Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
among
EDGE PETROLEUM CORPORATION
EDGE DELAWARE SUB INC.
and
XXXXXX EXPLORATION COMPANY
Dated as of May 28, 2003
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER.....................................................................1
Section 1.1 The Merger............................................................1
Section 1.2 The Closing...........................................................2
Section 1.3 Effective Time........................................................2
ARTICLE 2 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING ENTITY................2
Section 2.1 Certificate of Incorporation of the Surviving Entity..................2
Section 2.2 Bylaws of the Surviving Entity........................................2
ARTICLE 3 DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY.................................2
Section 3.1 Board of Directors of Surviving Entity................................2
Section 3.2 Officers of Surviving Entity..........................................2
ARTICLE 4 CONVERSION OF XXXXXX COMMON STOCK............................................ .3
Section 4.1 Merger Ratio..........................................................3
Section 4.2 Conversion of Capital Stock of Xxxxxx and Merger Sub..................4
Section 4.3 Exchange of Certificates Representing Xxxxxx Common Stock.............5
Section 4.4 Adjustment of Merger Ratio............................................8
Section 4.5 Dissenting Shares.....................................................8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF XXXXXX.......................................8
Section 5.1 Existence; Good Standing; Corporate Authority.........................8
Section 5.2 Authorization, Validity and Effect of Agreements......................9
Section 5.3 Capitalization........................................................9
Section 5.4 Subsidiaries..........................................................9
Section 5.5 Compliance with Laws; Permits........................................10
Section 5.6 No Conflict..........................................................10
Section 5.7 SEC Documents........................................................11
Section 5.8 Litigation...........................................................12
Section 5.9 Absence of Certain Changes...........................................12
Section 5.10 Taxes................................................................13
Section 5.11 Employee Benefit Plans...............................................14
Section 5.12 Labor Matters........................................................16
Section 5.13 Environmental Matters................................................16
Section 5.14 Intellectual Property................................................17
Section 5.15 Decrees, Etc.........................................................17
Section 5.16 Insurance............................................................18
Section 5.17 No Brokers...........................................................18
Section 5.18 Opinion of Financial Advisor.........................................18
Section 5.19 Edge Stock Ownership.................................................18
Section 5.20 Vote Required........................................................19
Section 5.21 Undisclosed Liabilities..............................................19
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Section 5.22 Certain Contracts....................................................19
Section 5.23 [Intentionally left blank]...........................................20
Section 5.24 Improper Payments....................................................20
Section 5.25 Takeover Statutes; Rights Plans......................................20
Section 5.26 Title to Properties; Liens and Encumbrances..........................20
Section 5.27 Reserve Report.......................................................21
Section 5.28 Gas Contracts........................................................22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF EDGE AND MERGER SUB.........................22
Section 6.1 Existence; Good Standing; Corporate Authority........................22
Section 6.2 Authorization, Validity and Effect of Agreements.....................23
Section 6.3 Capitalization.......................................................23
Section 6.4 Subsidiaries.........................................................23
Section 6.5 Compliance with Laws; Permits........................................24
Section 6.6 No Conflict..........................................................24
Section 6.7 SEC Documents........................................................25
Section 6.8 Litigation...........................................................26
Section 6.9 Absence of Certain Changes...........................................26
Section 6.10 Taxes................................................................27
Section 6.11 Employee Benefit Plans...............................................28
Section 6.12 Labor Matters........................................................30
Section 6.13 Environmental Matters................................................30
Section 6.14 Intellectual Property................................................31
Section 6.15 Decrees, Etc.........................................................31
Section 6.16 Insurance............................................................31
Section 6.17 No Brokers...........................................................32
Section 6.18 [Intentionally left blank]...........................................32
Section 6.19 Xxxxxx Stock Ownership...............................................32
Section 6.20 Vote Required........................................................32
Section 6.21 Undisclosed Liabilities..............................................32
Section 6.22 Certain Contracts....................................................32
Section 6.23 [Intentionally left blank]...........................................33
Section 6.24 Improper Payments....................................................33
Section 6.25 Takeover Statutes; Rights Plans......................................33
Section 6.26 Title to Properties; Liens and Encumbrances..........................33
Section 6.27 Reserve Report.......................................................34
Section 6.28 Gas Contracts........................................................35
ARTICLE 7 COVENANTS.....................................................................35
Section 7.1 Conduct of Xxxxxx Business...........................................35
Section 7.2 No Solicitation by Xxxxxx............................................42
Section 7.3 Confidentiality Matters..............................................44
Section 7.4 Meetings of Stockholders.............................................44
Section 7.5 Filings; Commercially Reasonable Best Efforts, Etc...................45
Section 7.6 Inspection...........................................................47
Section 7.7 Publicity............................................................47
Section 7.8 Registration Statement on Form S-4...................................47
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Section 7.9 Listing Application..................................................48
Section 7.10 Letters of Accountants...............................................48
Section 7.11 Agreements of Rule 145 Affiliates....................................49
Section 7.12 Expenses.............................................................49
Section 7.13 Indemnification and Insurance........................................49
Section 7.14 Antitakeover Statutes................................................50
Section 7.15 Control of Appraisal Process.........................................50
Section 7.16 Employee Matters.....................................................50
Section 7.17 Section 16(b) Board Approval.........................................51
Section 7.18 Registration Rights..................................................51
ARTICLE 8 CONDITIONS....................................................................51
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger...........51
Section 8.2 Conditions to Obligation of Xxxxxx to Effect the Merger..............52
Section 8.3 Conditions to Obligation of Edge and Merger Sub to Effect the Merger.53
ARTICLE 9 TERMINATION...................................................................54
Section 9.1 Termination by Mutual Consent........................................54
Section 9.2 Termination by Edge or Xxxxxx........................................54
Section 9.3 Termination by Xxxxxx................................................55
Section 9.4 Termination by Edge..................................................55
Section 9.5 Effect of Termination................................................56
Section 9.6 Extension; Waiver....................................................57
ARTICLE 10 GENERAL PROVISIONS...........................................................57
Section 10.1 Nonsurvival of Representations, Warranties and Agreements............57
Section 10.2 Notices..............................................................57
Section 10.3 Assignment; Binding Effect; Benefit..................................58
Section 10.4 Entire Agreement.....................................................59
Section 10.5 Amendments...........................................................59
Section 10.6 Governing Law........................................................59
Section 10.7 Counterparts.........................................................59
Section 10.8 Headings.............................................................59
Section 10.9 Interpretation.......................................................59
Section 10.10 Waivers..............................................................60
Section 10.11 Incorporation of Disclosure Letters and Exhibits.....................60
Section 10.12 Severability.........................................................61
Section 10.13 Enforcement of Agreement.............................................61
Section 10.14 Consent to Jurisdiction and Venue....................................61
Section 10.15 Waiver of Jury Trial.................................................61
Section 10.16 No Affiliate Liability...............................................61
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GLOSSARY OF DEFINED TERMS
Defined Terms Where Defined
------------- -------------
Acknowledgement Agreements.......................................Section 8.3(e)
Action..........................................................Section 7.13(a)
Affiliate.........................................................Section 10.16
Agreement..............................................................Preamble
Antitrust Laws...................................................Section 7.5(c)
Applicable Laws..................................................Section 5.5(a)
Assumed Plan.....................................................Section 4.2(d)
Average Closing Price...............................................Section 4.1
Certificate of Merger...............................................Section 1.3
Certificates.....................................................Section 4.3(b)
Closing.............................................................Section 1.2
Closing Date........................................................Section 1.2
Closing Price.......................................................Section 4.1
Code...................................................................Recitals
Confidentiality Agreement...........................................Section 7.6
Confidentiality Obligations.........................................Section 7.3
Confidentiality Regulations.........................................Section 7.3
Contingent Obligation............................................Section 7.1(m)
Cutoff Date......................................................Section 7.2(d)
Debt.............................................................Section 7.1(m)
DGCL................................................................Section 1.1
Director Options....................................................Section 4.1
Dissenting Shares...................................................Section 4.5
E&P Business.....................................................Section 7.1(m)
Edge...................................................................Preamble
Edge Acquisition Proposal........................................Section 9.3(c)
Edge Benefit Plans..............................................Section 6.11(a)
Edge Common Stock......................................................Recitals
Edge Common Stock Value.............................................Section 4.1
Edge Disclosure Letter................................................ARTICLE 6
Edge Material Adverse Effect....................................Section 10.9(c)
Edge Material Contracts.........................................Section 6.22(a)
Edge Permits.....................................................Section 6.5(b)
Edge Petroleum Engineers...........................................Section 6.27
Edge Preferred Stock................................................Section 6.3
Edge Real Property...............................................Section 6.5(c)
Edge Reports........................................................Section 6.7
Edge Reserve Report................................................Section 6.27
Edge Stockholder Agreements............................................Recitals
Effective Time......................................................Section 1.3
Environmental Laws..............................................Section 5.13(a)
ERISA...........................................................Section 5.11(a)
ERISA Affiliate.................................................Section 5.11(b)
Exchange Act........................................................Section 5.4
Exchange Agent...................................................Section 4.3(a)
Exchange Fund....................................................Section 4.3(a)
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Defined Terms Where Defined
------------- -------------
Form S-4.........................................................Section 7.8(a)
Hazardous Materials.............................................Section 5.13(b)
Indemnified Parties.............................................Section 7.13(a)
Indemnified Party...............................................Section 7.13(a)
Letter of Transmittal............................................Section 4.3(b)
Liens...............................................................Section 5.4
Material Adverse Effect.........................................Section 10.9(c)
Merger.................................................................Recitals
Merger Ratio........................................................Section 4.1
Merger Sub.............................................................Preamble
Xxxxxx.................................................................Preamble
Xxxxxx Acquisition Proposal......................................Section 7.2(a)
Xxxxxx Benefit Plans............................................Section 5.11(a)
Xxxxxx Common Stock....................................................Recitals
Xxxxxx Disclosure Letter..............................................ARTICLE 5
Xxxxxx Material Adverse Effect..................................Section 10.9(c)
Xxxxxx Material Contracts.......................................Section 5.22(a)
Xxxxxx Option.................................................Section 4.2(d)(i)
Xxxxxx Options................................................Section 4.2(d)(i)
Xxxxxx Permits...................................................Section 5.5(b)
Xxxxxx Petroleum Engineers.........................................Section 5.27
Xxxxxx Preferred Stock..............................................Section 5.3
Xxxxxx Real Property.............................................Section 5.5(c)
Xxxxxx Reports......................................................Section 5.7
Xxxxxx Reserve Report..............................................Section 5.27
Xxxxxx Stock Plans............................................Section 4.2(d)(i)
Xxxxxx Stockholder Agreements..........................................Recitals
Xxxxxx Superior Proposal.........................................Section 7.2(a)
Nasdaq..............................................................Section 6.6
Party Affiliate...................................................Section 10.16
Person............................................................Section 10.16
Proxy Statement/Prospectus.......................................Section 7.8(a)
Regulatory Filings...............................................Section 5.6(b)
Retention Bonus.................................................Section 7.16(b)
Retention Plan..................................................Section 7.16(b)
Returns.........................................................Section 5.10(a)
Rule 145 Affiliates................................................Section 7.11
SEC..........................................................Section 4.2(d)(ii)
Securities Act...................................................Section 4.3(d)
Significant Subsidiary..............................................Section 5.4
Subsidiary......................................................Section 10.9(d)
Surviving Entity....................................................Section 1.1
Takeover Statute...................................................Section 5.25
taxes...........................................................Section 5.10(d)
Third-Party Provisions.............................................Section 10.3
Transaction.........................................................Section 7.3
Veritas Warrant.....................................................Section 4.1
Warrants.........................................................Section 4.2(e)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of May ,
2003, is by and among Edge Petroleum Corporation, a Delaware corporation
("Edge"), Edge Delaware Sub Inc., a Delaware corporation ("Merger Sub"), and
Xxxxxx Exploration Company, a Delaware corporation ("Xxxxxx").
RECITALS
A. The Merger. At the Effective Time (as defined herein), the
parties intend to effect a merger of Merger Sub with and into Xxxxxx, with
Xxxxxx being the surviving entity (the "Merger"), pursuant to which each share
of common stock, par value $.01 per share, of Xxxxxx ("Xxxxxx Common Stock")
will be converted into the right to receive the number of shares of common
stock, par value $.01 per share, of Edge ("Edge Common Stock") that is equal to
the Merger Ratio.
B. Intended U.S. Tax Consequences. The parties to this Agreement
intend that, for federal income tax purposes, the Merger qualify as a
reorganization within the meaning of section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
C. Intended U.S. Accounting Treatment. The parties to this
Agreement intend that the Merger be treated as the purchase of Xxxxxx by Edge
for U.S. generally accepted accounting principles.
D. Stockholder Agreements. Concurrently with the execution and
delivery of this Agreement, (i) certain affiliates of Xxxxxx are entering into
Stockholder Agreements with Edge (collectively, the "Xxxxxx Stockholder
Agreements") and (ii) certain affiliates of Edge are entering into Stockholder
Agreements with Xxxxxx (collectively, the "Edge Stockholder Agreements"), in
each case providing for, among other things, the voting of shares of Xxxxxx
Common Stock or Edge Common Stock, as applicable, owned by such affiliates.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to conditions of
this Agreement, at the Effective Time, Merger Sub shall be merged with and into
Xxxxxx in accordance with this Agreement, and the separate corporate existence
of Merger Sub shall thereupon cease. Xxxxxx shall be the surviving entity in the
Merger (sometimes hereinafter referred to as the "Surviving Entity"). The Merger
shall have the effects specified herein and in the General Corporation Law of
the State of Delaware (the "DGCL").
Section 1.2 The Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the Merger (the "Closing") shall
take place (a) at the offices of Xxxxx Xxxxx L.L.P., Xxx Xxxxx Xxxxx, 000
Xxxxxxxxx, Xxxxxxx, Xxxxx 00000, at 9:00 a.m., local time, on the first business
day immediately following the day on which the last to be fulfilled or waived of
the conditions set forth in Section 8.1, or, if on such day any condition set
forth in Section 8.2 or Section 8.3 has not been fulfilled or waived, as soon as
practicable after all the conditions set forth in Article 8 have been fulfilled
or waived in accordance herewith (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions) or (b) at such other time, date or place as Edge and
Xxxxxx may agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
Section 1.3 Effective Time. On the Closing Date, Edge, Xxxxxx and
Merger Sub shall cause a certificate of merger (the "Certificate of Merger")
meeting the requirements of Section 251 of the DGCL to be properly executed and
filed in accordance with such section. The Merger shall become effective at the
time of filing of the Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with the DGCL or at such later time that Edge
and Xxxxxx shall have agreed upon and designated in such filing as the effective
time of the Merger (the "Effective Time").
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING ENTITY
Section 2.1 Certificate of Incorporation of the Surviving Entity.
As of the Effective Time, the certificate of incorporation of Xxxxxx in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Entity, until duly amended in accordance with
applicable law.
Section 2.2 Bylaws of the Surviving Entity. The bylaws of Merger Sub
in effect immediately prior to the Effective Time shall be the bylaws of the
Surviving Entity, until duly amended in accordance with applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS OF
THE SURVIVING ENTITY
Section 3.1 Board of Directors of Surviving Entity. The directors of
Merger Sub immediately prior to the Effective Time shall be the directors of the
Surviving Entity as of the Effective Time, until their successors shall be
elected and qualified or their earlier death, resignation or removal in
accordance with the certificate of incorporation and bylaws of the Surviving
Entity.
Section 3.2 Officers of Surviving Entity. The officers of Merger Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Entity as of the Effective Time, until their successors shall be appointed or
their earlier death, resignation or removal in accordance with the certificate
of incorporation and bylaws of the Surviving Entity.
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ARTICLE 4
CONVERSION OF XXXXXX COMMON STOCK
Section 4.1 Merger Ratio. For purposes of this Agreement, the
"Merger Ratio" shall be equal to (1)(a) $12,700,000 divided by (b) the Edge
Common Stock Value (defined below) divided by (2) the sum of (a) the number of
shares of Xxxxxx Common Stock outstanding at the Determination Time (other than
shares of Xxxxxx Common Stock to be canceled without payment of any
consideration therefor pursuant to Section 4.2(c) and shares of Xxxxxx Common
Stock issued upon the exercise of the Veritas Warrant and the Director Options)
and (b) Six Thousand Three Hundred Seventy-Three (6,373).
"Edge Common Stock Value" shall be the Average Closing Price if the
Average Closing Price is less than or equal to $5.00 and greater than or equal
to $4.70. If the Average Closing Price is greater than $5.00, the Edge Common
Stock Value shall be $5.00. If the Average Closing Price is less than $4.70 per
share, the Edge Common Stock Value shall be $4.70. Notwithstanding the
foregoing, in the event that Edge following the date hereof, but prior to the
Determination Time, issues shares of its capital stock for consideration per
share for all such issuances which is less than $4.70 per share of Edge Common
Stock calculated on a weighted average basis (excluding issuances (x) pursuant
to employee benefit plans and (y) pursuant to outstanding options, warrants or
convertible securities in accordance with their terms, in each case of (x) and
(y) as in existence on the date hereof or as specifically contemplated by this
Agreement) pursuant to one or more private placements to third parties, then the
Edge Common Stock Value shall be equal to the greater of (A) $4.70 and (B) the
lower of (i) such weighted average issuance price per share and (ii) the amount
as determined by the foregoing provisions of this definition.
"Determination Time" shall be the close of business on the fifth trading
day prior to the scheduled date (without regard to any adjournment) of the
meeting of the Xxxxxx Stockholders required by Section 7.4.
"Average Closing Price" shall mean the average of the Closing Prices for
the twenty consecutive trading days ending on the day the Determination Time
occurs.
"Closing Price" shall mean for each trading day the per share closing
price of Edge Common Stock as reported on the Nasdaq National Market (or, in
case no such reported sale takes place on such trading day, the average of the
reported closing bid and asked prices of a share of Edge Common Stock on such
trading day on the Nasdaq National Market (as reported in the Central edition of
The Wall Street Journal or, if not reported thereby, another authoritative
source)).
"Director Options" shall mean the options granted by Xxxxxx to Xxxx
Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxxxx and X. X. Xxxxxx on May 23, 2002 to
purchase an aggregate of 1,200 shares of Xxxxxx Common Stock.
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"Veritas Warrant" shall mean the warrant, as amended, issued by Xxxxxx
to Veritas DGC Land, Inc. on April 15, 1999 and which is currently exercisable
for 60,050 shares of Xxxxxx Common Stock.
Section 4.2 Conversion of Capital Stock of Xxxxxx and Merger Sub.
(a) At the Effective Time, each share of common stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one fully paid and
non-assessable share of Xxxxxx Common Stock.
(b) At the Effective Time, each share of Xxxxxx Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares of
Xxxxxx Common Stock to be canceled without payment of any consideration therefor
pursuant to Section 4.2(c), and Dissenting Shares (defined below)), shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive a fraction of a share of Edge Common
Stock equal to the Merger Ratio and each such share of Xxxxxx Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of such shares of Xxxxxx Common Stock shall thereafter
cease to have any rights with respect to such shares of Xxxxxx Common Stock,
except the right to receive, without interest, certificates for shares of Edge
Common Stock in accordance with Section 4.3(b) and cash for fractional shares in
accordance with Section 4.3(b) and Section 4.3(e) upon the surrender of the
relevant Certificate (as hereinafter defined).
(c) Each share of Xxxxxx Common Stock issued and held in Xxxxxx'x
treasury and each share of Xxxxxx Common Stock owned by any wholly owned
Subsidiary of Xxxxxx or by Edge or Merger Sub, shall, at the Effective Time and
by virtue of the Merger, cease to be outstanding and shall be canceled and
retired without payment of any consideration therefor, and no capital shares of
Edge or other consideration shall be delivered in exchange therefor.
(d) (i) At the Effective Time, all options to acquire shares of
Xxxxxx Common Stock outstanding at the Effective Time under Xxxxxx'x stock plans
(collectively, the "Xxxxxx Stock Plans") identified in Section 4.2(d) of the
Xxxxxx Disclosure Letter (individually, a "Xxxxxx Option" and collectively, the
"Xxxxxx Options") shall remain outstanding following the Effective Time, subject
to the modifications described in this Section 4.2(d)(i). Prior to the Effective
Time, Xxxxxx and Edge shall take all actions (if any) as may be required to
permit the assumption of such Xxxxxx Options by Edge pursuant to this Section
4.2(d)(i). At the Effective Time, the Xxxxxx Options shall be assumed and
adjusted by Edge in such manner that Edge (i) is a corporation "assuming a stock
option in a transaction to which Section 424(a) applies" within the meaning of
Section 424 of the Code, or (ii) to the extent that the Xxxxxx Option is not or
ceases to qualify as an "incentive stock option" within the meaning of Section
422 of the Code, would be such a corporation were Section 424 of the Code
applicable to such option. Subject to the remainder of this Section 4.2(d), each
Xxxxxx Option assumed and adjusted by Edge shall be subject to the same terms
and conditions as under the applicable Xxxxxx Stock Plan and the applicable
option agreement entered into pursuant thereto, except that, immediately
following the Effective Time (A) each Xxxxxx Option shall be exercisable for
that whole number of shares of Edge Common Stock equal to the product (rounded
to the nearest whole share) of the number
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of shares of Xxxxxx Common Stock subject to such Xxxxxx Option immediately prior
to the Effective Time multiplied by the Merger Ratio, and (B) the exercise price
per Edge Share shall be an amount equal to the exercise price per share of
Xxxxxx Common Stock subject to such Xxxxxx Option in effect immediately prior to
the Effective Time divided by the Merger Ratio (the price per share, as so
determined, being rounded down to the nearest whole cent). Without limiting the
foregoing, effective at the Effective Time, Edge shall assume the Xxxxxx Stock
Option and Restricted Stock Plan of 1997, as amended, (the "Assumed Plan") for
purposes of employing such plan to make grants of stock options and other awards
based on shares of Edge Common Stock following the Effective Time.
(ii) At or prior to the Effective Time, Edge shall take all
corporate action necessary to reserve for issuance a number of shares of Edge
Common Stock equal to the number of shares of Edge Common Stock available for
issuance pursuant to the Assumed Plan (which number shall be the product
(rounded to the nearest whole share) of the number of shares of Xxxxxx Common
Stock available for issuance immediately prior to the Effective Time
multiplied by the Merger Ratio). From and after the date of this Agreement,
Xxxxxx and its Subsidiaries shall take no action to provide for the
acceleration of the exercisability of any Xxxxxx Options in connection with
the Merger (except to the extent such acceleration is required under the
terms of such Xxxxxx Options or this Agreement). On the Closing Date, Edge
shall file with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-8 (or a post-effective amendment on Form S-8
with respect to the Form S-4 or such other appropriate form) covering all
such shares of Edge Common Stock and shall cause such registration statement
to remain effective (and shall cause the prospectus or prospectuses relating
thereto to remain compliant with applicable securities laws) for as long as
there are outstanding any such Xxxxxx Options.
(iii) Except as otherwise specifically provided by this
Section 4.2(d), the terms of the Xxxxxx Options and the relevant Xxxxxx Stock
Plans, as in effect on the Effective Time, shall remain in full force and
effect with respect to the Xxxxxx Options after giving effect to the Merger
and the assumptions by Edge as set forth above. As soon as practicable
following the Effective Time, Edge shall deliver to the holders of Xxxxxx
Options appropriate notices setting forth such holders' rights pursuant to
the respective Xxxxxx Stock Plans and the agreements evidencing the grants of
such Xxxxxx Options, and that such Xxxxxx Options and such agreements shall
be assumed by Edge and shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 4.2(d)).
(e) At the Effective Time, all warrants (the "Warrants") to purchase
shares of Xxxxxx Common Stock listed in Section 5.3 of the Xxxxxx Disclosure
Letter shall be assumed by Edge in accordance with the terms of the Warrant
Agreements and the Warrants shall be adjusted as provided therein.
Section 4.3 Exchange of Certificates Representing Xxxxxx Common
Stock.
(a) As of the Effective Time, Edge shall appoint its transfer agent
for Edge Common Stock or such other bank or trust company reasonably
satisfactory to Xxxxxx as
5
exchange agent (the "Exchange Agent"), and Edge shall, when and as needed,
deposit, or cause to be deposited with the Exchange Agent for the benefit of the
holders of shares of Xxxxxx Common Stock for exchange in accordance with this
Article 4, certificates representing the shares of Edge Common Stock to be
issued pursuant to Section 4.2 and delivered pursuant to this Section 4.3 in
exchange for outstanding shares of Xxxxxx Common Stock. When and as needed, the
Surviving Entity shall provide the Exchange Agent immediately following the
Effective Time cash sufficient to pay cash in lieu of fractional shares in
accordance with Section 4.3(b) and Section 4.3(e) (such cash and certificates
for shares of Edge Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund").
(b) Promptly after the Effective Time, Edge shall cause the Exchange
Agent to mail to each holder of record of one or more certificates
("Certificates") that immediately prior to the Effective Time represented shares
of Xxxxxx Common Stock (other than to holders of shares of Xxxxxx Common Stock
that, pursuant to Section 4.2(c), are canceled without payment of any
consideration therefor and other than Dissenting Shares): (A) a letter of
transmittal (the "Letter of Transmittal"), which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Edge and Xxxxxx may reasonably agree
and (B) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Edge Common Stock and cash in
lieu of fractional shares. Upon surrender of a Certificate for cancellation to
the Exchange Agent together with such Letter of Transmittal, duly executed and
completed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) a certificate
representing that number of whole shares of Edge Common Stock and (y) a check
representing the amount of cash in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, which such holder has the right to receive
pursuant to the provisions of this Article 4, after giving effect to any
required withholding tax, and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to holders of
Certificates. In the event of a transfer of ownership of Xxxxxx Common Stock
that is not registered in the transfer records of Xxxxxx, a certificate
representing the proper number of shares of Edge Common Stock, together with a
check for the cash to be paid in lieu of fractional shares, may be issued to
such a transferee if the Certificate representing such Xxxxxx Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. In the event that a holder has not previously
exchanged their Certificates for Xxxxxx Common Stock in connection with the 1
for 10 reverse stock split of Xxxxxx, the effect of such reverse stock split
shall be taken into account (and appropriate notice thereof shall be given to
the Exchange Agent by Xxxxxx) prior to the issuance of any certificate for Edge
Common Stock in exchange for such Certificates for Xxxxxx Common Stock.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time with
respect to shares of Edge Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Edge Common Stock represented by such Certificate as a result
of the conversion provided in Section 4.2(b) until such Certificate is
6
surrendered as provided herein. Subject to the effect of applicable laws,
following surrender of any such Certificate (other than Certificates
representing Dissenting Shares), there shall be paid to the holder of the
Certificates so surrendered, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore payable and not paid with respect to the
number of whole shares of Edge Common Stock issued pursuant to Section 4.2, less
the amount of any withholding taxes, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Edge Common Stock, less the amount
of any withholding taxes.
(d) At or after the Effective Time, the Surviving Entity shall pay
from funds on hand at the Effective Time any dividends or make other
distributions with a record date prior to the Effective Time that may have been
declared or made by Xxxxxx on shares of Xxxxxx Common Stock which remain unpaid
at the Effective Time, and after the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving Entity of the shares of Xxxxxx
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving Entity,
the presented Certificates shall be canceled and exchanged for certificates
representing shares of Edge Common Stock and cash in lieu of fractional shares,
if any, deliverable in respect thereof pursuant to this Agreement in accordance
with the procedures set forth in this Article 4. Certificates surrendered for
exchange by any person constituting an "affiliate" of Xxxxxx for purposes of
Rule 145(c) under the Securities Act of 1933, as amended (the "Securities Act"),
shall not be exchanged until Xxxxxx has received a written agreement from such
person as provided in Section 7.11.
(e) No fractional shares of Edge Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional shares of Edge Common
Stock pursuant to Section 4.2(b), cash adjustments provided by Merger Sub will
be paid to holders in respect of any fractional shares of Edge Common Stock that
would otherwise be issuable, and the amount of such cash adjustment shall be
equal to such fractional proportion of the Edge Common Stock Value.
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any certificates for shares of Edge Common Stock) that
remains undistributed to the former stockholders of Xxxxxx one year after the
Effective Time shall be delivered to Edge. Any former stockholders of Xxxxxx who
have not theretofore complied with this Article 4 shall thereafter look only to
Edge for delivery of certificates representing their shares of Edge Common Stock
and cash in lieu of fractional shares and for any unpaid dividends and
distributions on the shares of Edge Common Stock deliverable to such former
stockholder pursuant to this Agreement.
(g) None of Edge, Xxxxxx, the Surviving Entity, the Exchange Agent
or any other person shall be liable to any person for any portion of the
Exchange Fund properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or
7
destroyed and, if required by the Surviving Entity, the posting by such person
of a bond in such reasonable amount as the Surviving Entity may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate certificates representing the shares of Edge Common Stock,
cash in lieu of fractional shares and unpaid dividends and distributions on
shares of Edge Common Stock (as provided in Section 4.3(c)), deliverable in
respect thereof pursuant to this Agreement.
Section 4.4 Adjustment of Merger Ratio. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, Edge
changes the number of shares of Edge Common Stock, or Xxxxxx changes the number
of shares of Xxxxxx Common Stock, issued and outstanding as a result of a stock
split, reverse stock split, stock dividend, recapitalization or other similar
transaction, the Merger Ratio and other items dependent thereon shall be
appropriately adjusted.
Section 4.5 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Xxxxxx Common Stock that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who have properly exercised appraisal rights with respect thereto
under the DGCL (the "Dissenting Shares") shall not be converted into or
represent the right to receive shares of Edge Common Stock as provided in
Section 4.2(b), but the holders of Dissenting Shares shall be entitled to
receive such payment of the appraised value of such shares held by them from the
Surviving Entity as shall be determined pursuant to the DGCL; provided, however,
that if any such holder shall have failed to perfect or shall withdraw or lose
the right to appraisal and payment under the DGCL, each such holder's shares
shall thereupon be deemed to have been converted as of the Effective Time into
the right to receive shares of Edge Common Stock, without any interest thereon,
as provided in Section 4.2(b), and upon surrender in the manner provided in
Section 4.3(b) of the Certificate(s) representing such shares, such shares shall
no longer be Dissenting Shares.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Except as set forth in the disclosure letter delivered to Edge by Xxxxxx
at or prior to the execution hereof (the "Xxxxxx Disclosure Letter") and which
either makes reference to the particular subsection of this Agreement to which
exception is being taken or for which the disclosure in the Xxxxxx Disclosure
Letter is sufficiently obvious on its face to give Edge reasonable notice that
it applies as an exception to another representation and warranty in this
Article 5, Xxxxxx represents and warrants to Edge and Merger Sub that:
Section 5.1 Existence; Good Standing; Corporate Authority. Xxxxxx is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Xxxxxx is duly qualified to do business and, to
the extent such concept or similar concept exists in the relevant jurisdiction,
is in good standing under the laws of any jurisdiction in which the character of
the properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified has not had, and could not reasonably be expected to have,
individually or in the aggregate, a Xxxxxx
8
Material Adverse Effect (as defined in Section 10.9). Xxxxxx has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted. The copies of Xxxxxx'x certificate of
incorporation and bylaws previously made available to Edge are true and correct
and contain all amendments as of the date hereof.
Section 5.2 Authorization, Validity and Effect of Agreements. Xxxxxx
has the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements and documents contemplated hereby to which it
is a party and to consummate the transactions this Agreement and those other
agreements and documents contemplate. The consummation by Xxxxxx of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on behalf of Xxxxxx, other than the approvals referred to in
Section 5.20. Xxxxxx has duly executed and delivered this Agreement. This
Agreement constitutes the valid and legally binding obligation of Xxxxxx,
enforceable against Xxxxxx in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights and general principles of equity. Xxxxxx has taken
all action necessary to render the restrictions set forth in Section 203 of the
DGCL, and any other applicable takeover law restricting or purporting to
restrict business combinations, and in Articles X and XII of its certificate of
incorporation inapplicable to this Agreement, the Stockholder Agreements and the
transactions contemplated hereby and thereby.
Section 5.3 Capitalization. The authorized capital stock of Xxxxxx
consists of 40,000,000 shares of Xxxxxx Common Stock and 2,000,000 shares of
preferred stock, par value $.01 per share ("Xxxxxx Preferred Stock"). As of the
date of this Agreement, there were (i) 2,061,253 outstanding shares of Xxxxxx
Common Stock, (ii) 132,750 shares of Xxxxxx Common Stock reserved for issuance
upon the exercise of outstanding Xxxxxx Options, (iii) 960,050 shares of Xxxxxx
Common Stock reserved for issuance upon the exercise of outstanding warrants to
purchase Xxxxxx Common Stock, and (iv) no outstanding shares of Xxxxxx Preferred
Stock. All such issued and outstanding shares of Xxxxxx Common Stock and Xxxxxx
Preferred Stock are duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights. As of the date of this Agreement, except as set
forth in this Section 5.3, there are no outstanding shares of capital stock and
there are no options, warrants, calls, subscriptions, convertible securities or
other rights, agreements or commitments which may obligate Xxxxxx or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Xxxxxx or any of its Subsidiaries. Xxxxxx has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of Xxxxxx on any
matter. Section 5.3 of the Xxxxxx Disclosure Letter sets forth a list of all
outstanding options and warrants of Xxxxxx as of the date hereof together with
all applicable exercise or strike prices, vesting and termination dates of such
options and warrants.
Section 5.4 Subsidiaries. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Each of Xxxxxx'x Significant Subsidiaries is a corporation or
other legal entity duly organized, validly existing and, to the extent such
concept or similar concept exists in the relevant jurisdiction, in good standing
under the laws of its jurisdiction of incorporation or organization, has the
corporate or other entity power and authority to own, operate and lease its
properties and to carry on its business as
9
it is now being conducted, and is duly qualified to do business and is in good
standing (where applicable) in each jurisdiction in which the ownership,
operation or lease of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing has not had, and could not reasonably be expected to
have, a Xxxxxx Material Adverse Effect. As of the date of this Agreement, all of
the outstanding shares of capital stock of, or other ownership interests in,
each of Xxxxxx'x Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable, and are owned, directly or indirectly, by Xxxxxx free and
clear of all mortgages, deeds of trust, liens, security interests, pledges,
leases, conditional sale contracts, charges, privileges, easements, rights of
way, reservations, options, rights of first refusal and other encumbrances
("Liens").
Section 5.5 Compliance with Laws; Permits. Except for such matters
as, individually or in the aggregate, has not had and could not reasonably be
expected to have a Xxxxxx Material Adverse Effect and except for matters arising
under Environmental Laws (as defined herein), which are treated exclusively in
Section 5.13:
(a) Neither Xxxxxx nor any Subsidiary of Xxxxxx is in violation of
any applicable law, rule, regulation, code, governmental determination,
order, treaty, convention, governmental certification requirement or other
public limitation, U.S. or non-U.S. (collectively, "Applicable Laws"), and no
claim is pending or, to the knowledge of Xxxxxx, threatened with respect to
any such matters. No condition exists which constitutes, or could reasonably
be expected to constitute, a violation of or deficiency under any Applicable
Law by Xxxxxx or any Subsidiary of Xxxxxx.
(b) Xxxxxx and each Subsidiary of Xxxxxx hold all permits, licenses,
certifications, variations, exemptions, orders, franchises and approvals of
all governmental or regulatory authorities necessary for the lawful conduct
of their respective businesses (the "Xxxxxx Permits"). All Xxxxxx Permits are
in full force and effect and there exists no default thereunder or breach
thereof, and Xxxxxx has no notice or actual knowledge that such Xxxxxx
Permits will not be renewed in the ordinary course after the Effective Time.
No governmental authority has given, or to the knowledge of Xxxxxx threatened
to give, any action to terminate, cancel or reform any Xxxxxx Permit.
(c) Xxxxxx and each Subsidiary of Xxxxxx possess all permits,
licenses, operating authorities, orders, exemptions, franchises, variances,
consents, approvals or other authorizations required for the present
ownership and operation of all its real property or leaseholds ("Xxxxxx Real
Property"). There exists no material default or breach with respect to, and
no party or governmental authority has taken or, to the knowledge of Xxxxxx,
threatened to take, any action to terminate, cancel or reform any such
permit, license, operating authority, order, exemption, franchise, variance,
consent, approval or other authorization pertaining to Xxxxxx Real Property.
Section 5.6 No Conflict.
(a) Neither the execution and delivery by Xxxxxx of this Agreement
nor the consummation by Xxxxxx of the transactions contemplated hereby in
accordance with the terms hereof will (i) subject to the approvals referred to
in Section 5.20, conflict with or result in a
10
breach of any provisions of the certificate of incorporation or bylaws of
Xxxxxx; (ii) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or
amendment, or in a right of termination or cancellation of, or give rise to a
right of purchase under, or accelerate the performance required by, or result in
the creation of any Lien upon any of the properties of Xxxxxx or its
Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in a detriment to Xxxxxx or any of
its Subsidiaries under, any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, license, concession, franchise,
permit, lease, contract, agreement, joint venture or other instrument or
obligation to which Xxxxxx or any of its Subsidiaries is a party, or by which
Xxxxxx or any of its Subsidiaries or any of their properties may be bound or
affected; or (iii) subject to the filings and other matters referred to in
Section 5.6(b), contravene or conflict with or constitute a violation of any
provision of any law, rule, regulation, judgment, order or decree binding upon
or applicable to Xxxxxx or any of its Subsidiaries, except, in the case of
matters described in clause (ii) or (iii), as would not reasonably be expected
to have, individually or in the aggregate, a Xxxxxx Material Adverse Effect.
(b) Neither the execution and delivery by Xxxxxx of this Agreement
nor the consummation by Xxxxxx of the transactions contemplated hereby in
accordance with the terms hereof will require any consent, approval,
qualification or authorization of, or filing or registration with, any court or
governmental or regulatory authority, other than (i) the filing of the
Certificate of Merger provided for in Section 1.3 and (ii) filings required
under the Exchange Act, the Securities Act, or applicable state securities and
"Blue Sky" laws, ((i) through (ii) collectively, the "Regulatory Filings"),
except for any consent, approval, qualification or authorization the failure of
which to obtain and for any filing or registration the failure of which to make
does not and is not reasonably likely to have a Xxxxxx Material Adverse Effect.
Section 5.7 SEC Documents. Xxxxxx has filed with the SEC all
documents (including exhibits and any amendments thereto) required to be so
filed by it since January 1, 2000 pursuant to Sections 13(a), 14(a) and 15(d) of
the Exchange Act, and has made available to Edge each registration statement,
report, proxy statement or information statement (other than preliminary
materials) it has so filed, each in the form (including exhibits and any
amendments thereto) filed with the SEC (collectively, the "Xxxxxx Reports"). As
of its respective date, each Xxxxxx Report (i) complied in all material respects
with the applicable requirements of the Exchange Act and the rules and
regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified or superceded by subsequent filings with the SEC prior to
the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Xxxxxx Reports (including the related notes
and schedules) 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 and fairly presents in all material respects the consolidated
financial position of Xxxxxx and its Subsidiaries as of its date, and each of
the consolidated statements of operations, cash flows and changes in
stockholders' equity included in or incorporated by reference into the Xxxxxx
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, cash flows or changes in
stockholders' equity, as the case may be, of Xxxxxx and its
11
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to (x) such exceptions as may be permitted by Form 10-Q of
the SEC and (y) normal year-end audit adjustments which will not be material in
effect); and said financial statements (including the related notes and
schedules) have been prepared in accordance with generally accepted accounting
principles which have been consistently applied throughout the periods covered
thereby, except as may be noted therein. Except as and to the extent set forth
on the consolidated balance sheet of Xxxxxx and its Subsidiaries included in the
Xxxxxx Reports, including all notes thereto, as of the date of such balance
sheet, neither Xxxxxx nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved against in, a balance
sheet of Xxxxxx or in the notes thereto prepared in accordance with generally
accepted accounting principles consistently applied, other than liabilities or
obligations which have not had and could not reasonably be expected to have,
individually or in the aggregate, a Xxxxxx Material Adverse Effect.
Section 5.8 Litigation. Except as described in the Xxxxxx Reports
filed prior to the date of this Agreement, there are no actions, suits or
proceedings pending against Xxxxxx or any of its Subsidiaries or, to Xxxxxx'x
knowledge, threatened against Xxxxxx or any of its Subsidiaries, at law or in
equity or in any arbitration or similar proceedings, before or by any U.S.
federal, state or non-U.S. court, tribal court, commission, board, bureau,
agency or instrumentality or any U.S. or non-U.S. arbitral or other dispute
resolution body, or any new development in any such existing proceeding, that
are reasonably likely to have, individually or in the aggregate, a Xxxxxx
Material Adverse Effect. The liabilities that are reasonably likely to be
incurred by Xxxxxx in such actions, suits or proceedings do not exceed the
reserves included in the balance sheet of Xxxxxx and its subsidiaries included
in the Xxxxxx Reports by an amount which would have a Xxxxxx Material Adverse
Effect.
Section 5.9 Absence of Certain Changes. From December 31, 2002 to
the date of this Agreement, Xxxxxx has conducted its business only in the
ordinary course and there has not been (i) any event or occurrence that has had
or is reasonably likely to have a Xxxxxx Material Adverse Effect; (ii) any
material change by Xxxxxx or any of its Subsidiaries, when taken as a whole, in
any of its accounting methods, principles or practices or any of its tax
methods, practices or elections; (iii) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of Xxxxxx or any
redemption, purchase or other acquisition of any of its securities; (iv) any
split, combination or reclassification of any capital stock of Xxxxxx or any of
its Subsidiaries 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; (v) any granting, or any commitment or promise to grant, by
Xxxxxx or any of its Subsidiaries to any officer of Xxxxxx or any of its
Subsidiaries of (A) any increase in compensation, except in the ordinary course
of business, including in connection with promotions, consistent with prior
practice or as required by employment agreements in effect as of the date of the
consolidated balance sheet of Xxxxxx and its Subsidiaries included in the Xxxxxx
Reports 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 Xxxxxx, or as
employment, severance or termination agreements in effect as of date of the
consolidated balance sheet of Xxxxxx and its Subsidiaries included in the Xxxxxx
Reports required; (vi) any entry by Xxxxxx or any of its Subsidiaries into any
employment, severance or termination agreement with any officer of Xxxxxx or any
of its Subsidiaries; (vii) any increase in,
12
or any commitment or promise to increase, benefits payable or available under
any pre-existing Xxxxxx Benefit Plan (as defined in Section 5.11), except in
accordance with the pre-existing terms of that Xxxxxx Benefit Plan, any
establishment of, or any commitment or promise to establish, any new Xxxxxx
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; (vii) any damage to or any destruction or
loss of physical properties Xxxxxx or any of its Subsidiaries owns or uses,
whether or not covered by insurance, that in the aggregate have had or
reasonably could be expected to have a Xxxxxx Material Adverse Effect; or (viii)
any reevaluations by Xxxxxx or any of its Subsidiaries of any of their assets
(other than any ceiling test writedown related to adjusting the fair value of
assets as a result of the consideration to be paid pursuant to this Agreement)
which, in accordance with generally accepted accounting principles, Xxxxxx will
reflect in its consolidated financial statements, including any impairment of
assets, and which in the aggregate are material to them. Schedule 5.9 of the
Xxxxxx Disclosure Letter sets forth all severance and termination payments which
will be payable upon the consummation of the Merger and the termination of any
employees of Xxxxxx.
Section 5.10 Taxes.
(a) All tax returns, statements, reports, declarations, estimates
and forms ("Returns") required to be filed by or with respect to Xxxxxx and any
of its Subsidiaries (including any Return required to be filed by an affiliated,
consolidated, combined, unitary or similar group that included Xxxxxx or any of
its Subsidiaries) on or prior to the date hereof have been properly filed on a
timely basis with the appropriate governmental authorities, except to the extent
that any failure to file has not had and could not reasonably be expected to
have, individually or in the aggregate, a Xxxxxx Material Adverse Effect, and
all taxes due with such Returns have been duly paid, or deposited in full on a
timely basis or adequately reserved for in accordance with generally accepted
accounting principles, except to the extent that any failure to pay or deposit
or make adequate provision for the payment of such taxes have not had and could
not reasonably be expected to have, individually or in the aggregate, a Xxxxxx
Material Adverse Effect. Representations made in this Section 5.10 are made to
the knowledge of Xxxxxx to the extent that the representations relate to a
corporation which was, but is not currently, a part of Xxxxxx'x or any
Subsidiary's affiliated, consolidated, combined, unitary or similar group.
(b) Except as could not reasonably be expected to have, individually
or in the aggregate, a Xxxxxx Material Adverse Effect, (i) no audits or other
administrative proceedings or court proceedings are presently pending with
regard to any taxes or Returns of Xxxxxx or any of its Subsidiaries; (ii) no
governmental authority is now asserting in writing any deficiency or claim for
taxes or any adjustment to taxes with respect to which Xxxxxx or any of its
Subsidiaries may be liable which have not been fully paid or finally settled;
and (iii) neither Xxxxxx nor any of its Subsidiaries has any liability for taxes
of any person, except for liabilities for taxes under Treas. Reg. Section
1.1502-6 or any similar provision of state, local, or non-U.S. tax law, except
for taxes of the affiliated group of which Xxxxxx or any of its Subsidiaries is
the common parent within the meaning of Section 1504(a)(1) of the Code, or any
similar provision of state, local, or non-U.S. tax law. As of the date of this
Agreement, neither Xxxxxx nor any of its Subsidiaries has granted any requests,
agreements, consents or waivers to extend the statutory period of
13
limitations applicable to the assessment or collection of any taxes with respect
to any Returns of Xxxxxx or any of its Subsidiaries. Neither Xxxxxx nor any of
its Subsidiaries is a party to an agreement that provides for the payment of any
amount in connection with the Merger that would be reasonably likely to
constitute an "excess parachute payment" within the meaning of Section 280G of
the Code. Neither Xxxxxx nor any of its Subsidiaries is a party to any closing
agreement described in Section 7121 of the Code or any predecessor provision
thereof or any similar agreement under state, local, or non-U.S. tax law.
Neither Xxxxxx nor any of its Subsidiaries is a party to, is bound by or has any
obligation under any tax sharing, allocation or indemnity agreement or any
similar agreement or arrangement. Neither Xxxxxx nor any of its Subsidiaries has
made an election under Section 341(f) of the Code. To the knowledge of Xxxxxx,
Xxxxxx has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code at any time within the past five years.
(c) Neither Xxxxxx nor any of its Subsidiaries knows of any fact or
has taken or failed to take any action that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(d) For purposes of this Agreement, "tax" or "taxes" means all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
accumulated earnings, personal holding company, excess profits, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, disability, capital stock, or windfall profits
taxes, customs duties or other taxes, fees, assessments or governmental charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any taxing authority (U.S. or non-U.S.).
Section 5.11 Employee Benefit Plans.
(a) Section 5.11 of the Xxxxxx Disclosure Letter contains a list of
all Xxxxxx Benefit Plans. The term "Xxxxxx Benefit Plans" means all material
employee benefit plans and other material benefit arrangements, including all
"employee benefit plans" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not U.S.-based
plans, and all other employee benefit, bonus, incentive, deferred compensation,
stock option (or other equity-based), severance, employment, change in control,
welfare (including post-retirement medical and life insurance) and fringe
benefit plans, practices or agreements, whether or not subject to ERISA or
U.S.-based and whether written or oral, sponsored, maintained or contributed to
or required to be contributed to by Xxxxxx or any of its Subsidiaries, to which
Xxxxxx or any of its Subsidiaries is a party or is required to provide benefits
under applicable law or in which any person who is currently, has been or, prior
to the Effective Time, is expected to become an employee of Xxxxxx is a
participant. Xxxxxx will provide Edge, within 30 days after the date hereof,
with true and complete copies of the Xxxxxx Benefit Plans and, for each such
plan, if applicable, the most recent trust agreement, all contracts relating to
such plan with respect to which Xxxxxx or any of its Subsidiaries may have
liability (including, without limitation, insurance contracts, service provider
contracts, subscription and participation agreements, and investment manager
contracts), the most recent Form 5500, the most recent summary plan description
and all summaries of material modifications subsequently prepared, the most
recent funding statement, the most recent annual report and actuarial report (if
applicable), the most recent IRS determination letter (if such plan is intended
to qualify under
14
Section 401(a) of the Code) and any subsequent determination letter application,
the most recent annual audited financial statements and opinion, the most recent
annual and periodic accounting of plan assets, all material communications with
any governmental entity or agency regarding such plan, and all material employee
communications regarding such plan.
(b) Except for such matters as, individually or in the aggregate,
have not had and could not reasonably be expected to have a Xxxxxx Material
Adverse Effect: all applicable reporting and disclosure requirements have been
met with respect to Xxxxxx Benefit Plans; there has been no "reportable event,"
as that term is defined in Section 4043 of ERISA, with respect to Xxxxxx Benefit
Plans subject to Title IV of ERISA for which the 30-day reporting requirement
has not been waived, and the consummation of the transactions contemplated by
this Agreement will not result in such a "reportable event"; to the extent
applicable, the Xxxxxx Benefit Plans comply with the requirements of ERISA, the
Code and the regulations of any applicable jurisdiction (including, without
limitation, for each Xxxxxx Benefit Plan that is a "group health plan", as
defined in Section 607(1) of ERISA or Section 5001(b)(1) of the Code, the
provisions of the Health Insurance Portability and Accountability Act of 1996
contained in the Code and ERISA, and the regulations thereunder, and the
continuation coverage requirements required pursuant to Section 4980B of the
Code and Part 6 of Title I of ERISA and the regulations thereunder, and any
applicable similar state law); any Xxxxxx Benefit Plan intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the IRS as to such plan's qualification under Section 401(a) of the Code
and nothing has occurred since the date of such letter that could reasonably be
expected to cause the loss of such qualification; the Xxxxxx Benefit Plans have
been maintained and operated in accordance with their terms, and, to Xxxxxx'x
knowledge, no person has engaged in any "prohibited transaction," within the
meaning of Section 406 of ERISA or Section 4975 of the Code, which is not exempt
under Section 408 of ERISA or Section 4975 of the Code, respectively, in
relation Xxxxxx Benefit Plans, and there are no breaches of fiduciary duty in
connection with the Xxxxxx Benefit Plans; there are no pending or, to Xxxxxx'x
knowledge, threatened claims against or otherwise involving any Xxxxxx Benefit
Plan, and no suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Xxxxxx Benefit Plan activities) has been
brought against or with respect to any such Xxxxxx Benefit Plan; no Xxxxxx
Benefit Plan is subject to an ongoing audit, investigation, or other
administrative proceeding of the IRS, the Department of Labor or any other
governmental entity or agency, and no Xxxxxx Benefit Plan is subject to any
pending application for administrative relief under any voluntary compliance
program of the IRS, the Department of Labor or any other governmental entity or
agency; all material contributions required to be made as of the date hereof to
the Xxxxxx Benefit Plans have been made or provided for; neither Xxxxxx or any
of its Subsidiaries has any commitment or obligation to establish any new or
additional Xxxxxx Benefit Plan or to increase the benefits under any Xxxxxx
Benefit Plan; with respect to the Xxxxxx Benefit Plans or any "employee pension
benefit plans," as defined in Section 3(2) of ERISA, that are subject to Title
IV of ERISA and have been maintained or contributed to within six years prior to
the Effective Time by Xxxxxx, its Subsidiaries or any trade or business (whether
or not incorporated) which is under common control, or which is treated as a
single employer, with Xxxxxx or any of its Subsidiaries under Section 414(b),
(c), (m) or (o) of the Code (an "ERISA Affiliate"), (i) neither Xxxxxx nor any
of its Subsidiaries has incurred any direct or indirect liability under Title IV
of ERISA in connection with any termination thereof or withdrawal therefrom; and
(ii) there does not exist any accumulated funding deficiency within the meaning
of Section 412 of the Code or Section 302 of ERISA, whether or not waived.
15
(c) Neither Xxxxxx nor any of its Subsidiaries nor any of its ERISA
Affiliates contributes to, or has an obligation to contribute to, and has not
within six years prior to the Effective Time contributed to, or had an
obligation to contribute to, a "multiemployer plan" within the meaning of
Section 3(37) of ERISA, and the execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
benefit plan, policy, arrangement or agreement or any trust or loan (in
connection therewith) that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with respect
to any employee of Xxxxxx or any Subsidiary thereof.
(d) No Xxxxxx Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of Xxxxxx or any Subsidiary of Xxxxxx for periods
extending beyond their retirement or other termination of service other than (i)
coverage mandated by applicable law or (ii) death benefits under any "pension
plan."
(e) Xxxxxx has not granted any Tax Benefit Rights (as defined in the
Assumed Plan) pursuant to Section 7 of the Assumed Plan or any similar rights.
Section 5.12 Labor Matters.
(a) Neither Xxxxxx nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or similar contract, agreement or
understanding with a labor union or similar labor organization. As of the date
of this Agreement, to Xxxxxx'x knowledge, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened.
(b) Except for such matters as have not had and could not reasonably
be expected to have a Xxxxxx Material Adverse Effect, (i) neither Xxxxxx nor any
Subsidiary of Xxxxxx has received any written complaint of any unfair labor
practice or other unlawful employment practice or any written notice of any
material violation of any federal, state or local statutes, laws, ordinances,
rules, regulations, orders or directives with respect to the employment of
individuals by, or the employment practices of, Xxxxxx or any Subsidiary of
Xxxxxx or the work conditions or the terms and conditions of employment and
wages and hours of their respective businesses and (ii) there are no unfair
labor practice charges or other employee related complaints against Xxxxxx or
any Subsidiary of Xxxxxx pending or, to the knowledge of Xxxxxx, threatened,
before any governmental authority by or concerning the employees working in
their respective businesses.
Section 5.13 Environmental Matters.
(a) Xxxxxx and each Subsidiary of Xxxxxx has been and is in
compliance with all applicable orders of any court, governmental authority or
arbitration board or tribunal and any applicable law, ordinance, rule,
regulation or other legal requirement (including common law) related to
protection of the environment ("Environmental Laws") except for such matters as
have not had and could not reasonably be expected to have, individually or in
the aggregate, a Xxxxxx
16
Material Adverse Effect. There are no past or present facts, conditions or
circumstances that interfere with continued compliance by Xxxxxx or any
Subsidiary of Xxxxxx with any Environmental Law, except for any non-compliance
or interference that is not reasonably likely to have, individually or in the
aggregate, a Xxxxxx Material Adverse Effect.
(b) Except for such matters as have not had and could not reasonably
be expected to have, individually or in the aggregate, a Xxxxxx Material Adverse
Effect, no judicial or administrative proceedings or governmental investigations
are pending or, to the knowledge of Xxxxxx, threatened against Xxxxxx or its
Subsidiaries that allege the violation of or seek to impose liability pursuant
to any Environmental Law, and there are no past or present facts, conditions or
circumstances at, on or arising out of, or otherwise associated with, any
current (or, to the knowledge of Xxxxxx or its Subsidiaries, former) businesses,
assets or properties of Xxxxxx or any Subsidiary of Xxxxxx, including but not
limited to on-site or off-site disposal, release or spill of any material,
substance or waste classified, characterized or otherwise regulated as
hazardous, toxic, pollutant, contaminant or words of similar meaning under
Environmental Laws, including petroleum or petroleum products or byproducts
("Hazardous Materials") which violate Environmental Law or are reasonably likely
to give rise to (i) costs, expenses, liabilities or obligations for any cleanup,
remediation, disposal or corrective action under any Environmental Law, (ii)
claims arising for personal injury, property damage or damage to natural
resources, or (iii) fines, penalties or injunctive relief.
(c) Neither Xxxxxx nor any of its Subsidiaries has (i) received any
notice of noncompliance with, violation of, or liability or potential liability
under any Environmental Law or (ii) entered into any consent decree or order or
is subject to any order of any court or governmental authority or tribunal under
any Environmental Law or relating to the cleanup of any Hazardous Materials,
except for any such matters as have not had and could not reasonably be expected
to have a Xxxxxx Material Adverse Effect.
Section 5.14 Intellectual Property. Xxxxxx and its Subsidiaries own
or possess adequate licenses or other valid rights to use all patents, patent
rights, know-how, trade secrets, trademarks, trademark rights and other
proprietary information and other proprietary intellectual property rights used
or held for use in connection with their respective businesses as currently
being conducted, except where the failure to own or possess such licenses and
other rights has not had and could not reasonably be expected to have,
individually or in the aggregate, a Xxxxxx Material Adverse Effect, and, there
are no assertions or claims challenging the validity of any of the foregoing
that are reasonably likely to have, individually or in the aggregate, a Xxxxxx
Material Adverse Effect. The conduct of Xxxxxx'x and its Subsidiaries'
respective businesses as currently conducted does not conflict with any patents,
patent rights, licenses, trademarks, trademark rights, trade names, trade name
rights or copyrights of others that are reasonably likely to have, individually
or in the aggregate, a Xxxxxx Material Adverse Effect. There is no material
infringement of any proprietary right owned by or licensed by or to Xxxxxx or
any of its Subsidiaries that is reasonably likely to have, individually or in
the aggregate, a Xxxxxx Material Adverse Effect.
Section 5.15 Decrees, Etc. Except for such matters as have not had
and could not reasonably be expected to have a Xxxxxx Material Adverse Effect,
(a) no order, writ, fine, injunction, decree, judgment, award or determination
of any court or governmental authority or
17
any arbitral or other dispute resolution body has been issued or entered against
Xxxxxx or any Subsidiary of Xxxxxx that continues to be in effect that affects
the ownership or operation of any of their respective assets or that involves an
amount greater than $100,000, and (b) no criminal order, writ, fine, injunction,
decree, judgment or determination of any court or governmental authority has
been issued against Xxxxxx or any Subsidiary of Xxxxxx.
Section 5.16 Insurance.
(a) Schedule 5.16 of the Xxxxxx Disclosure Letter sets forth a
complete list of all insurance policies maintained by Xxxxxx and its
Subsidiaries, including the name of the issuer, the amount and nature of the
coverage, the amount of the premium and terms of the coverage. All such policies
are in full force and effect as of the date of this Agreement and the premiums
therefore are currently paid.
(b) Except for such matters as have not had and could not reasonably
be expected to have, individually or in the aggregate, a Xxxxxx Material Adverse
Effect, no event relating specifically to Xxxxxx or its Subsidiaries has
occurred that is reasonably likely, after the date of this Agreement, to result
in an upward adjustment in premiums under any insurance policies they maintain.
Excluding insurance policies that have expired and been replaced in the ordinary
course of business, no excess liability or protection and indemnity insurance
policy has been canceled by the insurer within one year prior to the date
hereof, and to Xxxxxx'x knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any such insurance
policy of Xxxxxx or any Subsidiary of Xxxxxx during the period of one year prior
to the date hereof. Prior to the date hereof, no event has occurred, including
the failure by Xxxxxx or any Subsidiary of Xxxxxx to give any notice or
information or by giving any inaccurate or erroneous notice or information,
which materially limits or impairs the rights of Xxxxxx or any Subsidiary of
Xxxxxx under any such excess liability or protection and indemnity insurance
policies.
Section 5.17 No Brokers. Xxxxxx has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Xxxxxx or Edge to pay any finder's fees, brokerage or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby, except that Xxxxxx has
retained X. X. Xxxxxx & Company as its financial advisors, the arrangements with
which have been disclosed in writing to Edge prior to the date hereof.
Section 5.18 Opinion of Financial Advisor. The Board of Directors of
Xxxxxx has received the oral opinion of X. X. Xxxxxx & Company to the effect
that, as of the date of this Agreement, the Merger Ratio is fair, from a
financial point of view, to the holders of Xxxxxx Common Stock. A copy of the
written opinion of X. X. Xxxxxx & Company will be delivered to Edge as soon as
practicable after the date of this Agreement.
Section 5.19 Edge Stock Ownership. Neither Xxxxxx nor any of its
Subsidiaries owns any shares of capital stock of Edge or any other securities
convertible into or otherwise exercisable to acquire shares of capital stock of
Edge.
18
Section 5.20 Vote Required. The only votes of the holders of any
class or series of Xxxxxx capital stock necessary to approve any transaction
contemplated by this Agreement are the affirmative vote in favor of the approval
of the Merger and this Agreement of the holders of at least a majority of the
outstanding shares of Xxxxxx Common Stock.
Section 5.21 Undisclosed Liabilities. Neither Xxxxxx nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
fixed, accrued, contingent or otherwise, except liabilities and obligations that
(i) are disclosed in the Xxxxxx Reports filed prior to the date of this
Agreement, (ii) are referred to in the Xxxxxx Disclosure Letter, or (iii) have
not had and could not reasonably be expected to have, individually or in the
aggregate, a Xxxxxx Material Adverse Effect.
Section 5.22 Certain Contracts
(a) Section 5.22 of the Xxxxxx Disclosure Letter contains a list of
all of the following contracts or agreements (other than those set forth on
an exhibit index in the Xxxxxx Reports filed prior to the date of this
Agreement) to which Xxxxxx or any Subsidiary of Xxxxxx is a party or by which
any of them or their assets is bound as of the date of this Agreement: (i)
any non-competition agreement that purports to limit the manner in which, or
the localities in which, all or any portion of their respective businesses is
conducted, other than any such limitation that is (x) not material to Xxxxxx
and its Subsidiaries, taken as a whole, (y) would not have the effect of
restricting the activities of Edge after the Effective Time and (z) will not
be material to Edge and its Subsidiaries, taken as a whole, following the
Effective Time, (ii) any contract or agreement for Debt with a borrowing
capacity or outstanding Debt of $50,000 or more, (iii) any transaction or
series of similar transactions, since December 31, 2002 or any currently
proposed transaction, or series of transactions, to which Xxxxxx or any of
its Subsidiaries was or is to be a party, in which the amount involved
exceeds $50,000 and in which any person who is currently or was since
December 31, 2002 an employee of Xxxxxx or any of its Subsidiaries at the
level of vice president or above had, or will have, a direct or indirect
material interest or (iv) any "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC) (all contracts or agreements of
the types described in clauses (i) through (iv) being referred to herein as
"Xxxxxx Material Contracts").
(b) As of the date of this Agreement, each Xxxxxx Material Contract
is in full force and effect, and Xxxxxx and each of its Subsidiaries have in
all material respects performed all obligations required to be performed by
them to date under each Xxxxxx Material Contract to which it is a party,
except where such failure to be binding or in full force and effect or such
failure to perform does not and is not reasonably likely to create,
individually or in the aggregate, a Xxxxxx Material Adverse Effect. Except
for such matters as do not and are not reasonably likely to have a Xxxxxx
Material Adverse Effect, neither Xxxxxx nor any of its Subsidiaries (x) knows
of, or has received written notice of, any breach of or violation or default
under (nor, to the knowledge of Xxxxxx, does there exist any condition which
with the passage of time or the giving of notice or both would result in such
a violation or default under) any Xxxxxx Material Contract or (y) has
received written notice of the desire of the other party or parties to any
such Xxxxxx
19
Material Contract to exercise any rights such party has to cancel, terminate
or repudiate such contract or exercise remedies thereunder. Each Xxxxxx
Material Contract is enforceable by Xxxxxx or a Subsidiary of Xxxxxx in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights and general principles of equity, except where such unenforceability
is not reasonably likely to create, individually or in the aggregate, a
Xxxxxx Material Adverse Effect.
Section 5.23 [Intentionally left blank].
Section 5.24 Improper Payments. No bribes, kickbacks or other
improper payments have been made by Xxxxxx or any Subsidiary of Xxxxxx or agent
of any of them in connection with the conduct of their respective businesses or
the operation of their respective assets, and neither Xxxxxx, any Subsidiary of
Xxxxxx nor any agent of any of them has received any such payments from vendors,
suppliers or other persons, where any such payment made or received is
reasonably likely to have a Xxxxxx Material Adverse Effect.
Section 5.25 Takeover Statutes; Rights Plans. The execution, delivery
and performance of this Agreement and the Stockholder Agreements and the
consummation of the transactions contemplated hereby and thereby will not cause
to be applicable to Xxxxxx Section 203 of the DGCL or any similar provision (a
"Takeover Statute") (after giving effect to any actions that will be taken prior
to the Effective Time). Xxxxxx does not have any preferred share purchase rights
plan or similar rights plan in effect.
Section 5.26 Title to Properties; Liens and Encumbrances. Except as
would not have, individually or in the aggregate, a Xxxxxx Material Adverse
Effect, Xxxxxx and its Subsidiaries have defensible title to all of the
properties and assets, both real and personal, tangible and intangible, that
they purport to own, including the properties and assets reflected in the Xxxxxx
Reports and including the lands and leases and associated net revenue and
working interests reflected in the Xxxxxx Reserve Reports (as defined herein),
other than dispositions or expirations in the ordinary course of business since
the date thereof, and they are not subject to any Lien, except routine statutory
liens securing liabilities not yet due and payable and minor liens,
encumbrances, restrictions, exceptions, reservations, limitations and other
imperfections (but in no event liens securing indebtedness for borrowed money)
that do not materially detract from the value of the specific asset affected or
the present use of such asset and except (A) Liens for taxes not yet due and
payable or, if payable, that are being contested in good faith in the ordinary
course of business, (B) statutory Liens (including materialmen's, mechanic's,
repairmen's, landlord's and other similar liens) arising in the ordinary course
of business to secure payments not yet due and payable or, if payable, that are
being contested in good faith in the ordinary course of business, (C) such
easements, restrictions, reservations or other encumbrances, as well as
imperfections or irregularities of title, if any, as do not individually or in
the aggregate interfere materially with the operation, or materially interfere
with the value or use, of such property or asset, (D) obligations or duties to
any municipality or public authority with respect to any franchise, grant,
license or permit and all applicable laws, rules, regulations and orders of any
governmental authority, (E) all lessors' royalties, overriding royalties, net
profits interests, production payments, carried interests, reversionary
interests and other burdens on or deductions from the proceeds of production
that do not operate to (x) reduce the net
20
revenue interest of Xxxxxx or its Subsidiaries below that purported to be owned
by Xxxxxx or its Subsidiaries or as set forth in the Xxxxxx Reserve Report, (y)
increase the proportionate share of costs and expenses of leasehold operations
attributable to or to be borne by the working interest of Xxxxxx or its
Subsidiaries above that purported to be owned by Xxxxxx or its Subsidiaries or
as set forth in the Xxxxxx Reserve Report, without a proportionate increase in
the net revenue interest of Xxxxxx or its Subsidiaries or (z) increase the
working interest of Xxxxxx or its Subsidiaries above that purported to be owned
by Xxxxxx or its Subsidiaries or as set forth in the Xxxxxx Reserve Report,
without a proportionate increase in the net revenue interest of Xxxxxx or its
Subsidiaries (F) the terms and conditions of joint operating agreements, (G) all
rights to consent by, required notices to, and filings with or other actions by
governmental or tribal entities, if any, in connection with the change of
ownership or control of an interest in federal, state, tribal or other domestic
governmental oil and gas leases, if the same are customarily obtained subsequent
to such change of ownership or control, but only insofar as such consents,
notices, filings and other actions relate to the transactions contemplated by
this Agreement, (H) any preferential purchase rights, (I) required third party
consents to assignment, (J) conventional rights of reassignment prior to
abandonment and (K) the terms and provisions of oil and gas leases, unit
agreements, pooling agreements, communication agreements and other documents
creating interests comprising the oil and gas properties; insofar and only
insofar as such terms and provisions do not operate to (x) reduce the net
revenue interest of Xxxxxx or its Subsidiaries below that purported to be owned
by Xxxxxx or its Subsidiaries or as set forth in the Xxxxxx Reserve Report, (y)
increase the proportionate share of costs and expenses of leasehold operations
attributable to or to be borne by the working interest of Xxxxxx or its
Subsidiaries above that purported to be owned by Xxxxxx or its Subsidiaries or
as set forth in the Xxxxxx Reserve Report without a proportionate increase in
the net revenue interest of Xxxxxx or its Subsidiaries or (z) increase the
working interest of Xxxxxx or its Subsidiaries above that purported to be owned
by Xxxxxx or its Subsidiaries or as set forth in the Xxxxxx Reserve Report
without a proportionate increase in the net revenue interest of Xxxxxx or its
Subsidiaries. Section 5.26 of the Xxxxxx Disclosure Letter lists the current
projects and properties in which either Xxxxxx or its Subsidiaries have an
interest and the specific interests which Xxxxxx or its Subsidiaries own in each
project or property. Section 5.26 of the Xxxxxx Disclosure Letter lists the
current projects and properties in which both (i) Xxxxxx or its Subsidiaries and
(ii) Eagle Investments, Inc. have an interest and the specific interest that
Eagle Investments, Inc. owns in each project or property.
Section 5.27 Reserve Report. The historical information supplied by
Xxxxxx to Xxxxxx and Xxxxx, Ltd., independent petroleum engineers (the "Xxxxxx
Petroleum Engineers"), underlying the estimates of the reserves of Xxxxxx and
its Subsidiaries as of December 31, 2002 in the letter dated January 16, 2003
and delivered by the Xxxxxx Petroleum Engineers to Xxxxxx (the "Xxxxxx Reserve
Report"), including, without limitation, production volumes, sales prices for
production, contractual pricing provisions under oil or gas sales or marketing
contracts or under hedging arrangements, costs of operations and development,
and working interest and net revenue information relating to Xxxxxx'x and its
Subsidiaries' ownership interests in properties, was true and correct in all
material respects on the date of such Xxxxxx Reserve Report; the estimates of
future capital expenditures and other future exploration and development costs
supplied to the Xxxxxx Petroleum Engineers were prepared in good faith and with
a reasonable basis; to the best of Xxxxxx'x or its Subsidiaries knowledge, the
Xxxxxx Petroleum Engineers were, as of the date of the Xxxxxx Reserve Report
prepared by them, and are, as of the date hereof, independent petroleum
engineers with respect to Xxxxxx and it Subsidiaries; other than normal
21
production of reserves and intervening spot market product price fluctuations,
and except as disclosed in the Xxxxxx Reports, Xxxxxx is not aware of any facts
or circumstances that would result in a materially adverse change in the
reserves in the aggregate, or the aggregate present value of future net cash
flows therefrom, as described in the Xxxxxx Reports and as reflected in the
Xxxxxx Reserve Report; estimates of such reserves and the present value of the
future net cash flows therefrom as described in the Xxxxxx Reports and reflected
in the Xxxxxx Reserve Report included in the Xxxxxx Reports comply in all
material respects to the applicable requirements of the rules and regulations
under the Exchange Act. A true and correct copy of the Xxxxxx Reserve Report has
been provided to Edge.
Section 5.28 Gas Contracts. Except as set forth in Section 5.28 of
the Xxxxxx Disclosure Letter, Xxxxxx and its Subsidiaries, as of the date
hereof, (a) are not obligated in any material respect by virtue of any
prepayment made under any contract containing a "take-or-pay" or "prepayment"
provision or under any similar agreement to deliver hydrocarbons produced from
or allocated to any of Xxxxxx'x consolidated oil and gas properties at some
future date without receiving full payment therefor at the time of delivery, and
(b) have not produced gas, in any material amount, subject to, and none of
Xxxxxx'x consolidated oil and gas properties is subject to, balancing rights of
third parties or subject to balancing duties under governmental requirements,
except as to such matters for which Xxxxxx has established monetary reserves
adequate in amount in accordance with generally accepted accounting principles
to satisfy such obligations and has segregated such reserves from its other
accounts.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
OF EDGE AND MERGER SUB
Except as set forth in the disclosure letter delivered to Xxxxxx by Edge
at or prior to the execution hereof (the "Edge Disclosure Letter") and which
either makes reference to the particular subsection of this Agreement to which
exception is being taken or for which the disclosure in the Edge Disclosure
Letter is sufficiently obvious on its face to give Xxxxxx reasonable notice that
it applies as an exception to another representation and warranty in this
Article 6, Edge and Merger Sub, jointly and severally, represent and warrant to
Xxxxxx that:
Section 6.1 Existence; Good Standing; Corporate Authority. Each of
Edge and Merger Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation. Edge is duly
qualified to do business and, to the extent such concept or similar concept
exists in the relevant jurisdiction, is in good standing under the laws of any
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified has not had, and could
not reasonably be expected to have, individually or in the aggregate, an Edge
Material Adverse Effect (as defined in Section 10.9). Edge has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted. The copies of the certificate of
incorporation and bylaws of Edge and Merger Sub previously made available to
Xxxxxx are true and correct and contain all amendments as of the date hereof.
22
Section 6.2 Authorization, Validity and Effect of Agreements. Each
of Edge and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement and all other agreements and documents
contemplated hereby (including the Stockholder Agreements) to which it is a
party and to consummate the transactions this Agreement and those other
agreements and documents contemplate. The consummation by each of Edge and
Merger Sub of the transactions contemplated hereby, including the issuance by
Edge of shares of Edge Common Stock pursuant to the Merger, have been duly
authorized by all requisite corporate action on behalf of Edge, other than the
approvals referred to in Section 6.20. Each of Edge and Merger Sub has duly
executed and delivered this Agreement. This Agreement constitutes the valid and
legally binding obligation of Edge and Merger Sub, enforceable against Edge or
Merger Sub, as applicable, in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
Section 6.3 Capitalization. The authorized capital stock of Edge
consists of 25,000,000 shares of Edge Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share ("Edge Preferred Stock"). As of the
date of this Agreement, there were (i) 9,498,016 outstanding shares of Edge
Common Stock, (ii) 1,148,550 shares of Edge Common Stock reserved for issuance
upon the exercise of outstanding Edge options, (iii) 104,136 shares of Edge
Common Stock reserved for the issuance of restricted stock which is subject to
vesting, (iv) 420,000 shares of Edge Common Stock reserved for issuance upon the
exercise of outstanding Edge warrants, and (v) no outstanding shares of Edge
Preferred Stock. All such issued and outstanding shares of Edge Common Stock are
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. The shares of Edge Common Stock to be issued in connection
with the Merger, when issued in accordance with this Agreement, will be validly
issued, fully paid, nonassessable and free of preemptive rights. As of the date
of this Agreement, except as set forth in this Section 6.3, there are no
outstanding shares or capital stock, and there are no options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
which may obligate Edge or any of its Subsidiaries to issue, transfer or sell
any shares of capital stock or other voting securities of Edge or any of its
Subsidiaries. Edge has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Edge on any matter.
Section 6.4 Subsidiaries.
(a) Each of Edge's Significant Subsidiaries is a corporation or
other legal entity duly organized, validly existing and, to the extent such
concept or similar concept exists in the relevant jurisdiction, in good standing
under the laws of its jurisdiction of incorporation or organization, has the
corporate or other entity power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing (where applicable) in each
jurisdiction in which the ownership, operation or lease of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing has not had, and
could not reasonably be expected to have, an Edge Material Adverse Effect. As of
the date of this Agreement, all of the outstanding shares of capital stock of,
or other ownership interests
23
in, each of Edge's Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable, and are owned, directly or indirectly, by Edge free and clear
of all Liens.
(b) Merger Sub. All of the outstanding capital stock of Merger Sub
is owned directly by Edge, and Merger Sub has been formed solely for the purpose
of engaging in the transactions contemplated hereby and, as of the Effective
Time, will not have engaged in any activities other than in connection with the
transactions contemplated by this Agreement. Immediately prior to the Effective
Time, Merger Sub will have 100 outstanding shares of its common stock, par value
$.01 per share.
Section 6.5 Compliance with Laws; Permits. Except for such matters
as, individually or in the aggregate, has not had and could not reasonably be
expected to have an Edge Material Adverse Effect and except for matters arising
under Environmental Laws, which are treated exclusively in Section 6.13:
(a) Neither Edge nor any Subsidiary of Edge is in violation of any
Applicable Laws, and no claim is pending or, to the knowledge of Edge,
threatened with respect to any such matters. No condition exists which
constitutes, or could reasonably be expected to constitute, a violation of or
deficiency under any Applicable Law by Edge or any Subsidiary of Edge.
(b) Edge and each Subsidiary of Edge hold all permits, licenses,
certifications, variations, exemptions, orders, franchises and approvals of
all governmental or regulatory authorities necessary for the lawful conduct
of their respective businesses (the "Edge Permits"). All Edge Permits are in
full force and effect and there exists no default thereunder or breach
thereof, and Edge has no notice or actual knowledge that such Edge Permits
will not be renewed in the ordinary course after the Effective Time. No
governmental authority has given, or to the knowledge of Edge threatened to
give, any action to terminate, cancel or reform any Edge Permit.
(c) Edge and each Subsidiary of Edge possess all permits, licenses,
operating authorities, orders, exemptions, franchises, variances, consents,
approvals or other authorizations required for the present ownership and
operation of all its real property or leaseholds ("Edge Real Property").
There exists no material default or breach with respect to, and no party or
governmental authority has taken or, to the knowledge of Edge, threatened to
take, any action to terminate, cancel or reform any such permit, license,
operating authority, order, exemption, franchise, variance, consent, approval
or other authorization pertaining to the Edge Real Property.
Section 6.6 No Conflict.
(a) Neither the execution and delivery by Edge and Merger Sub of
this Agreement nor the consummation by Edge and Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will (i) subject to the
approvals referred to in Section 6.20, conflict with or result in a breach of
any provisions of the certificate of incorporation or bylaws of Edge or Merger
Sub; (ii) violate, or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would
24
constitute a default) under, or result in the termination or in a right of
termination, amendment or cancellation of, or give rise to a right of purchase
under or accelerate the performance required by, or result in the creation of
any Lien upon any of the properties of Edge or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, or
otherwise result in a detriment to Edge or any of its Subsidiaries under, any of
the terms, conditions or provisions of, any note, bond, mortgage, indenture,
deed of trust, license, concession, franchise, permit, lease, contract,
agreement, joint venture or other instrument or obligation to which Edge or any
of its Subsidiaries is a party, or by which Edge or any of its Subsidiaries or
any of their properties may be bound or affected; or (iii) subject to the
filings and other matters referred to in Section 6.6(b), contravene or conflict
with or constitute a violation of any provision of any law, rule, regulation,
judgment, order or decree binding upon or applicable to Edge or any of its
Subsidiaries, except, in the case of matters described in clause (ii) or (iii),
as would not reasonably be expected to have, individually or in the aggregate,
an Edge Material Adverse Effect.
(b) Neither the execution and delivery by Edge or Merger Sub of this
Agreement nor the consummation by Edge or Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval, qualification or authorization of, or filing or registration
with, any court or governmental or regulatory authority, other than the
Regulatory Filings and the filing of a listing application with The Nasdaq Stock
Market, Inc. ("Nasdaq") pursuant to Section 7.9, except for any consent,
approval, qualification or authorization the failure of which to obtain and for
any filing or registration the failure of which to make does not and is not
reasonably likely to have an Edge Material Adverse Effect.
Section 6.7 SEC Documents. Edge has filed with the SEC all documents
(including exhibits and any amendments thereto) required to be so filed by it
since January 1, 2000 pursuant to Sections 13(a), 14(a) and 15(d) of the
Exchange Act, and has made available to Xxxxxx each registration statement,
report, proxy statement or information statement (other than preliminary
materials) it has so filed, each in the form (including exhibits and any
amendments thereto) filed with the SEC (collectively, the "Edge Reports"). As of
its respective date, each Edge Report (i) complied in all material respects in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified or superceded by subsequent filings with the SEC prior to
the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Edge Reports (including the related notes and
schedules) 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 and fairly presents in all material respects the consolidated
financial position of Edge and its Subsidiaries as of its date, and each of the
consolidated statements of operations, cash flows and changes in stockholders'
equity included in or incorporated by reference into the Edge Reports (including
any related notes and schedules) fairly presents in all material respects the
results of operations, cash flows or changes in stockholders' equity, as the
case may be, of Edge and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to (x) such exceptions as may be
permitted by Form 10-Q of the SEC and (y) normal year-end audit adjustments
which will not be material in effect); and said financial statements (including
the
25
related notes and schedules) have been prepared in accordance with generally
accepted accounting principles which have been consistently applied throughout
the periods covered thereby, except as may be noted therein. Except as and to
the extent set forth on the consolidated balance sheet of Edge and its
Subsidiaries included in the most recent Edge Report filed prior to the date of
this Agreement that includes such a balance sheet, including all notes thereto,
as of the date of such balance sheet, neither Edge nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of Edge or in the notes thereto prepared in
accordance with generally accepted accounting principles consistently applied,
other than liabilities or obligations which have not had and could not
reasonably be expected to have, individually or in the aggregate, an Edge
Material Adverse Effect.
Section 6.8 Litigation. Except as described in the Edge Reports
filed prior to the date of this Agreement, there are no actions, suits or
proceedings pending against Edge or any of its Subsidiaries or, to Edge's
knowledge, threatened against Edge or any of its Subsidiaries, at law or in
equity or in any arbitration or similar proceedings, before or by any U.S.
federal, state or non-U.S. court, tribal court, commission, board, bureau,
agency or instrumentality or any U.S. or non-U.S. arbitral or other dispute
resolution body or any new development in any such existing proceeding, that are
reasonably likely to have, individually or in the aggregate, an Edge Material
Adverse Effect. The liabilities that are reasonably likely to be incurred by
Edge in such actions, suits or proceedings do not exceed the reserves included
in the balance sheet included in the most recent Edge Report filed prior to the
date of this Agreement that includes a balance sheet by an amount which would
have an Edge Material Adverse Effect.
Section 6.9 Absence of Certain Changes. From December 31, 2002 to
the date of this Agreement, Edge has conducted its business only in the ordinary
course and there has not been (i) any event or occurrence that has had or is
reasonably likely to have an Edge Material Adverse Effect; (ii) any material
change by Edge or any of its Subsidiaries, when taken as a whole, in any of its
accounting methods, principles or practices or any of its tax methods, practices
or elections; (iii) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Edge or any redemption, purchase
or other acquisition of any of its securities; (iv) any split, combination or
reclassification of any capital stock of Edge or any of its Subsidiaries 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; (v) any
granting, or any commitment or promise to grant, by Edge or any of its
Subsidiaries to any officer of Edge or any of its Subsidiaries of (A) any
increase in compensation, except in the ordinary course of business, including
in connection with promotions, consistent with prior practice or as required by
employment agreements in effect as of the date of the consolidated balance sheet
of Edge and its Subsidiaries included in the Edge Reports 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 Edge, or as employment, severance
or termination agreements in effect as of the date of the consolidated balance
sheet of Edge and its Subsidiaries included in the Edge Reports required; (vi)
any entry by Edge or any of its Subsidiaries into any employment, severance or
termination agreement with any officer of Edge or any of its Subsidiaries; (vii)
any increase in, or any commitment or promise to increase, benefits payable or
available under any pre-existing Edge Benefit Plan (as defined in Section 6.11),
except in accordance with the pre-existing terms
26
of that Edge Benefit Plan, any establishment of, or any commitment or promise to
establish, any new Edge 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; (vii)
any damage to or any destruction or loss of physical properties Edge or any of
its Subsidiaries owns or uses, whether or not covered by insurance, that in the
aggregate have had or reasonably could be expected to have an Edge Material
Adverse Effect; or (viii) any reevaluations by Edge or any of its Subsidiaries
of any of their assets which, in accordance with generally accepted accounting
principles, Edge will reflect in its consolidated financial statements,
including any impairment of assets, and which in the aggregate are material to
them.
Section 6.10 Taxes.
(a) All Returns required to be filed by or with respect to Edge and
any of its Subsidiaries (including any Return required to be filed by an
affiliated, consolidated, combined, unitary or similar group that included Edge
or any of its Subsidiaries) on or prior to the date hereof have been properly
filed on a timely basis with the appropriate governmental authorities, except to
the extent that any failure to file has not had and could not reasonably be
expected to have, individually or in the aggregate, an Edge Material Adverse
Effect, and all taxes due with such Returns have been duly paid, or deposited in
full on a timely basis or adequately reserved for in accordance with generally
accepted accounting principles, except to the extent that any failure to pay or
deposit or make adequate provision for the payment of such taxes have not had
and could not reasonably be expected to have, individually or in the aggregate,
an Edge Material Adverse Effect. Representations made in this Section 6.10 are
made to the knowledge of Edge to the extent that the representations relate to a
corporation which was, but is not currently, a part of Edge's or any
Subsidiary's affiliated, consolidated, combined, unitary or similar group.
(b) Except as could not reasonably be expected to have, individually
or in the aggregate, an Edge Material Adverse Effect, (i) no audits or other
administrative proceedings or court proceedings are presently pending with
regard to any taxes or Returns of Edge or any of its Subsidiaries; (ii) no
governmental authority is now asserting in writing any deficiency or claim for
taxes or any adjustment to taxes with respect to which Edge or any of its
Subsidiaries may be liable which have not been fully paid or finally settled;
and (iii) neither Edge nor any of its Subsidiaries has any liability for taxes
of any other person, except for liabilities for taxes under Treas. Reg. Section
1.1502-6 or any similar provision of state, local, or non-U.S. tax law, except
for taxes of the affiliated group of which Edge or any of its Subsidiaries is
the common parent, within the meaning of Section 1504(a)(1) of the Code, or any
similar provision of state, local, or non-U.S. tax law. As of the date of this
Agreement, neither Edge nor any of its Subsidiaries has granted any requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment or collection of any taxes with respect to any
Returns of Edge or any of its Subsidiaries. Neither Edge nor any of its
Subsidiaries is a party to an agreement that provides for the payment of any
amount in connection with the Merger that would be reasonably likely to
constitute an "excess parachute payment" within the meaning of Section 280G of
the Code. Neither Edge nor any of its Subsidiaries is a party to any closing
agreement described in Section 7121 of the Code or any predecessor provision
thereof or any similar agreement under state, local, or non-U.S. tax law.
Neither Edge nor any of its
27
Subsidiaries is a party to, is bound by or has any obligation under any tax
sharing, allocation or indemnity agreement or any similar agreement or
arrangement. Neither Edge nor any of its Subsidiaries has made an election under
Section 341(f) of the Code. To the knowledge of Edge, Edge has not been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code at any time within the past five years.
(c) Neither Edge nor any of its Subsidiaries knows of any fact or
has taken or failed to take any action that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
Section 6.11 Employee Benefit Plans.
(a) Section 6.11 of the Edge Disclosure Letter contains a list of
all Edge Benefit Plans. The term "Edge Benefit Plans" means all material
employee benefit plans and other material benefit arrangements, including all
"employee benefit plans" as defined in Section 3(3) of ERISA, whether or not
U.S.-based plans, and all other material employee benefit, bonus, incentive,
deferred compensation, stock option (or other equity-based), severance,
employment, change in control, welfare (including post-retirement medical and
life insurance) and fringe benefit plans, practices or agreements, whether or
not subject to ERISA or U.S.-based and whether written or oral, sponsored,
maintained or contributed to or required to be contributed to by Edge or any of
its Subsidiaries, to which Edge or any of its Subsidiaries is a party or is
required to provide benefits under applicable law or in which any person who is
currently, has been or, prior to the Effective Time, is expected to become an
employee of Edge is a participant. Edge will provide Xxxxxx, within 30 days
after the date hereof, with true and complete copies of the Edge Benefit Plans
and, for each such plan, if applicable, the most recent trust agreement, all
contracts relating to such plan with respect to which Edge or any of its
Subsidiaries may have liability (including, without limitation, insurance
contracts, service provider contracts, subscription and participation
agreements, and investment manager contracts), the most recent Form 5500, the
most recent summary plan description and all summaries of material modifications
subsequently prepared, the most recent funding statement, the most recent annual
report and actuarial report (if applicable), the most recent IRS determination
letter (if such plan is intended to qualify under Section 401(a) of the Code)
and any subsequent determination letter application, the most recent annual
audited financial statements and opinion, the most recent annual and periodic
accounting of plan assets, all material communications with any governmental
entity or agency regarding such plan, and all material employee communications
regarding such plan.
(b) Except for such matters as, individually or in the aggregate,
have not had and could not reasonably be expected to have an Edge Material
Adverse Effect: all applicable reporting and disclosure requirements have been
met with respect to Edge Benefit Plans; there has been no "reportable event," as
that term is defined in Section 4043 of ERISA, with respect to Edge Benefit
Plans subject to Title IV of ERISA for which the 30-day reporting requirement
has not been waived, and the consummation of the transactions contemplated by
this Agreement will not result in such a "reportable event"; to the extent
applicable, Edge Benefit Plans comply with the requirements of ERISA, the Code
and the regulations of any applicable jurisdiction (including, without
limitation, for each Edge Benefit Plan that is a "group health plan", as defined
in Section 607(1) of ERISA or Section 5001(b)(1) of the Code, the provisions of
the
28
Health Insurance Portability and Accountability Act of 1996 contained in the
Code and ERISA, and the regulations thereunder, and the continuation coverage
requirements required pursuant to Section 4980B of the Code and Part 6 of Title
I of ERISA and the regulations thereunder, and any applicable similar state
law); any Edge Benefit Plan intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the IRS as to such
plan's qualification under Section 401(a) of the Code and nothing has occurred
since the date of such letter that could reasonably be expected to cause the
loss of such qualification; the Edge Benefit Plans have been maintained and
operated in accordance with their terms, and, to Edge's knowledge, no person has
engaged in any "prohibited transaction," within the meaning of Section 406 of
ERISA or Section 4975 of the Code, which is not exempt under Section 408 of
ERISA or Section 4975 of the Code, respectively, in relation to the Edge Benefit
Plans, and there are no breaches of fiduciary duty in connection with Edge
Benefit Plans; there are no pending or, to Edge's knowledge, threatened claims
against or otherwise involving any Edge Benefit Plan, and no suit, action or
other litigation (excluding claims for benefits incurred in the ordinary course
of Edge Benefit Plan activities) has been brought against or with respect to any
such Edge Benefit Plan; no Edge Benefit Plan is subject to an ongoing audit,
investigation, or other administrative proceeding of the IRS, the Department of
Labor or any other governmental entity or agency, and no Edge Benefit Plan is
subject to any pending application for administrative relief under any voluntary
compliance program of the IRS, the Department of Labor or any other governmental
entity or agency; all material contributions required to be made as of the date
hereof to the Edge Benefit Plans have been made or provided for; neither Edge or
any of its Subsidiaries has any commitment or obligation to establish any new or
additional Edge Benefit Plan or to increase the benefits under any Edge Benefit
Plan; with respect to Edge Benefit Plans or any "employee pension benefit
plans," as defined in Section 3(2) of ERISA, that are subject to Title IV of
ERISA and have been maintained or contributed to within six years prior to the
Effective Time by Edge, its Subsidiaries or any ERISA Affiliate, (i) neither
Edge nor any of its Subsidiaries has incurred any direct or indirect liability
under Title IV of ERISA in connection with any termination thereof or withdrawal
therefrom; and (ii) there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA, whether
or not waived.
(c) Neither Edge nor any of its Subsidiaries nor any of its ERISA
Affiliates contributes to, or has an obligation to contribute to, and has not
within six years prior to the Effective Time contributed to, or had an
obligation to contribute to, a "multiemployer plan" within the meaning of
Section 3(37) of ERISA, and the execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
benefit plan, policy, arrangement or agreement or any trust or loan (in
connection therewith) that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with respect
to any employee of Edge or any Subsidiary thereof.
(d) No Edge Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of Edge or any Subsidiary of Edge for periods
extending beyond their retirement or other termination of service other than (i)
coverage mandated by applicable law or (ii) death benefits under any "pension
plan".
29
Section 6.12 Labor Matters.
(a) Neither Edge nor any of its Subsidiaries is a party to, or bound
by, any collective bargaining agreement or similar contract, agreement or
understanding with a labor union or similar labor organization. As of the date
of this Agreement, to Edge's knowledge, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened.
(b) Except for such matters as have not had and could not reasonably
be expected to have an Edge Material Adverse Effect, (i) neither Edge nor any
Subsidiary of Edge has received any written complaint of any unfair labor
practice or other unlawful employment practice or any written notice of any
material violation of any federal, state or local statutes, laws, ordinances,
rules, regulations, orders or directives with respect to the employment of
individuals by, or the employment practices of, Edge or any Subsidiary of Edge
or the work conditions or the terms and conditions of employment and wages and
hours of their respective businesses and (ii) there are no unfair labor practice
charges or other employee related complaints against Edge or any Subsidiary of
Edge pending or, to the knowledge of Edge, threatened, before any governmental
authority by or concerning the employees working in their respective businesses.
Section 6.13 Environmental Matters.
(a) Edge and each Subsidiary of Edge has been and is in compliance
with all Environmental Laws except for such matters as have not had and could
not reasonably be expected to have, individually or in the aggregate, an Edge
Material Adverse Effect. There are no past or present facts, conditions or
circumstances that interfere with continued compliance by Edge or any Subsidiary
of Edge with any Environmental Law, except for any non-compliance or
interference that is not reasonably likely to have, individually or in the
aggregate, an Edge Material Adverse Effect.
(b) Except for such matters as have not had and could not reasonably
be expected to have, individually or in the aggregate, an Edge Material Adverse
Effect, no judicial or administrative proceedings or governmental investigations
are pending or, to the knowledge of Edge, threatened against Edge or its
Subsidiaries that allege the violation of or seek to impose liability pursuant
to any Environmental Law, and there are no past or present facts, conditions or
circumstances at, on or arising out of, or otherwise associated with, any
current (or, to the knowledge of Edge or its Subsidiaries, former) businesses,
assets or properties of Edge or any Subsidiary of Edge, including but not
limited to on-site or off-site disposal, release or spill of any Hazardous
Materials which violate Environmental Law or are reasonably likely to give rise
to (i) costs, expenses, liabilities or obligations for any cleanup, remediation,
disposal or corrective action under any Environmental Law, (ii) claims arising
for personal injury, property damage or damage to natural resources, or (iii)
fines, penalties or injunctive relief.
(c) Neither Edge nor any of its Subsidiaries has (i) received any
notice of noncompliance with, violation of, or liability or potential liability
under any Environmental Law or (ii) entered into any consent decree or order or
is subject to any order of any court or governmental authority or tribunal under
any Environmental Law or relating to the cleanup of
30
any Hazardous Materials, except for any such matters as have not had and could
not reasonably be expected to have an Edge Material Adverse Effect.
Section 6.14 Intellectual Property. Edge and its Subsidiaries own or
possess adequate licenses or other valid rights to use all patents, patent
rights, know-how, trade secrets, trademarks, trademark rights and other
proprietary information and other proprietary intellectual property rights used
or held for use in connection with their respective businesses as currently
being conducted, except where the failure to own or possess such licenses and
other rights has not had and could not reasonably be expected to have,
individually or in the aggregate, an Edge Material Adverse Effect, and there are
no assertions or claims challenging the validity of any of the foregoing that
are reasonably likely to have, individually or in the aggregate, an Edge
Material Adverse Effect. The conduct of Edge's and its Subsidiaries' respective
businesses as currently conducted does not conflict with any patents, patent
rights, licenses, trademarks, trademark rights, trade names, trade name rights
or copyrights of others that are reasonably likely to have, individually or in
the aggregate, an Edge Material Adverse Effect. There is no material
infringement of any proprietary right owned by or licensed by or to Edge or any
of its Subsidiaries that is reasonably likely to have, individually or in the
aggregate, an Edge Material Adverse Effect.
Section 6.15 Decrees, Etc. Except for such matters as have not had
and could not reasonably be expected to have an Edge Material Adverse Effect,
(a) no order, writ, fine, injunction, decree, judgment, award or determination
of any court or governmental authority or any arbitral or other dispute
resolution body has been issued or entered against Edge or any Subsidiary of
Edge that continues to be in effect that affects the ownership or operation of
any of their respective assets or that involves an amount greater than $100,000,
and (b) no criminal order, writ, fine, injunction, decree, judgment or
determination of any court or governmental authority has been issued against
Edge or any Subsidiary of Edge.
Section 6.16 Insurance.
(a) Schedule 6.16 of the Edge Disclosure Letter sets forth a
complete list of all insurance policies maintained by Edge and its Subsidiaries,
including the name of the issuer, the amount and nature of the coverage, the
amount of the premium and terms of the coverage. All such policies are in full
force and effect as of the date of this Agreement and the premiums therefore are
currently paid.
(b) Except for such matters as have not had and could not reasonably
be expected to have, individually or in the aggregate, an Edge Material Adverse
Effect, no event relating specifically to Edge or its Subsidiaries has occurred
that is reasonably likely, after the date of this Agreement, to result in an
upward adjustment in premiums under any insurance policies they maintain.
Excluding insurance policies that have expired and been replaced in the ordinary
course of business, no excess liability or protection and indemnity insurance
policy has been canceled by the insurer within one year prior to the date
hereof, and to Edge's knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any such insurance
policy of Edge or any Subsidiary of Edge during the period of one year prior to
the date hereof. Prior to the date hereof, no event has occurred, including the
failure by Edge or any Subsidiary of Edge to give any notice or information or
by giving any inaccurate
31
or erroneous notice or information, which materially limits or impairs the
rights of Edge or any Subsidiary of Edge under any such excess liability or
protection and indemnity insurance policies.
Section 6.17 No Brokers. Edge has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Xxxxxx or Edge to pay any finder's fees, brokerage or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
Section 6.18 [Intentionally left blank].
Section 6.19 Xxxxxx Stock Ownership. Neither Edge nor any of its
Subsidiaries owns any shares of capital stock of Xxxxxx or any other securities
convertible into or otherwise exercisable to acquire capital stock of Xxxxxx.
Section 6.20 Vote Required. The only votes of the holders of any
class or series of Edge capital stock necessary to approve any transaction
contemplated by this Agreement are the vote of the holders of shares of Edge
Common Stock required by the rules of Nasdaq to approve the issuance of shares
of Edge Common Stock pursuant to the Merger.
Section 6.21 Undisclosed Liabilities. Neither Edge nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
fixed, accrued, contingent or otherwise, except liabilities and obligations that
(i) are disclosed in the Edge Reports filed prior to the date of this Agreement,
(ii) are referred to in the Edge Disclosure Letter, or (iii) have not had and
could not reasonably be expected to have, individually or in the aggregate, an
Edge Material Adverse Effect.
Section 6.22 Certain Contracts.
(a) Section 6.22 of the Edge Disclosure Letter contains a list of
all of the following contracts or agreements (other than those set forth on
an exhibit index in the Edge Reports filed prior to the date of this
Agreement) to which Edge or any Subsidiary of Edge is a party or by which any
of them or their assets is bound as of the date of this Agreement: (i) any
non-competition agreement that purports to limit the manner in which, or the
localities in which, all or any portion of their respective businesses is
conducted other than any such limitation that is not, and will not be
following the Effective Time, material to Edge and its Subsidiaries, taken as
a whole, (ii) any contract or agreement for Debt with a borrowing capacity or
outstanding Debt of $50,000 or more, (iii) any transaction or series of
similar transactions, since December 31, 2002 or any currently proposed
transaction, or series of transactions, to which Edge or any of its
Subsidiaries was or is to be a party, in which the amount involved exceeds
$50,000 and in which any person who is currently or was since December 31,
2002 an employee of Edge or any of its Subsidiaries at the level of vice
president or above had, or will have, a direct or indirect material interest
or (iv) any "material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC) (all contracts or agreements of the types
described in clauses (i) through (iv) being referred to herein as "Edge
Material Contracts").
32
(b) As of the date of this Agreement, each Edge Material Contract is
in full force and effect, and Edge and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by them
to date under each Edge Material Contract to which it is a party, except
where such failure to be binding or in full force and effect or such failure
to perform does not and is not reasonably likely to create, individually or
in the aggregate, an Edge Material Adverse Effect. Except for such matters as
do not and are not reasonably likely to have an Edge Material Adverse Effect,
neither Edge nor any of its Subsidiaries (x) knows of, or has received
written notice of, any breach of or violation or default under (nor, to the
knowledge of Edge, does there exist any condition which with the passage of
time or the giving of notice or both would result in such a violation or
default under) any Edge Material Contract or (y) has received written notice
of the desire of the other party or parties to any such Edge Material
Contract to exercise any rights such party has to cancel, terminate or
repudiate such contract or exercise remedies thereunder. Each Edge Material
Contract is enforceable by Edge or a Subsidiary of Edge in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights and general
principles of equity, except where such unenforceability is not reasonably
likely to create, individually or in the aggregate, an Edge Material Adverse
Effect.
Section 6.23 [Intentionally left blank].
Section 6.24 Improper Payments. No bribes, kickbacks or other
improper payments have been made by Edge or any Subsidiary of Edge or agent of
any of them in connection with the conduct of their respective businesses or the
operation of their respective assets, and neither Edge, any Subsidiary of Edge,
nor any agent of any of them has received any such payments from vendors,
suppliers or other persons, where any such payment made or received is
reasonably likely to have an Edge Material Adverse Effect.
Section 6.25 Takeover Statutes; Rights Plans. The execution, delivery
and performance of this Agreement and the Stockholder Agreements and the
consummation of the transactions contemplated hereby and thereby will not cause
to be applicable to Edge any Takeover Statute (after giving effect to any
actions that will be taken prior to the Effective Time). Edge does not have any
preferred share purchase rights plan or similar rights plan in effect.
Section 6.26 Title to Properties; Liens and Encumbrances. Except as
set forth in Section 6.26 of the Edge Disclosure Letter, pursuant to the Amended
and Restated Credit Agreement by and between Edge and Union Bank of California,
N.A. dated as of October 6, 2000 and as would not have, individually or in the
aggregate, an Edge Material Adverse Effect, Edge and its Subsidiaries have
defensible title to all of the properties and assets, both real and personal,
tangible and intangible, that they purport to own, including the properties and
assets reflected in the Edge Reports and including the lands and leases and
associated net revenue and working interests reflected in the Edge Reserve
Reports (as defined herein), other than dispositions or expirations in the
ordinary course of business since the date thereof, and they are not subject to
any Lien, except routine statutory liens securing liabilities not yet due and
payable and minor liens, encumbrances, restrictions, exceptions, reservations,
limitations and other
33
imperfections (but in no event liens securing indebtedness for borrowed money)
that do not materially detract from the value of the specific asset affected or
the present use of such asset and except (A) Liens for taxes not yet due and
payable or, if payable, that are being contested in good faith in the ordinary
course of business, (B) statutory Liens (including materialmen's, mechanic's,
repairmen's, landlord's and other similar liens) arising in the ordinary course
of business to secure payments not yet due and payable or, if payable, that are
being contested in good faith in the ordinary course of business, (C) such
easements, restrictions, reservations or other encumbrances, as well as
imperfections or irregularities of title, if any, as do not individually or in
the aggregate interfere materially with the operation, or materially interfere
with the value or use, of such property or asset, (D) obligations or duties to
any municipality or public authority with respect to any franchise, grant,
license or permit and all applicable laws, rules, regulations and orders of any
governmental authority, (E) all lessors' royalties, overriding royalties, net
profits interests, production payments, carried interests, reversionary
interests and other burdens on or deductions from the proceeds of production
that do not operate to (x) reduce the net revenue interest of Edge or its
Subsidiaries below that purported to be owned by Edge or its Subsidiaries or as
set forth in the Edge Reserve Report, (y) increase the proportionate share of
costs and expenses of leasehold operations attributable to or to be borne by the
working interest of Edge or its Subsidiaries above that purported to be owned by
Edge or its Subsidiaries or as set forth in the Edge Reserve Report without a
proportionate increase in the net revenue interest of Edge or its Subsidiaries
or (z) increase the working interest of Edge or its Subsidiaries above that
purported to be owned by Edge or its Subsidiaries or as set forth in the Edge
Reserve Report without a proportionate increase in the net revenue interest of
Edge or its Subsidiaries, (F) the terms and conditions of joint operating
agreements, (G) all rights to consent by, required notices to, and filings with
or other actions by governmental or tribal entities, if any, in connection with
the change of ownership or control of an interest in federal, state, tribal or
other domestic governmental oil and gas leases, if the same are customarily
obtained subsequent to such change of ownership or control, but only insofar as
such consents, notices, filings and other actions relate to the transactions
contemplated by this Agreement, (H) any preferential purchase rights, (I)
required third party consents to assignment, (J) conventional rights of
reassignment prior to abandonment and (K) the terms and provisions of oil and
gas leases, unit agreements, pooling agreements, communication agreements and
other documents creating interests comprising the oil and gas properties;
insofar and only insofar as such terms and provisions do not operate to (x)
reduce the net revenue interest of Edge or its Subsidiaries below that purported
to be owned by Edge or its Subsidiaries or as set forth in the Edge Reserve
Report, (y) increase the proportionate share of costs and expenses of leasehold
operations attributable to or to be borne by the working interest of Edge or its
Subsidiaries above that purported to be owned by Edge or its Subsidiaries or as
set forth in the Edge Reserve Report without a proportionate increase in the net
revenue interest of Edge or its Subsidiaries or (z) increase the working
interest of Edge or its Subsidiaries above that purported to be owned by Edge or
its Subsidiaries or as set forth in the Edge Reserve Report without a
proportionate increase in the net revenue interest of Edge or its Subsidiaries.
Section 6.26 of the Edge Disclosure Letter lists the current projects and
properties in which Edge or its Subsidiaries has an interest and the specific
interests which Edge or its Subsidiaries own in each project or property.
Section 6.27 Reserve Report. The historical information supplied by
Edge to Xxxxx Xxxxx Company, independent petroleum engineers (the "Edge
Petroleum Engineers"), underlying the estimates of the reserves of Edge and its
Subsidiaries as of December 31, 2002 in
34
the letter dated March 17, 2003 and delivered by the Edge Petroleum Engineers to
Edge (the "Edge Reserve Report"), including, without limitation, production
volumes, sales prices for production, contractual pricing provisions under oil
or gas sales or marketing contracts or under hedging arrangements, costs of
operations and development, and working interest and net revenue information
relating to Edge's and its Subsidiaries' ownership interests in properties, was
true and correct in all material respects on the date of such Edge Reserve
Report; the estimates of future capital expenditures and other future
exploration and development costs supplied to the Edge Petroleum Engineers were
prepared in good faith and with a reasonable basis; to the best of Edge's
knowledge, the Edge Petroleum Engineers were, as of the date of the Edge Reserve
Report prepared by them, and are, as of the date hereof, independent petroleum
engineers with respect to Edge and its Subsidiaries; other than normal
production of reserves and intervening spot market product price fluctuations,
and except as disclosed in the Edge Reports, Edge is not aware of any facts or
circumstances that would result in a materially adverse change in the reserves
in the aggregate, or the aggregate present value of future net cash flows
therefrom, as described in the Edge Reports and as reflected in the Edge Reserve
Report; estimates of such reserves and the present value of the future net cash
flows therefrom as described in the Edge Reports and reflected in the Edge
Reserve Report included in the Edge Reports comply in all material respects to
the applicable requirements of the rules and regulations under the Exchange Act.
A true and correct copy of the Edge Reserve Report has been provided to Edge.
Section 6.28 Gas Contracts. Except as set forth in Section 6.28 of
the Edge Disclosure Letter, Edge and its Subsidiaries, as of the date hereof,
(a) are not obligated in any material respect by virtue of any prepayment made
under any contract containing a "take-or-pay" or "prepayment" provision or under
any similar agreement to deliver hydrocarbons produced from or allocated to any
of Edge's consolidated oil and gas properties at some future date without
receiving full payment therefor at the time of delivery, and (b) have not
produced gas, in any material amount, subject to, and none of Edge's
consolidated oil and gas properties is subject to, balancing rights of third
parties or subject to balancing duties under governmental requirements, except
as to such matters for which Edge has established monetary reserves adequate in
amount in accordance with generally accepted accounting principles to satisfy
such obligations and has segregated such reserves from its other accounts.
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Xxxxxx Business. Prior to the Effective Time,
except as set forth in the Xxxxxx Disclosure Letter or as expressly contemplated
by any other provision of this Agreement or the Stockholder Agreements or
(provided that Xxxxxx has provided Edge with advance notice of the proposed
action to the extent practicable) as required by Applicable Laws, unless Edge
has consented in writing thereto, Xxxxxx:
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted and not introduce any
new methods of management or operation that in the aggregate are material to
its business;
35
(b) shall use its commercially reasonable best efforts, and shall
cause each of its Subsidiaries to use its commercially reasonable best
efforts, to preserve intact its business organizations and goodwill (except
that any of its Subsidiaries may be merged with or into, or be consolidated
with, any of its Subsidiaries or may be liquidated into it or any of its
Subsidiaries), keep available the services of its officers and employees and
maintain satisfactory relationships with those persons having business
relationships with them;
(c) shall not amend or propose to amend its certificate of
incorporation or bylaws;
(d) shall promptly notify Edge of any material change in its
condition (financial or otherwise) or business or any termination,
cancellation, repudiation or material breach of any Xxxxxx Material Contract,
respectively (or communications indicating that the same may be
contemplated), or any material litigation or proceedings (including
arbitration and other dispute resolution proceedings) or material
governmental complaints, investigations, inquiries or hearings (or
communications indicating that the same may be contemplated), or any material
developments in any such litigation, proceedings, complaints, investigations,
inquiries or hearings or the breach in any material respect of any
representation or warranty contained herein;
(e) shall promptly make available to Edge true and correct copies of
any report, statement or schedule filed with the SEC subsequent to the date
of this Agreement;
(f) shall not, and shall not permit any of its Subsidiaries to, (i)
except pursuant to the exercise of options, warrants, conversion rights and
other contractual rights existing on the date hereof and disclosed pursuant
to this Agreement, issue any shares of its capital stock, effect any stock
split or otherwise change its capitalization as it existed on the date
hereof, (ii) grant, confer or award any option, warrant, conversion right or
other right not existing on the date hereof to acquire any shares of its
capital stock, (iii) amend or otherwise modify any option, warrant,
conversion right or other right to acquire any shares of its capital stock
existing on the date hereof, (iv) with respect to any of its former, present
or future employees (excluding officers and directors), increase any
compensation or benefits, or enter into, amend or extend (or permit the
extension of) any employment or consulting agreement, (v) with respect to any
of its former, present or future officers or directors, increase any
compensation or benefits or enter into, amend or extend (or permit the
extension of) any employment or consulting agreement, (vi) adopt any new
employee benefit plan or agreement (including any stock option, stock benefit
or stock purchase plan) or amend (except as required by law or as required
under Section 7.1(t)) any existing employee benefit plan in any material
respect, (vii) terminate any executive officer without cause or permit
circumstances to exist that would give any executive officer a right to
terminate employment if the termination would entitle such executive officer
to receive enhanced separation payments upon consummation of the Merger, or
(viii) permit any holder of an option to acquire shares of Xxxxxx Common
Stock to have shares withheld upon exercise, for tax purposes, in excess of
the number of
36
shares needed to satisfy the minimum statutory withholding requirements for
federal and state tax withholding;
(g) shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock
or (ii) redeem, purchase or otherwise acquire any shares of its capital stock
or capital stock of any of its Subsidiaries, or make any commitment for any
such action;
(h) shall not, and shall not permit any of its Subsidiaries to,
except for contractual commitments in effect on the date hereof and disclosed
in the Xxxxxx Disclosure Letter, 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 (including capital stock of
Subsidiaries) which are, individually or in the aggregate, material to it and
its Subsidiaries as a whole, except for (i) sales of surplus or obsolete
equipment, (ii) sales of hydrocarbons in the ordinary course of business, or
(iii) sales, leases or other transfers between such party and its wholly
owned Subsidiaries or between those Subsidiaries;
(i) shall not, and shall not permit any of its Subsidiaries to,
negotiate for the acquisition of any business or the start-up of any new
business or acquire or agree to acquire by merging or consolidating with, or
by purchasing an equity interest in or a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof;
(j) shall not, except as may be required as a result of a change in
generally accepted accounting principles, change any of the material
accounting principles or practices used by it;
(k) shall, and shall cause each of its Subsidiaries to, use their
commercially reasonable best efforts to maintain in full force without
interruption its present insurance policies or comparable insurance coverage;
(l) shall not, and shall not permit any of its Subsidiaries to, (i)
make or rescind any material election relating to taxes, including elections
for any and all joint ventures, partnerships, limited liability companies,
working interests or other investments where it has the capacity to make such
binding election, (ii) settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, or (iii) change in any material respect any of its methods
of reporting any item for tax purposes from those employed in the preparation
of its tax returns for the most recent taxable year for which a return has
been filed, except as may be required by applicable law;
(m) shall not, and shall not permit any of its Subsidiaries to, (i)
incur any Debt or guarantee any Debt or issue or sell any debt securities or
warrants or rights to acquire any of its debt securities or any of its
Subsidiaries or guarantee any debt securities of others, (ii) except in the
ordinary course of business or with or between its Subsidiaries, enter into
any material lease (whether such lease is an operating or capital lease) or
create
37
any material mortgages, Liens, security interests or other encumbrances on
its property in connection with any indebtedness thereof (other than
Permitted Liens) or (iii) make or commit to make capital expenditures that,
individually or in the aggregate, exceed $100,000 per quarter for each
quarter from the date of this Agreement to the Effective Time, excluding
capital expenditures to repair damage covered by insurance; for the purposes
of this Agreement, (x) "Debt" shall mean, with respect to any person, the
aggregate amount of, without duplication, (1) all obligations for borrowed
money; (2) all obligations evidenced by bonds, debentures, notes or other
similar instruments; (3) all obligations to pay the deferred purchase price
of property or services; (4) all capitalized lease obligations; (5) all
obligations or liabilities of others secured by a lien on any asset owned by
such person whether or not such obligation or liability is assumed, to the
extent of the lesser of such obligation or liability or the book value of
such asset; (6) all Contingent Obligations of such person; and (7) any other
obligations or liabilities which are required by generally accepted
accounting principles to be shown as debt on a balance sheet, and (y)
"Contingent Obligation" shall mean, as applied to any person, any direct or
indirect liability, contingent or otherwise, of that person with respect to
any indebtedness, lease, dividend, letter of credit or other similar
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business) co-made or discounted or sold
with recourse by that person, or in respect of which that person is otherwise
directly or indirectly liable, including, without limitation, any such
obligation for which that person is in effect liable through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency
or any balance sheet, income or other financial condition of the obligor of
such obligation, or to make payment for any products, materials or supplies
or for any transportation, services or lease regardless of the non-delivery
or non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof. The amount of any Contingent Obligation
shall be equal to the amount of the obligation, or portion thereof, so
guaranteed or otherwise supported;
(n) shall not, and shall cause its Subsidiaries not to, purchase or
otherwise acquire any shares of capital stock of Edge;
(o) shall not take any action that is reasonably likely to delay
materially or adversely affect the ability of any of the parties hereto to
obtain any consent, authorization, order or approval of any governmental
commission, board or other regulatory body required to consummate the
transactions contemplated by this Agreement;
(p) unless in the good faith opinion of its Board of Directors after
consultation with its outside legal counsel the following would be
inconsistent with its fiduciary duties, (i) shall not terminate, amend,
modify or waive any provision of any agreement
38
containing a standstill covenant to which it is a party; and (ii) during such
period shall enforce, to the fullest extent permitted under Applicable Law,
the provisions of such agreement, including by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States of America or any
state having jurisdiction;
(q) shall not take any action that would reasonably be expected to
result in any condition in Article 8 not being satisfied;
(r) shall with respect to its and its Subsidiaries oil and gas
operations:
(i) operate and maintain or cause to be operated and
maintained, to the extent of their contractual rights to do so, its oil and
gas properties and assets or any unit of which its oil and gas properties and
assets are a part, as a reasonable prudent operator and in a good and
workmanlike manner in accordance with all applicable laws, rules, regulations
and orders and the terms of the respective applicable operating and other
agreements;
(ii) maintain its oil and gas leases, unit agreements,
pooling agreements, communitization agreements, orders or declarations and
other documents creating interests comprising its oil and gas properties and
assets and all permits, licenses and similar rights and privileges relative
thereto in full force and effect (except for abandonment of its oil and gas
leases not capable of producing oil, gas or other minerals covered thereby in
commercial quantities after the expiration of their respective primary terms)
and comply with all material express or implied covenants therein and perform
all of their material obligations under contracts relating to or affecting
its oil and gas properties and assets;
(iii) exercise due diligence in safeguarding and maintaining
secure and confidential all seismic, geological and geophysical maps, data
and information and other confidential data in their possession relating
primarily to its oil and gas properties and assets;
(iv) pay or cause to be paid all rentals, royalties, shut-in
royalties, minimum royalties and other costs and expenses incurred in
connection with its oil and gas properties and assets before they become
delinquent, except royalties held in suspense in the ordinary course of
business, royalties being claimed on take-or-pay payments and expenses being
contested in good faith in the ordinary course of business by appropriate
action;
(v) inform Edge of all requests for commitments to expend
funds in excess of $50,000 with respect to any of its oil and gas properties
and assets and will not, without providing Edge a reasonable opportunity to
instruct Xxxxxx, agree to participate in any operation proposed after the
date hereof relating to any of its oil and gas properties and assets and
requiring an expenditure in excess of $50,000; and
(vi) maintain all xxxxx, fixtures, facilities, personal
property and equipment included in its oil and gas properties and assets in
at least as good a condition
39
as they were in at the date hereof, except for ordinary wear and tear
incurred during such period, and remove no material portions thereof from its
oil and gas properties and assets, except portions that are replaced with
other personal property, fixtures or improvements of equal or greater value
and usefulness; and
(s) shall not with respect to its and its Subsidiaries oil and gas
operations:
(i) abandon any well on any of its oil and gas properties
and assets capable of commercial production, or release or abandon any of its
oil and gas properties and assets (except for abandonment of oil and gas
leases not capable of producing oil, gas or other minerals covered thereby in
commercial quantities after the expiration of their respective primary
terms);
(ii) enter into any gas sales or purchase contract (together
with any supplier-purchaser relationship or dedication accompanying such
contract) not terminable at will (without penalty) on notice of 60 days or
less;
(iii) commence any drilling, reworking, completing or other
operations on its oil and gas properties and other assets operated by them,
and not consent or become a non-consenting party with respect to the
commencement of any drilling, reworking, completing or other operations on
its oil and gas properties and other assets not operated by Xxxxxx or its
Subsidiaries (except emergency operations) without obtaining the prior
written consent of Edge; provided that such prior written consent of Edge
shall not be required with respect to (i) any single operation or series of
related operations for which the amount of expenditure or liability
attributable to Xxxxxx'x interest is less than $50,000, (ii) those
expenditures set forth on Schedule 7.1(s) to the Xxxxxx Disclosure Letter
that Xxxxxx or its Subsidiaries was obligated to undertake prior to the date
of this Agreement and (iii) any circumstances by which Xxxxxx or its
Subsidiaries becomes a nonconsenting party, but makes a binding offer open
for a 10-day period for Edge to farm-out the oil and gas property pursuant to
a mutually acceptable form of Farm-Out Agreement.
(t) shall, prior to the Closing Date take the corporate actions
necessary to effectuate the termination of the Xxxxxx Savings Plan, which
termination shall be effective as of the day immediately prior to the
Effective Time and whereby the assets held in connection with the Xxxxxx
Savings Plan shall be distributed following the Effective Time.
(u) shall not (i) agree in writing or otherwise to take any of the
foregoing prohibited actions or (ii) permit any of its Subsidiaries to agree
in writing or otherwise to take any of the foregoing prohibited actions that
refer to Subsidiaries.
Section 7.1A Conduct of Edge's Business. Prior to the Effective Time,
except as set forth in the Edge Disclosure Letter or as expressly contemplated
by any other provision of this Agreement or the Stockholder Agreements or
(provided that Edge has provided Xxxxxx with advance notice of the proposed
action to the extent practicable) as required by Applicable Laws, unless Xxxxxx
has consented in writing thereto, Edge:
40
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations in accordance with the primary business focus of Edge and its
Subsidiaries, taken as a whole;
(b) shall use its commercially reasonable best efforts, and shall
cause each of its Subsidiaries to use its commercially reasonable best
efforts, to preserve intact its business organizations and goodwill (except
that any of its Subsidiaries may be merged with or into, or be consolidated
with, any of its Subsidiaries or may be liquidated into it or any of its
Subsidiaries);
(c) shall not amend or propose to amend its certificate of
incorporation or bylaws (other than an amendment to its bylaws to increase
the advance notice provisions thereof);
(d) shall promptly notify Xxxxxx of any material change in its
condition (financial or otherwise) or business or any material litigation or
material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the breach
in any material respect of any representation or warranty contained herein;
(e) shall promptly make available to Xxxxxx true and correct copies
of any report, statement or schedule filed with the SEC subsequent to the
date of this Agreement;
(f) shall not, and shall cause its Subsidiaries not to, (i) issue or
sell any shares of Edge's capital stock or the capital stock of any of its
Subsidiaries (or securities convertible into or exchangeable for capital
stock) for less than $4.70 per share of Edge Common Stock or Edge Common
Stock equivalent (in the case of any warrant, option, convertible or similar
security of Edge), except for issuances (x) pursuant to employee benefit
plans or (y) pursuant to outstanding options, warrants or convertible
securities in accordance with their terms, in each case of (x) and (y) as in
existence on the date hereof and (ii) shall not issue to holders of Edge's
capital stock any rights to purchase any shares of Edge's capital stock for
less than the fair market value thereof (other than pursuant to a customary
stockholder rights plan which includes a provision whereby one right under
such plan will be issued in respect of each share of Edge Common Stock issued
in the Merger);
(g) shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock
(other than pursuant to a customary stockholder rights plan) or (ii) redeem,
purchase or otherwise acquire any shares of its capital stock or capital
stock of any of its Subsidiaries, or make any commitment for any such action,
in each case at a price below the then fair market value of such capital
stock;
(h) during the period beginning five business days prior to the
mailing of the Proxy Statement/Prospectus and ending at the Edge Price Ending
Date, shall not (and shall cause its Subsidiaries not to) redeem, repurchase
or otherwise acquire any shares of
41
Edge Common Stock (other than pursuant to existing employee benefit plans)
and other than in accordance with Regulation M; and
(i) shall not, except as may be required as a result of a change in
generally accepted accounting principles, change any of the material
accounting principles or practices used by it;
(j) shall not, and shall cause its Subsidiaries not to, purchase or
otherwise acquire any shares of capital stock of Xxxxxx;
(k) shall not take any action that is reasonably likely to delay
materially or adversely affect the ability of any of the parties hereto to
obtain any consent, authorization, order or approval of any governmental
commission, board or other regulatory body required to consummate the
transactions contemplated by this Agreement;
(l) shall not take any action that would reasonably be expected to
result in any condition in Article 8 not being satisfied;
(m) other than any acquisition or series of acquisitions, related or
unrelated (i) as to which the target company or assets being acquired are not
primarily engaged in, or not primarily used in, the exploration, development
or production of crude oil or natural gas or other minerals (the "E&P
Business") and for which the aggregate purchase price is not in excess of $1
million, or (ii) as to which the (A) target company or assets being acquired
are primarily engaged in, or primarily used in, the E&P Business and (B)
which does not result in a debt-to-capital ratio in excess of 50% after
giving effect to the acquisition, shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof.
Section 7.2 No Solicitation by Xxxxxx.
(a) Xxxxxx agrees that (i) none of it, its Subsidiaries, its
officers or directors or the officers and directors of its Subsidiaries shall,
and it shall direct and use its best efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) not to, and on becoming
aware of it will use its best efforts to stop such person from continuing to,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing nonpublic information), or take any action designed to facilitate,
directly or indirectly, any inquiry, proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a tender
or exchange offer, merger, consolidation, purchase, transaction in which any of
Xxxxxx'x capital stock is issued to a third party or its stockholders, business
combination, purchase or lease of assets or similar transaction or series of
transactions (other than the transactions contemplated by this Agreement and
except for sales of hydrocarbons in the ordinary course of business and the sale
of Xxxxxx'x interest in the N. Monroeville Field (any such proposal, offer or
transaction being hereinafter referred to as a "Xxxxxx Acquisition Proposal") or
cooperate with or assist, participate
42
or engage in any discussions or negotiations concerning a Xxxxxx Acquisition
Proposal; and (ii) it will immediately cease and cause to be terminated any
existing negotiations with any parties conducted heretofore with respect to any
of the foregoing; provided that nothing contained in this Agreement shall
prevent Xxxxxx or its Board of Directors from (A) complying with Rule 14d-9 and
Rule 14e-2 promulgated under the Exchange Act with regard to a Xxxxxx
Acquisition Proposal or (B) prior to the Cutoff Date (as defined herein),
providing information (pursuant to a confidentiality and standstill agreement in
reasonably customary form with terms at least as favorable to Xxxxxx as the
Confidentiality Agreement (as defined in Section 7.6) and which does not contain
terms that prevent Xxxxxx from complying with its obligations under this Section
7.2(a)) to, or engaging in any negotiations or discussions with, any person or
entity who has made an unsolicited bona fide written Xxxxxx Acquisition Proposal
with respect to at least fifty (50%) percent of the outstanding capital stock of
Xxxxxx or at least fifty (50%) percent of the assets of Xxxxxx (with the value
of the assets to be sold and all assets determined by reference to the PV10
value of such assets as shown in the Xxxxxx Reserve Report) that did not result
from a breach of this Section 7.2(a) and that, in the good faith judgment of the
Board of Directors of Xxxxxx, taking into account the identity of the person
making the Xxxxxx Acquisition Proposal, all legal, financial, regulatory and
other aspects of the proposal and the likelihood of financing and consummation,
and after considering the advice of its legal counsel and financial advisor,
could reasonably be expected to be consummated without undue delay and
represents a transaction more favorable to its stockholders than the Merger (a
"Xxxxxx Superior Proposal"), to the extent the Board of Directors of Xxxxxx,
after consultation with its outside legal counsel, determines that the failure
to do so would be inconsistent with its fiduciary obligations.
(b) Prior to taking any action referred to in Section 7.2(a), if
Xxxxxx intends to participate in any such discussions or negotiations or provide
any such information to any such third party, Xxxxxx shall give prompt prior
oral and written notice to Edge of each such action. Xxxxxx will immediately
notify Edge orally and in writing of any such requests for such information or
the receipt of any Xxxxxx Acquisition Proposal or any inquiry with respect to or
that could lead to a Xxxxxx Acquisition Proposal, including the identity of the
person or group engaging in such discussions or negotiations, requesting such
information or making such Xxxxxx Acquisition Proposal, and the material terms
and conditions of any Xxxxxx Acquisition Proposal. Xxxxxx will (i) keep Edge
fully informed of the status and details (including any changes or proposed
changes to such status or details) on a timely basis of any such requests,
Xxxxxx Acquisition Proposals or inquiries and (ii) provide to Edge as soon as
practicable after receipt or delivery thereof with copies of all correspondence
and other written material sent or provided to Xxxxxx from any third party in
connection with any Xxxxxx Acquisition Proposal or sent or provided by Xxxxxx to
any third party in connection with any Xxxxxx Acquisition Proposal. Any written
notice under this Section 7.2(b) shall be given by facsimile with receipt
confirmed or personal delivery.
(c) Nothing in this Section 7.2 shall permit Xxxxxx to enter into
any agreement with respect to a Xxxxxx Acquisition Proposal during the term of
this Agreement, it being agreed that during the term of this Agreement, Xxxxxx
shall not enter into any agreement with any person that provides for, or in any
way facilitates, a Xxxxxx Acquisition Proposal, other than (i) a confidentiality
and standstill agreement in reasonably customary form with terms at least as
favorable to Xxxxxx as the Confidentiality Agreement and which does not contain
terms that prevent Xxxxxx from complying with its obligations under this Section
and (ii) an agreement
43
which (1) is not and expressly states that it is not binding upon Xxxxxx or its
Subsidiaries and does not create any liability upon or obligation of Xxxxxx or
its Subsidiaries or Edge and its Subsidiaries unless and until such time as this
Agreement is terminated pursuant to Article 9 (other than as a result of a
breach of this Agreement by Xxxxxx or its Subsidiaries) and (2) shall terminate
upon the Effective Time under this Agreement and (3) without limiting the
generality of the foregoing, will not have effect of directly or indirectly
causing Xxxxxx or its Subsidiaries to take any action or refrain from taking any
action prior to the Effective Time nor cause Xxxxxx or its Subsidiaries to incur
any liability or obligation in respect of any action or inaction occurring prior
to the termination of this Agreement and (4) specifically states that
notwithstanding anything to the contrary contained in such agreement, the
provision of this Section 7.2(c) shall control with respect to such agreement.
(d) For purposes hereof, the "Cutoff Date," when used with respect
to Xxxxxx, means the date the condition set forth in Section 8.1(a)(i) is
satisfied.
Section 7.3 Confidentiality Matters. Notwithstanding anything to the
contrary set forth in the Confidentiality Agreement or in any other written or
oral understanding or agreement to which the parties hereto are parties or by
which they are bound, the parties acknowledge and agree that any obligations of
confidentiality contained therein (the "Confidentiality Obligations"), as they
relate to the "tax treatment or tax structure" (as that phrase is used in
Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
(the "Confidentiality Regulations") promulgated under Section 6011 of the
Internal Revenue Code of 1986, as amended) of any proposed transactions, matters
or arrangements described therein, or any related transactions, matters or
arrangements (the "Transaction") shall terminate at the earliest of (a) the date
of the public announcement of discussions relating to the Transaction, (b) the
date of public announcement of the Transaction, and (c) the date of the
execution of an agreement to enter into the Transaction. Furthermore, nothing
contained in this Agreement shall restrict the ability of a party to consult a
tax advisor of its own choosing with respect to the Transaction.
Section 7.4 Meetings of Stockholders.
(a) Each of Edge (if a vote of Edge's stockholders is required
pursuant to the rules of the Nasdaq) and Xxxxxx shall take all action necessary
in accordance with applicable law and its certificate of incorporation and
bylaws, to convene a meeting of its stockholders as promptly as practicable to
consider and vote upon (i) in the case of Edge, the issuance of shares of Edge
Common Stock pursuant to the Merger and, at the discretion of Edge, an amendment
of its Incentive Plan to increase the number of shares of Edge Common Stock
reserved for issuance thereunder and (ii) in the case of Xxxxxx, the adoption of
this Agreement. Edge and Xxxxxx shall coordinate and cooperate with respect to
the timing of such meetings and shall use their commercially reasonable best
efforts to hold such meetings on the same day. Notwithstanding any other
provision of this Agreement, unless this Agreement is terminated in accordance
with the terms hereof, Xxxxxx and Edge (if a vote of Edge's stockholders is
required pursuant to the rules of the Nasdaq) shall each submit the foregoing
matters to its stockholders, whether or not the Board of Directors of Xxxxxx or
Edge, as the case may be, withdraws, modifies or changes its recommendation and
declaration regarding such matters.
44
(b) Each of Edge and Xxxxxx, through its Board of Directors, shall
recommend approval of such matters and use its best efforts to solicit approval
by its stockholders in favor of such matters (including, without limitation, the
solicitation of proxies, the hiring of proxy solicitors, and the taking of all
other action necessary or advisable to secure the vote of their stockholders
required by applicable laws and the Nasdaq to obtain such approvals); provided,
however, and notwithstanding, that the Board of Directors of Edge or the Board
of Directors of Xxxxxx may at any time prior to such party's Cut-Off Date upon
two business days' prior written notice to Xxxxxx or Edge, respectively, (i)
withdraw, modify or change any recommendation and declaration regarding such
matters or (ii) recommend and declare advisable any Xxxxxx Superior Proposal
(but subject to Section 7.2(c)), if in the good faith opinion of such Board of
Directors after consultation with its outside legal counsel the failure to so
withdraw, modify or change its recommendation and declaration or to so recommend
and declare advisable any Xxxxxx Superior Proposal would be inconsistent with
its fiduciary obligations and (iii) in the event of a withdrawal, modification
or change in recommendation or the determination to do so, discontinue the best
efforts referred to in this sentence. In the event of a recommendation and
declaration pursuant to clause (ii) in the preceding sentence, Xxxxxx must have
fully complied with the terms of this Agreement including without limitation
Section 7.2(b) and have considered and caused its financial and legal advisors
to consider, any written counteroffer from Edge, and the Board of Directors of
Xxxxxx, must have determined in the good faith of its members and after
consultation with its financial and legal advisors that the terms and conditions
of such counteroffer are not at least as favorable to the stockholders of
Xxxxxx, as that proposal. Any withdrawal, modification or change in the
recommendation or the determination to do so or discontinuance of best efforts
of any party in accordance with this Section 7.4 shall not constitute a breach
of such party's representations, warranties, covenants or agreements contained
in this Agreement.
Section 7.5 Filings; Commercially Reasonable Best Efforts, Etc.
(a) Subject to the terms and conditions herein provided, Xxxxxx and
Edge shall:
(i) use their commercially reasonable best efforts to
cooperate with one another in (A) determining which filings are required to
be made prior to the Effective Time with, and which consents, approvals,
permits or authorizations are required to be obtained prior to the Effective
Time from, governmental or regulatory authorities of the United States, the
several states, and non-U.S. jurisdictions in connection with the execution
and delivery of this Agreement, and the consummation of the Merger and the
transactions contemplated hereby; and (B) timely making all such filings and
timely seeking all such consents, approvals, permits or authorizations
without causing an Edge Material Adverse Effect or a Xxxxxx Material Adverse
Effect;
(ii) promptly notify each other of any communication
concerning this Agreement or the transactions contemplated hereby to that
party from any governmental or regulatory authority and permit the other
party to review in advance any proposed communication concerning this
Agreement or the transactions contemplated hereby to any governmental or
regulatory authority;
45
(iii) not agree to participate in any meeting or discussion
with any governmental or regulatory authority in respect of any filings,
investigation or other inquiry concerning this Agreement or the transactions
contemplated hereby unless it consults with the other party in advance and,
to the extent permitted by such governmental or regulatory authority, gives
the other party the opportunity to attend and participate in such meeting or
discussion;
(iv) furnish the other party with copies of all
correspondence, filings and communications (and memoranda setting forth the
substance thereof) between them and their affiliates and their respective
representatives on the one hand, and any government or regulatory authority
or members or any such authority's staff on the other hand, with respect to
this Agreement and the transactions contemplated hereby; and
(v) furnish the other party with such necessary information
and reasonable assistance as such other party and its affiliates may
reasonably request in connection with their preparation of necessary filings,
registrations or submissions of information to any governmental or regulatory
authorities.
(b) Without limiting Section 7.5(a), but subject to Section
7.5(c), Edge and Xxxxxx shall:
(i) each use commercially reasonable best efforts to avoid
the entry of, or to have vacated, terminated or modified, any decree, order
or judgment that would restrain, prevent or delay the Closing; and
(ii) each use commercially reasonable best efforts to take
any and all steps necessary to obtain any consents or eliminate any
impediments to the Merger.
(c) Nothing in this Agreement shall require Edge to dispose of any
of its assets or to limit its freedom of action with respect to any of its
businesses, or to consent to any disposition of Xxxxxx'x assets or limits on
Xxxxxx'x freedom of action with respect to any of its businesses, whether prior
to or after the Effective Time, or to commit or agree to any of the foregoing,
to obtain any consents, approvals, permits or authorizations or to remove any
impediments to the Merger relating to any antitrust, competition or premerger
notification, trade regulation law, regulation or order ("Antitrust Laws") or to
avoid the entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other order in any suit or proceeding relating to Antitrust
Laws, other than dispositions, limitations or consents, commitments or
agreements which in each such case may be conditioned upon the consummation of
the Merger and the transactions contemplated hereby and that, in each such case
do not and are not reasonably likely, individually or in the aggregate, to have
an Edge Material Adverse Effect after the Effective Time.
(d) Edge and Xxxxxx intend that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. Neither Edge,
Xxxxxx nor their respective Subsidiaries shall take actions, cause actions to be
taken or fail to take actions, as a result of which the Merger would not qualify
as a reorganization within the meaning of Section 368(a) of the Code.
46
Section 7.6 Inspection. From the date hereof to the Effective Time,
each of Xxxxxx and Edge shall allow all designated officers, attorneys,
accountants and other representatives of Edge or Xxxxxx, as the case may be,
reasonable access, at all reasonable times during normal business hours, upon
reasonable notice, to the records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs of Edge and Xxxxxx and their respective Subsidiaries, including
inspection of such properties; provided that no investigation pursuant to this
Section 7.6 shall affect any representation or warranty given by any party
hereunder, and provided further that notwithstanding the provision of
information or investigation by any party, no party shall be deemed to make any
representation or warranty except as expressly set forth in this Agreement.
Notwithstanding the foregoing, no party shall be required to provide any
information which it reasonably believes it may not provide to the other party
by reason of applicable law, rules or regulations, which constitutes information
protected by attorney/client privilege, or which it is required to keep
confidential by reason of contract or agreement with third parties. The parties
hereto shall make reasonable and appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.
Each of Edge and Xxxxxx agrees that it shall not, and shall cause its respective
representatives not to, use any information obtained pursuant to this Section
7.6 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. All non-public information obtained pursuant to
this Section 7.6 shall be governed by the Confidentiality Agreement dated March
5, 2003 between Edge and Xxxxxx (the "Confidentiality Agreement").
Section 7.7 Publicity. No party hereto shall issue any press release
regarding this Agreement or the subject matter hereof without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange or quotation system.
Section 7.8 Registration Statement on Form S-4.
(a) Each of Edge and Xxxxxx shall cooperate with each other and
promptly prepare, and Edge, in consultation with Xxxxxx, shall file with the
SEC, as soon as practicable, a Registration Statement on Form S-4 (the "Form
S-4") under the Securities Act with respect to the shares of Edge Common Stock
issuable in the Merger, a portion of which Registration Statement shall also
serve as the joint proxy statement with respect to the meetings of the
stockholders of Edge and of Xxxxxx in connection with the transactions
contemplated by this Agreement (the "Proxy Statement/Prospectus"). The
respective parties, in consultation with each other, will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Edge shall use its commercially
reasonable best efforts, and Xxxxxx shall cooperate with Edge, to have the Form
S-4 declared effective by the SEC as promptly as practicable. Edge shall use its
commercially reasonable best efforts to obtain, prior to the effective date of
the Form S-4, all necessary non-U.S., state securities law or "Blue Sky" permits
or approvals required to carry out the transactions contemplated by this
Agreement and will pay all expenses incident thereto (including all SEC and
other filing fees and all printing and mailing expenses associated with the Form
S-4 and the Proxy Statement/Prospectus). Edge shall advise Xxxxxx, promptly
after it receives notice thereof, of the time when the Form S-4 has
47
become effective or any supplement or amendment has been filed, the issuance of
any stop order, the suspension of the qualification of the shares of Edge Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses thereto
or requests by the SEC for additional information. Each of the parties shall
also promptly provide each other party copies of all written correspondence
received from the SEC and summaries of all oral comments received from the SEC
in connection with the transactions contemplated by this Agreement. Each of the
parties shall promptly provide each other party with drafts of all
correspondence intended to be sent to the SEC in connection with the
transactions contemplated by this Agreement and allow each such party the
opportunity to comment thereon prior to delivery to the SEC.
(b) Edge, if a vote of Edge's stockholders is required pursuant to
the rules of the Nasdaq, and Xxxxxx shall each use its commercially reasonable
best efforts to cause the Proxy Statement/Prospectus to be mailed to its
stockholders as promptly as practicable after the Form S-4 is declared effective
under the Securities Act.
(c) Each of Edge and Xxxxxx shall ensure that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the respective meetings of stockholders of Edge and Xxxxxx, or, in the case
of information provided by it for inclusion in the Form S-4 or any amendment or
supplement thereto, at the time it becomes effective, (i) will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) will comply as
to form in all material respects with the provisions of the Securities Act and
the Exchange Act.
Section 7.9 Listing Application. Edge shall promptly prepare and
submit to the Nasdaq a listing application covering the shares of Edge Common
Stock issuable in the Merger and shall use its commercially reasonable best
efforts to obtain, prior to the Effective Time, approval for the listing of such
shares of Edge Common Stock, subject to official notice of issuance.
Section 7.10 Letters of Accountants.
(a) Xxxxxx shall use its commercially reasonable best efforts to
cause to be delivered to Edge "comfort" letters of Xxxxxx & Xxxxx, PLLC,
Xxxxxx'x independent public accountants, dated within two business days of the
effective date of the Form S-4 and within two business days of the Closing Date,
respectively, and addressed to Edge with regard to certain financial information
regarding Xxxxxx included in the Form S-4, in form reasonably satisfactory to
Edge and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
(b) Edge shall use its commercially reasonable best efforts to cause
to be delivered to Xxxxxx "comfort" letters of KPMG LLP, Edge's independent
public accountants, dated within two business days of the effective date of the
Form S-4 and within two business days of the Closing Date, respectively, and
addressed to Xxxxxx, with regard to certain financial
48
information regarding Edge included in the Form S-4, in form reasonably
satisfactory to Xxxxxx and customary in scope and substance for "comfort"
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
Section 7.11 Agreements of Rule 145 Affiliates. Prior to the
Effective Time, Xxxxxx shall cause to be prepared and delivered to Edge a list
identifying all persons who Xxxxxx believes, at the date of the meeting of
Xxxxxx'x stockholders to consider and vote upon the approval of the Merger and
this Agreement, may be deemed to be "affiliates" of Xxxxxx, as that term is used
in paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Rule 145
Affiliates"). Xxxxxx shall use its commercially reasonable best efforts to cause
each person who is identified as a Rule 145 Affiliate in such list to deliver to
Edge, at or prior to the Effective Time, a written agreement, in the form of
Exhibit A. Edge shall be entitled to place restrictive legends on any shares of
Edge Common Stock issued to such Rule 145 Affiliates pursuant to the Merger.
Section 7.12 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except as expressly provided herein or as otherwise agreed in writing
by the parties.
Section 7.13 Indemnification and Insurance.
(a) From and after the Effective Time, the Surviving Entity shall
indemnify, defend and hold harmless to the fullest extent permitted under
applicable law each person who is, or has been at any time prior to the
Effective Time, an officer or director of Xxxxxx (or any Subsidiary or division
thereof) and each person who served at the request of Xxxxxx as a director,
officer, trustee or fiduciary of another corporation, partnership, joint
venture, trust, pension or other employee benefit plan or enterprise
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), (i) Edge shall cause
the Surviving Entity to pay, as incurred, the fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to the Surviving Entity, in advance of the final disposition of any such Action
to the fullest extent permitted by applicable law and, if required, upon receipt
of any undertaking required by applicable law, and (ii) Edge and the Surviving
Entity will cooperate in the defense of any such matter; provided, however, the
Surviving Entity shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or delayed),
and provided further, that Edge and the Surviving Entity shall not be obligated
pursuant to this Section 7.13 to pay the fees and disbursements of more than one
counsel (plus one firm of local counsel, if any) for all Indemnified Parties in
any single Action, unless, in the good faith judgment of any of the Indemnified
Parties, there is or may be a conflict of interests between two or more of such
Indemnified Parties, in which case there may be separate counsel for each
similarly situated group.
49
(b) The parties agree that the rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, in the certificate of incorporation and bylaws of Xxxxxx and its
Subsidiaries with respect to matters occurring through the Effective Time, shall
survive the Merger.
(c) For a period of six years after the Effective Time, Edge and the
Surviving Entity shall cause to be maintained officers' and directors' liability
insurance covering the Indemnified Parties who are, or at any time prior to the
Effective Time were, covered by Xxxxxx'x existing officers' and directors'
liability insurance policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance, provided that Edge and the
Surviving Entity shall not be required to pay annual premiums in excess of 200%
of the last annual premium paid by Xxxxxx prior to the date hereof (the amount
of which premium is set forth in the Xxxxxx Disclosure Letter), but in such case
shall purchase as much coverage as reasonably practicable for such amount.
(d) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
certificate of incorporation or bylaws of Xxxxxx or any of its Subsidiaries,
under applicable law or otherwise. The provisions of this Section 7.13 shall
survive the consummation of the Merger and expressly are intended to benefit
each of the Indemnified Parties.
(e) In the event Edge, the Surviving Entity or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in either such case, proper
provision shall be made so that the successors and assigns of Edge or the
Surviving Entity, as the case may be, shall assume the obligations set forth in
this Section 7.13.
Section 7.14 Antitakeover Statutes. If any Takeover Statute is or may
become applicable to the transactions contemplated hereby, each of the parties
hereto and the members of its Board of Directors shall grant such approvals and
take such actions as are necessary so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
any Takeover Statute on any of the transactions contemplated by this Agreement.
Section 7.15 Control of Appraisal Process. If Xxxxxx receives any
demand for an appraisal of Xxxxxx Common Stock under Section 262 of the DGCL, it
will promptly notify Edge of that demand and will not, without the prior written
consent of Edge, offer, or accept an offer, to settle, or make or otherwise
commit to make any payment in respect of, any such demand. Edge will have the
right to participate in and direct all negotiations and proceedings with respect
to all such demands. In connection with the Merger, Xxxxxx will comply with the
applicable notice requirements of Section 262 of the DGCL.
Section 7.16 Employee Matters. (a) Xxxxxx agrees that it shall not
make, and it shall not permit its Subsidiaries to make, any representations or
promises, oral or written, to employees of Xxxxxx and its Subsidiaries
concerning continued employment following the Effective Time, or the terms and
conditions of that employment, except as requested by Edge
50
under 7.16(b) or otherwise in writing with the prior written consent of Edge.
Nothing in this Agreement shall be considered a contract between Edge, Xxxxxx,
its Subsidiaries and any employee for such employee's continued employment.
(b) At or after the Effective Time, Xxxxxx shall establish a
retention plan in a substantially similar form as that attached hereto as
Exhibit B (the "Retention Plan") for the purpose of retaining the services of
certain Xxxxxx employees, to be effective as of the Effective Time. The Xxxxxx
employees eligible to receive an award under the Retention Plan (each a
"Retention Bonus") and the amount of each Retention Bonus shall be determined by
Edge. Nothing in this Agreement shall be considered a contract between Edge,
Xxxxxx, its Subsidiaries and any employee or consideration for, or inducement
with respect to, any employee's continued employment and, without limitation,
all such employees are and will continue to be considered to be employees at
will pursuant to the applicable employment at will laws or doctrines, subject to
any express written agreement to the contrary with such employee.
Section 7.17 Section 16(b) Board Approval. Prior to Closing, the
Board of Directors of Xxxxxx shall, by resolution duly adopted by such Board of
Directors or a duly authorized committee of "non-employee directors" thereof,
approve and adopt, for purposes of exemption from "short-swing" liability under
Section 16(b) of the Exchange Act, the conversion at the Effective Time of the
shares of Xxxxxx Common Stock held by officers and directors of Xxxxxx into
shares of Edge Common Stock and cash as a result of the conversion of shares of
shares in the Merger, and the assumption by Edge at the Effective Time of the
Xxxxxx Options and Xxxxxx Warrants. Such resolution shall set forth the name of
the applicable "insiders" for purposes of Section 16 of the Exchange Act, the
number of securities to be acquired by each individual, that the approval is
being granted to exempt the transaction under Rule 16b-3 under the Exchange Act
and, for the Xxxxxx Options to be assumed by Edge at the Effective Time, the
material terms of the options and warrants to purchase Edge Common Stock
acquired by such insiders as a result of the assumption of the Xxxxxx Options
and Xxxxxx Warrants by Edge.
Section 7.18 Registration Rights. Edge will execute and deliver a
Registration Rights Agreement substantially in the form attached hereto as
Exhibit C.
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) The Merger and this Agreement shall have been approved
and adopted by the affirmative vote of holders of a majority of the
outstanding shares of Xxxxxx Common Stock entitled to vote thereon; and
(ii) The issuance of shares of Edge Common Stock pursuant to
the Merger shall have been approved by the holders of shares of Edge Common
Stock as and to the extent required by the rules of the Nasdaq.
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(b) None of the parties hereto shall be subject to any decree, order
or injunction of a court of competent jurisdiction, U.S. or non-U.S., which
prohibits the consummation of the Merger; provided, however, that, prior to
invoking this condition, each party agrees to comply with Section 7.5, and
with respect to other matters not covered by Section 7.5, to use its
commercially reasonable best efforts to have any such decree, order or
injunction lifted or vacated; and no statute, rule or regulation shall have
been enacted by any governmental authority which prohibits or makes unlawful
the consummation of the Merger.
(c) The Form S-4 shall have become effective and no stop order with
respect thereto shall be in effect.
(d) The shares of Edge Common Stock to be issued pursuant to the
Merger shall have been authorized for listing on the Nasdaq, subject to
official notice of issuance.
Section 8.2 Conditions to Obligation of Xxxxxx to Effect the Merger.
The obligation of Xxxxxx to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) Edge and Merger Sub shall have performed, in all material
respects, their covenants and agreements contained in this Agreement required
to be performed on or prior to the Closing Date, and the representations and
warranties of Edge and Merger Sub contained in this Agreement and in any
document delivered in connection herewith (i) that are qualified as to
materiality or Edge Material Adverse Effect shall be true and correct in all
respects as of the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case as of such
earlier date), and (ii) that are not so qualified shall be true and correct
in all respects as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case as of such earlier date), except for such breaches of representations
and inaccuracies in warranties in this clause (ii) that do not and could not
reasonably be expected to have, individually or in the aggregate, an Edge
Material Adverse Effect, and Xxxxxx shall have received a certificate of each
of Edge and Merger Sub, executed on its behalf by its President or one of its
Vice Presidents, dated the Closing Date, certifying to such effect; provided
that, the failure to deliver the foregoing certificate shall not in itself
constitute a breach of this Agreement if such failure is the result of such
officer's inability to truthfully make such certification as of the Closing
Date other than as a result of (i) the failure to comply with any covenant
contained in this Agreement by Edge or Merger Sub or (ii) any representation
or warranty which was not true as of the date of this Agreement.
(b) Xxxxxx shall have received the opinion of Xxxxxx & Xxxxxx
L.L.P., counsel to Xxxxxx, in form and substance reasonably satisfactory to
Xxxxxx and dated the Closing Date, a copy of which shall be furnished to
Edge, to the effect that the Merger will qualify as a reorganization under
Section 368(a) of the Code and no gain or loss will be recognized for United
States federal income tax purposes by the stockholders of Xxxxxx who exchange
Xxxxxx Common Stock solely for Edge Common Stock pursuant to the Merger
(except with respect to cash received in lieu of fractional shares). In
rendering
52
such opinion, such counsel shall be entitled to receive and rely upon
representations of Xxxxxx, Edge and Merger Sub dated as of the Closing Date.
(c) At any time after the date of this Agreement, there shall not
have been any event or occurrence, or series of events or occurrences, that
has had or is reasonably likely to have, individually or in the aggregate
with all other events or occurrences since the date of this Agreement, an
Edge Material Adverse Effect.
Section 8.3 Conditions to Obligation of Edge and Merger Sub to
Effect the Merger. The obligations of Edge and Merger Sub to effect the Merger
shall be subject to the fulfillment or waiver at or prior to the Closing Date of
the following conditions:
(a) Xxxxxx shall have performed, in all material respects, its
covenants and agreements contained in this Agreement required to be performed
on or prior to the Closing Date, and the representations and warranties of
Xxxxxx contained in this Agreement and in any document delivered in
connection herewith (i) that are qualified as to materiality or Xxxxxx
Material Adverse Effect shall be true and correct in all respects as of the
Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such earlier date),
and (ii) that are not so qualified shall be true and correct in all respects
as of the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case as of such
earlier date), except for such breaches of representations and inaccuracies
in warranties in this clause (ii) that do not and are not reasonably likely
to have, individually or in the aggregate, a Xxxxxx Material Adverse Effect,
and Edge shall have received a certificate of Xxxxxx, executed on its behalf
by its President or one of its Vice Presidents, dated the Closing Date,
certifying to such effect; provided that, the failure to deliver the
foregoing certificate shall not in itself constitute a breach of this
Agreement if such failure is the result of such officer's inability to
truthfully make such certification as of the Closing Date other than as a
result of (i) the failure to comply with any covenant contained in this
Agreement by Xxxxxx or (ii) any representation or warranty which was not true
as of the date of this Agreement.
(b) At any time after the date of this Agreement, there shall not
have been any event or occurrence, or series of events or occurrences, that
has had or is reasonably likely to have, individually or in the aggregate
with all other events or occurrences since the date of this Agreement, a
Xxxxxx Material Adverse Effect.
(c) Edge shall have received from each Rule 145 Affiliate an
agreement to the effect set forth in Section 7.11.
(d) The aggregate number of shares held by holders of Xxxxxx Common
Stock who have made demands for appraisal in accordance with the DGCL shall
not exceed 15% of the shares of Xxxxxx Common Stock outstanding and entitled
to vote at the Xxxxxx meeting of stockholders.
(e) Edge shall have received an agreement from Eagle Investments,
Inc., in the form attached hereto as Exhibit D, representing to Edge as to
the ownership interests
53
of such person as set forth in Section 5.26 of the Xxxxxx Disclosure Letter
(the "Acknowledgement Agreements").
(f) If the Closing occurs on or prior to July 31, 2003, Edge shall
have received a waiver from Veritas DGC Land, Inc. in a form reasonably
acceptable to Edge which waives the application of Section 3 of the Second
Amendment to Promissory Note, Warrant and Registration Rights Agreement dated
as of June 28, 2002 as against Edge and its Affiliates other than Xxxxxx.
(g) Xxxxxx shall have either (i) obtained the Bank One consent
referred to in Section 5.6 to the Xxxxxx Disclosure Letter in a form
reasonably satisfactory to Edge or (ii) demonstrated to the reasonable
satisfaction of Edge that such consent is no longer required.
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent. 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 Xxxxxx'x and Edge's stockholders of
the Merger, by the mutual written consent of Xxxxxx and Edge approved by action
of their respective Boards of Directors.
Section 9.2 Termination by Edge or Xxxxxx. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of Edge or Xxxxxx if:
(a) the Merger shall not have been consummated by March 31, 2004;
provided, however, that the right to terminate this Agreement pursuant to
this clause (a) shall not be available to any party whose failure to perform
or observe in any material respect any of its obligations under this
Agreement in any manner shall have been the cause of, or resulted in, the
failure of the Merger to occur on or before such date;
(b) a meeting (including adjournments and postponements) of Xxxxxx'x
stockholders for the purpose of obtaining the approvals required by Section
8.1(a)(i) shall have been held and such stockholder approvals shall not have
been obtained;
(c) a meeting (including adjournments and postponements) of Edge's
stockholders for the purpose of obtaining the approvals required by Section
8.1(a)(ii) shall have been held and such stockholder approvals shall not have
been obtained; or
(d) a U.S. federal, state or non-U.S. court of competent
jurisdiction or federal, state or non-U.S. governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause (d) shall have complied with Section 7.5
and, with respect to other matters not
54
covered by Section 7.5, shall have used its reasonable commercial efforts to
remove such injunction, order or decree.
Section 9.3 Termination by Xxxxxx. This Agreement may be terminated
at any time prior to the Effective Time by action of the Board of Directors of
Xxxxxx, after consultation with its outside legal advisors, if:
(a) (i)(A) there has been a breach by Edge or Merger Sub of any
representation, warranty, covenant or agreement set forth in this Agreement
or if any representation or warranty of Edge or Merger Sub shall have become
untrue, in either case such that the conditions set forth in Section 8.2(a)
would not be satisfied if the Closing were to have been held on the date
notice of termination is given to Edge by Xxxxxx and (B) such breach is not
curable, or, if curable, is not cured within 30 days after written notice of
such breach is given to Edge by Xxxxxx; or (ii) there is any event or
occurrence, or series of events or occurrences, that has had or is reasonably
likely to have, individually or in the aggregate with all other events or
occurrences since the date of this Agreement, an Edge Material Adverse Effect
that has not been cured at the time of the termination of this Agreement
pursuant to this subsection;
(b) a vote of Edge's stockholders is required pursuant to the rules
of the Nasdaq, the Board of Directors of Edge shall have failed to recommend
to its stockholders or shall have withdrawn or materially modified, in a
manner adverse to Xxxxxx, its approval or recommendation of the issuance of
shares of Edge Common Stock pursuant to the Merger, or resolved to do so; or
(c) the Board of Directors of Edge shall have failed to recommend
against a tender or exchange offer for the acquisition of 50% or more of the
voting power of Edge's outstanding capital stock within the time periods
prescribed under Rule 14d-9 and Rule 14e-2 under the Exchange Act (unless
Edge has taken no position as provided in Section 14e-2(a)(2) and (3) of the
Exchange Act as a result of Edge not having adequate information or not
having completed its due diligence with respect thereto prior to such time or
Edge otherwise not having sufficient time to have formulated or made a
recommendation), or Edge shall have (i) entered into or the Board of
Directors of Edge shall have recommended, a transaction, proposal or offer,
involving the acquisition, directly or indirectly, for consideration
consisting of cash and/or securities, of 50% or more of the shares of Edge's
capital stock then outstanding, voting securities representing 50% or more of
the voting power of the then outstanding shares of Edge capital stock, or all
or substantially all of the assets of Edge (an "Edge Acquisition Proposal")
or (ii) entered into any definitive agreement in respect of an Edge
Acquisition Proposal. For the avoidance of doubt, the taking of any of the
foregoing actions in this Section 9.3(c) by Edge shall not be considered a
breach of this Agreement by Edge.
Section 9.4 Termination by Edge. This Agreement may be terminated
at any time prior to the Effective Time by action of the Board of Directors of
Edge, after consultation with its outside legal advisors, if:
55
(a) (i)(A) there has been a breach by Xxxxxx of any representation,
warranty, covenant or agreement set forth in this Agreement or if any
representation or warranty Xxxxxx shall have become untrue, in either case
such that the conditions set forth in Section 8.3(a) would not be satisfied
if the Closing were to have been held on the date notice of termination is
given to Xxxxxx by Edge and (B) such breach is not curable, or, if curable,
is not cured within 30 days after written notice of such breach is given to
Xxxxxx by Edge; or (ii) there is any event or occurrence, or series of events
or occurrences, that has had or is reasonably likely to have, individually or
in the aggregate with all other events or occurrences since the date of this
Agreement, an Xxxxxx Material Adverse Effect that has not been cured at the
time of the termination of this Agreement pursuant to this subsection; or
(b) the Board of Directors of Xxxxxx shall have failed to recommend
to its stockholders the approval of the transactions contemplated hereby or
shall have withdrawn or materially modified, in a manner adverse to Edge, its
approval or recommendation of the Merger or recommended a Xxxxxx Acquisition
Proposal, or resolved to do so.
Section 9.5 Effect of Termination.
(a) If this Agreement is terminated:
(i) by Xxxxxx or Edge pursuant to Section 9.2(b) [failure to
obtain Xxxxxx stockholder approval]; or
(ii) by Edge pursuant to Section 9.4(b) [withdrawal of Xxxxxx
recommendation to stockholders];
then Xxxxxx shall pay Edge a fee of (x) $345,000 plus (y) all out-of-pocket
expenses paid or payable to third parties which do not in the aggregate exceed
$500,000 and which are incurred by Edge and for which reasonable documentation
is supplied with respect to the transactions contemplated by this Agreement at
the time of such termination in cash by wire transfer to an account designated
by Edge.
(b) If this Agreement is terminated:
(A) by Xxxxxx or Edge pursuant to Section 9.2(c) [failure to
obtain Edge Stockholder approval]; or
(B) by Xxxxxx pursuant to Section 9.3(b) [withdrawal of Edge
recommendation to stockholders] or Section 9.3(c) [an Edge Acquisition
Proposal];
then Edge shall pay Xxxxxx a fee of (x) $345,000 plus (y) all out of pocket
expenses paid or payable to third parties which do not in the aggregate exceed
$500,000 and which are incurred by Xxxxxx and for which reasonable documentation
is supplied with respect to the transactions contemplated by this Agreement at
the time of such termination in cash by wire transfer to an account designated
by Xxxxxx.
56
(c) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 9, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 9.5, the last sentence of Section 7.6 and Section 7.12 and
except for the provisions of Sections 10.2, 10.3, 10.4, 10.6, 10.8, 10.9, 10.10,
10.11, 10.12, 10.13, 10.14, 10.15 and 10.16 provided that nothing herein shall
relieve any party from any liability for any willful and material breach by such
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement and all rights and remedies of the nonbreaching party
under this Agreement in the case of such a willful and material breach, at law
or in equity, shall be preserved. The Confidentiality Agreement shall survive
any termination of this Agreement, and the provisions of such Confidentiality
Agreement shall apply to all information and material delivered by any party
hereunder.
Section 9.6 Extension; Waiver. At any time prior to the Effective
Time, each party may by action taken by its Board of Directors, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Merger; provided, however, that the agreements contained in Article 4 and in
Sections 7.11, 7.12 and 7.13 and this Article 10 and the agreements delivered
pursuant to this Agreement shall survive the Merger. 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. The Confidentiality Agreement shall
survive any termination of this Agreement, and the provisions of the
Confidentiality Agreement shall apply to all information and material delivered
by any party hereunder.
Section 10.2 Notices. Except as otherwise provided herein, any notice
required to be given hereunder shall be sufficient if in writing, and sent by
facsimile transmission or by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
57
(a) if to Xxxxxx, to it at:
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy, which will not constitute notice for purposes
hereof, to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx Early
Facsimile: (000) 000-0000
(b) if to Edge or Merger Sub, to it at:
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
with a copy, which will not constitute notice for purposes
hereof, to:
Xxxxx Xxxxx L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 10.3 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, all or any of its rights, interests and
obligations hereunder to Edge or to any direct or indirect wholly owned
Subsidiary of Edge. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Article IV (but beginning only after the Effective Time and to the extent and
only to the extent necessary for a stockholder of Xxxxxx to receive the Edge
Common Stock specified in Section 4.2(b) and the Certificates and cash in lieu
of fractional shares relating thereto), Section 7.13, and except as provided in
any agreements delivered pursuant hereto (collectively, the "Third-Party
58
Provisions"), nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. The Third-Party
Provisions may be enforced by the beneficiaries thereof.
Section 10.4 Entire Agreement. This Agreement, the Stockholder
Agreements, the exhibits to this Agreement, the Xxxxxx Disclosure Letter, the
Edge Disclosure Letter and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect thereto, except that the
Confidentiality Agreement shall continue in effect, subject to the provisions of
Section 7.3 hereof, and except nothing herein shall affect liabilities, if any,
arising prior to the date hereof under any exclusivity agreement between Xxxxxx
and Edge with respect to the transactions contemplated by this Agreement.
Section 10.5 Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of Xxxxxx or Edge, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. To be effective, any
amendment or modification hereto must be in a written document each party has
executed and delivered to the other parties.
Section 10.6 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 10.7 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 10.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be given no
substantive or interpretative effect whatsoever.
Section 10.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, words denoting any
gender shall include all genders, and words denoting natural persons shall
include corporations and partnerships and vice versa.
(b) The phrase "to the knowledge of" and similar phrases relating to
knowledge of Xxxxxx or Edge, as the case may be, shall mean the actual
knowledge of its executive officers.
59
(c) "Material Adverse Effect" with respect to any person shall mean
a material adverse effect on or change in (a) the business, assets,
liabilities, condition (financial or otherwise), results of operations or
prospects of such person (including the Surviving Entity when used with
respect to Xxxxxx) and its Subsidiaries, taken as a whole, or (b) the ability
of the party to consummate the transactions contemplated by this Agreement or
fulfill the conditions to closing. "Xxxxxx Material Adverse Effect" and "Edge
Material Adverse Effect" mean a Material Adverse Effect with respect to
Xxxxxx and Edge, respectively.
(d) The term "Subsidiary," when used with respect to any party,
means any corporation or other organization (including a limited liability
company), whether incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least 50% of the securities or
other interests having by their terms ordinary voting power to elect at least
50% of the board of directors or others performing similar functions with
respect to such corporation or other organization or any organization of
which such party is a general partner or managing member.
(e) 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 10.3.
(f) 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.
(g) Except as this Agreement otherwise specifies, all references
herein to any Applicable Law, including the Code, ERISA, the Exchange Act and
the Securities Act, are references to that Applicable Law or any successor
Applicable Law, as the same may have been amended or supplemented from time
to time, and any rules or regulations promulgated thereunder.
Section 10.10 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, or 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 shall be deemed to impair any such right
power or remedy, nor will it be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
Section 10.11 Incorporation of Disclosure Letters and Exhibits. The
Xxxxxx Disclosure Letter, the Edge Disclosure Letter and all exhibits attached
hereto and referred to
60
herein are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
Section 10.12 Severability. If any provision of this Agreement is
invalid, illegal or unenforceable, that provision will, to the extent possible,
be modified in such a manner as to be valid, legal and enforceable but so as to
retain most nearly 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. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 10.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 10.14 Consent to Jurisdiction and Venue. Each of the parties
hereto (i) consents to submit itself to the personal jurisdiction of any
Delaware state court or any federal court located in the States of Texas or
Delaware in the event any dispute arises out of this Agreement or any of the
transactions contemplated herein, (ii) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court and (iii) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated herein in any court other
than any Texas or Delaware state court or any federal court sitting in the
States of Texas or Delaware.
Section 10.15 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
Section 10.16 No Affiliate Liability. To the maximum extent allowed by
law, unless otherwise expressly liable pursuant to a written agreement, no Party
Affiliate (as defined below), acting in his or its behalf as an agent of a party
to this Agreement, shall have any liability or obligation for breaches of this
Agreement, and each party hereto waives and releases all claims of any such
liability and obligation to the maximum extent allowed by law, except as set
forth below. Notwithstanding the provisions of the preceding sentence, Edge and
Merger Sub, on the one hand, and Xxxxxx, on the other hand, neither waive nor
release any claims they may otherwise have against any Party Affiliate of Xxxxxx
or Edge, as applicable (i) for such Party Affiliate's actual, intentional
misrepresentation (a) of any fact to Xxxxxx'x or Edge's independent auditors, or
any item reflected in the Xxxxxx Reports or the Edge Reports, and (b) to the
extent such misrepresentation has caused the Xxxxxx Reports or Edge Reports
(including any reports filed after the date of this Agreement) to materially
misstate the financial position of Xxxxxx or Edge and their respective
consolidated Subsidiaries, at such date, or the consolidated results of their
operations and their consolidated cash flow for the period then ended, (ii) for
actions taken
61
by a Party Affiliate of Xxxxxx in violation of the provisions of Section 7.2 of
this Agreement (but only to the extent that Edge or Merger Sub seeks to enforce
such provisions against a Party Affiliate by specific performance, injunctive
relief or by any other equitable means available to Edge), (iii) for actions
taken or the failure to take such action, as applicable, by a Party Affiliate of
Xxxxxx or Edge in violation of the terms of any applicable Xxxxxx Stockholder
Agreement, Edge Stockholder Agreement or the Acknowledgement Agreements and (iv)
the failure of the Party Affiliate to comply with Section 7.13. As used in this
Section: (1) "Party Affiliate" means (x) any Affiliate of a party or (y) any
director, officer, trustee, employee, representative or agent of (i) any party
or (ii) any Affiliate of any party and (2) "Affiliate" means (A) any natural
person, corporation, general partnership, joint venture, limited partnership,
limited liability company, limited liability partnership, trust, business
association, group acting in concert or person acting in a representative
capacity (each a "Person") who directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control with any
such Person, (B) any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of such Person
or (C) any other Person for which a Person described in clause (B) acts in any
such capacity.
62
The parties have caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
EDGE PETROLEUM CORPORATION
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
Senior Vice President and Chief
Financial Officer
EDGE DELAWARE SUB INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
President and Secretary
XXXXXX EXPLORATION COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive Officer
