-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, r5xw3soxB+14kxz3CvXdkvgF6U2jiK6lHCkSgNGGDt9pFpufchUBJmPArBdYvHBD 3RB7cag3U1CEIVVs96Ajcw== 0000769409-95-000018.txt : 19950905 0000769409-95-000018.hdr.sgml : 19950905 ACCESSION NUMBER: 0000769409-95-000018 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19950602 FILED AS OF DATE: 19950831 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNAMICS CORP CENTRAL INDEX KEY: 0000769409 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 952502865 STATE OF INCORPORATION: CA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15034 FILM NUMBER: 95569564 BUSINESS ADDRESS: STREET 1: 21171 WESTERN AVE STE 110 CITY: TORRANCE STATE: CA ZIP: 90501 BUSINESS PHONE: 3107827277 MAIL ADDRESS: STREET 1: GEODYNAMICS CORPORATION STREET 2: 21171 WESTERN AVENUE - SUITE 110 CITY: TORRANCE STATE: CA ZIP: 90501 10-K 1 SECURITIES AND EXCHANGE COMMISSION UNITED STATES Washington D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: June 2, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to _____________________ Commission File Number 0-15034 GEODYNAMICS CORPORATION (Exact name of registrant as specified in its charter) California 95-2502865 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 21171 Western Avenue, Suite 110, Torrance, California 90501 (Address of principal executive office) (310) 782-7277 (Registrant's telephone number including area code) Securities registered pursuant to Section 12 (b) of the Act: (None) Securities registered pursuant to Section 12 (g) of the Act: Common Stock Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [ X ] The aggregate market value of the registrant's voting stock held by non-affiliates of the registrant on July 31, 1995, computed with reference to the final quotation of such stock as reported in the NASDAQ National Market System for July 31, 1995 was $25,187,356 for 2,457,303 shares. As of the close of business on July 31, 1995, the registrant had outstanding 2,636,808 shares of common stock, without par value. Documents Incorporated By Reference Portions of the registrant's definitive proxy statement for the 1995 Annual Meeting of Shareholders to be held on November 16, 1995 are incorporated by reference in Part III of this report. PART I ITEM 1. BUSINESS Geodynamics Corporation and subsidiaries (Geodynamics or the Company) provides information engineering services primarily to Government customers. The majority of revenues (approximately 89% in fiscal 1995) are from contracts with the Department of Defense (DoD). The Company provides these services to DoD customers engaged in three major systems areas: command, control, communications, computers and intelligence (C4I) (pronounced "C-fourth-I") systems; weapons systems; and space systems. Non-DoD revenues are primarily in support of petroleum exploration and Geographic Information Systems (GIS). On June 2, 1995, Geodynamics had contracts, including task orders, with intelligence, military and civil agencies of the U.S. Government and Government prime contractors. Due to the highly restricted nature of the Company's work, many of its contracts cannot be described in this report. The Company acquired LaFehr and Chan Technologies, Inc. (LCT) in June 1994, the beginning of the current fiscal year. LCT has offices in Houston, Texas and London, England, and has approximately 40 employees. It provides software and data interpretation services for oil and mineral exploration, marine gravity and airborne data acquisitions. LCT operates the largest marine gravity meter fleet in the world. Certain of its meters are also used to perform airborne gravity surveys. In January 1995, the Company established a wholly-owned subsidiary, Geodynamics Services Corporation (GSC) to provide GIS activities. Business Areas Although the acquisition of LCT has provided some new business areas for the Company, Geodynamics' main business remains in the analysis, specification, design, development and integration management of information systems for C4I, weapons, and space projects. The Company's services in these areas include mission planning, systems engineering technical analysis, performance analysis of existing and planned programs, determination of requirements for new systems and technologies design, development, and integration of commercial off-the-shelf (COTS) software and custom software. C4I Systems C4I systems provide military leaders with the capability to manage and control intelligence collection and weapons during peacetime, crises, and military conflict. Intelligence systems provide the battlefield commander with situation assessments and pre- and post-strike information on opposing forces. In addition, selected C4I systems degrade the capability of an adversary to perform all of those critical functions. There are a variety of C4I systems. Data collection systems provide indications and warnings of attack, and strike and damage assessment information. Command and control systems support military planning, plus monitoring and execution of operations. Communications systems provide rapid, accurate and secure exchange of information among all users. Navigation and position fixing systems support the deployment of friendly forces, the planning and execution of force operations, and facilitate the accurate delivery of military supplies. Electronic warfare and electronic countermeasure systems are employed to disrupt the performance of enemy weapons and C4I systems and to protect U.S. systems from similar disruptions. The Company is currently in the process of bidding for renewal of its contract with the TENCAP office of the Air Force Space Command which requires support in the planning and management of tactical exercises, intelligence requirements management, mission assessment analysis, and prototype systems for support of operational forces. This contract accounted for $8.7 million of revenue for fiscal year 1995. Weapons Systems The Company is engaged in the development of an improved mission planning capability for the F-15 and F-16 aircraft. This effort involves the use of multispectral imagery for determining optimum mission routes to avoid enemy defensive missiles and yet achieve high probability of mission success. Geodynamics is involved in the development of the Air Force Space Command's Space Warfare Center (SWC) which is tasked with assessing how space systems can most effectively support the war fighter. This involves mission planning, execution, simulation of resources and assessment of effectiveness. Space Systems Use of data from space systems in preparation for military operations is part of the forces doctrine. The Company is providing systems engineering and development support to a customer for re-engineering a large classified command and control system. The Company has a long history of performance analysis for space systems using highly complex modeling and simulation tools. Services The Company's technical expertise in the above business areas relate to systems engineering, custom applications software development, and, more recently, the field of application and integration of COTS software. Special areas of emphasis include the development of complex gravity field modeling for non-seismic oil exploration, modeling of vehicle subsystems, development, operations and maintenance of ground station command and control systems, guidance system analysis, sensor platforms and space systems support to the warfighter. Geodynamics' other skills include development of algorithms relating to mission planning, signal processing, image processing, message handling, orbit and trajectory determination, telemetry data analysis, digital cartographic, GIS, and linkage analysis. The latter provides the capability to associate any class of objects (people, organizations, or events) with any other object class, and is used in a number of classified government organizations to detect highly sophisticated criminal or fraudulent activity. Systems Engineering The Company provides systems engineering services directly to U.S. Government intelligence and military agencies and indirectly through government prime contractors. Geodynamics' systems engineering capabilities encompass all phases of a project, from initial concept definition through system operations. Its services may include: 1) analysis of initial program objectives to establish system performance requirements to guide system design activity; 2) review of the availability of equipment and systems and assessment of the technical feasibility of their application or adaptability to satisfy system performance requirements; 3) development and application of computer simulations of complex systems and "real world" environments to evaluate system effectiveness and validate requirements; 4) preparation of test plans, supervision of tests, analysis of test data, and preparation of test reports for the entire system, and 5) system operations. The Company also provides independent verification and validation of software systems to aid the customer in evaluating the acceptability of those systems. As part of this effort the Company will verify and validate the design, development and implementation of such software to ascertain that the required objectives are satisfactorily met for each phase of operation. Applications Software Geodynamics designs and develops custom applications software which allows the customer to expedite the investigation of highly analytical problems pertaining to intelligence and military applications. In many cases, such software is provided in connection with the Company's systems engineering services to meet customer requirements. Geodynamics has developed and delivered turn-key computer systems which consist of specifically-designed hardware systems purchased from third party hardware vendors and packaged with custom applications software developed by the Company. While turn-key emphasis has pertained to mid-size and minicomputers, significant recent emphasis has involved microprocessor capability, particularly as it applies to planning and exploitation workstation development. The Company and its LCT subsidiary have developed a unique software applications package to separate aircraft accelerations from true gravity variations in support of airborne gravity measurements for petroleum and minerals exploration. Gravity and Magnetic Applications Through LCT, the Company provides sophisticated gravity and magnetic data acquisition products and services to the international energy, mining, engineering and environmental industries. These services include marine, land and airborne geophysical data acquisition, processing and interpretation. In 1995, LCT acquired the marine gravity and magnetic assets of a significant provider of marine gravity and magnetic data acquisition and processing services. Customers Geodynamics provides services primarily to the U.S. Government. U.S. Government customers include the Defense Intelligence Agency, the National Security Agency and other intelligence agencies, various segments of the U.S. Air Force, the U.S. Army, the U.S. Navy, and United and Specified Commands of the Joint Chiefs of Staff. Among the Company's U.S. Air Force customers are the Air Staff, Space and Missile Center, Space Command, Western Space and Missile Center, and the Electronic Systems Center. The Company acts as a subcontractor to such government prime contractors as Lockheed Martin Corporation, Loral, Hughes Information Technology Company, and Texas Instruments. LCT's exploration company customers include Geco-Prakla, Western Geophysical, Digicon, and a number of oil companies including British Petroleum, Japan National Oil Company, Amoco, Mobil, Phillips, and Saudi Aramco. For the year ended June 2, 1995, contracts with the U.S. Air Force accounted for 33.8% of the Company's revenues and subcontracts with Loral accounted for 13.6% of revenues. No other single customer accounted for more than 10% of fiscal 1995 revenues. U.S. Government Contracts Substantially all of Geodynamics' revenues have been derived from contracts with intelligence and military agencies of the U.S. Government and from subcontracts with U.S. Government prime contractors. The revenues and income of the Company could be materially affected by changes in government procurement policies or a reduction in government expenditures for services of the type provided by the Company. The Company's business is performed under cost reimbursement, fixed price and fixed rate time and materials contracts. Cost reimbursement contract types include cost plus fixed fee, cost plus incentive fee and cost plus award fee contracts. These contracts provide for reimbursement of costs to the extent allocable, allowable and funded under applicable regulations, and payment of a fee, which may either be fixed by the contract (cost plus fixed fee) or variable, based on actual performance within specified limits for such factors as cost, technical performance, and management (cost plus incentive fee) or the customer's subjective evaluation of the Company's work (cost plus award fee). Under U.S. Government regulations, certain costs, including financing costs, are not reimbursable. Under fixed price contracts, the Company agrees to perform certain work for a fixed price; under a fixed rate time and materials contract, the customer agrees to pay a specific rate per labor hour for each particular service to be performed. Greater risks are involved under fixed price contracts than under cost reimbursement contracts or time and material contracts because in fixed price contracts the Company assumes responsibility for providing the specific products or services regardless of the actual costs incurred. The following table gives the approximate percentage of the Company's revenues realized from the basic types of contracts during the fiscal years indicated: Year Ended ------------------------------------------- June 2, 1995 June 3, 1994 May 28, 1993 ------------ ------------ ------------ U.S. Government Defense Contracts: Cost Reimbursement 49.1% 51.1% 51.4% Fixed Price 7.3% 9.6% 10.5% Fixed Rate Time and Materials 32.9% 37.1% 37.2% ------ ------ ------ 89.3% 97.8% 99.1% Non-Defense Revenue 10.7% 2.2% 0.9% ------ ------ ------ 100.0% 100.0% 100.0% ====== ====== ======
Contract costs for services or products supplied to government agencies, including allocated indirect costs are subject to audit and adjustment. The Company's contract costs have been audited by the Defense Contract Audit Agency through fiscal 1988. Contract costs for periods subsequent to fiscal 1988 have been recorded at amounts which are expected to be realized upon final settlement. The Company's U.S. Government contracts may be terminated, in whole or in part, at the convenience of the customer (as well as for cause in the event of default). In the event of a convenience termination, the customer generally is obligated to pay the costs incurred by the Company under the contract plus a fee based upon work completed. The Company has never had a contract terminated for cause. A termination or substantial curtailment of the U.S. Government programs under which Geodynamics holds contracts could have an adverse effect upon the Company's revenues, income, and backlog. Long-term U.S. Government contracts generally are conditioned upon the continuing availability of congressional appropriations. Congress usually appropriates funds on a fiscal year basis, even though contract performance may take several years. Consequently, at the outset of a major program, the contract is usually partially funded and additional monies are normally committed to the contract by the procuring agency only as appropriations are made by Congress for future fiscal years. Backlog At June 2, 1995, Geodynamics' backlog was $101 million, approximately $3 million higher than at the end of the prior fiscal year. Backlog includes unexercised options which, in the Company's opinion, will be exercised; however, there is no assurance that such options will be exercised. All of the Company's contracts reflected in this backlog are subject to termination for convenience of the customer. See "Business--U.S. Government Contracts", and "Management's Discussion and Analysis". Marketing Geodynamics' marketing activities are conducted principally by its senior management and by its professional staff of engineers, scientists and analysts. Geodynamics also prepares proposals in response to government requests for proposals. Competition Most of the business areas in which Geodynamics is involved are competitive, and require highly skilled and experienced technical personnel with high levels of U.S. Government security clearances. Recent changes in U.S. Government procurement policies have increased emphasis on competitive bidding, a trend the Company anticipates will continue. There are many companies which compete in the service areas in which the Company is engaged, some of which have significantly greater financial and personnel resources. Government Security Clearances Geodynamics' ability to maintain its current business base and to grow in the future is based in part on its ability to provide employees and facilities which meet rigorous U.S. Government security requirements. The Company employs a Corporate Security Director as well as a resident Security Representative at each of its operational divisions. Each division has a continuing program to meet applicable security requirements and to maintain employee awareness of the paramount need for compliance with security requirements. Patents and Technical Data The Company does not consider patent protection to be significant to its current operations. The U.S. Government has proprietary rights to the technical data, including software products, which result from Geodynamics' services under U.S. Government contracts or subcontracts. In the case of subcontracts, the prime contractor may also have certain rights to such technical data. Employees A majority of the technical staff holds advanced degrees in the primary areas of math, physics, electrical and mechanical engineering, and business. The Company's employees are generally required to have high level U.S. Government security clearances to operate under the Company's contract efforts on behalf of the Government. At June 2, 1995, Geodynamics employed 473 full-time employees, including 367 in systems engineering and software development and energy services, 27 in corporate management and administration, and 79 in support staff. The numbers reflect an increase of approximately 6% from the levels reported for the previous year. The increase is primarily a result of the purchase of LCT, net of a decrease of approximately 8% for the remainder of the Company. The Company's employees are not represented by any labor union. The Company believes that its employee relations are good, and it has not experienced any labor disputes or work stoppages. Executive Officers Certain information with respect to the Executive Officers of the Company at the end of fiscal 1995 who are not Director nominees of the Company is set forth below: Name Age Position - ------------------- --- ---------------------------------------------- Kwok Chan 42 President and CEO of LCT Robert G. Cook 49 Controller, Assistant Corporate Secretary Joanne M. Dunlap 45 Vice President, Administrative Services and Corporate Secretary Paul J. Henrikson 51 Vice President A. Ronald Jacobsen 59 Vice President & General Manager, Western Division M. Carolyn Mihara 57 Executive Assistant to the President and CEO David P. Nelson 54 Vice President/Finance, Chief Financial Officer Patrick J. Reynolds 53 Corporate Contracts Manager Jack F. Scherrer 49 Vice President & General Manager, Eastern Division Richard P. Smith 58 Vice President & General Manager, Central Division Harry W. Utter 48 General Manager, Geodynanmics Services Corporation Kwok Chan Dr. Kwok Chan is President and Co-founder of LCT, a wholly-owned subsidiary of Geodynamics Corporation. Formerly, he was Senior Geophysicist of Edcon Incorporated of Denver, Colorado. Dr. Chan received a Bachelor of Science, a Master of Science and a Ph.D., all in Engineering Geoscience at the Department of Materials Science and Engineering, University of California at Berkeley. Robert G. Cook Mr. Cook joined the Company in 1989 as Controller. In 1990, he was also named Assistant Corporate Secretary. From 1988 through 1989, until he joined the Company, Mr. Cook performed consulting and contract work in the accounting field, and from 1985 through 1988, he was Accounting Manager for Power Up! Software Corporation. Mr. Cook is a Certified Public Accountant and holds a Bachelor's degree in Accounting, and a Masters of Business Administration from Santa Clara University. Joanne M. Dunlap Ms. Dunlap joined the Company in 1984 as the Corporate Personnel Manager. In October 1988 she also assumed the duties of Corporate Secretary and in 1990 she was named Vice President, Administrative Services. Ms. Dunlap holds a Bachelor's degree in Business from Alma College and a Masters of Business Administration from Central State University of Oklahoma. Ms. Dunlap completed post-graduate work at the University of Oklahoma. Paul J. Henrikson Mr. Henrikson joined the Company in 1979 as Department Head of the Advanced Technology and Applications Department. In 1982 Mr. Henrikson was named associate Site Director. In 1994, Mr. Henrikson was appointed Corporate Director of Advanced Programs and in 1995, he was appointed Vice President. Mr. Henrikson received his Bachelors degree in Engineering and Applied Physics from Harvard University and a Masters degree in Electrical Engineering from the University of Minnesota. A. Ronald Jacobsen Mr. Jacobsen joined the company in 1977 as Vice President and Site Manager of the Los Angeles facility. In May 1984, he became Vice President of Business Development; in 1990 he assumed the title of Vice President, Corporate Advanced Programs and in 1994 he was appointed Vice President and General Manager, Western Division. Mr. Jacobsen has a Bachelor of Science degree in Physics from Northern Illinois University. M. Carolyn Mihara Ms. Mihara joined the Company in 1990 and has served as an Executive Assistant to the Chairman of the Board, President and Chief Executive Officer since that time. Ms. Mihara graduated from the Mary Dalton Frye Secretarial College and holds a Bachelor of Science degree in Business Management from Pepperdine University. David P. Nelson Mr. Nelson joined the Company in 1990 as Vice President/Finance and Chief Financial Officer. Previously, Mr. Nelson was Senior Vice President, Chief Financial Officer for Perceptronics, Inc. for six years. Mr. Nelson holds Bachelor's and Master's degrees in Economics from the University of California at Los Angeles. Patrick J. Reynolds Mr. Reynolds joined the Company in December 1991 as Corporate Contracts Manager. He was previously employed by McDonnell Douglas Electronic Systems Company, Northrop Corporation, Trident Data Systems, Hughes Aircraft Company and the United States Air Force as a Contracting Officer. Mr. Reynolds has a Bachelor's degree in Business Administration from the University of Iowa. Jack F. Scherrer Mr. Scherrer joined the Company in 1985 as a Member of the Professional Staff. In August 1985, Mr. Scherrer was named as Program Manager for the ORB Program and in 1994 he was appointed General Manager, Eastern Division. Mr. Scherrer received his Bachelor's degree in Physics from Thomas More College and a Master's degree in Physics from the University of Dayton. Richard P. Smith Mr. Smith is a Corporate Vice President and Division General Manager for the Company's Central Division headquartered in Colorado Springs, Colorado. He joined the Company as a member of the professional staff in June 1982 after a successful career in the United States Air Force where he served as a communications and intelligence officer and educator. He established the first Air Force all-source tactical collection management capability in Europe and was a key participant in fielding the Air Force Wargaming Center as part of the Air University Complex. Mr. Smith initially supported the development of the Denver Regional business base and opened the Colorado Springs office in July 1983. As General Manager of the Central Division, he has been a major influence in government-wide Tactical Applications of National Capabilities (TENCAP) support to global military operations. Mr. Smith holds a Bachelor of Science degree in Education from Montana State University and a Master's in Business Administration from Auburn University. Harry W. Utter Mr. Utter joined the Company in 1989 as Program Manager for the Midwest Region. In 1992 he became the Director of Corporate New Business Development and was appointed General Manager of the Commercial Division in 1994. Previously, Mr. Utter served in the United States Air Force where he was a Lieutenant Colonel and Director of Contract Management. His Air Force career was spent in acquisition of space systems. Mr. Utter holds a Bachelor of Science degree in Engineering Management form the United States Air Force Academy and a Masters of Business Administration Management from the University of California at Los Angeles. ITEM 2. PROPERTIES Geodynamics maintains the following facilities aggregating approximately 225,000 square feet: Current Square Year Facility Facility Footage Established Security Level - --------------------- -------------- ------------- -------------- Santa Barbara, CA (2) 18,356 1968 -- Washington, D.C. 54,036 1977 Top Secret Torrance, CA 52,994 1977 Top Secret Sunnyvale, CA 22,600 1981 Top Secret Denver, CO 10,795 1982 Top Secret Colorado Springs, CO 33,321 1984 Top Secret Hanover, MD 10,575 1984 Top Secret Gaithersburg, MD 1,050 1989 Unclassified Tampa, FL 3,933 1993 Top Secret Hampton, VA 6,156 1993 Top Secret Houston, TX 9,892 1994 Unclassified London, England 1,730 1965 Unclassified
All of the Company's facilities are leased from unaffiliated third parties. The lease expiration dates range from December 1995 to September 2000. The leases for these facilities, with one exception, have renewal options ranging from one to five years. The Company has made significant leasehold improvements to most of its facilities in order to meet U.S. Government security requirements. The aggregate annual rent for these facilities for the fiscal year ended June 2, 1995 was approximately $2.6 million. The Company believes that its facilities are adequate and suitable for the conduct of its current operations. ITEM 3. LEGAL PROCEEDINGS The Company is not engaged in any legal proceedings which are material to the business or financial condition of the Company. In the Company's third quarter Form 10-Q filed April 17, 1995, the results of a contested shareholder election were described. The costs involved in the election of approximately $1 million are believed to be reimbursable costs under its contracts with the Government. Subsequent to that time, and in order to resolve litigation surrounding the proxy contest preceding the shareholder election, the Company entered into a Settlement Agreement with Alney A. Baham to pay him the total sum of approximately $328,000, and subsequently granted him two 5-year options, one for 10,000 shares at a price of $8.00 per share, and one for 10,000 shares at a price of $10.00 per share. The price of Geodynamics' stock at the date these options were approved was $8.75 per share. The Company also entered into a Settlement Agreement with William Strong and Mason Hill Asset Management, Inc. and delivered a 2-year stock option to Mr. Strong for 20,000 shares at a price of $8.75 per share (the price of Geodynamics' stock when the settlement was authorized). Each settlement agreement included mutual releases by the parties. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted during the fourth quarter of fiscal year 1995 to a vote of security holders through the solicitation of proxies or otherwise. ITEM 5. MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS The Company's common stock is traded on the NASDAQ National Market System under the symbol "GDYN". As of July 31, 1995, there were approximately 404 holders of record of the Company's common stock (exclusive of shares held in street names) and the closing price of the common stock was $10.25. The Board of Directors has approved a quarterly dividend policy. Pursuant to this policy, dividends totaling $.28 per share were declared during both fiscal 1994 and 1995. Quarterly stock price data for the two years ended June 2, 1995 was as follows: First Quarter Second Quarter Third Quarter Fourth Quarter ------------- -------------- ------------- -------------- FY 95: High $8 1/4 $8 1/4 $9 1/4 $9 1/2 Low 6 1/2 6 7 7 1/2 FY 94: High 9 1/4 9 1/4 9 1/4 9 1/2 Low 8 1/4 8 1/4 7 3/4 7 3/4
ITEM 6. SELECTED FINANCIAL DATA INCOME STATEMENT DATA: (thousands, except per-share data) Year Ended ------------------------------------------------------------------------ June 2, 1995 June 3, 1994 May 28, 1993 May 29, 1992 May 31, 1991 ------------ ------------ ------------ ------------ ------------ Revenues $60,770 $54,823 $57,696 $58,424 $62,114 Costs and expenses 57,937 53,734 55,017 55,487 56,817 ------------ ------------ ------------ ------------ ------------ Income from operations 2,833 1,089 2,679 2,937 5,297 Other income 312 351 288 395 278 ------------ ------------ ------------ ------------ ------------ Income before provision for income taxes 3,145 1,440 2,967 3,332 5,575 Provision for income taxes 1,227 555 1,019 1,271 2,100 ------------ ------------ ------------ ------------ ------------ Net income $ 1,918 $ 885 $ 1,948 $ 2,061 $ 3,475 ============ ============ ============ ============ ============ Earnings per common share $ .73 $ .38 $ .80 $ .77 $ 1.22 ============ ============ ============ ============ ============ Weighted average number of common shares outstanding 2,630 2,327 2,428 2,689 2,856 ============ ============ ============ ============ ============ Cash dividends per common share $ .28 $ .28 $ .28 $ .28 $ .25 ============ ============ ============ ============ ============
BALANCE SHEET AND OTHER DATA: (thousands) Working capital $15,738 $16,634 $18,405 $17,331 $19,918 Long-term liabilities 1,872 142 305 1,135 1,507 Shareholders' equity 30,456 26,408 26,820 26,334 27,962 Total assets 40,640 32,279 32,722 34,352 38,920
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following tables set forth for the periods indicated the percentages which selected items in the statements of income bear to revenues and the annual percentage change of the dollar amounts of such items for the period indicated. Percentage of Revenues Year Ended --------------------------------------------- June 2, 1995 June 3, 1994 May 28, 1993 ------------ ------------ ------------ Revenues 100.0% 100.0% 100.0% Costs and expenses 95.3 98.0 95.4 Income from operations 4.7 2.0 4.6 Income before provision for income taxes 5.2 2.6 5.1 Provision for income taxes 2.0 1.0 1.7 Net income 3.2 1.6 3.4
Percentage Change Year Ended ----------------------------- June 2, 1995 June 3, 1994 ------------ ------------ Revenues 10.8% (5.0)% Costs and expenses 7.8 (2.3) Income from operations 160.1 (59.4) Income before provision for income taxes 118.4 (51.5) Provision for income taxes 121.1 (45.5) Net income 116.7 (54.6)
Year Ended June 2, 1995 as Compared with Year Ended June 3, 1994 - ---------------------------------------------------------------- Revenues for fiscal 1995 increased to $60.8 million, a 10.8% increase over the $54.8 million reported in fiscal year 1994. The increase is primarily the result of the consolidation of LCT, the Company's wholly-owned subsidiary which was acquired at the beginning of the current fiscal year. LCT's revenues for the current fiscal year were $5.2 million. In addition, the Company's core DoD business contributed an increase of 3% of revenues compared to the prior fiscal year. Costs and expenses for fiscal year 1995 were $57.9 million, as compared with $53.7 million in the prior fiscal year. Income from operations and the operating margin in fiscal year 1995 improved to $2.8 million and 4.7%, respectively, from the fiscal year 1994 comparable figures of $1.1 million and 2.0%. Net costs involved in the contested shareholder election were approximately $1 million and are believed to be reimbursable costs under the Company's contracts with the U.S. Government. A decrease in operating losses incurred by non-DoD development activities, from $2.4 million in fiscal 1994 to $.7 million in fiscal 1995, is primarily responsible for the improvement. In fiscal 1996, no further losses are expected from these activities, which have been substantially curtailed, and the Company does not presently anticipate initiating any new activities of this nature. At the beginning of fiscal 1995, the Company acquired 100% of the stock of LCT for $5 million plus an earnout amount to be determined by LCT's financial performance through December 31, 1995. The $5 million was payable 1/2 in stock and 1/2 in cash, which resulted in use of $2.5 million cash and the issuance of 322,000 shares of Geodynamics stock. LCT conducts gravity and magnetic surveys around the world and provides related products and services. For the current fiscal year, LCT reported revenues of $5.2 million compared with $5.7 million for fiscal 1994, which was not consolidated, since it was pre-acquisition. Net profit was $60,000 compared with $71,000 in fiscal 1994. Net income in fiscal 1995 reflected $105,000 of pre-tax charges due to the amortization of assets written up with respect to purchase accounting for the acquisition. Fiscal 1995 revenues and profits were below expectation due to lower actual performance from marine and gravity surveys. The Company anticipates that the additional earnout amount, to be payable 1/2 in stock and 1/2 in cash, will range between $1.0 million and $3.5 million depending on revenues and profit margins for the two-year period ending December 31, 1995. There is no assurance that the final amount, which will be subject to audit, will be within this range. Backlog at June 2, 1995 was $101 million, approximately 3% higher than the $98 million reported at June 3, 1994. Year Ended June 3, 1994 as Compared with Year Ended May 28, 1993 - ---------------------------------------------------------------- Revenues for fiscal 1994 were $54.8 million down 5.0% from the $57.7 million in fiscal 1993. Of this decrease, approximately $3.6 million was from the Company's DoD business while non-DoD (commercial) business provided a $700,000 increase. The DoD revenue reduction was due primarily to the continuing contraction of military spending and the reduction or termination of military programs which impacted a number of the Company's contracts, including one program being terminated. Costs and expenses in fiscal 1994 were $53.7 million, down from $55.0 million in the prior fiscal year. The resulting income from operations in fiscal 1994 was $1.1 million, down nearly 60% from the $2.7 million in fiscal 1993. The operating margin was 2.0% in fiscal 1994, down from 4.6% in the prior year. Income from operations included $3.5 million from DoD business, representing a 6.5% margin on revenue in the current year versus income from operations of $3.3 million in fiscal 1993 with a margin of 5.8%. Non-DoD business showed net expenditures (primarily for research and development) of approximately $2.4 million in fiscal 1994 including sales of $1.2 million. In the prior year commercial business incurred net expenditures of approximately $600,000 including revenues of approximately $500,000. Backlog at June 3, 1994 was $98 million, down from $102 million at May 28, 1993, representing a 4% reduction. CAPITAL RESOURCES AND LIQUIDITY Cash and short-term investments of $8.2 million at the end of fiscal 1995 were down from the $8.8 million in the prior fiscal year. This decrease is primarily the result of the net cash impact of the LCT acquisition and of purchases of equipment, net of numerous cash sources (see Consolidated Statements of Cash Flows). Contracts receivable were $15.4 million, up from the $13.6 million at the end of fiscal 1994; this represented aging at 93 days, as compared with 91 days for 1994. The Company's working capital position decreased due to the consolidation of LCT; the current ratio at June 2, 1995 was 2.9 to 1, compared with 3.9 to 1 at June 3, 1994. The Company's investment in ERDAS, Inc. remains at $1.2 million, representing a 19.5% interest in outstanding ERDAS stock. For the year ended December 31, 1994, ERDAS reported revenues of $11,828,000 and a net profit of $433,000. As of June 2, 1995, there were short-term borrowings by LCT under the Company's $8 million unsecured line of credit totaling $747,000, guaranteed by the parent company, to provide working capital for LCT. Subsequent Event On June 8, 1995, the Company announced that it had retained the investment banking firm of A.G. Edwards & Sons, Inc. to review the options available to maximize shareholder value, including the possible sale of the Company. On August 21, 1995 the Company also announced that this process was continuing, but that there had been no decision concerning the sale of the Company. The Company is continuing in this process. Effect of Inflation Geodynamics believes that during the past three years inflation has not had a material impact on operations, since approximately one-half of its revenues were derived from cost reimbursement contracts and most of the balance has been derived from fixed price contracts which are bid with inflation factors assumed in the pricing. PART II ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following Consolidated Financial Statements are included in Part II, Item 8: Report of Independent Public Accountants Consolidated Balance Sheets at June 2, 1995 and June 3, 1994 Consolidated Statements of Income for the Years Ended June 2, 1995, June 3, 1994, and May 28, 1993 Consolidated Statements of Shareholders' Equity for the Years Ended June 2, 1995, June 3, 1994, and May 28, 1993 Consolidated Statements of Cash Flows for the Years Ended June 2, 1995, June 3, 1994, and May 28, 1993 Notes to Consolidated Financial Statements ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Geodynamics Corporation: We have audited the accompanying consolidated balance sheets of GEODYNAMICS CORPORATION (a California corporation) and subsidiaries as of June 2, 1995 and June 3, 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended June 2, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Geodynamics Corporation and subsidiaries as of June 2, 1995 and June 3, 1994, and the results of their operations and their cash flows for each of the three years in the period ended June 2, 1995 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Los Angeles, California July 28, 1995 GEODYNAMICS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 2, June 3, 1995 1994 ----------- ----------- ASSETS Current Assets: Cash $ 2,310,000 $ 1,237,000 Short-term investments 5,862,000 7,546,000 Receivables : Contracts, including current portion of unbilled receivables of $1,910,000 in 1995 and $3,483,000 in 1994 14,524,000 12,607,000 Current portion of employee loans 26,000 142,000 Refundable income taxes --- 430,000 Deferred income taxes 513,000 --- Prepaid expenses and other 815,000 401,000 ----------- ----------- Total current assets 24,050,000 22,363,000 ----------- ----------- Equipment and Leasehold Improvements, at cost: Computer and test equipment 20,073,000 11,511,000 Office furniture and equipment 4,367,000 3,963,000 Leasehold improvements 3,658,000 3,620,000 ----------- ----------- 28,098,000 19,094,000 Less accumulated depreciation and amortization (16,615,000) (14,188,000) ----------- ----------- Net equipment and leasehold improvements 11,483,000 4,906,000 ----------- ----------- Other Assets: Noncurrent unbilled contract receivables 920,000 1,041,000 Investments 1,277,000 2,812,000 Goodwill, net of amortization of $75,000 1,425,000 --- Other intangible assets, net of amortization of $916,000 in 1995 and $209,000 in 1994 1,080,000 750,000 Employee loans receivable, net of current portion 171,000 175,000 Deferred income taxes --- 80,000 Other noncurrent assets 234,000 152,000 ----------- ----------- Total other assets 5,107,000 5,010,000 ----------- ----------- $40,640,000 $32,279,000 =========== ===========
The accompanying notes are an integral part of these consolidated statements. GEODYNAMICS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) June 2, June 3, 1995 1994 ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 2,907,000 $ 1,692,000 Accrued expenses : Payroll and payroll related 1,167,000 937,000 Benefit plans 157,000 602,000 Vacation 1,905,000 1,530,000 Dividends payable 182,000 156,000 Income taxes payable 137,000 ---- Deferred income taxes ---- 469,000 Current portion of long-term debt 54,000 ---- Line of credit 747,000 ---- Deferred revenue 246,000 ---- Contract billings in excess of revenues 810,000 343,000 ----------- ----------- Total current liabilities 8,312,000 5,729,000 ----------- ----------- Long-Term Liabilities: Long-term debt, net of current portion 163,000 ---- Deferred income taxes 1,570,000 ---- Deferred lease obligations and other 139,000 142,000 ----------- ----------- Total long-term liabilities 1,872,000 142,000 ----------- ----------- Commitments and Contingencies Shareholders' Equity: Common stock, without par value: Authorized - 10,000,000 shares Outstanding - 2,605,000 shares at June 2, 1995 and 2,230,000 shares at June 3, 1994 11,910,000 8,997,000 Retained earnings 18,542,000 17,414,000 Foreign currency translation 4,000 ---- Less notes receivable from sale of stock ---- (3,000) ----------- ----------- Total shareholders' equity 30,456,000 26,408,000 ----------- ----------- $40,640,000 $32,279,000 =========== =========== The accompanying notes are an integral part of these consolidated statements.
GEODYNAMICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Years Ended ----------------------------------------- June 2, June 3, May 28, 1995 1994 1993 ----------- ----------- ----------- Revenues $60,770,000 $54,823,000 $57,696,000 Costs and expenses 57,937,000 53,734,000 55,017,000 ----------- ----------- ----------- Income from operations 2,833,000 1,089,000 2,679,000 ----------- ----------- ----------- Other income (expense): Interest income 383,000 366,000 306,000 Interest expense (71,000) (15,000) (18,000) ----------- ----------- ----------- Net other income 312,000 351,000 288,000 ----------- ----------- ----------- Income before provision for income taxes 3,145,000 1,440,000 2,967,000 Provision for income taxes 1,227,000 555,000 1,019,000 ----------- ----------- ----------- Net income $1,918,000 $885,000 $1,948,000 =========== =========== =========== Earnings per common share $0.73 $0.38 $0.80 =========== =========== =========== Weighted average number of common shares outstanding 2,630,000 2,327,000 2,428,000 =========== =========== =========== Cash dividends per common share $0.28 $0.28 $0.28 =========== =========== =========== The accompanying notes are an integral part of these consolidated statements.
GEODYNAMICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Notes Common Stock Foreign Receivable Total ------------------------ Retained Currency from Sale Shareholders' Shares Amount Earnings Translation of Stock Equity ---------- ---------- ----------- ----------- ---------- ------------- Balance, May 29, 1992 2,419,000 $9,399,000 $16,982,000 $0 $(47,000) $26,334,000 Payments of notes receivable from sale of common stock --- --- --- --- 25,000 25,000 Exercise of stock options and tax benefits related to stock options 4,000 25,000 --- --- --- 25,000 Nonqualified stock options charged to operations --- 127,000 --- --- --- 127,000 Cash dividends on common stock --- --- (666,000) --- --- (666,000) Repurchases of common stock (110,000) (443,000) (530,000) --- --- (973,000) Net income --- --- 1,948,000 --- --- 1,948,000 ---------- ---------- ----------- ----------- ---------- ------------ Balance, May 28, 1993 2,313,000 9,108,000 17,734,000 0 (22,000) 26,820,000 Payments of notes receivable from sale of common stock --- --- --- --- 19,000 19,000 Exercise of stock options and tax benefits related to stock options 19,000 87,000 --- --- --- 87,000 Nonqualified stock options charged to operations --- 157,000 --- --- --- 157,000 Cash dividends on common stock --- --- (631,000) --- --- (631,000) Repurchases of common stock (119,000) (482,000) (574,000) --- --- (1,056,000) Employee stock purchase shares issued 17,000 127,000 --- --- --- 127,000 Net income --- --- 885,000 --- --- 885,000 ---------- ---------- ----------- ----------- ---------- ------------ Balance, June 3, 1994 2,230,000 8,997,000 17,414,000 0 (3,000) 26,408,000 Shares issued for LCT, Inc. acquisition 322,000 2,500,000 --- --- --- 2,500,000 Payments of notes receivable from sale of common stock --- --- --- --- 3,000 3,000 Exercise of stock options and tax benefits related to stock options 32,000 177,000 --- --- --- 177,000 Nonqualified stock options charged to operations --- 78,000 --- --- --- 78,000 Cash dividends on common stock --- --- (747,000) --- --- (747,000) Repurchases of common stock (15,000) (63,000) (43,000) --- --- (106,000) Employee stock purchase shares issued 36,000 221,000 --- --- --- 221,000 Foreign currency translation --- --- --- 4,000 --- 4,000 Net income --- --- 1,918,000 --- --- 1,918,000 ---------- ----------- ----------- ----------- ---------- ------------ Balance, June 2, 1995 2,605,000 $11,910,000 $18,542,000 $4,000 $0 $30,456,000 ========== =========== =========== =========== ========== ============ The accompanying notes are an integral part of these consolidated statements.
GEODYNAMICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended -------------------------------------- June 2, June 3, May 28, 1995 1994 1993 ---------- ----------- ----------- Cash flows from operating activities: Net income $1,918,000 $ 885,000 $ 1,948,000 Adjustments to reconcile net income to net cash provided by operating activities: Cash effect of changes, net of the effects from acquired company: Depreciation and amortization 3,476,000 2,462,000 2,293,000 Loss on retirement of capital assets 39,000 188,000 --- Nonqualified stock options charged to operations 90,000 157,000 127,000 Deferred income taxes (1,092,000) 24,000 (89,000) Loss on investments 31,000 --- --- (Increase) decrease in: Contract receivables, net (227,000) 381,000 3,257,000 Refundable income taxes 430,000 (430,000) 1,554,000 Prepaid expenses and other (351,000) (70,000) 206,000 Other noncurrent assets (56,000) 159,000 (208,000) Increase (decrease) in: Accounts payable (103,000) 38,000 (1,033,000) Accrued expenses 148,000 (28,000) (88,000) Income taxes payable 137,000 (319,000) (642,000) Deferred lease obligations and other --- (163,000) (257,000) ---------- ----------- ----------- Net cash provided by operating activities 4,440,000 3,284,000 7,068,000 ---------- ----------- ----------- Cash flows from investing activities: Loans to LCT, Inc. --- (1,612,000) --- Purchases of short-term investments (2,277,000) (10,392,000) (11,428,000) Sales of short-term investments 3,961,000 10,323,000 8,708,000 Purchase of LCT, net of acquired cash of $1,319,000 (1,419,000) --- --- Employee loans, net 120,000 (67,000) 140,000 Purchases of equipment and leasehold improvements (3,299,000) (1,550,000) (1,679,000) Additions to other intangible assets (156,000) (313,000) (428,000) Net cash used in investing activities (3,070,000) (3,611,000) (4,687,000) The accompanying notes are an integral part of these consolidated statements.
GEODYNAMICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) For the Years Ended -------------------------------------- June 2, June 3, May 28, 1995 1994 1993 ---------- ----------- ----------- Cash flows from financing activities: Line of credit borrowings 747,000 --- --- Proceeds from exercise of common stock options and tax benefits related to stock options 177,000 87,000 25,000 Repurchases of common stock (106,000) (1,056,000) (973,000) Cash dividends paid (721,000) (637,000) (673,000) Foreign currency translation 4,000 --- --- Long-term debt (622,000) --- --- Payments on notes receivable from sale of stock 3,000 19,000 25,000 Proceeds from employee stock purchase plan 221,000 127,000 --- ---------- ----------- ----------- Net cash used in financing activities (297,000) (1,460,000) (1,596,000) ---------- ----------- ----------- Net increase (decrease) in cash 1,073,000 (1,787,000) 785,000 Cash at beginning of year 1,237,000 3,024,000 2,239,000 ---------- ----------- ----------- Cash at end of year $2,310,000 $1,237,000 $3,024,000 ========== =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period - income taxes $1,704,000 $1,290,000 $659,000 Cash paid during the period - interest $89,000 $15,000 $18,000 The accompanying notes are an integral part of these consolidated statements.
GEODYNAMICS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Line of Business Geodynamics Corporation and subsidiaries (Geodynamics or the Company) provides information engineering services and products for Government, commercial and international customers. The Company provides these services to programs in several major systems areas: command, control, communications, computers and intelligence systems; strategic weapons systems; space systems; and commercial products. For the year ended June 2, 1995, approximately 89% of the Company's revenues have been derived from contracts with intelligence and military agencies of the U. S. Government and government prime contractors. 33.8 percent of the Company's fiscal 1995 revenues were derived from contracts with a U.S. Government agency, and 13.6 percent were derived from subcontracts with a government prime contractor. Basis of Consolidation On June 2, 1995 and for the year then ended, the consolidated financial statements include the accounts of the Company and the accounts of its wholly-owned subsidiaries LaFehr and Chan Technologies, Inc. (LCT) and Geodynamics Services Corporation (GSC). Statements for the two fiscal years ended June 3, 1994 include only the accounts of Geodynamics Corporation. All material intercompany accounts and transactions in fiscal 1995 have been eliminated. Revenue Recognition Contract revenues are recorded under the percentage-of-completion method of accounting, primarily on the basis of costs incurred to total estimated costs. Unbilled contract receivables represent revenues recognized under the percentage-of-completion method but not yet billed to customers. Noncurrent unbilled contract receivables are not expected to be billable during the succeeding twelve-month period, under retainage provisions in the contracts. Contract billings in excess of revenues represent certain contracts for which billings exceed revenues recognized under the percentage-of-completion method. In the period in which it is determined that a loss will result from the performance of a contract, the entire amount of the estimated loss is charged to income. Other changes in contract price and estimates of costs and profits at completion are recognized prospectively. This method recognizes in the current period the cumulative effect of the changes on current and prior periods. Certain government agencies have audited the Company's contract costs through the fiscal year ended June 3, 1988. Subsequent years remain open for audit. Short-term Investments Short-term investments are stated at market value, which equals cost, and consist of money market funds. For purposes of the statements of cash flows, the Company does not consider its short-term investments as cash equivalents. Non-current Investments Non-current investments include $1,200,000 invested in ERDAS, Inc. In September 1993, the Company converted a portion of its loan to ERDAS to equity, raising the Company's holdings in ERDAS common stock from 14 percent to 19.5 percent. Conversion of the remaining loan balance of $115,000, plus exercise of an option, would permit the Company to acquire up to a total of 25% of ERDAS common stock through July 31, 1996. ERDAS performed services for and paid royalties to the Company amounting to $3,054,000 and $175,000, respectively, for the year ended June 2, 1995. These services and royalties were not material during the two years ended June 3, 1994. The Company acquired 100% of the stock of LCT on June 9, 1994. The price, payable 1/2 in stock and 1/2 in cash, was $5,000,000 plus an earn-out amount to be determined by LCT's financial results through December 31, 1995. The purchase price has been allocated to the assets acquired based on their estimated fair value at the acquisition date. The portion of the purchase price allocated to intangible assets, including goodwill, was $2,380,000. As part of the agreement, Geodynamics' previous $1,500,000 loan to LCT was substantially repaid. The accompanying consolidated financial statements as of June 2, 1995, include the results of operations of LCT since the acquisition date. At June 3, 1994, the loan to LCT of $1,500,000 was included in investments. Fiscal 1994 proforma results reflect revenues of $60,502,000, net income of $760,000, and earnings per share of $0.29. This unaudited proforma revenue and earnings data for the year ended June 3, 1994 reflects combined results of operations of fiscal 1994 after giving effect to certain adjustments, including amortization of intangibles, depreciation, and reduction of interest income and related tax effects as if the acquisition occurred on May 29, 1993. The proforma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combination occurred on May 29, 1993 or which may occur in the future. Equipment and Leasehold Improvements Depreciation of equipment is provided using primarily accelerated methods over the estimated useful lives of the assets, ranging from three to ten years. Residual values of 50% of acquisition cost are assumed for gravity meters; all other assets have none. Leasehold improvements are amortized on a straight-line basis over the lesser of the life of the asset or the remaining life of the related lease. The Company follows the policy of capitalizing expenditures which materially increase asset lives and charging ordinary maintenance and repairs to operations as incurred. Maintenance and repairs expense totaled $497,000, $343,000, and $364,000 for the years ended June 2, 1995, June 3, 1994, and May 28, 1993, respectively. When assets are sold or otherwise disposed of, the cost and related reserves are removed from the accounts and any resulting gain or loss is included in income. Earnings Per Common Share Earnings per common share are computed by dividing net income available for common shareholders by the weighted average number of common shares and common share equivalents (consisting of common stock options) outstanding during the periods. Fully diluted earnings per share did not vary significantly from primary earnings per share. The following summarizes the information used to compute earnings per common share: Year Ended -------------------------------------------- June 2, 1995 June 3, 1994 May 28, 1993 ------------ ------------ ------------ Net income available for common shareholders $1,918,000 $ 885,000 $1,948,000 ============ ============ ============ Weighted average common shares outstanding 2,544,000 2,267,000 2,395,000 Dilutive effect of stock options 86,000 60,000 33,000 ------------ ------------ ------------ Weighted average shares used to compute earnings per common share 2,630,000 2,327,000 2,428,000 ============ ============ ============
Foreign Currency Translation The assets and liabilities for LCT's UK operations are translated into U.S. dollars using currency exchange rates at year-end. Income statement items are translated at average exchange rates prevailing during the period. The resulting translation adjustments are recorded in shareholders' equity. During the twelve months ended June 2, 1995, the UK operations generated revenues of approximately $705,000 and operating income of $215,000. Reclassifications Certain reclassifications have been made to the prior years' financial statements to conform to the current year presentation. 2. INCOME TAXES Effective May 29, 1993, the Company changed its method of accounting for income taxes to comply with the provisions of Statement of Financial Accounting Standards (SFAS) No. 109. This change had a minimal effect on the Company's financial statements. Under SFAS No. 109, deferred income tax assets and liabilities are computed based on the temporary difference between the financial statement and income tax bases of assets and liabilities using the statutory marginal income tax rate in effect for the year in which the differences are expected to reverse. Deferred income tax expenses or credits are based on the changes in the deferred income tax assets or liabilities from period to period. The components of the net deferred income tax liability at June 2, 1995 and June 3, 1994 are as follows: 1995 1994 ----------- ----------- Short-term deferred income taxes: Assets: Accrued vacation $ 585,000 $ 471,000 Self-insurance 187,000 182,000 Leases 45,000 61,000 Net operating loss carryforward 123,000 --- Other 61,000 38,000 ----------- ----------- Total deferred assets 1,001,000 752,000 ----------- ----------- Liabilities: Prepaid rent (110,000) (96,000) Long-term contracts (378,000) (1,125,000) ----------- ----------- (488,000) (1,221,000) ----------- ----------- Net short-term deferred tax asset (liability) $ 513,000 $ (469,000) =========== =========== Long-term deferred income taxes: Assets: Depreciation $ 298,000 $ 243,000 Deferred compensation 148,000 135,000 Leases 45,000 56,000 Other 55,000 --- ----------- ----------- 546,000 434,000 ----------- ----------- Liabilities: Long-term contracts (388,000) (354,000) Goodwill (1,728,000) --- ----------- ----------- (2,116,000) (354,000) ----------- ----------- Net long-term deferred tax asset (liability) $(1,570,000) $ 80,000 =========== ===========
The components of the provision for income taxes for the three years ended June 2, 1995 are as follows: Current Deferred Total ---------- ------------ ---------- 1995: Federal $1,907,000 $ (847,000) $1,060,000 State 417,000 (250,000) 167,000 ---------- ------------ ---------- $2,324,000 $ (1,097,000) $1,227,000 ========== ============ ========== 1994: Federal $ 432,000 $ 24,000 $ 456,000 State 99,000 -- 99,000 ---------- ------------ ---------- $ 531,000 $ 24,000 $ 555,000 ========== ============ ========== 1993: Federal $1,634,000 $ (761,000) $ 873,000 State 344,000 (198,000) 146,000 ---------- ------------ ---------- $1,978,000 $ (959,000) $1,019,000 ========== ============ ==========
A reconciliation of income taxes at the statutory federal income tax rate and the provision for income taxes is as follows: Year Ended ----------------------------------------------------------------- June 2, 1995 June 3, 1994 May 28, 1993 ------------------- ----------------- ------------------- Amount % Amount % Amount % ---------- ----- -------- ----- ---------- ----- Expected federal tax $1,069,000 34.0 $490,000 34.0 $1,009,000 34.0 State tax, net of federal tax benefit 110,000 3.5 59,000 4.1 96,000 3.2 Tax exempt interest and dividend income (10,000) (.3) (4,000) (.3) (9,000) (.3) Other items 58,000 1.8 10,000 .7 (77,000) (2.6) ---------- ----- -------- ----- ---------- ----- $1,227,000 39.0 $555,000 38.5 $1,019,000 34.3 ========== ===== ======== ===== ========== =====
Net operating loss carryforwards of approximately $333,000 expire in 2008. 3. LINE OF CREDIT AND LONG-TERM DEBT Geodynamics has an $8,000,000 unsecured line of credit agreement with a bank which expires November 1995. Borrowings under the agreement bear interest at the bank's reference, offshore or fixed rate. At June 2, 1995, borrowings (advances to LCT, guaranteed by parent company) under this line were $747,000 and the interest rate was 9.25%. The weighted average interest rate in fiscal 1995 was 8.97%. There were no borrowings under this line in prior years since 1991. The agreement requires the Company to maintain certain financial ratios and a minimum tangible net worth of $24,500,000. As of June 2, 1995, the Company was in compliance with such covenants. Long-term debt consists of the following loans made to LCT by its then largest shareholders prior to Geodynamics' acquisition of LCT: June 2, 1995 June 3, 1994 ------------ ------------ 11.25% Subordinated Note Payable to shareholder, due 1999 $209,000 --- 6.0% Unsecured Note Payable to former shareholder, due 1996 7,000 --- 6.0% Subordinated Note Payable to former shareholder, due 1997 1,000 --- ------------ ------------ 217,000 --- Less current maturities (54,000) --- ------------ ------------ $163,000 --- ============ ============
Long-term debt matures as follows: $54,000 in 1996, $53,000 in 1997, $58,000 in 1998, and $52,000 in 1999. 4. LEASE COMMITMENTS The Company has operating leases for facilities and equipment expiring at various dates though September 2000, with certain rights of extension. Certain facility leases provide initial periods during which the Company is not required to make rent payments. For these leases the Company has prorated the cost over the life of the leases. The rent expense under operating leases was approximately $2,645,000, $2,716,000, and $2,825,000 for the years ended June 2, 1995, June 3, 1994, and May 28, 1993, respectively. Minimum annual lease payments under all noncancelable leases are due as follows: Fiscal year: 1996 $2,852,000 1997 2,159,000 1998 1,787,000 1999 1,266,000 2000 696,000 Thereafter 158,000
Commitments under the facility lease agreements also extend, in most instances, to property taxes, insurance and maintenance. 5. BENEFIT PLANS The Company has defined contribution retirement plans which cover substantially all of its employees. Under the terms of the plans, contributions are made to a trust at the discretion of the Company's Board of Directors. The Company also has a money purchase pension plan covering substantially all of its employees and contributes ten percent of the total qualifying compensation of all eligible participants. Contributions under all plans were approximately $2,435,000, $2,650,000, and $2,581,000 for the years ended June 2, 1995, June 3, 1994, and May 28, 1993, respectively. In addition, the Company has an incentive compensation plan for certain key employees, pursuant to which cash bonuses are paid as determined by the Board of Directors. Expenses under this plan were approximately $71,000, $85,000, and $101,000 for the years ended June 2, 1995, June 3, 1994, and May 28, 1993, respectively. 6. CAPITAL TRANSACTIONS Preferred Stock The Company has two classes of preferred stock with 2,035,000 shares authorized and none outstanding as of June 2, 1995 and June 3, 1994. Common Stock Options At June 2, 1995, 656,000 shares of common stock were reserved for issuance under two incentive stock option plans for key employees. Options outstanding under these plans are exercisable over a period of five years and were issued at the fair market value at the date of grant. At June 2, 1995, 139,000 shares of common stock were reserved under various nonqualified stock option plans. The Company has made various grants under these plans at below the then-current market price. Such options are generally exercisable at 20% per year. The difference between the exercise price and the fair market value at the grant date is amortized as compensation expense over the vesting period. During fiscal year 1995, the Company adopted a director stock purchase option plan. This plan allows for options to vest in 20% increments through June 1, 1999. These director options are included in the following table as Nonqualified Stock Options. Information relative to common stock options is as follows: Incentive Stock Options Nonqualified Stock Options ------------------------- -------------------------- Number Number of Shares Option Price of Shares Option Price --------- ------------ --------- ------------ Shares under option, May 29, 1992 494,000 $8.50-16.38 94,000 $2.00- 6.00 Options granted 3,000 7.00- 7.38 32,000 5.00 Options canceled (50,000) 9.00-16.38 (1,000) 6.00 Options exercised -- -- (4,000) 2.00- 6.00 --------- ------------ --------- ------------ Shares under option, May 28, 1993 447,000 7.00-16.38 121,000 2.00- 6.00 Options granted 13,000 8.25- 9.00 60,000 6.00 Options canceled (87,000) 9.00-15.88 (14,000) 6.00 Options exercised -- -- (19,000) 2.00- 6.00 --------- ------------ --------- ------------ Shares under option, June 3, 1994 373,000 7.00-16.38 148,000 2.00- 6.00 Options granted 188,000 6.00 243,000 3.00-12.00 Options canceled (69,000) 6.00-12.88 (6,000) 6.00 Options exercised -- -- (32,000) 3.00- 6.00 --------- ------------ --------- ------------ Shares under option, June 2, 1995 492,000 $6.00-16.38 353,000 $2.00-12.00 ========= ============ ========= ============
As of June 2, 1995, options to purchase 428,000 common shares were exercisable. The vesting of certain options accelerates if the Company has a change in control. Common Stock Purchase Plans Under the Company's long-term stock purchase plan, the Company sold shares of common stock to employees at fair market value. As permitted under this plan, the purchasers paid for these shares with notes bearing interest at 10 percent per annum, payable in 40 equal quarterly principal installments. The amount of the related notes receivable as of June 2, 1995 and June 3, 1994 is shown as a reduction of shareholders' equity in the accompanying consolidated balance sheets. No shares were issued during the three years in the period ended June 2, 1995. There are no additional shares available for issuance under this plan at June 2, 1995. In fiscal 1994, the Company initiated an Employee Stock Purchase Plan, under which employees may elect to have cash withheld currently from their paychecks to buy shares of Company stock at 85% of market price on predetermined quarterly purchase dates. The plan is available to substantially all employees, and expires 10 years from the date of adoption. As of June 2, 1995, 53,000 shares had been issued under this plan and 77,000 additional shares were available for future subscription by employees. In February 1995, the Company adopted the 1994 Employee Stock Bonus Plan. The plan covers all salaried employees and officers. The Company reserved 100,000 shares of stock for this plan and no shares had been issued at June 2, 1995. 7. SIGNIFICANT FOURTH QUARTER EVENTS In connection with a proxy contest and related changes in management, the Company entered into various agreements with two former employees. The settlements included cash payments and certain additional employee benefits, the effect of which has been reflected in the accompanying consolidated financial statements. The Company also entered into a 20 month employment agreement with its new president. This agreement provides for a minimum guaranteed salary if the officer is terminated prior to December 31, 1996 as well as a sign-on bonus, cash distribution bonus, operations and performance bonuses. The agreement also includes stock options, some of which become immediately exercisable upon a change in control. The sign-on bonus as well as the income statement effect of the options have been reflected in the accompanying consolidated financial statements. 8. CONTINGENCIES The Company from time to time is involved in disputes in the normal course of business. While the outcome of such disputes can never be predicted with certainty, in the opinion of management none of the open matters at June 2, 1995 will have a material effect on its financial statements. Subsequent to year-end the Company entered into employee retention agreements with certain key members of management. These agreements provide for a cash bonus upon a change in control as well as severance pay and other employee benefits payable upon termination related to a change in control. In connection with the purchase of meters from a company which is now a customer, LCT entered into an agreement to provide a credit of 50 percent off the standard meter rental on future business with this customer. Accruals for expected costs in connection with this transaction have been recorded, and approximately $726,000 in credits are outstanding which, when utilized, will result in break-even operating margins on those jobs. 9. BUSINESS SEGMENT REPORTING Geodynamics Corporation has two lines of business, Department of Defense (DoD) contracting and non-DoD services. The following table summarizes certain financial data by industry segment as of June 2, 1995 and for the year then ended. Comparative data for years prior to fiscal 1995 have been omitted because such data are not meaningful. Geographic area information is omitted because it is not significant. DoD Non-DoD Consolidated Contracts Services Totals ------------ ----------- ------------- Segment Data : Revenues $54,246,000 $6,524,000 $60,770,000 Income (loss) from operations 3,491,000 (658,000) 2,833,000 Identifiable assets 27,922,000 12,718,000 40,640,000 Depreciation and amortization 2,893,000 583,000 3,476,000 Capital expenditures 964,000 2,335,000 3,299,000
10. QUARTERLY FINANCIAL DATA (Unaudited) The following table presents summarized quarterly results as previously reported on Form 10-Q: (in thousands except for per-share data) Fiscal Year 1995 ------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- Revenues $13,144 $14,619 $16,556 $16,451 Income from operations 812 856 735 430 Income before provision for income taxes 859 937 841 508 Net income $ 528 $ 577 $ 517 $ 296 Earnings per common share $ .21 $ .22 $ .20 $ .10 Fiscal Year 1994 ------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- Revenues $12,568 $14,788 $14,007 $13,460 Income from operations 411 399 17 262 Income before provision for income taxes 480 488 105 367 Net income $ 298 $ 302 $ 57 $ 228 Earnings per common share $ .13 $ .13 $ .02 $ .10
PART III Pursuant to General Instruction G(3) to Form 10-K, the information called for by items 10, 11 and 12 is incorporated herein by reference. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS See the information under the caption "Election of Directors" as set forth in the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders to be held on November 16, 1995, which is incorporated herein by reference. Also, see Item I, Part I, of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION See the information under the caption "Executive Compensation" as set forth in the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders to be held on November 16, 1995, which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT See the information under the caption "Security Ownership of Certain Management Beneficial Owners and Management" as set forth in the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders to be held on November 16, 1995, which is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (A) Financial Statements: (1) Financial Statements The following Financial Statements are included in Part II, Item 8: Report of Independent Public Accountants Consolidated Balance Sheets at June 2, 1995 and June 3, 1994 Consolidated Statements Of Income for the Years Ended June 2, 1995, June 3, 1994, and May 28, 1993 Consolidated Statements of Shareholders' Equity for the Years Ended June 2, 1995, June 3, 1994, and May 28, 1993 Consolidated Statements of Cash Flows for the Years Ended June 2, 1995, June 3, 1994, and May 28, 1993 Notes to Consolidated Financial Statements (2) Financial Statement Schedules Financial statement schedules have been omitted because they are not applicable, not required, or the required information has been provided in the financial statements or notes thereto. (B) Reports on Form 8-K: None. (C) Exhibits: See exhibit index following. EXHIBIT INDEX Exhibit Number 3.1 * Form of Amended and Restated Articles of Incorporation (filed as Exhibit 3.1 to Registration Statement on Form S-1 dated July 18, 1985, File No. 2-97949). 3.2 * Bylaws, as amended (filed as Exhibit 3.2 to Registration Statement on Form S-1 dated July 18, 1985, File No. 2-97949). 4. * Form of Stock Certificate representing Registrant's Common Stock (filed as Exhibit 4 to Registration Statement on Form S-1 dated July 18, 1985, File No. 2-97949). 10.1 * Employee Incentive Plan dated September 20, 1982 (filed as Exhibit 10.11 to Registration Statement on Form S-1 dated July 18, 1985, File No.2-97949). 10.2 * Geodynamics Corporation Incentive Stock Option Plan No. 3 dated October 1986 (filed as Exhibit 1 to Form 10-Q for the quarter ended November 28, 1986). 10.3 * Directors' Stock Option Plan dated November 21, 1988 and amended on October 17, 1991 (filed as Exhibit A to the Company's definitive Proxy Statement for the 1991 Annual Meeting to Shareholders). 10.4 * Amendment and Restatement of Geodynamics Corporation Profit Sharing Plan and Trust (filed as Exhibit 10.20 to Form 10-K for the year ended May 29, 1987). 10.5 * Amendment and Restatement of Geodynamics Corporation Money Purchase Pension Plan and Trust (filed as Exhibit 10.21 to Form 10-K for the year ended May 29, 1987). 10.6 * Amended and Restated Geodynamics Corporation Incentive Stock Option Plan No. 3, dated August 20, 1987 (filed as Exhibit 1 to Form 10-Q for the quarter ended November 27, 1987). 10.7 * Geodynamics Corporation 1990 Nonqualified Stock Option Plan dated October 17, 1990 (filed as Exhibit B to the Company's definitive Proxy Statement for the 1991 Annual Meeting of Shareholders). 10.8 * Geodynamics Corporation 1993 Stock Purchase Plan dated February 18, 1993 (filed as Exhibit 1 to form 10-Q for the quarter ended November 26, 1993). 10.9 Settlement Agreement with Alney A. Baham, dated April 5, 1995 as amended. 10.10 Agreement with Alney A. Baham, dated April 5, 1995, as amended. 10.11 Confirmation agreement with Alney A. Baham dated August 15, 1995,including stock options. 10.12 Settlement Agreement with Robert L. Paulson, dated July 5, 1995. 10.13 Settlement Agreement with William Strong and Mason Hill Asset Management, Inc., dated . 10.14 Employment Agreement with Bruce J. Gordon, dated June 14, 1995. 10.15 Short-term Stock Purchase Option for 15,000 shares with Bruce J. Gordon, dated June 14, 1995. 10.16 Long-term Stock Purchase Option for 15,000 shares with Bruce J. Gordon, dated June 14, 1995. 10.17 Long-term Stock Purchase Option for 30,000 shares with Bruce J. Gordon, dated June 14, 1995. 10.18 Unfunded Supplemental Employee Retirement Plan between Geodynamics and Bruce Gordon, dated June 14, 1995. 10.19 Employee Retention Agreement between Geodynamics and Joanne Dunlap, dated August 10, 1995. 10.20 Employee Retention Agreement between Geodynamics and Dave Nelson, dated August 10, 1995. 10.21 Employee Retention Agreement between Geodynamics and Paul Henrikson, dated August 10, 1995. 10.22 Employee Retention Agreement between Geodynamics and Carolyn Mihara, dated August 10, 1995. 10.23 Form of Director's Option Plan. 13.1 ** Report of Arthur Andersen LLP * Incorporated herein by references as indicated ** Included in Part II, Item 8 of this Form 10-K. SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GEODYNAMICS CORPORATION by Date: August 31, 1995 /s/ THOMAS R. LA FEHR --------------------- Thomas R. LaFehr Chairman of the Board Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ THOMAS R. LA FEHR Chairman of the Board August 31, 1995 - ------------------------- Thomas R. La Fehr /s/ BRUCE J. GORDON President and Chief August 31, 1995 - ------------------------- Executive Officer Bruce J. Gordon /s/ DAVID P. NELSON Vice President, Chief - ------------------------- Financial Officer David P. Nelson (Principal Financial Officer) August 31, 1995 /s/ ROBERT G. COOK Corporate Controller - ------------------------- (Principal Accounting Officer) August 31, 1995 Robert G. Cook /s/ MICHAEL E. EDLESON Director August 31, 1995 - ------------------------- Michael E. Edleson /s/ W. RICHARD ELLIS Director August 31, 1995 - ------------------------- W. Richard Ellis /s/ DONALD L. HAAS Director August 31, 1995 - ------------------------- Donald L. Haas /s/ DELBERT H. JACOBS Director August 31, 1995 - ------------------------- Delbert H. Jacobs /s/ WILL STACKHOUSE Director August 31, 1995 - ------------------------- Will Stackhouse EX-99.EXHIBIT10-9SET 2 SETTLEMENT AGREEMENT This Settlement Agreement (the "Agreement") is made as of the 5th day of April, 1995 between Geodynamics Corporation, a California corporation ("Geodynamics") and Alney A. Baham ("Baham") (collectively "the Parties") with reference to the following facts: A. Baham is an employee of Geodynamics, most recently as a Senior Systems Engineer in Valley Forge, Pennsylvania. He has been suspended without pay since January 1, 1995. B. From mid-1994 through the date of the Geodynamics Annual Meeting of Shareholders held on February 16, 1995 (the "Annual Meeting"), Baham conducted various proxy solicitations to the shareholders of Geodynamics including the presentation of an opposing slate of nominees for election to the Geodynamics Board of Directors (the "Board") at the Annual Meeting. C. Baham has claimed that Geodynamics libeled and slandered him causing damage to his reputation. D. Geodynamics and Baham each deny the allegations of wrongdoing made by the other. E. Geodynamics and Baham wish to resolve the various disputes which have arisen between them, to provide for the termination of Baham's employment by Geodynamics, to settle Baham's claims for damages to his reputation and emotional distress and to establish the guidelines respecting the continued relationship between Baham and Geodynamics. F. This settlement is the compromise of a disputed claim and neither the payment hereunder nor this Agreement is to be construed as an admission of liability on the part of any of the settling parties. In settling this matter, it is the desire of the parties to terminate their disputes and buy their peace. Accordingly, in consideration of the foregoing premises and the agreements contained herein, Geodynamics and Baham agree as follows: 1. Effective Date. Geodynamics shall be bound by the Agreement only if it is approved by a majority of the members of the Board of Geodynamics; provided, however, that Geodynamics' obligations under subparagraph 2 (a) (5) and paragraph 5 shall be effective upon execution of this Agreement. The date Geodynamics' Board of Directors approves this Agreement shall be referred to as the "Effective Date." If no such approval is given, this Agreement, except for subparagraph 2 (a) (5) and paragraph 5, shall be null and void. 2. Termination of Employment; Payments to Baham. (a) Concurrently with the Effective Date of this Agreement, Baham's employment with the Company shall terminate, and Geodynamics shall pay to Baham an amount equal to: (1) $21,176.65, representing Baham's unpaid salary during the period January 1, 1995 through March 3, 1995, Baham's accrued vacation pay through March 3, 1995, and nine days of pay attributable to Baham's time to relocate from Pennsylvania to California; (2) the sum of $200,000 as damages for emotional distress and injury to Baham's reputation both arising from allegedly libelous and slanderous conduct by Geodynamics; (3) the sum of $95,000 arising from the alleged wrongful termination of Baham's employment; and (4) $4,375.00, reflecting the value on March 3, 1995 of Baham's options in a cashless exercise of those options. (5) Geodynamics will reimburse Baham for relocation expenses in the amount of $6,000.00. In addition, Geodynamics also will reimburse Baham $5,865.04 for expenses incurred by Baham as a Geodynamics employee. (b) On the Effective Date all of Baham's rights to participate in any and all employee benefits of Geodynamics shall cease (other than his COBRA rights), notwithstanding the consulting arrangement established by Section 4 hereof, provided, however, that Geodynamics shall make a contribution to Baham's self-directed pension accounts of all sums due to Baham under Geodynamics' pension plan for the period ended March 10, 1995. It is acknowledged and agreed that Baham's pension accounts are 100% vested, are not subject t any claim by Geodynamics and that Baham may, at his discretion continue to maintain those accounts with Geodynamics' designated trustee so long as it is permissible for terminated employees to do so under Geodynamics' pension plan and the contracts for administration of the plan. 3. General Releases: (a) In consideration of the agreements contained herein, Geodynamics, on the one hand, and Baham and Baham's spouse (by execution of a joinder concurrently herewith), on the other hand, on behalf of themselves, their successors, assigns, grants, heirs, administrators and representatives, each fully and forever release and discharge the other(s) of them and their respective officers, directors, employees, attorneys, agents, insurers and affiliates from any and all cause or causes of actions, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind or character, known or unknown, suspected to exist or not suspected to exist, anticipated or not anticipated, whether or not heretofore brought before any state or federal court or before any state or federal agency or other governmental entity, whether statutory or common law ("Claims") to the Effective Date, including without limitation on the generality of the foregoing, any and all claims, demands or causes of action attributable to, connected with or incidental to Baham's claims for libel, slander and infliction of emotional distress and to the employment or potential employment of Baham by Geodynamics and the separation of that employment, or otherwise. This release is intended to apply to any Claims arising from federal, state or local laws which prohibit discrimination on the basis of race, national origin, sex, religion, age, marital status, pregnancy, handicap, perceived handicap, ancestry, sexual orientation, family or personal leave or any other form of discrimination, any Claims for severance pay, sick leave, family leave, workplace injury, vacation, life insurance, bonuses, incentive compensation, health insurance, disability or medical insurance or any other fringe benefit or compensation, and all rights and Claims arising under the Employee Retirement Income Security Act of 1974 ("ERISA"), or pertaining to ERISA regulated benefits. (b) IT IS EXPRESSLY UNDERSTOOD that California Civil Code Section 1542 provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which is known by him must have materially affected his settlement with the debtor. THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY EXPRESSLY WAIVED BY EACH OF THE PARTIES HERETO to the fullest extent that a party may waive all such rights and benefits, if any, of such provisions pertaining to the matters released herein. In addition, each of the parties hereto hereby waives any similar provision in any other jurisdiction, if in any way applicable, and each of the parties hereto acknowledges that these waivers are an essential and material term of this Agreement. In connection with such waiver, each of the parties hereto acknowledges that such party has been advised of and has considered the possibility that such party may not now fully know the number or magnitude of all the Claims that such party may have against any other party hereto with respect to the matters released herein, and that such party may hereafter discover Claims presently unknown or unsuspected, or facts in addition to or different from those that such party now knows or believes to be true, with respect to the matters released herein. Nevertheless, it is each of the parties' intention, through this release, fully, finally, and forever to settle and release all such matters, and all Claims relative thereto, which may exist, or hereto have existed against the other, and each agrees that this release is such a full and final release. In furtherance of such intention, the release herein given shall be and remain in effect as a full and complete release of such additional or different Claims or facts relative thereto notwithstanding the discovery by such part of the existence of any additional or different Claims or facts relating to the Claims. (c) ADEA Release. Baham agrees and expressly acknowledges that this Agreement includes a waiver and release of all claims which Baham has or may have under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. $ 632, et seq. ("ADEA"). The following terms and conditions apply to and are part of the waiver and release of ADEA claims under this Agreement. (1) The waiver and release of claims under the ADEA contained in this Agreement does not cover rights or claims that may arise after the date on which Baham signs this Agreement. (2) This Agreement involves consideration in addition to anything of value to which Baham is already entitled. (3) Baham is advised to consult, and has in fact consulted, an attorney before signing this Agreement. (4) Baham is granted twenty-one (21) days after he is presented with this Agreement to decide whether or not to sign this Agreement. If he executes this Agreement prior to the expiration of such period, he does so voluntarily and upon advice of counsel. (5) Baham will have the right to revoke the waiver and release of claims under the ADEA within seven (7) days of signing this Agreement. (6) This paragraph 3 (c) and Geodynamics' obligation to pay money to Baham under subparagraphs 2 (a) (2) and (3) shall be effective upon the later of the Effective Date or the date the revocation period expires without this paragraph having been revoked. The remaining provisions of this Agreement shall be effective upon the Effective Date. 4. Consulting Agreement. This Agreement will operate as a consulting agreement whereby Baham will be retained as a consultant to Geodynamics for a period commencing on the date of this Agreement and terminating on the earlier of (i) two years from the date hereof, or (ii) the date Baham obtains other full- time employment to which responsibility for his security clearances could be transferred. Baham shall be paid $1.00 per year for such consulting agreement. During the period of the consulting agreement, Geodynamics shall use its best efforts to maintain Baham's security clearance intact, if possible, but shall have no other obligations hereunder. 5. Customer Employment Waiver. Geodynamics hereby agrees to waive any prohibition in any contract with any of its prior, present or future customers, contractors, subcontractors, vendors or associates that would preclude or limit such person on entity from employing Baham, or his employer, in any capacity or retaining him as a consultant by providing a letter in the form attached hereto as Exhibit A. Geodynamics will send within three (3) days of the execution of this Agreement a letter to this effect to Martin Marietta Corporation. Upon written request of Baham to Geodynamics, Geodynamics will reaffirm such waiver in writing to any person or entity. 6. Miscellaneous. (a) Non-Disclosure. Except as required to comply with the law, to consult with their financial and tax advisor, or to meet their contractual obligation, each party agrees to keep the terms of this Agreement confidential and agrees not to make, nor cause to be made, any news release, disclosure or public announcement pertaining to this Agreement or the subject matter hereof without the prior written approval of the other party. (b) Equitable Remedies: Each of the parties hereto acknowledges that the remedy at law for any breach, or threatened breach, of the provisions of this Agreement will be inadequate and, accordingly, each of them covenants and agrees that, with respect to any such breach or threatened breach, the non-breaching party, in addition to any other rights or remedies that it may have and regardless of whether such other rights or remedies have been previously exercised, will be entitled to such equitable and injunctive relief as may be available. (c) Arbitration. Except with respect to any application by Geodynamics or Baham for injunctive or other non- monetary equitable relief pursuant to paragraph 6 (b) of this Agreement, any controversy, dispute, or claim between the parties to this Agreement or any party released pursuant to it, including any claim arising out of, in connection with, or in relation to the interpretation, performance or breach of this Agreement shall be settled by arbitration before a single arbitrator conducted in Los Angeles, California, in accordance with the most applicable then existing rules of the American Arbitration Association, and judgment upon any award rendered by the arbitrator(s) may be entered by any state or federal court having jurisdiction thereof. Such arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator by striking alternately (the first to strike being chosen by lot) from a list of seven arbitrators designated by the American Arbitration Association; four shall be retired judges of the Superior or Appellate Courts resident in Los Angeles or Orange Counties selected from the "Independent List" of retired judges and three shall be members of the National Academy of Arbitrators resident within Los Angeles or Orange Counties, California. In the event of any such arbitration, the fees of the arbitrator and any costs associated with the arbitration shall be divided equally between the parties. The prevailing party shall be awarded reasonable attorney's fees as part of the arbitration award. (d) Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, warranties, statements and understandings, whether oral or written, with respect to the subject matter hereof. (e) Notices. All notices, demands, elections, or requests provided for or permitted to be given pursuant to this Agreement must be in writing. All notices, demands, elections, and requests shall be deemed to have been duly given on the date delivered personally or on the date of receipt if sent by overnight delivery services, facsimile transmission, or registered or certified U.S. Mail with return receipt requested, to the following addresses, or such other addresses as may be subsequently designated in writing and delivered to the other parties hereto: To Geodynamics: Geodynamics Corporation 21171 Western Avenue, Suite 110 Torrance, California 90501 Attention: Robert L. Paulson, Chief Executive Officer Fax: (310) 781-3615 with copies to: Joseph E. Nida, Esq. Nida & Maloney 801 Garden Street, Suite 201 Santa Barbara, California 93101 Fax: (805) 568-1955 and Alexander F. Wiles, Esq. Irell & Manella 1800 Avenue of the Stars, Suite 900 Los Angeles, California 90067 Fax: (310) 203-7199 To Baham: Mr. Alney A. Baham 19502 Georgina Avenue Cerritos, California 90703 Fax: (310) 860-3341 with a copy to: Mitchell Albert, Esq. Haight, Brown & Bonesteel 1620 26th Street Santa Monica, California, 90404 Fax: (310) 829-5117 (f) Governing Law; Attorneys' Fees. This Agreement and the rights and obligations of the parties hereunder, shall be interpreted, construed, and enforced in accordance with the laws of the State of California without regard to principles of law (such as "conflicts of laws") that might make the law of some other jurisdiction applicable. In the event any legal action or arbitration is instituted to construe or enforce this Agreement or the rights or obligations of any party, the prevailing party shall be entitled to reasonable attorneys' fees, costs and expenses incurred in such legal action. Attorneys' fees incurred in enforcing any judgment in respect of this Agreement are recoverable as a separate item. The preceding sentence is intended to be severable from the other provisions of this Agreement and to survive any judgment and, to the maximum extent permitted by law, shall not be deemed merged into any such judgment. (g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. (h) Amendments, Supplements. This Agreement may not be amended or modified except in a writing signed by Geodynamics and Baham and expressly stating that it is intended to amend this Agreement, except for the addresses to which communications may be sent, which any party may change in accordance with the terms of this Agreement. (i) No Third Party Beneficiaries. Nothing contained in this Agreement is intended to and nothing contained herein shall be interpreted to confer on any party not a party hereto or a successor or assign thereof the rights of a third party beneficiary. (j) Captions. All section titles or captions contained in this Agreement or in any schedule or exhibit annexed hereto or referred to herein are for convenience only, shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement. All references herein to sections shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. (k) Severability. If any provision of this Agreement or the application thereof to any person or circumstances shall be held to be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (l) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (m) No Representations; Counsel. Baham represents that he has secured the advice of counsel prior to executing this Agreement and acknowledges that no representations or warranties have been made by him by Geodynamics to induce him to enter into this Agreement other than those set forth in writing in this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. GEODYNAMICS CORPORATION ("Geodynamics") By: /s/ Robert L. Paulson Chairman of the Board and Chief Executive Officer /s/ ALNEY A. BAHAM CONSENT OF SPOUSE The undersigned, Julia H. Baham, spouse of Alney A. Baham, hereby consents to the execution of the foregoing Agreement by Alney Baham, waives and relinquishes any rights she might otherwise have in the subject matter thereof, by her community property interest, if any, or otherwise, and expressly joins in an reiterates the general release set forth in Section 3 of the Settlement Agreement and the irrevocable prosy and limitations on shareholder activity contained in Section 4 of the Agreement. Dated: April 5th, 1995 /s/ Julia H. Baham Exhibit A Customer Waiver Letter TO WHOM IT MAY CONCERN: This is to notify you that Geodynamics hereby waives any prohibition in any agreement(s) it has with its past, present or future customers, prime contractors, subcontractors, vendors or associates that would prohibit Alney A. Baham, or his employer by virtue of Mr. Baham's relationship with the employer, from going to work for them, being retained by them as a consultant, or supporting them in any capacity. [Our only condition to this waiver is that Mr. Baham assure both you and us that he is no longer an employee of Geodynamics at the time he commences his engagement with you. We currently expect that Mr. Baham will cease to be an employee of Geodynamics no later than April 19, 1995.]1 1 Geodynamics will reissue this letter without the bracketed language after the Effective Date or the termination of Mr. Baham's employment, whichever occurs first. EX-99.EXHIBIT10-10AG 3 AMENDMENT TO AGREEMENT This Amendment To Agreement (the "Agreement") is made as of the 19th day of April, 1995 between Geodynamics Corporation, a California corporation ("Geodynamics") and Alney A. Baham ("Baham") (collectively "the Parties") with reference to the following facts. A. Baham and Geodynamics entered into an Agreement as of April 5, 1995, which Agreement was to be effective only upon approval by the Geodynamics' Board of Directors (the "Board"). B. On April 19, 1995, Geodynamics' Board approved the Agreement signed as of the same date subject only to Baham's willingness to modify subparagraph 4 (c) (4) of the Agreement. C. Baham has consented to the amendment requested by the Geodynamics' Board. Accordingly, in consideration of the foregoing premises and the agreements contained herein and in the Agreement, Geodynamics and Baham agree as follows: 1. Paragraph 1 of the Agreement shall be deleted and the following substituted in its place: "1. Effective Date. The term "Effective Date" as used in this Agreement shall mean April 19, 1995." 2. Subparagraph 4 (d) (4) of the Agreement shall be amended to delete the words "or to influence any decision of the Board (other than as set forth in Section 5 below)". 3. Subparagraph 6 (a) of the Agreement shall be amended to delete the first sentence thereof consisting of the words "Attached hereto as Exhibit B is a copy of the press release to be issued by the Parties on the Effective Date." Exhibit B is also deleted from the Agreement and no press release shall be issued. 4. This amendment constitutes the entire agreement among the parties to amend the Agreement and supersedes all prior and contemporaneous agreements, representations, warranties, statements and understandings, whether oral or written, with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first written above. GEODYNAMICS CORPORATION By: /s/ David P. Nelson Chief Financial Officer /s/ ALNEY A. BAHAM AGREEMENT This Agreement is made as of the 5th day of April, 1995 between Geodynamics Corporation, a California corporation ("Geodynamics") and Alney A. Baham ("Baham") (collectively "the Parties") with reference to the following facts: A. Baham is an employee of Geodynamics, most recently as a Senior Systems Engineer in Valley Forge, Pennsylvania, He has been suspended without pay since January 1, 1995. B. Baham, on behalf of himself, members of his family and his self-directed pension plan, is the beneficial owner of 34,900 shares of the Common Stock of Geodynamics (the "Geodynamics Stock") and is the holder of options to purchase approximately 9,100 additional shares of Geodynamics' Stock. C. From mid-1994 through the date of the Geodynamics Annual Meeting of Shareholders held on February 16, 195 (the "annual Meeting"), Baham conducted various proxy solicitations to the shareholders of Geodynamics including the presentation of an opposing slate of nominees for election to the Geodynamics Board of Directors (the "Board") at the Annual Meeting. In connection therewith, Geodynamics instituted legal proceedings against Baham and the other members of the opposing slate alleging, among other things, false and misleading solicitation materials. Baham contends that the election is null and void because Geodynamics made false and misleading statements in its proxy solicitation materials. Geodynamics and Baham each deny the allegations of wrongdoing made by the other. D. Geodynamics has raised objections concerning the voting of certain late proxies by Baham at the Annual Meeting, which objections the Inspector of Elections sustained. Baham has informed the Company that he believes the Inspector acted incorrectly. E. Geodynamics and Baham wish to resolve the various disputes which have arisen between them and to establish the guidelines respecting Baham's continued ownership of Geodynamics Stock and the continued relationship between Baham and Geodynamics. F. This settlement is the compromise of a disputed claim and neither the payment nor this Agreement is to be construed as an admission of liability on the part of any of the settling parties. In settling this matter, it is the desire of the parties to terminate the lawsuit between them and buy their peace. Accordingly, in consideration of the foregoing premises and the agreements contained herein, Geodynamics and Baham agree as follows: 1. Effective Date. Geodynamics shall be bound by the Agreement only if it and the Settlement Agreement of this same date are approved by a majority of the members of the Board of Geodynamics. The date Geodynamics' Board of Directors approves this Agreement shall be referred to as the "Effective Date." If no such approval is given, this Agreement shall be null and void. 2. Election of Directors. The parties acknowledge that Geodynamics has secured the resignations of Richard Smith and Frederick Evans, two of the six management nominees elected at the Annual Meeting, and has appointed Bruce Gordon and Will Stackouse, two members of the slate of nominees proposed by Baham at the Annual Meeting, to fill the vacancies created by those resignations. Geodynamics will use its best efforts to cause Messrs. Edleson, Gordon, and Stackhouse to be renominated and reelected to the Board at the 1995 Annual Meeting of Shareholders provided, however, that these directors may be identified as the last three candidates on the management slate if cumulative voting is employed. Baham hereby waives all of his rights to challenge the results of the election of directors at the Annual Meeting and agrees that he will not encourage or support any other shareholder making such a challenge. 3. Dismissal of Lawsuit; General Releases. (a) As soon as practicable following the Effective Date, Geodynamics shall dismiss with prejudice, and not reinstitute in any form, as to Baham and the other members of his slate the lawsuit currently pending in the United States District Court for the Central District of California, (Case No. CV-94-8335 LGB) entitled Geodynamics Corporation vs. Alney A. Baham, et al, (the "Lawsuit"). Prior to filing a request for dismissal, Geodynamics shall execute and file a stipulation and order seeking to vacate the existing preliminary injunction and temporary restraining order issued in the Lawsuit. (b) In consideration of the foregoing dismissal of the Lawsuit and the other agreements contained herein, Geodynamics, on the one hand, and Baham and Baham's spouse (by execution of a joinder concurrently herewith), on the other hand, on behalf of themselves, their successors, assigns, agents, heirs, administrators and representatives, each fully and forever release and discharge the other(s) of them and their respective officers, directors, employed, attorneys, agents, insurers, and affiliates from any and all cause or causes of actions, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind or character, known or unknown, suspected to exist or not suspected to exist, anticipated or not anticipated, whether or not heretofore brought before any state or federal court or before any state or federal agency or other governmental entity, whether statutory or common law ("Claims") to the Effective Date, including without limitation on the generality of the foregoing, any and all claims, demands or causes of action attributable to, connected with or incidental to the annual Meeting, the election of directors at the Annual Meeting, the solicitation of proxies, the Lawsuit or otherwise. (c) IT IS EXPRESSLY UNDERSTOOD that California Civil Code Section 1542 provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY EXPRESSLY WAIVED BY EACH OF THE PARTIES HERETO to the fullest extent that a party may waive all such rights and benefits, if any, of such provisions pertaining to the matters released herein. In addition, each of the parties hereto hereby waives any similar provision in any other jurisdiction, if in any way applicable, and each of the parties hereto acknowledges that these waivers are an essential and material term of this Agreement. In connection with such waiver, each of the parties hereto acknowledges that such party has been advised of and has considered the possibility that such party may not now fully know the number or magnitude of all the Claims that such party may have against any other party hereto with respect to the matters released herein, and that such party may hereafter discover Claims presently unknown or unsuspected, or facts in addition to or different from those that such party now knows or believes to be true, with respect to the matters released herein. Nevertheless, it is each of the parties' intention, through this release, fully, finally, and forever to settle and release all such matters, and all Claims relative thereto, which may exist, or hereto have existed against the other, and each agrees that this release is such a full and final release. In furtherance of such intention, the release herein given shall be and remain in effect as a full and complete release of such additional or different Claims or facts relative thereto notwithstanding the discovery by such part of the existence of any additional or different Claims or facts relating to the Claims. 4. Agreements Respecting Geodynamics Stock and Future Relationships. With respect to the continuing relationship of Baham with Geodynamics and in consideration of the dismissal of the lawsuit and the other agreements herein, the parties agree as follows: (a) Irrevocable Proxy and Option. Baham hereby grants Geodynamics an option (the "Option") to purchase all shares of Geodynamics Stock beneficially owned by Baham, whether now owned or hereafter acquired and whether owned of record by Baham, members of his family, his self-directed pension trust, or any affiliate of the foregoing (the "Option Shares"), for the period commencing the date hereof and ending on March 1, 2000 (the "Option Period") at an exercise price of the greater of $10.00 over the fair market value of each share or two times the fair market value of each share on the date Geodynamics exercises that option. For purposes of this subparagraph and subparagraph 4 (c), fair market value shall mean the average of bid and ask on the NASDAQ system. In connection with the grant of the Option and to secure his obligations under subparagraph (d) below, concurrently herewith, Baham shall execute and deliver to Geodynamics an irrevocable proxy, in the form attached hereto as Exhibit A, to vote all the Option Shares during the Option Period. (b) Options. The parties acknowledge that all options to purchase shares of Geodynamics Stock currently held by Baham are hereby deemed expired on the Effective Date. (c) Right of First Refusal. If, at any time prior to March 1, 2000, Baham proposes to sell or offer for sale any shares of Geodynamics Stock then owned by him, including shares issued upon exercise of options (the "Shares"), he shall first offer the Shares for purchase by Geodynamics and shall advise Geodynamics as to the number of Shares being offered and the price proposed for such Shares. For a period of two (2) business days thereafter, or, in the case of a private sale of the Shares, for a period of five (5) business days, Geodynamics may accept such offer on the terms provided and either purchase or cause another person designated by it to purchase the Shares at the purchase price by company check or by certified check. If Geodynamics does not elect to purchase the Shares, Baham may sell the Shares in the market or consummate the private transaction. However, if the sale were to be at fair market value, and if the price has decreased from the time Baham first notified Geodynamics of the option to buy, Geodynamics shall pay Baham the difference between the price he receives for his Shares and the fair market value at the time he gave notice to the Company, provided Baham consummates the sale within two days of receiving notice from Geodynamics of its decision not to by the Shares. If Baham does not sell the Shares within two days, then Baham shall be free to sell such Shares at any time within 90 days thereafter so long as the price at which such Shares are sold is not less than the price offered to Geodynamics. Should the offering price be reduced or should the shares not be sold within such 90-day period, then Baham shall follow the foregoing procedure in connection with any subsequent offer to sell the Shares. (d) No Further Proxy Contest; Etc. Until March 1, 2000, Baham shall not purchase or otherwise acquire any additional shares of Geodynamics' Stock. In addition, until such date, Baham shall not, alone or with others, without the prior written consent of the Board specifically expressed in a resolution adopted by a majority of the members of the Board: (1) submit any proposal for the vote of shareholders of Geodynamics, seek the consent of Geodynamics' shareholders to any action, or seek to influence the vote of Geodynamics shareholders on any election of directors or other proposal submitted by management or others; (2) with respect to securities of Geodynamics, become a member of any "group" within the meaning of Section 13 (d) (3) of the Securities Exchange Act of 1934, as amended; (3) induce or attempt to induce, directly or indirectly, any other person to initiate or support any tender or exchange offer for Geodynamics Stock or any proposal for change of control of Geodynamics, whether in connection with a proxy contest or otherwise, or to offer or seek to cause any third party to offer to purchase the stock or substantially all of the assets of Geodynamics, whether by merger, tender offer or otherwise; (4) attempt to obtain election or appointment to the Board or to influence any decision of the Board (other than as set forth in Section 5 below); (5) take any action inconsistent with the foregoing; or (6) seek employment with Geodynamics or any current subsidiary or affiliate of Geodynamics. 5. Baham Expenses. Without in any way limiting the scope of subparagraph 3 (b) of this Agreement, Geodynamics agrees that, at the first meeting of the Board after the Effective Date, Geodynamics will place on the agenda a request by Baham to reimburse him for his expenses in conducting the proxy contest with respect to the Annual Meeting as compensation for what Baham views as services rendered to all shareholders and efforts to increase shareholder value. Baham will be entitled to make a presentation to the Board at that time and to contact any person (if such person is willing) before that meeting to campaign in favor of his request. The parties acknowledge that this Agreement does not create, and shall not be construed as creating, any legal obligation by Geodynamics with respect to such proposal and that Geodynamics has made no representations or warranties concerning the likelihood that such request will be honored. In the event reimbursement is denied by the Board, Baham will take no further action to seek reimbursement and, in particular, agrees that he will not institute any legal action against Geodynamics with respect thereto and will not seek to have the issue of reimbursement reconsidered by the Board. In the event that Geodynamics expands its Board of Directors beyond seven persons prior to the Board meeting at which this matter is considered, Geodynamics will delegate the authority to vote on the Baham proposal to a special committee composed of the seven directors serving on the Board immediately following the resignations and appointments referred to in paragraph 2 of this Agreement. 6. Miscellaneous. (a) Announcement; Non-Disclosure. Attached hereto as Exhibit B is a copy of the press release to be issued by the Parties on the Effective Date. Except as required to comply with the law, to consult with their financial and tax advisors, or to meet their contractual obligations, each party agrees to keep the terms of this Agreement confidential and agrees not to make, nor case to be made, any other news release, disclosure or public announcement pertaining to this Agreement or the subject matter hereof without the prior written approval of the other party. (b) Equitable Remedies. Each of the parties hereto acknowledges that the remedy at law for any breach, or threatened breach, of the provisions of this Agreement will be inadequate and, accordingly, each of them covenants and agrees that, with respect to any such breach or threatened breach, the non-breaching party, in addition to any other rights or remedies that it may have and regardless of whether such other rights or remedies have been previously exercised, will be entitled to such equitable and injunctive relief as may be available. (c) Arbitration. Except with respect to any application by Geodynamics or Baham for injunctive or other non- monetary equitable relief pursuant to paragraph 6 (b) of this Agreement, any controversy, dispute, or claim between the parties to this Agreement or any party released pursuant to it, including any claim arising out of, in connection with, or in relation to the interpretation, performance or breach of this Agreement shall be settled by arbitration before a single arbitrator conducted in Los Angeles, California, in accordance with the most applicable then existing rules of the American Arbitration Association, and judgment upon any award rendered by the arbitrator(s) may be entered by any state or federal court having jurisdiction thereof. Such arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator by striking alternately (the first to strike being chosen by lot) from a list of seven arbitrators designated by the American Arbitration Association; four shall be retired judges of the Superior or Appellate Courts resident in Los Angeles or Orange Counties selected from the "Independent List" of retired judges and three shall be members of the National Academy of Arbitrators resident within Los Angeles or Orange Counties, California. In the event of any such arbitration, the fees of the arbitrator and any costs associated with the arbitration shall be divided equally between the parties. The prevailing party shall be awarded reasonable attorney's fees as part of the arbitration award. (d) Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, warranties, statements and understandings, whether oral or written, with respect to the subject matter hereof. (e) Notices. All notices, demands, elections, or requests provided for or permitted to be given pursuant to this Agreement must be in writing. All notices, demands, elections, and requests shall be deemed to have been duly given on the date delivered personally or on the date of receipt if sent by overnight delivery services, facsimile transmission, or registered or certified U.S. Mail with return receipt requested, to the following addresses, or such other addresses as may be subsequently designated in writing and delivered to the other parties hereto: To Geodynamics: Geodynamics Corporation 21171 Western Avenue, Suite 110 Torrance, California 90501 Attention: Robert L. Paulson, Chief Executive Officer Fax: (310) 781-3615 with copies to: Joseph E. Nida, Esq. Nida & Maloney 801 Garden Street, Suite 201 Santa Barbara, California 93101 Fax: (805) 568-1955 and Alexander F. Wiles, Esq. Irell & Manella 1800 Avenue of the Stars, Suite 900 Los Angeles, California 90067 Fax: (310) 203-7199 To Baham: Mr. Alney A. Baham 19502 Georgina Avenue Cerritos, California 90703 Fax: (310) 860-3341 with a copy to: Mitchell Albert, Esq. Haight, Brown & Bonesteel 1620 26th Street Santa Monica, California, 90404 Fax: (310) 829-5117 (f) Governing Law; Attorneys' Fees. This Agreement and the rights and obligations of the parties hereunder, shall be interpreted, construed, and enforced in accordance with the laws of the State of California without regard to principles of law (such as "conflicts of laws") that might make the law of some other jurisdiction applicable. In the event any legal action or arbitration is instituted to construe or enforce this Agreement or the rights or obligations of any party, the prevailing party shall be entitled to reasonable attorneys' fees, costs and expenses incurred in such legal action. Attorneys' fees incurred in enforcing any judgment in respect of this Agreement are recoverable as a separate item. The preceding sentence is intended to be severable from the other provisions of this Agreement and to survive any judgment and, to the maximum extent permitted by law, shall not be deemed merged into any such judgment. (g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. (h) Amendments, Supplements. This Agreement may not be amended or modified except in a writing signed by Geodynamics and Baham and expressly stating that it is intended to amend this Agreement, except for the addresses to which communications may be sent, which any party may change in accordance with the terms of this Agreement. (i) No Third Party Beneficiaries. Nothing contained in this Agreement is intended to and nothing contained herein shall be interpreted to confer on any party not a party hereto or a successor or assign thereof the rights of a third party beneficiary. (j) Captions. All section titles or captions contained in this Agreement or in any schedule or exhibit annexed hereto or referred to herein are for convenience only, shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement. All references herein to sections shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. (k) Severability. If any provision of this Agreement or the application thereof to any person or circumstances shall be held to be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (l) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (m) No Representations; Counsel. Baham represents that he has secured the advice of counsel prior to executing this Agreement and acknowledges that no representations or warranties have been made by him by Geodynamics to induce him to enter into this Agreement other than those set forth in writing in this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. GEODYNAMICS CORPORATION ("Geodynamics") By: /s/ Robert L. Paulson Chairman of the Board and Chief Executive Officer /s/ ALNEY A. BAHAM CONSENT OF SPOUSE The undersigned, Julia H. Baham, spouse of Alney A. Baham, hereby consents to the execution of the foregoing Agreement by Alney Baham, waives and relinquishes any rights she might otherwise have in the subject matter thereof, by her community property interest, if any, or otherwise, and expressly joins in an reiterates the general release set forth in Section 3 of the Settlement Agreement and the irrevocable prosy and limitations on shareholder activity contained in Section 4 of the Agreement. Dated: April 5th, 1995 /s/ Julia H. Baham Exhibit A IRREVOCABLE PROXY (coupled with an interest) The undersigned, Alney A. Baham, as the beneficial owner of 34,900 shares of Common Stock (the Shares ) of Geodynamics Corporation, a California corporation (the Company ) owned by himself, members of his family, and his self-directed pension plan, hereby revokes any and all previous proxies granted with respect to the Shares and grants to the Company as irrevocable proxy to vote the Shares,, together with any additional shares of Geodynamics Common Stock here after required by any of them (all such additional shares being included within the terms Shares herein), with all power to attend any and all meetings of the shareholders of the Company and to represent, vote, execute consents and waivers, and otherwise to act for the undersigned in the same manner and with the same effect as if the undersigned were personally present at any such meeting and voting such shares or personally acting on any matters submitted to shareholders for approval or consent. Certain of the Shares owned beneficially by Baham are owned of record by persons, firms or entities other than Baham individually. Baham agrees to take all action required in order to cause the record owners of all Shares to vote such Shares, through the execution of proxies or otherwise, in accordance with the instructions received by him from the Company, including without limitation any recommendation of a majority of the Board of Directors of the Company in any proxy or consent solicitation. The undersigned authorizes any officer of the Company to act on the Company s behalf with respect to the proxy granted hereunder and further authorizes the Company to substitute any other person to act hereunder, to revoke any such substitution, and to file this proxy and any substitution or revocation with the Secretary of the Company. This proxy is being made in connection with the grant by the undersigned to the Company of an option to purchase the Shares set forth in that certain Agreement or even date herewith between the Company and the undersigned and is irrevocable in accordance with such Agreement until March 1, 2000, or until the option is exercised in full or the Shares are otherwise sold in accordance with the Agreement. The undersigned acknowledges that the remedy at law for any breach, or threatened breach, of the provisions hereof will be inadequate and, accordingly, covenants and agrees that in addition to any other rights or remedies that the Company may have with respect to any such breach or threatened breach, and regardless of whether such other rights or remedies have been previously exercised, the Company will be entitled to such equitable and injunctive relief as may be available. In the event any legal action or arbitration is instituted to construe or enforce this Proxy or the rights or obligations of any party, the prevailing party shall be entitled to reasonable attorneys fees, costs and expenses incurred in such legal action. Dated: April 5th , 1995 /s/ Alney A. Baham Alney A. Baham CONSENT OF SPOUSE The undersigned, Julia H. Baham, spouse of Alney A. Baham hereby consents to the execution of the foregoing Irrevocable Proxy by Alney A. Baham, waives and relinquishes any rights she might otherwise have in the subject matter thereof, by her community property interest, if any, or otherwise. Dated: April 5th, 1995 /s/ Julia H. Baham Julia H. Baham Exhibit B Press Release Draft April , 1995 Press Release Geodynamics Corporation and Alney A. Baham today announced they had reached a settlement of their ongoing disputes. The settlement resolves any possible challenge by Mr. Baham to the results of the election of members of Geodynamics Board of Directors at the Company s Annual Meeting of Shareholders held on February 16, 1995. As previously reported, Geodynamics Board now consists of Thomas R. LaFehr, Robert L. Paulson, W. Richard Ellis and Donald L. Haas, each of whom was a management nominee, and Michael E. Edleson, Bruce J. Gordon, and Will Stackhouse, each of whom was a member of Mr. Baham s slate. Pursuant to the settlement, Geodynamics will dismiss the lawsuit against Mr. Baham and his slate of nominees relating to the Annual Meeting and has agreed to re-nominate the directors from Mr. Baham s slate at the next Annual Meeting of Shareholders. Geodynamics also announced that, pursuant to the settlement, Mr. Baham had agreed to support the new Board and had given the Company a general release from all claims. The other terms of the settlement are confidential. In announcing the settlement, Robert Paulson, Chief Executive Officer of the Company, said that he looks forward to working with the new Board, including the new members from Mr. Baham s slate, and wishes Mr. Baham well in his future endeavors. Mr. Baham stated that he has confidence in the new Board, intends to remain a shareholder of Geodynamics, and wishes the new Board well in its efforts to maximize shareholder value. EX-99.EXHIBIT10-11CO 4 CONFIRMATION AGREEMENT THIS CONFIRMATION AGREEMENT (the "Confirmation Agreement") is made and entered into on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California corporation ("Geodynamics") and ALNEY A. BAHAM ("Baham") with respect to the following facts: A. Geodynamics and Baham are parties to two agreements dated April 5, 1995, one entitled, "Settlement Agreement" and one entitled, "Agreement" (collectively the "Agreements"). B. In accordance with the terms of the Agreement, Baham presented to Geodynamics' Board of Directors (the "Board") on May 22, 1995 a request for reimbursement of expenses beyond the payments made in accordance with the Agreements. C. The Board deliberated and has proposed to Baham a response to his request for reimbursement of certain proxy related expenses, which has been accepted by Baham, and the parties wish to enter into this Confirmation Agreement to reflect the subsequent agreement of the parties to amend the Agreements. In consideration of the foregoing premises and the agreements contained herein, Geodynamics and Baham agree as follows: 1. Ratification of Agreements and Releases. Each party does hereby ratify and confirm the Agreements, and each party agrees that the other party has acted in good faith and has fully complied with all of the terms of the Agreements. In addition, each party does hereby ratify and confirm all releases previously granted under the Agreements. 2. Options. In consideration of the foregoing and in consideration for Baham's efforts to enhance shareholder value, Geodynamics hereby grants to Baham two 5-year stock options (the "Options") in the forms attached hereto as Exhibits A-1 and A-2, respectively. Options (or securities to be issued upon exercise of the Options) are not being registered under the Securities Act of 1933 (the "Act") on the grounds that the sale thereof is exempt under the applicable provisions of the Act as not involving any public offering, and Geodynamics' reliance on such exemption is predicated in part on Baham's representation that he is acquiring the securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. It is Baham's understanding that, in the view of the Securities and Exchange Commission (the "SEC"), the statutory basis for such exemption would not be present if, notwithstanding Baham's representation, he had in mind merely acquiring the securities for resale on the occurrence or nonoccurrence of some predetermined event such as, for example, the expiration of a holding period under the Internal Revenue Code, or a market rise, or if the market does not rise, or for any other fixed or determinable period in the future. Baham hereby represents to Geodynamics that he does not intend to dispose of his beneficial interest in all or any part of the Options issued to him or the securities. Further, Baham agrees that he will not transfer, by way of gift or otherwise, sell, pledge or encumber said securities unless he obtains at his own expense a "no action" letter from the SEC or an opinion of counsel satisfactory to Geodynamics that the transfer of the securities does not violate the Act. 3. Employee Stock Options. Section 2(a)(4) of the Settlement Agreement is terminated and canceled and, in lieu thereof, Baham is granted the right to exercise the ten thousand three hundred (10,300) employee stock options ("Employee Options") held by him in accordance with their existing terms (except for the termination of the right to exercise on termination of employment) for the same period of time as the Options. The payment specified in Section 2(a)(4) of the Settlement Agreement will not be made to Baham. Section 4(d) of the Agreement shall not apply to the exercise of the Employee Options or to the Options granted herewith. Further, it is agreed that notwithstanding the provisions of Section 4(d) of the Agreement in the event Baham sells or transfers any shares now or hereafter owned by him to persons other than members of his immediate family or any affiliate thereof, he may purchase additional shares so long as he does not own more shares than he owned upon the date of the Agreement plus ten thousand three hundred (10,300) shares subject to the Employee Options and the Options. Baham acknowledges that the Employee options will no longer be subject to treatment for income tax purposes as "Incentive Stock Options." 4. Disclosure. Paragraph 6(a) of the Settlement Agreement and paragraph 6(a) of the Agreement are hereby deleted. It is hereby acknowledged by Baham that Geodynamics is required to file the Settlement Agreement, the amendments thereto and this Confirmation Agreement with the SEC, and to describe those agreements in the Form 10-K to be filed with the SEC. 5. Counsel. Baham represents that he has consulted with his counsel prior to executing this Confirmation Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Confirmation Agreement as of August 15, 1995. GEODYNAMICS: GEODYNAMICS CORPORATION By: /s/ Joanne M. Dunlap Title: Vice President BAHAM: /s/ Alney A. Baham ALNEY A. BAHAM I join in the foregoing. August 15, 1995 /s/ JULIA BAHAM Exhibit A-1 GEODYNAMICS CORPORATION ALNEY A. BAHAM $8.00 STOCK PURCHASE OPTION THIS $8.00 STOCK PURCHASE OPTION (the "Option") is made and entered into at Torrance, California on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California Corporation, hereinafter called the "Company" and ALNEY A. BAHAM, hereinafter called "Baham". WHEREAS: A. Baham is a shareholder in the Company; and B. Baham and the Company have entered into a Confirmation Agreement of even date, which requires the issuance of stock options to Baham. NOW, THEREFORE, in consideration of the premises, it is agreed as follows: 1. GRANT OF OPTION. Subject to the conditions set forth herein, the Company hereby grants to Baham the non- assignable right, privilege and option to purchase ten thousand (10,000) shares (the "Option Shares") of its Common Stock at EIGHT DOLLARS ($8.00) per share (the "Option Price"), in the manner hereinafter provided. 2. TIME OF EXERCISE OF OPTION. This Option may be exercised by Baham for the five (5) year period commencing upon its execution date. 3. METHOD OF EXERCISE. Stock purchased under this Option shall, at the time of purchase, be paid for in full. To the extent that the right to purchase shares has accrued thereunder, this Option may be exercised, from time to time, by written notice to the Company stating the number of shares with respect to which this Option is being exercised and the time of delivery thereof, which shall be at least fifteen (15) days after the giving of such notice, unless an earlier date shall have been mutually agreed upon. At the time specified in such notice, the Company shall, without transfer or issue tax to Baham, deliver to him at the main office of the Company, or at such other place as shall be mutually acceptable, a certificate or certificates for such shares, against the payment of the Option Price, in full, for the number of shares to be delivered, by certified or bank cashier's check, or the equivalent thereof acceptable to the Company. Provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it, with reasonable diligence, to comply with any requirements of any state or federal agency or any securities exchange. Provided, further, that in the event that the California Commissioner of Corporations has imposed an escrow upon the stock of the Company, said shares shall be delivered to the escrow holder previously designated by said Commissioner of Corporations, rather than to Baham. If Baham fails to accept delivery of and pay for all or any part of the number of shares specified in the notice given by Baham, upon tender and delivery of said shares, Baham's right to exercise this Option with respect to such undelivered shares shall be terminated. 4. RECLASSIFICATION, CONSOLIDATION OR MERGER. If, and to the extent that the number of issued shares of Common Stock of the Company shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in stock, or the like (but not dividends payable in cash), the number of Option Shares subject to this Option, and the Option Price therefor, shall be proportionately adjusted. If the Company is reorganized or consolidated, or merged with another corporation, Baham shall be entitled to receive options covering shares of such reorganized, consolidated or merged Company in the same proportion, at an equivalent price, and subject to the same conditions. For purposes of the preceding sentence, the excess of the aggregate fair market value of the shares subject to this Option immediately after the reorganization, consolidation, or merger over the aggregate Option Price of such shares, shall not be more than the excess of the aggregate fair market value of all shares subject to this Option immediately before such reorganization, consolidation, or merger over the aggregate Option Price of such shares, and the new option or the assumption of the old option shall not give Baham additional benefits which he did not have under the old option. 5. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option is non-transferable by Baham, and is exercisable only by him, and Baham shall have no rights as a shareholder of shares subject to this Option until payment of the Option Price and the delivery of such shares as herein provided. Provided, however, that this Option may be exercisable by Baham's executor or personal representative within six (6) months after his death. 6. RESTRICTIONS ON ISSUANCE OF SHARES. The Company shall not be obligated to sell and issue any shares pursuant to this Option, unless permission to issue said shares has first been obtained from the Commissioner of Corporations of the State of California, and, further, unless the shares with respect to which this Option is being exercised are, at the time, effectively registered, or exempt from registration, under the Securities Act of 1933, as amended. 7. REGISTRATION. (a) Definitions. As used in this Section 7: (i) The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and the declaration or ordering by the Securities and Exchange Commission ("SEC") of the effectiveness of such registration statement; and (ii) The term "Registrable Securities" means (a) the Common Stock issued or issuable upon exercise of the Option or issued or issuable upon exercise of a like option issued to Baham on the date hereof and (b) any Common Stock which Baham shall be entitled to receive, or shall have received, because of Baham's ownership of such securities, such as additional securities received upon stock splits, recapitalizations and the like. (b) Demand Registration. (i) Upon the written demand of Baham, the Company shall prepare and file a registration statement under the Securities Act covering an offering of such number of shares of Common Stock comprising the Registrable Securities as shall have been requested by Baham in such demand, and shall cause such registration statement to become effective, all in accordance with the provisions of this Agreement; provided that (i) the Company shall be obligated to effect registration pursuant to this Section 7(b)(i) no more than one time and (ii) no demand shall be made at any time that the Company is not eligible to register securities on From S-3 promulgated by the SEC (or any comparable successor form) and the Company shall only be required to effect a registration if at the time of effectiveness thereof, the Company continues to be eligible to use such From S-3. (ii) Whenever the Company shall have received a demand to effect registration pursuant to Section 7(b)(i), the Company may give notice of such proposed registration to other holders of unregistered securities of the Company. Subject to such conditions as the Company may impose, any such holder may request that all of such holder's unregistered securities, or any portion thereof designated by such holder, be included in the offering. (iii) The Company shall proceed as expeditiously as possible after receipt of a demand pursuant to Section 7(b)(i) to file a registration statement and use its best efforts to effect, within 120 days after the giving of such written demand (or, in the case of a demand made within 60 days prior to the end of the Company's then fiscal year, within 210 days after the giving of such written demand) the registration of an offering under the Securities Act. Such offering shall include: (A) the Registrable Securities specified in the demand given pursuant to Section 7(b)(i); and (B) all other shares of Common Stock that the holders thereof have requested be included in the offering pursuant to Section 7(b)(ii); all to the extent required to permit the respective holders to dispose of such securities in compliance with applicable law. The Company shall have the right to include in such offering authorized but unissued shares of its Common Stock, except as, and to the extent that, in the opinion of the managing underwriter, such inclusion would adversely affect the amount of, or price at which, the Registrable Securities otherwise included therein can be sold. Should the Company chose to distribute its securities through such underwriting, it shall (together with Baham) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 7(b), if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit the securities to be included in the registration and underwriting for the account of the Company or other holders, as the Company shall determine, to an amount not less than 10% of the total number of shares included in such offering. Should the Company chose not to distribute its securities through such underwriting, Baham, with the consent of the Company (which shall not be unreasonably withheld), shall select the representative, if any, of the underwriters to be engaged in connection with any such registration. Any such underwriter shall be a member firm of the New York Stock Exchange with a net capital of at least $15,000,000. (c) Piggyback Registration. (i) Notice of Registration. If, at any time or from time to time, the Company shall determine to register any of its securities for its own account in connection with an offering of its securities to the general public for cash on a form which would permit the registration of Registrable Securities, the Company will, subject to the further provisions of this Section 7: (A) promptly give to Baham written notice thereof; and (B) subject to clause (ii) below, use its reasonable efforts to include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made on or prior to the later of (1) ten days after such notice from the Company or (2) ten days before the initial filing of the registration statement which is the subject of such notice. (ii) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise Baham as a part of the written notice given pursuant to Section 7(c)(i)(A). In such event, the right of Baham to registration pursuant to this Section 7(c) shall be conditioned upon Baham's participation in such underwriting and the inclusion of Baham's Registrable Securities in the underwriting to the extent provided herein. Should Baham propose to distribute his securities through such underwriting, he shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 7(c), if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit or eliminate the Registrable Securities to be included in the registration and underwriting. In any underwritten public offering in which Baham participates pursuant to this Agreement, Baham agrees that he will consent to any lockup of securities demanded by the underwriter in connection with any such registration provided all other selling shareholders agree to like restrictions. In any underwritten public offering in which Baham does not participate pursuant to this Agreement, Baham agrees that he will consent to any lockup of securities demanded by the underwriter, not in excess of 120 days in the aggregate for any one offering, in connection with any such registration provided all selling shareholders, if any, and all officers and directors of the Company not participating in such public offering agree to like restrictions. (d) Expenses of Registration. Subject to any state blue sky laws requiring otherwise, all expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 7 with respect to Registrable Securities, including without limitation, all underwriting spreads, legal, accounting, registration, filing and qualification fees, and printing expenses with respect to or allocable to Registrable Securities, shall be borne by the Company. (e) Registration Procedure. Upon receipt of any notice from the Company, at any time when a prospectus is required to be delivered under the Securities Act, of the happening of any event of which it is aware as a result of which the prospectus contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, Baham will forthwith discontinue distribution of the Registrable Securities pursuant to the registration statement until Baham's receipt of the copies of any supplemented or amended prospectus. (f) Indemnification. If and whenever Registrable Securities of Baham are included in a registered offering, Baham will indemnify the Company, each of its directors and officers who sign such registration statement, each underwriter, if any, of the Company's securities covered by such a registration statement and each person who controls the Company within the meaning of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such directors, officers, persons or underwriters for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other registration statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company by an instrument duly executed by Baham and stated to be specifically for use therein. (g) Information by Baham. Baham shall furnish in writing to the Company such information regarding him and the distribution proposed by him as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 7. (h) Sale Without Registration. At the time of any transfer of any Registrable Securities which shall not be registered under the Securities Act the Company may require, as a condition of allowing such transfer, that Baham or transferee furnish to the Company: (i) such information as is reasonably necessary in order to establish that such transfer may be made without registration under the Securities Act; and (ii) at the expense of Baham or transferee, an opinion of counsel, satisfactory in form and substance to the Company, to the effect that such transfer may be made without registration under such Act. (j) Termination of Rights and Transfer Restrictions. The conditions precedent imposed by Section 7(h) upon the transferability of the Registrable Securities, and the registration obligations of the Company imposed by this Section 7, shall cease and terminate as to any particular Registrable Securities when such securities shall have been (i) effectively registered under the Securities Act and sold or otherwise disposed of in accordance with the intended method of disposition set forth in the applicable registration statement in such manner as to cause them to have been "distributed" under the Securities Act, (ii) at such time as such Registrable Securities are transferred by Baham or (iii) at such time as an opinion of counsel (which opinion and counsel shall be satisfactory to the Company and Baham) shall have been rendered to the Company and Baham to the effect that such conditions are not required to establish compliance with the Securities Act. 8. BINDING EFFECT. This Option shall be binding upon the heirs, executors, administrators and successors of the parties hereto. (Signatures on next page) IN WITNESS WHEREOF, the parties have caused this Option to be executed this 15th day of August, 1995. "Company" GEODYNAMICS CORPORATION By: /s/ Joanne M. Dunlap Title: Vice President "Baham" /s/ Alney A. Baham ALNEY A. BAHAM Exhibit A-2 GEODYNAMICS CORPORATION ALNEY A. BAHAM $10.00 STOCK PURCHASE OPTION THIS $10.00 STOCK PURCHASE OPTION (the "Option") is made and entered into at Torrance, California on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California Corporation, hereinafter called the "Company" and ALNEY A. BAHAM, hereinafter called "Baham". WHEREAS: A. Baham is a shareholder in the Company; and B. Baham and the Company have entered into a Confirmation Agreement of even date, which requires the issuance of stock options to Baham. NOW, THEREFORE, in consideration of the premises, it is agreed as follows: 1. GRANT OF OPTION. Subject to the conditions set forth herein, the Company hereby grants to Baham the non- assignable right, privilege and option to purchase ten thousand (10,000) shares (the "Option Shares") of its Common Stock at TEN DOLLARS ($10.00) per share (the "Option Price"), in the manner hereinafter provided. 2. TIME OF EXERCISE OF OPTION. This Option may be exercised by Baham or his estate for the five (5) year period commencing upon its execution date. 3. METHOD OF EXERCISE. Stock purchased under this Option shall, at the time of purchase, be paid for in full. This Option may be exercised, from time to time, by written notice to the Company stating the number of shares with respect to which this Option is being exercised and the time of delivery thereof, which shall be at least fifteen (15) days after the giving of such notice, unless an earlier date shall have been mutually agreed upon. At the time specified in such notice, the Company shall, without transfer or issue tax to Baham, deliver to him at the main office of the Company, or at such other place as shall be mutually acceptable, a certificate or certificates for such shares, against the payment of the Option Price, in full, for the number of shares to be delivered, by certified or bank cashier's check, or the equivalent thereof acceptable to the Company. Provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it, with reasonable diligence, to comply with any requirements of any state or federal agency or any securities exchange. Provided, further, that in the event that the California Commissioner of Corporations has imposed an escrow upon the stock of the Company, said shares shall be delivered to the escrow holder previously designated by said Commissioner of Corporations, rather than to Baham. If Baham fails to accept delivery of and pay for all or any part of the number of shares specified in the notice given by Baham, upon tender and delivery of said shares, Baham's right to exercise this Option with respect to such undelivered shares shall be terminated. 4. RECLASSIFICATION, CONSOLIDATION OR MERGER. If, and to the extent that the number of issued shares of Common Stock of the Company shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in stock, or the like (but not dividends payable in cash), the number of Option Shares subject to this Option, and the Option Price therefor, shall be proportionately adjusted. If the Company is reorganized or consolidated, or merged with another corporation, Baham shall be entitled to receive options covering shares of such reorganized, consolidated or merged Company in the same proportion, at an equivalent price, and subject to the same conditions. For purposes of the preceding sentence, the excess of the aggregate fair market value of the shares subject to this Option immediately after the reorganization, consolidation, or merger over the aggregate Option Price of such shares, shall not be more than the excess of the aggregate fair market value of all shares subject to this Option immediately before such reorganization, consolidation, or merger over the aggregate Option Price of such shares, and the new option or the assumption of the old option shall not give Baham additional benefits which he did not have under the old option. 5. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option is non-transferable by Baham, and is exercisable only by him, and Baham shall have no rights as a shareholder of shares subject to this Option until payment of the Option Price and the delivery of such shares as herein provided. Provided, however, that this Option may be exercisable by Baham's executor or personal representative. 6. RESTRICTIONS ON ISSUANCE OF SHARES. The Company shall not be obligated to sell and issue any shares pursuant to this Option, unless permission to issue said shares has first been obtained from the Commissioner of Corporations of the State of California, and, further, unless the shares with respect to which this Option is being exercised are, at the time, effectively registered, or exempt from registration, under the Securities Act of 1933, as amended. 7. REGISTRATION. (a) Definitions. As used in this Section 7: (i) The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and the declaration or ordering by the Securities and Exchange Commission ("SEC") of the effectiveness of such registration statement; and (ii) The term "Registrable Securities" means (a) the Common Stock issued or issuable upon exercise of the Option or issued or issuable upon exercise of a like option issued to Baham on the date hereof and (b) any Common Stock which Baham shall be entitled to receive, or shall have received, because of Baham's ownership of such securities, such as additional securities received upon stock splits, recapitalizations and the like. (b) Demand Registration. (i) Upon the written demand of Baham, the Company shall prepare and file a registration statement under the Securities Act covering an offering of such number of shares of Common Stock comprising the Registrable Securities as shall have been requested by Baham in such demand, and shall cause such registration statement to become effective, all in accordance with the provisions of this Agreement; provided that (i) the Company shall be obligated to effect registration pursuant to this Section 7(b)(i) no more than one time and (ii) no demand shall be made at any time that the Company is not eligible to register securities on From S-3 promulgated by the SEC (or any comparable successor form) and the Company shall only be required to effect a registration if at the time of effectiveness thereof, the Company continues to be eligible to use such From S-3. (ii) Whenever the Company shall have received a demand to effect registration pursuant to Section 7(b)(i), the Company may give notice of such proposed registration to other holders of unregistered securities of the Company. Subject to such conditions as the Company may impose, any such holder may request that all of such holder's unregistered securities, or any portion thereof designated by such holder, be included in the offering. (iii) The Company shall proceed as expeditiously as possible after receipt of a demand pursuant to Section 7(b)(i) to file a registration statement and use its best efforts to effect, within 120 days after the giving of such written demand (or, in the case of a demand made within 60 days prior to the end of the Company's then fiscal year, within 210 days after the giving of such written demand) the registration of an offering under the Securities Act. Such offering shall include: (A) the Registrable Securities specified in the demand given pursuant to Section 7(b)(i); and (B) all other shares of Common Stock that the holders thereof have requested be included in the offering pursuant to Section 7(b)(ii); all to the extent required to permit the respective holders to dispose of such securities in compliance with applicable law. The Company shall have the right to include in such offering authorized but unissued shares of its Common Stock, except as, and to the extent that, in the opinion of the managing underwriter, such inclusion would adversely affect the amount of, or price at which, the Registrable Securities otherwise included therein can be sold. Should the Company chose to distribute its securities through such underwriting, it shall (together with Baham) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 7(b), if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit the securities to be included in the registration and underwriting for the account of the Company or other holders, as the Company shall determine, to an amount not less than 10% of the total number of shares included in such offering. Should the Company chose not to distribute its securities through such underwriting, Baham, with the consent of the Company (which shall not be unreasonably withheld), shall select the representative, if any, of the underwriters to be engaged in connection with any such registration. Any such underwriter shall be a member firm of the New York Stock Exchange with a net capital of at least $15,000,000. (c) Piggyback Registration. (i) Notice of Registration. If, at any time or from time to time, the Company shall determine to register any of its securities for its own account in connection with an offering of its securities to the general public for cash on a form which would permit the registration of Registrable Securities, the Company will, subject to the further provisions of this Section 7: (A) promptly give to Baham written notice thereof; and (B) subject to clause (ii) below, use its reasonable efforts to include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made on or prior to the later of (1) ten days after such notice from the Company or (2) ten days before the initial filing of the registration statement which is the subject of such notice. (ii) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise Baham as a part of the written notice given pursuant to Section 7(c)(i)(A). In such event, the right of Baham to registration pursuant to this Section 7(c) shall be conditioned upon Baham's participation in such underwriting and the inclusion of Baham's Registrable Securities in the underwriting to the extent provided herein. Should Baham propose to distribute his securities through such underwriting, he shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 7(c), if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit or eliminate the Registrable Securities to be included in the registration and underwriting. In any underwritten public offering in which Baham participates pursuant to this Agreement, Baham agrees that he will consent to any lockup of securities demanded by the underwriter in connection with any such registration provided all other selling shareholders agree to like restrictions. In any underwritten public offering in which Baham does not participate pursuant to this Agreement, Baham agrees that he will consent to any lockup of securities demanded by the underwriter, not in excess of 120 days in the aggregate for any one offering, in connection with any such registration provided all selling shareholders, if any, and all officers and directors of the Company not participating in such public offering agree to like restrictions. (d) Expenses of Registration. Subject to any state blue sky laws requiring otherwise, all expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 7 with respect to Registrable Securities, including without limitation, all underwriting spreads, registration, legal, accounting, filing and qualification fees, and printing expenses with respect to or allocable to Registrable Securities, shall be borne by the Company. (e) Registration Procedure. Upon receipt of any notice from the Company, at any time when a prospectus is required to be delivered under the Securities Act, of the happening of any event of which it is aware as a result of which the prospectus contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, Baham will forthwith discontinue distribution of the Registrable Securities pursuant to the registration statement until Baham's receipt of the copies of any supplemented or amended prospectus. (f) Indemnification. If and whenever Registrable Securities of Baham are included in a registered offering, Baham will indemnify the Company, each of its directors and officers who sign such registration statement, each underwriter, if any, of the Company's securities covered by such a registration statement and each person who controls the Company within the meaning of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such directors, officers, persons or underwriters for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other registration statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company by an instrument duly executed by Baham and stated to be specifically for use therein. (g) Information by Baham. Baham shall furnish in writing to the Company such information regarding him and the distribution proposed by him as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 7. (h) Sale Without Registration. At the time of any transfer of any Registrable Securities which shall not be registered under the Securities Act the Company may require, as a condition of allowing such transfer, that Baham or transferee furnish to the Company: (i) such information as is reasonably necessary in order to establish that such transfer may be made without registration under the Securities Act; and (ii) at the expense of Baham or transferee, an opinion of counsel, satisfactory in form and substance to the Company, to the effect that such transfer may be made without registration under such Act. (j) Termination of Rights and Transfer Restrictions. The conditions precedent imposed by Section 7(h) upon the transferability of the Registrable Securities, and the registration obligations of the Company imposed by this Section 7, shall cease and terminate as to any particular Registrable Securities when such securities shall have been (i) effectively registered under the Securities Act and sold or otherwise disposed of in accordance with the intended method of disposition set forth in the applicable registration statement in such manner as to cause them to have been "distributed" under the Securities Act, (ii) at such time as such Registrable Securities are transferred by Baham or (iii) at such time as an opinion of counsel (which opinion and counsel shall be satisfactory to the Company and Baham) shall have been rendered to the Company and Baham to the effect that such conditions are not required to establish compliance with the Securities Act. 8. BINDING EFFECT. This Option shall be binding upon the heirs, executors, administrators and successors of the parties hereto. (Signatures on next page) IN WITNESS WHEREOF, the parties have caused this Option to be executed this 15th day of August, 1995. "Company" GEODYNAMICS CORPORATION By: /s/ Joanne M. Dunlap Title: Vice President "Baham" /s/ Alney A. Baham ALNEY A. BAHAM EX-99.EXHIBIT10-12SE 5 SETTLEMENT AGREEMENT By and Between GEODYNAMICS CORPORATION ("Geodynamics") and ROBERT L. PAULSON ("Employee") Table of Contents Page 1. RESIGNATION OF EMPLOYMENT 1 2. FRINGE BENEFITS 1 3. RELEASE BY EMPLOYEE 2 4. SETTLEMENT PAYMENT TERMS 2 5. EXERCISE OF STOCK OPTIONS 3 6. ADEA RELEASE 3 7. BREACH OF AGREEMENT 3 8. NO THIRD PARTY RIGHTS 4 9. ENTIRE AGREEMENT 4 10. ABSENCE OF WARRANTIES AND REPRESENTATIONS 4 11. CALIFORNIA LAW 4 12. ATTORNEYS' FEES 4 13. RETURN OF PROPERTY 4 14. NO DISPARAGEMENT/COOPERATION 4 15. CONFIDENTIALITY 4 16. ARBITRATION 5 17. INJUNCTIVE RELIEF 5 18. INDEPENDENT COUNSEL 5 SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT (the "Agreement") is made and entered into on the date hereinafter set forth by and between GEODYNAMICS CORPORATION ("Geodynamics") and ROBERT L. PAULSON (the "Employee"). WHEREAS: A. The Employee is an employee of Geodynamics; B. The Employee has certain claims for libel, slander, defamation and discrimination and he has threatened to file suit against Geodynamics related to actions taken by the Board of Directors of Geodynamics (the "Board") at its April 19, 1995 Board meeting (the "April 19 Events"); C. In consideration of the terms of this Agreement, the Employee has advised Geodynamics that he desires to resign effective as of May 22, 1995 (the Resignation Date"); and D. Geodynamics and the Employee wish to confirm the Employee's resignation effective as of the Resignation Date, and to set forth in this Agreement the responsibilities and rights of the parties in respect to the termination of the Employee's employment. NOW, THEREFORE, in consideration of the premises and promises, warranties and representations herein contained, it is agreed as follows: 1. RESIGNATION OF EMPLOYMENT. As of the Resignation Date, the Employee resigns, and confirms his resignation, as an officer and Director of Geodynamics, as a Director of Geodynamics Services Corp., as a Director of Erdas, Inc., and as a Director of LaFehr & Chan Technologies, Inc. All compensation and fringe benefits will cease to be provided by Geodynamics to the Employee as of the Resignation Date. 2. FRINGE BENEFITS. The Employee shall be entitled to continue his health and dental insurance benefits at his expense under the terms of the Consolidated Omnibus Reconciliation Act of 1986 ("COBRA") in accordance with COBRA premium rates then in effect for up to eighteen (18) months for the Employee and thirty- six (36) months for the Employee's dependents from the Resignation Date. In consideration of this Agreement, the Employee agrees that he will not receive a bonus or contribution to the Geodynamics Profit Sharing Plan for the current fiscal year, all in accordance with applicable law. The Employee will receive a contribution to Geodynamics' Money Purchase Pension Plan up to the Resignation Date in accordance with that Plan. The Employee will be paid for any accrued but unused vacation time up to the Resignation Date. The Employee agrees that he has no further claims for any compensation or damages owed to him by Geodynamics. 3. RELEASE BY EMPLOYEE. In consideration of the execution of this Agreement by Geodynamics, the Employee hereby releases Geodynamics, its officers, directors, employees, shareholders and agents or insurers, from and against any and all claims of any nature, whether known or unknown, directly or indirectly related to his employment and resignation of his employment, or claims for further compensation or damages. The Employee agrees that the release shall also apply to those types of claims set forth in Section 1542 of the California Civil Code, which provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him, must have materially affected his settlement with the debtor." The Employee further agrees that this release shall also specifically apply to any claims with respect to his employment, termination of his employment, or of unlawful termination or breach of his employment contract and loss of any and all salary, benefits or other damages tangible or intangible relating thereto. 4. SETTLEMENT PAYMENT TERMS. In consideration of a one- time payment of ONE HUNDRED SIXTY ONE THOUSAND DOLLARS ($161,000) paid by Geodynamics to the Employee, payable at the execution of this Agreement, as a structured, non-taxable payment and in settlement of the claims and personal injury related to the April 19th Events, the Employee will grant to Geodynamics the release set forth in Section 3 above. These payments are made to the Employee to compensate the Employee fully and complete for alleged personal injuries, including pain and suffering, emotional distress, anxiety or trauma, and any physical manifestation thereof, bodily injury, injury to reputation and personal injury. As such, pursuant to applicable federal, state and local tax laws, such sum is not taxable as income and is to be paid free from withholding and/or deduction of income or other employment-related taxes. Accordingly, Geodynamics will pay such sum to the Employee without deduction or withholding of such items; provided, however, that if it is determined that this sum or any part thereof should be treated as taxable income, the Employee agrees to pay all taxes and any costs, assessments, interest, penalties, damages or other losses to which he is or may be subject by reason of a characterization of the aforesaid sum as non-taxable damages as opposed to taxable income. The Employee indemnifies and holds harmless Geodynamics from any and all liabilities which may arise to the Employee or Geodynamics concerning or relating, in any manner, to any obligations related to moneys received by the Employee hereunder. 5. EXERCISE OF STOCK OPTIONS. The Employee is concurrently exercising his remaining stock option for fifteen thousand (15,000) shares of Geodynamics' common stock at a price of TWO DOLLARS ($2.00) per share, and Geodynamics will cause the issuance of such shares upon the execution of this Agreement, and the Employee agrees that the THIRTY THOUSAND DOLLAR ($30,000) strike price will be reduced from the payment due the Employee in Paragraph 4 above. 6. ADEA RELEASE. The Employee agrees and expressly acknowledges that this Agreement includes a waiver and release of all claims which the Employee has or may have under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. 621, et seq. ("ADEA"). The following terms and conditions apply to and are part of the waiver and release of ADEA claims under this Agreement: (a) The waiver and release of claims under ADEA contained in this Agreement do not cover rights or claims that may arise after the date on which the Employee signs this Agreement. (b) This Agreement involves consideration in addition to anything of value to which the Employee is already entitled. (c) The Employee is advised to consult, and has in fact consulted, an attorney before signing this Agreement. (d) The Employee is granted, twenty-one (21) days after he is presented with this Agreement, to decide whether or not to sign this Agreement. If he executes this Agreement prior to the expiration of such period, he does so voluntarily and upon advice of counsel. (e) The Employee will have the right to revoke the waiver and release of claims under ADEA within seven (7) days of signing this Agreement. Revocation must be made by giving written notice to Joseph E. Nida, Esq., 801 Garden Street, Suite 201, Santa Barbara, California 93101. For revocation to be effective, written notice must actually be received no later than the seventh (7th) calendar day after the Employee signs this Agreement. (f) This paragraph 6 and Geodynamics' obligation to pay money to the Employee under Paragraph 4 above shall be effective upon the later of the Resignation Date or the date the revocation period expires without this paragraph having been revoked. The remaining provisions of this Agreement shall be effective upon the Resignation Date. 7. BREACH OF AGREEMENT. In the event that Geodynamics finds that the Employee is in breach of any provision of this Agreement, Geodynamics may give the Employee ten (10) days' written notice of such breach. Should the Employee not cure any such breaches within ten (10) days of the date of such notice, Geodynamics may terminate the payment provided in Paragraph 4. hereof. The Employee agrees that any such termination will not affect the continued validity of the release provided for in Paragraph 3. hereof. 8. NO THIRD PARTY RIGHTS. The parties warrant and represent that they are authorized to enter into this Agreement and that no third parties, other than the parties hereto, have any interest in any of the claims released hereby. 9. ENTIRE AGREEMENT. This Agreement contains the entire settlement understanding of the parties and cannot be altered or amended except by a writing duly executed by all parties hereto. This Agreement shall be binding upon and inure to the benefit of the successors, assigns, and personal representatives of the parties. 10. ABSENCE OF WARRANTIES AND REPRESENTATIONS. Each party acknowledges that they have signed this Agreement without having relied upon or being induced by any agreement, warranty or representation of fact or opinion of any person not expressly set forth herein. All representations and warranties of either party contained herein shall survive its signing and delivery. 11. CALIFORNIA LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 12. ATTORNEYS' FEES. In the event of any controversy, claim or dispute between the parties hereto, arising out of or in any manner relating to this Agreement, including an attempt to rescind or set aside, the prevailing party in any action brought to settle such controversy, claim or dispute, shall be entitled to recover reasonable attorney's fees and costs of suit. 13. RETURN OF PROPERTY. The Employee represents and warrants that he has returned to Geodynamics all property, documents, files, papers and materials of any kind that are the property of Geodynamics, or that related in any way to the business of Geodynamics, as well as any copies and/or facsimiles of the same, and that he has not retained in his possession or control any reproduction, copies or facsimiles that are the property of Geodynamics or that related in any way to the business of Geodynamics. 14. NO DISPARAGEMENT/COOPERATION. Neither party hereto will make disparaging comments regarding the other party. In addition, the Employee shall cooperate with Geodynamics in respect to any questions from Geodynamics or its officers or directors with respect to the Employee's activities during the tenure of his employment with Geodynamics. 15. CONFIDENTIALITY. Except as to the Internal Revenue Service, the California State Franchise Tax Board and other taxing authorities, the terms of this Agreement shall be kept confidential, and no party, representative, attorney or family member shall reveal its contents, or characterize its contents, to any third party except as required by law or except as necessary to comply with law. 16. ARBITRATION. Any controversy between the parties regarding the construction or application of this Agreement, and any claim arising out of this Agreement or its breach, shall be submitted to arbitration in Torrance, California, upon the written request of one party after service of that request on the other party. The parties shall each appoint one person to hear the dispute. If these two arbitrators cannot agree, the two arbitrators shall choose a third impartial arbitrator whose decision shall be final and conclusive on both parties. The cost or arbitration shall be borne by the losing party. The arbitrator is also authorized to award attorney's fees to the prevailing party. 17. INJUNCTIVE RELIEF. In the event of breach of this Agreement, either party may seek injunctive relief in enforcing the terms of this Agreement, in addition to all other remedies to which it may be entitled. 18. INDEPENDENT COUNSEL. The Employee represents that, prior to the execution of this Agreement, he was advised to seek independent counsel. Each party to this Agreement shall bear their own attorney's fees and costs, and other expenses in connection with the negotiation and preparation of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 5th day of July, 1995. "Geodynamics" GEODYNAMICS CORPORATION By: /s/ Joanne M. Dunlap Title: Vice President "Employee" /s/ Robert L. Paulson ROBERT L. PAULSON EX-99.EXHIBIT10-13SE 6 AMENDED AND RESTATED AGREEMENT between GEODYNAMICS CORPORATION, a California corporation and WILLIAM W. STRONG and MASON HILL ASSET MANAGEMENT, INC., a New York corporation Table of Contents Page 1. Effective Date 1 2. Dismissal of Lawsuit; General Release 2 3. Strong Stock Option 3 4. Representation of Strong 3 5. Miscellaneous 3 (a) Non-Disclosure 3 (b) Equitable Remedies 3 (c) Entire Agreement 4 (d) Notices 4 (e) Governing Law 5 (f) Successors and Assigns 5 (g) Amendments; Supplements 5 (h) No Third Party Beneficiaries 5 (i) Captions 5 (j) Severability 5 (k) Counterparts 5 Exhibit A - William W. Strong Stock Purchase Option AMENDED AND RESTATED AGREEMENT THIS AMENDED AND RESTATED AGREEMENT (the "Amendment") is made as of the 30th day of June, 1995 between GEODYNAMICS CORPORATION, a California corporation ("Geodynamics"), on the one hand, and WILLIAM STRONG ("Strong") and MASON HILL ASSET MANAGEMENT, INC., a New York corporation ("Mason Hill"), on the other hand, with reference to the following facts: A. Strong, on behalf of himself, members of his family and certain retirement accounts for his benefit, is the beneficial owner of approximately six thousand five hundred (6,500) shares of the Common Stock of Geodynamics. In addition, through his stock ownership and as an officer and/or director of the respective general partner of two partnerships (Greylock Fund and Equinox Partners) which own shares of Common Stock of Geodynamics, Strong is the beneficial owner of an additional approximately seventeen thousand nine hundred seventy five (17,975) shares of the Common Stock of Geodynamics. B. Mason Hill, of which Strong is the President and sole shareholder, is investment adviser to various clients who own, in the aggregate, approximately two hundred eight thousand three hundred thirty three (208,333) shares of the Common Stock of Geodynamics (all such present and future accounts are collectively referred to as "Client Accounts"). The term "Shares" shall refer to the shares of Geodynamics stock owned by Strong, partnerships of which he is a general partner and in Mason Hill's Client Accounts. C. Strong and Mason Hill have incurred certain expenses in connection with various matters arising out of Geodynamics' 1994 Annual Meeting of Shareholders held on February 16, 1995 (the "Annual Meeting") and related litigation (the "Strong Expenses"). D. Geodynamics, Strong and Mason Hill wish to resolve various disputes which have arisen between them, to provide for the reimbursement of the Strong Expenses by Geodynamics and to establish the guidelines with respect to the continued support of management of Geodynamics by Strong, Mason Hill and Mason Hill's and/or Strong's present and future clients. This settlement is a compromise of a disputed claim and neither the payment hereunder nor this Amendment is to be construed as an admission of liability on the part of any of the settling parties. E. The parties were parties to an Agreement dated April 11, 1995 (the "Old Agreement"), and the Old Agreement was not approved by Geodynamics and, therefore, the parties hereto wish to amend and restate the Old Agreement in its entirety. Accordingly, in consideration of the foregoing premises and the agreements contained herein, Geodynamics, Strong and Mason Hill agree as follows: 1. Effective Date; Amendment and Restatement. The Old Agreement is hereby canceled, amended and restated in its entirety. This Amendment will be effective upon its execution (the "Effective Date"). 2. Dismissal of Lawsuit; General Release. (a) As soon as practicable following the Effective Date, Geodynamics shall dismiss with prejudice its claims against Strong and Mason Hill in the suit currently pending in the United States District Court for the Central District of California (Case No. CV-94-8335 LGB) entitled Geodynamics Corporation v. Alney A. Baham, et al (the "Lawsuit"). (b) In consideration of the foregoing dismissal and the other agreements contained herein, Geodynamics, on the one hand, and Strong and Mason Hill, on the other hand, each fully and forever release and discharge the other(s) of them and their respective officers, directors, employees, attorneys, agents, Client Accounts and affiliates from any and all claims, demands, actions, suits, causes of action, obligations, controversies, debts, costs, expenses, accounts, damages, judgments, losses, injuries and liabilities, of whatever kind or nature, in law, equity or otherwise, present and future, whether known or unknown, suspected or unsuspected, contingent or fixed ("Claims") arising out of or in connection with any matter or cause whatsoever related to Geodynamics through the Effective Date, including all matters arising out of the Annual Meeting, the Lawsuit or otherwise. IT IS EXPRESSLY UNDERSTOOD that California Civil Code Section 1542 provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY EXPRESSLY WAIVED BY EACH OF THE PARTIES HERETO to the fullest extent that it may waive all such rights and benefits, if any, of such provisions pertaining to the matters released herein. In addition, each of the parties hereto hereby waives any similar provision in any other jurisdiction, if in any way applicable, and each of the parties hereto acknowledges that these waivers are an essential and material term of this Amendment. In connection with such waiver, each of the parties hereto acknowledges that it or he has been advised of and has considered the possibility that it or he may not now fully know the number or magnitude of all the Claims that it or he may have against any other party hereto with respect to the matters released herein, and that it or he may hereafter discover Claims presently unknown or unsuspected, or facts in addition to or different from those that it or he now knows or believes to be true, with respect to the matters released herein. Nevertheless, it is each of the parties' intention, through this release, fully, finally and forever to settle and release all such matters, and all Claims relative thereto, which may exist or heretofore have existed against the other, and agrees that this release is such a full and final release. In furtherance of such intention, the release herein given shall be and remain in effect as a full and complete release of such additional different Claims or facts relative thereto, notwithstanding the discovery by it of the existence of any additional or different Claims or facts relating to the Claims. 3. Strong Stock Option. In consideration of this Amendment, Geodynamics will issue to Strong a stock option for twenty thousand (20,000) shares of the Common Stock of Geodynamics (the "Option") at the closing bid price on Tuesday, May 23, 1995, with a two (2) year term, in the form attached hereto as Exhibit A. 4. Representation of Strong. In consideration of the issuance of the Option to Strong (and the subsequent issuance of the Shares pursuant to the Option), Strong represents that he is an "accredited investor" within the meaning of Regulation D under the 1933 Act, and is acquiring the stock described in Section 3. above for investment for his own account, and not with a view to distribution subject, nevertheless, to any requirement of law that the disposition of his property shall at all times be within his control. Strong has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the purchase of the stock subject to the Option. Strong is aware that he may be required to bear the economic risk of an investment in the stock for an indefinite period, and he is able to bear such risk for an indefinite period. Strong acknowledges that (a) the Option and the Shares to be acquired by him upon the exercise of the Option are not being registered under the 1933 Act on the grounds that the issuance of such stock is exempt from registration under Section 4(2) of the 1933 Act as not involving any public offering and (b) Geodynamics' reliance on such exemption is predicated in part on the representations made to Geodynamics by Strong in this Section 4. 5. Miscellaneous. (a) Non-Disclosure. Except as required by applicable provisions of the federal securities laws, each party agrees not to make, nor cause to be made, any other news release or other public announcement pertaining to this Amendment or the subject matter hereof without the prior written approval of the other party. Notwithstanding the foregoing, Strong and Mason Hill acknowledge that this Amendment may be required to be filed with the Securities and Exchange Commission and NASDAQ in connection with Geodynamics' public disclosure obligations, and Geodynamics acknowledges that Strong and Mason Hill may disclose all or part of this Amendment to Client Accounts, governmental agencies or prospective directors of Geodynamics. (b) Equitable Remedies. Each of the parties hereto acknowledges that the remedy at law for any breach, or threatened breach, of the provisions of this Amendment will be inadequate and, accordingly, each of them covenants and agrees that, with respect to any such breach or threatened breach, the non-breaching party, in addition to any other rights or remedies that it may have and regardless of whether such other rights or remedies have been previously exercised, will be entitled to such equitable and injunctive relief as may be available. (c) Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, warranties, statements and understandings, whether oral or written, with respect to the subject matter hereof. (d) Notices. All notices, demands, elections or requests provided for or permitted to be given pursuant to this Amendment must be in writing. All notices, demands, elections and requests shall be deemed to have been duly given on the date delivered personally or on the date of receipt if sent by overnight delivery services, facsimile transmission or registered or certified U.S. mail with return receipt requested, to the following addresses, or such other addresses as may be subsequently designated in writing and delivered to the other parties hereto: To Geodynamics: Geodynamics Corporation 21171 Western Avenue, Suite 110 Torrance, CA 90501 Fax: 310-781-3681 Attention: Bruce J. Gordon, Chief Executive Officer and President with copies to: Joseph E. Nida, Esq. Nida & Maloney 801 Garden Street, Suite 201 Santa Barbara, CA 93101 Fax: 805-568-1955 To Strong and Mason Hill: Mr. William Strong Mason Hill Asset Management, Inc. 477 Madison Avenue, 8th Floor New York, NY 10022 Fax: 212-832-2215 with a copy to: Law Offices of Hardy L. Thomas, A Professional Corporation 420 Boyd Street Los Angeles, CA 90013 Fax: 213-620-0687 (e) Governing Law. This Amendment and the rights and obligations of the parties hereunder, shall be interpreted, construed and enforced in accordance with the laws of the State of California without regard to principles of law (such as "conflicts of laws") that might make the law of some other jurisdiction applicable. (f) Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Amendment specifically does not bind Mason Hill's clients or any transferee of any of the stock owned or controlled by any of the parties hereto. (g) Amendments; Supplements. This Amendment may not be amended or modified, except in a writing signed by all parties and expressly stating that it is intended to amend this Amendment, except for the addresses to which communications may be sent, which any party may change in accordance with the terms of this Amendment. (h) No Third Party Beneficiaries. Nothing contained in this Amendment is intended to and nothing contained herein shall be interpreted to confer on any party not a party hereto or a successor or assign thereof the rights of a third party beneficiary. (i) Captions. All section titles or captions contained in this Amendment or in any schedule or exhibit annexed hereto or referred to herein are for convenience only, shall not be deemed a part of this Amendment and shall not affect the meaning or interpretation of this Amendment. All references herein to sections shall be deemed references to such parts of this Amendment, unless the context shall otherwise require. (j) Severability. If any provision of this Amendment or the application thereof to any person or circumstances shall be held to be invalid or unenforceable to any extent, the remainder of this Amendment and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (k) Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (Signatures on next page) IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written. GEODYNAMICS: GEODYNAMICS CORPORATION By: /s/ Bruce J. Gordon Bruce J. Gordon, Chief Executive Officer and President STRONG: /s/ William W. Strong WILLIAM W. STRONG MASON HILL ASSET MANAGEMENT, INC. By: /s/ William W. Strong William W. Strong, President Exhibit A GEODYNAMICS CORPORATION WILLIAM W. STRONG STOCK PURCHASE OPTION This Stock Purchase Option (the "Option") is made and entered into at Torrance, California on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California Corporation, hereinafter called the "Company" and WILLIAM W. STRONG, hereinafter called "Strong". WHEREAS: A. Strong is a shareholder in the Company; and B. Strong and the Company have entered into an Amended and Restated Agreement of even date, which requires the issuance of a stock option to Strong. NOW, THEREFORE, in consideration of the premises, it is agreed as follows: 1. GRANT OF OPTION. Subject to the conditions set forth herein, the Company hereby grants to Strong the non- assignable right, privilege and option to purchase twenty thousand (20,000) shares (the "Option Shares") of its Common Stock at EIGHT AND 75/100THS DOLLARS ($8.75) per share (the "Option Price"), in the manner hereinafter provided. 2. TIME OF EXERCISE OF OPTION. This Option may be exercised by Strong for the two (2) year period commencing upon its execution date. 3. METHOD OF EXERCISE. Stock purchased under this Option shall, at the time of purchase, be paid for in full. To the extent that the right to purchase shares has accrued thereunder, this Option may be exercised, from time to time, by written notice to the Company stating the number of shares with respect to which this Option is being exercised and the time of delivery thereof, which shall be at least fifteen (15) days after the giving of such notice, unless an earlier date shall have been mutually agreed upon. At the time specified in such notice, the Company shall, without transfer or issue tax to Strong, deliver to him at the main office of the Company, or at such other place as shall be mutually acceptable, a certificate or certificates for such shares, against the payment of the Option Price, in full, for the number of shares to be delivered, by certified or bank cashier's check, or the equivalent thereof acceptable to the Company. Provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it, with reasonable diligence, to comply with any requirements of any state or federal agency or any securities exchange. Provided, further, that in the event that the California Commissioner of Corporations has imposed an escrow upon the stock of the Company, said shares shall be delivered to the escrow holder previously designated by said Commissioner of Corporations, rather than to Strong. If Strong fails to accept delivery of and pay for all or any part of the number of shares specified in the notice given by Strong, upon tender and delivery of said shares, Strong's right to exercise this Option with respect to such undelivered shares shall be terminated. 4. RECLASSIFICATION, CONSOLIDATION OR MERGER. If, and to the extent that the number of issued shares of Common Stock of the Company shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in stock, or the like (but not dividends payable in cash), the number of Option Shares subject to this Option, and the Option Price therefor, shall be proportionately adjusted. If the Company is reorganized or consolidated, or merged with another corporation, Strong shall be entitled to receive options covering shares of such reorganized, consolidated or merged Company in the same proportion, at an equivalent price, and subject to the same conditions. 5. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option is non-transferable by Strong, and is exercisable only by him, and Strong shall have no rights as a shareholder of shares subject to this Option until payment of the Option Price and the delivery of such shares as herein provided. Provided, however, that this Option may be exercisable by Strong's executor or personal representative within six (6) months after his death. 6. RESTRICTIONS ON ISSUANCE OF SHARES. The Company shall not be obligated to sell and issue any shares pursuant to this Option, unless permission to issue said shares has first been obtained from the Commissioner of Corporations of the State of California, and, further, unless the shares with respect to which this Option is being exercised are, at the time, effectively registered, or exempt from registration, under the Securities Act of 1933, as amended. 7. REGISTRATION. (a) Definitions. As used in this Section 7: (i) The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and the declaration or ordering by the Securities and Exchange Commission ("SEC") of the effectiveness of such registration statement; and (ii) The term "Registrable Securities" means (a) the Common Stock issued or issuable upon exercise of the Option and (b) any Common Stock which Strong shall be entitled to receive, or shall have received, because of Strong's ownership of such securities, such as additional securities received upon stock splits, recapitalizations and the like. (b) Demand Registration. (i) Upon the written demand of Strong, the Company shall prepare and file a registration statement under the Securities Act covering an offering of such number of shares of Common Stock comprising the Registrable Securities as shall have been requested by Strong in such demand, and shall cause such registration statement to become effective, all in accordance with the provisions of this Agreement; provided that (i) the Company shall be obligated to effect registration pursuant to this Section 7(b)(i) no more than one time and (ii) no demand shall be made at any time that the Company is not eligible to register securities on From S-3 promulgated by the SEC (or any comparable successor form) and the Company shall only be required to effect a registration if at the time of effectiveness thereof, the Company continues to be eligible to use such From S-3. (ii) Whenever the Company shall have received a demand to effect registration pursuant to Section 7(b)(i), the Company may give notice of such proposed registration to other holders of unregistered securities of the Company. Subject to such conditions as the Company may impose, any such holder may request that all of such holder's unregistered securities, or any portion thereof designated by such holder, be included in the offering. (iii) The Company shall proceed as expeditiously as possible after receipt of a demand pursuant to Section 7(b)(i) to file a registration statement and use its best efforts to effect, within 120 days after the giving of such written demand (or, in the case of a demand made within 60 days prior to the end of the Company's then fiscal year, within 210 days after the giving of such written demand) the registration of an offering under the Securities Act. Such offering shall include: (A) the Registrable Securities specified in the demand given pursuant to Section 7(b)(i); and (B) all other shares of Common Stock that the holders thereof have requested be included in the offering pursuant to Section 7(b)(ii); all to the extent required to permit the respective holders to dispose of such securities in compliance with applicable law. The Company shall have the right to include in such offering authorized but unissued shares of its Common Stock, except as, and to the extent that, in the opinion of the managing underwriter, such inclusion would adversely affect the amount of, or price at which, the Registrable Securities otherwise included therein can be sold. Should the Company chose to distribute its securities through such underwriting, it shall (together with Strong) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 7(b), if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit the securities to be included in the registration and underwriting for the account of the Company or other holders, as the Company shall determine, to an amount not less than 10% of the total number of shares included in such offering. Should the Company chose not to distribute its securities through such underwriting, Strong, with the consent of the Company (which shall not be unreasonably withheld), shall select the representative, if any, of the underwriters to be engaged in connection with any such registration. Any such underwriter shall be a member firm of the New York Stock Exchange with a net capital of at least $15,000,000. (c) Piggyback Registration. (i) Notice of Registration. If, at any time or from time to time, the Company shall determine to register any of its securities for its own account in connection with an offering of its securities to the general public for cash on a form which would permit the registration of Registrable Securities, the Company will, subject to the further provisions of this Section 7: (A) promptly give to Strong written notice thereof; and (B) subject to clause (ii) below, use its reasonable efforts to include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made on or prior to the later of (1) ten days after such notice from the Company or (2) ten days before the initial filing of the registration statement which is the subject of such notice. (ii) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise Strong as a part of the written notice given pursuant to Section 7(c)(i)(A). In such event, the right of Strong to registration pursuant to this Section 7(c) shall be conditioned upon Strong's participation in such underwriting and the inclusion of Strong's Registrable Securities in the underwriting to the extent provided herein. Should Strong propose to distribute his securities through such underwriting, he shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 7(c), if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit or eliminate the Registrable Securities to be included in the registration and underwriting. In any underwritten public offering in which Strong participates pursuant to this Agreement, Strong agrees that he will consent to any lockup of securities demanded by the underwriter in connection with any such registration provided all other selling shareholders agree to like restrictions. In any underwritten public offering in which Strong does not participate pursuant to this Agreement, Strong agrees that he will consent to any lockup of securities demanded by the underwriter, not in excess of 120 days in the aggregate for any one offering, in connection with any such registration provided all selling shareholders, if any, and all officers and directors of the Company not participating in such public offering agree to like restrictions. (d) Expenses of Registration. Subject to any state blue sky laws requiring otherwise, all expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 7 with respect to Registrable Securities, including without limitation, all underwriting spreads, legal, accounting, registration, filing and qualification fees, and printing expenses with respect to or allocable to Registrable Securities, shall be borne by the Company. (e) Registration Procedure. Upon receipt of any notice from the Company, at any time when a prospectus is required to be delivered under the Securities Act, of the happening of any event of which it is aware as a result of which the prospectus contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, Strong will forthwith discontinue distribution of the Registrable Securities pursuant to the registration statement until Strong's receipt of the copies of any supplemented or amended prospectus. (f) Indemnification. If and whenever Registrable Securities of Strong are included in a registered offering, Strong will indemnify the Company, each of its directors and officers who sign such registration statement, each underwriter, if any, of the Company's securities covered by such a registration statement and each person who controls the Company within the meaning of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such directors, officers, persons or underwriters for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other registration statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company by an instrument duly executed by Strong and stated to be specifically for use therein. (g) Information by Strong. Strong shall furnish in writing to the Company such information regarding him and the distribution proposed by him as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 7. (h) Sale Without Registration. At the time of any transfer of any Registrable Securities which shall not be registered under the Securities Act the Company may require, as a condition of allowing such transfer, that Strong or transferee furnish to the Company: (i) such information as is reasonably necessary in order to establish that such transfer may be made without registration under the Securities Act; and (ii) at the expense of Strong or transferee, an opinion of counsel, satisfactory in form and substance to the Company, to the effect that such transfer may be made without registration under such Act. (j) Termination of Rights and Transfer Restrictions. The conditions precedent imposed by Section 7(h) upon the transferability of the Registrable Securities, and the registration obligations of the Company imposed by this Section 7, shall cease and terminate as to any particular Registrable Securities when such securities shall have been (i) effectively registered under the Securities Act and sold or otherwise disposed of in accordance with the intended method of disposition set forth in the applicable registration statement in such manner as to cause them to have been "distributed" under the Securities Act, (ii) at such time as such Registrable Securities are transferred by Strong or (iii) at such time as an opinion of counsel (which opinion and counsel shall be satisfactory to the Company and Strong) shall have been rendered to the Company and Strong to the effect that such conditions are not required to establish compliance with the Securities Act. 8. BINDING EFFECT. This Option shall be binding upon the heirs, executors, administrators and successors of the parties hereto. (Signatures on next page) IN WITNESS WHEREOF, the parties have caused this Option to be executed this 30th day of June, 1995. "Company" GEODYNAMICS CORPORATION By:_______________________________ Title:_____________________________ "Strong" /s/ William W. Strong WILLIAM W. STRONG EX-99.EXHIBIT10-14EM 7 EMPLOYMENT AGREEMENT By and Between BRUCE J. GORDON ("Employee") and GEODYNAMICS CORPORATION, a California corporation ("Corporation") Table of Contents Page 1. EMPLOYMENT 1 1.1 Position and Duties 1 2. TERM 1 3. COMPENSATION 1 3.1 Amount of Salary 1 3.2 Bonuses 1 3.2.1 Signing Bonus 1 3.2.2 Cash Distribution Bonus 1 3.2.3 Operations Bonus 2 3.2.4 Special Performance Bonus 2 3.2.5 Other Bonus Terms 2 3.3 Reimbursements 3 3.4 Supplemental Employee Retirement Plan 3 3.5 Fringe Benefits 3 3.6 Compensated Leave 3 4. STOCK OPTIONS 3 4.1 Short-Term Options 3 4.2 Two Long-Term Options 3 4.3 Directors Options 4 5. NO COMPETITION DURING EMPLOYMENT 4 5.1 Other Services 4 5.2 Competition 4 5.3 Solicitation 4 5.4 Competing Enterprise 4 5.5 Other Activities 4 5.6 Payments 5 6. BUSINESS DISCLOSURES 5 7. TERMINATION OF AGREEMENT 5 7.1 Grounds 5 7.1.1 Expiration of Term 5 7.1.2 Mutual Agreement 5 7.1.3 Without Cause 5 7.1.4 Death 5 7.1.5 Disability 5 7.1.6 For Cause 5 7.2 Effect of a Termination on Compensation or Stock Options 6 8. MISCELLANEOUS 6 8.1 Notices 6 8.2 Partial Invalidity 6 8.3 Waiver 6 8.4 Assignment; Effect on Agreement 6 8.5 Arbitration 6 8.6 Governing Law 6 8.7 Entire Agreement 7 8.8 Counsel 7 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into at Torrance, California on the date hereinafter set forth by and between BRUCE J. GORDON (hereinafter referred to as the "Employee") and GEODYNAMICS CORPORATION, a California corporation (hereinafter referred to as the "Corporation"). The parties hereto, intending to be legally bound, do hereby agree as follows: 1. EMPLOYMENT. 1.1 Position and Duties. The Corporation does hereby employ the Employee, and the Employee hereby accepts such employment as the President and Chief Executive Officer of the Corporation, upon the terms and provisions set forth in this Agreement. The Employee shall perform all duties expected from the President and Chief Executive Officer and shall observe and comply with the Corporation's rules and regulations regarding the performance of his duties and shall carry out and perform all orders, directions and policies stated to him by the Corporation periodically, either orally or in writing. The Employee shall carry out the duties assigned to him in a trustworthy, businesslike and loyal manner. The Employee acknowledges that he has received and read the Corporation's Employee Manual (the "Employee Manual") and agrees to be bound thereby. 2. TERM. This Agreement shall commence as of April 19, 1995 (the "Effective Date"), and shall continue until December 31, 1996, unless sooner terminated as herein provided (the "Termination Date"). 3. COMPENSATION. 3.1 Amount of Salary. The Corporation shall pay to the Employee a monthly salary of EIGHT THOUSAND DOLLARS ($8,000) per month, payable bi-weekly. The Employee's salary will be adjusted by the mutual agreement of the parties hereto effective as of June 1, 1996. If this Agreement is terminated for any reason, the Employee will receive a minimum payment under this Section 3.1 of NINETY SIX THOUSAND DOLLARS ($96,000), net of salary payments paid to the Employee through the Termination Date. 3.2 Bonuses. The Employee will be paid the following bonuses: 3.2.1 Signing Bonus. A THIRTY THOUSAND DOLLAR ($30,000) signing bonus, receipt of which is hereby acknowledged. 3.2.2 Cash Distribution Bonus. An amount equal to one-half percent (0.5%) of all cash distributed by the Corporation to its shareholders, whether as dividends, stock repurchases (including any stock repurchased from Robert L. Paulson) and all cash received by shareholders upon a disposition or acquisition of the Corporation, from the Effective Date to the Termination Date. This bonus may not exceed FORTY THOUSAND DOLLARS ($40,000). 3.2.3 Operations Bonus. For the fiscal year, 1996, a bonus equal to six percent (6%) of the sum of the following: Income from operations Plus interest income Plus $600,000 Less 10% of Total Assets Total assets shall be equal to the average of the total assets on the following dates: the end of fiscal year 1995 and the end of each fiscal quarterly accounting periods for each fiscal quarter of fiscal year 1996. This bonus may not exceed EIGHTY THOUSAND DOLLARS ($80,000). 3.2.4 Special Performance Bonus. A Special Performance Bonus will be paid to the Employee, which shall be established by the Board of Directors of the Corporation (the "Board"), in its absolute discretion, based upon exceptional performance by the Employee or if the Employee has concluded a Change of Control. As used in this Agreement, "Change in Control" shall mean any of the following: the sale or merger of the Corporation when the existing Directors of the Board do not constitute a majority of the Board, where there has been a sale of substantially all of the assets of the Corporation or a majority of the shares of the Corporation are now owned by one party, or one party and the affiliates thereof. 3.2.5 Other Bonus Terms. Any bonus described in Sections 3.3.2 and 3.3.3 hereof will be computed in accordance with generally accepted accounting principles uniformly applied. Any dispute over the computation or amount of the foregoing bonuses shall be resolved by the Corporation's certified public accountants, which decision will be binding upon both parties hereto. With the exception of the Signing Bonus described in Section 3.2.1 above, all bonuses will be payable within sixty (60) days of the Termination Date (except for the Operations Bonus described in Section 3.2.3 hereof, which would be payable within sixty (60) days of December 31, 1996). If the Employee's employment terminates for any reason, prior to the end of fiscal year 1996, the Operations Bonus described in Section 3.2.3 hereof will be prorated by the number of weeks worked in fiscal year 1996 over fifty-two (52) weeks. 3.3 Reimbursements. The Employee shall be reimbursed by the Corporation only for amounts actually expended by the Employee in the course of performing duties for the Corporation in accordance with the Employee Manual. 3.4 Supplemental Employee Retirement Plan. The Corporation shall pay to the Employee, as an unfunded form of deferred compensation, up to the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000), payable at the rate of TWO THOUSAND DOLLARS ($2,000) per month, payable on the first day of each month commencing on the later of (i) April 1, 1996 or (ii) one (1) month following the earlier of the Termination Date, but no earlier than April 1, 1996, with the final payment in June, 2000. 3.5 Fringe Benefits. The Corporation agrees that the Employee shall also be entitled to life insurance, health and medical insurance and other fringe benefits available to senior management of the Corporation. In addition, the Employee will be provided a company car (and gas, insurance and maintenance) and reimbursement for accommodations and lodging in Torrance, California, as well as for equipment and expenses for his home office. 3.6 Compensated Leave. The Employee will be entitled to seven (7) paid holidays, and vacation and sick leave in accordance with the Employee Manual. 4. STOCK OPTIONS. The Employee shall be entitled to the following stock options: 4.1 Short-Term Options. An option will be issued to the Employee for fifteen thousand (15,000) shares with a fair market value exercise price set to be EIGHT DOLLARS ($8.00). All options shall expire in 1997 as follows: three thousand (3,000) expire on each of January 2, March 31, June 30, September 30 and December 31, 1997. The options are exercisable once the Employee leaves the position of Chief Executive Officer of the Corporation, or if there is a Change of Control. The options expiring during the Employee's employment hereunder are unexercisable. 4.2 Two Long-Term Options. 4.2.1 An option will be issued to the Employee for thirty thousand (30,000) shares with an initial exercise price of TEN DOLLARS ($10.00) (increasing $0.50 on each anniversary), expiring in ten (10) years. Fifteen thousand (15,000) shares shall be exercisable immediately and fully vested. If the Employee is still the Chief Executive Officer of the Corporation, fifteen thousand (15,000) shares shall be exercisable on or after December 31, 1995. There shall be no acceleration. 4.2.2 In addition, the Employee shall be entitled to another option for fifteen thousand (15,000) shares with a fixed exercise price of TWELVE DOLLARS ($12.00), expiring in five (5) years, and shall be exercisable on or after June 1, 1996 or exercisable immediately upon a Change of Control. 4.3 Directors Options. The Employee will have already been granted the full allotment of shares from the Director's Stock Option Plan effective February 17, 1995. The first twenty percent (20%) of those options, for the first year of service, will be surrendered. As long as the Employee returns to the Board as an outside director by the next "vesting date" (June 1, 1996), the Employee will retain the other eighty percent (80%) of the options granted, which will become exercisable ("vest") on the normal schedule. (If after June 1, 1996, but before June 1, 1997, then the Employee will retain the remaining sixty percent (60%), etc.). Should there be a Change of Control, then all the remaining eighty percent (80%) (or 60%) reverts to the Employee and is exercisable immediately. 5. NO COMPETITION DURING EMPLOYMENT. The Employee agrees that, during the term of this Agreement, he diligently shall devote his time and efforts to the duties and responsibilities as set forth herein, and without prior express written authorization of the Board, the Employee shall not, directly or indirectly, either alone or in concert with others, during the term of this Agreement: 5.1 Other Services. Perform or render any services of a business, professional or commercial nature relating to service or products similar to those of the Corporation, to or for the benefit of any other person or firm, whether for compensation or otherwise, except for personal investments and except for his services as a Director of the Rancho Santa Fe Community Services District and for other activities approved by the Corporation; 5.2 Competition. Engage in any activity directly or indirectly in competition with or adverse to the Corporation. 5.3 Solicitation. Engage in any activity for purposes of influencing or attempting to influence the Corporation's customers, either directly or indirectly, to conduct business with any business enterprise in competition with the Corporation; 5.4 Competing Enterprise. Undertake or participate in any planning for or organization of any business activity that is or will be in competition with the Corporation in any field(s) or area(s) in which the Employee has worked or with which the Employee has come into contact, or of which the Employee has gained knowledge during the term of his employment under this Agreement. 5.5 Other Activities. Engage in any other business activity that would materially interfere with the performance of any of the Employee's obligations and duties under this Agreement; or 5.6 Payments. The Employee will not accept, directly or indirectly, any payments or gifts from any supplier, customer or other party involved with the Corporation. 6. BUSINESS DISCLOSURES. All processes, inventions, patents, copyrights, trademarks and other intangible rights that may be conceived or developed by the Employee, either alone or with others, during the term of the Employee's employment, whether or not conceived or developed during the Employee's working hours and with respect to which the equipment, supplies, facilities or trade secret information of the Corporation or that relate to the business of the Corporation or to the Corporation's actual or demonstrably anticipated research and development, or that result from any work performed by the Employee for the Corporation, shall be the sole property of the Corporation. The Employee shall disclose to the Corporation all such matters conceived during the term of this Agreement, whether or not the property of the Corporation under the terms of the preceding sentence, provided that such disclosure shall be received by the Corporation in confidence. The Employee shall execute all documents, including patent applications and assignments, required by the Corporation to establish the Corporation's rights under this section. 7. TERMINATION OF AGREEMENT. 7.1 Grounds. This Agreement shall terminate upon the occurrence of any of the following events: 7.1.1 Expiration of Term. Upon expiration of the term specified in paragraph 2 hereof. 7.1.2 Mutual Agreement. Whenever the Corporation and the Employee mutually agree in writing to termination. 7.1.3 Without Cause. By either party on ninety (90) days' prior written notice. 7.1.4 Death. Upon the death of the Employee. 7.1.5 Disability. In the event that the Employee is unable to perform his assigned duties and responsibilities due to illness, physical or mental disability or any other reason, and if such disability continues for a period of three (3) consecutive months after all available sick leave has been utilized, the Corporation may terminate this Agreement upon ten (10) days' written notice. 7.1.6 For Cause. This Agreement may be immediately terminated by the Corporation for the following causes: the Employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any criminal law (other than traffic violations or similar offenses) or a material breach of any provision of this Agreement. 7.2 Effect of a Termination on Compensation or Stock Options. Unless the Employee voluntarily terminates his employment in accordance with Section 7.1.3 hereof or his employment is terminated for cause in accordance with Section 7.1.6 hereof, all compensation provided hereunder will be payable to his successor in interest, Bruce J. Gordon and Janet M. Gordon, Trustees U/A the Gordon Family Trust dated 12-12-89 (the "Trust"). The Trust may exercise any stock options granted the Employee in accordance with their terms. 8. MISCELLANEOUS. 8.1 Notices. Any notice required to be given pursuant to this Agreement shall be effective only if in writing and delivered personally or by mail. If given by mail, such notice must be sent by registered or certified mail, postage prepaid, mailed to the parties at the addresses set forth on the signature page hereof, or at such other addresses as the parties may designate from time to time by written notice. Mailed notices shall be deemed received two (2) business days after the date of deposit in the mail 8.2 Partial Invalidity. If any term or provision of this Agreement or the application thereof to any person or circumstance shall be held to be invalid or unenforceable to any extent, the remainder of this Agreement or application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected thereby and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 8.3 Waiver. No waiver of any right hereunder shall be effective for any purpose, unless in writing, signed by the party hereto possessing said right, nor shall any such waiver be construed to be a waiver of any subsequent right, term or provision of this Agreement. 8.4 Assignment; Effect on Agreement. It is hereby acknowledged and agreed that the Employee's rights and obligations under this Agreement are personal in nature and shall not be assigned or delegated. This Agreement shall be binding on and inure to the benefit of the heirs, personal representatives, successors and assigns of the parties subject, however, to the restrictions on assignment and delegation contained herein. 8.5 Arbitration. All disputes regarding the interpretation or enforcement of this Agreement shall be subject to arbitration in Torrance, California before one (1) arbitrator selected in accordance with the rules of the American Arbitration Association. 8.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California and shall be subject to the jurisdiction of the State Courts located in Los Angeles, California or the Federal Court for the Central District of California. 8.7 Entire Agreement. This Agreement contains the entire agreement and understanding between the parties and supersedes all prior agreements and understandings, oral or written. No modification, termination or attempted waiver shall be valid, unless in writing and signed by both parties. There are no other inducements to the Employee entering into this Agreement. 8.8 Counsel. This Agreement was prepared by the Corporation's counsel, and the Employee acknowledges that he was advised to seek independent counsel prior to executing this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 14th day of June, 1995. CORPORATION GEODYNAMICS CORPORATION, a California corporation By: /s/ Title:____________________________________ Address: 21171 Western Avenue, Suite 110 Torrance, CA 90501 EMPLOYEE /s/ Bruce J. Gordon BRUCE J. GORDON Address: P.O. Box 3644 Rancho Santa Fe, CA 92067 EX-99.EXHIBIT10-15SH 8 GEODYNAMICS CORPORATION BRUCE J. GORDON (SHORT-TERM) STOCK PURCHASE OPTION THIS (SHORT-TERM) STOCK PURCHASE OPTION (the "Option") is made and entered into at Torrance, California on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California Corporation, hereinafter called the "Company", and BRUCE J. GORDON, hereinafter called "Gordon". WHEREAS: A. Gordon is the President and Chief Executive Officer of the Company; and B. The Company wishes to grant to Gordon this option to purchase stock in the Company in accordance with Section 4.1 of his Employment Agreement with the Company (the "Employment Agreement"). NOW, THEREFORE, in consideration of the premises, it is agreed as follows: 1. GRANT OF OPTION. Subject to the conditions set forth herein, the Company hereby grants to Gordon the right, privilege and option to purchase fifteen thousand (15,000) shares (the "Option Shares") of its Common Stock at EIGHT DOLLARS ($8.00) per share (the "Option Price"), in the manner hereinafter provided. 2. TIME OF EXERCISE OF OPTION. This Option may be exercised by Gordon only if he is no longer acting as President or Chief Executive Officer of the Company, or immediately, should there be a "change of control" of the Company, which shall mean: (i) the direct or indirect sale or exchange of substantially all of the stock of the Company; or (ii) a merger in which the shareholders of the stock of the Company do not retain at least a majority of the beneficial interest in the voting stock of the Company, or (iii) a sale or exchange of all or substantially all of the assets of the Company, then this Option may be exercised in full by Gordon. 3. METHOD OF EXERCISE. Stock purchased under this Option shall, at the time of purchase, be paid for in full. To the extent that the right to purchase shares has accrued thereunder, this Option may be exercised, from time to time, by written notice to the Company stating the number of shares with respect to which this Option is being exercised and the time of delivery thereof, which shall be at least fifteen (15) days after the giving of such notice, unless an earlier date shall have been mutually agreed upon. At the time specified in such notice, the Company shall, without transfer or issue tax to Gordon, deliver to him at the main office of the Company, or at such other place as shall be mutually acceptable, a certificate or certificates for such shares, against the payment of the Option Price, in full, for the number of shares to be delivered, by certified or bank cashier's check, or the equivalent thereof acceptable to the Company. Provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it, with reasonable diligence, to comply with any requirements of any state or federal agency or any securities exchange. Provided, further, that in the event that the California Commissioner of Corporations has imposed an escrow upon the stock of the Company, said shares shall be delivered to the escrow holder previously designated by said Commissioner of Corporations, rather than to Gordon. If Gordon fails to accept delivery of and pay for all or any part of the number of shares specified in the notice given by Gordon, upon tender and delivery of said shares, Gordon's right to exercise this Option with respect to such undelivered shares shall be terminated. 4. TERMINATION OF OPTION. Except as herein otherwise stated, this Option, to the extent not theretofore exercised, shall terminate forthwith as follows: 3,000 shares January 2, 1996 3,000 shares March 31, 1996 3,000 shares June 30, 1996 3,000 shares September 30, 1996 3,000 shares December 31, 1996 Total: 15,000 shares 5. RECLASSIFICATION, CONSOLIDATION OR MERGER. If, and to the extent that the number of issued shares of Common Stock of the Company shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in stock, or the like (but not dividends payable in cash), the number of Option Shares subject to this Option, and the Option Price therefor, shall be proportionately adjusted. If the Company is reorganized or consolidated, or merged with another corporation, Gordon shall be entitled to receive options covering shares of such reorganized, consolidated or merged Company in the same proportion, at an equivalent price, and subject to the same conditions. For purposes of the preceding sentence, the excess of the aggregate fair market value of the shares subject to this Option immediately after the reorganization, consolidation, or merger over the aggregate Option Price of such shares, shall not be more than the excess of the aggregate fair market value of all shares subject to this Option immediately before such reorganization, consolidation, or merger over the aggregate Option Price of such shares, and the new option or the assumption of the old option shall not give Gordon additional benefits which he did not have under the old option. 6. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option is non-transferable by Gordon, and is exercisable only by him, and Gordon shall have no rights as a shareholder of shares subject to this Option until payment of the Option Price and the delivery of such shares as herein provided. Provided, however, that this Option may be exercisable by Gordon's executor or personal representative within six (6) months after his death. 7. RESTRICTIONS ON ISSUANCE OF SHARES. The Company shall not be obligated to sell and issue any shares pursuant to this Option, unless permission to issue said shares has first been obtained from the Commissioner of Corporations of the State of California, and, further, unless the shares with respect to which this Option is being exercised are, at the time, effectively registered, or exempt from registration, under the Securities Act of 1933, as amended. 8. BINDING EFFECT. This Option shall be binding upon the heirs, executors, administrators and successors of the parties hereto. IN WITNESS WHEREOF, the parties have caused this Option to be executed this 14th day of June, 1995. COMPANY: GEODYNAMICS CORPORATION By:_________________________________ Title:_______________________________ GORDON: /s/ Bruce J. Gordon BRUCE J. GORDON EX-99.EXHIBIT10-16LO 9 GEODYNAMICS CORPORATION BRUCE J. GORDON (LONG-TERM 15,000 SHARE) STOCK PURCHASE OPTION THIS (LONG-TERM 15,000 SHARE) STOCK PURCHASE OPTION (the "Option") is made and entered into at Torrance, California on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California Corporation, hereinafter called the "Company" and BRUCE J. GORDON, hereinafter called "Gordon". WHEREAS: A. Gordon is the President and Chief Executive Officer of the Company; and B. The Company wishes to grant to Gordon this option to purchase stock in the Company in accordance with Section 4.2.2 of his Employment Agreement with the Company (the "Employment Agreement"). NOW, THEREFORE, in consideration of the premises, it is agreed as follows: 1. GRANT OF OPTION. Subject to the conditions set forth herein, the Company hereby grants to Gordon the right, privilege and option to purchase fifteen thousand (15,000) shares (the "Option Shares") of its Common Stock at TWELVE DOLLARS ($12.00) per share (the "Option Price"), in the manner hereinafter provided. 2. TIME OF EXERCISE OF OPTION. This Option may be exercised by Gordon on or after June 1, 1996 or immediately, should there be a "change of control" of the Company, which shall mean: (i) the direct or indirect sale or exchange of substantially all of the stock of the Company; or (ii) a merger in which the shareholders of the stock of the Company do not retain at least a majority of the beneficial interest in the voting stock of the Company, or (iii) a sale or exchange of all or substantially all of the assets of the Company, then this Option may be exercised in full by Gordon. 3. METHOD OF EXERCISE. Stock purchased under this Option shall, at the time of purchase, be paid for in full. To the extent that the right to purchase shares has accrued thereunder, this Option may be exercised, from time to time, by written notice to the Company stating the number of shares with respect to which this Option is being exercised and the time of delivery thereof, which shall be at least fifteen (15) days after the giving of such notice, unless an earlier date shall have been mutually agreed upon. At the time specified in such notice, the Company shall, without transfer or issue tax to Gordon, deliver to him at the main office of the Company, or at such other place as shall be mutually acceptable, a certificate or certificates for such shares, against the payment of the Option Price, in full, for the number of shares to be delivered, by certified or bank cashier's check, or the equivalent thereof acceptable to the Company. Provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it, with reasonable diligence, to comply with any requirements of any state or federal agency or any securities exchange. Provided, further, that in the event that the California Commissioner of Corporations has imposed an escrow upon the stock of the Company, said shares shall be delivered to the escrow holder previously designated by said Commissioner of Corporations, rather than to Gordon. If Gordon fails to accept delivery of and pay for all or any part of the number of shares specified in the notice given by Gordon, upon tender and delivery of said shares, Gordon's right to exercise this Option with respect to such undelivered shares shall be terminated. 4. TERMINATION OF OPTION. Except as herein otherwise stated, this Option, to the extent not theretofore exercised, shall terminate five (5) years from the date of the effective date of the Employment Agreement. 5. RECLASSIFICATION, CONSOLIDATION OR MERGER. If, and to the extent that the number of issued shares of Common Stock of the Company shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in stock, or the like (but not dividends payable in cash), the number of Option Shares subject to this Option, and the Option Price therefor, shall be proportionately adjusted. If the Company is reorganized or consolidated, or merged with another corporation, Gordon shall be entitled to receive options covering shares of such reorganized, consolidated or merged Company in the same proportion, at an equivalent price, and subject to the same conditions. For purposes of the preceding sentence, the excess of the aggregate fair market value of the shares subject to this Option immediately after the reorganization, consolidation, or merger over the aggregate Option Price of such shares, shall not be more than the excess of the aggregate fair market value of all shares subject to this Option immediately before such reorganization, consolidation, or merger over the aggregate Option Price of such shares, and the new option or the assumption of the old option shall not give Gordon additional benefits which he did not have under the old option. 6. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option is non-transferable by Gordon, and is exercisable only by him, and Gordon shall have no rights as a shareholder of shares subject to this Option until payment of the Option Price and the delivery of such shares as herein provided. Provided, however, that this Option may be exercisable by Gordon's executor or personal representative within six (6) months after his death. 7. RESTRICTIONS ON ISSUANCE OF SHARES. The Company shall not be obligated to sell and issue any shares pursuant to this Option, unless permission to issue said shares has first been obtained from the Commissioner of Corporations of the State of California, and, further, unless the shares with respect to which this Option is being exercised are, at the time, effectively registered, or exempt from registration, under the Securities Act of 1933, as amended. 8. BINDING EFFECT. This Option shall be binding upon the heirs, executors, administrators and successors of the parties hereto. IN WITNESS WHEREOF, the parties have caused this Option to be executed this 14th day of June, 1995. COMPANY: GEODYNAMICS CORPORATION By:_________________________________ Title:_______________________________ GORDON: /s/ Bruce J. Gordon BRUCE J. GORDON EX-99.EXHIBIT10-17LO 10 GEODYNAMICS CORPORATION BRUCE J. GORDON (LONG-TERM 30,000 SHARE) STOCK PURCHASE OPTION THIS (LONG-TERM 30,000 SHARE) STOCK PURCHASE OPTION (the "Option") is made and entered into at Torrance, California on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California Corporation, hereinafter called the "Company" and BRUCE J. GORDON, hereinafter called "Gordon"). WHEREAS: A. Gordon is the President and Chief Executive Officer of the Company; and B. The Company wishes to grant to Gordon this option to purchase stock in the Company in accordance with Section 4.2.1 of Gordon's Employment Agreement with the Company (the "Employment Agreement"). NOW, THEREFORE, in consideration of the premises, it is agreed as follows: 1. GRANT OF OPTION. Subject to the conditions set forth herein, the Company hereby grants to Gordon the right, privilege and option to purchase thirty thousand (30,000) shares (the "Option Shares") of its Common Stock at TEN DOLLARS ($10.00) per share, which shall be increased by fifty cents ($0.50) per share each anniversary of the effective date of the Employment Agreement (the "Option Price"), in the manner hereinafter provided. 2. TIME OF EXERCISE OF OPTION. This Option may be exercised by Gordon as follows: A. Fifteen thousand (15,000) shares shall be immediately exercisable; and B. The balance of fifteen thousand (15,000) shares shall be exercisable if Gordon is still the Chief Executive Officer of the Company on December 31, 1995 (which may not be accelerated). 3. METHOD OF EXERCISE. Stock purchased under this Option shall, at the time of purchase, be paid for in full. To the extent that the right to purchase shares has accrued thereunder, this Option may be exercised, from time to time, by written notice to the Company stating the number of shares with respect to which this Option is being exercised and the time of delivery thereof, which shall be at least fifteen (15) days after the giving of such notice, unless an earlier date shall have been mutually agreed upon. At the time specified in such notice, the Company shall, without transfer or issue tax to Gordon, deliver to him at the main office of the Company, or at such other place as shall be mutually acceptable, a certificate or certificates for such shares, against the payment of the Option Price, in full, for the number of shares to be delivered, by certified or bank cashier's check, or the equivalent thereof acceptable to the Company. Provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it, with reasonable diligence, to comply with any requirements of any state or federal agency or any securities exchange. Provided, further, that in the event that the California Commissioner of Corporations has imposed an escrow upon the stock of the Company, said shares shall be delivered to the escrow holder previously designated by said Commissioner of Corporations, rather than to Gordon. If Gordon fails to accept delivery of and pay for all or any part of the number of shares specified in the notice given by Gordon, upon tender and delivery of said shares, Gordon's right to exercise this Option with respect to such undelivered shares shall be terminated. 4. TERMINATION OF OPTION. Except as herein otherwise stated, this Option, to the extent not theretofore exercised, shall terminate ten (10) years from the effective date of the Employment Agreement. 5. RECLASSIFICATION, CONSOLIDATION OR MERGER. If, and to the extent that the number of issued shares of Common Stock of the Company shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in stock, or the like (but not dividends payable in cash), the number of Option Shares subject to this Option, and the Option Price therefor, shall be proportionately adjusted. If the Company is reorganized or consolidated, or merged with another corporation, Gordon shall be entitled to receive options covering shares of such reorganized, consolidated or merged Company in the same proportion, at an equivalent price, and subject to the same conditions. For purposes of the preceding sentence, the excess of the aggregate fair market value of the shares subject to this Option immediately after the reorganization, consolidation, or merger over the aggregate Option Price of such shares, shall not be more than the excess of the aggregate fair market value of all shares subject to this Option immediately before such reorganization, consolidation, or merger over the aggregate Option Price of such shares, and the new option or the assumption of the old option shall not give Gordon additional benefits which he did not have under the old option. 6. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option is non-transferable by Gordon, and is exercisable only by him, and Gordon shall have no rights as a shareholder of shares subject to this Option until payment of the Option Price and the delivery of such shares as herein provided. Provided, however, that this Option may be exercisable by Gordon's executor or personal representative within six (6) months after his death. 7. RESTRICTIONS ON ISSUANCE OF SHARES. The Company shall not be obligated to sell and issue any shares pursuant to this Option, unless permission to issue said shares has first been obtained from the Commissioner of Corporations of the State of California, and, further, unless the shares with respect to which this Option is being exercised are, at the time, effectively registered, or exempt from registration, under the Securities Act of 1933, as amended. 8. BINDING EFFECT. This Option shall be binding upon the heirs, executors, administrators and successors of the parties hereto. IN WITNESS WHEREOF, the parties have caused this Option to be executed this 14th day of June, 1995. "Company" GEODYNAMICS CORPORATION By:_________________________________ Title:_______________________________ GORDON: /s/ Bruce J. Gordon BRUCE J. GORDON EX-99.EXHIBIT10-18US 11 UNFUNDED SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN THIS UNFUNDED SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN (the "Agreement") is made and entered into on the date hereinafter set forth by and between GEODYNAMICS CORPORATION, a California corporation ("Geodynamics") and BRUCE J. GORDON ("Gordon"). WHEREAS: A. Geodynamics and Gordon have entered into an Employment Agreement (the "Employment Agreement") which, among other things, provides that Gordon will be granted an Unfunded Supplemental Employee Retirement Plan ("SERP") as a consideration to induce Gordon to accept the role of President and Chief Executive Officer of Geodynamics; and B. The parties hereto wish to set forth the terms of the SERP in this Agreement. NOW, THEREFORE, in consideration of the premises and promises, warranties and representations herein contained, it is agreed as follows: 1. Unfunded Deferred Compensation. In consideration of Gordon's acceptance of employment with Geodynamics, Geodynamics hereby agrees that Gordon shall receive up to ONE HUNDRED THOUSAND DOLLARS ($100,000) in deferred compensation, payable at the rate of TWO THOUSAND DOLLARS ($2,000) per month, payable on the first day of each month commencing on the later of (i) April 1, 1996 or (ii) one month following the termination of the Employment Agreement, but no earlier than April 1, 1996, with the final payment due in June, 2000. 2. Effect of a Termination on Compensation. Unless Gordon voluntarily terminates his employment in accordance with Section 7.1.3 of the Employment Agreement, or his employment is terminated for cause in accordance with Section 7.1.6 of the Employment Agreement, all compensation provided hereunder will be payable to his successor in interest, Bruce J. Gordon and Janet M. Gordon, Trustees U/A the Gordon Family Trust dated 12-12-89 (the "Trust"). 3. Miscellaneous. 3.1 Notices. Any notice required to be given pursuant to this Agreement shall be effective only if in writing and delivered personally or by mail. If given by mail, such notice must be sent by registered or certified mail, postage prepaid, mailed to the parties at the addresses set forth on the signature page hereof, or at such other addresses as the parties may designate from time to time by written notice. Mailed notices shall be deemed received two (2) business days after the date of deposit in the mail. 3.2 Partial Invalidity. If any term or provision of this Agreement or the application thereof to any person or circumstance shall be held to be invalid or unenforceable to any extent, the remainder of this Agreement or application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected thereby and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 3.3 Waiver. No waiver of any right hereunder shall be effective for any purpose, unless in writing, signed by the party hereto possessing said right, nor shall any such waiver be construed to be a waiver of any subsequent right, term or provision of this Agreement. 3.4 Assignment; Effect on Agreement. It is hereby acknowledged and agreed that Gordon's rights and obligations under this Agreement are personal in nature and shall not be assigned or delegated. This Agreement shall be binding on and inure to the benefit of the heirs, personal representatives, successors and assigns of the parties subject, however, to the restrictions on assignment and delegation contained herein. 3.5 Arbitration. All disputes regarding the interpretation or enforcement of this Agreement shall be subject to arbitration in Torrance, California before one (1) arbitrator selected in accordance with the rules of the American Arbitration Association. 3.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California and shall be subject to the jurisdiction of the State Courts located in Los Angeles, California or the Federal Court for the Central District of California. 3.7 Entire Agreement. This Agreement contains the entire agreement and understanding between the parties and supersedes all prior agreements and understandings, oral or written. No modification, termination or attempted waiver shall be valid, unless in writing and signed by both parties. There are no other inducements to Gordon entering into this Agreement. 3.8 Counsel. This Agreement was prepared by Geodynamics' counsel, and Gordon acknowledges that he was advised to seek independent counsel prior to executing this Agreement. (Signatures on next page) IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 14th day of June, 1995. GEODYNAMICS: GEODYNAMICS CORPORATION, a California corporation By:______________________________________ Title:____________________________________ Address: 21171 Western Avenue, Suite 110 Torrance, CA 90501 GORDON: /s/ Bruce J. Gordon BRUCE J. GORDON Address: P.O. Box 3644 Rancho Santa Fe, CA 92067 EX-99.EXHIBIT10-19EM 12 EMPLOYEE RETENTION AGREEMENT By and Between GEODYNAMICS CORPORATION, a California corporation ("Corporation") and JOANNE M. DUNLAP ("Employee") Table of Contents 1. CERTAIN DEFINITIONS 1 2. EMPLOYMENT PERIOD 2 3. TERMS OF EMPLOYMENT 2 (a) Position and Duties 2 (b) Compensation 3 (i) Base Salary 3 (ii) Change in Control Bonus 3 (iii) Annual Bonus 3 (iv) Incentive, Savings and Retirement Plans 3 (v) Welfare Benefit Plans 4 (vi) Expenses 4 (vii) Fringe Benefits 4 (viii)Office and Support Staff 4 (ix) Vacation 5 (x) Indemnity Agreement 5 (c) Payment in Lieu of Retaining Employee 5 4. TERMINATION 5 (a) Death or Disability 5 (b) Cause 5 (c) Notice of Termination 6 (d) Date of Termination 6 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6 (a) Death 6 (b) Disability 7 (c) Cause 7 (d) Other Than for Cause, Death or Disability 7 6. NON-EXCLUSIVITY OF RIGHTS 7 7. FULL SETTLEMENT 8 8. ENFORCEMENT OF RIGHTS 8 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8 10. CONFIDENTIAL INFORMATION 10 11. SUCCESSORS 11 12. MISCELLANEOUS 11 EMPLOYEE RETENTION AGREEMENT THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and between GEODYNAMICS CORPORATION, a California corporation (the "Company") and JOANNE M. DUNLAP (the "Employee"), is entered into on the date hereinafter set forth. The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change in Control (as hereinafter defined) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Employee's full attention and dedication to the Company currently and in the event of any threatened or pending change in control, and to provide the Employee with compensation arrangements upon a Change in Control which provide the Employee with individual financial security and which are competitive with those of other corporations. In order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. Should a Change of Control occur because of a Management Buyout (as hereinafter defined), then this Agreement will have no force or effect. This Agreement will automatically expire on May 1, 1996 if no Change in Control occurs by that time. 1. CERTAIN DEFINITIONS (a) The "Effective Date" shall be the first date during the "Change in Control Period" (as defined in Section 1(b) below) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Employee's employment with the Company is terminated prior to the date on which a Change in Control occurs, and it is reasonably demonstrated that such termination was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement, the Effective Date shall mean the date immediately prior to the date of such termination. (b) The "Change in Control Period" is the period commencing on the Effective Date and ending on the first anniversary of such date. (c) A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person", as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities (other than as a result of acquisitions of such securities from the Company); (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "Person" (as hereinafter defined) acquires more than twenty percent (20%) of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. (d) A "Management Buyout" shall occur when there has been a Change of Control in which the Employee shall hold a significant financial interest or management position. 2. EMPLOYMENT PERIOD The Company hereby agrees to continue the Employee in its employ and, subject to Section 5(d) hereof, the Employee hereby agrees to remain in the employ of the Company, for the period commencing on the Effective Date and ending on the first anniversary of such date (the "Employment Period"). 3. TERMS OF EMPLOYMENT (a) Position and Duties (i) During the Employment Period: (A) the Employee's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the ninety (90) day period immediately preceding the Effective Date and (B) the Employee's services shall be performed at the location where the Employee was employed immediately preceding the Effective Date, or any office or location less than fifteen (15) miles from such location and less than ten (10) miles in commuting distance further than the Employee's commuting distance to the location at which the Employee performed such services prior to the Change in Control. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and to use the Employee's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Employee to (A) serve on corporate, civic or charitable boards or committees; (B) deliver lectures, fulfill speaking engagements or teach at educational institutions; and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Employees' responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Employee's responsibilities to the Company. (b) Compensation (i) Base Salary. During the Employment Period, the Employee shall receive an annual base salary (the "Base Salary"), payable biweekly, at a weekly rate at least equal to the highest weekly Base Salary paid or payable to the Employee by the Company during the twelve (12) month period immediately preceding the month in which the Effective Date occurs, with an annual increase in salary consistent with the increases, if any, received for current periods over the previous annual calendar twelve (12) months. (ii) Change in Control Bonus. Upon the Effective Date, Employee will be paid in cash a bonus equal to Forty-Five Thousand Dollars ($45,000). All applicable taxes and other payments will be withheld from that sum. (iii) Annual Bonus. In addition to Base Salary, the Employee shall be awarded, during the Employment Period, an annual bonus (an "Annual Bonus") at least equal to the guaranteed bonus to which the Employee is entitled under any contractual arrangements between the Employee and the Company as of the date hereof, or not less than the sum of the bonus of the most recent past Annual Bonus received by the Employee. (iv) Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonuses payable as hereinabove provided, the Employee shall be entitled to receive cash sales incentives and to participate during the Employment Period in all other incentive, savings and retirement plans, practices, policies and programs applicable to other key employees of the Company and its subsidiaries (including the Company's employee benefit plans, in each case providing benefits which are the economic equivalent to those in effect or as subsequently amended). Such plans, practices, policies and programs, in the aggregate, shall provide the Employee with compensation, benefits and reward opportunities at least as favorable as the most favorable of such compensation, benefits and reward opportunities provided by the Company for the Employee under such plans, practices, policies and programs as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (v) Welfare Benefit Plans. During the Employment Period, the Employee and/or the Employee's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs), at least as favorable as the most favorable of such plans, practices, policies and programs in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect at any time thereafter with respect to other key employees of the Company. (vi) Expenses. During the Employment Period, the Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee in accordance with the most favorable policies, practices and procedures of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company. (vii) Fringe Benefits. During the Employment Period, the Employee shall be entitled to fringe benefits and perquisites in accordance with the most favorable plans, practices, programs and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, but not less in dollar value than the Employee's present fringe package. (viii) Office and Support Staff. During the Employment Period, the Employee shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Employee by the Company at any time during the one hundred eighty (180) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (ix) Vacation. During the Employment Period, the Employee shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, and will pay all fees or costs incurred to protect and uphold all aspects of said agreement. (x) Indemnity Agreement. During the Employment Period, the Company shall keep in full force and effect, and shall not purport to amend or terminate, any existing indemnity agreement between the Employee and the Company. (c) Payment in Lieu of Retaining Employee. In lieu of retaining the Employee during the Employment Period (or portion thereof), the Company may pay to the Employee an amount equal to sixty-five percent (65%) of (b)(i) above for a period of twelve (12) months to be paid on the date of termination of employment. This payment is in excess of the amount due under the severance pay policy of the Company. 4. TERMINATION (a) Death or Disability. This Agreement shall terminate automatically upon the Employee's death. If as a result of incapacity due to physical or mental illness, the Employee shall have been absent from the full-time performance of the Employee's duties with the Company for six (6) consecutive months, and within thirty (30) days after written notice of termination is given to the Employee, the Employee shall not have returned to the full- time performance of the Employee's duties, the Employee's employment may be terminated for "Disability" (as hereinafter defined). Any termination for Disability under this Agreement shall not affect any rights the Employee may otherwise have. If the Company determines in good faith that the Disability of the Employee has occurred (pursuant to the definition of "Disability" set forth below), it may give the Employee written notice of its intention to terminate the Employee's employment. In such event, the Employee's employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by the Employee (the "Disability Effective Date"), provided, that, within the thirty (30) days after such receipt, the Employee shall not have returned to full-time performance of the Employee's duties. (b) Cause. The Company may terminate the Employee's employment for "Cause." For purposes of this Agreement, "Cause" shall mean termination (A) upon the Employee's willful and continued failure to substantially perform the Employee's with the Company up to his or her normal skill level (performance of the past) (other than any such failure resulting from the Employee's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by the Employee, provided that a written demand for substantial performance has been delivered to the Employee by the Company specifically identifying the manner in which the Company believes that the Employee has not substantially performed the Employee's duties and the Employee has not cured such failure within ninety (90) days after such demand; (B) the Employee's willful violation of any material provision of any confidentiality, nondisclosure, assignment of invention, noncompetition or similar agreement entered into by the Employee in connection with the Employee's employment by the Company. For purposes of this paragraph, no act or failure to act on the Employee's part shall be deemed "willful" unless done by the Employee not in good faith and without the Employee's reasonable belief that the Employee's action was in the best interest of the Company; or (C) other than specifically identified herein, no other termination is without full compensation within the Employee's Employment Agreements for the life of the same without contest. (c) Notice of Termination. Any termination by the Company for Cause or by the Employee for any reason shall be communicated by Notice of Termination (as hereinafter defined) to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice. (d) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be; provided, however, that (i) if the Employee's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Employee of such termination and (ii) if the Employee's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Employee or the Disability Effective Date, as the case may be. 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION (a) Death. If the Employee's employment is terminated by reason of the Employee's death, this Agreement shall terminate without further obligation to the Employee's legal representatives under this Agreement, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination. All such Accrued Obligations shall be paid to the Employee's estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Company to surviving families of employees of the Company under such plans, programs, practices and policies relating to family death benefits, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect on the date of the Employee's death with respect to other key employees of the Company and their families. (b) Disability. If the Employee's employment is terminated by reason of the Employee's Disability, this Agreement shall terminate without further obligations to the Employee, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination, including for this purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to the Employee in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee shall be entitled, after the Disability Effective Date, to receive disability and other benefits at least equal to the most favorable of those provided by the Company to disabled employees and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or Employee's family, as in effect at any time thereafter with respect to other key employees of the Company and their families. (c) Cause. If the Employee's employment shall be terminated for Cause, this Agreement shall terminate without further obligations to the Employee, other than the obligation to pay those obligations accrued or earned and vested (if applicable) by the Employee through the Date of Termination, plus the amount of any accrued vacation pay and any compensation previously deferred by the Employee (together with accrued interest thereon). (d) Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Employee's employment other than for Cause, Disability or death, or if the Employee shall terminate his or her employment for any reason, the payment described in Paragraph 3(c) shall be made. 6. NON-EXCLUSIVITY OF RIGHTS Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in any benefit, bonus, stock option, stock purchase incentive or other plans, programs, policies or practices, provided by the Company or any of its subsidiaries and for which the Employee may qualify, nor shall anything herein limit or otherwise affect such rights as the Employee may have under any stock option or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Employee is otherwise entitled to receive under any plan, policy, practice or program of the Company, or any of its subsidiaries, at or subsequent to the Date of Termination, shall be payable in accordance with such plan, policy, practice or program. 7. FULL SETTLEMENT The Company's obligation to make the payments provided for in this Agreement, and otherwise to perform its obligations hereunder, shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement. 8. ENFORCEMENT OF RIGHTS (a) Any dispute or controversy between the Company and the Employee which the parties are unable to resolve by negotiation shall be settled exclusively by arbitration, conducted before a panel of one (1) arbitrator in Los Angeles, California, or at the direction of the Employee, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. (b) The Company shall pay to the Employee all legal fees and expenses incurred by the Employee as a result of any dispute under this Agreement (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") to any payment or benefit provided hereunder). 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment (within the meaning of Section 380G(b)(2) of the Code) or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties to the Employee, with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment under this Agreement (a "Gross- Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by AA and Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and to the Employee within thirty (30) business days of the Date of Termination, if applicable, or such earlier time as is requested by the Company. The initial Gross-Up Payment, if any, as determined pursuant to this Section 9(b), shall be paid to the Employee within five (5) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall furnish the Employee with an opinion that failure to report the Excise Tax on the Employee's applicable federal income tax return would not result in the imposition of negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) below, and the Employee thereafter is required to make payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten (10) business days after the Employee knows of such claim and shall appraise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing, from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceedings relating to such claim. Provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c) above, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim, and the Company does not notify the Employee in writing of its intent to contest such denial or refund prior to the expiration of sixty (60) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. CONFIDENTIAL INFORMATION The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company, or any of its subsidiaries, and their respective businesses, which shall have been obtained by the Employee during the Employee's employment by the Company, or any of its subsidiaries, and which shall not be or become public knowledge (other than by acts by the Employee or his or her representatives in violation of this Agreement). After termination of the Employee's employment with the Company, the Employee shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Employee under the Agreement. 11. SUCCESSORS (a) This Agreement is personal to the Employee and, without the prior written consent of the Company, shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such successor had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. 12. MISCELLANEOUS (a) This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Employee: Joanne M. Dunlap 31991 Via Oso Coto de Casa, CA 92679 If to the Company: Geodynamics Corporation 21171 Western Avenue, Suite 110 Torrance, CA 90501 Attention: President or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement or any other agreements by and between the Company and the Employee. (d) The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Employee's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Company and the Employee with respect to the subject matter hereof, and the Employee waives any severance benefits (but not pension benefits) that he or she might otherwise be entitled to under other Company employee plans, excluding such provisions as may be contained in the form of Severance Agreement as may be in effect between the Employee and the Company. (g) The Employee and the Company acknowledge that, except as provided by any other agreement between the Employee and the Company, the employment of the Employee by the Company is "at will", and, prior to the Effective Date, may be terminated by either the Employee or the Company at any time. Upon a termination of the Employee's employment or upon the Employee's ceasing to be an officer of the Company, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Employee has hereunto set his or her hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf all, as of the 10th day of August, 1995. (Signatures on next page) EMPLOYEE: /s/ Joanne M. Dunlap JOANNE M. DUNLAP COMPANY: GEODYNAMICS CORPORATION, a California corporation By:___________________________________ Title:_________________________________ ATTEST: _____________________________ EX-99.EXHIBIT10-20EM 13 EMPLOYEE RETENTION AGREEMENT By and Between GEODYNAMICS CORPORATION, a California corporation ("Corporation") and DAVID P. NELSON ("Employee") Table of Contents 1. CERTAIN DEFINITIONS 1 2. EMPLOYMENT PERIOD 2 3. TERMS OF EMPLOYMENT 2 (a) Position and Duties 2 (b) Compensation 3 (i) Base Salary 3 (ii) Change in Control Bonus 3 (iii) Annual Bonus 3 (iv) Incentive, Savings and Retirement Plans 3 (v) Welfare Benefit Plans 4 (vi) Expenses 4 (vii) Fringe Benefits 4 (viii)Office and Support Staff 4 (ix) Vacation 5 (x) Indemnity Agreement 5 (c) Payment in Lieu of Retaining Employee 5 4. TERMINATION 5 (a) Death or Disability 5 (b) Cause 5 (c) Notice of Termination 6 (d) Date of Termination 6 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6 (a) Death 6 (b) Disability 7 (c) Cause 7 (d) Other Than for Cause, Death or Disability 7 6. NON-EXCLUSIVITY OF RIGHTS 7 7. FULL SETTLEMENT 8 8. ENFORCEMENT OF RIGHTS 8 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8 10. CONFIDENTIAL INFORMATION 10 11. SUCCESSORS 11 12. MISCELLANEOUS 11 EMPLOYEE RETENTION AGREEMENT THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and between GEODYNAMICS CORPORATION, a California corporation (the "Company") and DAVID P. NELSON (the "Employee"), is entered into on the date hereinafter set forth. The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change in Control (as hereinafter defined) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Employee's full attention and dedication to the Company currently and in the event of any threatened or pending change in control, and to provide the Employee with compensation arrangements upon a Change in Control which provide the Employee with individual financial security and which are competitive with those of other corporations. In order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. Should a Change of Control occur because of a Management Buyout (as hereinafter defined), then this Agreement will have no force or effect. This Agreement will automatically expire on May 1, 1996 if no Change in Control occurs by that time. 1. CERTAIN DEFINITIONS (a) The "Effective Date" shall be the first date during the "Change in Control Period" (as defined in Section 1(b) below) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Employee's employment with the Company is terminated prior to the date on which a Change in Control occurs, and it is reasonably demonstrated that such termination was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement, the Effective Date shall mean the date immediately prior to the date of such termination. (b) The "Change in Control Period" is the period commencing on the Effective Date and ending on the first anniversary of such date. (c) A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person", as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities (other than as a result of acquisitions of such securities from the Company); (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "Person" (as hereinafter defined) acquires more than twenty percent (20%) of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. (d) A "Management Buyout" shall occur when there has been a Change of Control in which the Employee shall hold a significant financial interest or management position. 2. EMPLOYMENT PERIOD The Company hereby agrees to continue the Employee in its employ and, subject to Section 5(d) hereof, the Employee hereby agrees to remain in the employ of the Company, for the period commencing on the Effective Date and ending on the first anniversary of such date (the "Employment Period"). 3. TERMS OF EMPLOYMENT (a) Position and Duties (i) During the Employment Period: (A) the Employee's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the ninety (90) day period immediately preceding the Effective Date and (B) the Employee's services shall be performed at the location where the Employee was employed immediately preceding the Effective Date, or any office or location less than fifteen (15) miles from such location and less than ten (10) miles in commuting distance further than the Employee's commuting distance to the location at which the Employee performed such services prior to the Change in Control. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and to use the Employee's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Employee to (A) serve on corporate, civic or charitable boards or committees; (B) deliver lectures, fulfill speaking engagements or teach at educational institutions; and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Employees' responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Employee's responsibilities to the Company. (b) Compensation (i) Base Salary. During the Employment Period, the Employee shall receive an annual base salary (the "Base Salary"), payable biweekly, at a weekly rate at least equal to the highest weekly Base Salary paid or payable to the Employee by the Company during the twelve (12) month period immediately preceding the month in which the Effective Date occurs, with an annual increase in salary consistent with the increases, if any, received for current periods over the previous annual calendar twelve (12) months. (ii) Change in Control Bonus. Upon the Effective Date, Employee will be paid in cash a bonus equal to Seventy Thousand Dollars ($70,000). All applicable taxes and other payments will be withheld from that sum. (iii) Annual Bonus. In addition to Base Salary, the Employee shall be awarded, during the Employment Period, an annual bonus (an "Annual Bonus") at least equal to the guaranteed bonus to which the Employee is entitled under any contractual arrangements between the Employee and the Company as of the date hereof, or not less than the sum of the bonus of the most recent past Annual Bonus received by the Employee. (iv) Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonuses payable as hereinabove provided, the Employee shall be entitled to receive cash sales incentives and to participate during the Employment Period in all other incentive, savings and retirement plans, practices, policies and programs applicable to other key employees of the Company and its subsidiaries (including the Company's employee benefit plans, in each case providing benefits which are the economic equivalent to those in effect or as subsequently amended). Such plans, practices, policies and programs, in the aggregate, shall provide the Employee with compensation, benefits and reward opportunities at least as favorable as the most favorable of such compensation, benefits and reward opportunities provided by the Company for the Employee under such plans, practices, policies and programs as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (v) Welfare Benefit Plans. During the Employment Period, the Employee and/or the Employee's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs), at least as favorable as the most favorable of such plans, practices, policies and programs in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect at any time thereafter with respect to other key employees of the Company. (vi) Expenses. During the Employment Period, the Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee in accordance with the most favorable policies, practices and procedures of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company. (vii) Fringe Benefits. During the Employment Period, the Employee shall be entitled to fringe benefits and perquisites in accordance with the most favorable plans, practices, programs and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, but not less in dollar value than the Employee's present fringe package. (viii) Office and Support Staff. During the Employment Period, the Employee shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Employee by the Company at any time during the one hundred eighty (180) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (ix) Vacation. During the Employment Period, the Employee shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, and will pay all fees or costs incurred to protect and uphold all aspects of said agreement. (x) Indemnity Agreement. During the Employment Period, the Company shall keep in full force and effect, and shall not purport to amend or terminate, any existing indemnity agreement between the Employee and the Company. (c) Payment in Lieu of Retaining Employee. In lieu of retaining the Employee during the Employment Period (or portion thereof), the Company may pay to the Employee an amount equal to seventy-five percent (75%) of (b)(i) above for a period of twelve (12) months to be paid on the date of termination of employment. This payment is in excess of the amount due under the severance pay policy of the Company. 4. TERMINATION (a) Death or Disability. This Agreement shall terminate automatically upon the Employee's death. If as a result of incapacity due to physical or mental illness, the Employee shall have been absent from the full-time performance of the Employee's duties with the Company for six (6) consecutive months, and within thirty (30) days after written notice of termination is given to the Employee, the Employee shall not have returned to the full- time performance of the Employee's duties, the Employee's employment may be terminated for "Disability" (as hereinafter defined). Any termination for Disability under this Agreement shall not affect any rights the Employee may otherwise have. If the Company determines in good faith that the Disability of the Employee has occurred (pursuant to the definition of "Disability" set forth below), it may give the Employee written notice of its intention to terminate the Employee's employment. In such event, the Employee's employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by the Employee (the "Disability Effective Date"), provided, that, within the thirty (30) days after such receipt, the Employee shall not have returned to full-time performance of the Employee's duties. (b) Cause. The Company may terminate the Employee's employment for "Cause." For purposes of this Agreement, "Cause" shall mean termination (A) upon the Employee's willful and continued failure to substantially perform the Employee's with the Company up to his or her normal skill level (performance of the past) (other than any such failure resulting from the Employee's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by the Employee, provided that a written demand for substantial performance has been delivered to the Employee by the Company specifically identifying the manner in which the Company believes that the Employee has not substantially performed the Employee's duties and the Employee has not cured such failure within ninety (90) days after such demand; (B) the Employee's willful violation of any material provision of any confidentiality, nondisclosure, assignment of invention, noncompetition or similar agreement entered into by the Employee in connection with the Employee's employment by the Company. For purposes of this paragraph, no act or failure to act on the Employee's part shall be deemed "willful" unless done by the Employee not in good faith and without the Employee's reasonable belief that the Employee's action was in the best interest of the Company; or (C) other than specifically identified herein, no other termination is without full compensation within the Employee's Employment Agreements for the life of the same without contest. (c) Notice of Termination. Any termination by the Company for Cause or by the Employee for any reason shall be communicated by Notice of Termination (as hereinafter defined) to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice. (d) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be; provided, however, that (i) if the Employee's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Employee of such termination and (ii) if the Employee's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Employee or the Disability Effective Date, as the case may be. 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION (a) Death. If the Employee's employment is terminated by reason of the Employee's death, this Agreement shall terminate without further obligation to the Employee's legal representatives under this Agreement, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination. All such Accrued Obligations shall be paid to the Employee's estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Company to surviving families of employees of the Company under such plans, programs, practices and policies relating to family death benefits, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect on the date of the Employee's death with respect to other key employees of the Company and their families. (b) Disability. If the Employee's employment is terminated by reason of the Employee's Disability, this Agreement shall terminate without further obligations to the Employee, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination, including for this purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to the Employee in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee shall be entitled, after the Disability Effective Date, to receive disability and other benefits at least equal to the most favorable of those provided by the Company to disabled employees and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or Employee's family, as in effect at any time thereafter with respect to other key employees of the Company and their families. (c) Cause. If the Employee's employment shall be terminated for Cause, this Agreement shall terminate without further obligations to the Employee, other than the obligation to pay those obligations accrued or earned and vested (if applicable) by the Employee through the Date of Termination, plus the amount of any accrued vacation pay and any compensation previously deferred by the Employee (together with accrued interest thereon). (d) Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Employee's employment other than for Cause, Disability or death, or if the Employee shall terminate his or her employment for any reason, the payment described in Paragraph 3(c) shall be made. 6. NON-EXCLUSIVITY OF RIGHTS Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in any benefit, bonus, stock option, stock purchase incentive or other plans, programs, policies or practices, provided by the Company or any of its subsidiaries and for which the Employee may qualify, nor shall anything herein limit or otherwise affect such rights as the Employee may have under any stock option or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Employee is otherwise entitled to receive under any plan, policy, practice or program of the Company, or any of its subsidiaries, at or subsequent to the Date of Termination, shall be payable in accordance with such plan, policy, practice or program. 7. FULL SETTLEMENT The Company's obligation to make the payments provided for in this Agreement, and otherwise to perform its obligations hereunder, shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement. 8. ENFORCEMENT OF RIGHTS (a) Any dispute or controversy between the Company and the Employee which the parties are unable to resolve by negotiation shall be settled exclusively by arbitration, conducted before a panel of one (1) arbitrator in Los Angeles, California, or at the direction of the Employee, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. (b) The Company shall pay to the Employee all legal fees and expenses incurred by the Employee as a result of any dispute under this Agreement (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") to any payment or benefit provided hereunder). 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment (within the meaning of Section 380G(b)(2) of the Code) or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties to the Employee, with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment under this Agreement (a "Gross- Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by AA and Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and to the Employee within thirty (30) business days of the Date of Termination, if applicable, or such earlier time as is requested by the Company. The initial Gross-Up Payment, if any, as determined pursuant to this Section 9(b), shall be paid to the Employee within five (5) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall furnish the Employee with an opinion that failure to report the Excise Tax on the Employee's applicable federal income tax return would not result in the imposition of negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) below, and the Employee thereafter is required to make payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten (10) business days after the Employee knows of such claim and shall appraise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing, from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceedings relating to such claim. Provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c) above, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim, and the Company does not notify the Employee in writing of its intent to contest such denial or refund prior to the expiration of sixty (60) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. CONFIDENTIAL INFORMATION The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company, or any of its subsidiaries, and their respective businesses, which shall have been obtained by the Employee during the Employee's employment by the Company, or any of its subsidiaries, and which shall not be or become public knowledge (other than by acts by the Employee or his or her representatives in violation of this Agreement). After termination of the Employee's employment with the Company, the Employee shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Employee under the Agreement. 11. SUCCESSORS (a) This Agreement is personal to the Employee and, without the prior written consent of the Company, shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such successor had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. 12. MISCELLANEOUS (a) This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Employee: David P. Nelson 5626 Seaside Heights Rancho Palos Verdes, CA 90275 If to the Company: Geodynamics Corporation 21171 Western Avenue, Suite 110 Torrance, CA 90501 Attention: President or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement or any other agreements by and between the Company and the Employee. (d) The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Employee's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Company and the Employee with respect to the subject matter hereof, and the Employee waives any severance benefits (but not pension benefits) that he or she might otherwise be entitled to under other Company employee plans, excluding such provisions as may be contained in the form of Severance Agreement as may be in effect between the Employee and the Company. (g) The Employee and the Company acknowledge that, except as provided by any other agreement between the Employee and the Company, the employment of the Employee by the Company is "at will", and, prior to the Effective Date, may be terminated by either the Employee or the Company at any time. Upon a termination of the Employee's employment or upon the Employee's ceasing to be an officer of the Company, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Employee has hereunto set his or her hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf all, as of the 10th day of August, 1995. (Signatures on next page) EMPLOYEE: /s/ David P. Nelson DAVID P. NELSON COMPANY: GEODYNAMICS CORPORATION, a California corporation By:___________________________________ Title:_________________________________ ATTEST: _____________________________ EX-99.EXHIBIT10-21EM 14 EMPLOYEE RETENTION AGREEMENT By and Between GEODYNAMICS CORPORATION, a California corporation ("Corporation") and PAUL HENRIKSON ("Employee") Table of Contents 1. CERTAIN DEFINITIONS 1 2. EMPLOYMENT PERIOD 2 3. TERMS OF EMPLOYMENT 2 (a) Position and Duties 2 (b) Compensation 3 (i) Base Salary 3 (ii) Incentive, Savings and Retirement Plans 3 (iii) Welfare Benefit Plans 4 (iv) Expenses 4 (v) Fringe Benefits 4 (vi) Office and Support Staff 4 (vii) Vacation 4 (viii) Indemnity Agreement 4 (c) Payment in Lieu of Retaining Employee 5 4. TERMINATION 5 (a) Death or Disability 5 (b) Cause 5 (c) Notice of Termination 6 (d) Date of Termination 6 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6 (a) Death 6 (b) Disability 6 (c) Cause 7 (d) Other Than for Cause, Death or Disability 7 6. NON-EXCLUSIVITY OF RIGHTS 7 7. FULL SETTLEMENT 7 8. ENFORCEMENT OF RIGHTS 8 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8 10. CONFIDENTIAL INFORMATION 10 11. SUCCESSORS 11 12. MISCELLANEOUS 11 EMPLOYEE RETENTION AGREEMENT THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and between GEODYNAMICS CORPORATION, a California corporation (the "Company") and PAUL HENRIKSON (the "Employee"), is entered into on the date hereinafter set forth. The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change in Control (as hereinafter defined) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Employee's full attention and dedication to the Company currently and in the event of any threatened or pending change in control, and to provide the Employee with compensation arrangements upon a Change in Control which provide the Employee with individual financial security and which are competitive with those of other corporations. In order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. Should a Change of Control occur because of a Management Buyout (as hereinafter defined), then this Agreement will have no force or effect. This Agreement will automatically expire on May 1, 1996 if no Change in Control occurs by that time. 1. CERTAIN DEFINITIONS (a) The "Effective Date" shall be the first date during the "Change in Control Period" (as defined in Section 1(b) below) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Employee's employment with the Company is terminated prior to the date on which a Change in Control occurs, and it is reasonably demonstrated that such termination was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement, the Effective Date shall mean the date immediately prior to the date of such termination. (b) The "Change in Control Period" is the period commencing on the Effective Date and ending on the first anniversary of such date. (c) A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person", as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities (other than as a result of acquisitions of such securities from the Company); (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "Person" (as hereinafter defined) acquires more than twenty percent (20%) of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. (d) A "Management Buyout" shall occur when there has been a Change of Control in which the Employee shall hold a significant financial interest or management position. 2. EMPLOYMENT PERIOD The Company hereby agrees to continue the Employee in its employ and, subject to Section 5(d) hereof, the Employee hereby agrees to remain in the employ of the Company, for the period commencing on the Effective Date and ending on the first anniversary of such date (the "Employment Period"). 3. TERMS OF EMPLOYMENT (a) Position and Duties (i) During the Employment Period: (A) the Employee's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the ninety (90) day period immediately preceding the Effective Date and (B) the Employee's services shall be performed at the location where the Employee was employed immediately preceding the Effective Date, or any office or location less than fifteen (15) miles from such location and less than ten (10) miles in commuting distance further than the Employee's commuting distance to the location at which the Employee performed such services prior to the Change in Control. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and to use the Employee's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Employee to (A) serve on corporate, civic or charitable boards or committees; (B) deliver lectures, fulfill speaking engagements or teach at educational institutions; and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Employees' responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Employee's responsibilities to the Company. (b) Compensation (i) Base Salary. During the Employment Period, the Employee shall receive an annual base salary (the "Base Salary"), payable biweekly, at a weekly rate at least equal to the highest weekly Base Salary paid or payable to the Employee by the Company during the twelve (12) month period immediately preceding the month in which the Effective Date occurs, with an annual increase in salary consistent with the increases, if any, received for current periods over the previous annual calendar twelve (12) months. (ii) Incentive, Savings and Retirement Plans. In addition to Base Salary payable as hereinabove provided, the Employee shall be entitled to receive cash sales incentives and to participate during the Employment Period in all other incentive, savings and retirement plans, practices, policies and programs applicable to other key employees of the Company and its subsidiaries (including the Company's employee benefit plans, in each case providing benefits which are the economic equivalent to those in effect or as subsequently amended). Such plans, practices, policies and programs, in the aggregate, shall provide the Employee with compensation, benefits and reward opportunities at least as favorable as the most favorable of such compensation, benefits and reward opportunities provided by the Company for the Employee under such plans, practices, policies and programs as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (iii) Welfare Benefit Plans. During the Employment Period, the Employee and/or the Employee's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs), at least as favorable as the most favorable of such plans, practices, policies and programs in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect at any time thereafter with respect to other key employees of the Company. (iv) Expenses. During the Employment Period, the Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee in accordance with the most favorable policies, practices and procedures of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company. (v) Fringe Benefits. During the Employment Period, the Employee shall be entitled to fringe benefits and perquisites in accordance with the most favorable plans, practices, programs and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, but not less in dollar value than the Employee's present fringe package. (vi) Office and Support Staff. During the Employment Period, the Employee shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Employee by the Company at any time during the one hundred eighty (180) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (vii) Vacation. During the Employment Period, the Employee shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, and will pay all fees or costs incurred to protect and uphold all aspects of said agreement. (viii) Indemnity Agreement. During the Employment Period, the Company shall keep in full force and effect, and shall not purport to amend or terminate, any existing indemnity agreement between the Employee and the Company. (c) Payment in Lieu of Retaining Employee. In lieu of retaining the Employee during the Employment Period (or portion thereof), the Company may pay to the Employee an amount equal to seventy-five percent (75%) of (b)(i) above for a period of twelve (12) months to be paid on the date of termination of employment. This payment is in excess of the amount due under the severance pay policy of the Company. 4. TERMINATION (a) Death or Disability. This Agreement shall terminate automatically upon the Employee's death. If as a result of incapacity due to physical or mental illness, the Employee shall have been absent from the full-time performance of the Employee's duties with the Company for six (6) consecutive months, and within thirty (30) days after written notice of termination is given to the Employee, the Employee shall not have returned to the full- time performance of the Employee's duties, the Employee's employment may be terminated for "Disability" (as hereinafter defined). Any termination for Disability under this Agreement shall not affect any rights the Employee may otherwise have. If the Company determines in good faith that the Disability of the Employee has occurred (pursuant to the definition of "Disability" set forth below), it may give the Employee written notice of its intention to terminate the Employee's employment. In such event, the Employee's employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by the Employee (the "Disability Effective Date"), provided, that, within the thirty (30) days after such receipt, the Employee shall not have returned to full-time performance of the Employee's duties. (b) Cause. The Company may terminate the Employee's employment for "Cause." For purposes of this Agreement, "Cause" shall mean termination (A) upon the Employee's willful and continued failure to substantially perform the Employee's with the Company up to his or her normal skill level (performance of the past) (other than any such failure resulting from the Employee's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by the Employee, provided that a written demand for substantial performance has been delivered to the Employee by the Company specifically identifying the manner in which the Company believes that the Employee has not substantially performed the Employee's duties and the Employee has not cured such failure within ninety (90) days after such demand; (B) the Employee's willful violation of any material provision of any confidentiality, nondisclosure, assignment of invention, noncompetition or similar agreement entered into by the Employee in connection with the Employee's employment by the Company. For purposes of this paragraph, no act or failure to act on the Employee's part shall be deemed "willful" unless done by the Employee not in good faith and without the Employee's reasonable belief that the Employee's action was in the best interest of the Company; or (C) other than specifically identified herein, no other termination is without full compensation within the Employee's Employment Agreements for the life of the same without contest. (c) Notice of Termination. Any termination by the Company for Cause or by the Employee for any reason shall be communicated by Notice of Termination (as hereinafter defined) to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice. (d) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be; provided, however, that (i) if the Employee's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Employee of such termination and (ii) if the Employee's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Employee or the Disability Effective Date, as the case may be. 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION (a) Death. If the Employee's employment is terminated by reason of the Employee's death, this Agreement shall terminate without further obligation to the Employee's legal representatives under this Agreement, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination. All such Accrued Obligations shall be paid to the Employee's estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Company to surviving families of employees of the Company under such plans, programs, practices and policies relating to family death benefits, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect on the date of the Employee's death with respect to other key employees of the Company and their families. (b) Disability. If the Employee's employment is terminated by reason of the Employee's Disability, this Agreement shall terminate without further obligations to the Employee, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination, including for this purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to the Employee in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee shall be entitled, after the Disability Effective Date, to receive disability and other benefits at least equal to the most favorable of those provided by the Company to disabled employees and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or Employee's family, as in effect at any time thereafter with respect to other key employees of the Company and their families. (c) Cause. If the Employee's employment shall be terminated for Cause, this Agreement shall terminate without further obligations to the Employee, other than the obligation to pay those obligations accrued or earned and vested (if applicable) by the Employee through the Date of Termination, plus the amount of any accrued vacation pay and any compensation previously deferred by the Employee (together with accrued interest thereon). (d) Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Employee's employment other than for Cause, Disability or death, or if the Employee shall terminate his or her employment for any reason, the payment described in Paragraph 3(c) shall be made. 6. NON-EXCLUSIVITY OF RIGHTS Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in any benefit, bonus, stock option, stock purchase incentive or other plans, programs, policies or practices, provided by the Company or any of its subsidiaries and for which the Employee may qualify, nor shall anything herein limit or otherwise affect such rights as the Employee may have under any stock option or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Employee is otherwise entitled to receive under any plan, policy, practice or program of the Company, or any of its subsidiaries, at or subsequent to the Date of Termination, shall be payable in accordance with such plan, policy, practice or program. 7. FULL SETTLEMENT The Company's obligation to make the payments provided for in this Agreement, and otherwise to perform its obligations hereunder, shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement. 8. ENFORCEMENT OF RIGHTS (a) Any dispute or controversy between the Company and the Employee which the parties are unable to resolve by negotiation shall be settled exclusively by arbitration, conducted before a panel of one (1) arbitrator in Los Angeles, California, or at the direction of the Employee, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. (b) The Company shall pay to the Employee all legal fees and expenses incurred by the Employee as a result of any dispute under this Agreement (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") to any payment or benefit provided hereunder). 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment (within the meaning of Section 380G(b)(2) of the Code) or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties to the Employee, with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment under this Agreement (a "Gross- Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by AA and Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and to the Employee within thirty (30) business days of the Date of Termination, if applicable, or such earlier time as is requested by the Company. The initial Gross-Up Payment, if any, as determined pursuant to this Section 9(b), shall be paid to the Employee within five (5) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall furnish the Employee with an opinion that failure to report the Excise Tax on the Employee's applicable federal income tax return would not result in the imposition of negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) below, and the Employee thereafter is required to make payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten (10) business days after the Employee knows of such claim and shall appraise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing, from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceedings relating to such claim. Provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c) above, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim, and the Company does not notify the Employee in writing of its intent to contest such denial or refund prior to the expiration of sixty (60) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. CONFIDENTIAL INFORMATION The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company, or any of its subsidiaries, and their respective businesses, which shall have been obtained by the Employee during the Employee's employment by the Company, or any of its subsidiaries, and which shall not be or become public knowledge (other than by acts by the Employee or his or her representatives in violation of this Agreement). After termination of the Employee's employment with the Company, the Employee shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Employee under the Agreement. 11. SUCCESSORS (a) This Agreement is personal to the Employee and, without the prior written consent of the Company, shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such successor had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. 12. MISCELLANEOUS (a) This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Employee: Paul Henrikson 32404 Sea Raven Drive Rancho Palo Verdes, CA 90274 If to the Company: Geodynamics Corporation 21171 Western Avenue, Suite 110 Torrance, CA 90501 Attention: President or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement or any other agreements by and between the Company and the Employee. (d) The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Employee's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Company and the Employee with respect to the subject matter hereof, and the Employee waives any severance benefits (but not pension benefits) that he or she might otherwise be entitled to under other Company employee plans, excluding such provisions as may be contained in the form of Severance Agreement as may be in effect between the Employee and the Company. (g) The Employee and the Company acknowledge that, except as provided by any other agreement between the Employee and the Company, the employment of the Employee by the Company is "at will", and, prior to the Effective Date, may be terminated by either the Employee or the Company at any time. Upon a termination of the Employee's employment or upon the Employee's ceasing to be an officer of the Company, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Employee has hereunto set his or her hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf all, as of the 10th day of August, 1995. (Signatures on next page) EMPLOYEE: /s/ Paul Henrikson PAUL HENRIKSON COMPANY: GEODYNAMICS CORPORATION, a California corporation By:___________________________________ Title:_________________________________ ATTEST: _____________________________ EX-99.EXHIBIT10-22EM 15 EMPLOYEE RETENTION AGREEMENT By and Between GEODYNAMICS CORPORATION, a California corporation ("Corporation") and CAROLYN MIHARA ("Employee") Table of Contents 1. CERTAIN DEFINITIONS 1 2. EMPLOYMENT PERIOD 2 3. TERMS OF EMPLOYMENT 2 (a) Position and Duties 2 (b) Compensation 3 (i) Base Salary 3 (ii) Change in Control Bonus 3 (iii) Annual Bonus 3 (iv) Incentive, Savings and Retirement Plans 3 (v) Welfare Benefit Plans 4 (vi) Expenses 4 (vii) Fringe Benefits 4 (viii)Office and Support Staff 4 (ix) Vacation 5 (x) Indemnity Agreement 5 4. TERMINATION 5 (a) Death or Disability 5 (b) Cause 5 (c) Notice of Termination 6 (d) Date of Termination 6 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION 6 (a) Death 6 (b) Disability 6 (c) Cause 7 (d) Other Than for Cause, Death or Disability 7 6. NON-EXCLUSIVITY OF RIGHTS 7 7. FULL SETTLEMENT 7 8. ENFORCEMENT OF RIGHTS 8 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 8 10. CONFIDENTIAL INFORMATION 10 11. SUCCESSORS 11 12. MISCELLANEOUS 11 EMPLOYEE RETENTION AGREEMENT THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") by and between GEODYNAMICS CORPORATION, a California corporation (the "Company") and CAROLYN MIHARA (the "Employee"), is entered into on the date hereinafter set forth. The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change in Control (as hereinafter defined) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Employee's full attention and dedication to the Company currently and in the event of any threatened or pending change in control, and to provide the Employee with compensation arrangements upon a Change in Control which provide the Employee with individual financial security and which are competitive with those of other corporations. In order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. Should a Change of Control occur because of a Management Buyout (as hereinafter defined), then this Agreement will have no force or effect. This Agreement will automatically expire on May 1, 1996 if no Change in Control occurs by that time. 1. CERTAIN DEFINITIONS (a) The "Effective Date" shall be the first date during the "Change in Control Period" (as defined in Section 1(b) below) on which a Change in Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Employee's employment with the Company is terminated prior to the date on which a Change in Control occurs, and it is reasonably demonstrated that such termination was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement, the Effective Date shall mean the date immediately prior to the date of such termination. (b) The "Change in Control Period" is the period commencing on the Effective Date and ending on the first anniversary of such date. (c) A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur: (i) any "person", as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities (other than as a result of acquisitions of such securities from the Company); (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "Person" (as hereinafter defined) acquires more than twenty percent (20%) of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. (d) A "Management Buyout" shall occur when there has been a Change of Control in which the Employee shall hold a significant financial interest or management position. 2. EMPLOYMENT PERIOD The Company hereby agrees to continue the Employee in its employ and, subject to Section 5(d) hereof, the Employee hereby agrees to remain in the employ of the Company, for the period commencing on the Effective Date and ending on the first anniversary of such date (the "Employment Period"). 3. TERMS OF EMPLOYMENT (a) Position and Duties (i) During the Employment Period: (A) the Employee's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the ninety (90) day period immediately preceding the Effective Date and (B) the Employee's services shall be performed at the location where the Employee was employed immediately preceding the Effective Date, or any office or location less than fifteen (15) miles from such location and less than ten (10) miles in commuting distance further than the Employee's commuting distance to the location at which the Employee performed such services prior to the Change in Control. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and to use the Employee's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Employee to (A) serve on corporate, civic or charitable boards or committees; (B) deliver lectures, fulfill speaking engagements or teach at educational institutions; and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Employees' responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Employee's responsibilities to the Company. (b) Compensation (i) Base Salary. During the Employment Period, the Employee shall receive an annual base salary (the "Base Salary"), payable biweekly, at a weekly rate at least equal to the highest weekly Base Salary paid or payable to the Employee by the Company during the twelve (12) month period immediately preceding the month in which the Effective Date occurs, with an annual increase in salary consistent with the increases, if any, received for current periods over the previous annual calendar twelve (12) months. (ii) Change in Control Bonus. Upon the Effective Date, Employee will be paid in cash a bonus equal to Fifty Thousand Dollars ($50,000). All applicable taxes and other payments will be withheld from that sum. (iii) Annual Bonus. In addition to Base Salary, the Employee shall be awarded, during the Employment Period, an annual bonus (an "Annual Bonus") at least equal to the guaranteed bonus to which the Employee is entitled under any contractual arrangements between the Employee and the Company as of the date hereof, or not less than the sum of the bonus of the most recent past Annual Bonus received by the Employee. (iv) Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonuses payable as hereinabove provided, the Employee shall be entitled to receive cash sales incentives and to participate during the Employment Period in all other incentive, savings and retirement plans, practices, policies and programs applicable to other key employees of the Company and its subsidiaries (including the Company's employee benefit plans, in each case providing benefits which are the economic equivalent to those in effect or as subsequently amended). Such plans, practices, policies and programs, in the aggregate, shall provide the Employee with compensation, benefits and reward opportunities at least as favorable as the most favorable of such compensation, benefits and reward opportunities provided by the Company for the Employee under such plans, practices, policies and programs as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (v) Welfare Benefit Plans. During the Employment Period, the Employee and/or the Employee's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs), at least as favorable as the most favorable of such plans, practices, policies and programs in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect at any time thereafter with respect to other key employees of the Company. (vi) Expenses. During the Employment Period, the Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee in accordance with the most favorable policies, practices and procedures of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company. (vii) Fringe Benefits. During the Employment Period, the Employee shall be entitled to fringe benefits and perquisites in accordance with the most favorable plans, practices, programs and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, but not less in dollar value than the Employee's present fringe package. (viii) Office and Support Staff. During the Employment Period, the Employee shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Employee by the Company at any time during the one hundred eighty (180) day period immediately preceding the Effective Date or, if more favorable to the Employee, as provided at any time thereafter with respect to other key employees of the Company. (ix) Vacation. During the Employment Period, the Employee shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company as in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee, as in effect at any time thereafter with respect to other key employees of the Company, and will pay all fees or costs incurred to protect and uphold all aspects of said agreement. (x) Indemnity Agreement. During the Employment Period, the Company shall keep in full force and effect, and shall not purport to amend or terminate, any existing indemnity agreement between the Employee and the Company. 4. TERMINATION (a) Death or Disability. This Agreement shall terminate automatically upon the Employee's death. If as a result of incapacity due to physical or mental illness, the Employee shall have been absent from the full-time performance of the Employee's duties with the Company for six (6) consecutive months, and within thirty (30) days after written notice of termination is given to the Employee, the Employee shall not have returned to the full- time performance of the Employee's duties, the Employee's employment may be terminated for "Disability" (as hereinafter defined). Any termination for Disability under this Agreement shall not affect any rights the Employee may otherwise have. If the Company determines in good faith that the Disability of the Employee has occurred (pursuant to the definition of "Disability" set forth below), it may give the Employee written notice of its intention to terminate the Employee's employment. In such event, the Employee's employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by the Employee (the "Disability Effective Date"), provided, that, within the thirty (30) days after such receipt, the Employee shall not have returned to full-time performance of the Employee's duties. (b) Cause. The Company may terminate the Employee's employment for "Cause." For purposes of this Agreement, "Cause" shall mean termination (A) upon the Employee's willful and continued failure to substantially perform the Employee's with the Company up to his or her normal skill level (performance of the past) (other than any such failure resulting from the Employee's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by the Employee, provided that a written demand for substantial performance has been delivered to the Employee by the Company specifically identifying the manner in which the Company believes that the Employee has not substantially performed the Employee's duties and the Employee has not cured such failure within ninety (90) days after such demand; (B) the Employee's willful violation of any material provision of any confidentiality, nondisclosure, assignment of invention, noncompetition or similar agreement entered into by the Employee in connection with the Employee's employment by the Company. For purposes of this paragraph, no act or failure to act on the Employee's part shall be deemed "willful" unless done by the Employee not in good faith and without the Employee's reasonable belief that the Employee's action was in the best interest of the Company; or (C) other than specifically identified herein, no other termination is without full compensation within the Employee's Employment Agreements for the life of the same without contest. (c) Notice of Termination. Any termination by the Company for Cause or by the Employee for any reason shall be communicated by Notice of Termination (as hereinafter defined) to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice. (d) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be; provided, however, that (i) if the Employee's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Employee of such termination and (ii) if the Employee's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Employee or the Disability Effective Date, as the case may be. 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION (a) Death. If the Employee's employment is terminated by reason of the Employee's death, this Agreement shall terminate without further obligation to the Employee's legal representatives under this Agreement, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination. All such Accrued Obligations shall be paid to the Employee's estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Company to surviving families of employees of the Company under such plans, programs, practices and policies relating to family death benefits, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or the Employee's family, as in effect on the date of the Employee's death with respect to other key employees of the Company and their families. (b) Disability. If the Employee's employment is terminated by reason of the Employee's Disability, this Agreement shall terminate without further obligations to the Employee, other than those obligations accrued or earned and vested (if applicable) by the Employee as of the Date of Termination, including for this purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to the Employee in a lump sum in cash within thirty (30) days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Employee shall be entitled, after the Disability Effective Date, to receive disability and other benefits at least equal to the most favorable of those provided by the Company to disabled employees and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, in accordance with the most favorable plans, programs, practices and policies of the Company in effect at any time during the ninety (90) day period immediately preceding the Effective Date or, if more favorable to the Employee and/or Employee's family, as in effect at any time thereafter with respect to other key employees of the Company and their families. (c) Cause. If the Employee's employment shall be terminated for Cause, this Agreement shall terminate without further obligations to the Employee, other than the obligation to pay those obligations accrued or earned and vested (if applicable) by the Employee through the Date of Termination, plus the amount of any accrued vacation pay and any compensation previously deferred by the Employee (together with accrued interest thereon). (d) Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Employee's employment other than for Cause, Disability or death, or if the Employee shall terminate his or her employment for any reason, the payment described in Paragraph 3(c) shall be made. 6. NON-EXCLUSIVITY OF RIGHTS Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in any benefit, bonus, stock option, stock purchase incentive or other plans, programs, policies or practices, provided by the Company or any of its subsidiaries and for which the Employee may qualify, nor shall anything herein limit or otherwise affect such rights as the Employee may have under any stock option or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Employee is otherwise entitled to receive under any plan, policy, practice or program of the Company, or any of its subsidiaries, at or subsequent to the Date of Termination, shall be payable in accordance with such plan, policy, practice or program. 7. FULL SETTLEMENT The Company's obligation to make the payments provided for in this Agreement, and otherwise to perform its obligations hereunder, shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement. 8. ENFORCEMENT OF RIGHTS (a) Any dispute or controversy between the Company and the Employee which the parties are unable to resolve by negotiation shall be settled exclusively by arbitration, conducted before a panel of one (1) arbitrator in Los Angeles, California, or at the direction of the Employee, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. (b) The Company shall pay to the Employee all legal fees and expenses incurred by the Employee as a result of any dispute under this Agreement (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") to any payment or benefit provided hereunder). 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment (within the meaning of Section 380G(b)(2) of the Code) or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties to the Employee, with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment under this Agreement (a "Gross- Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by AA and Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and to the Employee within thirty (30) business days of the Date of Termination, if applicable, or such earlier time as is requested by the Company. The initial Gross-Up Payment, if any, as determined pursuant to this Section 9(b), shall be paid to the Employee within five (5) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall furnish the Employee with an opinion that failure to report the Excise Tax on the Employee's applicable federal income tax return would not result in the imposition of negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) below, and the Employee thereafter is required to make payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten (10) business days after the Employee knows of such claim and shall appraise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing, from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceedings relating to such claim. Provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c) above, the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim, and the Company does not notify the Employee in writing of its intent to contest such denial or refund prior to the expiration of sixty (60) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. CONFIDENTIAL INFORMATION The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company, or any of its subsidiaries, and their respective businesses, which shall have been obtained by the Employee during the Employee's employment by the Company, or any of its subsidiaries, and which shall not be or become public knowledge (other than by acts by the Employee or his or her representatives in violation of this Agreement). After termination of the Employee's employment with the Company, the Employee shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Employee under the Agreement. 11. SUCCESSORS (a) This Agreement is personal to the Employee and, without the prior written consent of the Company, shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such successor had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. 12. MISCELLANEOUS (a) This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Employee: Carolyn Mihara 2414-A Nelson Avenue Redondo Beach, CA 90278 If to the Company: Geodynamics Corporation 21171 Western Avenue, Suite 110 Torrance, CA 90501 Attention: President or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement or any other agreements by and between the Company and the Employee. (d) The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Employee's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Company and the Employee with respect to the subject matter hereof, and the Employee waives any severance benefits (but not pension benefits) that he or she might otherwise be entitled to under other Company employee plans, excluding such provisions as may be contained in the form of Severance Agreement as may be in effect between the Employee and the Company. (g) The Employee and the Company acknowledge that, except as provided by any other agreement between the Employee and the Company, the employment of the Employee by the Company is "at will", and, prior to the Effective Date, may be terminated by either the Employee or the Company at any time. Upon a termination of the Employee's employment or upon the Employee's ceasing to be an officer of the Company, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Employee has hereunto set his or her hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf all, as of the 10th day of August, 1995. (Signatures on next page) EMPLOYEE: /s/ Carolyn Mihara CAROLYN MIHARA COMPANY: GEODYNAMICS CORPORATION, a California corporation By:___________________________________ Title:_________________________________ ATTEST: _____________________________ EX-99.EXHIBIT10-23FO 16 GEODYNAMICS CORPORATION DIRECTORS' STOCK OPTION PLAN April 19, 1995 PURPOSE OF THE PLAN The purpose of the Directors' Stock Option Plan (the "Plan") of Geodynamics Corporation ("Geodynamics") is to provide an incentive which will attract and retain the best available persons to serve on the Board of Directors of Geodynamics and will provide additional incentives to such persons to further the success of Geodynamics. Under the Plan, directors of Geodynamics (the "Directors") will receive a grant of options to purchase common stock of Geodynamics (the "Options") in lieu of an annual retainer for a projected five-year period of service as a Director. PERSONS ELIGIBLE Only Directors who are not full-time employees of Geodynamics are eligible to participate in the Plan. FORM OF OPTION The form of Option attached to this Plan is hereby incorporated herein by reference, and the Plan shall be subject to all requirements set forth therein. PRICE AND NUMBER OF OPTIONS The terms of the Option are set as a formula plan. The exercise price of the Options has been initially established as $5 per share, The exercise price so established shall remain in effect until it is changed by the Board of Directors as provided herein to maintain an exercise price between 50% and 75% of the price of the stock at grant. The number of Options will be established along with the exercise price so as to compensate Directors in an amount equal to that portion of the Director's fees otherwise payable. The Director may only receive one such grant within any five-board-year period. The formula for the total number of options in the grant is based on the fair-market value of the shares on the commencement date: Annual Compensation Amount = (Fair Market Value - Exercise Price)(# of Options)(0.20) Non-retainer fees, expenses of Directors for travel and related items shall not be subject to this Plan and shall be payable in cash. EX-27 17 ART. 5 FDS FOR YEAR ENDED JUNE 2, 1995
5 1000 YEAR JUN-02-1995 JUN-02-1995 2,310 5,862 14,524 0 0 24,050 28,098 (16,615) 40,640 8,312 0 11,910 0 0 18,544 40,640 60,770 60,306 55,017 55,035 0 0 18 3,145 1,227 0 0 0 0 1,918 0.73 0.73
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