Exhibit: 2.1
--------------------------------------------------------------------------------
AGREEMENT
Among
XXXXXX AMERICAS AND EUROPE CORPORATION,
ECM ACQUISITION COMPANY
and
ESENJAY EXPLORATION, INC.
Dated as of March 17, 2002
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE ONE THE OFFER.............................................................1
Section 1.01. The Offer.......................................................1
Section 1.02. Company Actions.................................................3
ARTICLE TWO THE MERGER............................................................5
Section 2.01. Certificate of Merger...........................................5
Section 2.02. The Effective Time..............................................5
Section 2.03. Effects of the Merger...........................................5
Section 2.04. Closing.........................................................6
ARTICLE THREE EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES..............6
Section 3.01. Effect on Capital Stock.........................................6
Section 3.02. Derivative Securities and Derivative Securities Plans...........7
Section 3.03. Exchange of Certificates........................................7
ARTICLE FOUR REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................8
Section 4.01. Organization; Power.............................................8
Section 4.02. Capitalization..................................................8
Section 4.03. Authority; Enforceability.......................................9
Section 4.04. Consents and Approvals; No Violations..........................10
Section 4.05. SEC Reports and Financial Statements...........................10
Section 4.06. Absence of Certain Changes or Events...........................11
Section 4.07. No Undisclosed Liabilities.....................................12
Section 4.08. Information Supplied...........................................12
Section 4.09. Benefit Plans..................................................13
Section 4.10. Other Compensation Arrangements and Employee Matters...........15
Section 4.11. Litigation.....................................................17
Section 4.12. Compliance With Governmental Requirements......................17
Section 4.13. Reserve Information............................................17
Section 4.14. Tax Matters....................................................17
Section 4.15. State Takeover Statutes........................................19
Section 4.16. Brokers; Fees and Expenses.....................................19
Section 4.17. Opinion of the Company Financial Advisor.......................19
Section 4.18. Intellectual Property..........................................19
Section 4.19. Environmental Matters..........................................20
Section 4.20. Stockholders Agreement.........................................21
Section 4.21. Option Agreement...............................................21
ARTICLE FIVE REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB....................21
Section 5.01. Organization; Power............................................21
Section 5.02. Authority; Enforceability......................................21
-i-
Section 5.03. Consents and Approvals; No Violations..........................22
Section 5.04. Information Supplied...........................................22
Section 5.05. Interim Operations of Sub......................................23
Section 5.06. Brokers; Fees and Expenses.....................................23
Section 5.07. Financing......................................................23
ARTICLE SIX COVENANTS............................................................23
Section 6.01. Covenants of the Company.......................................23
Section 6.02. No Solicitation................................................26
Section 6.03. Other Actions..................................................28
ARTICLE SEVEN ADDITIONAL AGREEMENTS..............................................28
Section 7.01. Effecting the Merger; Stockholder Approval.....................28
Section 7.02. Access to Information..........................................29
Section 7.03. Reasonable Efforts.............................................29
Section 7.04. Benefits.......................................................30
Section 7.05. Directors......................................................30
Section 7.06. Fees and Expenses..............................................30
Section 7.07. Indemnification; Insurance.....................................31
Section 7.08. Antitakeover Measures..........................................32
Section 7.09. Certain Litigation.............................................32
Section 7.10. Credit Agreement...............................................32
ARTICLE EIGHT CONDITIONS.........................................................32
Section 8.01. Conditions to Each Party's Obligation To Effect the Merger.....32
ARTICLE NINE TERMINATION AND AMENDMENT...........................................33
Section 9.01. Termination....................................................33
Section 9.02. Effect of Termination..........................................35
Section 9.03. Amendment......................................................35
Section 9.04. Extension; Waiver..............................................36
Section 9.05. Independent Director Approval..................................36
ARTICLE TEN MISCELLANEOUS........................................................36
Section 10.01. Nonsurvival of Representations and Warranties..................36
Section 10.02. Notices........................................................37
Section 10.03. Definitions and Interpretation.................................38
Section 10.04. Counterparts...................................................39
Section 10.05. Entire Agreement; Third Party Beneficiaries....................39
Section 10.06. Publicity......................................................39
Section 10.07. Assignment.....................................................39
SECTION 10.08. GOVERNING LAW..................................................40
Section 10.09. Exercise of Rights and Remedies................................40
Section 10.10. Reformation and Severability...................................40
Section 10.11. Remedies Cumulative............................................40
Section 10.12. Enforcement....................................................40
-ii-
Schedule 2.03 - Effects of the Merger - Officers
Schedule 3.02 - Derivative Securities and Derivative Securities Plans
Schedule 4.01 - List of Subsidiaries
Schedule 7.04 - Benefits
Schedule 7.06 - Fees and Expenses
Exhibit A - Stockholders Agreement
Exhibit B - Option Agreement
Exhibit C - Definitions
Exhibit D - Offer Conditions
-iii-
Xxxxxx Americas and Europe Corporation ("Parent"), ECM Acquisition
Company ("Sub"), a wholly owned subsidiary of Parent, and Esenjay Exploration,
Inc. (the "Company"), each of which is a
Delaware corporation, hereby enter into
this Agreement dated as of March 17, 2002.
PRELIMINARY STATEMENT
On the terms and subject to the conditions this Agreement contains,
Parent proposes to acquire the Company in a two-step transaction. The first step
would be a tender offer by Sub for all the outstanding shares of the Company's
common stock, and the second step would be a follow-on merger between Sub and
the Company in which the Company would become the surviving corporation.
The board of directors of the Company has:
o determined that Parent's proposed tender offer and merger are fair to
and in the best interests of the Company's stockholders;
o declared the agreement of merger this Agreement contains advisable and
resolved to recommend that the holders of the Company's common stock
accept that offer and adopt that agreement of merger; and
o authorized the Company to enter into this agreement.
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
ARTICLE ONE
THE OFFER
Section 1.01. THE OFFER. (a) As soon as practicable after the date of
this Agreement, and in any event during the period of seven business days
beginning on the day of the first public announcement that Parent and the
Company have entered into this Agreement, Sub will commence the Offer. The
consideration Sub will pay under the Offer for Shares validly tendered and not
subsequently properly withdrawn will be:
(1) $2.84 per Share, net to the seller in cash and without interest;
or
(2) such greater consideration per Share, if any, as Sub may, in its
sole discretion, offer in the Offer Documents to pay for each of those
Shares.
If any party terminates this Agreement under Article Nine at any time prior to
the acceptance for payment by Sub of Shares under the Offer, Sub may, in its
sole discretion, without the consent of the Company and notwithstanding Section
1.01(b) to the contrary, make any change in the terms and conditions of the
Offer and revise the Offer Documents accordingly.
(b) The obligation of Sub to accept for payment and pay for Shares
validly tendered in the Offer and not subsequently properly withdrawn will be
subject to the Offer Conditions. Sub expressly reserves the right, in its sole
discretion, to waive any of the Offer Conditions or make any change in the terms
and conditions of the Offer, except that, without the prior written consent of
the Company, Sub will not:
(1) waive or make any change in the Minimum Tender Condition;
(2) reduce the maximum number of Shares it will purchase under the
Offer;
(3) decrease the Offer consideration or, other than by adding
consideration, change the form of the Offer consideration; or
(4) make any change in or addition to the Offer Conditions or
otherwise amend the Offer in a manner adverse to the holders of Common
Stock.
For purposes of clause (4) above, none of the following will
constitute a change in the Offer in a manner adverse to the holders of Common
Stock:
(1) any increase in or addition to the Offer consideration; or
(2) any extension of the Offer beyond the then scheduled Expiration
Date:
(A) for any period any applicable Governmental Requirement or any
interpretation thereof or position thereunder by the SEC may require;
(B) in increments of not more than five business days each, if
Parent has reasonably determined that any Offering Condition is not
capable of being satisfied on or prior to that scheduled Expiration
Date;
(C) for one or more periods, up to a total of 10 business days
for all those periods, if, notwithstanding that all Offer Conditions
are satisfied or waived by Sub, to the extent waivable by Sub, as of
that scheduled Expiration Date, less than 90% of all outstanding
Shares have been validly tendered and not subsequently properly
withdrawn; or
(D) for any period or periods, if, prior to the acceptance for
payment by Sub of Shares under the Offer, the Company has terminated
this Agreement under Section 9.01(a)(4).
(c) As soon as practicable on the Offer Commencement Date, Parent and
Sub will file the Schedule TO with the SEC. Thereafter, in each case as and to
the extent any applicable federal securities law so requires, Parent will:
(1) promptly correct any information in the Offer Documents or the
Schedule 14D-9 which is or has become false or misleading in any material
respect concerning it or its Affiliates or the Company, provided that, in
the case of information concerning the
-2-
Company, the Company shall have furnished the corrected information to
Parent under Section 1.02(b);
(2) cause the Schedule TO, as so corrected or otherwise changed, to be
promptly filed with the SEC; and
(3) take all lawful action necessary to cause the Offer Documents, as
originally filed with the SEC and as thereafter so corrected or otherwise
changed, to be disseminated to the holders of Shares.
(d) For purposes of Section 7.05, Parent will supply to the Company in
writing and be solely responsible for any information concerning Parent and Sub
and their nominees, directors, officers and Affiliates which Section 14(f) of
the Exchange Act and Exchange Act Rule 14f-1 require be disclosed to the
Company's stockholders.
(e) Parent will provide to Sub the funds necessary to enable Sub, as
soon as practicable after the Offer expires and the satisfaction or waiver of
the Offer Conditions, to accept for payment and pay for all Shares validly
tendered in the Offer and not subsequently properly withdrawn.
(f) In this Section 1.01, the terms "commence" and "public
announcement" have the meanings Exchange Act Rule 14d-2 specifies.
Section 1.02. COMPANY ACTIONS. (a) The Company hereby approves of and
consents to the Offer and the agreement of merger this Agreement contains and
represents and warrants to Parent and Sub that the Company Board, at a meeting
duly called and held, has duly by the vote of directors which the Charter
Documents of the Company require adopted resolutions:
(1) confirming the Company Board's determination that the Offer and
the Merger are fair to and in the best interests of the Company's
stockholders;
(2) approving and consenting to this Agreement and the transactions it
contemplates, including the Offer and the Merger, which approval and
consent are sufficient to render the Section 203 Restrictions inapplicable
to the consummation of the Offer or the Merger;
(3) declaring the advisability of this Agreement, including the
agreement of merger it contains; and
(4) resolving to recommend to the holders of Shares that they accept
the Offer and adopt this Agreement, including the agreement of merger it
contains; provided, however, that prior to the consummation of the Offer,
the Company Board will have the right, under the circumstances Section
6.02(b) describes, to withdraw that recommendation and recommend that the
holders of Shares reject the Offer and the agreement of merger this
Agreement contains.
-3-
The Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Company Board to which clause (4) above refers. Each
director and executive officer of the Company has advised the Company Board that
he intends to tender all his Shares in the Offer for so long as no party has
terminated this Agreement under Article Nine.
(b) As soon as practicable on or after the Offer Commencement Date,
the Company will:
(1) file the Schedule 14D-9 with the SEC; and
(2) promptly commence mailing the Schedule 14D-9 to its stockholders.
The Company will, if Parent so requests, include in the Schedule 14D-9 the
information Section 14(f) of the Exchange Act and Exchange Act Rule 14f-1
require be disclosed to the Company's stockholders in connection with the
performance by the Company of its obligations under Section 7.05.
Thereafter, in each case as and to the extent any applicable federal
securities law so requires, the Company will:
(1) promptly correct any information in the Offer Documents or the
Schedule 14D-9 which is or has become false or misleading in any material
respect concerning it or its Affiliates or Parent and its Affiliates,
provided that, in the case of information concerning Parent and its
Affiliates, Parent shall have furnished the corrected information to the
Company under Section 1.01(c);
(2) cause the Schedule 14D-9, as so corrected or otherwise changed, to
be promptly filed with the SEC; and
(3) take all lawful action necessary to cause the Schedule 14D-9, as
originally filed with the SEC and as thereafter so corrected or otherwise
changed, to be disseminated to the holders of Shares.
(c) In connection with the Offer, the Company will:
(1) cause its transfer agent to furnish Sub promptly with (A) mailing
labels containing the names and addresses of the record holders of Shares
as of a recent date and of those persons becoming record holders subsequent
to that date and (B) copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Common Stock; and
(2) furnish to Sub such information and assistance, including updated
lists of stockholders, security position listings and computer files, as
Parent may reasonably request in communicating the Offer to the Company's
stockholders.
Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to
-4-
consummate the Merger, Parent and Sub and their agents will hold in confidence
the information any such labels, listings and files contain, will use that
information only in connection with the Offer and the Merger and, if this
Agreement is terminated, will, on request, deliver, and will use their best
efforts to cause their agents to deliver, to the Company all copies of and any
extracts or summaries from that information then in their possession or control.
ARTICLE TWO
THE MERGER
Section 2.01. CERTIFICATE OF MERGER. Subject to the terms and
conditions hereof, the Company will cause the Certificate of Merger to be duly
executed on or promptly following the Closing Date and filed with the Applicable
Filing Office.
Section 2.02. THE EFFECTIVE TIME. The Effective Time will be the time
and date the Certificate of Merger specifies or, if the Certificate of Merger
does not so specify, the time the Certificate of Merger is duly filed with the
Applicable Filing Office.
Section 2.03. EFFECTS OF THE MERGER. At and as of the Effective Time:
(1) Sub will merge with and into the Company in accordance with the
DGCL;
(2) Sub will cease to exist as a separate legal entity;
(3) the Company will be the Surviving Corporation and, as such, will,
all with the effect the DGCL provides, (A) possess all the properties and
rights, and be subject to all the restrictions and duties, of the Company
and Sub and (B) be governed by the laws of the State of
Delaware;
(4) the Company's certificate of incorporation in effect immediately
prior to the Effective Time will be amended in article V thereof to provide
that the authorized Capital Stock of the Company will consist of 1,000
shares of New Common Stock and in article VII thereof by deleting in their
entirety the second and third paragraphs thereof and, as so amended, that
certificate will become and thereafter remain, until changed in accordance
with applicable law, the certificate of incorporation of the Surviving
Corporation;
(5) the Company's bylaws in effect immediately prior to the Effective
Time will become and thereafter remain, until changed in accordance with
their terms or applicable law, the bylaws of the Surviving Corporation;
(6) the Company's directors immediately prior to the Effective Time
who were Sub's nominees under Section 7.05 will be the directors of the
Surviving Corporation until the earlier of their resignation or removal or
the election of their successors; and
(7) the officers of the Surviving Corporation will be as Schedule 2.03
sets forth, and each of those persons will serve in each office Schedule
2.03 specifies for that
-5-
person until the earlier of that person's resignation or removal or the
appointment or election of that person's successor.
Section 2.04. CLOSING. The closing of the Merger will take place at
10:00 a.m., local time, on a date Parent will specify, which will be no later
than the second business day after satisfaction or waiver of the conditions
Article Eight sets forth (the "Closing Date"), at the Applicable Xxxxx Xxxxx
Office, unless the parties agree in writing to another date or place.
ARTICLE THREE
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.01. EFFECT ON CAPITAL STOCK. (a) As of the Effective Time
and without any action on the part of any holder of Common Stock or Capital
Stock of Sub:
(1) CAPITAL STOCK OF SUB. The theretofore issued and outstanding
shares of Capital Stock of Sub will convert into and become 1,000 validly
issued, fully paid and nonassessable shares of New Common Stock;
(2) TREASURY COMMON STOCK AND PARENT-OWNED COMMON STOCK. Each Share
issued and outstanding immediately prior to the Effective Time which any
Company Entity or Parent Entity then owns automatically will be cancelled
and retired and cease to exist, and no consideration will be delivered in
exchange therefor;
(3) CONVERSION OF COMMON STOCK. Except as clause (2) above otherwise
provides and subject to the provisions of clause (4) below, each Share
issued and outstanding immediately prior to the Effective Time
automatically will (A) convert into the right, and solely the right, to
receive the Merger Consideration, less any required withholding taxes, on
surrender of the Certificate representing that Share and (B) be cancelled
and retired and cease to exist; and
(4) DISSENTING SHARES. No Dissenting Share will convert into the right
to receive the Merger Consideration, except that, if under the Appraisal
Statute the right to an appraisal of that Dissenting Share thereafter
ceases prior to that appraisal, that Dissenting Share will be treated as a
Share that had converted as of the Effective Time into the right to receive
the Merger Consideration under clause (3) above.
(b) RIGHTS OF CERTIFICATE HOLDERS. Each holder of a Certificate will,
as of the Effective Time and thereafter, cease to have any rights respecting the
shares that Certificate represented immediately prior to the Effective Time
other than:
(1) if those shares are not Dissenting Shares, the right to receive
the Merger Consideration in respect of those shares under Section
3.01(a)(3); or
(2) if those shares are Dissenting Shares, the rights the Appraisal
Statute and Section 3.01(a)(4) provide.
-6-
(c) CONTROL OF APPRAISAL PROCESS. If the Company receives any demand
for an appraisal of Common Stock under the Appraisal Statute, it will promptly
notify Parent of that demand and will not, without the prior written consent of
Parent, offer, or accept an offer, to settle, or make or otherwise commit to
make any payment in respect of, any such demand. Parent will have the right to
participate in and direct all negotiations and proceedings with respect to all
such demands.
Section 3.02. DERIVATIVE SECURITIES AND DERIVATIVE SECURITIES PLANS.
Each party will comply with the provisions of Schedule 3.02, which the parties
incorporate herein by this reference.
Section 3.03. EXCHANGE OF CERTIFICATES. (a) Prior to the Effective
Time, Parent will designate the Paying Agent and from time to time will make or
cause to be made available to the Paying Agent funds in the amounts and at the
times necessary for the payment of the Merger Consideration on surrender of
Certificates. Any and all interest earned on funds made available to the Paying
Agent hereunder will belong to and be turned over to Parent.
(b) As soon as reasonably practicable after the Effective Time, the
Paying Agent will mail to each holder of record of a Certificate:
(1) a letter of transmittal, which will specify that delivery will be
effected, and risk of loss and title to Certificates will pass, only on
delivery of Certificates to the Paying Agent and will be in a form and have
such other provisions as Parent may specify; and
(2) instructions for use in effecting the surrender of Certificates in
exchange for the Merger Consideration.
On surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as Parent may appoint, together with that letter of
transmittal, duly executed, and such other documents as the Paying Agent
reasonably may require, the holder of that Certificate will be entitled to
receive for each Share that Certificate formerly represented the amount of cash
equal to the Merger Consideration, and that Certificate forthwith will be
cancelled. In the event of a transfer of ownership of Converted Shares which is
not registered in the transfer records of the Company, payment may be made to a
Person other than the Person in whose name the Certificate so surrendered is
registered, if that Certificate is properly endorsed or otherwise in proper form
for transfer and the Person requesting that payment:
(1) pays any transfer or other Taxes the payment to a Person other
than the registered holder of that Certificate necessitates; or
(2) establishes to the satisfaction of the Surviving Corporation that
the Tax has been paid or is not applicable.
No interest will accrue or become payable on the cash payable on the surrender
of any Certificate.
-7-
(c) All cash paid on the surrender of Certificates in accordance with
the terms of this Article Three will be deemed to have been paid in full
satisfaction of all rights pertaining to the Converted Shares those Certificates
theretofore represented. At the Effective Time, the stock transfer books of the
Company will close, and there will be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the Converted Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Paying Agent for any reason, they will be cancelled and exchanged as this
Article Three provides.
(d) None of Parent, the Surviving Corporation or the Paying Agent will
be liable to any Person in respect of any cash delivered to a public official
under any applicable abandoned property, escheat or similar law.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as the Company Disclosure Letter sets forth, the Company
represents and warrants to Parent and Sub as follows:
Section 4.01. ORGANIZATION; POWER. Each Company Entity is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority under those laws and its Charter Documents to own or lease and
operate its properties and to carry on its business as now being conducted. Each
Company Entity is duly qualified or licensed to do business and in good standing
in each jurisdiction in which property it owns, leases or operates is located or
the nature of the business it conducts makes that qualification or licensing
necessary, except where the failures of all Company Entities to be so duly
qualified or licensed and in good standing, individually or in the aggregate,
would not have a Company Material Adverse Effect or prevent or materially delay
the consummation of the Offer or the Merger.
The Company has made available to Parent complete and correct copies
of the Charter Documents of the Company and each of the other Company Entities,
in each case as amended to the date of this Agreement. The respective Charter
Documents of the Company Entities, other than the Company, do not contain any
provision limiting or otherwise restricting the ability of the Company to
control those Entities.
Schedule 4.01 contains an accurate list of all the Subsidiaries of the
Company. The Company owns all the outstanding shares of Capital Stock of each
other Company Entity, directly or indirectly through one or more of the other
Company Entities, free and clear of all liens, and all those shares are duly
authorized, validly issued, fully paid and nonassessable.
Section 4.02. CAPITALIZATION. As of the date of this Agreement, the
authorized Capital Stock of the Company is comprised solely of:
(1) 40,000,000 shares of Common Stock of which, as of March 1, 2002;
19,121,568 shares were issued and outstanding and no shares were treasury
shares; and
-8-
(2) 5,000,000 shares of Preferred Stock, of which, as of March 1,
2002, no shares were issued and outstanding.
As of March 1, 2002:
(1) 2,653,836 shares of Common Stock were reserved for issuance on the
exercise of Options then issued and outstanding under the Option Plan; and
(2) 566,250 shares of Common Stock were reserved for issuance on the
exercise of Warrants then issued and outstanding.
Since March 1, 2002, no Options or Warrants have been granted and no
shares of Common Stock have been issued except for shares of Common Stock
issued:
(1) on the exercise of Options and Warrants outstanding on that date;
(2) as employer's contributions under the Savings Plan as the Company
Disclosure Letter sets forth;
(3) on the exercise of the Options to be granted as the Company
Disclosure Letter sets forth; and
(4) as payment under the Current Bonus Plan as the Company Disclosure
Letter sets forth.
All outstanding shares of Common Stock are, and all shares of Common
Stock the Company may issue under the Option Plan or on the exercise of Warrants
will be, when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and nonassessable and free of any preemptive rights
in respect thereto.
As of the date of this Agreement:
(1) no Derivative Securities of any Company Entity are outstanding
other than the Options and Warrants this Section 4.02 describes above;
(2) no Company Entity has outstanding any binding obligation to
repurchase, redeem or otherwise acquire for value any Capital Stock of any
Company Entity; and
(3) the Company has delivered to Parent an accurate, complete schedule
that sets forth, for each outstanding Option and Warrant, the exercise
price thereof, the number of shares of Common Stock issuable on that
exercise, the extent to which that Option or Warrant presently is
exercisable and the expiration date and the holder thereof.
Section 4.03. AUTHORITY; ENFORCEABILITY. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions this Agreement contemplates. The execution, delivery
and performance of this Agreement by the Company and the consummation of the
transactions this Agreement contemplates have been duly authorized by all
necessary corporate action on the part of the
-9-
Company, other than, with respect to the Merger, the approval of the agreement
of merger this Agreement contains by the holders of the outstanding Common
Stock.
The Company has duly executed and delivered this Agreement, and this
Agreement, assuming it constitutes valid and binding obligations of Parent and
Sub, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as that enforceability
may be:
(1) limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally; and
(2) subject to general principles of equity, regardless of whether
that enforceability is considered in a proceeding in equity or at law.
Section 4.04. CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the
execution, delivery or performance of this Agreement by the Company nor the
consummation of the transactions this Agreement contemplates will:
(1) conflict with or result in any breach of any provision of the
Charter Documents of any Company Entity;
(2) require any Governmental Approval, except (A) as the Exchange Act,
the DGCL and state securities or blue sky laws may require and (B) where
failures to obtain or effect Governmental Approvals would not have a
Company Material Adverse Effect;
(3) result in a violation or breach of, or constitute, with or without
due notice or lapse of time or both, a default, or give rise to any right
of termination, amendment, cancellation or acceleration, under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement, option, warrant or other instrument or
obligation to which any Company Entity is a party or by which any of its
properties or assets may be bound; or
(4) violate any Governmental Requirement applicable to any Company
Entity or any of its properties or assets;
except, in the case of clauses (3) and (4), for violations, breaches or defaults
that would not have, individually or in the aggregate, a Company Material
Adverse Effect or prevent or materially delay the consummation of the Offer or
the Merger.
Section 4.05. SEC REPORTS AND FINANCIAL STATEMENTS. Each Company
Entity has timely filed with the SEC, and has made available to Parent true and
complete copies of, all SEC Documents the federal securities laws have required
it to so file. Each of those SEC Documents, as of its date:
(1) complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable; and
-10-
(2) 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 not misleading, in light, in the case only
of SEC Documents filed under the Exchange Act, of the circumstances under
which they were made.
The consolidated financial statements of the Company included in any SEC
Document, in fact or by incorporation by reference:
(1) complied as to form in all material respects with the applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto;
(2) were prepared in accordance with GAAP, except, in the case of
unaudited quarterly statements on Exchange Act Form 10-Q, as that form
otherwise permitted, applied on a consistent basis during the periods
presented, except as the notes thereto indicate otherwise; and
(3) presented fairly in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of
the dates of the balance sheets those financial statements include and the
consolidated results of their operations and their consolidated cash flows
for the periods ended on those dates, subject, in the case of unaudited
quarterly statements, to normal year-end audit adjustments.
The audited consolidated financial statements of the Company for the
year ended December 31, 2001 will not differ in any adverse respects,
individually or in the aggregate, Material to the Company Entities from the
unaudited consolidated financial statements of the Company for the year ended
December 31, 2001, a true and correct copy of which is attached to the Company
Disclosure Letter.
The Company is, and the Company Entities considered as a whole are not
"insolvent," as the federal bankruptcy code uses the quoted term.
Section 4.06. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as the
Filed SEC Documents disclose, since the Current Audited Balance Sheet Date, each
Company Entity has conducted its business only in the ordinary course, and there
has not occurred:
(1) any Company Material Adverse Effect;
(2) any declaration, setting aside or payment of any dividend or other
distribution with respect to the Capital Stock of any Company Entity or any
redemption, purchase or other acquisition of any of that Capital Stock;
(3) any split, combination or reclassification of any Capital Stock of
any Company Entity or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of that Capital Stock;
(4) any granting, or any commitment or promise to grant, by any
Company Entity to any officer of any Company Entity of (A) any increase in
compensation, except in the ordinary course of business, including in
connection with promotions, consistent
-11-
with prior practice or as employment agreements in effect as of the Current
Audited Balance Sheet Date required or (B) any increase in severance or
termination pay, except as part of a standard employment package to any
person promoted or hired, but not including the five most highly
compensated executive officers of the Company, or as employment, severance
or termination agreements in effect as of the Current Audited Balance Sheet
Date required;
(5) except for termination arrangements in the ordinary course of
business consistent with past practice with employees other than any
executive officer of the Company, any entry by any Company Entity into any
employment, severance or termination agreement with any officer of any
Company Entity;
(6) any increase in, or any commitment or promise to increase,
benefits payable or available under any pre-existing Benefit Plan, except
in accordance with the pre-existing terms of that Benefit Plan, any
establishment of, or any commitment or promise to establish, any new
Benefit Plan, any amendment of any existing stock options, stock
appreciation rights, performance awards or restricted stock awards or,
except in accordance with and under pre-existing compensation policies, any
grant, or any commitment or promise to grant, any stock options, stock
appreciation rights, performance awards, or restricted stock awards;
(7) any damage to or any destruction or loss of physical properties
any Company Entity owns or uses, whether or not covered by insurance, that
in the aggregate have had or reasonably could be expected to have a Company
Material Adverse Effect;
(8) any reevaluations by the Company Entities of any of their assets
which, in accordance with GAAP, the Company will reflect in its
consolidated financial statements, including any impairment of assets, and
which in the aggregate are Material to them; or
(9) any material change in accounting methods, principles or practices
by the Company.
Section 4.07. NO UNDISCLOSED LIABILITIES. Except as and to the extent
the Current Audited Financial Statements, or the financial statements any
subsequently Filed SEC Document contains, include an accrual or reserve therefor
or otherwise disclose, no Company Entity has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that GAAP would
require to be reflected on a consolidated balance sheet of the Company and its
consolidated Subsidiaries, including the notes thereto, except for liabilities
or obligations they incurred in the ordinary course of business since the date
of the most recently Filed SEC Document that have not had and will not have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 4.08. INFORMATION SUPPLIED. No information the Company has
supplied or will supply specifically for inclusion or incorporation by reference
in the Offer Documents or the Schedule 14D-9, at the respective times those
documents are filed with the SEC or first published, sent or given to the
Company's stockholders, contained or will contain any untrue statement of a
material fact or omitted or will omit to state any material fact required to be
stated
-12-
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were or are made, not misleading, except that the
Company makes no representation or warranty with respect to statements made or
incorporated by reference in the Schedule 14D-9 which constitute information
Parent or Sub has supplied or may hereafter supply in writing specifically for
inclusion or incorporation by reference in the Schedule 14D-9. The Schedule
14D-9 will comply as to form in all material respects with the applicable
requirements of the Exchange Act.
Section 4.09. BENEFIT PLANS. (a) The Company has delivered to Parent
prior to the date of this Agreement true and correct copies of all Benefit Plans
now existing or which existed at any time within the six-year period ending on
the date of this Agreement. Each such plan has been administered in accordance
with its terms. Each Company Entity and all the Benefit Plans are in compliance
with the applicable provisions of ERISA, the Code and all other applicable
Governmental Requirements.
(b) No Company Entity has, or had within the six-year period ending on
the date of this Agreement, any ERISA Affiliates other than the other Company
Entities.
(c) All Benefit Plans intended to qualify under Section 401(a) of the
Code (the "Qualified Plans") are so qualified, and the IRS has determined them
to be so qualified or application for determination letters have been timely
submitted to the IRS. The Company will promptly provide Parent after the date of
this Agreement with true and complete copies of the current plan determination
letters, most recent actuarial valuation reports, if any, most recent Form 5500,
or, as applicable, Form 5500-C/R, filed with respect to each Qualified Plan and
the most recent trustee or custodian report. To the extent that any Qualified
Plans have not been amended to comply with applicable Governmental Requirements,
the remedial amendment period permitting retroactive amendment of those
Qualified Plans has not expired and will not expire within 120 days after the
consummation of the Offer. All reports and other documents required to be filed
with any Governmental Authority or distributed to plan participants or
beneficiaries, including annual reports, summary annual reports, actuarial
reports, PBGC-1 Forms, audits or returns, have been timely filed or distributed.
(d) No Benefit Plan or Company Entity has engaged in any Prohibited
Transaction. No Benefit Plan has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(a) of ERISA, and no
circumstances exist as a result of which any Company Entity could have any
direct or indirect liability whatsoever, including being subject to any
statutory lien to secure payment of any such liability, to the PBGC under Title
IV of ERISA or to the IRS for any excise tax or penalty with respect to any
Benefit Plan now or hereafter maintained or contributed to by any Company
Entity. Further:
(1) no termination, partial termination or discontinuance of
contributions to any Qualified Plan has occurred without a determination by
the IRS that such action does not adversely affect the tax-qualified status
of that plan;
(2) no Termination Event has occurred;
-13-
(3) no Reportable Event has occurred with respect to any Benefit Plan
which was not properly reported;
(4) the valuation of assets of any Qualified Plan, as of the Effective
Time, will equal or exceed the actuarial present value of all "benefit
liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under
that plan in accordance with the assumptions the regulations of the PBGC
governing the funding of terminated defined benefit plans contain;
(5) with respect to Benefit Plans qualifying as "group health plans"
under Section 4980B of the Code or Section 607(1) or 609 of ERISA,
relating to the benefit continuation rights "COBRA" or qualified medical
child support orders impose, each Company Entity has complied in all
material respects with all reporting, disclosure, notice, election and
other benefit continuation and coverage requirements so imposed as and when
applicable to those plans, and no Company Entity has incurred, or will
incur, any direct or indirect liability or is, or will be, subject to any
loss, assessment, excise tax penalty, loss of federal income tax deduction
or other sanction, arising on account of or in respect of any direct or
indirect failure by any Company Entity, at any time prior to the
consummation of the Offer to comply with any such benefit continuation of
coverage Governmental Requirement, which is capable of being assessed or
asserted before or after that consummation directly or indirectly against
any Company Entity, Parent or any Affiliate of Parent; and
(6) no Company Entity has incurred liability under Section 4062 of
ERISA.
(e) No Company Entity is, or at any time within the six-year period
ended on the date of this Agreement was, obligated to contribute to a
Multiemployer Plan.
(f) No act, omission or transaction has occurred which would result in
the imposition on any Company Entity with respect to any Benefit Plan of:
(1) any breach of fiduciary duty liability damages under Section 409
of ERISA;
(2) a civil penalty under Section 502 (c), (i) or (l) of ERISA; or
(3) any excise tax under the Code.
(g) Any Benefit Plan funded trust intended to be exempt under Section
501(c)(9) of the Code:
(1) satisfies the requirements of that Section;
(2) has received a favorable determination letter from the IRS
regarding that exempt status; and
(3) has not, since receipt of the most recent favorable determination
letter, been amended or operated in a way that would adversely affect that
exempt status.
-14-
(h) Each Benefit Plan that is a Welfare Plan may be amended or
terminated at any time after the consummation of the Offer without liability to
any Company Entity.
Section 4.10. OTHER COMPENSATION ARRANGEMENTS AND EMPLOYEE MATTERS.
(a) Except as the Filed SEC Documents disclose, and except for the Severance
Plan, the TSIP and the Current Bonus Plan, as of the date of this Agreement, no
Company Entity is a party to any written or oral:
(1) consulting agreement not terminable on not more than 60 calendar
days' prior notice or union or collective bargaining agreement;
(2) agreement with any executive officer or other key employee of any
Company Entity (A) the benefits of which are contingent, or the terms of
which are materially affected or altered, on the occurrence of a
transaction involving the Company of the nature this Agreement contemplates
or (B) providing any term of employment or compensation guarantee; or
(3) agreement or plan, including any stock option plan (other than the
Option Plan), stock appreciation right plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased or affected,
or the vesting of the benefits of which will be accelerated or affected, by
the occurrence of any of the transactions this Agreement contemplates or
the value of any of the benefits of which will be calculated on the basis
of any of the transactions this Agreement contemplates.
(b) Each Company Entity has been and is in compliance with the IRCA
and all applicable Governmental Requirements respecting employment and
employment practices, terms and conditions of employment, wages and hours and
workplace health and safety at well sites and in other work areas.
(c) No Company Entity has any obligation or made any commitment or
promise to provide medical, dental or life insurance benefits to or on behalf of
any of its employees who may retire or any of its former employees who have
retired, except as the continuation of coverage provisions of Section 4980B of
the Code and the applicable parallel provisions of ERISA may require.
(d) No Company Entity is a party to or bound by any collective
bargaining or other labor union agreement. To the knowledge of the Company, no
labor union organizing activities involving any Company Entity are ongoing.
(e) The Company has delivered to Parent prior to the date of this
Agreement an accurate, complete schedule that sets forth as of March 1, 2002, on
the basis of the assumptions that schedule contains:
(1) the name of each "Participant" in the Severance Plan; and
-15-
(2) for each named "Participant:"
(A) the amount of the "Incentive Benefit" to which that
individual may be come entitled; and
(B) the amount of the "Severance Benefit" to which that
individual may become entitled.
The consummation of neither the Offer nor the Merger will constitute a
"succession" for purposes of Section 8.1 of the Severance Plan, and the failure
of the Company to obtain from Parent or any of its Affiliates an agreement to
assume and agree to perform the obligations of the Company under the Severance
Plan will not constitute a breach of that plan for any purpose of that plan. The
Severance Plan will permit its amendment in accordance with Schedule 7.04
without the consent of any Participant.
Quoted terms this Section 4.10(e) uses have the meanings the Severance Plan
specifies.
(f) The Company has delivered to Parent prior to the date of this
Agreement an accurate, complete schedule that sets forth as of March 1, 2002:
(1) the names of all participants in the TSIP and, for each such
participant, the estimated liability of the Company thereto under the TSIP;
(2) the names of all participants in the Current Bonus Plan and, for
each such participant, the estimated liability of the Company thereto for
all amounts payable thereunder with respect to calendar years 2000 and
2001; and
(3) the names of all "Grantees" of all then granted and outstanding
"Incentive Awards" under the LIP and, for each such award, the "cash value"
thereof for purposes of Section 5.7(b) of the LIP on the assumption that
the highest price that will be paid under the Offer will be the dollar
amount per Share Section 1.01(a) sets forth.
Quoted terms this Section 4.10(f) uses have the meanings the LIP specifies.
(g) Effecting the disposition of outstanding Options and Warrants in
accordance with Schedule 3.02 will not require the consent of any holder of any
Option or Warrant which has not been duly obtained prior to the date of this
Agreement and furnished to Parent.
(h) As of March 1, 2002, each then current employee of the Company had
executed and delivered to the Company a confidentiality agreement in one of the
forms the Company delivered to Parent prior to the date of this Agreement. Each
of those agreements is a legal, valid and binding obligation of the employee
party thereto.
(i) The Company has delivered to Parent prior to the date of this
Agreement an accurate, correct list of the names, years of service and current
rates of salary and wages for all current employees and consultants who are
employed or otherwise compensated by a
-16-
Company Entity. No person any Company Entity has classified as an independent
contractor properly should be classified as a common-law employee of that
Company Entity.
(j) The Company Entities have no contract, commitment, obligation or
intention, whether legally binding or not, to establish or adopt any new or
additional plans or other arrangements that would constitute Benefit Plans if
adopted, or to increase the benefits under any existing Benefit Plan.
Section 4.11. LITIGATION. Except as the Filed SEC Documents disclose,
and except for suits filed in connection with the Offer, no actions, claims,
investigations, proceedings or suits are pending or, to the knowledge of the
Company, threatened against Company Entities by or before any Governmental
Authority the outcomes of which, individually or in the aggregate, reasonably
could be expected to have a Company Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger. Except as the
Filed SEC Documents disclose, no Company Entity is subject to any outstanding
orders, writs, injunctions, decrees or binding awards that reasonably could be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.12. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Except as the
Filed SEC Documents disclose, the Company Entities:
(1) hold all Governmental Approvals necessary for the lawful conduct
of their businesses; and
(2) are in compliance with the terms of their Governmental Approvals
and all applicable Governmental Requirements;
except for such failures to hold Governmental Approvals and to comply with
Governmental Approvals and Governmental Requirements as would not, individually
or in the aggregate, have a Company Material Adverse Effect.
Section 4.13. RESERVE INFORMATION. The Company has delivered to Parent
prior to the date of this Agreement the definitive report of Xxxxx Xxxxx
Company, independent petroleum engineers, on the Company's proved reserves as of
December 31, 2001 together with the written acknowledgment by Xxxxx Xxxxx
Company that the report so delivered is as represented and warranted hereby. The
underlying factual information provided to Xxxxx Xxxxx Company, to the extent
that Xxxxx Xxxxx Company relied on it in the preparation of that report on the
Company's proved reserves as of December 31, 2001, was, at the time of delivery,
true and correct in all material respects, except for such errors as,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect.
Section 4.14. TAX MATTERS. (a) Each Company Entity has filed all
federal income tax returns and all other material Tax returns and reports any
Governmental Requirement has required it to file. All those returns are complete
and correct. Each Company Entity has paid, or the Company has paid on its
behalf, all Taxes those returns showed as due and all Taxes for which no return
was required to be filed.
-17-
(b) No Tax return of any Company Entity is under audit or examination
by any taxing authority, and no Company Entity has received any written or oral
notice of any such audit or examination. With respect to Taxes paid or payable
by any Company Entity, a Company Entity has paid each deficiency resulting from
any audit or examination relating thereto, except for deficiencies a Company
Entity is contesting in good faith, and no relevant taxing authority has raised
in writing:
(1) any issues relating thereto in the course of any presently pending
audit or examination; or
(2) any material issues relating thereto in any completed audit or
examination which reasonably could be expected to recur in a later taxable
period.
The consolidated federal income tax returns of the Company have never been
examined by the IRS and all years are closed through 1997.
(c) No liens for Taxes exist with respect to any assets or properties
of any Company Entity, except for statutory liens for Taxes not yet due.
(d) No Company Entity is a party to or is bound by any Tax sharing
agreement, Tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes, including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any taxing authority.
(e) Any disallowance of a deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amount paid or payable by any
Company Entity under any contract, Option Plan, Benefit Plan, program,
arrangement or understanding currently in effect.
(f) Any amount or other entitlement that could be received, whether in
cash or property or the vesting of property, as a result of any of the
transactions this Agreement contemplates by any employee, officer or director of
the Company or any of its Affiliates who is a "disqualified individual," as
proposed Treasury Regulation Section 1.280G-1 defines that term, under any
employment, severance or termination agreement, other compensation arrangement
or Benefit Plan currently in effect would not be characterized as an "excess
parachute payment," as Section 280G(b)(1) of the Code defines that term.
(g) Each Company Entity has timely filed, or caused to be timely filed
on its behalf, all Royalty Returns any contract or Governmental Requirement has
required it to file, and all those Royalty Returns are true, complete and
accurate in all material respects as provided for under any contract or by any
applicable Governmental Requirement. All Royalties those Royalty Returns showed
to be due, or otherwise owing, as well as all Royalties for which no Royalty
Return was required to be filed, have been timely paid. The Company Disclosure
Letter contains lists of:
(1) all jurisdictions in which any Company Entity currently files
Royalty Returns;
-18-
(2) all planned audits by the relevant authorities; and
(3) all disputed Royalty matters and an estimated dollar amount
attributable to each of those matters;
and each of those lists is true and complete in all material respects. No
Governmental Authority or other Person has asserted, assessed, proposed or
threatened any deficiencies with respect to any Royalty against the Company
Entities which, individually or in the aggregate, are Material to them.
(h) For purposes of Article Nine, no representations Section 4.09 and
this Section 4.14 contain (each, a "Relevant Representation") will be deemed to
be untrue unless all untruths the Relevant Representations contain cumulatively
reasonably could be expected to have a Company Material Adverse Effect.
Section 4.15. STATE TAKEOVER STATUTES. The Company Board has approved
the Offer, the Merger and this Agreement, and that approval is irrevocable and
sufficient to render the Section 203 Restrictions inapplicable to the Offer, the
Merger and this Agreement and the transactions this Agreement contemplates. To
the Company's knowledge, no other state takeover statute or similar Governmental
Requirement applies or purports to apply to the Offer, the Merger, this
Agreement or any of the transactions this Agreement contemplates.
Section 4.16. BROKERS; FEES AND EXPENSES. No Company Entity has,
directly or indirectly, agreed to pay or incurred any obligation to pay any
broker, investment banker, financial advisor or other Person, other than the
Company Financial Advisor and Xxxxxxx & Xxxxx, Inc., the fees and expenses of
which the Company will pay, any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions this Agreement
contemplates. The Company Disclosure Letter correctly sets forth the estimated
fees and expenses the Company has incurred and expects to incur in connection
with this Agreement and the transactions it contemplates, including the fees of
the Company's legal counsel, counsel for the Company Financial Advisor and
Xxxxxxx & Xxxxx, Inc. The Company has provided Parent true and complete copies
of all executory agreements, all of which are in writing, between the Company
Financial Advisor or Xxxxxxx & Xxxxx, Inc. and the Company.
Section 4.17. OPINION OF THE COMPANY FINANCIAL ADVISOR. The Company
has received the written opinion of the Company Financial Advisor to the effect
that, as of the date of that opinion, the consideration the holders of Shares
will receive under the Offer and in the Merger is fair to those holders from a
financial point of view.
Section 4.18. INTELLECTUAL PROPERTY. Except to the extent that the
inaccuracies in any of the following, or the circumstances giving rise to those
inaccuracies, individually or in the aggregate, would not have a Company
Material Adverse Effect:
(1) each Company Entity owns, or is licensed or otherwise has the
right to use, in each case, clear of any liens or encumbrances of any kind,
all Proprietary Rights used in or necessary for the conduct of its business
as currently conducted;
-19-
(2) no claims are pending or, to the knowledge of the Company,
threatened that any Company Entity is infringing on or otherwise violating
the rights of any Person with regard to any Proprietary Rights any Company
Entity owns or uses under a license;
(3) to the knowledge of the Company, no Person is infringing on or
otherwise violating any right of any Company Entity with respect to any
Proprietary Rights any Company Entity owns or uses under a license;
(4) none of the former or current members of management or key
personnel of any Company Entity, including all former and current
employees, agents, consultants and contractors who have contributed to or
participated in the conception and development of the Proprietary Rights of
any Company Entity, has asserted or threatened in writing any claim against
any Company Entity in connection with the involvement of those Persons in
the conception and development of the Proprietary Rights of any Company
Entity;
(5) the execution and delivery of this Agreement, compliance with its
terms and consummation of the transactions it contemplates do not and will
not conflict with or result in any violation or default, with or without
notice or lapse of time or both, or give rise to any right or license or
any creation or extension of any lien or encumbrance relating to the
Proprietary Rights of any Company Entity or any right of termination,
cancellation or acceleration or any loss of any Proprietary Rights of any
Company Entity or benefits related thereto which, in the aggregate, are
Material to the Company Entities, and no consent of any Person will be
required for the use of any of these Proprietary Rights by Parent or any
Affiliate or Parent following the consummation of the Offer; and
(6) each Company Entity has taken reasonable and necessary steps to
protect its Proprietary Rights, and, to the knowledge of the Company, none
of the Proprietary Rights of the Company Entities has been lost or are in
jeopardy of being lost because of any omission to act by any Company
Entity.
Section 4.19. ENVIRONMENTAL MATTERS. Except as the Filed SEC Documents
disclose or as would not, individually or in the aggregate, have a Company
Material Adverse Effect:
(1) each Company Entity has all Governmental Approvals all applicable
Environmental Laws require it to have and is in compliance with the
requirements of those Environmental Laws and Governmental Approvals;
(2) to the knowledge of the Company, there are no pending or
threatened claims against or governmental investigations involving any
Company Entity under any Environmental Laws; and
(3) to the knowledge of the Company, there are no circumstances with
respect to any current or former property or operations of any Company
Entity or any other Person for which any Company Entity has assumed
liability that would form the basis of any claims of material violations of
Environmental Laws against one or more of the Company Entities, and
applicable Governmental Requirements have not required the
-20-
Company to disclose facts relating to environmental proceedings or matters
in the Filed SEC Documents which the Company has not so disclosed.
The representations and warranties in Section 7.17 of the Credit Agreement are
true and correct. The Company has delivered to Parent prior to the date of this
Agreement an accurate, complete copy of the "Disclosure Schedule," as the Credit
Agreement defines the quoted term.
Section 4.20. STOCKHOLDERS AGREEMENT. Each Stockholder has duly
executed and delivered to Parent the Stockholders Agreement, and the
Stockholders Agreement constitutes a valid and binding obligation of that
Stockholder, enforceable against that Stockholder in accordance with its terms,
except as that enforceability may be:
(1) limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally; and
(2) subject to general principles of equity, regardless of whether
that enforceability is considered in a proceeding in equity or at law.
Section 4.21. OPTION AGREEMENT. Each Option Grantor has duly executed
and delivered to Parent the Option Agreement, and the Option Agreement
constitutes a valid and binding obligation of that Option Grantor, enforceable
against that Option Grantor in accordance with its terms, except as that
enforceability may be:
(1) limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally; and
(2) subject to general principles of equity, regardless of whether
that enforceability is considered in a proceeding in equity or at law.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 5.01. ORGANIZATION; POWER. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of
Delaware and has all requisite corporate power and authority
under those laws and its Charter Documents to:
(1) own or lease its properties and carry on its business as now
conducted; and
(2) execute, deliver and perform its obligations under this Agreement
and consummate the transactions this Agreement contemplates it will
consummate.
Section 5.02. AUTHORITY; ENFORCEABILITY. The execution, delivery and
performance of this Agreement by each of Parent and Sub and the consummation of
the transactions this Agreement contemplates have been duly authorized by all
necessary corporate
-21-
action on its part which its Charter Documents and the applicable Governmental
Requirements of the State of
Delaware require. No vote of Parent's stockholders
is required to approve this Agreement or the other transactions this Agreement
contemplates.
Each of Parent and Sub has duly executed and delivered this Agreement,
and this Agreement, assuming it constitutes a valid and binding obligation of
the Company, constitutes its valid and binding obligation enforceable against it
in accordance with its terms, except as that enforceability may be:
(1) limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally; and
(2) subject to general principles of equity, regardless of whether
that enforceability is considered in a proceeding in equity or at law.
Section 5.03. CONSENTS AND APPROVALS; NO VIOLATIONS. (a) The
execution, delivery and performance of this Agreement by each Parent Entity, the
consummation of the Offer and the Merger and the effectuation by either Parent
Entity of any other transaction this Agreement contemplates it will effect do
not and will not:
(1) violate or breach any Charter Document of Parent or Sub;
(2) violate any Governmental Requirement applicable to Parent or Sub;
or
(3) except as would not, individually or in the aggregate, reasonably
be expected to prevent or materially delay the consummation of the Offer or
the Merger, violate, breach or constitute, with or without due notice or
lapse of time or both, a default under, or result in, or afford another
Person the right to cause, any cancellation or termination of, any
amendment or other change in the terms of or any acceleration of the
obligations of either Parent or Sub or its obligations under any agreement
Material to Parent.
(b) Except as the Exchange Act, the DGCL and state securities or blue
sky laws do or may require, no Governmental Requirement requires either of
Parent or Sub to obtain any Governmental Approval, or make any filings,
including any report or notice, with any Governmental Authority, in connection
with its execution, delivery or performance of this Agreement, the enforcement
against it of its obligations hereunder, the consummation of the Offer or the
Merger or the effectuation of any other transaction this Agreement contemplates
it will effect.
Section 5.04. INFORMATION SUPPLIED. The information Parent or Sub has
supplied or may hereafter supply specifically for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9 or the information
statement, if any, respecting the Merger will, at the respective times they are
filed with the SEC or first published, sent or given to the Company's
stockholders, not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that Parent and Sub make no representation
respecting the information the Company has supplied or may hereafter
-22-
supply in writing specifically for inclusion or incorporation by reference
therein. The Offer Documents comply as to form in all material respects with the
applicable requirements of Exchange Act.
Section 5.05. INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions this Agreement contemplates, has engaged
in no other business activities and has conducted its operations only as this
Agreement contemplates.
Section 5.06. BROKERS; FEES AND EXPENSES. Neither Parent nor Sub has,
directly or indirectly, agreed to pay or incurred any obligation to pay any
broker, investment banker, financial advisor or other Person, other xxxx Xxxxxxx
Xxxxx & Co., the fees and expenses of which Parent or Sub will pay, any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions this Agreement contemplates.
Section 5.07. FINANCING. Parent has the funds available to purchase
all the outstanding Shares on a fully diluted basis in the Offer and pay the
Merger Consideration in the Merger and all fees and expenses this Agreement
contemplates it or Sub will pay.
ARTICLE SIX
COVENANTS
Section 6.01. COVENANTS OF THE COMPANY. (a) Until such time as
Parent's nominees constitute a majority of the whole Company Board, the Company
will, and will cause each other Company Entity to, except as this Agreement
otherwise expressly contemplates or permits or as Parent otherwise has
previously consented in writing:
(1) carry on its businesses in substantially the same manner as it has
heretofore and not introduce any new methods of management, operation or
accounting that in the aggregate are Material to the business of the
Company Entities;
(2) maintain its properties and facilities, including those it holds
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(3) perform in all material respects all its obligations under
agreements relating to or affecting its properties, rights and other
assets, including the Credit Agreement;
(4) keep in full force and effect without interruption all its present
insurance policies or other comparable insurance coverage;
(5) use reasonable commercial efforts to (A) maintain and preserve its
business organization intact, (B) retain its present employees and (C)
maintain its relationships with suppliers, customers and others having
business relations with it;
(6) comply with all applicable Governmental Requirements; and
-23-
(7) maintain the instruments and agreements governing its outstanding
indebtedness and leases on their present terms and not enter into (i) new
or amended indebtedness or (ii) new or amended lease instruments or
agreements involving amounts over $25,000 in any single case or $100,000 in
the aggregate.
(b) Until such time as Parent's nominees constitute a majority of the
whole Company Board, the Company will not, and will not permit any other Company
Entity to, except as this Agreement otherwise expressly contemplates or permits
or as Parent otherwise has previously consented in writing:
(1) (A) declare or pay any dividends on or make other distributions in
respect of any of its Capital Stock, other than dividends or distributions
a wholly owned Subsidiary of the Company may declare, pay or make to the
Company or one of its other wholly owned Subsidiaries, (B) split, combine
or reclassify any of its Capital Stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its Capital Stock or (C) repurchase, redeem or
otherwise acquire any shares of Capital Stock of any Company Entity;
(2) issue, deliver or sell, or authorize, or propose the issuance,
delivery or sale of, any shares of its Capital Stock of any class, or any
Derivative Securities or phantom securities, except that:
(A) the Company may issue:
(i) shares of Common Stock on the exercise of Options and
Warrants awarded and outstanding on the date of this Agreement
in accordance with the present terms of those Options or
Warrants and the applicable Option Plan or Warrant agreement,
(ii) shares of Common Stock under the Current Bonus Plan,
as the Company Disclosure Letter sets forth,
(iii) shares of Common Stock as employer's contributions
under the Savings Plan, as the Company Disclosure Letter sets
forth and
(iv) Options awarded but not issued under the LIP, as the
Company Disclosure Letter sets forth, provided those Options
are in form and substance reasonably satisfactory to Parent;
and
(B) any wholly owned Subsidiary of the Company may issue shares
of its Capital Stock to the Company or one of its other wholly owned
Subsidiaries;
(3) amend or propose to amend its Charter Documents;
-24-
(4) make, or enter into a contract or other commitment to make,
directly or indirectly:
(A) any investments, other than Permitted Investments, in the
Capital Stock or indebtedness of any Person; or
(B) except in connection with transactions GAAP characterizes as
hedging transactions, as distinct from trading transactions, that the
Credit Agreement requires, issue or acquire any commodity derivatives;
(5) negotiate for the acquisition of any business or the start-up of
any new business or, merge, consolidate or otherwise effect a business
combination with, or agree to merge, consolidate or otherwise effect a
business combination with, any other Entity;
(6) other than sales of production and products in the ordinary course
of business and consistent with prior practice and the requirements of the
Credit Agreement, directly or indirectly sell, lease, license, encumber or
otherwise dispose of, or enter into a contract to sell, lease, license,
encumber or otherwise dispose of, any of its assets;
(7) incur any new or additional indebtedness for borrowed money
(which, for purposes of this Section 6.01, will include any production
payment, whether volumetric or denominated in a currency, or similar
royalty, overriding royalty net profits or other interest in any oil or gas
property) or guarantee any such indebtedness, issue or sell any debt
securities or warrants or rights to acquire any debt securities of the
Company or any other Company Entity or guarantee any debt securities of
others;
(8) make any Tax elections that, individually or in the aggregate,
would have a Company Material Adverse Effect or settle or compromise any
income tax liabilities of the Company or any other Company Entity that,
individually or in the aggregate, would have a Company Material Adverse
Effect;
(9) pay, discharge, settle or satisfy any claims, liabilities or
obligations, absolute, accrued, asserted or unasserted, contingent or
otherwise, other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities the unaudited consolidated financial
statements of the Company for the year ended December 31, 2001 recognize or
disclose or incurred since December 31, 2001, in the ordinary course of
business consistent with past practice, or waive the benefits of, or agree
to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any other Company Entity is a party;
(10) fail to comply with any covenant Article VIII of the Credit
Agreement contains;
(11) except in the ordinary course of business, modify, amend or
terminate any contract or agreement Material to the Company Entities to
which any Company Entity is a party or of which it is a beneficiary or by
which it is bound or waive, release or assign any rights or claims Material
to the Company Entities;
-25-
(12) permit the call of the 2002 annual meeting, or any special
meeting, of its stockholders; or
(13) amend or otherwise change any agreement it or any other Company
Entity has with the Company Financial Advisor.
In the case of any requested deviation by the Company from the provisions of
clause (7) above, Parent will not unreasonably withhold its consent.
Section 6.02. NO SOLICITATION. (a) The Company:
(1) will, and will cause all its Representatives to, cease immediately
any discussions or negotiations with any parties which may be ongoing with
respect, or which reasonably may be expected to lead, to any Acquisition
Proposal; and
(2) will not authorize or permit any of its Representatives to (A)
solicit, initiate or encourage, including by way of furnishing information,
or take any other action to facilitate, any inquiries or the making of any
proposal which constitutes, or reasonably may be expected to lead to, any
Acquisition Proposal or (B) participate in any discussions or negotiations
regarding, or which reasonably may be expected to lead to, any Acquisition
Proposal;
provided, however, that, if at any time before Sub accepts Shares for payment
under the Offer, the Company receives an unsolicited bona fide written
Acquisition Proposal and a majority of the Company Board determines in good
faith that the proposal reasonably may be expected to constitute a Superior
Takeover Proposal, the Company may, and may permit its Representatives to, in
response to that proposal, and provided that the Company complies with
Section 6.02(c):
(1) furnish information about the Company to any Person under a
confidentiality agreement in a form Parent has previously approved in
writing, which approval Parent will not unreasonably withhold; and
(2) participate in negotiations regarding that proposal.
Without limiting the foregoing, the parties hereto acknowledge their respective
understandings that any violation of the restrictions the preceding sentence
sets forth will constitute a breach of this Section 6.02(a) by the Company.
(b) Except as this Section 6.02(b) otherwise sets forth, neither the
Company Board nor any committee thereof will:
(1) withdraw or modify, or propose to withdraw or modify in a manner
adverse to Parent, the approval or recommendation by the Company Board of
the Offer or the agreement of merger this Agreement contains;
(2) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal; or
-26-
(3) cause the Company to enter into any agreement respecting any
Acquisition Proposal;
provided, however, that if at any time before Sub accepts Shares for payment
under the Offer, the Company receives an unsolicited bona fide written
Acquisition Proposal that a majority of the Company Board determines in good
faith constitutes a Superior Takeover Proposal, the Company Board may, at any
time that is after the fourth business day following the Company's delivery to
Parent of the written notice Section 6.02(c) requires the Company to deliver in
connection with that proposal:
(1) withdraw or modify its recommendation, but not its approval, which
will be irrevocable, of the Offer and the agreement of merger this
Agreement contains; and
(2) approve or recommend that proposal or cause the Company to enter
into an agreement implementing that proposal.
(c) If the Company or, to its knowledge, any of its Representatives
receives any Acquisition Proposal or any request for information or inquiry with
respect, or which reasonably may be expected to lead, to an Acquisition
Proposal, the Company will:
(1) immediately advise Parent orally of, and thereafter promptly, but
in no event later than 24 hours after receipt, confirm to Parent in
writing, the material terms and conditions of that Acquisition Proposal,
request or inquiry and the identity of the Person making that Acquisition
Proposal, request or inquiry; and
(2) thereafter will keep Parent fully informed of the status and
details, including amendments or proposed amendments, of that Acquisition
Proposal, request or inquiry.
(d) Nothing this Section 6.02 contains will prohibit the Company from
taking and disclosing to its stockholders a position Exchange Act Rule 14e-2(a)
contemplates or from making any disclosure to the Company's stockholders if, in
the opinion of the Company Board, after consultation with counsel, failure so to
disclose would be inconsistent with the fiduciary duties of its members to the
Company's stockholders under
Delaware law; provided, however, that neither the
Company nor the Company Board or any committee thereof will, except as Section
6.02(b) otherwise permits, withdraw or modify, or propose to withdraw or modify,
the Company Board's position with respect to the Offer and the agreement of
merger this Agreement contains or approve or recommend, or propose to approve or
recommend, a Superior Takeover Proposal.
(e) During any period of four business days which Section 6.02(b)
describes, the Company will not, and will not permit any other Company Entity
to, enter into any binding agreement respecting any Superior Takeover Proposal.
If, during or after any such period, the Company changes its intention to enter
into any such binding agreement, the Company promptly will notify Parent of that
change and its particulars.
-27-
Section 6.03. OTHER ACTIONS. The Company will not, and will not permit
any other Company Entity to, take any action that would result in:
(1) any of the representations and warranties of the Company in this
Agreement which are qualified as to materiality or a Company Material
Adverse Effect becoming untrue;
(2) any of those representations and warranties which are not so
qualified becoming untrue in any material respect; or
(3) any of the Offer Conditions not being satisfied, subject to the
Company's right to take the actions Section 6.02 expressly permits it to
take.
ARTICLE SEVEN
ADDITIONAL AGREEMENTS
Section 7.01. EFFECTING THE MERGER; STOCKHOLDER APPROVAL. (a) If
Parent Entities own at least 90% of the outstanding Shares after Sub consummates
the Offer, the parties hereto will take all actions necessary to effect the
Merger under Section 253 of the DGCL as soon as practicable after that
consummation.
(b) If Parent and Sub cannot or choose not to effect the Merger under
Section 253 of the DGCL, the parties will effect the Merger under Section 251 of
the DGCL as soon as practicable after complying with the applicable
informational requirements of the Exchange Act, and the Company will submit the
agreement of merger this Agreement contains to its stockholders for the purpose
of their acting on that agreement notwithstanding that the Company Board, having
heretofore declared that agreement advisable, may have determined after the date
of this Agreement that that agreement is no longer advisable and recommended
that its stockholders reject it.
(c) If Parent will effect the Merger under Section 251 of the DGCL
and, in connection therewith, the Company must furnish to its stockholders an
information statement under Section 14(c) of the Exchange Act, the Company will,
at Parent's request, as soon as practicable following the consummation of the
Offer, prepare and file a preliminary information statement with the SEC and
will use its reasonable best efforts to respond to any comments of the SEC or
its staff and to cause that information statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all those comments
to the satisfaction of that staff. The Company will notify Parent promptly of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to that information statement or
for additional information and will supply Parent with copies of all
correspondence between the Company or any of its Representatives and the SEC or
its staff with respect to the information statement or the Merger. If at any
time any event occurs that an amendment or supplement to the information
statement should set forth, the Company will promptly prepare and mail to its
stockholders that amendment or supplement. The Company will not mail any
information statement, or any amendment or supplement thereto, to which Parent
reasonably objects.
-28-
(d) In connection with the Merger, the Company will comply with the
applicable notice requirements of the Appraisal Statute.
(e) Parent will cause all Shares that all Parent Entities own to vote
in favor of the agreement of merger this Agreement contains if it is to be
effected under Section 251 of the DGCL.
Section 7.02. ACCESS TO INFORMATION. On reasonable notice and subject
to any restrictions that confidentiality agreements to which the Company is
subject contain, from which restrictions the Company will use reasonable efforts
to be released, the Company will:
(1) afford to Parent and its Representatives access, during normal
business hours at any time prior to the Effective Time, to all the
properties, books, contracts, commitments and records of the Company
Entities; and
(2) furnish promptly to Parent (A) a copy of each report, schedule,
registration statement and other document filed or received by it during
such period under the federal securities or Tax laws and (B) all other
information concerning its business, properties and personnel as Parent
reasonably may request.
The Company will deliver to Parent copies of its audited consolidated
financial statements for the year ended December 31, 2001, together with the
report of Deloitte & Touche LLP thereon, promptly after they become available to
the Company.
Except as the Company otherwise may agree, unless and until Parent
Entities own at least a majority of the outstanding Shares, and notwithstanding
termination of this Agreement, Parent will keep, and will cause its
Representatives and Affiliates to keep, all Confidential Information of the
Company Entities confidential and not to disclose any of that Confidential
Information to any Person other than those Representatives and Affiliates and
then only on a confidential basis; provided, however, that Parent or Sub may
disclose that Confidential Information:
(1) as any applicable Governmental Requirement may require; or
(2) as any Governmental Authority may request.
Neither Parent nor any of its Affiliates will use any Confidential Information
of the Company Entities in any manner detrimental to the Company or its
stockholders and, in the event any party terminates this Agreement for any
reason under Article Nine, Parent will, and will cause Sub to, promptly return
all that Confidential Information to the Company.
Section 7.03. REASONABLE EFFORTS. Each party agrees to use its
reasonable efforts to:
(1) take all actions necessary to comply promptly with all
Governmental Requirements applicable to it with respect to the Offer or the
Merger, which actions will include furnishing all information hereafter
required to be filed in connection with approvals of or filings with any
other Governmental Authority, and promptly cooperate
-29-
with and furnish information to each other in connection with any such
requirements imposed upon any of them or their Affiliates in connection
with the Offer or the Merger; and
(2) take all reasonable actions necessary to obtain, and will
cooperate with each other in obtaining, any Governmental Approval of, or
any exemption by, any Governmental Authority or other public or private
third party required to be obtained or made by Parent, Sub or the Company
or any of their respective Affiliates in connection with the Offer or the
Merger or the taking of any action those transactions or this Agreement
contemplate.
Parent will cause Sub to comply with its obligations under this Agreement.
Section 7.04. BENEFITS. Each party will comply with the provisions
Schedule 7.04 sets forth, which the parties incorporate herein by this
reference.
Section 7.05. DIRECTORS. Promptly on the acceptance for payment of,
and payment for, any Shares by Sub in the Offer, Sub will be entitled to
designate such number of members of the Company Board as will give Sub, subject
to compliance with Section 14(f) of the Exchange Act, at least a majority of the
members of the whole Company Board, and the Company will, at that time, cause
Sub's nominees to be so elected by the then constituted Company Board; provided,
however, that if Sub's nominees are so elected, then, until the Effective Time,
the Company Board will have at least two directors who are Independent
Directors. Subject to applicable Governmental Requirements, the Company will
take all action Parent reasonably may request to effect the Company's compliance
with this Section 7.05.
Section 7.06. FEES AND EXPENSES. (a) Except as Section 7.06(b) and (c)
otherwise provide, each party will pay the fees and expenses it incurs in
connection with the Offer, the Merger, this Agreement and the transactions this
Agreement contemplates, whether or not the Offer or the Merger is consummated.
(b) The Company will pay the Termination Fee to Parent if any of the
following events occurs:
(1) Parent becomes entitled to, and does, terminate this Agreement
under Section 9.01(a)(3)(A) or (B);
(2) the Company becomes entitled to, and does, terminate this
Agreement under Section 9.01(a)(4); or
(3) an Acquisition Proposal having been publicly announced,
communicated or otherwise disclosed prior to the purchase of Shares under
the Offer and the termination of this Agreement under Article Nine:
(A) (1) Parent becomes entitled to, and does, terminate this
Agreement under Section 9.01(a)(3)(C) unless that termination results
from a breach of Section 4.06(1) that was not caused by any action or
omission to act on the part of the Company or (2) the Company becomes
entitled to, and does, at a time when
-30-
the Minimum Tender Condition has not been satisfied and neither Parent
nor Sub is in a material breach of this Agreement, terminate this
Agreement under Section 9.01(a)(2)(A); and
(B) within 12 months after that termination, the Company
consummates or enters into an agreement providing for the consummation
of any transaction that has been the subject of any Acquisition
Proposal.
The Company must pay the Termination Fee to Parent by wire transfer of
immediately available funds to Parent's account Schedule 7.06 specifies:
(1) if an event clause (1) of the preceding sentence describes occurs,
as promptly as is reasonable practicable, but in no event later than two
business days, after that occurrence; and
(2) if an event clause (2) or (3) of the preceding sentence describes
occurs, concurrently with that occurrence.
(c) If the Company becomes obligated to pay the Termination Fee to
Parent under Section 7.06(b), it also will reimburse Parent for all
out-of-pocket fees and expenses reasonably incurred by Parent and Sub from and
after January 1, 2002 in connection with the Offer, the Merger, this Agreement
and the transactions this Agreement contemplates and the enforcement of their
rights hereunder. If the Company becomes entitled to, and does, terminate this
Agreement under Section 9.01(a)(5), Parent will reimburse the Company for all
out-of-pocket fees and expenses reasonably incurred by the Company from and
after January 1, 2002 in connection with the Offer, the Merger, this Agreement
and the transactions this Agreement contemplates and the enforcement of its
rights hereunder.
Section 7.07. INDEMNIFICATION; INSURANCE. (a) All rights to
indemnification for acts or omissions occurring before the Effective Time now
existing in favor of the current or former directors or officers of the Company
as its Charter Documents or contractual arrangements provide on the date of this
Agreement, or as applicable law otherwise provides, will survive the Merger and
continue in full force and effect in accordance with their terms.
(b) For six years from the Effective Time, Parent will, unless Parent
elects, at its option, in writing to guarantee performance of the
indemnification obligations to which Section 7.07(a) refers, maintain in effect
the Company's current D&O Insurance covering those persons who are currently
covered by the Company's D&O Insurance policy, a copy of which the Company has
made available to Parent; provided, however, that Parent will extend the
Company's current D&O policy in effect to cover clams made prior to the first
anniversary of the Effective Time if the premium for that additional coverage
does not exceed $80,000.
(c) This Section 7.07 will survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the indemnified parties and will be binding on all successors
and assigns of Parent and the Surviving Corporation.
-31-
Section 7.08. ANTITAKEOVER MEASURES. So long as the Offer remains
outstanding and complies with Section 1.01(b), the Company will not at any time,
notwithstanding that the Company may have terminated this Agreement under
Article Nine, adopt, or permit any other Company Entity to adopt, by means of
any amendment to any of its Charter Documents or any agreement on its part, any
Anti-Parent Takeover Measures, including any "poison pill" rights plan or any
measure to the same or similar effect as the Section 203 Restrictions.
Section 7.09. CERTAIN LITIGATION. (a) The Company will not settle any
litigation currently pending, or commenced after the date hereof, against the
Company or any of its directors (other than human resources/employment matters),
without the prior written consent of Parent, which consent Parent will not
unreasonably withhold.
(b) The Company will not voluntarily cooperate with any third party
that has sought or may hereafter seek to restrain or prohibit or otherwise
oppose the Offer or the Merger and will cooperate with Parent and Sub to resist
any such effort to restrain or prohibit or otherwise oppose the Offer or the
Merger, unless the Company Board determines, in the good faith of its members
after consultation with the Company's outside counsel, that failing so to
cooperate with that third party or cooperating with Parent or Sub, as the case
may be, would constitute a breach of its members' fiduciary duties under
Delaware law.
Section 7.10. CREDIT AGREEMENT. The Company will use reasonable
efforts to cause the lenders under the Credit Agreement to forbear from
accelerating its indebtedness under the Credit Agreement solely as a result of
the consummation of the Offer or the performance by the Company of its
obligations under Section 7.05.
ARTICLE EIGHT
CONDITIONS
Section 8.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger will be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(1) COMPANY STOCKHOLDER APPROVAL. If the DGCL so requires for the
effectuation of the Merger, the Company shall have obtained the approval by
the Company's stockholders of the agreement of merger this Agreement
contains;
(2) NO INJUNCTIONS OR RESTRAINTS. No Governmental Requirement or other
legal restraint or prohibition preventing or materially restraining the
consummation of the Merger shall be in effect; provided, however, that each
of the parties shall have used reasonable efforts to prevent the entry of
any injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered; and
(3) PURCHASE OF SHARES. Sub shall have previously accepted for payment
and paid for Shares under the Offer.
-32-
ARTICLE NINE
TERMINATION AND AMENDMENT
Section 9.01. TERMINATION. (a) This Agreement may be terminated, and
the Merger may be abandoned, at any time prior to the Effective Time, whether
before or after approval by the Company's stockholders of the agreement of
merger this Agreement contains:
(1) by mutual written consent of Parent and the Company;
(2) by either Parent or the Company:
(A) if (1) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance
with its terms without Sub having accepted for payment any Shares
under the Offer or (2) Sub shall not have accepted for payment any
Shares under the Offer within 180 days following the date of this
Agreement; provided, however, that the right to terminate this
Agreement under this Section 9.01(a)(2)(A) will not be available to
any party whose failure to perform any of its obligations hereunder or
whose breach of any of its representations and warranties herein shall
have caused that right to become exercisable; or
(B) if any Governmental Authority shall have issued any order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares under the Offer or the consummation of the Merger
and that order, decree or ruling or other action shall have become
final and nonappealable;
(3) by Parent if, prior to the purchase of Shares under the Offer:
(A) the Company Board shall have:
(1) withdrawn, or modified or otherwise changed, in a manner
or to an effect adverse to Parent or Sub, its approval or
recommendation of the Offer or the agreement of merger this
Agreement contains;
(2) approved or recommended any Acquisition Proposal or
determined any Acquisition Proposal to be a Superior Takeover
Proposal; or
(3) taken any action for the purpose of rendering the Section
203 Restrictions inapplicable to any acquisition of Shares, other
than under the Offer or the Merger, or any Takeover Transaction,
other than the Merger;
(B) the Company shall have breached any provision of Section 6.02
or 7.08 in any material respect;
-33-
(C) the Company shall have breached:
(1) any of its representations and warranties herein which (a)
are qualified as to materiality or a Company Material Adverse
Effect or (b) are not so qualified if, as a result of all breaches
thereof in the aggregate, a Company Material Adverse Effect has
occurred or reasonably could be expected to occur; or
(2) any of its covenants and other agreements herein, other
than in Sections 6.02 and 7.08, in any material respect,
all which breaches, in the case of clauses (C)(1) and (C)(2), either
are not capable of being cured or, in the case of any such breach that
is so capable, that breach has not been cured before the first to
occur of (1) the elapse of 10 consecutive business days after Parent
or Sub has delivered to the Company a written notice of that breach or
(2) the expiration of the Offer; or
(D) any Stockholder shall have breached any of its covenants and
other agreements in Sections 2, 3, 4 and 5 of the Stockholders
Agreement;
(4) by the Company, if, prior to the purchase of Shares under the
Offer:
(A) the Company Board, by a majority vote of the whole board, has
determined in the good faith of its members and on the basis of, among
other facts, the advice of the Company Financial Advisor and the
Company's outside counsel, that the Company has received a Superior
Takeover Proposal;
(B) the Company Board has directed the Company to notify Parent
in writing that the Company intends to enter into a definitive
agreement respecting that proposal, and the Company has delivered that
notice to Parent together with either the then most current version of
that agreement or an accurate, complete description of all the
material terms and conditions thereof; and
(C) Parent, within four business days after its receipt of that
notice, either (1) has not delivered to the Company a written
counteroffer to that proposal or (2) has delivered to the Company a
written counteroffer to that proposal which the Company Board has
determined, in the good faith of its members and after consultation
with the Company Financial Advisor and the Company's outside counsel,
is not at least as favorable to the Company's stockholders, other than
Parent Entities, as that proposal;
(5) by the Company, if Sub or Parent shall have breached:
(A) any of its representations and warranties herein which (1)
are qualified as to materiality or a material adverse effect or (2)
are not so qualified if, as a result of all breaches thereof in the
aggregate, a material adverse effect on the ability of Parent and Sub
to consummate the Offer or the Merger has occurred or reasonably could
be expected to occur; or
-34-
(B) any of its covenants and other agreements herein in any
material respect, if, as a result of all breaches thereof in the
aggregate, a material adverse effect on the ability of Parent and Sub
to consummate the Offer or the Merger has occurred or reasonably could
be expected to occur,
all which breaches, in the case of clauses (A) and (B), are not capable of
being cured or, in the case of any such breach that is so capable, that
breach has not been cured before the elapse of 10 consecutive business days
after the Company has delivered to Parent a written notice of that breach;
or
(6) by the Company if, prior to the acceptance for payment or purchase
of Shares under the Offer, Sub shall have terminated the Offer on the
stated ground that condition (h) of the Offer Conditions has not been
satisfied.
(b) The Company may not terminate this Agreement under Section
9.01(a)(5) if it is, and Parent may not terminate this Agreement under Section
9.01(a)(3) if either Sub or it is, then in a material breach of any of its
representations and warranties or covenants or other agreements herein.
(c) Any termination of this Agreement by any party under this Article
Nine will require the prior authorization of either the board of directors of
that party or the duly authorized designee of that board.
Section 9.02. EFFECT OF TERMINATION. If any party terminates this
Agreement in accordance with Section 9.01, this Agreement will forthwith become
void and no party will have any liability or obligation hereunder, except that
Sections 4.16, 5.06, and 6.02, the last two sentences of Section 7.02, Sections
7.06 and 7.08, this Section 9.02 and Article Ten will survive any such
termination and remain in full force and effect; provided, however, that nothing
herein will relieve any party for liability for any breach by it hereof.
Section 9.03. AMENDMENT. (a) If:
(1) the Company has given a notice to Parent of the type to which
Section 9.01(a)(4)(B) refers,
(2) Parent, within four business days after its receipt of that notice
has delivered to the Company a written counteroffer to the Superior
Takeover Proposal that is the subject of that notice and
(3) the Company Board has determined that counteroffer to be at least
as favorable to the Company's stockholders, other than Parent Entities, as
that proposal,
the parties promptly will execute and deliver an amendment or supplement to this
Agreement, and Parent promptly after that execution and delivery by the parties
will amend the Offer Documents, to give effect to the changes in the terms of
the Offer and the Merger which that counteroffer contemplates will be made. That
amendment or supplement to this Agreement will not require any further
authorization by the Company Board, whose approval of this Agreement prior to
the date hereof will constitute the approval of that amendment or supplement.
-35-
(b) Except as Section 9.02(a) otherwise provides, the parties may
amend this Agreement if and to the extent that their respective boards of
directors authorize them to do so, at any time before or after the Company's
stockholders have approved the agreement of merger this Agreement contains, if
the DGCL requires that approval, but, after any such approval, the parties
hereto may not effect any further amendment which by law requires further
approval by those stockholders without that further approval. To be effective,
any amendment hereto must be in a written document each party has executed and
delivered to the other parties.
Section 9.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties, by action their respective boards of directors have taken or
authorized, may, to the extent applicable Governmental Requirements permit:
(1) extend the time for the performance of any of the obligations or
other acts of any party;
(2) waive any inaccuracies in the representations and warranties this
Agreement contains; or
(3) waive compliance with any of the covenants or other agreements or
conditions this Agreement contains.
To be effective, any agreement on the part of a party to any such extension or
waiver must be in a written document that party has executed and delivered to
the other parties.
Section 9.05. INDEPENDENT DIRECTOR APPROVAL. After Sub's nominees have
become members of the Company Board under Section 7.05 and prior to the
Effective Time, the Company may not:
(1) amend or terminate this Agreement or
(2) take any action under Section 9.04,
unless a majority of the Independent Directors then in office, as well as a
majority of the whole Company Board, shall have duly authorized that action.
ARTICLE TEN
MISCELLANEOUS
Section 10.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties herein will:
(1) if made by Parent or Sub, terminate and expire as of the Effective
Time; and
(2) if made by the Company, terminate and expire as of the time Sub
accepts Shares for payment in the Offer; provided, however, that if, prior
to that payment and after all Offer Conditions have been satisfied or
waived by Sub, to the extent waivable by
-36-
Sub, as of the then scheduled Expiration Date, Sub has extended the Offer
because less than 90% of all outstanding Shares have been validly tendered
and not subsequently properly withdrawn, the representations and warranties
of the Company herein will terminate and expire as of that then scheduled
Expiration Date.
After a representation and warranty has terminated and expired, no claim for
damages or other relief may be made or prosecuted through litigation or
otherwise by any Person who would have been entitled to that relief on the basis
of that representation and warranty prior to its termination and expiration.
This Section 10.01 will not limit or otherwise affect any covenant or agreement
of any party which by its terms contemplates performance by that party after the
Effective Time.
Section 10.02. NOTICES. All notices and other communications hereunder
must be in writing and will be deemed given if delivered personally, telecopied
or otherwise sent by means of electronic communications equipment (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as it has specified by like notice):
(a) if to Parent or Sub, to it at
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxx.xxxxxxxx@xxxxxx.xxx
With a copy, which will not constitute notice for purposes hereof, to:
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx XxXxxx
Telecopy: (000) 000-0000
Email: xxxxx.xxxxxx@xxxxxxxxxx.xxx
and
-37-
(b) if to the Company, to it at
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxxxx@xxxxxxx.xxx
With a copy, which will not constitute notice for purposes hereof, to:
Xxxxxx & Xxxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
or
T. Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
Email: xxxxxxx@xxxxxxxxxxxx.xxx
Section 10.03. DEFINITIONS AND INTERPRETATION. (a) Capitalized terms
this Agreement uses have the meanings Exhibit C specifies. The parties hereto,
by this reference to Exhibit C, hereby incorporate it herein.
(b) Except as this Agreement otherwise specifies, all references
herein to any Governmental Requirement, including the Code, ERISA, the Exchange
Act and the Securities Act, are references to that Governmental Requirement or
any successor Governmental Requirement, as the same may have been amended or
supplemented from time to time, and any rules or regulations promulgated
thereunder.
(c) This Agreement uses the words "herein," "hereof" and "hereunder"
and words of similar import to refer to this Agreement as a whole and not to any
provision of this Agreement, and the words "Article," "Section," "Schedule" and
"Exhibit" refer to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless it otherwise specifies. This Agreement uses the word "party"
to refer to any original signatory hereto and its permitted successors and
assigns under Section 10.07.
(d) Whenever the context so requires, the singular number includes the
plural and vice versa, and a reference to one gender includes the other gender
and the neuter.
(e) The word "including," and, with correlative meaning, the word
"include," means including, without limiting the generality of any description
preceding that word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
-38-
(f) The term "business day" means any day other than a day on which
commercial banks are authorized or required to close in New York City.
(g) The phrase "to the knowledge of the Company" or phrases with
similar wording, when used in this Agreement to qualify any representation and
warranty of the Company, means the collective knowledge, after reasonable
investigation, of the executive officers of the Company and each other
individual who holds a management position with the Company on or after the date
of this Agreement; provided, however, that if any Governmental Requirement to
which any such representation or warranty refers specifies a different meaning
for that phrase, the meaning that Governmental Requirement specifies will apply
for purposes of that representation and warranty.
(h) The language this Agreement uses will be deemed to be the language
the parties have chosen to express their mutual intent, and no rule of strict
construction will be applied against any party.
(i) This Agreement includes captions to Articles, Sections and
subsections of, and Schedules and Exhibits to, this Agreement for convenience of
reference only, and these captions do not constitute a part of this Agreement
for any other purpose or in any way affect the meaning or construction of any
provision of this Agreement.
Section 10.04. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which will be considered one and the same agreement
and will become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 10.05. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
Agreement, together with the Schedules, the Company Disclosure Letter and
Exhibit C:
(1) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect
to the subject matter hereof; and
(2) except for Article Three and Section 7.07, are not intended to
confer on any Person other than the parties any rights or remedies
hereunder.
Section 10.06. PUBLICITY. Except as any applicable Governmental
Requirement or the rules of the National Association of Securities Dealers, Inc.
otherwise require, for so long as this Agreement is in effect, the Company will
not, and will not permit any of its Affiliates to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions this Agreement contemplates without the consent of Parent,
which consent Parent will not unreasonably withhold.
Section 10.07. ASSIGNMENT. This Agreement and the rights, interests or
obligations of the parties hereunder may not be assigned by any of the parties
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that Sub may assign, in its sole discretion, all or
any of its rights, interests and obligations hereunder to Parent or to any
direct or indirect wholly owned Subsidiary of Parent. Subject to the
-39-
preceding sentence, this Agreement will be binding on, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
SECTION 10.08. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
DELAWARE
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF THAT WOULD CAUSE THE
LAWS OF ANY OTHER JURISDICTION TO APPLY.
Section 10.09. EXERCISE OF RIGHTS AND REMEDIES. Except as this
Agreement otherwise provides, no delay or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default
hereunder by any other party will impair any such right, power or remedy, nor
will it be construed, deemed or interpreted as a waiver of or acquiescence in
any such breach or default, or of any similar breach or default occurring later;
nor will any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
Section 10.10. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision will, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties as
expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
Section 10.11. REMEDIES CUMULATIVE. No right, remedy or election any
provision of this Agreement gives will be deemed exclusive, but each will be
cumulative with all other rights, remedies and elections available at law or in
equity.
Section 10.12. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, the parties will be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the provisions of
this Agreement in the Appropriate
Delaware Court, this being in addition to any
other remedy to which law or in equity entitles them. Each party will:
(1) submit itself to the personal jurisdiction of the Appropriate
Delaware Court with respect to any dispute that arises out of this
Agreement or any transaction this Agreement contemplates;
(2) not attempt to deny or defeat that personal jurisdiction by motion
or other request for leave from any such court; and
(3) not bring any action relating to this Agreement or any transaction
this Agreement contemplates in any court other than the Appropriate
Delaware Court.
-40-
The parties have caused this Agreement to be signed by their
respective officers thereunto duly authorized as of the date first written
above.
XXXXXX AMERICAS AND EUROPE CORPORATION
By /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxxx
President
ECM ACQUISITION COMPANY
By /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxxx
President
ESENJAY EXPLORATION, INC.
By /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
President
SCHEDULE 2.03
to the
Agreement
to which
Xxxxxx Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
EFFECTS OF THE MERGER - OFFICERS
1. DEFINITIONS. Capitalized terms this Schedule uses, but does not
define, have the meanings the captioned Agreement specifies.
2. OFFICERS. Effective as of the Effective Time, the officers of the
Surviving Corporation will be as follows:
NAME OFFICE
Xxxxxxxx X. Xxxxxxxx President
Xxxxx X. Xxxxxxxx Vice President, Secretary and
Treasurer
End of Schedule
-1-
SCHEDULE 3.02
to the
Agreement
to which
Xxxxxx Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
DERIVATIVE SECURITIES AND DERIVATIVE SECURITIES PLANS
1. DEFINITIONS. Capitalized terms this Schedule uses, but does not
define, have the meanings the captioned Agreement specifies.
2. OPTIONS. Effective as of the Effective Time, each then outstanding
Option will automatically convert into solely the right to receive with respect
to each Share subject thereto, without interest, cash in the amount equal to the
amount by which the Merger Consideration exceeds the exercise price payable to
purchase that Share under that Option.
3. WARRANTS. Effective as of the Effective Time, each then outstanding
Warrant will automatically convert into solely the right to receive with respect
to each Share (or stock unit or other phantom equivalent to a Share) subject
thereto, without interest, cash in the amount, if any, equal to the amount by
which the Merger Consideration exceeds the exercise price payable to purchase
that Share (or stock unit or other phantom equivalent to a Share) under that
Warrant.
4. OPTION PLAN. The Company will take the action respecting the Option
Plan which Schedule 7.04 specifies.
End of Schedule
-2-
SCHEDULE 4.01
to the
Agreement
to which
Xxxxxx Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
LIST OF SUBSIDIARIES
1. DEFINITIONS. Capitalized terms this Schedule uses, but does not
define, have the meanings the captioned Agreement specifies.
2. SUBSIDIARIES. The Company has no Subsidiaries.
End of Schedule
-3-
SCHEDULE 7.04
to the
Agreement
to which
Xxxxxx Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
BENEFITS
1. DEFINITIONS. Capitalized terms this Schedule uses, but does not
define, have the meanings the captioned Agreement specifies.
2. SEVERANCE PLAN. Prior to the consummation of the Offer, the Company
will amend the Severance Plan, in form and substance satisfactory to Parent, to
provide:
(A) only individuals who are "Employees" on the date of this Agreement
will be "Participants" under the Severance Plan;
(B) the transfer of a "Participant's" employment with the Company to
an Affiliate of Parent will not, in and of itself, constitute a termination
of employment by the "Employer" for any purpose of the Severance Plan or a
"Good Reason" for that "Participant" to terminate that employment.
Parent acknowledges that the consummation of the Offer will constitute a "Change
in Control" under Section 2.4(b) of the Severance Plan and will cause the
Company thereafter to perform its obligations under the Severance Plan, and to
make any payments to its employees the Severance Plan will require it to pay
consistent with the methodology underlying the schedule to which Section 4.10(e)
refers. The quoted terms this Section 2 uses have the meanings the Severance
Plan specifies.
3. OPTION PLAN. Prior to the consummation of the Offer, the Company
will amend the Option Plan to provide that no additional Options will granted
thereunder after the date of this Agreement except as disclosed in the Company
Disclosure Letter. In addition, the Company will amend the LIP to:
(A) provide that no "Incentive Awards" granted after the date of this
Agreement can include, or become payable in whole or in part with, any
Common Stock or other equity security; and
(B) to delete the parenthetical phrase "(other than cash)" wherever it
appears in Section 5.5(a) of the LIP.
The quoted term this Section 3 uses has the meaning the LIP specifies.
-4-
4. SAVINGS PLAN. Prior to the consummation of the Offer, the Company
will amend the Savings Plan, in form and substance satisfactory to Parent, to
provide only individuals who are "Employees" on the date of this Agreement will
be "Participants" under the Savings Plan. Immediately on execution of this
Agreement, the Company will adopt an amendment to the Savings Plan, in a form
acceptable to the Parent, to provide that the participants in the Savings Plan
shall have the right to direct a tender of Shares held by the trustee of the
Savings Plan and to clarify that the Company and its officers shall have no
fiduciary liability for the actions of the participants. The quoted terms this
Section 4 uses has the meanings the Savings Plan specifies.
5. SERVICE CREDIT. Parent will deem the period of continuous
employment with the Company Entities to be service with the Parent for purposes
of determining eligibility to join, and vesting under, the Parent's 401(k) Plan.
Parent will recognize all industry service for purposes of determining vacation
eligibility. Eligibility for a bonus under any bonus plan of Parent in which
employees of the Company on the date of this Agreement become entitled to
participate will be pro-rated on the basis of the number of complete months of
service with Parent following the consummation of the Merger.
6. CURRENT BONUS PLAN. Parent will cause the Company to make the
payments which become due after the consummation of the Offer under the Current
Bonus Plan as the Company Disclosure Letter sets forth.
End of Schedule
-5-
SCHEDULE 7.06
to the
Agreement
to which
Xxxxxx Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
FEES AND EXPENSES
1. DEFINITIONS. Capitalized terms this Schedule uses, but does not
define, have the meanings the captioned Agreement specifies.
2. The Company will pay the Termination Fee, if it has become payable
under Section 7.06, in accordance with the following wire-transfer instructions:
Bank of America
ABA 000000000
A/C No. 3750493171
End of Schedule
-6-
Exhibit A
Stockholders Agreement
STOCKHOLDERS AGREEMENT
Xxxxxx Americas and Europe Corporation ("Parent"), a Delaware
corporation, and the holders of outstanding common stock of Esenjay Exploration,
Inc. (the "Company"), a Delaware corporation, to which this Agreement refers to
as "Stockholders" on the signature pages hereof (the "Stockholders") hereby
enter into this Agreement dated as of March 17, 2002.
PRELIMINARY STATEMENT
Parent and its subsidiary, ECM Acquisition Company ("Sub"), a
Delaware corporation, propose to enter into an agreement dated as of March 17,
2002 with the Company (the "Acquisition Agreement"). On the terms and subject to
the conditions the Acquisition Agreement contains, Parent proposes to acquire
the Company in a two-step transaction. The first step would be a tender offer by
Sub for all the outstanding shares of the Company's common stock, and the second
step would be a follow-on merger between Sub and the Company in which the
Company would become the surviving corporation.
The board of directors of the Company has:
o determined that Parent's proposed tender offer and merger are fair
to and in the best interests of the Company's stockholders;
o declared the agreement of merger the Acquisition Agreement contains
advisable and resolved to recommend that the holders of the
Company's common stock accept that offer and adopt that agreement of
merger; and
o authorized the Company to enter into the Acquisition Agreement.
The Stockholders collectively own approximately 53% of the shares of
the Company's common stock issued and outstanding as of March 1, 2002. In order
to induce Parent and Sub to enter into and thereafter perform their respective
obligations under the Acquisition Agreement, the Stockholders are entering into
this Agreement.
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
Section 1. DEFINITIONS. (a) In this Agreement:
(1) the "Original Shares" of a Stockholder means the number of
shares of Common Stock which appears opposite that Stockholder's name on
the signature pages hereof; and
1
(2) the "Subject Shares" of a Stockholder means that Stockholder's
Original Shares together with:
(A) all shares of Common Stock or other Capital Stock, all
Derivative Securities, including any preferred stock purchase
rights, and all other properties or rights, including any phantom
securities, to which that Stockholder hereafter becomes entitled by
reason of any dividend or other distribution the Company pays or
makes in respect of the Common Stock or any other class or series of
its Capital Stock;
(B) all properties, securities and rights to which that
Stockholder becomes entitled by reason of any split, combination or
reclassification of the Common Stock or any other Capital Stock of
the Company or any issuance by the Company in respect or lieu of or
in substitution for shares of its Capital Stock; and
(C) all properties, securities and rights of any type to which
clause (2)(A) or (B) of this definition refers which that
Stockholder purchases or otherwise acquires after the date hereof
from the Company or any other Person.
(b) Capitalized terms this Agreement uses, but does not define, have
the meanings the Acquisition Agreement specifies. References herein to "this
Agreement" are to this Agreement as it may be amended, modified or supplemented
from time to time hereafter in writing by each party against which another party
seeks to enforce that amendment, modification or supplement.
Section 2. TENDER OF SUBJECT SHARES. (a) Each Stockholder will (1)
effect a valid tender under and in accordance with the terms of the Offer, as
soon as practicable after the Offer Commencement Date and in no event later than
prior to the initially scheduled Expiration Date, of all that Stockholder's
Subject Shares and (2) not withdraw or attempt to withdraw those tendered
Subject Shares from the Offer until after the first to occur of (A) the
termination of the Acquisition Agreement by the Company under Section 9.01(a)(4)
thereof or (B) a termination of the Offer in accordance with its terms prior to
the purchase by Sub of any Shares thereunder. Any tender of Subject Shares by a
Stockholder in accordance with this Section 2 must include the physical delivery
of certificates representing those Subject Shares and the execution and delivery
of a properly completed letter of transmittal with respect thereto.
(b) If the Subject Securities of a Stockholder include property,
securities or rights that Sub has not amended the Offer to include, this Section
2 will not require that Stockholder to tender, and Sub will not be required to
amend the Offer to include, any property, securities or rights not so included.
Section 3. VOTING OF SUBJECT SHARES. (a) If the agreement of merger
the Acquisition Agreement contains is duly submitted to the stockholders of the
Company for their approval or disapproval, each Stockholder will duly and
properly vote all that Stockholder's Subject Shares entitled to vote on that
matter in favor of the adoption of that agreement.
2
(b) If any action or agreement is duly submitted to the stockholders
of the Company which, if taken or effected, reasonably could be expected to
(1) result in a breach of any representation, warranty, covenant or
other agreement of the Company in or under the Acquisition Agreement, or
(2) prevent, impede, interfere with, delay or postpone the
consummation of the Offer or the Merger, including any Acquisition
Proposal,
each Stockholder will duly and properly vote all that Stockholder's Subject
Shares entitled to vote on that matter against the taking of that action or the
effecting of that agreement.
(c) If any action by the stockholders or the Company to which
Section 3(a) or (b) refers is sought to be taken by written consent in lieu of a
meeting of those stockholders, each Stockholder will give or withhold that
Stockholder's consent thereto to the same effect as if that action were
presented for approval or disapproval at such a meeting.
(d) Each Stockholder:
(1) hereby irrevocably grants to, and appoints, Xxxxx Xxxxxxxx and
Xxxxx Xxxxxxxx, or either of them, in their respective capacities as
officers of Parent or Sub, and any individual who hereafter succeeds to
any such office, and each of them individually, that Stockholder's proxy
and attorney-in-fact, with full power of substitution, for and in the
name, place and stead of that Stockholder, to vote that Stockholder's
Subject Shares in accordance with this Section 3;
(2) represents that any proxies that Stockholder has heretofore
given in respect of any of that Stockholder's Subject Shares are not
irrevocable and hereby revokes all such proxies and agrees to give all
notices required to evidence that revocation;
(3) acknowledges that Stockholder's understanding that Parent is
entering into the Acquisition Agreement in reliance on that Stockholder's
execution and delivery of this Agreement and affirms that that Stockholder
is granting the irrevocable proxy this Section 3 contains in connection
with Parent's execution and delivery of the Acquisition Agreement and to
secure the performance by that Stockholder of that Stockholder's
obligations hereunder;
(4) affirms that that irrevocable proxy is coupled with an interest
and may not be revoked under any circumstances; and
(5) ratifies all that the proxies and attorneys-in-fact designated
by that proxy lawfully may do or cause to be done in their several
capacities as such and confirms that that proxy is intended to be
irrevocable under the applicable Delaware law.
3
Section 4. NO INCONSISTENT ARRANGEMENTS. Each Stockholder agrees
that, except as the Acquisition Agreement and this Agreement otherwise provide
or contemplate, that Stockholder will not:
(1) sell, transfer, pledge, assign or otherwise dispose of
(collectively, "Transfer"), for value, by gift or otherwise, or consent to
or permit any Transfer of, any of that Stockholder's Subject Shares or any
interest therein;
(2) enter into any contract, option or other agreement or
understanding respecting any such Transfer;
(3) grant any proxy, power-of-attorney or other authorization
respecting those Subject Shares;
(4) deposit into a voting trust, or enter into a voting agreement
respecting, any of those Subject Shares; or
(5) take any other action that reasonably could be expected in any
way to restrict, limit or interfere with the performance by that
Stockholder of that Stockholder's obligations hereunder or with the
consummation of the Offer or the Merger.
Section 5. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby
waives all rights of appraisal or dissent that Stockholder has under the DGCL
with respect to the Merger.
Section 6. TREATMENT OF CONFIDENTIAL INFORMATION. (a) Each of
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx and Xxxxx X. Xxxxxxxxxxxxxx (the "Receiving
Stockholders"), severally and not jointly with any other Person, acknowledges
that he has or may have had in the past, currently has and in the future may
have access to Confidential Information of the Company Entities and Parent and
its Affiliates. Each Receiving Stockholder, severally and not jointly with any
other Person, agrees that he will keep confidential and not use, directly or
indirectly, for his own benefit or the benefit of any business of any Person
other than the Company Entities and Parent and its Affiliates, all that
Confidential Information that Receiving Stockholder has or hereafter obtains
and, except with the specific prior written consent of Parent, will not disclose
that Confidential Information to any Person except (1) Representatives of Parent
and (2) his own Representatives, provided that these Representatives, other than
counsel, agree to the confidentiality provisions of this Section 6; provided,
however, that, for purpose of this Section 6(a), Confidential Information a
Receiving Stockholder has does not include such information as:
(1) becomes known to the public generally through no fault of that
Receiving Stockholder;
(2) is required to be disclosed by law or the order of any
Governmental Authority under color of law, provided, that prior to the
disclosure by that Receiving Stockholder of any information under this
clause (2), that Receiving Stockholder will give prior written notice
thereof to Parent and provide Parent with the opportunity to contest that
disclosure; or
4
(3) that Receiving Stockholder reasonably believes is required to be
disclosed in connection with the defense of a lawsuit against that
Receiving Stockholder.
In the event of a breach or threatened breach by any Receiving Stockholder of
the provisions of this Section 6 with respect to any Confidential Information,
Parent or the Company will be entitled to an injunction restraining that
Receiving Stockholder from disclosing, in whole or in part, that Confidential
Information. Nothing herein shall be construed as prohibiting Parent or the
Company from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
(b) Because of (1) the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 6(a) and (2) the
immediate and irreparable damage that would be caused to Parent or the Company
for which it would have no other adequate remedy, each of the Receiving
Stockholders agrees that Parent or the Company may enforce the provisions of
Section 6(a) by injunctions and restraining orders against each of them who
breaches any of those provisions.
Section 7. REPRESENTATIONS AND WARRANTIES. Each Stockholder
represents and warrants to Parent that, as applied solely to that Stockholder,
all the following representations and warranties in this Section 7 are as of the
date of this Agreement, and will be immediately prior to Sub's payment for that
Stockholder's Subject Shares, true and correct:
(1) the Stockholder:
(A) is the record and beneficial owner of, and has good and
marketable title to, the Stockholder's Original Shares and, as of
the date Sub consummates the Offer, all other Subject Shares the
Stockholder hereafter acquires, in each case free and clear of any
"adverse claim," as the applicable Uniform Commercial Code defines
that term, or other lien or encumbrance; and
(B) has and will have, with respect to the Original Shares, and
will have, with respect to all other Subject Shares the Stockholder
hereafter acquires, the sole right to Transfer and direct the voting
of those securities;
(2) except as this Agreement or the Option Agreement otherwise
provides, none of the Original Shares is, and none of the other Subject
Shares the Stockholder hereafter acquires will be, subject to any voting
trust, voting agreement or other agreement, arrangement or restriction
respecting the Transfer or voting of any of those securities;
(3) the Stockholder has the full power, legal capacity and authority
to execute, deliver and perform the Stockholder's obligations under this
Agreement. This Agreement constitutes the legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except as that enforceability may be:
5
(A) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally; and
(B) subject to general principles of equity, regardless of
whether that enforceability is considered in a proceeding in equity
or at law;
(4) if the Stockholder is an Entity, the Stockholder has obtained,
in accordance with all applicable Governmental Requirements and its
Charter Documents, all approvals and the taking of all actions necessary
for the authorization, execution, delivery and performance by the
Stockholder of this Agreement;
(5) if the Stockholder is acting otherwise than in his individual
capacity, whether as an executor or a guardian or in any other fiduciary
or representative capacity, all actions on the part of the Stockholder and
all other Persons, including any court, necessary for the authorization,
execution, delivery and performance by the Stockholder of this Agreement
have been duly taken;
(6) the Stockholder's execution, delivery and performance in
accordance with its terms of this Agreement and the effectuation of the
transactions this Agreement contemplates do not and will not:
(A) violate or conflict with any Governmental Requirement;
(B) breach or constitute a default under any agreement or
instrument to which the Stockholder is a party or by which the
Stockholder or any Subject Shares the Stockholder owns is bound;
(C) result in the creation or imposition of, or afford any
Person the right to obtain, any lien upon any Subject Shares the
Stockholder owns, or upon any revenues, income or profits of the
Stockholder therefrom; or
(D) if the Stockholder is an Entity, violate the Stockholder's
Charter Documents; and
(7) no litigation is pending or, to the knowledge of the
Stockholder, threatened to which the Stockholder is or may become a party
which:
(A) questions or involves the validity or enforceability of any
of the Stockholder's obligations under this Agreement; or
(B) seeks, or reasonably could be expected to seek, (1) to
prevent or delay the consummation by the Stockholder of the
transactions this Agreement contemplates the Stockholder will
consummate or (2) damages in connection with any such consummation.
6
Section 8. SEVERAL NATURE OF OBLIGATIONS. The obligations of each
Stockholder under this Agreement are several and not joint, or joint and
several, with the obligations of any other Stockholder under this Agreement.
Section 9. TERMINATION OF VARIOUS OBLIGATIONS. The obligations of
each Stockholder under Sections 2, 3, 4 and 5, and the irrevocable proxy each
Stockholder has granted in Section 3, will terminate on the first to occur of
the termination of the Acquisition Agreement by the Company under Section
9.01(a)(4) thereof or the termination by Sub of the Offer without purchasing any
Shares thereunder. The obligations of each Receiving Stockholder under Section 6
will terminate on the termination by Sub of the Offer without purchasing any
Shares thereunder, but, except for termination on that occurrence, will continue
in accordance with its terms notwithstanding any termination of the Acquisition
Agreement.
Section 10. NOTICES. All notices and other communications hereunder
must be in writing and will be deemed given if delivered personally, telecopied
or otherwise sent by means of electronic communications equipment (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as it has specified by like notice):
(1) if to Parent, to it at
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxx.xxxxxxxx@xxxxxx.xxx
With a copy, which will not constitute notice for purposes
hereof, to:
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx XxXxxx
Telecopy: (000) 000-0000
Email: xxxxx.xxxxxx@xxxxxxxxxx.xxx
and
(2) if to a Stockholder, to the address set forth opposite that
Stockholder's name on the signature pages hereto.
Section 11. CONSTRUCTION AND INTERPRETATION. (a) This Agreement uses
the words "herein," "hereof" and "hereunder" and words of similar import to
refer to this Agreement
7
as a whole and not to any provision of this Agreement, and the word "Section"
refers to a Section of this Agreement, unless it otherwise specifies. This
Agreement uses the word "party" to refer to any original signatory hereto and
its permitted successors and assigns under Section 15.
(b) Whenever the context so requires, the singular number includes
the plural and vice versa, and a reference to one gender includes the other
gender and the neuter.
(c) The word "including," and, with correlative meaning, the word
"include," means including, without limiting the generality of any description
preceding that word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
(d) The language this Agreement uses will be deemed to be the
language the parties have chosen to express their mutual intent, and no rule of
strict construction will be applied against any party.
(e) This Agreement includes captions for convenience of reference
only, and these captions do not constitute a part of this Agreement for any
other purpose or in any way affect the meaning or construction of any provision
of this Agreement.
Section 12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which will be considered one and the same agreement
and will become effective as to any Stockholder when two or more counterparts
have been signed by that Stockholder and Parent and delivered to each other, it
being understood that to be binding on any Stockholder, no other Stockholder
need sign this Agreement and Parent need not sign the same counterpart.
Section 13. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement:
(1) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof; and
(2) except as Section 6 otherwise provides, is not intended to
confer on any Person other than the parties any rights or remedies
hereunder.
Section 14. PUBLICITY. (a) Each Stockholder hereby agrees that
Parent and any of its Affiliates may publish and disclose in the Offer Documents
and the information statement Section 7.01(c) of the Acquisition Agreement
contemplates, and any other documents Parent or Sub files with the SEC in
connection with the Offer or the Merger, the identity and ownership of Subject
Shares by that Stockholder and the nature of that Stockholder's commitments,
agreements and understandings under this Agreement.
(b) Except as any applicable Governmental Requirement or the rules
of the National Association of Securities Dealers, Inc. otherwise require, for
so long as this Agreement is in effect, no Stockholder will, or will permit any
of its Affiliates to, issue or cause the publication of any press release or
other public announcement with respect to the transactions
8
this Agreement contemplates without the consent of Parent, which consent Parent
will not unreasonably withhold.
Section 15. ASSIGNMENT. This Agreement and the rights, interests or
obligations of the parties hereunder may not be assigned by any Stockholder,
whether by operation of law or otherwise, without the prior written consent of
Parent. Subject to the preceding sentence, this Agreement will be binding on,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
Section 16. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF THAT WOULD CAUSE THE LAWS OF ANY OTHER
JURISDICTION TO APPLY.
Section 17. EXERCISE OF RIGHTS AND REMEDIES. Except as this
Agreement otherwise provides, no delay or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default
hereunder by any other party will impair any such right, power or remedy, nor
will it be construed, deemed or interpreted as a waiver of or acquiescence in
any such breach or default, or of any similar breach or default occurring later;
nor will any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
Section 18. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision will, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties as
expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
Section 19. REMEDIES CUMULATIVE. No right, remedy or election any
provision of this Agreement gives will be deemed exclusive, but each will be
cumulative with all other rights, remedies and elections available at law or in
equity.
Section 20. ENFORCEMENT. Each Stockholder agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, Parent will be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the provisions
of this Agreement in the Appropriate Delaware Court, this being in addition to
any other remedy to which Section 6, law or equity entitles Parent or any of its
Affiliates. Each Stockholder will:
(1) submit itself to the personal jurisdiction of the Appropriate
Delaware Court with respect to any dispute that arises out of this
Agreement or any transaction this Agreement contemplates;
(2) not attempt to deny or defeat that personal jurisdiction by
motion or other request for leave from any such court; and
9
(3) not bring any action relating to this Agreement or any
transaction this Agreement contemplates in any court other than the
Appropriate Delaware Court.
10
The parties have signed this Agreement as of the date first written
above.
XXXXXX AMERICAS AND
EUROPE CORPORATION
By:
--------------------------
Xxxxxxxx X. Xxxxxxxx
President
STOCKHOLDERS
No. of Original Shares: 48,000
Aspect Resources, LLC
000 00xx Xxxxxx, Xxxxx 000 By:
Xxxxxx, Xxxxxxxx 00000 ----------------------
Xxxx X. Xxxxxxxx
ASPECT ENERGY, LLC
BY: ASPECT MANGEMENT CORPORATION,
No. of Original Shares: 4,729,456 MANAGER
c/o Xxxx X. Xxxxxxxx
Aspect Resources, LLC BY:
000 00xx Xxxxxx, Xxxxx 000 --------------------
Xxxxxx, Xxxxxxxx 00000 XXXX X. XXXXXXXX
PRESDIENT
No. of Original Shares: 132,754
Esenjay Exploration, Inc.
000 Xxxxx Xxxxx, Xxxxx 0000 By: /s/
Xxxxxx Xxxxxxx, Xxxxx 00000 ------------------------
Xxxxxxx X. Xxxxxxx
ESENJAY PETROLEUM CORPORATION
No. of Original Shares: 4,896,415
c/o Xxxxxxx X. Xxxxxxx
Esenjay Exploration, Inc. By:
000 Xxxxx Xxxxx, Xxxxx 0000 ------------------------
Xxxxxx Xxxxxxx, Xxxxx 00000 Xxxxxxx X. Xxxxxxx
President
STOCKHOLDERS (continued)
No. of Original Shares: 202,297
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
Xxxxxxx, Xxxxx 00000 --------------------------
Xxxxx X. Xxxxx
No. of Original Shares: 0
Aspect Resources, LLC
000 00xx Xxxxxx, Xxxxx 000 By:
-------------------------
Xxxxxx, Xxxxxxxx 00000 Xxxx X. Xxxxxxxx
No. of Original Shares: 14,000
Pollicoff, Xxxxx & Xxxxx
Xxx Xxxxxxxx Xxxxx, Xxxxx 000 By:
Xxxxxxx, Xxxxx 00000 -------------------------
Xxxxxxx X. Xxxxxxxxx
No. of Original Shares: 12,000
Xxxxxxx & Xxxxx Incorporated
00000 Xxxxxxxxxxx Xxxx Xxxxx, Xxxxx 000X By:
Xxxxxxx, Xxxxx 00000 -------------------------
Xxxx X. Xxxxxxx
No. of Original Shares: 12,000
Xxxxx International Inc.
00000 X. Xxxxx Xxxxxx By:
Xxxxxxx, Xxxxx 00000 -------------------------
Hobart X. Xxxxx
No. of Original Shares: 12,470
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
Xxxxxxx, Xxxxx 00000 -----------------------------
Xxxxx X. Xxxxxxxxxxxxxx
No. of Original Shares: 12,000
000 Xxxxx Xxx By:
Xxxxxx Xxxxxxx, Xxxxx 00000 ----------------------
Xxxxxxx X. Xxxxx
Exhibit B
Option Agreement
OPTION AGREEMENT
Xxxxxx America and Europe Corporation ("Parent"), a Delaware
corporation, and the holders of outstanding common stock of Esenjay Exploration,
Inc. (the "Company"), a Delaware corporation, to which this Agreement refers to
as "Stockholders" on the signature pages hereof (the "Stockholders") hereby
enter into this Agreement dated as of March 17, 2002.
PRELIMINARY STATEMENT
Parent and its subsidiary, ECM Acquisition Company ("Sub"), a
Delaware corporation, propose to enter into an agreement dated as of March 17,
2002 with the Company (the "Acquisition Agreement"). On the terms and subject to
the conditions the Acquisition Agreement contains, Parent proposes to acquire
the Company in a two-step transaction. The first step would be a tender offer by
Sub for all the outstanding shares of the Company's common stock, and the second
step would be a follow-on merger between Sub and the Company in which the
Company would become the surviving corporation.
The board of directors of the Company has:
o determined that Parent's proposed tender offer and merger are fair
to and in the best interests of the Company's stockholders;
o declared the agreement of merger the Acquisition Agreement contains
advisable and resolved to recommend that the holders of the
Company's common stock accept that offer and adopt that agreement of
merger; and
o authorized the Company to enter into the Acquisition Agreement.
The Stockholders collectively own approximately 52% of the shares of
the Company's common stock issued and outstanding as of March 1, 2002. In order
to induce Parent and Sub to enter into and thereafter perform their respective
obligations under the Acquisition Agreement, the Stockholders are entering into
this Agreement.
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
Section 1. DEFINITIONS. (a) In this Agreement:
(1) the "Original Shares" of a Stockholder means the number of
shares of Common Stock which appears opposite that Stockholder's name on
the signature pages hereof; and
(2) the "Subject Shares" of a Stockholder means that Stockholder's
Original Shares together with:
(A) all shares of Common Stock or other Capital Stock, all
Derivative Securities, including any preferred stock purchase
rights, and all other properties or rights, including any phantom
securities, to which that Stockholder hereafter becomes entitled by
reason of any dividend or other distribution the Company pays or
makes in respect of the Common Stock or any other class or series of
its Capital Stock;
(B) all properties, securities and rights to which that
Stockholder becomes entitled by reason of any split, combination or
reclassification of the Common Stock or any other Capital Stock of
the Company or any issuance by the Company in respect or lieu of or
in substitution for shares of its Capital Stock; and
(C) all properties, securities and rights of any type to which
clause (2)(A) or (B) of this definition refers which that
Stockholder purchases or otherwise acquires after the date hereof
from the Company or any other Person.
(b) Capitalized terms this Agreement uses, but does not define, have
the meanings the Acquisition Agreement specifies. References herein to "this
Agreement" are to this Agreement as it may be amended, modified or supplemented
from time to time hereafter in writing by each party against which another party
seeks to enforce that amendment, modification or supplement.
Section 2. OPTION TO PURCHASE SUBJECT SHARES. (a) Each Stockholder
hereby grants to Parent an irrevocable option (each such option, a "Purchase
Option") to purchase from that Stockholder at any time during the Option
Exercise Period all that Stockholder's Subject Shares at a total cash option
exercise price equal to the product of (1) the total number of that
Stockholder's Original Shares multiplied by (2) $2.84 (each such price, a
"Purchase Price").
(b) In this Section 2, "Option Exercise Period" means, if Parent
becomes entitled to, and does, terminate the Acquisition Agreement under Section
9.01(a)(3) thereof or the Company becomes or purports to become entitled to, and
does or purportedly does, terminate this Agreement under Section 9.01(a)(4)
thereof, the period of 30 days beginning the date of that termination or
purported termination; provided, however, that if the Offer Commencement Date
shall have previously occurred, that 30-day period will begin on the next day
following the date Sub terminates the Offer without having purchased any Shares
thereunder.
(c) Parent must exercise each Purchase Option in whole only and must
exercise all Purchase Options at the same time. To exercise the Purchase
Options, Parent must deliver to each Stockholder a written notice of Parent's
intention to effect that exercise, and the closing of the purchase of the
Subject Shares subject to the Purchase Options will take place:
(1) in accordance with the escrow arrangement Section 2(d) describes
below or, if for any reason that escrow arrangement and the deposit
thereunder of the Subject Shares has not occurred when Parent exercises
the Purchase Options,
(2) in the office of Xxxxx Xxxxx LLP in Houston, Texas.
2
In the latter case, Parent will designate in that notice the date and time of
the closing, which date may be the next day after Parent has delivered that
notice. At that closing, Parent will pay in respect of each Purchase Option the
Purchase Price payable under that Purchase Option against delivery of the
certificates representing the Subject Shares subject to that Purchase Price,
duly endorsed for transfer to Parent.
(d) Each Stockholder agrees to deposit as promptly as possible (1)
certificates representing all of that Stockholder's Subject Shares, duly
endorsed in blank with signatures guaranteed, and (2) an irrevocable power of
attorney with Bank of America, Bank of New York or such other party as may be
mutually agreed upon by the Parent and the Stockholders, as escrow agent (the
"Escrow Agent") under an escrow agreement substantially in the form of Annex A
with such changes therein, if any, as the Escrow Agent may require or as Parent
and the Stockholders may agree (the "Escrow Agreement"). The irrevocable power
of attorney shall authorize the Escrow Agent to effect a valid tender of such
Subject Shares under and in accordance with the terms of the Offer, pursuant to
the terms of the Stockholders Agreement. This shall include, without limitation,
physical delivery of such certificates and the execution and delivery of a
properly completed letter of transmittal and any other required documentation or
instruments with respect thereto. If any Stockholder withdraws its tendered
Subject Shares from the Offer in accordance with the terms of the Stockholders
Agreement, the Escrow Agent shall hold such Subject Shares in escrow until
Parent exercises its Purchase Option with respect thereto or the Option Exercise
Period has otherwise ended. When that escrow is established (the "Escrow"), the
Purchase Options may be exercised in accordance with this Section 2, by delivery
to the Escrow Agent of a notice in the form of Exhibit 1 to the Escrow Agreement
and the Purchase Prices thereunder.
Section 3. LIMITATION ON COMPETITION. (a) Each Stockholder agrees,
severally and not jointly with any other Person, that that Stockholder will not,
during the period beginning on the date hereof and ending on the first
anniversary of the date hereof (the "Non-Compete Period"), directly or
indirectly, for any reason, for that Stockholder's own account or on behalf of
or together with any other Person:
(1) acquire or enter into an agreement to acquire, directly or
through direct or indirect ownership or contract rights with respect to a
Person, including without limitation whether as principal, agent,
stockholder, partner, joint venturer, employer, employee or in any other
capacity, any interest (an "Interest") of any kind or character in the
lands or in the minerals on or under said lands whatsoever located within
the Non-Compete Area (as Annex B defines that term), whether by means of
lease, purchase, assignment, trade, sublease, easement, farmout, or any
other form of acquisition, including any merger with or acquisition of
stock or ownership interests in any other Person; or
(2) call on or otherwise solicit, directly or indirectly through any
Person, any natural person who is at that time employed by the Company in
any managerial capacity with the purpose or intent of attracting that
person from the employ of the Company.
Notwithstanding the foregoing, any Stockholder may own and hold as a passive
investment up to 10% of the outstanding Capital Stock of a competing Entity. In
the event that a Stockholder
3
acquires an Interest in the Non-Compete Area during the Non-Compete Period, that
Stockholder (the "Acquiring Stockholder") must promptly notify Parent in writing
of that acquisition, including a full description of the acquired Interest and
the rights, obligations and duties with respect thereto, accompanied by a copy
of any acquisition agreement and any other relevant documents. Within 30 days
following that acquisition, the Acquiring Stockholder will convey, transfer and
assign all its rights, titles, and interests in the Interest so acquired to the
Company without consideration.
(b) Because of (1) the difficulty of measuring economic losses to
Parent or the Company as a result of any breach by a Stockholder of that
Stockholder's covenants in Section 3(a) and (2) the immediate and irreparable
damage that could be caused to Parent or the Company for which it would have no
other adequate remedy, each Stockholder agrees that Parent or the Company may
enforce the provisions of Section 3(a) by injunctions and restraining orders
against that Stockholder if that Stockholder breaches any of those provisions.
The breaching Stockholder will be responsible for, and Parent and the Company
will be entitled to receive reimbursement of, all costs of enforcing their
rights under this Section 3, including reasonable attorney's fees.
(c) The parties each agree that Sections 3(a) and (b) impose a
reasonable restraint on the Stockholders in light of the activities and business
of Parent and the Company on the date hereof and the current business plans of
the Company and Parent and its Affiliates.
(d) The covenants in this Section 3 are severable and separate, and
the unenforceability of any specific covenant in this Section 3 is not intended
by any party to, and will not, affect the provisions of any other covenant in
this Section 3. If any court of competent jurisdiction determines that the
scope, time or territorial restrictions Section 3(a) sets forth are unreasonable
as applied to any Stockholder, the parties, including that Stockholder,
acknowledge their mutual intention and agreement that those restrictions be
enforced to the fullest extent the court deems reasonable, and thereby will be
reformed to that extent as applied to that Stockholder and any other
Stockholders similarly situated.
(e) All the covenants in this Section 3 are intended by each party
to be, and will be construed as, an agreement independent of any other provision
in this Agreement. It is specifically agreed that the time periods Section 3(a)
specifies will be computed in the case of each Stockholder by excluding from
that computation any time during which that Stockholder is in violation of any
provision of Section 3(a). The covenants this Section 3 contains will not be
affected by any breach of any other provision hereof by any party.
(f) Each Stockholder, severally and not jointly with any other
Person, hereby agrees that this Section 3 is a material and substantial part of
the transactions the Acquisition Agreement contemplates.
4
Section 4. REPRESENTATIONS AND WARRANTIES. Each Stockholder
represents and warrants to Parent that, as applied solely to that Stockholder,
all the following representations and warranties in this Section 4 are as of the
date of this Agreement, and will be immediately prior to Sub's payment for that
Stockholder's Subject Shares, true and correct:
(1) the Stockholder:
(A) is the record and beneficial owner of, and has good and
marketable title to, the Stockholder's Original Shares and, as of
the date Sub consummates the Offer, all other Subject Shares the
Stockholder hereafter acquires, in each case free and clear of any
"adverse claim," as the applicable Uniform Commercial Code defines
that term, or other lien or encumbrance; and
(B) has and will have, with respect to the Original Shares, and
will have, with respect to all other Subject Shares the Stockholder
hereafter acquires, the sole right to Transfer and direct the voting
of those securities;
(2) except as the Stockholders Agreement otherwise provides, none of
the Original Shares is, and none of the other Subject Shares the
Stockholder hereafter acquires will be, subject to any voting trust,
voting agreement or other agreement, arrangement or restriction respecting
the Transfer or voting of any of those securities;
(3) the Stockholder has the full power, legal capacity and authority
to execute, deliver and perform the Stockholder's obligations under this
Agreement. This Agreement constitutes the legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except as that enforceability may be:
(A) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally; and
(B) subject to general principles of equity, regardless of
whether that enforceability is considered in a proceeding in equity
or at law;
(4) if the Stockholder is an Entity, the Stockholder has obtained,
in accordance with all applicable Governmental Requirements and its
Charter Documents, all approvals and the taking of all actions necessary
for the authorization, execution, delivery and performance by the
Stockholder of this Agreement;
(5) if the Stockholder is acting otherwise than in his individual
capacity, whether as an executor or a guardian or in any other fiduciary
or representative capacity, all actions on the part of the Stockholder and
all other Persons, including any court, necessary for the authorization,
execution, delivery and performance by the Stockholder of this Agreement
have been duly taken;
5
(6) the Stockholder's execution, delivery and performance in
accordance with its terms of this Agreement and the effectuation of the
transactions this Agreement contemplates do not and will not:
(A) violate or conflict with any Governmental Requirement;
(B) breach or constitute a default under any agreement or
instrument to which the Stockholder is a party or by which the
Stockholder or any Subject Shares the Stockholder owns is bound;
(C) result in the creation or imposition of, or afford any
Person the right to obtain, any lien upon any Subject Shares the
Stockholder owns, or upon any revenues, income or profits of the
Stockholder therefrom; or
(D) if the Stockholder is an Entity, violate the Stockholder's
Charter Documents; and
(7) no litigation is pending or, to the knowledge of the
Stockholder, threatened to which the Stockholder is or may become a party
which:
(A) questions or involves the validity or enforceability of any
of the Stockholder's obligations under this Agreement; or
(B) seeks, or reasonably could be expected to seek, (1) to
prevent or delay the consummation by the Stockholder of the
transactions this Agreement contemplates the Stockholder will
consummate or (2) damages in connection with any such consummation.
Section 5. SEVERAL NATURE OF OBLIGATIONS. The obligations of each
Stockholder under this Agreement are several and not joint, or joint and
several, with the obligations of any other Stockholder under this Agreement.
Section 6. TERMINATION OF CERTAIN OBLIGATIONS. The obligations of
each Stockholder under Sections 2 and 3 will terminate on the expiration of an
Option Exercise Period during which Parent has not exercised its Purchase
Options, but, except for termination on that occurrence, will continue in
accordance with its terms notwithstanding any termination of the Acquisition
Agreement. The obligations of each Stockholder under Section 3 will, if they
have not terminated earlier in accordance with the preceding sentence, terminate
at 5:00 p.m., Denver, Colorado time, on March 17, 2003.
Section 7. NOTICES. All notices and other communications hereunder
must be in writing and will be deemed given if delivered personally, telecopied
or otherwise sent by means of electronic communications equipment (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as it has specified by like notice):
6
(1) if to Parent, to it at
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxx.xxxxxxxx@xxxxxx.xxx
With a copy, which will not constitute notice for purposes
hereof, to:
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx XxXxxx
Telecopy: (000) 000-0000
Email: xxxxx.xxxxxx@xxxxxxxxxx.xxx
and
(2) if to a Stockholder, to the address set forth opposite that
Stockholder's name on the signature pages hereto.
Section 8. CONSTRUCTION AND INTERPRETATION. (a) This Agreement uses
the words "herein," "hereof" and "hereunder" and words of similar import to
refer to this Agreement as a whole and not to any provision of this Agreement,
and the words "Section" and "Annex" refer to a Section of or Annex to this
Agreement, unless it otherwise specifies. This Agreement uses the word "party"
to refer to any original signatory hereto and its permitted successors and
assigns under Section 12.
(b) Whenever the context so requires, the singular number includes
the plural and vice versa, and a reference to one gender includes the other
gender and the neuter.
(c) The word "including," and, with correlative meaning, the word
"include," means including, without limiting the generality of any description
preceding that word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
(d) The language this Agreement uses will be deemed to be the
language the parties have chosen to express their mutual intent, and no rule of
strict construction will be applied against any party.
(e) This Agreement includes captions for convenience of reference
only, and these captions do not constitute a part of this Agreement for any
other purpose or in any way affect the meaning or construction of any provision
of this Agreement.
7
Section 9. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which will be considered one and the same agreement
and will become effective as to any Stockholder when two or more counterparts
have been signed by that Stockholder and Parent and delivered to each other, it
being understood that to be binding on any Stockholder, no other Stockholder
need sign this Agreement and Parent need not sign the same counterpart.
Section 10. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
Agreement:
(1) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof; and
(2) except as Sections 3 and 4 otherwise provide, is not intended to
confer on any Person other than the parties any rights or remedies
hereunder.
Section 11. PUBLICITY. (a) Each Stockholder hereby agrees that
Parent and any of its Affiliates may publish and disclose in the Offer Documents
and the information statement Section 7.01(c) of the Acquisition Agreement
contemplates, and any other documents Parent or Sub files with the SEC in
connection with the Offer or the Merger, the identity and ownership of Subject
Shares by that Stockholder and the nature of that Stockholder's commitments,
agreements and understandings under this Agreement.
(b) Except as any applicable Governmental Requirement or the rules
of the National Association of Securities Dealers, Inc. otherwise require, for
so long as this Agreement is in effect, no Stockholder will, or will permit any
of its Affiliates to, issue or cause the publication of any press release or
other public announcement with respect to the transactions this Agreement
contemplates without the consent of Parent, which consent Parent will not
unreasonably withhold.
Section 12. ASSIGNMENT; ASSUMPTION. (a) This Agreement and the
rights, interests or obligations of the parties hereunder may not be assigned by
any Stockholder, whether by operation of law or otherwise, without the prior
written consent of Parent. Parent may assign its rights and interest hereunder
against any Stockholder to any of its Affiliates, and any such assignee
Affiliate may reassign those rights and interests to any other Affiliate of
Parent, without the consent of that Stockholder, but any other such assignment
to any other Person will require the prior written consent of that Stockholder,
which consent that Stockholder will not unreasonably withhold. Subject to the
preceding sentence, this Agreement will be binding on, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
(b) Each Stockholder that is an Entity will require the successor to
that Entity's business and assets substantially as an entirety, whether by
merger, consolidation, sale of assets or other transaction, to assume in writing
that Stockholder's obligations hereunder.
Section 13. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS
8
THEREOF THAT WOULD CAUSE THE LAWS OF ANY OTHER JURISDICTION TO APPLY; PROVIDED,
HOWEVER, THAT SECTION 3 AND THE RIGHTS AND OBLIGATIONS THEREUNDER OF THE PARTIES
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
Section 14. EXERCISE OF RIGHTS AND REMEDIES. Except as this
Agreement otherwise provides, no delay or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default
hereunder by any other party will impair any such right, power or remedy, nor
will it be construed, deemed or interpreted as a waiver of or acquiescence in
any such breach or default, or of any similar breach or default occurring later;
nor will any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
Section 15. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision will, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties as
expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
Section 16. REMEDIES CUMULATIVE. No right, remedy or election any
provision of this Agreement gives will be deemed exclusive, but each will be
cumulative with all other rights, remedies and elections available at law or in
equity.
Section 17. ENFORCEMENT. Each Stockholder agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, Parent will be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the provisions
of this Agreement in the Appropriate Court, this being in addition to any other
remedy to which Section 3, law or equity entitles Parent or any of its
Affiliates. Each Stockholder will:
(1) submit itself to the personal jurisdiction of the Appropriate
Court with respect to any dispute that arises out of this Agreement or any
transaction this Agreement contemplates;
(2) not attempt to deny or defeat that personal jurisdiction by
motion or other request for leave from any such court; and
(3) not bring any action relating to this Agreement or any
transaction this Agreement contemplates in any court other than the
Appropriate Court.
In this Section 17, "Appropriate Court" means:
(1) in the case of any dispute that arises under this Agreement or
any transaction this Agreement contemplates, other than under Section 3
and the conduct that Section contemplates, the Appropriate Delaware Court;
and
9
(2) in the case of any dispute that arises under Section 3 or any
conduct to which that Section relates, the civil district courts located
in Xxxxxx County, Texas.
Section 18. FURTHER ASSURANCES. At the request of Parent, each
Stockholder will duly execute and deliver to Parent a signature page hereto
together with the notarization of that Stockholder's signature by an appropriate
notary public and such other documents as, in the good-faith judgment of Parent,
are reasonably necessary or advisable to carry out more effectively other
provisions and purposes of Section 3.
10
The parties have signed this Agreement as of the date first written
above.
XXXXXX AMERICAS AND
EUROPE CORPORATION
By:
---------------------------
Xxxxxxxx X. Xxxxxxxx
President
STOCKHOLDERS
No. of Original Shares: 48,000
Aspect Resources, LLC
000 00xx Xxxxxx, Xxxxx 000 By:
Xxxxxx, Xxxxxxxx 00000 ---------------------------
Xxxx X. Xxxxxxxx
ASPECT ENERGY, LLC
BY: ASPECT MANGEMENT CORPORATION,
No. of Original Shares: 4,729,456 MANAGER
c/o Xxxx X. Xxxxxxxx
Aspect Resources, LLC BY:
000 00xx Xxxxxx, Xxxxx 000 ---------------------------
Xxxxxx, Xxxxxxxx 00000 XXXX X. XXXXXXXX
PRESDIENT
No. of Original Shares: 132,754
Esenjay Exploration, Inc.
000 Xxxxx Xxxxx, Xxxxx 0000 By:
Xxxxxx Xxxxxxx, Xxxxx 00000 ---------------------------
Xxxxxxx X. Xxxxxxx
STOCKHOLDERS (continued)
ESENJAY PETROLEUM CORPORATION
No. of Original Shares: 4,896,415
c/o Xxxxxxx X. Xxxxxxx
Esenjay Exploration, Inc. By:
000 Xxxxx Xxxxx, Xxxxx 0000 ---------------------------
Xxxxxx Xxxxxxx, Xxxxx 00000 Xxxxxxx X. Xxxxxxx
President
No. of Original Shares: 202,297
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
Xxxxxxx, Xxxxx 00000 ---------------------------
Xxxxx X. Xxxxx
STATE OF __________ ss.
ss.
COUNTY/PARISH OF _______________ ss.
(Alabama) I, _________________, a _________________, in and for the
above mentioned county and state, hereby certify that Xxxxxxx
X. Xxxxxxx, whose name as president, of Esenjay Petroleum
Corporation, a corporation, is signed to the foregoing
agreement and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he, as such officer and with full authority,
executed the same voluntarily for and as the act of such
corporation.
(Louisiana) On this the day of March, 2002, before me, __________________,
the undersigned officer, personally appeared Xxxxxxx X.
Xxxxxxx who acknowledged himself to be the president of
Esenjay Petroleum Corporation, a corporation, and that he, as
such president, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as president.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named Xxxxxxx X.
Xxxxxxx, who acknowledged that he is president of Esenjay
Petroleum Corporation, a Delaware corporation, and that for
and on behalf of the corporation, and as its act and deed he
executed the above and foregoing instrument, after first
having been duly authorized by the corporation so to do.
(Oklahoma) This instrument was acknowledged before me on March __, 2002,
by Xxxxxxx X. Xxxxxxx, as president of Esenjay Petroleum
Corporation.
(Texas) This instrument was acknowledged before me on March __, 2002,
by Xxxxxxx X. Xxxxxxx, president of Esenjay Petroleum
Corporation, a Delaware corporation, on behalf of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
this _______ day of March, A. D. 2002.
___________________________________
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ ss.
ss.
COUNTY/PARISH OF _______________ ss.
(Alabama) I, _______________ , a _______________ , hereby certify that
Xxxx X. Xxxxxxxx, whose name is signed to the foregoing
agreement, and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he executed the same voluntarily on the day the
same bears date.
(Louisiana) On this the ___ day of March, 2002, before me, , the
undersigned officer, personally appeared Xxxx X. Xxxxxxxx,
known to me or satisfactorily proven to be the person whose
name is subscribed to the within instrument and acknowledged
he executed the same for the purposes therein contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named Xxxx X.
Xxxxxxxx, who acknowledged that he executed the above and
foregoing instrument.
(Oklahoma and
Texas) This instrument was acknowledged before me on March __,
2002, by Xxxx X. Xxxxxxxx.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
this _______ day of March, A.D. 2002.
__________________________________
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ ss.
ss.
COUNTY/PARISH OF _______________ ss.
(Alabama) I, _______________ , a _______________ , hereby certify that
Xxxxxxx X. Xxxxxxx, whose name is signed to the foregoing
agreement, and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he executed the same voluntarily on the day the
same bears date.
(Louisiana) On this the ___ day of March, 2002, before me, , the
undersigned officer, personally appeared Xxxxxxx X. Xxxxxxx,
known to me or satisfactorily proven to be the person whose
name is subscribed to the within instrument and acknowledged
he executed the same for the purposes therein contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named Xxxxxxx X.
Xxxxxxx, who acknowledged that he executed the above and
foregoing instrument.
(Oklahoma and
Texas) This instrument was acknowledged before me on March __,
2002, by Xxxxxxx X. Xxxxxxx.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
this _______ day of March, A.D. 2002.
____________________________________
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ ss.
ss.
COUNTY/PARISH OF _______________ ss.
(Alabama) I, _______________ , a _______________ , hereby certify that
Xxxxx X. Xxxxx, whose name is signed to the foregoing
agreement, and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he executed the same voluntarily on the day the
same bears date.
(Louisiana) On this the ___ day of March, 2002, before me, , the
undersigned officer, personally appeared Xxxxx X. Xxxxx, known
to me or satisfactorily proven to be the person whose name is
subscribed to the within instrument and acknowledged he
executed the same for the purposes therein contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named Xxxxx X. Xxxxx,
who acknowledged that he executed the above and foregoing
instrument.
(Oklahoma and
Texas) This instrument was acknowledged before me on March __,
2002, by Xxxxx X. Xxxxx.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
this _______ day of March, A.D. 2002.
________________________________
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ ss.
ss.
COUNTY/PARISH OF _______________ ss.
(Alabama) I, ___________________, hereby certify that Xxxx X. Xxxxxxxx
whose name is signed to the foregoing conveyance, and who is
known to me, acknowledged before me on this day that, being
informed of the contents of the conveyance, he executed the
same voluntarily on the day the same bears date.
(Louisiana) On this ___ day of March, 2002, before me,
___________________, the undersigned officer, personally
appeared Xxxx X. Xxxxxxxx, known to me or satisfactorily
proven to be the person whose name is subscribed as president
for Aspect Management Corporation which is manager for Aspect
Energy, LLC, and acknowledged that he executed the same act of
his limited liability company for the purposes therein
contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named Xxxx X.
Xxxxxxxx, who acknowledged that he is president of Aspect
Management Corporation which is manager for Aspect Energy, LLC
and that in said representative capacity he executed the above
and foregoing instrument, after first having been duly
authorized so to do.
(Oklahoma) This instrument was acknowledged before me on March __, 2002,
by Xxxx X. Xxxxxxxx, as president of Aspect Management
Corporation which is manager for Aspect Energy, LLC.
(Texas) This instrument was acknowledged before me on March __, 2002,
by Xxxx X. Xxxxxxxx, president of Aspect Management
Corporation, as manager on behalf of Aspect Energy, LLC, a
limited liability company.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
this _______ day of March, A.D. 2002.
_________________________________
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
ANNEX A
ESCROW AGREEMENT
Xxxxxx Americas and Europe Corporation ("Parent"), a Delaware
corporation, the holders of outstanding common stock of Esenjay Exploration,
Inc. (the "Company"), a Delaware corporation, to which this Escrow Agreement
refers as "Stockholders" on the signature pages hereof (the "Stockholders") and
___________________________, as Escrow Agent ("Escrow Agent") hereby enter into
this Escrow Agreement dated as of March ___, 2002
PRELIMINARY STATEMENT
Parent and its subsidiary, ECM Acquisition Company ("Sub"), a
Delaware corporation, have entered into an agreement dated as of March 17, 2002
with the Company (the "Acquisition Agreement"). On the terms and subject to the
conditions the Acquisition Agreement contains, Parent will acquire the Company
in a two-step transaction. The first step will be a tender offer by Sub for all
the outstanding shares of the Company's common stock.
The Stockholders collectively own approximately 52% of the shares of
the Company's common stock issued and outstanding as of March 1, 2002. In order
to induce Parent and Sub to enter into and thereafter perform their respective
obligations under the Acquisition Agreement, the Stockholders have entered into
a Stockholders Agreement dated as of March 17, 2002 (the "Stockholders
Agreement") and an Option Agreement dated as of March 17, 2002 (the "Option
Agreement").
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
1. Capitalized terms this Escrow Agreement uses, but does not define, have the
meanings the Option Agreement or the Stockholders Agreement specifies.
2. Each Stockholder will deliver to Escrow Agent, against receipt therefor of
the Escrow Agent, certificates registered in the name of that Stockholder, but
endorsed in blank with signatures guaranteed, representing all that
Stockholder's Subject Shares. Escrow Agent will hold and dispose of the
certificates each Stockholder deposits with it hereunder in accordance with the
terms hereof.
3. Each Stockholder hereby irrevocably appoints and designates Escrow Agent as
the agent, representative and attorney-in-fact for and on behalf of that
Stockholder to take any and all actions on behalf of that Stockholder to effect,
in accordance with the Stockholders Agreement, a valid tender of that
Stockholder's Subject Shares under and in accordance with the terms of the
Offer. This power of attorney includes, without limitation, physical delivery of
those certificates and the execution and delivery of a properly completed letter
of transmittal and any other required documentation or instruments with respect
thereto. If, prior to the acceptance for payment by Sub of Shares under the
Offer,
A-1
(1) (A) Parent terminates the Acquisition Agreement under
Section 9.01(a)(3) thereof or (B) the Company terminates the
Acquisition Agreement under Section 9.01(a)(4) thereof, and
(2) Sub terminates the Offer,
Parent will give written notice of that termination and the date of termination
of the Offer to Escrow Agent and cause the certificates representing the Subject
Shares of each Stockholder that have been tendered under the Offer to be
redelivered to Escrow Agent for redeposit into escrow hereunder. Following that
redeposit, Escrow Agent will hold those certificates in its custody hereunder
until it disposes of those certificates in accordance with Section 4 below.
4. (a) If at any time during the Option Exercise Period Parent shall
deliver to Escrow Agent written notice in the form of Exhibit 1 hereto of its
exercise of the Purchase Options, together with immediately available funds in
the aggregate amount of the Purchase Prices payable thereunder, Escrow Agent
promptly will deliver the certificates representing all Subject Shares Parent
has purchased on its exercise of the Purchase Options to Parent. Escrow Agent
will, promptly following its receipt of those funds, deliver to each
Stockholder, in accordance with that Stockholder's written wire transfer
instructions, immediately available funds in the amount of the Purchase Price to
which that Stockholder is entitled.
(b) If during the Option Exercise Period Parent does not exercise
the Purchase Options and purchase the Subject Shares subject thereto under
Section 4(a), Escrow Agent promptly will deliver to each Stockholder following
the expiration of the Option Exercise Period the certificates representing that
Stockholder's Subject Shares.
5. Prior to the termination of this Escrow Agreement, Escrow Agent
will vote all Subject Shares that it holds or has tendered under the Offer in
accordance with the written instructions of Parent.
6. Escrow Agent may resign by mailing its written notice of that
resignation to the Stockholders and Parent; provided, however, that this
resignation will not be effective until Parent shall have appointed a successor
Escrow Agent and that successor shall have executed an Escrow Agreement
substantially in the form hereof. Any successor escrow agent must be a national
or state bank authorized to exercise corporate trust powers, and having a
combined capital and surplus of at least $100,000,000. Escrow Agent will receive
reasonable compensation for its services hereunder which Parent will pay or
cause to be paid.
7. Each of the Stockholders and Parent severally represents and
warrants to the Escrow Agent that it has full right, power and authority to
execute and deliver this Escrow Agreement.
8. All notices, requests, claims, demands and other communications
hereunder must be in writing and will be given (and will be deemed to have been
duly received if so given) by personal delivery or facsimile, by mail
(registered or certified mail, postage prepaid, return receipt requested), or by
means of electronic communications equipment (which is confirmed) to the
respective parties as follows:
A-2
If to Parent, to it at:
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
Email: xxxxx.xxxxxxxx@xxxxxx.xxx
With a copy, which will not constitute notice for purposes hereof,
to:
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx XxXxxx
Telecopy No.: (000) 000-0000
Email: xxxxx.xxxxxx@xxxxxxxxxx.xxx
and
If to a Stockholder, to that Stockholder's address set forth
opposite that Stockholder's name on the signature pages hereto.
If to Escrow Agent, to it at:
________________________________
________________________________
________________________________
________________________________
________________________________
Attention: Corporate Trust Department
9. This Agreement may be executed in two or more counterparts, all
of which will be considered one and the same agreement, it being understood that
to be binding on any Stockholder, no other Stockholder need sign this Agreement
and Parent need not sign the same counterpart.
10. Each Stockholder that is an Entity will require the successor to
that Entity's business and assets substantially as an entirety, whether by
merger, consolidation, sale of assets or other transaction, to assume in writing
that Stockholder's obligations hereunder.
11. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF THAT WOULD CAUSE THE LAWS OF ANY OTHER JURISDICTION TO APPLY.
A-3
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be duly executed on the date below written.
Dated: March __, 2002
XXXXXX AMERICAS AND
EUROPE CORPORATION
By:
--------------------------------
Xxxxxxxx X. Xxxxxxxx
President
ESCROW AGENT
-----------------------------------
By:
-------------------------------
Name:
Title:
STOCKHOLDERS
Aspect Resources, LLC
000 00xx Xxxxxx, Xxxxx 000 By:
Xxxxxx, Xxxxxxxx 00000 ------------------------------
Xxxx X. Xxxxxxxx
ASPECT ENERGY, LLC
BY: ASPECT MANGEMENT CORPORATION,
MANAGER
c/o Xxxx X. Xxxxxxxx
Aspect Resources, LLC BY:
000 00xx Xxxxxx, Xxxxx 000 ------------------------------
Xxxxxx, Xxxxxxxx 00000 XXXX X. XXXXXXXX
PRESDIENT
Esenjay Exploration, Inc.
000 Xxxxx Xxxxx, Xxxxx 0000 By:
Xxxxxx Xxxxxxx, Xxxxx 00000 -----------------------------
Xxxxxxx X. Xxxxxxx
A-4
STOCKHOLDERS (continued)
ESENJAY PETROLEUM CORPORATION
c/o Xxxxxxx X. Xxxxxxx
Esenjay Exploration, Inc. By:
000 Xxxxx Xxxxx, Xxxxx 0000 ----------------------------
Xxxxxx Xxxxxxx, Xxxxx 00000 Xxxxxxx X. Xxxxxxx
President
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
Xxxxxxx, Xxxxx 00000 ----------------------------
Xxxxx X. Xxxxx
A-5
EXHIBIT 1
[Letterhead of Xxxxxx Americas and Europe Corporation]
_______________, 200__
[ESCROW AGENT] (or any successor)
Ladies and Gentlemen:
We refer to the Escrow Agreement, dated March __, 2002 among the
undersigned, the Stockholders signatory thereto and you, as Escrow Agent. We
hereby exercise the option to purchase such Subject Shares referred to in that
Escrow Agreement and deliver herewith the Purchase Prices therefor.
Very truly yours,
XXXXXX AMERICAS AND
EUROPE CORPORATION
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
The undersigned, [Escrow Agent] (or successor), as Escrow Agent,
acknowledges receipt of this and the Purchase Prices therefor.
------------------------------------
Escrow Agent
ANNEX B
NON-COMPETE AREA
The Non-Compete Area shall include the 3D project areas described in the table
below, and further described, without limitation, on the plats attached hereto
and made a part hereof, on Annexes B-1 through B-22, inclusive, INSOFAR AND ONLY
INSOFAR as said 3D project areas cover (a) all lands and depths lying and being
situated within the fixed geographic boundaries of the respective 3D seismic
surveys, together with (b) all lands and depths lying situated within an area
extending one and one-half (1.5) miles outside the exterior boundary of each 3D
project area;
SAVE AND EXCEPT the following described lands and 3D project areas: (i) the
Aspect Resources, LLC "Millenium" 3D seismic survey, Matagorda County, Texas, as
depicted on Annex B-22 attached hereto; (ii) any portion of the one and one-half
(1.5) mile extension described above from any adjoining 3D project area that may
extend into the foregoing "Millenium" 3D survey area; (iii) all that part of
Matagorda County, Texas, lying and being east of the Colorado River extending
southerly and northerly from the exterior boundary of the foregoing "Millenium"
3D survey area as depicted on Annex B-22 attached hereto; and (iv) all lands and
depths lying and being situated within Brazoria, Xxxxxxxx, Galveston and
Jefferson Counties, Texas, and Allen, Beauregard, Calcasieu and Xxxxxxxxx Xxxxx
Parishes, Louisiana.
Notwithstanding the foregoing, it is understood and agreed that the Non-Compete
Area contemplated herein shall not be applicable to any of the 3D project areas
appearing on this Annex B as to any such area in which Stockholder has the
present right, as of the date of this Option Agreement, to participate under the
terms of a governing participation agreement, operating agreement, area of
mutual interest, or the like (a "Governing Agreement"). In that event, the terms
of the Governing Agreement shall control as between the affected parties hereto.
COMPANY 3D SQ.
PROJECT COUNTY OPERATOR INTEREST MILES VENDOR
------- ------ -------- -------- ----- ------
Xxxxx Dome / Lafite Brazoria Esenjay 100.00% 53 Grant
Xxxxxx Xxxxxxxx Aspect 18.00% 14 Veritas
Blessing Matagorda Samedan 33.90% 22 Veritas
Buckeye Matagorda Esenjay 45.00% 40 Xxxxx
Xxxxxx Slough Matagorda Esenjay 29 - 40% 8 Grant
17 Grant
El Maton Matagorda Esenjay 64.40% 29 Veritas
Geronimo San Xxxxxxxx Esenjay 42.00% 76 Veritas
Xxxxxxx Galveston AR / H&P 10 - 22.5% 70 Veritas
Houston Endowment San Xxxxxxxx/Aransas Esenjay 66.80% 66.82 Solid State
Xxxxxx Xxxxxxx La Roco 8.00% 25 unknown
Markham Matagorda Esenjay 16 - 39% 5 Grant
Midfield Matagorda Esenjay 62.50% 21 Veritas
COMPANY 3D SQ.
PROJECT COUNTY OPERATOR INTEREST MILES VENDOR
------- ------ -------- -------- ----- ------
Piledriver Xxxxxxxx Esenjay 62.50% 2 Western
Powderhorn Xxxxxxx Prime 15.00% 30 Veritas
Raymondville Xxxxxxx Xxxx 9.42% 62 Grant
Raymondville Extension 30.00% unknown
S. W. Pheasant Xxxxxxx Aspect 75.00% 10 unknown
Xxxxx Point Galveston Xxxxxxxxxx 7.50% 80 Veritas
Tidehaven Matagorda Esenjay 28 - 57.75% 28 Veritas
Wolf Point Xxxxxxx Esenjay 45.50% 8 unknown
-
666.82
Gila Bend Xxxxxx Esenjay 14.70% 16 unknown
Xxxxxx Ranch Xxxxx/XxXxxxxx Esenjay 90.00% 00 Xxxxxxx
Xxxx Xxxxx Xxxxxx Xxxxxxx 66.50% 00 Xxxxxxx
Xxxxxx Xxxxx Xxxxxx Xxxxxxx 28.50% 25 Vanguard
Mikeska Live Oak Esenjay 47.37% 00 Xxxxxx
Xxxxxxxxxx Bee Esenjay 50.00% 00 Xxxxxx
Xxxxxxxxx Xxxxxx Ocean 25.00% 23 Western
Xxxxxxxxx Xxxxxx Xxxxxxx 00 xxxxxxx
Xxxxxx Xxxxxx Xxxxxxx 25.00% 55 Western
--
000
Xxx Xxxx / Xxxxxxx Xxxxxxxxx Aspect 16 - 33% 56 Veritas
Xxxxx Xxxxxxxxx H & P 12.50% 48 Veritas
Lovells Lake Jefferson H & P 12.50% 00 Xxxxxxx
Xxx "X" Xxxxxxxxx XX 25.00% 00 Xxxxxxx
Xxxx Xxxxxxxx Jefferson LAG 7.67% 23 Veritas
West Port Acres Xxxxxxxxx XX 12.50% 21 Veritas
--
275
Four Isle Dome Terrebonne Ph. Xxxxxxxx 5.00% 80 Western
Xxxxxxxxxx Xxxxxxxxxx Ph. Harken 12-46.875% 35 unknown
--
115
Xxxxxx Xxxx. / Calc. Ph. CPC 25.00% 85 unknown
Xxxxxx'x Creek Xxxxxxxxxx Ph. CPC 25.00% 88 Grant
Xxxx Xxxxxxx Esenjay 28.00% 00 Xxxxxx
Xxxxxxxx Xxx / Xxx Xxxxxxxx Xxxxxxx 34.12% 98 Western
000
X. Xxxxx Pinnacle Reef (several) Esenjay N/A 400 unknown
Lipsmacker Choctaw, AL Esenjay 44.00% 73 USA
Xxxxxxxx Creek Xxxxx, MS Esenjay 93.50% 12 CGG
--
000
Xxxx Xxxxxx Xxx 000 XX st. Offshore Fairways 20.00% 12 unknown
--
12
TOTAL 2,117
B-2
EXHIBIT C
DEFINITIONS
This Exhibit is Exhibit C to the Agreement dated as of March 17, 2002
among Xxxxxx Americas and Europe Corporation, ECM Acquisition Company and
Esenjay Exploration, Inc., each of which is a Delaware corporation (this
"Agreement"). The following terms this Agreement uses have the meanings this
Exhibit assigns to them.
"Acquisition Proposal" means any inquiry, proposal or offer from any
Person relating to:
(1) any direct or indirect acquisition or purchase, other than
the Offer and the Merger or any other Takeover Transaction by Parent
or any Affiliate of Parent, by means of a Takeover Transaction or
otherwise, of (A) a substantial amount of assets of any Company Entity
or (B) 15% or more of any class of equity securities of any Company
Entity; or
(2) any other transaction the consummation of which reasonably
(A) could be expected to impede, interfere with, prevent or materially
delay the Offer or the Merger or (B) would be expected to dilute
materially the benefits to Parent of the transactions this Agreement
contemplates.
"Affiliate" means, as to any specified Person, any other Person that,
directly or indirectly through one or more intermediaries or otherwise,
controls, is controlled by or is under common control with the specified
Person. This definition uses "control" to mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through ownership of Capital Stock or
other securities of that Person, by contract or otherwise.
"Agreement" means this Agreement, including Exhibit C, the Schedules
and the Company Disclosure Letter, as each of the same may be amended,
modified or supplemented from time to time in accordance with the
provisions hereof.
"Anti-Parent Takeover Measure" means:
(1) any measure having or purporting to have, in the event the
Company terminates this Agreement under Section 9.01(a)(4), a
deterrent effect on the ability of Parent or any Affiliate of Parent
to consummate the Offer or otherwise effect a Takeover Transaction
thereafter, including any "poison pill" rights plan, any provision in
any Charter Document which imposes supermajority, class or series
voting requirements or restricts or may otherwise adversely affect the
ability of a holder of a majority of the shares of outstanding Common
Stock to propose or effect action by the stockholders of the Company
or any transaction with any Company Entity, including any provision in
the terms of any class or series of Preferred Stock; and
C-1
(2) any provision that at any time is any more restrictive than
Section 6.02(a) on the ability of the Company and its Representatives
to solicit, initiate or encourage, including by way of furnishing
information, or to take any other action to facilitate, a Takeover
Transaction by Parent or any Affiliate of Parent.
"Applicable Xxxxx Xxxxx Office" means the office of Xxxxx Xxxxx L.L.P.
located at 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000.
"Applicable Filing Office" means the Secretary of State of the State
of Delaware.
"Appraisal Statute" means Section 262 of the DGCL.
"Appropriate Delaware Court" means:
(1) the Court of Chancery in and for New Castle County in the
State of Delaware; or
(2) if that court lacks subject-matter jurisdiction, any
appropriate state or federal court in New Castle County, Delaware.
"Benefit Plan" means each of the following which any Company Entity
has maintained, is maintaining or is required to maintain or to which any
Company Entity has contributed, is contributing or is required to
contribute, in each case for the benefit of any present or former employee,
officer or director of any Company Entity:
(1) each "employee pension benefit plan" (as Section 3(2) of
ERISA defines that term) (hereinafter, a "Pension Plan");
(2) each "employee welfare benefit plan" (as Section 3(1) of
ERISA defines that term) (hereinafter, a "Welfare Plan"); and
(3) each other arrangement, plan, policy, program or practice,
written or oral relating to stock options, stock purchases,
compensation, deferred compensation, bonuses, severance, fringe
benefits or other employee benefits.
"Capital Stock" means, with respect to:
(1) any corporation, (A) any share, or any depositary receipt or
other certificate representing any share, of any equity ownership
interest in that corporation and (B) any other security possessing
voting rights with respect to matters on which holders of the
corporation's Capital Stock are entitled to vote; and
(2) any other Entity, any share, membership or other percentage
interest, unit of participation or other equivalent, however
designated, of an equity interest in that Entity.
C-2
"Certificate" means any stock certificate formerly representing
Converted Shares as of the Effective Time.
"Certificate of Merger" means the certificate of merger respecting the
Merger which contains the information the DGCL requires to effect the
Merger.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980.
"Charter Documents" means, with respect to any Entity at any time, in
each case as amended, modified and supplemented at that time:
(1) the articles or certificate of formation, incorporation or
organization or the equivalent organizational documents, of that
Entity;
(2) the bylaws or limited liability company agreement or
regulations, or the equivalent governing documents, of that Entity;
and
(3) each document setting forth the designation, amount and
relative rights, limitations and preferences of any class or series of
that Entity's Capital Stock.
"Closing Date" has the meaning Section 2.04 specifies.
"Code" means the Internal Revenue Code of 1986.
"Common Stock" means the common stock, par value $.01 per share, of
the Company.
"Company" has the meaning first paragraph hereof specifies.
"Company Board" means the board of directors of the Company, and
references herein to the "whole" Company Board at any time are to the total
authorized members of the Company Board at that time, including any
vacancies.
"Company Disclosure Letter" means the disclosure letter the Company
delivered to Parent prior to the execution of this Agreement and in which
the Company provided the information Article Four describes it as so
providing and took exception to various of its representations and
warranties in Article Four.
"Company Entity" means at any time the Company or any Entity that is a
Subsidiary of the Company at that time.
"Company Financial Advisor" means Hibernia Southcoast Capital LLC.
"Company Material Adverse Effect" means, with respect to the
consequences of any fact or circumstance, including the occurrence or
non-occurrence of any event, that the fact or circumstance has caused, is
causing or reasonably could be expected to cause,
C-3
directly, indirectly or consequentially, individually or in the aggregate
with all other facts and circumstances qualified as to materiality, damage
or loss to, including under Environmental Laws, any Company Entity or
combination of Company Entities that is Material to the Company Entities.
"Confidential Information" means, with respect to any Person, all
trade secrets and other confidential, nonpublic or proprietary information
of that Person, including information derived from reports, investigations,
research, reserve studies, seismic or other geophysical or geological work,
work in progress, codes, marketing and sales programs, customer lists,
records relating to past production service provided to customers, capital
expenditure projects, cost summaries, pricing formulae, contract analyses,
financial information, projections, present and future business plans,
confidential filings with any Governmental Authority and all other
confidential, nonpublic concepts, methods of doing business, ideas,
materials or information prepared or performed for, by or on behalf of that
Person respecting any aspect of its business.
"Converted Shares" means:
(1) Shares that have converted into the right to receive the
Merger Consideration under Section 3.01(a)(3); and
(2) Dissenting Shares that will be deemed under Section
3.01(a)(4) to have so converted.
"Credit Agreement" means the second amended and restated credit
agreement dated as of August 13, 2001 between the Company and Deutsche Bank
AG New York Branch, as in effect on the date hereof.
"Current Audited Balance Sheet Date" means December 31, 2000.
"Current Bonus Plan" means, collectively, the 2000 Bonus Pay Plan and
the 2001 Bonus Pay Plan of the Company.
"Current Audited Financial Statements" means the audited consolidated
financial statements of the Company and its Subsidiaries as of the Current
Audited Balance Sheet Date and for the period of two years then ended,
including the notes thereto and the related audit report of Deloitte &
Touche LLP.
"DGCL" means the General Corporation Law of the State of Delaware.
"Derivative Securities" of a specified Entity means any Capital Stock,
debt security or other Indebtedness of the specified Entity or any other
Person which is convertible into or exchangeable for, or any option,
warrant or other right to acquire:
(1) any unissued Capital Stock of the specified Entity; or
(2) any Capital Stock of the specified Entity which that Entity
issued and holds directly or indirectly as treasury Capital Stock.
C-4
"D&O Insurance" means directors' and officers' liability insurance.
"Dissenting Share" means any share of Common Stock issued and
outstanding immediately prior to the Effective Time as to which its then
holder of record then is entitled to an appraisal of its fair value under
the Appraisal Statute.
"Effective Time" means the time as of which the Merger becomes
effective under the DGCL.
"Eligible Securities" means equity or debt securities:
(1) of which no Company Entity is an issuer; and
(2) which are not convertible into, exchangeable for or
exercisable to purchase or otherwise acquire any securities of which
any Company Entity is an issuer.
"Entity" means any sole proprietorship, corporation, partnership of
any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual company,
joint stock company or joint venture.
"Environmental Laws" means any and all Governmental Requirements
relating to the environment or public or worker health or safety, including
ambient air, surface water (including water management and runoff), land
surface or subsurface strata, or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes (including Solid Wastes, Hazardous
Wastes or Hazardous Substances) or noxious noise or odor into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, recycling, removal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes (including petroleum, petroleum
distillates, asbestos or asbestos-containing material, volatile organic
compounds and polychlorinated biphenyls).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means, with respect to any specified Person at any
time, any other Person, including an Affiliate of the specified Person,
that is, or at any time within six years of that time was, a member of any
ERISA Group of which the specified Person is or was a member at the same
time.
"ERISA Group" means any "group of organizations" within the meaning of
Section 414(b), (c), (m) or (o) of the Code or any "controlled group" (as
Section 4001(a)(14) of ERISA defines that term).
"Exchange Act" means the Securities Exchange Act of 1934.
"Expiration Date" means 12:00 midnight, New York City time, on the
date on which the Offer will expire, which date will be:
C-5
(1) the 20th business day from the Offer Commencement Date; or
(2) such later date as Sub may designate in accordance with the
Exchange Act:
(A) with the prior written consent of the Company; or
(B) without the prior written consent of the Company if
Section 1.01(b) so permits.
"Filed SEC Documents" means all SEC Documents filed with and publicly
available for inspection by the SEC on its website prior to the date of
this Agreement.
"GAAP" means, as applied to any financial statements, generally
accepted accounting principles and practices in the United States as in
effect from time to time which:
(1) have been concurred in by independent public accountants; and
(2) have been or are applied on a basis consistent, except for
changes concurred in by independent public accountants, with the most
recent audited financial statements the Filed SEC Documents include.
"Governmental Approval" means at any time any authorization, consent,
approval, permit, franchise, certificate, license, implementing order or
exemption of, or registration or filing with, any Governmental Authority,
including any certification or licensing of a natural person to engage in a
profession or trade or a specific regulated activity, at that time.
"Governmental Authority" means:
(1) any national, state, county, municipal or other government,
domestic or foreign, or any agency, board, bureau, commission, court,
department or other instrumentality of any such government;
(2) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes for its own
account; and
(3) for purposes of Section 4.11, any arbitrator or mediator
having the power to bind the parties to an arbitration or alternative
dispute resolution proceeding.
"Governmental Requirement" means at any time any obligation or
requirement:
(1) under any law including common law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, writ, edict,
award, authorization or other requirement of any Governmental
Authority in effect at that time;
C-6
(2) included in any issued Governmental Approval at that time; or
(3) resulting from binding arbitration or mediation at that time.
"Independent Director" means:
(1) any individual who: (A) is a director of the Company on the
date of this Agreement; (B) is not an officer or employee of any
Company Entity; and (C) has been designated by the Company Board by
written notice to Parent as a director who will continue to serve as a
member of the Company Board for purposes of this Agreement; or
(2) If any individual clause (1) above describes as an
Independent Director ceases to be a member of the Company Board for
any reason, any individual who: (A) is not an officer, director,
employee or Affiliate of any Company Entity or Parent or any of its
Affiliates; and (B) is elected by the Company Board to fill the
resulting vacancy.
"IRCA" means the Immigration Reform and Control Act of 1986.
"IRS" means the Internal Revenue Service.
"LIP" means the "Esenjay Exploration, Inc. Long-Term Incentive Plan"
as in effect on November 1, 1999 and on the date of this Agreement.
"Material" means, as applied to any Person or the Company Entities,
material to the business, operations, property or other assets,
liabilities, financial condition, results of operations or prospects of
that Person and its Subsidiaries considered as a whole or the Company
Entities considered as a whole, as the case may be.
"Merger" means the merger of Sub or its assignee permitted hereby with
and into the Company:
(1) on the terms and subject to the conditions this Agreement
sets forth; or
(2) if this Agreement has been earlier terminated and Sub
thereafter consummates the Offer, on the terms and subject to the
conditions that would have been applicable if this Agreement had
remained in effect.
"Merger Consideration" means the Offer consideration per Share Sub
pays for Shares it purchases in the Offer, without interest.
"Minimum Tender Condition" means the condition to the Offer that there
shall be validly tendered and not properly withdrawn prior to the
expiration of the Offer the number of Shares which, together with the
Shares Sub, Parent and Parent's other direct and indirect Subsidiaries own,
would represent at least a majority of all outstanding Shares on a fully
diluted basis on the date of purchase.
C-7
"Multiemployer Plan" means a "multiemployer plan," as Section
4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of ERISA
defines that term.
"New Common Stock" means the common stock, per value $.001 per share,
of the Surviving Corporation.
"Offer" means the offer of Sub to purchase all outstanding Shares that
Parent does not already own, directly or indirectly through its
Subsidiaries, for:
(1) the price of $2.84 per Share, net to the seller in cash and
without interest thereon; or
(2) such greater consideration per Share, if any, as Sub may, in
its sole discretion, offer in the Offer Documents to pay for each of
those Shares.
"Offer Commencement Date" means the date on which Sub commences the
Offer under Section 1.01(a).
"Offer Conditions" means the conditions of the Offer which Exhibit D
contains, as those conditions may be amended or supplemented from time to
time:
(1) in accordance with Section 1.01(b) until such time, if ever,
as any party terminates this Agreement under Article Nine; and
(2) if any party terminates this Agreement under Article Nine, in
accordance with Section 1.01(a) after that termination.
"Offer Documents" means the offer to purchase to be dated on or about
the Offer Commencement Date of Sub and the related letter of transmittal
and other documents ancillary to the Offering the Schedule TO includes as
of the Offer Commencement Date, as those documents thereafter may be
amended or supplemented from time to time.
"Option" means any option to purchase Common Stock which has been
granted under any of the Option Plans and remains outstanding on the date
of this Agreement.
"Option Agreement" means the option agreement dated the date of this
Agreement in the form Exhibit B includes.
"Option Grantors" means the Persons named as "Stockholders" by the
Option Agreement.
"Option Plan" means collectively the "Frontier Natural Gas Corporation
Employee Option Plan -- 1997" and the LIP.
"Parent" has the meaning the first paragraph hereof specifies.
"Parent Entity" means Parent, Sub or any Entity that is a Subsidiary
of Parent.
C-8
"Paying Agent" means at any time the bank or trust company acting as
Parent's paying agent at that time in connection with the exchange of
Certificates for the Merger Consideration.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has the meaning the definition of "Benefit Plan" herein
specifies.
"Permitted Investments" means:
(1) at the time of purchase or other acquisition by any Company
Entity,
(A) obligations issued or guaranteed by the United States of
America with a remaining maturity not exceeding one year,
(B) commercial paper with maturities of not more than 270
days and a published rating of not less than A-1 by S&P or P-1 by
Xxxxx'x and
(C) certificates of deposit and bankers' acceptances having
maturities of not more than one year of any commercial bank or
trust company if (1) that bank or trust company has a combined
capital and surplus of at least $500,000,000 and (2) its
unsecured long-term debt obligations, or those of a holding
company of which it is a subsidiary, are rated not less than A-
by S&P or A3 by Xxxxx'x; and
(2) other extensions of credit made by any Company Entity to its
customers in the ordinary course of its business and consistent with
its past practices.
"Person" means any natural person, Entity, estate, trust, union or
employee organization or Governmental Authority or, for the purpose of the
definition of "ERISA Affiliate," any trade or business.
"Preferred Stock" means the preferred stock, par value $.01 per share,
of the Company.
"Prohibited Transaction" means any transaction either Section 4975 of
the Code or Section 406 of ERISA prohibits and neither Section 4975 of the
Code nor Section 408 of ERISA exempts.
"Proprietary Rights" means:
(1) patents, applications for patents and patent rights;
(2) in each case, whether registered, unregistered or under
pending registration, trademark rights, trade names, trade name
rights, corporate names,
C-9
business names, trade styles or dress, service marks and logos and
other trade designations and copyrights; and
(3) in the case of any Company Entity, all agreements relating to
the technology, know-how or processes used or held for use in any
business of any Company Entity.
"Qualified Plans" has the meaning Section 4.09 specifies.
"Relevant Representation" has the meaning Section 4.14 specifies.
"RCRA" means the Resource Conservation and Recovery Act of 1976.
"Reportable Event" means, with respect to any Pension Plan:
(1) the occurrence of any of the events set forth in Section
4043(b) or (c) (other than a Reportable Event as to which the
provision of 30 days' notice to the PBGC is waived under applicable
regulations), 4062(e) or 4063(a) of ERISA with respect to that plan;
(2) any event requiring any Company Entity to provide security to
that plan under Section 401(a)(29) of the Code; or
(3) any failure to make a payment Section 412(m) of the Code
requires with respect to that plan.
"Representatives" means, with respect to any Person, the directors,
officers, employees, Affiliates, accountants, including independent
certified public accountants, advisors, attorneys, consultants or other
agents of that Person, or any other representatives of that Person or of
any of those directors, officers, employees, Affiliates, accountants,
advisors, attorneys, consultants or other agents.
"Royalty" includes any payment attributable to any royalty, overriding
royalty or other interest in oil and gas properties and payments any
contractual arrangement or applicable Governmental Approval or Governmental
Requirement may require which are attributable to the production of natural
resources and owed to a federal, state or local Governmental Authority or
otherwise, including all interest, penalties and additions imposed with
respect to the amount of those payments.
"Royalty Return" means, as originally filed or as thereafter amended,
any federal, state or local declaration, form, information return, report,
return or statement relating to Royalties.
"Savings Plan" means Esenjay Employee Savings Plan as in effect on the
date of this Agreement and since October 1, 1998.
"Schedule 14D-9" means a Solicitation/Recommendation Statement on
Exchange Act Schedule 14D-9 of the Company, as filing person, which
contains, among other
C-10
information respecting the Company and the Offer, the recommendations of
the Company Board to which Section 1.02(b) refers, as originally filed with
the SEC under the Exchange Act and, after that filing, as amended from time
to time.
"Schedule TO" means a Tender Offer Statement on Exchange Act Schedule
TO of Parent and Sub, as filing persons, which contains, among other
information and documents respecting Parent, Sub and the Offer, the Offer
Documents, as originally filed with the SEC under the Exchange Act and,
after that filing, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means at any time all forms, registration and other
statements reports, schedules, exhibits and other documents relating to
periods beginning or transactions or other events occurring on or after
January 1, 1999 which the Exchange Act or the Securities Act has required
the Company or any other Company Entity to file with the SEC at or prior to
that time.
"Section 203 Restrictions" means the provisions of Section 203 of the
DGCL which impose conditions to or restrictions on "business combinations"
by Delaware corporations with their "interested stockholders" (the quoted
terms having the meanings Section 203 specifies).
"Securities Act" means the Securities Act of 1933.
"Severance Plan" means the Company's severance compensation plan known
as the "Esenjay Exploration, Inc. Employee Incentive and Severance
Protection Plan," as adopted effective as of February 21, 2001 and as
thereafter amended, modified or supplemented prior to the date of this
Agreement.
"Shares" means at any time the outstanding shares of Common Stock.
"Solid Wastes, Hazardous Wastes or Hazardous Substances" have the
meanings ascribed to those terms in CERCLA, RCRA or any other Environmental
Law applicable to the business or operations of any Company Entity which
imparts a broader meaning to any of those terms than does CERCLA or RCRA.
"Stockholders" means the Persons named as "Stockholders" by the
Stockholders Agreement.
"Stockholders Agreement" means the stockholders agreement dated the
date of this Agreement in the form Exhibit A includes.
"Sub" has the meaning the first paragraph hereof specifies.
"Subsidiary" of any specified Person at any time means any Entity a
majority of the Capital Stock of which the specified Person owns or
controls at that time, directly or indirectly, through another Subsidiary
of the specified Person.
C-11
"Superior Takeover Proposal" means any bona fide written Acquisition
Proposal from any Person relating to any direct or indirect purchase or
other acquisition by any Person, other than Parent or an Affiliate of
Parent, of the entire equity interest in the Company which that Person does
not already own or the business and assets of the Company substantially as
an entirety in a Takeover Transaction which:
(1) is for a Takeover Consideration to the holders of the Common
Stock and is otherwise on terms which the Company Board determines in
the good faith of its members and on the basis of written advice of
the Company Financial Advisor, and taking into account all legal,
financial, regulatory and other aspects of that proposal and the
Person making that proposal, would, if consummated, be more favorable,
from a financial point of view, to those holders than the Offer and
the Merger and is reasonably likely to be consummated without undue
delay; and
(2) does not include or otherwise provide for or contemplate,
directly or indirectly, the adoption by any Company Entity of, or any
commitment by any Company Entity to perform, any Anti-Parent Takeover
Measure.
"Surviving Corporation" means the corporation surviving the Merger.
"Takeover Consideration" means:
(1) cash;
(2) Eligible Securities; or
(3) any combination of cash and Eligible Securities.
"Takeover Transaction" means any one of the following or any
combination of one or more of the following in a series of related
transactions: any merger, consolidation, business combination, sale of
assets, tender or exchange offer, share exchange, conversion,
recapitalization, redemption, liquidation, dissolution or similar
transaction involving any Company Entity.
"Tax" or "Taxes" means all net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges or assessments of any
nature whatever imposed by any Governmental Requirement, whether disputed
or not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
"Termination Event" means, with respect to any Pension Plan:
(1) any Reportable Event with respect to that plan which is
likely to result in the termination of that plan;
C-12
(2) the termination of, or the filing of a notice of intent to
terminate, that plan or the treatment of any amendment to that plan as
a termination under Section 4041(c) of ERISA; or
(3) the institution of proceedings to terminate, or the
appointment of a trustee to administer, that plan under Section 4042
of ERISA.
"Termination Fee" means cash in the amount of $3,000,000.
"TSIP" means the "Esenjay Exploration, Inc. Targeted Sales Incentive
Plan" as in effect on February 21, 2001 and on the date of this Agreement.
"Warrant" means any warrant to purchase or otherwise acquire Common
Stock from the Company or any other Company Entity which has been created
and is outstanding on the date of this Agreement.
"Welfare Plan" has the meaning the definition of "Benefit Plan" herein
specifies.
End of Exhibit C
C-13
EXHIBIT D
OFFER CONDITIONS
This Exhibit is Exhibit D to the Agreement dated as of March 17, 2002
among Xxxxxx Americas and Europe Corporation, ECM Acquisition Company and
Esenjay Exploration, Inc., each of which is a Delaware corporation (the
"Agreement"). Capitalized terms this Exhibit uses, but does not define, have the
meanings the Agreement specifies.
Notwithstanding any other term of the Offer or the Agreement, Sub will
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Exchange Act Rule 14e-l(c), which relates to
Sub's obligation to pay for or return tendered Shares promptly after the
termination or withdrawal of the Offer, to pay for, and may postpone the
acceptance for payment of and payment for, Shares tendered, and, except as the
Agreement otherwise provides, terminate the Offer as to any Shares not then paid
for if there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of Shares which would satisfy the Minimum
Tender Condition.
Moreover, notwithstanding any other term of the Offer or the
Agreement, Sub will not be required to commence the Offer, accept for payment
or, subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate or amend the Offer, with or without the
consent of the Company as the Agreement provides, or if, at any time on or after
the date of the Agreement and before the acceptance of Shares for payment or the
payment therefor, any of the following conditions exists:
(a) there shall be pending any suit, action or proceeding by any
Governmental Authority, or pending any suit, action or proceeding that has
a reasonable likelihood of success by any other Person:
(1) seeking to restrain, prohibit or make illegal or materially
more costly the making or consummation of the Offer or the Merger or
any other transactions contemplated by the Agreement (collectively,
the "Transactions");
(2) seeking to prohibit or limit the ownership or operation by
the Company, Parent or any of their respective Affiliates of any
material portion of the business or assets of the Company, Parent or
any of their respective Affiliates, or to compel the Company, Parent
or any of their respective Affiliates to dispose of or hold separate
any material portion of the business or assets of the Company, Parent
or any of their respective Affiliates, as a result of the Offer, the
Merger or any other Transaction;
(3) seeking to impose limitations that in the aggregate are
material on the ability of Parent or Sub or any Affiliate of Parent to
acquire or hold, or exercise full rights of ownership of, any Shares,
including the right to vote the Shares purchased or otherwise acquired
by it on all matters properly presented to the stockholders of the
Company;
D-1
(4) seeking to prohibit Parent or any of its Affiliates from
effectively controlling in any material respect the business or
operations of the Company; or
(5) that otherwise reasonably could be expected to have a Company
Material Adverse Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to, or
any consent or approval withheld with respect to, (1) Parent, the Company
or any of their respective Affiliates or (2) the Offer, the Merger or any
other Transaction, in either case by any Governmental Authority that is
reasonably likely to result, directly or indirectly, in any of the
consequences to which paragraph (a) above refers;
(c) (1) it shall have been publicly disclosed, or Parent shall have
otherwise learned, that beneficial ownership, determined for the purposes
of this paragraph under Exchange Act Rule l3d-3, of more than 15% of the
Shares has been acquired by another Person that is not a Stockholder or (2)
the Company Board or any committee thereof shall have:
(A) withdrawn or modified the approval or recommendation of the
Company Board of the Offer, including by amendment of the Schedule
14D-9, in a manner adverse to Parent or Sub;
(B) approved or recommended to the stockholders of the Company an
Acquisition Proposal, determined that an Acquisition Proposal is a
Superior Takeover Proposal or announced its intention to enter into an
agreement with respect to an Acquisition Proposal;
(C) approved or recommended that the stockholders of the Company
tender their Shares into any tender offer or exchange offer that is an
Acquisition Proposal or is related thereto; or
(D) resolved to do any of the foregoing;
(d) the Company shall have breached any of its representations and
warranties in the Agreement prior to their termination which (1) are
qualified as to materiality or a Company Material Adverse Effect or (2) are
not so qualified if, as a result of all breaches thereof, a Company
Material Adverse Effect has occurred or reasonably could be expected to
occur;
(e) there shall have occurred any changes, conditions, events or
developments that have had, or reasonably could be expected to have,
individually or in the aggregate, a Company Material Adverse Effect;
(f) there shall have occurred or been threatened:
D-2
(1) any material change in Australian currency exchange rates
relative to United States currency exchange rates or a suspension of,
or limitation on, the markets therefor;
(2) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States;
(3) any limitations, whether or not mandatory, by any government
or governmental authority, domestic, foreign or supranational, on, or
other event that might affect the extension of credit by banks or
other lending institutions;
(g) the Company shall have breached in any material respect any
material agreement or covenant of the Company under the Agreement;
(h) the Parent shall not have received environmental site assessment
reports from each of (1) Cornerstone Environmental Services, Inc., covering
12 of the Company's operating xxxxx and (2) Xxxxxxxx Environmental
Services, Inc., covering the Company's remaining operating xxxxx, in each
case in form and substance satisfactory to Parent in its sole discretion;
(i) the auditor's report to the audited consolidated financial
statements of the Company for the year ended December 31, 2001, shall not
have contained any reservation, qualification or non-standard disclosure;
or
(j) the Agreement shall have been terminated in accordance with its
terms;
in each case which, and regardless of the circumstances giving rise to any such
condition, including any action or inaction by Parent or any of its Affiliates,
makes it inadvisable, in the good-faith judgment of Parent, to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent.
Sub or Parent may assert any of those conditions regardless of the circumstances
giving rise thereto or may waive any of those conditions in whole or in part at
any time and from time to time in its sole discretion; provided, however, that
the Minimum Tender Condition may not be waived without the prior written consent
of the Company. The failure by Parent, Sub or any other Affiliate of Parent at
any time to exercise any of the foregoing rights will not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances will not be deemed a waiver with respect to any other facts
and circumstances and each such right will be deemed an ongoing right that may
be asserted at any time and from time to time. Any determination by Parent with
respect to the foregoing conditions will be final and binding on all parties.
End of Exhibit D
D-3
