1
EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
OEI HOLDING CORPORATION,
UNITED MERIDIAN CORPORATION,
and
OCEAN ENERGY, INC.
Dated as of December 22, 1997
2
TABLE OF CONTENTS
ARTICLE I THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Newco Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 The UMC Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5 Effects of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.7 Newco Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II EFFECT OF THE MERGERS ON THE STOCK OF UMC, NEWCO AND OEI; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . 4
Section 2.1 Effect of the Newco Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Effect of the UMC Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.1 Board of Directors of OEI Subsequent to Effective Time . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.2 Board Committees and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF OEI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5 OEI SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.6 OEI Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.9 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.12 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.14 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.16 Labor Matters; Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.17 Beneficial Ownership of UMC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 4.18 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.19 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.20 Required Stockholder Vote or Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.21 Joint Proxy Statement/Prospectus; Registration Statement . . . . . . . . . . . . . . . . . . . . 24
Section 4.22 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.23 Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.24 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.25 Tax-Free Reorganization and Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.26 Section 203 of the DGCL Not Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.27 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.28 OEI Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF UMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.5 UMC SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.6 UMC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.9 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.12 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.14 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.16 Labor Matters; Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.17 Beneficial Ownership of OEI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.18 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.19 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.20 Required Stockholder Vote or Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.21 Joint Proxy Statement/Prospectus; Registration Statement . . . . . . . . . . . . . . . . . . . . 39
Section 5.22 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.23 Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.24 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.25 Tax-Free Reorganization and Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.26 Section 203 of the DGCL Not Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.27 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.28 UMC Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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ARTICLE VI COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.1 Conduct of Business by OEI and UMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.2 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.3 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.4 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.5 Employee Stock Options, Incentive and Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.6 Filings; Other Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.8 Takeover Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.9 No Solicitation by OEI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.10 No Solicitation by UMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.11 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.12 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.13 Accountants' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.14 Additional Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.15 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.16 Stockholder Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.17 OEI Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.18 Indenture Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.19 New Bank Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.20 Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VII CONDITIONS TO THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.1 Conditions to Each Party's Obligation to Effect the Mergers . . . . . . . . . . . . . . . . . . . 58
Section 7.2 Conditions to Obligations of OEI to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.3 Conditions to Obligations of UMC to Effect the UMC Merger . . . . . . . . . . . . . . . . . . . . 59
ARTICLE VIII TERMINATION, WAIVER, AMENDMENT AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.1 Termination or Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.3 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.4 Amendment or Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.5 Extension of Time, Waiver, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.1 No Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.3 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.6 Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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Section 9.8 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.9 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.11 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.12 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Exhibit A -- Selected Provisions from OEI Bylaws
Exhibit B -- Certain Executive Officers of OEI Following the Effective Time
Exhibit C -- Form of OEI Affiliate Letter
Exhibit D -- Form of UMC Affiliate Letter
Exhibit E -- Form of Employment Agreement for Xxxxx X. Xxxxxx
Exhibit F -- Form of Employment Agreement for Xxxx X. Xxxxx
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TABLE OF DEFINITIONS
Defined Terms Section
------------- -------
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(j)
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intro
Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
XXX Xx. 00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(j)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
Certificates of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Common Shares Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(e)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
controlled by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
Customary Post-Closing Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Art.V
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Enforceability Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13(a)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12(a)
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(e)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2(b)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13(b)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Hydrocarbons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19(b)
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.22
Joint Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.21
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(b)
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(b)
Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intro
Newco Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
v
7
Newco Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Newco Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Newco Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Newco Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Newco Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(e)
OEI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intro
OEI Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9(b)
OEI Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12(a)
OEI Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
OEI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a)
OEI Director Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
OEI Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Art.IV
OEI Engagement Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.24
OEI ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12(a)
OEI Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
OEI Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12(a)
OEI Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12(a)
OEI Junior Preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a)
OEI Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
OEI Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)
OEI Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19(a)
OEI Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9(a)
OEI Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
OEI Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
OEI Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12(b)
OEI Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
OEI Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a)
OEI Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a)
OEI Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a)
OEI SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5(d)
OEI SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
OEI Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
OEI Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
OEI Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(c)
OEI Stockholders' Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.20
OEI Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9(b)
OEI Takeover Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9(a)
Oil and Gas Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19(b)
Old OEI Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Old OEI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Option Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12(b)
PCBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13(e)
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18
vi
8
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
Pooling Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.21
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Significant Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)
Surviving Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Tax Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(j)
Tax Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(j)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(j)
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(a)
UMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intro
UMC Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10(b)
UMC Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5(b)
UMC Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
UMC Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
UMC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
UMC Director Nominees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
UMC Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Art.V
UMC Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
UMC Engagement Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.24
UMC ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
UMC Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
UMC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
UMC Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12(c)
UMC Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12(c)
UMC Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
UMC Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(c)
UMC Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.19(a)
UMC Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
UMC Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
UMC Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10(a)
UMC Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
UMC Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
UMC Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12(d)
UMC Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
UMC Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
UMC SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5(a)
UMC SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
UMC Series B Common . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
UMC Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
vii
9
UMC Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5(a)
UMC Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(c)
UMC Stockholders' Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.20
UMC Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10(b)
UMC Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
UMC Takeover Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10(a)
under common control with . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16(b)
viii
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 22, 1997 (this
"Agreement"), by and among OEI HOLDING CORPORATION, a Delaware corporation
("Newco"), UNITED MERIDIAN CORPORATION, a Delaware corporation ("UMC"), and
OCEAN ENERGY, INC. a Delaware corporation ("OEI").
RECITALS
WHEREAS, UMC and OEI have determined to engage in a strategic business
combination; and
WHEREAS, (i) Newco is a newly formed corporation organized and
existing under the laws of the State of Delaware, one-half of the issued and
outstanding capital stock of which is owned by each of UMC and OEI; (ii) UMC is
a corporation organized and existing under the laws of the State of Delaware;
and (iii) OEI is a corporation organized and existing under the laws of the
State of Delaware; and
WHEREAS, the Board of Directors of each of UMC and OEI have approved
and declared fair to and advisable and in the best interests of their
respective stockholders that each of UMC, OEI and Newco combine pursuant to the
Mergers (as hereinafter defined) upon the terms and subject to the conditions
provided in this Agreement; and
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Mergers and also to
prescribe various conditions to the Mergers; and
WHEREAS, for federal income tax purposes, it is intended that the
mergers contemplated hereby constitute transactions described in Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that the
transactions contemplated by this Agreement will be accounted for as a "pooling
of interests" (a "Pooling Transaction") in accordance with United States
generally accepted accounting principles ("GAAP") and the rules, regulations
and interpretations of the Securities and Exchange Commission (the "SEC"); and
WHEREAS, immediately following the execution and delivery of this
Agreement, UMC and OEI will enter into a stock option agreement (the "OEI Stock
Option Agreement"), pursuant to which OEI will grant UMC the option (the "OEI
Option") to purchase shares of OEI Common Stock (as hereinafter defined), upon
the terms and subject to the conditions set forth therein; and
WHEREAS, immediately following the execution and delivery of this
Agreement, UMC and OEI will enter into a stock option agreement (the "UMC Stock
Option Agreement" and,
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11
together with the OEI Stock Option Agreement, the "Option Agreements"),
pursuant to which UMC will xxxxx XXX the option (the "UMC Option") to purchase
shares of UMC Common Stock (as hereinafter defined), upon the terms and subject
to the conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 The Newco Merger. (a) Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Newco shall merge with and into OEI (the
"Newco Merger") at the Newco Effective Time (as defined herein), and (i) each
outstanding share of common stock, par value $0.01 per share, of Newco ("Newco
Common Stock") shall be automatically canceled and retired, (ii) each share of
OEI Common Stock issued and outstanding immediately prior to the Newco
Effective Time ("Old OEI Common Stock") shall be converted into a right to
receive 2.34 shares of OEI Common Stock (as defined in Section 4.2) and (iii)
each share of OEI Junior Preferred (as defined in Section 4.2) issued and
outstanding immediately prior to the Newco Effective Time, if any, shall remain
issued and outstanding and unchanged as a result of the Newco Merger. OEI
shall be the surviving corporation in the Newco Merger (the "Newco Surviving
Corporation"). From and after the Newco Effective Time, the identity and
separate existence of Newco shall cease.
(b) In connection with the Newco Merger, OEI shall take such
actions as may be necessary to reserve sufficient shares of OEI Common Stock
prior to the Newco Merger to permit the issuance of shares of OEI Common Stock
(i) to the holders of Old OEI Common Stock in accordance with the terms of the
Agreement and (ii) upon the exercise of options ("OEI Stock Options") to
purchase or acquire shares of OEI Common Stock under employee incentive or
benefit plans, programs or arrangements and non-employee director plans
presently maintained by OEI ("OEI Option Plans") outstanding at the Newco
Effective Time .
Section 1.2 The UMC Merger. (a) Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the DGCL, UMC
shall merge with and into OEI (the "UMC Merger," and together with the Newco
Merger, the "Mergers") at the UMC Effective Time (as defined herein), and (i)
each outstanding share of UMC Common Stock (as defined in Section 5.2) shall be
converted into a right to receive 1.30 shares of OEI Common Stock and (ii) each
share of OEI Common Stock issued and outstanding immediately prior to the UMC
Effective Time and each share of OEI Junior Preferred issued and outstanding
immediately prior to the UMC Effective Time, if any, shall remain issued and
outstanding and unchanged as a result of the UMC Merger. OEI shall be the
surviving corporation in the UMC Merger (the "UMC Surviving Corporation" and,
together with the Newco Surviving Corporation, the
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"Surviving Corporations"). From and after the UMC Effective Time, the identity
and separate existence of UMC shall cease.
(b) In connection with the UMC Merger, OEI shall take such actions
as may be necessary to reserve sufficient shares of OEI Common Stock prior to
the UMC Merger to permit the issuance of shares of OEI Common Stock (i) to the
holders of UMC Common Stock as of the UMC Effective Time in accordance with the
terms of this Agreement and (ii) upon the exercise of UMC Stock Options (as
defined in Section 6.5(a)) to be assumed by OEI in accordance with Section 6.5
hereof.
Section 1.3 Closing. The closing of the Mergers (the "Closing") will
take place at 10:00 a.m. (Houston, Texas time) on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII,
unless another time or date is agreed to by the parties hereto. The Closing
will be held at such location as is agreed to by the parties hereto.
Section 1.4 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger (individually, a "Certificate of Merger"
with respect to each of the Mergers, and collectively with respect to both
Mergers, the "Certificates of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL in order to effect both Mergers. The Newco Merger shall become
effective at such time as is specified in the Certificate of Merger for the
Newco Merger, which time shall be at 10:30 a.m. (Houston, Texas time) on the
date of the Closing (the "Newco Effective Time"). The UMC Merger shall become
effective at such time as is specified in the Certificate of Merger for the UMC
Merger, which time shall be at 10:31 a.m. (Houston, Texas time) on the date of
the Closing (the "UMC Effective Time" or, in some cases, the "Effective Time").
Section 1.5 Effects of the Mergers.
(a) DGCL. Each of the Mergers shall have the effects set forth in
Section 259 of the DGCL.
(b) Charter Documents. The Certificate of Merger for the Newco
Merger shall provide in substance that at the Newco Effective Time, the
certificate of incorporation and bylaws of OEI shall be amended to contain the
same provisions as those set forth in the certificate of incorporation and
bylaws, respectively, of Newco, as in effect immediately prior to the Newco
Effective Time; provided that (i) Sections 1, 5, 7, 8, 9, 11 and 12 of the
certificate of incorporation of OEI and (ii) the Certificate of Designation of
the OEI Junior Preferred, in each case as in effect immediately prior to the
Newco Effective Time, shall not be amended and shall remain effective without
modification as a result of the Mergers, until thereafter changed or amended as
provided therein or by applicable law. The form of such amendments shall be
consistent with the foregoing sentence and, with respect to the bylaws, shall
be consistent with Section 1.7 hereof, as determined by OEI, Newco and UMC
prior to the OEI Effective Time. At the UMC Effective Time, the certificate of
incorporation and bylaws of OEI, as in effect immediately prior to the UMC
Effective Time, shall be the certificate of incorporation and
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bylaws, respectively, of OEI until thereafter changed or amended as provided
therein or by applicable law.
Section 1.6 Directors and Officers. The directors and officers
designated in accordance with Sections 3.1 and 3.2 shall, from and after the
UMC Effective Time, be the directors and officers of OEI, and, subject to the
provisions of Sections 3.1 and 3.2, such directors and officers shall serve
until their respective successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with OEI's certificate of incorporation and bylaws.
Section 1.7 Newco Charter Documents. (a) The certificate of
incorporation of Newco shall be in form and substance satisfactory to each of
UMC and OEI prior to the mailing of the Joint Proxy Statement/Prospectus (as
defined herein) and (b) the bylaws of Newco shall be in form and substance
satisfactory to each of UMC and OEI prior to the mailing of the Joint Proxy
Statement/Prospectus and shall include, without limitation, the provisions set
forth in EXHIBIT A, without any other provisions conflicting with the substance
of the provisions set forth therein.
ARTICLE II
EFFECT OF THE MERGERS ON THE STOCK OF
UMC, NEWCO AND OEI; EXCHANGE OF CERTIFICATES
Section 2.1 Effect of the Newco Merger As of the Newco Effective Time,
by virtue of the Newco Merger and without any action on the part of OEI, Newco
or the holders of any securities of OEI or Newco:
(a) Cancellation of Newco Common Stock. Each issued and
outstanding share of Newco Common Stock shall be automatically canceled and
retired and shall cease to exist.
(b) Conversion of Old OEI Common Stock. Subject to Section 2.3(e),
each issued and outstanding share of Old OEI Common Stock shall be converted
into the right to receive 2.34 (the "Newco Exchange Ratio") fully paid and
nonassessable shares of OEI Common Stock (the "Newco Merger Consideration").
As of the Newco Effective Time, all such shares of Old OEI Common Stock shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate or certificates which
immediately prior to the Newco Effective Time represented outstanding shares of
Old OEI Common Stock (the "Old OEI Certificates") shall cease to have any
rights with respect thereto, except the right to receive (i) certificates ("OEI
Certificates") representing the number of whole shares of OEI Common Stock into
which such shares have been converted, (ii) certain dividends and other
distributions in accordance with Section 2.3(c), and (iii) cash in lieu of
fractional shares of Old OEI Common Stock in accordance with Section 2.3(e),
without interest.
(c) Treatment of OEI Junior Preferred. Each share of OEI Junior
Preferred issued and outstanding immediately prior to the Newco Effective Time,
if any, shall remain issued and outstanding and unchanged as a result of the
Newco Merger.
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Section 2.2 Effect of the UMC Merger. As of the UMC Effective Time, by
virtue of the UMC Merger and without any action on the part of UMC, OEI or the
holders of any securities of UMC or OEI:
(a) Cancellation of Treasury Stock and OEI Owned Stock. Each share
of UMC Common Stock that is owned by UMC or by OEI, or by a direct or indirect
wholly-owned subsidiary of UMC or OEI, shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(b) Cancellation of Treasury Stock and UMC Owned Stock. Each share
of Old OEI Common Stock that is owned by OEI or by UMC, or by a direct or
indirect wholly-owned subsidiary of OEI or UMC, shall automatically be canceled
and retired and shall cease to exist, and no consideration shall be delivered
in exchange therefor.
(c) Conversion of UMC Common Stock. Subject to Section 2.3(e),
each issued and outstanding share of UMC Common Stock (other than shares to be
canceled in accordance with Section 2.2(a) shall be converted into the right to
receive 1.30 (the "UMC Exchange Ratio") fully paid and nonassessable shares of
OEI Common Stock (the "UMC Merger Consideration"). As of the UMC Effective
Time, all such shares of UMC Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate or certificates which immediately prior to such
Effective Time represented outstanding shares of UMC Common Stock (the "UMC
Certificates" and, together with the OEI Certificates, the "Certificates")
shall cease to have any rights with respect thereto, except the right to
receive (i) OEI Certificates, (ii) certain dividends and other distributions in
accordance with Section 2.3(c), and (iii) cash in lieu of fractional shares of
OEI Common Stock in accordance with Section 2.3(e), without interest.
(d) Treatment of OEI Common Stock and OEI Junior Preferred. Each
share of OEI Common Stock issued and outstanding immediately prior to the UMC
Effective Time (including shares into which Old OEI Common Stock was converted
pursuant to the Newco Merger, but excluding shares to be canceled in accordance
with Section 2.2(b)) and each share of OEI Junior Preferred issued and
outstanding immediately prior to the UMC Effective Time, if any, shall remain
issued and outstanding and unchanged as a result of the UMC Merger.
Section 2.3 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, OEI shall enter into
an agreement with such bank or trust company as may be designated by UMC and
OEI (the "Exchange Agent"), which shall provide that OEI shall deposit with the
Exchange Agent as of the Effective Time, for the benefit of the holders of
shares of UMC Common Stock and Old OEI Common Stock, for exchange in accordance
with this Article II, through the Exchange Agent, OEI Certificates representing
the number of whole shares of OEI Common Stock issuable pursuant to Section 2.1
in exchange for outstanding shares of Old OEI Common Stock and issuable
pursuant to Section 2.2 in exchange for outstanding shares of UMC Common Stock
(such shares of OEI Common Stock, together with any dividends or distributions
with respect thereto with a record date after the Effective Time, any Excess
Shares (as defined in Section 2.3(e)) and any cash
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(including cash proceeds from the sale of the Excess Shares) payable in lieu of
any fractional shares of OEI Common Stock being hereinafter referred to as the
"Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted into the Newco Merger Consideration,
pursuant to Section 2.1, or the UMC Merger Consideration, pursuant to Section
2.2 (collectively, the "Merger Consideration") (i) a 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
UMC and OEI may reasonably specify), and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor an OEI
Certificate representing that number of whole shares of OEI Common Stock which
such holder has the right to receive pursuant to the provisions of this Article
II, certain dividends or other distributions in accordance with Section 2.3(c)
and cash in lieu of any fractional shares in accordance with Section 2.3(e),
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of UMC Common Stock not registered in the transfer
records of UMC or of Old OEI Common Stock not registered in the transfer
records of OEI, an OEI Certificate representing the proper number of shares of
OEI Common Stock may be issued to a person other than the person in whose name
the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such issuance shall pay any transfer or other non- income taxes
required by reason of the issuance of shares of OEI Common Stock to a person
other than the registered holder of such Certificate or establish to the
satisfaction of OEI that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.3, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender OEI Certificates representing the number of whole
shares of OEI Common Stock into which the shares of UMC Common Stock or Old OEI
Common Stock formerly represented by such Certificate have been converted,
certain dividends or other distributions in accordance with Section 2.3(c) and
cash in lieu of any fractional shares in accordance with Section 2.3(e). No
interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to the provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to OEI 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 OEI Common Stock represented thereby,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.3(e), and all such dividends, other distributions
and cash in lieu of fractional shares of OEI Common Stock shall be paid by OEI
to the Exchange Agent and shall be included in the Exchange Fund, in each case
until the surrender of such Certificate in accordance with this Article II.
Subject to the effect of applicable escheat or similar laws, following
surrender of any such Certificate there shall be paid to the holder of the OEI
Certificate representing whole shares of OEI Common Stock issued in exchange
therefor, without interest,
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(i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of OEI Common Stock and the amount of any cash
payable in lieu of a fractional share of OEI Common Stock to which such holder
is entitled pursuant to Section 2.3(e) 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 such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of OEI
Common Stock. OEI shall make available to the Exchange Agent cash for these
purposes.
(d) No Further Ownership Rights in UMC Common Stock and Old OEI
Common Stock. All shares of OEI Common Stock issued upon the surrender for
exchange of Certificates in accordance with the terms of this Article II
(including any cash paid pursuant to this Article II) shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to the
shares of UMC Common Stock and Old OEI Common Stock theretofore represented by
such Certificates, subject, however, to OEI's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which may have been authorized or made by UMC on such shares of UMC Common
Stock or by OEI on such shares of Old OEI Common Stock, as the case may be,
which remain unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of OEI of the shares of
UMC Common Stock or Old OEI Common Stock, as the case may be, which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to OEI or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this Article II, except as
otherwise provided by law.
(e) No Fractional Shares. (i) No OEI Certificates or scrip
representing fractional shares of OEI Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of OEI
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of OEI.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent will determine the excess of (A) the number of whole shares of
OEI Common Stock delivered to the Exchange Agent by OEI pursuant to Section
2.3(a) over (B) the aggregate number of whole shares of OEI Common Stock to be
distributed to holders of UMC Common Stock and Old OEI Common Stock pursuant to
Section 2.3(b) (such excess being herein called the "Excess Shares"). Following
the Effective Time, the Exchange Agent will, on behalf of former stockholders
of UMC, if any, and OEI, sell the Excess Shares at then-prevailing prices on
the New York Stock Exchange, Inc. (the "NYSE"), all in the manner provided in
Section 2.3(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent will be
executed on the NYSE through one or more member firms of the NYSE and will be
executed in round lots to the extent practicable. The Exchange Agent will use
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's sole judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of such sale or sales
have been distributed to the holders of UMC Common Stock and Old OEI Common
Stock, the Exchange Agent will hold
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such proceeds in trust for the holders of UMC Common Stock and Old OEI Common
Stock (the "Common Shares Trust"). OEI will pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent incurred in connection with such sale of the
Excess Shares. The Exchange Agent will determine the portion of the Common
Shares Trust to which each holder of UMC Common Stock and Old OEI Common Stock
is entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Shares Trust by a fraction, the numerator of which is the
amount of the fractional share interest to which such holder of UMC Common
Stock or Old OEI Common Stock is entitled (after taking into account all shares
of UMC Common Stock or Old OEI Common Stock held at the Effective Time by such
holder) and the denominator of which is the aggregate amount of fractional
share interests to which all holders of UMC Common Stock and Old OEI Common
Stock are entitled.
(iv) Notwithstanding the provisions of Section 2.3(e)(ii) and
(iii), OEI may elect at its option, exercised prior to the Effective Time, in
lieu of the issuance and sale of Excess Shares and the making of the payments
hereinabove contemplated, to pay each holder of UMC Common Stock or Old OEI
Common Stock an amount in cash equal to the product obtained by multiplying (A)
the fractional share interest to which such holder (after taking into account
all shares of UMC Common Stock or Old OEI Common Stock held at the Effective
Time by such holder) would otherwise be entitled by (B) the closing price for a
share of OEI Common Stock as reported on the NYSE Composite Transactions Tape
(as reported in The Wall Street Journal, or, if not reported thereby, any other
authoritative source) on the Closing Date, and, in such case, all references
herein to the cash proceeds of the sale of the Excess Shares and similar
references will be deemed to mean and refer to the payments calculated as set
forth in this Section 2.3(e)(iv).
(v) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of UMC Common Stock and Old OEI Common
Stock with respect to any fractional share interests, the Exchange Agent will
make available such amounts to such holders of UMC Common Stock and Old OEI
Common Stock subject to and in accordance with the terms of Section 2.3(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to OEI upon demand, and any holders
of the Certificates who have not theretofore complied with this Article II
shall thereafter look only to OEI for payment of their claim for Merger
Consideration, any cash in lieu of fractional shares of OEI Common Stock and
any dividends or distributions with respect to OEI Common Stock.
(g) No Liability. None of Newco, UMC, OEI or the Exchange Agent
shall be liable to any person in respect of any shares of OEI Common Stock (or
dividends or distributions with respect thereto) or cash from the Exchange Fund
in each case delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration, any cash payable
to the holder of
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such Certificate pursuant to this Article II or any dividends or distributions
payable to the holder of such Certificate would otherwise escheat to or become
the property of any governmental body or authority) any such Merger
Consideration or cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of OEI, free and clear of all claims or interest of any person
previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by OEI, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
OEI.
(i) Lost, Stolen or Destroyed Certificates. If 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
destroyed and, if required by OEI, the posting by such person of a bond in such
reasonable amount as OEI 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 the Merger
Consideration and, if applicable, any cash in lieu of fractional shares, and
unpaid dividends and distributions on shares of OEI Common Stock deliverable in
respect thereof, pursuant to this Agreement.
ARTICLE III
GOVERNANCE
Section 3.1 Board of Directors of OEI Subsequent to Effective Time.
Immediately subsequent to the UMC Effective Time, the Board of Directors of OEI
shall have 14 members and shall be divided into three classes, Class I, Class
II and Class III, with the term of Class I expiring at OEI's first annual
meeting following the Effective Time, the term of Class II expiring at OEI's
second annual meeting following the Effective Time and the term of Class III
expiring at OEI's third annual meeting following the Effective Time. Prior to
the mailing to stockholders of the Joint Proxy Statement/Prospectus, (i) the
Board of Directors of OEI shall select from among the current members of the
Board of Directors of OEI seven individuals (the "OEI Director Nominees") for
nomination as directors of OEI, which nominees shall include Xxxxx X. Xxxxxx,
and (ii) the Board of Directors of UMC shall select from among the current
members of the Board of Directors of UMC seven individuals (the "UMC Director
Nominees") for nomination as directors of OEI, which nominees shall include
Xxxx X. Xxxxx. If an individual so selected consents to serve as a director,
such individual shall be elected as a director of OEI, effective as of the UMC
Effective Time, for a term expiring at OEI's next annual meeting of
stockholders following the Effective Time at which the term of the class to
which such director belongs expires, subject to being renominated as a director
at the discretion of OEI's Board of Directors. Each class shall consist of an
equal, or as near as equal as possible, number of directors (as provided in
OEI's certificate of incorporation and the DGCL) and the specific designation
of UMC Director Nominees and OEI Director Nominees to a particular class shall
be determined by UMC and OEI prior to the mailing to stockholders of the Joint
Proxy Statement/Prospectus; provided, however, that (i) Xxxxx X. Xxxxxx shall
be designated by the Board of Directors of OEI as a Class III Director and
shall serve as President and Chief
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Executive Officer as of the UMC Effective Time until the earlier of his
resignation or removal or until his successor is duly elected and qualified in
accordance with the Bylaws of OEI in effect subsequent to the UMC Effective
Time and (ii) Xxxx X. Xxxxx shall be designated by the Board of Directors of
UMC as a Class III Director and shall serve as Chairman of the Board as of the
UMC Effective Time until the earlier of his resignation or removal or until his
successor is duly elected and qualified in accordance with the Bylaws of OEI in
effect subsequent to the UMC Effective Time. If at any time prior to the UMC
Effective Time, any UMC Director Nominee or OEI Director Nominee shall be
unable to serve as a director at the UMC Effective Time, the respective Board
of Directors that designated such individual as provided herein shall designate
another individual to serve in such individual's place; provided that in the
event Xxxx Xxxxx is unable to serve as Chairman of the Board, Xxxxx X. Xxxxxx
shall serve as Chairman of the Board as of the Effective Time until his
successor is duly elected and qualified in accordance with the Bylaws of OEI in
effect subsequent to the UMC Effective Time; provided, further, in the event
Xxxxx X. Xxxxxx is unable to serve as President and Chief Executive Officer,
Xxxx Xxxxx shall serve as President and Chief Executive Officer of the Company
as of the Effective Time until his successor is duly elected and qualified in
accordance with the Bylaws of OEI in effect subsequent to the UMC Effective
Time.
Section 3.2. Board Committees and Executive Officers. The committees
of the Board of Directors of OEI immediately subsequent to the UMC Effective
Time shall contain an equal number of UMC Director Nominees and OEI Director
Nominees and the composition of such committees (including chairmen thereof)
shall be as designated prior to the mailing to stockholders of the Joint Proxy
Statement/Prospectus until the earlier of the resignation or removal of any
individual so designated or until their respective successors are duly elected
and qualified, as the case may be, it being agreed that if at any time prior to
the UMC Effective Time any director nominee designated as a member of a
committee shall be unable to serve as a member of a committee (including as a
chairman of any committee) at the UMC Effective Time, the respective Board of
Directors that designated such individual as provided herein (or in the case of
Messrs. Xxxxx and Xxxxxx, the respective Board of Directors on which they
presently serve) shall designate another individual to serve in such
individual's place. The chairman of each of the Finance and Audit Committees
of the Board of Directors of OEI immediately subsequent to the UMC Effective
Time shall be UMC Director Nominees and the chairman of each of the Nominating
and Compensation Committees of the Board of Directors of OEI immediately
subsequent to the UMC Effective Time shall be OEI Director Nominees.
Subsequent to the UMC Effective Time, those individuals set forth on EXHIBIT B
hereto shall be executive officers of OEI having the titles and positions set
forth opposite their respective names on such Exhibit until the earlier of the
resignation or removal of any such individual or until their respective
successors are duly elected and qualified, as the case may be. Prior to the
mailing to the stockholders of the Joint Proxy Statement/Prospectus, OEI and
UMC may mutually agree to designate additional individuals to serve as
executive officers of OEI subsequent to the UMC Effective Time. Subject to
Section 3.1, if any executive officer set forth on EXHIBIT B or designated in
accordance with this Section 3.2 ceases to be a full-time employee of either
OEI or UMC (or otherwise declines to serve in such designated capacity) at or
before the UMC Effective Time, OEI and UMC will agree upon another person to
serve in such person's stead or agree to leave such office vacant through the
UMC Effective Time.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OEI
Except as set forth on the Disclosure Schedule (the "OEI Disclosure
Schedule") included in the letter and delivered by OEI to UMC prior to the
execution of this Agreement, OEI represents and warrants to UMC as follows:
Section 4.1 Organization and Qualification.
(a) OEI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. OEI is duly
qualified to do business as a foreign corporation and is in good standing in
the jurisdictions set forth in Section 4.1(a) of the OEI Disclosure Schedule,
which includes each jurisdiction in which the character of OEI's properties
owned or leased by it or the nature of its business makes such qualification
necessary, except in jurisdictions, if any, where the failure to be so
qualified would not, individually or in the aggregate, result in an OEI
Material Adverse Effect (as defined in Section 4.1(c)). OEI has all requisite
corporate power and authority to own, use or lease its properties and to carry
on its business as it is now being conducted. OEI has made available to UMC a
complete and correct copy of its certificate of incorporation and bylaws, each
as amended to date, and OEI's certificate of incorporation and bylaws as so
delivered are in full force and effect. OEI is not in default in the
performance, observation or fulfillment of any provision of its certificate of
incorporation or bylaws.
(b) Section 4.1(b) of the OEI Disclosure Schedule lists
the name and jurisdiction of organization of each Subsidiary (as defined in
Section 4.1(c)) of OEI and the jurisdictions in which each such Subsidiary is
qualified or holds licenses to do business as a foreign corporation or other
organization as of the date hereof. Each of OEI's Subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, is duly qualified to do business as a foreign
entity and is in good standing in the jurisdictions set forth in Section 4.1(b)
of the OEI Disclosure Schedule, which includes each jurisdiction in which the
character of such Subsidiary's properties owned or leased by it or the nature
of its business makes such qualification necessary, except in jurisdictions, if
any, where the failure to be so qualified would not, individually or in the
aggregate, result in an OEI Material Adverse Effect. Each of OEI's Subsidiaries
has all requisite corporate (or other organizational) power and authority to
own, use or lease its properties and to carry on its business as it is now
being conducted. OEI has made available to UMC a complete and correct copy of
the certificate of incorporation and bylaws (or similar organizational
documents) of each of OEI's Subsidiaries, each as amended to date, and the
certificate of incorporation and bylaws (or similar organizational documents)
as so delivered are in full force and effect. No Subsidiary of OEI is in
default in any material respect in the performance, observation or fulfillment
of any provision of its certificate of incorporation or bylaws (or similar
organizational documents). Other than OEI's Subsidiaries, OEI does not
beneficially own or control, directly or indirectly, any class of equity or
similar securities of any corporation or other organization, whether
incorporated or unincorporated.
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(c) For purposes of this Agreement, (i) an "OEI Material
Adverse Effect" shall mean any event, circumstance, condition, development or
occurrence causing, resulting in or having a material adverse effect on the
condition (financial or otherwise), business, assets, properties or results of
operations of OEI and its Subsidiaries taken as a whole; and (ii) "Subsidiary"
shall mean, with respect to any party, any corporation or other organization,
whether incorporated or unincorporated, of which (A) at least a majority of the
securities or other interests having by their terms voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
beneficially owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries, or (B) such
party or any Subsidiary of such party is a general partner of a partnership or
a manager of a limited liability company.
Section 4.2 Capitalization.
(a) As of the date hereof, the authorized capital stock
of OEI consists of (i) 100,000,000 shares of common stock, par value $.01 per
share ("OEI Common Stock"), of which 22,901,786 shares are issued and
outstanding as of the date of this Agreement, 100 shares are held as treasury
shares, and 3,023,955 shares are reserved for issuance upon exercise of options
under OEI Stock Plans and (ii) 10,000,000 shares of preferred stock, par value
$.01 per share, which have not yet been issued or designated as to a series by
the Board of Directors of OEI; provided that 2,000,000 of such shares have been
or will be designated by OEI as "Series A Junior Participating Preferred Stock"
(the "OEI Junior Preferred") in connection with the adoption by the Board of
Directors of OEI, concurrently with the authorization of this Agreement, of a
stockholder rights plan (the "OEI Rights Plan") pursuant to which a preferred
share purchase right (an "OEI Right") has been or will be declared payable as a
dividend on all outstanding shares of OEI Common Stock, which Rights will be
issued pursuant to a OEI Rights Agreement of even date with this Agreement
between OEI and Xxxxxx Trust and Savings Bank (the "OEI Rights Agreement"). All
of the aforesaid outstanding shares of capital stock have been validly issued,
are fully paid and nonassessable, and are free of preemptive rights. Except as
described above, including pursuant to the OEI Rights Plan, as of the date
hereof, there are no shares of capital stock or other equity securities of OEI
outstanding and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of any capital stock of OEI, or contracts,
commitments, understandings, or arrangements by which OEI is or may become
bound to issue additional shares of its capital stock (other than previously
reserved shares described above) or options, warrants or rights to purchase or
acquire any shares of its capital stock.
(b) Except as set forth in Section 4.2(b) of the OEI
Disclosure Schedule, OEI is, directly or indirectly, the record and beneficial
owner of all of the outstanding shares of capital stock or other equity
securities, as the case may be, of each of OEI's Subsidiaries, there are no
irrevocable proxies with respect to any such shares, and no equity securities
of any Subsidiary of OEI are or may become required to be issued by reason of
any options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable or exercisable for, shares of any capital stock of any Subsidiary
of OEI, and
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there are no contracts, commitments, understandings or arrangements by which
OEI or any Subsidiary of OEI is or may be bound to either sell any outstanding
securities of any Subsidiary or issue additional shares of capital stock of any
Subsidiary of OEI or securities convertible into or exchangeable or exercisable
for any such shares. Except as set forth in Section 4.2(b) of the OEI
Disclosure Schedule, all of such shares so owned by OEI are validly issued,
fully paid and nonassessable and are owned by it free and clear of any liens,
mortgages, pledges, security interests, encumbrances, claims or charges of any
kind (collectively, "Liens"). There are not as of the date hereof and there
will not be at the Effective Time any stockholder agreements, voting trusts or
other agreements or understandings to which OEI is a party or by which it is
bound relating to the voting of any shares of the capital stock of OEI that
will limit in any way the solicitation of proxies by or on behalf of OEI from,
or the casting of votes by, the stockholders of OEI with respect to the
Mergers. There are no restrictions on OEI to vote the stock of any of its
Subsidiaries.
Section 4.3 Authority. The Board of Directors of OEI has approved
the Newco Merger, the UMC Merger and this Agreement, and declared the Newco
Merger, the UMC Merger and this Agreement to be in the best interests of the
stockholders of OEI. The Board of Directors of OEI has taken all necessary
corporate action to approve the transactions contemplated by the Agreement to
Vote and Proxy dated as of the date hereof between UMC and each of Xxxxx X.
Xxxxxx and the Xxxxxx Family Limited Partnership (the "OEI Proxies") pursuant
to Section 203(a) of the DGCL. The directors of OEI have advised OEI and Newco
that they intend to vote or cause to be voted all of the shares of OEI Common
Stock beneficially owned by them and their affiliates in favor of approval of
the Mergers and this Agreement. OEI has full corporate power and authority to
execute and deliver this Agreement and the other agreements contemplated hereby
(the "Ancillary Agreements") to which OEI is or will be a party and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Ancillary Agreements to
which OEI is or will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by OEI's
Board of Directors, and no other corporate proceedings on the part of OEI are
necessary to authorize this Agreement and the Ancillary Agreements to which OEI
is or will be a party or to consummate the transactions contemplated hereby or
thereby, other than the approval of this Agreement, the Newco Merger and the
UMC Merger by its stockholders as contemplated by Section 6.3(c). This
Agreement has been, and the Ancillary Agreements to which OEI is or will be a
party are, or upon execution and delivery will be, duly and validly executed
and delivered by OEI and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto,
constitute, or upon execution and delivery will constitute, valid and binding
obligations of OEI enforceable against OEI in accordance with their respective
terms, except as such enforceability may be subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and other laws relating to
or affecting the rights of creditors generally and of general principles of
equity (the "Enforceability Exception").
Section 4.4 Consents and Approvals; No Violation. Except as set
forth in Section 4.4 of the OEI Disclosure Schedule, the execution and delivery
of this Agreement and the Ancillary Agreements do not, and the consummation of
the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of
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termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any Lien, security
interest, charge or encumbrance upon any of the properties or assets of OEI or
any of its Subsidiaries under, any provision of (a) the certificate of
incorporation or bylaws of OEI or any provision of the comparable charter or
organization documents of any of its Subsidiaries, (b) any material loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license which OEI or any of its
Subsidiaries is a party or by which OEI or any of its Subsidiaries or any of
their respective properties or assets may be bound or (c) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to OEI or any of
its Subsidiaries or any of their respective properties or assets, other than in
the case of clause (b) or (c), any such conflicts, violations, defaults,
terminations, cancellations, accelerations, Liens, security interests, charges
or encumbrances that, individually or in the aggregate, would not result in an
OEI Material Adverse Effect, materially impair the ability of OEI to perform
its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any domestic (Federal and state),
foreign or supranational court, commission, governmental body, regulatory
agency, authority or tribunal (a "Governmental Authority") is required by or
with respect to OEI or any of its Subsidiaries in connection with the execution
and delivery of this Agreement by OEI or the consummation by OEI of the
transactions contemplated hereby, except for (a) the filing with the SEC of the
Joint Proxy Statement/Prospectus and such reports in connection, or in
compliance, with the provisions of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations of the SEC thereunder as may be
required in connection with this Agreement and the transactions contemplated
hereby and the obtaining from the SEC of such orders as may be required, (b)
the filing of the Certificates of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of
other states in which OEI or any of its Subsidiaries is qualified to do
business, (c) such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Mergers or the
transactions contemplated by this Agreement, (d) such filings as may be
required in connection with applicable taxes, (e) such other consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the corporation, takeover or "Blue Sky" laws of various
states, (f) such filings and approvals as may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (g) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have an OEI Material Adverse
Effect, materially impair the ability of OEI to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 4.5 OEI SEC Reports. OEI has filed with the SEC, and has
heretofore made available to UMC true and complete copies of, each form,
registration statement, report, schedule, proxy or information statement and
other document (including exhibits and amendments thereto, but excluding
preliminary materials), including without limitation its Annual Reports to
Stockholders incorporated by reference in certain of such reports, which OEI
was required to file with the SEC since December 31, 1994, and prior to or on
the date of this Agreement under the Securities Act or the Exchange Act
(collectively, the "OEI SEC Reports"). As of the respective
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dates such OEI SEC Reports were filed or, if any such OEI SEC Reports were
amended, as of the date such amendment was filed, each of the OEI SEC Reports,
including without limitation any financial statements or schedules included
therein, (a) complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the
applicable rules and regulations promulgated thereunder, and (b) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Section 4.6 OEI Financial Statements. Each of the audited
consolidated financial statements and unaudited consolidated interim financial
statements of OEI (including any related notes and schedules) included (or
incorporated by reference) in the OEI SEC Reports (collectively, the "OEI
Financial Statements") have been prepared from, and are in accordance with, the
books and records of OEI and its consolidated Subsidiaries, comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto and subject, in the case of quarterly
financial statements, to normal and recurring year-end adjustments) and fairly
present, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial position of OEI
and its consolidated Subsidiaries as of the date thereof and the consolidated
results of operations and cash flows (and changes in financial position, if
any) of OEI and its consolidated Subsidiaries for the periods presented therein
(subject to normal year-end adjustments, none of which are material, and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
Section 4.7 Absence of Undisclosed Liabilities. Except as
disclosed in the OEI SEC Reports, as of the date hereof, there are no
liabilities of OEI or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that are
reasonably likely to have an OEI Material Adverse Effect, other than: (a)
liabilities adequately provided for on the balance sheet of OEI dated as of
December 31, 1996 (including the notes thereto), contained in OEI's Annual
Report on Form 10-K for the year ended December 31, 1996; (b) financial
liabilities and contractual obligations incurred in the ordinary course of
business subsequent to December 31, 1996; and (c) liabilities under this
Agreement.
Section 4.8 Absence of Certain Changes. Except as disclosed in
the OEI SEC Reports, as contemplated by this Agreement, as set forth in Section
4.8 of the OEI Disclosure Schedule or as disclosed in OEI Financial Statements,
since December 31, 1996, (a) OEI and its Subsidiaries have conducted their
business in all material respects in the ordinary course consistent with past
practices, (b) there has not been any change or development, or combination of
changes or developments that, individually or in the aggregate, would have an
OEI Material Adverse Effect, (c) there has not been any declaration, setting
aside or payment of any dividend or other distribution with respect to any
shares of capital stock of OEI, or any repurchase, redemption or other
acquisition by OEI or any of its Subsidiaries of any outstanding shares of
capital stock or other securities of, or other ownership interests in, OEI or
any of its Subsidiaries, (d) there has not been any amendment of any term of
any outstanding security of OEI or any of its Subsidiaries, (e) there
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has not been any change in any method of accounting or accounting practice by
OEI or any of its Subsidiaries, except for any such change required by reason
of a concurrent change in GAAP, (f) there has not been any material change in
any tax method, practice or election by OEI or any of its Subsidiaries and (g)
there has not been any other transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business) that is reasonably likely to have an OEI Material
Adverse Effect, except for general economic changes and changes that may affect
the industries of OEI and its Subsidiaries generally.
Section 4.9 No Default. Neither OEI nor any of its Subsidiaries
is in default or violation (and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation) of any term,
condition or provision of (a) the certificate of incorporation or bylaws of OEI
or the comparable charter or organizational documents of any of its
Subsidiaries, (b) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license to which OEI or any of its Subsidiaries is now a party or by which
OEI or any of their respective properties or assets is bound or (c) any order,
writ, injunction, decree, statute, rule or regulation applicable to OEI or any
of its Subsidiaries, except in the case of (b) and (c) for defaults or
violations which in the aggregate would not have an OEI Material Adverse
Effect.
Section 4.10 Taxes. Except as otherwise disclosed in Section 4.10
of the OEI Disclosure Schedule (and for matters that would not be an OEI
Material Adverse Effect, individually or in the aggregate):
(a) OEI and each of its Subsidiaries have timely filed
(or have had timely filed on their behalf) or will file or cause to be timely
filed, all Tax Returns (as defined in Section 4.10(j)) required by applicable
law to be filed by, with respect to, or include any of them prior to or as of
the Closing Date. All such Tax Returns and amendments thereto are or will be
true, complete and correct in all material respects.
(b) OEI and each of its Subsidiaries have paid (or have
had paid on their behalf), or where payment is not yet due, have established
(or have had established on their behalf and for their sole benefit and
recourse), or will establish or cause to be established on or before the
Closing Date, an adequate accrual for the payment of all material Taxes (as
defined in Section 4.10(j)) for which OEI or any of its Subsidiaries could be
held liable with respect to any period ending prior to or as of the Closing
Date.
(c) No Audit (as defined in Section 4.10(j)) by a Tax
Authority (as defined in Section 4.10(j)) is pending or, to the knowledge of
OEI, threatened with respect to any Tax Returns filed by, or Taxes due from,
OEI or any Subsidiary. No issue has been raised by any Tax Authority in any
Audit of OEI or any of its Subsidiaries that if raised with respect to any
other period not so audited could be expected to result in a material proposed
deficiency for any period not so audited. No material deficiency or adjustment
for any Taxes has been threatened, proposed, asserted or assessed against OEI
or any of its Subsidiaries. There are no Liens for Taxes upon the assets of OEI
or any of its Subsidiaries, except Liens for current Taxes not yet delinquent.
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(d) Neither OEI nor any of its Subsidiaries has given or
been requested to give any waiver of statutes of limitations relating to the
payment of Taxes or have executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date.
(e) Prior to the date hereof, OEI and its Subsidiaries
have disclosed, and provided or made available to UMC true and complete copies
of, all material Tax sharing, Tax indemnity, or similar agreements to which OEI
or any of its Subsidiaries is a party, is bound by, or has any obligation or
liability for Taxes.
(f) Neither OEI nor any of its Subsidiaries has filed a
consent under section 341(f) of the Code concerning collapsible corporations.
Neither OEI nor any of its Subsidiaries has made any material payments, is
obligated to make any material payments, or is a party to any agreement that
under certain circumstances could obligate it to make any material payments
that will not be deductible under sections 162(m), 263, or 280G of the Code.
Neither OEI nor any of its Subsidiaries has been a United States real property
holding corporation within the meaning of section 897(c)(2) of the Code during
the applicable period specified in section 897(c)(1)(A)(ii) of the Code.
Neither OEI nor any of its Subsidiaries (i) has been a member of an Affiliated
Group filing a consolidated federal Tax Return (other than a group the common
parent of which was OEI) or (ii) has any liability for the Taxes of any person
(other than any of OEI and its Subsidiaries) under Treasury Regulation section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor, by contract or otherwise.
(g) Neither OEI nor any of its Subsidiaries has agreed to
or is required to make any adjustment pursuant to section 481(a) of the Code
(or any predecessor provision), and there is no application pending with any
taxing authority requesting permission for any changes in any accounting method
of OEI or any of its Subsidiaries. The Internal Revenue Service has not
proposed any such adjustment or change in accounting method with respect to OEI
or any of its Subsidiaries.
(h) Neither OEI nor any of its Subsidiaries has been or
is in violation (or with notice or lapse of time or both, would be in
violation) of any applicable law relating to the payment or withholding of
Taxes. OEI and its Subsidiaries have duly and timely withheld from employee
salaries, wages and other compensation and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all
periods under all applicable laws.
(i) The unpaid Taxes of OEI and its Subsidiaries (i) did
not, as of the most recent fiscal month end included in OEI Financial
Statements, exceed by any material amount the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the most recent balance
sheet included in OEI Financial Statements (rather than in any notes thereto)
and (ii) will not exceed by any material amount that reserve as adjusted for
operations and transactions through the Effective Time in accordance with the
past custom and practice of OEI and its Subsidiaries in filing their Tax
Returns.
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(j) As used in this Agreement, (i) "Audit" shall mean any
audit, assessment of Taxes, other examination by any Tax Authority, proceeding
or appeal of such proceeding relating to Taxes; (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign Governmental Authority responsible for the administration of any Taxes;
(iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes; and (v) "Affiliated
Group" means any affiliated group within the meaning of section 1504(a) of the
Code or any similar group defined under a similar provision of state, local or
foreign law.
Section 4.11 Litigation. Except as disclosed in the OEI SEC
Reports or Section 4.11 of the OEI Disclosure Schedule, as of the date of this
Agreement, there is no suit, claim, action, proceeding, arbitration or
investigation pending or, to the knowledge of OEI, threatened against or
directly affecting OEI, any of its Subsidiaries or any of the directors or
officers of OEI or any of its Subsidiaries in their capacity as such by or
before any court, Governmental Authority or any arbitrator of any kind ("OEI
Litigation"), and neither OEI nor its Subsidiaries is aware of any facts that
are likely to give rise to any OEI Litigation, that (in any case) could
reasonably be expected to have an OEI Material Adverse Effect or could
reasonably be expected to materially adversely affect OEI's ability to
consummate the transactions contemplated by this Agreement, if adversely
determined. Neither OEI nor any of its Subsidiaries, nor any officer, director
or employee of OEI or any of its Subsidiaries, has been permanently or
temporarily enjoined by any order, judgment, injunction or decree of any court
or any other Governmental Authority from engaging in or continuing any conduct
or practice in connection with the business, assets or properties of OEI or
such Subsidiary nor, to the knowledge of OEI, is OEI, any Subsidiary or any
officer, director or employee of OEI or its Subsidiaries under investigation by
any Governmental Authority. Except as disclosed in the OEI SEC Reports or
Section 4.11 of the OEI Disclosure Schedule, there is not in existence any
order, judgment, injunction or decree of any court or other tribunal against
OEI or any of its Subsidiaries that is reasonably likely to have an OEI
Material Adverse Effect or is reasonably expected to materially adversely
affect OEI's ability to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby. Notwithstanding the foregoing,
no representation or warranty in this Section 4.11 is made with respect to
Environmental Laws (as defined in Section 4.13(a)), which are covered
exclusively by the provisions set forth in Section 4.13.
Section 4.12 Employee Benefit Plans; ERISA.
(a) Section 4.12(a) of the OEI Disclosure Schedule
contains a true and complete list of the written and oral plans, policies and
arrangements of any type (including but not limited to plans described in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), currently sponsored, maintained or contributed to by OEI or any
trade or business, whether or not incorporated, which together with OEI would
be deemed a "single employer" within the meaning of section 414(b), (c) or (m)
of the Code or section 4001(b)(1) of ERISA (an "OEI ERISA Affiliate"), which
provide compensation, insurance or other coverage, or
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any other benefits to the employees, independent contractors or non-employee
directors of OEI or any Subsidiary of OEI ("OEI Benefit Plans").
(b) With respect to each OEI Benefit Plan: (i) if
intended to qualify under section 401(a) or 401(k) of the Code, such plan
satisfies the requirements of such sections, has received a favorable
determination letter from the Internal Revenue Service with respect to its
qualification, and its related trust has been determined to be exempt from tax
under section 501(a) of the Code and, to the knowledge of OEI, nothing has
occurred since the date of such letter to adversely affect such qualification
or exemption; (ii) each such plan has been administered in substantial
compliance with its terms and applicable law; (iii) neither OEI nor any OEI
ERISA Affiliate has engaged in, and OEI and each OEI ERISA Affiliate do not
have any knowledge of any person that has engaged in, any transaction or acted
or failed to act in any manner that would subject OEI or any OEI ERISA
Affiliate to any liability for a breach of fiduciary duty under ERISA that
could reasonably be expected to result in an OEI Material Adverse Effect; (iv)
no disputes are pending or, to the knowledge of OEI or any OEI ERISA Affiliate,
threatened; (v) neither OEI nor any OEI ERISA Affiliate has engaged in, and OEI
and each OEI ERISA Affiliate do not have any knowledge of any person that has
engaged in, any transaction in violation of section 406(a) or (b) of ERISA for
which no exemption exists under section 4975(c)(2) of the Code or section
4975(d) of the Code that could reasonably be expected to result in an OEI
Material Adverse Effect; (vi) there have been no "reportable events" within the
meaning of section 4043 of ERISA for which the 30 day notice requirement of
ERISA has not been waived by the Pension Benefit Guaranty Corporation (the
"PBGC"); (vii) all contributions due have been made on a timely basis (within,
where applicable, the time limit established under section 302 of ERISA or
section 412 of the Code); (viii) no notice of intent to terminate such plan has
been given under section 4041 of ERISA and no proceeding has been instituted
under section 4042 of ERISA to terminate such plan; and (ix) except for defined
benefit plans, such plan may be terminated on a prospective basis without any
continuing liability for benefits other than benefits accrued to the date of
such termination. All contributions made or required to be made under any OEI
Benefit Plan meet the requirements for deductibility under the Code, and all
contributions which are required and which have not been made have been
properly recorded on the books of OEI or an OEI ERISA Affiliate.
(c) No OEI Benefit Plan is a "multiemployer plan" (as
defined in section 4001(a)(3) of ERISA) or a "multiple employer plan" (as
described in section 413(c) of the Code), and, except as provided in Section
4.12(c) of the OEI Disclosure Schedule, no OEI Benefit Plan is or was subject
to section 302 of ERISA or section 412 of the Code. No event has occurred with
respect to OEI or an OEI ERISA Affiliate in connection with which OEI could be
subject to any liability, Lien or encumbrance with respect to any OEI Benefit
Plan or any employee benefit plan described in section 3(3) of ERISA
maintained, sponsored or contributed to by an OEI ERISA Affiliate under ERISA
or the Code. Except as provided in Part 6 of Title I of ERISA, no welfare plan
(as defined in section 3(1) of ERISA) provides any benefits to any retiree or
former employee or service provider of OEI.
(d) Except as set forth in Section 4.12(d) of the OEI
Disclosure Schedule, no employees of OEI or any of its Subsidiaries are covered
by any severance plan or similar arrangement.
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Section 4.13 Environmental Matters. Except as set forth in (i)
Section 4.13 of the OEI Disclosure Schedule or (ii) the OEI SEC Reports:
(a) The businesses of OEI and its Subsidiaries have been
and are operated in compliance with all Federal, state and local environmental
protection, health and safety or similar laws, statutes, ordinances,
restrictions, licenses, rules, regulations, permit conditions and legal
requirements, including without limitation the Federal Clean Water Act, Safe
Drinking Water Act, Resource Conservation & Recovery Act, Clean Air Act,
Comprehensive Environmental Response, Compensation and Liability Act, Emergency
Planning and Community Right to Know Act, Oil Pollution Act of 1990, and the
Toxic Substances Control Act, each as amended and currently in effect
(collectively, "Environmental Laws").
(b) Neither OEI nor any of its Subsidiaries has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, discharge, release, disposal, transport or handling of any chemicals,
pollutants, contaminants, wastes, solid wastes, toxic substances, hazardous
substances, hazardous wastes, petroleum, petroleum products or any substance
regulated under any Environmental Law ("Hazardous Substances") at any of its
properties or facilities, except in material compliance with all Environmental
Laws or except as would not result in an OEI Material Adverse Effect, and, to
OEI's knowledge, no generation, manufacture, processing, distribution, use,
treatment, handling, storage, discharge, release, disposal, transport or
handling of any Hazardous Substances has occurred at any property or facility
owned, leased or operated by OEI or any of its Subsidiaries except in material
compliance with all Environmental Laws.
(c) Neither OEI nor any of its Subsidiaries has received
any written notice from any Governmental Authority or other third party or, to
the knowledge of OEI, any other communication alleging or concerning any
violation by OEI or any of its Subsidiaries of, or responsibility or liability
of OEI or any of its Subsidiaries under, any Environmental Law or for personal
injuries and/or property damages. There are no pending, or to the knowledge of
OEI, threatened, claims, suits, actions, proceedings or investigations with
respect to the businesses or operations of OEI or any of its Subsidiaries
alleging or concerning any violation of or responsibility or liability under
any Environmental Law or alleging personal injuries and/or property damages,
nor does OEI have any knowledge of any fact or condition that could give rise
to such a claim, suit, action, proceeding or investigation.
(d) OEI and its Subsidiaries are in possession of and in
material compliance with all approvals, permits, licenses, registrations and
similar type authorizations from all Governmental Authorities under all
Environmental Laws with respect to the operation of the businesses of OEI and
its Subsidiaries; there are no pending or, to the knowledge of OEI, threatened,
actions, proceedings or investigations seeking to modify, revoke or deny
renewal of any of such approvals, permits, licenses, registrations and
authorizations; and OEI does not have knowledge of any fact or condition that
is reasonably likely to give rise to any action, proceeding or investigation to
modify, revoke or deny renewal of any of such approvals, permits, licenses,
registrations and authorizations. No notice to, approval of, or authorization
or consent from any
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Governmental Authority is necessary for the transfer of or modification to any
approval, permit, license, registration or authorization, and the consummation
of the transactions contemplated by this Agreement will not violate, alter,
impair or invalidate, in any respect, any approval, permit, license,
registration or authorization.
(e) Without in any way limiting the generality of the
foregoing, (i) none of the off-site locations where OEI or any of its
Subsidiaries has transported, released, discharged, stored, disposed or
arranged for the disposal of Hazardous Substances is listed on CERCLIS or the
NPL or, to the knowledge of OEI, is the subject of pending or threatened
claims, suits, actions, proceedings or investigations by any Governmental
Authority or other third party, (ii) to OEI's knowledge, all underground
storage tanks owned or operated by OEI or any of its Subsidiaries are in
compliance with Environmental Laws, and there have been no releases of
Hazardous Substances from such underground storage tanks, (iii) to the
knowledge of OEI, there is no asbestos contained in or forming part of any
equipment, building, building component, structure or office space owned or
leased by OEI, and (iv) no polychlorinated biphenyls ("PCBs") or PCB-containing
items are used or stored at any property owned, leased or operated by OEI or
any of its Subsidiaries.
Section 4.14 Compliance with Applicable Laws. Except as set forth
in Section 4.14 of the OEI Disclosure Schedule or as disclosed in the OEI SEC
Reports, neither OEI nor any of its Subsidiaries has received notice of any
revocation or modification of any Federal, state, local or foreign governmental
license, certification, tariff, permit, authorization or approval, the
revocation or modification of which would have an OEI Material Adverse Effect.
The conduct of the business of each of OEI and its Subsidiaries complies with
all statutes, laws, regulations, ordinances, rules, judgments, orders, decrees
or arbitration awards applicable hereto, except for violations or failures to
comply, if any, that, individually or in the aggregate, would not have an OEI
Material Adverse Effect. Notwithstanding the foregoing, no representation or
warranty in this Section 4.14 is made with respect to Environmental Laws, which
are covered exclusively by the provisions set forth in Section 4.13.
Section 4.15 Insurance. Section 4.15 of the OEI Disclosure
Schedule lists each of the insurance policies relating to OEI or its
Subsidiaries which are currently in effect. OEI has provided UMC with a true,
complete and correct copy of each such policy or the binder therefor. With
respect to each such insurance policy or binder, none of OEI, any of its
Subsidiaries or any other party to the policy is in breach or default
thereunder (including with respect to the payment of premiums or the giving of
notices), and OEI does not know of any occurrence or any event which (with
notice or the lapse of time or both) would constitute such a breach or default
or permit termination, modification or acceleration under the policy, except
for such breaches or defaults which, individually or in the aggregate, would
not result in an OEI Material Adverse Effect. Section 4.15 of the OEI
Disclosure Schedule describes any self-insurance arrangements affecting OEI or
its Subsidiaries. The insurance policies listed in Section 4.15 of the OEI
Disclosure Schedule include all policies which are required in connection with
the operation of the businesses of OEI and its Subsidiaries as currently
conducted by applicable laws and all agreements relating to OEI and its
Subsidiaries.
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Section 4.16 Labor Matters; Employees.
(a) Except as set forth in Section 4.16(a) of the OEI
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of OEI, threatened
against or affecting OEI or any of its Subsidiaries and, during the past five
years, there has not been any such action, (ii) none of OEI or any of its
Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to a material
number of employees of OEI or any of its Subsidiaries, (iii) no material number
of the employees of OEI or any of its Subsidiaries are represented by any labor
organization and none of OEI or any of its Subsidiaries have any knowledge of
any current union organizing activities among a material number of employees of
OEI or any of its Subsidiaries nor does any question concerning representation
exist concerning such employees, (iv) OEI and its Subsidiaries have each at all
times been in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no material unfair labor practice
charge or complaint against any of OEI or any of its Subsidiaries pending or,
to the knowledge of OEI, threatened before the National Labor Relations Board
or any similar state or foreign agency, (vi) there is no material grievance or
arbitration proceeding arising out of any collective bargaining agreement or
other grievance procedure relating to OEI or any of its Subsidiaries, and (vii)
neither the Occupational Safety and Health Administration, the Department of
Labor, the Equal Employment Opportunity Commission nor any corresponding state
agency has threatened to file any citation, and there are no pending citations,
relating to OEI or any of its Subsidiaries.
(b) Except as set forth in Section 4.16(b) of the OEI
Disclosure Schedule, since the enactment of the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN Act"), none of OEI or any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of OEI or any of its Subsidiaries, or
(ii) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of OEI or any of its Subsidiaries, nor has OEI or any of
its Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law, that could reasonably be expected to have an OEI
Material Adverse Effect. The Mergers are not anticipated to result in any
"plant closing" or "mass layoff" which would require any action to comply with
the WARN Act.
(c) Except as disclosed in Section 4.11 of the OEI
Disclosure Schedule and for matters which would not have an OEI Material
Adverse Effect, there is no suit, claim, action, proceeding or investigation
regarding any labor or employment matter pending or threatened against or
directly affecting OEI, any of its Subsidiaries or any of the directors or
officers of OEI or any of its Subsidiaries in their capacity as such by or
before any administrative agency, court, Governmental Authority or any
arbitrator of any kind, that could reasonably be expected to have an OEI
Material Adverse Effect, if adversely determined.
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Section 4.17 Beneficial Ownership of UMC Common Stock. As of the
date hereof, neither OEI nor its Subsidiaries "beneficially owns" (as defined
in Rule 13d-3 under the Exchange Act) any of the outstanding UMC Common Stock
or any of UMC's outstanding debt securities.
Section 4.18 Permits. Immediately prior to the Effective Time and
except for approvals that are ministerial in nature and are customarily
obtained from Governmental Authorities after the Effective Time in connection
with transactions of the same nature as are contemplated hereby ("Customary
Post-Closing Consents"), OEI or its Subsidiaries will hold all of the permits,
licenses, certificates, consents, approvals, entitlements, plans, surveys,
relocation plans, environmental impact reports and other authorizations of
Governmental Authorities ("Permits") required or necessary to construct, run,
own, operate, use and maintain its properties and conduct its operations as
presently conducted, except for such Permits, the lack of which, individually
or in the aggregate, would not have an OEI Material Adverse Effect; provided,
however, that notwithstanding the foregoing, no representation or warranty in
this Section 4.18 is made with respect to Permits issued pursuant to
Environmental Laws, which are covered exclusively by the provisions set forth
in Section 4.13. OEI is in compliance with the terms of its Permits, except
where the failure to comply would not have an OEI Material Adverse Effect.
Section 4.19 Material Contracts.
(a) Set forth in Section 4.19(a) of the OEI Disclosure
Schedule is a list of each contract, lease, indenture, agreement, arrangement
or understanding to which OEI or any of its Subsidiaries is subject that is of
a type that would be required to be included as an exhibit to a Form S-1
Registration Statement pursuant to the rules and regulations of the SEC if such
a registration statement was filed by OEI (collectively, the "OEI Material
Contracts").
(b) Except as set forth in Section 4.19(a) or 4.19(b) of
the OEI Disclosure Schedule, the Oil and Gas Interests (as defined herein) of
OEI and its Subsidiaries are not subject to (i) any instrument or agreement
evidencing or related to indebtedness for borrowed money, whether directly or
indirectly, or (ii) any agreement not entered into in the ordinary course of
business in which the amount involved is in excess of $500,000. With respect to
the Oil and Gas Interests of OEI and its Subsidiaries, (i) all OEI Material
Contracts are in full force and effect and are the valid and legally binding
obligations of the parties thereto and are enforceable in accordance with their
respective terms; (ii) no party to any OEI Material Contract is in material
breach or default with respect to its obligations thereunder, including with
respect to payments or otherwise; (iii) no party to any OEI Material Contract
has given notice of any action to terminate, cancel, rescind or procure a
judicial reformation thereof; and (iv) no OEI Material Contract contains any
provision that prevents OEI or any of its Subsidiaries from owning, managing
and operating the Oil and Gas Interests of OEI and its Subsidiaries in
accordance with historical practices. For purposes of this Agreement "Oil and
Gas Interests" means direct and indirect interests in and rights with respect
to oil, gas, mineral, and related properties and assets of any kind and nature,
direct or indirect, including working, leasehold and mineral interests and
operating rights and royalties, overriding royalties, production payments, net
profit interests and other nonworking interests and nonoperating interests; all
interests in rights with respect to oil, condensate, gas, casinghead gas and
other liquid or gaseous hydrocarbons (collectively, "Hydrocarbons") and other
minerals or revenues therefrom,
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all contracts in connection therewith and claims and rights thereto (including
all oil and gas leases, operating agreements, unitization and pooling
agreements and orders, division orders, transfer orders, mineral deeds, royalty
deeds, oil and gas sales, exchange and processing contracts and agreements, and
in each case, interests thereunder), surface interests, fee interests,
reversionary interests, reservations, and concessions; all easements, rights of
way, licenses, permits, leases, and other interests associated with,
appurtenant to, or necessary for the operation of any of the foregoing; and all
interests in equipment and machinery (including xxxxx, well equipment and
machinery), oil and gas production, gathering, transmission, treating,
processing, and storage facilities (including tanks, tank batteries, pipelines,
and gathering systems), pumps, water plants, electric plants, gasoline and gas
processing plants, refineries, and other tangible personal property and
fixtures associated with, appurtenant to, or necessary for the operation of any
of the foregoing.
(c) As of the date of this Agreement, except as set forth
in Section 4.19(c) of the OEI Disclosure Schedule, with respect to
authorizations for expenditures executed on or after January 1, 1997, (i) there
are no material outstanding calls for payments that are due or that OEI or its
Subsidiaries are committed to make that have not been made; (ii) there are no
material operations with respect to which OEI or its Subsidiaries have become a
non- consenting party; and (iii) there are no commitments for the material
expenditure of funds for drilling or other capital projects other than projects
with respect to which the operator is not required under the applicable
operating agreement to seek consent.
(d) Except as set forth in Section 4.19(d) of the OEI
Disclosure Schedule, (i) there are no express contractual obligations to engage
in continuous development operations in order to maintain any producing
material Oil and Gas Interest of OEI or any of its Subsidiaries in force and
effect; (ii) there are no provisions applicable to the material Oil and Gas
Interests of OEI or any of its Subsidiaries which increase the royalty
percentage of the lessor thereunder; and (iii) none of the material Oil and Gas
Interests of OEI or any of its Subsidiaries are limited by terms fixed by a
certain number of years (other than primary terms under oil and gas leases).
Section 4.20 Required Stockholder Vote or Consent. The affirmative
vote of the holders of no greater than a majority of the outstanding shares of
OEI Common Stock is required to (a) adopt this Agreement and approve the Newco
Merger and the UMC Merger, (b) approve the benefit plans to be adopted by OEI
and/or the amendments to existing benefit plans of OEI to be adopted in
accordance with Section 6.17 (to the extent OEI and UMC determine such
stockholder approval is required and advisable) and (c) approve the other
matters contemplated hereby (the "OEI Stockholders' Approval"). No other vote
of the holders of any class or series of OEI's capital stock is required by
law, the certificate of incorporation or bylaws of OEI or otherwise to adopt
this Agreement and approve the Mergers and the other matters contemplated
hereby.
Section 4.21 Joint Proxy Statement/Prospectus; Registration
Statement. None of the information supplied or to be supplied by OEI for
inclusion or incorporation by reference in (a) the Joint Proxy
Statement/Prospectus relating to the OEI Stockholders Meeting and the UMC
Stockholders Meeting (in each case, as defined herein) (also constituting the
prospectus in respect of OEI Common Stock into which shares of Old OEI Common
Stock and UMC Common Stock will be converted) (the "Joint Proxy
Statement/Prospectus"), to be filed by OEI and UMC with the
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SEC, and any amendments or supplements thereto, or (b) the Registration
Statement on Form S-4 (the "Registration Statement") to be filed by OEI with
the SEC in connection with the Mergers and the issuance of OEI Common Stock in
connection therewith, and any amendments or supplements thereto, will, at the
respective times such documents are filed, and, in the case of the Joint Proxy
Statement/Prospectus, at the time the Joint Proxy Statement/Prospectus or any
amendment or supplement thereto is first mailed to stockholders of OEI and UMC,
at the time such stockholders vote on approval and adoption of this Agreement
and at the Effective Time, and, in the case of the Registration Statement, when
it becomes effective under the Securities Act, contain, in the case of the
Joint Proxy Statement/Prospectus, any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading and, in the case of the Registration
Statement, any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. If at any time prior to the Effective Time any event
with respect to OEI, its officers and directors or any of its Subsidiaries
shall occur which is required to be described in an amendment of, or a
supplement to, the Joint Proxy Statement/Prospectus or the Registration
Statement, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of OEI and UMC. The Registration Statement will comply (with
respect to OEI) as to form in all material respects with the provisions of the
Securities Act, and the Joint Proxy Statement/Prospectus will comply (with
respect to OEI) as to form in all material respects with the provisions of the
Exchange Act.
Section 4.22 Intellectual Property. OEI and its Subsidiaries own,
or are licensed or otherwise have the right to use, all patents, patent rights,
trademarks, rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights, technology, know-how, processes and other proprietary
intellectual property rights and computer programs (collectively, "Intellectual
Property") currently used in the conduct of the business of OEI and its
Subsidiaries, except where the failure to so own or otherwise have the right to
use such Intellectual Property would not, individually or in the aggregate,
have an OEI Material Adverse Effect. No person has notified either OEI or any
of its Subsidiaries that their use of the Intellectual Property infringes on
the rights of any person, subject to such claims and infringements as do not,
individually or in the aggregate, give rise to any liability on the part of OEI
and its Subsidiaries that could have an OEI Material Adverse Effect, and, to
OEI's knowledge, no person is infringing on any right of OEI or any of its
Subsidiaries with respect to any such Intellectual Property. No claims are
pending or, to OEI's knowledge, threatened that OEI or any of its Subsidiaries
is infringing or otherwise adversely affecting the rights of any person with
regard to any Intellectual Property.
Section 4.23 Hedging. Section 4.23 of the OEI Disclosure Schedule
sets forth for the periods shown obligations of OEI and each of its
Subsidiaries for the delivery of Hydrocarbons attributable to any of the
properties of OEI or any of its Subsidiaries in the future on account of
prepayment, advance payment, take-or-pay or similar obligations without then or
thereafter being entitled to receive full value therefor. Except as set forth
in Section 4.23 of the OEI Disclosure Schedule, as of the date of this
Agreement, neither OEI nor any of its Subsidiaries is bound by futures, hedge,
swap, collar, put, call, floor, cap, option or other contracts that are
intended to
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benefit from or reduce or eliminate the risk of fluctuations in the price of
commodities, including Hydrocarbons, or securities.
Section 4.24 Brokers. No broker, finder or investment banker
(other than Xxxxxx Brothers Inc., the fees and expenses of which will be paid
by OEI) is entitled to any brokerage, finder's fee or other fee or commission
payable by OEI or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
OEI or any of its Subsidiaries. True and correct copies of all agreements and
engagement letters currently in effect with Xxxxxx Brothers Inc. (the "OEI
Engagement Letters") have been provided to UMC.
Section 4.25 Tax-Free Reorganization and Pooling. Neither OEI nor,
to the knowledge of OEI, any of its affiliates has taken or agreed to take any
action or failed to take any action which action or failure (without giving
effect to any actions or failures to act by UMC or any of its affiliates) would
prevent the Mergers and the other transactions contemplated herein from being
treated for financial accounting purposes as a Pooling Transaction or would
prevent the Mergers from constituting reorganizations within the meaning of
section 368(a)(1)(A) of the Code.
Section 4.26 Section 203 of the DGCL Not Applicable. The Board of
Directors of OEI has approved the Newco Merger, the UMC Merger, this Agreement,
the OEI Option, the OEI Proxies and the transactions contemplated hereby and
thereby, and such approval is sufficient to render inapplicable to the Mergers
and the other transactions contemplated hereby the restrictions contained in
Section 203 of the DGCL.
Section 4.27 Opinion of Financial Advisor. The Board of Directors
of OEI has received an opinion from Xxxxxx Brothers Inc., dated the date of
this Agreement, to the effect that, as of such date and subject to the
assumptions and other matters set forth therein, the Newco Exchange Ratio, in
relation to the UMC Exchange Ratio, is fair, from a financial point of view, to
the holders of Old OEI Common Stock.
Section 4.28 OEI Rights Plan. Under the terms of the OEI Rights
Plan, the transactions contemplated by this Agreement will not cause any person
to become an Acquiring Person or cause a Distribution Date or Stock Acquisition
Date (as each such term is defined in the OEI Rights Plan) to occur or cause
the rights to be issued pursuant to the OEI Rights Plan to become exercisable.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF UMC
Except as set forth on the Disclosure Schedule (the "UMC Disclosure
Schedule," together with the OEI Disclosure Schedule, the "Disclosure
Schedule"), included in the letter and delivered by UMC to OEI prior to the
execution of this Agreement UMC represents and warrants to OEI as follows:
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Section 5.1 Organization and Qualification.
(a) UMC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. UMC is duly
qualified to do business as a foreign corporation and is in good standing in
the jurisdictions set forth in Section 5.1(a) of the UMC Disclosure Schedule,
which includes each jurisdiction in which the character of UMC's properties
owned or leased by it or the nature of its business makes such qualification
necessary, except in jurisdictions, if any, where the failure to be so
qualified would not, individually or in the aggregate, result in a UMC Material
Adverse Effect (as defined in Section 5.1(c)). UMC has all requisite corporate
power and authority to own, use or lease its properties and to carry on its
business as it is now being conducted. UMC has made available to OEI a complete
and correct copy of its certificate of incorporation and bylaws, each as
amended to date, and UMC's certificate of incorporation and bylaws as so
delivered are in full force and effect. UMC is not in default in the
performance, observation or fulfillment of any provision of its certificate of
incorporation or bylaws.
(b) Section 5.1(b) of the UMC Disclosure Schedule lists
the name and jurisdiction of organization of each Subsidiary of UMC and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to
do business as a foreign corporation or other organization as of the date
hereof. Each of UMC's Subsidiaries is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, is duly
qualified to do business as a foreign entity and is in good standing in the
jurisdictions set forth in Section 5.1(b) of the UMC Disclosure Schedule, which
includes each jurisdiction in which the character of such Subsidiary's
properties owned or leased by it or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not, individually or in the aggregate, result in a UMC
Material Adverse Effect. Each of UMC's Subsidiaries has all requisite
corporate (or other organizational) power and authority to own, use or lease
its properties and to carry on its business as it is now being conducted. UMC
has made available to OEI a complete and correct copy of the certificate of
incorporation and bylaws (or similar organizational documents) of each of UMC's
Subsidiaries, each as amended to date, and the certificate of incorporation and
bylaws (or similar organizational documents) as so delivered are in full force
and effect. No Subsidiary of UMC is in default in any material respect in the
performance, observation or fulfillment of any provision of its certificate of
incorporation or bylaws (or similar organizational documents). Other than UMC's
Subsidiaries, UMC does not beneficially own or control, directly or indirectly,
any class of equity or similar securities of any corporation or other
organization, whether incorporated or unincorporated.
(c) For purposes of this Agreement, a "UMC Material
Adverse Effect" shall mean any event, circumstance, condition, development or
occurrence causing, resulting in or having a material adverse effect on the
condition (financial or otherwise), business, assets, properties or results of
operations of UMC and its Subsidiaries, taken as a whole.
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Section 5.2 Capitalization.
(a) As of the date hereof, the authorized capital stock
of UMC consists of (i) 45,000,000 shares of common stock, of which par value
$0.01 per share ("UMC Common Stock"), of which 35,792,891 shares are issued and
outstanding as of the date of this Agreement, none are held as treasury shares,
a sufficient number are reserved for issuance upon conversion of shares of
Series B Nonvoting Common Stock, par value $.01 per share (the "UMC Series B
Common"), in accordance with the terms of UMC's certificate of incorporation,
as amended, 583,749 are reserved for issuance upon exercise of options under
UMC's 1987 Nonqualified Stock Option Plan, 3,124,263 are reserved for issuance
upon exercise of options under UMC's 1994 Nonqualified Stock Option Plan, and
247,000 are reserved for issuance upon exercise of options under UMC's 1994
Outside Directors' Nonqualified Stock Option Plan (collectively, the "UMC
Option Plans"); (ii) 1,000,000 shares of UMC Series B Common, of which, as of
the date of this Agreement, none are issued and outstanding and none are held
as treasury shares; (iii) 450,000 shares of Series A Junior Preferred Stock,
par value $.01 per share, of which, as of the date of this Agreement, none are
issued and outstanding, none are held as treasury shares and all of which are
reserved for issuance upon exercise of rights under the Rights Agreement, dated
February 13, 1996, between UMC and ChaseMellon Shareholder Services, L.L.C.
(the "UMC Rights Plan"); and (iv) 32,000,000 shares of Preferred Stock, par
value $.01 per share, which have not yet been issued or designated as to a
series by the Board of Directors of UMC. All of the aforesaid outstanding
shares of capital stock have been validly issued, are fully paid and
nonassessable, and are free of preemptive rights. Except as described above, as
of the date hereof, there are no shares of capital stock or other equity
securities of UMC outstanding and no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, shares of any capital
stock of UMC, or contracts, commitments, understandings, or arrangements by
which UMC is or may become bound to issue additional shares of its capital
stock (other than the previously reserved shares described above) or options,
warrants or rights to purchase or acquire any shares of its capital stock.
(b) Except as set forth in Section 5.2(b) of the UMC
Disclosure Schedule, UMC is, directly or indirectly, the record and beneficial
owner of all of the outstanding shares of capital stock or other equity
securities, as the case may be, of each Subsidiary of UMC, there are no
irrevocable proxies with respect to any such shares, and no equity securities
of any Subsidiary of UMC are or may become required to be issued by reason of
any options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable or exercisable for, shares of any capital stock of any Subsidiary
of UMC, and there are no contracts, commitments, understandings or arrangements
by which UMC or any Subsidiary of UMC is or may be bound to either sell any
outstanding securities of any Subsidiary or issue additional shares of capital
stock of any Subsidiary of UMC or securities convertible into or exchangeable
or exercisable for any such shares. Except as set forth in Section 5.2(b) of
the UMC Disclosure Schedule, all of such shares so owned by UMC are validly
issued, fully paid and nonassessable and are owned by it free and clear of all
Liens. There are not as of the date hereof and there will not be at the
Effective Time any stockholder agreements, voting trusts or other agreements or
understandings to which UMC is a party or by which it is bound relating to the
voting of any shares of the capital stock of UMC that will limit in any way the
solicitation of
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proxies by or on behalf of UMC from, or the casting of votes by, the
stockholders of UMC with respect to the Merger. There are no restrictions on
UMC to vote the stock of any of its Subsidiaries.
Section 5.3 Authority. The Board of Directors of UMC has approved
the UMC Merger and this Agreement, and declared the UMC Merger and this
Agreement to be in the best interests of the stockholders of UMC. The Board of
Directors of UMC has taken all necessary corporate action to approve the
transactions contemplated by the Agreement to Vote and Proxy dated as of the
date hereof between OEI and Xxxx X. Xxxxx (the "UMC Proxy") pursuant to Section
203(a) of the DGCL. The directors of UMC have advised UMC and Newco that they
intend to vote or cause to be voted all of the shares of UMC Common Stock
beneficially owned by them and their affiliates in favor of approval of the UMC
Merger and this Agreement. UMC has full corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which it is
or will be a party and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to which it is or will be a party and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by UMC's Board of Directors, and no other corporate proceedings on
the part of UMC are necessary to authorize this Agreement or the Ancillary
Agreements to which UMC is or will be a party or to consummate the transactions
contemplated hereby or thereby, other than the approval of this Agreement and
the UMC Merger by its stockholders as contemplated by Section 6.3(c). This
Agreement has been, and the Ancillary Agreements to which UMC is or will be a
party are, or upon execution and delivery will be, duly and validly executed
and delivered by UMC and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto,
constitute, or upon execution and delivery will constitute, valid and binding
obligations of UMC enforceable against UMC in accordance with their respective
terms, except for the Enforceability Exception.
Section 5.4 Consents and Approvals; No Violation. Except as set
forth in Section 5.4 of the UMC Disclosure Schedule, the execution and delivery
of this Agreement and the Ancillary Agreements do not, and the consummation of
the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the
creation of any Lien, security interest, charge or encumbrance upon any of the
properties or assets of UMC or any of its Subsidiaries under, any provision of
(a) the certificate of incorporation or bylaws of UMC or any provision of the
comparable charter or organization documents of any of its Subsidiaries, (b)
any material loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license which
UMC or any of its Subsidiaries is a party or by which UMC or any of its
Subsidiaries or any of their respective properties or assets may be bound or
(c) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to UMC or any of its Subsidiaries or any of their respective
properties or assets, other than in the case of clause (b) or (c), any such
conflicts, violations, defaults, terminations, cancellations, accelerations,
Liens, security interests, charges or encumbrances that, individually or in
their aggregate, would not result in a UMC Material Adverse Effect, materially
impair the ability of UMC to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby. No filing or
registration with, or
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authorization, consent or approval of any Governmental Authority is required by
or with respect to UMC or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by UMC or the consummation by UMC of
the transactions contemplated hereby, except for (a) the filing with the SEC of
the Joint Proxy Statement/Prospectus, the Registration Statement and such
reports in connection, or in compliance, with the provisions of the Exchange
Act and the Securities Act and the rules and regulations of the SEC thereunder
as may be required in connection with this Agreement and the transactions
contemplated hereby and the obtaining from the SEC of such orders as may be
required, (b) the filing of the Certificates of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which UMC or any of its Subsidiaries is
qualified to do business, (c) such filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Mergers or the
transactions contemplated by this Agreement, (d) such filings as may be
required in connection with applicable taxes, (e) such other consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the corporation, takeover or "Blue Sky" laws of various
states, (f) such filings and approvals as may be required under the HSR Act,
and (g) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a UMC Material Adverse Effect,
materially impair the ability of UMC to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby.
Section 5.5 UMC SEC Reports. UMC has filed with the SEC, and has
heretofore made available to OEI true and complete copies of, each form,
registration statement, report, schedule, proxy or information statement and
other document (including exhibits and amendments thereto, but excluding
preliminary materials), including without limitation its Annual Reports to
Stockholders incorporated by reference in certain of such reports, which UMC
was required to file with the SEC since December 31, 1994, and prior to or on
the date of this Agreement under the Securities Act or the Exchange Act
(collectively, the "UMC SEC Reports"). As of the respective dates such UMC SEC
Reports were filed or, if any such UMC SEC Reports were amended, as of the date
such amendment was filed, each of the UMC SEC Reports, including without
limitation any financial statements or schedules included therein, (a) complied
in all material respects with all applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and the applicable rules and
regulations promulgated thereunder, and (b) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 5.6 UMC Financial Statements. Each of the audited
consolidated financial statements and unaudited consolidated interim financial
statements of UMC (including any related notes and schedules) included (or
incorporated by reference) in the UMC SEC Reports (collectively, the "UMC
Financial Statements") have been prepared from, and are in accordance with, the
books and records of UMC and its consolidated Subsidiaries, comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto and subject, in the case of quarterly
financial
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statements, to normal and recurring year-end adjustments) and fairly present,
in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of UMC and
its consolidated Subsidiaries as of the date thereof and the consolidated
results of operations and cash flows (and changes in financial position, if
any) of UMC and its consolidated Subsidiaries for the periods presented therein
(subject to normal year-end adjustments, none of which are material, and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
Section 5.7 Absence of Undisclosed Liabilities. Except as
disclosed in the UMC SEC Reports, as of the date hereof, there are no
liabilities of UMC or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that are
reasonably likely to have a UMC Material Adverse Effect, other than: (a)
liabilities adequately provided for on the balance sheet of UMC dated as of
December 31, 1996 (including the notes thereto), contained in UMC's Annual
Report on Form 10-K for the year ended December 31, 1996; (b) financial
liabilities and contractual obligations incurred in the ordinary course of
business subsequent to December 31, 1996; and (c) liabilities under this
Agreement.
Section 5.8 Absence of Certain Changes. Except as disclosed in
the UMC SEC Reports, as contemplated by this Agreement, as set forth in Section
5.8 of the UMC Disclosure Schedule or as disclosed in UMC Financial Statements,
since December 31, 1996, (a) UMC and its Subsidiaries have conducted their
business in all material respects in the ordinary course consistent with past
practices, (b) there has not been any change or development, or combination of
changes or developments that, individually or in the aggregate, would have a
UMC Material Adverse Effect, (c) there has not been any declaration, setting
aside or payment of any dividend or other distribution with respect to any
shares of capital stock of UMC or any repurchase, redemption or other
acquisition by UMC or any of its Subsidiaries of any outstanding shares of
capital stock or other securities of, or other ownership interests in, UMC or
any of its Subsidiaries, (d) there has not been any amendment of any term of
any outstanding security of UMC or any of its Subsidiaries, (e) there has not
been any change in any method of accounting or accounting practice by UMC or
any of its Subsidiaries, except for any such change required by reason of a
concurrent change in GAAP, (f) there has not been any material change in any
tax method, practice or election by UMC or any of its Subsidiaries and (g)
there has not been any other transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business) that is reasonably likely to have a UMC Material
Adverse Effect, except for general economic changes and changes that may affect
the industries of UMC and its Subsidiaries generally.
Section 5.9 No Default Neither UMC nor any of its Subsidiaries is
in default or violation (and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation) of any term,
condition or provision of (a) the certificate of incorporation or bylaws of UMC
or the comparable charter or organizational documents of any of its
Subsidiaries, (b) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license to which UMC or any of its Subsidiaries is now a party or by which
UMC or any of its Subsidiaries or any of their respective properties or assets
is bound or (c) any order, writ, injunction, decree, statute, rule or
regulation
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applicable to UMC or any of its Subsidiaries, except in the case of (b) and (c)
for defaults or violations which in the aggregate would not have a UMC Material
Adverse Effect.
Section 5.10 Taxes. Except as otherwise disclosed in Section 5.10
of the UMC Disclosure Schedule (and for matters that would not be a UMC
Material Adverse Effect, individually or in the aggregate):
(a) UMC and each of its Subsidiaries have timely filed
(or have had timely filed on their behalf) or will file or cause to be timely
filed, all Tax Returns required by applicable law to be filed by, with respect
to, or include any of them prior to or as of the Closing Date. All such Tax
Returns and amendments thereto are or will be true, complete and correct in all
material respects.
(b) UMC and each of its Subsidiaries have paid (or have
had paid on their behalf), or where payment is not yet due, have established
(or have had established on their behalf and for their sole benefit and
recourse), or will establish or cause to be established on or before the
Closing Date, an adequate accrual for the payment of all Taxes for which UMC or
any of its Subsidiaries could be held liable with respect to any period ending
prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending, to the
knowledge of UMC, or threatened with respect to any Tax Returns filed by, or
Taxes due from, UMC or any Subsidiary. No issue has been raised by any Tax
Authority in any Audit of UMC or any of its Subsidiaries that if raised with
respect to any other period not so audited could be expected to result in a
material proposed deficiency for any period not so audited. No material
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against UMC or any of its Subsidiaries. There are no Liens for
Taxes upon the assets of UMC or any of its Subsidiaries, except Liens for
current Taxes not yet delinquent.
(d) Neither UMC nor any of its Subsidiaries has given or
been requested to give any waiver of statutes of limitations relating to the
payment of Taxes or have executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date.
(e) Prior to the date hereof, UMC and its Subsidiaries
have disclosed, and provided or made available to OEI true and complete copies
of, all material Tax sharing, Tax indemnity, or similar agreements to which UMC
or any of its Subsidiaries is a party, is bound by, or has any obligation or
liability for Taxes.
(f) Neither UMC nor any of its Subsidiaries has filed a
consent under section 341(f) of the Code concerning collapsible corporations.
Neither UMC nor any of its Subsidiaries has made any material payments, is
obligated to make any material payments, or is a party to any agreement that
under certain circumstances could obligate it to make any material payments
that will not be deductible under sections 162(m), 263, or 280G of the Code.
Neither UMC nor any of its Subsidiaries has been a United States real property
holding corporation within the meaning of section 897(c)(2) of the Code during
the applicable period specified in section 897(c)(1)(A)(ii) of the Code.
Neither UMC nor any of its Subsidiaries (i) has been a member of an
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Affiliated Group filing a consolidated federal Tax Return (other than a group
the common parent of which was UMC) or (ii) has any liability for the taxes of
any person (other than any of UMC and its Subsidiaries) under Treasury
Regulation section 1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee or successor, by contract or otherwise.
(g) Neither UMC nor any of its Subsidiaries has agreed to
or is required to make any adjustment pursuant to section 481(a) of the Code
(or any predecessor provision), and there is no application pending with any
taxing authority requesting permission for any changes in any accounting method
of UMC or any of its Subsidiaries. The Internal Revenue Service has not
proposed any such adjustment or change in accounting method with respect to UMC
or any of its Subsidiaries.
(h) Neither UMC nor any of its Subsidiaries has been or
is in violation (or with notice or lapse of time or both, would be in
violation) of any applicable law relating to the payment or withholding of
Taxes. UMC and its Subsidiaries have duly and timely withheld from employee
salaries, wages and other compensation and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all
periods under all applicable laws.
(i) The unpaid Taxes of UMC and its Subsidiaries (i) did
not, as of the most recent fiscal month end included in UMC Financial
Statements, exceed by any material amount the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the most recent balance
sheet included in UMC Financial Statements (rather than in any notes thereto)
and (ii) will not exceed by any material amount that reserve as adjusted for
operations and transactions through the Effective Time in accordance with the
past custom and practice of UMC and its Subsidiaries in filing their Tax
Returns.
Section 5.11 Litigation. Except as disclosed in the UMC SEC
Reports or Section 5.11 of the UMC Disclosure Schedule, as of the date of this
Agreement, there is no suit, claim, action, proceeding, arbitration, or
investigation pending or, to the knowledge of UMC, threatened against or
directly affecting UMC, any of its Subsidiaries or any of the directors or
officers of UMC or any of its Subsidiaries in their capacity as such by or
before any court, Governmental Authority or any arbitrator of any kind ("UMC
Litigation"), and neither UMC nor its Subsidiaries is aware of any facts that
are likely to give rise to any UMC Litigation, that (in any case) could
reasonably be expected to have a UMC Material Adverse Effect or could
reasonably be expected to materially adversely affect UMC's ability to
consummate the transactions contemplated by this Agreement, if adversely
determined. Neither UMC nor any of its Subsidiaries, nor any officer, director
or employee of UMC or any of its Subsidiaries, has been permanently or
temporarily enjoined by any order, judgment, injunction or decree of any court
or any other Governmental Authority from engaging in or continuing any conduct
or practice in connection with the business, assets or properties of UMC or
such Subsidiary nor, to the knowledge of UMC, is UMC, any Subsidiary or any
officer, director or employee of UMC or its Subsidiaries under investigation by
any Governmental Authority. Except as disclosed in the UMC SEC Reports or
Section 5.11 of the UMC Disclosure Schedule, there is not in existence any
order, judgment, injunction or decree of any court or other tribunal against
UMC or any of its Subsidiaries that is reasonably likely to have a
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UMC Material Adverse Effect or is reasonably expected to materially adversely
affect UMC's ability to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby. Notwithstanding the foregoing,
no representation or warranty in this Section 5.11 is made with respect to
Environmental Laws, which are covered exclusively by the provisions set forth
in Section 5.13.
Section 5.12 Employee Benefit Plans; ERISA.
(a) Section 5.12(a) of the UMC Disclosure Schedule
contains a true and complete list of the written and oral plans, policies and
arrangements of any type (including but not limited to plans described in
section 3(3) of ERISA), currently sponsored, maintained or contributed to by
UMC or any trade or business, whether or not incorporated, which together with
UMC would be deemed a "single employer" within the meaning of section 414(b),
(c) or (m) of the Code or section 4001(b)(1) of ERISA (a "UMC ERISA
Affiliate"), which provide compensation, insurance or other coverage, or any
other benefits to the employees, independent contractors or non-employee
directors of UMC or any Subsidiary of UMC ("UMC Benefit Plans").
(b) With respect to each UMC Benefit Plan: (i) if
intended to qualify under section 401(a) or 401(k) of the Code, such plan
satisfies the requirements of such sections, has received a favorable
determination letter from the Internal Revenue Service with respect to its
qualification, and its related trust has been determined to be exempt from tax
under section 501(a) of the Code and, to the knowledge of UMC, nothing has
occurred since the date of such letter to adversely affect such qualification
or exemption; (ii) each such plan has been administered in substantial
compliance with its terms and applicable law; (iii) neither UMC nor any UMC
ERISA Affiliate has engaged in, and UMC and each UMC ERISA Affiliate do not
have any knowledge of any person that has engaged in, any transaction or acted
or failed to act in any manner that would subject UMC or any UMC ERISA
Affiliate to any liability for a breach of fiduciary duty under ERISA that
could reasonably be expected to result in a UMC Material Adverse Effect; (iv)
no disputes are pending, or, to the knowledge of UMC or any UMC ERISA
Affiliate, threatened; (v) neither UMC nor any UMC ERISA Affiliate has engaged
in, and UMC and each UMC ERISA Affiliate do not have any knowledge of any
person that has engaged in, any transaction in violation of section 406(a) or
(b) of ERISA for which no exemption exists under section 4975(c)(1) of the Code
or section 4975(d) of the Code that could reasonably be expected to result in a
UMC Material Adverse Effect; (vi) there have been no "reportable events" within
the meaning of section 4043 of ERISA for which the 30 day notice requirement of
ERISA has not been waived by the PBGC; (vii) all contributions due have been
made on a timely basis (within, where applicable, the time limit established
under section 302 of ERISA or section 412 of the Code); (viii) no notice of
intent to terminate such plan has been given under section 4041 of ERISA and no
proceeding has been instituted under section 4042 of ERISA to terminate such
plan; and (ix) except for defined benefit plans, such plan may be terminated on
a prospective basis without any continuing liability for benefits other than
benefits accrued to the date of such termination. All contributions made or
required to be made under any UMC Benefit Plan meet the requirements for
deductibility under the Code, and all contributions which are required and
which have not been made have been properly recorded on the books of UMC or a
UMC ERISA Affiliate.
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(c) No UMC Benefit Plan is a "multiemployer plan" (as
defined in section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of section 413(c) of the Code), and except as provided in Section
5.12(c) of the UMC Disclosure Schedule, no UMC Benefit Plan is or was subject
to section 302 of ERISA or section 412 of the Code. No event has occurred with
respect to UMC or a UMC ERISA Affiliate in connection with which UMC could be
subject to any liability, Lien or encumbrance with respect to any UMC Benefit
Plan or any employee benefit plan described in section 3(3) of ERISA
maintained, sponsored or contributed to by a UMC ERISA Affiliate under ERISA or
the Code. Except as provided in Part 6 of Title I of ERISA, no welfare plan (as
defined in section 3(1) of ERISA) provides any benefits to any retiree or
former employee or service provider of UMC.
(d) Except as set forth in Section 5.12(d) of the UMC
Disclosure Schedule, no employees of UMC or any of its Subsidiaries are covered
by any severance plan or similar arrangement.
Section 5.13 Environmental Matters. Except as set forth in (i)
Section 5.13 of the UMC Disclosure Schedule or (ii) the UMC SEC Reports:
(a) The businesses of UMC and its Subsidiaries have been
and are operated in compliance with all Environmental Laws.
(b) Neither UMC nor any of its Subsidiaries has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, discharge, release, disposal, transport or handling of any Hazardous
Substances at any of its properties or facilities, except in material
compliance with all Environmental Laws or except as would not result in a UMC
Material Adverse Effect, and, to UMC's knowledge, no generation, manufacture,
processing, distribution, use, treatment, handling, storage, discharge,
release, disposal, transport or handling of any Hazardous Substances has
occurred at any property or facility owned, leased or operated by UMC or any of
its Subsidiaries except in material compliance with all Environmental Laws.
(c) Neither UMC nor any of its Subsidiaries has received
any written notice from any Governmental Authority or other third party or, to
the knowledge of UMC, any other communication alleging or concerning any
violation by UMC or any of its Subsidiaries of, or responsibility or liability
of UMC or any of its Subsidiaries under, any Environmental Law or for personal
injuries and/or property damages. There are no pending, or to the knowledge of
UMC, threatened, claims, suits, actions, proceedings or investigations with
respect to the businesses or operations of UMC or any of its Subsidiaries
alleging or concerning any violation of or responsibility or liability under
any Environmental Law or alleging personal injuries and/or property damages,
nor does UMC have any knowledge of any fact or condition that could give rise
to such a claim, suit, action, proceeding or investigation.
(d) UMC and its Subsidiaries are in possession of and in
material compliance with all approvals, permits, licenses, registrations and
similar type authorizations from all Governmental Authorities under all
Environmental Laws with respect to the operation of the businesses of UMC and
its Subsidiaries; there are no pending or, to the knowledge of UMC,
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threatened, actions, proceedings or investigations seeking to modify, revoke or
deny renewal of any of such approvals, permits, licenses registrations and
authorizations; and UMC does not have knowledge of any fact or condition that
is reasonably likely to give rise to any action, proceeding or investigation to
modify, revoke or deny renewal of any of such approvals, permits, licenses,
registrations and authorizations. No notice to, approval of, or authorization
or consent from any Governmental Authority is necessary for the transfer of or
modification to any approval, permit, license, registration or authorization,
and the consummation of the transactions contemplated by this Agreement will
not violate, alter, impair or invalidate, in any respect, any approval, permit,
license, registration or authorization.
(e) Without in any way limiting the generality of the
foregoing, (i) none of the off-site locations where UMC or any of its
Subsidiaries has transported, released, discharged, stored, disposed or
arranged for the disposal of Hazardous Substances is listed on CERCLIS or the
NPL or, to the knowledge of UMC, is the subject of pending or threatened
claims, suits, actions, proceedings or investigations by any Governmental
Authority or other third party, (ii) to UMC's knowledge, all underground
storage tanks owned or operated by UMC or any of its Subsidiaries are in
compliance with Environmental Laws, and there have been no releases of
Hazardous Substances from such underground storage tanks, (iii) to the
knowledge of UMC, there is no asbestos contained in or forming part of any
equipment, building, building component, structure or office space owned or
leased by UMC and (iv) no PCBs or PCB-containing items are used or stored at
any property owned, leased or operated by UMC or any of its Subsidiaries.
Section 5.14 Compliance with Applicable Laws. Except as set forth
in Section 5.14 of the UMC Disclosure Schedule or as disclosed in the UMC SEC
Reports, neither UMC nor any of its Subsidiaries has received notice of any
revocation or modification of any Federal, state, local or foreign governmental
license, certification, tariff, permit, authorization or approval, the
revocation or modification of which would have a UMC Material Adverse Effect.
The conduct of the business of each of UMC and its Subsidiaries complies with
all statutes, laws, regulations, ordinances, rules, judgments, orders, decrees
or arbitration awards applicable hereto, except for violations or failures to
comply, if any, that, individually or in the aggregate, would not have a UMC
Material Adverse Effect. Notwithstanding the foregoing, no representation or
warranty in this Section 5.14 is made with respect to Environmental Laws, which
are covered exclusively by the provisions set forth in Section 5.13.
Section 5.15 Insurance. Section 5.15 of the UMC Disclosure
Schedule lists each of the insurance policies relating to UMC or its
Subsidiaries which are currently in effect. UMC has provided OEI with a true,
complete and correct copy of each such policy or the binder therefor. With
respect to each such insurance policy or binder, none of UMC, any of its
Subsidiaries or any other party to the policy is in breach or default
thereunder (including with respect to the payment of premiums or the giving of
notices), and UMC does not know of any occurrence or any event which (with
notice or the lapse of time or both) would constitute such a breach or default
or permit termination, modification or acceleration under the policy, except
for such breaches or defaults which, individually or in the aggregate, would
not result in a UMC Material Adverse Effect. Section 5.15 of the UMC Disclosure
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Schedule describes any self-insurance arrangements affecting UMC or its
Subsidiaries. The insurance policies listed in Section 5.15 of the UMC
Disclosure Schedule include all policies which are required in connection with
the operation of the businesses of UMC and its Subsidiaries as currently
conducted by applicable laws and all agreements relating to UMC and its
Subsidiaries.
Section 5.16 Labor Matters; Employees.
(a) Except as set forth in Section 5.16(a) of the UMC
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of UMC, threatened
against or affecting UMC or any of its Subsidiaries and, during the past five
years, there has not been any such action, (ii) none of UMC or any of its
Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to a material
number of employees of UMC or any of its Subsidiaries, (iii) no material number
of the employees of UMC or any of its Subsidiaries are represented by any labor
organization and none of UMC or any of its Subsidiaries have any knowledge of
any current union organizing activities among a material number of employees of
UMC or any of its Subsidiaries nor does any question concerning representation
exist concerning such employees, (iv) UMC and its Subsidiaries have each at all
times been in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no material unfair labor practice
charge or complaint against any of UMC or any of its Subsidiaries pending or,
to the knowledge of UMC, threatened before the National Labor Relations Board
or any similar state or foreign agency, (vi) there is no material grievance or
arbitration proceeding arising out of any collective bargaining agreement or
other grievance procedure relating to UMC or any of its Subsidiaries, and (vii)
neither the Occupational Safety and Health Administration, the Department of
Labor, the Equal Employment Opportunity Commission nor any corresponding state
agency has threatened to file any citation, and there are no pending citations,
relating to UMC or any of its Subsidiaries.
(b) Except as set forth in Section 5.16(b) of the UMC
Disclosure Schedule, since the enactment of the WARN Act, none of UMC or any of
its Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of UMC or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of UMC or any of its Subsidiaries, nor has
UMC or any of its Subsidiaries been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger application
of any similar state or local law, in each case that could reasonably be
expected to have a UMC Material Adverse Effect. The UMC Merger is not
anticipated to result in any "plant closing" or "mass layoff" which would
require any action to comply with the WARN Act.
(c) Except as disclosed in Section 5.11 of the UMC
Disclosure Schedule and for matters which would not have a UMC Material Adverse
Effect, there is no suit, claim, action, proceeding or investigation regarding
any labor or employment matter pending or threatened
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against or directly affecting UMC, any of its Subsidiaries or any of the
directors or officers of UMC or any of its Subsidiaries in their capacity as
such by or before any administrative agency, court, Governmental Authority or
any arbitrator of any kind, that could reasonably be expected to have a UMC
Material Adverse Effect, if adversely determined.
Section 5.17 Beneficial Ownership of OEI Common Stock. As of the
date hereof, neither UMC nor its Subsidiaries beneficially owns any of the
outstanding OEI Common Stock or any of OEI's outstanding debt securities.
Section 5.18 Permits. Immediately prior to the Effective Time and
except for Customary Post-Closing Consents, UMC or its Subsidiaries will hold
all of the Permits required or necessary to construct, run, operate, use and
maintain their properties and conduct their operations as presently conducted,
except for such Permits, the lack of which, individually or in the aggregate,
would not have a UMC Material Adverse Effect; provided, however, that
notwithstanding the foregoing, no representation or warranty in this Section
5.18 is made with respect to Permits issued pursuant to Environmental Laws,
which are covered exclusively by the provisions set forth in Section 5.13. UMC
is in compliance with the terms of its Permits, except where the failure to
comply would not have a UMC Material Adverse Effect.
Section 5.19 Material Contracts.
(a) Set forth in Section 5.19(a) of the UMC Disclosure
Schedule is a list of each contract, lease, indenture, agreement, arrangement
or understanding to which UMC or any of its Subsidiaries is subject that is of
a type that would be required to be included as an exhibit to a Form S-1
Registration Statement pursuant to the rules and regulations of the SEC if such
a registration statement was filed by UMC (collectively, the "UMC Material
Contracts").
(b) Except as set forth in Section 5.19(a) or 5.19(b) of
the UMC Disclosure Schedule, the Oil and Gas Interests of UMC and its
Subsidiaries are not subject to (i) any instrument or agreement evidencing or
related to indebtedness for borrowed money, whether directly or indirectly, or
(ii) any agreement not entered into in the ordinary course of business in which
the amount involved is in excess of $500,000. With respect to the Oil and Gas
Interests of UMC and its Subsidiaries, (i) all UMC Material Contracts are in
full force and effect and are the valid and legally binding obligations of the
parties thereto and are enforceable in accordance with their respective terms;
(ii) no party to any UMC Material Contract is in material breach or default
with respect to its obligations thereunder, including with respect to payments
or otherwise; (iii) no party to any UMC Material Contract has given notice of
any action to terminate, cancel, rescind or procure a judicial reformation
thereof; and (iv) no UMC Material Contract contains any provision that prevents
UMC or any of its Subsidiaries from owning, managing and operating the Oil and
Gas Interests of UMC and its Subsidiaries in accordance with historical
practices.
(c) As of the date of this Agreement, except as set forth
in Section 5.19(c) of the UMC Disclosure Schedule, with respect to
authorizations for expenditures executed on or after January 1, 1997, (i) there
are no material outstanding calls for payments that are due or that UMC or its
Subsidiaries are committed to make that have not been made; (ii) there are no
material
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operations with respect to which UMC or its Subsidiaries have become a
non-consenting party; and (iii) there are no commitments for the material
expenditure of funds for drilling or other capital projects other than projects
with respect to which the operator is not required under the applicable
operating agreement to seek consent.
(d) Except as set forth in Section 5.19(d) of the UMC
Disclosure Schedule, (i) there are no express contractual obligations to engage
in continuous development operations in order to maintain any producing
material Oil and Gas Interest of UMC or any of its Subsidiaries in force and
effect; (ii) there are no provisions applicable to the material Oil and Gas
Interests of UMC or any of its Subsidiaries which increase the royalty
percentage of the lessor thereunder; and (iii) none of the material Oil and Gas
Interests of UMC or any of its Subsidiaries are limited by terms fixed by a
certain number of years (other than primary terms under oil and gas leases).
Section 5.20 Required Stockholder Vote or Consent. The affirmative
vote of the holders of no greater than a majority of the outstanding shares of
UMC Common Stock is required to adopt this Agreement and approve the UMC Merger
and the other transactions contemplated hereby (the "UMC Stockholders'
Approval"). No other vote of the holders of any class or series of UMC's
capital stock is required by law, the certificate of incorporation or bylaws of
UMC or otherwise to adopt this Agreement and approve the UMC Merger and the
other transactions contemplated hereby.
Section 5.21 Joint Proxy Statement/Prospectus; Registration
Statement. None of the information supplied or to be supplied by UMC for
inclusion or incorporation by reference in (a) the Joint Proxy
Statement/Prospectus to be filed by OEI and UMC with the SEC, and any
amendments or supplements thereto, or (b) the Registration Statement to be
filed by OEI with the SEC in connection with the Mergers and the issuance of
OEI Common Stock in connection therewith, and any amendments or supplements
thereto, will, at the respective times such documents are filed, and, in the
case of the Joint Proxy Statement/Prospectus, at the time the Joint Proxy
Statement/Prospectus or any amendment or supplement thereto is first mailed to
stockholders of OEI and UMC, at the time such stockholders vote on approval and
adoption of this Agreement and at the Effective Time, and, in the case of the
Registration Statement, when it becomes effective under the Securities Act,
contain, in the case of the Joint Proxy Statement/Prospectus, any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading and, in
the case of the Registration Statement, any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. If at any time prior to the
Effective Time any event with respect to UMC, its officers and directors or any
of its Subsidiaries shall occur which is required to be described in an
amendment of, or a supplement to, the Joint Proxy Statement/Prospectus or the
Registration Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of OEI and UMC. The Registration Statement
will comply (with respect to UMC) as to form in all material respects with the
provisions of the Securities Act, and the Joint Proxy Statement/Prospectus will
comply (with respect to UMC) as to form in all material respects with the
provisions of the Exchange Act.
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Section 5.22 Intellectual Property. UMC and its Subsidiaries own,
or are licensed or otherwise have the right to use all Intellectual Property
currently used in the conduct of the business of UMC and its Subsidiaries,
except where the failure to so own or otherwise have the right to use such
Intellectual Property would not, individually or in the aggregate, have a UMC
Material Adverse Effect. No person has notified either UMC or any of its
Subsidiaries that their use of the Intellectual Property infringes on the
rights of any person, subject to such claims and infringements as do not,
individually or in the aggregate, give rise to any liability on the part of UMC
and its Subsidiaries that could have a UMC Material Adverse Effect, and, to
UMC's knowledge, no person is infringing on any right of UMC or any of its
Subsidiaries with respect to any such Intellectual Property. No claims are
pending or, to UMC's knowledge, threatened that UMC or any of its Subsidiaries
is infringing or otherwise adversely affecting the rights of any person with
regard to any Intellectual Property.
Section 5.23 Hedging. Section 5.23 of the UMC Disclosure Schedule
sets forth for the periods shown obligations of UMC and each of its
Subsidiaries for the delivery of Hydrocarbons attributable to any of the
properties of UMC or any of its Subsidiaries in the future on account of
prepayment, advance payment, take-or-pay or similar obligations without then or
thereafter being entitled to receive full value therefor. Except as set forth
in Section 5.23 of the UMC Disclosure Schedule, as of the date of this
Agreement, neither UMC nor any of its Subsidiaries is bound by futures, hedge,
swap, collar, put, call, floor, cap, option or other contracts that are
intended to benefit from or reduce or eliminate the risk of fluctuations in the
price of commodities, including Hydrocarbons, or securities.
Section 5.24 Brokers. No broker, finder or investment banker
(other xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, the fees and
expenses of which will be paid by UMC) is entitled to any brokerage, finder's
fee or other fee or commission payable by UMC or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of UMC or any of its Subsidiaries. True and
correct copies of all agreements and engagement letters currently in effect
with Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (the "UMC Engagement
Letters") have been provided to OEI.
Section 5.25 Tax-Free Reorganization and Pooling. Neither UMC nor,
to the knowledge of UMC, any of its affiliates has taken or agreed to take any
action or failed to take any action which action or failure (without giving
effect to any actions or failures to act by OEI or any of its affiliates) would
prevent the Mergers and the other transactions contemplated herein from being
treated for financial accounting purposes as a Pooling Transaction or would
prevent the Mergers from constituting reorganizations within the meaning of
section 368(a)(1)(A) of the Code.
Section 5.26 Section 203 of the DGCL Not Applicable. The Board of
Directors of UMC has approved the UMC Merger, this Agreement, the UMC Option,
the UMC Proxy and the transactions contemplated hereby and thereby, and such
approval is sufficient to render inapplicable to the UMC Merger and the other
transactions contemplated hereby the restrictions contained in Section 203 of
the XXXX.
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Section 5.27 Opinion of Financial Advisor. The Board of Directors
of UMC has received an opinion from Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, dated the date of this Agreement, to the effect that, as of such
date, and subject to the assumptions and other matters set forth therein, the
UMC Exchange Ratio is fair, from a financial point of view, to the holders of
UMC Common Stock.
Section 5.28 UMC Rights Plan. Under the terms of the UMC Rights
Plan, the transactions contemplated by this Agreement will not cause any person
to become an Acquiring Person or cause a Distribution Date or Stock Acquisition
Date (as each such term is defined in the UMC Rights Plan) to occur or cause
the rights issued pursuant to the UMC Rights Plan to become exercisable.
ARTICLE VI
COVENANTS AND AGREEMENTS
It is further agreed as follows:
Section 6.1 Conduct of Business by OEI and UMC. From and after the
date hereof and prior to the Effective Time or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 8.1 (the "Termination
Date"), and except as may be agreed in writing by the other parties hereto or
as may be permitted pursuant to this Agreement:
(a) Except as set forth in Section 6.1 of the OEI Disclosure
Schedule, OEI:
(i) shall, and shall cause each of its Subsidiaries to, conduct
its operations according to their ordinary and usual course of business in
substantially the same manner as heretofore conducted, and shall use all
commercially reasonable efforts to preserve intact its present business
organization, keep available the services of its current officers and employees
and endeavor to preserve relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect at the Effective Time;
(ii) shall not, and it shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merging or consolidating with, or by purchasing
any equity interest in or any of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, other than any such acquisition or
acquisitions having a purchase price not exceeding $50,000,000 in the
aggregate;
(iii) shall not, other than: (A) as may be necessary or required by
law to consummate the transactions contemplated hereby or (B) sales, leases,
encumbrances or other dispositions in the ordinary course of business
consistent with past practice that are not material, individually or in the
aggregate, to OEI and its Subsidiaries taken as a whole, and it shall not
permit any of its Subsidiaries to, sell, lease, encumber or otherwise dispose
of, or agree to sell, lease (whether
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such lease is an operating or capital lease), encumber or otherwise dispose of,
any of its material assets;
(iv) shall not, and shall not permit any of its Subsidiaries to,
(A) incur any indebtedness for borrowed money (except (w) intercompany debt,
(x) indebtedness incurred to finance any transactions or capital or other
expenditures permitted by this Agreement and regular borrowings under credit
facilities made in the ordinary course of OEI's cash management practices, (y)
refinancings of existing debt and (z) immaterial borrowings that, in each such
case, permit prepayment of such debt without penalty (other than LIBOR breakage
costs)) or guarantee any such indebtedness or issue or sell any debt securities
or warrants or rights to acquire any debt securities of OEI or any of its
Subsidiaries or guarantee any debt securities of others, (B) except in the
ordinary course of business, enter into any material lease (whether such lease
is an operating or capital lease) or create any material mortgages, Liens,
security interests or other encumbrances on the property of OEI or any of its
Subsidiaries in connection with any indebtedness thereof, (C) make or commit to
make aggregate capital expenditures in excess of an amount equal to the
aggregate capital expenditures budgeted by OEI for the fiscal years ending
December 31, 1997 as set forth in the capital expenditure budgets delivered to
UMC, less any budgeted capital expenditures expended prior to the date of this
Agreement, or (D) make or commit to make aggregate capital expenditures in
excess of an amount equal to the sum of (y) the aggregate capital expenditures
budgeted by OEI for the fiscal year ending December 31, 1998, as set forth in
the capital expenditure budgets delivered to UMC, plus (z) capital expenditures
(not otherwise included in budgeted capital expenditures) that may be incurred
in connection with acquisitions permitted by this Agreement;
(v) shall not, and shall not (except in the ordinary course of
business consistent with past practice) permit any of its Subsidiaries that is
not wholly owned to: (A) declare, authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of capital stock, (B)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of OEI's capital stock, or (C) repurchase, redeem or
otherwise acquire, or permit any of its Subsidiaries to purchase, redeem or
otherwise acquire, any shares of its capital stock, except as required by the
terms of its securities outstanding on the date hereof or as contemplated by
any existing employee benefit plan;
(vi) shall not, and shall not permit any of its Subsidiaries to,
except (A) in the ordinary course of business consistent with past practice or
(B) as otherwise provided in this Agreement, enter into or amend any
employment, severance or similar agreements or arrangements with any of their
respective directors or executive officers, enter into, adopt or amend any
bonus, deferred compensation, stock purchase, stock option, pension, retirement
or other employee benefit plan, program, agreement or arrangement ("Plan") or
grant any increases in the compensation of any of its directors, officers or
employees, except increases to employees who are not directors or officers made
in the ordinary course of business and in accordance with past practice;
provided, however, that nothing in this Section 6.1(a)(vi) shall prevent OEI or
its Subsidiaries from paying or reimbursing, to the extent necessary, any of
its respective directors, officers or employees relocation expenses:
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(vii) shall not, and shall not permit any of its Significant
Subsidiaries to, except as otherwise permitted or contemplated by this
Agreement, authorize, recommend, propose or announce an intention to adopt a
plan of complete or partial liquidation or dissolution;
(viii) shall not, nor shall it permit any of its Subsidiaries to,
enter into any agreement or arrangement with any of their respective Affiliates
(as such term is defined in Rule 405 under the Securities Act, an "Affiliate"),
other than with its wholly owned Subsidiaries, on terms less favorable to it or
its Subsidiary, as the case may be, than could be reasonably expected to have
been obtained with an unaffiliated third party on an arm's-length basis.
(ix) shall not propose or adopt any amendments to its certificate
of incorporation or by-laws;
(x) shall not, and shall not permit any of its Significant
Subsidiaries to, issue, deliver or sell or authorize or propose to issue,
deliver or sell, any shares of their capital stock of any class or other voting
securities or any securities convertible into such shares (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise), except as specifically set forth in Section 4.2 and
except pursuant to the OEI Rights Plan;
(xi) shall not, and shall not permit any of its Subsidiaries to,
take any actions which would, or would be reasonably likely to, prevent
accounting for the Mergers in accordance with the pooling of interests method
of accounting under the requirements of Opinion No. 16 "Business Combinations"
of the Accounting Principles Board of the American Institute of Certified
Public Accountants, as amended by applicable pronouncements by the Financial
Accounting Standards Board ("APB No. 16");
(xii) shall not, and shall not permit any of its Subsidiaries to (A)
make or rescind any material express or deemed election relating to Taxes
unless it is reasonably expected that such action will not have an OEI Material
Adverse Effect, 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, (B) settle
or compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except
where such settlement or compromise will not have an OEI Material Adverse
Effect, or (C) change in any material respect any of its methods of reporting
income or deductions for federal income tax purposes from those employed in the
preparation of its federal income Tax Returns that have been filed for prior
taxable years, except as may be required by applicable law or except for
changes that are reasonably expected not to have an OEI Material Adverse
Effect; and
(xiii) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or take
any action which would (A) make any representation or warranty in Article IV
hereof untrue or incorrect or (B) result in any of the conditions to the
Mergers set forth in Article VII not being satisfied.
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(b) Except as set forth in Section 6.1 of the UMC Disclosure
Schedule, UMC:
(i) shall, and shall cause each of its Subsidiaries to, conduct
its operations according to their ordinary and usual course of business in
substantially the same manner as heretofore conducted, and shall use all
commercially reasonable efforts to preserve intact its present business
organization, keep available the services of its current officers and employees
and endeavor to preserve relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect at the Effective Time;
(ii) shall not, and it shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merging or consolidating with, or by purchasing
any equity interest in or any of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, other than any such acquisition or
acquisitions having a purchase price not exceeding $50,000,000 in the
aggregate;
(iii) shall not, other than: (A) as may be necessary or required by
law to consummate the transactions contemplated hereby or (B) sales, leases,
encumbrances or other dispositions in the ordinary course of business
consistent with past practice that are not material, individually or in the
aggregate, to UMC and its Subsidiaries taken as a whole, and it shall not
permit any of its Subsidiaries to, sell, lease, encumber or otherwise dispose
of, or agree to sell, lease (whether such lease is an operating or capital
lease), encumber or otherwise dispose of, any of its material assets;
(iv) shall not, and shall not permit any of its Subsidiaries to,
(A) incur any indebtedness for borrowed money (except (t) intercompany debt,
(u) indebtedness incurred by Lion GPL, S.A. in connection with the Lion Liquid
Propane Gas Extraction Plant, (v) indebtedness incurred to finance any
transactions or capital or other expenditures permitted by this Agreement and
regular borrowings under credit facilities made in the ordinary course of UMC's
cash management practices, (w) refinancings of existing debt, (x) immaterial
borrowings that, in each such case, permit prepayment of such debt without
penalty (other than LIBOR breakage costs), (y) for indebtedness incurred by UMC
Equatorial Guinea Corporation in connection with Block B and any guarantees
thereof and (z) for indebtedness incurred by Havre Pipeline Company L.L.C.) or
guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of UMC or any of its
Subsidiaries or guarantee any debt securities of others, (B) except in the
ordinary course of business, enter into any material lease (whether such lease
is an operating or capital lease) or create any material mortgages, Liens,
security interests or other encumbrances on the property of UMC or any of its
Subsidiaries in connection with any indebtedness thereof, (C) make or commit to
make aggregate capital expenditures in excess of an amount equal to the
aggregate capital expenditures budgeted by UMC for the fiscal years ending
December 31, 1997 as set forth in the capital expenditure budgets delivered to
OEI, less any budgeted capital expenditures expended prior to the date of this
Agreement, or (D) make or commit to make aggregate capital expenditures in
excess of an amount equal to the sum of (y) the aggregate capital expenditures
budgeted by UMC for the fiscal year ending December 31, 1998, as set forth in
the capital expenditure budgets delivered to
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OEI, plus (z) capital expenditures (not otherwise included in budgeted capital
expenditures) that may be incurred in connection with acquisitions permitted by
this Agreement;
(v) shall not, and shall not (except in the ordinary course of
business consistent with past practice) permit any of its Subsidiaries that is
not wholly owned to: (A) declare, authorize or pay any dividends on or make any
distribution with respect to their outstanding shares of capital stock, (B)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of UMC's capital stock; or (C) repurchase, redeem or
otherwise acquire, or permit any of its Subsidiaries to purchase, redeem or
otherwise acquire, any shares of its capital stock, except as required by the
terms of its securities outstanding on the date hereof or as contemplated by
any existing employee benefit plan;
(vi) shall not, and shall not permit any of its Subsidiaries to,
except (A) in the ordinary course of business consistent with past practice or
(B) as otherwise provided in this Agreement, enter into or amend any Plan or
grant any increases in the compensation of any of its directors, officers or
employees, except increases to employees who are not directors or officers made
in the ordinary course of business and in accordance with past practice;
provided, however, the foregoing shall not prohibit the payment of bonuses
under the UMC Incentive Compensation Plan; provided, further, that nothing in
this Section 6.1(b)(vi) shall prevent UMC or its Subsidiaries from paying or
reimbursing, to the extent necessary, any of its respective directors, officers
or employees relocation expenses;
(vii) shall not, and shall not permit any of its Significant
Subsidiaries to, except as otherwise permitted or contemplated by this
Agreement, authorize, recommend, propose or announce an intention to adopt a
plan of complete or partial liquidation or dissolution;
(viii) shall not, nor shall it permit any of its Subsidiaries to,
enter into any agreement or arrangement with any of their respective
Affiliates, other than with its wholly owned Subsidiaries, on terms less
favorable to it or its Subsidiary, as the case may be, than could be reasonably
expected to have been obtained with an unaffiliated third party on an
arm's-length basis.
(ix) shall not propose or adopt any amendments to its certificate
of incorporation or by-laws;
(x) shall not, and shall not permit any of its Significant
Subsidiaries to, issue, deliver or sell or authorize or propose to issue,
deliver or sell, any shares of their capital stock of any class or other voting
securities or any securities convertible into such shares (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise), except as specifically set forth in Section 5.2 and
except pursuant to the UMC Rights Plan;
(xi) shall not, and shall not permit any of its Subsidiaries to,
take any actions which would, or would be reasonably likely, to, prevent
accounting for the Mergers in accordance with the pooling of interests method
of accounting under the requirements of APB No. 16;
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(xii) shall not, and shall not permit any of its Subsidiaries to (A)
make or rescind any material express or deemed election relating to Taxes
unless it is reasonably expected that such action will not have a UMC Material
Adverse Effect, 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, (B) settle
or compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except
where such settlement or compromise will not have a UMC Material Adverse
Effect, or (C) change in any material respect any of its methods of reporting
income or deductions for federal income tax purposes from those employed in the
preparation of its federal income Tax Returns that have been filed for prior
taxable years, except as may be required by applicable law or except for
changes that are reasonably expected not to have a UMC Material Adverse Effect;
(xiii) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or take
any action which would (A) make any representation or warranty in Article V
hereof untrue or incorrect or (B) result in any of the conditions to the
Mergers set forth in Article VII not being satisfied; and
(xiv) shall not, under any of the UMC Option Plans, provide notice
of the UMC Merger to the optionees thereunder more than 15 days prior to the
UMC Effective Time.
Notwithstanding any other provision of this Agreement and the Ancillary
Agreements, including, but not limited to, Sections 6.1(b)(iii), (v) and (viii)
of this Agreement, nothing in this Agreement or in the Ancillary Agreements
shall:
(1) to the extent that such restriction would constitute a breach of Section
10.19 of UMC's Indenture governing its 10.375% Senior Subordinated Notes due
2005, restrict the right or ability of UMC's Subsidiaries to (a) pay dividends
or make other distributions to UMC and its Subsidiaries, (b) pay any
indebtedness owed to UMC or any of its Subsidiaries, (c) make an investment in
UMC or any of its Subsidiaries, or (d) transfer any property to UMC or any of
its Subsidiaries; or
(2) to the extent that such prohibition, restriction or requirement would
constitute a breach of Section 9.14 or Section 9.18 of the Global Credit
Agreement among UMC, UMC Petroleum Corporation and the agents and lenders
parties thereto, (a) in any way prohibit or restrict the granting, conveying,
creation or imposition of any Lien on any property of UMC or any of its
Subsidiaries, or require the consent of or notice to any other person or entity
in connection therewith, or (b) restrict payments from the Subsidiaries of UMC
Petroleum Corporation to UMC Petroleum Corporation or Subsidiaries of UMC to
UMC.
Section 6.2 Investigation. Upon reasonable notice, each of OEI and UMC
shall afford to one another and to one another's officers, employees,
accountants, counsel and other authorized representatives full and complete
access during normal business hours, throughout the period prior to the earlier
of the Effective Time or the date of termination of this Agreement, to its and
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its Subsidiaries' properties, contracts, commitments, books, and records
(including but not limited to Tax Returns) and any report, schedule or other
document filed or received by it pursuant to the requirements of federal or
state securities laws and shall use their reasonable best efforts to cause
their respective representatives to furnish promptly to one another such
additional financial and operating data and other information as to its and its
Subsidiaries' respective businesses and properties as the other or its duly
authorized representatives may from time to time reasonably request. The
parties hereby agree that each of them will treat any such information in
accordance with the Confidentiality Agreement, dated as of April 16, 1997,
between OEI and UMC (the "Confidentiality Agreement"). Notwithstanding any
provision of this Agreement to the contrary, no party shall be obligated to
make any disclosure in violation of applicable laws or regulations, including
any such laws or regulations.
Section 6.3 Cooperation. (a) OEI and UMC shall together, or pursuant
to an allocation of responsibility to be agreed upon between them:
(i) prepare and file with the SEC as soon as is reasonably
practicable the Joint Proxy Statement/Prospectus and use their reasonable best
efforts to have the Joint Proxy Statement/Prospectus cleared by the SEC under
the Exchange Act and the Registration Statement declared effective by the SEC
under the Securities Act as promptly as possible after such filing;
(ii) cooperate with one another in order to lift any injunctions or
remove any other impediment to the consummation of the transactions
contemplated herein; and
(iii) cooperate with one another in obtaining opinions of Xxxxxxx &
Xxxxx L.L.P., counsel to OEI, and Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.,
counsel to UMC, dated as of the Effective Time, to the effect that the Newco
Merger and the UMC Merger, respectively, will constitute transactions described
in Section 368(a) of the Code. In connection therewith, each of OEI and UMC
shall deliver to Xxxxxxx & Xxxxx L.L.P. and Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P. customary representation letters in form and substance reasonably
satisfactory to such counsel and OEI and UMC shall use their reasonable best
efforts to obtain any representation letters drafted by their counsel from
their respective appropriate stockholders and shall deliver any such letters
obtained to Xxxxxxx & Xxxxx L.L.P. and Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P. (the representation letters referred to in this sentence are
collectively, the "Tax Certificates").
(b) Subject to the limitations contained in Section 6.2, OEI and
UMC shall each furnish to one another and to one another's counsel all such
information as may be required in order to effect the foregoing actions and
each represents and warrants to the other that no information furnished by it
in connection with such actions or otherwise in connection with the
consummation of the transactions contemplated by this Agreement will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in order to make any information so furnished, in light
of the circumstances under which it is so furnished, not misleading.
(c)(i) OEI shall cause the Joint Proxy Statement/Prospectus to be
mailed to OEI's stockholders, and UMC shall cause the Joint Proxy
Statement/Prospectus to be mailed to UMC's
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stockholders, in each case as promptly as practicable after the Registration
Statement is declared effective under the Securities Act.
(ii) OEI shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "OEI Stockholders Meeting") for the purpose of obtaining the
OEI Stockholders' Approval and shall, through its Board of Directors, recommend
to its stockholders the adoption of this Agreement and the approval of (A) the
Newco Merger and the UMC Merger, (B) the benefit plans to be adopted by OEI
and/or the amendments to existing benefit plans of OEI to be adopted in
accordance with Section 6.17 (to the extent OEI and UMC determine such
stockholder approval is required or advisable) and (C) the other matters
contemplated hereby. Without limiting the generality of the foregoing but
subject to its rights to terminate this Agreement pursuant to Section 6.9(b),
OEI agrees that its obligations pursuant to the first sentence of this Section
6.3(c)(ii) shall not be affected by the commencement, public proposal, public
disclosure or communication to OEI of any OEI Takeover Proposal (as defined in
Section 6.9(a)). The OEI Stockholders Meeting shall also be OEI's annual
meeting of stockholders for 1998, and OEI shall elect directors at such
meeting.
(iii) UMC shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "UMC Stockholders Meeting") for the purpose of obtaining the
UMC Stockholders' Approval and shall, through its Board of Directors, recommend
to its stockholders the adoption of this Agreement, the UMC Merger and the
other transactions contemplated hereby. Without limiting the generality of the
foregoing but subject to its rights to terminate this Agreement pursuant to
Section 6.10(b), UMC agrees that its obligations pursuant to the first sentence
of this Section 6.3(c)(iii) shall not be affected by the commencement, public
proposal, public disclosure or communication to UMC of any UMC Takeover
Proposal (as defined in Section 6.10(a)).
(iv) Each of UMC and OEI will use their best efforts to hold the
OEI Stockholders Meeting and the UMC Stockholders Meeting on the same date and
as soon as practicable after the date hereof.
(v) Each of UMC and OEI shall cause Newco to adopt this Agreement,
approve the Newco Merger and take all additional actions as may be necessary to
cause Newco to effect the transactions contemplated hereby.
(vi) OEI shall (A) promptly prepare to file with the SEC the
Registration Statement on Form S-4 under the Securities Act with respect to the
OEI Common Stock issuable in the Mergers; (B) as soon as is reasonably
practicable, take all such action as may be required under state blue sky or
securities laws in connection with the issuance of shares of OEI Common Stock
in the UMC Merger and as contemplated by this Agreement; and (C) promptly
prepare and file with the NYSE and such other stock exchanges as shall be
agreed upon listing applications covering the shares of OEI Common Stock
issuable in the UMC Merger or upon exercise of OEI and UMC stock options,
warrants, conversion rights or other rights or vesting or payment of other OEI
and UMC equity-based awards and use its reasonable best efforts to obtain,
prior to
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the Effective Time, approval for the listing of such OEI Common Stock, subject
only to official notice of issuance.
Section 6.4 Affiliate Agreements. (a) OEI shall, as soon as
practicable, deliver to UMC a list (reasonably satisfactory to counsel for
UMC), setting forth the names and addresses of all persons who will be, at the
time of the OEI Stockholders Meeting, in OEI's reasonable judgment,
"affiliates" of OEI for purposes of Rule 145 under the Securities Act or under
applicable SEC accounting releases with respect to pooling of interests
accounting treatment. OEI shall furnish such information and documents as UMC
may reasonably request for the purpose of reviewing such list. OEI shall use
its reasonable best efforts to cause each person who is identified as an
"affiliate" in the list furnished pursuant to this Section 6.4 to execute a
written agreement on or prior to the mailing of the Joint Proxy
Statement/Prospectus, in substantially the form of EXHIBIT C hereto.
(b) UMC shall, as soon as practicable, deliver to OEI a list
(reasonably satisfactory to counsel for OEI) setting forth the names and
addresses of all persons who will be, at the time of the UMC Stockholders
Meeting, in UMC's reasonable judgment, "affiliates" of UMC for purposes of Rule
145 under the Securities Act or under applicable SEC accounting releases with
respect to pooling of interests accounting treatment. UMC shall furnish such
information and documents as OEI may reasonably request for the purpose of
reviewing such list. UMC shall use its reasonable best efforts to cause each
person who is identified as an "affiliate" in the list furnished pursuant to
this Section 6.4 to execute a written agreement on or prior to the mailing of
the Joint Proxy Statement/Prospectus, in substantially the form of EXHIBIT D
hereto.
Section 6.5 Employee Stock Options, Incentive and Benefit Plans. (a)
Simultaneously with the UMC Merger, (i) to the extent that the holders of such
options so elect, each outstanding option ("UMC Stock Options") (and related
stock appreciation right ("UMC SAR"), if any) to purchase or acquire a share of
UMC Common Stock under UMC Option Plans shall be converted into an option
(together with a related stock appreciation right of UMC, if applicable) to
purchase the number of shares of OEI Common Stock equal to 1.30 times the
number of shares of UMC Common Stock which could have been obtained prior to
the Effective Time upon the exercise of each such option, at an exercise price
per share equal to the exercise price for each such share of UMC Common Stock
subject to an option (and related UMC SAR, if any) under the UMC Option Plans
divided by 1.30, and all references in each such option (and related UMC SAR,
if any) to UMC shall be deemed to refer to OEI, where appropriate, and (ii) OEI
shall assume the obligations of UMC under the UMC Option Plans. The other
terms of each such option and UMC SAR, and the plans under which they were
issued, shall continue to apply in accordance with their terms, including any
provisions providing for acceleration.
(b) Simultaneously with the UMC Merger, each outstanding award
(including restricted stock, phantom stock, stock equivalents and stock units)
("UMC Award") under any employee incentive or benefit plans, programs or
arrangements and non-employee director plans presently maintained by UMC which
provide for grants of equity-based awards shall be amended or converted into a
similar instrument of OEI, in each case with such adjustments to the terms of
such UMC Awards as are appropriate to preserve the value inherent in such UMC
Awards with
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no detrimental effects on the holders thereof. The other terms of each UMC
Award, and the plans or agreements under which they were issued, shall continue
to apply in accordance with their terms, including any provisions providing for
acceleration. With respect to any restricted stock awards as to which the
restrictions shall have lapsed on or prior to the Effective Time in accordance
with the terms of the applicable plans or award agreements, shares of such
previously restricted stock shall be converted in accordance with the
provisions of Section 2.2(c).
(c) UMC agrees that its employee incentive or benefit plans,
programs and arrangements and non-employee director plans shall be amended, to
the extent necessary and appropriate, to reflect the transactions contemplated
by this Agreement, including, but not limited to the conversion of shares of
UMC Common Stock held or to be awarded or paid pursuant to such benefit plans,
programs or arrangements into shares of OEI Common Stock on a basis consistent
with the transactions contemplated by this Agreement; provided that any present
employees of UMC shall be credited for their service with UMC and its
predecessor entities in connection with such amendments. The actions to be
taken by UMC pursuant to this Section 6.5(c) shall include the submission by
UMC of the amendments to the plans, programs or arrangements referred to herein
to its stockholders at the UMC Meeting, if such submission is determined to be
necessary or advisable by counsel to UMC; provided, however, that such approval
shall not be a condition to the consummation of the UMC Merger. At the UMC
Effective Time, OEI shall automatically assume the Severance Protection
Agreements between UMC and certain employees of UMC and its Subsidiaries.
(d) Simultaneously with the Newco Merger, to the extent that the
holders of such options so elect, each outstanding OEI Stock Option (and
related stock appreciation right ("OEI SAR"), if any) to purchase or acquire a
share of Old OEI Common Stock under OEI Option Plans shall be converted into an
option (together with a related stock appreciation right of OEI, if applicable)
to purchase the number of shares of OEI Common Stock equal to 2.34 times the
number of shares of Old OEI Common Stock which could have been obtained prior
to the Newco Effective Time upon the exercise of each such option, at an
exercise price per share equal to the exercise price for each such share of OEI
Common Stock subject to an option (and related OEI SAR, if any) under the OEI
Option Plans divided by 2.34. The other terms of each such option and OEI SAR,
and the plans under which they were issued, shall continue to apply in
accordance with their terms, including any provisions providing for
acceleration.
Section 6.6 Filings; Other Action. Subject to the terms and conditions
herein provided, OEI and UMC shall (a) promptly make their respective filings
and thereafter make any other required submissions under the HSR Act, (b) use
reasonable efforts to cooperate with one another in (i) determining whether any
filings are required to be made with, or consents, permits, authorizations or
approvals are required to be obtained from, any third party or other
governmental or regulatory bodies or authorities of federal, state, local and
foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
thereby and (ii) timely making all such filings and timely seeking all such
consents, permits, authorizations or approvals, and (c) use reasonable efforts
to take, or cause to be taken, all other actions and do, or cause to be done,
all other things necessary, proper or advisable to consummate and make
effective the transactions contemplated hereby,
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including, without limitation, taking all such further action as reasonably may
be necessary to resolve such objections, if any, as the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state
antitrust enforcement authorities or competition authorities of any other
nation or other jurisdiction or any other person may assert under relevant
antitrust or competition laws with respect to the transactions contemplated
hereby and to ensure that it is a "poolable entity" eligible to participate in
a transaction to be accounted for under the pooling of interests method of
accounting.
Section 6.7 Further Assurances. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers of OEI and UMC shall take all
such necessary action.
Section 6.8 Takeover Statute. If any "fair price," "moratorium,"
"control share acquisition" or other form of anti-takeover statute or
regulation shall become applicable to the transactions contemplated hereby,
each of OEI and UMC and the members of their respective Boards of Directors
shall grant such approvals and take such actions as are reasonably necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.
Section 6.9 No Solicitation by OEI. (a) OEI shall not, nor shall it
authorize or permit any of its directors or officers or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
to, directly or indirectly through another person, (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other
action designed to facilitate, any inquiries or the making of any proposal
which constitutes an OEI Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding an OEI Takeover
Proposal; provided, however, that if the Board of Directors of OEI determines
in good faith, after consultation with outside counsel, that it is necessary to
do so in order to comply with its fiduciary duties to OEI's stockholders under
applicable law, OEI may, in response to an OEI Superior Proposal (as defined in
Section 6.9(b)) which was not solicited by it or which did not otherwise result
from a breach of this Section 6.9(a), and subject to providing at least one
business day's prior written notice of its decision to take such action to UMC
(the "OEI Notice") and compliance with Section 6.9(c), (x) furnish information
with respect to OEI and its Subsidiaries to any person making an OEI Superior
Proposal pursuant to a customary confidentiality agreement (as determined by
OEI after consultation with its outside counsel) and (y) participate in
discussions or negotiations regarding such OEI Superior Proposal. For purposes
of this Agreement, "OEI Takeover Proposal" means any inquiry, proposal or offer
(or any improvement, restatement, amendment, renewal or reiteration thereof)
from any person relating to (i) any direct or indirect acquisition or purchase
of a business or assets that (A) constitutes 25% or more of the net revenues,
net income or assets of OEI and its Subsidiaries, taken as a whole, or (B) is
reasonably expected to result in the receipt of cash, securities and/or
property having a value of at least $400 million, (ii) the direct or indirect
acquisition of a substantial portion of shares of any class of equity
securities of OEI or any of its Subsidiaries, (iii) any tender offer or
exchange offer that if consummated would result in any person beneficially
owning a substantial portion of any class of equity securities of OEI or any of
its Subsidiaries or
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(iv) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving OEI or any of its
Subsidiaries, other than the transactions contemplated by this Agreement. OEI
shall be permitted to deliver only one OEI Notice with respect to each person
making an OEI Superior Proposal.
(b) Except as expressly permitted by this Section 6.9, neither the
Board of Directors of OEI nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to UMC,
the approval or recommendation by such Board of Directors or such committee of
the Mergers or this Agreement, (ii) approve or recommend, or propose publicly
to approve or recommend, any OEI Takeover Proposal, or (iii) cause OEI or any
of its Subsidiaries to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "OEI Acquisition
Agreement") related to any OEI Takeover Proposal. Notwithstanding the
foregoing, in the event that the Board of Directors of OEI determines in good
faith that there is a substantial probability that the adoption of this
Agreement by holders of OEI Common Stock will not be obtained due to the
existence of an OEI Superior Proposal, the Board of Directors of OEI may
(subject to this and the following sentences) terminate this Agreement (and
concurrently with or after such termination, if it so chooses, cause OEI to
enter into any OEI Acquisition Agreement with respect to any OEI Superior
Proposal), but only at a time that is after the third business day following
UMC's receipt of written notice advising UMC that the Board of Directors of OEI
is prepared to accept an OEI Superior Proposal, specifying the material terms
and conditions of such OEI Superior Proposal and identifying the person making
such OEI Superior Proposal. For purposes of this Agreement, an "OEI Superior
Proposal" means any OEI Takeover Proposal which the Board of Directors of OEI
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to OEI's
stockholders than the Mergers and for which financing, to the extent required,
is then committed or as to which the Board of Directors of OEI has received a
"highly confident letter" from a nationally recognized investment bank or
financial institution.
(c) In addition to the obligations of OEI set forth in paragraphs
(a) and (b) of this Section 6.9, OEI shall immediately advise UMC orally and in
writing of any request for information or of any OEI Takeover Proposal, the
material terms and conditions of such request or OEI Takeover Proposal and the
identity of the person making such request or OEI Takeover Proposal. OEI will
keep Newco reasonably informed of the status and details (including amendments
or proposed amendments) of any such request or OEI Takeover Proposal.
(d) Nothing contained in this Section 6.9 shall prohibit OEI from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
OEI's stockholders if, in the good faith judgment of the Board of Directors of
OEI, after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; provided, however, that
neither OEI nor its Board of Directors nor any committee thereof shall withdraw
or modify, or propose publicly to withdraw or modify, its position with respect
to this Agreement, the Newco Merger, the UMC Merger, the issuance of OEI Common
Stock in connection with the UMC
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Merger, or approve or recommend, or propose publicly to approve or recommend,
an OEI Takeover Proposal.
Section 6.10 No Solicitation by UMC. (a) UMC shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any
proposal which constitutes a UMC Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding a UMC Takeover
Proposal; provided, however, that if the Board of Directors of UMC determines
in good faith, after consultation with outside counsel, that it is necessary to
do so in order to comply with its fiduciary duties to UMC's stockholders under
applicable law, UMC may, in response to a UMC Superior Proposal (as defined in
Section 6.10(b)) which was not solicited by it or which did not otherwise
result from a breach of this Section 6.10(a), and subject to providing at least
one business day's prior written notice of its decision to take such action to
OEI (the "UMC Notice") and compliance with Section 6.10(c), (x) furnish
information with respect to UMC and its Subsidiaries to any person making a UMC
Superior Proposal pursuant to a customary confidentiality agreement (as
determined by UMC after consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such UMC Superior
Proposal. For purposes of this Agreement, "UMC Takeover Proposal" means any
inquiry, proposal or offer (or any improvement, restatement, amendment, renewal
or reiteration thereof) from any person relating to (i) any direct or indirect
acquisition or purchase of a business or assets that (A) constitutes 25% or
more of the net revenues, net income or assets of UMC and its Subsidiaries,
taken as a whole, or (B) is reasonably expected to result in the receipt of
cash, securities and/or property having a value of at least $400 million, (ii)
the direct or indirect acquisition of a substantial portion of shares of any
class of equity securities of UMC or any of its Subsidiaries, (iii) any tender
offer or exchange offer that if consummated would result in any person
beneficially owning a substantial portion of any class of equity securities of
UMC or any of its Subsidiaries or (iv) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving UMC or any of its Subsidiaries, other than the transactions
contemplated by this Agreement. UMC shall be permitted to deliver only one UMC
Notice with respect to each person making a UMC Superior Proposal.
(b) Except as expressly permitted by this Section 6.10, neither
the Board of Directors of UMC nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to UMC,
the approval or recommendation by such Board of Directors or such committee of
the UMC Merger or this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any UMC Takeover Proposal, or (iii) cause UMC
or any of its Subsidiaries to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, a "UMC
Acquisition Agreement") related to any UMC Takeover Proposal. Notwithstanding
the foregoing, in the event that the Board of Directors of UMC determines in
good faith that there is a substantial probability that the adoption of this
Agreement by holders of UMC Common Stock will not be obtained due to the
existence of a UMC Superior Proposal, the Board of Directors of UMC may
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(subject to this and the following sentences) terminate this Agreement (and
concurrently with or after such termination, if it so chooses, cause UMC to
enter into any UMC Acquisition Agreement, with respect to any UMC Superior
Proposal), but only at a time that is after the third business day following
OEI's receipt of written notice advising OEI that the Board of Directors of UMC
is prepared to accept a UMC Superior Proposal, specifying the material terms
and conditions of such UMC Superior Proposal and identifying the person making
such UMC Superior Proposal. For purposes of this Agreement, a "UMC Superior
Proposal" means any UMC Takeover Proposal which the Board of Directors of UMC
determine in its good faith judgment (based on the advice of a financial
adviser of nationally recognized reputation) to be more favorable to UMC's
stockholders than the UMC Merger and for which financing, to the extent
required, is then committed or as to which the Board of Directors of UMC has
received a "highly confident letter" from a nationally recognized investment
bank or financial institution.
(c) In addition to the obligations of UMC set forth in paragraphs
(a) and (b) of this Section 6.10, UMC shall immediately advise OEI orally and
in writing of any request for information or of any UMC Takeover Proposal, the
material terms and conditions of such request or UMC Takeover Proposal and the
identity of the person making such request or UMC Takeover Proposal. UMC will
keep OEI reasonably informed of the status and details (including amendments or
proposed amendments) of any such request or UMC Takeover Proposal.
(d) Nothing contained in this Section 6.10, shall prohibit UMC
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
UMC's stockholders if, in the good faith judgment of the Board of Directors of
UMC, after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; provided, however, that
neither UMC nor its Board of Directors nor any committee thereof shall withdraw
or modify, or propose publicly to withdraw or modify, its position with respect
to this Agreement, the UMC Merger, the issuance of OEI Common Stock in
connection with the UMC Merger, or approve or recommend, or propose publicly to
approve or recommend, a UMC Takeover Proposal.
Section 6.11 Public Announcements. OEI and UMC will consult with and
provide each other the opportunity to review and comment upon any press release
prior to the issuance of any press release relating to this Agreement or the
transactions contemplated herein and shall not issue any such press release
without the other party's consent except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section 6.12 Indemnification and Insurance.
(a) From and after the Effective Time, OEI shall indemnify, defend
and hold harmless each person who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer or director
of OEI or any of its Subsidiaries or an employee of OEI or any of its
Subsidiaries who acts as a fiduciary under any OEI Benefit Plans (the "OEI
Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorneys' fees), liabilities or judgments or amounts that are paid
in settlement with the approval of the indemnifying party (which approval shall
not be unreasonably withheld) of or in
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connection with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director, officer, or such employee of
OEI or any Subsidiary whether pertaining to any matter existing or occurring at
or prior to the Effective Time and whether asserted or claimed prior to, or at
or after, the Effective Time ("OEI Indemnified Liabilities"), including all OEI
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the fullest extent permitted under applicable law (and
OEI will pay expenses in advance of the final disposition of any such action or
proceeding to each OEI Indemnified Party to the fullest extent permitted by
law). Without limiting the foregoing, in the event any such claim, action,
suit, proceeding or investigation is brought against any OEI Indemnified
Parties (whether arising before or after the Effective Time), (i) the OEI
Indemnified Parties may retain counsel reasonably satisfactory to them and OEI,
and OEI shall pay all fees and expenses of such counsel for the OEI Indemnified
Parties; and (ii) OEI will use all commercially reasonable efforts to assist in
the vigorous defense of any such matter, provided that no party shall be liable
for any settlement effected without its written consent, which consent shall
not be unreasonably withheld. Any OEI Indemnified Party wishing to claim
indemnification under this Section 6.12(a), upon learning of any such claim,
action, suit, proceeding or investigation, shall notify OEI, but the failure so
to notify shall not relieve a party from any liability that it may have under
this Section 6.12(a), except to the extent such failure materially prejudices
such party. The OEI Indemnified Parties as a group may retain only one law
firm to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more OEI Indemnified Parties. The
parties agree that the rights to indemnification, including provisions relating
to advances of expenses incurred in defense of any action or suit, existing in
favor of the OEI Indemnified Parties in the charter and bylaws of OEI with
respect to matters occurring through the Effective Time, shall survive the
Mergers and shall continue in full force and effect for a period of six years
from the Effective Time; provided, however, that all rights to indemnification
in respect of any OEI Indemnified Liabilities asserted or made within such
period shall continue until the disposition of such OEI Indemnified
Liabilities. The foregoing provisions of this Section 6.12(a) shall not limit
or impair the rights of the OEI Indemnified Parties arising under any
indemnification or other agreements to which they are a party, the charter,
bylaws or other organizational documents of OEI and its Subsidiaries or
applicable laws.
(b) For three years from the Effective Time, OEI shall maintain in
effect its current directors' and officers' liability insurance policy (the
"OEI Policy") covering those persons who are currently covered by the OEI
Policy (a copy of which has been heretofore delivered to UMC); provided,
however, that in no event shall OEI be required to expend in any one year an
amount in excess of 150% of the annual premiums currently paid by OEI for such
insurance, and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, OEI shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
(c) From and after the Effective Time, OEI shall indemnify, defend
and hold harmless each person who is now, or has been at any time prior to the
date hereof or who
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becomes prior to the Effective time, an officer or director of Newco, UMC or
any of its Subsidiaries or an employee of UMC or any of its Subsidiaries who
acts as a fiduciary under any UMC Benefit Plans (the "UMC Indemnified Parties")
against all losses, claims, damages, costs, expenses (including attorneys'
fees), liabilities or judgments or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director,
officer, or such employee of UMC or any Subsidiary whether pertaining to any
matter existing or occurring at or prior to the Effective Time and whether
asserted or claimed prior to, or at or after, the Effective Time ("UMC
Indemnified Liabilities"), including all UMC Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby, in each case to the
fullest extent permitted under applicable law (and OEI will pay expenses in
advance of the final disposition of any such action or proceeding to each UMC
Indemnified Party to the fullest extent permitted by law). Without limiting
the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any UMC Indemnified Parties (whether arising
before or after the Effective Time), (i) the UMC Indemnified Parties may retain
counsel reasonably satisfactory to them and OEI, and OEI shall pay all fees and
expenses of such counsel for the UMC Indemnified Parties; and (ii) OEI will use
all commercially reasonable efforts to assist in the vigorous defense of any
such matter, provided that no party shall be liable for any settlement effected
without its written consent, which consent shall not be unreasonably withheld.
Any UMC Indemnified Party wishing to claim indemnification under this Section
6.12(c), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify OEI, but the failure so to notify shall not relieve
a party from any liability that it may have under this Section 6.12(c), except
to the extent such failure materially prejudices such party. The UMC
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more UMC Indemnified Parties. The parties agree that the rights
to indemnification, including provisions relating to advances of expenses
incurred in defense of any action or suit, existing in favor of the UMC
Indemnified Parties in the charter and bylaws of UMC with respect to matters
occurring through the Effective Time, shall survive the UMC Merger and shall
continue in full force and effect for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
UMC Indemnified Liabilities asserted or made within such period shall continue
until the disposition of such UMC Indemnified Liabilities. The foregoing
provisions of this Section 6.12(c) shall not limit or impair the rights of the
UMC Indemnified Parties arising under any indemnification or other agreements
to which they are a party, the charter, bylaws or other organizational
documents of UMC and its Subsidiaries or applicable laws.
(d) For three years from the Effective Time, OEI shall maintain in
effect UMC's directors' and officers' liability insurance policy (the "UMC
Policy"), which policy UMC shall obtain prior to the Effective Time and which
policy shall be substantially similar to the OEI Policy, covering those persons
who are covered by the UMC Policy and persons who are directors of OEI;
provided, however, that in no event shall OEI be required to expend in any one
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year an amount in excess of 150% of the annual premiums to be paid by UMC for
such insurance, and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, OEI shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
(e) In the event that OEI or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
person, then, in each such case, proper provisions shall be made so that the
successors and assigns of OEI shall assume the obligations set forth in this
Section 6.12. The provisions of this Section 6.12 are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each person
entitled to indemnification or insurance coverage or expense advancement
pursuant to this Section 6.12, his heirs and representatives.
Section 6.13 Accountants' "Comfort" Letters. OEI and UMC will each use
reasonable best efforts to cause to be delivered to each other letters from
their respective independent accountants, dated a date within two business days
before the date of the Registration Statement, in form reasonably satisfactory
to the recipient and customary in scope for comfort letters delivered by
independent accountants in connection with registration statements on Form S-4
under the Securities Act.
Section 6.14 Additional Reports. OEI and UMC shall each furnish to the
other copies of any reports of the type referred to in Sections 4.5, 4.6, 5.5
and 5.6 which it files with the SEC on or after the date hereof and (ii) any
other filings made by such party or its Subsidiaries with any Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby, and each of OEI and UMC, as the case may be, represents and warrants
that as of the respective dates thereof, such reports will 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 statement therein, in light of
the circumstances under which they were made, not misleading. Any unaudited
consolidated interim financial statements included in such reports (including
any related notes and schedules) will fairly present the financial position of
OEI and its consolidated Subsidiaries or UMC and its consolidated Subsidiaries,
as the case may be, as of the dates thereof and the results of operations and
changes in financial position or other information included therein for the
periods or as of the date then ended (subject, where appropriate, to normal
year-end adjustments), in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto).
Section 6.15 Advice of Changes. OEI and UMC, as the case may be, shall
confer on a regular basis with each other, report on operational matters and
promptly advise each other orally and in writing of any change or event having,
or which, insofar as can reasonably be foreseen, could have an OEI Material
Adverse Effect or UMC Material Adverse Effect, as the case may be.
Section 6.16 Stockholder Litigation. Each of OEI and UMC shall give
the other the reasonable opportunity to participate in the defense of any
litigation against OEI or UMC, as
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applicable, and its directors relating to the transactions contemplated by this
Agreement and the Option Agreements.
Section 6.17 OEI Benefit Plans. Prior to the mailing to the
stockholders of the Joint Proxy Statement/Prospectus, but to become effective
immediately after the Effective Time, OEI shall adopt new employee benefit
plans (and/or amend existing employee benefit plans) having terms and
conditions acceptable to OEI and UMC.
Section 6.18 Indenture Matters. OEI and UMC shall, and shall cause
their respective Subsidiaries to, take all actions that are necessary or
appropriate in order for OEI, certain of OEI's Subsidiaries and certain of
UMC's Subsidiaries, as applicable, to assume or guarantee by supplemental
indenture the indentures for the outstanding publicly-held notes of UMC and OEI
referred to in the UMC SEC Reports and the OEI SEC Reports.
Section 6.19 New Bank Credit Facility. OEI and UMC shall use their
reasonable best efforts, and shall cooperate, to obtain as promptly as
practicable commitments from financing sources to refinance on an unsecured
basis the existing bank credit facilities of UMC, OEI and their respective
Subsidiaries (excluding, in the case of UMC, Havre Pipeline Company L.L.C.).
Section 6.20 Place of Business. As soon as practicable after the
Effective Time, the executive offices and corporate headquarters of OEI shall
be relocated to the current offices of UMC in Houston, Texas.
ARTICLE VII
CONDITIONS TO THE MERGERS
Section 7.1 Conditions to Each Party's Obligation to Effect the
Mergers. The respective obligations of each party to effect the Mergers shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) The OEI Stockholders' Approval and the UMC Stockholders'
Approval shall have been obtained all in accordance with applicable law.
(b) No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or enforced by any
court or other tribunal or governmental body or authority which prohibits the
consummation of the Mergers substantially on the terms contemplated hereby. In
the event any order, decree or injunction shall have been issued, each party
shall use its reasonable efforts to remove any such order, decree or
injunction.
(c) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending such effectiveness shall have been issued and remain in effect.
(d) The shares of OEI Common Stock issuable in the UMC Merger
shall have been approved for listing on the NYSE, subject only to official
notice of issuance.
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(e) Any applicable waiting period under the HSR Act shall have
expired or been terminated and any other OEI Required Approvals and UMC
Required Approvals shall have been obtained, except where the failure to obtain
such other OEI Required Approvals and UMC Required Approvals would not have a
Material Adverse Effect on OEI or UMC, as the case may be.
(f) UMC shall have received an opinion of its tax counsel, Akin,
Gump, Strauss, Xxxxx & Xxxx, L.L.P., in form and substance reasonably
satisfactory to it, and dated as of the Effective Time, to the effect that the
UMC Merger will constitute a transaction described in Section 368(a) of the
Code. OEI shall have received an opinion of its tax counsel, Xxxxxxx & Xxxxx
L.L.P., in form and substance reasonably satisfactory to it, and dated as of
the Effective Time, to the effect that the Mergers will constitute transactions
described in Section 368(a) of the Code. In rendering such opinions, Akin,
Gump, Strauss, Xxxxx & Xxxx, L.L.P. and Xxxxxxx & Xxxxx L.L.P. may require
delivery of and rely upon the Tax Certificates.
(g) Each of UMC and OEI shall have received from Xxxxxx Xxxxxxxx
LLP a written opinion dated the Effective Time to the effect that the
transactions contemplated by this Agreement, including the Mergers, when
effected in accordance with the terms hereof, shall be accounted for in the
consolidated financial statements of OEI and its Subsidiaries as a Pooling
Transaction, and a copy of each party's respective opinion shall have been
delivered to the other.
Section 7.2 Conditions to Obligations of OEI to Effect the Mergers.
The obligation of OEI to effect the Newco Merger and the UMC Merger is further
subject to the conditions that (a) the representations and warranties of UMC
contained herein that are qualified as to materiality shall be true and correct
in all respects and each of the representations and warranties of UMC contained
herein that are not so qualified shall be true and correct in all material
respects as of the Effective Time with the same effect as though made as of the
Effective Time except (i) for changes specifically permitted by the terms of
this Agreement, (ii) that the accuracy of representations and warranties that
by their terms speak as of the date of this Agreement or some other date will
be determined as of such date and (iii) where any such failure of the
representations and warranties in the aggregate to be true and correct in all
respects would not have a UMC Material Adverse Effect, (b) UMC shall have
performed in all material respects all obligations and complied with all
covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time, (c) UMC shall have delivered to OEI a certificate,
dated the Effective Time and signed by its Chairman of the Board and Chief
Executive Officer or a Senior Vice President, certifying to both such effects,
(d) OEI shall have received from each person named in the UMC list referred to
in Section 6.4(b) an executed copy of an agreement as provided in such Section
and (e) Xx. Xxxxx X. Xxxxxx shall have entered into an employment agreement
with OEI substantially in the form attached hereto as EXHIBIT E.
Section 7.3 Conditions to Obligations of UMC to Effect the UMC Merger.
The obligation of UMC to effect the UMC Merger is further subject to the
conditions that (a) the representations and warranties of OEI contained herein
that are qualified as to materiality shall be true and correct in all respects
and each of the representations and warranties of OEI contained herein that are
not so qualified shall be true and correct in all material respects as of the
Effective Time with
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the same effect as though made as of the Effective Time except (i) for changes
specifically permitted by the terms of this Agreement, (ii) that the accuracy
of representations and warranties that by their terms speak as of the date of
this Agreement or some other date will be determined as of such date and (iii)
where any such failure of the representations and warranties in the aggregate
to be true and correct in all respects would not have an OEI Material Adverse
Effect, (b) OEI shall have performed in all material respects all obligations
and complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time, (c) OEI shall have delivered
to UMC a certificate, dated the Effective Time and signed by its Chairman of
the Board, Chief Executive Officer and President or a Senior Vice President,
certifying to both such effects, (d) UMC shall have received from each person
named in the OEI list referred to in Section 6.4(a) an executed copy of an
agreement as provided in such Section, (e) all necessary actions to effect the
provisions of Sections 3.1 and 3.2 shall have been taken and (f) Xx. Xxxx X.
Xxxxx shall have entered into an employment agreement with OEI substantially in
the form attached hereto as EXHIBIT F.
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
Section 8.1 Termination or Abandonment. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Mergers by the
respective stockholders of OEI and UMC:
(a) by the mutual written consent of OEI and UMC;
(b) by either UMC or OEI if the Effective Time shall not have
occurred on or before July 31, 1998; provided, that the party seeking to
terminate this Agreement pursuant to this Section 8.1(b) shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the failure to consummate the
Mergers on or before such date;
(c) by either UMC or OEI if (i) a statute, rule, regulation or
executive order shall have been enacted, entered or promulgated prohibiting the
consummation of the Mergers substantially on the terms contemplated hereby or
(ii) an order, decree, ruling or injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation of the Mergers
substantially on the terms contemplated hereby and such order, decree, ruling
or injunction shall have become final and non-appealable; provided, that the
party seeking to terminate this Agreement pursuant to this Section 8.1(c)(ii)
shall have used its reasonable best efforts to remove such injunction, order or
decree;
(d) by either UMC or OEI, if the approvals of the stockholders of
either UMC or OEI contemplated by this Agreement shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
stockholders or at any adjournment thereof;
(e) by UMC in accordance with Section 6.10(b); provided that, in
order for the termination of this Agreement pursuant to this paragraph (e) to
be deemed effective, UMC shall
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have complied with all provisions contained in Section 6.10, including the
notice provisions therein, with applicable requirements, including the payment
of the Termination Fee, of Section 8.3 and with the requirements of Section
9.2(b);
(f) by UMC, if OEI or any of its directors or officers shall
participate in discussion or negotiations in breach of Section 6.9;
(g) by OEI in accordance with Section 6.9(b); provided that, in
order for the termination of this Agreement pursuant to this paragraph (g) to
be deemed effective, OEI shall have complied with all provisions of Section
6.9, including the notice provisions therein, with applicable requirements,
including the payment of the Termination Fee, of Section 8.3 and with the
requirements of Section 9.2(b);
(h) by OEI, if UMC or any of its directors or officers shall
participate in discussions or negotiations in breach of Section 6.10; or
(i) by OEI or UMC if there shall have been a material breach by
the other of any of its representations, warranties, covenants or agreements
contained in this Agreement and such breach shall not have been cured within 30
days after notice thereof shall have been received by the party alleged to be
in breach.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.1, this Agreement shall terminate (except for
the provisions of Sections 6.2, 8.3 and 9.2), and there shall be no other
liability on the part of UMC or OEI to the other except liability arising out
of a willful and material breach of this Agreement or as provided for in the
Confidentiality Agreement.
Section 8.3 Termination Fee. (a) In the event that (i) after the date
hereof and prior to the OEI Stockholders Meeting an OEI Takeover Proposal shall
have been made known to OEI or any of its Subsidiaries or shall have been made
directly to its stockholders generally or any person shall have publicly
announced an intention (whether or not conditional) to make an OEI Takeover
Proposal and thereafter this Agreement is terminated by either UMC or OEI
pursuant to Section 8.1(b) or 8.1(d) (provided that the basis for such
termination is that the OEI Stockholders' Approval shall not have been obtained
and provided, further, that the UMC stockholders shall not have voted to
disapprove this Agreement) or (ii) this Agreement is terminated (A) by OEI
pursuant to Section 8.1(g) or (B) by UMC pursuant to Section 8.1(f), then OEI
shall promptly, but in no event later than two days after the date of such
termination, pay UMC a fee equal to $40 million (the "Termination Fee"),
payable by wire transfer of same day funds; provided, however, that no
Termination Fee shall be payable to UMC in any circumstance in which UMC
stockholders vote to disapprove this Agreement and provided further, that no
Termination Fee shall be payable to UMC pursuant to clause (i) of this
paragraph (a) or pursuant to a termination by UMC pursuant to Section 8.1(f)
unless and until within 12 months of such termination OEI or any of its
Subsidiaries consummates any OEI Takeover Proposal, in which event the
Termination Fee shall be payable upon such consummation. OEI acknowledges that
the agreements contained in this Section 8.3(a) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, UMC would not enter into this
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Agreement; accordingly, if OEI fails promptly to pay the amount due pursuant to
this Section 8.3(a), and, in order to obtain such payment, UMC commences a suit
which results in a judgment against OEI for the fee set forth in this Section
8.3(a), OEI shall pay to UMC its costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on the
amount of the fee at the prime rate of The Chase Manhattan Bank in effect on
the date such payment was required to be made.
(b) In the event that (i) after the date hereof and prior to the
UMC Stockholders Meeting a UMC Takeover Proposal shall have been made known to
UMC or any of its Subsidiaries or shall have been made directly to its
stockholders generally or any person shall have publicly announced an intention
(whether or not conditional) to make a UMC Takeover Proposal and thereafter
this Agreement is terminated by either UMC or OEI pursuant to Section 8.1(b) or
8.1(d) (provided that the basis for such termination is that the UMC
Stockholders' Approval shall not have been obtained and provided, further, that
the OEI stockholders shall not have voted to disapprove this Agreement) or (ii)
this Agreement is terminated (A) by UMC pursuant to Section 8.1(e) or (B) by
OEI pursuant to Section 8.1(h), then UMC shall promptly, but in no event later
than two days after the date of such termination, pay OEI the Termination Fee,
payable by wire transfer of same day funds; provided, however, that no
Termination Fee shall be payable to OEI in any circumstance in which OEI
stockholders vote to disapprove this Agreement and provided further, that no
Termination Fee shall be payable to OEI pursuant to clause (i) of this
paragraph (b) or pursuant to a termination by OEI pursuant to Section 8.1(h)
unless and until within 12 months of such termination UMC or any of its
Subsidiaries consummates any UMC Takeover Proposal, in which event the
Termination Fee shall be payable upon such consummation. UMC acknowledges that
the agreements contained in this Section 8.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, OEI would not enter into this Agreement; accordingly, if UMC fails
promptly to pay the amount due pursuant to this Section 8.3(b), and, in order
to obtain such payment, OEI commences a suit which results in a judgment
against UMC for the fee set forth in this Section 8.3(b), UMC shall pay to OEI
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of The Chase Manhattan Bank in effect on the date such payment was
required to be made.
Section 8.4 Amendment or Supplement. At any time before or after
approval of the matters presented in connection with the Mergers by the
respective stockholders of OEI and UMC and prior to the Effective Time, this
Agreement may be amended or supplemented in writing by OEI and UMC with respect
to any of the terms contained in this Agreement; provided, however that
following approval by the stockholders of OEI and UMC there shall be no
amendment or change to the provisions hereof with respect to the conversion
ratio of shares of Old OEI Common Stock or UMC Common Stock into shares of OEI
Common Stock as provided herein nor any amendment or change not permitted under
applicable law, without further approval by the stockholders of OEI and UMC.
Section 8.5 Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, any party may:
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(a) extend the time for the performance of any of the obligations
or acts of the other party;
(b) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document delivered pursuant
hereto; or
(c) subject to the proviso of Section 8.4, waive compliance with
any of the agreements or conditions of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by OEI or UMC in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right hereunder. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Survival of Representations and Warranties. None of the
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Mergers,
except for the agreements set forth in Article II and Article III, the
agreements of "affiliates" of OEI and UMC to be delivered pursuant to Section
6.4, the provisions of Sections 6.5, 6.11, 6.12 and 6.20 and this Article IX.
Section 9.2 Expenses. (a) Whether or not the Mergers are consummated,
all Expenses (as defined herein) shall be paid by the party incurring such
Expenses, except that (i) the filing fee in connection with any HSR Act filing,
(ii) the commissions and other out-of-pocket transaction costs, including the
Expenses and compensation of the Exchange Agent, incurred in connection with
the sale of Excess Shares, (iii) the Expenses incurred in connection with the
printing and mailing of the Joint Proxy Statement/Prospectus, (iv) all transfer
taxes and (v) any other Expenses that were agreed to be shared by the parties
prior to their incurrence shall be shared equally by OEI and UMC.
(b) Notwithstanding the foregoing, in the event that this
Agreement is terminated (A) by OEI pursuant to Section 8.1(g) or (B) by UMC
pursuant to Section 8.1(e), then the terminating party shall reimburse the
non-terminating party for all Expenses incurred by such party, such
reimbursement not to exceed $3 million. As used in this Agreement, "Expenses"
shall include all reasonable out-of-pocket expenses (including, without
limitations, all reasonable fees and expenses of counsel, accountants,
investment bankers experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparations, negotiations, execution and performance of
this Agreement and the Option Agreements, the preparation, printing, filing and
mailing of the Registration Statement, the Joint Proxy Statement/Prospectus,
the solicitation of stockholder approvals, requisite XXX
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Act filings and all other matters related to the consummation of the
transactions contemplated hereby and thereby.
Section 9.3 Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered (by telecopy or otherwise) to the
other parties.
Section 9.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
Section 9.5 Notices. All notices and other communications hereunder
shall be in writing (including telecopy or similar writing) and shall be
effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 9.5 and the appropriate telecopy
confirmation is received or (b) if given by any other means, when delivered at
the address specified in this Section 9.5:
To UMC:
United Meridian Corporation
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Chairman and Chief Executive Officer
Telecopy: (000) 000-0000
copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
Telecopy: (000) 000-0000
To OEI:
Ocean Energy, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: Chairman and Chief Executive Officer
Telecopy: (000) 000-0000
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copy to:
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Section 9.6 Assignment; Binding Effect. 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. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 9.7 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 9.8 Enforcement of Agreement. The parties hereto agree that
money damages or other remedy at law would not be sufficient or adequate remedy
for any breach or violation of, or a default under, this Agreement by them and
that in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default
and to any other equitable relief, including, without limitation, specific
performance, without bond or other security being required.
Section 9.9 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Confidentiality Agreement and the Option Agreements constitute
the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, between the parties, or any of them,
with respect to the subject matter hereof and thereof and except for the
provisions of Section 6.5 and 6.12 hereof, is not intended to and shall not
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 9.10 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 9.11 Definitions. References in this Agreement to "Significant
Subsidiaries" shall mean Subsidiaries (as defined in Section 4.1(c)) which
constitute "significant subsidiaries" under Rule 405 promulgated by the SEC
under the Securities Act. References in this Agreement (except as specifically
otherwise defined) to "affiliates" shall mean, as to any person, any other
person which, directly or indirectly, controls, or is controlled by, or is
under common control with, such person. As used in this definition, "control"
(including, with its correlative meanings,
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"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a person, whether through the ownership of securities
or partnership of other ownership interests, by contract or otherwise.
References in the Agreement to "person" shall mean an individual, a
corporation, a partnership, an association, a trust or any other entity or
organization, including, without limitation, a governmental body or authority.
Notwithstanding the foregoing, Newco shall not be deemed to be an "affiliate"
or a "subsidiary" of either UMC or OEI.
Section 9.12 Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would
occur, no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or equity.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
OEI HOLDING CORPORATION
By: /s/ XXXX X. XXXXX
--------------------------------
Name: Xxxx X. Xxxxx
--------------------------------
Title: Chairman
--------------------------------
UNITED MERIDIAN CORPORATION
By: /s/ XXXX X. XXXXX
--------------------------------
Name: Xxxx X. Xxxxx
--------------------------------
Title: Chairman and Chief Executive
Officer
--------------------------------
OCEAN ENERGY, INC.
By: /s/ XXXXX X. XXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------
Title: Chairman, President and Chief
Executive Officer
--------------------------------
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EXHIBIT A
TO THE MERGER AGREEMENT
BYLAW INSERTS FOR OEI
ARTICLE __
BOARD OF DIRECTORS
SECTION 3.04. Committees. (a) The Corporation shall have four
standing committees: the finance committee, the nominating committee, the
audit committee and the compensation committee. The finance committee shall
have those powers and authority as are delegated to it from time to time
pursuant to a resolution passed by a two-thirds vote of the total number of
directors specified in the resolution pursuant to Section 3.02 of the Amended
and Restated Bylaws which the Corporation would have if there were not
vacancies (the "entire Board of Directors").
(b) The nominating committee shall have the following exclusive
powers and authority: (i) evaluating and recommending director candidates to
the Board of Directors, (ii) recommending director compensation and benefits
philosophy for the Corporation, (iii) reviewing individual director performance
as issues arise and (iv) periodically reviewing the Corporation's corporate
governance profile.
(c) The audit committee shall have the following powers and
authority: (i) employing independent public accountants to audit the books of
account, accounting procedures and financial statements of the Corporation and
to perform such other duties from time to time as the audit committee may
prescribe, (ii) receiving the reports and comments of the Corporation's
internal auditors and of the independent public accountants employed by the
committee and to take such action with respect thereto as may seem appropriate,
(iii) requesting the Corporation's consolidated subsidiaries and affiliated
companies to employ independent public accountants to audit their respective
books of account, accounting procedures and financial statements, (iv)
requesting the independent public accountants to furnish to the compensation
committee the certifications required under any present or future stock option,
incentive compensation or employee benefit plan of the Corporation, (v)
reviewing the adequacy of internal financial controls, (vi) approving the
accounting principles employed in financial reporting, (vii) approving the
appointment or removal of the Corporation's general auditor, and (viii)
reviewing the accounting principles employed in financial reporting. None of
the members of the audit committee shall be an officer or full-time employee of
the Corporation or of any subsidiary or affiliate of the Corporation.
(d) The compensation committee shall have the following powers and
authority: (i) determining and fixing the compensation for all senior officers
of the Corporation and those of its subsidiaries that the compensation
committee shall from time to time consider appropriate, as well as all
employees of the Corporation and its subsidiaries compensated at a rate in
excess of
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such amount per annum as may be fixed or determined from time to time by the
Board of Directors, (ii) performing the duties of the committees of the Board
of Directors provided for in any present or future stock option, incentive
compensation or employee benefit plan of the Corporation or, if the
compensation committee shall so determine, any such plan of any subsidiary and
(iii) reviewing the operations of and policies pertaining to any present or
future stock option, incentive compensation or employee benefit plan of the
Corporation or any subsidiary that the compensation committee shall from time
to time consider appropriate.
(e) In addition, the Board of Directors may, by resolution passed
by a two-thirds vote of the entire Board of Directors, designate one or more
additional committees, with each such committee consisting of one or more
directors of the Corporation and having such powers and authority as the Board
of Directors shall designate by such resolutions.
(f) Any modification to the powers and authority of any committee
shall require the adopting of a resolution by a two-thirds vote of the entire
Board of Directors.
(g) All acts done by any committee within the scope of its powers
and authority pursuant to these Amended and Restated Bylaws and the resolutions
adopted by the Board of Directors in accordance with the terms hereof shall be
deemed to be, and may be certified as being, done or conferred under authority
of the Board of Directors. The Secretary or any Assistant Secretary is
empowered to certify that any resolutions duly adopted by any such committee is
binding upon the Corporation and to execute and deliver such certifications
from time to time as may be necessary or proper to conduct of the business of
the Corporation.
(h) Regular meetings of committees shall be held at such times as
may be determined by resolution of the Board of Directors or the committee in
question and no notice shall be required for any regular meeting other than
such resolution. A special meeting of any committee shall be called by
resolution of the Board of Directors, or by the Secretary or an Assistant
Secretary upon the request of the chairman or a majority of the members of any
committee. Notice of special meetings shall be given to each member of the
committee in the same manner as that provided for in Section [Directors' notice
provision] of these Amended and Restated Bylaws.
SECTION 3.05 Committee Members. (a) Each member of any committee
of the Board of Directors shall hold office until such member's successor is
elected and has qualified, unless such member sooner dies, resigns or is
removed. The number of directors which shall constitute any committee shall be
determined by resolution adopted by the Board of Directors.
(b) The Board of Directors may remove a director from a committee
or change the chairmanship of a committee by resolution adopted by the Board of
Directors, provided that a resolution to remove Xxxx Xxxxx or Xxxxx X. Xxxxxx
from a committee or the chairmanship of a committee shall require a two-thirds
vote of the entire Board of Directors.
(c) The Board of Directors may designate one or more directors as
alternate members of any committee to fill any vacancy on a committee and to
fill a vacant chairmanship of a
A-2
79
committee, occurring as a result of a member or chairman leaving the committee,
whether through death, resignation, removal or otherwise.
SECTION 3.06. Committee Secretary. The Board of Directors may
elect a secretary of any such committee. If the Board of Directors does not
elect such a secretary, the committee shall do so. The secretary of any
committee need not be a member of the committee, but shall be selected from a
member of the staff of the office of the Secretary of the Corporation, unless
otherwise provided by the Board of Directors or the committee, as applicable.
ARTICLE 4
OFFICERS
SECTION 4.01. General. The officers of the Corporation shall be
elected by the Board of Directors and shall consist of a Chairman of the Board;
a President and Chief Executive Officer (which shall be the same person holding
both such offices); and may also consist of a Chief Operating Officer; a Chief
Financial Officer; one or more Senior Executive Vice Presidents; one or more
Vice Presidents; a Secretary; one or more Assistant Secretaries; a Treasurer;
one or more Assistant Treasurers; a Controller; and such other officers as in
the judgment of the Board of Directors may be necessary or desirable. All
officers chosen by the Board of Directors shall have such powers and duties as
generally pertain to their respective offices, subject to the specific
provisions of this Article 4. Such officers shall also have powers and duties
as from time to time may be conferred by the Board of Directors or any
committee thereof. Any number of officers may be held by the same person,
unless otherwise prohibited by law, the Amended and Restated Certificate of
Incorporation or these Amended and Restated Bylaws. The officers of the
Corporation need not be stockholders or directors of the Corporation.
SECTION 4.02. Election and Term of Office. Subject to Section
[4.08] of these Amended and Restated Bylaws, the elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Subject to
Section 4.08 of these Amended and Restated Bylaws, each officer shall hold
office until his successor shall have been duly elected and shall have
qualified or until his death or until he shall resign or be removed.
SECTION 4.03. Chairman of the Board. The Chairman of the Board
shall be a member of the Board of Directors and shall be an officer of the
Corporation. The Chairman of the Board, if present, shall preside at all
meetings of the Board of Directors.
SECTION 4.04. Vice Chairman of the Board. The Vice Chairman
of the Board shall be a member of the Board of Directors and shall be an
officer of the Corporation. The Vice Chairman of the Board shall have such
duties and powers as shall be assigned to him from time to time by the
President and Chief Executive Officer of the Corporation.
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80
SECTION 4.05. President and Chief Executive Officer. Subject to
the penultimate sentence of this Section, the offices of President and Chief
Executive Officer shall be held by a single individual who is a member of the
Board of Directors and such person shall be an officer of the Corporation. The
President and Chief Executive Officer shall supervise, coordinate and manage
the Corporation's business and activities and supervise, coordinate and manage
its operating expenses and capital allocation, shall make recommendations as to
compensation and benefits to the Compensation Committee of the Board of
Directors with respect to the employees of the Corporation and its
subsidiaries, shall have general authority to exercise all the powers necessary
for the President and Chief Executive Officer of the Corporation and shall
perform such other duties and have such other powers as may be prescribed by
the Board of Directors or these Amended and Restated Bylaws, all in accordance
with basic policies as established by and subject to the oversight of the Board
of Directors. In the absence or disability of the Chairman of the Board, the
duties of the Chairman of the Board shall be performed and the Chairman of the
Board's authority may be exercised by the President and Chief Executive
Officer, and in the event the President and Chief Executive Officer is absent
or disabled, such duties shall be performed and such authority may be exercised
by a director designated for this purpose by the Board of Directors.
Notwithstanding the foregoing, the Board of Directors may designate the Chief
Operating Officer, if one is so designated by the Board of Directors, as
President of the Corporation provided that the duties and authority of the
Chief Executive Officer are not materially diminished. The Vice Chairman and
all Executive Vice Presidents shall report directly to the Chief Executive
Officer or such other officer of the Corporation that the President and Chief
Executive Officer may designate.
SECTION 4.06 Chief Financial Officer. The Chief Financial Officer
shall have responsibility for the financial affairs of the Corporation and
shall exercise supervisory responsibility for the performance of the duties of
the Treasurer and the Controller. The Chief Financial Officer shall perform
such other duties and have such other powers as may be prescribed by the Board
of Directors or these Amended and Restated Bylaws, all in accordance with basic
policies as established by and subject to the oversight of the Board of the
Directors, the Chairman and Chief Executive Officer and the President and Chief
Operating Officer.
SECTION 4.07 Certain Actions. Notwithstanding anything to the
contrary contained in these Amended and Restated Bylaws, the removal of the
current Chairman of the Board and President and Chief Executive Officer as of
[date of the Effective Time], or any material modification to either of their
respective roles, duties or authority shall require a two-thirds vote of the
entire Board of Directors.
The foregoing provisions containing two-thirds vote provisions of the entire
Board of Directors shall not be amended by a vote of less than two-thirds of
the entire Board of Directors.
A-4
81
EXHIBIT B
TO THE MERGER AGREEMENT
CERTAIN EXECUTIVE OFFICERS OF OEI
FOLLOWING THE EFFECTIVE TIME
CERTAIN OFFICERS
At the Effective Time, the following persons shall be designated as
officers of OEI to serve in their indicated capacity:
Xxxx X. Xxxxx Chairman
Xxxxx X. Xxxxxx President and Chief Executive Officer
Xxxxx Xxxxxx Vice Chairman
Xxxxxx X. Xxxx Executive Vice President - Administration
Xxxxxxxx X. Xxxxxxxx Executive Vice President - Chief
Financial Officer
Xxxxxx X. Xxxxxx Executive Vice President and General
Counsel
Xxxxx Xxxxxxxxxx Executive Vice President - International
Xxxxxxx X. Xxxxxxxxx, Xx. Executive Vice President - North America
B-1
82
EXHIBIT C
TO MERGER AGREEMENT
[Affiliate's Name and Address]
_____________, 199_
Ocean Energy, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: President and Chief Executive Officer
Ladies and Gentlemen:
I have been advised that, as of the date of this letter, I may be
deemed to be an "affiliate" of Ocean Energy, Inc., a Delaware corporation
("OEI"), as that term is defined for purposes of Rule 145(c) and (d)
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the
terms of the Agreement and Plan of Merger, dated as of December 22, 1997, among
OEI Holding Corporation, a Delaware corporation ("Newco"), United Meridian
Corporation, a Delaware corporation ("UMC"), and OEI, (i) Newco will be merged
with and into OEI and (ii) UMC will be merged with and into OEI (the merger
listed in clause (i) above being referred to herein as the "Merger" and such
agreement being referred to herein as the "Merger Agreement"). As a result of
the Merger, I may receive shares of common stock, par value $.01 per share, of
OEI (the "OEI Common Stock") in exchange for shares of OEI Common Stock issued
and outstanding immediately prior to the Merger ("Old OEI Common Stock").
I hereby represent and warrant to, and covenant and agree with, OEI
that:
1. I will not make any sale, transfer or other disposition of any
OEI Common Stock I may receive as a result of the Merger in violation of the
Securities Act or the rules and regulations of the SEC promulgated thereunder.
2. I will not make any sale, transfer or other disposition of Old
OEI Common Stock owned by me from the date that is 30 days prior to the
Effective Time (as defined in the Merger Agreement) and I will not make any
sale, transfer or other disposition of any shares of OEI Common Stock I may
receive as a result of the Merger until after such time as results covering at
least 30 days of combined operations of Newco, OEI and UMC have been published
by OEI, in the form of a quarterly earnings report, an effective registration
statement filed with the SEC, a report to the SEC on Form 10-K, 10-Q, or 8-K,
or any other public filing or announcement which includes the results of at
least 30 days of combined operations. OEI shall notify the "affiliates" of the
publication of such results.
3. I have read this letter and the Merger Agreement and have
discussed their requirements and other applicable limitations on my ability to
sell, transfer or otherwise dispose
83
Ocean Energy, Inc.
____________, 199_
Page 2
of the Old OEI Common Stock owned by me and the OEI Common Stock I may receive
as a result of the Merger, to the extent I believed necessary, with my counsel
or counsel for OEI.
4. I have been advised that the issuance of OEI Common Stock
pursuant to the Merger has been registered under the Securities Act on a
Registration Statement on Form S-4. I have also been advised, however, that,
to the extent I am considered an "affiliate" of OEI at the time the Merger
Agreement is submitted for a vote of the stockholders of OEI, any public
offering or sale by me of any shares of OEI Common Stock that I receive
pursuant to the Merger will, under current law, require either (a) the further
registration under the Securities Act of any shares of OEI Common Stock to be
sold by me, (b) compliance with Rule 145 under the Securities Act, or (c) the
availability of another exemption from such registration under the Securities
Act.
5. I understand that stop transfer instructions will be given to
OEI's transfer agent with respect to shares of OEI Common Stock received by me
pursuant to the Merger and that a legend substantially as follows will be
placed on the certificates for the shares of OEI Common Stock issued to me
pursuant to the Merger.
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND OEI HOLDING CORPORATION, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF OEI
HOLDING CORPORATION.
I also understand that, unless the transfer by me of my OEI Common
Stock has been registered under the Securities Act or is a sale made in
conformity with the provisions of Rule 145, OEI reserves the right to put the
following legend on the certificates issued to my transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW
TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
84
Ocean Energy, Inc.
____________, 199_
Page 3
It is understood and agreed that the legends set forth in this
Paragraph 4 shall be removed by delivery of substitute certificates without
such legends if such legends are not required for purposes of the Securities
Act or this Agreement. It is understood and agreed that such legends referred
to above will be removed if (a) one year shall have elapsed from the date the
undersigned acquired the OEI Common Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (b) two
years shall have elapsed from the date the undersigned acquired the OEI Common
Stock received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (c) OEI has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to OEI, or
a "no action" letter obtained from the staff of the SEC, to the effect that the
restrictions imposed by Rule 145 under the Securities Act no longer apply to
the undersigned. Prior to any transfer of any of the OEI Common Stock, I will
give written notice to OEI of my intention to effect such offer, sale or
transfer, describing the proposed transaction in sufficient detail to enable
OEI and its counsel to determine that the proposed transaction will not violate
the Securities Act.
6. I have no present intention, plan or arrangement to offer,
sell or transfer, or otherwise make any disposition of, the OEI Common Stock
received in the Merger.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of OEI as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Sincerely,
---------------------------------------------
Print Name:
----------------------------------
Accepted on the ___ day
of _____________, 199_
OCEAN ENERGY, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
85
EXHIBIT D
TO MERGER AGREEMENT
[Affiliate's Name and Address]
__________, 199_
Ocean Energy, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: President and Chief Executive Officer
Ladies and Gentlemen:
I have been advised that, as of the date of this letter, I may be
deemed to be an "affiliate" of United Meridian Corporation., a Delaware
corporation ("UMC"), as that term is defined for purposes of Rule 145(c) and
(d) promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the
terms of the Agreement and Plan of Merger dated as of December 22, 1997, among
OEI Holding Corporation, a Delaware corporation ("Newco"), Ocean Energy, Inc.,
a Delaware corporation ("OEI"), and UMC, (i) Newco will be merged with and into
OEI and (ii) UMC will be merged with and into OEI (the merger listed in clause
(ii) above being referred to herein as the "Merger" and such agreement being
referred to herein as the "Merger Agreement"). As a result of the Merger, I
may receive shares of common stock, par value $.01 per share, of OEI (the "OEI
Common Stock") in exchange for shares of common stock, par value $.01 per
share, of UMC ("UMC Common Stock").
I hereby represent and warrant to, and covenant and agree with, OEI
that:
1. I will not make any sale, transfer or other disposition of any
OEI Common Stock I may receive as a result of the Merger in violation of the
Securities Act or the rules and regulations of the SEC promulgated thereunder.
2. I will not make any sale, transfer or other disposition of UMC
Common Stock owned by me from the date that is 30 days prior to the Effective
Time (as defined in the Merger Agreement) and I will not make any sale,
transfer or other disposition of any shares of OEI Common Stock I may receive
as a result of the Merger until after such time as results covering at least 30
days of combined operations of Newco, OEI and UMC have been published by OEI,
in the form of a quarterly earnings report, an effective registration statement
filed with the SEC, a report to the SEC on Form 10- K, 10-Q, or 8-K, or any
other public filing or announcement which includes the results of at least 30
days of combined operations. OEI shall notify the "affiliates" of the
publication of such results.
3. I have read this letter and the Merger Agreement and have
discussed their requirements and other applicable limitations on my ability to
sell, transfer or otherwise dispose
86
Ocean Energy, Inc.
____________, 199_
Page 2
of the UMC Common Stock owned by me and the OEI Common Stock I may receive as a
result of the Merger, to the extent I believed necessary, with my counsel or
counsel for UMC.
4. I have been advised that the issuance of OEI Common Stock
pursuant to the Merger has been registered under the Securities Act on a
Registration Statement on Form S-4. I have also been advised, however, that,
to the extent I am considered an "affiliate" of UMC at the time the Merger
Agreement is submitted for a vote of the stockholders of UMC, any public
offering or sale by me of any shares of OEI Common Stock that I receive
pursuant to the Merger will, under current law, require either (a) the further
registration under the Securities Act of any shares of OEI Common Stock to be
sold by me, (b) compliance with Rule 145 under the Securities Act, or (c) the
availability of another exemption from such registration under the Securities
Act.
5. I understand that stop transfer instructions will be given to
OEI's transfer agent with respect to shares of OEI Common Stock received by me
pursuant to the Merger and that a legend substantially as follows will be
placed on the certificates for the shares of OEI Common Stock issued to me
pursuant to the Merger.
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND OEI HOLDING CORPORATION, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF OEI
HOLDING CORPORATION.
I also understand that, unless the transfer by me of my OEI Common
Stock has been registered under the Securities Act or is a sale made in
conformity with the provisions of Rule 145, OEI reserves the right to put the
following legend on the certificates issued to my transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW
TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
87
Ocean Energy, Inc.
____________, 199_
Page 3
It is understood and agreed that the legends set forth in this
Paragraph 4 shall be removed by delivery of substitute certificates without
such legends if such legends are not required for purposes of the Securities
Act or this Agreement. It is understood and agreed that such legends referred
to above will be removed if (a) one year shall have elapsed from the date the
undersigned acquired the OEI Common Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (b) two
years shall have elapsed from the date the undersigned acquired the OEI Common
Stock received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (c) OEI has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to OEI, or
a "no action" letter obtained from the staff of the SEC, to the effect that the
restrictions imposed by Rule 145 under the Securities Act no longer apply to
the undersigned. Prior to any transfer of any of the OEI Common Stock, I will
give written notice to OEI of my intention to effect such offer, sale or
transfer, describing the proposed transaction in sufficient detail to enable
OEI and its counsel to determine that the proposed transaction will not violate
the Securities Act.
6. I have no present intention, plan or arrangement to offer,
sell or transfer, or otherwise make any disposition of, the OEI Common Stock
received in the Merger.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of UMC as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Sincerely,
-----------------------------------
Print Name:
------------------------
Accepted on the ___ day
of _____________, 199_
OCEAN ENERGY, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
88
EXHIBIT E
TO THE MERGER AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as
of [date of the Effective Time] (the "Effective Date") by and between Ocean
Energy, Inc., a Delaware corporation ("Company"), and Xxxxx X. Xxxxxx
("Employee").
WHEREAS, the Company employs Employee and desires to continue such
employment relationship and Employee desires to continue such employment;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Employee, and Employee
hereby accepts employment by the Company, on the terms and conditions set forth
in this Agreement.
2. Term of Employment. Subject to the provisions for earlier
termination provided in the Agreement, the term of this Agreement (the "Term")
shall commence on the Effective Date and shall terminate on the third
anniversary of the Effective Date; provided, however, commencing on the
Effective Date and on each day thereafter, the Term shall automatically be
extended one additional day unless the Board of Directors of the Company (the
"Board") shall give written notice to Employee that the Term shall cease to be
so extended as of a specified future date, in which event the Agreement shall
terminate on the third anniversary of the specified future date.
Notwithstanding any provision of this Agreement to the contrary, termination of
this Agreement shall not alter or impair any rights or benefits of Employee (or
Employee's estate or beneficiaries) that have arisen under this Agreement on or
prior to such termination.
3. Employee's Duties. During the Term, Employee shall serve as
the Chief Executive Officer and President of the Company, with such customary
duties and responsibilities as may from time to time be assigned to him by the
Board, provided that such duties are at all times consistent with the duties of
such positions. Employee shall report directly to the Board. All other
employees of the Company shall report to Employee.
Employee agrees to devote his full attention and time during normal
business hours to the business and affairs of the Company and to use reasonable
best efforts to perform faithfully and efficiently such duties and
responsibilities. Notwithstanding the foregoing, during the Term Employee may
engage in the following activities so long as they do not interfere in any
material respect with the performance of Employee's duties and responsibilities
hereunder: (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures, fulfill speaking engagements or teach on a part-time
basis at educational institutions, and (iii) manage his personal investments;
provided, however, in no event shall the conduct of any of such activities by
89
Employee be deemed to materially interfere with Employee's duties hereunder
until Employee has been notified in writing thereof by the Board and given a
reasonable period in which to cure such interference.
The Company agrees to use its reasonable best efforts to cause
Employee to be elected or appointed, or re-elected or re-appointed, as a
director of the Company at all times during the Term.
4. Base Compensation. For services rendered by Employee under
this Agreement the Company shall pay to Employee a base salary ("Base
Compensation") of $600,000 per annum payable in accordance with the Company's
customary payroll practice for its senior executive officers. The amount of
Base Compensation shall be reviewed periodically by the Board and may be
increased from time to time as the Board may deem appropriate. Base
Compensation, as in effect at any time, may not be decreased.
5. Annual Bonus. In addition to his Base Compensation, Employee
shall be eligible to receive each year during the Term, a cash incentive
payment in an amount equal to 200% of Employee's Base Compensation (the "Target
Bonus"). The amount of the Target Bonus earned for any year shall be
determined by the Compensation Committee of the Board based on Employee's
individual performance and the performance by the Company; provided, however,
in no event will the annual incentive compensation paid Employee for any year
(the "Bonus") be less than the greater of (i) 75% of Employee's Base
Compensation or (ii) the annual bonus paid by the Company to any other senior
executive officer of the Company.
6. Other Benefits. Employee shall be entitled to participate in
all incentive compensation plans and to receive all fringe benefits and
perquisites offered by the Company to any of its senior executive officers,
including, without limitation, participation in the various employee benefit
plans or programs provided to the employees of the Company in general, subject
to the regular eligibility requirements with respect to each of such benefit
plans or programs, and such other benefits or prerequisites as may be approved
by the Board during the Term, all on a basis at least as favorable to Employee
as may be provided or offered to any other senior executive officer of the
Company.
In addition, and not in limitation of the foregoing, Employee
shall be entitled to the following:
(a) Business Expenses. The Company shall reimburse
Employee for all business expenses reasonably incurred by Employee in
the performance of his duties. It is understood that Employee is
authorized to incur reasonable business expenses for promoting the
business of the Company, including reasonable expenditures for travel,
lodging, meals and client or business associate entertainment.
Request for reimbursement for such expenses must be accompanied by
appropriate documentation.
(b) Automobile. The Company shall either provide
Employee with an
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90
automobile of a make and model selected by Employee or promptly
reimburse Employee in full for his cost of leasing or purchasing an
automobile. In addition, the Company shall pay or reimburse Employee
for all reasonable costs and expenses associated with the use,
maintenance, insurance and repair of such automobile.
(c) Clubs. The Company shall reimburse Employee for the
cost and expenses (including initiation fees, assessments and annual
dues) of such social clubs and business clubs as Employee determines,
in his good faith opinion, to be helpful or appropriate to the
performance of his duties.
(d) Relocation Expenses. In conjunction with Employee's
relocation of his principal residence to the greater Houston, Texas
metropolitan area, the Company shall reimburse Employee for all
out-of-pocket expenses involved in such move, including, without
limitation, packing and transport of personal, family, and household
goods and vehicles by suitable service providers, for any brokerage
fees for the sale or purchase of any residences, of any loss of
economic value occasioned by the timing of the sale or by Employee's
inability to recover monies invested in any personal residence sold,
temporary housing costs in suitable alternative housing, all utility
severance and hook-up costs, and any other relocation expenses, all
such sums to be grossed-up for the impact of any federal, state or
local taxes levied against Employee for such portions of such
reimbursement as shall be taxable and non-deductible to Employee.
7. Termination. This Agreement may be terminated prior to the
end of its Term as set forth below.
(a) Resignation. Employee may resign his position at any
time. In the event of such resignation, except in the case of
resignation for Good Reason (as defined below), Employee shall not be
entitled to further compensation pursuant to this Agreement.
(b) Death. If Employee's employment is terminated due to
his death, this Agreement shall terminate and the Company shall have
no obligations to his legal representatives with respect to this
Agreement other than the payment of any compensation which had accrued
hereunder at the date of Employee's death.
(c) Discharge.
(i) The Company may terminate this Agreement and
Employee's employment for any reason deemed sufficient by the
Company upon notice as provided in Section 10. However, in
the event that Employee's employment is terminated during the
Term by the Company for any reason other than his Misconduct
or Disability (as such terms are defined below), then, subject
to Section 7(h) below: (A) within five business days of the
Date of Termination, the Company shall pay to Employee a lump
sum amount in cash equal to three times the sum of (1)
Employee's Base Compensation and (2) Employee's Target Bonus;
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(B) for the 36-month period after such Date of Termination the
Company, at its sole expense, shall continue to provide or
arrange to provide Employee (and Employee's dependents) with
health insurance benefits no less favorable than the health
plan benefits provided by the Company (or any successor)
during such 36-month period to any senior executive officer of
the Company; provided, further, to the extent the coverage or
benefits received are taxable to Employee, the Company shall
make Employee "whole" on a net after tax basis; and (C) on
the Date of Termination all then outstanding Company
stock-based awards of Employee, whether under this Agreement,
a Company stock plan or otherwise, shall become immediately
exercisable and payable in full, as the case may be, with any
performance goals associated therewith being deemed to have
been achieved at the maximum levels. Notwithstanding anything
in this Agreement to the contrary, if any payment to Employee
in respect of a Company stock- based award would give rise to
a short-swing profit liability to Employee under Section 16(b)
of the Securities Exchange Act of 1934, then both the payment
and the entitlement to payment thereof shall automatically be
deferred until the earliest date at which the payment of such
benefit would not result in a short-swing profit liability to
Employee.
(ii) Notwithstanding the foregoing provisions of
this Section 7, in the event Employee is terminated because of
Misconduct, the Company shall have no obligations pursuant to
this Agreement after the Date of Termination. As used herein,
"Misconduct" means (a) the willful and continued failure by
Employee to substantially perform his duties with the Company
(other than any such failure resulting from Employee's
incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice
of Termination by Employee for Good Reason), after a written
demand for substantial performance is delivered to Employee by
the Board, which demand specifically identifies the manner in
which the Board believes that Employee has not substantially
performed his duties, or (b) the willful engaging by Employee
in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise. For purposes hereof, no
act, or failure to act, on Employee's part shall be deemed
"willful" unless done, or omitted to be done, by Employee not
in good faith and without reasonable belief that Employee's
action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Employee shall not be deemed to
have been terminated for Misconduct unless and until there
shall have been delivered to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting
of the Board called and held for such purpose, finding that in
the good faith opinion of the Board Employee was guilty of
conduct set forth above and specifying the particulars thereof
in detail.
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(d) Disability.
(i) If Employee shall have been absent from the
full-time performance of Employee's duties with the Company
for six consecutive months as a result of Employee's
incapacity due to physical or mental illness, as determined by
Employee's physician, and within 30 days after written Notice
of Termination is given by the Company Employee shall not have
returned to the full-time performance of Employee's duties,
Employee's employment may be terminated by the Company for
"Disability", provided Employee is entitled to and receiving
benefits under an insured long term disability plan of the
Company. Thereafter, Employee shall not be entitled to
further compensation pursuant to this Agreement.
(ii) If Employee fails during any period during
the Term to perform Employee's full-time duties with the
Company as a result of incapacity due to physical or mental
illness, as determined by Employee's physician, Employee shall
continue to receive his Base Compensation, less any amount
payable to Employee under a Company disability plan, and all
other compensation and benefits during such period until this
Agreement is terminated.
(e) Resignation for Good Reason. Employee shall be
entitled to terminate his employment for Good Reason as defined
herein. If Employee terminates his employment for Good Reason,
Employee shall be entitled to the compensation and benefits provided
in Paragraph 7(c)(i) hereof. "Good Reason" shall mean (1) the breach
of any of the Company's obligations under this Agreement without
Employee's express written consent or (2) the occurrence of any of the
following circumstances, as the case may be, without Employee's
express written consent unless such breach or circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination pursuant to Subsection 7(f) given in respect thereof:
(i) the assignment by the Board to Employee of
any duties that, in the good faith opinion of Employee, are
inconsistent with Employee's positions with the Company, or an
adverse alteration (as determined in good faith by Employee)
in the nature or status of Employee's office, title,
responsibilities, including reporting responsibilities, or the
conditions of Employee's employment from those in effect
immediately prior to such alteration;
(ii) the failure by the Company to continue in
effect any compensation plan in which Employee participates
that is material to Employee's total compensation unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or
the failure by the Company to continue Employee's
participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable to Employee,
both in terms of the amount of benefits provided and the level
of Employee's participation relative to other participants;
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(iii) the taking of any action by the Company which
would directly or indirectly materially reduce or deprive
Employee of any material fringe benefit then enjoyed by
Employee;
(iv) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated in Section 12
hereof;
(v) the relocation of the Company's principal
executive offices outside the greater Houston, Texas
metropolitan area, or the Company's requiring Employee to
relocate anywhere other than the location of the Company's
principal executive offices, except for required travel on the
Company's business to an extent substantially consistent with
Employee's past business travel obligations; or
(vi) any purported termination of Employee's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Subsection (f)
hereof, which purported termination shall not be effective for
purposes of this Agreement.
Employee's right to terminate employment pursuant to this
subsection shall not be affected by Employee's incapacity due to
physical or mental illness. In addition, Employee's continued
employment following any event, act or omission, regardless of the
length of such continued employment, shall not constitute Employee's
consent to, or a waiver of Employee's rights with respect to, such
event, act or omission constituting a Good Reason circumstance
hereunder.
(f) Notice of Termination. Any purported termination of
Employee's employment by the Company or by Employee shall be
communicated by written Notice of Termination to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
set forth in reasonable detail the reason for termination of
Employee's employment, or in the case of resignation for Good Reason,
said notice must specify in reasonable detail the basis for such
resignation. No purported termination which is not effected pursuant
to this Section 7(f) shall be effective.
(g) Date of Termination, Etc. "Date of Termination"
shall mean the date specified in the Notice of Termination. Either
party may, within 15 days after any Notice of Termination is given,
provide notice to the other party pursuant to Section 10 hereof that a
dispute exists concerning the termination. Notwithstanding the
pendency of any such dispute, the Company will continue to pay
Employee his full Base Compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, Base
Compensation) and continue Employee as a participant in all
compensation, benefit and insurance plans in which Employee was
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with Section 16
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hereof, but in no event past the expiration date of this Agreement.
Any payments and benefits provided during such period of dispute shall
not reduce any other payments or benefits due Employee under this
Agreement nor shall Employee be liable to repay the Company for such
payments and benefits if it is finally determined the Employee is not
entitled to payments under the other provisions of this Agreement
following Employee's termination of employment.
(h) Mitigation. Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this
Section 7 by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Agreement be
reduced by any compensation or benefit earned by Employee as a result
of employment by another employer, self-employment earnings, by
retirement benefits, by offset against any amount claimed to be owing
by Employee to the Company, or otherwise, except that any cash
severance amount payable to Employee pursuant to a Company maintained
severance plan or policy for employees in general shall reduce the
amount otherwise payable to Employee pursuant to Section 7(c)(i)(A).
(i) Gross-Up of Parachute Payments. If, during the Term,
any payment, including without limitation any imputed income, made or
benefit provided to or on behalf of Employee, including any
accelerated vesting or any deferred compensation or other award, in
connection with a "change in control" of the Company, whether or not
made or provided pursuant to this Agreement, results in Employee being
subject to the excise tax imposed by section 4999 of the Internal
Revenue Code of 1986, as amended (or any successor or similar
provision), the Company shall pay Employee an additional amount of
cash (the "Additional Amount") such that the net amount of all
payments and benefits received by Employee after paying all applicable
taxes thereon, including on such Additional Amount, shall be equal to
the net after-tax amount of payments and benefits that Employee would
have received if section 4999 were not applicable.
8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
affiliated companies and for which Employee may qualify, nor shall anything
herein limit or otherwise adversely affect such rights as Employee may have
under any stock option or other agreements with the Company or any of its
affiliated companies.
9. Assignability. The obligations of Employee hereunder are
personal and may not be assigned or delegated by him or transferred in any
manner whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer. The Company shall have the right to assign this
Agreement and to delegate all rights, duties and obligations hereunder, either
in whole or in part, to any parent, affiliate, successor or subsidiary
organization or company of the Company, provided that no such assignment or
delegation shall relieve the Company of its duties and obligations hereunder
nor affect the rights of Employee hereunder.
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10. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered, sent by
overnight courier or by facsimile with confirmation of receipt or on the third
business day after being mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the Company at its principal
office address and facsimile number, directed to the attention of the Board
with a copy to the Secretary of the Company, and to Employee at Employee's
residence address and facsimile number on the records of the Company or to such
other address as either party may have furnished to the other in writing in
accordance herewith except that notice of change of address shall be effective
only upon receipt.
11. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company ("Successor") or
any corporation which becomes the ultimate parent corporation of the Company or
any such Successor ("Ultimate Parent") to expressly assume and agree in writing
satisfactory to the Employee to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such written
agreement prior to the effectiveness of any such succession or creation of the
parent corporation relationship shall be a breach of this Agreement and shall
entitle Employee to compensation and benefits from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession (or creation
of the parent corporation relationship) becomes effective shall be deemed the
Date of Termination. As used in this Agreement, including, without limitation,
in Section 3, the term "Company" shall include any Successor and Ultimate
Parent which executes and delivers the Agreement as provided for in this
Section 12 or which otherwise becomes bound by all terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of Employee hereunder shall
inure to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
13. Indemnification. During the Term and for a period of six years
thereafter, the Company shall cause Employee to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or service in
other capacities at the request of the Company. The coverage provided to
Employee pursuant to this Section 8 shall be of a scope and on terms and
conditions at least as favorable as the most favorable coverage provided to any
other officer or director of the Company (or any successor).
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In addition, to the maximum extent permitted under applicable
law, during the Term and for a period of six years thereafter, the Company
shall indemnify Employee against and hold Employee harmless from any costs,
liabilities, losses and exposures for Employee's services as an employee,
officer and director of the Company (or any successor).
14. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Employee and such officer as may be
specifically authorized by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or in compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement is an integration
of the parties agreement; no agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Texas.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Arbitration. Employee shall be permitted (but not required)
to elect that any dispute or controversy arising under or in connection with
this Agreement be settled by arbitration in the city in which Employee resides
at such time in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. All legal fees and costs incurred by
Employee in connection with the resolution of any dispute or controversy under
or in connection with this Agreement shall be paid by the Company as bills for
such services are presented by Employee to the Company.
17. Prior Employment Agreement. This Agreement supersedes and
replaces in full any existing employment agreement (written or oral) between
the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on
___________, 1997, effective for all purposes as provided above.
OCEAN ENERGY, INC.
By:
----------------------------------
Name:
---------------------------------
Chairman of the Compensation
Committee of the Board
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EMPLOYEE
-------------------------------------
Xxxxx X. Xxxxxx
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EXHIBIT F
TO THE MERGER AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
[date of the Effective Time] (the "Effective Date") by and between Ocean Energy,
Inc., a Delaware corporation ("Company"), and Xxxx X. Xxxxx ("Employee").
WHEREAS, the Company employs Employee and desires to continue such
employment relationship and Employee desires to continue such employment;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. Employment. The Company hereby employs Employee, and Employee hereby
accepts employment by the Company, on the terms and conditions set forth in this
Agreement.
2. Term of Employment. Subject to the provisions for earlier termination
provided in the Agreement, the term of this Agreement (the "Term") shall
commence on the Effective Date and shall terminate on the third anniversary of
the Effective Date; provided, however, commencing on the Effective Date and on
each day thereafter, the Term shall automatically be extended one additional day
unless the Board of Directors of the Company (the "Board") shall give written
notice to Employee that the Term shall cease to be so extended as of a specified
future date, in which event the Agreement shall terminate on the third
anniversary of the specified future date. Notwithstanding any provision of this
Agreement to the contrary, termination of this Agreement shall not alter or
impair any rights or benefits of Employee (or Employee's estate or
beneficiaries) that have arisen under this Agreement on or prior to such
termination.
3. Employee's Duties. During the Term, Employee shall assume and discharge
the responsibilities of the Chairman of the Board, as well as such other
responsibilities as may be assigned to him by the Board; provided that such
duties are at all times consistent with the duties of such positions.
Employee agrees to devote his full attention and time during normal
business hours to the business and affairs of the Company and to use reasonable
best efforts to perform faithfully and efficiently such duties and
responsibilities. Notwithstanding the foregoing, during the Term, Employee may
engage in the following activities so long as they do not interfere in any
material respect with the performance of Employee's duties and responsibilities
hereunder: (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures, fulfill speaking engagements or teach on a part-time
basis at educational institutions, and (iii) manage his personal investments;
provided, however, in no event shall the conduct of any of such
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activities by Employee be deemed to materially interfere with Employee's duties
hereunder until Employee has been notified in writing thereof by the Board and
given a reasonable period in which to cure such interference.
The Company agrees to use its reasonable best efforts to cause
Employee to be elected or appointed, or re-elected or re-appointed, as a
director of the Company at all times during the Term.
4. Base Compensation. For services rendered by Employee under this
Agreement the Company shall pay to Employee a base salary ("Base Compensation")
of $475,000 per annum payable in accordance with the Company's customary payroll
practice for its senior executive officers. The amount of Base Compensation
shall be reviewed periodically by the Board and may be increased from time to
time as the Board may deem appropriate. Base Compensation, as in effect at any
time, may not be decreased.
5. Annual Bonus. In addition to his Base Compensation, Employee shall be
eligible to receive each year during the Term, a cash incentive payment in an
amount equal to 200% of Employee's Base Compensation (the "Target Bonus"). The
amount of the Target Bonus earned for any year shall be determined by the
Compensation Committee of the Board based on Employee's individual performance
and the performance by the Company; provided, however, in no event will the
annual incentive compensation paid Employee for any year (the "Bonus") be less
than the greater of (i) 75% of Employee's Base Compensation or (ii) the annual
bonus paid by the Company to any other senior executive officer of the Company.
6. Other Benefits. Employee shall be entitled to participate in all
incentive compensation plans and to receive all fringe benefits and perquisites
offered by the Company to any of its senior executive officers, including,
without limitation, participation in the various employee benefit plans or
programs provided to the employees of the Company in general, subject to the
regular eligibility requirements with respect to each of such benefit plans or
programs, and such other benefits or prerequisites as may be approved by the
Board during the Term, all on a basis at least as favorable to Employee as may
be provided or offered to any other senior executive officer of the Company.
7. Termination. This Agreement may be terminated prior to the end of its
Term as set forth below.
(a) Resignation. Employee may resign his position at any time. In the
event of such resignation, except in the case of resignation for Good
Reason (as defined below), Employee shall not be entitled to further
compensation pursuant to this Agreement.
(b) Death. If Employee's employment is terminated due to his death,
this Agreement shall terminate and the Company shall have no obligations
to his legal representatives with respect to this Agreement other than the
payment of any compensation which had accrued hereunder at the date of
Employee's death.
(c) Discharge.
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(i) The Company may terminate this Agreement and Employee's
employment for any reason deemed sufficient by the Company upon notice
as provided in Section 10. However, in the event that Employee's
employment is terminated during the Term by the Company for any reason
other than his Misconduct or Disability (as such terms are defined
below), then, subject to Section 7(h) below: (A) within five business
days of the Date of Termination, the Company shall pay to Employee a
lump sum amount in cash equal to three times the sum of (1) Employee's
Base Compensation and (2) Employee's Target Bonus; (B) for the
36-month period after such Date of Termination the Company, at its
sole expense, shall continue to provide or arrange to provide Employee
(and Employee's dependents) with health insurance benefits no less
favorable than the health plan benefits provided by the Company (or
any successor) during such 36-month period to any senior executive
officer of the Company; provided, further, to the extent the coverage
or benefits received are taxable to Employee, the Company shall make
Employee "whole" on a net after tax basis; and (C) on the Date of
Termination all then outstanding Company stock-based awards of
Employee, whether under this Agreement, a Company stock plan or
otherwise, shall become immediately exercisable and payable in full,
as the case may be, with any performance goals associated therewith
being deemed to have been achieved at the maximum levels.
Notwithstanding anything in this Agreement to the contrary, if any
payment to Employee in respect of a Company stock-based award would
give rise to a short-swing profit liability to Employee under Section
16(b) of the Securities Exchange Act of 1934, then both the payment
and the entitlement to payment thereof shall automatically be deferred
until the earliest date at which the payment of such benefit would not
result in a short-swing profit liability to Employee.
(ii) Notwithstanding the foregoing provisions of this Section 7,
in the event Employee is terminated because of Misconduct, the Company
shall have no obligations pursuant to this Agreement after the Date of
Termination. As used herein, "Misconduct" means (a) the willful and
continued failure by Employee to substantially perform his duties with
the Company (other than any such failure resulting from Employee's
incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination by
Employee for Good Reason), after a written demand for substantial
performance is delivered to Employee by the Board, which demand
specifically identifies the manner in which the Board believes that
Employee has not substantially performed his duties, or (b) the
willful engaging by Employee in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For
purposes hereof, no act, or failure to act, on Employee's part shall
be deemed "willful" unless done, or omitted to be done, by Employee
not in good faith and without reasonable belief that Employee's action
or omission was in the best interest of the Company. Notwithstanding
the foregoing, Employee shall not be deemed to have been terminated
for
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Misconduct unless and until there shall have been delivered to
Employee a copy of a resolution duly adopted by the affirmative vote
of not less than two-thirds of the entire membership of the Board at
a meeting of the Board called and held for such purpose, finding
that in the good faith opinion of the Board Employee was guilty of
conduct set forth above and specifying the particulars thereof in
detail.
(d) Disability.
(i) If Employee shall have been absent from the full-time
performance of Employee's duties with the Company for six
consecutive months as a result of Employee's incapacity due to
physical or mental illness, as determined by Employee's physician,
and within 30 days after written Notice of Termination is given by
the Company Employee shall not have returned to the full-time
performance of Employee's duties, Employee's employment may be
terminated by the Company for "Disability", provided Employee is
entitled to and receiving benefits under an insured long term
disability plan of the Company. Thereafter, Employee shall not be
entitled to further compensation pursuant to this Agreement.
(ii) If Employee fails during any period during the Term to
perform Employee's full-time duties with the Company as a result of
incapacity due to physical or mental illness, as determined by
Employee's physician, Employee shall continue to receive his Base
Compensation, less any amount payable to Employee under a Company
disability plan, and all other compensation and benefits during such
period until this Agreement is terminated.
(e) Resignation for Good Reason. Employee shall be entitled to
terminate his employment for Good Reason as defined herein. If Employee
terminates his employment for Good Reason, Employee shall be entitled to
the compensation and benefits provided in Paragraph 7(c)(i) hereof.
"Good Reason" shall mean (1) the breach of any of the Company's
obligations under this Agreement without Employee's express written
consent or (2) the occurrence of any of the following circumstances, as
the case may be, without Employee's express written consent unless such
breach or circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination pursuant to
Subsection 7(f) given in respect thereof:
(i) the assignment by the Board to Employee of any duties that,
in the good faith opinion of Employee, are inconsistent with
Employee's positions with the Company, or an adverse alteration (as
determined in good faith by Employee) in the nature or status of
Employee's office, title, responsibilities, including reporting
responsibilities, or the conditions of Employee's employment from
those in effect immediately prior to such alteration;
(ii) the failure by the Company to continue in effect any
compensation plan in which Employee participates that is material to
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Employee's total compensation unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to
continue Employee's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable to
Employee, both in terms of the amount of benefits provided and the
level of Employee's participation relative to other participants;
(iii) the taking of any action by the Company which would
directly or indirectly materially reduce or deprive Employee of any
material fringe benefit then enjoyed by Employee;
(iv) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 12 hereof;
(v) the relocation of the Company's principal executive offices
outside the greater Houston, Texas metropolitan area, or the
Company's requiring Employee to relocate anywhere other than the
location of the Company's principal executive offices, except for
required travel on the Company's business to an extent substantially
consistent with Employee's past business travel obligations; or
(vi) any purported termination of Employee's employment that is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (f) hereof, which purported termination
shall not be effective for purposes of this Agreement.
Employee's right to terminate employment pursuant to this subsection
shall not be affected by Employee's incapacity due to physical or mental
illness. In addition, Employee's continued employment following any
event, act or omission, regardless of the length of such continued
employment, shall not constitute Employee's consent to, or a waiver of
Employee's rights with respect to, such event, act or omission
constituting a Good Reason circumstance hereunder.
(f) Notice of Termination. Any purported termination of Employee's
employment by the Company or by Employee shall be communicated by
written Notice of Termination to the other party hereto in accordance
with Section 10 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall set forth in reasonable
detail the reason for termination of Employee's employment, or in the
case of resignation for Good Reason, said notice must specify in
reasonable detail the basis for such resignation. No purported
termination which is not effected pursuant to this Section 7(f) shall be
effective.
(g) Date of Termination, Etc. "Date of Termination" shall mean the
date specified in the Notice of Termination. Either party may, within 15
days after any Notice of Termination is given, provide notice to the
other party pursuant to Section 10
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hereof that a dispute exists concerning the termination. Notwithstanding
the pendency of any such dispute, the Company will continue to pay
Employee his full Base Compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, Base
Compensation) and continue Employee as a participant in all
compensation, benefit and insurance plans in which Employee was
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with Section 16
hereof, but in no event past the expiration date of this Agreement. Any
payments and benefits provided during such period of dispute shall not
reduce any other payments or benefits due Employee under this Agreement
nor shall Employee be liable to repay the Company for such payments and
benefits if it is finally determined the Employee is not entitled to
payments under the other provisions of this Agreement following
Employee's termination of employment.
(h) Mitigation. Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Section 7 by
seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Agreement be reduced by any
compensation or benefit earned by Employee as a result of employment by
another employer, self-employment earnings, by retirement benefits, by
offset against any amount claimed to be owing by Employee to the
Company, or otherwise, except that any cash severance amount payable to
Employee pursuant to a Company maintained severance plan or policy for
employees in general shall reduce the amount otherwise payable to
Employee pursuant to Section 7(c)(i)(A).
(i) Gross-Up of Parachute Payments. If, during the Term, any
payment, including without limitation any imputed income, made or
benefit provided to or on behalf of Employee, including any accelerated
vesting or any deferred compensation or other award, in connection with
a "change in control" of the Company, whether or not made or provided
pursuant to this Agreement, results in Employee being subject to the
excise tax imposed by section 4999 of the Internal Revenue Code of 1986,
as amended (or any successor or similar provision), the Company shall
pay Employee an additional amount of cash (the "Additional Amount") such
that the net amount of all payments and benefits received by Employee
after paying all applicable taxes thereon, including on such Additional
Amount, shall be equal to the net after-tax amount of payments and
benefits that Employee would have received if section 4999 were not
applicable.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies and for which Employee may qualify, nor shall anything
herein limit or otherwise adversely affect such rights as Employee may have
under any stock option or other agreements with the Company or any of its
affiliated companies.
9. Assignability. The obligations of Employee hereunder are personal and
may not be assigned or delegated by him or transferred in any manner whatsoever,
nor are such obligations subject to involuntary alienation, assignment or
transfer. The Company shall have the right to assign this Agreement and to
delegate all rights, duties and obligations hereunder,
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either in whole or in part, to any parent, affiliate, successor or subsidiary
organization or company of the Company, provided that no such assignment or
delegation shall relieve the Company of its duties and obligations hereunder nor
affect the rights of Employee hereunder.
10. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by overnight
courier or by facsimile with confirmation of receipt or on the third business
day after being mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the Company at its principal office
address and facsimile number, directed to the attention of the Board with a copy
to the Secretary of the Company, and to Employee at Employee's residence address
and facsimile number on the records of the Company or to such other address as
either party may have furnished to the other in writing in accordance herewith
except that notice of change of address shall be effective only upon receipt.
11. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and assets of the Company ("Successor") or any corporation which
becomes the ultimate parent corporation of the Company or any such Successor
("Ultimate Parent") to expressly assume and agree in writing satisfactory to the
Employee to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such written agreement prior to the
effectiveness of any such succession or creation of the parent corporation
relationship shall be a breach of this Agreement and shall entitle Employee to
compensation and benefits from the Company in the same amount and on the same
terms as he would be entitled to hereunder if he terminated his employment for
Good Reason, except that for purposes of implementing the foregoing, the date on
which any such succession (or creation of the parent corporation relationship)
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, including, without limitation, in Section 3, the term "Company" shall
include any Successor and Ultimate Parent which executes and delivers the
Agreement as provided for in this Section 12 or which otherwise becomes bound by
all terms and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of Employee hereunder shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
13. Indemnification. During the Term and for a period of six years
thereafter, the Company shall cause Employee to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability
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for acts or omissions in connection with service as an officer or director of
the Company or service in other capacities at the request of the Company. The
coverage provided to Employee pursuant to this Section 8 shall be of a scope and
on terms and conditions at least as favorable as the most favorable coverage
provided to any other officer or director of the Company (or any successor).
In addition, to the maximum extent permitted under applicable law,
during the Term and for a period of six years thereafter, the Company shall
indemnify Employee against and hold Employee harmless from any costs,
liabilities, losses and exposures for Employee's services as an employee,
officer and director of the Company (or any successor).
14. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officer as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement is an integration of the parties
agreement; no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Arbitration. Employee shall be permitted (but not required) to elect
that any dispute or controversy arising under or in connection with this
Agreement be settled by arbitration in the city in which Employee resides at
such time in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. All legal fees and costs incurred by Employee in connection
with the resolution of any dispute or controversy under or in connection with
this Agreement shall be paid by the Company as bills for such services are
presented by Employee to the Company.
17. Prior Employment Agreement. This Agreement supersedes and replaces in
full any existing employment agreement (written or oral) between the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement on ________, 1998,
effective for all purposes as provided above.
OCEAN ENERGY, INC.
By:
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Name:
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Chairman of the Compensation
Committee of the Board
EMPLOYEE
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Xxxx X. Xxxxx
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