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