-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TnZa+hPC9aG9NoaRfO0gzloBgNE+TggSX0qQV4zVd29Et9opv+GEXTMduNCTLRm8 5+0curHJC2mE1+HDsyFjBg== 0000890566-97-001278.txt : 19970526 0000890566-97-001278.hdr.sgml : 19970526 ACCESSION NUMBER: 0000890566-97-001278 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970512 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970523 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORE LABORATORIES N V CENTRAL INDEX KEY: 0001000229 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] STATE OF INCORPORATION: P7 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26710 FILM NUMBER: 97613760 BUSINESS ADDRESS: STREET 1: 1017 BZ AMSTERDAM CITY: THE NETHERLANDS STATE: P7 BUSINESS PHONE: 3120420319 MAIL ADDRESS: STREET 1: HERENGRACHT 424 STREET 2: 1017 BZ AMSTERDAM CITY: THE NETHERLANDS STATE: P7 8-K 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 12, 1997 CORE LABORATORIES N.V. (Exact name of registrant as specified in its charter) THE NETHERLANDS NOT APPLICABLE (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 0-26710 (Commission File Number) HERENGRACHT 424 1017 BZ AMSTERDAM THE NETHERLANDS NOT APPLICABLE (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (31-20) 420-3191 ================================================================================ ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On May 12, 1997, Core Laboratories N.V. (the "Company") consummated the acquisition of Saybolt International B.V. for $67 million in cash and the assumption of approximately $5 million of net debt. Saybolt International B.V., and its subsidiaries ("Saybolt") provide analytical and field services to characterize and test crude oil and petroleum products to the oil industry. Saybolt operates in over 40 countries and has approximately 1,650 employees. Saybolt reported revenues of $105,358,000, $97,803,000 and $90,258,000 in 1996, 1995 and 1994, respectively. The transaction was accounted for under the purchase method and financed using additional borrowings. Accordingly, due to the acquisition exceeding 20% of the Company's assets at December 31, 1996, as required in Rule 3-05 of Regulation S-X, the Company will file within 60 days certain required financial statements and proforma information. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of business acquired. The Company will file within sixty (60) days the required financial statements of the acquired business. (b) Pro forma financial information. The Company will file within sixty (60) days the required pro forma financial statements. (c) Exhibits. The following exhibits are filed herewith: 10.1 Credit Agreement among Core Laboratories N.V., Core Laboratories, Inc., Core Laboratories (U.K.) Limited, Bankers Trust Company, and NationsBank, N.A., dated as of May 12, 1997. 10.2 Stock Purchase Agreement among Core Laboratories N.V., Saybolt International B.V. and the shareholders of Saybolt International B.V., dated as of April 16, 1997. 10.3 Employment agreement among Saybolt Netherlands B.V. and Frerik Pluimers dated as of May 12, 1997. 10.4 Escrow Agreement among Core Laboratories N.V., each of the shareholders of Saybolt International B.V. and Chase Manhattan Bank dated as of May 12, 1997. 99.1 News Release of Core Laboratories N.V. regarding the acquisition of Saybolt dated May 12, 1997. 1 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CORE LABORATORIES N.V. by: Core Laboratories International B.V. Dated: May 23, 1997 By: /s/ RICHARD L. BERGMARK Richard L. Bergmark Chief Financial Officer and Treasurer (Principal Financial Officer and Chief Accounting Officer) EX-10.1 2 EXHIBIT 10.1 CREDIT AGREEMENT $55,000,000.00 TERM LOAN, $30,000,000 REVOLVING CREDIT LOAN AND $5,000,000 DUTCH GUILDER EQUIVALENT REVOLVING LOAN TO CORE LABORATORIES N.V., $20,000,000 REVOLVING CREDIT LOAN TO CORE LABORATORIES, INC., AND $15,000,000 BRITISH POUNDS STERLING EQUIVALENT TERM LOAN TO CORE LABORATORIES (U.K.) LIMITED, AS BORROWERS, THE BANKS NAMED HEREIN, AND BANKERS TRUST COMPANY, AS ADMINISTRATIVE AGENT AND NATIONSBANK, N.A. AS SYNDICATION AGENT AND ISSUING BANK DATED AS OF MAY 12, 1997 TABLE OF CONTENTS Page ---- PRELIMINARY STATEMENT..........................................................1 ARTICLE I DEFINITIONS, ETC.........................................1 Section 1.01. Certain Defined Terms...................................1 Section 1.02. Accounting Terms........................................1 Section 1.03. Computation of Time Periods.............................2 Section 1.04. References, Etc.........................................2 ARTICLE II COMMITMENTS AND TERMS OF CREDIT..........................3 Section 2.01. Commitments.............................................3 Section 2.02. Borrowing Procedures; Conversions.......................5 Section 2.03. Issuing and Reimbursing the Letters of Credit...........7 Section 2.04. The Notes..............................................11 Section 2.05. Reduction of the Commitments...........................11 Section 2.06. Mandatory Repayment of Loans...........................12 Section 2.07. Interest Accrual, Payments.............................14 Section 2.08. Optional Prepayments...................................16 Section 2.09. Payments, Notice of Certain Repayments and Computations.........................................16 Section 2.10. Fees...................................................18 Section 2.11. Setoff, Counterclaims and Taxes........................19 Section 2.12. Funding Losses.........................................22 Section 2.13. Change of Law..........................................22 Section 2.14. Increased Costs........................................23 Section 2.15. Claims Certificate.....................................24 ARTICLE III CONDITIONS OF CREDIT.............................26 Section 3.01. Conditions Precedent to Effectiveness, the Initial Borrowing....................................26 Section 3.02. Conditions Precedent to All Letters of Credit and Loans............................................28 ARTICLE IV REPRESENTATIONS AND WARRANTIES..........................29 Section 4.01. Corporate Existence....................................29 Section 4.02. Corporate Authority; Binding Obligations...............29 Section 4.03. No Conflict............................................29 Section 4.04. No Consent.............................................30 Section 4.05. No Defaults or Violations of Law.......................30 Section 4.06. Financial Position.....................................30 Section 4.07. Litigation.............................................31 Section 4.08. Use of Proceeds........................................31 Section 4.09. Governmental Regulation................................31 -i- Section 4.10. Disclosure.............................................32 Section 4.11. ERISA..................................................32 Section 4.12. Payment of Taxes.......................................33 Section 4.13. Title and Liens........................................33 Section 4.14. Patents and Intellectual Property. ....................33 Section 4.15. Environmental Matters..................................33 Section 4.16. Security Interests.....................................34 Section 4.17. Labor Relations........................................34 Section 4.18. No Material Adverse Change.............................34 Section 4.19. Credit Parties as Percentage of Consolidated Entity....35 ARTICLE V AFFIRMATIVE COVENANTS...................................36 Section 5.01. Reporting Requirements.................................36 Section 5.02. Taxes; Claims..........................................39 Section 5.03. Compliance with Laws...................................39 Section 5.04. Insurance..............................................39 Section 5.05. Existence..............................................39 Section 5.06. Inspections............................................40 Section 5.07. Maintenance of Properties..............................40 Section 5.08. Accounting Systems.....................................40 Section 5.09. Use of Loans...........................................40 Section 5.10. Additional Guarantees and Stock Pledges................40 Section 5.11. Further Assurances in General..........................41 ARTICLE VI NEGATIVE COVENANTS......................................42 Section 6.01. Indebtedness Restriction...............................42 Section 6.02. Lien Restriction.......................................43 Section 6.03. Derivatives............................................44 Section 6.04. Financial Covenants....................................44 Section 6.05. Sales of Assets........................................45 Section 6.06. Consolidation and Mergers..............................45 Section 6.07. Restricted Disbursements...............................45 Section 6.08. Lines of Business......................................46 Section 6.09. Transactions with Affiliates...........................46 Section 6.10. Restrictions on Subsidiaries...........................47 ARTICLE VII DEFAULT AND REMEDIES....................................48 Section 7.01. Events of Default......................................48 Section 7.02. Setoff in Event of Default.............................51 Section 7.03. No Waiver; Remedies....................................51 Section 7.04. Enforcement............................................51 -ii- ARTICLE VIII THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT AND THE ISSUING BANK..................52 Section 8.01. Authorization and Action...............................52 Section 8.02. Reliance, Etc..........................................52 Section 8.03. Agents, Affiliates and Other Activities................53 Section 8.04. Bank Credit Decision...................................54 Section 8.05. Indemnification........................................54 Section 8.06. Employees..............................................55 Section 8.07. Successor Administrative Agent.........................55 Section 8.08. Successor Syndication Agent and Issuing Bank...........56 Section 8.09. Notice of Default......................................57 Section 8.10. Execution of Loan Documents............................57 ARTICLE IX GUARANTY................................................58 Section 9.01. Guaranty...............................................58 Section 9.02. Guaranty Absolute......................................58 Section 9.03. Waiver.................................................59 Section 9.04. Subrogation............................................60 Section 9.05. Continuing Guaranty....................................60 Section 9.06. Effect of Bankruptcy Proceeding........................60 Section 9.07. Further Responsibilities...............................61 Section 9.08. Subordination..........................................61 ARTICLE X MISCELLANEOUS...........................................62 Section 10.01. Amendments, Etc.......................................62 Section 10.02. Participation Agreements and Assignments; Inter-Creditor Matters...............................62 Section 10.03. Notices...............................................65 Section 10.04. Costs and Expenses....................................67 Section 10.05. Successors and Assigns................................68 Section 10.06. Survival of Representations and Warranties............68 Section 10.07. Separability..........................................68 Section 10.08. Captions..............................................68 Section 10.09. Counterparts and Facsimile Signatures.................68 Section 10.10. Governing Law.........................................69 Section 10.11. Waiver of Jury Trial..................................69 Section 10.12. Submission to Jurisdiction............................69 Section 10.13. Limitation on Interest................................70 Section 10.14. Indemnification.......................................71 Section 10.15. Confidentiality.......................................72 Section 10.16. Judgment..............................................73 Section 10.17. Final Agreement of the Parties........................73 -iii- ANNEXES; EXHIBITS AND SCHEDULES Annex A Definitions Exhibit 1.01-C Form of Subordination Agreement Exhibit 2.02 Form of Borrowing Request Exhibit 2.02 Form of Conversion Notice Exhibit 2.03 Form of Letter of Credit Request Exhibit 2.04(a) Form of Tranche A Note Exhibit 2.04(b) Form of Tranche B Note Exhibit 2.04(c) Form of Revolving Note Exhibit 2.04(d) Form of Guilder Note Exhibit 3.01(f) Letter of Termination Exhibit 3.01(n) Form of Contribution and Indemnity Agreement Exhibit 10.02 Form of Assignment and Acceptance Agreement Schedule 1.01-A Agent Account Schedule 1.01-B Borrower Account Schedule 1.01-C Existing Letters of Credit Schedule 4.01 Subsidiaries of the Parent and Related Information Schedule 4.07 Litigation Schedule 4.15 Environmental Disclosures Schedule 5.10 Additional Guarantors Schedule 6.01 Existing Indebtedness Schedule 6.02 Existing Liens Schedule 6.07(j) Existing Investments Schedule 10.12 Address of Guarantors -iv- CREDIT AGREEMENT THIS CREDIT AGREEMENT dated as of May 12, 1997 is among CORE LABORATORIES N.V., a Netherlands limited liability company (the "PARENT"), CORE LABORATORIES, INC., a Delaware corporation (the "US BORROWER"), CORE LABORATORIES (U.K.) LIMITED, a company organized under the laws of England and Wales (the "UK BORROWER" and, together with the Parent and the US Borrower, the "BORROWERS"), the banks named on the signature pages hereto (together with their respective successors and assigns in such capacity, the "BANKS"), BANKERS TRUST COMPANY, as administrative agent for the Banks (together with its successors and assigns in such capacity, the "ADMINISTRATIVE AGENT") and NATIONSBANK, N.A., as syndication agent for the Banks (together with its successors and assigns in such capacity, the "SYNDICATION AGENT"), as the issuing bank with respect to the Letters of Credit issued hereunder (together with its successors and assigns in such capacity, the "ISSUING BANK"). Unless otherwise defined herein, all capitalized terms used herein and defined in ARTICLE I are used herein as so defined. PRELIMINARY STATEMENT The Borrowers have requested that the Banks provide (a) the Parent with: (i) a $55,000,000 term loan facility, (ii) a $5,000,000 Equivalent Dutch Guilder revolving credit facility and (iii) a $30,000,000 revolving credit facility, (b) the US Borrower with a $20,000,000 revolving credit facility providing for letters of credit and revolving loans, and (c) the UK Borrower with a $15,000,000 Equivalent Pounds Sterling term loan facility, each of which will be used as specified herein. The Banks have agreed to provide the Borrowers with such credit facilities upon the terms and conditions set forth in this Agreement. Accordingly, in consideration of the foregoing and the mutual covenants set forth herein, the parties agree as follows: ARTICLE I DEFINITIONS, ETC. Section 1.01. CERTAIN DEFINED TERMS. Capitalized terms used in this Agreement and not otherwise defined herein, shall have the respective meanings set forth in ANNEX A (such meanings to be equally applicable to both singular and plural forms of the terms defined). Section 1.02. ACCOUNTING TERMS. All accounting terms not specifically defined herein shall be construed, and all financial calculations shall be made, in accordance with GAAP consistent with those applied in the preparation of the consolidated financial statements referred to in SECTION 4.06, PROVIDED, if any accounting changes made by any Borrower that are allowed or required by GAAP result in the calculations that are utilized to compute the compliance with -1- SECTION 6.04 being inconsistent with such prior calculations, the affected Borrower agrees to negotiate in good faith with the Administrative Agent and the Syndication Agent to re-establish appropriate, meaningful ratios and covenants. Section 1.03. COMPUTATION OF TIME PERIODS. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding." Section 1.04. REFERENCES, ETC. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement or any Annex or Exhibit attached hereto shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All references herein to Articles, Sections, Annexes, Exhibits and Schedules shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement and the Annexes, Exhibits and Schedules attached hereto and made a part hereof. In this Agreement, unless a clear contrary intention appears, the word "including" (and with correlative meaning "include") means including, without limiting the generality of any description preceding such term. No provision of this Agreement shall be interpreted or construed against any Person solely because that Person or its legal representative drafted such provision. -2- ARTICLE II COMMITMENTS AND TERMS OF CREDIT Section 2.01. COMMITMENTS. (a) TRANCHE A LOAN. Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make a term loan to the Parent (a "TRANCHE A LOAN") on or promptly after the Effective Date in an amount not to exceed such Bank's Tranche A Commitment. Each Tranche A Loan shall be made as a Base Rate Loan or a Eurocurrency Rate Loan and as part of a maximum of two Tranche A Borrowing made by the Banks ratably according to their respective Commitment Percentages. Tranche A Loans, once repaid, may not be reborrowed. Funding and maintenance of the Tranche A Loans shall be in Dollars. (b) TRANCHE B LOAN. Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make a term loan to the UK Borrower (a "TRANCHE B LOAN") on or promptly after the Effective Date in an amount not to exceed the Pounds Sterling Equivalent of such Bank's Tranche B Commitment as of the Date of Determination. Each Tranche B Loan shall be made as a Eurocurrency Rate Loan and as part of a maximum of two Tranche B Borrowing made by the Banks ratably according to their respective Commitment Percentages. Tranche B Loans, once repaid, may not be reborrowed. Subject to SECTION 2.13(A), funding and maintenance of the Tranche B Loans shall be in Pounds Sterling. (c) DOLLAR REVOLVING LOANS. (i) Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make one or more loans (each a "DOLLAR REVOLVING LOAN") to the Parent and US Borrower from time to time on any Business Day during the period from the Effective Date up to, but excluding, the Termination Date in an aggregate amount outstanding for such Bank not to exceed at any time an amount equal to such Bank's Dollar Revolving Commitment; PROVIDED HOWEVER, that the portion of the Total Dollar Revolving Commitment allocated to the Parent shall be $30,000,000 and the portion of the Total Dollar Revolving Commitment allocated to the US Borrower shall be $20,000,000; and neither such Borrower may borrow Dollar Revolving Loans if the aggregate amount of all such Dollar Revolving Loans would be in excess of its allocated portion of the Total Dollar Revolving Commitment. Each Dollar Revolving Loan shall be made as either a Base Rate Loan or a Eurocurrency Rate Loan and as part of a single Borrowing made on the same day by the Banks ratably according to their respective Commitment Percentages. Each Base Rate Borrowing of Dollar Revolving Loans shall be in an aggregate amount not less than $1,000,000, and in integral multiples of $200,000 in excess thereof or, if less, the entire unfunded portion of the Total Dollar Revolving Commitment. Each Eurocurrency Rate Borrowing of Dollar Revolving Loans shall be in an aggregate amount not less than $1,000,000 and, in an integral multiple of $200,000 in excess thereof. Within the limits set forth above and subject to the terms and conditions of this Agreement, the Parent and the US Borrower may borrow, repay pursuant to SECTION 2.06 or prepay pursuant to SECTION 2.08 and reborrow under this SECTION 2.01(C). All funding and maintenance of the Dollar Revolving Loans shall be in Dollars. -3- (ii) The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue standby or commercial letters of credit for the account of the US Borrower, on behalf of it or any of its Affiliates and for the benefit of any obligee of payment obligations of the US Borrower or any of its Affiliates (the "LETTERS OF CREDIT") from time to time on any Business Day during the period from the Effective Date up to, but excluding, the Termination Date in an aggregate amount for all Outstanding Letters of Credit not exceeding at any time the Letter of Credit Sublimit. Subject to SECTION 2.01(C)(III), a Letter of Credit shall be denominated in any currency requested by the US Borrower and agreeable to the Issuing Bank, shall expire no later than the date set forth in SECTION 2.03(A), and shall be in such form as approved from time to time by the Issuing Bank and the US Borrower. Each Bank severally agrees, on the terms and conditions hereinafter set forth, to purchase participations in the Letters of Credit issued by the Issuing Bank pursuant to this Agreement in an amount equal to such Bank's Commitment Percentage in respect of the Total Dollar Revolving Commitment of the face amount of such Letter of Credit. Upon the issuance of each Letter of Credit and as of the Effective Date with respect to the Existing Letters of Credit, the Issuing Bank shall be deemed, without further action by any party hereto, to have sold to each Bank, and each Bank shall be deemed, without further action by any party hereto, to have purchased from the Issuing Bank, a participation, to the extent of such Bank's Commitment Percentage in respect of the Total Dollar Revolving Commitment, in such Letter of Credit and the Existing Letters of Credit, the obligations of the Issuing Bank thereunder and in the reimbursement obligations of the US Borrower due in respect of drawings made under such Letter of Credit or the Existing Letters of Credit. The Banks will execute any other documents the Issuing Bank may reasonably request to evidence the purchase of such participation. On each day during the period commencing with the issuance by the Issuing Bank of any Letter of Credit and as of the Effective Date with respect to the Existing Letters of Credit and ending on the date when such Letter of Credit or Existing Letters of Credit shall have expired or been terminated, and, irrespective of whether such Letter of Credit or Existing Letters of Credit have expired or terminated if such Letter of Credit or Existing Letters of Credit have been drawn upon and the amount so drawn has not been reimbursed to the Issuing Bank, the Dollar Revolving Commitment of each Bank shall be deemed to be utilized for all purposes hereof in an amount equal to such Bank's Commitment Percentage in respect of the Total Dollar Revolving Commitment of the Outstanding Letters of Credit. (iii) In regard to any Letter of Credit issued in a currency other than Dollars, the following shall apply: (x) any presentation thereof resulting in payments by the Issuing Bank thereunder shall be repaid to said Issuing Bank, at the option of the US Borrower, in the currency in which said payments were made by the Issuing Bank or in Dollars calculated on the date of US Borrower's repayment thereof, (y) if the US Borrower tenders Dollars for the Reimbursement Amount, then, unless such tender results in the actual receipt by the Issuing Bank (acting reasonably and in good faith in converting such Dollars into the currency in which said payments were made by the Issuing Bank) of the Reimbursement Amount, the US Borrower shall also promptly pay to the Issuing Bank an additional amount in Dollars as may be necessary to compensate and indemnify the Issuing Bank for such shortfall (and if, for any reason, the amount in Dollars so received exceeds the Reimbursement Amount, the Issuing Bank will refund such excess), and (z) all calculations required by SECTION 2.01(C)(IV) shall be made, calculating the Dollar Equivalent of such non-Dollar -4- Outstanding Letters of Credit as of the date of each such Borrowing Request or Letter of Credit Request. (iv) Notwithstanding any other term or provision hereof (A) no Dollar Revolving Loan shall be made and no Letter of Credit shall be issued if after giving effect thereto the aggregate amount of the Dollar Revolving Credit Outstanding (not including Letters of Credit issued under SECTION 6.01(G)) would exceed the Total Dollar Revolving Commitment; and (B) no Letter of Credit shall be issued if, after giving effect thereto the aggregate amount of Outstanding Letters of Credit would exceed the Letter of Credit Sublimit. (d) GUILDER REVOLVING LOANS. Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make one or more loans (each a "GUILDER REVOLVING LOAN") to the Parent from time to time on any Business Day, during the period from the Effective Date up to but excluding the Termination Date, in an aggregate amount outstanding for such Bank not to exceed at any time, such Bank's Guilder Revolving Commitment, determined by reference to the Equivalent thereof in Dollars on the relevant Date of Determination. Each Guilder Revolving Loan shall be made as a Eurocurrency Rate Loan and as part of a single Borrowing made on the same day by the Banks ratably according to their respective Commitment Percentages. Each Borrowing of Guilder Revolving Loans shall be in an aggregate amount not less than the Equivalent in Dutch Guilders of $800,000 as of the Date of Determination and, in an integral multiple of the Equivalent in Dutch Guilders of $200,000 in excess thereof. Within the limits set forth above and subject to the terms and conditions of this Agreement, the Parent may borrow, repay pursuant to SECTION 2.06 or prepay pursuant to SECTION 2.08 and reborrow under this SECTION 2.01(D). Subject to SECTION 2.13(A), funding and maintenance of Guilder Revolving Loans shall be in Dutch Guilders. (e) All Existing Letters of Credit, whether or not issued by the Issuing Bank, shall be deemed to be Letters of Credit hereunder. Upon the expiration of any Existing Letter of Credit, same shall be reissued only by the Issuing Bank (or may be issued or reissued by another financial institution in accordance with SECTION 6.01(G)) in accordance with the provisions of this Agreement. (f) Loans of more than one Type and, in the case of Revolving Loans, in more than one currency, may be outstanding at the same time, but the Borrowers shall not be entitled to request any Borrowing or to Convert Loans comprising any Borrowing into Loans of another Type, if after giving effect to such Borrowing or Conversion, as the case may be, any Bank would have outstanding at any one time more than (i) two (2) different Types of Tranche A Loans, (ii) two (2) different Types of Tranche B Loans, (iii) six (6) different Types of Dollar Revolving Loans, and (iv) two (2) different Types of Guilder Revolving Loans. Section 2.02. BORROWING PROCEDURES; CONVERSIONS. (a) Each Borrowing shall be made upon the written, telecopied or facsimile transmitted request of the relevant Borrower, given to the Administrative Agent not later than 11:00 a.m. (New York time) on (i) the third Business Day prior to the proposed Borrowing Date in the case of a Eurocurrency Rate Borrowing denominated in Dollars or Pounds Sterling, (ii) the fourth Business Day prior to the proposed Borrowing Date in -5- the case of a Eurocurrency Rate Borrowing denominated in Dutch Guilders, or (iii) the Business Day prior to the proposed Borrowing Date in the case of a Base Rate Borrowing. The Administrative Agent shall give each other member of the Bank Group prompt notice of such request by telecopier, telex or cable. Each request for a Borrowing (a "BORROWING REQUEST") shall specify therein (A) the Borrowing Date for such Borrowing, (B) the requested Type of Loans comprising such Borrowing, (C) the aggregate amount of such Borrowing, (D) in the case of a Eurocurrency Rate Borrowing, the Interest Period for the Loans comprising such Borrowing and (E) in the case of a Revolving Loan, whether such Revolving Loan is to be a Dollar Revolving Loan or a Guilder Revolving Loan. Each Borrowing Request shall be substantially in the form of EXHIBIT 2.02(A). Each Bank shall, before 12:00 Noon (New York time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the applicable Agent Account in same day funds, such Bank's Commitment Percentage of such Borrowing. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in ARTICLE III, the Administrative Agent will, not later than 3:00 p.m. (New York time) on the date of such Borrowing, make such funds available to the relevant Borrowing at the applicable Borrower Account as is reasonably acceptable to the Administrative Agent and as such Borrower shall have specified in the related Borrowing Request. Each Borrowing Request shall be irrevocable and binding on the Borrower delivering the same. (b) Unless the Administrative Agent shall have received notice from a Bank prior to the date of any Borrowing that such Bank will not make available to the Administrative Agent such Bank's Commitment Percentage of such Borrowing, the Administrative Agent may assume that such Bank has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) of this SECTION 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower requesting such Borrowing on such date a corresponding amount. If and to the extent that such Bank shall not have so made its Commitment Percentage of such Borrowing available to the Administrative Agent, such Bank and the Borrower requesting such Borrowing severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of such Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan as part of such Borrowing for purposes of this Agreement, and such Borrower shall be relieved of the obligation to repay such amount under this SECTION 2.02(B). The failure of any Bank to make the Loan to be made by it as part of any Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make its Loan on the date of such Borrowing or any subsequent Borrowing Date, but no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on the date of any Borrowing. (c) Each Borrower may, subject to the terms of this Agreement, upon written, telecopied or facsimile transmitted notice (a "CONVERSION NOTICE") to the Administrative Agent, given not later than the times specified below on any Business Day on which no Default or Event -6- of Default has occurred and is continuing, Convert all Loans comprising one or more Borrowings from its credit facility hereunder into one or more Borrowings comprised of Loans from the same credit facility so long as, after giving effect to any such Conversion, each Borrowing resulting from such Conversion is comprised of Loans denominated in the same currency and, in the case of each Borrowing comprised of Eurocurrency Rate Loans, having not more than two (2) separate Interest Periods for each such Loan. The Administrative Agent shall promptly transmit the contents of such Conversion Notice to each other member of the Bank Group by telecopier, telex or cable. Notwithstanding any other term or provision hereof, after giving effect to any such Conversion, the size of all Borrowings outstanding hereunder, and the number of different Types of Loans outstanding hereunder, shall conform to the requirements of SECTION 2.01. In the event of any Conversion of Eurocurrency Rate Loans on any day other than the last day of the Interest Period applicable thereto, the Borrower requesting the same shall be obligated, if necessary, to reimburse the Banks in respect thereof pursuant to SECTION 2.12. Each Conversion Notice must be given not later than 11:00 a.m. (New York time) on (i) the third Business Day prior to the proposed Conversion Date in the case of a Conversion of Dollar denominated Base Rate Loans into Dollar denominated Eurocurrency Rate Loans or of Dollar denominated Eurocurrency Rate Loans of one Interest Period into Dollar denominated Eurocurrency Rate Loans of another Interest Period, or (ii) the fourth Business Day prior to the date of the proposed Conversion in the case of a Conversion of Foreign Currency denominated Eurocurrency Rate Loans of one Interest Period into Foreign Currency denominated Eurocurrency Rate Loans of another Interest Period, or (iii) the Business Day immediately preceding the proposed Conversion Date in the case of a Conversion of Eurocurrency Rate Loans denominated in Dollars into Base Rate Loans. Each notice of a Conversion given by a Borrower shall specify (A) the Conversion Date for such Conversion, (B) the Loans to be Converted, (C) the Type of Loans to which such Loans are to be Converted, (D) the currency of the Loans to be Converted and (E) in the case of a Conversion into Eurocurrency Rate Loans, the Interest Period for such Converted Loans, and shall be in substantially the form of EXHIBIT 2.02(C). If a Borrower shall fail to give a timely Conversion Notice conforming to the requirements of this Agreement with respect to any Eurocurrency Rate Loans denominated in Dollars prior to the expiration of the Interest Period applicable thereto, such Eurocurrency Rate Loans shall, automatically on the last day of such Interest Period, be Converted into Base Rate Loans. If a Borrower shall fail to give a timely Conversion Notice conforming to the requirements of this Agreement with respect to any Eurocurrency Rate Loans denominated in a Foreign Currency prior to the expiration of the Interest Period applicable thereto, such Eurocurrency Rate Loans shall, automatically on the last day of such Interest Period, be converted into a Eurocurrency Rate Loan with an Interest Period of one month. Each Conversion Notice shall be irrevocable and binding on the Borrower requesting such Conversion. Section 2.03. ISSUING AND REIMBURSING THE LETTERS OF CREDIT. (a) Each Letter of Credit shall, subject to the terms of this Agreement, be issued upon the written, facsimile transmitted request (an original of which shall be immediately forwarded by overnight courier to the Issuing Bank) or such other computerized issuance or application procedure, instituted from time to time by the Issuing Bank and agreed to by the US Borrower, of the US Borrower given to the Issuing Bank not later than 12:00 noon (New York time) on the third Business Day prior to the proposed date of -7- issuance of such Letter of Credit. Each such request for a Letter of Credit (a "LETTER OF CREDIT REQUEST") made by the US Borrower shall be substantially in the form of EXHIBIT 2.03 hereto and shall specify the Business Day on which such Letter of Credit is to be issued, the currency of such Letter of Credit, the beneficiary of such Letter of Credit, the amount of such Letter of Credit, the draw conditions applicable thereto and the Person on whose behalf the Letter of Credit is to be issued, and shall provide for an expiry date which is not later than thirty (30) months from the issuance date and each Letter of Credit which is self-extending beyond its expiration date must be cancelable upon at least thirty (30) days notice given by the Issuing Bank to the beneficiary of such Letter of Credit. Such request shall also include any documents that the Issuing Bank has specified in writing to the US Borrower that it customarily requires in connection therewith to the extent such documents are applicable. No Letter of Credit may have an expiry date later than twelve (12) months after the Termination Date. (b) Upon satisfaction of the applicable terms and conditions set forth in ARTICLE III, the Issuing Bank shall issue such Letter of Credit to the specified beneficiary not later than the close of business (New York time) on the date so specified. The Issuing Bank shall promptly provide to the Agent for distribution to, or directly to, each other member of the Bank Group a summary report of all Outstanding Letters of Credit issued by the Issuing Bank upon the issuance of each Letter of Credit, at the end of each calendar month or at such other times as reasonably requested by a member of the Bank Group, but any failure of the Issuing Bank to provide such Persons with a copy of such report or Letter of Credit shall not in any way affect the US Borrower's obligation to reimburse the Issuing Bank for any amount paid by the Issuing Bank under any Letter of Credit or the Banks' obligations to reimburse the Issuing Bank for such amount, to the extent provided herein, in the event the US Borrower fails to do so. Each such Letter of Credit shall (i) provide for the payment of drafts or other forms of demand to be presented for honor thereunder by the beneficiary in accordance with the terms thereof, at sight when accompanied by the documents described therein; and (ii) be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, (or any subsequent revisions thereof approved by a Congress of the International Chamber of Commerce and adhered to by the Issuing Bank) (the "UCP"); and (iii) as to matters not governed by the UCP, be governed by, and construed and interpreted in accordance with, the governing law specified in this Agreement. (c) Upon presentment to the Issuing Bank of any demand for honor under any Letter of Credit by the beneficiary thereof and the determination by the Issuing Bank that such demand is in order, the Issuing Bank shall give prompt notice (a "REIMBURSEMENT NOTICE") to the US Borrower of (i) the Letter of Credit to which such Reimbursement Notice relates, (ii) the amounts and the currency to be paid on account of such demand (the "REIMBURSEMENT AMOUNT") and (iii) the date on which such amounts are to be paid (the "REIMBURSEMENT DATE"), but any failure to so notify the US Borrower shall not in any way affect the US Borrower's obligations to reimburse the Issuing Bank for any amount paid by the Issuing Bank under any Letter of Credit. In determining whether to pay under any Letter of Credit, the Issuing Bank shall not have any obligation relative to the US Borrower and the Banks other than the obligations imposed on issuing banks under the UCP and -8- applicable law. Any action taken or omitted to be taken by the Issuing Bank under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and non-appealable judgment), shall not create for the Issuing Bank any resulting liability to the US Borrower or the Banks, IT BEING UNDERSTOOD THAT ANY ACT OR OMISSION CONSTITUTING ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) SHALL NOT RESULT IN ANY RESULTING LIABILITY FOR THE ISSUING BANK. (d) Upon receipt of any Reimbursement Notice, the US Borrower shall reimburse the Issuing Bank by forthwith paying to the Administrative Agent for the benefit of the Issuing Bank (who shall promptly notify the Issuing Bank of such payment) no later than 10:00 a.m. (New York time) on the Reimbursement Date specified in such Reimbursement Notice an amount equal to the Reimbursement Amount specified in such Reimbursement Notice, together with interest from such Reimbursement Date until such reimbursement is made by the US Borrower at a fluctuating rate per annum equal to the lesser of (i) the Highest Lawful Rate and (ii) the Base Rate in effect during the time such reimbursement obligation remains unpaid PLUS the Applicable Margin for Base Rate Loans from such Reimbursement Date until the third day immediately following the delivery of such Reimbursement Notice by the Issuing Bank to the US Borrower and thereafter, the Default Rate. To the extent availability may then exist, and upon compliance with the relevant terms and conditions of this Agreement, the US Borrower may repay any or all of the obligations described in this paragraph by requesting a Borrowing and applying the proceeds thereof accordingly, together with any amounts owed under SECTION 2.01(C)(III)(Y). (e) If the US Borrower shall fail to reimburse the Issuing Bank for any payment by the Issuing Bank under a Letter of Credit by 12:00 noon. (New York time) on the Reimbursement Date specified in the Reimbursement Notice related thereto, the Administrative Agent shall give prompt notice thereof to each other member of the Bank Group. Upon receipt of such notice, each Bank shall, notwithstanding any other provision of this Agreement (including the occurrence and continuance of a Default or an Event of Default), make available to the Administrative Agent for the benefit of the Issuing Bank an amount equal to its Commitment Percentage of the Reimbursement Amount and in the same currency as specified in the related Reimbursement Notice no later than the close of business on such Reimbursement Date. If such Reimbursement Amount is not in fact made available to the Administrative Agent by such Bank on such Reimbursement Date, such Bank shall pay to the Administrative Agent for the account of the Issuing Bank, on demand made by the Issuing Bank, in addition to such Reimbursement Amount, interest on such amount for the number of days that elapse from such Reimbursement Date to the date on which the amount equal to such Bank's Commitment Percentage of such Reimbursement Amount becomes immediately available to the Issuing Bank at a rate per annum equal to the average daily Federal Funds Rate for such days. Any amount received by the Administrative Agent or the Issuing Bank from the US Borrower in respect of a demand honored under a Letter of Credit after one or more of the Banks have made funds available for the payment of such demand pursuant to this paragraph shall be paid over by the Administrative Agent or the Issuing Bank, as the case may be, to such Banks, pro rata according to the amounts so made available by such Banks, promptly upon receipt by the Administrative Agent -9- or the Issuing Bank of such amount. Nothing in this Agreement shall diminish the US Borrower's obligation under this Agreement to provide the funds for the payment of, or on demand to reimburse the Issuing Bank for payment of, any demand presented to, and duly honored by, the Issuing Bank under any Letter of Credit. (f) In order to induce the issuance of Letters of Credit by the Issuing Bank and the purchase of participations therein by the Banks, the US Borrower irrevocably agrees (i) that the obligation of the US Borrower to reimburse the Issuing Bank for amounts paid by the Issuing Bank under any Letter of Credit, including accrued interest thereon, as set forth herein is absolute and unconditional, (ii) that no member of the Bank Group shall be responsible or liable for, and the US Borrower's unconditional obligation to reimburse the Issuing Bank through the Administrative Agent for amounts paid by the Issuing Bank on account of demands duly honored under the Letters of Credit shall not be affected by, any circumstance, act or omission whatsoever relating to any Letter of Credit, whether or not known to any member of the Bank Group, unless such circumstance, act or omission results in the wrongful payment of any Letter of Credit and such circumstance, act or omission constitutes the gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and non-appealable judgment) on the part of such member of the Bank Group, (iii) that any action taken or omitted to be taken by any member of the Bank Group under or in connection with any Letter of Credit or any related demand, document or property shall be binding on the US Borrower and shall not put any member of the Bank Group under any resulting liability to the US Borrower, unless such action or omission results in the wrongful payment of any Letter of Credit and such action or omission constitutes the gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and non-appealable judgment) on the part of such member of the Bank Group and (iv) to indemnify, defend and hold each member of the Bank Group harmless from and against any and all liabilities, damages, claims or reasonable expenses (including reasonable attorneys' fees and amounts paid in settlement) arising out of or based on any Letter of Credit, except to the extent the same is the result of the wrongful payment of any Letter of Credit and such wrongful payment constitutes gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and non-appealable judgment) on the part of the Person seeking indemnity hereunder, IT BEING THE EXPRESS INTENTION OF THE US BORROWER THAT EACH MEMBER OF THE BANK GROUP SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST AND SHALL NOT HAVE ANY LIABILITY OR OBLIGATION FOR ANY AND ALL LIABILITIES, CLAIMS, OR REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM THE ORDINARY NEGLIGENCE (WHETHER SOLE, CONCURRENT, OR CONTRIBUTORY) OF SUCH MEMBER OF THE BANK GROUP. The US Borrower hereby waives presentment for payment and notice of dishonor, protest and notice of protest with respect to demands honored under the Letters of Credit. (g) The provisions of this Agreement and the other Loan Documents concerning collateral, timing of payments, interest rates applicable to any reimbursement obligation relating to any Letter of Credit, any representations, warranties, covenants, events of default, remedies and governing law shall supersede in their entirety the provisions of any Letter of Credit application -10- relating to such matters. In the event any other provision of any Letter of Credit application is inconsistent with, or in conflict of any provision of this Agreement or any Loan Documents, the provisions of this Agreement or the Loan Documents shall govern. Section 2.04. THE NOTES. (a) The Tranche A Loans made by each Bank shall be evidenced by a single Tranche A Note issued to such Bank by the Parent, (i) dated the date of this Agreement (or such other date as may be specified in SECTION 10.02), (ii) payable to the order of such Bank and (iii) otherwise duly completed. (b) The Tranche B Loans made by each Bank shall be evidenced by a single Tranche B Note issued to such Bank by the UK Borrower, (i) dated the date of this Agreement (or such other date as may be specified in SECTION 10.02), (ii) payable to the order of such Bank and (iii) otherwise duly completed. (c) The Dollar Revolving Loans made by each Bank shall be evidenced by Dollar Revolving Notes issued to such Bank by each of the Parent and the US Borrower, (i) dated the date of this Agreement (or such other date as may be specified in SECTION 10.02), (ii) payable to the order of such Bank and (iii) otherwise duly completed. Each Dollar Revolving Loan made by a Bank to the Parent or the US Borrower and all payments made on account of the principal amount thereof shall be entered by such Bank in its records or on the schedule (or a continuation thereof) attached to the appropriate Dollar Revolving Note of such Bank, PROVIDED, that prior to any transfer of any such Dollar Revolving Note, such Bank shall endorse the amount and maturity of any outstanding Dollar Revolving Loans on the schedule (or a continuation thereof) attached to such Dollar Revolving Note. (d) The Guilder Revolving Loans made by each Bank shall be evidenced by a single Guilder Revolving Note issued to such Bank by the Parent, (i) dated the date of this Agreement (or such other date as may be specified in SECTION 10.02), (ii) payable to the order of such Bank and (iii) otherwise duly completed. Each Guilder Revolving Loan made by a Bank to the Parent and all payments made on account of the principal amount thereof shall be entered by such Bank in its records or on the schedule (or a continuation thereof) attached to the Guilder Revolving Note of such Bank, PROVIDED, that prior to any transfer of any such Guilder Revolving Note, such Bank shall endorse the amount and maturity of any outstanding Guilder Revolving Loans on the schedule (or a continuation thereof) attached to such Guilder Revolving Note. Section 2.05. REDUCTION OF THE COMMITMENTS. (a) The Parent or the US Borrower shall have the right, upon at least three Business Days' notice to the Administrative Agent to terminate in whole or reduce ratably in part the unused portion of the Total Dollar Revolving Commitment; PROVIDED, that each partial reduction in the Total Dollar Revolving Commitment shall be in the aggregate amount of $2,000,000 or an integral multiple of $1,000,000 in excess thereof. Any such reduction or termination shall be irrevocable. -11- (b) The Parent shall have the right, upon at least three Business Days' notice to the Administrative Agent to terminate in whole or reduce ratably in part the unused portion of the Total Guilder Revolving Commitment; PROVIDED, that each partial reduction in the Total Guilder Revolving Commitment shall be in the aggregate amount of $1,000,000 or an integral multiple thereof. Any such reduction or termination shall be irrevocable. (c) Immediately following the funding of the Tranche A Loans, the Tranche A Commitment of each Bank shall terminate and no further Tranche A Loans shall be funded. If the Tranche A Loans have not been funded by May 16, 1997, the Tranche A Commitment of each Bank shall terminate. (d) Immediately following the funding of the Tranche B Loans, the Tranche B Commitment of each Bank shall terminate and no further Tranche B Loans shall be funded. If the Tranche B Loans have not been funded by May 30, 1997, the Tranche B Commitment of each Bank shall terminate. Section 2.06. MANDATORY REPAYMENT OF LOANS. (a) On each Scheduled Payment Date, (i) the Parent shall repay the Tranche A Loans in an amount equal to the Repayment Percentage for such Scheduled Payment Date of the aggregate amount of Tranche A Loans funded pursuant to SECTION 2.01(A), rounded upward to the nearest $50,000, and (ii) the UK Borrower shall repay the Tranche B Loans in an amount equal to the Repayment Percentage for such Scheduled Payment Date of the aggregate amount of Tranche B Loans funded pursuant to SECTION 2.01(B), rounded upward to the nearest $50,000. Any prepayments of Tranche A Loans or Tranche B Loans shall be applied against the remaining scheduled installments required under this Section 2.06(a) on a pro rata basis. As used herein, "REPAYMENT PERCENTAGE" means, for any Scheduled Payment Date, the percentage specified below for such Scheduled Payment Date: Scheduled Payment Date Repayment Percentage ---------------------- -------------------- March 31, 1999 5% June 30, 1999 5% September 30, 1999 5% December 31, 1999 5% March 31, 2000 7.5% June 30, 2000 7.5% September 30, 2000 7.5% December 31, 2000 7.5% March 31, 2001 7.5% June 30, 2001 7.5% September 30, 2001 7.5% December 31, 2001 7.5% March 31, 2002 10% June 30, 2002 10% -12- (b) (i) The US Borrower or the Parent, as applicable, shall from time to time repay (or, in the case of Outstanding Letters of Credit (other than those outstanding pursuant to SECTION 6.01(G)), provide Cover) for any Dollar Revolving Credit Outstanding (other than Letters of Credit issued under SECTION 6.01(G)) or any amount outstanding under a Guilder Revolving Loan in such amounts as shall be necessary so that at all times the Dollar Revolving Credit Outstanding (not including Letters of Credit issued under SECTION 6.01(G)) shall not be in excess of the Total Dollar Revolving Commitment and the amounts outstanding under the Guilder Revolving Loans shall not exceed the Total Guilder Revolving Commitment. (ii) If a Default has occurred and is continuing, then the US Borrower shall immediately, following a request therefor, provide Cover for any Outstanding Letter of Credit (other than Letters of Credit issued under SECTION 6.01(G)) necessary so that at all times the Outstanding Letters of Credit (other than those outstanding under SECTION 6.01(G)) shall not be in excess of the Letter of Credit Sublimit. Any repayment or Cover required by this SECTION 2.06(B) shall be due and payable on the date such repayment or Cover obligation accrues pursuant to the preceding subparagraphs. (c) (i) Any Net Sales Proceeds or Casualty Proceeds received by or on behalf of any Borrower shall be utilized: (A) to make an investment in other assets to be used in said Borrower's business with the proceeds thereof or to rebuild or replace the asset sold, destroyed, damaged or taken, with such rebuilding or replacement to commence within 180 days of the loss or sale and be pursued diligently thereafter, or (B) if no such rebuilding or replacement is to occur, and the amount of such proceeds is in excess of $250,000, all of said proceeds (not merely the excess over $250,000) shall be used to reduce all remaining scheduled payments of the Loans of the Borrower owning such asset on a pro rata basis. If said Borrower is the Parent, the Loan reduced shall be the Tranche A Loan; (ii) any Net Sales Proceeds, Debt Proceeds or Casualty Proceeds received by or on behalf of any non-Borrower Credit Party may be utilized in the same manner described in subparagraph (c)(i) above, or, if not so utilized shall be applied on a pro rata basis, first, to reduce payments due on the Tranche A Loan, second, to reduce payments due on the Tranche B Loan, in each case, pro-rata on the remaining installments due, and third, to reduce amounts outstanding on either of the Revolving Credit Loans as the Parent may elect subject to the provisions of SECTION 9.01(B); and (iii) any Debt Proceeds shall be utilized to reduce payments due of the Loans of the Borrower receiving same pro-rata on the remaining installments due, and, if said Borrower is the Parent, the Loan reduced shall be the Tranche A Loan. (d) In the event that the US Borrower shall be required pursuant to this SECTION 2.06 to repay or provide Cover for Dollar Revolving Credit Outstanding, the US Borrower -13- shall make such repayment and provide such Cover in the following order: (i) first, to pay the amount of all unreimbursed drawings under any Letters of Credit, (ii) second, to repay the principal of any of its Base Rate Loans, (iii) third, to repay the principal of any of its Eurocurrency Rate Loans, (iv) fourth, to provide Cover for the undrawn portion of any Letters of Credit. Any cash delivered as Cover pursuant to this SECTION 2.06(D) shall be placed in an interest bearing account, for the benefit of the US Borrower, selected by the Administrative Agent; and so long as no Default has occurred and is continuing, any accrued interest or dividends paid on all Cover shall be distributed monthly to the US Borrower, PROVIDED, such distribution shall be suspended during a period in which a Default has occurred and is continuing. (e) All outstanding Loans shall be fully due and payable on the Termination Date. (f) Each repayment of Loans required by this SECTION 2.06 shall be accompanied by payment of accrued interest to the date of such payment on the principal amount paid. In the event of any payment of a Eurocurrency Rate Loan, the Borrower making such payment shall be obligated to reimburse the Banks for funding losses, if any, pursuant to SECTION 2.12. (g) Any Borrowing under a Loan shall be repaid in the same currency in which said Borrowing was advanced. Section 2.07. INTEREST ACCRUAL, PAYMENTS. (a) ACCRUAL AND PAYMENT. Subject to the provisions of SECTION 10.13, each Borrower shall pay interest on the unpaid principal amount of each Loan made by each Bank to such Borrower from the Borrowing Date of such Loan until such principal amount shall be paid in full, on the dates and at the rates per annum specified as follows: (i) BASE RATE LOANS. If such Loan is a Base Rate Loan, a rate per annum equal at all times to the lesser of (A) the Highest Lawful Rate and (B) the Base Rate in effect from time to time PLUS the Applicable Margin in effect from time to time for Base Rate Loans, and unpaid accrued interest on such Loans shall be due and payable on each Payment Date and on the date such Base Rate Loan shall be paid in full or Converted. (ii) EUROCURRENCY RATE LOANS. If such Loan is a Eurocurrency Rate Loan, a rate per annum equal at all times during the Interest Period for such Loan to the lesser of (A) the Highest Lawful Rate and (B) the sum of the Eurocurrency Rate for such Interest Period PLUS the Applicable Margin in effect as of the first day of such Interest Period for Eurocurrency Rate Loans, and unpaid accrued interest on such Loans shall be due and payable the last day of such Interest Period and, in the case of an Interest Period longer than three months, on the date occurring every three months after the first day of such Interest Period, and on the date such Eurocurrency Rate Loan shall be paid in full or Converted. Any amount of principal or, to the extent permitted by applicable law, interest which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, at a rate per annum equal at all times -14- to the lesser of (A) the Highest Lawful Rate and (B) the Base Rate in effect from time to time during the applicable period PLUS the Applicable Margin in effect from time to time during such period PLUS two percent (2%) (the "DEFAULT RATE"), payable on demand. (b) DETERMINATION OF INTEREST RATES. (i) The Administrative Agent shall give prompt notice to each Borrower and each other member of the Bank Group of the applicable interest rate determined by the Administrative Agent hereunder for each Borrowing. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (ii) If the Majority Banks shall, at least one Business Day before the date of any requested Eurocurrency Rate Borrowing, notify the Administrative Agent that the Eurocurrency Rate applicable to such Borrowing will not adequately reflect the cost to such Banks of making, funding or maintaining their respective Eurocurrency Rate Loans for such Borrowing in the currency requested, the right of the Borrowers to select Eurocurrency Rate Loans for such Borrowing in such currency or any subsequent Borrowing in such currency shall be suspended until the Administrative Agent shall notify the Borrowers and each other member of the Bank Group that the circumstances causing such suspension no longer exist, and each Loan denominated in Dollars comprising such Borrowing shall be made as, or Converted into, as applicable, a Base Rate Loan and each Loan denominated in a Foreign Currency shall be exchanged for the Equivalent thereof in Dollars and converted into Base Rate Loans. (c) As used herein, "APPLICABLE MARGIN" means, and "Commitment Fee," means, for any day, (subject to SECTION 2.10), at such time as the Margin Ratio is in one of the following ranges, the percentage per annum set forth opposite such Margin Ratio:
Commitment Fee Subsequent to Margin Ratio Eurocurrency Margin Base Rate Margin December 31, 1997 ------------ ------------------- ---------------- ----------------- Less than 2.0 to 1.0 .75% 0% .25% Equal to or greater than 2.0 to 1.0 but less than 2.5 to 1.0 1.00% 0% .25% Equal to or greater than 2.5 to 1.0 but less than 3.0 to 1.0 1.25% .25% .375% Equal to or greater than 3.0 to 1.0 but less than 3.5 to 1.0 1.50% .50% .375% Equal to or greater than 3.5 to 1.0 1.75% .75% .375%
(d) For purposes hereof, "MARGIN RATIO" means, as of any date, the ratio of (i) the Parent's total consolidated Indebtedness as of the calendar quarter ending on such date, to (ii) its consolidated EBITDA for the twelve month period ending on the last day of such calendar quarter. The Margin Ratio set forth in the most recent Margin Ratio Certificate delivered to the Administrative Agent shall, for purposes of determining the Applicable Margin, be in effect from -15- the second business day after the date such Margin Ratio Certificate is delivered (or is required to be delivered), until the second business day after the next such Margin Ratio Certificate is delivered (or is required to be delivered), with the following exceptions: (a) if the Administrative Agent in good faith determines that the calculations of the Margin Ratio reflected in any Margin Ratio Certificate are not accurate, the Administrative Agent may correct any error and calculate the appropriate Margin Ratio (and promptly give the Borrowers notice thereof with supporting documentation and calculations), (b) if the Parent fails to deliver any Margin Ratio Certificate when due, the Margin Ratio shall be deemed to be greater than 3.5 to 1.0 until such Margin Ratio Certificate is delivered, and (c) for the period commencing on the Execution Date and ending on the date the first Margin Ratio Certificate is due hereunder, the Margin Ratio shall be deemed to be 3.5 to 1.0. Section 2.08. OPTIONAL PREPAYMENTS. (a) Each Borrower may, from time to time on any Business Day, upon notice to the Administrative Agent stating the proposed date and aggregate principal amount thereof, and if such notice is given such Borrower shall, prepay the outstanding principal amount of the Base Rate Loans made to such Borrower and comprising part of the same Borrowing in whole or ratably in part; PROVIDED, that any partial prepayment of such Base Rate Loans shall be in an aggregate principal amount of not less than $2,000,000. Each Borrower may from time to time upon at least three Business Days' notice to the Administrative Agent stating the proposed date and the aggregate principal amount thereof, and if such notice is given such Borrower shall, prepay the outstanding principal amount of the Eurocurrency Rate Loans made to such Borrower and comprising part of the same Borrowing in whole or ratably in part; PROVIDED, that any partial prepayment of such Eurocurrency Rate Loans shall be in an aggregate principal amount of not less than $2,000,000 or an integral multiple of $1,000,000 in excess thereof (or, in the case of Foreign Currency denominated Loans, the Equivalent thereof in Dollars as of the Date of Determination). (b) Each prepayment of Loans made pursuant to this SECTION 2.08 shall be accompanied by a payment of accrued interest to the date of such prepayment on the principal amount prepaid. In the event of any prepayment of a Eurocurrency Rate Loan, the Borrower making such prepayment shall be obligated to reimburse the Banks for funding losses, if any, pursuant to SECTION 2.12. Section 2.09. PAYMENTS, NOTICE OF CERTAIN REPAYMENTS AND COMPUTATIONS. (a) Except with respect to principal of, interest on and other amounts arising from, or incurred in respect of, Loans or Letters of Credit denominated in a Foreign Currency, all payments of principal, interest, commitment fees and other amounts hereunder, under the Notes and the other Loan Documents shall be made in Dollars to the Administrative Agent at the applicable Agent Account in immediately available funds not later than 11:00 a.m. (New York time) on the date when due. Unless otherwise specified herein, all payments of principal, interest and other amounts hereunder, under the Notes and the other Loan Documents denominated in a Foreign Currency shall be made in the same Foreign Currency to the Administrative Agent (or the Issuing Bank with respect to Letters of Credit) at the applicable Agent Account in immediately available funds not later than 11:00 a.m. (at -16- the time of the jurisdiction in which the applicable Agent's Account for such Foreign Currency is located) on the date when due. Upon receipt of such payments, the Administrative Agent will promptly cause to be distributed like funds and in like currencies relating to the payment of principal or interest or commitment fees ratably (other than amounts payable pursuant to SECTION 2.11, SECTION 2.12, SECTION 2.13 or SECTION 2.14) to the Banks, for the account of their respective Applicable Lending Offices, and like funds in like currencies relating to the payment of any other amount payable to any Bank, to such Bank for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. (b) Unless the Administrative Agent shall have received notice from the Borrower required to make any payment hereunder prior to the date on which any payment is due to the Banks under the Loan Documents that such Borrower will not make such payment in full, the Administrative Agent may assume that such Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent such Borrower shall not have made such payment in full to the Administrative Agent, each Bank shall repay to the Administrative Agent forthwith on demand such amount distributed to such Bank, together with interest thereon for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Administrative Agent at the Federal Funds Rate. (c) All payments by the Borrowers of the fees payable to the Administrative Agent or the Issuing Bank shall be made in Dollars directly to such Person at its address specified in SECTION 10.03 in immediately available funds not later than 11:00 a.m. (New York time) on the date when due. (d) All computations of interest based on the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurocurrency Rate or the Federal Funds Rate shall be made on the basis of a year of 360 days (unless use of a 360 day year would cause the interest contracted for, charged or received hereunder to exceed the Highest Lawful Rate, in which case such computations shall be made on the basis of a year of 365 or 366 days, as the case may be), in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or commitment fees are payable. (e) Whenever any payment under the Loan Documents shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be; PROVIDED, if such extension would cause payment of interest on or principal of Eurocurrency Rate Loans to be made in the next following calendar month, such payment shall be made on the immediately preceding Business Day. -17- (f) If any Bank shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of the Loans made by it (other than pursuant to SECTION 2.11, SECTION 2.12, SECTION 2.13 or SECTION 2.14), or payments by the Issuing Bank made pursuant to SECTION 2.03, in excess of its ratable share of payments on account of the Loans or payments by the Issuing Bank made pursuant to SECTION 2.03, obtained by all the Banks, such Bank shall forthwith purchase from the other Banks such participations in the Loans made by such other Banks, or the reimbursement obligations in respect of the payments by the Issuing Bank made pursuant to SECTION 2.03, as the case may be, as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them. The Borrowers agree that any Bank so purchasing a participation from another Bank pursuant to this SECTION 2.09(F) may exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Bank were the direct creditor of the Borrowers in the amount of such participation. (g) To the extent that the Administrative Agent receives funds for application to the amounts owing by any Borrower under or in respect of this Agreement or any Note in currencies other than the currency or currencies required to enable the Administrative Agent to distribute funds to the Banks in accordance with the terms of this SECTION 2.09, the Administrative Agent shall be entitled to convert or exchange such funds into Dollars or into a Foreign Currency or from Dollars to a Foreign Currency, as the case may be, to the extent necessary to enable the Administrative Agent to distribute such funds in accordance with the terms of this SECTION 2.09; PROVIDED that if such conversion results in the receipt by the Administrative Agent (acting reasonably and in good faith in making such conversion) of an insufficient amount of the currency required to be distributed, the applicable Borrower shall pay promptly such additional amount as may be necessary to compensate and indemnify the Administrative Agent for such shortfall. Section 2.10. FEES. (a) Subject to the provisions of SECTION 10.13, the US Borrower and the Parent each agree to pay to each Bank, on their respective pro rata share of the Available Revolving Commitment, a commitment fee equal to (i) 0.375% per annum of the Available Revolving Commitment of such Bank in effect from time to time for the period from the Execution Date until December 31, 1997 and, (ii) thereafter to, but excluding, the Termination Date (or if earlier, the termination in full of such Bank's Dollar Revolving Commitment and Guilder Revolving Commitment) at the rate set forth in the Margin Ratio grid in SECTION 2.07(C). Accrued commitment fees shall be due and payable in arrears on each Payment Date in each year, on the date of any reduction or termination of the Dollar Revolving Commitment and Guilder Revolving Commitment of such Bank and on the Termination Date (or if earlier, the termination in full of such Bank's Dollar Revolving Commitment and Guilder Revolving Commitment); and shall be computed for the period commencing with the day to which such fee was last paid (or, in the case of the first commitment fee payment date, for the period commencing with and including the Execution Date) to the date such fee is due and payable. All commitment fees shall be paid in immediately available funds, and shall be based on a 360-day year and actual days elapsed. (b) (i) The US Borrower agrees to pay the Administrative Agent, for the account of the Banks, a fee in respect of each Letter of Credit issued for the account of the US Borrower (the -18- "L/C FEES") for the period from the date of issuance of such Letter of Credit to and including the expiry of such Letter of Credit computed at a rate per annum equal to the greater of: (i) $500 or (ii) the Applicable Margin for Eurocurrency Loans multiplied by the face amount of such Letter of Credit. For any Letter of Credit issued with a face amount denominated in a currency other than Dollars, the L/C Fees will be converted into the Equivalent thereof in Dollars as of the issuance date of such Letter of Credit, and thereafter as of the first day of each calendar quarter. All L/C Fees shall be paid in immediately available funds and shall based on a 360 day year and actual days elapsed. Accrued L/C Fees for each Letter of Credit shall be due and payable in arrears on each Payment Date (or if earlier, the termination in full of the Dollar Revolving Commitments); PROVIDED, if the L/C Fee is the $500 minimum, such $500 shall be paid in full on the first Payment Date after the issuance of such Letter of Credit. No additional fees shall be payable hereunder from any of the Borrowers or to any of the Banks in respect of Existing Letters of Credit, if the minimum fee in effect at the time of issuance of such Existing Letters of Credit has previously been paid. (ii) In addition to the L/C Fees, the US Borrower agrees to pay the Issuing Bank, solely for the Issuing Bank's account, a per annum fee in respect of each Letter of Credit issued by the Issuing Bank for the account of the US Borrower (the "FACING FEES"), equal to the greater of: (i) $500 or (ii) 1/8% of the face amount of such Letter of Credit. For any Letter of Credit issued with a face amount denominated in a currency other than Dollars, the Facing Fees will be converted into the Equivalent thereof in Dollars as of the issuance date of such Letter of Credit, and thereafter as of the first day of each calendar quarter. All Facing Fees shall be paid in immediately available funds. Accrued Facing Fees for each Letter of Credit shall be due and payable in arrears on each Payment Date (or if earlier, the termination in full of the Dollar Revolving Commitments); PROVIDED, if the Facing Fee is the $500 minimum, such $500 shall be paid in full on the first Payment Date after the issuance of such Letter of Credit. In addition to the Facing Fees, the US Borrower shall pay the Issuing Bank, solely for the Issuing Bank's account, its customary service charges relating to the amendment to, and transfer of any Letters of Credit. Such amounts to be due and payable when such services are rendered by the Issuing Bank. No Facing Fees shall be due and payable in connection with the Existing Letters of Credit. (iii) The Administrative Agent shall distribute all L/C Fees collected during the quarterly period then ended to the Banks ratably according to their respective Commitment Percentages. (c) Subject to the provisions of SECTION 10.13, the Borrowers shall pay the Administrative Agent, solely for the Administrative Agent's account, or to the Syndication Agent for the Syndication Agent's account, as applicable, such other fees as agreed to in writing among the Borrowers, the Administrative Agent and the Syndication Agent, when and as due. Section 2.11. SETOFF, COUNTERCLAIMS AND TAXES. (a) All payments of principal, interest, expenses, reimbursements, compensation, commitment fees, letter of credit fees, facing fees, arrangement fees or administration fees and any other amount from time to time due under the Notes, this Agreement or any other Loan Document shall be made by the relevant Borrowers without setoff -19- or counterclaim and shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each member of the Bank Group, taxes imposed on its income or gross receipts, and franchise taxes imposed on it, by the jurisdiction under the laws of which such member of the Bank Group is organized or any political subdivision thereof and, in the case of each Bank, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "TAXES"). If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Loan Document to any member of the Bank Group, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this SECTION 2.11) such member of the Bank Group receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, each Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under the Notes or the other Loan Documents or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Notes or the other Loan Documents (hereinafter referred to as "OTHER TAXES"). (c) Each Borrower will indemnify each member of the Bank Group for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this SECTION 2.11) paid, by such member of the Bank Group (whether paid on its own behalf or on behalf of any other member of the Bank Group) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 10 days from the date such member of the Bank Group makes written demand therefor; PROVIDED that no Borrower shall be obligated to indemnify any member of the Bank Group for any Taxes incurred as the result of a material inaccuracy of the representations and warranties made by it under SECTION 2.11(F) (unless such inaccuracy is the result of a change in an applicable Requirement of Law) or the failure by such Person to comply with its obligations in SECTION 2.11(F). (d) Within 30 days after the date of any payment of Taxes, the relevant Borrower will furnish to the Administrative Agent, at its address referred to in SECTION 10.03, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this SECTION 2.11 shall survive the payment in full of the Credit Outstanding and all other amounts owing under the other -20- Loan Documents. The provisions of this SECTION 2.11 are in all respects subject to SECTION 10.13 hereof. (f) Each Bank shall (i) promptly after the Effective Date or promptly after the date of the Assignment and Acceptance, pursuant to which it became a Bank in the case of each other Bank and (ii) from time to time thereafter upon the obsolescence or expiration of any previously delivered form or certificate (but only so long as such Bank remains lawfully able to do so), provide the Borrowers and the Administrative Agent with any form or certificate that is required by any taxing authority, including, if applicable, two original Internal Revenue Service forms 1001 or 4224, as appropriate (or any successor form or other form prescribed by the Internal Revenue Service), an original Internal Revenue Service form W-9 (or any successor form), or such other forms as shall be appropriate to establish, subject to the last sentence of this SECTION 2.11(F), that such Bank is (y) exempt from Home Jurisdiction Withholding Taxes on payments pursuant to this Agreement, the Notes or any other Loan Document (or, in the case of a Bank that becomes a party to this Agreement pursuant to SECTION 10.02(A) and (z) exempt from or entitled to a reduced rate of Home Jurisdiction Withholding Taxes on payments pursuant to this Agreement, the Notes or any other Loan Document that is no greater than the rate to which the assigning Bank was entitled). Each member of the Bank Group represents and warrants that such information is true and complete in all material respects as of the date it is delivered. Each Bank shall promptly notify the Borrowers and the Administrative Agent if, because of any change in the jurisdiction of organization or an Applicable Lending Office of such Bank, (A) it is required to withdraw or cancel any form or certificate previously submitted by it or any form or certificate has otherwise become ineffective or inaccurate or (B) payments to it are or will be subject to withholding of any Home Jurisdiction Withholding Tax to a greater or lesser extent than the extent to which payments to it pursuant to this Agreement, the Notes or any other Loan Document were previously subject. If any form or document referred to in this SECTION 2.11(F) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form 1001 or 4224, that the Bank reasonably considers to be confidential, the Bank shall give notice thereof to the Borrowers and the Administrative Agent and shall not be obligated to include in such form or document such confidential information; PROVIDED, HOWEVER, such form or document will state that such confidential information may be requested directly from the Bank. (g) If a Bank shall receive a refund of any Taxes paid by a Borrower pursuant to this SECTION 2.11 by reason of the fact that such Taxes were not correctly or legally asserted, the Bank shall within 90 days after receipt of such refund pay to such Borrower the amount of such refund along with any interest actually received by such Bank thereon, if any; PROVIDED, HOWEVER, that such payments shall be required only to the extent any Bank can determine, in its good faith judgment, that such refunds are attributable to payments made by or on behalf of such Borrower; and PROVIDED, FURTHER, that no Bank shall have any obligation under this Agreement to claim or otherwise seek to obtain any such refund, but agrees to use reasonable efforts to assist a Borrower in doing so. -21- Section 2.12. FUNDING LOSSES. Each of the Borrowers hereby indemnifies each Bank against any loss or reasonable expense (including, but not limited to, any loss or reasonable expense sustained or incurred or to be sustained or incurred in liquidating or reemploying deposits from third parties acquired to effect or maintain such Loan or any part thereof as a Eurocurrency Rate Loan) which such Bank may sustain or incur as a consequence of (a) any failure by any of the Borrowers to fulfill on the date of any Borrowing the applicable conditions set forth in ARTICLE III, (b) any failure by any of the Borrowers to borrow hereunder, to Convert Loans hereunder after a Borrowing Request or Conversion Notice, respectively, has been given by such Borrower, (c) any payment, prepayment or Conversion of a Eurocurrency Rate Loan required or permitted by any other provisions of this Agreement, including, without limitation, payments made due to the acceleration of the maturity of the Notes pursuant to SECTION 7.01, or otherwise made on a date other than the last day of the applicable Interest Period, (d) any default in the payment or prepayment of the principal amount of any Loan or any part thereof or interest accrued thereon, as and when due and payable (at the due date thereof, by notice of prepayment or otherwise) or (e) the occurrence of an Event of Default. Such loss or reasonable expense shall include, without limitation, an amount equal to the excess, if any, as determined by each Bank of (i) its cost of obtaining the funds for the Loan being paid, prepaid or Converted or not borrowed or Converted (based on the Eurocurrency Rate applicable thereto) for the period from the date of such payment, prepayment or Conversion or failure to borrow or Convert to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow or Convert, the Interest Period for the Loan which would have commenced on the date of such failure to borrow or Convert) over (ii) the amount of interest (as estimated by such Bank) that would be realized by such Bank in reemploying the funds so paid, prepaid or Converted or not borrowed or Converted for such period or Interest Period, as the case may be. Each Borrower shall pay to the Administrative Agent for the account of each Bank the amount shown as due on any certificate received by it under SECTION 2.15 within ten (10) days after its receipt of the same. Notwithstanding the foregoing, in no event shall any Bank be permitted to receive any compensation hereunder constituting interest in excess of the Highest Lawful Rate. Without prejudice to the survival of any other obligations of the Borrowers hereunder, but subject to the last sentence of SECTION 2.15, the obligations of the Borrowers under this SECTION 2.12 shall survive the termination of this Agreement and/or the payment or assignment of any of the Notes. Section 2.13. CHANGE OF LAW. (a) If at any time after the Effective Date any Bank determines in good faith (which determination shall be presumed correct) that any change in any applicable Requirement of Law, or in the interpretation, application or administration thereof makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for such Bank or its Eurocurrency Lending Office to fund or maintain any Eurocurrency Rate Loan in a particular currency (any of the foregoing determinations being a "EUROCURRENCY EVENT"), then, such Bank, at its option, may: (i) declare that Eurocurrency Rate Loans in such currency will no longer be made or maintained by such Bank, whereupon the right of the Borrowers to select Eurocurrency Rate Loans in such currency for any Borrowing shall be suspended until such Bank shall notify the Administrative Agent that the circumstances causing such Eurocurrency Event no longer exist; (ii) with respect to any Eurocurrency Rate Loans in such currency of such Bank then outstanding, require that (A) if such Eurocurrency Rate Loans are denominated in Dollars, such affected Loans -22- shall be Converted to Base Rate Loans and (B) if such Eurocurrency Loans are denominated in a Foreign Currency, such affected Loans shall be exchanged for the Equivalent thereof in Dollars and converted to Base Rate Loans, in which event all such Eurocurrency Rate Loans shall automatically be Converted into Base Rate Loans on the effective date of such notice and all payments or prepayments of principal that would have otherwise been applied to repay such Converted Eurocurrency Rate Loans shall instead be applied to repay the Base Rate Loans resulting from such Conversion; and/or (iii) with respect to any Eurocurrency Rate Loans in such currency requested of such Bank but not yet made as or Converted into such, require that such Eurocurrency Rate Loans in such currency be made as or Converted into, as applicable, Base Rate Loans. (b) Upon the occurrence of any Eurocurrency Event, and at any time thereafter so long as such Eurocurrency Event shall continue, such Bank may exercise its aforesaid option by giving written notice thereof to the Administrative Agent and the Borrowers, such notice to be effective upon receipt thereof by the Borrowers. Any Conversion of any Eurocurrency Rate Loan which is required under this SECTION 2.13 shall be made, together with accrued and unpaid interest and all other amounts payable to such Bank under this Agreement with respect to such Converted Loan (including, without limitation, amounts payable pursuant to SECTION 2.12 hereof), on the date stated in the notice to the Borrowers referred to above. Section 2.14. INCREASED COSTS. (a) If, due to either (i) any Requirement of Law or (ii) the compliance with any guideline by any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Bank of agreeing to make or making, funding or maintaining Eurocurrency Rate Loans, then the Borrowers shall from time to time, subject to the provisions of SECTION 2.15 and SECTION 10.13, pay to the Administrative Agent for the account of such Bank additional amounts sufficient to compensate such Bank for such increased cost within 10 days after the receipt by any of the Borrowers of a certificate received under SECTION 2.15 showing the amount due. (b) If any Bank shall have determined in good faith that any law, rule, regulation or guideline adopted pursuant to or arising out of the July 1988 report of the Basle Committee on Banking Regulations and Supervisory Practices entitled "International Convergence of Capital Measurement and Capital Standards" or that the adoption of any applicable law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration thereof by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or compliance by such Bank (or any Applicable Lending Office of such Bank) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority or comparable agency, increases the amount of capital required or expected to be maintained by such Bank or any corporation controlling such Bank from the level required as of the Effective Date, then the Borrowers shall from time to time, subject to the provisions of SECTION 2.15 and SECTION 10.13, pay to such Bank additional amounts sufficient to compensate such Bank or such corporation in the light of such circumstances, to the extent that such Bank reasonably determines such increase in capital to be allocable to the existence of such Bank's Commitment hereunder. -23- (c) If any law, executive order or regulation is adopted or interpreted by any central bank or other Governmental Authority so as to affect any of the Borrowers' obligations or the compensation to any Bank or the Issuing Bank in respect of the Letters of Credit or the cost to such Bank or the Issuing Bank of establishing and/or maintaining the Letters of Credit (or any participation therein), then the affected Borrower shall from time to time, subject to the provisions of SECTION 2.15 and SECTION 10.13, reimburse or indemnify such Bank or the Issuing Bank, as the case may be, with respect thereto so that such Bank or the Issuing Bank, as the case may be, shall be in the same position as if there had been no such adoption or interpretation. The protection of this SECTION 2.14 shall be available to the Issuing Bank and the Banks regardless of any possible contention of invalidity or inapplicability of law, regulation or condition which shall have been imposed. Section 2.15. CLAIMS CERTIFICATE. (a) Each Bank or the Issuing Bank, as the case may be, will notify the Borrowers of any event occurring after the date of this Agreement which will entitle such Bank or the Issuing Bank, as the case may be, to compensation or indemnification pursuant to SECTION 2.11 through SECTION 2.14 as promptly as practicable after such Bank obtains actual knowledge of the occurrence of such event, and, in any event, within 180 days thereof. A certificate of such Bank or the Issuing Bank, as the case may be, setting forth in reasonable detail (i) such amount or amounts as shall be necessary to compensate such Bank (or participating banks or other entities pursuant to SECTION 10.02) or the Issuing Bank, as the case may be, as specified above and (ii) the calculation of such amount or amounts shall be delivered to the Borrowers (with a copy to the Administrative Agent) and shall be conclusive absent manifest error. The Borrowers shall pay to such Bank or to the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after its receipt of the same. Subject to the last sentence of this SECTION 2.15, the failure of any Bank or the Issuing Bank to demand any such compensation or indemnification shall not constitute a waiver of the right of such Bank, any other Bank or the Issuing Bank, to demand any such compensation or indemnification as such rights are set forth herein. (b) In the event any Bank gives a notice to a Borrower pursuant to Section 2.07(b), SECTIONS 2.11 through 2.14 that it cannot fund certain Loans or that such funding will be at an increased cost or a higher interest rate, or is unable to deliver the forms as required by SECTION 2.11, the affected Borrower may give notice in response, with copies to the Administrative Agent, that it wishes to seek one or more banks to replace such Bank in accordance with the provisions set forth in SECTION 10.02. Each Bank giving such a notice agrees that, at the request of such Borrower, it will assign all of its interests hereunder and under the Notes and the Commitment to a designated, Eligible Assignee for the full amount then owing to it, all in accordance with SECTION 10.02. Thereafter, said assignee shall have all of the rights hereunder and obligations of the assigning Bank (except as otherwise expressly set forth herein) and such Bank shall have no further obligations to any Borrower hereunder. Unless otherwise agreed by the Majority Banks, any such assignment of one Borrower's Loans shall only be made if all other Borrowers' Loans to such Bank are likewise assigned. -24- (c) Any notice given pursuant to this Section 2.15 shall be deemed to contain a representation by the Bank issuing such notice that: (i) such Bank has used reasonable efforts to minimize said costs or charges but cannot, in its sole judgment, do so at reasonable expense, and (ii) the increased costs and charges are common to substantially all of the comparable loan customers of such Bank and are not unique to the Borrowers. -25- ARTICLE III CONDITIONS OF CREDIT Section 3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS, THE INITIAL BORROWING OR LETTER OF CREDIT. The obligation of each Bank to make its initial Loan on the occasion of the initial Borrowing hereunder or the obligation of the Issuing Bank to issue the initial Letter of Credit hereunder, as the case may be, is subject to the conditions precedent that the Administrative Agent shall have received on or before the date of such initial Borrowing or initial Letter of Credit issuance, all of the following, each in form and substance reasonably satisfactory to the Bank Group and in such number of counterparts as may be reasonably requested by the Administrative Agent: (a) The following Loan Documents duly executed by the Persons indicated below: (i) this Agreement executed by each Borrower and each member of the Bank Group, (ii) the Notes executed by the relevant Borrower, (iii) the Pledge Agreements executed by each Person owning stock to be pledged thereunder (except with respect to the certificates of Scott Pickford plc and Protechnics Company, which will be delivered within ten (10) days after the Execution Date), and (iv) the Guaranty Agreements executed by each Guarantor in the form of ARTICLE IX. (b) Evidence that the Liens created by the Pledge Agreements have been duly perfected and constitute valid first priority Liens, which shall include, without limiting the generality of the foregoing: (i) the delivery to the Administrative Agent of such financing statements under the Uniform Commercial Code for filing in such jurisdictions as the Administrative Agent may require; and (ii) delivery of certificates representing the "Pledged Shares" described in the Pledge Agreements and related stock powers executed in blank to the extent such shares are evidenced by certificates and (iii) the opinion and related back-up material described in SECTION 3.01(J). (c) A certificate of the secretary or an assistant secretary of each Borrower certifying, INTER ALIA, (i) to the extent required under the jurisdiction of its formation, true and correct copies of resolutions adopted by the Board of Directors or other appropriate body of each Borrower (A) authorizing the execution, delivery and performance by such Borrower of the Loan Documents to which it is or will be a party and the consummation of the transactions contemplated thereby, and (B) authorizing officers of such Borrower to negotiate, execute and deliver the Loan Documents to which it is or will be a party and any related documents, including, without limitation, any agreement -26- contemplated by this Agreement, (ii) true and correct copies of the articles of incorporation and bylaws (or other similar charter documents) of such Borrower and (iii) the incumbency and, if such officer is an individual, the specimen signatures of the officers of such Borrower executing any Loan Documents to which it is a party. (d) A certificate of the secretary or an assistant secretary of each Guarantor certifying, INTER ALIA, (i) to the extent required under the jurisdiction of its formation, true and correct copies of resolutions adopted by the Board of Directors or other appropriate body of such Person (A) authorizing the execution, delivery and performance by such Person of the Loan Documents to which it is or will be a party and the consummation of the transactions contemplated thereby, and (B) authorizing officers of such Person to execute and deliver the Loan Documents to which it is or will be a party and any related documents, including, without limitation, any agreement contemplated by this Agreement, (ii) true and correct copies of the articles of incorporation and bylaws (or other similar charter documents) of such Person and (iii) the incumbency and, if such officer is an individual, the specimen signatures of the officers of such Person executing any Loan Documents to which it is a party (PROVIDED, that such certificates in respect of a Guarantor being acquired as of the Effective Date may be delivered on the day following such acquisition). (e) Extracts from the Dutch Commercial Register or other certificates of appropriate public officials as to the existence and good standing of each Borrower and each Guarantor in its jurisdiction of incorporation, and, in the case of the US Borrower, as to its authority to do business in all locations in which its operations makes such certificates necessary. (f) Evidence that all Indebtedness (other than the Existing Letters of Credit) owed by the US Borrower to NationsBank of Texas, N.A. and Bank of America Texas, N.A. has been (or with the proceeds of the initial Borrowing, will be) paid in full and the underlying credit facility and all commitments thereunder have been canceled, said evidence to consist of a letter substantially in the form of EXHIBIT 3.01(F) or other evidence satisfactory to the Administrative Agent. (g) A report from Johnson & Higgins of Texas, Inc. (or other insurance consultants acceptable to the Administrative Agent) addressing the scope of the insurance coverage of the Parent and its Subsidiaries, all in form and substance reasonably satisfactory to the Administrative Agent; and a certificate of the Parent certifying as to the insurance coverages maintained by each of Saybolt and Scott Pickford. (h) Copies of the purchase agreements and all documentation related thereto (including disclosure schedules, if any) related to the acquisitions of Saybolt and Scott Pickford and (i) in the case of Scott Pickford, notice from the Share Transfer Agent/Registrar for Scott Pickford that the Parent has consummated the acquisition of not less than 90% of its issued and outstanding shares, and (ii) in the case of Saybolt, evidence that all conditions precedent thereto have been fulfilled other than the funding, all in form and substance satisfactory to the Administrative Agent. -27- (i) A certificate signed by a Responsible Officer of each of the Borrowers certifying as to the satisfaction of the conditions specified in SECTION 3.02. (j) The favorable, signed opinions of John D. Denson, General Counsel of the Borrowers, Vinson & Elkins L.L.P., special New York counsel to the Borrowers and the Guarantors, Norton Rose, special English counsel to the UK Borrower and Guarantors in the United Kingdom, and Nauta Dutilh, Dutch counsel to the Parent and Guarantors in the Netherlands, each addressed to the Administrative Agent and the Bank Group, in form and substance reasonably satisfactory to the Administrative Agent and its counsel. (k) A written confirmation from the Process Agent of its appointment and acceptance as process agent for each Borrower and each Guarantor. (l) The payment to the Bank Group of the fees due to them as of such date under the Loan Documents. (m) Subordination Agreements reasonably satisfactory to the Administrative Agent subordinating all inter-company indebtedness among the Credit Parties to the Obligations. (n) Contribution and Indemnity Agreements among the Guarantors apportioning the rights and obligations of each Guarantor in the form of EXHIBIT 3.01(N). (o) Such other documents, certificates and opinions as the Administrative Agent may reasonably request relating to this Agreement and the other Loan Documents. Section 3.02. CONDITIONS PRECEDENT TO ALL LETTERS OF CREDIT AND LOANS. The obligation of the Issuing Bank to issue any Letter of Credit, and of each Bank to make any Loan, shall be subject to the further conditions precedent that (a) on the Borrowing Date of such Loan or the issuance date of such Letter of Credit, as the case may be, the following statements shall be true, and by virtue of delivery of a Borrowing Request or a Letter of Credit Request, as applicable, by any Borrower, each Borrower shall be deemed to have certified to the Bank Group as of such date that (i) the representations and warranties contained in ARTICLE IV are true and correct on and as of such date, before and after giving effect to such Loan or Letter of Credit, as the case may be, and as though made on and as of such date, unless they relate expressly to a prior date, (ii) no Default or Event of Default has occurred and is continuing, or would result from such Loan or Letter of Credit, as the case may be, and (iii) no event has occurred that could reasonably be expected to have a Material Adverse Effect on any Borrower and (b) the Administrative Agent shall not have received any notice under SECTION 5.01(E), SECTION 5.01(F), SECTION 5.01(G), or SECTION 5.01(H). -28- ARTICLE IV REPRESENTATIONS AND WARRANTIES In order to induce the Bank Group to enter into this Agreement, each Borrower hereby represents and warrants to the Bank Group as follows: Section 4.01. CORPORATE EXISTENCE. Each of the Borrowers and its Subsidiaries is a corporation (or other Person) duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and is duly qualified or licensed to transact business as a foreign corporation (or other Person) and is in good standing under the laws of each jurisdiction in which the conduct of its operations or the ownership or leasing of its properties requires such qualification or licensing, except where the failure to be so qualified or licensed could not reasonably be expected to have a Material Adverse Effect. SCHEDULE 4.01 is a complete list of all of the direct or indirect Subsidiaries of the Parent as of the Effective Date (subsequent to the Saybolt acquisition) indicating the name of its parent. SCHEDULE 4.01 will be supplemented within fifteen (15) days from the Execution Date by adding thereto, for each Subsidiary, (i) the jurisdiction in which it was incorporated, and (ii) the location of its chief executive office or the office at which it has the majority of its staff, equipment or inventory. Section 4.02. CORPORATE AUTHORITY; BINDING OBLIGATIONS. Each Credit Party has all requisite corporate power and authority to conduct its business, to own, operate and encumber its Property, and to execute, deliver and perform all of its obligations under the Loan Documents executed by, or to be executed by, such Person. The execution, delivery and performance of each of the Loan Documents to which any Credit Party is a party and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action (or comparable action, in the case of a Credit Party that is not a corporation). Each of the Loan Documents to which any Credit Party is a party has been duly executed and delivered by such Person, is in full force and effect and constitutes the legal, valid and binding obligation of such Person, enforceable against it in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or judicial decisions affecting the enforcement of creditor's rights generally and general principles of equity, and (b) that (i) the rights and remedies afforded the Bank Group under the Security Documents relating to the Collateral and (ii) the rights and duties of the issuer of any of the Collateral, in the case of either clauses (i) and (ii) with respect to (A) registration of transfer, (B) the effectiveness of registration of transfer, (C) duties of the issuer to adverse claimants and (D) assertion of adverse claims, may be limited by the laws of the jurisdiction in which the issuer of such Collateral was organized. Section 4.03. NO CONFLICT. The execution, delivery and performance by each Credit Party of each Loan Document to which such Person is a party and the consummation of each of the transactions contemplated thereby do not and shall not, by the lapse of time, the giving of notice or -29- otherwise: (a) constitute a violation of any Requirement of Law or a breach of any provision contained in the articles or certificate of incorporation or bylaws or other applicable governance documents of such Person, or any shareholder agreement pertaining to such Person, or contained in any material agreement, instrument or document to which it is now a party or by which it or its properties is bound, except for such violations or breaches that could not reasonably be expected to have a Material Adverse Effect; or (b) result in or require the creation or imposition of any Lien whatsoever upon any of the Properties of any Credit Party or its Subsidiaries (other than Liens arising pursuant to the Loan Documents). Section 4.04. NO CONSENT. Except for those filings and consents required from time to time to comply with and perform obligations of the Parent and its Subsidiaries under this Agreement and the other Loan Documents to which such Persons are a party, such as filings and consents related to environmental matters, ERISA matters, Taxes and intellectual property, filings required to maintain corporate and similar standing and existence, filings pursuant to the Uniform Commercial Code and other security filings and recordings, filings required by the SEC, routine filings in the ordinary course of business, and filings required in connection with the exercise by the Bank Group of remedies in connection with the Loan Documents, no authorization, consent, approval, license, or exemption of or filing or registration with, any Governmental Authority or any other Person, which has not been obtained, was, is or will be necessary for (a) the valid execution, delivery or performance by any Credit Party of any of the Loan Documents to which it is a party, (b) the legality, validity, binding effect or enforceability of any of the Loan Documents, or (c) the ownership, use or operation by the Credit Parties and their respective Subsidiaries of any of their Properties other than those that could not reasonably be expected to have a Material Adverse Effect. Section 4.05. NO DEFAULTS OR VIOLATIONS OF LAW. No Default or Event of Default has occurred and is continuing. No default (or event or circumstance occurred which, but for the passage of time or the giving of notice, or both, would constitute a default) has occurred and is continuing with respect to any note, indenture, loan agreement, mortgage, lease, deed or other agreement to which any Borrower or its Subsidiaries is a party or by which any of them or their Properties is bound, except for such defaults that could not reasonably be expected to have a Material Adverse Effect. Neither the Borrowers nor any of their Restricted Subsidiaries is in violation of any applicable Requirement of Law except for such violations that could not reasonably be expected to have a Material Adverse Effect. Section 4.06. FINANCIAL POSITION. (a) Prior to the Execution Date, the Parent has furnished to the Bank Group the consolidated balance sheet of the Parent as at December 31, 1996, and the related consolidated statements of operations, shareholders' equity and cash flows for the fiscal year then ended, audited by Arthur Andersen LLP, independent certified public accountants and comparable items for Saybolt prepared by Price Waterhouse L.L.P. as of December 31, 1996 and for Scott Pickford prepared by Crane & Partners, as of March 31, 1996. The financial statements referred to in the previous sentence have been prepared in accordance with GAAP (except for that in respect of Scott Pickford, which was prepared in accordance with GAAP as in effect in the United Kingdom) consistently applied throughout the periods involved and present fairly in all material -30- respects the consolidated financial condition of the Persons named therein as of the date thereof and the results of its operations for the periods then ended. No event has occurred since December 31, 1996, or in the case of Scott Pickford since March 31, 1996, that could reasonably be expected to have a Material Adverse Effect in respect of any of said Persons. (b) Except as fully reflected in the audited financial statements referred to in paragraph (a) of this SECTION 4.06, as of the Execution Date, there are no liabilities or obligations of the Borrowers or any of their Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in aggregate, could reasonably be expected to have a Material Adverse Effect. (c) On and as of the Effective Date, on a PRO FORMA basis after giving effect to all Indebtedness incurred, and to be incurred, and Liens created, and to be created, by each Credit Party in connection therewith, (x) the sum of the assets, at a fair valuation, of each Credit Party will exceed its debts, (y) no Credit Party will have incurred or intended to, or believe that they will, incur debts beyond their ability to pay such debts as such debts mature and (z) no Credit Party will have unreasonably small capital with which to conduct its business. Section 4.07. LITIGATION. Except as disclosed in SCHEDULE 4.07, there are no actions, suits or proceedings pending or, to the knowledge of any Borrower, threatened against or affecting any Borrower or its Subsidiaries, or the Properties of any such Person, before or by any Governmental Authority or other Person, which could reasonably be expected to have a Material Adverse Effect, PROVIDED, with respect to actions, suits or proceedings involving Saybolt or Scott Pickford, this representation and warranty is limited to the extent of the actual knowledge of any Borrower in regard thereto. Section 4.08. USE OF PROCEEDS. (a) Each Borrower's uses of the proceeds of the Loans made to it, and, in the case of the US Borrower, of the Letters of Credit are, and will continue to be, legal and proper corporate uses, and such uses do not violate and are otherwise consistent with the terms of the Loan Documents, including, without limitation, SECTION 5.09, and all Requirements of Law (including Regulations G, T, U and X). (b) None of the Borrowers nor any of their respective Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U), and no part of the proceeds of any Loan or Letter of Credit will be used, directly or indirectly, (i) to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or (ii) for the purpose of purchasing, carrying or trading in any securities under such circumstances as to involve the Borrowers or any of their respective Subsidiaries in a violation of Regulation X. Section 4.09. GOVERNMENTAL REGULATION. None of the Borrowers nor any of their respective Subsidiaries is subject to regulation under the Public Utility Holding Company Act, as amended, the Investment Company Act of 1940, as amended, or any other Requirement of Law such -31- that the ability of any such Person to incur Indebtedness is limited or its ability to consummate the transactions contemplated by this Agreement or the other Loan Documents is impaired. Section 4.10. DISCLOSURE. The schedules, documents, exhibits, reports, certificates and other written statements and information furnished by or on behalf of the Borrowers to the Bank Group do not contain any Material misstatement of fact, or omit to state a Material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. None of the Borrowers nor any of their respective Subsidiaries has withheld any fact known to it which has or could reasonably be expected to have a Material Adverse Effect. Section 4.11. ERISA. (a) The US Borrower and each ERISA Affiliate have operated and administered each Pension Plan and Other Benefit Plan in compliance with all applicable laws, except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither the US Borrower nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Internal Revenue Code relating to employee benefit plans (as defined in Section 3 of ERISA); and no event, transaction or condition has occurred or exists or is threatened that could reasonably be expected to result in the incurrence of any such liability by the US Borrower or any ERISA Affiliate, or in the imposition of any Lien on any of the Properties of the US Borrower or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Internal Revenue Code, other than such liabilities or Liens as could not be reasonably expected to have a Material Adverse Effect. (b) The present value of the aggregate benefit liabilities under each Pension Plan subject to Title IV of ERISA, determined as of the end of such Pension Plan's most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Pension Plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Pension Plan allocable to such benefit liabilities by an amount that is Material. The term "benefit liabilities" has the meaning specified in section 4001 of ERISA and the terms "current value" and "present value" have the meaning specified in Section 3 of ERISA. (c) The US Borrower and its ERISA Affiliates do not currently and have never had any liability or obligation with respect to any Material liabilities (and are not subject to Material contingent withdrawal liabilities) under section 4201 or 4204 of ERISA with respect to any Multiemployer Plan. (d) The expected post-retirement benefit obligation (determined as of the last day of the US Borrower's most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Internal Revenue Code ("COBRA")) of the US Borrower and its ERISA Affiliates is not Material and, except as modified by COBRA, such -32- obligations can be unilaterally terminated at any time by the US Borrower, or its ERISA Affiliates without any Material liability. Section 4.12. PAYMENT OF TAXES. Each Borrower has filed, and has caused each of its Subsidiaries to file, all federal, state and local tax returns and other reports and all other tax returns required to be filed, whether in the United States or in any foreign jurisdiction, that such Borrower and each such Subsidiary are required by law to file and have paid all taxes and other similar charges that are due and payable pursuant to such returns and reports, except (a) to the extent any of the same are being contested in good faith by appropriate proceedings promptly initiated and diligently conducted, and with respect to which adequate reserves have been set aside on the books of such Person in accordance with GAAP, or (b) to the extent the failure to file such taxes could not reasonably be expected to have a Material Adverse Effect, PROVIDED, with respect to matters pertaining to Saybolt or Scott Pickford, this representation and warranty is limited to the extent of the actual knowledge of any Borrower in regard thereto. Section 4.13. TITLE AND LIENS. Each Borrower and each of its Subsidiaries have good title to all of its Material Properties, free and clear of all Liens except Liens permitted by SECTION 6.02. All Material agreements necessary for the conduct of the business of each Borrower and its Subsidiaries are valid and subsisting, in full force and effect and, to the knowledge of any Borrower, there exists no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such agreement, which would affect in any Material respect the conduct of the business of each Borrower and its Subsidiaries. Section 4.14. PATENTS AND INTELLECTUAL PROPERTY. Each Borrower and its Subsidiaries has obtained all Material patents, trademarks, service marks, trade names, copyrights, licenses and other rights, that are necessary for the operation of their businesses taken as a whole as presently conducted. Section 4.15. ENVIRONMENTAL MATTERS. Except as disclosed in SCHEDULE 4.15 hereto, (a) (i) each Borrower and its Subsidiaries possess all Material environmental, health and safety licenses, permits, authorizations, registrations, approvals and similar rights necessary under law or otherwise for such Person to conduct its operations as now being conducted, (ii) each of such licenses, permits, authorizations, registrations, approvals and similar rights is valid and subsisting, in full force and effect and enforceable by such Person, and (iii) such Person is in compliance with all terms, conditions or other provisions of such permits, authorizations, registrations, approvals and similar rights, except, in each case covered by clauses (a)(i), (ii) and (iii), to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect; (b) none of the Borrowers nor any of their respective Subsidiaries has received any notices of any violation of, noncompliance with, or remedial obligation under, Requirements of Environmental Laws, and there are no writs, injunctions, decrees, orders or judgments outstanding, or lawsuits, claims, proceedings, investigations or inquiries pending or, to the knowledge of any Borrower, threatened, relating to the ownership, use, condition, maintenance, or operation of, or conduct of business related to, any Property owned, leased or operated by such Borrower or any of its Subsidiaries, other than those -33- violations, instances of noncompliance, obligations, writs, injunctions, decrees, orders, judgments, lawsuits, claims, proceedings, investigations or inquiries that could not reasonably be expected to have a Material Adverse Effect; (c) there are no Material obligations, undertakings or liabilities arising out of or relating to Environmental Laws to which any Borrower or its Subsidiaries has agreed to, assumed or retained, or by which such Borrower or its Subsidiaries is adversely affected, by contract or otherwise; (d) there are no facts, circumstances or conditions on or related to any Property of any Borrower or its Subsidiaries that could reasonably be expected to have a Material Adverse Effect or cause any such Property to be subject to any material restrictions on its ownership, use, occupancy or transferability to the extent such restrictions could reasonably be expected to have a Material Adverse Effect, and (e) none of the Borrowers nor any of their respective Subsidiaries has received a written notice or claim to the effect that such Person is or may be liable to any Person as the result of a release or threatened release of a hazardous material or solid waste that could reasonably be expected to have a Material Adverse Effect, PROVIDED, with respect to matters pertaining to Saybolt or Scott Pickford, this representation and warranty is limited to the extent of the actual knowledge of any Borrower in regard thereto.. Section 4.16. SECURITY INTERESTS. Each of the Pledge Agreements creates, as security for the Obligations purported to be secured thereby, a valid and enforceable perfected, first priority security interest in and Lien on all of the Collateral subject thereto, in favor of the Administrative Agent for the benefit of the Bank Group. No filings or recordings are required in order to perfect the security interests created under any Pledge Agreement except for filings or recordings required in connection with any such Pledge Agreement which shall have been made upon or prior to (or are the subject of arrangements, satisfactory to the Administrative Agent, for filing on or promptly after the date of) the execution and delivery thereof. Section 4.17. LABOR RELATIONS. None of the Borrowers nor any of their respective Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice compliant pending against any Borrower or any of its Subsidiaries or threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against any Borrower or any of its Subsidiaries or, to the best of any Borrower's knowledge, threatened against any of them, (b) no strike, labor dispute, slowdown or stoppage pending against any Borrower or any of its Subsidiaries or, to the best of the Borrower's knowledge, threatened against any Borrower or any of its Subsidiaries and (c) no union representation petition existing with respect to the employees of any Borrower or any of its Subsidiaries and no union organizing activities are taking place, except with respect to any matter specified in clause (a), (b) or (c) above, either individually or in the aggregate, such as could not reasonably be expected to have a Material Adverse Effect, PROVIDED, with respect to matters pertaining to Saybolt or Scott Pickford, this representation and warranty is limited to the extent of the actual knowledge of any Borrower in regard thereto. Section 4.18. NO MATERIAL ADVERSE CHANGE. There has occurred no event or effect that has had or could reasonably be expected to have a Material Adverse Effect. -34- Section 4.19. CREDIT PARTIES AS PERCENTAGE OF CONSOLIDATED ENTITY. As of the Execution Date, the Credit Parties have at least sixty percent (60%) of the total assets and total revenues of the Parent on a consolidated basis. -35- ARTICLE V AFFIRMATIVE COVENANTS So long as any Letter of Credit remains outstanding, any principal amount of any Loan, any principal amount of any reimbursement obligation in respect of any Letter of Credit, any amount of interest accrued under the Notes or in respect of any Letter of Credit, or any commitment or other fee, expense, compensation or any other amount payable to any member of the Bank Group under the Loan Documents shall remain unpaid or outstanding or any Bank shall have any Commitment hereunder: Section 5.01. REPORTING REQUIREMENTS. The Parent shall deliver or cause to be delivered to the Administrative Agent (with sufficient copies for the Administrative Agent to distribute the same to the other members of the Bank Group): (a) As soon as available and in any event within sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of the Parent: (i) copies of the unaudited consolidated and consolidating balance sheets of the Parent as of the end of such period, and unaudited consolidated and consolidating statements of operations, shareholders' equity and cash flows of the Parent for that period and for the portion of the year ending with such period, in each case setting forth in comparative form (on a consolidated basis) the figures for the corresponding period of the preceding fiscal year, all in reasonable detail; and (ii) a certificate of a Responsible Officer of the Parent (1) stating that (A) such financial statements fairly present in all material respects the consolidated and consolidating financial position and results of operations of the Parent in accordance with GAAP consistently applied, subject to year-end adjustments and the absence of notes and (B) no Default or Event of Default has occurred and is continuing and the Parent is not aware of any event or condition which could reasonably be expected to create a Default or Event of Default or, if any such event has occurred and is continuing, the action the Parent is taking or proposes to take with respect thereto, and (2) setting forth calculations demonstrating compliance with SECTION 6.04 and (3) stating that the Borrowers are in compliance with the provisions of SECTION 5.10. (b) As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of the Parent: (i) copies of the audited consolidated balance sheets of the Parent as of the close of such fiscal year and audited consolidated statements of operations, shareholders' equity and cash flows of the Parent for such fiscal year, accompanied by an opinion thereon (which -36- shall not be qualified) of independent accountants of recognized national standing selected by the Parent and reasonably satisfactory to the Majority Banks, to the effect that such consolidated financial statements have been prepared in accordance with GAAP consistently applied (except for changes with which such accountants concur) and that such audit has been made in accordance with generally accepted auditing standards, and the corresponding unaudited consolidating statements in each case setting forth in comparative form (on a consolidated basis) the figures for the preceding fiscal year, all in reasonable detail; and (ii) a certificate of a Responsible Officer of the Parent (A) setting forth calculations demonstrating compliance with SECTION 6.04, (B) stating that no Default or Event of Default has occurred and is continuing or, if any such event has occurred and is continuing, the action the Parent is taking or proposes to take with respect thereto, and (C) stating that the Borrowers are in compliance with SECTION 5.10. (c) As soon as available and in any event with in sixty (60) days after the end of each calendar quarter, a certificate of a Responsible Officer of the Parent setting forth a calculation of the Margin Ratio (a "MARGIN RATIO CERTIFICATE") as of the end of such calendar quarter. (d) Within ten (10) Business Days after the sending or filing thereof, copies of all definitive reports and shareholder information which a Borrower or any of its Subsidiaries sends to its shareholders or the SEC, or otherwise makes available to the public. (e) Immediately after a Borrower or any of its Subsidiaries becomes aware of the occurrence or the likelihood of an occurrence of a Default or Event of Default, a certificate of a Responsible Officer of such Borrower setting forth details of such Default or Event of Default and the action which has been taken or is to be taken with respect thereto. (f) As soon as reasonably possible and in any event within five (5) Business Days after a Borrower or any of its Subsidiaries becomes aware thereof, written notice from a Responsible Officer of such Borrower of (i) the institution of or overt threat of, any action, suit, proceeding, governmental investigation or arbitration by any Governmental Authority or other Person against or affecting such Borrower or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect and that has not been previously disclosed in writing to the Bank Group pursuant to this SECTION 5.01 or (ii) any Material development in any action, suit, proceeding, governmental investigation or arbitration already disclosed to the Bank Group pursuant to this SECTION 5.01. (g) As soon as reasonably possible and in any event within five (5) Business Days after a Borrower or any of its Subsidiaries becomes aware thereof, written notice from a Responsible Officer of such Borrower of (i) any violation of, noncompliance with, or remedial obligations under, Requirements of Environmental Laws that could reasonably be expected to have a Material Adverse Effect, (ii) any release or threatened release affecting any Property owned, leased or operated by a Borrower or any of its Subsidiaries that could reasonably be expected to have a Material Adverse -37- Effect, (iii) the amendment or revocation of any permit, authorization, registration, approval or similar right that could reasonably be expected to have a Material Adverse Effect or (iv) changes to Requirements of Environmental Laws that could reasonably be expected to have a Material Adverse Effect. (h) Promptly, and in any event within five (5) Business Days after becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that a Borrower or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Pension Plan, any Reportable Event, for which notice thereof has not been waived pursuant to applicable regulations as in effect on the date hereof; or (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or the receipt by a Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction or condition that could result in the incurrence of any Material liability by a Borrower or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Internal Revenue Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of a Borrower or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions; or (iv) the inability or failure of a Borrower or any ERISA Affiliate to make timely any payment or contribution to or with respect to any Pension Plan, Multiemployer Plan or Other Benefit Plan, if such failure, either separately or together with all other such failures could reasonably be expected to be Material; or (v) any event with respect to any Pension Plan, Multiemployer Plan and/or Other Benefit Plan, individually or in the aggregate, that could reasonably be expected to result in a Material liability. (i) In addition, on or before April 15 of each year commencing April 15, 1998, the Parent will deliver to the Administrative Agent a report prepared by the Parent's independent insurance broker which report (i) lists all insurance policies and programs then in effect with respect to the Properties of the Borrowers and their respective Subsidiaries, (ii) specifies for each such policy and program, (A) the amount thereof, (B) the risks insured against thereby, (C) the name of the insurer and each insured party thereunder and (D) the policy or other identification number thereof, and (iii) certifies that all such policies and programs are in full force and effect, accompanied by a report from the Parent certifying that such policies are placed with such insurance companies, underwriters or associations, in such amounts, against such risks, and in such form, as are normally issued against by Persons of similar size and established reputation engaged in the same or similar businesses and similarly situated, and conform with the requirements of this Agreement. (j) Within sixty (60) days of the end of each fiscal quarter ending March 31st, June 30th and September 30th and within one hundred twenty (120) days of the fiscal quarter ending December 31st, a schedule by each actively operating legal entity listing total assets, total revenues and EBITDA of such legal entity. -38- (k) Promptly upon receipt thereof and following such time as the appropriate officers of the Parent shall have had reasonable time to respond thereto, a copy of each formal report or "management letter" submitted to the Parent by its independent accountants in connection with any annual, interim or special audit made by it of the books of the Parent. (l) Such other information as any member of the Bank Group may from time to time reasonably request respecting the business, Properties, operations or condition, financial or otherwise, of the Borrowers or any of their Subsidiaries. Section 5.02. TAXES; CLAIMS. Each Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon such Person or upon its income or profits, or upon any Properties belonging to such Person, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien upon any Properties of such Person, other than (a) any such tax, assessment, charge, levy or claim which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and with respect to which adequate reserves are set aside on the books of such Person in accordance with GAAP, or (b) if the failure to file such taxes could not reasonably be expected to have a Material Adverse Effect. Section 5.03. COMPLIANCE WITH LAWS. Each Borrower will comply, and will cause each of its Subsidiaries to comply, with all applicable Requirements of Law imposed by, any Governmental Authority, if non-compliance with such Requirement of Law could reasonably be expected to have a Material Adverse Effect. Without limitation of the foregoing, each Borrower shall, and shall cause each of its Subsidiaries to, comply with all Requirements of Environmental Laws, operate Properties and conduct its business in accordance with good environmental practices, and handle, treat, store and dispose of hazardous materials or solid waste in accordance with such practices, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. Section 5.04. INSURANCE. Each Borrower will maintain, and will cause each of its Subsidiaries to maintain insurance, with financially sound and reputable insurance companies or associations, against such risks and in such amounts (and with co-insurance and deductibles), as are usually insured against by Persons of similar size and established reputation engaged in the same or similar businesses and similarly situated, including insurance against fire, casualty, business interruption, injury to Persons or property and other normal hazards normally insured against. Section 5.05. EXISTENCE. Each Borrower will preserve and maintain, and will cause each of its Subsidiaries to preserve and maintain, its existence, rights, franchises and privileges in the jurisdiction of its incorporation or organization, and qualify and remain qualified, and cause each of its Subsidiaries to qualify and remain qualified, as a foreign corporation in each jurisdiction in which such qualification is material to the business and operations of such Person or the ownership or leasing of the Properties of such Person except to the extent that a Subsidiary merges or -39- consolidates in compliance with SECTION 6.06 or ceases to be a Subsidiary of any Borrower if such cessation is permitted under this Agreement. Section 5.06. INSPECTIONS. Upon at least one (1) Business Day advance notice, each Borrower will permit, and will cause each of its Subsidiaries to permit, any agents or representatives of the Administrative Agent or its designee to from time to time examine and make copies of and abstracts from the records and books of account of, and visit the Properties of any of the Borrowers and their Subsidiaries and to discuss any of the affairs, finances and accounts of any such Person that in any way relate to this Agreement or the performance or ability to perform hereunder of any Credit Party, with any of said Person's independent public accountants, officers or directors during normal business hours. If an Event of Default has occurred and is continuing, Borrowers will pay for all such examinations; prior thereto the examining Bank will pay for same. Section 5.07. MAINTENANCE OF PROPERTIES. Each Borrower will maintain and preserve, and will cause each of its Subsidiaries to maintain and preserve, all of its Property necessary for the proper conduct of its business in good repair, good working order and condition, ordinary wear and tear excepted, and make all necessary and proper repairs, replacements, additions and improvements thereto to the extent and in the manner customary in the industry except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. Section 5.08. ACCOUNTING SYSTEMS. Each Borrower will keep, and will cause each of its Subsidiaries to keep, adequate records and books of account in which complete entries will be made in accordance with GAAP consistently applied (subject to year end adjustments), reflecting all financial transactions of such Person. Each Borrower shall maintain or cause to be maintained a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP, and each of the financial statements described herein shall be prepared from such system and records. Section 5.09. USE OF LOANS AND LETTERS OF CREDIT. All Letters of Credit shall be issued for general corporate purposes consistent with the terms of this Agreement and all Requirements of Law. The Parent will use the proceeds of the Tranche A Loans solely to finance or refinance the acquisitions of Saybolt and its related Subsidiaries and Affiliates and the UK Borrower will use the proceeds of the Tranche B Loans solely to finance or refinance the acquisition of Scott Pickford, and, in each case in a manner consistent with the terms of this Agreement and all Requirements of Law. The US Borrower and the Parent will use the proceeds of all Dollar Revolving Loans and the Parent will use the proceeds of the Guilder Revolving Loans for working capital and other general corporate purposes consistent with the terms of this Agreement and all Requirements of Law. Section 5.10. ADDITIONAL GUARANTEES AND STOCK PLEDGES. (a) Within ten (10) days from the Execution Date, the Borrowers shall identify such Subsidiaries it intends to cause to become Credit Parties as are necessary to modify SECTION 4.19 such that the figure in said section becomes seventy five percent (75%) instead of sixty percent (60%). Within thirty (30) days, the -40- Borrowers shall cause such Subsidiaries to become Credit Parties and will cause all of the capital stock of said Persons to be pledged to the Administrative Agent as security for the Obligations all as more fully described in SECTION 5.10(B). (b) In the event any Borrower or any of their Subsidiaries acquires any Subsidiary subsequent to the Execution Date, or if any current Subsidiary (other than Core Laboratories Sales N.V. or Saybolt Nederland B.V., which shall be excluded herefrom) that is not a Credit Party changes in such a manner that said Subsidiary: (i) has total revenue constituting five percent (5%) or more of the pro forma consolidated total revenues, or (ii) has five percent (5%) of the pro forma consolidated total assets, of the Parent and all of its Subsidiaries on a consolidated basis (in the case of both (i) and (ii), after the acquisitions of Saybolt and Scott Pickford), such Subsidiary shall execute and deliver to the Administrative Agent a Guaranty Agreement guaranteeing the Obligations on the same basis as the other Guarantors and the Parent shall (or shall cause the relevant Subsidiary to) execute and deliver to the Administrative Agent an amendment and supplement to the Pledge Agreement, in form and substance reasonably satisfactory to the Administrative Agent, pledging 100% of the capital stock of such Subsidiary as security for the Obligations along with such financing statements, stock powers, legal opinions and other documents or certificates related thereto as the Administrative Agent may reasonably request. In addition, subsequent to the Execution Date, if the Borrowers and all of the Subsidiaries that are Guarantors do not have total revenue and total assets equal to both seventy-five percent (75%) of the consolidated total revenue and the total assets, respectively, of the Parent and all of its Subsidiaries on a consolidated basis, as shown by the reports required under SECTION 5.01(J), the Parent will pledge, or cause to be pledged, the stock of such Subsidiaries as the Majority Banks may reasonably request to attain each of said seventy-five percent (75%) levels and will cause such Persons to become Guarantors, all with appropriate supporting documentation as referenced above. Section 5.11. FURTHER ASSURANCES IN GENERAL. Each Borrower shall, and shall cause each of its Subsidiaries to, protect and perfect the Liens contemplated by the Pledge Agreements. Each Borrower at its expense shall, and shall cause each of its Subsidiaries to, promptly execute and deliver all such other and further documents, agreements and instruments in compliance with or accomplishment of the covenants and agreements of a Borrower or any of its Subsidiaries in the Loan Documents, including, without limitation, the accomplishment of any condition precedent that may have been waived by the Banks prior to the initial Borrowing or Letter of Credit or any subsequent Borrowings or Letters of Credit. -41- ARTICLE VI NEGATIVE COVENANTS So long as any Letter of Credit remains outstanding, any principal amount of any reimbursement obligation in respect of any Letter of Credit, any principal amount of any Loan, any amount of interest accrued under the Notes or in respect of any Letter of Credit, or any commitment, facility or other fee, expense, compensation or any other amount payable to any member of the Bank Group under the Loan Documents shall remain unpaid or outstanding or any Bank shall have any Commitment hereunder: Section 6.01. INDEBTEDNESS RESTRICTION. Each Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist, any Indebtedness other than: (a) Indebtedness of the Borrowers and the Guarantors under the Loan Documents; (b) Indebtedness of the Borrowers or their Subsidiaries in respect of any Derivatives permitted by SECTION 6.03; (c) Indebtedness existing on the Execution Date and described on SCHEDULE 6.01; (d) subject to the limitations of SECTION 6.07, unsecured Indebtedness owing to a Borrower by any of its Subsidiaries or owing by a Borrower to any of its Subsidiaries, PROVIDED any such Indebtedness in excess of $5,000,000 shall be evidenced by a subordinated promissory note in a form reasonably satisfactory to the Administrative Agent, and shall be pledged to the Administrative Agent for the benefit of the Banks as security for the Obligations; (e) Other Indebtedness of up to $2,000,000 (or its Equivalent) outstanding at any one time and any Guaranties thereof; (f) Other unsecured Indebtedness consisting of funded debt in the form of money market lines of credit or similar arrangements not to exceed $5,000,000 (or its Equivalent) outstanding at any one time and any Guaranties thereof; (g) Other unsecured Indebtedness (contingent or direct) not to exceed $5,000,000 outstanding at any one time in respect of letters of credit issued for the account of any of the Credit Parties in the conduct of their business in the ordinary course and any Guaranties thereof; and (h) Indebtedness in existence (but not incurred or created in connection with such acquisition) on the date on which a Person is acquired (after the Execution Date) by the Parent or any of its Subsidiaries and for which Indebtedness: (i) neither the Parent nor any of its other Subsidiaries has any obligation with respect to such Indebtedness, and (ii) none of the Properties of -42- the Parent or any of its other Subsidiaries is bound (and any extensions, renewals, modifications or refinancings thereof which do not increase the principal amount thereof or shorten the respective maturities thereof or increase the collateral therefor), not to exceed $10,000,000 outstanding at any one time. Section 6.02. LIEN RESTRICTION. Each Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to be created, assumed or incurred or to exist, any Lien upon any of such Person's Property, whether now owned or hereafter acquired, other than the following Liens ("EXCEPTED LIENS"): (a) Liens created pursuant to this Agreement or any other Loan Document; (b) statutory Liens for taxes or other assessments that are not yet delinquent (or that, if delinquent, are being contested in good faith by appropriate proceedings and for which the Borrowers or their Subsidiaries have set aside on their books adequate reserves in accordance with GAAP consistently applied); (c) Liens imposed by law which were incurred in the ordinary course of business, such as carriers', warehousemen's and mechanics' liens, statutory landlord's liens and other similar liens arising in the ordinary course of business, and (x) which do not in the aggregate Materially detract from the value of such Property or Materially impair the use thereof in the operation of the business of any Borrower or its Subsidiaries or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such Lien or procuring the release of the Property subject to such lien from arrest or detention; (d) Liens on any real property which do not secure Indebtedness and do not in the aggregate Materially detract from the value of such Property or Materially impair the use thereof in the operation of the business of any Borrower or its Subsidiaries; (e) Liens existing on the Execution Date and listed on SCHEDULE 6.02, without giving effect to any subsequent extensions or renewals thereof; (f) Liens on cash and Cash Equivalents in an aggregate amount not to exceed $500,000.00 to secure performance of bids, trade contracts, leases and other similar obligations incurred in the ordinary course of business; (g) Liens securing any purchase money Indebtedness or Capital Leases allowed under SECTION 6.01(E) on the property or assets acquired in connection with the incurrence of such purchase money Indebtedness; (h) Liens on Property of the Person acquired as contemplated under SECTION 6.01(H) to secure Indebtedness permitted by SECTION 6.01(H); and -43- (i) Liens upon any Property hereafter acquired by the Parent or any of its Subsidiaries to secure Indebtedness in existence on the date of such acquisition (but not incurred or created in connection with such acquisition), which indebtedness is assumed by such Person simultaneously with such acquisition, which Liens extend only to the Property so acquired and which is otherwise non-recourse to the Parent and its Subsidiaries. Section 6.03. DERIVATIVES. The Borrowers shall not, and shall not permit any of their Subsidiaries to, enter into any Derivatives other than interest rate and foreign exchange Derivatives entered into for purposes of hedging bona fide interest and foreign exchange risk and not for speculation, PROVIDED that any such arrangements entered into with any of the Banks shall be secured by the Collateral on a last-out basis. Section 6.04. FINANCIAL COVENANTS. (a) FIXED CHARGE COVERAGE RATIO. As of the last day of any month, the Parent will not permit the ratio of (i) its consolidated EBITDA for the twelve (12) month period then ended calculated on a rolling twelve (12) month basis to (ii) its consolidated Fixed Charges for such twelve month period to be less than that shown as follows for the periods indicated From To Minimum Ratio -------------- -------- ------------- Effective Date 12/31/97 1.4 to 1.0 1/1/98 12/31/98 1.5 to 1.0 1/1/99 3/31/99 1.4 to 1.0 4/1/99 6/30/99 1.3 to 1.0 7/1/99 9/30/99 1.2 to 1.0 10/1/99 12/31/99 1.1 to 1.0 1/1/00 and thereafter 1.0 to 1.0 (b) INDEBTEDNESS-TO-EBITDA RATIO. As of any date of determination, the Parent will not permit the ratio of (i) its total consolidated Indebtedness as of the last day of the fiscal quarter immediately preceding the date of determination to (ii) its consolidated EBITDA for the twelve month period ending on the last day of the quarter immediately preceding the date of determination, calculated on a rolling twelve (12) month basis, to be greater than (A) 4.0 to 1.0 from the Effective Date through December 31, 1997, (B) 3.5 to 1.0 from January 1, 1998 through June 30, 1998, (C) 3.0 to 1.0 from July 1, 1998 through June 30, 1999, (D) 2.75 to 1.0 from July 1, 1999 through June 30, 2000, and (E) 2.5 to 1.0 from July 1, 2000 through the Termination Date. -44- (c) MINIMUM NET WORTH. The Parent will not permit consolidated Net Worth to at any time be less than the sum of (i) $39,500,000.00 plus (ii) fifty percent (50%) of Net Income for any fiscal quarter ending after the Effective Date (excluding any such fiscal quarter in which Net Income is a negative number), plus (iii) 100% of the proceeds of any equity offering or similar capital infusion after the Effective Date. (d) MINIMUM CURRENT RATIO. The Parent will not permit the ratio of (i) its Current Assets to (ii) its Current Liabilities at the end of any fiscal quarter to be less than 1.0 to 1.0. Section 6.05. SALES OF ASSETS. Each Borrower will not, and will not permit any of its Subsidiaries to (a) sell, transfer, assign or otherwise dispose of the capital stock of any Credit Party or (b) sell, transfer, assign or otherwise dispose of any Property (except for sales or other dispositions of inventory and surplus or obsolete equipment in the ordinary course of business). Section 6.06. CONSOLIDATION AND MERGERS. Each Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, dissolve or consolidate with or merge into any Person or permit any Person to consolidate with or merge into it, except that: (i) any Subsidiary of the Parent may merge into or consolidate with any other Subsidiary of the Parent (PROVIDED that if either of such Subsidiaries is a Borrower, such Borrower shall be the surviving entity), (ii) any Subsidiary of the Parent (other than the UK Borrower or the US Borrower) may merge into or consolidate with the Parent (so long as the Parent is the surviving entity), and (iii) any Subsidiary may dissolve after transferring substantially all of its assets to the Parent or another Credit Party PROVIDED in each case that immediately after giving effect and pro forma effect thereto, no event shall occur and be continuing which constitutes either a Default or an Event of Default. Section 6.07. RESTRICTED DISBURSEMENTS. Each Borrower will not, and will not permit any of its Subsidiaries to approve, make, incur or commit to incur any Restricted Disbursements after the Execution Date other than: (a) advances or extensions of credit on terms customary in the industry involved in the form of accounts receivable incurred, and investments, loans, and advances made in settlement of such accounts receivable, all in the ordinary course of business; (b) investments in cash or Cash Equivalents; (c) dividends paid by any direct or indirect Subsidiary of the Parent to the Parent directly or indirectly (d) Indebtedness between the Parent and its Subsidiaries to the extent permitted by SECTION 6.01; (e) investments in any Credit Party; -45- (f) Capital Expenditures (including Capital Leases) of not more than (i) $7,500,000 during the remainder of calendar year 1997; (ii) $16,500,000 for calendar year 1998; and (iii) one hundred ten percent (110%) of the total for the prior calendar year for each calendar year after 1998 during the term hereof; (g) acquisitions by the Parent or any of its Subsidiaries of capital stock or other equity interests in any other Person the consideration for which is: (y) common stock of the Parent or (z) cash of not more than $7,500,000.00 in any single transaction or $22,500,000.00 in the aggregate (in each case, including assumption of debt) during the term hereof; PROVIDED that no Default exists or would occur as a result of such acquisition; (h) investments in or loans to non-Credit Party Subsidiaries of not more than $5,000,000.00 (or its Equivalent thereof in Dollars) in excess of the investments or loans outstanding on the Execution Date outstanding in the aggregate at any one time; PROVIDED, that if any Person in which such Investment is made becomes a Credit Party, the actual amount of the dollar Investment in such Person shall no longer be considered an Investment under this SECTION 6.07(H); (i) other Restricted Disbursements of investments in capital stock of a Borrower in respect of pension plans, cash paid in connection with stock option programs, employee stock buybacks, and similar items not to exceed $500,000.00 per fiscal year of the Parent; (j) investments currently shown on SCHEDULE 6.07(J); (k) other investments of not more than $500,000 in the aggregate per fiscal year of the Parent; and (l) investments acquired incidentally to and in conjunction with acquisitions of assets permitted by this Section 6.07; PROVIDED that such investments do not constitute more than five percent (5%) of the total consideration paid for such acquisition. Section 6.08. LINES OF BUSINESS. Each Borrower will not, and will not permit any of its Subsidiaries to, materially alter the character of the business of such Borrower and its Subsidiaries taken as a whole from that conducted on the Effective Date. Section 6.09. TRANSACTIONS WITH AFFILIATES. None of the Borrowers nor any of their respective Subsidiaries, will enter into any transaction with an Affiliate other than transactions entered into in the ordinary course of business and upon terms no less favorable than those that such Borrower or its Subsidiary, as applicable, could obtain in an arms length transaction with a Person that is not an Affiliate. No Credit Party will transfer assets or funds to any Affiliate or Subsidiary that is not a Credit Party except for value, as permitted under SECTION 6.06 or as an investment permitted under SECTION 6.07. -46- Section 6.10. RESTRICTIONS ON SUBSIDIARIES. Each Borrower will not, and will not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or restriction which prohibits or otherwise restricts (a) the ability of any Subsidiary to (i) pay dividends or make other distributions or pay any Indebtedness owed to any Credit Party, (ii) make loans or advances to any Credit Party, or (iii) transfer any of its Properties to any Borrower or (b) the ability of any Borrower or any Subsidiary of such Borrower to create, incur, assume or suffer to exist any Lien upon its Property to secure the Obligations or to become a guarantor of the Obligations, other than prohibitions or restrictions existing under or by reason of: (1) this Agreement and the other Loan Documents; (2) applicable law; (3) Liens, prohibitions or restrictions permitted by SECTION 6.02 and any documents or instruments governing the terms of any Indebtedness or other obligations secured by any such Liens, PROVIDED that such prohibitions or restrictions apply only to the Property subject to such Liens; and (4) prohibitions or restrictions contained in any document or instrument governing the terms of the Indebtedness permitted by SECTION 6.01(H). -47- ARTICLE VII DEFAULT AND REMEDIES Section 7.01. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF DEFAULT") shall occur and be continuing: (a) any Borrower shall fail to pay when due any installment of principal of the Notes or any reimbursement obligation in respect of any Letter of Credit; or (b) any Borrower shall fail to pay any interest on any Loan or any arrangement fee, commitment fee, administration fee, funding fee, L/C Fee, Facing Fee, commission, expense, compensation, reimbursement or other amount when due and such default shall continue for a period of five (5) days which shall, in no event, be less than three (3) Business Days; or (c) any Borrower shall fail to perform any term, covenant or agreement contained in ARTICLE VI or SECTION 5.01(E) of this Agreement; or (d) any Borrower shall fail to perform any term, covenant or agreement contained in this Agreement (other than those referenced in subsections (a), (b) and (c) of this SECTION 7.01) and such failure shall not have been remedied within thirty (30) days of: (y) any Borrower's obtaining knowledge thereof or (z) written notice thereof having been delivered to any Borrower by the Administrative Agent, whichever comes first; or (e) any Credit Party shall fail to perform any term, covenant or agreement contained in any Loan Document (other than those referenced in subsections (a), (b), (c) and (d) of this SECTION 7.01) and such failure shall not have been remedied within thirty (30) days of: (y) any Borrower's obtaining knowledge thereof or (z) written notice thereof having been delivered to any Borrower by the Administrative Agent, whichever comes first; or (f) any representation or warranty made by a Borrower or any Guarantor or any of their respective officers, in any Loan Document or in any certificate, agreement, instrument or statement contemplated by or delivered pursuant to, or in connection with, any Loan Document shall prove to have been incorrect in any Material respect when made; or (g) a Borrower or any of its Subsidiaries shall (i) fail to pay Indebtedness having a principal amount in excess of $500,000.00 (or its Equivalent if in a currency other than Dollars) in the aggregate (other than the amounts referred to in subsections (a) and (b) of this SECTION 7.01) owing by such Person, or any interest or premium thereon, when due (or, if permitted by the terms of the relevant document, within any applicable grace period), whether such Indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise; or (ii) fail to perform any term, covenant or condition on its part to be performed under any agreement or instrument evidencing, securing or relating to any such Indebtedness, when required to be performed, and such failure shall continue after the applicable grace period, if any, -48- specified in such agreement or instrument, if the effect of such failure is to accelerate or to permit the holder or holders of such Indebtedness to accelerate, the maturity of such Indebtedness; or (h) any Loan Document shall (other than with the consent of the Majority Banks), at any time after its execution and delivery for any reason, cease to be in full force and effect or to provide the Liens contemplated thereby, or shall be declared to be null and void, or the validity or any enforceability thereof or of the Liens contemplated thereby shall be contested by any Credit Party or any Credit Party shall deny in writing that it has any or further liability or obligation under any such Loan Document; or (i) a Borrower or any of its Subsidiaries shall be adjudicated insolvent, or shall generally not pay, or admit in writing its inability to pay, its debts as they mature, or make a general assignment for the benefit of creditors, or any proceeding shall be instituted by any such Person seeking to adjudicate it insolvent, seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its Property, or a Borrower or any of its Subsidiaries shall take any action in furtherance of any of the actions set forth above in this SECTION 7.01(I); or (j) any proceeding of the type referred to in SECTION 7.01(I) is filed, or any such proceeding is commenced against a Borrower or any of its Subsidiaries or any such Person by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order for relief is entered in an involuntary case under the bankruptcy law of the United States, or an order, judgment or decree is entered appointing a trustee, receiver, custodian, liquidator or similar official or adjudicating any such Person insolvent, or approving the petition in any such proceedings, and such order, judgment or decree remains in effect for sixty (60) days; or (k) a final judgment or order for the payment of money in excess of $500,000.00 (or its Equivalent if in a currency other than Dollars) (net of acknowledged, uncontested insurance coverage) shall be rendered against any Credit Party which has not been discharged, vacated or reversed and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) a stay of enforcement of such judgment or order by reason of a pending appeal or otherwise, shall not be in effect for any period of thirty (30) consecutive days; or (l) if (i) any Pension Plan shall fail to satisfy the minimum funding standards of ERISA or the Internal Revenue Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Internal Revenue Code, (ii) a notice of intent to terminate any Pension Plan shall have been or is reasonably expected to be filed with the PBGC (other than in connection with a termination under Section 4041(b) of ERISA) or the PBGC shall have instituted proceedings under Section 4042 of ERISA to terminate or appoint a trustee to administer any Pension Plan or the PBGC shall have notified a Borrower or any ERISA Affiliate that a Pension Plan may become a subject to any such proceedings, -49- (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under all Pension Plans, determined in accordance with Title IV of ERISA, shall exceed $500,000, (iv) a Borrower or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA, the penalty or excise tax provisions of the Internal Revenue Code relating to employee benefit plans and/or other liability with respect to one or more Other Benefit Plans, (v) a Borrower or any ERISA Affiliate withdraws from any Multiemployer Plan, (vi) a Borrower or any ERISA Affiliate fails to make any contribution due, or payment to, any Pension Plan, Multiemployer Plan and/or Other Benefit Plan, or (vii) a Borrower or any ERISA Affiliate establishes or amends any employee welfare benefit plan that provides post- employment welfare benefits in a manner that would increase the liability of a Borrower or any ERISA Affiliate thereunder, and any such event or events described in clauses (i) through (vii) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect; or (m) a Change of Control shall occur; or (n) the stock of the Parent is involuntarily delisted by the NASDAQ or other public exchange on which it is traded; then, (i) upon the occurrence of any Event of Default described in SECTION 7.01(I) or SECTION 7.01(J), (A) the Commitments shall automatically terminate and (B) the entire unpaid principal amount of all Loans, all interest accrued and unpaid thereon, and all other amounts payable by the Borrowers under this Agreement, the Notes and, the other Loan Documents shall automatically become immediately due and payable, without presentment for payment, demand, protest, notice of intent to accelerate, notice of acceleration or further notice of any kind, all of which are hereby expressly waived by each Borrower, and the Administrative Agent may direct the beneficiary of any outstanding Letter of Credit to make a drawing under such Letter of Credit in an amount equal to the full amount available thereunder and require from the US Borrower immediate reimbursement for payments made pursuant to such drawing, or the Administrative Agent, to the extent Cover had not already been provided, may direct the US Borrower to deposit with the Administrative Agent cash equal to the aggregate amount of all Outstanding Letters of Credit as security for the US Borrower's obligations in respect of such Letters of Credit, and (ii) upon the occurrence of any other Event of Default, the Administrative Agent may, and upon the direction of the Majority Banks shall, by notice to each Borrower (A) declare the Commitments to be terminated, whereupon the same shall forthwith terminate, (B) declare the entire unpaid principal amount of all Loans, all interest accrued and unpaid thereon, and all other amounts payable by the Borrowers under this Agreement, the Notes, and the other Loan Documents, to be forthwith due and payable, whereupon all such amounts shall become and be forthwith due and payable, without presentment for payment, demand, protest, notice of intent to accelerate, notice of acceleration or further notice of any kind, all of which are hereby expressly waived by each Borrower, (C) direct the beneficiary of any outstanding Letter of Credit to make a drawing under such Letter of Credit in an amount equal to the full amount available thereunder and require from the US Borrower immediate reimbursement for payments made pursuant to such drawing, or, to the extent Cover had not already been provided, may direct the US -50- Borrower to deposit with the Administrative Agent cash equal to the aggregate amount of all Outstanding Letters of Credit as security for the US Borrower's obligations in respect of such Letters of Credit, (D) setoff any amounts held by it against any of the Obligations, as hereafter provided and (E) exercise any other right or remedy available to it hereunder under any of the other Loan Documents or at law or in equity. Section 7.02. SETOFF IN EVENT OF DEFAULT. Upon the occurrence and during the continuance of any Event of Default, each member of the Bank Group is hereby authorized, at any time and from time to time, without notice to any Borrower (any such notice being expressly waived by each Borrower) and to the fullest extent permitted by applicable law, to setoff and apply any and all deposits at any time held and other indebtedness at any time owing by such member of the Bank Group (or any branch, Subsidiary or Affiliate of such member of the Bank Group) to or for the credit or the account of any Borrower against any and all of the obligations of any Borrower or any other Person, now or hereafter existing under this Agreement, the Notes or the other Loan Documents, irrespective of whether or not such member of the Bank Group shall have made any demand for satisfaction of such obligations and although such obligations may be unmatured. Any member of the Bank Group exercising such right agrees to notify the relevant Borrower promptly after any such setoff and application made by such Person; PROVIDED, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Bank Group under this SECTION 7.02 are in addition to other rights and remedies (including, without limitation, other rights of setoff) which the Bank Group may have hereunder or under any applicable law. Section 7.03. NO WAIVER; REMEDIES. No failure on the part of any member of the Bank Group to exercise, or any delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in this Agreement are cumulative and not exclusive of any remedies provided in any of the other Loan Documents or by law. Section 7.04. ENFORCEMENT. The amounts payable by the Borrowers under the Loan Documents to each Bank shall be a separate and independent debt, but no Bank shall be entitled to enforce any right arising out of any Loan Document except through the Administrative Agent acting for and on behalf of all Banks unless otherwise agreed by the Majority Banks. -51- ARTICLE VIII THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT AND THE ISSUING BANK Section 8.01. AUTHORIZATION AND ACTION. Each Bank hereby appoints and authorizes the Administrative Agent, the Syndication Agent and the Issuing Bank to take such action in such capacity on such Bank's behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent, the Syndication Agent or the Issuing Bank by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes or of amounts owing under the other Loan Documents), neither the Administrative Agent, the Syndication Agent nor the Issuing Bank shall be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks, and such instructions shall be binding upon all Banks and any other holders of Notes; PROVIDED, HOWEVER, that neither the Administrative Agent, the Syndication Agent nor the Issuing Bank shall be required to take any action which exposes it to personal liability or which is contrary to the Loan Documents or applicable law. Each of the Administrative Agent, the Syndication Agent and the Issuing Bank is hereby expressly authorized on behalf of the other members of the Bank Group, without hereby limiting any implied authority, (a) to receive on behalf of each of the other members of the Bank Group any payment of principal of or interest on the Loans outstanding hereunder, any Letters of Credit and all other amounts accrued hereunder paid to such Persons, and promptly to distribute to each other member of the Bank Group its proper share of all payments so received; (b) to give notice within a reasonable time on behalf of each other member of the Bank Group to the Borrowers of any Default or Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge as provided in SECTION 8.09; (c) to distribute to the other members of the Bank Group copies of all notices, agreements and other material as provided for in this Agreement as received by such Person; and (d) to distribute to the Borrowers any and all requests, demands and approvals received by such Person from any other member of the Bank Group. Nothing herein contained shall be construed to constitute the Administrative Agent, the Syndication Agent or the Issuing Bank as a trustee for any holder of the Notes or of a participation therein, nor to impose on the Administrative Agent, the Syndication Agent or the Issuing Bank any duties or obligations other than those expressly provided for in the Loan Documents. Section 8.02. RELIANCE, ETC. None of the Administrative Agent, the Syndication Agent, the Issuing Bank, their Affiliates and their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and non-appealable judgment). Without limitation of the generality of the foregoing, the Administrative Agent, the Syndication Agent and the Issuing Bank: (a) may treat the payee of any Note as the holder thereof until the Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Bank which is the payee of -52- such Note, as assignor, and an Eligible Assignee, as assignee, as provided in SECTION 10.02; (b) may consult with legal counsel (including counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Bank and shall not be responsible to any Bank for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of the Borrowers or any other Person or to inspect the property (including the books and records) of the Borrowers or any other Person; (e) shall not be responsible to any Bank for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan Document, any collateral provided for therein, or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. None of the Administrative Agent, the Syndication Agent, the Issuing Bank, their Affiliates and their respective directors, officers, employees or agents shall have any responsibility to the Borrowers on account of the failure or delay in performance or breach by any Bank of any of its obligations hereunder or to any Bank on account of the failure of or delay in performance or breach by any other Bank or any Borrower of any of its obligations hereunder or in connection herewith; PROVIDED that the foregoing does not relieve the Administrative Agent, the Syndication Agent or the Issuing Bank of any of its respective obligations in its capacity as a Bank. Section 8.03. AGENTS, AFFILIATES AND OTHER ACTIVITIES. Without limiting the right of any other Bank to engage in any business transactions with the Borrowers or any of their Affiliates, with respect to its Commitment, the Loans made by it, the Notes issued to it and its interest in the Outstanding Letters of Credit, the Administrative Agent and the Syndication Agent shall each have the same rights and powers under this Agreement as any other Bank and may exercise the same as though they were not such Agents; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include said Person in its individual capacity. Each of said Agents, or any of their Affiliates, may be engaged in, or may hereafter engage in, one or more loan, Letter of Credit, leasing, derivative or other financing activities not the subject of the Loan Documents (collectively, the "OTHER FINANCINGS") with the Borrowers or any of their Affiliates, or may act as trustee on behalf of, or depositary for, or otherwise engage in other business transactions with the Borrowers or any of their Affiliates (all Other Financings and other such business transactions being collectively, the "OTHER ACTIVITIES") with no responsibility to account therefor to the Banks. Without limiting the rights and remedies of the Banks specifically set forth in the Loan Documents, no other Bank shall have any interest in (a) any Other Activities, (b) any present or future guarantee by or for the account of the Borrowers not contemplated or included in the Loan Documents, (c) any present or future offset exercised by said Agents in respect of any such Other Activities, (d) any present or future Property taken as security for any such Other Activities or (e) any Property now or hereafter in the possession or control of said Agents which may be or become security for the obligations of the Borrowers under the Loan Documents by reason of the general description of indebtedness secured, -53- or of Property, contained in any other agreements, documents or instruments related to such Other Activities; PROVIDED, that if any payment in respect of such guarantees or such Property or the proceeds thereof shall be applied to reduction of the obligations evidenced hereunder and by the Notes, then each Bank shall be entitled to share in such application according to its pro rata portion of such obligations. Section 8.04. BANK CREDIT DECISION. Each Bank acknowledges that it has, independently and without reliance upon any other member of the Bank Group and based on the financial statements referred to in SECTION 4.06 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon any other member of the Bank Group and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Section 8.05. INDEMNIFICATION. The Banks agree to indemnify each of the Administrative Agent, the Syndication Agent and the Issuing Bank, their Affiliates or any of their respective directors, officers, agents or employees (to the extent not reimbursed by the Borrowers), ratably according to its Commitment Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against any such Person in any way relating to or arising out of this Agreement or the other Loan Documents or any action taken or omitted by any such Person under this Agreement or the other Loan Documents, PROVIDED, that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Person's gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and non-appealable judgment). IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE ISSUING BANK AND THEIR AFFILIATES AND THEIR DIRECTORS, OFFICERS, AGENTS OR EMPLOYERS SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND ARISING OUT OF OR RESULTING FROM THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OF SUCH PERSON. Neither the Administrative Agent, the Syndication Agent nor the Issuing Bank shall be required to do any act hereunder or under any other document or instrument delivered hereunder or in connection herewith or take any action toward the execution or enforcement of the agencies hereby created, or to prosecute or defend any suit in respect of this Agreement or the Loan Documents or any Collateral, unless indemnified to its satisfaction by the holders of the Notes against loss, cost, liability, and expense. If any indemnity furnished to the Administrative Agent, the Syndication Agent and the Issuing Bank for any purpose is, in the opinion of such Person insufficient or becomes impaired, such Person may call for additional indemnity and not commence or cease to do the acts indemnified against until such additional indemnity is furnished. Without limitation of the foregoing, each Bank agrees to reimburse the Administrative Agent, the Syndication Agent and the Issuing Bank promptly upon -54- demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by such Person in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and the other Loan Documents, to the extent that the Administrative Agent, the Syndication Agent or the Issuing Bank is not reimbursed for such expenses by the Borrowers. Section 8.06. EMPLOYEES. Each of the Administrative Agent, the Syndication Agent and the Issuing Bank may execute any of their respective duties under this Agreement, the other Loan Documents and any instrument, agreement or document executed, issued or delivered pursuant hereto or thereto or in connection herewith or therewith, by or through employees, agents and attorneys-in-fact, and shall not be answerable for the default or misconduct of any such employee, agent or attorney-in-fact selected by it with reasonable care. Each of the Administrative Agent, the Syndication Agent and the Issuing Bank may, and upon the written instruction of the Majority Banks shall, enforce on behalf of the Banks any claims which the Administrative Agent and/or the Banks may have against any such employee, agent or attorney-in-fact, and any recovery therefrom shall be applied for the pro rata benefit of the Banks. Section 8.07. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign at any time by giving written notice thereof to the other members of the Bank Group and the Borrower. Upon any such resignation, the Majority Banks shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Banks, and shall have accepted such appointment, within thirty (30) days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent, which shall be a commercial bank or corporation organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. So long as no Default exists, the Borrowers shall have the right to approve each successor Administrative Agent, which approval shall not be unreasonably withheld. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement, subject to the requirement that such retiring Administrative Agent will execute such documents and take such actions as may be necessary or desirable to cause the successor Administrative Agent to be vested with all such rights, powers, privileges and duties. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this ARTICLE VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. All reasonable costs and expenses incurred by the Bank Group in connection with any amendments or other documentation required by this SECTION 8.07 shall be paid by the Borrowers pursuant to SECTION 10.04. -55- Section 8.08. SUCCESSOR SYNDICATION AGENT AND ISSUING BANK. (a) The Syndication Agent may resign at any time by giving written notice thereof to the other members of the Bank Group and the Borrowers. Upon any such resignation, the Majority Banks shall have the right to appoint a successor Syndication Agent. If no successor Syndication Agent shall have been so appointed by the Majority Banks, and shall have accepted such appointment, within thirty (30) days after the retiring Syndication Agent's giving of notice of resignation, then the retiring Syndication Agent may, on behalf of the Banks, appoint a successor Syndication Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. So long as no Default exists, the Borrowers shall have the right to approve each successor Syndication Agent, which approval shall not be unreasonably withheld. Upon the acceptance of any appointment as Syndication Agent hereunder by a successor Syndication Agent, such successor Syndication Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Syndication Agent, and the retiring Syndication Agent shall be discharged from its duties and obligations under this Agreement, subject to the requirement that such retiring Syndication Agent will execute such documents and take such actions as may be necessary or desirable to cause the successor Syndication Agent to be vested with all such rights, powers, privileges and duties. After any retiring Syndication Agent's resignation hereunder as Syndication Agent, the provisions of this ARTICLE VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Syndication Agent under this Agreement. All reasonable costs and expenses incurred by the Bank Group in connection with any amendments or other documentation required by this SECTION 8.08(A) shall be paid by the Borrowers pursuant to SECTION 10.04. (b) The Issuing Bank may resign at any time by giving written notice thereof to the other members of the Bank Group and the Borrowers. Upon any such resignation, the Majority Banks shall have the right to appoint a successor Issuing Bank. If no successor Issuing Bank shall have been so appointed by the Majority Banks, and shall have accepted such appointment, within thirty (30) days after the retiring Issuing Bank's giving of notice of resignation, then the retiring Issuing Bank may, on behalf of the Banks, appoint a successor Issuing Bank, which shall be a commercial bank or corporation organized under the laws of the United States of America or of any state thereof and having a combined capital and surplus of at least $500,000,000. So long as no Default exists, the US Borrower shall have the right to approve each successor Issuing Bank, which approval shall not be unreasonably withheld. Upon the acceptance of any appointment as Issuing Bank hereunder by a successor Issuing Bank, such successor Issuing Bank shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Issuing Bank, and the retiring Issuing Bank shall be discharged from its duties and obligations under this Agreement, subject to the requirement that such retiring Issuing Bank will execute such documents and take such actions as may be necessary or desirable to cause the successor Issuing Bank to be vested with all such rights, powers, privileges and duties. Without limiting the generality of the foregoing, the US Borrower, the retiring Issuing Bank and the successor Issuing Bank will cause each Letter of Credit issued by the retiring Issuing Bank to be terminated and replaced by a Letter of Credit issued by the successor Issuing Bank. After any retiring Issuing Bank's resignation hereunder as Issuing Bank, the provisions of this ARTICLE VIII shall inure to its benefit as to any -56- actions taken or omitted to be taken by it while it was Issuing Bank under this Agreement. All reasonable costs and expenses incurred by the Bank Group in connection with any amendments or other documentation required by this SECTION 8.08(B) shall be paid by the Borrowers pursuant to SECTION 10.04. Section 8.09. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless it shall have received notice from a Bank or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default" or "notice of event of default," as applicable. If the Administrative Agent receives such a notice from a Borrower, the Administrative Agent shall give notice thereof to the other members of the Bank Group and, if such notice is received from a Bank, the Administrative Agent shall give notice thereof to the other members of the Bank Group and the Borrowers. The Administrative Agent shall be entitled to take action or refrain from taking action with respect to such Default or Event of Default as provided in this ARTICLE VIII. Section 8.10. EXECUTION OF LOAN DOCUMENTS. Each member of the Bank Group hereby authorizes and directs the Administrative Agent, the Syndication Agent and the Issuing Bank to execute and deliver on its behalf each Loan Document to be executed by the Administrative Agent pursuant to the terms of this Agreement. -57- ARTICLE IX GUARANTY Section 9.01. GUARANTY. (a) In consideration of, and in order to induce the Banks to make Loans under this Agreement and to induce the Issuing Bank to issue Letters of Credit under this Agreement, each Guarantor, including each Borrower, hereby jointly, severally, unconditionally and irrevocably, guarantees, as primary obligor, and not merely as surety, the punctual payment and performance when due, whether at stated maturity, as an installment, by required or optional prepayment or by demand, acceleration or otherwise, of all Obligations of the Borrowers now or hereafter existing, except as hereinafter provided. If any or all of the Obligations becomes due and payable hereunder, the Guarantors jointly and severally unconditionally promise to pay such Obligations to the Administrative Agent, or order, on demand, together with any and all expenses (including reasonable counsel fees and expenses) which may be incurred by the Bank Group in collecting any of the Obligations and in connection with the protection, defense or enforcement of any rights under this Agreement or any Loan Document; PROVIDED that notwithstanding anything contained herein or in any of the Loan Documents to the contrary, the maximum liability of each Guarantor hereunder shall never exceed the maximum amount which said Guarantor could pay without having such payment set aside as a fraudulent transfer or fraudulent conveyance or similar action under the U.S. Bankruptcy Code or applicable state or foreign law, PROVIDED FURTHER, each Guarantor shall be unconditionally required to pay all amounts demanded of it hereunder prior to any determination of such maximum liability and the recipient of such payment, if so required by a final non-appealable order of a court of competent jurisdiction by final and non-appealable judgment, shall then be liable for the refund of any excess amounts. If any such rebate or refund is ever required, all other Guarantors (and the Borrowers) shall be fully liable for the repayment thereof to the maximum extent allowed by applicable law. (b) Notwithstanding any provisions of SECTION 9.01(A), the Guarantor, Scott Pickford, shall not guaranty the Tranche B Loan, nor shall the Guarantors Saybolt International B.V. or Saybolt Eastern Hemisphere B.V. guaranty either: (i) the Tranche A Loan or (ii) the Dollar Revolving Loan to the Parent in the principal amount of $30,000,000.00. (c) The Guaranty of each of Saybolt International B.V., Saybolt North America, Inc., Saybolt, Inc. and Saybolt Eastern Hemisphere B.V. shall be effective only upon the acquisition of Saybolt by the Parent, as referenced in SECTION 3.01(H). Until such acquisition, such Guaranty by said Persons shall not be effective, notwithstanding said Persons' execution of this agreement, PROVIDED, such Guaranty shall automatically become effective without the need for further action of any kind by any Person at the time such acquisition is effective. Section 9.02. GUARANTY ABSOLUTE. Subject to SECTION 9.01, each of the Guarantors hereby unconditionally guarantees that the Obligations will be paid strictly in accordance with the terms of this Agreement, the Notes and the other Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any member of the Bank Group with respect thereto. The liability of each Guarantor under this -58- ARTICLE IX shall constitute a guaranty of payment and not of collection and shall be absolute and unconditional irrespective of, and each Guarantor waives any and all defenses that may arise out of, any of the following: (a) any lack of validity or enforceability of the Obligations, this Agreement, the Notes, or any other Loan Document or any other agreement, security document or instrument relating hereto or thereto; (b) any extension, renewal, modification, settlement, compromise, waiver or release or any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from this Agreement, the Notes or any other Loan Document or any other agreement or instrument relating thereto or executed in connection therewith or pursuant thereto; (c) any taking, exchange, release or non-perfection of any Collateral, or any release or amendment or waiver of or consent to departure from any other Guaranty Agreement, for all or any of the Obligations; (d) any manner of application of collateral, or proceeds thereof, to all or any of the Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Obligations or any other assets of the Borrowers or any other Person (including any other Guarantor); (e) any change, restructuring or termination of the corporate structure or existence of any of the Borrowers or any other Person; (f) any manner of application of payments on the Obligations, whether at the direction of any of the Borrowers or any other Person; (g) any other similar circumstances which might otherwise constitute a defense available to, or a discharge of, any of the Borrowers or any other Person (including any other Guarantor) of all or part of the Obligations; or (h) any of said Guarantor's obligations as a Borrower hereunder in respect of any other Loan. The obligations of the Guarantors under this guaranty shall not be subject to reduction, termination or other impairment by reason of any setoff, recoupment, counterclaim or defense or for any other reason. This guaranty is to be in addition to and is not to prejudice or be prejudiced by any other securities or guaranties (including any guaranty signed by any other Guarantor) which any member of the Bank Group may now or hereafter hold from or on account of any of the Borrowers and is to be binding on each Guarantor as a continuing security notwithstanding any payments from time to time made to any member of the Bank Group or any settlement of account or disability or incapacity affecting such Guarantor or any other thing whatsoever. Section 9.03. WAIVER. Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Agreement and any liability to which this Agreement applies or may apply, and waives presentment, demand of payment, notice of intent to accelerate, notice of acceleration, notice of dishonor or nonpayment, and any requirement that any member of the Bank Group institute suit, collection proceedings or take any other action to collect the Obligations, including any requirement that any member of the Bank Group protect, secure, perfect or insure any security interest or Lien against any Property subject thereto or exhaust any right or take any action against the Borrowers or any other Person (including the other Guarantor) or any Collateral (it being the intention of the Bank Group and each Guarantor that the obligations of such Guarantor under this ARTICLE IX are to be a guaranty of payment and not of collection) or that any Borrower or any other Person (including the any other Guarantor) be joined in any action hereunder. Each Guarantor hereby expressly waives, to the extent it is located in Texas or otherwise entitled to the benefits thereof, each and every right to which it may be entitled by virtue of the suretyship laws of the State of Texas, including, without limitation, any and all rights -59- it may have pursuant to Rule 31 or Rule 32, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and Chapter 34 of the Texas Business and Commerce Code. Each Guarantor hereby waives marshaling of assets and liabilities, sale in inverse order of alienation, notice by any member of the Bank Group of the creation of any Indebtedness or liability to which it applies or may apply, any amounts received by any member of the Bank Group, notice of disposition or substitution of Collateral and of the creation, advancement, increase, existence, extension, renewal, rearrangement and/or modification of the Obligations. Section 9.04. SUBROGATION. Subject to SECTION 9.06, each Guarantor hereby irrevocably agrees that until the Obligations have been paid in full and all the Commitments have been canceled, it will not exercise any rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder (a) to be subrogated to the rights of any member of the Bank Group against any of the Borrowers with respect to such payment, (b) to be reimbursed, indemnified or exonerated by any of the Borrowers in respect thereof, (c) to receive any payment, in the nature of contribution or for any other reason, from any of the Borrowers with respect to such payment, (d) to enforce any remedy which such Guarantor now has or may hereafter have against the Borrowers or (e) to receive any benefit of, or right to participate in, any security now or hereafter held by or for the benefit of any member of the Bank Group. Each Guarantor agrees that if any amount shall be paid to such Guarantor on account of any such rights at any time while such rights are restricted pursuant to the preceding sentence, such amount shall be held in trust for the benefit of the Bank Group and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Obligations, whether matured or unmatured, in accordance with the terms of this Agreement. Section 9.05. CONTINUING GUARANTY. This guaranty is a continuing guaranty and shall remain in full force and effect until payment in full of the Obligations. Section 9.06. EFFECT OF BANKRUPTCY PROCEEDING. This guaranty shall continue to be effective, or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Obligations is rescinded or must otherwise be restored or returned by any member of the Bank Group upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any of the Borrowers, any Guarantor or any other Person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to any of the Borrowers, any Guarantor or any other Person, or any substantial part of their Property, or otherwise, all as though such payments had not been made. If an Event of Default shall at any time have occurred and be continuing and declaration of such Event of Default shall at such time be prevented by reason of the pendency against any of the Borrowers of a case or proceeding under a bankruptcy or insolvency law, each Guarantor agrees that, for purposes of this Agreement and its obligations hereunder, the Obligations shall be deemed to have been accelerated with the same effect as if the Obligations had been accelerated in accordance with the terms hereof, and each Guarantor shall forthwith pay the Obligations specified by the Administrative Agent to be paid hereunder without further notice or demand. -60- Section 9.07. FURTHER RESPONSIBILITIES. It is not necessary for any member of the Bank Group to inquire into the capacity or powers of the Borrowers or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. Each Guarantor assumes all responsibility for being and keeping itself informed of the other Borrowers' financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks which each Guarantor assumes and incurs hereunder, and agrees that no member of the Bank Group shall have any duty to advise either Guarantor of information known to them regarding such circumstances or risks. Section 9.08. SUBORDINATION. Each Borrower and Guarantor hereby subordinates all indebtedness owing to it from any other Borrower or Guarantor to the Obligations, and agrees that upon the occurrence and during the continuance of a Default or an Event of Default, it shall not accept any payment on the same until payment in full of the Obligations, and shall in no circumstance whatsoever attempt to set off or reduce any obligations hereunder because of such Indebtedness. -61- ARTICLE X MISCELLANEOUS Section 10.01. AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement, any Note or any other Loan Document, or consent to any departure by any Person herefrom or therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrowers and the Majority Banks, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, that no amendment, waiver or consent shall, unless in writing and signed by all the Banks, do any of the following: (a) waive any of the conditions specified in ARTICLE III, (b) increase the Commitments of the Banks, (c) reduce the principal of, or interest on, the Notes, the reimbursement obligations in respect of the Letters of Credit or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Notes, the reimbursement obligations in respect of the Letters of Credit or any fees or other amounts payable hereunder, (e) release a Credit Party or any other Person from its payment obligations to the Bank Group, regardless of whether such obligations are those of a primary obligor, a guarantor or surety, or otherwise, (f) authorize the Administrative Agent to release Liens against any Collateral covered by the Security Documents, (g) take action which expressly requires the signing of all the Banks pursuant to the terms of this Agreement, (h) reduce the Commitment Percentages or the aggregate unpaid principal amount of the Notes, or the number of Banks, as the case may be, required for the Administrative Agent, the Syndication Agent, the Issuing Bank or the Banks or any of them to take any action under this Agreement or change the definition of Majority Banks or (i) amend this SECTION 10.01; PROVIDED, FURTHER, that no amendment, waiver or consent shall (i) unless in writing and signed by the Borrowers and the Administrative Agent in addition to the Banks required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document, (ii) unless in writing and signed by the Borrowers and the Syndication Agent in addition to the Banks required above to take such action, affect the rights or duties of the Syndication Agent under this Agreement or any other Loan Document and (iii) unless in writing and signed by the Borrowers and the Issuing Bank in addition to the Banks required above to take such action, affect the rights or duties of the Issuing Bank under this Agreement, the Letters of Credit, Letter of Credit Applications, or any other Loan Document. Any amendment, waiver or consent that becomes effective in accordance with this SECTION 10.01 shall be binding on all of the Banks and upon each future holder of any Note and upon each Credit Party without regard to whether such Note has been marked to indicate such amendment, waiver or consent. Section 10.02. PARTICIPATION AGREEMENTS AND ASSIGNMENTS; INTER-CREDITOR MATTERS. (a) Each Bank may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Loans owing to it, the Note or the Notes held by it, its interest in the Outstanding Letters of Credit and the other Loan Documents); PROVIDED, that (i) each such assignment shall be of a constant; and not a varying, percentage of all rights and obligations of the assignor under this Agreement and the other Loan Documents, (ii) the amount of the Commitment or Loans of the assigning Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and -62- Acceptance with respect to such assignment) shall, unless otherwise agreed to by the Administrative Agent or unless such assignment is to a member of the Bank Group, in no event be less than $5,000,000.00 in respect of all Loans assigned (or, if in a Foreign Currency, in its Equivalent thereof in Dollars), (iii) each such assignment to an Eligible Assignee who is not a member of the Bank Group must be approved by the Parent, the Administrative Agent and the Issuing Bank (which approval shall not be unreasonably withheld), and (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note subject to such assignment and a recordation fee in the amount of $3,500 for processing such assignment. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Bank under the Loan Documents, (y) the assigning Bank thereunder shall, to the extent that rights and obligations under the Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from further obligations under the Loan Documents (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Bank's rights and obligations under this Agreement, such Bank shall cease to be a party hereto) and (z) the assignee thereunder shall be deemed to have made, as of such effective date, to the Administrative Agent and the Borrowers the representations and warranties set forth in SECTION 2.11(F). (b) By executing and delivering an Assignment and Acceptance, the assigning Bank thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or any other Person or the performance or observance by any Borrower or any other Person of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement and the other Loan Documents, together with copies of the financial statements referred to in SECTION 4.06 and SECTION 5.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon any member of the Bank Group (including such assigning Bank) and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent, the Syndication Agent and the Issuing Bank, to take such action on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to such Person by the terms thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with -63- their terms all of the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Bank. (c) The Administrative Agent shall maintain at its address referred to in SECTION 10.03 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the Commitment of, and principal amount of the Loans owing to, each Bank from time to time (the "REGISTER"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers and each member of the Bank Group may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any member of the Bank Group at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank and an assignee representing that it is an Eligible Assignee, together with any Notes subject to such assignment and the administrative fee payable to the Administrative Agent for such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of EXHIBIT 10.02 hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers. Within five (5) Business Days after its receipt of such notice, the Borrowers, at their own expense, shall execute and deliver to the Administrative Agent, in exchange for the surrendered Notes, new Notes to the order of such Eligible Assignee in an amount corresponding to the relevant Commitment and Loans assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank has retained any Commitment and Loans hereunder, new Notes to the order of the assigning Bank in an amount corresponding to the relevant Commitment and Loans retained by it hereunder. Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Notes shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form prescribed by SECTION 2.04 hereto. The Administrative Agent shall promptly return such surrendered Notes to the Parent marked "canceled" or otherwise defaced. (e) Each Bank may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Loans owing to it and its interest in the Outstanding Letters of Credit); PROVIDED, that (i) such Bank's obligations under this Agreement (including, without limitation, its Commitment to the Borrowers hereunder) and the other Loan Documents shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, and the participating banks or other entities shall not be considered a "Bank" for purposes of the Loan Documents, (iii) the participating banks or other entities shall be entitled to the cost protection provisions contained in SECTION 2.11 through SECTION 2.14 to the same extent that the Bank from which such participating bank or other entity acquired its participation would be entitled to the benefit of such cost protection provisions so long as such Borrower is not obligated to pay any amount under such Sections in excess of the amount that would have been due -64- to such Bank under such Sections if no participations had been made by such Bank, and (iv) the Borrowers and the other members of the Bank Group shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement and the other Loan Documents, and such Bank shall retain the sole right to enforce the obligations of the Borrowers relating to the Loans and the Letters of Credit to the extent permitted hereby and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers with respect to the amounts of any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Loans or the amount of any reimbursement obligations payable with respect to any Letter of Credit or the dates fixed for payments of principal or interest on the Loans or reimbursement obligations in respect of any Letters of Credit). (f) Any Bank may at any time pledge or assign all or any portion of its rights under this Agreement and the other Loan Documents to any Federal Reserve Bank without notice to or consent of the Borrowers. No such pledge or assignment shall release the assigning Bank from its obligations hereunder. (g) The Administrative Agent, the Syndication Agent, the Issuing Bank and each Bank may furnish any information concerning a Borrower or its Subsidiaries in its possession from time to time to Affiliates of the Administrative Agent, the Syndication Agent, the Issuing Bank or such Bank (including without limitation, in the case of BTCo, BT Securities Corporation and its employees, to the extent necessary for the purposes contemplated by this Agreement, including, without limitation, the syndication of the credit facilities contemplated hereby) and, in the case of each Bank, to assignees and participants (including prospective assignees and participants) of such Bank; PROVIDED such recipient agrees to be bound by the terms of SECTION 10.15. If requested by the Parent, such Bank will identify prospective assignees and participants that have received such information. Section 10.03. NOTICES. All correspondence, statements, notices, requests and demands (collectively "COMMUNICATIONS") shall be in writing (including telegraphic Communications) and mailed, telegraphed, telecopied, facsimile transmitted or delivered as follows: if to the Parent -- Core Laboratories N.V. Herengracht 424 1017 BZ Amsterdam The Netherlands Telecopier: 011-31-20-627-9886 -65- if to the US Borrower -- Core Laboratories, Inc. 5295 Hollister Road Houston, Texas 77040 Attn: Richard L. Bergmark Telecopier: (713) 690-3947 Telephone: (713) 460-9600 if to the U.K. Borrower -- Core Laboratories (U.K.) Limited Howe Moss Drive Dyce Aberdeen AB 2 OES Scotland, United Kingdom Telecopier: 011-44-1224-723-303 in the case of each notice to any Borrower, with a copy to -- Vinson & Elkins L.L.P. 2300 First City Tower 1001 Fannin St. Houston, Texas 77002 Attn: T. Mark Kelly Telecopier: (713) 615-5531 and to: John D. Denson General Counsel, Core Laboratories 5295 Hollister Road Houston, Texas 77040 Telecopier: (713) 690-3947 if to the Administrative Agent -- Bankers Trust Company 130 Liberty Street, 14th Floor New York, New York 10006 Attention: James T. Cullen Telecopier: (212) 250-6029 or (212) 250-7351 -66- with a copy to -- Bankers Trust Company 909 Fannin Street, Suite 3000 Houston, Texas 77010 Attention: Roberta K. Bohn Telecopier: (713) 759-6708 and to -- Andrews & Kurth L.L.P. 4200 Texas Commerce Tower Houston, Texas 77002 Attention: Thomas J. Perich Telecopier: (713) 220-4285 if to the Syndication Agent or the Issuing Bank -- NationsBank, N.A. 700 Louisiana, 7th Floor Houston, Texas 77002 Attention: Craig S. Wall or Jennifer Textus Telecopier: (713) 247-7748 and to -- Andrews & Kurth L.L.P. 4200 Texas Commerce Tower Houston, Texas 77002 Attention: Thomas J. Perich Telecopier: (713) 220-4285 if to any Bank, at its Domestic Lending Office, or as to each such party, at such other address as such party shall designate in a written Communication to each of the other parties hereto. All such Communications shall be effective, in the case of written or telegraphed Communications, when deposited in the mails or delivered to the telegraph company, respectively, and, in the case of a Communication by telecopy or facsimile transmission, when telecopied or transmitted against receipt of a confirmation, in each case addressed as aforesaid, except that Communications to any member of the Bank Group pursuant to ARTICLE II and ARTICLE VIII shall not be effective until received by such Persons. Section 10.04. COSTS AND EXPENSES. Each Borrower agrees to pay promptly (a) all reasonable costs and expenses (including fees and expenses of legal counsel) of the Administrative -67- Agent, the Syndication Agent and the Issuing Bank incurred in connection with the preparation, execution, delivery, filing, administration and recording of the Loan Documents and the primary syndication of this Agreement in the course of the initial syndication period (both before and after the date hereof) and (b) all reasonable costs and expenses of any member of the Bank Group incurred in connection with the enforcement of the Loan Documents including, but not limited to, the reasonable fees and out-of-pocket expenses of counsel for any member of the Bank Group, and local counsel who may be retained by such counsel, with respect thereto, and the costs and expenses in connection with the custody, preservation, or the sale of, or collection from, or other realization upon the sale of, or collection from, or other realization upon any Collateral covered by any of the Loan Documents. The agreements of any of the Borrowers contained in this SECTION 10.04 shall survive the termination of the Commitments and the payment of all other amounts owing under any of the Loan Documents. Section 10.05. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Bank Group and their respective successors and assigns, except that no Borrower may assign or transfer its rights hereunder without the prior written consent of the Banks. Section 10.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained in this Agreement and the other Loan Documents or made in writing by the Borrowers or any Guarantor in connection herewith or therewith, shall survive the execution and delivery of this Agreement, the Notes and the other Loan Documents. Any investigation by any member of the Bank Group shall not diminish in any respect whatsoever its right to rely on such representations and warranties. Section 10.07. SEPARABILITY. Should any clause, sentence, paragraph, subsection, Section or Article of this Agreement be judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Agreement. The parties hereto agree that the part or parts of this Agreement so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom by the parties hereto, and the remainder will have the same force and effectiveness as if such stricken part or parts had never been included herein. Section 10.08. CAPTIONS. The captions in this Agreement have been inserted for convenience only and shall be given no substantive meaning or significance whatsoever in construing the terms and provisions of this Agreement. Section 10.09. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same agreement. Counterparts executed by facsimile shall be binding and enforceable against the party forwarding same and all other parties hereto, PROVIDED each party hereto -68- agrees to use reasonable efforts to provide original signatures to all other parties as soon as practicable. Section 10.10. GOVERNING LAW. THIS AGREEMENT (INCLUDING THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. Section 10.12. SUBMISSION TO JURISDICTION. (A) EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, CITY AND STATE OF NEW YORK, OR ANY FEDERAL COURT LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, AND EACH BORROWER AND EACH GUARANTOR IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; PROVIDED, NOTHING IN THIS SECTION 10.12 IS INTENDED TO WAIVE THE RIGHT OF ANY MEMBER OF THE BANK GROUP TO REMOVE ANY SUCH ACTION OR PROCEEDING COMMENCED IN ANY SUCH NEW YORK STATE COURT TO AN APPROPRIATE NEW YORK FEDERAL COURT TO THE EXTENT THE BASIS FOR SUCH REMOVAL EXISTS UNDER APPLICABLE LAW. EACH BORROWER AND EACH GUARANTOR HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEM (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTIES SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY SENDING BY CERTIFIED MAIL OR COURIER DELIVERY SERVICE A COPY OF SUCH PROCESS TO SUCH BORROWER OR SUCH GUARANTOR IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, WITH A COPY TO SUCH BORROWER OR SUCH GUARANTOR AT ITS ADDRESS SPECIFIED HEREIN AND EACH BORROWER AND EACH GUARANTOR HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, EACH BORROWER -69- AND EACH GUARANTOR ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE SENDING BY CERTIFIED MAIL OR COURIER DELIVERY SERVICE OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS SPECIFIED HEREIN. FOR ALL NON-BORROWER GUARANTORS, THE ADDRESS MAY BE THAT SHOWN ON SCHEDULE 10.12 EACH BORROWER AND EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION 10.12 SHALL AFFECT THE RIGHT OF ANY MEMBER OF THE BANK GROUP TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY MEMBER OF THE BANK GROUP TO BRING ANY ACTION OR PROCEEDING AGAINST A BORROWER, A GUARANTOR OR ITS PROPERTIES, IN THE COURTS OF ANY OTHER JURISDICTION. (B) TO THE EXTENT THAT ANY BORROWER OR ANY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY (SOVEREIGN OR OTHERWISE) FROM ANY LEGAL ACTION, SUIT OR PROCEEDING, FROM JURISDICTION OF ANY COURT OR FROM SET-OFF OR ANY LEGAL PROCESS (WHETHER SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) WITH RESPECT TO ITSELF OR ANY OF ITS PROPERTY, SUCH BORROWER OR GUARANTOR HEREBY IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH BORROWER AND EACH GUARANTOR HEREBY AGREES THAT THE WAIVERS SET FORTH IN THIS SECTION 10.12 SHALL HAVE THE FULLEST EXTENT PERMITTED UNDER THE FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976 OF THE UNITED STATES OF AMERICA AND ARE INTENDED TO BE IRREVOCABLE AND NOT SUBJECT TO WITHDRAWAL FOR PURPOSES OF SUCH ACT. Section 10.13. LIMITATION ON INTEREST. Each provision in this Agreement and each other Loan Document is expressly limited so that in no event whatsoever shall the amount paid, or otherwise agreed to be paid, by a Borrower for the use, forbearance or detention of the money to be loaned under this Agreement or any other Loan Document or otherwise (including any sums paid as required by any covenant or obligation contained herein or in any other Loan Document which is for the use, forbearance or detention of such money), exceed that amount of money which would cause the effective rate of interest to exceed the Highest Lawful Rate, and all amounts owed under this Agreement and each other Loan Document shall be held to be subject to reduction to the effect that such amounts so paid or agreed to be paid which are for the use, forbearance or detention of money under this Agreement or such Loan Document shall in no event exceed that amount of money which would cause the effective rate of interest to exceed the Highest Lawful Rate. To the extent that the Highest Lawful Rate applicable to a Bank is at any time determined by Texas law, such rate -70- shall be the "indicated rate ceiling" described in Section (a)(1) of Article 1.04 of Chapter 1, Subtitle 1, Title 79, of the Revised Civil Statutes of Texas, 1925, as amended; PROVIDED, to the extent permitted by such Article, the Banks from time to time by notice from the Administrative Agent to the Borrowers may revise the aforesaid election of such interest rate ceiling as such ceiling affects the then-current or future balances of the Loans outstanding under the Notes. Notwithstanding any provision in this Agreement or any other Loan Document to the contrary, if the maturity of the Notes or the obligations in respect of the other Loan Documents are accelerated for any reason, or in the event of prepayment of all or any portion of the Notes or the obligations in respect of the other Loan Documents by a Borrower or in any other event, earned interest on the Loans and such other obligations of such Borrower may never exceed the maximum amount permitted by applicable law, and any unearned interest otherwise payable under the Notes or the obligations in respect of the other Loan Documents that is in excess of the maximum amount permitted by applicable law shall be canceled automatically as of the date of such acceleration or prepayment or other such event and, if theretofore paid, shall be credited on the principal of the relevant Notes or, if the principal of the relevant Notes has been paid in full, held as collateral for any contingent or unmatured obligation of such Borrower, or, if there are no contingent or unmatured obligations of such Borrower then outstanding, refunded to such Borrower. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Highest Lawful Rate, the Borrowers and the Banks shall, to the maximum extent permitted by applicable law, amortize, prorate, allocate and spread, in equal parts during the period of the actual term of this Agreement, all interest at any time contracted for, charged, received or reserved in connection with this Agreement. Chapter 15, Subtitle 3, Title 79, of the Revised Civil Statutes of Texas, 1925, as amended (relating to revolving loans and revolving triparty accounts), shall not apply to this Agreement or the Notes or the transactions contemplated hereby. Section 10.14. INDEMNIFICATION. Each Borrower agrees to indemnify, defend and hold each member of the Bank Group, their Affiliates and their officers, employees, agents, directors, shareholders and Affiliates (collectively, "INDEMNIFIED PERSONS") harmless from and against any and all loss, liability, damage, judgment, claim, deficiency or expense (including interest, penalties, reasonable attorneys' fees and amounts paid in settlement) incurred by or asserted against any Indemnified Person arising out of, in any way connected with, or as a result of (i) the execution and delivery of this Agreement and the other Loan Documents, the performance by the parties hereto and thereto of its obligations hereunder and thereunder (including but not limited to the making of the Commitments of each Bank) and consummation of the transactions contemplated hereby and thereby, (ii) the actual or proposed use of the Letters of Credit or the proceeds of the Loans, (iii) any violation by a Borrower or any of its Subsidiaries of any Requirement of Law, including but not limited to Environmental Laws, (iv) ownership by the Bank Group of any Property following foreclosure under the Security Documents, to the extent such losses, liabilities, damages, judgments, claims, deficiencies or expenses arise out of or result from the presence, disposal or release of any hazardous materials or solid waste in, on or under such property during the period owned, leased or operated by a Borrower or any of its Subsidiaries, including, without limitation, losses, liabilities, damages, judgments, claims, deficiencies or expenses which are imposed under Environmental Laws upon Persons by virtue of their ownership, (v) any member of the Bank Group being deemed an -71- operator of any such real or personal property in circumstances in which no member of the Bank Group is generally operating or generally exercising control over such Property, to the extent such losses, liabilities, damages, judgments, claims, deficiencies or expenses arise out of or result from any hazardous materials or solid waste located in, on or under such property or (vi) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnified Person is a party thereto; PROVIDED that such indemnity shall not apply to any such losses, claims, damages, liabilities or related expenses that are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnified Person. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, IT IS THE EXPRESS INTENTION OF THE BORROWERS THAT EACH INDEMNIFIED PERSON SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DEFICIENCIES, JUDGMENTS OR REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM THE ORDINARY NEGLIGENCE (WHETHER SOLE, CONCURRENT OR CONTRIBUTORY) OF SUCH INDEMNIFIED PERSON. THE OBLIGATIONS OF THE BORROWERS UNDER THIS SECTION 10.14 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT. Section 10.15. CONFIDENTIALITY. In the event that a Borrower or any of its Subsidiaries provides any member of the Bank Group with written confidential information belonging to such Borrower or any of its Subsidiaries, that has been identified in writing at the time of delivery as "confidential", each member of the Bank Group severally agrees to thereafter maintain such information in confidence in accordance with the standards of care and diligence that each utilizes in maintaining its own confidential information. This obligation of confidence shall not apply to such portions of the information which (i) are in the public domain, (ii) hereafter become part of the public domain, (iii) are previously known by the Bank Group from some source other than a Borrower, (iv) are hereafter obtained by or available to any member of the Bank Group from a third party who owes no obligation of confidence to the Borrowers with respect to such information or through any other means, (vi) are disclosed with a Borrower's consent, (vii) must be disclosed either pursuant to any Requirements of Law or to Persons regulating the activities of any member of the Bank Group, or (viii) as may be required by law or regulation or order of any Governmental Authority in any judicial, arbitration or governmental proceeding. Further, any member of the Bank Group may disclose any such information to any other Bank, any consultants, any independent certified public accountants, any legal counsel employed by such Person in connection with this Agreement or any other Loan Document, including without limitation, the enforcement or exercise of all rights and remedies thereunder, or any assignee or participant (including prospective assignees and participants) in the Loans; PROVIDED, HOWEVER, that the member of the Bank Group disclosing such information imposes on the Person to whom such information is disclosed the same obligation to maintain the confidentiality of such information as is imposed upon it hereunder. Notwithstanding anything to the contrary provided herein, this obligation of confidence shall cease three (3) years from the date the information was furnished, unless such Borrower requests, in writing at least thirty (30) days prior to the expiration of such three year period, that the Bank Group maintain the confidentiality of such information for an additional three year period. Each Borrower -72- waives any and all other rights it may have to confidentiality as against the Bank Group arising by contract, agreement, statute or law except as expressly stated in this SECTION 10.15. Section 10.16. JUDGMENT. (a) RATE OF EXCHANGE. If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due under any Loan Document in another currency into Dollars or into a Foreign Currency, as the case may be, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, a Bank could purchase such other currency with Dollars or with such Foreign Currency, as the case may be, in New York City, New York at the close of business on the Business Day immediately preceding the day on which final judgment is given, together with any premiums and costs of exchange payable in connection with such purchase. (b) INDEMNITY. The obligation of each Borrower in respect of any sum due from it to the Administrative Agent or any Bank under any Loan Document shall, notwithstanding any judgment in a currency other than Dollars or a Foreign Currency, as the case may be, be discharged only to the extent that on the Business Day next succeeding receipt by the Administrative Agent or such Bank of any sum adjudged to be so due in such other currency, the Administrative Agent or such Bank may, in accordance with normal banking procedures, purchase Dollars or such Foreign Currency, as the case may be, with such other currency. If the Dollars or such Foreign Currency so purchased are less than the sum originally due to such Administrative Agent or such Bank in Dollars or in such Foreign Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Bank against such loss, and if the Dollars or such Foreign Currency so purchased exceed the sum originally due to the Administrative Agent or any Bank in Dollars or in such Foreign Currency, as the case may be, the Administrative Agent or such Bank agrees to remit to such Borrower such excess. Section 10.17. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES. -73- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by its officers thereunto duly authorized as of the date first above written. BORROWERS: CORE LABORATORIES N.V. BY: CORE LABORATORIES INTERNATIONAL B.V., ITS SOLE MANAGING DIRECTOR By: /s/ JACOBUS SCHOUTEN Jacobus Schouten Managing Director CORE LABORATORIES, INC. By: /s/ RICHARD L. BERGMARK Richard L. Bergmark Chief Financial Officer and Treasurer CORE LABORATORIES (U.K.) LIMITED By: /s/ KEN GUEST Ken Guest President ADMINISTRATIVE AGENT: BANKERS TRUST COMPANY, as Administrative Agent By: /s/ CALLIE HAYES Callie Hayes Managing Director SYNDICATION AGENT: NATIONSBANK, N.A., as Syndication Agent and as Issuing Bank By: /s/ CRAIG S. WALL Craig S. Wall Senior Vice President GUARANTORS: CORE LABORATORIES N.V. BY: CORE LABORATORIES INTERNATIONAL B.V., ITS SOLE MANAGING DIRECTOR By: /s/ JACOBUS SCHOUTEN Jacobus Schouten Managing Director CORE LABORATORIES, INC. By: /s/ RICHARD L. BERGMARK Richard L. Bergmark Chief Financial Officer and Treasurer PROTECHNICS COMPANY By: /s/ RICHARD L. BERGMARK Richard L. Bergmark Treasurer CORE LABORATORIES INTERNATIONAL B.V. By: /s/ JACOBUS SCHOUTEN Jacobus Schouten Managing Director CORE LABORATORIES (U.K.) LIMITED By: /s/ KEN GUEST Ken Guest President SCOTT PICKFORD PLC By: /s/ KEN GUEST Ken Guest Managing Director SAYBOLT INTERNATIONAL B.V. SAYBOLT EASTERN HEMISPHERE B.V. By: /s/ FRERIK PLUIMERS Frerik Pluimers Managing Director SAYBOLT, INC. SAYBOLT NORTH AMERICA, INC. By: /s/ DAVID MEAD David Mead President BANKS: Tranche A Commitment: BANKERS TRUST COMPANY $27,500,000.00 Tranche B Commitment: $7,500,000.00 By: /s/ CALLIE HAYES Dollar Revolving Commitment Callie Hayes (a) to Parent - Managing Director $15,000,000.00 (b) to US Borrower - $10,000,000.00 Total - $25,000,000.00 Guilder Revolving ADDRESS: Commitment: $2,500,000 Equivalent 130 Liberty Street, 14th Floor New York, New York 10006 Telecopy No.: (212) 250-6029 DOMESTIC LENDING OFFICE: Bankers Trust Company 130 Liberty Street, 14th Floor New York, New York 10006 EUROCURRENCY LENDING OFFICE: Bankers Trust Company 130 Liberty Street, 14th Floor New York, New York 10006 Tranche A Commitment: NATIONSBANK, N.A. $27,500,000.00 Tranche B Commitment: $7,500,000.00 By: /s/ CRAIG S. WALL Dollar Revolving Commitment Craig S. Wall (a) to Parent - Senior Vice President $15,000,000.00 (b) to US Borrower - $10,000,000.00 Total - $25,000,000.00 Guilder Revolving ADDRESS: Commitment: $2,500,000 Equivalent 700 Louisiana, 7th Floor Houston, Texas 77002 Telecopy No.: (713) 247-7748 DOMESTIC LENDING OFFICE: NationsBank, N.A. Attn: Jennifer Textus 700 Louisiana Houston, Texas 77002 Telecopy No.: (713) 247-7748 EUROCURRENCY LENDING OFFICE: NationsBank, N.A. Attn: Jennifer Textus 700 Louisiana Houston, Texas 77002 Telecopy No.: (713) 247-7748 EX-10.2 3 EXHIBIT 10.2 STOCK PURCHASE AGREEMENT AMONG CORE LABORATORIES N.V., SAYBOLT INTERNATIONAL B.V. AND THE SHAREHOLDERS OF THE SAYBOLT INTERNATIONAL B.V. APRIL 16, 1997 TABLE OF CONTENTS Page ---- ARTICLE I THE ACQUISITION 1.01 THE ACQUISITION..................................................1 1.02 CLOSING..........................................................1 1.03 PURCHASE PRICE...................................................1 1.04 ADJUSTMENT TO CLOSING PURCHASE PRICE.............................2 1.05 DEPOSIT..........................................................2 ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS 2.01 GOOD TITLE.......................................................2 2.02 AUTHORIZATION AND VALIDITY OF AGREEMENTS.........................3 2.03 NO WITHHOLDING...................................................3 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 3.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.....................3 3.02 ORGANIZATIONAL DOCUMENTS.........................................4 3.03 CAPITALIZATION...................................................4 3.04 AUTHORITY........................................................5 3.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.......................5 3.06 PERMITS; COMPLIANCE..............................................6 3.07 FINANCIAL STATEMENTS.............................................7 3.08 ABSENCE OF CERTAIN CHANGES OR EVENTS.............................7 3.09 LITIGATION.......................................................8 3.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS............................8 3.11 TAXES...........................................................11 3.12 CERTAIN BUSINESS PRACTICES......................................11 3.13 ENVIRONMENTAL MATTERS...........................................12 3.14 UNDISCLOSED LIABILITIES.........................................13 3.15 CERTAIN AGREEMENTS..............................................13 3.16 CONTRACTS AND COMMITMENTS.......................................14 3.17 AFFILIATE INTERESTS.............................................14 -i- 3.18 INTELLECTUAL PROPERTY...........................................14 3.19 BROKERS.........................................................15 3.20 INSURANCE.......................................................15 3.21 PROPERTIES......................................................15 3.22 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS......................16 3.23 MATERIAL SUBSIDIARIES...........................................16 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR 4.01 ORGANIZATION AND QUALIFICATION..................................16 4.02 AUTHORITY.......................................................16 4.03 NO CONFLICT; REQUIRED FILINGS AND CONSENTS......................17 4.04 LITIGATION......................................................17 ARTICLE V COVENANTS OF THE COMPANY 5.01 AFFIRMATIVE COVENANTS OF THE COMPANY............................18 5.02 NEGATIVE COVENANTS OF THE COMPANY...............................18 ARTICLE VI COVENANTS OF THE SHAREHOLDERS 6.01 COVENANTS OF THE SHAREHOLDERS...................................20 ARTICLE VII ADDITIONAL AGREEMENTS 7.01 NOTIFICATION OF CERTAIN MATTERS.................................21 7.02 ACCESS AND INFORMATION..........................................21 7.03 APPROPRIATE ACTION; CONSENTS; FILINGS...........................22 7.04 PUBLIC ANNOUNCEMENTS............................................23 7.05 EXPENSES........................................................23 7.06 BOARD OF SUPERVISORY DIRECTORS; OPERATING COMMITTEE.............24 7.07 STICHTING PARTICIPATIE..........................................24 7.08 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. .......24 -ii- ARTICLE VIII INDEMNIFICATION 8.01 IN GENERAL......................................................25 8.02 DEDUCTIBLE; TIME LIMIT; FORM OF PAYMENT; CAP; EXCLUSIVITY.......26 8.03 DEFENSE OF THIRD PARTY CLAIMS...................................26 8.04 WAIVER..........................................................27 ARTICLE IX CONDITIONS 9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY...............27 9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR.................28 9.03 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDERS.........29 ARTICLE X MISCELLANEOUS 10.01 TERMINATION.....................................................30 10.02 EFFECT OF TERMINATION...........................................30 10.03 WAIVER AND AMENDMENT............................................31 10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES.....................31 10.05 ASSIGNMENT......................................................31 10.06 CERTAIN DEFINITIONS.............................................31 10.07 NOTICES.........................................................32 10.08 GOVERNING LAW...................................................34 10.09 SEVERABILITY....................................................35 10.10 COUNTERPARTS....................................................35 10.11 HEADINGS........................................................35 10.12 SPECIFIC PERFORMANCE............................................35 10.13 FORUM...........................................................35 EXHIBITS: Exhibit A -- Form of Escrow Agreement Exhibit B -- Form of Pluimers Employment Agreement Exhibit C -- Form of Mead Employment Agreement Exhibit D -- Form of Heinsbroek Employment Agreement -iii- STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (this "Agreement") is made and entered into as of April 16, 1997 by and among Core Laboratories N.V., a Netherlands public limited liability company ("Acquiror"), Saybolt International B.V., a Netherlands private limited liability company (the "Company"), and each of the shareholders of the Company set forth on the signature pages hereto (collectively, the "Shareholders"). WHEREAS, the Shareholders are the record and (except for Capital Partnership Nominees Ltd. ("CPNL") and Stichting Participatie Saybolt International B.V. (the "Stichting")) beneficial owners of all of the issued and outstanding Class A ordinary shares, par value 1.00 Dutch guilders per share, of the Company ("Company Class A Shares") and Class B ordinary shares, par value 0.10 Dutch guilders per share, of the Company ("Company Class B Shares" and, together with the Company Class A Shares, the "Company Shares"); and WHEREAS, pursuant to the terms and subject to the conditions set forth in this Agreement, each of the Shareholders desires to sell all the Company Shares owned by such Shareholder and Acquiror desires to acquire all of the issued and outstanding Company Shares; NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I THE ACQUISITION 1.01 THE ACQUISITION. Pursuant to the terms and subject to the conditions set forth in this Agreement, Acquiror agrees to purchase from the Shareholders all of the issued and outstanding Company Shares (the "Acquisition") for an aggregate cash purchase price, subject to adjustment as provided in Section 1.04, of U.S. $67 million (the "Purchase Price"). Pursuant to the terms and subject to the conditions set forth in this Agreement, each of Shareholders agrees to sell to Acquiror that number of Company Shares set forth opposite such Shareholder's name on the signature pages to this Agreement for such Shareholder's pro rata portion of the Purchase Price. 1.02 CLOSING. The Closing (as defined in Section 10.06) shall take place (a) at 10:00 a.m. on the next business day following the date on which the conditions set forth in Article IX (other than the conditions set forth in Sections 9.01(b), 9.02(e), 9.03(c) and 9.03(d) and the delivery of the certificates described in Sections 9.02(a), 9.02(b), 9.03(a) and 9.03(b)) of this Agreement have been (or, in the case of Sections 9.02(a), 9.02(b), 9.03(a) and 9.03(b), would be on such date) satisfied or, if permissible, waived, at the offices of Nauta Dutilh located at Weena 750, 3014 DA Rotterdam, The Netherlands or (b) at such other date, place and time as the parties hereto may agree in writing. 1.03 PURCHASE PRICE. Subject to satisfaction or, if permissible, waiver of the conditions set forth in Article IX, the Purchase Price shall be paid by Acquiror at the Closing as follows: (a) U.S. $6 million (the "Escrowed Purchase Price") shall be delivered to Chase Manhattan Bank, N.A., as escrow agent (the "Escrow Agent"), pursuant to an escrow agreement substantially in the form of Exhibit A to this Agreement (the "Escrow Agreement") to secure the obligations of the -1- Shareholders pursuant to Article VIII, (b) U.S. $61 million (as such amount may be reduced by Section 1.04, the "Closing Purchase Price") shall be paid to the Shareholders in immediately available funds (each Shareholder to be paid at the Closing an amount equal to the Closing Purchase Price multiplied by a fraction, the numerator of which is the number of Company Shares owned by such Shareholder and the denominator of which is the aggregate number of Company Shares issued and outstanding on the Closing Date). Each Company Class A Share and each Company Class B Share shall receive the same proportion of the Closing Purchase Price on a per share basis. 1.04 ADJUSTMENT TO CLOSING PURCHASE PRICE. If the estimate delivered by the Company pursuant to Section 9.02(f) of the fees and disbursements of legal counsel, accountants, investment bankers, brokers or finders and actuaries incurred by the Company in connection with the negotiation of this Agreement and that certain Heads of Agreement dated as of January 17, 1997 between the Company and Acquiror and in connection with the transactions contemplated hereby and thereby ("Company Transaction Costs") exceeds U.S. $2.1 million, then the Closing Purchase Price shall be reduced by such excess. 1.05 DEPOSIT. Within two business days after the execution and delivery of this Agreement, Acquiror shall pay to the Company a deposit of U.S. $1 million (the "Deposit") in immediately available funds. The Company agrees to pay to Acquiror the amount of the Deposit plus any accrued interest earned thereon, in immediately available funds, within two business days following the earlier of (a) receipt by the Company of Acquiror's written waiver, in a form reasonably acceptable to the Company, of the conditions set forth in Section 9.02(g) of this Agreement and a copy of any commitment letters received by Acquiror from the source or sources of the Financing (as defined in Section 9.02(g)) evidencing a commitment from such source or sources to provide the Financing to Acquiror, subject to customary conditions, and (b) termination of this Agreement for any reason other than a termination of this Agreement solely as a result of the failure to satisfy the conditions set forth is Section 9.02(g) of this Agreement. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS Each of the Shareholders, severally and not jointly, represents and warrants (except for CPNL, which represents and warrants only to Section 2.01 and the first sentence of Section 2.02) to Acquiror that: 2.01 GOOD TITLE. Except as set forth in Section 2.01 of the Company Disclosure Schedule (as hereinafter defined), such Shareholder is the sole record and (except for CPNL and the Stichting) beneficial owner of, and has good and valid title to, the number of shares of Company Stock set forth opposite such Shareholder's name on the signature pages hereto, free and clear of all liens, claims, encumbrances, options, voting trusts or agreements, proxies or other claims or charges of any nature whatsoever (other than resulting from this Agreement). Upon the execution by each of the Shareholders, the Company and Acquiror of the document referred to in Section 9.02(e), Acquiror shall be the owner of, and have good and valid title to, the shares of Company Stock described opposite such Shareholder's name on the signature pages hereto, free and clear of all liens, claims, -2- encumbrances, options, voting trusts or agreements, proxies or other claims or charges of any nature whatsoever (other than resulting from this Agreement). 2.02 AUTHORIZATION AND VALIDITY OF AGREEMENTS. Such Shareholder has the full power, legal right, capacity and authority to enter into, execute and deliver this Agreement and the Escrow Agreement and to carry out and perform the transactions contemplated hereby and thereby. Each of this Agreement and the Escrow Agreement constitutes a valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms, (a) except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar law now or hereafter in effect relating to or affecting creditors' rights generally, and without limitation, the effect of statutory or other laws regarding fraudulent conveyances and preferential transfers, (b) subject to the limitations imposed by general rules of equity (regardless of whether such enforceability is considered at law or in equity) and (c) with respect to the Stichting, subject to Section 9.01(f). 2.03 NO WITHHOLDING. Neither Acquiror nor any of its affiliates are required to deduct or withhold from the consideration otherwise payable pursuant to this Agreement or the Escrow Agreement to such Shareholder any amounts under the Code (as hereinafter defined) or any other provision of federal, state, local or foreign tax law. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY Subject to Section 8.02, the Company represents and warrants to Acquiror that: 3.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The Company is a Netherlands private limited liability company, and each of the Company's subsidiaries (as such term in defined in Section 10.06 herein) is, except as set forth in Section 3.01 of the Company Disclosure Schedule (as defined below), duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and each of the Company and its subsidiaries has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and, except as set forth in Section 3.01 of the Company Disclosure Schedule, is duly qualified and in good standing to do business in each jurisdiction in which the nature of the business conducted by it or the ownership or leasing of its properties makes such qualification necessary, other than where the failure to be so duly qualified and in good standing could not reasonably be expected to have a Company Material Adverse Effect. The term "Company Material Adverse Effect" as used in this Agreement shall mean any change or effect that would be materially adverse to the business, operations or financial condition of the Company and its subsidiaries, taken as a whole, at the time of such change or effect. Section 3.01 of the Disclosure Schedule delivered by the Company to Acquiror concurrently with the execution of this Agreement (the "Company Disclosure Schedule") sets forth, as of the date of this Agreement, a true and complete list of all the Company's directly or indirectly owned subsidiaries, together with the jurisdiction of incorporation or organization of each subsidiary, the jurisdictions in which each such subsidiary is qualified to conduct business, and the percentage of -3- each subsidiary's outstanding capital stock or other equity interests owned by the Company or another subsidiary of the Company. Such list also indicates which of such subsidiaries are Material Subsidiaries (as hereinafter defined). (b) The corporate or other official record books of the Company and each of its Material Subsidiaries accurately record in all material respects all material company actions taken by their respective shareholders, directors and officers. The copies of the minutes of the meetings of the directors of the Company and each of its Material Subsidiaries, as made available to Acquiror for review, are true and complete copies of the originals of such documents. The term "Material Subsidiary" as used in this Agreement shall mean any subsidiary that in 1996 accounted for 2% or more of the Company's consolidated revenues, 5% or more of the Company's consolidated net assets or both. 3.02 ORGANIZATIONAL DOCUMENTS. The Company has heretofore furnished or made available to Acquiror complete and correct copies of the Articles of Association or the equivalent organizational documents, in each case as amended or restated to the date hereof, of the Company and each of its subsidiaries. Neither the Company nor any of its Material Subsidiaries is in violation of any of the provisions of its Articles of Association (or equivalent organizational documents). 3.03 CAPITALIZATION. (a) The authorized share capital of the Company amounts to NLG 2,000,000. There are authorized 1,000,000 Class A Company Shares and 9,990,000 Class B Company Shares. As of the date of this Agreement, there are 504,639 Class A Company Shares and 495,361 Class B Company Shares issued and outstanding. No Company Shares are held by the Company in its treasury or by the Company's subsidiaries and no Company Shares are reserved for issuance for any purpose. Except as set forth above, there are no capital shares (including preferred shares) of, or other equity interests in, the Company authorized, issued or outstanding. Each of the issued capital shares of, or other equity interests in, each of the Company and its subsidiaries is duly authorized, validly issued and, in the case of capital shares, fully paid and nonassessable, and has not been issued in violation of (nor, except pursuant to the Saybolt International B.V. Shareholders' and Subscription Agreement dated June 4, 1992 (a true, correct and complete copy of which has been provided to Acquiror), are any of the authorized capital shares of, or other equity interests in, the Company or any of its subsidiaries subject to) any preemptive right, right of first refusal or similar rights created by statute, the Articles of Association (or the equivalent organizational documents) of the Company or any of its subsidiaries, or any agreement to which the Company or any of its subsidiaries is a party or is bound, and all such issued shares or other equity interests of the Company's subsidiaries owned by the Company or a subsidiary of the Company are owned free and clear of all security interests, liens, claims, pledges, agreements, limitations on the Company's or such subsidiaries' voting rights, charges or other encumbrances of any nature whatsoever. (b) No bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into or exchangeable or exercisable for securities having the right to vote) on any matters on which shareholders may vote ("Voting Debt") are issued or outstanding. -4- (c) Except as set forth in Section 3.03(a) above or in Section 3.03(c) of the Company Disclosure Schedule, there are no outstanding subscriptions, options, warrants or other rights (including registration rights), agreements, arrangements or commitments of any character to which the Company or any of its subsidiaries is a party relating to the issued or unissued capital stock or other equity interests of the Company or any of its subsidiaries or obligating the Company or any of its subsidiaries to grant, issue or sell any shares of capital stock, Voting Debt or other equity interests of the Company or any of its subsidiaries. Except as set forth in Section 3.03(c) of the Company Disclosure Schedule, there are no obligations, contingent or otherwise, of the Company or any of its subsidiaries (i) to repurchase, redeem or otherwise acquire any Company Shares or shares of other capital stock of the Company or the capital stock or other equity interests of any subsidiary of the Company or (ii) (other than advances to wholly owned subsidiaries in the ordinary course of business) to provide material funds to, or to make any material investment in (in the form of a loan, capital contribution or otherwise), or to provide any guarantee with respect to the material obligations of, any person other than a wholly owned subsidiary of the Company. Except (i) as set forth in Section 3.03(c) of the Company Disclosure Schedule or (ii) for subsidiaries of the Company set forth in Section 3.01 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries (x) directly or indirectly owns, (y) has agreed to purchase or otherwise acquire or (z) holds any interest convertible into or exchangeable or exercisable for, 5% or more of the capital stock or other equity interest of any corporation, partnership, joint venture or other business association or entity. Except as set forth in Section 3.03(c) of the Company Disclosure Schedule, there are no voting trusts, shareholder agreements, proxies or other agreements or understandings with respect to the voting of any shares of capital stock or other equity interests of the Company or any of its subsidiaries. 3.04 AUTHORITY. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Acquiror, constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms. 3.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Assuming that all consents, licenses, permits, waivers, approvals, authorizations, orders, filings and notifications contemplated by the exceptions to Section 3.05(b) are obtained or made and except as disclosed in Section 3.05(a) of the Company Disclosure Schedule, the execution and delivery of this Agreement by the Company does not, and the performance by the Company of its obligations hereunder, including consummation of the transactions contemplated hereby, will not (i) conflict with or violate the Articles of Association, or the equivalent organizational documents, in each case as amended or restated, of the Company or any of its Material Subsidiaries, (ii) conflict with or violate any federal, state, foreign (including, but not limited to, Dutch Law) or local law, statute, ordinance, rule or regulation (collectively, "Laws") or any judgment, order, writ, injunction, determination, arbitration award or decree applicable to the -5- Company or any of its Material Subsidiaries or by or to which any of their respective properties is bound or subject or (iii) result in any material breach of or constitute a material default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation or imposition of a mortgage, pledge, lien, security interest or other charge or encumbrance on any of the properties or assets of the Company or any of its Material Subsidiaries pursuant to, any material note, bond, mortgage, indenture, contract, agreement (other than pursuant to the provisions of the Company's credit facility as in effect on the date of this Agreement, a true, correct and complete copy of which has been provided to Acquiror), lease, license, permit, authorization, franchise or other instrument or obligation to which the Company or any of its Material Subsidiaries is a party or by or to which the Company or any of its Material Subsidiaries or any of their respective properties is bound or subject. (b) The execution and delivery of this Agreement by the Company does not, and the performance by the Company of its obligations hereunder, including consummation of the transactions contemplated hereby, will not, require the Company to obtain any consent, license, permit, certificate, waiver, approval, authorization or order of, or to make any filing with or notification to, any foreign, federal, national, republic, provincial, state, territorial, county, municipal or city agency, department, commission, board, office, bureau, court, tribunal or any other political entity, aggregation, or subdivision of any of the foregoing (each, a "Governmental Entity"), except (i) the applicable requirements, if any, of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filings and notices required pursuant to Dutch Law, (iii) where the failure to obtain such consents, licenses, permits, certificates, waivers, approvals, authorizations or orders, or to make such filings or notifications could not reasonably be expected to cause a Company Material Adverse Effect or to prevent the Company from performing its obligations under this Agreement or (iv) as disclosed in Section 3.05(b) of the Company Disclosure Schedule. 3.06 PERMITS; COMPLIANCE. Except as disclosed in Section 3.06 of the Company Disclosure Schedule, each of the Company and its Material Subsidiaries is in possession of all (i) franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, identification and registration numbers, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the "Company Permits"). Section 3.06 of the Company Disclosure Schedule sets forth a list of each of the Company Permits and the jurisdiction issuing the same, all of which are in good standing and, to the Company's knowledge, not subject to meritorious challenge. Section 3.06 of the Company Disclosure Schedule also sets forth, as of the date of this Agreement, all actions, proceedings or investigations pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries that could reasonably be expected to result in the loss, suspension or revocation of a Company Permit. Except as set forth in Section 3.06 of the Company Disclosure Schedule, the Company and its Material Subsidiaries are in material compliance with, and none of them has received, since December 31, 1994, from any Governmental Entity any written notice with respect to any material non-compliance with, (i) any Law applicable to the Company or any of its subsidiaries or by or to which any of their respective properties is bound or subject, (ii) any judgment, order, writ, injunction determination, arbitration award or decree applicable to the Company or any of its subsidiaries or (iii) any of the Company Permits. -6- 3.07 FINANCIAL STATEMENTS. The Company has provided Acquiror with true, correct and complete copies of its consolidated balance sheets as of, and its income statements and statements of cash flows for the years ended, December 31, 1994, 1995 and 1996, and the notes related thereto (collectively, the "Company Financial Statements"). Each of the Company Financial Statements (including, in each case, any related notes thereto) (i) has been audited by Price Waterhouse L.L.P., (ii) has been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods covered thereby (except (A) to the extent disclosed therein or required by changes in GAAP, or (B) as may be indicated in the notes thereto) and (iii) fairly present the consolidated financial position of the Company and its subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows for the periods indicated. 3.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by this Agreement or as set forth in Section 3.08 of the Company Disclosure Schedule, since December 31, 1995 the Company and its subsidiaries have conducted their respective businesses only in the ordinary course and in a manner consistent with past practice, and there has not been: (i) any damage, destruction or loss with respect to any property, assets or business of the Company or any of its subsidiaries that, whether or not covered by insurance, would constitute a Company Material Adverse Effect; (ii) any change by the Company or its subsidiaries in their accounting methods or practices, credit practices or collection policies; (iii) except for dividends by a wholly owned subsidiary of the Company to the Company or to another wholly owned subsidiary of the Company, any declaration, setting aside or payment of any dividends or distributions in respect of the Company Shares or shares of stock of, or other equity interests in, the Company or any subsidiary of the Company or any redemption, purchase or other acquisition of any of the Company's securities or any of the securities of any subsidiary of the Company; (iv) any material increase in the benefits under, or the establishment or amendment of, any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, performance awards (including, without limitation, the granting of stock appreciation rights or restricted stock awards), stock purchase or other employee benefit plan, or any increase in the compensation payable or to become payable to any of the directors or officers of the Company or the employees of the Company and its subsidiaries as a group, except in the ordinary course of business and consistent with past practice or in contemplation of the Acquisition and with Acquiror's written consent; (v) any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any of the properties or assets of the Company or any of its subsidiaries other than in the ordinary course of business; (vi) any change in the financial condition, properties, assets, liabilities, business or operations of the Company or any of its subsidiaries, which change by itself or in conjunction with all other such changes, whether or not arising in the ordinary course of business, would constitute a Company Material Adverse Effect (except that operating results have been consistent, generally, with the results reflected in the Company Financial Statements); (vii) any contingent liability incurred by the Company or any of its subsidiaries as guarantor or otherwise with respect to the obligations of others or any cancellation of any material debt or claim owing to, or waiver of any material right of, the Company or any of its subsidiaries, other than warranties or other similar items incurred in the ordinary course of business; (viii) any mortgage, encumbrance or lien placed on any of the properties of the Company or any of its subsidiaries which remains in existence on the date this representation is made; (ix) any payment or discharge of a material lien or liability of the Company or any of its subsidiaries which was not shown in the Company Financial Statements or incurred in the ordinary course of business thereafter; -7- (x) any other Company Material Adverse Effect or (xi) any agreement or understanding, whether in writing or otherwise, for the Company or any of its subsidiaries to take any of the actions specified in paragraphs (i) through (x) above. 3.09 LITIGATION. Except as disclosed in Section 3.09 of the Company Disclosure Schedule, (a) there is no claim, action, suit, litigation, proceeding, arbitration or, to the knowledge of the Company, investigation of any kind, at law or in equity (including actions or proceedings seeking injunctive relief), pending or, to the knowledge of the Company or any of the Shareholders, threatened against the Company or any of its subsidiaries or any properties or rights of the Company or any of its subsidiaries that could reasonably be expected to have a Company Material Adverse Effect, and (b) neither the Company nor any of its subsidiaries is subject to any executory judgment, order, writ, injunction, decree or award of any Governmental Entity, including without limitation any cease and desist order and any consent decree, settlement agreement or other similar written agreement with any Governmental Entity that could reasonably be expected to have a Company Material Adverse Effect. 3.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) COPIES OF BENEFIT PLANS. Section 3.10(a) of the Company Disclosure Schedule provides a list of each Benefit Plan that is sponsored, maintained or contributed to by the Company or any of its subsidiaries, or has been so sponsored, maintained or contributed to within six years prior to the date of this Agreement. True, correct and complete copies of each of such Benefit Plans, and related trusts, if applicable, including all amendments thereto, have been furnished to Acquiror. There have also been furnished to Acquiror, with respect to each such Benefit Plan required to file such report or description, the most recent report on Form 5500 and the summary plan description. (b) EMPLOYEE BENEFIT PLAN COMPLIANCE. (i) Except as set forth in Section 3.10(b) of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries contributes to or has an obligation to contribute to, nor has the Company or any of its subsidiaries at any time within six years prior to the date of this Agreement contributed to or had an obligation to contribute to, a "multiemployer plan" within the meaning of Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). (ii) All obligations, whether arising by Law or by contract, required to be performed in connection with the Benefit Plans have been performed, and there have been no omissions, defaults or violations by any party with respect to any Benefit Plan or any Law applicable thereto. (iii) Each Plan (as defined in Section 10.06) that is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), (A) satisfies the requirements of such Section in all material respects, (B) has received a favorable determination letter from the Internal Revenue Service (the "IRS") regarding such qualified status and covering amendments required under the Tax Reform Act of 1986 (the "TRA"), the Unemployment Compensation Amendments of 1992, the Omnibus -8- Reconciliation Act of 1993, the final nondiscrimination regulations under Section 401(a)(4) of the Code and all other amendments required to be filed within the TRA remedial amendment period described in Internal Revenue Procedure 95-12 (the "TRA Amendments") (or the TRA Amendments to such Plans have been timely made and filed with the IRS for such a determination letter) and (C) has not, since receipt of the most recent favorable determination letter, been amended or operated in a way that would materially adversely affect such qualified status. (iv) There are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of the Company, threatened against, or with respect to, any of the Benefit Plans or their assets, and there is no matter pending (other than routine qualification determination filings) with respect to any of the Benefit Plans before the IRS, the Department of Labor, the PBGC or any other Governmental Entity. (v) As to any Plan subject to Title IV of ERISA, there has been no event or condition that presents the material risk of Plan termination, no accumulated funding deficiency, whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code has been incurred, no reportable event within the meaning of Section 4043 of ERISA (for which the disclosure requirements of Regulation ss.2615.3 promulgated by the Pension Benefit Guaranty Corporation (the "PBGC") have not been waived) has occurred, no notice of intent to terminate the Plan has been given under Section 4041 of ERISA, no proceeding has been instituted under Section 4042 of ERISA to terminate the Plan, no liability to the PBGC has been incurred and the assets of the Plan equal or exceed the actuarial present value of the benefit liabilities, within the meaning of Section 4041 of ERISA, under the Plan, based upon reasonable actuarial assumptions and the asset valuation principles established by the PBGC. (vi) With respect to any employee benefit plan, within the meaning of Section 3(3) of ERISA, that is not listed on Schedule 3.10(a) but which is sponsored, maintained, or contributed to, or has been sponsored, maintained or contributed to within six years prior to the date of this Agreement, by any corporation, trade, business or entity under common control with the Company or any of its subsidiaries, within the meaning of Section 414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA ("Commonly Controlled Entity"), (A) no withdrawal liability, within the meaning of Section 4201 of ERISA, has been incurred, which withdrawal liability has not been satisfied, (B) no liability to the PBGC has been incurred by any Commonly Controlled Entity, which liability has not been satisfied, (C) no accumulated funding deficiency, whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code has been incurred and (D) all contributions (including installments) to such plan required by Section 302 of ERISA and Section 412 of the Code have been timely made. (vii) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (A) contravenes the terms of any Benefit Plan or any Law related to any Benefit Plan, (B) will require the Company or any of its subsidiaries to make a larger contribution to, or pay greater benefits under, any Benefit -9- Plan than it otherwise would or (C) will create or give rise to any additional vested rights or service credits under any Benefit Plan. (viii) Except for the Retirement Income Plan For Employees of Saybolt Inc., neither the Company nor any of its subsidiaries (A) sponsors or maintains any defined benefit pension plan or (B) contributes to or has or had an obligation to contribute to a retirement plan for which the contribution is or was calculated either (1) on the basis of actuarial assumptions and methods or (2) on a basis other than a fixed amount per month. (c) NO ADDITIONAL SEVERANCE. Except as set forth in Section 3.10(c) of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries is a party to any agreement, nor has the Company or any of its subsidiaries established any policy or practice requiring, nor does any applicable Law require, it to make a payment or provide any other form of compensation or benefit to any person performing services for the Company or any of its subsidiaries upon termination of such services that would not be payable or provided in the absence of the consummation of the transactions contemplated by this Agreement. (d) NO EXCESS PARACHUTE PAYMENTS. In connection with the consummation of the transactions contemplated by this Agreement, no payments have or will be made under the Benefit Plans that, in the aggregate, would result in imposition of the sanctions imposed under Section 280G or Section 4999 of the Code. (e) AMENDMENT OR TERMINATION OF BENEFIT PLANS. Each Plan may be unilaterally amended or terminated in its entirety by the Company without violating the terms of such Benefit Plans or applicable Law and without liability except as to benefits accrued and vested thereunder prior to or upon such amendment or termination. (f) LABOR MATTERS. Except as set forth in Section 3.10(f) of the Company Disclosure Schedule, there are no collective bargaining or other labor union contracts to which the Company or its subsidiaries is a party applicable to persons employed by the Company or its subsidiaries and no collective bargaining agreement is being negotiated by the Company or any of its subsidiaries. There is no pending or, to the knowledge of the Company, threatened labor dispute, strike or work stoppage against the Company or any of its subsidiaries. Except as disclosed in Section 3.10(f) of the Company Disclosure Schedule, to the knowledge of the Company, none of the Company, any of its subsidiaries or any of their respective representatives or employees has committed any unfair labor practice in connection with the operation of the respective businesses of the Company or its subsidiaries that could reasonably be expected to have a Company Material Adverse Effect, and there is no pending or, to the knowledge of the Company, threatened charge or complaint against the Company or any of its subsidiaries by the United States National Labor Relations Board or any other Governmental Entity. The Company and each of its subsidiaries have each complied in all material respects with the Family and Medical Leave Act of 1993. (g) EMPLOYMENT AND OTHER AGREEMENTS. The Company has furnished to Acquiror true, correct and complete (i) copies of the form of each employment agreement to which the Company or any of its Material Subsidiaries is a party and a list of each employee who is a party to each such form of agreement that includes the compensation level of such employee pursuant to such -10- agreement and the termination date of such agreement, (ii) copies of all employment agreements with senior executives, officers and directors of the Company and (iii) copies of each other agreement between the Company or any of its subsidiary and any employee or former employee that provides severance, health, deferred compensation or other employee benefit. Section 3.10(g) of the Company Disclosure Schedule lists each such document described in the preceding sentence. (h) Section 3.10(h) of the Company Disclosure Schedule sets forth a list of all employees of the Company and each of its subsidiaries as of approximately February 28, 1997 and, with respect to each such employee, (i) his annual salary or annualized hourly rate of pay, (ii) his expected annual bonus, if any, (iii) whether he is an active or inactive employee and, if applicable, the reason for inactive status (i.e., short-term disability, long-term disability, layoff, paid or unpaid leave of absence, or other), (iv) whether he is a union or nonunion employee and, if applicable, name of applicable collective bargaining agreement, (v) whether he is full-time (30 or more hours per week) or part-time (less than 30 hours per week), and (vi) whether he is subject to or exempt from the provisions of the Fair Labor Standards Act. 3.11 TAXES. Except as set forth in Section 3.11 of the Company Disclosure Schedule, (a) (i) all material returns and reports ("Tax Returns") of or with respect to any Tax (as defined in Section 10.06 hereof) which is required to be filed with respect to the Company or any its subsidiaries have been duly and timely filed, (ii) all information provided in each such Tax Return is true, correct and complete in all material respects, (iii) all Taxes shown as due on each such Tax Return have been timely paid in full, (iv) all withholding Tax requirements imposed on or with respect to Company or any of its subsidiaries have been satisfied in all material respects, and (v) no material penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax; (b) there is no claim pending against the Company or any of its subsidiaries for any material amount of Taxes, and no material assessment, deficiency or adjustment has been asserted or proposed with respect to any Tax Return of or with respect to the Company or any of its subsidiaries other than those disclosed (and to which are attached true and complete copies of all audit or similar reports) in Section 3.11 of the Company Disclosure Schedule; (c) except for statutory liens for current Taxes not yet due, no liens for Taxes exist upon any of the assets of the Company or any of its Material Subsidiaries; and (d) none of the transactions contemplated by this Agreement will result in any Tax liability or the recognition of any item of income or gain to the Company or any of its subsidiaries. 3.12 CERTAIN BUSINESS PRACTICES. None of the Company, any of its subsidiaries or any directors, officers, agents or employees of the Company or any of its subsidiaries (in their capacities as such) has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful purposes relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of the United States Foreign Corrupt Practices Act of 1977, as amended, (iii) consummated any transaction, made any payment, entered into any agreement or arrangement -11- or taken any other action in violation of Section 1128B(b) of the United States Social Security Act, as amended, or (iv) made any other unlawful payment. 3.13 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section 3.13 of the Company Disclosure Schedule, (i) neither the Company nor any of its Material Subsidiaries has ever generated, transported, used, stored, treated, disposed of, or managed any Hazardous Waste (as defined below) in material violation of applicable Law nor has it transported any Hazardous Material (as defined below) in material violation of applicable Law; (ii) no Hazardous Material has ever been or is threatened to be Released (as defined below) or disposed of at any property presently or formerly owned, operated, leased or used by the Company or any of its Material Subsidiaries or has ever come to be located in the soil, surface water or groundwater at any such property; and (iii) neither the Company nor any of its subsidiaries presently owns, operates or leases any property at which underground storage tanks, pits or sumps are or, to the knowledge of the Company, were located. (b) Except as set forth in Section 3.13 of the Company Disclosure Schedule, (i) neither the Company nor any of its Material Subsidiaries has any material liability under, nor is the Company or any of its Material Subsidiaries in violation in any material respect of, any Environmental Law (as defined below); (ii) each property owned, operated, leased, or used by the Company or any of its Material Subsidiaries, and any facilities and operations thereon are presently in compliance in all material respects with all applicable Environmental Laws; (iii) neither the Company nor any of its Material Subsidiaries is in receipt of any written request for information, written notice, demand letter, administrative inquiry, or formal or informal complaint or claim from any Governmental Entity that gives rise to, or is reasonably expected to give rise to, any material liability of the Company or any of its Material Subsidiaries under any applicable Environmental Law related to human or animal health or safety or the protection, preservation or restoration of the environment; (iv) neither the Company nor any of its Material Subsidiaries has any material liability to any non-Governmental Entity under any Environmental Law arising from exposure to or otherwise in connection with any Release or threatened Release of any Hazardous Waste or Hazardous Material; and (v) neither the Company nor any of its subsidiaries has any knowledge that any of the items enumerated in clause (iii) of this Section 3.13(b) will be forthcoming. (c) Except as set forth in Section 3.13 of the Company Disclosure Schedule, to the knowledge of the Company, no property owned, operated, leased, or used by the Company or any of its Material Subsidiaries contains any asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs) or equipment containing PCBs, radioactive materials or any urea formaldehyde foam insulation. For purposes of this Section 3.13(c), the Company shall be deemed to have knowledge of all actions taken by or on behalf of the Company or any of its subsidiaries. (d) The Company has provided to Acquiror copies of all significant documents, records and information (including copies of all "Phase I" audits or surveys prepared within the last ten years with respect to any property owned, leased or operated by the Company or any of its subsidiaries during such period) in the possession of the Company or any of its Material Subsidiaries concerning any matter related to human or animal health or safety or the environment, whether generated by the Company or any of its subsidiaries or others, including, without limitation, -12- environmental audits, environmental risk assessments, site assessments, documentation regarding off-site disposal of Hazardous Materials, spill control plans, and reports, correspondence, permits, licenses, approvals, consents, and other authorizations issued by any Governmental Entity concerning any matter related to human or animal health or safety or the environment. (e) For purposes of this Section 3.13, (i) "Hazardous Material" shall mean and include any hazardous waste, hazardous material, hazardous substance, petroleum product, oil, toxic substance, pollutant, or contaminant, as defined or regulated under any Environmental Law, or any other substance, exposure to which is regulated under any Environmental Law, that may pose a threat to the environment or to human or animal health or safety; (ii) "Hazardous Waste" shall mean and include any hazardous waste as defined or regulated under any Environmental Law; (iii) "Environmental Law"shall mean and include any and all laws, common laws, statutes, ordinances, rules, regulations, codes, licenses, permits, consents, approvals, authorizations, orders, judgments, decrees, injunctions, requirements, agreements, or determinations of any Governmental Entity in any and all jurisdictions in which the Company presently or formerly owned, operated, leased, or used property, whether existing as of the date hereof, previously enforced, or subsequently enacted, that are related to (A) the protection, preservation, or restoration of the environment (including, without limitation, air, water, vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life, or any other natural resource), or to human and/or animal health or safety or (B) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, Release, or disposal of any Hazardous Waste or Hazardous Material; (iv) "Release" shall mean and include any actual spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, dumping or disposing into the environment in material violation of applicable Law; (v) "the Company" shall mean and include the Company, its predecessors and all other entities for whose conduct the Company is or may be held responsible under any Environmental Law; and (vi) "subsidiary" shall mean and include each subsidiary of the Company, its predecessors and all other entities for whose conduct such subsidiary is or may be held responsible under any Environmental Law. 3.14 UNDISCLOSED LIABILITIES. Except (a) for reserves specifically reflected or accrued for (and only to the extent reflected or accrued for) in the balance sheet dated as of December 31, 1996 included in the Company Financial Statements, (b) for liabilities incurred in the ordinary course of business since December 31, 1996, or (c) as set forth in Section 3.14 of the Company Disclosure Schedule, none of the Company or any of its subsidiaries has, and, to the knowledge of the Company, there is no basis for the assertion against the Company or any of its subsidiaries of, any liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due. 3.15 CERTAIN AGREEMENTS. None of the Company or any of its subsidiaries is a party to, or bound by, any contract, agreement or organizational document which purports to restrict, by virtue of a noncompetition, territorial exclusivity or other provision covering such subject matter, the scope of the business or operations of any of the Company or any of its subsidiaries geographically or otherwise. -13- 3.16 CONTRACTS AND COMMITMENTS. Section 3.16 of the Company Disclosure Schedule sets forth (i) a list of each contract, obligation or commitment to which the Company or any of its subsidiaries is a party or by which its or their property is bound that involves consideration or other expenditure in excess of $100,000 ($250,000 in the case of service agreements with the customers of the Company or its subsidiaries) or performance over a period of more than 12 months or that is otherwise material to the business or operations of the Company and its Material Subsidiaries, taken as a whole ("Material Contracts"); (ii) a list of all real or personal property leases to which any of the Company or any of its Material Subsidiaries is a party involving consideration or other expenditure in excess of $50,000 over the term of the lease ("Material Leases"); (iii) a list of guarantees, or agreements to indemnify or be contingently liable for, the payment or performance by any person or business entity to which any of the Company or any of its Material Subsidiaries is a party other than guarantees and agreements entered into in the ordinary course of business ("Guarantees"); and (iv) a list of contracts or other formal or informal understandings or agreements between the Company or any of its subsidiaries and any of its officers, directors, employees, consultants, agents or shareholders (or any of such shareholders' family members or affiliates) ("Affiliate Agreements"). A true and complete copy of each Material Contract, Material Lease, Guarantee and Affiliate Agreement has been furnished or made available to Acquiror prior to the date hereof. Except as specifically disclosed in Section 3.16 of the Company Disclosure Schedule, each of the Material Contracts, Material Leases, Guarantees and Affiliate Agreements constitutes the valid and legally binding obligation of the parties thereto and is in full force and effect without default on the part of any party thereto. Except as set forth in Section 3.16 of the Company Disclosure Schedule or for any agreements, arrangements or commitments between the Company and its wholly owned subsidiaries or between such wholly owned subsidiaries, there are no agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any person is or may be entitled to receive any payment based on, or calculated in accordance with, the revenues or earnings of the Company or any of its subsidiaries. 3.17 AFFILIATE INTERESTS. Except as set forth in Section 3.17 of the Company Disclosure Schedule, no current or former shareholder, employee, consultant, officer or director, of the Company or any of its Material Subsidiaries has any interest in any property, tangible, or intangible, including, without limitation, patents, trade secrets, other confidential business information, trademarks, service marks or trade names used in or pertaining to the business of the Company or any of its Material Subsidiaries, except (with respect to shareholders) for the normal rights of a shareholder. 3.18 INTELLECTUAL PROPERTY. The Company or one or more of its subsidiaries own, are licensed or otherwise have the right to use or sublicense, all foreign and domestic patents, trademarks (common law and registered), trademark registration applications, service marks (common law and registered), service mark registration applications, trade names and copyrights, copyright applications, trade secrets, know-how and other proprietary information as are necessary for the conduct of the business of the Company and its subsidiaries as currently conducted. A list of all such intellectual property is set forth in Section 3.18 of the Company Disclosure Schedule. Neither the Company nor any of its subsidiaries is currently in receipt of any notice of infringement or notice of conflict with the asserted rights of others in any patents, trademarks, service marks, trade names, trade secrets and copyrights owned or held by other persons, except, in each case, for matters that could not reasonably be expected to have a Company Material Adverse Effect. Neither the execution -14- and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate or breach the terms of or cause any cancellation of any material license held by the Company or any of its subsidiaries with regard to any patent, trademark, service mark, trade name, trade secret or copyright. 3.19 BROKERS. Except for Credit Suisse First Boston Corporation and North American Capital Corp. and as disclosed in Section 3.19 of the Company Disclosure Schedule, no broker, finder, investment banker or other person is entitled to any brokerage, finder's or other fee, commission or payment in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. The Company has provided Acquiror with a complete and correct copy of all agreements between the Company and Credit Suisse First Boston Corporation and North American Capital Corp. pursuant to which such firm may be entitled to any payment that in any way relates to the transactions contemplated by this Agreement. 3.20 INSURANCE. Section 3.20 of the Company Disclosure Schedule sets forth a list of all policies of insurance currently in effect relating to the business or operations of the Company and its Material Subsidiaries (true and complete copies of which have been furnished to Acquiror). Such insurance policies are in full force and effect. The Company and each of its Material Subsidiaries are presently insured, and during each of the past five calendar years have been insured, against such risks as companies engaged in the same or substantially similar business would, in accordance with good business practice, customarily be insured. The Company and its Material Subsidiaries have given in a timely manner to their respective insurers all notices required to be given under such insurance policies with respect to all claims and actions covered by insurance, and, except as set forth in Section 3.20 of the Company Disclosure Schedule, no insurer has denied coverage of any such claims or actions or reserved it rights in respect of or rejected any of such claims. None of the Company or any of its Material Subsidiaries has received any notice or other communication from any such insurer canceling or materially amending any of such insurance policies, and no such cancellation is pending or threatened. The execution of this Agreement and the consummation of the transactions contemplated hereby will not cause such insurance policies to lapse, terminate or be canceled and will not result in any party thereto having the right to terminate or cancel such insurance policies. 3.21 PROPERTIES. Except as set forth in Section 3.21 of the Company Disclosure Schedule, the Company and its subsidiaries have good and defensible title, free and clear of all liens and material restrictions on their use, to all their material properties and assets whether tangible or intangible, real, personal or mixed, reflected in the Company Financial Statements as being owned by the Company and its subsidiaries as of the date thereof, other than (i) any properties or assets that have been sold or otherwise disposed of in the ordinary course of business since the date of such financial statements, (ii) liens disclosed in the notes to such financial statements and (iii) liens arising in the ordinary course of business. All buildings, fixtures, equipment and other property and assets that are material to the Company's business on a consolidated basis that are held under leases or sub-leases by the Company or any of its subsidiaries are held under valid instruments enforceable in accordance with their respective terms, subject to applicable laws of bankruptcy, insolvency or similar laws relating to creditors' rights generally and to general principles of equity (whether applied in a proceeding in law or equity). All of the Company's and its Material Subsidiaries' -15- equipment in regular use has been reasonably maintained and is in serviceable condition, reasonable wear and tear excepted. 3.22 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS. The relationships of the Company and each of its Material Subsidiaries with its customers and suppliers are good commercial working relationships, except as disclosed in Section 3.22 of the Company Disclosure Schedule. No customer that accounted for more than (a) 5% of the consolidated revenues of the Company and its subsidiaries for the year ended December 31, 1996 ("Consolidated Revenues"), (b) 10% of the revenues of any Material Subsidiary (other than a Material Subsidiary that accounted for less than 5% of Consolidated Revenues) or (c) that is otherwise significant to the Company and its subsidiaries has canceled or otherwise terminated or threatened to cancel or otherwise terminate its relationship with the Company or any of its subsidiaries. No significant supplier of the Company and its subsidiaries has canceled or otherwise terminated or threatened to cancel or otherwise terminate its relationship with the Company and its subsidiaries. To the Company's knowledge, no such customer or supplier has any plan or intention to terminate, cancel or otherwise materially and adversely modify its relationship with the Company or any of its subsidiaries. 3.23 MATERIAL SUBSIDIARIES. The Company and the Material Subsidiaries accounted for in excess of 80% of the consolidated revenues of the Company and its subsidiaries for the year ended December 31, 1996. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR Acquiror hereby represents and warrants to the Company and the Shareholders that: 4.01 ORGANIZATION AND QUALIFICATION. Acquiror is a limited liability company duly organized, validly existing and in good standing under the laws of The Netherlands. Acquiror has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and is duly qualified and in good standing to do business in each jurisdiction in which the nature of the business conducted by it or the ownership or leasing of its properties makes such qualification necessary, other than where the failure to be so duly qualified and in good standing could not reasonably be expected to have an Acquiror Material Event. The term "Acquiror Material Event" as used in this Agreement shall mean any change or effect that would be materially adverse to Acquiror's ability to comply with the provisions of this Agreement or to consummate the transactions contemplated hereby. 4.02 AUTHORITY. Acquiror has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Acquiror and the performance by Acquiror of its obligations hereunder, including the consummation of the transactions contemplated hereby, have been duly authorized by all necessary corporate action, and no other corporate proceedings on the part of Acquiror are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Acquiror and, assuming the due authorization, execution and delivery hereof by the -16- other parties hereto, constitutes the legal, valid and binding obligation of Acquiror enforceable in accordance with its terms. 4.03 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Assuming that all consents, licenses, permits, waivers, approvals, authorizations, orders, filings and notifications contemplated by the exceptions to Section 4.03(b) are obtained or made and except as otherwise disclosed in Section 4.03(a) of the Disclosure Schedule delivered by Acquiror to the Company contemporaneously with the execution and delivery of this Agreement (the "Acquiror Disclosure Schedule"), the execution and delivery of this Agreement by Acquiror does not, and performance of its obligations hereunder, including the consummation of the transactions contemplated hereby, will not (i) conflict with or violate Acquiror's Articles of Association, (ii) conflict with or violate any Laws in effect as of the date of this Agreement applicable to Acquiror or any of Acquiror's subsidiaries or by or to which any of their properties is bound or subject or (iii) result in any breach of or constitute a default (or an event that with or without notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation or imposition of a mortgage, pledge, lien, security interest or other charge or encumbrance on any of the properties or assets of Acquiror or any of Acquiror's subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, authorization, franchise or other instrument or obligation to which Acquiror or any of Acquiror's material subsidiaries is a party or by or to which Acquiror or any of Acquiror's subsidiaries or any of their respective properties is bound or subject, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults, events, rights of termination, amendment, acceleration or cancellation, payment obligations or liens or encumbrances that could not reasonably be expected to have an Acquiror Material Event. (b) The execution and delivery of this Agreement by Acquiror does not, and the performance of this Agreement by Acquiror will not, including the consummation of the transactions contemplated hereby, require Acquiror to obtain any consent, license, permit, certificate, waiver approval, authorization or order of, or to make any filing with or notification to, any Governmental Entities, except (i) the applicable requirements, if any, of the HSR Act, the Exchange Act, the Securities Act, any other applicable state or federal securities or blue sky laws and the NASD, (ii) the filings and notices required pursuant to Dutch Law, (iii) where the failure to obtain such consents, licenses, permits, certificates, waivers, approvals, authorizations or orders, or to make such filings or notifications could not reasonably be expected to have an Acquiror Material Event or (iv) as disclosed in Section 4.03(b) of the Acquiror Disclosure Schedule. 4.04 LITIGATION. There is no claim, action, suit, litigation, proceeding, arbitration or, to the knowledge of Acquiror, investigation of any kind, at law or in equity (including actions or proceedings seeking injunctive relief), pending or, to the knowledge of Acquiror, threatened against Acquiror or any of its subsidiaries or any properties or rights of Acquiror or any of its subsidiaries that could be reasonably expected to cause an Acquiror Material Event, and neither Acquiror nor any of its subsidiaries is subject to any executory judgment, order, writ, injunction, decree or award of any Governmental Entity, including without limitation any cease and desist order and any consent -17- decree, settlement agreement or other similar written agreement with any Governmental Entity, that could be reasonably expected to cause an Acquiror Material Event. ARTICLE V COVENANTS OF THE COMPANY 5.01 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby covenants and agrees that, prior to the Closing, unless otherwise expressly contemplated by this Agreement or consented to in writing by Acquiror (which consent shall not be unreasonably withheld), the Company will and will cause each of its subsidiaries to: (a) operate its business in the usual and ordinary course consistent with past practices; (b) use all reasonable efforts to preserve substantially intact its business organization, maintain its rights and franchises, retain the services of its respective officers and key employees and maintain its relationships with its respective customers and suppliers; (c) maintain and keep its properties and assets in as good repair and condition as at present, ordinary wear and tear excepted, and maintain supplies and inventories in quantities consistent with its customary business practice; and (d) use all reasonable efforts to keep in full force and effect insurance and bonds comparable in amount and scope of coverage to those currently maintained. 5.02 NEGATIVE COVENANTS OF THE COMPANY. Except as expressly contemplated by this Agreement or otherwise consented to in writing by Acquiror (which consent shall not be unreasonably withheld), from the date of this Agreement until the Closing, the Company will not do, and will not permit any of its subsidiaries to do, any of the following: (a) Except pursuant to agreements disclosed in Section 3.10(g) of the Company Disclosure Schedule, (i) increase the compensation payable to or to become payable to any director or executive officer; (ii) increase the compensation payable or pay bonuses to any employees other than in the ordinary course of business, (iii) grant any severance or termination pay (other than pursuant to the normal severance practices of the Company or its subsidiaries as in effect on the date of this Agreement) to, or enter into any employment or severance agreement with, any director, officer or employee; (iv) establish, adopt or enter into any employee benefit plan or arrangement or (v) except as may be required by applicable law, amend, or take any other actions (including, without limitation, the acceleration of vesting, waiving of performance criteria or the adjustment of awards or any other actions permitted upon a "change in control" (as defined in the respective plans) of the Company), with respect to any of the Benefit Plans or any of the plans, programs, agreements, policies or other arrangements described in Section 3.10(g) of this Agreement; (b) declare or pay any dividend on, or make any other distribution in respect of, outstanding shares of its or any of its subsidiaries' capital stock or other equity interests, except -18- dividends by a wholly owned subsidiary of the Company to the Company or another wholly owned subsidiary of the Company; (c) (i) except as described in Section 3.03(c) of the Company Disclosure Schedule, redeem, purchase or otherwise acquire any shares of its or any of its subsidiaries' capital stock, any securities or obligations convertible into or exchangeable for any shares of its or its subsidiaries' capital stock (other than any such acquisition directly from any wholly owned subsidiary of the Company in exchange for capital contributions or loans to such subsidiary), or any options, warrants or conversion or other rights to acquire any shares of its or its subsidiaries' capital stock or any such securities or obligations; (ii) effect any reorganization or recapitalization of the Company or any of its subsidiaries; or (iii) split, combine or reclassify any of its or its subsidiaries' capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its or its subsidiaries' capital stock; (d) (i) except as set forth in Section 3.03(a) hereof or as described in Section 3.03(c) of the Company Disclosure Schedule, issue (whether upon original issue or out of treasury), sell, grant, award, deliver or limit the voting rights of any shares of any class of its or its subsidiaries' capital stock, any securities convertible into or exercisable or exchangeable for any such shares, or any rights, warrants or options to acquire, any such shares; (ii) amend or otherwise modify the terms of any such rights, warrants or options the effect of which shall be to make such terms materially more favorable to the holders thereof; or (iii) take any action to accelerate the vesting of any of the stock options; (e) acquire or agree to acquire, by merging or consolidating with, by purchasing an equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets of any other person (other than (i) the purchase of assets from suppliers or vendors in the ordinary course of business and consistent with past practice and (ii) the purchase of assets for consideration of not in excess of $100,000 in the aggregate); (f) sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of, any of its assets or any assets of any of its subsidiaries, except for pledges or dispositions of assets in the ordinary course of business and consistent with past practice; (g) initiate, solicit or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal relating to, or that may reasonably be expected to lead to, any Competing Transaction (as defined below), or enter into discussions or negotiate with any person or entity in furtherance of such inquiries or to obtain a Competing Transaction, or agree to, or endorse, any Competing Transaction, or authorize any of the officers, directors, employees or agents of the Company or any of its subsidiaries or any agent, investment banker, financial advisor, attorney, accountant or other representative retained by the Company or any of its subsidiaries to take any such action, and the Company shall promptly notify Acquiror or promptly provide Acquiror with a copy of all relevant terms of any such inquiries or proposals received by the Company or any of its subsidiaries. For purposes of this Agreement, the term "Competing Transaction" shall mean any proposal or offer from any person or entity (other -19- than Acquiror or an affiliate of Acquiror) relating to any acquisition or purchase of all or (other than in the ordinary course of business) any material portion of the assets of, or any possible disposition or issuance of any Company Shares or any capital stock or other equity interests in the Company or any of its subsidiaries (or any rights or securities exercisable for or convertible into Company Shares or any such capital stock or other equity interests), or any merger or other business combination with, the Company or any of its subsidiaries (provided that nothing in this Section 5.02(g) shall prevent the Company or its directors from informing the Shareholders of a Competing Transaction if required to do so by Dutch Law); (h) release any third party from its obligations under any existing standstill agreement or arrangement relating to a Competing Transaction or otherwise under any confidentiality or other similar agreement relating to information material to the Company or any of its subsidiaries; (i) propose to adopt any amendments to its Articles of Association that would have an adverse effect on the consummation of the transactions contemplated by this Agreement; (j) (i) change any of its significant accounting policies or (ii) make or rescind any express or deemed election relating to Taxes, settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, or change any of its methods of reporting income or deductions for Tax purposes from those employed in the preparation of Tax returns for the taxable year ending December 31, 1995, except, in the case of clause (i) or clause (ii), as may be required by any Law or by GAAP; (k) incur any obligation for borrowed money or purchase money indebtedness, whether or not evidenced by a note, bond, debenture or similar instrument or under any financing lease, whether pursuant to a sale-and-leaseback transaction or otherwise, except in the ordinary course of business consistent with past practice; (l) enter into any material arrangement, agreement or contract with any third party other than in the ordinary course of business; (m) take any action that reasonably could be expected to result in any of the conditions set forth in Article IX not being satisfied; or (n) agree in writing or otherwise to do any of the foregoing. ARTICLE VI COVENANTS OF THE SHAREHOLDERS 6.01 COVENANTS OF THE SHAREHOLDERS. Each of the Shareholders covenants and agrees that, prior to the Closing, such Shareholder will not: (a) take any action that reasonably could be expected to result in any of the conditions set forth in Article IX not being satisfied; or -20- (b) initiate, solicit or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal relating to, or that may reasonably be expected to lead to, any Competing Transaction, or enter into discussions or negotiate with any person or entity in furtherance of such inquiries or to obtain a Competing Transaction, or agree to, or endorse, any Competing Transaction, or authorize agent, investment banker, financial advisor, attorney, accountant or other representative retained by such Shareholder to take any such action, and such Shareholder shall promptly notify Acquiror or promptly provide Acquiror with a copy of all relevant terms of any such inquiries or proposals received by such Shareholder. ARTICLE VII ADDITIONAL AGREEMENTS 7.01 NOTIFICATION OF CERTAIN MATTERS. The Company and, with respect to clauses (i) and (ii), each of the Shareholders, as appropriate, shall give prompt notice to Acquiror, and Acquiror shall give prompt notice to the Company, orally and in writing, of (i) the occurrence, or failure to occur, of any event which occurrence or failure would be likely to cause any representation or warranty of the party giving such notice contained in this Agreement to be untrue or inaccurate at any time from the date hereof to the Closing, (ii) any material failure of the party giving such notice to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such person hereunder within the time specified therefor and (iii) any change or event having, or which, insofar as can be reasonably foreseen, could have a Company Material Adverse Effect or an Acquiror Material Event, as the case may be. 7.02 ACCESS AND INFORMATION. (a) The Company shall, and shall cause its subsidiaries to, (i) afford to Acquiror and its officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives (collectively, the "Acquiror Representatives") access during ordinary business hours and at other reasonable times, upon reasonable prior notice, to the officers, employees, accountants, agents, properties, offices and other facilities of the Company and its subsidiaries and to the books and records thereof and (ii) furnish promptly to Acquiror and the Acquiror Representatives such information concerning the business, properties, contracts, records and personnel of the Company and its subsidiaries (including, without limitation, financial, operating and other data and information) as may be reasonably requested, from time to time, by Acquiror or the Acquiror Representatives. (b) Notwithstanding the foregoing provisions of this Section 7.02, the Company shall not be required to grant access or furnish information to the Acquiror Representatives to the extent that such access or the furnishing of such information is prohibited by any Law or contract. Acquiror acknowledges that, prior to the execution of this Agreement, it has conducted an investigation with respect to the affairs of the Company and its subsidiaries to the extent that Acquiror, in its sole discretion, deemed appropriate. Notwithstanding the foregoing sentence, no investigation by the parties hereto made heretofore or hereafter shall affect the representations and -21- warranties of the parties that are contained herein, and each such representation and warranty shall survive such investigation. (c) The terms and provision of the mutual confidentiality and non-disclosure agreement, dated December 1, 1996, between Acquiror and the Company shall remain in full force and effect in accordance with its terms. 7.03 APPROPRIATE ACTION; CONSENTS; FILINGS. (a) The Company, Acquiror and, to the extent applicable to a particular Shareholder, such Shareholder shall each use, and the Company and Acquiror shall cause each of their respective subsidiaries to use, all reasonable efforts promptly (i) to take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement, (ii) to obtain from any Governmental Entities any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained by the Company, Acquiror or such Shareholder, respectively, or any of the Company's or Acquiror's respective subsidiaries, in connection with the authorization, execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and (iii) to make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement and the Acquisition required under (A) the Exchange Act, the rules and regulations thereunder and any other applicable U. S. federal or state or Dutch securities laws, (B) the HSR Act and (C) any other applicable Law; provided that Acquiror, the Company and each of the Shareholders shall cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the nonfiling party and its advisors prior to filing (except, with respect to the HSR Act, for such documents that are not customarily provided to the other party) and, if requested, shall accept all reasonable additions, deletions or changes suggested in connection therewith. The Company, Acquiror and each of the Shareholders shall furnish all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable Law in connection with the transactions contemplated by this Agreement. (b) Acquiror, the Company and, to the extent applicable to a particular Shareholder, such Shareholder (other than CPNL, which acts only as nominee for certain Shareholders) agree, and Acquiror and the Company shall cause each of their respective subsidiaries, to cooperate and to use all reasonable efforts to contest and resist any action, including legislative, administrative or judicial action, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) (an "Order") that is in effect and that restricts, prevents or prohibits the consummation of the Acquisition or any other transactions contemplated by this Agreement, including, without limitation, by vigorously pursuing all available avenues of administrative and judicial appeal and all available legislative action. Acquiror and the Company also agree to take all reasonable actions, including, without limitation, the disposition of assets or the withdrawal from doing business in particular jurisdictions, required by regulatory authorities as a condition to the granting of any approvals required in order to permit the consummation of the Acquisition or as may be required to avoid, lift, vacate or reverse any legislative or judicial action that would otherwise cause any condition to Closing not to be satisfied; PROVIDED, HOWEVER, that in no event shall any party take, or be required to take, any action that could -22- reasonably be expected to have a Company Material Adverse Effect or an Acquiror Material Adverse Effect. The term "Acquiror Material Adverse Effect" as used in this Agreement shall mean any change or effect that would be materially adverse to the business, operations or financial condition of Acquiror and its subsidiaries, taken as a whole, at the time of such change or effect. (c) The Company, Acquiror and each of the Shareholders shall each promptly give (or shall cause their respective subsidiaries to give) any notices regarding the Acquisition, this Agreement or the transactions contemplated hereby to third parties required by Law or by any contract, license, lease or other agreement to which such person is a party or by which such person is bound, and use (and cause its subsidiaries to use) all reasonable efforts to obtain any third party consents (i) necessary to consummate the transactions contemplated by this Agreement, (ii) otherwise required under any contracts, licenses, leases or other agreements in connection with the consummation of the transactions contemplated by this Agreement or (iii) required to prevent a Company Material Adverse Effect or an Acquiror Material Adverse Effect, respectively, from occurring after the Closing. (d) If the Company or any of its subsidiaries or Acquiror shall fail to obtain any third party consent described in subsection (c)(i) above, such party shall use all reasonable efforts, and shall take any such actions reasonably requested by the other parties, to limit the adverse effect upon the Company, Acquiror, their respective subsidiaries and businesses and each of the Shareholders resulting, or which could reasonably be expected to result after the Closing, from the failure to obtain such consent. (e) The Company shall, promptly after the date of this Agreement, take all actions necessary in accordance with applicable law and the Company Organizational Documents to obtain all necessary approvals with respect to the Acquisition and the other matters the subject of this Agreement by the Works Council of the Company (the "Works Council"). (f) Acquiror covenants and agrees that, prior to the Closing, Acquiror will not take any action that reasonably could be expected to result in any of the conditions set forth in Article IX not being satisfied. 7.04 PUBLIC ANNOUNCEMENTS. Acquiror and the Company shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or the Acquisition and shall not issue any such press release or make any such public statement prior to such consultation; PROVIDED, HOWEVER, that a party may, without consulting with the other party, issue such a press release or make such a public statement if required by applicable Law or the rules of the NASD or a national securities exchange if such party has used commercially reasonable efforts to consult with the other party but has been unable to do so in a timely manner. 7.05 EXPENSES. Subject to the provisions of Section 1.04 and Article VIII, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses. Notwithstanding the foregoing, but subject to Section 1.04 and Article VIII, the Shareholders shall not be responsible for costs and expenses incurred by the Company for the benefit of the Company in connection with this Agreement and the transactions contemplated hereby, including the Company Transaction Costs. -23- 7.06 BOARD OF SUPERVISORY DIRECTORS; OPERATING COMMITTEE. (a) Acquiror shall take such action as may be necessary to cause Eric Pluimers to be appointed or elected to the Board of Supervisory Directors of Acquiror as a Class II director (resulting in a three year term) as soon as practicable after the Closing. (b) Acquiror shall take such action as may be necessary to cause Erik Pluimers, David H. Mead and Jan W. Heinsbroek (if willing to serve) to be appointed to the Operating Committee of Acquiror promptly after the Closing. The purpose of such Operating Committee is to discuss and decide upon both short- and long-term operating matters. 7.07 STICHTING PARTICIPATIE. The Company shall use all reasonable efforts to cause the articles and the conditions of administration of the Stichting and (if required by such entity's organizational documents) each entity to which Stichting has transferred depositary receipts representing interests in Company Shares to be amended to enable Stichting and each of such entities as may be required by Dutch Law or the articles and conditions of administration of the Stichting and such entities to effect the Acquisition. 7.08 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. (a) The certificate of incorporation and the by-laws of each subsidiary of the Company having provisions covering the indemnification of current and former officers and directors shall contain the respective provisions that are set forth, as of the date of this Agreement, in such certificates of incorporation and by-laws (or similar organizational documents), and shall not be amended, repealed or otherwise modified for a period of three years from the Closing Date in any manner that would affect adversely the rights thereunder of individuals who at or at any time prior to the Closing were entitled to indemnification thereunder. (b) Acquiror shall cause to be maintained in effect for three years from the Closing Date directors' and officers' liability insurance covering those persons who are currently covered by the Company's directors' and officers' liability insurance policy set forth in Section 7.08(b) of the Company Disclosure Schedule on terms comparable to such existing insurance coverage with respect to claims arising from facts or events that occurred prior to the Closing; PROVIDED, HOWEVER, that in no event shall Acquiror or the Company be required to expend more than 200 percent of the current annual premiums paid by the Company for such insurance; PROVIDED, FURTHER, that if Acquiror or the Company is unable to obtain insurance for any period for 200 percent of the current annual premiums, then the obligation of Acquiror and the Company pursuant hereto shall be to obtain the best coverage reasonably available under the circumstances subject to the foregoing limitation on premiums. -24- ARTICLE VIII INDEMNIFICATION 8.01 IN GENERAL. Subject to the terms and conditions of this Article VIII, each of the Shareholders hereby agrees, severally and not jointly, to indemnify, defend and hold harmless Acquiror and its directors, officers, employees, consultants, affiliates and controlling persons (hereinafter, including the Company and its subsidiaries after the Closing, collectively, the "Acquiror Indemnified Parties") from and against all Claims (as defined below) asserted against, imposed upon or incurred by Acquiror or any Acquiror Indemnified Party, directly or indirectly, by reason of, arising out of, or resulting from (a) the inaccuracy or breach of any representation or warranty of the Company or such Shareholder contained in or made pursuant to this Agreement; (b) the breach of any covenant or agreement of the Company or such Shareholder contained in or made pursuant to this Agreement; (c) the current investigation of the United States Environmental Protection Agency and the United States Attorney's Office with respect to the Company or any of its subsidiaries and all "whistle blower" litigation and claims related thereto or arising therefrom; (d) any of the matters set forth in Section 3.09, 3.10, 3.11 or 3.13 of the Company Disclosure Schedule or identified in the "Phase I" audits prepared on behalf of Acquiror with respect to any of the properties owned, leased or operated by the Company or any of its subsidiaries (true and correct copies of which Phase I audits have been provided to the Company on or prior to the date of this Agreement); PROVIDED, HOWEVER, that if a reserve is specifically set forth for such matter in Section 8.01 of the Company Disclosure Schedule then indemnification pursuant to this Section 8.01 shall be limited to the amount by which Claims with respect to such matter exceed the Reserve Amount (as defined below) for the Reserve Category (as defined in Section 8.01 of the Company Disclosure Schedule) in which such matter is included in Section 8.01 of the Company Disclosure Schedule; or (e) the amount, if any, by which actual Company Transaction Costs exceeds the sum of U.S. $2.1 million plus the amount of any reduction in the Closing Purchase Price pursuant to Section 1.04. As used in this Article VIII, the term "Claim" shall include (i) all debts, liabilities and obligations, (ii) all losses, damages, reasonable costs and expenses (including, without limitation, interest (including prejudgment interest in any litigated matter), but excluding any allocation of overhead costs and expenses of Acquiror or any of its subsidiaries), penalties, court costs and reasonable attorneys' fees and expenses, and costs and expenses associated with remedial actions required to bring a property into compliance with Environmental Laws), and (iii) all demands, claims, actions, costs of investigation, causes of action, proceedings, arbitrations, judgments, settlements and assessments, whether or not ultimately determined to be valid. As used in this Article VIII, the term "Reserve Amount," as it relates to a particular Reserve Category, means, as of the date a particular Claim is made, the amount of the specific reserve set forth in Section 8.01 of the Company Disclosure Schedule for the matter the subject of such Claim plus the amount, if any, by which the aggregate of all reserves in the same Reserve Category as such Claim specifically relating to matters (other than the matter the subject of such Claim) that have been fully resolved exceeds the aggregate of (A) the amount of all Claims with respect to such fully resolved matters and (B) amounts incurred or paid by the Company or any of its subsidiaries after December 31, 1996 and prior to the Closing with respect to such fully resolved matters to the extent that the Acquiror Indemnified Parties are not entitled to indemnification pursuant to this Section 8.01 with respect to such amounts. All determinations made pursuant to the foregoing sentence shall be made without giving effect to the proviso in Section 8.01(d) or the provisions of Section 8.02(a). -25- 8.02 DEDUCTIBLE; TIME LIMIT; FORM OF PAYMENT; CAP; EXCLUSIVITY. (a) No indemnification shall be paid pursuant to Sections 8.01(a), (b) or (d) until the aggregate of all Claims pursuant to Section 8.01(a), (b) or (d) exceeds $335,000; thereafter indemnification shall be paid as provided for herein for all Claims in excess of such $335,000 deductible; PROVIDED, HOWEVER, that any Claim resulting from the inaccuracy or breach of any of the representations and warranties set forth in Article II of this Agreement shall not be subject to the foregoing limitations. (b) All indemnification payments made pursuant to Section 8.01(a), (b), (c) or (d) (except for those relating to the inaccuracy or breach of any of the representations and warranties set forth in Article II) to the extent available, shall be paid only with the assets held by the Escrow Agent to secure the payment of indemnification pursuant to the Escrow Agreement; PROVIDED, HOWEVER, that such indemnification payments (and any payments made as described in the first proviso to Section 8.02(c)) in the aggregate shall not exceed the amount of the Escrowed Purchase Price. (c) All indemnification payments made pursuant to Section 8.01(a) (to the extent that they relate to the inaccuracy or breach of any of the representations and warranties set forth in Article II) or 8.01(e) shall be paid by the appropriate Shareholder directly to Acquiror; PROVIDED, HOWEVER, that Acquiror, in its sole discretion, may elect to have all or part of any such indemnification pursuant to Section 8.01(e) paid with the assets held by the Escrow Agent pursuant to the Escrow Agreement. The Acquiror Indemnified Parties must request the indemnification payments referred to in the preceding sentence on or prior to the second anniversary of the Closing Date; PROVIDED, HOWEVER, that no time limitation will apply with respect to indemnification payments made pursuant 8.01(a) to the extent that they relate to the inaccuracy or breach of any of the representations and warranties set forth in Section 2.01. (d) Except with respect to fraud in connection with the negotiation and execution of this Agreement, this Article VIII shall be, from and after the Closing, the exclusive remedy of Acquiror for any breach of this Agreement by the Company or any of the Shareholders. 8.03 DEFENSE OF THIRD PARTY CLAIMS. The obligation of the Shareholders to indemnify the Acquiror Indemnified Parties under this Article VIII with respect to Claims relating to or arising from third parties (a "Third Party Claim") shall be subject to the following terms and conditions: (a) NOTICE AND DEFENSE. The Acquiror Indemnified Party will give the repre sentative of the shareholders of the Company set forth in Section 10.07 of this Agreement (the "Shareholder Representative") prompt written notice of any such Third Party Claim, and the Shareholder Representative may undertake the defense thereof by representatives chosen by the Shareholder Representative upon written notice to the Acquiror Indemnified Party provided within 20 days of receiving notice of such Third Party Claim (or sooner if the nature of the Third Party Claim so requires and an extension cannot be obtained with minimal expense or cost). Failure of the Acquiror Indemnified Party to give such notice shall not affect the indemnification obligations under this Article VIII, except to the extent the Shareholder Representative's defense of a Third Party Claim is prejudiced thereby. The Acquiror Indemnified Party shall make available to the Shareholder -26- Representative or its representatives all records and other materials required by the Shareholder Representative and in the possession or under the control of the Acquiror Indemnified Party, for the use of the Shareholder Representative and its representatives in defending any such clam, and shall in other respects give reasonable cooperation in such defense. Acquiror shall not be required to deliver any notice pursuant to this Section 8.03(a) with respect to the matters described in Sections 8.01(c) and 8.01(d), and the Shareholders hereby agree to waive any right to undertake the defense of such matters after the Closing. (b) FAILURE TO DEFEND. If the Shareholder Representative, within 20 days after notice of any such Third Party Claim (or sooner if the nature of any Third Party Claim so requires), fails to undertake the defense of such Third Party Claim actively and in good faith, then the Acquiror Indemnified Party will have the right to undertake the defense, compromise or settlement of such Third Party Claim, or consent to the entry of a judgment with respect thereto. (c) ACQUIROR INDEMNIFIED PARTY'S RIGHTS. Anything in this Article VIII to the contrary notwithstanding, (i) if there is a reasonable probability that the Third Party Claim may adversely affect the Acquiror Indemnified Party other than as a result of money damages and such Third Party Claim is reasonably likely to result in money payments in an aggregate amount of less than $100,000, the Acquiror Indemnified Party shall have the right to defend, compromise or settle such Third Party Claim (provided that the Acquiror Indemnified Party shall not settle such Third Party Claim or consent to any judgment without first obtaining the written consent of the Shareholder Representative, which shall not be unreasonably withheld), and (ii) the Shareholder Representative shall not without the written consent of the Acquiror Indemnified Party, settle or compromise any Third Party Claim or consent to the entry of any judgment that does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Acquiror Indemnified Party of an unconditional release from all liability in respect of such Third Party Claim. (d) Acquiror agrees to discuss the status of the matters described in Section 8.01(c) of this Agreement with the Shareholder Representative at such times as the Shareholder Representative may reasonably request, upon reasonable prior notice. 8.04 WAIVER. Each of the Shareholders hereby agrees to waive, and to not assert, any and all rights such Shareholder may have under Dutch or any other applicable Law or otherwise to make a claim against or otherwise demand or receive payment from the Company or any of its subsidiaries arising out of or with respect to the inaccuracy or breach of any representation or warranty of the Company set forth in this Agreement, the breach by the Company of any covenant or agreement of the Company set forth in this Agreement or the payment of any amounts to the Acquiror Indemnified Parties pursuant to this Article VIII or the Escrow Agreement. ARTICLE IX CONDITIONS 9.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY. The respective obligations of Acquiror and the Shareholders to effect the transactions contemplated hereby shall be subject to the -27- satisfaction at or prior to the Closing of the following conditions, any or all of which may be waived by the agreement of the parties, in whole or in part, to the extent permitted by applicable law: (a) the positive advice of the Works Council with respect to the Acquisition and any other matter relating to the Acquisition for which positive advice is required shall have been obtained; (b) Acquiror, each of the Shareholders and the Escrow Agent shall each have executed and delivered the Escrow Agreement; (c) no Governmental Entity shall have enacted, issued, promulgated, enforced or entered any Law or Order which is in effect and which has the effect of making the Acquisition or the other transactions contemplated in this Agreement illegal or otherwise prohibiting consummation of the Acquisition or such other transactions; (d) the applicable waiting period under the HSR Act shall have expired or been terminated; (e) the applicable waiting period under any competition Law or Order of any foreign Governmental Entity shall have expired or been terminated; (f) The Stichting and (if required by such entity's organizational documents) each entity to which the Stichting has transferred depositary receipts representing interests in Company Shares shall have amended their respective articles and conditions of administration to enable them to consummate the Acquisition and the depositary receipt holders in the Stichting shall have taken such action necessary to permit the Stichting to sell the Company Shares held by it; and (g) the satisfaction of all applicable requirements imposed by Dutch Law that must be satisfied prior to Closing. 9.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR. The obligations of Acquiror to effect the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of the following conditions, any or all of which may be waived by Acquiror, in whole or in part, to the extent permitted by applicable law: (a) each of the representations and warranties of the Company and the Shareholders contained in this Agreement shall be true and correct in all material respects (without duplication of any materiality exception contained in any individual representation and warranty) as of the date of this Agreement and as of the Closing as though made again as of the Closing. Acquiror shall have received a certificate (i) of the President and the Chief Financial Officer of the Company, dated the Closing Date, to such effect as it relates to the Company and (ii) from each of the Shareholders, dated the Closing Date, to such effect as it relates to Article II; (b) the Company and the Shareholders shall have performed or complied with all agreements and covenants required by this Agreement to be performed or complied with by the Company or the Shareholder on or prior to the Closing. Acquiror shall have received a certificate -28- (i) of the President and the Chief Financial Officer of the Company, dated the Closing Date, to such effect as it relates to the Company and (ii) from each of the Shareholders, dated the Closing Date, to such effect as it relates to Article VI; (c) the resignations, effective at Closing, of each of directors and officers of the Company shall have been delivered to Acquiror; (d) Each of the Shareholders, the Company and Acquiror shall have executed a deed of transfer (or other appropriate documentation) that effects the valid transfer of title to all of the issued and outstanding Company Shares to Acquiror; (e) Acquiror shall have received a certificate of the Chief Financial Officer of the Company, dated the Closing Date, that sets forth a good faith estimate of the amount of Company Transaction Costs; (f) Acquiror shall have obtained commitments for sufficient financing, in such amounts, on such terms and subject to such conditions as are satisfactory to it in its reasonable discretion, to enable it to pay the Cash Purchase Price and other amounts required to be paid by Acquiror hereunder or in connection herewith and adequate to conduct the business of the Company and its subsidiaries (including satisfactory working capital financing) (the "Financing"); all conditions to the availability of the Financing shall have been met; and the Financing shall be available; and (g) each of the Shareholders identified on page 39 of this Agreement shall have become record holders of the Company Class B Shares currently beneficially owned by them and shall have signed and delivered to the other signatories to this Agreement such signature pages, whereupon they shall automatically and without any further action on the part of any party become Shareholders for all purposes of this Agreement as of the date hereof, except that their representation in Section 2.01 hereof as to valid title shall be deemed made as of the date such title was transferred to them by CPNL. 9.03 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDERS. The obligations of the Shareholders to effect the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of the following conditions, any or all of which may be waived by the Shareholders, in whole or in part, to the extent permitted by applicable law: (a) each of the representations and warranties of Acquiror contained in this Agreement shall be true and correct in all material respects (without duplication of any materiality exception contained in any individual representation and warranty) as of the date of this Agreement and as of the Closing as though made again as of the Closing. The Company shall have received a certificate of the President and the Chief Financial Officer of Acquiror, dated the Closing Date, to such effect; (b) Acquiror shall have performed or complied with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing. The -29- Company shall have received a certificate of the President and the Chief Financial Officer of Acquiror, dated the Closing Date, to such effect; (c) employment agreements for each of Mr. Pluimers, Mr. Mead and Mr. Heinsbroek, substantially in the form of Exhibits B, C and D hereto, respectively, shall have been executed and delivered by the other parties thereto; and (d) Acquiror shall have (i) paid the Closing Purchase Price to the Shareholders and (ii) delivered the Escrowed Purchase Price to the Escrow Agent pursuant the Escrow Agreement, in each such case as provided in Article I. ARTICLE X MISCELLANEOUS 10.01 TERMINATION. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) by mutual consent of Acquiror, the Company and each of the Shareholders; (b) by Acquiror, the Company or any of the Shareholders if the Closing has not occurred on or before 45 days from the date of this Agreement; (c) by Acquiror, upon a material breach of any covenant or agreement on the part of the Company or the Shareholders set forth in this Agreement, or if any representation or warranty of the Company or the Shareholders shall have become untrue, in either case such that the conditions set forth in Section 9.02(a) or Section 9.02(b) would not be satisfied (a "Terminating Company Breach"); PROVIDED THAT, if such Termination Company Breach is curable by the Company or the Shareholders through the exercise of reasonable efforts and for so long as the Company or the Shareholders continue to exercise such reasonable efforts, Acquiror may not terminate this Agreement under this Section 10.01(c); (d) by the Company or any of the Shareholders, upon a material breach of any covenant or agreement on the part of Acquiror set forth in this Agreement, or if any representation or warranty of Acquiror shall have become untrue, in either case such that the conditions set forth in Section 9.03(a) or Section 9.03(b) would not be satisfied (a "Terminating Acquiror Breach"); PROVIDED THAT, if such Terminating Acquiror Breach is curable by Acquiror through the exercise of its reasonable efforts and for so long as Acquiror continues to exercise such reasonable efforts, the Company may not terminate this Agreement under this Section 10.02(d); (e) by Acquiror, the Company or any of the Shareholders, if there shall be any Order which is final and nonappealable preventing the consummation of the Acquisition, unless the party relying on such Order has not complied with its obligations under Section 7.05(b); or (f) by the Company or any of the Shareholders if the Deposit is not paid to the Company within two business days after the execution and delivery of this Agreement. -30- 10.02 EFFECT OF TERMINATION. In the event of any termination of this Agreement pursuant to Section 10.01, the Company and Acquiror shall have no obligation or liability to each other except that (i) the provisions of Sections 1.05, 7.02(c) and 7.05 shall survive any such termination, and (ii) nothing herein and no termination pursuant hereto will relieve any party from liability for any breach of this Agreement. 10.03 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived at any time by the party that is entitled to the benefits thereof. This Agreement may not be amended or supplemented at any time, except by an instrument in writing signed on behalf of each party hereto. The waiver by any party hereto of any condition or of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other condition or subsequent breach. 10.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement (including the Schedules and Exhibits hereto) together with that certain Letter Agreement dated as of the date hereof by and between Acquiror and the Company constitute the entire agreement and, except as provided in Section 7.02(c), supersede all other prior agreements and understandings, both oral and written, among the parties or any of them, with respect to the subject matter hereof. Neither this Agreement nor any document delivered in connection with this Agreement confers upon any person not a party hereto any rights or remedies hereunder except as provided in Article VIII hereof. 10.05 ASSIGNMENT. This Agreement shall inure to the benefit of and will be binding upon the parties hereto and their respective legal representatives, successors and permitted assigns. Acquiror may, upon notice to the Company, assign or delegate its rights and obligations under this Agreement or any part hereof to any direct or indirect wholly owned subsidiary of Acquiror, but no such assignment shall in any way operate to enlarge, alter or change any obligation of or due to the Company or the Shareholders or relieve Acquiror of its obligations hereunder. Except as set forth in this Agreement, this Agreement shall not be assignable by any party hereto without the consent of the other parties hereto. 10.06 CERTAIN DEFINITIONS. For the purposes of this Agreement, unless the context clearly indicates otherwise, the term: (a) "affiliate" means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned person; (b) "beneficial owner" and words of similar import shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act. (c) "Benefit Plan" or "Benefit Plans" shall mean each Plan and each personnel policy, stock option plan, collective bargaining agreement, bonus plan or arrangement, incentive award plan or arrangement, vacation policy, severance pay plan, policy or agreement, deferred compensation agreement or arrangement, executive compensation or supplemental income arrangement, consulting agreement, employment agreement, and each other employee benefit plan, agreement, arrangement, program, practice or understanding that is not a Plan and that is sponsored, maintained or contributed to by the Company or any of its subsidiaries for the benefit of the -31- employees, former employees, independent contractors, or agents of the Company or any of its subsidiaries, or has been so sponsored, maintained or contributed to since 1974; (d) "business day" shall mean any day other than a day on which banks in Rotterdam, The Netherlands are authorized or obligated to be closed; (e) "Closing" shall mean a meeting, which shall be held in accordance with Section 1.02 of this Agreement, of persons interested in the transactions contemplated by this Agreement at which all documents deemed necessary by the parties to this Agreement to evidence the fulfillment or waiver of all conditions precedent to the consummation of the Acquisition are executed and delivered; (f) "Closing Date" shall mean the date of the Closing as determined pursuant to Section 1.02 of this Agreement; (g) "control" (including the terms "controlled," "controlled by" and "under common control with") shall mean the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of stock or as trustee or executor, by contract or credit arrangement or otherwise; (h) "person" shall mean an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, other entity or group (as defined in Section 13(d) of the Exchange Act); (i) "Plan" or "Plans" shall mean each "employee benefit plan," as such term is defined in Section 3(3) of ERISA, including, but not limited to, any employee benefit plan that may be exempt from some or all of the provisions of ERISA, that is sponsored, maintained or contributed to by the Company or any of its subsidiaries for the benefit of the employees, former employees, independent contractors, or agents of the Company or any of its subsidiaries, or has been so sponsored, maintained or contributed to since 1974; (j) "Significant Subsidiary" shall mean any subsidiary of Acquiror that would constitute a "significant subsidiary" within the meaning of Rule 1-02 of Regulation S-X of the SEC; (k) "subsidiary" or "subsidiaries" of the Company, Acquiror or any other person, shall mean any corporation, partnership, joint venture or other legal entity of which the Company, Acquiror or any such other person, as the case may be (either alone or through or together with any other subsidiary), owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity; (l) "Tax" or "Taxes" shall mean any and all taxes, charges, fees, levies, assessments, duties or other amounts payable to any federal, state, local or foreign taxing authority or agency, including, without limitation, (i) income, franchise, profits, gross receipts, minimum, alternative minimum, estimated, ad valorem, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, disability, employment, social security, workers -32- compensation, unemployment compensation, utility, severance, excise, stamp, windfall profits, transfer and gains taxes, (ii) customs, duties, imposts, charges, levies or other similar assessments of any kind, and (iii) interest, penalties and additions to tax imposed with respect thereto; and 10.07 NOTICES. All notices, requests, demands, claims and other communications that are required to be or may be given under this Agreement shall be in writing and (i) delivered in person or by courier, (ii) sent by telecopy or facsimile transmission, or (iii) mailed, certified first class mail, postage prepaid, return receipt requested, to the appropriate party at the following addresses: if to the Company: Saybolt International BV Postbus 151 3000 AD Rotterdam The Netherlands Telecopy: (011) 31-10-460-9911 Attn: Erik Pluimers with copies to: Shearman & Sterling 599 Lexington Avenue New York, New York 10022-6069 Telecopy: (212) 848-7179 Attention: John A. Marzulli, Jr. Stibbe Simont Monahan Dehot P. O. Box 75460 1070 AP Amsterdam The Netherlands Telecopy: (011) 31-20-546-0733 Attention: Hector W. L. de Beaufort if to Acquiror: Core Laboratories N.V. Herengracht 424 1017 BZ Amsterdam The Netherlands Telecopy: (011) 31-20-627-9886 Attention: Managing Director -33- with copies to: Nauta Dutilh Postbus 1110 3000 BC Rotterdam Weena 750 3014 DA Rotterdam The Netherlands Telecopy: (011) 31-10-414-8444 Attention: Chris A. Fonteijn Core Laboratories, Inc. 5295 Hollister Road Houston, Texas 77040 Telecopy: (713) 690-3947 Attention: John D. Denson Vinson & Elkins L.L.P. 2300 First City Tower 1001 Fannin Street Houston, Texas 77002-6760 Telecopy: (713) 615-5531 Attention: T. Mark Kelly if to the Shareholder Representative: Stanley Roth North American Capital Corp. 510 Broad Hollow Road Melville, New York 11747-3665 Telecopy: (516) 752-9618 with copies to: Shearman & Sterling 599 Lexington Avenue New York, New York 10022-6069 Telecopy: (212) 848-7179 Attention: John A. Marzulli, Jr. Stibbe Simont Monahan Dehot P. O. Box 75460 1070 AP Amsterdam The Netherlands Telecopy: (011) 31-20-546-0733 Attention: Hector W. L. de Beaufort or to such other address as the parties set forth above shall have furnished to the other parties set forth above by notice given in accordance with this Section 10.07. Such notices shall be effective -34- (i) if delivered in person or by courier, upon actual receipt by the intended recipient, (ii) if sent by telecopy or facsimile transmission, when the sender receives telecopier confirmation that such notice was received at the telecopier number of the addressee, or (iii) if mailed, upon the earlier of five days after deposit in the mail and the date of delivery as shown by the return receipt therefor. 10.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE NETHERLANDS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. 10.09 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provision, covenants and restrictions of this Agreement shall continue in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term, provision, covenant or restriction is invalid, void or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. 10.10 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 10.11 HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 10.12 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy available at law or in equity. 10.13 FORUM. EXCEPT IN EACH CASE FOR ALL MATTERS RELATING IN ANY RESPECT TO THE ESCROW AGREEMENT OR THE FUNDS HELD PURSUANT THERETO, INCLUDING THE DETERMINATION OF ANY AND ALL AMOUNTS TO BE DISTRIBUTED FROM THE FUNDS HELD PURSUANT THERETO, (WHICH MATTERS SHALL BE GOVERNED BY THE TERMS (INCLUDING THE ARBITRATION PROVISIONS) OF THE ESCROW AGREEMENT), ACQUIROR, THE COMPANY AND THE SHAREHOLDERS FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS LOCATED IN THE NETHERLANDS AND AGREE AND CONSENT THAT SERVICE OF PROCESS MAY BE MADE UPON ANY OF THEM IN ANY LEGAL PROCEEDING ARISING EXCLUSIVELY OUT OF OR IN CONNECTION WITH THIS AGREEMENT BY SERVICE OF PROCESS AS PROVIDED BY DUTCH LAW (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING EXCLUSIVELY OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS LOCATED IN THE NETHERLANDS, (C) FOR SUCH PURPOSES IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN -35- INCONVENIENT FORUM, (D) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS WITH RESPECT TO ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO SUCH PARTY AND ITS COUNSEL AT THEIR ADDRESSES SET FORTH HEREIN, AND (E) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST ACQUIROR, THE COMPANY OR ANY OF THE SHAREHOLDERS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS OBLIGATIONS HEREUNDER SHALL, BE BROUGHT IN THE COURTS OF THE NETHERLANDS. THE SHAREHOLDERS IRREVOCABLY DESIGNATE, APPOINT AND EMPOWER STIBBE SIMONT MONAHAN DEHOT AS THEIR AUTHORIZED AGENT TO RECEIVE SERVICE OF PROCESS WHICH MAY BE SERVED AT THE ADDRESS SET FORTH IN SECTION 10.07 OF THIS AGREEMENT IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT. SERVICE IN SUCH MANNER UPON THE AGENT IS HEREBY ACKNOWLEDGED BY THE SHAREHOLDERS TO BE BINDING UPON THEM IN EVERY RESPECT. IN THE EVENT THAT, FOR ANY REASON, THE AGENT NAMED ABOVE SHALL NO LONGER SERVE AS THE AGENT OF THE SHAREHOLDERS TO RECEIVE PROCESS IN THE NETHERLANDS, THE SHAREHOLDERS SHALL APPOINT A SUCCESSOR SO TO SERVE. NOTHING HEREIN SHALL EFFECT THE RIGHT OF ANY PARTY TO ATTEMPT TO SERVE PROCESS WITH RESPECT TO THE MATTERS DESCRIBED ABOVE, EXCEPT FOR ALL MATTERS RELATING IN ANY RESPECT TO THE ESCROW AGREEMENT OR THE FUNDS HELD PURSUANT THERETO, INCLUDING THE DETERMINATION OF ANY AND ALL AMOUNTS TO BE DISTRIBUTED FROM THE FUNDS HELD PURSUANT THERETO, (WHICH MATTERS SHALL BE GOVERNED BY THE TERMS (INCLUDING THE ARBITRATION PROVISIONS) OF THE ESCROW AGREEMENT), IN ANY OTHER MANNER PERMITTED BY DUTCH LAW. -36- IN WITNESS WHEREOF, Acquiror, the Company and each of the Shareholders have each executed or caused this Agreement to be executed on its behalf by its officer thereunto duly authorized, as applicable, all as of the date first above written. CORE LABORATORIES N.V. By: Core Laboratories International B.V., its sole managing director By: ____________________________ Jacobus Schouten Managing Director SAYBOLT INTERNATIONAL B.V. By: ___________________________________ Name: ____________________________ Title: ___________________________ Number of Number of Class A Class B Shares Owned Shares Owned Shareholders: ------------ ------------ ------------- 57,000 - ------------------------------------ Frerik Pluimers 99,531 21,976 ALPINVEST HOLDING N.V. By: ________________________________ Name: Title: 22,115 - HEMERA II & CIE S.C.A By: ________________________________ Name: Title: -37- Number of Number of Class A Class B Shares Owned Shares Owned Shareholders: ------------ ------------ ------------- 26,533 - EUROFRANDEV S.A. By: ________________________________ Name: Title: 30,960 - PARINDEV PME SA By: ________________________________ Name: Title: 263,000 - STICHTING PARTICIPATIE SAYBOLT INTERNATIONAL B.V. By: ________________________________ Name: Title: 5,500 228,024 ABN AMRO PARTICIPATIES B.V. By: ________________________________ Name: Title: - 106,732 CITICORP CAPITAL INVESTORS EUROPE LTD. By: ________________________________ Name: Title: -38- Number of Number of Class A Class B Shares Owned Shares Owned Shareholders: ------------ ------------ ------------- - 106,732 EUROPENTERPRISE '92 CURACAO N.V. By: ________________________________ Name: Title: CAPITAL PARTNERSHIP NOMINEES LTD. - 31,897 By: ________________________________ Name: Title: -39- Number of Number of Class A Class B Shares Owned Shares Owned Shareholders: ------------ ------------ ------------- ______________________________________ Rolly Louis Rudolf Jules van Rappard ______________________________________ Maarten Ruijs ______________________________________ Michael David Cook Smith ______________________________________ Alexander Donald MacKenzie ______________________________________ Corinne Ingeborg Beatrice Koltes-Sulzer -40- EX-10.3 4 EXHIBIT 10.3 EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") is made and entered into as of May 12, 1997 by and between Saybolt Netherlands B.V., a private limited liability company organized under the laws of The Netherlands ("Employer"), and Frerik Pluimers, a resident of The Netherlands ("Employee"). WHEREAS, Employee is employed as the Chairman of Saybolt International B.V. ("Previous Employer"); WHEREAS, Core Laboratories N.V. ("Core"), Employee and Previous Employer are parties to a Stock Purchase Agreement dated as of the date hereof whereby Core will purchase all of the capital stock of Previous Employer, and Previous Employer will become a wholly owned subsidiary of Core (the "Acquisition"); WHEREAS, one of the conditions to consummation of the Acquisition is that Employer and Employee enter into this Agreement; WHEREAS, Employer is desirous of employing Employee, and Employee wishes to be employed by Employer, in accordance with the terms and conditions contained herein. NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties, covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I EMPLOYMENT 1.01 Employer hereby employs Employee, effective as of the Closing Date (as defined in the Stock Purchase Agreement) (the "Effective Date"), and Employee accepts such employment as of the Effective Date, according to the terms and conditions set forth in this Agreement. ARTICLE II TERM OF EMPLOYMENT 2.01 TERM. The term of this Agreement shall commence on the Effective Date and, except as provided in Section 7.03, shall continue until the earliest to occur of the following events: (a) Employee resigns, (b) Employee's service is terminated pursuant to the provisions of Sections 2.03, 2.04 or 2.05 or (c) the parties hereto agree in writing to terminate this Agreement. 2.02 DISABILITY. Employee shall be entitled to disability compensation in accordance with Dutch law (Wet Arbeidsongeschikheidsverzekering). In addition, Employer shall continue to provide excess insurance coverage (Aanvullende WAO verzekering) for the benefit of Employee in the amount it currently provides. -1- 2.03 DEATH. This Agreement shall terminate immediately on the date of Employee's death. Employee's estate shall be entitled only to, and Employer's obligation under this Agreement shall be limited to, the payment of any unpaid amount of Employee's base salary accrued under Section 4.01 to the date of Employee's death and any accrued and unused vacation days. 2.04 TERMINATION FOR CAUSE. The employment of Employee hereunder may be terminated "for cause" immediately without prior notice by Employer if Employer in its discretion determines that Employee shall have: (A) deliberately refused or failed, after reasonable notice in writing from the Board of Supervisory Directors of Core (the "Board") or a representative of Employer duly authorized by the Board (the "Supervising Representative") that such refusal or failure would constitute a default hereunder, to carry out any reasonable order of the Board or the Supervising Representative; (B) committed a breach of the terms of this Agreement or any other legal obligation owed by Employee to Employer; (C) demonstrated gross incompetence, negligence or willful misconduct in the execution of Employee's assigned duties; (D) demonstrated moral turpitude to the detriment of Employer or violated Employer's policy on the use of alcohol or drugs as in effect from time to time; or (E) been convicted of a felony or other serious crime. In such cases, Employee shall be entitled only to, and Employer's obligation under this Agreement shall be limited to, the payment of any unpaid amount of Employee's base salary accrued under Section 4.01 to the date of such termination and any accrued and unused vacation days. This Section 2.04 shall in no way be construed as precluding Employer from terminating Employee without cause or prior notice or for any reason, as provided in Section 2.05. 2.05 OTHER TERMINATION. Employee understands and agrees that he may be terminated from employment with Employer for any reason, without cause, at any time; PROVIDED, HOWEVER, that for any termination made pursuant to this Section 2.05, Employer shall provide Employee with 30 days prior notice of such termination. Furthermore, Employer agrees that Employee may terminate his employment with Employer at any time and for any reason by giving prior written notice to Employer. In such cases, Employee shall be entitled only to, and Employer's obligation under this Agreement shall be limited to, the payment of any unpaid amount of Employee's base salary accrued under Section 4.01 to the date of such termination and any accrued and unused vacation days. -2- ARTICLE III DUTIES AND FUNCTIONS 3.01 POSITION; DUTIES. Employee agrees to serve as a Managing Director of Employer, to perform the duties of such office diligently and to the best of his abilities and to assume such additional duties as may from time to time be assigned to him consistent with his position. 3.02 PERFORMANCE; SERVICE. Employee agrees in all respects to carry out and use his best efforts in carrying out the objectives of Employer and protecting Employer's interests. Employee agrees to be in the full-time service of Employer and to devote all of his business time and attention to the duties assigned to him pursuant to this Agreement; PROVIDED, HOWEVER, that Employee may (i) continue to serve as the Honorary Consul of Gambia and as director for such entities he currently serves in such capacity or (ii) assume such additional directorships as may be approved by the Board. 3.03 WORK FOR SUBSIDIARIES OR OTHER AFFILIATES. All terms and conditions set forth in this Agreement between Employer and Employee shall apply whether Employee carries out his activities in or for Employer or in or for any subsidiary or other affiliate thereof. Employee shall receive no salary or other payment for any position he holds with Employer or any subsidiary or other affiliate thereof other than as set forth in this Agreement. ARTICLE IV COMPENSATION During the term of employment described in Section 2.01 above while this Agreement is in effect, Employer shall provide to Employee the following: 4.01 BASE SALARY. Employer shall pay to Employee an annual gross base salary in the amount of Three Hundred Fifty Thousand and No/100 Dutch guilders (NLG 350,000), payable in twelve (12) equal installments on the last day of each calendar month. Annual cost of living adjustments may be made from time to time to such base salary (commensurate with increases to senior executives of Employer on August 1 of each calendar year) as determined by the Board or the Supervising Representative. 4.02 BONUS. Employee shall be eligible to receive an annual incentive bonus on March 31 of each calendar year in accordance with and subject to the performance criteria approved by the Board or the Supervising Representative and commensurate with those applicable to senior management of Employer. The amount of any such incentive bonus shall be limited to 60% of Employee's then base salary. 4.03 TAX. All amounts payable by Employer under this Agreement shall be subject to the prior reduction or withholding by Employer of appropriate taxes and other required amounts. If a determination is made by any relevant governmental authority that insufficient withholdings have been made and to the extent that such withholdings would, if made, have resulted in the Employee -3- receiving a lower amount of net remuneration, Employee shall indemnify Employer for all amounts determined to be so payable as a result of such failure to withhold any or sufficient amounts. ARTICLE V EMPLOYEE BENEFITS 5.01 AUTOMOBILE. During the Employee's term of employment hereunder, Employer shall provide the automobile-related benefits set forth in ANNEX 1 hereto. 5.02 PENSION. Employer shall continue for the benefit of Employee the monthly contribution to his pension plan with Previous Employer that is maintained in The Netherlands, to the extent such contribution does not (1) conflict with any applicable law and (2) conflict with the terms of such pension plan. A copy of the applicable pension plan is attached hereto as ANNEX 2. 5.03 OTHER EMPLOYEE BENEFITS. Employee shall be entitled to participate in all health, disability and other employee benefit plans offered by Employer or required (but only to the extent required) by applicable law under the terms and conditions of each such plan. With respect to Employer's disability plan, Employer shall continue to sponsor Employee for his existing benefit amount in excess of the Employer amount. The cash and expenses of such excess benefit amount shall be borne by Employee. ARTICLE VI ADDITIONAL RIGHTS OF EMPLOYEE 6.01 VACATION. In addition to Dutch public holidays, Employee shall be entitled to a paid annual vacation of twenty-three (23) business days during each full calendar year of employment during such times as shall not interfere with the operations of Employer. Employee's rights shall accrue ratably during each calendar year and shall be subject to proration for partial calendar years. In the event that in any calendar year Employee shall fail to use all vacation days to which he is entitled during such year, Employee shall be entitled to carry forward five (5) of such vacation days into the next succeeding calendar year. 6.02 EXPENSES. Employer shall reimburse, or direct payment of, all expenses reasonably incurred by Employee in the performance of his duties hereunder, upon the submission of written evidence of such expenses to the reasonable satisfaction of Employer, plus a fixed expense allowance in the amount of Five Hundred Dutch guilders (NLG 500) per month. 6.03 TERMINATION PAYMENT. (A) Subject to Paragraph (B) below, in the event that Employee's employment pursuant to this Agreement is terminated by Employer other than "for cause," as described in Section 2.04, or for death, Employer shall pay to Employee an amount equal to the annual gross base salary specified in Section 4.01 as adjusted for the year in which such termination occurs. Employee agrees that this termination payment will be in -4- lieu of, and not in addition to, any payment to which he would otherwise be entitled on account of termination of his employment under any other Employer severance, termination, pay in lieu of notice, or similar payment program, plan, policy or agreement. (B) The payment referred to in Section 6.03(A) shall be reduced by any statutory or other compensation that Employee may be entitled to receive from Employer as a result of such termination, and Employee, to the extent permitted by applicable law, hereby waives any and all rights and remedies with respect to such termination other than as expressly provided herein. 6.04 LOCATION. Employee's services shall be performed primarily at the facilities of Employer located in The Netherlands. Employee acknowledges that worldwide travel shall be required. In the event that the Board or the Supervising Representative determines in its sole discretion that the duties of Employee hereunder require that Employee relocate to a country or state other than as set forth above, the parties agree to enter into good faith negotiations regarding the terms of such relocation. In the event that, after forty five (45) days after such negotiations have commenced, the parties have failed to reach an agreement, Employer shall have the option of suspending its relocation plans or exercising its rights under Section 2.05 above. ARTICLE VII CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE 7.01 GENERAL. Employee hereby covenants and agrees with Employer that, except as otherwise expressly consented to, approved or otherwise permitted by the Board or the Supervising Representative in writing, during Employee's term of employment hereunder and for a subsequent period as set forth below, Employee shall not, in any geographic area or market area or market where Employer or any of its affiliates conduct any business either on the date of termination of the employment of Employee or during any of the immediately preceding twelve (12) months, directly or indirectly, acting alone, by providing material assistance to the efforts of his spouse or as a member of a partnership or other business entity or as a holder of any interest in a security of any class of a corporation or other business entity (other than as a holder of less than one percent (1%) of the outstanding amount of any security listed on a national securities exchange or designated as a National Market System security by the National Association of Securities Dealers, Inc.) or as an officer, director, partner, employee, consultant, agent or representative of any corporation, partnership or other business entity: (A) Other than as required in the performance of his assigned duties to Employer and other than as required by law, either use or disclose to any person, firm or corporation any confidential or proprietary information concerning the organization, business, inventions, discoveries, customers, suppliers, operations, affairs or trade secrets of Employer, Employer's affiliates or Previous Employer that Employee may have acquired in the course of, or incident to, his employment by Employer, Employer's affiliates or Previous Employer, whether or not Employee was aware that such information was confidential or proprietary when originally given to or learned by -5- him; PROVIDED, HOWEVER, that such obligations of non-use and nondisclosure shall not apply to information that is or becomes a part of the public domain without breach by Employee of the aforementioned obligations; (B) Engage anywhere in any business, trade, or other enterprise substantially similar to, or directly or indirectly in competition with, the business of Employer, Employer's affiliates or Previous Employer if engaging in such business, trade or other enterprise could result in any unauthorized use or disclosure by Employee of any confidential or proprietary information of or concerning Employer, Employer's affiliates or Previous Employer. Employer and Employee agree that Employer currently carries on substantial business worldwide. Employer and Employee further agree that Employee's engaging in the business of inspection, testing analytical services and calibration services of oil and chemicals and environmental testing of air, water and soil, would necessarily involve the unauthorized use or disclosure by Employee of such confidential or proprietary information; (C) Request, induce or attempt to influence any current, future or prospective customer or supplier of Employer, Employer's affiliates or Previous Employer to limit, curtail or cancel its business with Employer; or (D) Request, induce or attempt to influence any current, future or prospective officer, director, employee, consultant, agent or representative of Employer to (i) terminate his, her or its employment or business relationship with Employer or (ii) commit any act that, if committed by Employee, would constitute a breach of any provision of this Section 7.01. 7.02 INTENT; SCOPE. Employee and Employer agree that the provisions of clauses (A), (B), (C) and (D) of Section 7.01 are reasonable and necessary to protect the legitimate interests of Employer. The provisions of said clauses are separate and distinct commitments independent of each of the other said clauses. Employee and Employer further agree that if the scope of any said clauses is deemed by any administrative agency, arbitrator or court to be overly broad, such agency, arbitrator or court may reduce the scope thereof to that which it deems reasonable under the circumstances. 7.03 TERM. If Employee is terminated for any reason or voluntarily leaves the employ of Employer, the provisions set forth in this Article VII shall survive for a period of twelve (12) months following the date of such termination or cessation of employment. ARTICLE VIII PENALTY 8.01 GENERAL. Employee will forfeit to Employer for each breach of any of the provisions of Article VII hereof a penalty in the amount of Ten Thousand and No/100 Dutch guilders (NLG 10,000) for each day that the breach continues, without prejudice to: -6- (i) Employer's right to claim instead of this penalty the actual damage Employer has suffered through this breach; and (ii) any other relief to which Employer may be entitled under law or equity. 8.02 GROUNDS FOR TERMINATION. Breach by Employee of the provisions of Section 7.01 hereof shall also constitute grounds for immediate termination of Employee's employment and shall be considered a termination "for cause" within the meaning of Section 2.04. ARTICLE IX EMPLOYEE REPRESENTATIONS 9.01 Employee represents that he is free to enter into this Agreement and is not under any contractual or other restraint which would prohibit the satisfactory performance of his duties to Employer hereunder. Employee represents and warrants further that he has read and understands each of the provisions of this Agreement and that he has sought and obtained the advice of legal counsel before agreeing to be bound by the terms hereof. Employee acknowledges and agrees that Employer would not have continued Employee's employment and entered into this Agreement but for Employee's agreement to be bound by the covenants contained herein. ARTICLE X MISCELLANEOUS 10.01 ENTIRE AGREEMENT. This Agreement, including the annexes attached hereto, contains the entire understanding of the parties hereto in respect of its subject matter. This Agreement supersedes all prior written or oral agreements and understandings between the parties with respect to the subject matter hereof. 10.02 GOVERNING LAW. This Agreement shall be construed under and governed in accordance with the laws of The Netherlands. 10.03 NOTICES. Any notice or other communications required or permitted hereunder shall be sufficiently given if in writing and personally delivered or sent by airmail, postage prepaid, or by international air courier, telecopier or telex addressed to Employer or Employee, as the case may be, to the following address or at such other address for such party as specified by like notice: (A) If to Employer: to: Saybolt Netherlands B.V. c/o Core Laboratories N.V. 424 Herengracht 1017 BZ Amsterdam The Netherlands Attention: Jacobus Schouten Telecopy: (011) 31-20-627-9886 -7- copies to: Nauta Dutilh Postbus 1110 3000 BC Rotterdam Weena 750 3014 DA Rotterdam The Netherlands Attention: Chris A. Fonteijn Telecopy: (011) 31-10-414-8444 Core Laboratories, Inc. 5295 Hollister Road Houston, Texas 77040 Attention: John D. Denson Telecopy: (713) 690-3947 (B) If to Employee: to: Frerik Pluimers Saybolt Netherlands B.V. Postbus 151 3000 AD Rotterdam The Netherlands Telecopy: (011) 31-10-460-9911 10.04 CHANGE, MODIFICATION, WAIVER. No change or modification of this Agreement shall be valid unless it is in writing and signed by each of the parties hereto. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the party against whom the waiver is sought to be enforced. The failure of a party to insist upon strict performance of any provision of this Agreement in any one or more instances shall not be construed as a waiver or relinquishment of the right to insist upon strict compliance with such provision in the future. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, shall be deemed to be or construed as a further or continuing waiver of any such breach. 10.05 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs and assigns; PROVIDED, HOWEVER, that Employee shall not directly or indirectly assign or delegate any of his rights or obligations hereunder in whole or in part without the prior written consent of Employer, and any such assignment or delegation without such consent shall be void. 10.06 HEADINGS DESCRIPTIVE. The headings used herein are included for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 10.07 SAVINGS CLAUSE. Should any valid Dutch or other applicable law or final determination of any administrative agency, arbitrator or court of competent jurisdiction affect any provision of this Agreement, the provision or provisions so affected shall be automatically conformed to the law of determination and this Agreement shall otherwise continue in full force and effect. -8- IN WITNESS WHEREOF, Employer and Employee have each executed or caused this Agreement to be executed on its behalf by its officer thereunto duly authorized, as applicable, all as of the date first above written. SAYBOLT NETHERLANDS B.V. By:_________________________________ Name: Title: FRERIK PLUIMERS By:_________________________________ -9- ANNEX 1 AUTOMOBILE RELATED BENEFITS Employer shall reimburse Employee for his mileage. Employer acknowledges that Employee has outstanding a loan for the purchase of his Mercedes Benz automobile. ANNEX 2 PENSION PLAN EX-10.4 5 EXHIBIT 10.4 ESCROW AGREEMENT This Escrow Agreement (this "Agreement") is made and entered into as of May 12, 1997 by and among Core Laboratories N.V., a Netherlands public limited liability company ("Acquiror"), each of the shareholders of Saybolt International B.V., a Netherlands private limited liability company (the "Company"), signatory hereto (the "Shareholders") and Chase Manhattan Bank (the "Escrow Agent"). WHEREAS, Acquiror, the Company and the Shareholders are parties to that certain Stock Purchase Agreement, dated as of April 16, 1997 (the "Stock Purchase Agreement"); WHEREAS, Article VIII of the Stock Purchase Agreement provides that Acquiror and its directors, officers, employees, consultants, affiliates and controlling persons (hereinafter, including the Company and its subsidiaries after the Closing (as defined in the Stock Purchase Agreement), collectively, the "Acquiror Indemnified Parties") shall be indemnified and held harmless from and against certain matters, as more particularly set forth in the Stock Purchase Agreement; WHEREAS, Acquiror, on behalf of itself and the Acquiror Indemnified Parties, and the Shareholders desire to establish an escrow for the indemnification obligations of the Shareholders pursuant to the terms and conditions of the Stock Purchase Agreement and this Agreement; and WHEREAS, the Escrow Agent is willing to act as escrow agent hereunder; NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. DEFINITIONS. Capitalized terms used herein without definition shall have the meanings ascribed to them in the Stock Purchase Agreement. 2. APPOINTMENT OF ESCROW AGENT. Acquiror and the Shareholders hereby appoint the Escrow Agent to act as escrow agent hereunder, and the Escrow Agent hereby accepts such appointment for the purpose of receiving and disbursing the Escrow Funds (as defined below) in accordance with the terms and conditions set forth herein. 3. ESTABLISHMENT OF ESCROW; INVESTMENT. (a) On the date of this Agreement (the "Closing Date"), Acquiror shall deliver to the Escrow Agent the sum of U.S. $6 million in cash pursuant to Section 1.03 of the Stock Purchase Agreement (the "Escrow Amount"). Acquiror and the Shareholders hereby direct the Escrow Agent to invest and reinvest such Escrow Amount and the income therefrom in savings or money market accounts with, repurchase agreements with, or certificates of deposit (with maturities of not more than three months) issued by banks or trust companies located in the United States of America, the actual value of the assets of which is at least $100,000,000 in excess of its liabilities, or in United States Treasury Bills (with maturities of not more than three months) or mutual funds backed by United States Treasury Bills or as otherwise directed in writing by Acquiror and Stanley Roth, as the representative of the Shareholders (the "Shareholder Representative"). (b) Unless otherwise directed, the Escrow Agent may use a broker-dealer of its own selection, including a broker-dealer owned by or affiliated with the Escrow Agent or any of its affiliates. All brokerage costs and related expenses incurred hereunder shall be paid from the Escrow Funds. The Escrow Amount together with all amounts so earned from such investments and reinvestments ("Escrow Income") are collectively referred to herein as the "Escrow Funds." The Escrow Funds shall be held by Escrow Agent subject to the terms and conditions hereinafter set forth. (c) The Escrow Agent shall have the right to liquidate any investments held, in order to provide funds necessary to make required payments under this Escrow Agreement. The Escrow Agent in its capacity as escrow agent hereunder shall not have any liability for any loss sustained as a result of any investment made pursuant to the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Funds or any earnings thereon. 4. USE OF ESCROW FUNDS; DISTRIBUTIONS OF ESCROW INCOME. 4.1 USE OF ESCROW FUNDS. The Escrow Funds shall be used, to the extent required, to satisfy in full or in part the indemnification obligations of the Shareholders as set forth in Article VIII of the Stock Purchase Agreement ("Indemnification Obligations"). Notwithstanding the foregoing, the use of Escrow Funds to satisfy Indemnification Obligations shall be limited to $6 million in the aggregate. 4.2 CLAIM NOTICES. If at any time up to and including the second anniversary of the Closing Date, a Claim (as defined in Section 8.01 of the Stock Purchase Agreement) has been asserted against, resulted from, imposed upon or incurred by Acquiror or any Acquiror Indemnified Party, directly or indirectly, by reason of, arising out of or resulting from the matters set forth in Sections 8.01(a), (b), (d) or (e) of the Stock Purchase Agreement that Acquiror in good faith believes gives rise to an Indemnification Obligation, Acquiror may provide the Escrow Agent and the Shareholder Representative with written notice with respect to such Claim (a "Claim Notice"). Such Claim Notice shall (a) specify in reasonable detail the basis for each individual Indemnification Obligation with respect to such Claim in accordance with the provisions of the Stock Purchase Agreement and this Agreement, (b) include the amount (with supporting calculations and documents), if any, that Acquiror believes in good faith should be distributed from the Escrow Funds for each individual Indemnification Obligation at such time in accordance with the provisions of the Stock Purchase Agreement and this Agreement and (c) provide instructions with respect to the distribution of such amount, if any, including the recipients thereof and the amount to be distributed to each recipient. Each Claim Notice shall be executed by an authorized officer of Acquiror, and the Escrow Agent shall be entitled to rely on such Claim Notice as being duly authorized and executed by Acquiror on behalf of either itself or another Acquiror Indemnified Party. 4.3 DISTRIBUTION NOTICES. If (a) a Claim has been asserted against, resulted from, imposed upon or incurred by Acquiror or any Acquiror Indemnified Party, directly or indirectly, by reason of, arising out of or resulting from the matters set forth in (i) a Claim Notice previously delivered pursuant to Section 4.2 of this Agreement or (ii) Section 8.01(c) of the Stock Purchase Agreement and (b) Acquiror believes in good faith that such Claim gives rise to an Indemnification Obligation (or, in the case of clause (a)(i) above, an additional Indemnification Obligation) from the Escrow Funds in accordance with the provisions of the Stock Purchase Agreement and this Agreement as a result of such Claim, then Acquiror may provide the Escrow Agent and the Shareholder Representative with written notice (a "Distribution Notice") at any time thereafter. Such Distribution Notice shall (a) specify in reasonable detail the basis for each individual Indemnification Obligation with respect to such Claim in accordance with the provisions of the Stock Purchase Agreement and this Agreement, (b) include the amount (with supporting calculations and documents) that Acquiror believes in good faith should be distributed from the Escrow Funds for each individual Indemnification Obligation at such time in accordance with the provisions of the Stock Purchase Agreement and this Agreement and (c) provide instructions with respect to the distribution of such amount, including the recipients thereof and the amount to be distributed to each recipient. Each Distribution Notice shall be executed by an authorized officer of Acquiror, and the Escrow Agent shall be entitled to rely on such Distribution Notice as being duly authorized and executed by Acquiror on behalf of either itself or another Acquiror Indemnified Party. 4.4 INTEREST EXPENSE. Acquiror may from time to time submit to the Escrow Agent and the Shareholder Representative a notice, together with supporting documents, that requests payment of any due but previously unpaid Interest Expense (an "Interest Notice"). For purposes of this Section 4.4, the term "Interest Expense" means the amount of interest Acquiror would incur if it had borrowed the funds it used to pay any amounts for which it or any other Acquiror Indemnified Party is eventually indemnified pursuant to this Agreement for the period from the date of payment of such amount by Acquiror or any other Acquiror Indemnified Party to the receipt by Acquiror of indemnification pursuant to this Agreement. For purposes of such calculation, the marginal interest rate in effect under Acquiror's revolving credit facility during such period shall be used. Notwithstanding the foregoing, the aggregate amount of payments to Acquiror at any time pursuant to this Section 4.4 shall not exceed the aggregate amount of Escrow Income at such time. To the extent that Acquiror has submitted one or more Interest Notices that request payment of due but previously unpaid Interest Expense in excess of the aggregate amount of Escrow Income at such time, the Escrow Agent shall, subject to Section 4.6, pay such unpaid Interest Expense to the extent of available Escrow Income and thereafter upon receipt of additional Escrow Income, shall, subject to Section 4.6 pay, such Escrow Income to Acquiror pursuant to the terms of such outstanding Interest Notices until such time as all such unpaid Interest Expense has been paid. 4.5 DISTRIBUTIONS. If, within 20 days of the Notice Receipt Date (as hereinafter defined) for a Claim Notice, a Distribution Notice or an Interest Notice, Acquiror and the Escrow Agent are not in receipt of a Notice of Disagreement (as hereinafter defined) with respect to such Claim Notice, Distribution Notice or Interest Notice, then on the next Business Day thereafter the Escrow Agent shall pay from the Escrow Funds by wire transfer of immediately available funds the amount, if any, set forth in such Claim Notice, Distribution Notice or Interest Notice in accordance with the terms of such Claim Notice, Distribution Notice or Interest Notice. Acquiror shall not be entitled to any distributions of Escrow Funds with respect to a particular matter or for Interest Expense unless Acquiror has delivered a Claim Notice, a Distribution Notice or Interest Notice, as appropriate. 4.6 NOTICE OF DISAGREEMENT. If ,upon receipt of a Claim Notice, a Distribution Notice or an Interest Notice, the Shareholder Representative believes in good faith that the Acquiror Indemnified Parties are not entitled to all or part of the indemnification or Interest Expense, as applicable, described therein, then the Shareholder Representative may provide Acquiror and the Escrow Agent with written notice of such disagreement (a "Notice of Disagreement"). Such Notice of Disagreement shall specify in reasonable detail the basis for such disagreement and such Notice of Disagreement shall be received by Acquiror and the Escrow Agent within 20 days of the Notice Receipt Date for the Claim Notice, Distribution Notice or Interest Notice, as appropriate, with respect to which such Notice of Disagreement is being provided. Each Notice of Disagreement shall be executed by the Shareholder Representative, and the Escrow Agent shall be entitled to rely on such Notice of Disagreement as being duly authorized and executed by the Shareholder Representative. 4.7 RESOLUTION OF DISAGREEMENTS. Each of the parties hereto agrees to cause its representatives to negotiate in good faith and use all reasonable efforts to resolve any matters set forth in an effective Notice of Disagreement until the earlier of (a) the receipt by the Escrow Agent of a Resolution Notice (as hereinafter defined) with respect to such matters and (b) 20 days from the date of receipt by Acquiror of such Notice of Disagreement. If the matters set forth in a Notice of Disagreement are resolved by the parties hereto, within two Business Days of such resolution Acquiror and the Shareholders (or the Shareholder Representative on behalf of the Shareholders) shall deliver a notice to the Escrow Agent (a "Resolution Notice") that sets forth the amount, if any, that should be distributed from the Escrow Funds and instructions with respect to the distribution of such amount, if any, including the recipients thereof and the amount to be distributed to each recipient. The Escrow Agent shall pay from the Escrow Funds by wire transfer of immediately available funds the amount, if any, set forth in such Resolution Notice in accordance with the instructions set forth therein within two Business Days of receipt of such Resolution Notice. Each Resolution Notice shall be executed by an authorized officer of Acquiror and the Shareholder Representative, and the Escrow Agent shall be entitled to rely on such Resolution Notice as being duly authorized and executed by Acquiror and the Shareholder Representative. 4.8 ARBITRATION.At any time after the expiration of the 20-day period referred to in clause (a) of Section 4.7 with respect to any unresolved matters set forth in an effective Notice of Disagreement, Acquiror may elect to, and, upon such election, Acquiror and the Shareholders shall, submit such unresolved matters to final and binding arbitration in accordance with the arbitration procedures of the American Arbitration Association, such arbitration proceedings to be held in New York City or in such other place as may be agreed to in writing by Acquiror and the Shareholder Representative. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. In connection with such arbitration proceedings, each of the Shareholder Representative and Acquiror shall submit to the arbitrator the amount that the Shareholders would agree to distribute from the Escrow Funds, if any, or that Acquiror would agree to accept, respectively, to settle the unresolved matter. Notwithstanding anything herein to the contrary, the award rendered by the arbitrator shall be either the amount submitted by Acquiror or the amount submitted by the Shareholder Representative, and the arbitrator shall, in addition, award the prevailing party the reasonable costs and expenses incurred by such prevailing party in connection with such arbitration proceedings. The non-prevailing party in such arbitration proceeding agrees to indemnify the prevailing party from and against all reasonable costs and expenses of the arbitration proceeding. No costs and expenses of arbitration awarded or payable pursuant to this Section 4.8 shall be paid from the Escrow Funds. Except as otherwise expressly provided herein, in reaching his or her decision, the arbitrator shall have no authority or jurisdiction to change or modify any provision of this Agreement or to award punitive damages nor shall such provisions be modified or punitive damages be awarded in any other forum. The parties agree that if, pursuant to the award of the arbitrator, the Acquiror Indemnified Parties are to receive any payments from the Escrow Funds, the Escrow Agent shall make such payment within two Business Days of receipt from (a) such arbitrator of written notice, executed by such arbitrator, of such arbitrator's award and (b) written instructions from Acquiror (executed by a duly authorized officer of Acquiror) with respect to the distribution of such award, including the recipients thereof and the amount to be distributed, by wire transfer of immediately available funds in accordance with such written instructions. The Escrow Agent shall be entitled to rely on (i) the notice from the arbitrator as being duly authorized and executed by such arbitrator and (ii) the written instructions from Acquiror as being duly authorized and executed by Acquiror. 4.9 CERTAIN DEFINITIONS. For purposes of this Section 4: (a) With respect to a particular Claim Notice, Distribution Notice or Interest Notice, the term "Notice Receipt Date" shall mean the date indicated as such in a certificate delivered by Acquiror to the Escrow Agent. Such certificate shall be executed by an authorized officer of Acquiror and shall certify that Acquiror is in possession of confirmation, as provided in Section 7.5 of this Agreement, that such Claim Notice, Distribution Notice or Interest Notice has been received by the Shareholder Representative. The Escrow Agent shall be entitled to rely on such certificate as being duly authorized and executed by Acquiror. (b) The term "Business Day" shall mean any day on which commercial banks are not authorized or required to close in New York City. 5. TERMINATION OF ESCROW. The escrow provided for hereunder shall terminate (the "Escrow Termination Date") upon the earlier of (i) distribution of $6 million to the Acquiror Indemnified Parties by the Escrow Agent for Indemnification Obligations in accordance with Section 4.5 hereof and the satisfaction or resolution of each Interest Notice delivered by Acquiror pursuant to Section 4.4, (ii) the receipt of written notification ("a Termination Notice") from Acquiror to the Escrow Agent, which Termination Notice shall be provided promptly upon the later of (a) such time as all matters described in Claim Notices that relate to Section 8.01(a), (b) or (d) of the Stock Purchase Agreement have been fully resolved, (b) the matters described in Section 8.01(c) of the Stock Purchase Agreement have been fully resolved and (c) the second anniversary of the Closing Date, and (iii) the sixth anniversary of the Closing Date. Subject to any unpaid distributions required pursuant to Section 4, all Escrow Funds remaining on the Escrow Termination Date shall be distributed by the Escrow Agent to the Shareholders upon written instructions from the Shareholder Representative. Such distribution of Escrow Funds shall be made in the same manner, using the same percentages, as the distribution of the Closing Purchase Price to such Shareholders in connection with the Acquisition as directed in writing by the Shareholder Representative. 6. ESCROW AGENT. 6.1 DUTIES. The Escrow Agent's obligations and duties in connection herewith are purely ministerial and are confined to those specifically enumerated in this Agreement. The Escrow Agent shall not be liable or responsible for the sufficiency, correctness, genuineness or validity of any instrument deposited with it or with reference to the form of execution thereof, or the identity, authority or rights of any person executing or depositing same, and the Escrow Agent shall not be liable for any loss that may occur by reason of forgery, false representation or the exercise of its discretion in any particular manner or for any other reason, except for its own gross negligence, bad faith or willful misconduct. The Escrow Agent is not a principal, participant or beneficiary in any transaction underlying this Agreement and shall have no duty to inquire beyond the terms and provisions hereof. The Escrow Agent shall never be required to use, advance or risk its own funds or otherwise incur financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. 6.2 RELIANCE; LIABILITY. The Escrow Agent may rely and shall not be liable for acting or refraining from acting in good faith upon any written notice, instruction or request or other paper furnished to it hereunder and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be responsible for holding and distributing the Escrow Funds pursuant to this Agreement, but in no event shall be liable for any special, indirect, exemplary or consequential losses or damages of any kind whatsoever (including, but not limited to, lost profits) even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. The Escrow Agent is not responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of the subject matter of this Agreement or any part hereof or for the form or execution hereof, or for the identity or authority of any person executing or depositing the same. The Escrow Agent shall have no liability for any loss arising from any cause beyond its control, including, but not limited to, the following: (a) the act, failure or neglect of any other party hereto or any agent or correspondent prudently selected by the Escrow Agent for the remittance of the Escrow Funds; (b) any delay, error, omission or default of any mail, courier, telegraph, cable or wireless agency or operator; (c) the acts or edicts of any government or governmental agency or other group or entity exercising governmental powers; or (d) acts of God, FORCE MAJEURE, including, without limitation, war (whether or not declared or existing), revolution, insurrection, riot, civil commotion, accident, fire, explosion, stoppage of labor and strike. 6.3 INDEMNIFICATION. Except in instances of the Escrow Agent's own gross negligence, bad faith or willful misconduct, Acquiror and the Shareholders, jointly and severally, shall indemnify, defend and hold harmless the Escrow Agent, its officers, employees, agents and counsel against any and all costs, losses, claims, damages, liabilities, expenses, including reasonable costs of investigation, court costs and reasonable attorneys' fees, and disbursements that may be imposed upon the Escrow Agent in connection with its acceptance of appointment as the Escrow Agent and the exercise of, or failure to exercise, its rights and duties hereunder, including any litigation arising from this Agreement involving the subject matter hereof, and all such costs, expenses and disbursements shall be for the account of and shall be borne and paid by Acquiror and the Shareholders as a condition to termination of this Agreement. Such costs, losses, claims, damages, liabilities, expenses and disbursements shall be paid according to the fee schedule attached as Exhibit A hereto. To the extent the foregoing indemnity contemplates indemnification of the Escrow Agent for its own negligent acts or omissions under certain circumstances, that is the express intent of the parties hereto. The terms and provisions of this Section 6.3 shall survive the termination of this Agreement. 6.4 DISPUTES; UNCERTAINTY; CONFLICTS. In the event of a dispute between the parties or any other person, firm or entity with respect to this Agreement or the Escrow Funds, such dispute shall be resolved only by means of the provisions of Section 4.8, if applicable, or final and binding arbitration in accordance with the arbitration procedures of the American Arbitration Association, such arbitration proceedings to be held in New York City or in such other place as may be agreed to in writing by Acquiror and the Shareholder Representative. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction. 6.5 FEES. The Escrow Agent shall be compensated in accordance with the fee schedule attached as Exhibit A hereto. All such fees and expenses shall be paid first from the Escrow Funds as available, then in the absence of availability, jointly and severally by the parties hereto. 6.6 RESIGNATION AND SUCCESSOR. The Escrow Agent may resign and be discharged of its duties and obligations under this Agreement by written notice provided to Acquiror and the Shareholder Representative not less than 15 days before the date when such resignation is to take effect. A successor escrow agent shall be selected by Acquiror and the Shareholder Representative. Any successor escrow agent shall execute, acknowledge and deliver to Acquiror and the Shareholder Representative an instrument accepting such duties and obligations hereunder; and thereupon such successor escrow agent, without any further act, deed or conveyance, shall become fully vested with all rights, duties and obligations of its predecessor under this Agreement, with like effect as if originally named Escrow Agent. The Escrow Agent, ceasing to act hereunder, shall turn over to the successor escrow agent the Escrow Funds. If Acquiror and the Shareholder Representative fail to designate a substitute escrow agent within 30 days after the giving of such notice, the Escrow Agent may institute a bill of interpleader with any court of competent jurisdiction. The Escrow Agent's sole responsibility after the notice period expires shall be to keep safely the Escrow Funds and to deliver the same to a designated substitute escrow agent, if any, or in accordance with the directions of a final order or judgment of a court of competent jurisdiction, at which time the Escrow Agent's obligations hereunder shall cease and terminate. Subject to the Escrow Agent's right to institute a bill of interpleader, the Escrow Agent may not resign until a successor escrow agent has been appointed and accepts such function as provided in this Section 6.6. 6.7 CONSULTATION WITH LEGAL COUNSEL. The Escrow Agent may consult with its counsel or other counsel satisfactory to it concerning any question relating to its duties and responsibilities hereunder or otherwise in connection herewith and shall not be liable for any action taken, suffered or omitted by it in good faith upon the advice of such counsel. 6.8 RECEIPT OF ESCROW AMOUNT. By its execution and delivery of this Agreement, the Escrow Agent acknowledges receipt from Acquiror of the Escrow Amount. Receipt, investment and reinvestment of the Escrow Funds shall be confirmed by the Escrow Agent as soon as practicable by account statement, and any discrepancies in any such account statement will be noted by Acquiror and the Shareholder Representative to the Escrow Agent within 30 days after receipt thereof. Failure to inform the Escrow Agent in writing of any discrepancies in any such account statement within said 30-day period shall conclusively be deemed confirmation of such account statement in its entirety. Each account statement shall have been deemed to have been received by the party to whom directed on the earlier of (i) actual receipt thereof and (ii) ten Business Days after the deposit thereof in the United States Mail, postage prepaid. 6.9 MERGER, CONSOLIDATION, ETC. OF THE ESCROW AGENT. Any corporation into which the Escrow Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Escrow Agent in its individual capacity shall be a party, or any corporation to which substantially all the corporate trust business of the Escrow Agent in its individual capacity may be transferred, shall be the Escrow Agent under this Escrow Agreement without further act. 7. MISCELLANEOUS. 7.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Stock Purchase Agreement constitute the entire agreement between Acquiror and the Shareholders with respect to the subject matter hereof. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the parties hereto. 7.2 BINDING EFFECT. This Agreement shall inure to the benefit of and shall be binding upon each of Acquiror, the Company, the Shareholders and the Escrow Agent and their respective successors, executors, beneficiaries, administrators, heirs, personal representatives and assigns. 7.3 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its principles of conflicts of laws and any action brought hereunder shall be brought in the courts of the State of New York, located in the County of New York. Each party hereto irrevocably waives any objection on the grounds of venue, forum noncoveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of said courts.. 7.4 HEADINGS. The headings of the Sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof. 7.5 NOTICES. All notices, requests, demands, claims and other communications that are required to be or may be given under this Agreement shall be in writing and (i) delivered in person or by courier, (ii) sent by telecopy or facsimile transmission, or (iii) mailed, certified first class mail, postage prepaid, return receipt requested, to the appropriate party at the following addresses: if to Acquiror: Core Laboratories N.V. Herengracht 424 1017 BZ Amsterdam The Netherlands Telecopy: (011) 31-20-627-9886 Attention: Managing Director with copies to: Core Laboratories, Inc. 5295 Hollister Road Houston, Texas 77040 Telecopy: (713) 690-3947 Attention: John D. Denson Vinson & Elkins L.L.P. 2300 First City Tower 1001 Fannin Street Houston, Texas 77002-6760 Telecopy: (713) 615-5531 Attention: T. Mark Kelly if to the Escrow Agent: Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Telecopy: (212) 946-8156 Attention: Escrow Administration, 15th Floor if to the Shareholder Representative: Stanley Roth North American Capital Corp. 510 Broad Hollow Road Melville, New York 11747-3665 Telecopy: (516) 752-9618 with copies to: Shearman & Sterling 599 Lexington Avenue New York, New York 10022-6069 Telecopy: (212) 848-7179 Attention: John A. Marzulli, Jr. Stibbe Simont Monahan Dehot P. O. Box 75460 1070 AP Amsterdam The Netherlands Telecopy: (011) 31-20-546-0733 Attention: Hector W. L. de Beaufort or to such other address as the parties set forth above shall have furnished to the other parties set forth above by notice given in accordance with this Section 7.5. Such notices shall be effective (i) if delivered in person or by courier, upon actual receipt by the intended recipient, (ii) if sent by telecopy or facsimile transmission, when the sender receives telecopier confirmation that such notice was received at the telecopier number of the addressee, or (iii) if mailed, upon the earlier of 10 days after deposit in the mail and the date of delivery as shown by the return receipt therefor. 7.6 TAX MATTERS. Acquiror and each of the Shareholders shall provide the Escrow Agent with an appropriately completed Form W-8 or form W-9, as applicable, as soon as reasonably practicable after the execution of this Escrow Agreement. Failure so to provide such forms may prevent or delay disbursements from the Escrow Funds and may also result in the assessment of a penalty and the Escrow Agent's being required to withhold tax on any interest or other income earned on the Escrow Funds. Any payments of income shall be subject to applicable withholding regulations then in force in the United States or any other jurisdiction, as applicable. 7.7 ASSIGNMENT. This Escrow Agreement shall not be assigned by Acquiror or any of the Shareholders without the prior written consent of the Escrow Agent. 7.8 SEVERABILITY. If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions of this Agreement shall continue in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term, provision, covenant or restriction is invalid, void or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. 7.9 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, Acquiror, each of the Shareholders and Escrow Agent have each caused this Agreement to be executed on its behalf by its officer thereunto duly authorized, all as of the date first above written. ACQUIROR: CORE LABORATORIES N.V. By: Core Laboratories International B.V., its sole managing director By: ____________________________ Jacobus Schouten Managing Director SHAREHOLDERS: ______________________________________ Frerik Pluimers ALPINVEST HOLDING N.V. By: __________________________________ Name: Title: HEMERA II & CIE S.C.A By: __________________________________ Name: Title: EUROFRANDEV S.A. By: __________________________________ Name: Title: SHAREHOLDERS: PARINDEV PME SA By: __________________________________ Name: Title: STICHTING PARTICIPATIE SAYBOLT INTERNATIONAL B.V. By: __________________________________ Name: Title: ABN AMRO PARTICIPATIES B.V. By: __________________________________ Name: Title: CITICORP CAPITAL INVESTORS EUROPE LTD. By: __________________________________ Name: Title: EUROPENTERPRISE '92 CURACAO N.V. By: __________________________________ Name: Title: SHAREHOLDERS: ______________________________________ Rolly Louis Rudolph Jules van Rappard ______________________________________ Maarten Ruijs ______________________________________ Michael David Cook Smith ______________________________________ Alexander Donald MacKenzie ______________________________________ Corinne Ingeborg Beatrice Koltes-Sulzer THE ESCROW AGENT: CHASE MANHATTAN BANK By: __________________________________ Name: Title: EXHIBIT A $5,000 per annum or any part thereof without proration for partial years (includes investment in a Chase Manhattan Bank Money Market Account, The Chase Manhattan Bank Mutual Fund known as the Vista Fund or the Cash Escrow). $75 per investment (excludes Money Market, Vista Fund or Cash Escrow investments). EX-99.1 6 EXHIBIT 99.1 [LETTERHEAD OF CORE LABORATORIES] FOR IMMEDIATE RELEASE For more information, contact: Richard Bergmark, 713-329-7403 (phone) 713-939-8295 (fax) CORE LABORATORIES ACQUIRES SAYBOLT HOUSTON (May 12, 1997) -- Core Laboratories N.V. announced that it has acquired Saybolt International B.V. for $67 million in cash and the assumption of approximately $5 million of net debt. Saybolt, a privately held company with 1996 revenues of approximately $100 million, provides field and analytical services used to characterize crude oil and its derivatives. Combined, the companies will offer petroleum oilfield services from over 70 offices in 50 countries and locally serve every major petroleum producing province in the world. "Our client-driven business strategies of adding technologies and services to further leverage our global presence should lead to accelerated growth," said David M. Demshur, President and CEO of Core Laboratories. "Saybolt, with 24 offices in the Commonwealth of Independent States, provides the operating experience and base from which Core can offer reservoir description and production management services that are in increasing demand, especially in the southern Caspian Sea area," Demshur added. Although the acquisition will provide greater growth opportunities to both companies, there will be consolidation savings at both the operating and administrative levels. Several field offices will be combined and Saybolt's Western Hemisphere administrative functions will be moved from Parsippany, New Jersey to Houston, Texas. The total consolidation savings could exceed $3.0 million. "This acquisition is expected to be accretive to our 1997 operational earnings," said Richard L. Bergmark, CFO and Treasurer of Core Laboratories. "We have arranged financing for this transaction on attractive terms which should preclude the need to seek additional equity capital through a secondary offering at this time," Bergmark added. "We will be better able to service our clients and offer a more complete package of services," said Erik Pluimers, President and CEO of Saybolt. "Exchanging technology and increasing technical interaction of our senior engineers and scientists should lead to a new series of related services as we go forward. We are very encouraged about the future," Pluimers added. Core Laboratories N.V. (NASDAQ - NNM: CRLBF) is one of the world's leading providers of petroleum reservoir description data and production management services for maximizing hydrocarbon recovery from new and existing fields. The company is the world's largest provider of petroleum reservoir rock and fluids analyses and multidisciplinary reservoir description studies. Core is also a leading provider of field services evaluating the efficiencies of well completions and stimulations and the effectiveness of enhanced oil recovery projects. In addition, the Company manufactures and sells petroleum reservoir rock and fluid analysis instrumentation and other integrated systems. The Company's forecasts and projections herein are subject to various important cautionary factors as more fully described in Core Laboratories 1996 10-K and in other securities filings. # # # -----END PRIVACY-ENHANCED MESSAGE-----