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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
BELLWETHER EXPLORATION COMPANY
AND
XXXXX ENERGY COMPANY
Dated as of January 24, 2001
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TABLE OF CONTENTS
ARTICLE I THE MERGER........................................................1
1.1 The Merger.......................................................1
1.2 Effective Time of the Merger.....................................1
1.3 Tax Treatment....................................................2
1.4 Accounting Treatment.............................................2
ARTICLE II THE SURVIVING CORPORATION........................................2
2.1 Articles of Incorporation........................................2
2.2 Bylaws...........................................................2
2.3 Directors and Officers...........................................2
ARTICLE III CONVERSION OF SHARES............................................2
3.1 Conversion of Capital Stock......................................2
3.2 Surrender and Payment............................................6
3.3 Stock Options....................................................7
3.4 No Fractional Shares.............................................8
3.5 Dissenter's Rights...............................................8
3.6 Closing..........................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF XXXXX..........................9
4.1 Organization and Qualification...................................9
4.2 Capitalization..................................................10
4.3 Authority.......................................................11
4.4 Consents and Approvals; No Violation............................11
4.5 Xxxxx SEC Reports...............................................12
4.6 Financial Statements............................................12
4.7 Absence of Undisclosed Liabilities..............................13
4.8 Absence of Certain Changes......................................13
4.9 Taxes...........................................................13
4.10 Litigation......................................................14
4.11 Employee Benefit Plans; ERISA...................................15
4.12 Environmental Liability.........................................16
4.13 Compliance with Applicable Laws.................................18
4.14 Insurance.......................................................18
4.15 Labor Matters; Employees........................................18
4.16 Reserve Reports.................................................19
4.17 Permits.........................................................20
4.18 Material Contracts..............................................20
4.19 Required Stockholder Vote or Consent............................21
4.20 Proxy/Information Statement/Prospectus; Registration Statement..21
4.21 Intellectual Property...........................................22
4.22 Hedging.........................................................22
4.23 Brokers.........................................................22
4.24 Tax Matters.....................................................22
4.25 Fairness Opinion................................................23
4.26 Takeover Laws...................................................23
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ARTICLE V..................................................................24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BELLWETHER.....................24
5.1 Organization and Qualification..................................24
5.2 Capitalization..................................................25
5.3 Authority.......................................................25
5.4 Consents and Approvals; No Violation............................26
5.5 Bellwether SEC Reports..........................................27
5.6 Bellwether Financial Statements.................................27
5.7 Absence of Undisclosed Liabilities..............................28
5.8 Absence of Certain Changes......................................28
5.9 Taxes...........................................................28
5.10 Litigation......................................................29
5.11 Employee Benefit Plans; ERISA...................................29
5.12 Environmental Liability.........................................31
5.13 Compliance with Applicable Laws.................................32
5.14 Insurance.......................................................32
5.15 Labor Matters; Employees........................................33
5.16 Reserve Reports.................................................33
5.17 Permits.........................................................34
5.18 Material Contracts..............................................34
5.19 Required Stockholder Vote or Consent............................35
5.20 Proxy/Information Statement/Prospectus; Registration Statement..35
5.21 Intellectual Property...........................................36
5.22 Hedging.........................................................36
5.23 Brokers.........................................................36
5.24 Tax Matters.....................................................36
5.25 Fairness Opinion................................................37
5.26 Takeover Laws...................................................37
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER..........................37
6.1 Conduct of Business by Xxxxx Pending the Merger.................37
6.2 Conduct of Business by Bellwether Pending the Merger............40
ARTICLE VII ADDITIONAL AGREEMENTS..........................................42
7.1 Access and Information..........................................42
7.2 Acquisition Proposals...........................................43
7.3 Directors' and Officers' Indemnification and Insurance..........44
7.4 Further Assurances..............................................45
7.5 Expenses........................................................45
7.6 Cooperation.....................................................47
7.7 Publicity.......................................................47
7.8 Additional Actions..............................................47
7.9 Filings.........................................................47
7.10 Consents........................................................47
7.11 Employee Matters; Benefit Plans.................................47
7.12 Board, Committees and Executive Officers........................49
7.13 Stockholders Meetings...........................................50
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7.14 Preparation of the Proxy/Information Statement/Prospectus
and Registration Statement.....................................51
7.15 Stock Exchange Listing..........................................52
7.16 Notice of Certain Events........................................52
7.17 Site Inspections................................................53
7.18 Affiliate Agreements; Tax Treatment.............................53
7.19 Stockholder Litigation..........................................53
7.20 Indenture Matters...............................................53
7.21 Credit Facility.................................................54
7.22 Registration Rights Agreements..................................54
7.23 Option Issuance and Employment Agreements.......................54
7.24 Certain Bellwether Board Approvals..............................54
7.25 Termination of Agreements.......................................54
7.26 Voting Agreements...............................................54
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER......................54
8.1 Conditions to the Obligation of Each Party......................54
8.2 Conditions to the Obligations of Bellwether.....................55
8.3 Conditions to the Obligations of Xxxxx..........................56
ARTICLE IX SURVIVAL........................................................57
9.1 Survival of Representations and Warranties......................57
9.2 Survival of Covenants and Agreements............................57
ARTICLE X TERMINATION, AMENDMENT AND WAIVER................................57
10.1 Termination.....................................................57
10.2 Effect of Termination...........................................59
ARTICLE XI MISCELLANEOUS...................................................60
11.1 Notices.........................................................60
11.2 Separability....................................................61
11.3 Assignment......................................................61
11.4 Interpretation..................................................61
11.5 Counterparts....................................................61
11.6 Entire Agreement................................................61
11.7 Governing Law...................................................61
11.8 Attorneys' Fees.................................................61
11.9 No Third Party Beneficiaries....................................61
11.10 Disclosure Schedules............................................61
11.11 Amendments and Supplements......................................61
11.12 Extensions, Waivers, Etc........................................62
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") dated as of
January 24, 2001, by and between Bellwether Exploration Company, a Delaware
corporation ("BELLWETHER"), and Xxxxx Energy Company, a Texas corporation
("XXXXX").
WHEREAS, the respective Boards of Directors of Bellwether and Xxxxx
deem it advisable and in the best interests of their respective stockholders
that Xxxxx merge with and into Bellwether (the "MERGER") upon the terms and
subject to the conditions set forth herein, and such Boards of Directors have
approved the Merger; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) with the approval of Xxxxx'x Board of Directors, Bellwether has
entered into voting agreements with each of BancAmerica Capital Investors SBIC
I, L.P., Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxxx Xxxxxxxx Energy, L.P., Xxx X.
Xxxx, EnCap Energy Capital Fund III, L.P., SGC Partners II, LLC, EOS Partners
SBIC, L.P., EnCap Energy Capital Fund, III-B and Energy Capital Investment Co.,
PLC under which such parties have among other things agreed to support the
Merger upon the terms and conditions set forth therein and (ii) with the
approval of Bellwether's Board of Directors, Xxxxx has entered into voting
agreements with each of X.X. Xxxxx, Xxxxxxx X. Manner, Xxxx Xxx Xxxxx, A.K.
XxXxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxx, and Xxxxx X. Xxxx, under which
such parties have among other things agreed to support the Merger upon the terms
and conditions set forth therein (collectively, the "VOTING AGREEMENTS"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "CODE");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof, at
the Effective Time (as defined in Section 1.2) Xxxxx shall merge with and into
Bellwether and the separate corporate existence of Xxxxx shall thereupon cease
and Bellwether shall be the surviving corporation in the Merger (sometimes
referred to herein as the "SURVIVING CORPORATION"). The Merger shall have the
effects set forth in Article 5.06 of the Texas Business Corporation Act (the
"TBCA") and Section 259 of the Delaware General Corporation Law (the "DGCL"),
including the Surviving Corporation's succession to and assumption of all rights
and obligations of Xxxxx.
1.2 Effective Time of the Merger. The Merger shall become effective
(the "EFFECTIVE TIME") upon the latest of (i) the filing of properly executed
Articles of Merger relating to the Merger with the Secretary of State of Texas
in accordance with the TBCA, and the issuance by the Secretary of State of Texas
of a certificate of merger with respect thereto, (ii) the filing of a properly
executed Certificate of Merger relating to the Merger with the Secretary of
State of
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Delaware in accordance with the DGCL, and the issuance by the Secretary
of State of Delaware of a certificate of merger with respect thereto, and (iii)
at such later time as the parties shall agree and set forth in such Articles of
Merger and Certificate of Merger. The filing of the Articles of Merger and
Certificate of Merger referred to above shall be made as soon as practicable on
the Closing Date set forth in Section 3.6.
1.3 Tax Treatment. It is intended that the Merger shall constitute a
reorganization under Section 368(a) of the Code.
1.4 Accounting Treatment. It is intended that the Merger shall be
accounted for as a purchase transaction for financial accounting purposes.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Certificate of Incorporation of
Bellwether in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation at and after the
Effective Time until thereafter amended in accordance with the terms thereof and
the DGCL, except that Article I of the Surviving Corporation's Certificate of
Incorporation shall be amended to change the Surviving Corporation's name to a
name that is mutually acceptable to each of Bellwether and Xxxxx, which name
shall be chosen prior to the mailing of the Proxy/Information
Statement/Prospectus (as defined).
2.2 Bylaws. The bylaws of Bellwether as in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation at and after
the Effective Time, and thereafter may be amended in accordance with their terms
and as provided by the Certificate of Incorporation of the Surviving Corporation
and the DGCL.
2.3 Directors and Officers. At and after the Effective Time, the
directors and officers of the Surviving Corporation shall be as set forth in
Section 7.12, until their respective successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
bylaws.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion of Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any capital
stock described below:
(a) All shares of Common Stock of Xxxxx, par value $.01 ("XXXXX
COMMON STOCK"), that are held in Xxxxx'x treasury will be canceled and no cash,
Bellwether capital stock or other consideration shall be delivered in exchange
therefor.
(b) Conversion of Xxxxx Common Stock.
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(i) Subject to Sections 3.4 and 3.5, each share of Xxxxx
Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares of Xxxxx Common Stock treated in
accordance with Section 3.1(a)) will be converted into (x) the Cash
Amount (the "CASH CONSIDERATION") and (y) the right to receive the
number of shares of Bellwether Common Stock, par value $.01 per
share ("BELLWETHER COMMON STOCK") equal to the Exchange Ratio (the
"STOCK CONSIDERATION" and, together with the Cash Consideration,
the "COMMON CONVERSION CONSIDERATION"). All such shares of Xxxxx
Common Stock, when so converted, will no longer be outstanding and
will automatically be retired and will cease to be outstanding, and
the holder of a certificate ("COMMON STOCK CERTIFICATE") that,
immediately prior to the Effective Time, represented outstanding
shares of Xxxxx Common Stock will cease to have any rights with
respect thereto, except the right to receive, upon the surrender of
such Common Stock Certificate: (A) the applicable Common Conversion
Consideration, (B) certain dividends and other distributions under
Section 3.1(e), and (C) cash in lieu of fractional shares of
Bellwether Common Stock under Section 3.4, in each case without
interest (collectively, the "COMMON STOCK MERGER CONSIDERATION").
Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of
Bellwether Common Stock or Xxxxx Common Stock shall have been
changed into a different number of shares or a different class,
because of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the
Exchange Ratio and, with respect to such changes in the outstanding
shares of Xxxxx Common Stock, the Cash Amount, shall be
correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination
or exchange of shares.
(ii) For this Agreement the following terms will have the
indicated meanings:
"ASSUMED PRICE" means the quotient of (i) the sum of (A)
$56,412,896, (B) the aggregate exercise price of all of the
Xxxxx Convertible Securities (as defined) issued and
outstanding on the date hereof, and (C) $80,000,000 (provided
that if the Bellwether Market Price is (x) greater than $9.00,
then clause (C) shall be equal to the product of 8,888,889
times the Bellwether Market Price or (y) less than $7.00, then
clause (C) shall be equal to the product of 11,428,570 times
the Bellwether Market Price) divided by (ii) the Fully Diluted
Xxxxx Equity immediately prior to the acquisition of the Xxxxx
Convertible Securities under Section 3.3.
"XXXXX CONVERTIBLE SECURITY CASH-OUT AMOUNT" means if the
Bellwether Market Price is (i) less than or equal to $9.00,
then 70% of the Xxxxx Convertible Security Value Amount, and
(ii) greater than $9.00, then 70% of what the Xxxxx
Convertible Security Value Amount would be if the Bellwether
Market Price were $9.00. The "Xxxxx Convertible Security
Cash-Out Amount" may be calculated for any holder of Xxxxx
Convertible Securities or any grant of Xxxxx
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Convertible Securities by using the preceding formula except
for using the Xxxxx Security Value Amount attributable to that
holder or grant instead of for all the Xxxxx Convertible
Securities.
"XXXXX CONVERTIBLE SECURITY VALUE AMOUNT" means the
result of (i) the product of (A) the Assumed Price times (B)
the number of Xxxxx Convertible Securities outstanding
immediately prior to the acquisition of Xxxxx Convertible
Securities by Xxxxx under Section 3.3 minus (ii) the aggregate
exercise price of all of the Xxxxx Convertible Securities
outstanding immediately prior to the acquisition of Xxxxx
Convertible Securities by Xxxxx under Section 3.3. The "Xxxxx
Convertible Security Value Amount" may be calculated for any
holder of Xxxxx Convertible Securities or any grant of Xxxxx
Convertible Securities by using the preceding formula except
for replacing clauses (B) (and (ii)) with the number of (the
aggregate exercise price of) the Xxxxx Convertible Securities
for which such Xxxxx Convertible Security Value Amount is to
be calculated.
"BELLWETHER MARKET PRICE" means the average of the
closing prices on the Nasdaq National Market System of a share
of Bellwether Common Stock over 20 consecutive trading days
ending on the third trading day before the Closing Date.
"CASH AMOUNT" means the quotient of (i) the result of (A)
the sum of (w) $56,412,896 plus (x) the aggregate proceeds
Xxxxx has received prior to the Effective Time as the result
of the exercise of any Xxxxx Convertible Securities between
the date hereof and the Effective Time, minus (B) the Xxxxx
Convertible Security Cash-Out Amount, divided by (ii) the
number of shares of Xxxxx Common Stock (other than treasury
shares) outstanding at the Effective Time.
"EXCHANGE RATIO" means the quotient of (i) the result of
(x) $80,000,000 minus (y) the product of (I) number of
Reserved Bellwether Shares times (II) the Bellwether Market
Price divided by (ii) the product of (A) the Bellwether Market
Price times (B) the number of shares of Xxxxx Common Stock
(other than treasury shares) outstanding at the Effective
Time. For this definition, if the Bellwether Market Price is
greater than $9.00, the Bellwether Market Price will be deemed
to be $9.00, and if the Bellwether Market Price is less than
$7.00, the Bellwether Market Price will be deemed to be $7.00
"FULLY DILUTED XXXXX EQUITY" means the sum (without
duplication) of the number of shares of Xxxxx Common Stock:
(a) outstanding as of the Effective Time (other than treasury
shares); (b) issuable upon the exercise of the Xxxxx
Convertible Securities outstanding
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immediately prior to the acquisition of Xxxxx Convertible
Securities by Target under Section 3.3 (regardless of whether
such options or warrants are exercisable); and (c) for which
all of Xxxxx'x other derivative securities are exercisable for
or convertible into, directly or indirectly, as of the
Effective Time.
"RESERVED BELLWETHER SHARES" means the number of shares
of Bellwether Common Stock determined by determining the
quotient of (i) the result of (A) the Xxxxx Convertible
Security Value Amount minus (B) the Xxxxx Convertible Security
Cash-Out Amount, divided by (ii) the Bellwether Market Price
(rounded down to the nearest number of whole shares). The
"Reserved Bellwether Shares" may be calculated for any holder
of Xxxxx Convertible Securities or any grant of Xxxxx
Convertible Securities by using the preceding formula except
replacing clause (B) with the Xxxxx Convertible Security Value
Amount for the number of Xxxxx Convertible Securities for
which such Xxxxx Convertible Security Value Amount is to be
calculated.
(c) Subject to Section 3.5, each share of Cumulative Redeemable
Preferred Stock, Series B, par value $.01 of Xxxxx (the "XXXXX B PREFERRED
STOCK") issued and outstanding immediately prior to the Effective Time will be
converted into the amount of cash that would be required to redeem such share
pursuant to the statement of resolution with respect thereto (the "PREFERRED
CONVERSION CONSIDERATION"). All such shares of Xxxxx B Preferred Stock, when so
converted, will no longer be outstanding and will automatically be cancelled and
retired and will cease to exist, and the holder of a certificate ("PREFERRED
STOCK CERTIFICATE" and, together with the Common Stock Certificates, the "STOCK
CERTIFICATES") that, immediately prior to the Effective Time, represented
outstanding shares of Xxxxx B Preferred Stock will cease to have any rights with
respect thereto, except the right to receive, upon the surrender of such
Preferred Stock Certificate, the Preferred Conversion Consideration without
interest (collectively, the "PREFERRED STOCK MERGER CONSIDERATION" and, together
with the Common Stock Merger Consideration, the "MERGER CONSIDERATION").
(d) Each share of Bellwether Common Stock issued and outstanding
immediately prior to the Effective Time shall not be affected by the Merger.
(e) No dividends or other distributions declared or made after the
Effective Time with a record date after the Effective Time shall be paid to the
holder of any un-surrendered Common Stock Certificate with respect to the
applicable Common Stock Merger Consideration represented thereby until the
holder of record of such Common Stock Certificate shall surrender such Common
Stock Certificate in accordance with Section 3.2. Subject to the effect of
applicable laws (including escheat and abandoned property laws), following
surrender of any such Common Stock Certificate there shall be paid to the record
holder of the certificate or certificates representing the Common Stock Merger
Consideration issued in exchange therefor, without interest, (i) the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to Common Stock Merger Consideration, and (ii) if
the payment date for any dividend or distribution payable with respect to Common
Stock Merger Consideration has not occurred prior to the surrender of such
Common Stock
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Certificate, at the appropriate payment date therefor, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
the surrender of such Common Stock Certificate and a payment date subsequent to
the surrender of such Common Stock Certificate.
(f) All Merger Consideration issued upon the surrender of Stock
Certificates in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Stock Certificates
and the Xxxxx Common Stock or Xxxxx B Preferred Stock formerly represented
thereby, and from and after the Effective Time there shall be no further
registration of transfers effected on the stock transfer books of the Surviving
Corporation of shares of Xxxxx Common Stock or Xxxxx B Preferred Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Stock Certificates are presented to the Surviving Corporation
for any reason, they shall be canceled and exchanged as provided in this Article
III.
3.2 Surrender and Payment.
(a) Bellwether shall authorize one or more transfer agent(s)
reasonably acceptable to Xxxxx to act as Exchange Agent hereunder (the "EXCHANGE
AGENT") with respect to the Merger. At or prior to the Effective Time,
Bellwether shall deposit with the Exchange Agent for the benefit of the holders
of Xxxxx Common Stock and Xxxxx B Preferred Stock, for exchange in accordance
with this Section 3.2 through the Exchange Agent, Bellwether Common Stock and
cash (collectively, the "EXCHANGE FUND"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the applicable Merger Consideration in
exchange for surrendered Stock Certificates pursuant to Section 3.1 out of the
Exchange Fund. Except as contemplated by Section 3.2(e), the Exchange Fund shall
not be used for any other purpose.
(b) Promptly after the Effective Time, but in any event not later
than five business days thereafter, Bellwether will send, or will cause the
Exchange Agent to send, to each holder of a Stock Certificate or Certificates
that immediately prior to the Effective Time represented outstanding Xxxxx
Common Stock or Xxxxx B Preferred Stock a letter of transmittal and instructions
for use in effecting the exchange of such Stock Certificates for certificates
representing the Stock Consideration and the Cash Consideration (with respect to
the Xxxxx Common Stock) or the Preferred Stock Merger Consideration (with
respect to the Xxxxx B Preferred Stock). Provision also shall be made for
holders of Stock Certificates to procure in person immediately after the
Effective Time a letter of transmittal and instructions and to deliver in person
immediately after the Effective Time such letter of transmittal and Stock
Certificates in exchange for the applicable Merger Consideration.
(c) After the Effective Time, Stock Certificates shall represent
the right, upon surrender thereof to the Exchange Agent, together with a duly
executed and properly completed letter of transmittal relating thereto, to
receive in exchange therefor the applicable Merger Consideration subject to any
required tax withholding, and the Stock Certificates so surrendered shall be
canceled. No interest will be paid or will accrue on any cash amount payable
upon the surrender of any such Stock Certificates. Until so surrendered, each
such Stock Certificate shall, after the Effective Time, represent for all
purposes only the right to receive the applicable Merger Consideration.
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(d) If any shares of Bellwether Common Stock are to be issued
and/or cash to be paid to a Person other than the registered holder of the Stock
Certificate or Certificates surrendered in exchange therefor, it shall be a
condition to such issuance or payment that the Stock Certificate or Certificates
so surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such issuance shall pay to the Exchange
Agent any transfer or other taxes required as a result of such issuance to a
Person other than the registered holder or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. For this
Agreement, "PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a Governmental Authority.
(e) Any Merger Consideration in the Exchange Fund that remains
unclaimed by the holders of Xxxxx Common Stock or Xxxxx B Preferred Stock one
year after the Effective Time shall be returned to Bellwether, upon demand, and
any such holder who has not exchanged such holder's Stock Certificates in
accordance with this Section 3.2 prior to that time shall thereafter look only
to Bellwether, as a general creditor thereof, to exchange such Stock
Certificates or to pay amounts to which such holder is entitled pursuant to
Section 3.1. If outstanding Stock Certificates are not surrendered prior to six
years after the Effective Time (or, in any particular case, prior to such
earlier date on which any Merger Consideration issuable or payable in respect of
such Stock Certificates would otherwise escheat to or become the property of any
governmental unit or agency), the Merger Consideration issuable or payable in
respect of such Stock Certificates shall, to the extent permitted by applicable
law, become the property of Bellwether, free and clear of all claims or interest
of any Person previously entitled thereto. Notwithstanding the foregoing, none
of Bellwether, Xxxxx or the Surviving Corporation shall be liable to any holder
of Stock Certificates for any amount paid, or Merger Consideration delivered, to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) If any Stock Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Stock Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as Bellwether may direct as indemnity against any claim that may be made
against it with respect to such Stock Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Stock Certificate the Merger
Consideration in respect thereof pursuant to this Agreement.
3.3 Stock Options. Immediately prior to the Effective Time, Xxxxx shall
acquire from each holder of employee or director stock options of Xxxxx ("XXXXX
STOCK OPTIONS") and warrants of Xxxxx ("XXXXX WARRANTS" and, together with the
Xxxxx Stock Options, the "XXXXX CONVERTIBLE SECURITIES") outstanding immediately
prior to the Effective Time, Xxxxx Convertible Securities of such holder
representing the Xxxxx Convertible Security Cash-Out Amount of such Xxxxx
Convertible Securities in exchange for cash or at Xxxxx'x option, a note which
shall be payable immediately after the Effective Time, equal to the Xxxxx
Convertible Security Cash-Out Amount of all Xxxxx Convertible Securities of such
holder. Such Xxxxx Convertible Securities so acquired shall not be deemed to be
outstanding at the Effective Time. At the Effective Time, Bellwether shall
assume all Xxxxx Convertible Securities remaining outstanding. Each such Xxxxx
Convertible Security remaining outstanding after the exchange contemplated by
the first sentence of this Section 3.3 shall become an option or warrant having
a cashless exercise feature
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(a "BELLWETHER OPTION") to purchase that number of shares of Bellwether Common
Stock equal to the quotient of (i) the sum of (X) the Xxxxx Convertible Security
Value Amount of such Xxxxx Convertible Security and (Y) the aggregate exercise
price of such Xxxxx Convertible Security divided by (ii) the Bellwether Market
Price. The exercise price per share of Bellwether Common Stock with respect to
each such Bellwether Option shall equal the aggregate exercise price of the
Xxxxx Convertible Security assumed by Bellwether divided by the number of shares
of Bellwether Common Stock for which such Bellwether Option is exercisable. Such
Bellwether Option shall be deemed to be automatically exercised on a cashless
basis immediately after the time a post-effective amendment to the Registration
Statement converting it into a registration statement on Form S-8 has been
declared effective by the Securities and Exchange Commission (the "SEC"). Prior
to the Effective Time, Xxxxx shall take all steps necessary to give written
notice to each holder of a Xxxxx Stock Option that all Xxxxx Stock Options other
than those converted into Bellwether Options shall be canceled effective as of
the Effective Time. Xxxxx shall use its reasonable best efforts to cause its
Board of Directors or any committee thereof responsible for the administration
of Xxxxx'x option plans to take any and all action necessary to effectuate the
matters described in this Section 3.3 on or before the Effective Time. Any
amounts payable pursuant to this Section 3.3 shall be subject to any required
withholding of taxes and shall be paid without interest.
3.4 No Fractional Shares. No fractional shares of Bellwether Common
Stock shall be issued in the Merger and fractional share interests shall not
entitle the owner thereof to vote or to any rights of a stockholder of
Bellwether. All holders of fractional shares of Bellwether Common Stock shall be
entitled to receive, in lieu thereof, an amount in cash equal to such fraction
times the Bellwether Market Price.
3.5 Dissenter's Rights. Any shares of Xxxxx Common Stock or Xxxxx B
Preferred Stock that a stockholder thereof properly exercising its dissent or
appraisal rights under the TBCA (a "DISSENTING STOCKHOLDER") holds will be
converted into the right to receive such consideration as may be determined to
be due to such Dissenting Stockholder under the TBCA; except that any such
shares that a Dissenting Stockholder holds for which, after the Effective Time,
such Dissenting Stockholder withdraws its demand for purchase or loses its
purchase right as provided in the TBCA, will be deemed to be converted, as of
the Effective Time, into the right to receive the applicable Merger
Consideration. Xxxxx will give Bellwether (a) prompt notice of any written
demands for purchase, withdrawals of demands for purchase and any other
instruments served under the TBCA, and (b) the opportunity to direct all
negotiations and proceedings with respect to demands for purchase under the
TBCA. Xxxxx will not voluntarily make any payment with respect to any purchase
demands and will not, except with Bellwether's prior written consent, settle or
offer to settle any such demands.
3.6 Closing. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at a location mutually acceptable to
Xxxxx and Bellwether, at 10:00 a.m., local time, on the day (the "CLOSING DATE")
on which all of the conditions set forth in Article VIII are satisfied or
waived, or at such other date and time as Bellwether and Xxxxx shall otherwise
agree.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx represents and warrants to Bellwether as follows:
4.1 Organization and Qualification.
(a) Xxxxx is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas, is duly qualified to do
business as a foreign corporation and is in good standing in the jurisdictions
set forth in Section 4.1(a) of the disclosure letter delivered to Bellwether
contemporaneously with the execution hereof (the "XXXXX DISCLOSURE SCHEDULE"),
which include each jurisdiction in which the character of Xxxxx'x properties or
the nature of its business makes such qualification necessary, except in
jurisdictions, if any, where the failure to be so qualified would not result in
a Xxxxx Material Adverse Effect (as defined below). Xxxxx has all requisite
corporate power and authority to own, use or lease its properties and to carry
on its business as it is now being conducted. Xxxxx has made available to
Bellwether a complete and correct copy of its articles of incorporation and
bylaws, each as amended to date, and Xxxxx'x articles of incorporation and
bylaws as so delivered are in full force and effect. Xxxxx is not in default in
any respect in the performance, observation or fulfillment of any provision of
its articles of incorporation or bylaws.
(b) Section 4.1(b) of the Xxxxx Disclosure Schedule lists the name
and jurisdiction of organization of each Subsidiary of Xxxxx and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to do
business as a foreign corporation or other organization as of the date hereof.
Each of Xxxxx'x Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, is
duly qualified to do business as a foreign corporation and is in good standing
in the jurisdictions listed in Section 4.1(b) of the Xxxxx Disclosure Schedule,
which includes each jurisdiction in which the character of such Subsidiary's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Xxxxx Material Adverse Effect. Each of Xxxxx'x Subsidiaries has the
requisite corporate power and authority to own, use or lease its properties and
to carry on its business as it is now being conducted and as it is now proposed
to be conducted. Xxxxx has made available to Bellwether a complete and correct
copy of the certificate of incorporation and bylaws (or similar organizational
documents) of each of Xxxxx'x Subsidiaries, each as amended to date, and the
certificate of incorporation and bylaws (or similar organizational documents) as
so delivered are in full force and effect. No Subsidiary of Xxxxx is in default
in any respect in the performance, observation or fulfillment of any provision
of its articles of incorporation or bylaws (or similar organizational
documents). Other than Xxxxx'x Subsidiaries, Xxxxx does not beneficially own or
control, directly or indirectly, 5% or more of any class of equity or similar
securities of any corporation or other organization, whether incorporated or
unincorporated.
(c) For purposes of this Agreement, (i) a "XXXXX MATERIAL ADVERSE
EFFECT" shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having (or with the passage of time likely to cause,
result in or have) a material adverse effect on the financial condition,
business, assets, properties, prospects or results of operations of Xxxxx
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and its Subsidiaries taken as a whole; provided, that such term shall not
include effects that are not applicable primarily to Xxxxx resulting from market
conditions generally in the oil and gas industry; and (ii) "SUBSIDIARY" shall
mean, with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (x) at least a majority of the
securities or other interests having by their terms voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
beneficially owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries, or (y) such
party or any Subsidiary of such party is a general partner of a partnership or a
manager of a limited liability company.
4.2 Capitalization.
(a) The authorized capital stock of Xxxxx consists of 200,000,000
shares of Xxxxx Common Stock and 10,000,000 shares of preferred stock, par value
$.01 per share, of which 100,000 shares have been designated Convertible
Preferred Stock, Series A, 5,000,000 shares of Xxxxx B Preferred Stock, and
45,000 shares have been designated as Cumulative Redeemable Preferred Stock,
Series C. As of the date of this Agreement, (i) 87,935,885 shares of Xxxxx
Common Stock were issued and outstanding, (ii) no shares of Xxxxx Preferred
Stock, Series A were issued and outstanding, (iii) 5,000,000 shares of Xxxxx B
Preferred Stock were issued and outstanding, (iv) no shares of Xxxxx Preferred
Stock, Series C were issued and outstanding, (v) stock options to acquire
25,523,339 shares of Xxxxx Common Stock were outstanding under all stock option
plans and agreements of Xxxxx or its Subsidiaries, and (vi) warrants to purchase
250,000 shares of Xxxxx Common Stock were outstanding under all warrant
agreements of Xxxxx and its Subsidiaries. All such shares have been validly
issued and are fully paid and nonassessable and free of preemptive rights.
Except as set forth above, and other than this Agreement and pursuant to the
Xxxxx B Preferred Stock, there are no outstanding subscriptions, options,
rights, warrants, convertible securities, stock appreciation rights, phantom
equity, or other agreements or commitments (including "rights plans" or "poison
pills") obligating Xxxxx to issue, transfer, sell, redeem, repurchase or
otherwise acquire any shares of its capital stock of any class. The aggregate
exercise price of Xxxxx Convertible Securities outstanding as of the date hereof
is $3,587,104.
(b) Except as set forth in Section 4.2(b) of the Xxxxx Disclosure
Schedule, Xxxxx is, directly or indirectly, the record and beneficial owner of
all of the outstanding shares of capital stock of each Xxxxx Subsidiary, there
are no irrevocable proxies with respect to any such shares, and no equity
securities of any Xxxxx Subsidiary are or may become required to be issued
because of any options, warrants, rights to subscribe to, calls or commitments
or other agreements of any character whatsoever relating to, or securities or
rights convertible into or exchangeable or exercisable for, shares of any
capital stock of any Xxxxx Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which Xxxxx or any Xxxxx Subsidiary is or may
be bound to issue additional shares of capital stock of any Xxxxx Subsidiary or
securities convertible into or exchangeable or exercisable for any such shares.
All of such shares so owned by Xxxxx are validly issued, fully paid and
nonassessable and are owned by it free and clear of all liens, mortgages,
pledges, security interests, encumbrances, claims or charges of any kind
(collectively, "LIENS").
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4.3 Authority. Xxxxx has full corporate power and authority to
execute and deliver this Agreement and the Voting Agreements to which Xxxxx is
or will be a party and, subject to obtaining the Xxxxx Shareholders' Approval as
contemplated by Section 7.13, to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement and the
Voting Agreements to which Xxxxx is or will be a party and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by Xxxxx'x Board of Directors, and no other corporate proceedings on
the part of Xxxxx are necessary to authorize this Agreement and the Voting
Agreements to which Xxxxx is or will be a party or to consummate the
transactions contemplated hereby or thereby, other than the Xxxxx Shareholders'
Approval as contemplated by Section 7.13. This Agreement has been, and the
Voting Agreements to which Xxxxx is or will be a party are, or upon execution
will be, duly and validly executed and delivered by Xxxxx and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, constitutes, or upon execution will constitute, valid and
binding obligations of Xxxxx enforceable against Xxxxx in accordance with their
respective terms, except as such enforceability may be subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting the rights of creditors and of general principles of equity (the
"ENFORCEABILITY EXCEPTION").
4.4 Consents and Approvals; No Violation. The execution and delivery
of this Agreement, the consummation of the transactions contemplated hereby and
the performance by Xxxxx of its obligations hereunder will not:
(a) subject to the obtaining of any requisite approvals of Xxxxx'x
stockholders as contemplated by Section 7.13, conflict with any provision of
Xxxxx'x articles of incorporation or bylaws or the articles of incorporation or
bylaws (or other similar organizational documents) of any of its Subsidiaries;
(b) subject to the obtaining of any requisite approvals of Xxxxx'x
stockholders as contemplated by Section 7.13, require any consent, waiver,
approval, order, authorization or permit of, or registration, filing with or
notification to, (i) any governmental or regulatory authority or agency (a
"GOVERNMENTAL AUTHORITY"), except for applicable requirements of the Securities
Act of 1933, as amended (the "SECURITIES ACT"), the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), state laws relating to takeovers, if
applicable, state securities or blue sky laws, except as set forth in Section
4.4(b) of the Xxxxx Disclosure Schedule and except for approvals that are
ministerial in nature and are customarily obtained from Governmental Authorities
after the Effective Time in connection with transactions of the same nature as
are contemplated hereby ("CUSTOMARY POST-CLOSING CONSENTS") or (ii) except as
set forth in Section 4.4(b) of the Xxxxx Disclosure Schedule, any third party
other than a Governmental Authority, other than such non-Governmental Authority
third party consents, waivers, approvals, orders, authorizations and permits
that would not (i) result in a Xxxxx Material Adverse Effect, (ii) materially
impair the ability of Xxxxx or any of its Subsidiaries, as the case may be, to
perform its obligations under this Agreement or any Voting Agreement or (iii)
prevent the consummation of any of the transactions contemplated by this
Agreement;
(c) except as set forth in Section 4.4(c) of the Xxxxx Disclosure
Schedule, result in any violation of or the breach of or constitute a default
(with notice or lapse of time or
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both) under, or give rise to any right of termination, cancellation or
acceleration or guaranteed payments or a loss of a material benefit under, any
of the terms, conditions or provisions of any note, lease, mortgage, license,
agreement or other instrument or obligation to which Xxxxx or any of its
Subsidiaries is a party or by which Xxxxx or any of its Subsidiaries or any of
their respective properties or assets may be bound, except for such violations,
breaches, defaults, or rights of termination, cancellation or acceleration, or
losses as to which requisite waivers or consents have been obtained or which,
individually or in the aggregate, would not (i) result in a Xxxxx Material
Adverse Effect, (ii) materially impair the ability of Xxxxx or any of its
Subsidiaries to perform its obligations under this Agreement or any Voting
Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to Xxxxx or any
Subsidiary of Xxxxx;
(e) result in the creation of any Lien upon any material properties
or assets or on any shares of capital stock of Xxxxx or any of its Subsidiaries
under any agreement or instrument to which Xxxxx or any of its Subsidiaries is a
party or by which Xxxxx or any of its Subsidiaries or any of their properties or
assets is bound; or
(f) except as set forth in Section 4.4(f) of the Xxxxx Disclosure
Schedule, result in any holder of any securities of Xxxxx being entitled to
appraisal, dissenters' or similar rights.
4.5 Xxxxx SEC Reports. Xxxxx (or its predecessor registrant under the
Securities Act, Future Petroleum Corporation, a Utah corporation (the "XXXXX
PREDECESSOR")) has filed with the Securities and Exchange Commission (the
"SEC"), and has heretofore made available to Bellwether true and complete copies
of, each form, registration statement, report, schedule, proxy or information
statement and other document (including exhibits and amendments thereto),
including its Annual Reports to Stockholders incorporated by reference in
certain of such reports, required to be filed by it or its predecessors with the
SEC since January 1, 1997 under the Securities Act or the Exchange Act
(collectively, the "XXXXX SEC REPORTS"). As of the respective dates such Xxxxx
SEC Reports were filed or, if any such Xxxxx SEC Reports were amended, as of the
date such amendment was filed, each of the Xxxxx SEC Reports, including any
financial statements or schedules included therein, (a) complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and the applicable rules and regulations promulgated
thereunder, and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except as set forth in Section 4.5 of the Xxxxx
Disclosure Schedule, no event since the date of the last Xxxxx SEC Report has
occurred that would require Xxxxx to file a Current Report on Form 8-K.
4.6 Financial Statements. Each of the audited consolidated financial
statements and unaudited consolidated interim financial statements of Xxxxx and
the Xxxxx Predecessor (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-KSB for each of the
three fiscal years ended December 31, 1997, 1998 and 1999 and its Quarterly
Report on Form 10-QSB for its fiscal quarters ended March 31, 2000,
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June 30, 2000, and September 30, 2000 (collectively, the "FINANCIAL STATEMENTS")
have been prepared from, and are in accordance with, the books and records of
Xxxxx and its consolidated Subsidiaries, comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated in the notes thereto and subject, in the case of quarterly
financial statements, to normal and recurring year-end adjustments) and fairly
present, in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of Xxxxx
and its Subsidiaries as of the date thereof and the consolidated results of
operations and cash flows (and changes in financial position, if any) of Xxxxx
and its Subsidiaries for the periods presented therein (subject to normal
year-end adjustments and the absence of financial footnotes in the case of any
unaudited interim financial statements).
4.7 Absence of Undisclosed Liabilities. Except (a) as specifically
disclosed in the Xxxxx SEC Reports and (b) for liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
since December 31, 1999, neither Xxxxx nor any of its Subsidiaries has incurred
any liabilities or obligations of any nature (contingent or otherwise) that
would have a Xxxxx Material Adverse Effect or would be required by GAAP to be
reflected on a consolidated balance sheet of Xxxxx and its Subsidiaries or the
notes thereto which are not so reflected.
4.8 Absence of Certain Changes. Except as contemplated by this
Agreement, as set forth in Section 4.8 of the Xxxxx Disclosure Schedule or as
disclosed in the Xxxxx SEC Reports filed prior the date hereof, since December
31, 1999 (a) Xxxxx and its Subsidiaries have conducted their business in all
material respects in the ordinary course consistent with past practices, (b)
there has not been any change or development, or combination of changes or
developments that, individually or in the aggregate, would have a Xxxxx Material
Adverse Effect, (c) except with respect to the Xxxxx B Preferred Stock, there
has not been any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Xxxxx, or any
repurchase, redemption or other acquisition by Xxxxx or any of its Subsidiaries
of any outstanding shares of capital stock or other securities of, or other
ownership interests in, Xxxxx or any of its Subsidiaries, (d) there has not been
any amendment of any term of any outstanding security of Xxxxx or any of its
Subsidiaries, and (e) there has not been any change in any method of accounting
or accounting practice by Xxxxx or any of its Subsidiaries, except for any such
change required because of a concurrent change in GAAP or to conform a
Subsidiary's accounting policies and practices to those of Xxxxx.
4.9 Taxes. Except as otherwise disclosed in Section 4.9 of the Xxxxx
Disclosure Schedule and for matters that would have no adverse effect on Xxxxx:
(a) Xxxxx and each of its Subsidiaries have timely filed (or have
had timely filed on their behalf) or will file or cause to be timely filed, all
material Tax Returns (as defined below) required by applicable law to be filed
by any of them prior to or as of the Closing Date. All such Tax Returns and
amendments thereto are or will be true, complete and correct in all material
respects. All such Tax Returns accurately reflect the facts, assets, and
operations of Xxxxx and each of its Subsidiaries.
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(b) Xxxxx and each of its Subsidiaries have paid (or have had paid
on their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes (as defined below) due with
respect to any period ending prior to or as of the Closing Date.
(c) No Audit (as defined below) by a Tax Authority (as defined
below) is pending or threatened with respect to any Tax Returns filed by, or
Taxes due from, Xxxxx or any Subsidiary. No issue has been raised by any Tax
Authority in any Audit of Xxxxx or any of its Subsidiaries that if raised with
respect to any other period not so audited could be expected to result in a
material proposed deficiency for any period not so audited. No material
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against Xxxxx or any of its Subsidiaries. There are no liens for
Taxes upon the assets of Xxxxx or any of its Subsidiaries, except liens for
current Taxes not yet delinquent.
(d) Neither Xxxxx nor any of its Subsidiaries has given or been
requested to give any waiver of statutes of limitations relating to the payment
of Taxes or have executed powers of attorney with respect to Tax matters, which
will be outstanding as of the Closing Date.
(e) Prior to the date hereof, Xxxxx and its Subsidiaries have
disclosed, and provided or made available true and complete copies to Bellwether
of, all material Tax sharing, Tax indemnity, or similar agreements to which
Xxxxx or any of its Subsidiaries is a party to, is bound by, or has any
obligation or liability for Taxes.
(f) As used in this Agreement, (i) "AUDIT" shall mean any audit,
assessment of Taxes, other examination by any Tax Authority, proceeding or
appeal of such proceeding relating to Taxes; (ii) "TAXES" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "TAX
AUTHORITY" shall mean the Internal Revenue Service and any other domestic or
foreign Governmental Authority responsible for the administration of any Taxes;
and (iv) "TAX RETURNS" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
4.10 Litigation. Except as disclosed in the Xxxxx SEC Reports or
Section 4.10 of the Xxxxx Disclosure Schedule and for matters that would not
have a Xxxxx Material Adverse Effect, there is no suit, claim, action,
proceeding or investigation pending or, to Xxxxx'x knowledge, threatened against
or directly affecting Xxxxx, any Subsidiaries of Xxxxx or any of the directors
or officers of Xxxxx or any of its Subsidiaries in their capacity as such, nor
is there any reasonable basis therefor that could reasonably be expected to have
a Xxxxx Material Adverse Effect, if adversely determined. Neither Xxxxx nor any
of its Subsidiaries, nor any officer, director or employee of Xxxxx or any of
its Subsidiaries, has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any other Governmental Authority from
engaging in or continuing any conduct or practice in connection with the
business, assets or properties of Xxxxx or such Subsidiary nor, to the knowledge
of Xxxxx, is Xxxxx, any Subsidiary or any officer, director or employee of Xxxxx
or its Subsidiaries under investigation by any Governmental Authority. Except as
disclosed in the Xxxxx SEC Reports or Section 4.10 of the
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Xxxxx Disclosure Schedule, there is not in existence any order, judgment or
decree of any court or other tribunal or other agency enjoining or requiring
Xxxxx or any of its Subsidiaries to take any action of any kind with respect to
its business, assets or properties. Notwithstanding the foregoing, no
representation or warranty in this Section 4.10 is made with respect to
Environmental Laws, which are covered exclusively by the provisions set forth in
Section 4.12.
4.11 Employee Benefit Plans; ERISA.
(a) Section 4.11(a) of the Xxxxx Disclosure Schedule contains a
true and complete list of all employee benefit plans or arrangements (written or
oral) of any type (including plans described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), sponsored,
maintained or contributed to by Xxxxx or any trade or business, whether or not
incorporated, which together with Xxxxx would be deemed a "single employer"
within the meaning of Section 414(b), (c) or (m) of the Code or section
4001(b)(1) of ERISA (a "XXXXX ERISA AFFILIATE") within six years prior to the
Effective Time ("XXXXX BENEFIT Plans").
(b) With respect to each Xxxxx Benefit Plan: (i) if intended to
qualify under Section 401(a) or 401(k) of the Code, such plan satisfies the
requirements of such sections, has received a favorable determination letter
from the Internal Revenue Service with respect to its qualification, and its
related trust has been determined to be exempt from tax under Section 501(a) of
the Code and, to the knowledge of Xxxxx, nothing has occurred since the date of
such letter to adversely affect such qualification or exemption; (ii) each such
plan has been administered in substantial compliance with its terms and
applicable law, except for any noncompliance with respect to any such plan that
could not reasonably be expected to result in a Xxxxx Material Adverse Effect;
(iii) neither Xxxxx nor any Xxxxx ERISA Affiliate has engaged in, and Xxxxx and
each Xxxxx ERISA Affiliate do not have any knowledge of any Person that has
engaged in, any transaction or acted or failed to act in any manner that would
subject Xxxxx or any Xxxxx ERISA Affiliate to any liability for a breach of
fiduciary duty under ERISA that could reasonably be expected to result in a
Xxxxx Material Adverse Effect; (iv) no disputes are pending or, to the knowledge
of Xxxxx or any Xxxxx ERISA Affiliate, threatened; (v) neither Xxxxx nor any
Xxxxx ERISA Affiliate has engaged in, and Xxxxx and each Xxxxx ERISA Affiliate
do not have any knowledge of any Person that has engaged in, any transaction in
violation of Section 406(a) or (b) of ERISA or Section 4975 of the Code for
which no exemption exists under Section 408 of ERISA or Section 4975(c) of the
Code or Section 4975(d) of the Code or that would result in a civil penalty
being imposed under subsections (i) or (l) of Section 502 of ERISA, in either
case that could reasonably be expected to result in a Xxxxx Material Adverse
Effect; (vi) there have been no "reportable events" within the meaning of
Section 4043 of ERISA for which the 30 day notice requirement of ERISA has not
been waived by the Pension Benefit Guaranty Corporation (the "PBGC"); (vii) all
contributions due have been made on a timely basis (within, where applicable,
the time limit established under Section 302 of ERISA or Code Section 412);
(viii) no notice of intent to terminate such plan has been given under Section
4041 of ERISA and no proceeding has been instituted under Section 4042 of ERISA
to terminate such plan; (ix) no Xxxxx Benefit Plan is a plan covered by Title IV
of ERISA or subject to the funding requirements of Code Section 412; (x) except
to the extent required under ERISA Section 601 et seq. and Code Section 4980B,
neither Xxxxx nor any Xxxxx ERISA Affiliate provides health or welfare benefits
for any retired or former employee or is obligated to provide health or welfare
benefits to any
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active employee following such employee's retirement or other termination of
service; (xi) assuming the Merger closes after April 15, 2001 and that the
closing price of the Bellwether Common Stock on the date of the Effective Time
is $9.00 or less, then no payment that is owed or may become due to any
director, officer, employee, or agent of any Xxxxx or Xxxxx ERISA Affiliate will
be non-deductible to Xxxxx or Xxxxx ERISA Affiliate or subject to tax under Code
Section 280G or Section 4999, nor will Xxxxx or any Xxxxx ERISA Affiliate be
required to "gross-up" or otherwise compensate any such person because of the
imposition of any excise tax on a payment to such person; (xiii) the termination
of any Xxxxx Benefit Plan would not result in any material liability or further
obligation on the part of Xxxxx or any Xxxxx ERISA Affiliate; and (xiv) except
as would not cause a Xxxxx Material Adverse Effect, all reports and other
documents required to be filed by any of the Xxxxx Benefit Plans with any
governmental agency or distributed to plan participants or beneficiaries
(including notices required by the Consolidated Omnibus Reconciliation Act of
1986, actuarial reports, audits, or tax returns) have been timely filed or
distributed. All contributions made or required to be made under any Xxxxx
Benefit Plan meet the requirements for deductibility under the Code, and all
contributions which are required and which have not been made have been properly
recorded on the books of Xxxxx or a Xxxxx ERISA Affiliate.
(c) No Xxxxx Benefit Plan is a "multi-employer plan" (as defined in
Section 4001(a)(3) of ERISA) or a "multiple employer plan" (within the meaning
of Section 413(c) of the Code). No event has occurred with respect to Xxxxx or a
Xxxxx ERISA Affiliate in connection with which Xxxxx could be subject to any
liability, lien or encumbrance with respect to any Xxxxx Benefit Plan or any
employee benefit plan described in Section 3(3) of ERISA maintained, sponsored
or contributed to by a Xxxxx ERISA Affiliate under ERISA or the Code.
(d) Except as set forth in Section 4.11(d) of the Xxxxx Disclosure
Schedule, no employees of Xxxxx or any of its Subsidiaries are covered by any
severance plan or similar arrangement.
4.12 Environmental Liability. Except as set forth in Section 4.12 of
the Xxxxx Disclosure Schedule:
(a) The businesses of Xxxxx and its Subsidiaries have been and are
operated in material compliance with all federal, state and local environmental
protection, health and safety or similar laws, statutes, ordinances,
restrictions, licenses, rules, regulations, permit conditions and legal
requirements, including the Federal Clean Water Act, Oil Pollution Act, Safe
Drinking Water Act, Resource Conservation & Recovery Act, Clean Air Act, Outer
Continental Shelf Lands Act, Comprehensive Environmental Response, Compensation
and Liability Act, and Emergency Planning and Community Right to Know Act, each
as amended and currently in effect (together, "ENVIRONMENTAL LAWS").
(b) Neither Xxxxx nor any of its Subsidiaries has caused or allowed
the generation, treatment, manufacture, processing, distribution, use, storage,
discharge, release, disposal, transport or handling of any chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum, petroleum products or any substance regulated under any Environmental
Law ("HAZARDOUS SUBSTANCES") at any of its properties or facilities, except in
material compliance with all Environmental Laws, and, to Xxxxx'x knowledge, no
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generation, manufacture, processing, distribution, use, treatment, handling,
storage, discharge, release, disposal, transport or handling of any Hazardous
Substances has occurred at any property or facility owned, leased or operated by
Xxxxx or any of its Subsidiaries except in material compliance with all
Environmental Laws.
(c) Neither Xxxxx nor any of its Subsidiaries has received any
written notice from any Governmental Authority or third party or, to the
knowledge of Xxxxx, any other communication alleging or concerning any material
violation by Xxxxx or any of its Subsidiaries of, or responsibility or liability
of Xxxxx or any of its Subsidiaries under, any Environmental Law (or as regards
environmental conditions under the common law). There are no pending, or to the
knowledge of Xxxxx, threatened, claims, suits, actions, proceedings or
investigations with respect to the businesses or operations of Xxxxx or any of
its Subsidiaries alleging or concerning any material violation of or
responsibility or liability under any Environmental Law (or as regards
environmental conditions under the common law) that, if adversely determined,
could reasonably be expected to have a Xxxxx Material Adverse Effect, nor does
Xxxxx have any knowledge of any fact or condition that could give rise to such a
claim, suit, action, proceeding or investigation.
(d) Xxxxx and its Subsidiaries are in possession of all material
approvals, permits, licenses, registrations and similar type authorizations
from, and have filed all material notices and registrations with, all
Governmental Authorities under all Environmental Laws with respect to the
operation of the businesses of Xxxxx and its Subsidiaries; there are no pending
or, to the knowledge of Xxxxx, threatened, actions, proceedings or
investigations seeking to modify, revoke or deny renewal of any of such
approvals, permits, licenses, registrations and authorizations; and Xxxxx does
not have knowledge of any fact or condition that is reasonably likely to give
rise to any action, proceeding or investigation to modify, revoke or deny
renewal of any of such approvals, permits, licenses, registrations and
authorizations.
(e) Without in any way limiting the generality of the foregoing,
(i) to the knowledge of Xxxxx, all offsite locations where Xxxxx or any of its
Subsidiaries has transported, released, discharged, stored, disposed or arranged
for the disposal of Hazardous Substances are authorized disposal sites as
required by law, (ii) to Xxxxx'x knowledge, all underground storage tanks, and
the operating status, capacity and contents of such tanks, located on any
property currently or formerly owned, leased or operated by Xxxxx or any of its
Subsidiaries are identified in Section 4.12 of the Xxxxx Disclosure Schedule and
(iii) no polychlorinated biphenyls ("PCBS") or PCB-containing items are used or
stored at any property owned, leased or operated by Xxxxx or any of its
Subsidiaries except in compliance with Environmental Laws.
(f) There has been no discharge, release or disposal at any of the
properties owned or operated by Xxxxx, its Subsidiaries, or a predecessor in
interest, or to the knowledge of Xxxxx, at any disposal or treatment facility
which received Hazardous Substances generated by Xxxxx, its Subsidiaries, or any
predecessor in interest which could reasonably be expected to result in
liabilities that have a Xxxxx Material Adverse Effect.
(g) To Xxxxx'x knowledge, no pending claims have been asserted or
threatened to be asserted against Xxxxx or its Subsidiaries for any personal
injury (including wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous
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Substances used, handled, generated, transported or disposed by Xxxxx or its
Subsidiaries at property currently or formerly owned or operated by Xxxxx or its
Subsidiaries, except as could not reasonably be expected to result in
liabilities that have a Xxxxx Material Adverse Effect.
4.13 Compliance with Applicable Laws. Xxxxx and each of its
Subsidiaries hold all material approvals, licenses, permits, registrations and
similar type authorizations necessary for the lawful conduct of its respective
businesses, as now conducted, and such businesses are not being, and neither
Xxxxx nor any of its Subsidiaries has received any notice from any Person that
any such business has been or is being conducted in violation of any law,
ordinance or regulation, including any law, ordinance or regulation relating to
occupational health and safety, except for possible violations which either
individually or in the aggregate have not resulted and would not result in a
Xxxxx Material Adverse Effect; provided, however, notwithstanding the foregoing,
no representation or warranty in this Section 4.13 is made with respect to
Environmental Laws, which are covered exclusively by the provisions set forth in
Section 4.12.
4.14 Insurance. Section 4.14 of the Xxxxx Disclosure Schedule lists
each of the insurance policies relating to Xxxxx or its Subsidiaries which are
currently in effect. Xxxxx has made available to Bellwether a true, complete and
correct copy of each such policy or the binder therefor. With respect to each
such insurance policy or binder none of Xxxxx, any of its Subsidiaries or any
other party to the policy is in breach or default thereunder (including with
respect to the payment of premiums or the giving of notices), and Xxxxx does not
know of any occurrence or any event which (with notice or the lapse of time or
both) would constitute such a breach or default or permit termination,
modification or acceleration under the policy, except for such breaches or
defaults which, individually or in the aggregate, would not result in a Xxxxx
Material Adverse Effect. Section 4.14 of the Xxxxx Disclosure Schedule describes
any self-insurance arrangements affecting Xxxxx or its Subsidiaries. The
insurance policies listed in Section 4.14 of the Xxxxx Disclosure Schedule
include all policies which are required in connection with the operation of the
businesses of Xxxxx and its Subsidiaries as currently conducted by applicable
laws and all agreements relating to Xxxxx and its Subsidiaries.
4.15 Labor Matters; Employees.
(a) Except as set forth in Section 4.15 of the Xxxxx Disclosure
Schedule, (i) there is no labor strike, dispute, slowdown, work stoppage or
lockout actually pending or, to the knowledge of Xxxxx, threatened against or
affecting Xxxxx or any of its Subsidiaries and, during the past five years,
there has not been any such action, (ii) none of Xxxxx or any of its
Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to with
any labor organization or employee association applicable to employees of Xxxxx
or any of its Subsidiaries, (iii) none of the employees of Xxxxx or any of its
Subsidiaries are represented by any labor organization and none of Xxxxx or any
of its Subsidiaries have any knowledge of any current union organizing
activities among the employees of Xxxxx or any of its Subsidiaries nor does any
question concerning representation exist concerning such employees, (iv) Xxxxx
and its Subsidiaries have each at all times been in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation,
(v) there is no
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unfair labor practice charge or complaint against any of Xxxxx or any of its
Subsidiaries pending or, to the knowledge of Xxxxx, threatened before the
National Labor Relations Board or any similar state or foreign agency, (vi)
there is no grievance or arbitration proceeding arising out of any collective
bargaining agreement or other grievance procedure relating to Xxxxx or any of
its Subsidiaries, (vii) neither the Occupational Safety and Health
Administration nor any corresponding state agency has threatened to file any
citation, and there are no pending citations, relating to Xxxxx or any of its
Subsidiaries, and (viii) there is no employee or governmental claim or
investigation, including any charges to the Equal Employment Opportunity
Commission or state employment practice agency, investigations regarding Fair
Labor Standards Act compliance, audits by the Office of Federal Contractor
Compliance Programs, sexual harassment complaints or demand letters or
threatened claims.
(b) Since the enactment of the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN ACT"), none of Xxxxx or any of its Subsidiaries
has effectuated (i) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility of any of Xxxxx or any of its Subsidiaries, or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of Xxxxx or any of its Subsidiaries, nor has Xxxxx or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law, in each case that could reasonably be expected to
have a Xxxxx Material Adverse Effect.
4.16 Reserve Reports.
(a) All information (including the statement of the percentage of
reserves from the oil and gas xxxxx and other interests evaluated therein to
which Xxxxx or its Subsidiaries are entitled and the percentage of the costs and
expenses related to such xxxxx or interests to be borne by Xxxxx or its
Subsidiaries) supplied to Netherland Xxxxxx & Associates, Inc. and X. X. Xxxxx &
Company by or on behalf of Xxxxx and its Subsidiaries that was material to each
such firm's estimates of proved oil and gas "retained properties" reserves
attributable to the Oil and Gas Interests (as hereinafter defined) of Xxxxx and
its Subsidiaries in connection with the preparation of the proved oil and gas
reserve reports concerning the Oil and Gas Interests of Xxxxx and its
Subsidiaries as of July 1, 2000 and prepared by such engineering firms
(collectively, the "XXXXX RESERVE REPORT") was (at the time supplied or as
modified or amended prior to the issuance of the Xxxxx Reserve Report) true and
correct in all material respects and Xxxxx has no knowledge of any material
errors in such information that existed at the time of such issuance. For
purposes of this Agreement "OIL AND GAS INTERESTS" means direct and indirect
interests in and rights with respect to oil, gas, mineral, and related
properties and assets of any kind and nature, direct or indirect, including
working, leasehold and mineral interests and operating rights and royalties,
overriding royalties, production payments, net profit interests and other
non-working interests and non-operating interests; all interests in rights with
respect to oil, condensate, gas, casinghead gas and other liquid or gaseous
hydrocarbons (collectively, "HYDROCARBONS") and other minerals or revenues
therefrom, all contracts in connection therewith and claims and rights thereto
(including all oil and gas leases, operating agreements, unitization and pooling
agreements and orders, division orders, transfer orders, mineral deeds, royalty
deeds, oil and gas sales, exchange and processing contracts and agreements, and
in each case, interests thereunder), surface interests, fee interests,
reversionary interests, reservations, and concessions;
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all easements, rights of way, licenses, permits, leases, and other interests
associated with, appurtenant to, or necessary for the operation of any of the
foregoing; and all interests in equipment and machinery (including xxxxx, well
equipment and machinery), oil and gas production, gathering, transmission,
treating, processing, and storage facilities (including tanks, tank batteries,
pipelines, and gathering systems), pumps, water plants, electric plants,
gasoline and gas processing plants, refineries, and other tangible personal
property and fixtures associated with, appurtenant to, or necessary for the
operation of any of the foregoing. Except for changes (including changes in
commodity prices) generally affecting the oil and gas industry, there has been
no change in respect of the matters addressed in the Xxxxx Reserve Report that
would have a Xxxxx Material Adverse Effect.
(b) The "retained assets" reserve report (the "RETAINED ASSETS
RESERVE REPORT") delivered to Bellwether contemporaneously herewith and prepared
by Xxxxx with respect to the Oil and Gas Interests of Xxxxx and its Subsidiaries
(i) accounts for all material Oil and Gas Interests of Xxxxx and its
Subsidiaries disposed of prior to the date hereof and (ii) accounts for (pro
forma) the disposition of all properties described in Section 6.1(d) of the
Xxxxx Disclosure Schedule. The Retained Assets Reserve Report is true and
correct in all material respects and Xxxxx has no knowledge of any material
errors in such information that existed at the time of such issuance.
4.17 Permits. Immediately prior to the Effective Time and except for
Customary Post-Closing Consents, Xxxxx and its Subsidiaries will hold all of the
permits, licenses, certificates, consents, approvals, entitlements, plans,
surveys, relocation plans, environmental impact reports and other authorizations
of Governmental Authorities ("PERMITS") required or necessary to construct, own,
operate, use and/or maintain their respective properties and conduct their
operations as currently conducted, except for such Permits, the lack of which,
individually or in the aggregate, would not have a Xxxxx Material Adverse
Effect; provided, however, that notwithstanding the foregoing, no representation
or warranty in this Section 4.17 is made with respect to Permits issued pursuant
to Environmental Laws, which are covered exclusively by the provisions set forth
in Section 4.12.
4.18 Material Contracts.
(a) Set forth in Section 4.18(a) of the Xxxxx Disclosure Schedule
is a list of each contract, lease, indenture, agreement, arrangement or
understanding to which Xxxxx or any of its Subsidiaries is subject that is of a
type that would be required to be included as an exhibit to a Form S-1
Registration Statement pursuant to the rules and regulations of the SEC if such
a registration statement was filed by Xxxxx (the "XXXXX MATERIAL CONTRACTS").
(b) Except as set forth in Section 4.18(a) or 4.18(b) of the Xxxxx
Disclosure Schedule, the Oil and Gas Interests of Xxxxx and its Subsidiaries are
not subject to (i) any instrument or agreement evidencing or related to
indebtedness for borrowed money, whether directly or indirectly, or (ii) any
agreement not entered into in the ordinary course of business in which the
amount involved is in excess of $100,000. In addition, (A) all Xxxxx Material
Contracts are in full force and effect and are the valid and legally binding
obligations of the parties thereto and are enforceable in accordance with their
respective terms; (B) Xxxxx is not in material breach or default with respect
to, and to the knowledge of Xxxxx, no other party to any
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Xxxxx Material Contract is in material breach or default with respect to, its
obligations thereunder, including with respect to payments or otherwise; (C) no
party to any Xxxxx Material Contract has given notice of any action to
terminate, cancel, rescind or procure a judicial reformation thereof; and (D) no
Xxxxx Material Contract contains any provision that prevents Xxxxx or any of its
Subsidiaries from owning, managing and operating the Oil and Gas Interests of
Xxxxx and its Subsidiaries in accordance with historical practices.
(c) As of the date of this Agreement, except as set forth in
Section 4.18(c) of the Xxxxx Disclosure Schedule, with respect to authorizations
for expenditure executed on or after January 1, 2000, (i) there are no
outstanding calls for payments in excess of $100,000 that are due or which Xxxxx
or its Subsidiaries are committed to make that have not been made; (ii) there
are no material operations with respect to which Xxxxx or its Subsidiaries have
become a non-consenting party; and (iii) there are no commitments for the
material expenditure of funds for drilling or other capital projects other than
projects with respect to which the operator is not required under the applicable
operating agreement to seek consent.
(d) Except as set forth in Section 4.18(d) of the Xxxxx Disclosure
Schedule, (i) there are no provisions applicable to the Oil and Gas Interests of
Xxxxx and its Subsidiaries which increase the royalty percentage of the lessor
thereunder; and (ii) none of the Oil and Gas Interests of Xxxxx and its
Subsidiaries are limited by terms fixed by a certain number of years (other than
primary terms under oil and gas leases).
(e) Neither Xxxxx nor any of its Subsidiaries is a party to or
bound by a non-competition agreement or any other agreement or obligation which
purports to limit the manner in which, or the localities in which, the current
business of Xxxxx or its Subsidiaries, or Bellwether or its Subsidiaries is
conducted.
(f) Section 4.18(f) of the Xxxxx Disclosure Schedules lists each
contract or other agreement purporting to require, preclude, or limit the
ability of Xxxxx or any of its Subsidiaries to register the issuance of debt or
equity securities under the Securities Act (the "XXXXX REGISTRATION RIGHTS
AGREEMENTS").
4.19 Required Stockholder Vote or Consent. The only vote or written
consent of the holders of any class or series of Xxxxx'x capital stock that will
be necessary to consummate the Merger and the other transactions contemplated by
this Agreement is the approval and adoption of this Agreement by the holders of
(i) a majority of the votes entitled to be cast by holders of the Xxxxx Common
Stock and (ii) a majority of the votes entitled to be cast by holders of Xxxxx B
Preferred Stock voting as a separate class (the "XXXXX SHAREHOLDERS' APPROVAL").
4.20 Proxy/Information Statement/Prospectus; Registration Statement.
None of the information to be supplied by Xxxxx for inclusion in (a) the joint
proxy/information statement relating to the written consent by Xxxxx'x
shareholders with respect to the Xxxxx Shareholders' Approval (the "XXXXX
CONSENT") and the Bellwether Special Meeting (in each case, as defined below)
(also constituting the prospectus in respect of Bellwether Common Stock into
which shares of Xxxxx Common Stock will be converted) (the "PROXY/INFORMATION
STATEMENT/PROSPECTUS"), to be filed by Xxxxx and Bellwether with the SEC, and
any amendments or supplements thereto, or (b) the Registration Statement on Form
S-4 (the
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"REGISTRATION STATEMENT") to be filed by Bellwether with the SEC in connection
with the issuance of all Bellwether Common Stock in the Merger, and any
amendments or supplements thereto, will, at the respective times such documents
are filed, and, in the case of the Proxy/Information Statement/Prospectus, at
the time the Proxy/Information Statement/Prospectus or any amendment or
supplement thereto is first mailed to stockholders of Xxxxx and Bellwether, at
the time such stockholders vote on approval and adoption of this Agreement and
at the Effective Time, and, in the case of the Registration Statement, when it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be made therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
4.21 Intellectual Property. Xxxxx or its Subsidiaries own, or are
licensed or otherwise have the right to use, all patents, patent rights,
trademarks, rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights, technology, know-how, processes and other proprietary
intellectual property rights and computer programs ("INTELLECTUAL PROPERTY")
currently used in the conduct of the business of Xxxxx and its Subsidiaries,
except where the failure to so own or otherwise have the right to use such
Intellectual Property would not, individually or in the aggregate, have a Xxxxx
Material Adverse Effect. No Person has notified either Xxxxx or any of its
Subsidiaries that their use of the Intellectual Property infringes on the rights
of any Person, subject to such claims and infringements as do not, individually
or in the aggregate, give rise to any liability on the part of Xxxxx and its
Subsidiaries that could have a Xxxxx Material Adverse Effect, and, to Xxxxx'x
knowledge, no Person is infringing on any right of Xxxxx or any of its
Subsidiaries with respect to any such Intellectual Property. No claims are
pending or, to Xxxxx'x knowledge, threatened that Xxxxx or any of its
Subsidiaries is infringing or otherwise adversely affecting the rights of any
Person with regard to any Intellectual Property.
4.22 Hedging. Section 4.22 of the Xxxxx Disclosure Schedule sets forth,
for the periods shown, obligations of Xxxxx and each of its Subsidiaries for the
delivery of Hydrocarbons attributable to any of the properties of Xxxxx or any
of its Subsidiaries in the future on account of prepayment, advance payment,
take-or-pay or similar obligations without then or thereafter being entitled to
receive full value therefor. Except as set forth in Section 4.22 of the Xxxxx
Disclosure Schedule, as of the date of this Agreement, neither Xxxxx nor any of
its Subsidiaries is bound by futures, hedge, swap, collar, put, call, floor,
cap, option or other contracts that are intended to benefit from, relate to or
reduce or eliminate the risk of fluctuations in the price of commodities,
including Hydrocarbons, or securities.
4.23 Brokers. Except as listed on Section 4.23 of the Xxxxx Disclosure
Schedule, no broker, finder or investment banker is entitled to any brokerage,
finder's fee or other fee or commission payable by Xxxxx or any of its
Subsidiaries in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of Xxxxx or any of its
Subsidiaries. True and correct copies of all agreements and engagement letters
currently in effect with such brokers (the "XXXXX ENGAGEMENT LETTERS") have been
provided to Bellwether.
4.24 Tax Matters. Neither Xxxxx nor, to the knowledge of Xxxxx, any of
its affiliates has taken or agreed to take any action that would prevent the
Merger from constituting a
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reorganization within the meaning of Section 368(a) of the Code. Without
limiting the generality of the foregoing:
(a) Prior to and in connection with the Merger, (i) none of the
Xxxxx Common Stock will be redeemed, (ii) no extraordinary distribution will be
made with respect to Xxxxx Common Stock or Xxxxx B Preferred Stock, and (iii)
none of the Xxxxx Common Stock will be acquired by Xxxxx or any Person related
(as defined in Treas. Reg. Section 1.3681(e)(3) without regard to Section
1.3681(e)(3)(i)(A)) to Xxxxx.
(b) No assets of Xxxxx have been sold, transferred or otherwise
disposed of which would prevent Bellwether from continuing the historic business
of Xxxxx or from using a significant portion of Xxxxx'x historic business assets
in a business following the Merger, and Xxxxx intends to continue its historic
business or use a significant portion of its historic business assets in a
business.
(c) Xxxxx and the stockholders of Xxxxx will each pay their
respective expenses, if any, incurred in connection with the Merger.
(d) There is no intercorporate indebtedness existing between Xxxxx
and Bellwether that was issued, acquired, or will be settled at a discount.
(e) Xxxxx is not an investment company as defined in Section
368(a(2)(F)(iii) and (iv) of the Code.
(f) Xxxxx is not under the jurisdiction of a court in a title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(g) The liabilities of Xxxxx were incurred by Xxxxx in the ordinary
course of its business.
(h) Notwithstanding the foregoing, Xxxxx and Bellwether acknowledge
that Xxxxx may redeem the Xxxxx B Preferred Stock prior to the Merger.
4.25 Fairness Opinion. The Board of Directors of Xxxxx has received a
written opinion from Chase Securities Inc. to the effect that, as of the date of
such opinion, the Common Conversion Consideration to be received by the holders
of outstanding Xxxxx Common Stock pursuant to the Merger is fair, from a
financial point of view, to such holders. A true and complete copy of such
opinion has been given to Bellwether.
4.26 Takeover Laws. Xxxxx and the Board of Directors of Xxxxx have each
taken all action required to be taken by it to exempt this Agreement, and the
transactions contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium,"
"control share," "fair price," "affiliate transaction," "business combination,"
or other antitakeover laws and regulations of any state, including, the State of
Texas, and including Article Thirteen of the TBCA.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BELLWETHER
Bellwether represents and warrants to Xxxxx as follows:
5.1 Organization and Qualification.
(a) Bellwether is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is duly qualified
to do business as a foreign corporation and is in good standing in the
jurisdictions set forth in Section 5.1(a) of the disclosure letter delivered to
Xxxxx contemporaneously with the execution hereof (the "BELLWETHER DISCLOSURE
SCHEDULE"), which include each jurisdiction in which the character of
Bellwether's properties or the nature of its business makes such qualification
necessary, except in jurisdictions, if any, where the failure to be so qualified
would not result in a Bellwether Material Adverse Effect (as defined below).
Bellwether has all requisite corporate power and authority to own, use or lease
its properties and to carry on its business as it is now being conducted.
Bellwether has made available to Xxxxx a complete and correct copy of its
certificate of incorporation and bylaws, each as amended to date, and
Bellwether's certificate of incorporation and bylaws as so delivered are in full
force and effect. Bellwether is not in default in any respect in the
performance, observation or fulfillment of any provision of its certificate of
incorporation or bylaws.
(b) Section 5.1(b) of the Bellwether Disclosure Schedule lists the
name and jurisdiction of organization of each Subsidiary of Bellwether and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to do
business as a foreign corporation or other organization as of the date hereof.
Each of Bellwether's Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions listed in Section 5.1(b) of the Bellwether
Disclosure Schedule, which includes each jurisdiction in which the character of
such Subsidiary's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not result in a Bellwether Material Adverse Effect. Each
of Bellwether's Subsidiaries has the requisite corporate power and authority to
own, use or lease its properties and to carry on its business as it is now being
conducted and as it is now proposed to be conducted. Bellwether has made
available to Xxxxx a complete and correct copy of the certificate of
incorporation and bylaws (or similar organizational documents) of each of
Bellwether's Subsidiaries, each as amended to date, and the certificate of
incorporation and bylaws (or similar organizational documents) as so delivered
are in full force and effect. No Subsidiary of Bellwether is in default in any
respect in the performance, observation or fulfillment of any provision of its
certificate of incorporation or bylaws (or similar organizational documents).
Other than Bellwether's Subsidiaries, Bellwether does not beneficially own or
control, directly or indirectly, 5% or more of any class of equity or similar
securities of any corporation or other organization, whether incorporated or
unincorporated.
(c) For purposes of this Agreement, a "BELLWETHER MATERIAL ADVERSE
EFFECT" shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having (or with the passage of time likely to cause,
result in or have) a material adverse effect
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on the financial condition, business, assets, properties, prospects or results
of operations of Bellwether and its Subsidiaries taken as a whole; provided,
that such term shall not include effects that are not applicable primarily to
Bellwether resulting from market conditions generally in the oil and gas
industry.
5.2 Capitalization.
(a) The authorized capital stock of Bellwether consists of
30,000,000 shares of Bellwether Common Stock, and 1,000,000 shares of preferred
stock of Bellwether, par value $.01 per share. As of the date of this Agreement,
(i) 13,948,626 shares of Bellwether Common Stock were issued and outstanding,
(ii) 311,000 shares of Bellwether Common Stock were in treasury, (iii) no shares
of preferred stock were outstanding and (iv) stock options to acquire 2,302,666
shares of Bellwether Common Stock were outstanding under all stock option plans
and agreements of Bellwether. All such shares have been validly issued and are
fully paid and nonassessable and free of preemptive rights. Except as set forth
above, and other than this Agreement and the Preferred Stock Purchase Rights set
forth in the Rights Agreement dated as of September 12, 1997, by and between
Bellwether and American Stock Transfer & Trust Company, as Rights Agent (as
amended, the "BELLWETHER RIGHTS PLAN"), there are no outstanding subscriptions,
options, rights, warrants, convertible securities, stock appreciation rights,
phantom equity, or other agreements or commitments obligating Bellwether to
issue, transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock of any class. Except for any amendments filed with the Bellwether
SEC Reports (as defined below), the Bellwether Rights Plan has not been amended,
and no amendment thereof is proposed. No "Distribution Date" has occurred within
the meaning of the Bellwether Rights Plan, and the consummation of the
transactions contemplated hereby will not result in the occurrence of a
Distribution Date. Bellwether has taken all action required to render the
Bellwether Rights Plan (and the "Rights" thereunder) inapplicable to this
Agreement and the transactions contemplated hereby, including any Voting
Agreements.
(b) Except as set forth in Section 5.2(b) of the Bellwether
Disclosure Schedule, Bellwether is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock of each
Bellwether Subsidiary, there are no irrevocable proxies with respect to any such
shares, and no equity securities of any Bellwether Subsidiary are or may become
required to be issued because of any options, warrants, rights to subscribe to,
calls or commitments or other agreements of any character whatsoever relating
to, or securities or rights convertible into or exchangeable or exercisable for,
shares of any capital stock of any Bellwether Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which Bellwether or
any Bellwether Subsidiary is or may be bound to issue additional shares of
capital stock of any Bellwether Subsidiary or securities convertible into or
exchangeable or exercisable for any such shares. All of such shares so owned by
Bellwether are validly issued, fully paid and nonassessable and are owned by it
free and clear of all Liens.
5.3 Authority. Bellwether has full corporate power and authority to
execute and deliver this Agreement and the Voting Agreements to which it is or
will be a party and, subject to obtaining the Bellwether Stockholders' Approval
and other approvals as expressly contemplated by Section 7.13(b), to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Voting Agreements
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to which Bellwether is or will be a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by Bellwether's Board of Directors, and no other corporate
proceedings on the part of Bellwether are necessary to authorize this Agreement
or the Voting Agreements to which any of them are or will be a party or to
consummate the transactions contemplated hereby or thereby, other than obtaining
the Bellwether Stockholders' Approval and other approvals as expressly
contemplated by Section 7.13(b). This Agreement has been, and the Voting
Agreements to which Bellwether is or will be a party are, or upon execution will
be, duly and validly executed and delivered by Bellwether and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, constitutes or upon execution will constitute, valid and
binding obligations of Bellwether enforceable against Bellwether in accordance
with their respective terms, except for the Enforceability Exception.
5.4 Consents and Approvals; No Violation. The execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby and the
performance by Bellwether of its obligations hereunder will not:
(a) subject to the obtaining the Bellwether Stockholders' Approval
and other approvals as expressly contemplated by Section 7.13(b), conflict with
any provision of Bellwether's certificate of incorporation or bylaws or the
certificates of incorporation or bylaws (or other similar organizational
documents) of any of its Subsidiaries;
(b) subject to obtaining the Bellwether Stockholders' Approval and
other approvals as expressly contemplated by Section 7.13(b), require any
consent, waiver, approval, order, authorization or permit of, or registration,
filing with or notification to, (i) any Governmental Authority, except for
applicable requirements of the Securities Act, the Exchange Act, state laws
relating to takeovers, if applicable, state securities or blue sky laws, and
Customary Post-Closing Consents or (ii) except as set forth in Section 5.4(b) of
the Bellwether Disclosure Schedule, any third party other than a Governmental
Authority, other than such non-Governmental Authority third party consents,
waivers, approvals, orders, authorizations and permits that would not (i) result
in a Bellwether Material Adverse Effect, (ii) materially impair the ability of
Bellwether or any of its Subsidiaries, as the case may be, to perform its
obligations under this Agreement or any Voting Agreement or (iii) prevent the
consummation of any of the transactions contemplated by this Agreement;
(c) except as set forth in Section 5.4(c) of the Bellwether
Disclosure Schedule, result in any violation of or the breach of or constitute a
default (with notice or lapse of time or both) under, or give rise to any right
of termination, cancellation or acceleration or guaranteed payments or a loss of
a material benefit under, any of the terms, conditions or provisions of any
note, lease, mortgage, license, agreement or other instrument or obligation to
which Bellwether or any of its Subsidiaries is a party or by which Bellwether or
any of its Subsidiaries or any of their respective properties or assets may be
bound, except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses as to which requisite waivers or
consents have been obtained or which, individually or in the aggregate, would
not (i) result in a Bellwether Material Adverse Effect, (ii) materially impair
the ability of Bellwether or any of its Subsidiaries to perform its obligations
under this Agreement or
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any Voting Agreement or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to Bellwether or any
Subsidiary of Bellwether;
(e) result in the creation of any Lien upon any material properties
or assets or on any shares of capital stock of Bellwether or its Subsidiaries
under any agreement or instrument to which Bellwether or any of its Subsidiaries
is a party or by which Bellwether or any of its Subsidiaries or any of their
properties or assets is bound; or
(f) result in any holder of any securities of Bellwether being
entitled to appraisal, dissenters' or similar rights.
5.5 Bellwether SEC Reports. Bellwether has filed with the SEC, and has
heretofore made available to Xxxxx true and complete copies of, each form,
registration statement, report, schedule, proxy or information statement and
other document (including exhibits and amendments thereto), including its Annual
Reports to Shareholders incorporated by reference in certain of such reports,
required to be filed with the SEC since January 1, 1997 under the Securities Act
or the Exchange Act (collectively, the "BELLWETHER SEC REPORTS"). As of the
respective dates such Bellwether SEC Reports were filed or, if any such
Bellwether SEC Reports were amended, as of the date such amendment was filed,
each of the Bellwether SEC Reports, including any financial statements or
schedules included therein, (a) complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and the applicable rules and regulations promulgated thereunder, and (b)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No event since the date of the last Bellwether SEC Report has
occurred that would require Bellwether to file a Current Report on Form 8-K.
5.6 Bellwether Financial Statements. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
Bellwether (including any related notes and schedules) included (or incorporated
by reference) in its Annual Reports on Form 10-K for each of the three fiscal
years ended December 31, 1997, 1998 and 1999 and its Quarterly Report on Form
10-Q for its fiscal quarters ended March 31, 2000, June 30, 2000, and September
30, 2000 (collectively, the "FINANCIAL STATEMENTS") have been prepared from, and
are in accordance with, the books and records of Bellwether and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto and subject,
in the case of quarterly financial statements, to normal and recurring year-end
adjustments) and fairly present, in conformity with GAAP applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of Bellwether and its Subsidiaries as of the date thereof and
the consolidated results of operations and cash flows (and changes in financial
position, if any) of Bellwether and its Subsidiaries for the periods presented
therein (subject to normal year-end adjustments and the absence of financial
footnotes in the case of any unaudited interim financial statements).
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5.7 Absence of Undisclosed Liabilities. Except (a) as specifically
disclosed in the Bellwether SEC Reports and (b) for liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
since December 31, 1999, neither Bellwether nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature (contingent or otherwise)
that would have a Bellwether Material Adverse Effect or would be required by
GAAP to be reflected on a consolidated balance sheet of Bellwether and its
Subsidiaries or the notes thereto which are not so reflected.
5.8 Absence of Certain Changes. Except as contemplated by this
Agreement, as set forth in Section 5.8 of the Bellwether Disclosure Schedule or
as disclosed in the Bellwether SEC Reports filed prior to the date hereof, since
December 31, 1999 (a) Bellwether and its Subsidiaries have conducted their
business in all material respects in the ordinary course consistent with past
practices, (b) there has not been any change or development, or combination of
changes or developments that, individually or in the aggregate, would have a
Bellwether Material Adverse Effect, (c) there has not been any declaration,
setting aside or payment of any dividend or other distribution with respect to
any shares of capital stock of Bellwether or any repurchase, redemption or other
acquisition by Bellwether or any of its Subsidiaries of any outstanding shares
of capital stock or other securities of, or other ownership interests in,
Bellwether or any of its Subsidiaries, (d) there has not been any amendment of
any term of any outstanding security of Bellwether or any of its Subsidiaries,
and (e) there has not been any change in any method of accounting or accounting
practice by Bellwether or any of its Subsidiaries, except for any such change
required because of a concurrent change in GAAP or to conform a Subsidiary's
accounting policies and practices to those of Bellwether.
5.9 Taxes. Except as otherwise disclosed in Section 5.9 of the
Bellwether Disclosure Schedule and for matters that would have no adverse effect
on Bellwether:
(a) Bellwether and each of its Subsidiaries have timely filed (or
have had timely filed on their behalf) or will file or cause to be timely filed,
all material Tax Returns required by applicable law to be filed by any of them
prior to or as of the Closing Date. All such Tax Returns and amendments thereto
are or will be true, complete and correct in all material respects. All such Tax
Returns accurately reflect the facts, assets, and operations of Bellwether and
each of its Subsidiaries.
(b) Bellwether and each of its Subsidiaries have paid (or have had
paid on their behalf), or where payment is not yet due, have established (or
have had established on their behalf and for their sole benefit and recourse),
or will establish or cause to be established on or before the Closing Date, an
adequate accrual for the payment of all material Taxes due with respect to any
period ending prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with
respect to any Tax Returns filed by, or Taxes due from, Bellwether or any
Subsidiary. No issue has been raised by any Tax Authority in any Audit of
Bellwether or any of its Subsidiaries that if raised with respect to any other
period not so audited could be expected to result in a material proposed
deficiency for any period not so audited. No material deficiency or adjustment
for any Taxes has been threatened, proposed, asserted or assessed against
Bellwether or any of its Subsidiaries.
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There are no liens for Taxes upon the assets of Bellwether or any of its
Subsidiaries, except liens for current Taxes not yet delinquent.
(d) Neither Bellwether nor any of its Subsidiaries has given or
been requested to give any waiver of statutes of limitations relating to the
payment of Taxes or have executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date.
(e) Prior to the date hereof, Bellwether and its Subsidiaries have
disclosed, and provided or made available true and complete copies to Xxxxx of,
all material Tax sharing, Tax indemnity, or similar agreements to which
Bellwether or any of its Subsidiaries is a party to, is bound by, or has any
obligation or liability for Taxes.
5.10 Litigation. Except as disclosed in the Bellwether SEC Reports or
Section 5.10 of the Bellwether Disclosure Schedule and for matters that would
not have a Bellwether Material Adverse Effect, there is no suit, claim, action,
proceeding or investigation pending or, to Bellwether's knowledge, threatened
against or directly affecting Bellwether, any Subsidiaries of Bellwether or any
of the directors or officers of Bellwether or any of its Subsidiaries in their
capacity as such, nor is there any reasonable basis therefor that could
reasonably be expected to have a Bellwether Material Adverse Effect, if
adversely determined. Neither Bellwether nor any of its Subsidiaries, nor any
officer, director or employee of Bellwether or any of its Subsidiaries, has been
permanently or temporarily enjoined by any order, judgment or decree of any
court or any other Governmental Authority from engaging in or continuing any
conduct or practice in connection with the business, assets or properties of
Bellwether or such Subsidiary nor, to the knowledge of Bellwether, is
Bellwether, any Subsidiary or any officer, director or employee of Bellwether or
its Subsidiaries under investigation by any Governmental Authority. Except as
disclosed in the Bellwether SEC Reports or Section 5.10 of the Bellwether
Disclosure Schedule, there is not in existence any order, judgment or decree of
any court or other tribunal or other agency enjoining or requiring Bellwether or
any of its Subsidiaries to take any action of any kind with respect to its
business, assets or properties. Notwithstanding the foregoing, no representation
or warranty in this Section 5.10 is made with respect to Environmental Laws,
which are covered exclusively by the provisions set forth in Section 5.12.
5.11 Employee Benefit Plans; ERISA.
(a) Section 5.11(a) of the Bellwether Disclosure Schedule contains
a true and complete list of the employee benefit plans or arrangements (written
or oral) of any type (including plans described in Section 3(3) of ERISA),
sponsored, maintained or contributed to by Bellwether or any trade or business,
whether or not incorporated, which together with Bellwether would be deemed a
"single employer" within the meaning of Section 414(b), (c) or (m) of the Code
or Section 4001(b)(1) of ERISA (a "BELLWETHER ERISA AFFILIATE") within six years
prior to the Effective Time ("BELLWETHER BENEFIT PLANS").
(b) With respect to each Bellwether Benefit Plan: (i) if intended
to qualify under Section 401(a) or 401(k) of the Code, such plan satisfies the
requirements of such sections, has received a favorable determination letter
from the Internal Revenue Service with respect to its qualification, and its
related trust has been determined to be exempt from tax under Section 501(a) of
the Code and, to the knowledge of Bellwether, nothing has occurred since the
date of
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such letter to adversely affect such qualification or exemption; (ii) each such
plan has been administered in substantial compliance with its terms and
applicable law, except for any noncompliance with respect to any such plan that
could not reasonably be expected to result in a Bellwether Material Adverse
Effect; (iii) neither Bellwether nor any Bellwether ERISA Affiliate has engaged
in, and Bellwether and each Bellwether ERISA Affiliate do not have any knowledge
of any Person that has engaged in, any transaction or acted or failed to act in
any manner that would subject Bellwether or any Bellwether ERISA Affiliate to
any liability for a breach of fiduciary duty under ERISA that could reasonably
be expected to result in a Bellwether Material Adverse Effect; (iv) no disputes
are pending, or, to the knowledge of Bellwether or any Bellwether ERISA
Affiliate, threatened; (v) neither Bellwether nor any Bellwether ERISA Affiliate
has engaged in, and Bellwether and each Bellwether ERISA Affiliate do not have
any knowledge of any Person that has engaged in, any transaction in violation of
Section 406(a) or (b) of ERISA or Section 4975 of the Code for which no
exemption exists under Section 408 of ERISA or Section 4975(c) of the Code or
Section 4975(d) of the Code or that would result in a civil penalty being
imposed under subsections (i) or (l) of Section 502 of ERISA, in either case
that could reasonably be expected to result in a Bellwether Material Adverse
Effect; (vi) there have been no "reportable events" within the meaning of
Section 4043 of ERISA for which the 30 day notice requirement of ERISA has not
been waived by the PBGC; (vii) all contributions due have been made on a timely
basis (within, where applicable, the time limit established under Section 302 of
ERISA or Code Section 412); (viii) no notice of intent to terminate such plan
has been given under Section 4041 of ERISA and no proceeding has been instituted
under Section 4042 of ERISA to terminate such plan; (ix) no Bellwether Benefit
Plan is a plan covered by Title IV of ERISA or subject to the funding
requirements of Code Section 412; (x) except to the extent required under ERISA
Section 601 et seq. and Code Section 4980B, neither the Bellwether nor any
Bellwether ERISA Affiliate provides health or welfare benefits for any retired
or former employee or is obligated to provide health or welfare benefits to any
active employee following such employee's retirement or other termination of
service; (xi) no payment that is owed or may become due to any director,
officer, employee, or agent of any Bellwether or Bellwether ERISA Affiliate will
be non-deductible to the Bellwether or Bellwether ERISA Affiliate or subject to
tax under Code Section 280G or Section 4999, nor will the Bellwether or any
Bellwether ERISA Affiliate be required to "gross-up" or otherwise compensate any
such person because of the imposition of any excise tax on a payment to such
person; (xiii) the termination of any Bellwether Benefit Plan would not result
in any material liability or further obligation on the part of the Bellwether or
any Bellwether ERISA Affiliate; and (xiv) except as would not cause a Bellwether
Material Adverse Effect, all reports and other documents required to be filed by
any of the Bellwether Benefit Plans with any governmental agency or distributed
to plan participants or beneficiaries (including notices required by the
Consolidated Omnibus Reconciliation Act of 1986, actuarial reports, audits, or
tax returns) have been timely filed or distributed. All contributions made or
required to be made under any Bellwether Benefit Plan meet the requirements for
deductibility under the Code, and all contributions which are required and which
have not been made have been properly recorded on the books of Bellwether or a
Bellwether ERISA Affiliate.
(c) No Bellwether Benefit Plan is a "multi-employer plan" (as
defined in Section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of Section 413(c) of the Code). No event has occurred with respect
to Bellwether or a Bellwether ERISA Affiliate in connection with which
Bellwether could be subject to any liability, lien or encumbrance with respect
to any Bellwether Benefit Plan or any employee benefit plan
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described in Section 3(3) of ERISA maintained, sponsored or contributed to by a
Bellwether ERISA Affiliate under ERISA or the Code.
(d) Except as set forth in Section 5.11(d) of the Bellwether
Disclosure Schedule, no employees of Bellwether or any of its Subsidiaries are
covered by any severance plan or similar arrangement.
5.12 Environmental Liability. Except as set forth in Section 5.12 of
the Bellwether Disclosure Schedule:
(a) The businesses of Bellwether and its Subsidiaries have been and
are operated in material compliance with all Environmental Laws.
(b) Neither Bellwether nor any of its Subsidiaries has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, discharge, release, disposal, transport or handling of any Hazardous
Substances at any of its properties or facilities, except in material compliance
with all Environmental Laws, and, to Bellwether's knowledge, no generation,
manufacture, processing, distribution, use, treatment, handling, storage,
discharge, release, disposal, transport or handling of any Hazardous Substances
has occurred at any property or facility owned, leased or operated by Bellwether
or any of its Subsidiaries except in material compliance with all Environmental
Laws.
(c) Neither Bellwether nor any of its Subsidiaries has received any
written notice from any Governmental Authority or third party or, to the
knowledge of Bellwether, any other communication alleging or concerning any
material violation by Bellwether or any of its Subsidiaries of, or
responsibility or liability of Bellwether or any of its Subsidiaries under, any
Environmental Law (or as regards environmental conditions under the common law).
There are no pending, or to the knowledge of Bellwether, threatened, claims,
suits, actions, proceedings or investigations with respect to the businesses or
operations of Bellwether or any of its Subsidiaries alleging or concerning any
material violation of or responsibility or liability under any Environmental Law
(or as regards environmental conditions under the common law) that, if adversely
determined, could reasonably be expected to have a Bellwether Material Adverse
Effect, nor does Bellwether have any knowledge of any fact or condition that
could give rise to such a claim, suit, action, proceeding or investigation.
(d) Bellwether and its Subsidiaries are in possession of all
material approvals, permits, licenses, registrations and similar type
authorizations from, and have filed all material notices and registrations with,
all Governmental Authorities under all Environmental Laws with respect to the
operation of the businesses of Bellwether and its Subsidiaries; there are no
pending or, to the knowledge of Bellwether, threatened, actions, proceedings or
investigations seeking to modify, revoke or deny renewal of any of such
approvals, permits, licenses registrations and authorizations; and Bellwether
does not have knowledge of any fact or condition that is reasonably likely to
give rise to any action, proceeding or investigation to modify, revoke or deny
renewal of any of such approvals, permits, licenses, registrations and
authorizations.
(e) Without in any way limiting the generality of the foregoing,
(i) to the knowledge of Bellwether, all offsite locations where Bellwether or
any of its Subsidiaries has
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transported, released, discharged, stored, disposed or arranged for the disposal
of Hazardous Substances are authorized disposal sites as required by law, (ii)
to Bellwether's knowledge, all underground storage tanks, and the operating
status, capacity and contents of such tanks, located on any property currently
or formerly owned, leased or operated by Bellwether or any of its Subsidiaries
are identified in Section 5.12 of the Bellwether Disclosure Schedule and (iii)
no PCBs or PCB-containing items are used or stored at any property owned, leased
or operated by Bellwether or any of its Subsidiaries except in compliance with
Environmental Laws.
(f) There has been no discharge, release or disposal at any of the
properties owned or operated by Bellwether, its Subsidiaries, or a predecessor
in interest, or to the knowledge of Bellwether, at any disposal or treatment
facility which received Hazardous Substances generated by Bellwether, its
Subsidiaries, or any predecessor in interest which could reasonably be expected
to result in liabilities that have a Bellwether Material Adverse Effect.
(g) To Bellwether's knowledge, no pending claims have been asserted
or threatened to be asserted against Bellwether or its Subsidiaries for any
personal injury (including wrongful death) or property damage (real or personal)
arising out of exposure to Hazardous Substances used, handled, generated,
transported or disposed by Bellwether or its Subsidiaries at property currently
or formerly owned or operated by Bellwether or its Subsidiaries, except as could
not reasonably be expected to result in liabilities that have a Bellwether
Material Adverse Effect.
5.13 Compliance with Applicable Laws. Bellwether and each of its
Subsidiaries hold all material approvals, licenses, permits, registrations and
similar type authorizations necessary for the lawful conduct of its respective
businesses, as now conducted, and such businesses are not being, and neither
Bellwether nor any of its Subsidiaries has received any notice from any Person
that any such business has been or is being conducted in violation of any law,
ordinance or regulation, including any law, ordinance or regulation relating to
occupational health and safety, except for possible violations which either
individually or in the aggregate have not resulted and would not result in a
Bellwether Material Adverse Effect; provided, however, notwithstanding the
foregoing, no representation or warranty in this Section 5.13 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 5.12.
5.14 Insurance. Section 5.14 of the Bellwether Disclosure Schedule
lists each of the insurance policies relating to Bellwether or its Subsidiaries
which are currently in effect. Bellwether has made available to Xxxxx a true,
complete and correct copy of each such policy or the binder therefor. With
respect to each such insurance policy or binder none of Bellwether, any of its
Subsidiaries or any other party to the policy is in breach or default thereunder
(including with respect to the payment of premiums or the giving of notices),
and Bellwether does not know of any occurrence or any event which (with notice
or the lapse of time or both) would constitute such a breach or default or
permit termination, modification or acceleration under the policy, except for
such breaches or defaults which, individually or in the aggregate, would not
result in a Bellwether Material Adverse Effect. Section 5.14 of the Bellwether
Disclosure Schedule describes any self-insurance arrangements affecting
Bellwether or its Subsidiaries. The insurance policies listed in Section 5.14 of
the Bellwether Disclosure Schedule include all policies which are required in
connection with the operation of the businesses of Bellwether and its
Subsidiaries
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as currently conducted by applicable laws and all agreements relating to
Bellwether and its Subsidiaries.
5.15 Labor Matters; Employees.
(a) Except as set forth in Section 5.15(a) of the Bellwether
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of Bellwether,
threatened against or affecting Bellwether or any of its Subsidiaries and,
during the past five years, there has not been any such action, (ii) none of
Bellwether or any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of Bellwether or any of its Subsidiaries, (iii) none of
the employees of Bellwether or any of its Subsidiaries are represented by any
labor organization and none of Bellwether or any of its Subsidiaries have any
knowledge of any current union organizing activities among the employees of
Bellwether or any of its Subsidiaries nor does any question concerning
representation exist concerning such employees, (iv) Bellwether and its
Subsidiaries have each at all times been in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation,
(v) there is no unfair labor practice charge or complaint against any of
Bellwether or any of its Subsidiaries pending or, to the knowledge of
Bellwether, threatened before the National Labor Relations Board or any similar
state or foreign agency, (vi) there is no grievance or arbitration proceeding
arising out of any collective bargaining agreement or other grievance procedure
relating to Bellwether or any of its Subsidiaries, (vii) neither the
Occupational Safety and Health Administration nor any corresponding state agency
has threatened to file any citation, and there are no pending citations,
relating to Bellwether or any of its Subsidiaries, and (viii) there is no
employee or governmental claim or investigation, including any charges to the
Equal Employment Opportunity Commission or state employment practice agency,
investigations regarding Fair Labor Standards Act compliance, audits by the
Office of Federal Contractor Compliance Programs, sexual harassment complaints
or demand letters or threatened claims.
(b) Since the enactment of the WARN Act, none of Bellwether or any
of its Subsidiaries has effectuated (i) a "plant closing" (as defined in the
WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of Bellwether
or any of its Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of Bellwether or any of its
Subsidiaries, nor has Bellwether or any of its Subsidiaries been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law, in each case
that could reasonably be expected to have a Bellwether Material Adverse Effect.
5.16 Reserve Reports.
(a) All information (including the statement of the percentage of
reserves from the oil and gas xxxxx and other interests evaluated therein to
which Bellwether or its
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Subsidiaries are entitled and the percentage of the costs and expenses related
to such xxxxx or interests to be borne by Bellwether or its Subsidiaries)
supplied to Xxxxx Xxxxx Company Petroleum Engineers by or on behalf of
Bellwether and its Subsidiaries that was material to such firm's estimates of
proved oil and gas reserves attributable to the Oil and Gas Interests of
Bellwether and its Subsidiaries in connection with the preparation of the proved
oil and gas reserve reports concerning the Oil and Gas Interests of Bellwether
and its Subsidiaries as of November 30, 2000 by such engineering firm
(collectively, the "BELLWETHER RESERVE REPORT") was (at the time supplied or as
modified or amended prior to the issuance of the Bellwether Reserve Report) true
and correct in all material respects and Bellwether has no knowledge of any
material errors in such information that existed at the time of such issuance.
Except for changes (including changes in commodity prices) generally affecting
the oil and gas industry, there has been no change in respect of the matters
addressed in the Bellwether Reserve Report that would have a Bellwether Material
Adverse Effect.
(b) Set forth in Section 5.16(b) of the Bellwether Disclosure
Schedule is a list of all material Oil and Gas Interests that were included in
the Bellwether Reserve Report that have been disposed of prior to the date of
this Agreement.
5.17 Permits. Immediately prior to the Effective Time and except for
Customary Post-Closing Consents, Bellwether or its Subsidiaries will hold all of
the Permits required or necessary to construct, own, operate, use and/or
maintain their respective properties and conduct their operations as currently
conducted, except for such Permits, the lack of which, individually or in the
aggregate, would not have a Bellwether Material Adverse Effect; provided,
however, that notwithstanding the foregoing, no representation or warranty in
this Section 5.17 is made with respect to Permits issued pursuant to
Environmental Laws, which are covered exclusively by the provisions set forth in
Section 5.12.
5.18 Material Contracts.
(a) Set forth in Section 5.18(a) of the Bellwether Disclosure
Schedule is a list of each contract, lease, indenture, agreement, arrangement or
understanding to which Bellwether or any of its Subsidiaries is subject that is
of a type that would be required to be included as an exhibit to a Form S1
Registration Statement pursuant to the rules and regulations of the SEC if such
a registration statement was filed by Bellwether (the "BELLWETHER MATERIAL
CONTRACTS").
(b) Except as set forth in Section 5.18(a) or 5.18(b) of the
Bellwether Disclosure Schedule, the Oil and Gas Interests of Bellwether and its
Subsidiaries are not subject to (i) any instrument or agreement evidencing or
related to indebtedness for borrowed money, whether directly or indirectly, or
(ii) any agreement not entered into in the ordinary course of business in which
the amount involved is in excess of $100,000. In addition, (A) all Bellwether
Material Contracts are in full force and effect and are the valid and legally
binding obligations of the parties thereto and are enforceable in accordance
with their respective terms; (B) Bellwether is not in material breach or default
with respect to, and to the knowledge of Bellwether, no other party to any
Bellwether Material Contract is in material breach or default with respect to,
its obligations thereunder, including with respect to payments or otherwise; (C)
no party to any Bellwether Material Contract has given notice of any action to
terminate, cancel, rescind or procure a judicial reformation thereof; and (D) no
Bellwether Material Contract contains any
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provision that prevents Bellwether or any of its Subsidiaries from owning,
managing and operating the Oil and Gas Interests of Bellwether and its
Subsidiaries in accordance with historical practices.
(c) As of the date of this Agreement, except as set forth in
Section 5.18(c) of the Bellwether Disclosure Schedule, with respect to
authorizations for expenditure executed on or after January 1, 2000, (i) there
are no outstanding calls for payments in excess of $100,000 that are due or
which Bellwether or its Subsidiaries are committed to make that have not been
made; (ii) there are no material operations with respect to which Bellwether or
its Subsidiaries have become a non-consenting party; and (iii) there are no
commitments for the material expenditure of funds for drilling or other capital
projects other than projects with respect to which the operator is not required
under the applicable operating agreement to seek consent.
(d) Except as set forth in Section 5.18(d) of the Bellwether
Disclosure Schedule, (i) there are no provisions applicable to the Oil and Gas
Interests of Bellwether and its Subsidiaries which increase the royalty
percentage of the lessor thereunder; and (ii) none of the Oil and Gas Interests
of Bellwether and its Subsidiaries are limited by terms fixed by a certain
number of years (other than primary terms under oil and gas leases).
(e) Neither Bellwether nor any of its Subsidiaries is a party to or
bound by a non-competition agreement or any other agreement or obligation which
purports to limit the manner in which, or the localities in which, the current
business of Bellwether or its Subsidiaries, or Xxxxx or its Subsidiaries is
conducted.
(f) Section 5.18(f) of the Bellwether Disclosure Schedules lists
each contract or other agreement purporting to require, preclude, or limit the
ability of Bellwether or any of its Subsidiaries to register the issuance of
debt or equity securities under the Securities Act.
5.19 Required Stockholder Vote or Consent. The only vote of the holders
of any class or series of Bellwether's capital stock that will be necessary to
consummate the Merger is the adoption of this Agreement by the holders of a
majority of the shares of Bellwether Common Stock (the "BELLWETHER STOCKHOLDERS'
APPROVAL"). In addition, the only votes of the holders of any class or series of
Bellwether that will be necessary to consummate the other transactions
contemplated by this Agreement are (x) the approval of the Post Closing
Amendment (as defined) by the holders of a majority of the outstanding shares of
Bellwether Common Stock entitled to vote thereon, and (y) an amendment (the
"BELLWETHER INCENTIVE PLAN AMENDMENTS") to Bellwether's 1996 Stock Option Plan
to increase the number of shares authorized thereunder by 2,000,000 shares (the
"BELLWETHER INCENTIVE PLAN") by holders of a majority of the shares of
Bellwether Common Stock represented in person or by proxy and voting with
respect thereto.
5.20 Proxy/Information Statement/Prospectus; Registration Statement.
None of the information to be supplied by Bellwether for inclusion in (a) the
Proxy/Information Statement/Prospectus to be filed by Xxxxx and Bellwether with
the SEC, and any amendments or supplements thereto, or (b) the Registration
Statement to be filed by Bellwether with the SEC in connection with the Merger,
and any amendments or supplements thereto, will, at the respective times such
documents are filed, and, in the case of the Proxy/Information
Statement/Prospectus, at the time the Proxy/Information Statement/Prospectus or
any amendment or supplement thereto
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is first mailed to stockholders of Xxxxx and Bellwether, at the time such
stockholders vote on approval and adoption of this Agreement and at the
Effective Time, and, in the case of the Registration Statement, when it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be made therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.21 Intellectual Property. Bellwether or its Subsidiaries own, or are
licensed or otherwise have the right to use, all Intellectual Property currently
used in the conduct of the business of Bellwether and its Subsidiaries, except
where the failure to so own or otherwise have the right to use such Intellectual
Property would not, individually or in the aggregate, have a Bellwether Material
Adverse Effect. No Person has notified either Bellwether or any of its
Subsidiaries that their use of the Intellectual Property infringes on the rights
of any Person, subject to such claims and infringements as do not, individually
or in the aggregate, give rise to any liability on the part of Bellwether and
its Subsidiaries that could have a Bellwether Material Adverse Effect, and, to
Bellwether's knowledge, no Person is infringing on any right of Bellwether or
any of its Subsidiaries with respect to any such Intellectual Property. No
claims are pending or, to Bellwether's knowledge, threatened that Bellwether or
any of its Subsidiaries is infringing or otherwise adversely affecting the
rights of any Person with regard to any Intellectual Property.
5.22 Hedging. Section 5.22 of the Bellwether Disclosure Schedule sets
forth for the periods shown, obligations of Bellwether and each of its
Subsidiaries for the delivery of Hydrocarbons attributable to any of the
properties of Bellwether or any of its Subsidiaries in the future on account of
prepayment, advance payment, take-or-pay or similar obligations without then or
thereafter being entitled to receive full value therefor. Except as set forth in
Section 5.22 of the Bellwether Disclosure Schedule, as of the date of this
Agreement, neither Bellwether nor any of its Subsidiaries is bound by futures,
hedge, swap, collar, put, call, floor, cap, option or other contracts that are
intended to benefit from, relate to or reduce or eliminate the risk of
fluctuations in the price of commodities, including Hydrocarbons or securities.
5.23 Brokers. No broker, finder or investment banker (other than
Xxxxxxx Rice & Company the fees and expenses of which will be paid by
Bellwether) is entitled to any brokerage, finder's fee or other fee or
commission payable by Bellwether or any of its Subsidiaries in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of Bellwether or any of its Subsidiaries. True and correct copies
of all agreements and engagement letters currently in effect with Xxxxxxx Xxxx &
Company (the "BELLWETHER ENGAGEMENT LETTERS") have been provided to Xxxxx.
5.24 Tax Matters. Neither Bellwether nor, to the knowledge of
Bellwether, any of its affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a reorganization within the meaning
of Section 368(a) of the Code. Without limiting the generality of the foregoing:
(a) In connection with the Merger, none of Xxxxx Common Stock or
Xxxxx B Preferred Stock will be acquired by Bellwether or a Person related (as
defined in Treas. Reg. Section 1.3681(e)(3)) to Bellwether for consideration
other than Bellwether Common Stock, except for
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the Cash Consideration, the Preferred Stock Merger Consideration or any cash
received in lieu of fractional share interests in Bellwether Common Stock
pursuant to Section 3.4.
(b) Following the Merger, the Surviving Corporation will continue
the historic business of Xxxxx or use a significant portion of its assets in a
business, within the meaning of Treas. Reg. Section 1.3681(d).
(c) There is no intercorporate indebtedness existing between Xxxxx
and Bellwether that was issued, acquired, or will be settled at a discount.
(d) Bellwether will pay its own expenses incurred in connection
with or as part of the Merger or related transactions. Bellwether has not paid
and will not pay, directly or indirectly, any expenses (including transfer
taxes) incurred by any holder of Xxxxx Common Stock or Xxxxx B Preferred Stock
in connection with or as part of the Merger or any related transactions.
Bellwether has not agreed to assume, nor will it directly or indirectly assume,
any expense or other liability, whether fixed or contingent, of any holder of
Xxxxx Common Stock or Xxxxx B Preferred Stock.
(e) Bellwether is not an "investment company" within the meaning of
Section 368(a)(2)(F) of the Code.
(f) Bellwether has no plan or intention to sell or otherwise
dispose of any of the assets of Xxxxx except for dispositions made in the
ordinary course of business or transfers or successive transfers to one or more
corporations controlled (within the meaning of Section 368(c) of the Code) in
each case by the transferor corporation, or to reacquire any of the Bellwether
Common Stock or Bellwether Preferred Stock issued in the Merger.
5.25 Fairness Opinion. The Board of Directors of Bellwether has
received a written opinion from Xxxxxxx Rice & Company, L.L.C. to the effect
that, as of the date of such opinion, the Exchange Ratio, the Cash Consideration
and the Preferred Stock Merger Consideration is fair to the holders of
Bellwether Common Stock from a financial point of view. A true and complete copy
of such opinion has been given to Xxxxx.
5.26 Takeover Laws. Bellwether and the Board of Directors of Bellwether
have each taken all action required to be taken by it to exempt this Agreement,
and the transactions contemplated hereby from, and this Agreement and the
transactions contemplated hereby are exempt from, the requirements of any
"moratorium," "control share," "fair price," "affiliate transaction," "business
combination," or other antitakeover laws and regulations of any state, including
the State of Delaware, and including Section 203 of the DGCL.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of Business by Xxxxx Pending the Merger. From the date
hereof until the Effective Time, unless Bellwether shall otherwise agree in
writing, or except as set forth in the Xxxxx Disclosure Schedule or as otherwise
contemplated by this Agreement, Xxxxx shall conduct, and shall cause each of its
Subsidiaries to conduct its business in the ordinary course
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consistent with past practice and shall use and shall cause each of its
Subsidiaries to use, all reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of its present officers and key employees, subject to the terms of this
Agreement. Except as set forth in the Xxxxx Disclosure Schedule or as otherwise
provided in this Agreement, and without limiting the generality of the
foregoing, from the date hereof until the Effective Time, without the written
consent of Bellwether, which consent shall not be unreasonably withheld:
(a) Neither Xxxxx nor its Subsidiaries will adopt or propose any
change to its articles of incorporation or bylaws (or similar organizational
documents);
(b) Xxxxx will not, and will not permit any of its Subsidiaries to
(i) declare, set aside or pay any dividend or other distribution with respect to
any shares of capital stock of Xxxxx or its Subsidiaries (except for cumulated
dividends on the Xxxxx B Preferred Stock and intercompany dividends from direct
or indirect wholly owned subsidiaries) or (ii) except for the possible
redemption of the Xxxxx B Preferred Stock outstanding on the date hereof and the
related "clawback" of shares of Xxxxx Common Stock in connection therewith,
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other securities of, or other ownership interests in, Xxxxx or any of its
Subsidiaries, other than intercompany acquisitions of stock;
(c) Xxxxx will not, and will not permit any of its Subsidiaries to,
merge or consolidate with any other Person or acquire assets of any other Person
for aggregate consideration in excess of $500,000, or enter a new line of
business or commence business operations in any country in which Xxxxx is not
operating as of the date of this Agreement;
(d) Except as set forth in Section 6.1(d) of the Xxxxx Disclosure
Schedule, Xxxxx will not, and will not permit any of its Subsidiaries to, sell,
lease, license or otherwise surrender, relinquish or dispose of any assets or
properties (other than among Xxxxx and its direct and indirect wholly owned
Subsidiaries) with an aggregate fair market value exceeding $500,000 (other than
sales of Hydrocarbons in the ordinary course of business);
(e) Xxxxx will not settle any material Audit, make or change any
material Tax election or file any material amended Tax Return; Bellwether
acknowledges that Xxxxx may make an extraordinary payment of Taxes (the
liability for which has been properly accrued on the Xxxxx financial
statements).
(f) Except as otherwise permitted by this Agreement, Xxxxx will not
issue any securities (whether through the issuance or granting of options,
warrants, rights or otherwise and except pursuant to existing obligations
disclosed in the Xxxxx SEC Reports or the Xxxxx Disclosure Schedule), enter into
any amendment of any term of any outstanding security of Xxxxx or of any of its
Subsidiaries, incur any indebtedness except trade debt in the ordinary course of
business and debt pursuant to existing credit facilities or arrangements (except
as set forth in Section 6.1(f) of the Xxxxx Disclosure Schedule), fail to make
any required contribution to any Xxxxx Benefit Plan, increase compensation,
bonus (except as set forth in Section 6.1(f) of the Xxxxx Disclosure Schedule)
or other benefits payable to, or modify, adopt or amend any employment
agreements or severance agreements with, any executive officer or former
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employee or enter into any settlement or consent with respect to any pending
litigation other than settlements in the ordinary course of business;
(g) Xxxxx will not change any method of accounting or accounting
practice by Xxxxx or any of its Subsidiaries, except for any such change
required by GAAP;
(h) Xxxxx will not take any action that would give rise to a claim
under the WARN Act or any similar state law or regulation because of a "plant
closing" or "mass layoff" (each as defined in the WARN Act);
(i) Xxxxx will not amend or otherwise change the terms of the Xxxxx
Engagement Letters, except to the extent that any such amendment or change would
result in terms more favorable to Xxxxx;
(j) Except as set forth in Section 6.1(j) of the Xxxxx Disclosure
Schedule, neither Xxxxx nor any of its Subsidiaries will become bound or
obligated to participate in any operation, or consent to participate in any
operation, with respect to any Oil and Gas Interest that constitutes a capital
cost in each case in excess of $1,000,000 unless the operation is a currently
existing obligation of Xxxxx or any of its Subsidiaries or necessary to extend,
preserve or maintain an Oil and Gas Interest;
(k) Neither Xxxxx nor any of its Subsidiaries will (i) enter into
any futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from or reduce or eliminate the risk of
fluctuations in the price of commodities, including Hydrocarbons, or securities,
other than in the ordinary course of business in accordance with Xxxxx'x current
policies or (ii) enter into any fixed price commodity sales agreements with a
duration of more than three months;
(l) Xxxxx will not, and will not permit any of its Subsidiaries to
(i) take, or agree or commit to take, any action that would make any
representation and warranty of Xxxxx hereunder inaccurate in any respect at, or
as of any time prior to, the Effective Time or (ii) omit, or agree or commit to
omit, to take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time;
(m) Neither Xxxxx nor any of its Subsidiaries shall (i) adopt,
amend (other than amendments that reduce the amounts payable by Xxxxx or any
Subsidiary, or amendments required by law to preserve the qualified status of a
Xxxxx Benefit Plan) or assume an obligation to contribute to any employee
benefit plan or arrangement of any type or collective bargaining agreement or
enter into any employment, severance or similar contract with any Person
(including contracts with management of Xxxxx or any Subsidiaries that might
require that payments be made upon consummation of the transactions contemplated
hereby) or amend any such existing contracts to increase any amounts payable
thereunder or benefits provided thereunder, (ii) engage in any transaction
(either acting alone or in conjunction with any Xxxxx Benefit Plan or trust
created thereunder) in connection with which Xxxxx or any Subsidiary could be
subjected (directly or indirectly) to either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code, (iii) terminate any Xxxxx Benefit Plan
in a manner, or take any other action with respect to
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any Xxxxx Benefit Plan, that could result in the liability of Xxxxx or any
Subsidiary to any person, (iv) take any action that could adversely affect the
qualification of any Xxxxx Benefit Plan or its compliance with the applicable
requirements of ERISA, (v) fail to make full payment when due of all amounts
which, under the provisions of any Xxxxx Benefit Plan, any agreement relating
thereto or applicable law, Xxxxx or any Subsidiary are required to pay as
contributions thereto or (vi) fail to file, on a timely basis, all reports and
forms required by federal regulations with respect to any Xxxxx Benefit Plan;
(n) Neither Xxxxx nor any of its Subsidiaries will enter into any
commitment or agreement to license or purchase seismic data that will cost in
excess of $250,000, other than pursuant to agreements or commitments existing on
the date of this Agreement; and
(o) Xxxxx will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
6.2 Conduct of Business by Bellwether Pending the Merger. From the date
hereof until the Effective Time, unless Xxxxx shall otherwise agree in writing,
or except as set forth in the Bellwether Disclosure Schedule or as otherwise
contemplated by this Agreement, Bellwether shall conduct, and shall cause each
of its Subsidiaries to conduct, its business in the ordinary course consistent
with past practice and shall use, and shall cause each of its Subsidiaries to
use, all reasonable efforts to preserve intact its business organizations and
relationships with third parties and to keep available the services of its
present officers and key employees, subject to the terms of this Agreement.
Except as set forth in the Bellwether Disclosure Schedule or as otherwise
provided in this Agreement, and without limiting the generality of the
foregoing, from the date hereof until the Effective Time, without the written
consent of Xxxxx, which consent shall not be unreasonably withheld:
(a) Neither Bellwether nor its Subsidiaries will adopt or propose
any change to its certificate of incorporation or bylaws (or similar
organizational documents);
(b) Bellwether will not, and will not permit any of its
Subsidiaries to (i) declare, set aside or pay any dividend or other distribution
with respect to any shares of capital stock of Bellwether or its Subsidiaries
(except for intercompany dividends from direct or indirect wholly owned
Subsidiaries) or (ii) repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other securities of, or other ownership interests in,
Bellwether or any of its Subsidiaries, other than intercompany acquisitions of
stock;
(c) Except as set forth in Section 6.2(c) of the Bellwether
Disclosure Schedule, Bellwether will not, and will not permit any of its
Subsidiaries to, merge or consolidate with any other Person or acquire assets of
any other Person for aggregate consideration in excess of $500,000, or enter a
new line of business or commence business operations in any country in which
Bellwether is not operating as of the date of this Agreement;
(d) Except as set forth in Section 6.2(d) of the Bellwether
Disclosure Schedule, Bellwether will not and will not permit any of its
Subsidiaries to, sell, lease, license or otherwise surrender, relinquish or
dispose of any assets or properties (other than among
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Bellwether and its direct and indirect wholly owned Subsidiaries) with an
aggregate fair market value exceeding $500,000 (other than sales of Hydrocarbons
in the ordinary course of business);
(e) Bellwether will not settle any material Audit, make or change
any material Tax election or file any material amended Tax Return;
(f) Except as otherwise permitted by this Agreement, Bellwether
will not issue any securities (whether through the issuance or granting of
options, warrants, rights or otherwise and except pursuant to existing
obligations disclosed in the Bellwether SEC Reports or the Bellwether Disclosure
Schedule), enter into any amendment of any term of any outstanding security of
Bellwether or of any of its Subsidiaries, incur any indebtedness except trade
debt in the ordinary course of business and debt pursuant to existing credit
facilities or arrangements, fail to make any required contribution to any
Bellwether Benefit Plan, increase compensation, bonus (except as set forth in
Section 6.2(f) of the Bellwether Disclosure Schedule) or other benefits payable
to, or modify, adopt or amend any employment agreements or severance agreements
with, any executive officer or former employee or enter into any settlement or
consent with respect to any pending litigation other than settlements in the
ordinary course of business;
(g) Bellwether will not change any method of accounting or
accounting practice by Bellwether or any of its Subsidiaries, except for any
such change required by GAAP;
(h) Bellwether will not take any action that would give rise to a
claim under the WARN Act or any similar state law or regulation because of a
"plant closing" or "mass layoff" (each as defined in the WARN Act);
(i) Bellwether will not amend or otherwise change the terms of the
Bellwether Engagement Letters, except to the extent that any such amendment or
change would result in terms more favorable to Bellwether;
(j) Neither Bellwether nor any of its Subsidiaries will become
bound or obligated to participate in any operation, or consent to participate in
any operation, with respect to any Oil and Gas Interest that constitutes a
capital cost in each case in excess of $1,000,000 unless the operation is a
currently existing obligation of Bellwether or any of its Subsidiaries or
necessary to extend, preserve or maintain an Oil and Gas Interest;
(k) Neither Bellwether nor any of its Subsidiaries will (i) enter
into any futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from or reduce or eliminate the risk of
fluctuations in the price of commodities, including Hydrocarbons or securities,
other than in the ordinary course of business in accordance with Bellwether's
current policies or (ii) enter into any fixed price commodity sales agreements
with a duration of more than three months;
(l) Bellwether will not, and will not permit any of its
Subsidiaries to (i) take, or agree or commit to take, any action that would make
any representation and warranty of Bellwether hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time or (ii) omit, or
agree or commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time;
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(m) Neither Bellwether nor any of its Subsidiaries shall (i) adopt,
amend (other than amendments that reduce the amounts payable by Bellwether or
any Subsidiary, or amendments required by law to preserve the qualified status
of a Bellwether Benefit Plan) or assume an obligation to contribute to any
employee benefit plan or arrangement of any type or collective bargaining
agreement or enter into any employment, severance or similar contract with any
Person (including contracts with management of Bellwether or any Subsidiaries
that might require that payments be made upon consummation of the transactions
contemplated hereby) or amend any such existing contracts to increase any
amounts payable thereunder or benefits provided thereunder, (ii) engage in any
transaction (either acting alone or in conjunction with any Bellwether Benefit
Plan or trust created thereunder) in connection with which Bellwether or any
Subsidiary could be subjected (directly or indirectly) to either a civil penalty
assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code, (iii) terminate
any Bellwether Benefit Plan in a manner, or take any other action with respect
to any Bellwether Benefit Plan, that could result in the liability of Bellwether
or any Subsidiary to any person, (iv) take any action that could adversely
affect the qualification of any Bellwether Benefit Plan or its compliance with
the applicable requirements of ERISA, (v) fail to make full payment when due of
all amounts which, under the provisions of any Bellwether Benefit Plan, any
agreement relating thereto or applicable law, Bellwether or any Subsidiary are
required to pay as contributions thereto or (vi) fail to file, on a timely
basis, all reports and forms required by federal regulations with respect to any
Bellwether Benefit Plan;
(n) Neither Bellwether nor any of its Subsidiaries will enter into
any commitment or agreement to license or purchase seismic data that will cost
in excess of $250,000, other than pursuant to agreements or commitments existing
on the date of this Agreement; and
(o) Bellwether will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Access and Information. The parties shall each afford to the other
and to the other's financial advisors, legal counsel, accountants, consultants,
financing sources, and other authorized representatives access during normal
business hours throughout the period prior to the Effective Time to all of its
books, records, properties, contracts, leases, plants and personnel and, during
such period, each shall furnish promptly to the other (a) a copy of each report,
schedule and other document filed or received by it pursuant to the requirements
of federal or state securities laws, and (b) all other information as such other
party reasonably may request, provided that no investigation pursuant to this
Section 7.1 shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Merger. Each party shall hold in confidence all nonpublic information until such
time as such information is otherwise publicly available and, if this Agreement
is terminated, each party will deliver to the other all documents, work papers
and other materials (including copies) obtained by such party or on its behalf
from the other party as a result of this Agreement or in connection herewith,
whether so obtained before or after the execution hereof.
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Notwithstanding the foregoing, the Confidentiality Agreement dated February 3,
2000 between Bellwether and Xxxxx (the "CONFIDENTIALITY AGREEMENT") shall
survive the execution and delivery of this Agreement.
7.2 Acquisition Proposals.
(a) From the date of this Agreement until the termination hereof,
Bellwether and its Subsidiaries will not, and will cause their respective
officers, directors, employees or other agents not to, directly or indirectly,
(i) take any action to solicit, initiate or encourage any Bellwether Acquisition
Proposal (as hereinafter defined) or (ii) engage in negotiations with, or
disclose any nonpublic information relating to Bellwether or its Subsidiaries,
respectively, or afford access to their respective properties, books or records
to any Person that may be considering making, or has made, a Bellwether
Acquisition Proposal. Nothing contained in this Section 7.2(a) shall prohibit
Bellwether and its Board of Directors from (i) taking and disclosing a position
with respect to a tender offer by a third party pursuant to Rules 14d-9 and
14e-2(a) promulgated by the SEC under the Exchange Act, or (ii) furnishing
information, including nonpublic information to, or entering into negotiations
with, any Person that has indicated its willingness to make an unsolicited bona
fide Bellwether Acquisition Proposal if, and only to the extent that, (A) such
unsolicited bona fide proposal relating to a Bellwether Acquisition Proposal is
made by a third party that the Board of Directors of Bellwether determines in
good faith has the good faith intent to proceed with negotiations to consider,
and financial capability to consummate, such Bellwether Acquisition Proposal,
(B) the Board of Directors of Bellwether, after consulting with outside legal
counsel to Bellwether, determines in good faith that such action is required for
the Board of Directors of Bellwether to comply with its fiduciary duties imposed
by applicable law, (C) contemporaneously with furnishing such information to, or
entering into discussions or negotiations with, such Person Bellwether provides
written notice to Xxxxx to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such Person and (D) Bellwether
uses all reasonable efforts to keep Xxxxx informed in all material respects of
the status and terms of any such negotiations or discussions (including the
identity of the Person with whom such negotiations or discussions are being
held) and provides Xxxxx copies of such written proposals and any amendments or
revisions thereto or correspondence related thereto; provided, that Xxxxx agrees
to execute a confidentiality agreement, in form reasonably acceptable to it,
with respect to any such information delivered to Xxxxx pursuant to this clause
(D), which confidentiality agreement shall be subject to Xxxxx'x disclosure
obligations arising under applicable law or securities exchange regulations. The
term "BELLWETHER ACQUISITION PROPOSAL" means any offer or proposal for, or any
indication of interest in, a merger or other business combination directly or
indirectly involving Bellwether or any Bellwether Subsidiary or the acquisition
of a substantial equity interest in, or a substantial portion of the assets of,
any such party, other than the transactions contemplated by this Agreement.
(b) From the date of this Agreement until the termination hereof,
Xxxxx and its Subsidiaries will not, and will cause their respective officers,
directors, employees or other agents not to, directly or indirectly, (i) take
any action to solicit, initiate or encourage any Xxxxx Acquisition Proposal (as
hereinafter defined) or (ii) engage in negotiations with, or disclose any
nonpublic information relating to Xxxxx or its Subsidiaries, respectively, or
afford access to their respective properties, books or records to any Person
that may be considering making, or has
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made, a Xxxxx Acquisition Proposal. Nothing contained in this Section 7.2(b)
shall prohibit Xxxxx and its Board of Directors from (i) taking and disclosing a
position with respect to a tender offer by a third party pursuant to Rules 14d-9
and 14e-2(a) promulgated by the SEC under the Exchange Act, or (ii) furnishing
information, including nonpublic information to, or entering into negotiations
with, any Person that has indicated its willingness to make an unsolicited bona
fide Xxxxx Acquisition Proposal if, and only to the extent that, (A) such
unsolicited bona fide proposal relating to a Xxxxx Acquisition Proposal is made
by a third party that the Board of Directors of Xxxxx determines in good faith
has the good faith intent to proceed with negotiations to consider, and
financial capability to consummate, such Xxxxx Acquisition Proposal, (B) the
Board of Directors of Xxxxx, after duly consulting with outside legal counsel to
Xxxxx, determines in good faith that such action is required for the Board of
Directors of Xxxxx to comply with its fiduciary duties imposed by applicable
law, (C) contemporaneously with furnishing such information to, or entering into
discussions or negotiations with, such Person Xxxxx provides written notice to
Bellwether to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such Person and (D) Xxxxx uses all reasonable
efforts to keep Bellwether informed in all material respects of the status and
terms of any such negotiations or discussions (including the identity of the
Person with whom such negotiations or discussions are being held) and provides
Bellwether copies of such written proposals and any amendments or revisions
thereto or correspondence related thereto; provided, that Bellwether agrees to
execute a confidentiality agreement, in form reasonably acceptable to it, with
respect to any such information delivered to Bellwether pursuant to this clause
(D), which confidentiality agreement shall be subject to Bellwether's disclosure
obligations arising under applicable law or securities exchange regulations. The
term "XXXXX ACQUISITION PROPOSAL" means any offer or proposal for, or any
indication of interest in, a merger or other business combination directly or
indirectly involving Xxxxx or any Xxxxx Subsidiary or the acquisition of a
substantial equity interest in, or a substantial portion of the assets of, any
such party, other than the transactions contemplated by this Agreement.
7.3 Directors' and Officers' Indemnification and Insurance.
(a) For six years after the Effective Time, Bellwether shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer or director of Xxxxx and its Subsidiaries or an employee of Xxxxx or any
of its Subsidiaries who acts as a fiduciary under any of the Xxxxx Benefit Plans
(each an "INDEMNIFIED PARTY") against all losses, claims, damages, liabilities,
fees and expenses (including reasonable fees and disbursements of counsel and
experts and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the prior written
consent of Bellwether, which will not be unreasonably withheld)) arising in
whole or in part out of actions or omissions in their capacity as such occurring
at or prior to the Effective Time to the full extent permitted under Delaware
law or Bellwether's certificate of
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incorporation and bylaws and Xxxxx'x written indemnification agreements in
effect at the date hereof, including provisions therein relating to the
advancement of expenses incurred in the defense of any action or suit; provided,
that if any claim or claims are asserted or made within such six-year period,
all rights to indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims; and provided, further,
that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under Delaware
law, Bellwether's certificate of incorporation or bylaws or such agreements, as
the case may be, shall be made by independent counsel mutually acceptable to
Bellwether and the Indemnified Party; and provided, further, that nothing herein
shall impair any rights or obligations of any Indemnified Party. If any claim or
claims are brought against any Indemnified Party (whether arising before or
after the Effective Time), such Indemnified Party may select counsel for the
defense of such claim, which counsel shall be reasonably acceptable to Xxxxx (if
selected prior to the Effective Time) and Bellwether (if selected after the
Effective Time).
(b) Bellwether shall maintain Xxxxx'x existing officers' and
directors' liability insurance policy ("D&O INSURANCE") for a period of not less
than six years after the Effective Time, but only to the extent related to
actions or omissions prior to the Effective Time; provided, that Bellwether may
substitute therefor policies of substantially similar coverage and amounts
containing terms no less advantageous to such former directors or officers;
provided further, that the aggregate amount of premiums to be paid with respect
to the maintenance of such D&O Insurance for such six year period shall not
exceed $50,000.
7.4 Further Assurances. Each party hereto agrees to use all reasonable
efforts to obtain all consents and approvals and to do all other things
necessary for the consummation of the transactions contemplated by this
Agreement. The parties agree to take such further action to deliver or cause to
be delivered to each other at the Closing and at such other times thereafter as
shall be reasonably agreed by such additional agreements or instruments as any
of them may reasonably request for the purpose of carrying out this Agreement
and agreements and transactions contemplated hereby and thereby. The parties
shall afford each other access to all information, documents, records and
personnel who may be necessary for any party to comply with laws or regulations
(including the filing and payment of taxes and handling tax audits), to fulfill
its obligations with respect to indemnification hereunder or to defend itself
against suits or claims of others. Bellwether and Xxxxx shall duly preserve all
files, records or any similar items of Bellwether or Xxxxx received or obtained
as a result of the Merger with the same care and for the same period of time as
it would preserve its own similar assets.
7.5 Expenses.
(a) Except as provided in paragraphs (c) and (d), all Expenses (as
defined below) incurred by the parties hereto shall be borne solely and entirely
by the party that has incurred such Expenses; provided, however, that if this
Agreement is terminated for any reason, then the allocable share of Bellwether
and Xxxxx for all Expenses (including any fees and expenses of accountants,
experts, and consultants, but excluding the fees and expenses of legal counsel
and investment bankers) related to preparing, printing, filing and mailing the
Registration Statement, the Proxy/Information Statement/Prospectus and all SEC
and other regulatory filing fees incurred in connection with the Registration
Statement, Proxy/Information Statement/Prospectus, shall be allocated one-half
each.
(b) "EXPENSES" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including all reasonable fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Registration
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Statement, the Proxy/Information Statement/Prospectus, the solicitation of
stockholder approvals, and all other matters related to the consummation of the
transactions contemplated hereby.
(c) Xxxxx agrees that, if (i) Bellwether terminates this Agreement
pursuant to Section 10.1(g) or (ii) Xxxxx or Bellwether terminates this
Agreement pursuant to Section 10.1(h) or (iii) Bellwether terminates this
Agreement pursuant to Section 10.1(d) or Bellwether terminates this Agreement
pursuant to Section 10.1(b) at a time that a Xxxxx Breach (as defined in Section
10.1(d)) exists and in each case described in clauses (i) and (iii) within
twelve months after the termination of this Agreement (A) a transaction is
consummated, which transaction, if offered or proposed, would constitute a Xxxxx
Acquisition Proposal, (B) a definitive agreement (the execution and delivery of
which has been authorized by the boards of directors, or comparable bodies) that
would if consummated constitute a Xxxxx Acquisition Proposal is entered into or
(C) (X) any person shall have acquired beneficial ownership or the right to
acquire beneficial ownership of, or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
hereunder), shall have been formed that beneficially owns, or has the right to
acquire beneficial ownership of, outstanding shares of capital stock of Xxxxx
then representing 50% or more of the combined power to vote generally for the
election of directors and (Y) the Board of Directors of Xxxxx has taken any
action for the benefit of such person, that facilitates the acquisition by such
person or group of such beneficial ownership, then upon the first to occur of
any of (1) clauses (i) or (iii) above and any of clauses (A) - (C) above or (2)
clause (ii) above, Xxxxx shall pay to Bellwether a Termination Fee of $7.5
million, plus the reasonably documented Expenses of Bellwether up to $750,000.
In no event shall any such Termination Fee be payable if the Bellwether Board of
Directors withdraws, modifies or changes its recommendation of this Agreement or
the Merger or the stockholders of Bellwether fail to give the Bellwether
Stockholders' Approval when the proposals contemplated thereby are properly
submitted to a vote at the Bellwether Special Meeting or any postponement or
adjournment thereof.
(d) Bellwether agrees that, if (i) Xxxxx terminates this Agreement
pursuant to Section 10.1(i), (ii) Bellwether or Xxxxx terminates this Agreement
pursuant to Section 10.1(j) or (iii) Xxxxx terminates this Agreement pursuant to
Section 10.1(c) or Xxxxx terminates this Agreement pursuant to Section 10.1(b)
at a time that a Bellwether Breach (as defined in Section 10.1(c)) exists and in
each case described in clauses (i) and (iii) within twelve months after the
termination of this Agreement (A) a transaction is consummated, which
transaction, if offered or proposed, would constitute a Bellwether Acquisition
Proposal, (B) a definitive agreement (the execution and delivery of which has
been authorized by the boards of directors, or comparable bodies) that would if
consummated constitute a Bellwether Acquisition Proposal is entered into or (C)
(X) any person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated hereunder),
shall have been formed that beneficially owns, or has the right to acquire
beneficial ownership of, outstanding shares of capital stock of Bellwether then
representing 50% or more of the combined power to vote generally for the
election of directors and (Y) the Board of Directors of Bellwether has taken any
action, including the redemption of the Rights under the Bellwether Rights Plan,
or the amendment, termination or similar action with respect to the Bellwether
Rights Plan, for the benefit of such person, that facilitates the acquisition by
such person or group of such beneficial ownership, then upon the
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first to occur of any of (1) clauses (i) or (iii) above and any of clauses (A) -
(C) above or (2) clause (ii) above, Bellwether shall pay to Xxxxx a Termination
Fee of $7.5 million, plus the reasonably documented Expenses of Xxxxx up to
$750,000. In no event shall any such Termination Fee be payable if the Xxxxx
Board of Directors withdraws, modifies or changes its recommendation of this
Agreement or the Merger or the stockholders of Xxxxx fail to give the Xxxxx
Shareholders' Approval when the proposals contemplated thereby are properly
submitted for consent under the Xxxxx Consent or for a vote at any meeting of
shareholders or any postponement or adjournment thereof.
(e) Bellwether agrees that if it terminates this Agreement pursuant
to Section 10.1(l), except as contemplated thereby Bellwether shall pay to Xxxxx
a fee of $5,000,000.
7.6 Cooperation. Subject to compliance with applicable law, from the
date hereof until the Effective Time, each of the parties hereto shall confer on
a regular and frequent basis with one or more representatives of the other
parties to report operational matters of materiality and the general status of
ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Authority in
connection with this Agreement and the transactions contemplated hereby.
7.7 Publicity. Neither Xxxxx, Bellwether nor any of their respective
affiliates shall issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange and will use reasonable efforts to provide copies
of such release or other announcement to the other party hereto, and give due
consideration to such comments as such other party may have, prior to such
release.
7.8 Additional Actions. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, to consummate and make
effective the Merger and the other transactions contemplated by this Agreement,
subject, however, to the appropriate vote of stockholders of Xxxxx and
Bellwether required so to vote.
7.9 Filings. Each party hereto shall make all filings required to be
made by such party in connection herewith or desirable to achieve the purposes
contemplated hereby, and shall cooperate as needed with respect to any such
filing by any other party hereto.
7.10 Consents. Each of Bellwether and Xxxxx shall use all reasonable
efforts to obtain all consents necessary or advisable in connection with its
obligations hereunder.
7.11 Employee Matters; Benefit Plans. Bellwether and Xxxxx will
evaluate their personnel needs and consider continuing the employment of certain
employees of Bellwether, Xxxxx and its Subsidiaries on a case-by-case basis.
Prior to the Effective Time, Bellwether shall cause each Bellwether stock option
plan to be amended to provide that the transaction contemplated by this
Agreement shall constitute an event causing the acceleration of vesting of all
stock options thereunder. The parties acknowledge and agree that, except as
contemplated by
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the preceding sentence, the transaction contemplated hereby is not a change of
control for the purposes of any of Bellwether's or its Subsidiaries' contracts
or other agreements. Prior to the Effective Time, Xxxxx shall cause (a) each
Xxxxx stock option plan to be amended such that the transaction contemplated by
this Agreement shall constitute an event causing the acceleration of vesting of
all stock options thereunder, (b) each Xxxxx Benefit Plan that is an employee
pension benefit plan within the meaning of Section 3(2) of ERISA to be amended
to provide that all participants shall have a 100% vested and nonforfeitable
interest in their accrued benefits thereunder as of the Effective Time, and (c)
the employment or severance agreements with the individuals listed on Section
7.11 of the Xxxxx Disclosure Schedule to be treated as follows: (x) those that
are identified as being amended, to be amended such that the consummation of the
transaction contemplated by this Agreement shall constitute a change of control
for purposes thereunder and that such change of control in itself shall trigger
the requirement to make all payments related to a change of control thereunder
notwithstanding the current existence of additional conditions in such
agreements to such payments, and (y) those identified to continue outstanding
shall continue to do so (Bellwether hereby acknowledges that the Merger
constitutes a "change of control" for such agreements). After the Effective
Time, Bellwether will initially provide to any employees of Xxxxx and its
Subsidiaries who are employed by Bellwether as of the Effective Time (the
"RETAINED EMPLOYEES") the same or better base salary or wages provided to such
employees prior to the Effective Time, subject to such changes in base salary or
wages as shall be determined by Bellwether after the Effective Time. Bellwether
shall take all actions necessary or appropriate to permit the Retained Employees
to continue to participate from and after the Effective Time in the employee
benefit plans or arrangements in which such Retained Employees were
participating immediately prior to the Effective Time. Notwithstanding the
foregoing, Bellwether may permit any such employee benefit plan or arrangement
to be terminated or discontinued on or after the Effective Time, provided that
Bellwether shall (a) take all actions necessary or appropriate to permit the
Retained Employees participating in such employee benefit plan or arrangement to
immediately thereafter participate in employee benefit plans or arrangements
(the "REPLACEMENT PLANS") providing the same or better benefits than those
previously maintained by Xxxxx with respect to the Retained Employees prior to
the Merger, (b) with respect to a Replacement Plan that is a group health plan
(i) credit such Retained Employees, for the year during which participation in
the Replacement Plan begins, with any deductibles and copayments already
incurred during such year under the terminated or discontinued group health plan
and (ii) waive any preexisting condition limitations applicable to the Retained
Employees (and their eligible dependents) under the Replacement Plan to the
extent that a Retained Employee's (or dependent's) condition would not have
operated as a preexisting condition under the terminated or discontinued group
health plan, and (c)(1) cause each Replacement Plan that is an employee pension
benefit plan (as such term is defined in Section 3(2) of ERISA) intended to be
qualified under Section 401 of the Code to be amended to provide that the
Retained Employees shall receive credit for participation and vesting purposes
under such plan for their period of employment with Xxxxx, its Subsidiaries and
their predecessors to the extent such predecessor employment was recognized by
Xxxxx and its Subsidiaries and (2) credit the Retained Employees under each
other Replacement Plan that is not described in the preceding clause for their
period of employment with Xxxxx, its Subsidiaries and their predecessors to the
extent such predecessor employment was recognized by Xxxxx or its Subsidiaries.
At the Effective Time, Bellwether shall assume the obligations of Xxxxx under
the Xxxxx Benefit Plans and the agreements contemplated by clause (c)(y) above.
The terms of each
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such Xxxxx Benefit Plan shall continue to apply in accordance with their terms.
At the Effective Time, each outstanding award (including restricted stock,
phantom stock, stock equivalents and stock units) ("XXXXX AWARD") under any
employee incentive or benefit plans, programs or arrangements and non-employee
director plans presently maintained by Xxxxx which provide for grants of
equity-based awards shall be amended or converted into a similar instrument of
Bellwether, in each case with such adjustments to the terms of such Xxxxx Awards
as are appropriate to preserve the value inherent in such Xxxxx Awards with no
detrimental effects on the holders thereof. The other terms of each Xxxxx Award,
and the plans or agreements under which they were issued, shall continued to
apply in accordance with their terms. Bellwether agrees to pay (x) up to
$100,000 in the aggregate to certain employees of Xxxxx designated by Xxxxx who
will not be Retained Employees and (y) all heath insurance premiums and other
health benefits of such employees for the lesser of (I) six months from the
Closing and (II) the date such employees become covered under alternate health
insurance coverage.
7.12 Board, Committees and Executive Officers.
(a) Bellwether shall take such action, including amending its
bylaws, as shall be required to cause the Board of Directors of Bellwether
immediately after the Effective Time to have seven members. Prior to the mailing
to stockholders of the Proxy/Information Statement/Prospectus, (i) the Board of
Directors of Bellwether shall select from among the current members of the Board
of Directors of Bellwether four individuals (which shall include Xxxxxxx Manner)
(the "BELLWETHER DIRECTOR NOMINEES") to remain as directors of Bellwether, and
(ii) the Board of Directors of Xxxxx shall select from among the current members
of the Board of Directors of Xxxxx three individuals (which nominees shall be
Xxx Xxxx, Xxxxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx) (the "XXXXX DIRECTOR NOMINEES")
for nomination as directors of Bellwether. Bellwether shall use its best efforts
to cause the members of its Board of Directors that are not Bellwether Director
Nominees to either resign their position or be removed from their position. In
addition, Bellwether shall use its best efforts to cause the Xxxxx Director
Nominees to be elected as members of Bellwether's Board of Directors by
Bellwether's existing Board of Directors simultaneous with Closing. The Xxxxx
Director Nominees will serve as directors for a term expiring at Bellwether's
next annual meeting of stockholders following the Effective Time, provided that
Bellwether will use its best efforts to cause its Board to re-nominate them as
directors for election at the following annual meeting at the discretion of
Bellwether's Board of Directors. If at any time prior to the Effective Time, any
Xxxxx Director Nominee or Bellwether Director Nominee shall be unable to serve
as a director at the Effective Time, the respective Board of Directors that
designated such individual as provided herein shall designate another individual
to serve in such individual's PLACE; provided that if Xxxxxxx Manner is unable
to serve as Chairman of the Board and Chief Executive Officer, Xxxxxxxx Xxxxxxxx
shall serve as Chairman of the Board and Chief Executive Officer as of the
Effective Time until his successor is duly elected and qualified in accordance
with the bylaws of Bellwether in effect subsequent to the Effective Time;
provided, further, if Xxxxxxxx Xxxxxxxx is unable to serve as President and
Chief Financial Officer, Xxxxxxx Manner shall serve as President and Chief
Financial Officer as of the Effective Time until his successor is duly elected
and qualified in accordance with the bylaws of Bellwether in effect subsequent
to the Effective Time.
(b) Subsequent to the Effective Time, those individuals set forth
on Exhibit 7.12(b) shall be executive officers of Bellwether having the titles
and positions set forth opposite
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their respective names on such Exhibit until the earlier of the resignation or
removal of any such individual or until their respective successors are duly
elected and qualified, as the case may be. Prior to the Effective Time,
Bellwether and Xxxxx may mutually agree to designate additional individuals to
serve as executive officers of Bellwether subsequent to the Effective Time.
Subject to Section 7.12(a), if any executive officer set forth on Exhibit
7.12(b) or designated in accordance with this Section 7.12(b) ceases to be a
fulltime employee of either Bellwether or Xxxxx (or otherwise declines to serve
in such designated capacity) at or before the Effective Time, Bellwether and
Xxxxx will agree upon another person to serve in such person's stead or agree to
leave such office vacant through the Effective Time.
7.13 Stockholders Meetings.
(a) Xxxxx shall, as promptly as reasonably practicable after the
date hereof (i) take all steps reasonably necessary to solicit a written consent
of its shareholders for the purpose of securing the Xxxxx Shareholders'
Approval, (ii) distribute to its stockholders the Proxy/Information
Statement/Prospectus in accordance with applicable federal and state law and
with its articles of incorporation and bylaws, (iii) use all reasonable efforts
to solicit from its shareholders written consents in favor of the approval and
adoption of the this Agreement and the transactions contemplated hereby and to
secure the Xxxxx Shareholders' Approval, and (iv) cooperate and consult with
Bellwether with respect to each of the foregoing matters; provided, that nothing
contained in this Section 7.13(a) shall prohibit the Xxxxx Board of Directors
from failing to make or from withdrawing or modifying its recommendation to the
Xxxxx shareholders hereunder if the Board of Directors of Xxxxx, after
consultation with and based upon the written advice of independent legal
counsel, determines in good faith that such action is necessary for such Board
of Directors to comply with its fiduciary duties under applicable law.
(b) Bellwether shall, as promptly as reasonably practicable after
the date hereof (i) take all steps reasonably necessary to call, give notice of,
convene and hold either an annual or special meeting of its stockholders (the
"BELLWETHER STOCKHOLDER Meeting") for the purpose of (x) securing the Bellwether
Stockholders' Approval, (y) approving an amendment to Bellwether's Certification
of Incorporation (the "POST-CLOSING AMENDMENT"), to be filed with the Secretary
of State of Delaware after the Effective Time, the effect of which would be to
(A) increase the number of authorized shares of Bellwether Common Stock to
60,000,000, and (B) increase the number of authorized shares of preferred stock
of Bellwether to 5,000,000, and (z) approving the Bellwether Incentive Plan
Amendment, (ii) distribute to its stockholders the Proxy/Information
Statement/Prospectus in accordance with applicable federal and state law and its
certificate of incorporation and bylaws, which Proxy/Information
Statement/Prospectus shall contain the recommendation of the Bellwether Board of
Directors that its stockholders approve this Agreement, the Post Closing
Amendment and (iii) use all reasonable efforts to solicit from its stockholders
proxies in favor of approval of this Agreement, the Post Closing Amendment, and
the Bellwether Incentive Plan Amendment and to secure the Bellwether
Stockholders' Approval, and (iv) cooperate and consult with Xxxxx with respect
to each of the foregoing matters; provided, that nothing contained in this
Section 7.13(b) shall prohibit the Bellwether Board of Directors from failing to
make or from withdrawing or modifying its recommendation to the Bellwether
stockholders hereunder if the Board of Directors of Bellwether, after
consultation with and based upon the written advice of independent legal
counsel, determines in
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good faith that such action is necessary for such Board of Directors to comply
with its fiduciary duties under applicable law.
(c) If a Bellwether Superior Proposal is received and Bellwether
accepts such Bellwether Superior Proposal and thereby terminates this Agreement
under Section 10.1(j), then, unless Xxxxx terminates this Agreement under
Section 10.1(j), prior to the termination of this Agreement taking effect under
Section 10.1(j), Bellwether shall be obligated to comply with Section 7.13(b)
and the other terms of this Agreement, including by holding the Bellwether
Special Meeting. If the stockholders of Bellwether do not approve the Merger at
such meeting, then at such time this Agreement shall be deemed to be terminated
by Bellwether under Section 10.1(j), and, on the first business day after
Bellwether's stockholders fail to approve the Merger, Bellwether shall pay to
Xxxxx the Termination Fee and Expenses contemplated by Section 7.5. Bellwether
acknowledges and agrees that Xxxxx would be damaged irreparably if any provision
of this Section 7.13(c) is not performed in accordance with its specific terms
or is otherwise breached. Accordingly, Bellwether agrees that Xxxxx will be
entitled to an injunction or injunctions to prevent breaches of this Section
7.13(c) and to enforce specifically this Agreement and its terms and provisions
in any action or proceeding instituted in any court of the United States or any
state thereof having jurisdiction over the parties and the matter, in addition
to any other remedy to which Xxxxx may be entitled, at law or in equity.
7.14 Preparation of the Proxy/Information Statement/Prospectus and
Registration Statement.
(a) Bellwether and Xxxxx shall promptly prepare and file with the
SEC a preliminary version of the Proxy/Information Statement/Prospectus and will
use all reasonable efforts to respond to the comments of the SEC in connection
therewith and to furnish all information required to prepare the definitive
Proxy/Information Statement/Prospectus. At any time from (and including) the
initial filing with the SEC of the Proxy/Information Statement/Prospectus,
Bellwether shall file with the SEC the Registration Statement containing the
Proxy/Information Statement/Prospectus so long as Bellwether shall have provided
to Xxxxx a copy of the Registration Statement containing the Proxy/Information
Statement/Prospectus at least ten days prior to any filing thereof and any
supplement or amendment at least two days prior to any filing thereof. Subject
to the foregoing sentence, the date that the Registration Statement is filed
with the SEC shall be determined jointly by Bellwether and Xxxxx. Each of
Bellwether and Xxxxx shall use all reasonable efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing. Bellwether shall also take any action (other than qualifying
to do business in any jurisdiction in which it is not now so qualified or filing
a general consent to service of process in any jurisdiction) required to be
taken under any applicable state securities laws in connection with the issuance
of Bellwether Common Stock in the Merger and Xxxxx shall furnish all information
concerning Xxxxx and the holders of shares of Xxxxx capital stock as may be
reasonably requested in connection with any such action. Promptly after the
effectiveness of the Registration Statement, each of Bellwether and Xxxxx shall
cause the Proxy/Information Statement/Prospectus to be mailed to its respective
stockholders, and if necessary, after the definitive Proxy/Information
Statement/Prospectus shall have been mailed, promptly circulate amended,
supplemented or supplemental proxy materials and, if required in connection
therewith, re-solicit proxies or written consents, as applicable. Bellwether
shall advise Xxxxx and Xxxxx shall advise Bellwether, as applicable, promptly
after it
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receives notice thereof, of the time when the Registration Statement shall
become effective or any supplement or amendment has been filed, the issuance of
any stop order, the suspension of the qualification of the Bellwether Common
Stock for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy/Information Statement/Prospectus or the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information.
(b) Following receipt by KPMG LLP, Bellwether's independent
auditors, of an appropriate request from Xxxxx pursuant to XXX Xx. 00,
Xxxxxxxxxx shall use all reasonable efforts to cause to be delivered to Xxxxx a
letter of KPMG LLP, dated a date within two business days before the effective
date of the Registration Statement, and addressed to Xxxxx, in form and
substance reasonably satisfactory to Xxxxx and customary in scope and substance
for "cold comfort" letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Proxy/Information Statement/Prospectus.
(c) Following receipt by PricewaterhouseCoopers LLP, Xxxxx'x
independent auditors, of an appropriate request from Bellwether pursuant to SAS
No. 72, Xxxxx shall use all reasonable efforts to cause to be delivered to
Bellwether a letter of PricewaterhouseCoopers LLP, dated a date within two
business days before the effective date of the Registration Statement, and
addressed to Bellwether, in form and substance satisfactory to Bellwether and
customary in scope and substance for "cold comfort" letters delivered by
independent public accountants in connection with registration statements and
proxy statements similar to the Proxy/Information Statement/Prospectus.
7.15 Stock Exchange Listing. Bellwether shall use all reasonable
efforts to cause the Bellwether Common Stock to be issued in the Merger and to
be issued upon the exercise of options or warrants to purchase Bellwether Common
Stock contemplated hereby to be approved for listing on the Nasdaq National
Market System or the New York Stock Exchange prior to the Effective Time,
subject to official notice of issuance.
7.16 Notice of Certain Events. Each party to this Agreement shall
promptly as reasonably practicable notify the other parties hereto of:
(a) any notice or other communication from any Person alleging that
the consent of such Person (or other Person) is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against, relating to or
involving or otherwise affecting it or any of its Subsidiaries which, if pending
on the date of this Agreement, would have been required to have been disclosed
pursuant to Sections 4.10, 4.12, 5.10, or 5.12 or which relate to the
consummation of the transactions contemplated by this Agreement;
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(d) any notice of, or other communication relating to, a default or
event that, with notice or lapse of time or both, would become a default,
received by it or any of its Subsidiaries subsequent to the date of this
Agreement, under any material agreement; and
(e) any Xxxxx Material Adverse Effect or Bellwether Material
Adverse Effect or the occurrence of any event which is reasonably likely to
result in a Xxxxx Material Adverse Effect or a Bellwether Material Adverse
Effect, as the case may be.
7.17 Site Inspections. Subject to compliance with applicable law
(including applicable Environmental Laws), from the date hereof until the
Effective Time, each party hereto may undertake (at that party's sole cost and
expense) an environmental assessment or assessments (an "ASSESSMENT") of the
other party's operations, business and/or properties that are the subject of
this Agreement. An Assessment may include a review of permits, files and
records, as well as visual and physical inspections and testing. Before
conducting an Assessment, the party intending to conduct such Assessment (the
"INSPECTING PARTY") shall confer with the party whose operations, business or
property is the subject of such Assessment (the "INSPECTED PARTY") regarding the
nature, scope and scheduling of such Assessment, and shall comply with such
conditions as the Inspected Party may reasonably impose, among other things, to
avoid interference with the Inspected Party's operations or business. The
Inspected Party shall cooperate in good faith with the Inspecting Party's effort
to conduct an Assessment. The Inspecting Party shall provide copies of all data
generated during the Assessment and the Assessment itself to the Inspected
Party.
7.18 Affiliate Agreements; Tax Treatment.
(a) Xxxxx shall identify in a letter to Bellwether all persons who
are, on the date hereof, "affiliates" of Xxxxx, as such term is used in Rule 145
under the Securities Act. Xxxxx shall use all reasonable efforts to cause its
respective affiliates to deliver to Bellwether not later than 10 days prior to
the date of the Bellwether Special Meeting, a written agreement substantially in
the form attached hereto as Exhibit 7.18, and shall use all reasonable efforts
to cause persons who become "affiliates" after such date but prior to the
Closing Date to execute and deliver agreements at least 5 days prior to the
Closing Date.
(b) Each party hereto shall use all reasonable efforts to cause the
Merger to qualify, and shall not take, and shall use all reasonable efforts to
prevent any subsidiary of such party from taking, any actions which could
prevent the Merger from qualifying, as a reorganization under the provisions of
Section 368(a) of the Code.
7.19 Stockholder Litigation. Each of Bellwether and Xxxxx shall give
the other the reasonable opportunity to participate in the defense of any
litigation against Bellwether or Xxxxx, as applicable, and its directors
relating to the transactions contemplated by this Agreement.
7.20 Indenture Matters. Bellwether and Xxxxx shall, and shall cause
their respective Subsidiaries to, take all actions that are necessary or
appropriate (as mutually agreed by Bellwether and Xxxxx) for Bellwether, Xxxxx
and certain of their Subsidiaries, as applicable, to assume, guarantee or modify
as appropriate the agreements governing the outstanding publicly
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held debt securities of Bellwether referred to in the Bellwether SEC Reports to
avoid defaults thereunder.
7.21 Credit Facility. Bellwether and Xxxxx shall use all reasonable
efforts, and shall cooperate, to obtain as promptly as practicable commitments
from financing sources to refinance the existing bank credit facilities of
Xxxxx, Bellwether and their respective Subsidiaries.
7.22 Registration Rights Agreements. At Closing, Bellwether will
execute and deliver documents reasonably acceptable to Xxxxx pursuant to which
Bellwether will assume Xxxxx'x obligations under the Xxxxx Registration Rights
Agreements and modify the term "Registrable Securities" thereunder to include
the shares of Bellwether Common Stock issued pursuant to this Agreement in
exchange for the "Registrable Securities" under the Xxxxx Registration Rights
Agreements. In addition, Xxxxx and Bellwether agree to use their reasonable best
efforts to cause the parties to the Xxxxx Registration Rights Agreements and the
Registration Rights Agreement, by and among Bellwether and certain other parties
thereto, dated August 26, 1994, to enter into such amendments to such agreements
as may be necessary to cause such agreements to not be in conflict with each
other (it being understood that the failure to achieve such reconciliation will
not be a condition to the closing of the Merger).
7.23 Option Issuance and Employment Agreements. Immediately after, the
Effective Time, Bellwether shall issue employee stock options to purchase the
number of shares of Bellwether Common Stock, to the individuals, and on the
terms, each as listed on Exhibit 7.23.
7.24 Certain Bellwether Board Approvals. Bellwether will use its best
efforts to cause its Board of Directors prior to the Effective Time to approve
in the form required by Rule 16b-3 under the Exchange Act certain acquisitions
of Bellwether Common Stock pursuant to the Merger, as directed by Xxxxx and in
form reasonably acceptable to Xxxxx.
7.25 Termination of Agreements. Xxxxx and Bellwether will use their
reasonable best efforts to cause the agreements listed on Section 7.25 of the
Xxxxx Disclosure Schedule to be terminated on or prior to the Effective Time (it
being understood that the failure to achieve such termination will not be a
condition to the Merger).
7.26 Voting Agreements. Bellwether shall use its reasonable best
efforts to procure executed voting agreements in favor of Xxxxx substantially
similar to the Voting Agreements from Xx. Xxxx Xxxxx, Rho Management Partners,
L.P. and Xxxxx Xxxxxxx.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to the Obligation of Each Party. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) The Xxxxx Shareholders' Approval and the Bellwether
Stockholders' Approval shall have been obtained.
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(b) No action, suit or proceeding instituted by any Governmental
Authority shall be pending and no statute, rule or regulation and no injunction,
order, decree or judgment of any court or Governmental Authority of competent
jurisdiction shall be in effect, in each case which would prohibit, restrain,
enjoin or restrict the consummation of the Merger.
(c) The Registration Statement with respect to the issuance of all
Bellwether Common Stock in the Merger shall have become effective in accordance
with the provisions of the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no proceeding
for such purpose shall be pending before or threatened by the SEC.
(d) Each of Xxxxx and Bellwether shall have obtained such permits,
authorizations, consents, or approvals required to consummate the transactions
contemplated hereby.
(e) The shares of Bellwether Common Stock to be issued in the
Merger and to be issued upon the exercise of options and warrants to purchase
Bellwether Common Stock contemplated hereby shall have been approved for listing
on the Nasdaq National Market System or the New York Stock Exchange, subject to
official notice of issuance.
(f) The Second Amended and Restated Shareholders' Agreement dated
May 14, 1999 by and among Xxxxx Energy Company, B. Xxxx Xxxxx, Don Wm. Xxxxxxxx,
Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership,
Xxxxx Energy Resources, Ltd., TJG Investments, Inc., BargoEnergy Company, Xxx X.
Xxxx, Xxxxxx Xxxxxx, Xxxxx X. Xxxxxx, BargoOperating Company, Inc., EnCap Energy
Capital Fund III-B, L.P., BOCPEnergy Partners, L.P., EnCap Energy Capital Fund
III, L.P., Xxxxx Xxxxxxxx Energy Fund, L.P., BancAmerica Capital Investors SBIC
I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II,
L.P., and SGC Partners II LLC, as amended by the first amendment thereto, dated
August 11, 1999, shall have been terminated.
8.2 Conditions to the Obligations of Bellwether. The obligation of
Bellwether to effect the Merger is subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) Xxxxx shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of Xxxxx contained in
this Agreement, to the extent qualified with respect to materiality shall be
true and correct in all respects, and to the extent not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and as of such time,
except as expressly contemplated by the Xxxxx Disclosure Letter or this
Agreement and except that the accuracy of representations and warranties that by
their terms speak as of the date of this Agreement or some other date will be
determined as of such date, and Bellwether shall have received a certificate of
the Chief Executive Officer and Chief Financial Officer of Xxxxx as to the
satisfaction of this condition.
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(b) All proceedings to be taken by Xxxxx in connection with the
transactions contemplated by this Agreement and all documents, instruments and
certificates to be delivered by Xxxxx in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to Bellwether and its counsel.
(c) From the date of this Agreement through the Effective Time,
there shall not have occurred any change in the financial condition, business,
operations or prospects of Xxxxx and its Subsidiaries, taken as a whole, that
would constitute a Xxxxx Material Adverse Effect, other than any such change
that affects both Bellwether and Xxxxx in a substantially similar manner.
(d) Bellwether shall have received opinions from Xxxxxx and Xxxxx,
L.L.P. both prior to the effectiveness of the Registration Statement and
immediately prior to the Effective Time to the effect that (i) the Merger will
constitute a reorganization under Section 368(a) of the Code, (ii) Bellwether
and Xxxxx will each be a party to that reorganization, and (iii) no gain or loss
will be recognized by Bellwether or Xxxxx because of the Merger.
8.3 Conditions to the Obligations of Xxxxx. The obligation of Xxxxx to
effect the Merger is subject to the satisfaction at or prior to the Effective
Time of the following conditions:
(a) Bellwether shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of Bellwether
contained in this Agreement, to the extent qualified with respect to materiality
shall be true and correct in all respects, and to the extent not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and at and as of the Effective Time as if made at and as of
such time, except as expressly contemplated by the Bellwether Disclosure Letter
or this Agreement and except that the accuracy of representations and warranties
that by their terms speak as of the date of this Agreement or some other date
will be determined as of such date, and Xxxxx shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer (or person performing
similar functions) of Bellwether as to the satisfaction of this condition.
(b) All proceedings to be taken by Bellwether in connection with
the transactions contemplated by this Agreement and all documents, instruments
and certificates to be delivered by Bellwether in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to Xxxxx and its counsel.
(c) From the date of this Agreement through the Effective Time,
there shall not have occurred any change in the financial condition, business,
operations or prospects of 0P0arent and its Subsidiaries, taken as a whole, that
would constitute a Bellwether Material Adverse Effect, other than any such
change that affects both Bellwether and Xxxxx in a substantially similar manner.
(d) Xxxxx shall have received opinions from Akin, Gump, Strauss,
Xxxxx & Xxxx, L.L.P. both prior to the effectiveness of the Registration
Statement and immediately prior to the Effective Time to the effect that (i) the
Merger will constitute a reorganization under Section 368(a) of the Code, (ii)
Xxxxx and Bellwether will each be a party to that reorganization,
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and (iii) no gain or loss will be recognized by the shareholders of Xxxxx upon
the receipt of shares of Bellwether Common Stock in exchange for shares of Xxxxx
Common Stock pursuant to the Merger except with respect to the Cash
Consideration, the Preferred Stock Merger Consideration and any cash received in
lieu of fractional share interests.
(e) The members of the Board of Directors of Bellwether immediately
prior to the Effective Time who are not Bellwether Director Nominees shall have
resigned or been removed from the Board of Directors of Bellwether effective as
of the Effective Time.
(f) Bellwether and Xxxxxxxx Xxxxxxxx shall have entered into an
employment agreement with Xxxxxxxx Xxxxxxxx on reasonably satisfactory terms to
Bellwether and Xxxxx.
(g) The closing price of a share of Bellwether Common Stock on the
NASDAQ National Market on the date of the Effective Time shall be greater than
$6.00.
ARTICLE IX
SURVIVAL
9.1 Survival of Representations and Warranties. The representations and
warranties of the parties contained in this Agreement shall not survive the
Effective Time.
9.2 Survival of Covenants and Agreements. The covenants and agreements
of the parties to be performed after the Effective Time contained in this
Agreement shall survive the Effective Time.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the stockholders of
Xxxxx or Bellwether:
(a) by the mutual written consent of Bellwether and Xxxxx;
(b) by either Bellwether or Xxxxx if the Effective Time shall not
have occurred on or before July 16, 2001 (the "TERMINATION DATE"); provided that
the party seeking to terminate this Agreement pursuant to this Section 10.1(b)
shall not have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the failure
to consummate the Merger on or before the Termination Date.
(c) by Xxxxx if there has been a material breach by Bellwether of
any representation, warranty, covenant or agreement set forth in this Agreement
which breach (if susceptible to cure) has not been cured in all material
respects within twenty business days following receipt by Bellwether of notice
of such breach (a "BELLWETHER BREACH");
(d) by Bellwether, if there has been a material breach by Xxxxx of
any representation, warranty, covenant or agreement set forth in this Agreement
which breach (if
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susceptible to cure) has not been cured in all material respects within twenty
business days following receipt by Xxxxx of notice of such breach (a "XXXXX
BREACH");
(e) by either Xxxxx or Bellwether, if there shall be any applicable
law, rule or regulation that makes consummation of the Merger illegal or if any
judgment, injunction, order or decree of a court or other Governmental Authority
of competent jurisdiction shall restrain or prohibit the consummation of the
Merger, and such judgment, injunction, order or decree shall become final and
nonappealable;
(f) by either Xxxxx or Bellwether, if the stockholder approvals
referred to in Section 7.13 shall not have been obtained because of the failure
to obtain the requisite approval upon a vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof (or by written
consent, as applicable);
(g) by Bellwether, if (i) the Board of Directors of Xxxxx
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Bellwether or shall have resolved to do any of the
foregoing or the Board of Directors of Xxxxx shall have recommended to the
stockholders of Xxxxx any Xxxxx Acquisition Proposal or resolved to do so; or
(ii) a tender offer or exchange offer for outstanding shares of capital stock of
Xxxxx then representing 50% or more of the combined power to vote generally for
the election of directors is commenced, and the Board of Directors of Xxxxx does
not, within the applicable period required by law, recommend that stockholders
not tender their shares into such tender or exchange offer;
(h) by Xxxxx or Bellwether, if Xxxxx accepts a Xxxxx Superior
Proposal and makes payment as required pursuant to Section 7.5 and of the
Expenses for which Xxxxx is responsible under Section 7.5. For purposes of this
Agreement, "XXXXX SUPERIOR PROPOSAL" means an unsolicited bona fide proposal
made by a third party relating to a Xxxxx Acquisition Proposal on terms that the
Board of Directors of Xxxxx determines it cannot reject in favor of the Merger,
based on applicable fiduciary duties and the advice of Xxxxx'x outside counsel;
provided, however, that Xxxxx shall not be permitted to terminate this Agreement
pursuant to this Section 10.1(h) unless it has used all reasonable efforts to
provide Bellwether with five business days prior written notice of its intent to
so terminate this Agreement together with a detailed summary of the terms and
conditions of such Xxxxx Acquisition Proposal; provided further, that prior to
any such termination, Xxxxx shall, and shall cause its respective financial and
legal advisors to, negotiate in good faith with Bellwether to make such
adjustments in the terms and conditions of this Agreement as would enable Xxxxx
to proceed with the transactions contemplated herein, and it is acknowledged by
Bellwether that such negotiations with Bellwether shall be conducted in a manner
consistent with the fiduciary duties of the Xxxxx Board of Directors;
(i) by Xxxxx, if (i) the Board of Directors of Bellwether
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Xxxxx or shall have resolved to do any of the
foregoing or the Board of Directors of Bellwether shall have recommended to the
stockholders of Bellwether any Bellwether Acquisition Proposal or resolved to do
so; or (ii) a tender offer or exchange offer for outstanding shares of capital
stock of Bellwether then representing 50% or more of the combined power to vote
generally for the
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election of directors is commenced, and the Board of Directors of Bellwether
does not, within the applicable period required by law, recommend that
stockholders not tender their shares into such tender or exchange offer;
(j) by Xxxxx or, subject to Section 7.13(c), Bellwether, if
Bellwether accepts a Bellwether Superior Proposal and makes payment as required
pursuant to Section 7.5 and of the Expenses for which Bellwether is responsible
under Section 7.5. For purposes of this Agreement, "BELLWETHER SUPERIOR
PROPOSAL" means an unsolicited bona fide proposal made by a third party relating
to a Bellwether Acquisition Proposal on terms that the Board of Directors of
Bellwether determines it cannot reject in favor of the Merger, based on
applicable fiduciary duties and the advice of Bellwether's outside counsel;
provided, however, that Bellwether shall not be permitted to terminate this
Agreement pursuant to this Section 10.1(j) unless it has used all reasonable
efforts to provide Xxxxx with five business days prior written notice of its
intent to so terminate this Agreement together with a detailed summary of the
terms and conditions of such Bellwether Acquisition Proposal; provided further,
that prior to any such termination, Bellwether shall, and shall cause its
respective financial and legal advisors to, negotiate in good faith with Xxxxx
to make such adjustments in the terms and conditions of this Agreement as would
enable Bellwether to proceed with the transactions contemplated herein, and it
is acknowledged by Xxxxx that such negotiations with Xxxxx shall be conducted in
a manner consistent with the fiduciary duties of the Bellwether Board of
Directors.
(k) by Xxxxx, if the average of the closing prices on the Nasdaq
National Market System of a share of Bellwether Common Stock over any ten
consecutive trading days ending from the date hereof until the Effective Time is
less than $6.00; provided that Xxxxx may only terminate this Agreement under
this clause (k) if it provides such notice by the end of the fifth business day
after the last day of any such ten-day trading period.
(l) Upon payment of the fee contemplated by Section 7.5(e),
Bellwether may terminate this Agreement by giving notice to Xxxxx that
Bellwether has not obtained all of the financing it needs to refinance Xxxxx'x
debt at Closing, pay the aggregate Cash Amount, pay the Preferred Conversion
Consideration, effect the other transactions contemplated hereby and, to the
extent necessary, refinance Bellwether's existing bank debt. The termination
right under this Section 10.1(l) will terminate if it is not exercised 21 days
after the date on which Xxxxx provides a reserve report certified by its
independent petroleum engineers dated as of December 31, 2000 (the "UPDATE
RESERVE REPORT") with respect to the properties included in the Retained Assets
Reserve Report. In addition, if the volume of estimated proved reserves (using
consistent assumptions as to prices and costs) certified by the independent
petroleum engineers in the Update Reserve Report that is materially less than
that set forth in the Retained Assets Reserve Report, Bellwether may terminate
this Agreement in such 21 day period and, in such case, will not be obligated to
pay the fee contemplated by Section 7.5(e).
10.2 Effect of Termination. In the event of termination of the
Agreement and the abandonment of the Merger pursuant to this ARTICLE X, all
obligations of the parties shall terminate, except the obligations of the
parties pursuant to this Section 10.2 and except for the provisions of Sections
7.5, 7.7, 11.8 and the last two sentences of Section 7.1, provided that nothing
herein shall relieve any party from liability for any breaches hereof.
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ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices or communications hereunder shall be in
writing (including facsimile or similar writing) addressed as follows:
To Bellwether:
Bellwether Exploration Company
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Manner
Facsimile No.: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, III
Facsimile No.: (000) 000-0000
To Xxxxx:
Xxxxx Energy Company
000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxx Xxxx
Facsimile No.: (000) 000-0000
With a copy (which shall not constitute notice) to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxxxx Xx., Xxxxx 0000 Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
Facsimile No.: (000) 000-0000
Any such notice or communication shall be deemed given (i) when made, if made by
hand delivery, and upon confirmation of receipt, if made by facsimile, (ii) one
business day after being deposited with a next-day courier, postage prepaid, or
(iii) three business days after being sent certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as above (or to such
other address as such party may designate in writing from time to time).
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11.2 Separability. If any provision of this Agreement shall be declared
to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
11.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors, and assigns; provided, however, that neither this Agreement nor any
rights hereunder shall be assignable or otherwise subject to hypothecation and
any assignment in violation hereof shall be null and void.
11.4 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same Agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to each party.
11.6 Entire Agreement. This Agreement and the Confidentiality Agreement
represent the entire Agreement of the parties with respect to the subject matter
hereof and shall supersede any and all previous contracts, arrangements or
understandings between the parties hereto with respect to the subject matter
hereof.
11.7 Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of Texas, without reference to rules
relating to conflicts of law.
11.8 Attorneys' Fees. If any action at law or equity, including an
action for declaratory relief, is brought to enforce or interpret any provision
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and expenses from the other party, which fees and expenses shall
be in addition to any other relief which may be awarded.
11.9 No Third Party Beneficiaries. Except as provided in Sections 7.3
and 7.12, no Person other than the parties hereto is an intended beneficiary of
this Agreement or any portion hereof.
11.10 Disclosure Schedules. The disclosures made on any disclosure
schedule, including the Xxxxx Disclosure Schedule and the Bellwether Disclosure
Schedule, with respect to any representation or warranty shall be deemed to be
made with respect to any other representation or warranty requiring the same or
similar disclosure to the extent that the relevance of such disclosure to other
representations and warranties is evident from the face of the disclosure
schedule. The inclusion of any matter on any disclosure schedule will not be
deemed an admission by any party that such listed matter is material or that
such listed matter has or would have a Xxxxx Material Adverse Effect or a
Bellwether Material Adverse Effect, as applicable.
11.11 Amendments and Supplements. At any time before or after approval
of the matters presented in connection with the Merger by the respective
stockholders of Bellwether and Xxxxx and prior to the Effective Time, this
Agreement may be amended or supplemented in writing by Bellwether and Xxxxx with
respect to any of the terms contained in this Agreement, except as otherwise
provided by law; provided, however, that following approval of this Agreement by
the
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stockholders of Bellwether there shall be no amendment or change to the
provisions hereof unless permitted by the DGCL without further approval by the
stockholders of Bellwether, and following approval and adoption of this
Agreement by the stockholders of Xxxxx there shall be no amendment or change to
the provisions without the further approval of the stockholders of Xxxxx unless
permitted by the TBCA.
11.12 Extensions, Waivers, Etc. At any time prior to the Effective
Time, either party may:
(a) extend the time for the performance of any of the obligations
or acts of the other party;
(b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant hereto;
or
(c) subject to the proviso of Section 11.11 waive compliance with
any of the agreements or conditions of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by Bellwether or
Xxxxx in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BELLWETHER EXPLORATION COMPANY
By:
---------------------------
Name:
-------------------------
Title:
------------------------
XXXXX ENERGY COMPANY
By:
---------------------------
Name:
-------------------------
Title:
------------------------
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