AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXXX RESOURCES, INC.,
XXXXXXXX HOLDINGS, INC.,
XXXXXXXX ACQUISITION INC.
AND
DEVX ENERGY, INC.
DATED AS OF NOVEMBER 12, 2001
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.................................................................................1
SECTION 1.01 Definitions............................................................................1
ARTICLE II THE OFFER...................................................................................5
SECTION 2.01 The Offer..............................................................................5
SECTION 2.02 Company Action.........................................................................8
ARTICLE III THE MERGER..................................................................................9
SECTION 3.01 The Merger.............................................................................9
SECTION 3.02 Effective Time; Closing................................................................9
SECTION 3.03 Effect of the Merger..................................................................10
SECTION 3.04 Certificate of Incorporation; By-laws.................................................10
SECTION 3.05 Directors and Officers................................................................10
SECTION 3.06 Conversion of Securities..............................................................10
SECTION 3.07 Dissenting Shares.....................................................................11
SECTION 3.08 Surrender of Shares; Stock Transfer Books.............................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................13
SECTION 4.01 Organization and Qualification; Subsidiaries..........................................13
SECTION 4.02 Certificate of Incorporation and By-laws..............................................13
SECTION 4.03 Capitalization........................................................................13
SECTION 4.04 Authority Relative to This Agreement..................................................14
SECTION 4.05 No Conflict; Required Filings and Consents............................................14
SECTION 4.06 Permits; Compliance...................................................................15
SECTION 4.07 SEC Filings; Financial Statements.....................................................16
SECTION 4.08 Absence of Certain Changes or Events..................................................16
SECTION 4.09 Absence of Litigation.................................................................17
SECTION 4.10 Employee Benefit Plans................................................................17
SECTION 4.11 Labor and Employment Matters..........................................................19
SECTION 4.12 Offer Documents; Schedule 14D-9.......................................................20
SECTION 4.13 Oil and Gas Operations................................................................20
SECTION 4.14 Gas Imbalances........................................................................20
SECTION 4.15 Oil and Gas Agreements................................................................20
SECTION 4.16 Properties............................................................................20
SECTION 4.17 Oil and Gas Reserves..................................................................21
SECTION 4.18 Take-or-Pay Deliveries................................................................22
SECTION 4.19 Hedging...............................................................................22
SECTION 4.20 Intellectual Property.................................................................22
SECTION 4.21 Taxes.................................................................................22
SECTION 4.22 Environmental Matters.................................................................23
SECTION 4.23 Material Contracts....................................................................24
SECTION 4.24 Insurance.............................................................................25
SECTION 4.25 Brokers...............................................................................25
SECTION 4.26 Opinion of Financial Advisors.........................................................25
-i-
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.....................................25
SECTION 5.01 Corporate Organization................................................................25
SECTION 5.02 Authority Relative to This Agreement..................................................26
SECTION 5.03 No Conflict; Required Filings and Consents............................................26
SECTION 5.04 Offer Documents; Proxy Statement......................................................27
SECTION 5.05 Brokers...............................................................................27
SECTION 5.06 Absence of Litigation.................................................................27
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER.....................................................27
SECTION 6.01 Conduct of Business by the Company Pending the Merger.................................27
ARTICLE VII ADDITIONAL AGREEMENTS......................................................................30
SECTION 7.01 Stockholders' Meeting.................................................................30
SECTION 7.02 Proxy Statement.......................................................................30
SECTION 7.03 Company Board Representation; Section 14(f)...........................................31
SECTION 7.04 Access to Information; Confidentiality................................................32
SECTION 7.05 No Solicitation of Transactions.......................................................32
SECTION 7.06 Employee Matters......................................................................33
SECTION 7.07 Directors' and Officers' Indemnification and Insurance................................33
SECTION 7.08 Notification of Certain Matters.......................................................34
SECTION 7.09 Further Action; Reasonable Best Efforts...............................................34
SECTION 7.10 Public Announcements..................................................................35
SECTION 7.11 Confidentiality Agreement.............................................................35
ARTICLE VIII CONDITIONS TO THE MERGER...................................................................35
SECTION 8.01 Conditions to the Merger..............................................................35
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER..........................................................36
SECTION 9.01 Termination...........................................................................36
SECTION 9.02 Effect of Termination.................................................................37
SECTION 9.03 Fees..................................................................................37
SECTION 9.04 Amendment.............................................................................38
SECTION 9.05 Waiver................................................................................38
ARTICLE X GENERAL PROVISIONS.........................................................................38
SECTION 10.01 Notices...............................................................................38
if to Holdings or Purchaser:..........................................................38
SECTION 10.02 Severability..........................................................................39
SECTION 10.03 Entire Agreement; Assignment..........................................................39
SECTION 10.04 Parties in Interest...................................................................39
SECTION 10.06 Governing Law.........................................................................40
SECTION 10.07 Waiver of Jury Trial..................................................................40
SECTION 10.08 Headings..............................................................................40
SECTION 10.09 Counterparts..........................................................................40
Annex A Conditions to the Offer
-ii-
AGREEMENT AND PLAN OF MERGER, dated as of November 12, 2001 (this
"Agreement"), among XXXXXXXX RESOURCES, INC., a Delaware corporation ("CRI"),
XXXXXXXX HOLDINGS, INC., a Delaware corporation ("Holdings"), XXXXXXXX
ACQUISITION INC., a Delaware corporation and a wholly owned subsidiary of
Holdings ("Purchaser"), and DEVX ENERGY, INC., a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of CRI, Holdings, Purchaser and the
Company have each determined that it is in the best interests of their
respective stockholders for Holdings to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Purchaser shall make a
cash tender offer (the "Offer") to acquire all the shares of common stock, par
value $0.234 per share, of the Company ("Shares") that are issued and
outstanding for $7.32 per Share (such amount, or any greater amount per Share
paid pursuant to the Offer, being the "Per Share Amount"), net to the seller in
cash, upon the terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS, the Board of Directors of the Company (the "Board") has
approved the making of the Offer and resolved to recommend that holders of
Shares tender their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of CRI, Holdings, Purchaser and the Company have each approved this
Agreement and declared its advisability and approved the merger (the "Merger")
of Purchaser with and into the Company in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law"), following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, CRI, Holdings, Purchaser and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) For purposes of this Agreement:
"Acquisition Proposal" means any offer from any third party to acquire
by any means all or any substantial part of the assets or the shares of capital
stock of the Company or of any Subsidiary.
"affiliate" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person.
"beneficial owner", with respect to any Shares, has the meaning
ascribed to such term under Rule 13d-3(a) of the Exchange Act.
-1-
"business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings; or, in the case of determining a
date when any payment is due, any day (other than a Saturday or Sunday) on which
banks are not required or authorized to close in the City of New York.
"control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise;
"Environmental Law" means any United States federal, state, local or
non-United States law relating to (i) releases or threatened releases of
Hazardous Substances or materials containing Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (iii)
pollution or protection of the environment.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary and which,
together with the Company or any Subsidiary, is treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Hazardous Substances" means (i) those substances defined in or
regulated under the following United States federal statutes and their state
counterparts, and all regulations thereunder: the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (ii)
polychlorinated biphenyls, and (iii) any substance, material or waste regulated
by any Governmental Authority pursuant to any Environmental Law.
"knowledge of the Company" means the actual knowledge of any director
or officer of the Company.
"Liens" mean liens, security interests, charges, mortgages or other
encumbrances of any kind.
"Material Adverse Effect" means, when used in connection with the
Company or any Subsidiary, any event, circumstance, change or effect that is or
is reasonably likely to be materially adverse to the business or financial
condition of the Company and its Subsidiaries taken as a whole; provided that in
no event shall any of the following be deemed to constitute or be taken into
account in determining a Material Adverse Effect: any event, circumstance,
change or effect that results from (i) changes affecting the economy generally,
(ii) changes in the market price of natural gas, (iii) the public announcement
or pendency of the Offer, the Merger or the other transactions contemplated
hereby, or (iv) changes in the price of the Company's common stock.
-2-
"Oil and Gas Agreements" means the following types of agreements or
contracts to which the Company or a Subsidiary is a party, whether as an
original party, by succession or assignment or otherwise: oil and gas leases,
farm-in and farm-out agreements, agreements providing for an overriding royalty
interest, agreements providing for a royalty interest, agreements providing for
a net profits interest, crude oil or natural gas sales or purchase contracts,
joint operating agreements, unit operating agreements, unit agreements, field
equipment leases, and agreements restricting the Company or a Subsidiary's
ability to operate, obtain, explore for or develop interests in a particular
geographic area.
"person" means an individual (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act), corporation, partnership,
limited partnership, limited liability company, syndicate, trust, association or
entity or government, political subdivision, agency or instrumentality of a
government.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, CRI or any other person means any and all corporations,
partnerships, joint ventures, associations, limited liability companies and
other entities controlled by such person, directly or indirectly, through one or
more intermediaries.
"Superior Proposal" means any Acquisition Proposal which the Board
determines, in its good faith judgment (after having received the advice of FBR
or such other financial advisor of recognized reputation), to be more favorable
to the Company's stockholders than the Offer and the Merger and for which
financing, to the extent required, is then committed.
"Suspension Event" means the occurrence of any of the following: (i)
any general suspension of trading in, or limitation on prices for, securities on
any national securities exchange, Nasdaq or in the over-the-counter market in
the United States, (ii) a declaration of a general banking moratorium or any
suspension of payments in respect of banks in the United States, or (iii) any
limitation (whether or not mandatory) by any Governmental Authority on, or other
event that materially and adversely affects, the extension of credit by banks or
other lending institutions.
"Tax" or "Taxes" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchise, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges.
-3-
(b) The following terms have the meaning set forth in the Sections set
forth below:
DEFINED TERM LOCATION OF DEFINITION
------------ ----------------------
Ableco Indebtedness Section 6.01(e)
Action Section 4.09
AFE Section 6.01(j)
Agreement Preamble
Blue Sky Laws Section 4.05(b)
Board Recitals
Certificate of Merger Section 3.02
Certificates Section 3.09(b)
Code Section 4.10(b)
Company Preamble
Company Preferred Stock Section 4.03
Company's Oil and Gas Interests Section 4.16(a)
Company Stock Option Section 3.07
Company Stock Option Plans Section 3.07
Confidentiality Agreement Section 7.04(b)
CRI Preamble
D&O Section 7.07(b)
Delaware Law Recitals
Disclosure Schedule Section 4.01(b)
Dissenting Shares Section 3.08(a)
Effective Time Section 3.02
ERISA Section 4.10(a)
Exchange Act Section 2.01(a)
Fairness Opinion Section 2.02(a)
Fee Section 9.03(a)
FBR Section 2.02
GAAP Section 4.07(b)
Good and Marketable Title Section 4.16(b)
Governmental Authority Section 4.05(b)
Holdings Preamble
Hydrocarbons Section 4.13(b)
Initial Expiration Date Section 2.01(a)
IRS Section 4.10(a)
Material Contracts Section 4.23 (a)
Material Subsidiary Section 4.01(c)
Merger Recitals
Merger Consideration Section 2.01(d)
Minimum Condition Section 2.01(a)
Multiemployer Plan Section 4.10(b)
Multiple Employer Plan Section 4.10(b)
Offer Recitals
Offer Documents Section 2.01(e)
Offer to Purchase Section 2.01(e)
-4-
DEFINED TERM LOCATION OF DEFINITION
------------ ----------------------
Outstanding Options Section 2.01(b)
Outstanding Warrants Section 2.01(c)
Paying Agent Section 3.09(a)
Permits Section 4.06
Per Share Amount Recitals
Plans Section 4.10(a)
Proxy Statement Section 4.12
Purchaser Preamble
Recent Balance Sheet Section 4.07(c)
Reserve Report Section 4.17
Schedule 14D-9 Section 2.02(b)
Schedule TO Section 2.01(e)
SEC Section 2.01(a)
SEC Reports Section 4.07(a)
Securities Act Section 4.07(a)
Shares Recitals
Share Acceptance Date Section 2.01
Stockholders' Meeting Section 7.01(a)
Subsidiary Section 4.01(a)
Surviving Corporation Section 3.03
Transactions Section 2.02(a)
Warrant Section 3.07
ARTICLE II
THE OFFER
SECTION 2.01 The Offer.
(a) Provided that none of the events set forth in Annex A
hereto shall have occurred or be continuing, Purchaser shall commence the Offer
as promptly as reasonably practicable but in no event later than seven (7)
business days after the date hereof. The obligation of Purchaser to accept for
payment Shares tendered pursuant to the Offer shall be subject to (i) the
condition (the "Minimum Condition") that at least the number of Shares tendered
shall constitute a 50% plus one share of the sum of the number of then
outstanding Shares plus all Shares issuable upon the exercise of the Outstanding
Options (as of the business day preceding the Initial Expiration Date) and
Outstanding Warrants (as of the business day preceding the Initial Expiration
Date) shall have been validly tendered and not withdrawn prior to the expiration
of the Offer and (ii) the satisfaction or waiver of each of the other conditions
set forth in Annex A hereto. Purchaser expressly reserves the right to waive any
such condition set forth in Annex A, to increase the Per Share Amount, and to
make any other changes in the terms and conditions of the Offer; provided,
however, that no change may be made which decreases the Per Share Amount,
changes the form of consideration payable, reduces the maximum number of Shares
to be purchased in the Offer or imposes or modifies (other than to waive)
conditions to the Offer in addition to those set forth in Annex A hereto.
Subject to the terms of the Offer and this Agreement and the satisfaction or
waiver of the Minimum Condition as of the scheduled expiration date, which shall
initially be 20 business days following the commencement of the
-5-
Offer, and the other conditions set forth in Annex A hereto, Purchaser will
accept for payment and pay for all Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after such expiration date of the
Offer (such date, as extended pursuant to this Agreement, the "Share Acceptance
Date"). Notwithstanding the foregoing, Purchaser shall be entitled to extend the
Offer from time to time without the consent of the Company: (i) until no later
than January 11, 2002 if at the initial expiration of the Offer, which will be
12:00 midnight eastern standard time on the twentieth business day following
commencement of the Offer, as may be extended (the "Initial Expiration Date"),
the Minimum Condition is not satisfied, or (ii) until no later than December 31,
2001, if at the Initial Expiration Date, the Minimum Condition is satisfied, but
any other condition to the Offer is not satisfied or waived. Purchaser agrees to
extend the Offer from time to time until not later than December 31, 2001, if at
the then scheduled expiration date, the Minimum Condition has not been satisfied
or waived as permitted by this Agreement. Any extension of the Offer pursuant to
this Section 2.01 shall not, without the written consent of the Company, exceed
the number of days that Purchaser reasonably believes will be necessary so that
the Minimum Condition will be satisfied. In addition, Purchaser may, without the
consent of the Company, extend any then scheduled expiration date of the Offer
for any period required by applicable rules, regulations, interpretations or
positions of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer or for any period required by applicable law. If
the Initial Expiration Date has occurred, but fewer than 90% of the Shares have
been validly tendered and not withdrawn as of the Initial Expiration Date,
Purchaser may provide for a subsequent offering period (as contemplated by Rule
14d-11 under the Securities Act of 1934, as amended (the "Exchange Act")) as
long as providing for the subsequent offering period does not require the
extension of the initial offer period under applicable rules and regulations of
the SEC, which subsequent offering period shall not exceed 20 business days. In
addition, the Per Share Amount may be increased and the Offer may be extended to
the extent required by law in connection with such increase in each case without
the consent of the Company. On or prior to the dates that Purchaser becomes
obligated to accept for payment and pay for Shares pursuant to the Offer,
Holdings shall provide or cause to be provided to Purchaser the funds necessary
to pay for all Shares that Purchaser becomes so obligated to accept for payment
and pay for pursuant to the Offer.
The Per Share Amount shall, subject to applicable withholding of taxes,
be net to the seller in cash, upon the terms and subject to the conditions of
the Offer. Notwithstanding the foregoing and subject to the applicable rules of
the SEC and the terms and conditions of the Offer, Purchaser expressly reserves
the right to delay payment for Shares in order to comply in whole or in part
with applicable laws. Any such delay shall be effected in compliance with Rule
14e-1(c) under the Exchange Act.
(b) Following the execution of this Agreement, the Company
shall use its reasonable best efforts to cause all holders (and such holders'
spouses) of options to purchase Shares granted under the Company's 1997
Incentive Stock Option Plan and the Company's Directors Non-Qualified Option
Plan , each as amended through the date of this Agreement (the "Company Stock
Option Plans"), to execute prior to the Initial Expiration Date an Option
Relinquishment and Release Agreement (herein so called) in the form attached
hereto as Exhibit A. At the Share Acceptance Date, Purchaser shall cause the
Paying Agent to pay to such holders who have previously delivered an Option
Relinquishment and Release Agreement the cash amount equal to the product of (i)
the number of Shares subject to such option (irrespective of
-6-
whether such option is then exercisable) and (ii) the amount by which the Per
Share Amount exceeds the exercise or strike price per Share subject to such
option less any required withholding taxes. In the event that an option holder
fails to deliver an Option Relinquishment and Release Agreement prior to the
Initial Expiration Date, such holder's options (the "Outstanding Options")
shall, in accordance with the terms and conditions of the governing Company
Stock Option Plan and the holder's stock option agreement(s), be converted
without any action on the part of the holder thereof into the right to receive
Merger Consideration upon the exercise of such holder's options in accordance
with, and within the time period prescribed by, the applicable Company Stock
Option Plan and the holder's stock option agreement(s). The Purchaser shall pay,
or cause the Paying Agent to pay, to each holder of Outstanding Options, the
Merger Consideration, less any required withholding taxes, as promptly as
practicable after receiving a valid exercise of such options by the holder
thereof. To the extent that options to purchase the Company's common stock are
exercised by holders prior to the Effective Time, such holders shall receive
certificates evidencing the Shares underlying the options and may surrender such
certificates to the Paying Agent at the Effective Time for payment in cash as
provided in Article III hereof.
(c) Following the execution of this Agreement, the Company
shall send to holders of warrants to purchase Shares written notice of the Offer
and Merger and such information required by the terms of such warrant. The
Company shall send to all such persons a Warrant Relinquishment and Release
Agreement (herein so called) in the form attached hereto as Exhibit B and shall
use its reasonable best efforts to cause all holders of warrants (and such
holders' spouses) to execute prior to the Initial Expiration Date a Warrant
Relinquishment and Release Agreement. At the Share Acceptance Date, Purchaser
shall cause the Paying Agent to pay to such holders who have previously
delivered a Warrant Relinquishment and Release Agreement the cash amount equal
to the product of (i) the number of Shares subject to such warrant and (ii) the
amount by which the Per Share Amount exceeds the exercise price per share of
Shares subject to such warrant less any required withholding taxes. In the event
that a warrant holder fails to deliver a Warrant Relinquishment and Release
Agreement prior to the Initial Expiration Date, such holder's warrants (the
"Outstanding Warrants") shall, in accordance with the terms and conditions of
the Outstanding Warrant be converted without any action on the part of the
holder thereof into the right to receive Merger Consideration upon the exercise
of such holder's warrants in accordance with the warrant agreement(s). The
Purchaser shall pay, or cause the Paying Agent to pay, to each holder of
Outstanding Warrants, the Merger Consideration, less any required withholding
taxes, as promptly as practicable after receiving a valid exercise of such
warrants by the holder thereof. To the extent that warrants to purchase the
Shares are exercised by holders prior to the Effective Time, such holders shall
receive certificates evidencing the Shares underlying the warrants and may
surrender such certificates to the Paying Agent at the Effective Time for
payment in cash as provided in Article III hereof.
(d) If the payment equal to the Per Share Amount in cash (the
"Merger Consideration") is to be made to a person other than the person in whose
name the surrendered certificate formerly evidencing Shares is registered on the
stock transfer books of the Company, it shall be a condition of payment that the
certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the certificate
surrendered, or shall have
-7-
established to the satisfaction of Purchaser that such taxes either have been
paid or are not applicable.
(e) As promptly as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer.
The Schedule TO shall contain or shall incorporate by reference an
offer to purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule TO, the Offer to
Purchase and such other documents, together with all supplements and amendments
thereto, being referred to herein collectively as the "Offer Documents"). Each
of CRI, Purchaser and the Company agrees to correct promptly any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect, and CRI and Purchaser further agree to take
all steps necessary to cause the Schedule TO, as so corrected, to be filed with
the SEC, and the other Offer Documents, as so corrected, to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. CRI and Purchaser shall give the Company and its
counsel a reasonable opportunity to review and comment on the Offer Documents
prior to such documents being filed with the SEC or disseminated to holders of
Shares. CRI and Purchaser shall provide the Company and its counsel with any
comments CRI, Purchaser or their counsel may receive from the SEC or its staff
with respect to the Offer Documents after the receipt of such comments and shall
provide the Company and its counsel with a reasonable opportunity to participate
in the response of CRI or Purchaser to such comments.
SECTION 2.02 Company Action.
(a) The Company hereby approves of and consents to the Offer
and represents that (i) the Board, at a meeting duly called and held on November
4, 2001, has (a) determined that this Agreement and the transactions
contemplated hereby, including each of the Offer and the Merger (collectively,
the "Transactions"), are fair to, and in the best interests of, the holders of
Shares, (b) approved, adopted and declared advisable this Agreement and the
Transactions (such approval and adoption having been made in accordance with
Delaware Law, including, without limitation, Section 203 thereof) and (c)
resolved to recommend that the holders of Shares accept the Offer and tender
their Shares pursuant to the Offer, and approve and adopt this Agreement and the
Merger, and (ii) Friedman, Billings, Xxxxxx & Co., Inc. ("FBR") has delivered to
the Board its opinion that the consideration to be received by the holders of
Shares pursuant to each of the Offer and the Merger is fair to the holders of
Shares from a financial point of view (the "Fairness Opinion"). The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
the Board described in the immediately preceding sentence, and the Company shall
not withdraw or modify such recommendation in any manner adverse to CRI,
Holdings or Purchaser except as provided in Section 7.05(b). The Company has
been advised by its directors and executive officers that they intend to tender
all Shares beneficially owned by them to Purchaser pursuant to the Offer.
-8-
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 containing the Fairness Opinion and, except as provided in
Section 7.05(b), the recommendation of the Board described in Section 2.02(a)
(together with all amendments and supplements thereto, the "Schedule 14D-9"),
and shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9
promulgated under the Exchange Act, and any other applicable federal securities
laws. Each of CRI, Holdings, Purchaser and the Company agrees to correct
promptly any information provided by it for use in the Schedule 14D-9 which
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9, as so
corrected, to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
The Company shall give CRI, Holdings, and Purchaser and their counsel a
reasonable opportunity to review and comment on the Schedule 14D-9 prior to such
document being filed with the SEC or disseminated to holders of Shares. The
Company shall provide CRI, Holdings, and Purchaser and their counsel with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 after the receipt of such comments and shall
provide CRI, Holdings, Purchaser and their counsel with a reasonable opportunity
to participate in the response of the Company to such comments.
(c) The Company shall promptly cause its transfer agent to
furnish Purchaser with mailing labels containing the names and addresses of all
record holders of Shares and with security position listings of Shares held in
stock depositories, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and beneficial owners of Shares. The Company shall
promptly furnish Purchaser with such additional information, including, without
limitation, updated listings and computer files of stockholders, mailing labels
and security position listings, and such other assistance in disseminating the
Offer Documents to holders of Shares as CRI, Holdings, or Purchaser may
reasonably request. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, CRI, Holdings, and
Purchaser shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the
Transactions, and, if this Agreement shall be terminated in accordance with
Section 9.01, shall deliver and shall cause their agents to deliver to the
Company all copies of such information then in their possession or control.
ARTICLE III
THE MERGER
SECTION 3.01 The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions set forth in Article VIII, and in accordance with
Delaware Law, Purchaser shall be merged with and into the Company.
SECTION 3.02 Effective Time; Closing. As promptly as practicable (but
not later than two business days) after the satisfaction or, if permissible,
waiver of the conditions set forth in Article VIII, the parties hereto shall
cause the Merger to be consummated by filing this Agreement or a certificate of
merger or certificate of ownership and merger (in either case, the "Certificate
of Merger") with the Secretary of State of the State of Delaware, in such form
as is
-9-
required by, and executed in accordance with, the relevant provisions of
Delaware Law (the date and time of such filing being the "Effective Time").
Prior to such filing, a closing shall be held at the offices of Xxxxx Liddell &
Xxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, or such other place
as the parties shall agree, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VIII.
SECTION 3.03 Effect of the Merger. As a result of the Merger, the
separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 3.04 Certificate of Incorporation; By-laws.
(a) At the Effective Time, the Certificate of Incorporation of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation; provided,
however, that, at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The name of the corporation is DevX Energy, Inc."
(b) Unless otherwise determined by CRI prior to the Effective
Time, and subject to Section 7.07(a), the By-laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such By-laws.
SECTION 3.05 Directors and Officers. The directors of Purchaser shall
be the initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation, and the officers of Purchaser immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal.
SECTION 3.06 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(a) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section 3.06(b)
and any Dissenting Shares (as hereinafter defined)) shall be canceled and shall
be converted automatically into the right to receive an amount equal to the
Merger Consideration payable, without interest, to the holder of such Share,
upon surrender, in the manner provided in Section 3.09, of the certificate that
formerly evidenced such Share;
-10-
(b) each Share held in the treasury of the Company and each
Share owned by CRI, Holdings, Purchaser, or the Company immediately prior to the
Effective Time shall be canceled without any conversion thereof and no payment
or distribution shall be made with respect thereto; and
(c) each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
SECTION 3.07 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and that are held by stockholders who shall have neither voted in favor of the
Merger nor consented thereto in writing and who shall have demanded properly in
writing appraisal for such Shares in accordance with Section 262 of Delaware Law
(collectively, the "Dissenting Shares") shall not be converted into, or
represent the right to receive, the Merger Consideration. Such stockholders
shall be entitled to receive payment of the appraised value of such Shares held
by them in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
Shares under such Section 262 shall thereupon be deemed to have been converted
into, and to have become exchangeable for, as of the Effective Time, the right
to receive the Merger Consideration, without any interest thereon, upon
surrender, in the manner provided in Section 3.09, of the certificate or
certificates that formerly evidenced such Shares.
(b) The Company shall give CRI (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to Delaware Law and received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Delaware Law. The Company shall not,
except with the prior written consent of CRI, make any payment with respect to
any demands for appraisal or offer to settle or settle any such demands.
SECTION 3.08 Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Purchaser shall designate a
bank or trust company to act as agent (the "Paying Agent") for the holders of
Shares to receive the funds to which holders of Shares shall become entitled
pursuant to Section 3.06(a) and CRI shall make funds available to the Paying
Agent. Such funds shall be invested by the Paying Agent as directed by the
Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each person who was, at the Effective
Time, a holder of record of Shares entitled to receive the Merger Consideration
pursuant to Section 3.06(a) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the
-11-
Certificates pursuant to such letter of transmittal. Upon surrender to the
Paying Agent of a Certificate, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, and
such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive and CRI shall cause
Paying Agent to pay in exchange therefor the Merger Consideration for each Share
formerly evidenced by such Certificate, and such Certificate shall then be
canceled. No interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificate for the benefit of the holder of
such Certificate. If the payment equal to the Merger Consideration is to be made
to a person other than the person in whose name the surrendered certificate
formerly evidencing Shares is registered on the stock transfer books of the
Company, it shall be a condition of payment that the certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer and that
the person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the certificate surrendered, or shall have
established to the satisfaction of Purchaser that such taxes either have been
paid or are not applicable. If any holder of Shares is unable to surrender such
holder's Certificates because such Certificates have been lost, mutilated or
destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
bond in a reasonable amount in form and substance and with surety reasonably
satisfactory to the Surviving Corporation.
(c) At any time following the sixth month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and, thereafter, such holders shall be entitled to look to the
Surviving Corporation and CRI (subject to abandoned property, escheat and other
similar laws) only as general creditors thereof with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them. Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public official pursuant
to any abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by applicable law.
-12-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to CRI, Holdings and Purchaser to enter into this
Agreement, the Company hereby represents and warrants to CRI, Holdings and
Purchaser that:
SECTION 4.01 Organization and Qualification; Subsidiaries.
(a) Except as disclosed in Section 4.01 of the Disclosure
Schedule, each of the Company and each subsidiary of the Company (a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. The Company and each
Subsidiary is duly qualified or licensed as a foreign corporation to do business
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except where such failure to be
qualified or licensed would not have a Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary and the names of the directors and officers of each Subsidiary, is
set forth in Section 4.01(b) of the Disclosure Schedule, which has been prepared
by the Company and delivered by the Company to CRI, Holdings and Purchaser prior
to the execution and delivery of this Agreement (the "Disclosure Schedule").
Except as disclosed in Section 4.01(b) of the Disclosure Schedule, the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
(c) All names by which the Company previously conducted
business or was known as are listed in Section 4.01(c) of the Disclosure
Schedule.
SECTION 4.02 Certificate of Incorporation and By-laws. The Company has
heretofore furnished to CRI a complete and correct copy of the Certificate of
Incorporation and the By-laws or equivalent organizational documents, each as
amended to date, of the Company and each Subsidiary. Such Certificates of
Incorporation, By-laws or equivalent organizational documents are in full force
and effect. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its Certificate of Incorporation, By-laws or equivalent
organizational documents.
SECTION 4.03 Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of common stock, par value $0.234 per
share, and 50,000,000 shares of preferred stock, par value $0.01 per share
("Company Preferred Stock") of which 9,600,000 shares have been designated as
Series A Preferred Stock, 9,600,000 shares have been designated as Series B
Preferred Stock and 10,400 shares have been designated as Series C Preferred
Stock. As of the date hereof, (a) 12,649,522 Shares were issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (b) 100,000
Shares are held in the treasury of the Company, (c) no Shares are held by the
Subsidiaries, (d) 522,500 Shares are reserved for future issuance pursuant to
outstanding stock options or stock incentive rights granted pursuant to the
Company Stock Option Plans and (e) 265,000 Shares are reserved for future
issuance pursuant to exercise of the Warrants. As of the date hereof, no shares
of Company Preferred Stock are issued and outstanding. Except as set forth in
this Section 4.03 or in Section 4.03 of the Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Subsidiary. Section 4.03 of the
-13-
Disclosure Schedule sets forth the following information with respect to each
Company Stock Option and Warrant outstanding on the date of this Agreement: (i)
the name of the Option or Warrant holder; (ii) the particular plan pursuant to
which such Company Stock Option was granted; (iii) the number of Shares subject
to such Company Stock Option or Warrant; (iv) the exercise price of such Company
Stock Option or Warrant; (v) the date on which such Company Stock Option or
Warrant was granted or issued; (vi) the applicable vesting schedule; (vii) the
date on which such Company Stock Option or Warrant expires; and (viii) whether
the exercisability of such Option or Warrant will be accelerated in any way by
the transactions contemplated by this Agreement. All Shares subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Shares or any capital stock of any Subsidiary or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary or any other person. Except as
disclosed in Section 4.03 of the Disclosure Schedule, each outstanding share of
capital stock of each Subsidiary is duly authorized, validly issued, fully paid
and nonassessable, and each such share is owned by the Company or another
Subsidiary free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
any Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
SECTION 4.04 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the holders of a majority of the then-outstanding Shares,
if and to the extent required by applicable law, and the filing and recordation
of appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by CRI, Holdings, and Purchaser,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. At a meeting duly called and
held on November 4, 2001, the Board approved this Agreement and the
Transactions, and such approvals are sufficient so that the restrictions on
business combinations set forth in Section 203(a) of Delaware Law shall not
apply to the Merger.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Certificate of Incorporation or By-laws or
equivalent organizational documents of the Company or any Subsidiary, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 4.05(b) have been obtained and all filings and obligations
described in Section 4.05(b) have been made, conflict with or violate any United
States or non-United States national, state, provincial, municipal, county or
local statute, law, ordinance, regulation, rule,
-14-
code, executive order, injunction, judgment, decree or other order ("Law")
applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) other than as
described in Section 4.05(a) of the Disclosure Schedule, result in any breach of
or constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or any Subsidiary
pursuant to or under, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, except, with respect to clause
(ii) or (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or materially delay consummation of the
Offer or Merger, or otherwise prevent or materially delay the Company from
performing its obligations under this Agreement and would not have a Material
Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States or non-United States national, state,
provincial, municipal, county or local government, governmental, regulatory or
administrative authority, agency, instrumentality or commission or any court,
tribunal, or judicial or arbitral body (a "Governmental Authority"), except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, (ii) filing and
recordation of appropriate merger documents as required by Delaware Law, and
(iii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
materially delay consummation of the Offer or the Merger, or otherwise prevent
or materially delay the Company from performing its obligations under this
Agreement and would not have a Material Adverse Effect.
SECTION 4.06 Permits; Compliance. Each of the Company and the
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Authority necessary for each of the
Company or the Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted, or as presently contemplated to be
conducted (the "Permits"), except where the failure to have, or the suspension
or cancellation of, any of the Permits would not prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially delay
the Company from performing its obligations under this Agreement and would not
have a Material Adverse Effect. No suspension or cancellation of any of the
Permits is pending or, to the knowledge of the Company, threatened, which
suspension or cancellation would have a Material Adverse Effect. Neither the
Company nor any Subsidiary is in conflict with, or in default, breach or
violation of, (a) any Law applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (b) any note, bond, mortgage, indenture, contract, agreement,
lease, license, Permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is bound, except for
any such conflicts, defaults, breaches or violations that would not prevent or
materially delay consummation of the Offer or the Merger or otherwise prevent or
-15-
materially delay the Company from performing its obligations under this
Agreement and would not have a Material Adverse Effect.
SECTION 4.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the SEC since July 1, 1999, including (i) its
Transition Report on Form 10-K for the Transition Period from July 1, 2000 to
Xxxxxxxx 00, 0000, (xx) its Annual Report on Form 10-K for the fiscal year ended
June 30, 2000, (iii) its Quarterly Reports on Form 10-Q for the periods ended
June 30, 2001 and March 31, 2001, (iv) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since July
1, 1999 and (v) all other forms, reports and other registration statements
(other than Quarterly Reports on Form 10-Q not referred to in clause (iii)
above) filed by the Company with the SEC since July 1, 1999 (the forms, reports
and other documents referred to in clauses (i) - (v) above being, collectively,
the "SEC Reports"). The SEC Reports (i) were prepared in accordance with either
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and (ii) did not, at the time they were filed, or, if
amended, as of the date of such amendment, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presents, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company and its consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein except as
otherwise noted therein and for normal, recurring year-end adjustments.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at June 30,
2001 including the notes thereto (the "Recent Balance Sheet") or as specifically
disclosed in SEC Reports filed since June 30, 2001 and prior to the date of this
Agreement, neither the Company nor any Subsidiary has any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since June 30, 2001.
(d) The Company has heretofore furnished to CRI complete and
correct copies of all amendments and modifications that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.
SECTION 4.08 Absence of Certain Changes or Events. Since December 31,
2000, except as set forth in Section 4.08 of the Disclosure Schedule, or as
expressly contemplated by this Agreement, or specifically disclosed in the SEC
Reports filed since December 31, 2000 and
-16-
prior to the date of this Agreement, (a) the Company and the Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice, and (b) there has not been any Material Adverse
Effect.
SECTION 4.09 Absence of Litigation. Except as set forth in Section 4.09
of the Disclosure Schedule, there is no litigation, suit, claim, action,
proceeding or investigation (an "Action") pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary, or any property or
asset of the Company or any Subsidiary, before any Governmental Authority that
would have a Material Adverse Effect. Neither the Company nor any Subsidiary nor
any property or asset of the Company or any Subsidiary is subject to any
continuing order of, consent decree, settlement agreement or similar written
agreement with, or continuing investigation by, any Governmental Authority, or
any order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority that would prevent or materially delay consummation of
the Offer or the Merger or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement or would have a Material
Adverse Effect.
SECTION 4.10 Employee Benefit Plans.
(a) Section 4.10(a) of the Disclosure Schedule lists (i) all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements, and all employment, termination, severance or
other contracts or agreements, whether legally enforceable or not, to which the
Company or any Subsidiary is a party, with respect to which the Company, any
Subsidiary or any ERISA Affiliate has any obligation or which are maintained,
contributed to or sponsored by the Company or any Subsidiary for the benefit of
any current or former employee, officer or director of, or any current or former
consultant to, the Company or any Subsidiary, (ii) each employee benefit plan
for which the Company or any Subsidiary could incur liability under Section 4069
of ERISA in the event such plan has been or were to be terminated, (iii) any
plan in respect of which the Company or any Subsidiary could incur liability
under Section 4212(c) of ERISA, and (iv) any contracts, arrangements or
understandings between the Company or any Subsidiary and any employee of the
Company or any Subsidiary including, without limitation, any contracts,
arrangements or understandings relating in any way to a sale of the Company or
any Subsidiary (collectively, the "Plans"). Each Plan is in writing (or a
written summary exists) and the Company has made available to Purchaser a true
and complete copy of each Plan and has made available to Purchaser a true and
complete copy of each material document, if any, prepared in connection with
each such Plan, including, without limitation, (i) a copy of each trust or other
funding arrangement, if such a trust or funding arrangement exists, (ii) each
summary plan description and summary of material modifications thereto, (iii)
the most recent three years' Internal Revenue Service ("IRS") Forms 5500, if
applicable (iv) the most recently received IRS determination letter for each
such Plan, if applicable, and (v) the most recent three years' actuarial reports
and financial statements in connection with each such Plan, if applicable.
(b) None of the Plans is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a
single-employer plan (within the meaning of Section 4001(a)(15) of ERISA) for
which the Company or any Subsidiary could
-17-
incur liability under Section 4063 or 4064 of ERISA (a "Multiple Employer
Plan"). Except as listed in Section 4.10(a) of the Disclosure Schedule, none of
the Plans (i) provides for the payment of separation, severance or similar-type
benefits to any person, (ii) obligates the Company or any Subsidiary to pay
separation, severance or similar-type benefits solely or partially as a result
of any transaction contemplated by this Agreement, or (iii) obligates the
Company or any Subsidiary to make any payment or provide any benefit as a result
of a "change in control", within the meaning of such term under Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"). Except as listed in
Section 4.10(a) of the Disclosure Schedule, none of the Plans provides for or
promises retiree medical, disability or life insurance benefits to any current
or former employee, officer or director of the Company or any Subsidiary.
(c) Each Plan is now and always has been operated in all
material respects in accordance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. The Company
and the Subsidiaries have performed all obligations required to be performed by
them under, are not in any material respect in default under or in violation of,
and have no knowledge of any material default or violation by any party to, any
Plan. No Action or any audit or investigation by any Governmental Authority is
pending or, to the knowledge of the Company, threatened with respect to any Plan
(other than claims for benefits in the ordinary course) and no fact or event
exists that could reasonably be expected to give rise to any such Action.
(d) Each Plan that is intended to be qualified under Section
401(a) of the Code has timely received a favorable determination, opinion,
advisory or notification letter from the IRS that the Plan is so qualified and
each trust established in connection with any Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received an opinion, advisory or modification letter from the IRS that it is so
exempt, and no fact or event has occurred since the date of such letter or
letters from the IRS that could reasonably be expected to adversely affect the
qualified status of any such Plan or the exempt status of any such trust.
(e) There has not been to the best of Company's knowledge any
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan. Neither the Company nor any
Subsidiary has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA, or
(ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and
no fact or event exists which could reasonably be expected to give rise to any
such liability.
(f) All contributions, premiums or payments required to be
made with respect to any Plan have been made on or before their due dates. All
such contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority and no
fact or event exists to the best of Company's knowledge which could reasonably
be expected to give rise to any such challenge or disallowance.
-18-
(g) None of the Plans is subject to the laws of any country
other than the United States.
SECTION 4.11 Labor and Employment Matters.
(a) Section 4.11 of the Disclosure Schedule sets forth a list
of all employees of the Company and any Subsidiary, together with their dates of
hire, and any employees currently on leave of absence, indicating the nature of
and length of such leave and whether such employees have employment agreements.
The Company has previously provided to CRI a schedule setting forth current base
salary and total wages paid in the prior year for all employees listed in
Section 4.11 of the Disclosure Schedule. Except as set forth in Section 4.11 of
the Disclosure Schedule, (i) there are no controversies pending or, to the
knowledge of the Company, threatened between the Company or any Subsidiary and
any of their respective employees; (ii) neither the Company nor any Subsidiary
is a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary, nor, to the
knowledge of the Company, are there any activities or proceedings of any labor
union to organize any such employees; (iii) there are no unfair labor practice
complaints pending against the Company or any Subsidiary before the National
Labor Relations Board or any current union representation questions involving
employees of the Company or any Subsidiary; (iv) there is no strike, slowdown,
work stoppage or lockout, or, to the knowledge of the Company, threat thereof,
by or with respect to any employees of the Company or any Subsidiary; and (v)
there are no currently effective agreements relating to severance or similar
payments or other benefits to be provided to directors, officers, employees,
consultants or former employees of the Company or any Subsidiary in connection
with or after termination of such director, officer, consultant or employee's
employment or other relationship with the Company or that may otherwise be owing
as a result of the Transactions.
(b) The Company and the Subsidiaries are in material
compliance with all applicable laws relating to the employment of labor,
including those related to wages, hours, collective bargaining and the payment
and withholding of taxes and other sums as required by the appropriate
Governmental Authority, and have withheld and paid to the appropriate
Governmental Authority or are holding for payment not yet due to such
Governmental Authority all amounts required to be withheld from employees of the
Company or any Subsidiary and are not liable for any arrears of wages, Taxes,
penalties or other sums for failure to comply with any of the foregoing. The
Company and the Subsidiaries have paid in full to all employees or adequately
accrued for in accordance with GAAP consistently applied all wages, salaries,
commissions, bonuses, benefits and other compensation due to or on behalf of
such employees, and there is no claim with respect to payment of wages, salary
or overtime pay that has been asserted or is now pending or threatened before
any Governmental Authority with respect to any persons currently or formerly
employed by the Company or any Subsidiary. Neither the Company nor any
Subsidiary is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or employment
practices. There is no charge of discrimination in employment or employment
practices, for any reason, including, without limitation, age, gender, race,
religion or other legally protected category, which has been asserted or is now
pending or, to the knowledge of the Company, threatened before the United States
Equal Employment Opportunity Commission, or any other
-19-
Governmental Authority in any jurisdiction in which the Company or any
Subsidiary have employed or employ any person, except as would not have a
Material Adverse Effect.
(c) The Company and the Subsidiaries are in compliance with
the provisions of the WARN Act and any similar state laws. Section 4.11 of the
Disclosure Schedule lists all employees who have been terminated in the 90-day
period ending as of the date hereof.
SECTION 4.12 Offer Documents; Schedule 14D-9.
Neither the Schedule 14D-9 nor any information supplied by the Company
for inclusion in the Offer Documents shall, at the times the Schedule 14D-9, the
Offer Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to stockholders of the Company, as the
case may be, contain 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, in the light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by CRI,
Holdings, Purchaser or any of CRI, Holdings or Purchaser's representatives for
inclusion in the Schedule 14D-9. The Schedule 14D-9 shall comply in all material
respects as to form with the requirements of the Exchange Act and the rules and
regulations thereunder.
SECTION 4.13 Oil and Gas Operations. Except as set forth in Section
4.13 of the Disclosure Schedule, proceeds from the sale of crude oil, natural
gas liquids and other hydrocarbons produced from crude oil or natural gas
("Hydrocarbons") produced from the Company's Oil and Gas Interests are being
received by the Company and the Subsidiaries in a timely manner and are not
being held in suspense for any reason (except in the ordinary course of business
or which would not have a Material Adverse Effect).
SECTION 4.14 Gas Imbalances. Except as set forth in Section 4.14 of the
Disclosure Schedule, none of the Company or the Subsidiaries has received any
material deficiency payment under any gas contract for which any person has a
right to take deficiency gas from the Company or a Subsidiary, nor has the
Company or any Subsidiary received any material payment for production which is
subject to refund or recoupment out of future production.
SECTION 4.15 Oil and Gas Agreements. The Company has previously
provided or made available to CRI true and complete copies of all the Oil and
Gas Agreements together with all amendments, extensions and other modifications
thereof.
SECTION 4.16 Properties.
(a) Except for items disclosed in Section 4.16 of the
Disclosure Schedule and goods and other property sold, used or otherwise
disposed of since June 30, 2001 in the ordinary course of business, the Company
and the Subsidiaries have Good and Marketable Title, for oil and gas purposes,
in and to all oil and gas properties set forth in the Reserve Report as owned by
the Company and the Subsidiaries (the "Company's Oil and Gas Interests"), and
defensible title for oil and gas purposes to all other properties, interests in
properties and assets, real and personal, reflected on the balance sheet of the
Company in its Quarterly Report on Form 10-Q for the period ended June 30, 2001,
as owned by the Company and the Subsidiaries, free and
-20-
clear of any Liens, except: (i) Liens associated with obligations reflected in
the SEC Reports; (ii) Liens for current Taxes not yet due and payable, (iii)
materialman's, mechanic's, repairman's, employee's, contractors, operator's, and
other similar liens, charges or encumbrances arising in the ordinary course of
business (A) if they have not been perfected pursuant to law, (B) if perfected,
they have not yet become due and payable or payment is being withheld as
provided by law, or (C) if their validity is being contested in good faith by
appropriate action, (iv) all rights to consent by, required notices to, filings
with, or other actions by governmental entities in connection with the sale or
conveyance of oil and gas leases or interests if they are customarily obtained
subsequent to the sale or conveyance, and (v) such imperfections of title,
easements and Liens which have not had, or would not reasonably be expected to
have, a Material Adverse Effect. To the knowledge of the Company, all leases and
other agreements pursuant to which the Company or any of the Subsidiaries leases
or otherwise acquires or obtains operating rights affecting any real or personal
property are in good standing, valid and effective and all royalties, rentals
and other payment due by the Company to any lessor of any such oil and gas
leases have been paid, except in each case, as has not had, and would not
reasonably be expected to have, a Material Adverse Effect. All major items of
operating equipment of the Company and the Subsidiaries used in connection with
the Company's Oil and Gas Interests over which the Company has operating rights
are in good operating condition and in a state of reasonable maintenance and
repair, ordinary wear and tear excepted, except as has not had, and would not
reasonably be expected to have, a Material Adverse Effect.
(b) The term "Good and Marketable Title" will, for purposes of
this Section 4.16, with respect to the Company and the Subsidiaries, mean such
title that: (i) is deducible of record (from the records of the applicable
parish or county or (A) in the case of federal leases, from the records of the
applicable office of the Minerals Management Service or Bureau of Land
Management, (B) in the case of Indian leases, from the applicable office of the
Bureau of Indian Affairs, (C) in the case of state leases, from the records of
the applicable state land office) or is assignable to the Company or the
Subsidiaries out of an interest of record (as so defined) by reason of the
performance by the Company or the Subsidiaries of all operations required to
earn an enforceable right to such assignment; (ii) entitles the Company or the
Subsidiaries to receive not less than the interest set forth in the Reserve
Report with respect to each proved property evaluated therein under the caption
"Net Revenue Interest" or "NRI" without reduction during the life of such
property except as stated in the Reserve Report; (iii) obligates the Company or
the Subsidiaries to pay costs and expenses relating to each such proved property
in an amount not greater than the interest set forth under the caption "Working
Interest" or "WI" in the Reserve Report with respect to such property without
increase over the life of such property except as shown on the Reserve Report;
and (iv) does not restrict the ability of the Company or the Subsidiaries to
utilize the properties as currently intended; except in each case where
deficiencies referenced in clauses (i) through (iv) would reasonably be expected
to have a Material Adverse Effect.
SECTION 4.17 Oil and Gas Reserves. The Company has furnished CRI prior
to the date of this Agreement with the Company's estimates of its and the
Subsidiaries' oil and gas reserves as of June 30, 2001 (the "Reserve Report").
To the knowledge of the Company, except as have not had, and would not
reasonably be expected to have, a Material Adverse Effect, the production
volumes and pressure data used to prepare the Reserve Report were accurate.
-21-
SECTION 4.18 Take-or-Pay Deliveries. Except as would not reasonably be
expected to have a Material Adverse Effect, there are no calls (exclusive of
market calls) on the Company's oil or gas production and the Company has no
obligation to deliver oil or gas pursuant to any take-or-pay, prepayment or
similar arrangement without receiving full payment therefor, excluding gas
imbalances disclosed in Section 4.14 of the Disclosure Schedule.
SECTION 4.19 Hedging. Section 4.19 of the Disclosure Schedule sets
forth all futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from, relate to or reduce or eliminate
the risk of fluctuations in the price of commodities, including Hydrocarbons or
securities, to which the Company or any of the Subsidiaries is bound.
SECTION 4.20 Intellectual Property. The Company and the Subsidiaries
own or possess all necessary licenses or other valid rights to use all patents,
patent rights, trademarks, trademark rights and proprietary information used or
held for use in connection with their respective businesses as currently being
conducted, free and clear of Liens, and to the knowledge of the Company, there
are no assertions or claims challenging the validity of any of the foregoing
which would have, or would reasonably be expected to have, a Material Adverse
Effect. Except in the ordinary course of business, neither the Company nor any
of the Subsidiaries has granted to any other person any license to use any of
the foregoing. To the knowledge of the Company, the conduct of the Company's and
the Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in a way which would have, or
would be reasonably expected to have, a Material Adverse Effect. To the
knowledge of the Company there is no infringement of any proprietary right owned
by the Company or any of the Subsidiaries in a way which would have, or would be
reasonably expected to have, a Material Adverse Effect.
SECTION 4.21 Taxes.
(a) Each of the Company, the Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
or entity is or was a member has (i) duly filed (or there has been filed on its
behalf) on a timely basis (taking into account any extensions of time to file
before the date hereof) with appropriate Governmental Authorities all Tax
returns, statements, reports, declarations, estimates and forms ("Returns")
required to be filed by or with respect to it, except to the extent that any
failure to file would not have, or reasonably be expected to have, a Material
Adverse Effect, and (ii) duly paid or deposited in full on a timely basis or
made adequate provisions in accordance with generally accepted accounting
principles (or there has been paid or deposited or adequate provision has been
made on its behalf) for the payment of all Taxes required to be paid by it other
than those being contested in good faith by the Company or a Subsidiary and
except to the extent that any failure to pay or deposit or make adequate
provision for the payment of such Taxes would not have, or reasonably be
expected to have, a Material Adverse Effect.
(b) Except to the extent set forth in Section 4.21 of the
Disclosure Schedule, (i) none of the federal income tax returns of the Company
or any of the Subsidiaries have been examined by the IRS for all periods; (ii)
as of the date hereof, neither the Company nor any of the Subsidiaries has
granted any requests, agreements, consents or waivers to extend the
-22-
statutory period of limitations applicable to the assessment of any Taxes with
respect to any Returns of the Company or any of the Subsidiaries that will be
outstanding as of the Effective Time; (iii) neither the Company nor any of the
Subsidiaries is a party to, is bound by or has any obligation under any Tax
sharing, allocation or indemnity agreement or any similar agreement or
arrangement that would have, or would reasonably be expected to have, a Material
Adverse Effect; and (iv) there are no Liens for Taxes on any assets of the
Company or the Subsidiaries except for Taxes not yet currently due, with respect
to matters being contested by the Company in good faith for which adequate
reserves are reflected in the financial statements and those which could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 4.22 Environmental Matters.
(a) Except as would not have, or reasonably be expected to
have, a Material Adverse Effect, to the knowledge of the Company, there are not
any present or past conditions or circumstances at, or arising out of, any
current or former businesses, assets or properties of the Company or any
Subsidiary, including but not limited to, on-site or off-site disposal or
release of any Hazardous Substance, which constitute a violation under any
Environmental Law or could reasonably be expected to give rise to: (i)
liabilities or obligations for any notification, cleanup, remediation, disposal
or corrective action under any Environmental Law or (ii) claims arising for
damage to natural resources.
(b) Except as would not have, or reasonably be expected to
have, a Material Adverse Effect, neither the Company nor any of the Subsidiaries
has (i) received any written notice of noncompliance with, violation of, or
liability or potential liability under any Environmental Law, (ii) received any
written notice regarding any existing, pending or threatened investigation or
inquiry related to alleged violations under any Environmental Law or regarding
any claims for remedial obligations or contribution under any Environmental Law
or (iii) entered into any consent decree or order or is subject to any order of
any court or governmental authority or tribunal under any Environmental Law or
relating to the cleanup of any Hazardous Substance.
(c) Except as would not have, or reasonably be expected to
have, a Material Adverse Effect, the Company and the Subsidiaries have in full
force and effect all permits, licenses, approvals and other authorizations
required by Environmental Laws to conduct their operations and to operate and
use any of the Company's or the Subsidiaries' assets for their current purposes
and uses and are operating in material compliance thereunder.
(d) Except as would not have or reasonably be expected to have
a Material Adverse Effect, the Company does not know of any reason that would
preclude it from renewing or obtaining a reissuance or transfer of the permits,
licenses, approvals, or other authorizations required pursuant to any applicable
Environmental Law to conduct their operations and to operate and use any of the
Company's or the Subsidiaries' assets for their current purposes and uses.
-23-
SECTION 4.23 Material Contracts.
(a) Other than the Oil and Gas Agreements, which have been
previously made available or provided to CRI, subsections (i) through (xii) of
Section 4.23 of the Disclosure Schedule contain a list of the following types of
contracts and agreements to which the Company or any Subsidiary is a party (such
contracts, agreements and arrangements as are required to be set forth in
Section 4.23(a) of the Disclosure Schedule, together with the Oil and Gas
Agreements, being the "Material Contracts"):
(i) each contract or agreement that contemplates an
exchange of consideration with a value of more than $250,000 net to the
Company's interest;
(ii) all management contracts (excluding contracts
for employment) and contracts with other consultants, including any contracts
involving the payment of royalties or other amounts calculated based upon the
revenues or income of the Company or any Subsidiary or income or revenues
related to any product of the Company or any Subsidiary, which require continued
payment thereunder and cannot be terminated by the Company or Subsidiary, as the
case may be, with 30-day notice;
(iii) all contracts and agreements evidencing
indebtedness for borrowed money of the Company;
(iv) all contracts and agreements with any
Governmental Authority, excluding state leases or other governmental mineral
rights;
(v) all contracts and agreements providing for
benefits under any Plan, excluding individual stock option grant agreements and
stock subscription agreements;
(vi) all agreements related to professional services
rendered to the Company or any Subsidiary in connection with the Offer, the
Merger and this Agreement;
(vii) all contracts providing for "earn-out" or
similar contingent payments in excess of $250,000 by the Company or any
Subsidiary;
(viii) all joint venture, partnership, and similar
agreements;
(ix) all contracts for employment required to be
listed in Section 4.11 of the Disclosure Schedule;
(x) all contracts providing for indemnification of
directors, officers, employees, consultants or other persons other than normal
course indemnity provisions; and
(xi) all other contracts and agreements, whether or
not made in the ordinary course of business, which are material to the Company,
any Subsidiary or the conduct of their respective businesses, or the absence of
which would prevent or delay consummation of the Offer or the Merger or
otherwise prevent or delay the Company from performing its obligations under
this Agreement or would have a Material Adverse Effect.
(b) Except as disclosed in Section 4.23(b) of the Disclosure
Schedule and except as would not prevent or delay consummation of the Offer or
the Merger or otherwise
-24-
prevent or delay the Company from performing its obligations under this
Agreement and would not have a Material Adverse Effect, (i) each Material
Contract is a legal, valid and binding agreement of the Company, and none of the
Material Contracts is in default by its terms or has been canceled by the other
party; (ii) to the Company's knowledge, no other party is in breach or violation
of, or default under, any Material Contract; and (iii) the Company and the
Subsidiaries are not in receipt of any claim of default under any such
agreement. The Company has furnished or made available to CRI true and complete
copies of all Material Contracts, including any amendments thereto.
SECTION 4.24 Insurance.
(a) Section 4.24(a) of the Disclosure Schedule sets forth,
with respect to each insurance policy under which the Company or any Subsidiary
is insured (other than such policies contemplated in Section 4.10), a named
insured or otherwise the principal beneficiary of coverage which is currently in
effect, (i) the names of the insurer, the principal insured and each named
insured, (ii) the policy number, (iii) the period, scope and amount of coverage
and (iv) the premium charged.
(b) With respect to each such insurance policy: (i) the policy
is legal, valid, binding and enforceable against the Company in accordance with
its terms and, except for policies that have expired under their terms in the
ordinary course, is in full force and effect; (ii) neither the Company nor any
Subsidiary is in material breach or default (including any such breach or
default with respect to the payment of premiums or the giving of notice), and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification, under the
policy; and (iii) to the knowledge of the Company, no insurer on the policy has
been declared insolvent or placed in receivership, conservatorship or
liquidation.
SECTION 4.25 Brokers. No broker, finder or investment banker (other
than FBR) is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
the Company. The Company has heretofore furnished to CRI a complete and correct
copy of all agreements between the Company and FBR pursuant to which such firm
would be entitled to any payment relating to the Transactions.
SECTION 4.26 Opinion of Financial Advisors. The Board of Directors of
the Company has received the opinion of FBR to the effect that, as of the date
of this Agreement, the Merger Consideration is fair, from a financial point of
view, to the holders of the Shares.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CRI, HOLDINGS AND PURCHASER
As an inducement to the Company to enter into this Agreement, CRI,
Holdings and Purchaser hereby, jointly and severally, represent and warrant to
the Company that:
SECTION 5.01 Corporate Organization. Each of Holdings and Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of
-25-
Delaware and has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not
prevent or materially delay consummation of the Transactions, or otherwise
prevent Holdings or Purchaser from performing its material obligations under
this Agreement. CRI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada, and has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such power, authority
and governmental approvals would not prevent or materially delay consummation of
the Transactions, or otherwise prevent CRI from performing its material
obligations under this Agreement.
SECTION 5.02 Authority Relative to This Agreement. Each of CRI,
Holdings and Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
CRI, Holdings and Purchaser and the consummation by CRI, Holdings and Purchaser
of the Transactions have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of CRI,
Holdings or Purchaser are necessary to authorize this Agreement or to consummate
the Transactions (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by Delaware Law). This
Agreement has been duly and validly executed and delivered by CRI, Holdings and
Purchaser and, assuming due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of each of CRI,
Holdings and Purchaser enforceable against each of Holdings and Purchaser in
accordance with its terms. At a meeting duly called or by way of unanimous
written consent, the Boards of Directors of CRI, Holdings and Purchaser each
unanimously approved this Agreement and the Transactions.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by CRI,
Holdings and Purchaser do not, and the performance of this Agreement by CRI,
Holdings and Purchaser will not, (i) conflict with or violate the Articles of
Incorporation of CRI, the Certificate of Incorporation of Parent or Purchaser or
the By-laws of any of CRI, Holdings or Purchaser, (ii) assuming that all
consents, approvals, authorizations and other actions described in Section
5.03(b) have been obtained and all filings and obligations described in Section
5.03(b) have been made, conflict with or violate any Law applicable to CRI,
Holdings or Purchaser or by which any property or asset of either of them is
bound or affected, or (iii) result in any breach of, or constitute a default (or
an event which, with notice or lapse of time or both, would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of CRI, Holdings or Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which CRI, Holdings or Purchaser is a party or
by which any property or asset of either of them is bound or affected, except,
with respect to clause (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or materially
delay consummation of the Offer or Merger, or otherwise prevent or materially
delay CRI, Holdings and Purchaser from performing their obligations under this
Agreement.
-26-
(b) The execution and delivery of this Agreement by CRI,
Holdings and Purchaser do not, and the performance of this Agreement by CRI,
Holdings and Purchaser will not, require any consent, approval, authorization or
permit of, or filing with, or notification to, any Governmental Authority,
except (i) for applicable requirements, if any, of the Exchange Act, Blue Sky
Laws and state takeover laws, (ii) filing and recordation of appropriate merger
documents as required by Delaware Law, and (iii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the Offer
or Merger, or otherwise prevent or materially delay CRI, Holdings or Purchaser
from performing their obligations under this Agreement.
SECTION 5.04 Offer Documents. The Offer Documents shall not, at the
time the Offer Documents are filed with the SEC or are first published, sent or
given to stockholders of the Company, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, CRI, Holdings and Purchaser make no
representation or warranty with respect to any information supplied by the
Company or any of its representatives for inclusion in any of the Offer
Documents. The Offer Documents shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 5.05 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of CRI,
Holdings or Purchaser.
SECTION 5.06 Absence of Litigation. None of CRI, Holdings and Purchaser
is subject to any continuing order of, consent decree, settlement agreement or
similar written agreement with, or continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority that would prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially delay
Holdings or Purchaser from performing its respective obligations under this
Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the Merger. The
Company agrees that, between the date of this Agreement and the Effective Time,
unless CRI shall otherwise agree in writing and except for actions taken or
omitted for the purpose of complying with this Agreement, the businesses of the
Company and the Subsidiaries shall be conducted only in, and the Company and the
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and the Subsidiaries and to preserve the current
relationships of the Company and the Subsidiaries with customers, suppliers and
other persons with which the Company or any Subsidiary has significant business
relations. By way of amplification and not limitation, except as expressly
contemplated by this Agreement and Section 6.01 of the Disclosure Schedule,
neither the Company nor any Subsidiary shall, between the date of this Agreement
and the Effective Time, directly or indirectly, do any of the following without
the prior written consent of CRI:
-27-
(a) amend or otherwise change its Certificate of Incorporation
or By-laws or equivalent organizational documents;
(b) split, combine, reclassify, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(c) issue (other than upon the exercise of options or warrants
previously granted to current or former officers, employees or directors of the
Company), purchase, redeem, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of any
shares of any class of capital stock of the Company or any Subsidiary, or any
options, warrants, convertible or exchangeable securities or other rights of any
kind to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the Company
or any Subsidiary;
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except for dividends by any direct or indirect wholly
owned Subsidiary to the Company or any other Subsidiary;
(e) sell, transfer, assign, dispose of or encumber (except to
the extent that the Company's and the Subsidiaries' ability to so restrict their
right to encumber their assets is limited under the documentation related to the
indebtedness of the Company and certain Subsidiaries under that certain Amended
and Restated Credit Agreement dated as of October 22, 1999 between the Company,
certain Subsidiaries, the lenders listed therein and Ableco Finance LLC, as
Collateral Agent, as may be amended (the "Ableco Indebtedness")), any assets of
the Company or any Subsidiary, excluding closing of the Company's office in
Ottawa, Canada, and the dissolution of Nasgas, LLC, or enter into any agreement
or commitment with respect to assets of the Company or a Subsidiary, other than
in the ordinary course consistent with past good business practice and other
than transfers between the Company and its Subsidiaries;
(f) sell, transfer, assign, dispose of or encumber (except to
the extent that the Company's and the Subsidiaries' ability to so restrict their
right to encumber their assets is limited under the documentation related to the
Ableco Indebtedness) any of the Company's Oil and Gas Interests represented in
the Reserve Report or enter into any agreement or commitment with respect to any
such sale, transfer, assignment, disposition or encumbrance;
(g) other than in the ordinary course and consistent with past
business practice, incur or become contingently liable for any indebtedness or
guarantee any such indebtedness or redeem, purchase or acquire or offer to
redeem, purchase or acquire any debt;
(h) acquire or agree to acquire any assets other than in the
ordinary course and consistent with past business practice;
(i) modify or amend any existing agreement or enter into any
new agreement with the Company's financial advisors or other similar
consultants, including without limitation, FBR;
-28-
(j) elect not to participate in any well to which proven
reserves (as identified in the Reserve Report) have been attributed in the
Reserve Report proposed pursuant to any existing net profits agreement or joint
operating agreement; notwithstanding the foregoing, if the applicable
authorization for expenditure ("AFE") exceeds $250,000 net to the Company's
interest and CRI fails to approve such expenditure as contemplated by Section
6.01(k)(iv) below, the Company shall not be deemed to be in default of this
Section 6.01(j) for its failure to participate in such well;
(k) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any
division thereof or any significant amount of assets, except for purchases of
inventory in the ordinary course of business consistent with past practice; (ii)
incur any indebtedness for borrowed money other than draws under the Company's
existing revolving credit facility or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for, the obligations of
any person, or make any loans or advances; (iii) except as provided in Section
6.01(j), enter into any contract or agreement other than in the ordinary course
of business and consistent with past practice; (iv) issue any AFE or authorize
any other individual capital expenditure in excess of $250,000 net to the
Company's interest; or (v) except as provided in Section 6.01(j), enter into or
amend any contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 6.01(k);
(l) increase the compensation payable or to become payable or
the benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past practice
in salaries or wages of employees of the Company or any Subsidiary who are not
directors or officers of the Company or any Material Subsidiary, or establish,
adopt, enter into or amend (except as may be required by law) any collective
bargaining, bonus, profit-sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, other than
year-end bonuses as previously disclosed to CRI;
(m) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures;
(n) make any material Tax election or settle or compromise any
material Tax liability;
(o) other than in connection with the winding up of the Ottawa
office and agreements with Xxxxx X. Xxxx, Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxx
Xxxxxxx and Xxxxxx X. Xxxxxx as disclosed in Section 4.11 of the Disclosure
Schedule pay, discharge or satisfy any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the Recent Balance Sheet or subsequently incurred in the ordinary course of
business and consistent with past practice or liabilities or obligations owed to
the Company or its Subsidiaries;
-29-
(p) amend, modify or consent to the termination of any
Material Contract, or amend, waive, modify or consent to the termination of the
Company's or any Subsidiary's material rights thereunder;
(q) commence or settle any material Action; or
(r) publicly announce an intention, enter into any formal or
informal agreement or otherwise make a commitment, to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through the Board, shall, in accordance with
applicable law and the Company's Certificate of Incorporation and By-laws, (i)
duly call, give notice of, convene and hold an annual or special meeting of its
stockholders as promptly as practicable following consummation of the Offer for
the purpose of considering and taking action on this Agreement and the Merger
(the "Stockholders' Meeting") and (ii) (a) include in the Proxy Statement, and
not subsequently withdraw or modify in any manner adverse to CRI, Holding or
Purchaser, the recommendation of the Board that the stockholders of the Company
approve and adopt this Agreement and the Transactions and (b) use its best
efforts to obtain such approval and adoption. At the Stockholders' Meeting, CRI,
Holdings and Purchaser shall cause all Shares then owned by them and their
subsidiaries to be voted in favor of the approval and adoption of this Agreement
and the Transactions.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding Shares, the parties shall
take all necessary and appropriate action to cause the Merger to become
effective, in accordance with Section 253 of Delaware Law, as promptly as
reasonably practicable after such acquisition, without a meeting of the
stockholders of the Company.
SECTION 7.02 Proxy Statement. If approval of the Company's stockholders
is required by applicable law to consummate the Merger, promptly following
consummation of the Offer, the Company shall file the Proxy Statement with the
SEC under the Exchange Act, and shall use its best efforts to have the Proxy
Statement cleared by the SEC as promptly as practicable. CRI, Purchaser and the
Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify CRI of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to CRI promptly copies of all correspondence between the Company or any
representative of the Company and the SEC with respect thereto. The Company
shall give CRI and its counsel the opportunity to review the Proxy Statement,
including all amendments and supplements thereto, prior to its being filed with
the SEC and shall give CRI and its counsel the opportunity to review all
responses to requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC. Each of the Company, CRI,
Holdings and Purchaser agrees to use its reasonable best
-30-
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC and to cause the Proxy Statement
and all required amendments and supplements thereto to be mailed to the holders
of Shares entitled to vote at the Stockholders' Meeting at the earliest
practicable time.
SECTION 7.03 Company Board Representation; Section 14(f).
(a) Promptly upon the purchase by Purchaser of 50% plus one
Share of the outstanding Shares (including Shares purchased pursuant to the
Offer), Purchaser shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board as shall give Purchaser
representation on the Board equal to the product of the total number of
directors on the Board (giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser following such
purchase bears to the total number of Shares then outstanding, and the Company
shall, at such time, promptly take all actions necessary to cause Purchaser's
designees to be elected as directors of the Company, including increasing the
size of the Board or securing the resignations of incumbent directors, or both.
At such times, the Company shall use its best efforts to cause persons
designated by Purchaser to constitute the same percentage as persons designated
by Purchaser shall constitute of the Board of (i) each committee of the Board,
(ii) each board of directors of each Subsidiary, and (iii) each committee of
each such board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, until the Effective Time, at the request of CRI,
the Company shall use its best efforts to ensure that at least two members of
the Board and each committee of the Board and such boards and committees of the
Subsidiaries, as of the date hereof, who are not employees of the Company shall
remain members of the Board and of such boards and committees.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder to fulfill its obligations under this Section 7.03, and shall include
in the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill such obligations. CRI, Holdings or Purchaser shall supply to the
Company, and be solely responsible for, any information with respect to either
of them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant
to this Section 7.03, prior to the Effective Time, any amendment of this
Agreement or the Certificate of Incorporation or By-laws of the Company, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of CRI,
Holdings or Purchaser, or waiver of any of the Company's rights hereunder, shall
require the concurrence of a majority of the directors of the Company then in
office who neither were designated by Purchaser nor are employees of the Company
or any Subsidiary, and, if serving on the Board currently, were disinterested
directors in connection with the Board's consideration of this Agreement.
-31-
SECTION 7.04 Access to Information; Confidentiality.
(a) From the date hereof until the Effective Time, the Company
shall, and shall cause the Subsidiaries and the officers, directors, employees,
auditors and agents of the Company and the Subsidiaries to, afford the officers,
employees and agents of CRI and Purchaser and persons providing or proposing to
provide CRI, Holdings or Purchaser with financing for the Transactions complete
access at all reasonable times to the officers, employees, agents, properties,
offices, plants and other facilities, books and records of the Company and each
Subsidiary, and shall furnish CRI, Holdings and Purchaser and persons providing
or proposing to provide CRI, Holdings or Purchaser with financing for the
Transactions with such financial, operating and other data and information as
CRI, Holdings or Purchaser, through their officers, employees or agents, may
reasonably request.
(b) All information obtained by CRI, Holdings or Purchaser
pursuant to this Section 7.04 shall be kept confidential in accordance with the
confidentiality agreement, dated January 16, 2001 (the "Confidentiality
Agreement"), between CRI and the Company and nothing herein shall limit or
abrogate the terms of the Confidentiality Agreement, except as set forth in
Section 7.10.
(c) No investigation pursuant to this Section 7.04 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto or any condition to the
Offer.
SECTION 7.05 No Solicitation of Transactions.
(a) Neither the Company nor any Subsidiary through any
officer, director, advisor or other person acting on its behalf shall, directly
or indirectly, solicit, initiate or encourage in any way any Acquisition
Proposal; provided, however, that the Company may furnish information to and
negotiate with a third party (a "Potential Acquirer") if the Potential Acquirer
has, in circumstances not involving any breach by the Company of the foregoing
provisions, made a tender or exchange offer for, or a proposal to the Board to
acquire 20% or more of the Shares, and (A) the Board determines in good faith,
based on the advice of outside counsel, that the failure to do so would be
reasonably likely to constitute a breach of its fiduciary duties to the
stockholders of the Company under applicable law, and (B) the Company's Board is
advised by its financial advisor that such Potential Acquirer has the financial
wherewithal to consummate the acquisition and such acquisition would be more
favorable to the stockholders of the Company than the Transactions contemplated
by this Agreement.
(b) Except as set forth in this Section 7.05(b), neither the
Board nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to CRI, Holdings or Purchaser, the
approval or recommendation by the Board or any such committee of this Agreement,
the Offer or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (iii) enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, in the event
that, prior to the Share Acceptance Date pursuant to the Offer, the Board
determines in good faith that it is required to do so by its fiduciary duties
under applicable law after having received advice from outside legal counsel,
the Board may withdraw or modify its approval or recommendation of the Offer and
the Merger, but only to terminate this Agreement in accordance with Section
9.01(d)(ii) (and, concurrently with such termination, cause the Company to enter
into an agreement with respect to a Superior Proposal).
-32-
(c) The Company shall, and shall direct or cause its
directors, officers, employees, representatives and agents to, immediately cease
and cause to be terminated any discussions or negotiations with third parties
that may be ongoing with respect to any Acquisition Proposal.
(d) The Company shall promptly advise CRI in writing (within
48 hours) of the material terms and conditions of such Acquisition Proposal.
SECTION 7.06 Employee Matters. The Company and the Subsidiaries will
cooperate with Purchaser in making their employees available during regular
business hours for Purchaser to conduct interviews to determine the prospect of
continuing employment of such employees following the Effective Time. As soon as
practicable after the date hereof, and in any event not later than the Share
Acceptance Date, Purchaser will provide to the Company a list of the employees
whom it intends to continue to employ, and a summary of the material terms of
such employment, which terms shall not be less favorable than such employee's
current employment terms, provided that such employees who are retained and for
whom a retention bonus would be due and payable (as disclosed in Section 4.11 of
the Disclosure Schedule) shall be paid such bonus on December 31, 2001. At any
time after receipt of the list, the Company may terminate any employees whose
names are not on such list and shall pay any severance to such employees to
which they may be entitled under the terms of any employment contract,
termination agreement or policies in existence as of October 19, 2001 or as
described in Section 7.06 of the Disclosure Schedule. Nothing contained in this
Section 7.06 shall change the nature of the "at will" employment relationship
that exists between the Company, the Subsidiaries, and their employees. After
the Effective Date, CRI will cause the Company to maintain welfare benefit plans
with benefits no less favorable to the persons covered thereby than the
Company's existing welfare benefit plans for such period of time as is necessary
for the Company to fulfill its obligations under the Company's existing
contracts and policies. The previous sentence may not be amended or waived
without the consent of the persons for whom the Company is obligated to provide
coverage.
SECTION 7.07 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article VI of the By-laws of the Company,
which provisions shall not be amended, repealed or otherwise modified in any
manner that would materially adversely affect the rights thereunder of
individuals who, at or prior to the Effective Time, were directors, officers,
employees, fiduciaries or agents of the Company, unless such modification shall
be required by law.
(b) CRI shall maintain the directors' and officers' ("D&O")
insurance that serves to reimburse persons currently covered by the Company's
D&O insurance in full force and effect for the continued benefit of such persons
for a continuous period of not less than two years from the Effective Time on
terms that are not materially different from the Company's D&O insurance
currently in effect (provided that the Surviving Corporation may substitute
-33-
therefor policies of at least the same coverage containing terms and conditions
that are not less favorable) with respect to matters occurring prior to the
Effective Time.
(c) In the event the Company, CRI, or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made so that the
successors and assigns of the Company, CRI or the Surviving Corporation, as the
case may be, or at CRI's option, CRI, shall assume the obligations set forth in
this Section 7.07.
(d) Notwithstanding anything to the contrary in this
Agreement, the provisions of this Section 7.07 shall survive the consummation of
the Merger.
(e) The parties acknowledge that the provisions of this
Section 7.07 are in addition to and not in lieu of the indemnification
obligations of the Company set forth in the agreements listed in Section 4.23 of
the Disclosure Schedule.
SECTION 7.08 Notification of Certain Matters. The Company shall give
prompt notice to CRI, and CRI shall give prompt notice to the Company, of (a)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any failure of the Company, CRI,
Holdings or Purchaser, as the case may be, to comply with or satisfy any
covenant or agreement to be complied with or satisfied by it hereunder, and (c)
any other material adverse development (other than changes in general economic
conditions or changes in oil or natural gas prices) relating to the business,
prospects, financial condition or results of operations of the Company and the
Subsidiaries; provided, however, that the delivery of any notice pursuant to
this Section 7.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.09 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use its reasonable best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Transactions, including, without limitation,
using its reasonable best efforts to obtain all Permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities and
parties to contracts with the Company and the Subsidiaries as are necessary for
the consummation of the Transactions and to fulfill the conditions to the Offer
and the Merger; provided that neither CRI, Purchaser nor Holdings will be
required by this Section 7.09 to take any action, including entering into any
consent decree, hold separate orders or other arrangements, that (a) requires
the divestiture of any assets of any of CRI, Holdings, Purchaser, the Company or
any of their respective subsidiaries or (b) limits CRI's ability to operate, the
Company and the Subsidiaries or any portion thereof or any of CRI's or its
affiliates' other assets or businesses in a manner consistent with past
practice. In case, at any time after the Effective Time, any further action is
necessary or desirable to carry out
-34-
the purposes of this Agreement, the proper officers and directors of each party
to this Agreement shall use their reasonable best efforts to take all such
action.
(b) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Transactions, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal.
SECTION 7.10 Public Announcements. CRI and the Company agree that no
public release or announcement concerning the Transactions, the Offer or the
Merger shall be issued by either party without the prior consent of the other
party (which consent shall not be unreasonably withheld), except as such release
or announcement may be required by Law or the rules or regulations of any United
States securities exchange or national market, in which case the party required
to make the release or announcement shall use its best efforts to allow the
other party reasonable time to comment on such release or announcement in
advance of such issuance.
SECTION 7.11 Confidentiality Agreement. Upon the acceptance for payment
of Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed
to have terminated without further action by the parties thereto.
SECTION 7.12 Assumption of Agreements. At the Share Acceptance Date,
CRI shall enter into an assumption or guaranty agreement reasonably satisfactory
to Messrs. Xxxx and Xxxxxx, pursuant to which CRI will assume or guaranty the
obligations of the Company under those certain termination agreements between
the Company and each of Xx. Xxxx and Xx. Xxxxxx each dated as of August 31,
2001.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Merger. The obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Effective Time, of the following conditions:
(a) Stockholder Approval. If and to the extent required by
Delaware Law, this Agreement and the Transactions shall have been approved and
adopted by the affirmative vote of the stockholders of the Company;
(b) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary, preliminary
or permanent) which is then in effect and has the effect of making the
acquisition of Shares by CRI, Holdings or Purchaser or any affiliate of either
of them illegal or otherwise restricting, preventing or prohibiting consummation
of the Transactions; and
(c) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, that this condition
-35-
shall not be applicable to the obligations of CRI, Holdings or Purchaser if, in
breach of this Agreement or the terms of the Offer, Purchaser fails to purchase
any Shares validly tendered and not withdrawn pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the stockholders of the Company:
(a) by mutual written consent of each of CRI, Holdings,
Purchaser and the Company duly authorized by the Boards of Directors of CRI,
Holdings, Purchaser and the Company; or
(b) by either CRI, Holdings, Purchaser or the Company if (i)
the Effective Time shall not have occurred on or before June 30, 2002; provided,
however, that the right to terminate this Agreement under this Section 9.01(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date or (ii) any Governmental
Authority shall have enacted, issued, promulgated, enforced or entered any
injunction, order, decree or ruling which has become final and nonappealable and
has the effect of making consummation of the Offer or the Merger illegal or
otherwise preventing or prohibiting consummation of the Offer or the Merger; or
(c) by CRI if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A hereto,
Purchaser shall have (a) failed to commence the Offer within 30 days following
the date of this Agreement, (b) terminated the Offer without having accepted any
Shares for payment thereunder or (c) failed to accept Shares for payment
pursuant to the Offer within 90 days following the commencement of the Offer
(provided, however, that the applicable time period specified in (a) and (c)
above shall be extended until June 30, 2002), unless such action or inaction
under (a), (b) or (c) shall have been caused by or resulted from the failure of
CRI, Holdings or Purchaser to perform, in any material respect, any of their
covenants or agreements contained in this Agreement, or the material breach by
CRI, Holdings or Purchaser of any of their representations or warranties
contained in this Agreement (ii) prior to the purchase of Shares pursuant to the
Offer, the Board or any committee thereof shall have withdrawn, modified or
failed to make in a manner adverse to CRI, Purchaser or Holdings its approval or
recommendation of this Agreement, the Offer or the Merger, or shall have
recommended or approved any Acquisition Proposal, or shall have resolved to do
any of the foregoing; or
(d) by the Company, upon approval of the Board, if (i)
Purchaser shall have (x) failed to commence the Offer within seven (7) business
days following the date of this Agreement, or (y) terminated the Offer without
having accepted any Shares for payment thereunder, unless such action or
inaction under (x) or (y) shall have been caused by or resulted from the failure
of the Company to perform, in any material respect, any of its material
-36-
covenants or agreements contained in this Agreement or the material breach by
the Company of any of its material representations or warranties contained in
this Agreement, (ii) the Share Acceptance Date has not occurred by January 1,
2002 (but subject to the occurrence of an extension of the Offer pursuant to
Section 2.01 or a Suspension Event), unless such failure of the Share Acceptance
Date to occur shall have been caused by or resulted from the failure of the
Company to perform, in any material respect, any of its material covenants or
agreements contained in this Agreement or the material breach by the Company of
any of its material representations or warranties contained in this Agreement,
(iii) CRI, Holdings or Purchaser shall have committed a material breach of this
Agreement, or (iv) prior to the Share Acceptance Date, the Board determines in
good faith that it is required to do so by its fiduciary duties under applicable
law after having received advice from outside legal counsel in order to enter
into a definitive agreement with respect to a Superior Proposal, upon two
calendar days' prior written notice to CRI setting forth in reasonable detail
the identity of the person making, and the final terms and conditions of, the
Superior Proposal; provided, however, that any termination of this Agreement
pursuant to this Section 9.01(d)(iv) shall not be effective until the Company
has made full payment of all amounts provided under Section 9.03;
provided, however, that in each case, the time periods and deadlines in
subsection (c) and (d) of this Section 9.01 may be extended, at the option of
either party as reasonably necessitated by the occurrence of a Suspension Event
for such period of time as may be reasonably necessary (but not to exceed five
(5) business days) following the conclusion of a Suspension Event, but in no
event to exceed January 31, 2002.
SECTION 9.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 9.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except
(a) as set forth in Section 9.03 and (b) nothing herein shall relieve any party
from liability for any intentional breach hereof prior to the date of such
termination; provided, however, that the Confidentiality Agreement shall survive
any termination of this Agreement.
SECTION 9.03 Fees.
(a) In the event this Agreement is terminated pursuant to
Section 9.01(c)(ii) or 9.01(d)(iv), then, in any such event, the Company shall
pay CRI promptly (but in no event later than one business day after the first of
such events shall have occurred) a fee of $3,500,000 (the "Fee"), which amount
shall be payable in immediately available funds.
(b) Except as set forth in this Section 9.03, all costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expenses, whether or not any Transaction is
consummated.
(c) In the event that the Company shall fail to pay the Fee it
shall also pay CRI interest on such unpaid Fee, commencing on the date that the
Fee became due, at a rate equal to the rate of interest publicly announced by
Citibank, N.A., from time to time, in the City of New York, as such bank's Base
Rate.
-37-
SECTION 9.04 Amendment. Subject to Section 7.03, this Agreement may be
amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the Transactions by the stockholders of the Company, no amendment may be made
that would reduce the amount or change the type of consideration into which each
Share shall be converted upon consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed by each of the parties
hereto.
SECTION 9.05 Waiver. Subject to Section 7.03, at any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any obligation or other act of any other party hereto, (b) waive any inaccuracy
in the representations and warranties of any other party contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any
agreement of any other party or any condition to its own obligations contained
herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by overnight
courier or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.01):
if to CRI, Holdings or Purchaser:
Xxxxxxxx Resources, Inc.
0000 Xxxx xxx Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: M. Xxx Xxxxxxx, President
with a copy to:
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
-38-
if to the Company:
DevX Energy, Inc.
00000 Xxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxx and Xxxxx, LLP
0000 X. Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Boeing
SECTION 10.02 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 10.03 Entire Agreement; Assignment. This Agreement supercedes
the letter of intent dated October 19, 2001 between CRI and the Company and
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Sections 7.04(b) and 7.11,
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. This Agreement shall
not be assigned (whether pursuant to a merger, by operation of law or
otherwise), except that CRI, Holdings and Purchaser may assign all or any of
their rights and obligations hereunder to any affiliate of CRI, provided that no
such assignment shall relieve the assigning party of its obligations hereunder
if such assignee does not perform such obligations.
SECTION 10.04 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Sections 7.06 and 7.07 (which are intended to be
for the benefit of the persons considered thereby and may be enforced by such
persons).
SECTION 10.05 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
-39-
SECTION 10.06 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined exclusively in any
Texas state or federal court sitting in Dallas
County,
Texas. The parties hereto hereby (a) submit to the exclusive
jurisdiction of any state or federal court sitting in the Dallas County,
Texas
for the purpose of any Action arising out of or relating to this Agreement
brought by any party hereto, and (b) irrevocably waive, and agree not to assert
by way of motion, defense, or otherwise, in any such Action, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that the Action
is brought in an inconvenient forum, that the venue of the Action is improper,
or that this Agreement or the Transactions may not be enforced in or by any of
the above- named courts.
SECTION 10.07 Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the Transactions.
SECTION 10.08 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 10.09 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 10.10 CRI Guaranty. CRI unconditionally guaranties all of
Holdings' and Purchaser's obligations and agreements under this Agreement.
[Signature Page Follows]
-40-
IN WITNESS WHEREOF, CRI, Holdings, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
XXXXXXXX RESOURCES, INC.
By: /s/ M. XXX XXXXXXX
----------------------------------------
M. Xxx Xxxxxxx, President
XXXXXXXX HOLDINGS, INC.
By: /s/ M. XXX XXXXXXX
----------------------------------------
M. Xxx Xxxxxxx, President
XXXXXXXX ACQUISITION INC.
By: /s/ M. XXX XXXXXXX
----------------------------------------
M. Xxx Xxxxxxx, President
DEVX ENERGY, INC.
By: /s/ XXXXXX X. XXXXXXXX
-----------------------------------------
Xxxxxx X. Xxxxxxxx, President
-41-
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment any Shares tendered pursuant to the Offer, and
may extend, terminate or amend the Offer, if (i) immediately prior to the
expiration of the Offer, the Minimum Condition shall not have been satisfied, or
(ii) at any time on or after the date of this Agreement and prior to the
expiration of the Offer, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any Action
by any Governmental Authority (i) challenging or seeking to make illegal, delay,
or otherwise, directly or indirectly, restrain or prohibit or make materially
more costly, the making of the Offer, the acceptance for payment of any Shares
by CRI, Holdings, Purchaser or any other affiliate of CRI, or the consummation
of any other Transaction, or seeking to obtain damages in connection with any
Transaction; (ii) seeking to prohibit or limit the ownership or operation by the
Company, CRI or any of their subsidiaries of all or any of the business or
assets of the Company, CRI or any of their subsidiaries or to compel the
Company, CRI or any of their subsidiaries, as a result of the Transactions, to
dispose of or to hold separate all or any portion of the business or assets of
the Company, CRI or any of their subsidiaries; (iii) seeking to impose or
confirm any limitation on the ability of CRI, Holdings, Purchaser or any other
affiliate of CRI to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer or otherwise on all matters properly presented
to the Company's stockholders, including, without limitation, the approval and
adoption of this Agreement and the Transactions; (iv) seeking to require
divestiture by CRI, Holdings, Purchaser or any other affiliate of CRI of any
Shares; or (v) that otherwise is likely to materially and adversely affect CRI
or have a Material Adverse Effect;
(b) any Governmental Authority or court of competent
jurisdiction shall have issued an order, decree, injunction or ruling or taken
any other action (i) permanently restraining, enjoining or otherwise prohibiting
or preventing the Transactions and such order, decree, injunction, ruling or
other action shall have become final and non-appealable, or (ii) that is
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clause (i) through (v) of paragraph (a) above;
(c) there shall have been any statute, rule, regulation,
legislation or interpretation enacted, promulgated, amended, issued or deemed
applicable to (i) CRI, the Company or any subsidiary or affiliate of CRI or the
Company or (ii) any Transaction, by any United States legislative body or
Governmental Authority with appropriate jurisdiction, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(d) (i) the Board, or any committee thereof, shall have
withdrawn or modified, in a manner adverse to CRI, Holdings or Purchaser, the
approval or recommendation of the Offer, the Merger, the Agreement, or approved
or recommended any Acquisition Proposal or any other acquisition of Shares other
than the Offer, the Merger or (ii) the Board, or any committee thereof, shall
have resolved to do any of the foregoing;
Annex A - 1
(e) (i) any representation or warranty of the Company in the
Agreement that is qualified as to Material Adverse Effect shall not be true and
correct as so qualified or (ii) any representation or warranty that is not so
qualified shall not be true and correct (except where the failure to be true and
correct would not have a Material Adverse Effect), in each case as if such
representation or warranty was made as of such time on or after the date of this
Agreement (except as to any representation or warranty made as of a specified
date);
(f) the Company shall have failed to perform, in any material
respect, any obligation or to comply, in any material respect, with any
agreement or covenant of the Company to be performed or complied with by it
under the Agreement; or
(g) the Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of CRI, Purchaser and
Holdings and may be asserted by CRI, Purchaser or Holdings regardless of the
circumstances giving rise to any such condition or may be waived by CRI,
Purchaser or Holdings in whole or in part at any time and from time to time in
their sole discretion. The failure by CRI, Holdings or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
Annex A - 2
