meeting of the Company (provided that the Board of Directors has
determined that Directors shall be elected at such meeting), the close of
business on the 10th day following the date on which the Company first makes
public disclosure of the meeting date. Each notice given by such Member shall
set forth: (i) the name and address of the Member who intends to make the
nomination and of the person or persons to be nominated; (ii) a representation
that the Member is a registered holder of shares entitled to vote at such
meeting (or if the record date for such meeting is subsequent to the date
required for such Member notice, a representation that the Member is such a
registered holder at the time of such notice and intends to be a registered
holder on the date for such meeting), and setting forth the class and number of
shares so held (including shares held beneficially); (iii) a representation that
such Member intends to appear in person or by proxy as a registered holder of
shares at the meeting to nominate the person or persons specified in the notice;
(iv) a description of all arrangements or understandings between such Member and
any other person or persons (identifying such person or persons) pursuant to
which the nomination or nominations are to be made by the Member; (v) such other
information regarding each nominee proposed by such Member as would be required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and
14
Exchange Commission of the United States of America; and (vi) the consent of
each nominee to serve as a director of the Company if so elected.
(b) If the facts show that a nomination was not made in
accordance with the provisions of Section 19.2(a), the presiding officer of the
general meeting shall so determine and declare to the meeting, whereupon the
defective nomination shall be disregarded. Public disclosure of the date of a
forthcoming general meeting may be made by the Company for purpose of this
Section 19.2 not only by the giving of the formal notice of the meeting, but
also (i) by notice to a national securities exchange (as such term is used in
the Securities Exchange Act of 1934, as amended of the United States of America
(the "Exchange Act"), or to the National Association of Securities Dealers, Inc.
(if the Ordinary Shares are then listed on such exchange or quoted on NASDAQ),
(ii) by filing a report under Section 13 or 15(d) of the Exchange Act (if the
Company is then subject thereto) or (iii) by a mailing to Members or by issuance
of a general press release.
(c) No business shall be transacted at an annual general
meeting of the Company other than such business as shall be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (ii) otherwise properly brought before the meeting by or
at the direction of the Board of Directors or (iii) brought before the meeting
by a Member present and entitled to vote at such meeting in accordance with the
following procedure. For business to be brought before an annual general meeting
of the Company by a Member, the Member must have given timely notice in writing
to the Secretary. To be timely, a Member's notice must be transmitted to, and
received by, the Secretary at the principal executive offices of the Company not
less than 90 days prior to the anniversary of the date of the immediately
preceding annual general meeting that was specified in the initial formal notice
of such meeting (but if the date of the forthcoming annual general meeting is
more than 30 days before or after such anniversary date, such written notice
must instead be received by the Secretary by the close of business on the 10th
day following the date on which the Company first makes public disclosure of the
meeting date). Each such notice given by such Member must set forth: (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting; (ii) the name and address
of the Member who intends to propose such business; (iii) a representation that
the Member is a registered holder of shares entitled to vote at such meeting (or
if the record date for such meeting is subsequent to the date required for such
Member notice, a representation that the Member is a registered holder at the
time of such notice and intends to be a registered holder on the date of such
meeting) and intends to appear in person or by proxy at such meeting to propose
such business; and (iv) any material interest of the Member in such business.
The presiding officer of the meeting may refuse to transact any business at any
meeting made without compliance with the foregoing procedure.
(d) Notwithstanding the provisions of Section 19.2, a Member
also shall comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in
Section 19.2. Nothing in Section 19.2 shall be deemed to affect any rights of
Members to request inclusion of proposals in the Company's proxy statement, if
one shall be necessary, pursuant to Rule 14a-8 under the Exchange Act.
19.3 The Chairman of the Board of Directors appointed by the Board of
Directors prior to the relevant general meeting of the Company or, in his
absence, a person designated by the
15
Chairman of the Board of Directors, or if no person is so designated, a person
designated by the Board of Directors shall preside at any meeting of the Members
and determine the order of business and all other matters relating to the
conduct of the meeting.
19.4 The presiding officer of any meeting of the Members shall have the
power to prescribe such rules, regulations and procedures and to do all such
things as in his judgment may be necessary or desirable for the proper conduct
of the meeting, including, without limitation, the establishment of procedures
for the maintenance of order and safety, the right of Directors, Members and
others to speak, limitations on the time allotted to questions or comments,
restrictions on entry to the meeting after the time scheduled for the
commencement thereof and the opening and closing of the voting polls.
19.5 The presiding officer may adjourn the meeting from time to time
and from place to place, but no business shall be transacted at any adjourned
meeting other than the business left unfinished at the meeting from which the
adjournment took place. When a general meeting is adjourned for 60 days or more,
notice of the adjourned meeting shall be given as in the case of an original
meeting; save as aforesaid it shall not be necessary to give any notice of an
adjournment or of the business to be transacted at an adjourned general meeting.
19.6 In the case of joint registered holders, the vote of the senior
holder who tenders a vote, whether in person or by proxy, shall be accepted to
the exclusion of the votes of the other joint holders, and for this purpose
seniority shall be determined by the order in which the names stand in the
Register.
19.7 No Member shall be entitled to vote at any general meeting of the
Company unless (a) he is registered as a Member on the record date for such
meeting or holds a valid proxy of such a Member or unless (b) all calls or other
sums presently payable in respect of the shares to be voted have been paid.
19.8 Votes may be given either personally or by proxy.
XX. PROXIES
20.1 The instrument appointing a proxy shall be in writing and shall be
executed under the hand of the appointor or his attorney duly authorized in
writing, or, if the appointor is a corporation or other legal entity, under the
hand of an officer, attorney or where applicable, trustee duly authorized in
that behalf; provided, however, that a Member may also authorize the casting of
a vote by proxy pursuant to telephonic or electronically transmitted
instructions (including, without limitation, instructions transmitted over the
Internet) obtained pursuant to procedures approved by the Board of Directors
which are reasonably designed to verify that such instructions have been
authorized by such Member. A proxy need not be a Member. Each Member entitled to
vote at a general meeting of the Company may authorize another person or persons
to act for him by proxy, but no such proxy shall be voted or acted upon after
three years from its date, unless the proxy specifically provides for a longer
period. If an instrument of proxy designates two or more persons to act as
proxies, their acts with respect to voting shall have the following effect: (a)
if only one proxy acts, his acts bind all; (b) if more than one proxy acts, the
act of the majority binds all; and (c)
16
if more than one acts and a majority do not agree on a particular issue, each
proxy shall be entitled to vote in respect of the same portion of the shares as
such proxy is of the proxies representing such shares.
20.2 The instrument appointing a proxy shall be deposited at the
principal executive offices of the Company or at such other place as is
specified for that purpose in the notice convening the meeting no later than the
time for holding the meeting, or adjourned meeting; provided, however, that the
presiding officer of the meeting may at his discretion direct that an instrument
of proxy shall be deemed to have been duly deposited upon receipt of telephonic,
electronic or facsimile transmission of the validly executed proxy or upon
receipt of telephonic, electronic, telex or cable confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
20.3 The instrument appointing a proxy may be in any usual or common
form and may be expressed to be for a particular meeting or any adjournment
thereof.
20.4 A vote given in accordance with the term of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the principal
or revocation of the proxy or of the authority under which the proxy was
executed, or the transfer of the share in respect of which the proxy is given
provided that no notice in writing of such death, insanity, revocation or
transfer as aforesaid shall have been received by the Company at its principal
executive offices before the commencement of the general meeting, or adjourned
meeting, at which it is sought to use the proxy.
20.5 Any corporation which is a Member of record of the Company may in
accordance with its articles of association or other governing documents or in
the absence of such provision by resolution of its board of directors or other
governing body authorize one or more persons as it thinks fit to act as its
representative or representatives at any meeting of the Company or Members of
the Company, and the person or persons so authorized shall be entitled to
exercise the same powers on behalf of the corporation which he or they represent
as the corporation could exercise if it were an individual Member of record of
the Company and may cast votes or abstain on any motion in any manner as he or
they may be directed.
XXI. DIRECTORS
21.1 (a) There shall be a Board of Directors the members of which
shall be any persons elected by the Members in accordance with Section 16.1 or
appointed by the Board of Directors in accordance with this Article XXI
consisting of not less than two, plus that number of Directors as any one or
more class or series of shares (other than Ordinary Shares) may be entitled to
elect, voting separately by class or series. The Board of Directors shall have
the exclusive power and right to set the exact number of Directors, subject to
such minimum number of directors as set forth herein, from time to time by
resolution adopted by the vote of a majority of the whole Board of Directors.
(b) Except as set out in Section 21.1, the Directors shall be
divided into three classes, designated by Class I, Class II and Class III. At
the 200[1] annual general meeting of the Company, Class I Directors shall be
elected for a term expiring at the 200[4] annual general meeting
17
of the Company. At the 200[2] annual general meeting of the Company, Class II
Directors shall be elected for a term expiring at the 200[5] annual general
meeting of the Company. At the 200[3] annual general meeting of the Company,
Class III Directors shall be elected for a term expiring at the 200[6] annual
general meeting of the Company. At each annual general meeting of the Company,
each class of Directors whose term shall then expire shall be elected to hold
office for a three-year term and until the election of their respective
successors in office or their earlier death, resignation or removal.
(c) If the number of Directors is decreased by resolution of
the Board of Directors pursuant to this Section 21.1, in no case shall that
decrease or shorten the term of any incumbent Director.
(d) Any newly created directorship resulting from an increase
in the number of Directors and any other vacancy on the Board of Directors,
however caused, may only be filled by a majority of the Directors then in
office, although less than a quorum, or by a sole remaining Director. Any
Director elected by the Board of Directors to fill a vacancy shall hold office
until the annual general meeting of the Company for the year in which the term
of the Director vacating office expires and until his successor shall have been
elected. Any newly created directorship resulting from an increase in the number
of Directors may be created in any Class of Directors that the Board of
Directors may determine, and any Director elected to fill the newly created
vacancy shall hold office until the term of office of such Class expires.
(e) One or more or all of the Directors may be removed only
for "cause" by the affirmative vote of the holders of at least a majority of the
issued shares generally entitled to vote, voting together as a single class, at
a general meeting of the Company for which proper notice of the proposed removal
has been given. As used in the preceding sentence, "cause" shall be limited to
(i) action by the Director involving willful malfeasance, which conduct has a
material adverse effect on the Company, or (ii) conviction of the Director of a
felony. The Board of Directors shall not have any power to remove any Director.
(f) Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of shares in issue has the right, voting
separately by class or series, to elect Directors at an annual general meeting
or extraordinary general meeting of the Company, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the provisions of these Articles. Directors so elected shall not be divided
into classes and shall be elected by such holders annually unless expressly
provided otherwise by those provisions or resolutions. The aforesaid Directors
and the Directors otherwise appointed under this Section 21.1 shall together
constitute the Board of Directors from time to time.
21.2 Each Director shall be entitled to receive as compensation for
such Director's services as a Director or committee member or for attendance at
meetings of the Board of Directors or committees, or both, such amounts (if any)
as shall be fixed from time to time by the Board of Directors. Each Director
shall be entitled to reimbursement for reasonable traveling expenses incurred by
such Director in attending any such meeting.
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21.3 A Director may hold any other office (other than as an outside
auditor of the Company) or place of profit under the Company in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Board of Directors may determine.
21.4 A Director may act by himself or for his firm in a professional
capacity for the Company (other than as an outside auditor of the Company), and
he or his firm shall be entitled to remuneration for professional services as if
he were not a Director; provided, however, that he has disclosed his interest in
the transaction.
21.5 No membership qualifications for Directors shall be required.
21.6 A Director may be or become a director or other officer of or
otherwise interested in any company promoted by the Company or in which the
Company may be interested as shareholder, member or otherwise, and no such
Director shall be accountable to the Company for any remuneration or other
benefits received by him as a director or officer of, or from his interest in,
such other company.
21.7 No person shall be disqualified from the office of Director or
prevented by such office from contracting with the Company, either as vendor,
purchaser or otherwise, nor shall any such contract or any contract or
transaction entered into by or on behalf of the Company in which any Director
shall be in any way interested or be liable to be avoided, nor shall any
Director so contracting or being so interested be liable to account to the
Company for any profit realized by any such contract or transaction by reason of
such Director holding office or of the fiduciary relation thereby established;
provided, however, that he has disclosed his interest in the transaction. A
Director shall be at liberty to vote in respect of any contract or transaction
in which he is so interested as aforesaid; provided, however, that the nature of
the interest of any Director in any such contract or transaction shall be
disclosed by him at or prior to its consideration and any vote thereon.
21.8 A general notice that a Director is a member of any specified firm
or company and is to be regarded as interested in any transaction with such firm
or company shall be sufficient disclosure under Section 21.7 and after such
general notice it shall not be necessary to give special notice relating to any
particular transaction.
21.9 The Directors may exercise all the powers of the Company to
provide pensions or other retirement or superannuation benefits and to provide
death or disability benefits or other allowances or gratuities (by insurance or
otherwise) for a person who is or has at any time been a Director of (a) the
Company, (b) a company which is or was an affiliate of the Company, or (c) a
predecessor in business of the Company or of an affiliate of the Company (or, in
each case, for any member of his family, including a spouse or former spouse, or
a person who is or was dependent on him). For this purpose, the Directors may
establish, maintain, subscribe and contribute to any scheme, plan, trust or fund
and pay premiums thereon. The Directors may arrange for this to be done by the
Company alone or in conjunction with another person.
21.10 A Director or former Director is entitled to receive and retain
for his own benefit a pension or other benefit provided under Section 21.9 and
is not obliged to account for it to the Company.
19
21.11 A Director may appoint any person to act as his proxy at any
meeting of the Board of Directors. Any proxy appointed for the purposes of any
such meeting will have the full authority to vote as provided in such proxy.
Such appointment must be made in writing under the hand of the appointor and may
at any time be revoked in like manner, and notice of every such appointment or
revocation in like manner, and the appointee need not be a Director or Member,
but must furnish the Company with such appointee's address.
XXII. POWERS AND DUTIES OF DIRECTORS
22.1 The business and affairs of the Company shall be managed by the
Board of Directors who may exercise all such powers of the Company and do all
such lawful acts and things as are not from time to time by the Statute or by
these Articles required to be exercised or done by the Company in general
meeting.
22.2 The Board of Directors may from time to time and at any time by
powers of attorney appoint any company, firm, person or body of persons, whether
nominated directly or indirectly by the Board of Directors, to be the attorney
or attorneys of the Company for such purpose and with such powers, authorities
and discretions (not exceeding those vested in or exercisable by the Board of
Directors under these Articles) and for such period and subject to such
conditions as it may think fit, and any such powers of attorney may contain such
provisions for the protection and convenience of persons dealing with any such
attorneys as the Board of Directors may deem fit and may also authorize any such
attorney to delegate all or any of the powers, authorities and discretions
vested in him.
22.3 All checks, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be by
such officer or officers or such other person or persons as the Board of
Directors shall from time to time designate.
22.4 The Board of Directors shall cause minutes to be made for the
purpose of recording the proceedings at all meetings of the Company and the
Directors and of committees of the Board of Directors.
22.5 The Board of Directors may exercise all the powers of the Company
to borrow money and to mortgage or charge its undertaking, property and uncalled
capital or any part thereof and to issue debentures, debenture stock and other
securities whether outright or as security for any debt, liability or obligation
of the Company or of any third party.
22.6 The Board of Directors may authorize any officer, officers, agent
or agents to enter into any contract or agreement of any nature whatsoever,
including, without limitation, any contract, deed, bond, mortgage, guaranty,
deed of trust, security agreement, pledge agreement, act of pledge, collateral
mortgage, collateral chattel mortgage or any other document or instrument of any
nature whatsoever, and to execute and deliver any such contract, agreement,
document or other instrument of any nature whatsoever for and in the name of and
on behalf of the Company, and such authority may be general or confined to
specific instances.
20
22.7 If, as the result of consolidation and division or subdivision of
shares, Members become entitled to fractions of a share, the Board of Directors
may on behalf of the Members deal with the fractions as it thinks fit. In
particular, the Board of Directors may:
(a) sell fractions of a share to a person (including, subject
to the Statute, to the Company) for the best price reasonably obtainable and
distribute the net proceeds of sale in due proportion amongst the persons
entitled (except that if the amount due to a person is less than US$10, or such
other sum as the Board of Directors may decide, the sum may be retained for the
benefit of the Company) and to give effect to such a sale the Board of Directors
may authorize a person to transfer the shares to the purchaser or his nominee
and may cause the name of the purchaser or his nominee to be entered in the
register as the holder of the shares. The purchaser is not bound to see to the
application of the purchase money and the title of the transferee to the shares
is not affected by an irregularity or invalidity in the proceedings connected
with the sale; or
(b) subject to these Articles, allot or issue to a member
credited as fully paid by way of capitalization the minimum number of shares
required to round up his holding of shares to a number which, following
consolidation and division or subdivision, leaves a whole number of shares (such
allotment or issue being deemed to have been effected immediately before
consolidation or subdivision, as the case may be) and if shares are so allotted
or issued the amount required to pay-up those shares may be capitalized as the
Board of Directors thinks fit out of amounts standing to the credit of reserves
(including a share premium account, capital redemption reserve and profit and
loss account), whether or not available for distribution, and applied in
paying-up in full the appropriate number of shares. A resolution of the Board of
Directors capitalizing part of the reserves has the same effect as if the
capitalization had been declared by Ordinary Resolution.
XXIII. COMMITTEES
23.1 The Board of Directors may, by resolution passed by a majority of
the whole Board of Directors, designate one or more committees, each committee
to consist of one or more of the Directors, as designated by the Board of
Directors. The Board of Directors may designate one or more alternate Directors
as members of any committee, who may replace any absent member at any meeting of
the committee. In the absence of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent member. At all
meetings of any committee, a majority of its members (or the member, if only
one) shall constitute a quorum for the transaction of business, and the act of a
majority of the members present shall be the act of any such committee, unless
otherwise specifically provided by the Statute, the Memorandum, these Articles
or the resolution establishing such committee. The Board of Directors shall have
the power at any time to change the number and members of any such committee, to
fill vacancies and to discharge any such committee.
23.2 Any such committee, to the extent provided in the resolution of
the Board of Directors but subject to any limitations of the Statute, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company and may authorize the seal
of the Company to be affixed to all papers that may require it. The provisions
herein with respect to notice of meetings of the Board of Directors shall apply
also to
21
meetings of committees, unless different provisions shall be prescribed by the
Board of Directors. Each committee shall serve at the pleasure of the Board of
Directors. It shall keep minutes of its meetings and report the same to the
Board of Directors when required and shall observe such procedures as are
prescribed by the Board of Directors.
23.3 The committees of the Board of Directors may include the Audit
Committee, the Compensation Committee and the Nomination Committee and any other
committees designated by the Board of Directors.
XXIV. PROCEEDINGS OF DIRECTORS
24.1 Except as otherwise provided by these Articles, the Board of
Directors shall meet together for the dispatch of business, convening,
adjourning and otherwise regulating its meetings as it thinks fit. Questions
arising at any meeting shall be decided by a majority of the Directors present
at a meeting at which there is a quorum.
24.2 Regularly scheduled meetings of the Board of Directors may be held
at such time and at such place as shall from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors, the Chief Executive Officer, the
President or a majority of the Directors.
24.3 No notice need be given of any regular meeting of the Board of
Directors or of any adjourned meeting of the Board of Directors. No notice need
be given to any Director who signs a written waiver thereof or who attends the
meeting without protesting the lack of notice. Notices need not state the
purpose of the meeting. Attendance of a Director at any meeting shall constitute
a waiver of notice of such meeting, except when a Director attends and makes it
known that he is attending for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
convened, and such purpose is duly recorded in the minutes of such meeting.
24.4 Notice of each special meeting of the Board of Directors shall be
given to each Director either by first class United States mail at least three
days before the meeting, by "overnight" or other express delivery service at
least two days before the meeting, or by electronic mail, telegram, telex,
cable, telecopy, facsimile, personal written delivery or telephone at least one
day before the meeting. Any notice given by telephone shall be immediately
confirmed by telegram, telex, cable, telecopy or facsimile. Notices are deemed
to have been given: by mail, when deposited in the United States mail with
postage prepaid; by "overnight" or other express delivery service, the day after
sending; by electronic mail, telegram, telex, or cable, at the time of sending;
by telecopy or facsimile, upon receipt of a transmittal confirmation; and by
personal delivery or telephone, at the time of delivery. Written notices shall
be sent to a director at the address designated by such Director for that
purpose or, if none has been so designated, at such director's last known
residence or business address. Without limiting the generality of any provisions
hereof, written notice shall include notice provided by electronic mail.
24.5 The quorum necessary for the transaction of the business of the
Board of Directors shall be a majority of the whole Board of Directors.
22
24.6 All acts done at any meeting of the Board of Directors or of a
committee of the Board of Directors shall, notwithstanding that it be afterwards
discovered that there was some defect in the appointment of any Director be as
valid as if every such person had been duly appointed and qualified to be a
Director.
24.7 Any one or more members of the Board of Directors or any committee
thereof may participate in a meeting of such Board of Directors or committee by
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
24.8 A resolution in writing (in one or more counterparts) signed by
all the Directors or all the members of a committee of Directors shall be as
valid and effectual as if it had been passed at a meeting of the Board of
Directors or committee, as the case may be, duly convened and held.
XXV. VACATION OF OFFICE OF DIRECTOR
25.1 The office of a Director shall be vacated:
(a) if he gives notice in writing to the Board of Directors or
Secretary that he resigns the office of Director;
(b) if he dies;
(c) if he is found to be or becomes of unsound mind; or
(d) if removed pursuant to Section 21.1.
25.2 In the case of a resignation, the resignation shall be effective
as of the date specified in the notice or if not so specified, upon receipt
thereof. Unless otherwise specified in the notice, acceptance shall not be
required to make it effective.
25.3 A resolution of the Board of Directors declaring a Director to
have vacated office under the terms of Section 25.1 is conclusive evidence as to
the fact and grounds of vacation stated in the resolution.
XXVI. CERTAIN BUSINESS COMBINATIONS
26.1 In addition to any approval by Members required pursuant to the
terms of any series or class of shares other than Ordinary Shares, the approval
of the holders of at least a majority of the issued shares generally entitled to
vote at a meeting called for such purpose, following approval by the Board of
Directors shall be required in order for the Company "to sell, lease or exchange
all or substantially all of its property or assets" as that phrase is
interpreted for the purposes of section 271 of the Delaware General Corporation
Law, as amended or re-enacted from time to time, of the United States of
America, provided that the foregoing approval by Members shall not apply to any
such transaction of the Company with any entity which the Company, "directly or
indirectly controls"
23
as that phrase is defined in Rule 405 under the Securities Act of 1933, as
amended or re-enacted from time to time, of the United States of America.
XXVII. BUSINESS COMBINATIONS WITH INTERESTED MEMBERS
27.1 The Company shall not engage in any Business Combination with any
Interested Member for a period of three years following the time that such
Member became an Interested Member, unless, at or subsequent to such time, the
Business Combination is approved by the Board of Directors and authorized at a
general meeting of the Company by the affirmative vote of at least 66 2/3% of
the issued shares generally entitled to vote which are not Owned by the
Interested Member; provided, however, that the restrictions contained in this
Section 27.1 shall not apply if:
(a) prior to such time that such Member became an Interested
Member, the Board of Directors approved either the Business Combination or the
transaction which resulted in the Member becoming an Interested Member;
(b) upon consummation of the transaction which resulted in the
Member becoming an Interested Member, the Interested Member Owned at least 85%
of the issued shares generally entitled to vote at the time the transaction
commenced, excluding for purposes of determining the number of shares then in
issue, those shares Owned (i) by Persons who are both Directors and officers of
the Company and (ii) employee share plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer;
(c) the Company does not have a class of voting shares that is
(i) listed on a national securities exchange (as such term is defined in the
Exchange Act), (ii) authorized for quotation on the NASDAQ Stock Market (or any
successor to such stock market) in the United States of America or (iii) held by
more than 2,000 Members, unless any of the foregoing results from action taken,
directly or indirectly, by an Interested Member or from a transaction in which a
Person becomes an Interested Member;
(d) a Member becomes an Interested Member inadvertently and
(i) as soon as practicable divests itself of Ownership of sufficient shares so
that the Member ceases to be an Interested Member and (ii) would not, at any
time within the three-year period immediately prior to a Business Combination
between the Company and such Member, have been an Interested Member but for the
inadvertent acquisition of Ownership;
(e) the Business Combination is proposed prior to the
consummation or abandonment of and subsequent to the earlier of the public
announcement or the notice required hereunder of a proposed transaction which
(i) constitutes one of the transactions described in the second sentence of this
Section 27.1(e); (ii) is with or by a person who either was not an Interested
Member during the previous three years or who became an Interested Member with
the approval of the Board of Directors or during the period described in Section
27.1(f); and (iii) is approved or not opposed by a majority of the members of
the Board of Directors then in office (but not less than one) who were Directors
prior to any person becoming an Interested Member during the previous three
years or were recommended for election or elected to succeed such Directors by a
majority of such
24
Directors. The proposed transactions referred to in the preceding sentence are
limited to (y) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions), whether as part of
a dissolution or otherwise, of assets of the Company or of any direct or
indirect majority-Owned subsidiary of the Company (other than to any direct or
indirect wholly Owned subsidiary or to the Company) having an aggregate market
value equal to 50% or more of either that aggregate market value of all of the
assets of the Company determined on a consolidated basis or the aggregate market
value of all the issued shares or (z) a proposed tender or exchange offer for
50% or more of the voting shares then in issue. The Company shall give not less
than 20 days' notice to all Interested Members prior to the consummation of any
of the transactions described in clause (y) of the second sentence of this
Section 27.1(e);
(f) the Business Combination is with an Interested Member who
became an Interested Member at a time when the restrictions contained in Section
27.1(e) did not apply by reason of Section 27.1(c);
(g) As used in this Section 27.1, the term:
(i) "Affiliate" means a person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, another
person.
(ii) "Associate," when used to indicate a
relationship with any person, means (A) any corporation,
partnership, unincorporated association or other entity of
which such person is a director, officer or partner or is,
directly or indirectly, the Owner of 20% or more of any class
of voting shares, (B) any trust or other estate in which such
person has at least a 20% beneficial interest or as to which
such person serves as trustee or in a similar fiduciary
capacity and (C) any relative or spouse of such person, or any
relative of such spouse, who has the same residence as such
person.
(iii) "Business Combination," when used in reference
to the Company and any Interested Member of the Company,
means:
(A) any merger or consolidation of any
direct or indirect majority-Owned subsidiary of the
Company with (1) the Interested Member or (2) with
any other corporation, partnership, unincorporated
association or other entity if the merger or
consolidation is caused by the Interested Member and
as a result of such merger or consolidation Section
27.1 is not applicable to the surviving entity;
(B) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions), except
proportionately as a Member, to or with the
Interested Member, whether as part of a dissolution
or otherwise, of assets of the Company or of any
direct or indirect majority-Owned subsidiary of the
Company which assets have an aggregate market value
equal to 10% or more of either the aggregate market
25
value of all the assets of the Company determined on
a consolidated basis or the aggregate market value of
all the shares then in issue;
(C) any transaction which results in the
issuance or transfer by the Company or by any direct
or indirect majority-Owned subsidiary of the Company
of any shares or shares of such subsidiary to the
Interested Member, except (1) pursuant to the
exercise, exchange or conversion of securities
exercisable for, exchangeable for or convertible into
shares or the shares of a direct or indirect
majority-Owned subsidiary of the Company which
securities were in issue prior to the time that the
Interested Member became such; (2) pursuant to a
Holding Company Merger; (3) pursuant to a dividend or
distribution paid or made, or the exercise, exchange
or conversion of securities exercisable for,
exchangeable for or convertible into shares or the
shares of a direct or indirect majority-Owned
subsidiary of the Company which security is
distributed, pro rata, to all holders of a class or
series of shares subsequent to the time the
Interested Member became such; (4) pursuant to an
exchange offer by the Company to purchase shares made
on the same terms to all holders of said shares; or
(5) any issuance or transfer of shares by the
Company; provided, however, that in no case under
(3)-(5) above shall there be an increase in the
Interested Member's proportionate interest in the
shares of any class or series or of the voting
shares;
(D) any transaction involving the Company or
any direct or indirect majority-Owned subsidiary of
the Company which has the effect, directly or
indirectly, of increasing the proportionate interest
of the shares of any class or series, or securities
convertible into the shares of any class or series,
or of the interest of the shares of any such
subsidiary which is Owned by the Interested Member,
except as a result of immaterial changes due to
fractional share adjustments or as a result of any
purchase or redemption of any shares not caused,
directly or indirectly, by the Interested Member; or
(E) any receipt by the Interested Member of
the benefit, directly or indirectly (except
proportionately as a Member), of any loans, advances,
guarantees, pledges or other financial benefits
(other than those expressly permitted in subsections
(A)-(D) of this Section 27.1(g)(iii)) provided by or
through the Company or any direct or indirect
majority-Owned subsidiary of the Company.
(iv) "control," including the terms "controlling,"
"controlled by" and "under common control with," means the
possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a
person, whether through the Ownership of voting shares, by
contract, or otherwise. A person who is the Owner of 20% or
more of the issued or outstanding voting shares of any
corporation, partnership, unincorporated association or other
entity shall be presumed to have control of such entity, in
the absence of proof by a preponderance of the evidence to the
contrary. Notwithstanding the foregoing, a presumption of
control
26
shall not apply where such person holds voting shares, in good
faith and not for the purpose of circumventing this section,
as an agent, bank, broker, nominee, custodian or trustee for
one or more Owners who do not individually or as a group have
control of such entity.
(v) "Interested Member" means any person (other than
the Company and any direct or indirect majority-Owned
subsidiary of the Company) that (A) is the Owner of 15% or
more of the issued voting shares or (B) is an Affiliate or
Associate of the Company and was the Owner of 15% or more of
the issued voting shares at any time within the three-year
period immediately prior to the date on which it is sought to
be determined whether such person is an Interested Member, and
also the Affiliates and Associates of such person; provided,
however, that the term "Interested Member" shall not include
any person whose Ownership of shares in excess of the 15%
limitation set forth herein is the result of action taken
solely by the Company; provided that such person shall be an
Interested Member if thereafter such person acquires
additional voting shares, except as a result of further
corporate action not caused, directly or indirectly, by such
person. For the purpose of determining whether a person is an
Interested Member, the voting shares deemed to be in issue
shall include shares deemed to be Owned by the person but
shall not include any other unissued shares which may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants
or options, or otherwise.
(vi) "merger or consolidation" shall be construed in
accordance with Section 203 of the Delaware General
Corporation Law (as amended or re-enacted from time to time)
of the United States of America.
(vii) "Owner" including the terms "Own," "Owned" and
"Ownership" when used with respect to any shares means a
person that individually or with or through any of its
Affiliates or Associates:
(A) beneficially Owns such shares, directly
or indirectly;
(B) has (1) the right to acquire such shares
(whether such right is exercisable immediately or
only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights,
warrants or options, or otherwise; provided, however,
that a person shall not be deemed the Owner of shares
tendered pursuant to a tender or exchange offer made
by such person or any of such person's Affiliates or
Associates until such tendered shares is accepted for
purchase or exchange; or (2) the right to vote such
shares pursuant to any agreement, arrangement or
understanding; provided, however, that a person shall
not be deemed the Owner of any shares because of such
person's right to vote such shares if the agreement,
arrangement or understanding to vote such shares
arises solely from a revocable proxy or consent given
in response to a proxy or consent solicitation made
to 10 or more persons; or
27
(C) has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting (except voting pursuant to a revocable proxy
or consent as described in Section
27.1(g)(vii)(B)(2)), or disposing of such shares with
any other person that beneficially Owns, or whose
Affiliates or Associates beneficially Own, directly
or indirectly, such shares.
(viii) "voting shares" means, with respect to the
Company or any other corporation, shares or stock of any class
or series which entitles the holder to vote generally in the
election of directors and, with respect to any other entity
that is not a corporation, any equity interest which entitles
the holder to vote generally in the election of the governing
body of such entity.
XXVIII. SEAL
28.1 The Board of Directors may adopt a seal, alter the seal at its
pleasure and authorize it to be used by causing it or a facsimile to be affixed
or impressed or reproduced in any other manner.
XXIX. OFFICERS
29.1 The officers of the Company shall be chosen by the Board of
Directors and shall include a President and a Secretary and may also include a
Chief Executive Officer or Officers, a Chairman of the Board of Directors, a
Vice Chairman of the Board of Directors, one or more Vice Presidents (who may be
further classified by such descriptions as "Executive," "Senior" or "Assistant"
as determined by the Board of Directors), and such other officers, as the Board
of Directors may deem necessary or appropriate. The Board of Directors may from
time to time authorize any officer to appoint and remove any other officer or
agent and to prescribe such person's authority and duties. Any person may hold
at one time two or more offices. Each officer shall have such authority and
perform such duties, in addition to those specified in these Articles, as may be
prescribed by the Board of Directors from time to time.
29.2 Each officer shall hold office for the term for which elected or
appointed by the Board of Directors, and until the person's successor has been
elected or appointed and qualified or until such person's earlier resignation or
removal. Any officer may be removed by the Board of Directors, with or without
cause. The election or appointment of an officer shall not in and of itself
create contractual rights against the Company. Any officer may resign at any
time by giving written notice to the Board of Directors or the Secretary. Any
such resignation shall take effect at the time specified therein or, if such
time is not specified therein, then upon receipt of such notice; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
29.3 The Chairman of the Board of Directors shall be a member of the
Board of Directors. The Chairman of the Board of Directors shall preside at all
meetings of the Board of Directors. If the Chairman of the Board of Directors is
not present, a Vice Chairman, if any, shall preside at such meeting.
28
29.4 Unless otherwise determined by the Board of Directors, the Chief
Executive Officer shall be responsible for the day-to-day management of the
business and affairs of the Company (but subject to the control of the Board of
Directors) and shall enjoy all other powers commonly incident to the office. If
so directed by the Board of Directors, more than one individual may concurrently
serve as Co-Chief Executive Officer of the Company.
29.5 Each of the Vice Presidents shall have such authority and perform
such duties as may be prescribed from time to time by the Board of Directors.
29.6 The Secretary shall keep the minutes of the meetings of the
Members and the Board of Directors and give notice of such meetings and shall
perform like duties for the committees of the Board of Directors when so
required. The Secretary shall have custody of the seal and affix and attest the
seal to any instrument to be executed under seal and enjoy all powers commonly
incident to the office. In the case of the absence or inability to act of the
Secretary, any Assistant Secretary (or, in the case of keeping minutes of a
meeting of Members or Directors, any other person designated by the presiding
officer of such meeting) may act in the Secretary's place.
29.7 Compensation of officers, agents and employees of the Company
shall be fixed from time to time by, or under the authority of, the Board of
Directors.
XXX. DIVIDENDS AND RESERVES
30.1 Subject to the Statute and any rights and restrictions for the
time being attached to any class or series of shares, the Board of Directors may
from time to time declare dividends (including interim dividends) on the shares
issued and authorize payment of the same out of the funds of the Company
lawfully available therefor.
30.2 Subject to the Statute and any rights and restrictions for the
time being attached to any class or series of shares, all dividends shall be
declared and paid according to the amounts paid or credited as paid on the
shares in respect of which the dividend is paid, but no amount paid or credited
as paid on a share in advance of calls shall be treated for the purposes of this
Section 30.2 as paid on the share. Subject to the Statute and any rights and
restrictions for the time being attached to any class or series of shares, all
dividends shall be apportioned and paid proportionately to the amounts paid or
credited as paid on the shares during any portion or portions of the period in
respect of which the dividend is paid but if any share is issued on terms
providing that it shall rank for dividend as from a particular date such share
shall rank for dividend accordingly.
30.3 If several persons are registered as joint holders of any share,
any of them may give effectual receipts for any dividends, bonuses or other
moneys payable on or in respect of the share.
30.4 The Board of Directors may deduct from any dividend payable to any
Member all sums of money (if any) presently payable by him to the Company or
account of calls or otherwise.
30.5 The Board of Directors may declare that any dividend be paid
wholly or partly by the distribution of shares or other securities of the
Company and/or specific assets and in particular of paid-up shares, debentures
or debenture stock of any other company or in any one or more of such ways, and
where any difficulty arises in regard to such distribution, the Board of
Directors may settle
29
the same as it deems expedient and in particular may issue fractional shares and
fix the value for distribution of such specific assets or any part thereof and
may determine that cash payments shall be made to any Members upon the footing
of the value so fixed in order to adjust the rights of all Members and may vest
any such specific assets in trustees as may seem expedient to the Board of
Directors.
30.6 No dividend shall bear interest against the Company unless
expressly authorized by the Board of Directors.
XXXI. CAPITALIZATION
31.1 The Company may upon the recommendation of the Board of Directors
capitalize any sum standing to the credit of any of the Company's reserve
accounts (including share premium account and capital redemption reserve fund)
or any sum standing to the credit of profit and loss account or otherwise
available for distribution and to appropriate such sum to Members in the
proportions in which such sum would have been divisible amongst them had the
same been a distribution of profits by way of dividend and to apply such sum on
their behalf in paying up in full unissued shares (not being redeemable shares)
for allotment and distribution credited as fully paid up to and amongst them in
the proportion aforesaid. In such event the Board of Directors shall do all acts
and things required to give effect to such capitalization, with full power to
the Board of Directors to make such provisions as it thinks fit for the case of
shares becoming distributable in fractions (including provisions whereby the
benefit of fractional entitlements accrue to the Company rather than to the
Members concerned). The Board of Directors may authorize any person to enter on
behalf of all of the Members interested into an agreement with the Company
providing for such capitalization and matters incidental thereto, and any
agreement made under such authority shall be effective and binding on all
concerned.
XXXII. AUDIT
32.1 The accounts relating to the Company's affairs shall be audited in
such manner, if at all, as may be determined from time to time by the Board of
Directors.
XXXIII. NOTICES
33.1 Notices shall be in writing and may be given by the Company to any
Member either by first class United States mail, "overnight" or other express
delivery service, electronic mail, telegram, telex, cable, telecopy, facsimile
or personal delivery. Notices are deemed to have been given: by mail, three days
after deposited in the United States mail with postage prepaid; by "overnight"
or other express delivery service, the day after sending; by electronic mail,
telegram, telex or cable, at the time of sending; by telecopy or facsimile, upon
receipt of a transmittal confirmation; and by personal delivery, at the time of
delivery.
33.2 A notice may be given by the Company to the person or persons
which the Company has been advised are entitled to a share or shares in
consequence of the death or bankruptcy of a Member by any manner set forth in
Section 33.1 addressed to them by name, or by the title of
30
representatives of the deceased, or trustee of the bankruptcy, or by any like
description at the address supplied for that purpose by the persons claiming to
be so entitled.
33.3 A notice may be given by the Company to the joint holders of
record of a share by giving the notice to the joining holder first named on the
Register in respect of the share.
33.4 Notice of every general meeting of the Company shall be given in
any manner hereinbefore authorized to:
(a) every holder of voting shares as shown in the Register as
of the record date for such meeting except that in the case of joint holder the
notice shall be sufficient if given to the joint holder first named in the
Register;
(b) every person upon whom the ownership of a voting share
devolves by reason of his being a legal personal representative or a trustee in
bankruptcy of a holder of voting shares where such holder but for his death or
bankruptcy would be entitled to receive notice of the meeting; and
(c) except as otherwise required by law or these Articles, no
other person shall be entitled to receive notice of general meetings.
XXXIV. LIMITATION OF LIABILITY AND INDEMNITY
34.1 (a) No Director shall be personally liable to the Company or,
if any, its Members for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or, if any, to its Members, (ii) for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law or (iii) for any transaction from which the Director derived an improper
personal benefit.
(b) The Company shall indemnify, to the fullest extent
permitted by the laws of the Cayman Islands as from time to time in effect, if
any, any person who was or is a party or is threatened to be made a party to, or
otherwise requires representation by counsel in connection with, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (whether or not an action by or in the right of
the Company) by reason of the fact that he is or was a Director or officer of
the Company, or, while serving as a Director or officer of the Company, is or
was serving at the request of the Company, as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
such capacity. The right to indemnification conferred by this Section 34.1 also
shall include the right of such persons to be paid in advance by the Company for
their expenses to the fullest extent permitted by the laws of the Cayman Islands
as from time to time in effect. The right to indemnification conferred on such
persons by this Section 34.1 shall be a contractual right.
(c) Unless otherwise determined by the Board of Directors, the
Company shall indemnify to the fullest extent permitted by the laws of the
Cayman Islands as from time to time in effect, if any, any person who was or is
a party or is threatened to be made a party to, or otherwise requires
representation by counsel in connection with, any threatened, pending or
completed action,
31
suit or proceeding, whether civil, criminal, administrative or investigative
(whether or not an action by or in the right of the Company), by reason of the
fact that he is or was an employee (other than an officer) or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action alleged to have been taken
or omitted in such capacity.
(d) The rights and authority conferred in this Section 34.1
shall not be exclusive of any other right that any person has or hereafter
acquires under any law, provision of these Articles or the Memorandum,
agreement, vote of Members or of the Board of Directors or otherwise.
(e) Neither the amendment nor repeal of this Section 34.1, nor
the adoption of any provision of the Memorandum or these Articles or of any law
inconsistent with this Section 34.1, shall eliminate or reduce the effect of
this Section 34.1 in respect of any acts or omissions occurring prior to such
amendment, repeal or adoption of an inconsistent provision.
XXXV. BOOKS AND RECORDS
35.1 In addition to any rights which may be conferred on Members by
Statute, upon written demand under oath stating the purpose thereof, any Member,
in person or by attorney or other agent, may review for any proper purpose,
during usual hours for business, the books and records of the Company including,
without limitation, the Register. A proper purpose shall mean a purpose
reasonably related to such person's interest as a Member. In every instance
where an attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing which authorizes the attorney or other agent to so act on
behalf of the Member. The demand under oath shall be directed to the corporation
at its principal executive offices.
The Board of Directors may establish procedures for, or
limitations or conditions on, Members' review of books and records of the
Company for the purpose of (a) protecting the interests of the Company, (b)
protecting the confidentiality of the information contained in those books and
records, (c) the convenience of the Company, or (d) protecting any other
interest of the Company that the Board of Directors deems proper.
XXXVI. WINDING UP
36.1 In the event of any dissolution, liquidation or winding up of the
Company, whether voluntary or involuntary, after there shall have been paid or
set aside for payment to the holders of any issued shares ranking senior to the
Ordinary Shares as to distribution on liquidation or distribution on winding up,
the full amounts to which they shall be entitled and the holders of the
then-issued Ordinary Shares shall be entitled to receive, pro rata according to
the number of Ordinary Shares registered in the names of such Members, any
remaining assets of the Company available for distribution to its Members;
provided, if, at such time, the holder of Ordinary Shares has any outstanding
debts, liabilities or engagements to or with the Company (whether presently
payable or not), either alone or jointly with any other person, whether a Member
or not (including, without limitation, any liability associated with the unpaid
purchase price of such Ordinary Shares), the liquidator appointed to oversee the
liquidation of the Company may deduct from the amount payable
32
in respect of such Ordinary Shares the aggregate amount of such debts,
liabilities and engagements and apply such amount to any of such holder's debts,
liabilities or engagements to or with the Company (whether presently payable or
not). The liquidator may with the sanction of a Special Resolution distribute,
in kind, to the holders of the Ordinary Shares remaining assets of the Company
or may, without the need of any such sanction sell, transfer or otherwise
dispose of all or any part of such remaining assets to any other person,
corporation, trust or entity and receive payment therefor in cash, shares or
obligations of such other person, corporation, trust or entity or any
combination thereof, and may sell all or any part of the consideration so
received, and may distribute the consideration received or any balance or
proceeds thereof to holders of the Ordinary Shares. The liquidator may, with the
like sanction, vest the whole or any part of such assets in trustees upon such
trusts for the benefit of the contributories as the liquidator, with the like
sanction shall think fit, but so that no Member shall be compelled to accept any
shares or other securities whereon there is any liability.
XXXVII. DEREGISTRATION
37.1 (a) The Company may by Special Resolution resolve to be
registered by way of continuation in a jurisdiction outside the Cayman Islands
or such other jurisdiction in which it is for the time being incorporated,
registered or existing; and
(b) In furtherance of a resolution adopted pursuant to (a)
above of this Section 37.1, the Directors may cause an application to be made to
the Registrar of Companies to deregister the Company in the Cayman Islands or
such other jurisdiction in which it is for the time being incorporated,
registered or existing and may cause all such further steps as they consider
appropriate to be taken to effect the transfer by way of continuation of the
Company.
XXXVIII. FISCAL YEAR
38.1 Each Fiscal Year shall commence on such date as may be specified
by the Board of Directors.
XXXIX. AMENDMENTS OF ARTICLES
39.1 Subject to the Statute and as provided in these Articles, the
Company may at any time and from time to time by Special Resolution alter or
amend these Articles in whole or in part.
33
Exhibit D
SUMMARY OF TERMS FOR CAYMANCO RIGHTS AGREEMENT
CAYMANCO
SUMMARY TERMS OF
SHAREHOLDER RIGHTS PLAN
ADOPTION OF PLAN;
TRANSFER OF RIGHTS;
RIGHTS CERTIFICATES: Prior to the Effective Time of the Merger, the Board of Caymanco will
declare a dividend of one Right for each Ordinary Share. Additionally,
each Ordinary Share issued in the Merger and Exchange Offer will include
a Right. After the adoption of the Plan and until the Distribution Date
(as defined below), the Rights are attached to and trade with the
Ordinary Shares. After the Distribution Date, the Rights detach; separate
Rights certificates are issued; and the Rights trade independently of the
Ordinary Shares.
DISTRIBUTION DATE;
ACQUIRING PERSON: The Distribution Date occurs and the Rights detach on the earlier of the
following:
(1) The tenth calendar day after the public announcement that a person,
including affiliates and associates (an "Acquiring Person"), has acquired
beneficial ownership of 15% or more of the Ordinary Shares (the date of
the public announcement is referred to as the "Stock Acquisition Date").
(2) The tenth business day after the commencement of a tender offer or
exchange offer for Ordinary Shares if, upon consummation of the offer,
the offeror (including affiliates and associates) would be an Acquiring
Person.
The timing of the Distribution Date is in certain circumstances subject
to extension by the Board of Directors and is deferred in the case of a
Permitted Offer (as defined under "Flip-In" below). In addition, the
Board of Directors has the ability to exempt from the definition of
"Acquiring Person" someone that (i) inadvertently crosses the 15%
threshold and (ii) promptly divests itself of Ordinary Shares so that it
owns less than 15% of the Ordinary Shares.
EXERCISABILITY: The Rights become exercisable after the Distribution Date. The Rights, in
all likelihood, would still not be exercised by
-1-
the holders (since the Purchase Price would likely still exceed the
market price) unless and until one of the Flip-In or Flip-Over Events
(described below) were to occur.
After the Distribution Date, each Right entitles the holder to purchase a
unit consisting of one one-hundredth of a Series A Junior Participating
Preferred Share (one unit would be essentially economically equivalent to
one Ordinary Share) at a fixed price (the "Purchase Price"). (See below
for a summary of the terms of the Junior Participating Preferred Shares.)
The Purchase Price will be determined by the Board when the Plan is
adopted and should reflect the views of the Board as to the potential
long-term value of the Ordinary Shares over the life of the Plan.
FLIP-IN: In the event (a "Flip-In Event") any person (including affiliates and
associates) becomes an Acquiring Person, except pursuant to a tender or
exchange offer for all outstanding Ordinary Shares at a price and on
terms determined by a majority of the members of the Board of Directors
(excluding directors who are representatives, nominees, affiliates or
associates of an Acquiring Person or the person making the offer) to be
fair to stockholders and otherwise in the best interests of the Company
and its stockholders (a "Permitted Offer"), then each of the Rights
(other than Rights held by the Acquiring Person and certain transferees)
"flips in" and becomes a Right to acquire, upon payment of the Right's
Purchase Price, Ordinary Shares of the Company having a value (based on
the average market price over a 30-day period prior to the Flip-In Event)
equal to twice the Purchase Price. The Rights held by the Acquiring
Person and certain transferees become null and void.
If the Company does not have enough authorized Ordinary Shares, the
Company is required to substitute value in the form of cash, property,
debt or equity securities, or a reduction of the Purchase Price, or any
combination of the foregoing, in an aggregate amount equal to the value
of the Ordinary Shares that would otherwise be issuable.
The Rights are not exercisable following a Flip-In Event until the
Company's right to redeem the Rights has expired.
EXCHANGE OPTION: After a Flip-In Event occurs and prior to a person's becoming the
beneficial owner of 50% or more of the Ordinary Shares, the Board of
Directors may, in lieu of allowing the Rights to
-2-
be exercised, issue in exchange for, and in mandatory redemption of, all
or any pro rata portion of the Rights one share of Ordinary Shares or one
one-hundredth of a Junior Participating Preferred Share (or certain
equivalent securities) for each Right so exchanged.
FLIP-OVER: If, from and after the time an Acquiring Person becomes such, the Company
is acquired in a business combination (e.g., the Company does not survive
or the Ordinary Shares are changed or exchanged), or more than 50% of the
Company's assets, cash flow or earning power (on a consolidated basis) is
sold or transferred in one transaction or a series of related
transactions ("Flip-Over Events"), each Right "flips over" and requires
that provision be made so as to entitle the holder to acquire, upon
payment of the Purchase Price, common stock of the other party to the
transaction having a market value equal to twice the Purchase Price. The
Flip-Over does not apply to certain "clean up" mergers following a
Permitted Offer.
REDEMPTION: Rights are redeemable for $.01 per Right by action of the Board of
Directors at any time prior to the tenth day following the first date of
public announcement of a Flip-In Event.
AMENDMENT: Terms of the Rights may be amended by the Board of Directors (1) if the
Rights are redeemable, in any manner and (2) otherwise, in certain
manners not adverse to the interests of Rights holders; provided that no
amendment may reduce the redemption price.
VOTING: The Rights have no voting power.
EXPIRATION: The Plan and the Rights expire 10 years from the date of the Plan's
adoption.
-3-
SUMMARY TERMS OF
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
Each Right entitles the holder to purchase one one-hundredth
of a share of a new series designated Series A Junior Participating Preferred
Shares ("Junior Participating Preferred Shares") that will be
established out of the Company's "blank check" Preferred Shares. The
dividend, liquidation and voting rights of the Junior Participating Preferred
Shares are designed so the value of the one-hundredth of a Junior Participating
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Ordinary Share. More detailed terms of the new series of Junior
Participating Preferred Shares are as follows:
DESIGNATION
AND AMOUNT: Series A Junior Participating Preferred Shares; the number of shares
authorized will be 1/100 of the number of authorized Ordinary Shares.
DIVIDENDS: Cumulative quarterly dividends are payable in cash in a per share amount
equal to the greater of (i) $1.00 per quarter or (ii) 100 times the
aggregate per share dividend paid on the Ordinary Shares. Noncash
dividends are payable in kind in a per share amount equal to 100 times
any noncash dividend paid per share of Ordinary Shares.
LIQUIDATION RIGHTS: The Junior Participating Preferred Shares are entitled to receive
upon any liquidation (after satisfaction of or provision for liabilities)
accrued but unpaid dividends plus the greater of (i) $100 or (ii) 100
times the per share amount distributed to holders of Ordinary Shares.
REDEMPTION: Redeemable in whole or part for cash in a per share amount equal to 100
times the market price of an Ordinary Share.
VOTING RIGHTS: 100 votes per share, voting together with the Ordinary Shares as a single
class, except as otherwise provided in the Articles of Association or
required by law. If dividends are in arrears for six quarters, the Junior
Participating Preferred Shares (together with any other Preferred Stock
with similar rights) will also have the right to elect two directors.
MERGER;
CONSOLIDATION: If the Company consolidates with another corporation or is merged and the
Ordinary Shares are changed or exchanged, holders will be entitled to
receive a per share amount and type of consideration equal to 100 times
the per share amount and type of consideration received by holders of
Ordinary Shares.
-4-
RANK: The Junior Participating Preferred Shares will rank senior to the
Ordinary Shares but, unless otherwise provided, junior to all future
series of Preferred Stock.
AMENDMENT: Terms may not be amended to affect adversely the holders without a
two-thirds vote of the outstanding shares of the Junior Participating
Preferred Shares.
-5-
Exhibit E
CONDITIONS OF EXCHANGE OFFER
(All capitalized terms have the same meaning as used in the
Merger
Agreement.)
Notwithstanding any other term of the Exchange Offer, Caymanco
will not be required to accept for exchange or issue any Caymanco Shares for any
PGS Shares or PGS ADSs tendered, and may terminate or amend the Exchange Offer,
if:
(a) the
Merger Agreement, the Merger and the transactions
contemplated thereby shall not have been adopted and approved by the affirmative
vote of holders of a majority of the votes attached to the outstanding shares of
Veritas Common Stock and Veritas Special Voting Stock, voting together as a
single class, entitled to vote thereon;
(b) the waiting period applicable to the consummation of the
Merger and the Exchange Offer under the HSR Act shall not have expired or shall
not have been terminated;
(c) there shall be pending or threatened in writing any
governmental claim, proceeding or action by an agency of the government of the
Required Jurisdictions seeking to restrain, prohibit or rescind any transaction
contemplated by the
Merger Agreement as an actual or threatened violation of any
Antitrust Law, as applicable, or seeking to penalize a party for completing any
such transaction, and there shall have been a final or preliminary
administrative order denying approval of or prohibiting the Merger or the
Exchange Offer issued by any such agency of a Required Jurisdictions;
(d) in the event of any review by the U.K. Office of Fair
Trading or, if applicable, the U.K. Secretary of State for Trade and Industry,
indications reasonably satisfactory to each of Veritas and PGS that neither the
Merger nor the Exchange Offer will be referred to the Competition Commission
shall not have been received;
(e) any mandatory waiting period under any other Antitrust Law
shall not have expired or shall not have been terminated where the failure to
observe such period is reasonably likely to have a Caymanco Material Adverse
Effect;
(f) there shall have been a final or preliminary
administrative order denying approval of or prohibiting the Merger or the
Exchange Offer issued by a governmental authority with jurisdiction to enforce
applicable Non-U.S. Antitrust Laws (other than authorities from the Required
Jurisdictions), which order is reasonably likely to have a Caymanco Material
Adverse Effect;
(g) any of the parties to the
Merger Agreement shall be
subject to any decree, order or injunction of a court of competent jurisdiction,
U.S. or non-U.S., which prohibits the consummation of the Merger or the Exchange
Offer; provided, however, that, prior to invoking this condition, each such
party shall have complied with Section 8.5 of the
Merger Agreement, and with
respect to other matters not covered by such Section 8.5, used commercially
reasonable
best efforts to have any such decree, order or injunction lifted or vacated; or
any statute, rule or regulation shall have been enacted by any governmental
authority which prohibits or makes unlawful the consummation of the Merger or
the Exchange Offer;
(h) the Form S-4 shall not have become effective with the SEC
or any stop order with respect thereto shall be in effect, or any required
Norwegian and Canadian governmental, regulatory or stock exchange approvals of
the Form S-4, the Proxy Statement/Prospectus or the Exchange Offer Prospectus
shall not have been obtained or remain in effect;
(i) the Caymanco Shares to be issued pursuant to the Merger
and the Exchange Offer shall have not been authorized for listing on the NYSE,
subject to official notice of issuance;
(j) PGS shall not have performed, in all material respects,
its covenants and agreements contained in the
Merger Agreement required to be
performed on or prior to the Closing Date, or the representations and warranties
of PGS contained in the
Merger Agreement (i) that are qualified as to
materiality or PGS Material Adverse Effect shall not be true and correct in all
respects as of the expiration of the Exchange Offer, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case as of such earlier date), and (ii) that are not so qualified shall not be
true and correct in all respects as of the expiration of the Exchange Offer,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case as of such earlier date), except for such breaches
of representations and inaccuracies in warranties in this clause (ii) that do
not and would not have, individually or in the aggregate, a PGS Material Adverse
Effect, or Veritas shall not have received a certificate of PGS executed on its
behalf by its President or one of its Vice Presidents, dated the expiration of
the Exchange Offer, certifying to such effect;
(k) at any time after the date of the
Merger Agreement, there
shall have been any event or occurrence, or series of events or occurrences,
that has had or would have, individually or in the aggregate with all other
events or occurrences since the date of the
Merger Agreement, a PGS Material
Adverse Effect;
(l) PGS shall not have in effect one or more definitive credit
agreements (or a breach or default shall exist with respect thereto) or shall
not have received one or more binding commitment letters which agreements and
commitments together provide for a maximum aggregate credit capacity of $430
million;
(m) PGS shall not have consummated the sale of its Atlantis
Subsidiary for an amount set forth in Section 9.2(d) of the PGS Disclosure
Letter;
(n) PGS shall not have entered into the Replacement Employment
Agreements in substantially the form previously provided to Veritas with at
least 15 of the active employees of PGS and its Subsidiaries identified on
Section 9.2(e) of the PGS Disclosure Schedule, of which at least three of such
Replacement Employment Agreements shall be with Messrs. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇, in exchange for which such employees shall agree to release PGS and its
Subsidiaries from any and all obligations under the Existing PGS
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Employment Agreements and the liabilities reasonably expected to be incurred by
PGS and its Subsidiaries under any of the Existing PGS Employment Agreements
that remain in effect as of the Effective Time shall not exceed $5 million;
(o) Veritas, Caymanco, Veritas Holdco and Veritas Merger Sub
shall not have performed, in all material respects, their covenants and
agreements contained in the
Merger Agreement required to be performed on or
prior to the expiration of the Exchange Offer, or the representations and
warranties of Veritas, Caymanco, Veritas Holdco and Veritas Merger Sub contained
in the Merger Agreement (i) that are qualified as to materiality or Veritas
Material Adverse Effect shall not be true and correct in all respects as of the
expiration of the Exchange Offer, except to the extent such representations and
warranties expressly relate to an earlier date (in which case as of such earlier
date), and (ii) that are not so qualified shall not be true and correct in all
respects as of the expiration of the Exchange Offer, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case as of such earlier date), except for such breaches of representations and
inaccuracies in warranties in this clause (ii) that do not and would not have,
individually or in the aggregate, a Veritas Material Adverse Effect, or PGS
shall not have received a certificate of each of Veritas, Caymanco, Veritas
Holdco and Veritas Merger Sub executed on its behalf by its President or one of
its Vice Presidents, dated the expiration of the Exchange Offer, certifying to
such effect;
(p) at any time after the date of the Merger Agreement, there
shall have been any event or occurrence, or series of events or occurrences,
that has had or would have, individually or in the aggregate with all other
events or occurrences since the date of the Merger Agreement, a Veritas Material
Adverse Effect; and
(q) Veritas shall not have in effect one or more definitive
credit agreements (or a breach or default shall exist with respect thereto) or
shall not have received one or more binding commitment letters which agreements
and commitments together provide for a maximum aggregate credit capacity of $235
million.
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