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Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
October 9, 1996, is between The Hallwood Group Incorporated, a Delaware
corporation (the "Purchaser"), and Hallwood Energy Corporation, a Texas
corporation (the "Company"), the Company and Purchaser sometimes being
hereinafter collectively referred to as the "Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company
each have determined that it is in the best interests of their respective
shareholders for Purchaser to acquire the shares of Common Stock, par value
$0.50 per share (the "Shares") that it does not currently directly or
indirectly own upon the terms and subject to the conditions set forth herein;
and
WHEREAS, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
The Tender Offer
1.1 Tender Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof and none of the events set
forth in Annex A hereto shall have occurred or be existing, within five
business days of the date hereof, Purchaser will commence a tender offer (the
"Offer") for all of the outstanding Shares that it currently does not directly
or indirectly own at a price of $19.50 per Share in cash, net to the seller,
subject to the conditions set forth in Annex A hereto. Subject to the terms
and conditions of the Offer, Purchaser will promptly pay for all Shares duly
tendered that it is obligated to purchase thereunder. The Company's Board of
Directors and a majority of the Company's Independent Directors (as defined in
Section 4.2) shall recommend acceptance of the Offer to its stockholders in a
Solicitation/Recommendation Statement on Schedule 14D-9 (as such statement may
be amended or supplemented from time to time, the "Schedule 14D-9") to be filed
with the Securities and Exchange Commission (the "SEC") upon commencement of
the Offer; provided, however, that if the Company's Board of Directors or the
Special Committee (the "Special Committee") composed of the Company's
Independent Directors determines that its fiduciary duties require it to amend
or withdraw its recommendation, such amendment or withdrawal shall not
constitute a breach of this Agreement. Purchaser will not, without the prior
written consent of the Company and the Special Committee, decrease the price
per Share or change the form of
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consideration payable in the Offer, decrease the number of Shares sought or
change the conditions to the Offer. Purchaser shall not terminate or withdraw
the Offer or extend the expiration date of the Offer unless at the expiration
date of the Offer the conditions to the Offer set forth on Annex A hereto shall
not have been satisfied or waived.
(b) Purchaser agrees, as to the Offer to Purchase and
related Letter of Transmittal (which together, as either of them may be amended
or supplemented from time to time, constitute the "Offer Documents"), and the
Company agrees, as to the Schedule 14D-9, that such documents shall, in all
material respects, comply with the requirements of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder and other applicable laws. The Company and its counsel,
as to the Offer Documents, and Purchaser and its counsel, as to the Schedule
14D-9, shall be given an opportunity to review such documents prior to their
being filed with the SEC.
(c) In connection with the Offer, the Company will
cause its Transfer Agent to furnish promptly to Purchaser a list, as of a
recent date, of the record holders of Shares and their addresses, as well as
mailing labels containing the names and addresses of all record holders of
Shares and lists of security positions of Shares held in stock depositories.
The Company will furnish Purchaser with such additional information (including,
but not limited to, updated lists of holders of Shares and their addresses,
mailing labels and lists of security positions) and such other assistance as
Purchaser or its agents may reasonably request in communicating the Offer to
the record and beneficial holders of Shares.
ARTICLE II
The Merger; Closing; Effective Time
2.1 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 2.3) the Company
shall be merged with and into Purchaser and the separate corporate existence of
the Company shall thereupon cease (the "Merger"). The Purchaser shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of Purchaser with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in Section 3.1. The Merger shall
have the effects specified in the Delaware General Corporation Law (the "DGCL")
and the Texas Business Corporation Act (the "TBCA").
2.2 Closing. The closing of the Merger (the "Closing")
shall take place (a) at the offices of Jenkens & Xxxxxxxxx, A Professional
Corporation, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx at 10:00 A.M. on the
first business day on which the last to be fulfilled or waived of the
conditions set forth in Article VIII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions) shall be fulfilled or waived in accordance with
this Agreement or (b) at such other place and time and/or on such other date as
the Company and Purchaser may agree.
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2.3 Effective Time. As soon as practicable following
the Closing, and provided that this Agreement has not been terminated or
abandoned pursuant to Article IX hereof, the Company and Purchaser will cause a
(i) Certificate of Merger (the "Delaware Certificate of Merger") to be executed
and filed with the Secretary of State of Delaware as provided in Section 251 of
the DGCL and (ii) Articles of Merger (the "Texas Articles of Merger") to be
executed and filed with the Secretary of State of Texas as provided in Art.
5.04 of the TBCA. The Merger shall become effective on the date on which the
Delaware Certificate of Merger has been duly filed with the Secretary of State
of Delaware and the Texas Articles of Merger have been duly filed with the
Secretary of State of the State of Texas, and such time is hereinafter referred
to as the "Effective Time."
2.4 Merger Without Meeting of Stockholders.
Notwithstanding Section 2.3 hereof, in the event that Purchaser, or any other
subsidiary of Purchaser shall acquire at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, the parties hereto agree, at the request of
Purchaser, to take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the acceptance for payment and
purchase of Shares by Purchaser pursuant to the Offer without a meeting of
stockholders of the Company in accordance with Section 253 of the DGCL and Art.
5.16 of the TBCA.
ARTICLE III
Certificate of Incorporation and By-Laws
of the Surviving Corporation
3.1 The Certificate of Incorporation. The Certificate
of Incorporation of Purchaser (the "Certificate") in effect at the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until duly amended in accordance with the terms thereof and the DGCL.
3.2 The By-Laws. The By-Laws of Purchaser in effect at
the Effective Time shall be the By-Laws of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the DGCL.
ARTICLE IV
Officers and Directors
of the Surviving Corporation
4.1 Officers and Directors. The directors and officers
of Purchaser at the Effective Time shall, from and after the Effective Time, be
the directors and officers, respectively, of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
4.2 Actions by Directors. For purposes of Section
1.1(a), Article IX and Sections 10.3 and 10.4, no action taken by the Board of
Directors of the Company prior to the Merger shall
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be effective unless such action is approved by the affirmative vote of at least
a majority of the directors of the Company who are not directors or officers of
Purchaser or officers of the Company or any affiliate of either of them (the
"Independent Directors").
ARTICLE V
Conversion or Cancellation of Shares in the Merger
5.1 Conversion or Cancellation of Shares. The manner
of converting or canceling shares of the Company in the Merger shall be as
follows:
(a) At the Effective Time, each Share of the Common
Stock of the Company issued and outstanding immediately prior to the Effective
Time (other than Shares owned by Purchaser or any other direct or indirect
subsidiary of Purchaser (collectively, the "Purchaser Companies") or Shares
that are owned by the Company or any direct or indirect subsidiary of the
Company or Shares ("Dissenting Shares") which are held by stockholders
("Dissenting Stockholders") properly exercising appraisal rights pursuant to
Art. 5.11 and 5.12 of the TBCA, if applicable (collectively, "Excluded
Shares")) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive, without interest,
an amount in cash (the "Merger Consideration") equal to $19.50 or such greater
amount which may be paid pursuant to the Offer. At the Effective Time, all
Shares, by virtue of the Merger and without any action on the part of the
holders thereof, shall no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such Shares (other than Excluded Shares) shall thereafter cease to have any
rights with respect to such Shares, except the right to receive the Merger
Consideration for such Shares upon the surrender of such certificate in
accordance with Section 5.2 or the right, if any, to receive payment from the
Surviving Corporation of the "fair value" of such Shares as determined in
accordance with Art. 5.12 of the TBCA.
(b) At the Effective Time, each Share issued and
outstanding at the Effective Time and owned by any of the Purchaser Companies
or held in the Company's treasury or owned by the Company or any direct or
indirect subsidiary of the Company shall, by virtue of the merger and without
any action on the part of the holder thereof, cease to be outstanding, shall be
canceled and retired without payment of any consideration therefor and shall
cease to exist.
5.2 Payment for Shares. Purchaser shall make available
or cause to be made available to the paying agent appointed by Purchaser with
the Company's prior approval (the "Paying Agent") amounts sufficient in the
aggregate to provide all funds necessary for the Paying Agent to make payments
pursuant to Section 5.1(a) hereof to holders of Shares issued and outstanding
immediately prior to the Effective Time. 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 (other than holders of Excluded Shares)
of issued and outstanding Shares a form (mutually agreed to by Purchaser and
the Company) of a letter of transmittal and instructions for use in effecting
the surrender of the certificates, which, immediately prior to the Effective
Time, represented any of such Shares in exchange for payment therefor. Upon
surrender to the Paying Agent of such certificates, together with such letter
of transmittal, duly executed and completed in accordance with the instructions
thereto, the Surviving Corporation shall promptly cause to be paid to the
persons
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entitled thereto a check in the amount to which such persons are entitled,
after giving effect to any required tax withholdings. No interest will be paid
or will accrue on the amount payable upon the surrender of any such
certificate. If payment is to be made to a person other than the registered
holder of the certificate surrendered, it shall be a condition of such payment
that the certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a person other
than the registered holder of the certificate surrendered or establish to the
satisfaction of the Surviving Corporation or the Paying Agent that such tax has
been paid or is not applicable. One hundred and twenty days following the
Effective Time, the Surviving Corporation shall be entitled to cause the Paying
Agent to deliver to it any funds (including any interest received with respect
thereto) made available to the Paying Agent which have not been disbursed to
holders of certificates formerly representing Shares outstanding on the
Effective Time, and thereafter such holders shall be entitled to look to the
Surviving Corporation only as general creditors thereof with respect to the
cash payable upon due surrender of their certificates. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto shall be liable to any
holder of certificates formerly representing Shares for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law. The Surviving Corporation shall pay all charges and expenses,
including those of the Paying Agent, in connection with the exchange of cash
for Shares.
5.3 Dissenters' Rights. If any Dissenting Stockholder
shall be entitled to be paid the "fair value" of such Dissenting Stockholder's
Shares, as provided in Art. 5.12 of the TBCA, the Company shall give Purchaser
notice thereof and Purchaser shall have the right to participate in all
negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Purchaser, voluntarily make any payment with respect to, or settle
or offer to settle, any such demand for payment. If any person who otherwise
would have been a Dissenting Stockholder shall have failed to perfect or shall
have effectively withdrawn or lost the right to dissent, the Shares held by
such person shall thereupon be treated as though such Shares had been converted
into the Merger Consideration pursuant to Section 5.1.
5.4 Transfer of Shares After the Effective Time. No
transfers of Shares shall be made on the stock transfer books of the Surviving
Corporation at or after the Effective Time.
ARTICLE VI
Representations and Warranties
6.1 Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchaser that:
(a) Corporate Organization and Qualification. Each of
the Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification except for where such failure to so
qualify or be in such good standing, which, when taken together with all other
such failures, could not reasonably be expected to have a Material Adverse
Effect (as defined below). Each of the Company and its subsidiaries has the
requisite corporate power and authority to carry on its respective businesses
as they are now being conducted except where the failure to have such power or
authority could not reasonably be expected to have a Material
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Adverse Effect. As used in this Agreement, the term "Material Adverse Effect"
means a material adverse effect on the condition (financial or otherwise),
properties, assets, liabilities, business or results of operations of the
Company and its subsidiaries, taken as a whole.
(b) Authorized Capital. The authorized capital stock
of the Company consists of 80,000,000 Shares, of which 777,126 Shares are
outstanding on the date hereof, and 20,000,000 shares of preferred stock, $0.10
par value per share, 10,000,000 shares of preferred stock, $0.01 par value per
share, and 12,000 shares of preferred stock, $1.00 par value per share
(collectively, the "Preferred Shares"), of which no shares are outstanding.
All of the outstanding Shares have been duly authorized and are validly issued,
fully paid and nonassessable. The Company has no Shares or Preferred Shares
reserved for issuance. Each of the outstanding shares of capital stock of each
of the Company's subsidiaries is duly authorized, validly issued, fully paid
and nonassessable and owned, either directly or indirectly, by the Company free
and clear of all liens, pledges, security interests, claims or other
encumbrances. Except as set forth above, there are no shares of capital stock
of the Company authorized, issued or outstanding and there are no preemptive
rights nor any outstanding subscriptions, options, warrants, rights,
convertible securities or other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of the
Company or any of its subsidiaries. After the Effective Time, the Surviving
Corporation will have no obligation to issue, transfer or sell any Shares or
shares of common stock of the Surviving Corporation pursuant to any Company
stock or option plans or any other employee benefit plan of the Company.
(c) Corporate Authority. Subject only to approval of
this Agreement by the holders of a majority of the outstanding Shares, the
Company has the requisite corporate power and authority and has taken all
corporate action necessary in order to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. This Agreement is a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors rights and to general equity principles.
(d) Governmental Filings; No Violations.
(i) Other than the filing of a certificate of merger
under the DGCL, the filing of the articles of merger under the TBCA and filings
required to be made pursuant to the Exchange Act (together, the "Regulatory
Filings"), no notices, reports or other filings are required to be made by the
Company or any of its subsidiaries with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by the Company or
any of its subsidiaries from, any governmental, regulatory or administrative
authority, agency, tribunal, commission or other entity, domestic,
international or foreign (collectively, "Governmental Entities" or each a
"Governmental Entity"), in connection with the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, the failure to make or obtain any or all of
which could reasonably be expected to have a Material Adverse Effect or could
prevent or materially delay the transactions contemplated by this Agreement,
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(ii) The execution and delivery of this Agreement by the
Company do not, and the consummation by the Company of the transactions
contemplated by this Agreement will not, constitute or result in (A) a breach
or violation of, or a default under, the Articles of Incorporation or By-Laws
of the Company or the comparable governing instruments of any of its
subsidiaries, (B) except as disclosed in the Company Reports (as hereinafter
defined) filed with the SEC prior to the date hereof, a breach or violation of,
a default under or the triggering of any payment or other material obligations
pursuant to, any of the Company's existing employee benefit plans or any grant
or award made under any of the foregoing, (C) a breach or violation of, or a
default under, the acceleration of or the creation of a lien, pledge, security
interest or other encumbrance on assets (with or without the giving of notice
or the lapse of time) pursuant to, any provision of any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") of the Company or any of its subsidiaries or any law, rule,
ordinance or regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which the Company or any of its
subsidiaries is subject or (D) any change in the rights or obligations of any
party under any of the Contracts, except, in the case of clause (C) or (D)
above, for such breaches, violations, defaults, accelerations or changes that,
alone or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect or that could not prevent, materially delay or materially burden
the transactions contemplated by this Agreement. Schedule 6.1(d) sets forth,
to the best knowledge of the officers of the Company, a list of any consents
required under any Contracts to be obtained prior to consummation of the
transactions contemplated by this Agreement (whether or not subject to the
exception set forth with respect to clause (C) above). The Company will use
its best efforts to obtain the consents referred to on such Schedule 6.1(d).
(e) Company Reports; Financial Statements. The Company
has made available to Purchaser each registration statement, schedule, report,
proxy statement or information statement prepared by it since December 31, 1995
("Audit Date"), including, without limitation, (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and (ii) the Company's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1996 and June
30, 1996, each in the form (including exhibits and any amendments thereto)
filed with the SEC (collectively, the "Company Reports"). To the best
knowledge of the Company, as of their respective dates, the Company Reports did
not, and any Company Reports filed with the SEC subsequent to the date hereof
will not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading. To the best knowledge of the Company, each of the consolidated
balance sheets included in or incorporated by reference into the Company
Reports (including the related notes and schedules) fairly presents the
consolidated financial position of the Company and its subsidiaries as of its
date and each of the consolidated statements of income and of changes in
financial position included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents the results
of operations, retained earnings and changes in financial position, as the case
may be, of the Company and its subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein. Other than the
Company Reports and the Company's proxy statement filed in connection with its
1996 annual meeting of stockholders, the Company has not filed any other
definitive reports or statements with the SEC since the Audit Date.
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(f) Absence of Certain Changes. Except as disclosed in
the Company Reports filed with the SEC prior to the date hereof, since the
Audit Date, the Company and its subsidiaries have conducted their respective
businesses only in, and have not engaged in any material transaction other than
according to, the ordinary and usual course of such businesses and there has
not been: (i) any material adverse change (including, without limitation, any
change arising out of or related to any natural disaster) in the condition
(financial or otherwise), properties, assets, liabilities, business or results
of operations of the Company or any of its subsidiaries or any development or
combination of developments of which the Company or any of its subsidiaries has
knowledge which is reasonably likely to result in any such change; (ii) any
declaration, setting aside or payment of any dividend or other distribution
with respect to the capital stock of the Company; or (iii) any change by the
Company in accounting principles, practices or methods.
(g) Brokers and Finders. Neither the Company nor any
of its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders, fees in
connection with the transactions contemplated herein, except that Principal
Financial Securities, Inc. (the "Financial Advisor") has been employed as
financial advisor to the Independent Directors and the arrangements with the
Financial Advisor have been disclosed in writing to Purchaser prior to the date
hereof.
(h) Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or regulation
(each a "Takeover Statute") is, or at the Effective Time will be, applicable to
the Company, the Shares, the Offer, the Merger or the transactions contemplated
by the Offer or hereby.
(i) Permits. The Company and its subsidiaries have
such certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations, registrations, qualifications and clearances from appropriate
Governmental Entities ("Permits") as are necessary to own, lease or operate
their properties and to conduct their businesses in the manner described in the
Company Reports and as currently owned or leased and conducted and all such
Permits are valid and in full force and effect except such licenses that the
failure to have or to be in full force and effect, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any written notice
that any violations are being or have been alleged in respect of any such
Permit and no proceeding is pending or, to the best of the Company's knowledge,
after due inquiry, threatened, to suspend, revoke or limit any such Permit. To
the best of the Company's knowledge, after due inquiry, the Company and its
subsidiaries are in compliance in all material respects with their respective
obligations under such Permits, with such exceptions as individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect,
and no event has occurred that allows, or after notice or lapse of time would
allow, revocation, suspension, limitation or termination of such Permits,
except such events as could not reasonably be expected to have a Material
Adverse Effect.
(j) Fairness Opinion. The Board of Directors of the
Company has received an opinion of the Financial Advisor dated the date hereof,
to the effect that the Offer and the Merger are fair, from a financial point of
view, to the holders of Shares (other than Purchaser).
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(k) Schedule 14D-9; Offer Documents. The Schedule
14D-9 distributed to the Company's stockholders in connection with the Merger
will not, at the date of filing with the SEC, 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 light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Purchaser for inclusion in the Schedule 14D-9. None of the information
supplied by the Company for inclusion in the Offer Documents or the Rule 13e-3
Transaction Statement on Schedule 13E-3 (together with any supplements or
amendments thereto, the "Schedule 13E-3"), at the respective times such Offer
Documents or the Schedule 13E-3 or any amendments or supplements thereto are
filed with the SEC, will 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 light of the circumstances under
which they were made, not misleading. With respect to information contained in
the Company Reports that are supplied by the Company for inclusion or
incorporation in the Offer Documents or the Schedule 13E-3, the representations
and warranties made in the preceding two sentences shall be limited to the best
of the Company's knowledge. The Company agrees to correct promptly any
information in the Schedule 14D-9 or any information provided by it for use in
the Offer Documents or the Schedule 13E-3 if and to the extent that such
information 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 the holders
of Shares, in each case as and to the extent required by applicable federal
securities laws.
6.2 Representations and Warranties of Purchaser.
Purchaser represents and warrants to the Company that:
(a) Corporate Organization and Qualification.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is in good
standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification except for such failure to so qualify or to be in such good
standing, which, when taken together with all other such failures, could not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), properties, assets, liabilities, business or results
of operations of Purchaser and its subsidiaries, taken as a whole.
(b) Corporate Authority. Purchaser has the requisite
corporate power and authority and has taken all corporate action necessary in
order to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement is a valid and binding agreement of
Purchaser enforceable against Purchaser in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors rights
and to general equity principles.
(c) Governmental Filings; No Violations.
(i) Other than Regulatory Filings by Purchaser (the
"Purchaser Regulatory Filings"), no notices, reports or other filings are
required to be made by Purchaser with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Purchaser
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from, any Governmental Entity in connection with the execution and delivery of
this Agreement by Purchaser and the consummation of the transactions
contemplated hereby by Purchaser, the failure to make or obtain any or all of
which could prevent or materially delay the transactions contemplated by this
Agreement.
(ii) The execution and delivery of this Agreement by
Purchaser do not, and the consummation of the transactions contemplated hereby
by Purchaser will not, constitute or result in a breach or violation of, or a
default under, the Certificate of Incorporation or By-Laws (or similar
organizational documents) of Purchaser.
(d) Funds. Purchaser has or will have at the time of
acceptance for payment of Shares pursuant to the Offer and at the Effective
Time the funds necessary to consummate the Offer and the Merger.
(e) Offer Documents; Schedule 14D-9. The Offer
Documents will not, at the date of filing with the SEC, 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
light of the circumstances under which they were made, not misleading, except
that no representation is made by Purchaser with respect to information
supplied by the Company for inclusion in the Offer Documents. None of the
information supplied by Purchaser for inclusion in the Schedule 14D-9 or
related materials or the Schedule 13E-3 at the respective times such Schedules
or any amendments or supplements thereto are filed with the SEC, will contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Purchaser agrees to
correct promptly any information in the Offer Documents or any information
provided by it for use in the Schedule 14D-9 or related materials or the
Schedule 13E-3 if and to the extent that it shall have become false or
misleading in any material respect and Purchaser further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws.
ARTICLE VII
Covenants
7.1 Interim Operations of the Company. The Company
covenants and agrees that, prior to the Effective Time (unless Purchaser shall
otherwise agree in writing and except as otherwise expressly contemplated by
this Agreement), the business of the Company and its subsidiaries shall be
conducted only in the ordinary and usual course consistent with past practice
and, to the extent consistent therewith, each of the Company and its
subsidiaries shall use its best efforts to preserve its business organization
intact (including maintaining all of its Permits) and maintain its existing
relations with customers, suppliers, employees and business associates and it
will take no action that would adversely affect the ability of the parties to
promptly consummate the transactions contemplated by this Agreement.
7.2 Meetings of the Company's Stockholders. If
required following termination of the Offer, the Company will take all action
necessary to convene a meeting of holders of Shares
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as promptly as practicable to consider and vote upon the approval of this
Agreement and the Merger. Subject to fiduciary requirements of applicable law,
the Board of Directors of the Company shall recommend such approval and the
Company shall take all lawful action to solicit such approval. At any such
meeting of the Company all of the Shares then owned by the Purchaser Companies
(including all Shares currently owned by the Purchaser Companies) will be voted
in favor of this Agreement. The Company's proxy or information statement with
respect to such meeting of shareholders (the "Proxy Statement"), at the date
thereof and at the date of such meeting, will not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by the Company
in reliance upon and in conformity with written information concerning the
Purchaser Companies furnished to the Company by Purchaser specifically for use
in the Proxy Statement. Purchaser understands that for purposes of this
Section 7.2 that while the Company's projections and forward-looking
information furnished by the Company to Purchaser were prepared in good faith
and represent the Company's best estimate as to the subject matter thereof, the
Company makes no representation or warranty as to the truth, completeness or
accuracy of any projections or forward-looking information furnished by the
Company to Purchaser. The Proxy Statement shall not be filed, and no amendment
or supplement to the Proxy Statement will be made by the Company, without
consultation with Purchaser and its counsel.
7.3 Filings; Other Action. Subject to the terms and
conditions herein provided, the Company and Purchaser shall: (a) promptly make
their respective Regulatory Filings and Purchaser Regulatory Filings and
thereafter make any other required submissions with respect to the Offer and
the Merger; and (b) use their respective best efforts to take promptly, or
cause to be taken promptly, all other action and do, or cause to be done, all
other things necessary, proper or appropriate under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement as soon as practicable.
7.4 Access. Upon reasonable notice, the Company shall
(and shall cause each of its subsidiaries to) afford Purchaser's officers,
employees, counsel, accountants and other authorized representatives
("Representatives") access, during normal business hours throughout the period
prior to the Effective Time, to its properties, books, Contracts and records
and, during such period, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to Purchaser all information concerning its
business, properties and personnel as Purchaser or its Representatives may
reasonably request, provided that no investigation pursuant to this Section 7.4
shall affect or be deemed to modify any representation or warranty made by the
Company.
7.5 Notification of Certain Matters. The Company shall
give prompt notice to Purchaser of: (a) any notice of, or other communication
relating to, any default or event that, with notice or lapse of time or both,
would become a default, received by the Company or any of its subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any Contract to which the Company or any of its subsidiaries is a party or is
subject where such default could reasonably be expected to have a Material
Adverse Effect; and (b) any material adverse change (including, without
limitation, any change arising out of or related to any natural disaster) in
the condition (financial or otherwise), properties, assets, liabilities,
business or results of operations of
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the Company or any of its subsidiaries or any development or combination of
developments of which the Company or any of its subsidiaries has knowledge
which could reasonably be expected to result in any such change. Each of the
Company and Purchaser shall give prompt notice to the other party of any notice
or other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement.
7.6 Publicity. The initial press release issued in
connection with the execution of this Agreement shall be a joint press release
and thereafter the Company and Purchaser shall consult with each other prior to
issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and prior to making any filings with
any Governmental Entity or with any national securities exchange with respect
thereto.
7.7 Indemnification; Directors' and Officers Insurance.
(a) From and after the Effective Time, the Surviving Corporation agrees that it
will indemnify and hold harmless each present and former director and/or
officer of the Company, determined as of the Effective Time (the "Indemnified
Parties"), that is made a party or threatened to be made a party to any
threatened, pending or completed, action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she was a director or officer of the Company or any subsidiary of the
Company prior to the Effective Time and arising out of actions or omissions of
the Indemnified Party in any such capacity occurring at or prior to the
Effective Time (a "Claim") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, amounts paid in settlement pursuant to
Section 7.7(b), losses, claims, damages or liabilities (collectively, "Costs")
reasonably incurred in connection with any Claim, whether asserted or claimed
prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under Texas law. The Surviving Corporation
shall also advance expenses (including attorneys' fees), as incurred by the
Indemnified Party to the fullest extent permitted under applicable law provided
such Indemnified Party provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification.
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 7.7, upon learning of any
such Claim, shall promptly notify the Surviving Corporation thereof, but the
failure to so notify shall not relieve the Surviving Corporation of any
liability it may have to such Indemnified Party if such failure does not
materially prejudice the indemnifying party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Surviving Corporation shall have the right to assume
the defense thereof and the Surviving Corporation shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Surviving Corporation elects not to
assume such defense or counsel or the Indemnified Parties advise that there are
issues which raise conflicts of interest between the Surviving Corporation and
the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and the Surviving Corporation shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; provided, however, that the Surviving
Corporation shall be obligated pursuant to this paragraph (b) to pay for only
one firm or counsel for all Indemnified Parties in any jurisdiction unless the
use of one counsel for such Indemnified Parties would present such counsel with
a conflict of interest, (ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) the
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Surviving Corporation shall not be liable for any settlement effected without
its prior written consent, which consent will not be unreasonably withheld; and
provided, further, however, that the Surviving Corporation shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that the indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. If
such indemnity is not available with respect to any Indemnified Party, then the
Surviving Corporation and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative faults and
benefits, with any aspect of "fault" otherwise allocable to the Company being
allocated to the Surviving Corporation.
(c) If a claim for indemnification or advancement under
this Section 7.7 is not paid in full by the Surviving Corporation within thirty
days after a written claim therefor has been received by the Surviving
Corporation, the Indemnified Party may any time thereafter bring suit against
the Surviving Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the Indemnified Party shall be entitled to be
paid also the expense of prosecuting such claims.
(d) Neither the failure of the Surviving Corporation
(including its Board of Directors, independent legal counsel or shareholders)
to have made a determination prior to the commencement of such suit that
indemnification of the Indemnified Party is proper in the circumstances because
he or she has met the applicable standard of conduct, nor an actual
determination by the Surviving Corporation (including its Board of Directors,
independent legal counsel, or shareholders) that the Indemnified Party has not
met such applicable standard of conduct, shall be a defense to the suit or
create a presumption that the Indemnified Party has not met the applicable
standard of conduct.
(e) For a period of six years after the Effective Time,
the Surviving Corporation shall maintain the Surviving Corporation's existing
directors and officers liability insurance or equivalent liability insurance
("D&O Insurance"), which will provide coverage for those persons who are
directors and officers of the Company as of the Effective Time, so long as the
annual premium therefor is not in excess of 125% of the last annual premium paid
by the Surviving Corporation prior to the date hereof (the "Current Premium").
If the Surviving Corporation determines that it is unable to maintain the
existing or equivalent D&O Insurance that includes coverage for those persons
who are directors and officers of the Company as of the Effective Time for a
premium not in excess of 125% of the Current Premium, but maintains D&O
Insurance for persons who are directors and officers of the Surviving
Corporation, then, for the six-year period after the Effective Time, the
Surviving Corporation will provide D&O Insurance for those persons who are
currently directors and officers of the Company on the same basis as the
Surviving Corporation maintains D&O Insurance for persons who are then directors
and officers of the Surviving Corporation. If the existing D&O Insurance
expires, is terminated or canceled during the six-year period after the
Effective Time and the Surviving Corporation does not then maintain D&O
Insurance for persons who are directors and officers of the Surviving
Corporation, the Surviving Corporation will use its reasonable best efforts to
obtain D&O Insurance for such period providing at least $2,000,000 of coverage
for those persons who are directors and officers of the Company at the Effective
Time.
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(f) In lieu of the insurance arrangement referred to
in clause (e) of this Section 7.7, the Surviving Corporation may, on or before
the expiration of the Offer, enter into alternative insurance arrangements,
provided that such arrangements are approved by each of the individuals who are
Independent Directors at any time from the date of this Agreement through the
Effective Time.
7.8 Other Agreements.
(a) Takeover Statute. If any Takeover Statute shall
become applicable to the Merger, the Offer or the other transactions
contemplated hereby, the Company and the members of the Board of Directors of
the Company shall grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.
(b) Best Efforts and Cooperation. The Company and
Purchaser each shall use (and shall cause its subsidiaries to use) its best
efforts to cause the conditions set forth in Article VIII to be satisfied and to
consummate the Merger and the other transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, the Company shall use (and
shall cause its subsidiaries to use) its best efforts (including providing
information and communication) to obtain each of the consents or waivers
identified pursuant to Section 6.1(d)(ii) and to obtain as promptly as
practicable all necessary approvals, authorizations and consents of Governmental
Entities required to be obtained in order to consummate the transactions
contemplated hereby, and each of the parties hereto shall cooperate with the
others in obtaining all such consents, waivers, approvals and authorizations.
(c) Purchaser Vote. Purchaser shall vote (or consent
with respect to) or cause to be voted (or a consent to be given with respect to)
any Shares (including all Shares currently owned) beneficially owned by it or
any of its subsidiaries or with respect to which it or any of its subsidiaries
has the power (by agreement, proxy or otherwise) to cause to be voted (or to
provide a consent), in favor of the adoption and approval of this Agreement at
any meeting of stockholders of the Company at which this Agreement shall be
submitted for adoption and approval and at all adjournments or postponements
thereof (or, if applicable, by any action of stockholders of the Company by
consent in lieu of a meeting).
7.9 Certain Amendments to the Certificate of
Incorporation and By-laws of the Surviving Corporation. No amendment to the
Certificate of Incorporation or By-laws of the Surviving Corporation shall
reduce in any way the elimination of personal liability of the directors of the
Company contained therein or adversely affect any then existing right of any
director or officer (or former director or officer) to be indemnified with
respect to acts, omissions or events occurring prior to the Effective Time.
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ARTICLE VIII
Conditions
8.1 Conditions to Obligations of Parties. The
respective obligations of the parties to consummate the Merger are subject to
the fulfillment of each of the following conditions:
(a) Stockholder Approval. In the event of a Company
stockholder meeting pursuant to Section 7.2, this Agreement shall have been
duly approved by the holders of a majority of the Shares, in accordance with
applicable law and the Articles of Incorporation and By-Laws of the Company;
(b) Purchase of Shares. Purchaser (or one of the
Purchaser Companies) shall have purchased Shares pursuant to the Offer;
(c) Litigation. No court or other Governmental Entity
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the Merger;
(d) Consent. The Company shall have obtained the
consent of its principal lender to the Merger or the Purchaser shall have
obtained a refinancing of such obligation on terms satisfactory to the
Purchaser in its sole discretion.
(e) Annex A. The Minimum Tender Condition shall have
been satisfied and none of the events listed in Annex A shall have occurred.
ARTICLE IX
Termination
9.1 Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval by holders of Shares, by the
mutual consent of Purchaser and the Company, by action of their respective
Boards of Directors.
9.2 Termination by Either Purchaser or the Company.
This Agreement may be terminated and the Merger may be abandoned by action of
the Board of Directors of either Purchaser or the Company if: (a) Purchaser, or
any Purchaser Company, shall have terminated the Offer without purchasing any
Shares pursuant thereto; provided, however, that in the case of termination of
this Agreement by Purchaser, such termination of the Offer is not in violation
of the terms of the Offer; or (b) without fault of the terminating party, the
Merger shall not have been consummated by December 31, 1996, whether or not
such date is before or after the approval by holders of Shares.
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9.3 Termination by Purchaser. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares, by action of the Board
of Directors of Purchaser, if: (a) the Company shall have failed to comply in
any material respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by the Company at or prior to such
date of termination; or (b) the Board of Directors of the Company or the
Independent Directors shall have withdrawn or modified in a manner adverse to
Purchaser its approval or recommendation of the Offer, this Agreement or the
Merger or the Board of Directors of the Company or the Independent Directors,
upon request by Purchaser, shall fail to reaffirm such approval or
recommendation, or shall have resolved to do any of the foregoing.
9.4 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares by action of the Board
of Directors of the Company, if Purchaser (a) shall have failed to comply in
any material respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by Purchaser at or prior to such
date of termination or (b) shall have failed to commence the Offer within the
time required in Section 1.1(a).
9.5 Effect of Termination and Abandonment. In the
event of termination of this Agreement and abandonment of the Merger pursuant
to this Article IX, no party hereto (or any of its directors or officers) shall
have any liability or further obligation to any other party to this Agreement,
except as provided in Section 10.2 below and except that nothing herein will
relieve any party from any liability or damages for any breach of this
Agreement.
ARTICLE X
Miscellaneous and General
10.1 Payment of Expenses. Whether or not the Merger
shall be consummated, each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the Merger.
10.2 Survival. The agreements of the Company and
Purchaser contained in Sections 5.2 (but only to the extent that such Section
expressly relates to actions to be taken after the Effective Time), 5.3, 5.4,
7.7, 7.9, and 10.1 shall survive the consummation of the Merger. The
agreements of the Company and Purchaser contained in Section 9.5 and this
Article X shall survive the termination of this Agreement. All other
representations, warranties, agreements and covenants in this Agreement shall
not survive the consummation of the Merger or the termination of this
Agreement.
10.3 Modification or Amendment. Subject to the
applicable provisions of the DGCL or the TBCA, at any time prior to the
Effective Time, the parties hereto may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized officers of the
respective parties.
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10.4 Waiver of Conditions. The conditions to each of
the parties obligations to consummate the Merger are for the sole benefit of
such party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
10.5 Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
10.6 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAW OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction
of the courts of the State of Texas and the Federal courts of the United States
of America located in the State of Texas solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action, suit or
proceeding shall be heard and determined in such a state or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 10.7 or in such other manner as
may be permitted by law, shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.6.
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10.7 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid:
if to Purchaser:
The Hallwood Group Incorporated
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
with a copy to:
W. Xxxx Xxxxxx, Esq.
Jenkens & Xxxxxxxxx, A Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
if to the Company:
Hallwood Energy Corporation
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx
Attention: Xxxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
and to:
Xxxxxx X. X. Xxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxx, P.C.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8 Entire Agreement. This Agreement (including any
annexes, exhibits or Schedules hereto) constitutes the entire agreement, and
supersedes all other prior agreements,
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understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof.
10.9 No Third Party Beneficiaries. Except as provided
in Sections 7.7 (Indemnification; Directors' and Officers' Insurance) and 7.9
(Certain Amendments to the Certificate of Incorporation and By-laws of the
Surviving Corporation), as to which directors and officers of the Company are
intended by the parties to be beneficiaries, this Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
10.10 Obligations of Purchaser and of the Company.
Whenever this Agreement requires Purchaser or, after the Effective Time, the
Surviving Corporation, to take any action, such requirement shall be deemed to
include an undertaking on the part of Purchaser to cause the Surviving
Corporation to take such action, including providing the requisite funds to
purchase Shares or make any other payment obligation. Whenever this Agreement
requires a subsidiary of the Company to take any action, such requirement shall
be deemed to include an undertaking on the part of the Company to cause such
subsidiary to take such action and, after the Effective Time, on the part of
the Surviving Corporation to cause such subsidiary to take such action.
10.11 Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability or the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted therefor in order to
carry out, so far as may be valid and enforceable, the intent and purpose of
such invalid or unenforceable provision and (b) the remainder of this Agreement
and the application of such provision to other persons or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
10.12 Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section or
Schedule, such reference shall be to a Section of or Annex or Schedule to this
Agreement unless otherwise indicated. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation."
10.13 Assignment. This Agreement shall not be assignable
by operation of law or otherwise; provided, however, that Purchaser may
designate, by written notice to the Company, another wholly-owned direct or
indirect subsidiary to be a Constituent Corporation in lieu of Purchaser, in
the event of which, all references herein to Purchaser shall be deemed
references to such other subsidiary, where applicable, except that all
representations and warranties made herein with respect to Purchaser as of the
date of this Agreement shall be deemed representations and warranties made with
respect to such other subsidiary as of the date of such designation.
10.14 Definition of "Subsidiary" and "Person". When a
reference is made in this Agreement to a subsidiary of a party, the word
"subsidiary" means any corporation or other organization whether incorporated
or unincorporated of which at least a majority of the securities or
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interests having by the terms thereof ordinary voting power to elect at least a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its subsidiaries, or
by such party and one or more of its subsidiaries. When a reference is made in
this Agreement to a person, the word "person" means and includes any natural
person, corporation, partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental or political
subdivision, regulatory body or other entity.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
The Hallwood Group Incorporated
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx, Vice President
Hallwood Energy Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx, President
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ANNEX A
Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer, Purchaser shall not be obligated to accept for payment any Shares
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer) or pay for, and
may delay the acceptance for payment of or payment for, any tendered Shares
unless there have been validly tendered and not withdrawn prior to the
expiration date of the Offer a majority of the Shares not currently owned by
Purchaser which, together with any Shares currently beneficially owned directly
or indirectly by Purchaser, also will constitute at least 90% of the total
Shares outstanding and issuable as of the date the Shares are accepted for
payment pursuant to the offer (the "Minimum Tender Condition"), or if on or
after October 9, 1996, and at or before the time of payment for any of such
Shares (whether or not any Shares have theretofore been accepted for payment or
paid for pursuant to the Offer), any of the following events shall occur:
(a) there shall be any statute, rule, regulation, judgment,
injunction or other order, enacted, promulgated, entered, enforced or deemed
applicable to the Offer or the Merger or any other action shall have been taken
by any government, legislative body, court or governmental, regulatory or
administrative agency, authority, tribunal or commission, domestic,
supranational or foreign (each, a "Governmental Entity"), or any other person,
domestic, supranational or foreign (i) challenging the legality of the
acquisition by Purchaser of the Shares; (ii) restraining, delaying or
prohibiting the making or consummation of the Offer or the Merger or obtaining
from the Company or Purchaser any damages in connection therewith; (iii)
relating to assets of, or prohibiting or limiting the ownership or operation by
Purchaser of all or any portion of the business or assets of, the Company or
Purchaser (including the business or assets of their respective affiliates and
subsidiaries) or imposing any limitation on the ability of Purchaser to conduct
such business or own such assets; (iv) imposing limitations on the ability of
Purchaser or (or any affiliate of Purchaser) to acquire or hold or to exercise
full rights of ownership of the Shares, including, without limitation, the
right to vote the Shares purchased by them on all matters properly presented to
the stockholders of the Company; or (v) having a substantial likelihood of any
of the foregoing;
(b) there shall have occurred and be continuing (i) any general
suspension of, or limitation on times or prices for, trading in securities on
any national securities exchange or in the over-the-counter market in the
United States or (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States (whether or not
mandatory);
(c) the Company shall have breached or failed to perform in any
material respect any of its covenants, obligations or agreements under the
Agreement, which breach or failure shall not have been cured within the earlier
of 30 days or the time for any payment causing such breach or failure, if
curable, or any representation or warranty of the Company set forth in the
Agreement shall have been inaccurate or incomplete in any material respect when
made or thereafter shall become inaccurate or incomplete in any material
respect;
ANNEX A - PAGE 1
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(d) any change, including, without limitation, any change arising out
of or related to any natural disaster, shall have occurred or been threatened
or become known (or any condition, event or development shall have occurred or
been threatened or become known involving a prospective change) in the
business, properties, assets, liabilities, condition (financial or otherwise),
or results of operations of the Company or any of its subsidiaries that could
reasonably be expected to be materially adverse to the Company and its
subsidiaries taken as a whole;
(e) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be made or obtained by the
Company, Purchaser or any stockholder of Purchaser with or from any
Governmental Entity in connection with the Offer and the Merger shall not have
been made or obtained except where the failure to make or to obtain, as the
case may be, such consents, registrations, approvals, permits, authorizations,
notices, reports or other filings could not reasonably be expected to have a
Material Adverse Effect;
(f) the Special Committee of the Board of Directors shall have
adversely amended or modified or shall have withdrawn its recommendation of the
Offer or the Merger, or shall have failed to publicly reconfirm such
recommendation upon request by Purchaser, or shall have resolved to do any of
the foregoing; or
(g) the Agreement shall have been terminated in accordance with its
terms or Purchaser shall have reached an agreement or understanding with the
Special Committee providing for termination of the Offer which, in the
reasonable judgment of Purchaser with respect to each and every matter referred
to above, and regardless of the circumstances (including any action or inaction
by Purchaser or any affiliate of Purchaser) giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser regardless of the circumstances (including any action
or inaction by Purchaser or any affiliate of Purchaser) giving rise to any such
conditions or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion, other than the Minimum Tender
Condition, which the Purchaser may waive only with the consent of the Special
Committee. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by Purchaser concerning the events
described above will be final and binding on all holders of the Shares.
ANNEX A - PAGE 2
