Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 13, 2001
AMONG
XXXX-XXXXX CORPORATION,
KING HOLDCO, INC.,
HS RESOURCES, INC.
KING MERGER SUB, INC
AND
HAWK MERGER SUB, INC.
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGERS......................................................2
1.1 The Mergers............................................2
1.2 Effect of the Company Merger...........................2
1.3 Consummation of the Merger.............................2
1.4 Certificate of Incorporation; Bylaws;
Directors and Officers.................................3
1.5 Holdco.................................................3
1.6 Conversion of Acquisition I Common Stock...............4
1.7 Conversion of Company Common Stock.....................4
1.8 Surrender of Shares; Stock Transfer Books..............6
1.9 Distributions with Respect to Unexchanged Shares.......7
1.10 No Further Ownership Rights in Company Common Stock....8
1.11 Fractional Shares......................................8
1.12 Lost Certificates......................................8
1.13 Withholding Rights.....................................8
1.14 Taking of Necessary Action; Further Action.............9
1.15 Parent Merger..........................................9
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................9
2.1 Organization...........................................9
2.2 Capital Stock of the Company..........................10
2.3 Authority Relative to this Agreement..................11
2.4 SEC Reports and Financial Statements..................12
2.5 Certain Changes.......................................13
2.6 Litigation............................................13
2.7 Disclosure in Proxy Statement.........................13
2.8 Broker's or Finder's Fees.............................14
2.9 Employee Plans........................................14
2.10 Board Recommendation; Company Action; Requisite
Vote of the Company's Stockholders....................16
2.11 Taxes.................................................16
2.12 Environmental.........................................18
2.13 Compliance with Laws..................................19
2.14 Employment Matters....................................19
2.15 Rights Agreement......................................20
2.16 Oil and Gas Reserves..................................20
2.17 Certain Contracts and Arrangements....................20
2.18 Financial and Commodity Hedging.......................20
2.19 Properties............................................20
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE PARENT,
HOLDCO AND ACQUISITION I........................................21
i
3.1 Organization..........................................21
3.2 Capital Stock.........................................22
3.3 Authority Relative to this Agreement and the
Parent Merger Agreement...............................23
3.4 SEC Reports and Financial Statements..................24
3.5 Litigation............................................24
3.6 Financing.............................................25
3.7 Proxy Statement.......................................25
3.8 Broker's or Finder's Fees.............................25
3.9 Parent Not An Interested Stockholder..................25
3.10 Independent Evaluation................................25
3.11 Tax Matters...........................................26
3.12 No Vote Required......................................26
3.13 Environmental.........................................26
3.14 Compliance with Laws..................................27
3.15 Beneficial Ownership..................................27
ARTICLE 4 CONDUCT OF BUSINESS PENDING THE COMPANY MERGER..................27
4.1 Conduct of Business by the Company Pending
the Company Merger....................................27
4.2 Conduct of Business of Parent.........................30
ARTICLE 5 ADDITIONAL AGREEMENTS...........................................31
5.1 Shareholders' Meeting.................................31
5.2 Registration Statement................................31
5.3 Employee Benefit Matters..............................32
5.4 Consents and Approvals................................33
5.5 Public Statements.....................................34
5.6 Reasonable Best Efforts...............................34
5.7 Notification of Certain Matters.......................35
5.8 Access to Information; Confidentiality................35
5.9 No Solicitation.......................................36
5.10 Indemnification and Insurance.........................38
5.11 Actions Regarding the Rights..........................39
5.12 Options...............................................39
5.13 Affiliates............................................39
5.14 Stock Exchange Listing................................40
5.15 Section 16 Matters....................................40
5.16 Directorship..........................................40
ARTICLE 6 CONDITIONS......................................................40
6.1 Conditions to the Obligation of Each Party
to Effect the Mergers.................................40
6.2 Additional Conditions to the Obligation of Parent,
Holdco and Acquisition I..............................41
6.3 Additional Conditions to the Obligation of
the Company...........................................41
ii
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER...............................42
7.1 Termination...........................................42
7.2 Effect of Termination.................................43
7.3 Fees and Expenses.....................................44
7.4 Amendment.............................................44
7.5 Waiver................................................44
ARTICLE 8 GENERAL PROVISIONS..............................................45
8.1 Notices...............................................45
8.2 Representations and Warranties........................46
8.3 Governing Law.........................................46
8.4 Counterparts; Facsimile Transmission of Signatures....46
8.5 Assignment; No Third Party Beneficiaries..............46
8.6 Severability..........................................46
8.7 Entire Agreement......................................47
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May 13,
2001 is among HS Resources, Inc., a Delaware corporation ("Company"), Xxxx-XxXxx
Corporation, a Delaware corporation ("PARENT"), King Holdco, Inc., a Delaware
corporation and wholly owned subsidiary of Parent ("HOLDCO"), Hawk Merger Sub,
Inc., a Delaware corporation and a wholly owned subsidiary of Holdco
("ACQUISITION I"), and King Merger Sub, Inc., a Delaware corporation and a
wholly owned subsidiary of Holdco ("ACQUISITION II").
WHEREAS, the parties have agreed pursuant to this Agreement that (i)
Acquisition I will be merged with and into the Company with the Company as the
surviving corporation, as described in Article I of this Agreement (the "COMPANY
MERGER"), and (ii) immediately prior to the Company Merger, Acquisition II will
be merged with and into Parent with Parent as the surviving corporation pursuant
to an Agreement and Plan of Merger (the "PARENT MERGER AGREEMENT") and in
accordance with Section 251(g) of the Delaware General Corporation Law
("DELAWARE LAW") (the "PARENT MERGER" and, together with the Company Merger, the
"MERGERS").
WHEREAS, concurrently with the consummation of the Parent Merger, Holdco
will be renamed "Xxxx-XxXxx Corporation" and will become the parent corporation
of Parent, as further described in Article I of this Agreement and in the Parent
Merger Agreement.
WHEREAS, it is intended for federal income tax purposes that (i) the Parent
Merger qualify as a reorganization within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "CODE"), or, taken
together with the Company Merger, qualify as an exchange within the meaning of
Section 351 of the Code and (ii) the Parent Merger and the Company Merger, taken
together, qualify as an exchange within the meaning of Section 351 of the Code.
WHEREAS, the board of directors of the Company has approved this Agreement
and the Company Merger and has determined that the Company Merger is fair to,
and in the best interests of, the holders of Company Common Stock and resolved
to recommend approval of this Agreement and the Company Merger by the
stockholders of the Company.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained in this Agreement and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Parent, Holdco, the
Company, Acquisition I and Acquisition II intending to be legally bound, hereby
agree as follows:
ARTICLE 1
THE MERGERS
1.1 THE MERGERS. Upon the terms and subject to the conditions of this
Agreement and in accordance with the Delaware Law, (a) immediately prior to the
Effective Time (defined below) upon the terms and subject to the conditions set
forth in the Parent Merger Agreement in accordance with Section 251(g) of the
Delaware Law, Acquisition II shall be merged with and into Parent in the Parent
Merger and (b) at the Effective Time, Acquisition I shall be merged with and
into the Company in the Company Merger. Following the Parent Merger, Parent
shall continue its corporate existence under the laws of the State of Delaware
as the surviving corporation of the Parent Merger (the "PARENT SURVIVING
CORPORATION") and a wholly owned subsidiary of Holdco and the separate corporate
existence of Acquisition II shall cease. Following the Company Merger, the
Company shall continue its corporate existence under the laws of the State of
Delaware as the surviving corporation of the Company Merger (the "COMPANY
SURVIVING CORPORATION") and a wholly owned subsidiary of Holdco and the separate
corporate existence of Acquisition I shall cease.
1.2 EFFECT OF THE COMPANY MERGER. The Company Merger shall have the effects
set forth in the applicable provisions of the Delaware Law. Without limiting the
generality of the foregoing, when the Company Merger has been effected, the
Company Surviving Corporation shall thereupon and thereafter possess all the
rights, privileges, powers and franchises of a public as well as of a private
nature, and be subject to all the restrictions, disabilities and duties of each
of the Company and Acquisition I (the "CONSTITUENT CORPORATIONS"); and each of
the rights, privileges, powers and franchises of each of the Constituent
Corporations and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well for stock
subscriptions as all other things in action or belonging to each of such
corporations, shall be vested in the Company Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest, shall be thereafter as effectually the property of the Company
Surviving Corporation as they were of the respective Constituent Corporations,
and the title to any real estate vested by deed or otherwise in any of such
Constituent Corporations shall not revert or be in any way impaired by reason of
the Company Merger; but all rights of creditors and all liens upon any property
of any of said Constituent Corporations shall be preserved unimpaired, and all
debts, liabilities and duties of the respective Constituent Corporations shall
thenceforth attach to the Company Surviving Corporation, and may be enforced
against it to the same extent as if said debts, liabilities and duties had been
incurred or contracted by it.
1.3 CONSUMMATION OF THE MERGER. As soon as is practicable after the
satisfaction or waiver of the conditions set forth in ARTICLE 6 hereof, the
parties hereto will cause the Company Merger to be consummated by filing with
the Secretary of State of Delaware a certificate of merger in such form as
required by, and executed in accordance with, the relevant provisions of the
Delaware Law (the time of such filing, or such subsequent time as the Company
and Parent agree and is set forth in the certificate of merger, being referred
to herein as the "EFFECTIVE TIME" and the date of such filing being referred to
herein as the "EFFECTIVE DATE"). The term "PARENT EFFECTIVE TIME" shall mean the
time and date of the filing of a properly executed certificate of
2
merger relating to the Parent Merger with the Secretary of State of the State of
Delaware (or such subsequent time and date as is set forth in said certificate
of merger). Unless this Agreement shall have been terminated and the
transactions contemplated herein shall have been abandoned, and subject to the
satisfaction or waiver of the conditions set forth in ARTICLE 6, the closing of
the Company Merger (the "CLOSING") will take place at a time and on a date (the
"CLOSING DATE") to be specified by the parties, which shall be no later than the
second business day after satisfaction or valid waiver of the latest to occur of
the conditions set forth in ARTICLE 6.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS.
(a) COMPANY SURVIVING CORPORATION. The certificate of incorporation and
bylaws of the Company as in effect immediately prior to the Effective Time shall
become the Certificate of Incorporation and bylaws of the Company Surviving
Corporation until thereafter amended as provided therein and under the Delaware
Law. The directors of Acquisition I immediately prior to the Effective Time will
be the initial directors of the Company Surviving Corporation and shall serve
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Company
Surviving Corporation's certificate of incorporation and bylaws and the Delaware
Law. The officers of Acquisition I immediately prior to the Effective Time will
be the initial officers of the Company Surviving Corporation and shall serve
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Company
Surviving Corporation's certificate of incorporation and bylaws and the Delaware
Law.
(b) PARENT SURVIVING CORPORATION. The certificate of incorporation and
bylaws of Parent as in effect immediately prior to the Parent Effective Time
shall become the certificate of incorporation and bylaws of the Parent Surviving
Corporation until thereafter amended as provided therein and under the Delaware
Law, except that the name of the Parent Surviving Corporation shall be changed
to Xxxx-XxXxx Operating Corporation (or such other name as Holdco may determine)
and such other changes as are required or permitted by Section 251(g) of the
Delaware Law shall be made. The directors of Parent immediately prior to the
Parent Effective Time will be the initial directors of the Parent Surviving
Corporation and shall serve until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Parent Surviving Corporation's certificate of incorporation
and bylaws and the Delaware Law. The officers of Parent immediately prior to the
Parent Effective Time will be the initial officers of the Parent Surviving
Corporation and shall serve until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Parent Surviving Corporation's certificate of incorporation
and bylaws and the Delaware Law.
1.5 HOLDCO. In accordance with the Parent Merger Agreement and Section
251(g) of the Delaware Law, the certificate of incorporation and the bylaws of
Holdco immediately following the Parent Effective Time will contain provisions
identical to those in the certificate of incorporation and bylaws of Parent
immediately prior to the Parent Effective Time, except as otherwise permitted by
Section 251(g) of the Delaware Law and except that at the Parent Effective Time
the name of Holdco shall be changed to "Xxxx-XxXxx Corporation."
3
1.6 CONVERSION OF ACQUISITION I COMMON STOCK. At the Effective Time, by
virtue of the Company Merger, each share of common stock of Acquisition I
outstanding immediately prior to the Effective Time shall be converted into and
become one share of common stock, par value $0.001 per share, of the Company
Surviving Corporation ("COMPANY SURVIVING CORPORATION COMMON STOCK"). Each
certificate which immediately prior to the Effective Time represented a number
of outstanding shares of common stock of Acquisition I shall, from and after the
Effective Time, be deemed for all purposes to represent the same number of
shares of Company Surviving Corporation Common Stock.
1.7 CONVERSION OF COMPANY COMMON STOCK. At the Effective Time, by virtue of
the Company Merger:
(a) Subject to the provisions of SECTIONS 1.7(C), (D) and (E), each
share of Company Common Stock that is outstanding immediately prior to the
Effective Time (excluding any Dissenting Shares and any shares of Company Common
Stock canceled or to remain outstanding pursuant to SECTION 1.7(E)) shall be
converted, at the election of the holder thereof in accordance with the
procedures set forth herein, into one of the following:
(i) for each such share of Company Common Stock with respect to
which an election to receive Holdco Common Stock has been effectively made
and not revoked pursuant to SECTION 1.7(B) (a "STOCK ELECTION"), the right
to receive 0.9404 shares (the "EXCHANGE RATIO") of Holdco Common Stock (the
"STOCK Consideration"); and
(ii) for each such share of Company Common Stock with respect to
which an election to receive cash has been effectively made and not revoked
pursuant to SECTION 1.7(B) (a "CASH ELECTION"), the right to receive $66.00
per share (the "PER SHARE AMOUNT") in cash, without interest (the "CASH
CONSIDERATION").
(b) Each person who, at the Effective Time, is a record holder of
shares of Company Common Stock (other than holders of shares of Company Common
Stock to be canceled or to remain outstanding as set forth in SECTION 1.7(E) or
Dissenting Shares) shall have the right to submit an Election Form specifying
the number of shares of Company Common Stock that such person desires to have
converted into the right to receive Holdco Common Stock pursuant to a Stock
Election, and the number of shares of Company Common Stock that such person
desires to have converted into the right to receive the Cash Consideration
pursuant to a Cash Election. Any such record holder who fails properly to submit
an Election Form on or prior to the Election Deadline in accordance with the
procedures set forth in SECTION 1.8(B) shall be deemed to have made a Cash
Election.
(c) In the event the total number of Cash Elections (including any
deemed Cash Elections as provided for in Section 1.7(b)) would require aggregate
Cash Consideration in excess of the Maximum Cash Consideration (as defined
below), such Cash Elections shall be subject to proration as follows: for each
Cash Election made by the holder of shares of Company Common Stock, the number
of shares of Company Common Stock that shall be converted into the right to
receive the Cash Consideration shall be the total number of shares of Company
Common Stock subject to such Cash Election multiplied by the Cash Proration
Factor. The
4
"CASH PRORATION FACTOR" means a fraction (x) the numerator of which shall be the
Maximum Cash Consideration and (y) the denominator of which shall be the product
of the aggregate number of shares of Company Common Stock subject to all Cash
Elections multiplied by the Per Share Amount. All shares of Company Common Stock
subject to Cash Elections, subject to proration required by this section, if
applicable, shall be converted into the right to receive the Cash Consideration.
The maximum aggregate amount of the Cash Consideration for purposes of the
calculation of the Cash Proration Factor shall be $833,000,000 (the "MAXIMUM
CASH CONSIDERATION"). All shares of Company Common Stock subject to a Cash
Election, other than that number converted into the right to receive the Cash
Consideration in accordance with this SECTION 1.7(C), shall be converted into
the right to receive the Stock Consideration.
(d) In the event the total number of Stock Elections would require
aggregate Stock Consideration in excess of the Maximum Stock Consideration, such
Stock Elections shall be subject to proration as follows: for each Stock
Election made by the holder of shares of Company Common Stock, the number of
shares of Company Common Stock that shall be converted into the right to receive
the Stock Consideration shall be the total number of shares of Company Common
Stock subject to such Common Stock Election multiplied by the Common Stock
Proration Factor. The "COMMON STOCK PRORATION FACTOR" means a fraction (x) the
numerator of which shall be the Maximum Stock Consideration and (y) the
denominator of which shall be the number of shares of Company Common Stock
subject to all Stock Elections. All shares of Company Common Stock subject to
Stock Elections, subject to proration required by this section, if applicable,
shall be converted into the right to receive the Stock Consideration. For
purposes of the calculation of the Common Stock Proration Factor, the maximum
aggregate number of shares of Company Common Stock that may receive Stock
Consideration shall be 5,412,835 shares (the "MAXIMUM STOCK CONSIDERATION"). All
shares of Company Common Stock subject to a Stock Election, other than that
number converted into the right to receive the Stock Consideration in accordance
with this SECTION 1.1(D), shall be converted into the right to receive the Cash
Consideration. In the event that both the proration mechanisms included in
SECTION 1.7(C) and 1.7(d) are applicable, the mechanism in SECTION 1.7(C) shall
be applied and the mechanism in SECTION 1.7(D) shall not be applied.
(e) Each share of Company Common Stock owned by the Company, Holdco, or
Acquisition I immediately prior to the Effective Time, shall be canceled and
retired without any conversion thereof and no payment or distribution shall be
made with respect thereto. Each share of Company Common Stock owned by a wholly
owned Company Subsidiary or any wholly owned direct or indirect subsidiary of
Holdco (other than Acquisition I) immediately prior to the Effective Time shall
remain outstanding.
The consideration provided for in SECTIONS 1.7(A) and (B), together with the
consideration provided for in SECTION 1.11, is referred to herein as the "MERGER
CONSIDERATION." "DISSENTING SHARES" are shares of Company Common Stock
outstanding immediately prior to the Effective Time and held by a holder who
neither shall have voted in favor of the Company Merger nor shall have consented
thereto in writing (other than a holder who has made a Stock Election for all of
such holder's shares and where the election is not subject to proration and is
not made pursuant to Section 1.7(d)) and who shall have demanded appraisal for
such shares in accordance
5
with the Delaware Law. Dissenting Shares shall not be converted into a right to
receive the Merger Consideration, unless such holder fails to perfect, withdraws
or otherwise loses its right to appraisal. If, after the Effective Time, such
holder fails to perfect, withdraws or loses its right to appraisal, such shares
shall be treated as if they had been converted as of the Effective Time into the
right to receive the Merger Consideration as if such holder had made a Cash
Election. The Company shall give Parent and Holdco prompt notice of any demands
received by the Company for appraisal of shares of Company Common Stock. Except
as required by applicable law or with the prior written consent of Parent or
Holdco, the Company shall not make any payment with respect to, or settle or
offer to settle, any such demands. At the Effective Time, each certificate (a
"CERTIFICATE") formerly representing any shares of Company Common Stock, other
than Dissenting Shares and the shares to be canceled or to remain outstanding
pursuant to SECTION 1.7(E), shall thereafter represent only the right to receive
the Merger Consideration and the right to receive any distribution or dividends
pursuant to SECTION 1.9.
1.8 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Prior to the Effective Time, Holdco shall designate a bank or trust
company to act as agent for the holders of shares of Company Common Stock in
connection with the Company Merger (the "EXCHANGE AGENT") to receive the Merger
Consideration to which holders of such shares shall become entitled pursuant to
SECTION 1.7. Following the Effective Time, Holdco will deposit with the Exchange
Agent certificates representing Holdco Common Stock and cash sufficient to make
all payments pursuant to SECTIONS 1.7(A) and 1.11 and, when and as needed,
Parent or Holdco will deposit with the Exchange Agent cash sufficient to make
all payments pursuant to SECTION 1.8. Such funds shall be invested by the
Exchange Agent as directed by Holdco, provided that such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations rated A-1 or P-1 or better by Xxxxx'x Investors Services, Inc.
or Standard & Poor's Corporation, respectively, or in certificates of deposit,
bank repurchase agreements or banker's acceptances of commercial banks with
capital exceeding $500 million.
(b) Promptly after the Effective Time, Holdco shall cause to be mailed
to each record holder, as of the Effective Time, of an outstanding certificate
or certificates which immediately prior to the Effective Time represented shares
of Company Common Stock (the "CERTIFICATES"), (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates for payment of the Merger Consideration therefor
and (ii) an election form (the "ELECTION FORM") providing for such holders to
make the Cash Election and/or the Stock Election. Any Election other than a
deemed Cash Election shall be validly made only if the Exchange Agent shall have
received by 5:00 p.m., New York City time, on a date (the "ELECTION DEADLINE")
to be decided upon by Holdco (which date shall not be later than the twentieth
business day after the Effective Time), an Election Form properly completed and
executed (with the signature or signatures thereon guaranteed to the extent
required by the Election Form) by such holder accompanied by such holder's
Certificates, or by an appropriate guarantee of delivery of such Certificates
from a member of any registered national securities exchange or of
6
the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States as set forth in such Election Form. Any
holder of Company Common Stock who has made an election by submitting an
Election Form to the Exchange Agent may at any time prior to the Election
Deadline change such holder's election by submitting a revised Election Form,
properly completed and signed that is received by the Exchange Agent prior to
the Election Deadline. Any holder of Company Common Stock may at any time prior
to the Election Deadline revoke his election and withdraw his Certificates
deposited with the Exchange Agent by written notice to the Exchange Agent
received by the close of business on the day prior to the Election Deadline.
Upon surrender to the Exchange Agent of a Certificate, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration for each share formerly
represented by such Certificate and such Certificate shall then be cancelled. No
interest shall be paid or accrued for the benefit of holders of the Certificates
on the Merger Consideration payable upon the surrender of the Certificates. If
payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable.
(c) At any time following six months after the Effective Time, Holdco
shall be entitled to require the Exchange Agent to deliver to it any funds
(including any interest received with respect thereto) which had been made
available to the Exchange Agent and which have not been disbursed to holders of
Certificates and, thereafter, such holders shall be entitled to look to Holdco
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates. Notwithstanding the foregoing, neither Holdco
nor the Exchange Agent shall be liable to any holder of a Certificate for the
Merger Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such shares except as otherwise provided for
herein or by applicable law.
1.9 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions declared or made with respect to shares of Holdco Common Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to shares of Holdco Common Stock that
such holder would be entitled to receive upon surrender of such Certificate and
no cash payment in lieu of fractional shares shall be paid to any
7
such holder pursuant to SECTION 1.11 until such holder shall surrender such
Certificate in accordance with SECTION 1.8. Subject to the effect of applicable
laws, following the surrender of any such Certificate, there shall be paid to
such holder of shares of Holdco Common Stock issuable in exchange therefor,
without interest, (a) promptly after the time of such surrender, the amount of
any cash payable in lieu of fractional shares of Holdco Common Stock to which
such holder is entitled pursuant to SECTION 1.11 and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Holdco Common Stock, and (b) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such shares of Holdco
Common Stock.
1.10 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Holdco Common Stock issued and cash paid upon the surrender for exchange of
Certificates in accordance with the terms of this ARTICLE 1 (including any cash
paid pursuant to SECTION 1.11) shall be deemed to have been issued (and paid) in
full satisfaction of all rights represented by such Certificates.
1.11 FRACTIONAL SHARES.
(a) No certificates or scrip or shares of Holdco Common Stock
representing fractional shares of Holdco Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional interests will not
entitle the owner thereof to vote or to have any rights of a stockholder of
Holdco or a holder of shares of Holdco Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Company Merger who
would otherwise have been entitled to receive a fraction of a share of Holdco
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to the product of (i) such fractional part of a share of Holdco Common
Stock multiplied by (ii) the average of the closing prices of Parent Common
Stock in the New York Stock Exchange for the five trading days prior to the
Effective Time.
1.12 LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Holdco, the
posting by such person of a bond in such reasonable amount as Holdco may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby and any unpaid
dividends and distributions on shares of Holdco Common Stock deliverable in
respect thereof, pursuant to this Agreement.
1.13 WITHHOLDING RIGHTS. Each of the Company Surviving Corporation and
Holdco shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules
8
and regulations promulgated thereunder, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Company
Surviving Corporation or Holdco, as the case may be, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the shares of Company Common Stock in respect of which such deduction and
withholding was made by the Company Surviving Corporation or Holdco, as the case
may be.
1.14 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent, Holdco,
the Company and Acquisition I shall use all reasonable efforts to take all such
actions as may be necessary or appropriate in order to effectuate the Company
Merger under the Delaware Law as promptly as commercially practicable. If at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Company Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of either the Company or Acquisition
I, the officers and directors of the Company Surviving Corporation are fully
authorized in the name of each constituent corporation or otherwise to take, and
shall take, all such lawful and necessary action. Prior to the Effective Time,
the Company shall cause the Company's directors to submit their resignations
from the Company's Board of Directors, such resignations to be effective at the
Effective Time.
1.15 PARENT MERGER. All matters pertaining to the conversion of outstanding
capital stock of Parent into capital stock of Holdco in the Parent Merger shall
be governed by the terms and provisions of the Parent Merger Agreement and
Section 251(g) and other applicable provisions of the Delaware Law
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as publicly disclosed by the Company in the Company SEC Reports (as
defined in SECTION 2.4(a)) filed with the SEC prior to the date of this
Agreement and except as set forth on the disclosure letter (each section of
which qualifies the correspondingly numbered representation and warranty or
covenant to the extent specified therein, provided that any disclosure set forth
with respect to any particular section shall be deemed to be disclosed in
reference to all other applicable sections of this Agreement if the disclosure
in respect of the particular section is sufficient on its face without further
inquiry reasonably to inform Parent of the information required to be disclosed
in respect of the other sections to avoid a breach under the representation and
warranty or covenant corresponding to such other sections) previously delivered
by the Company to Parent (the "COMPANY DISCLOSURE LETTER"), the Company hereby
represents and warrants to Parent and Holdco as follows. "To the knowledge of
the Company" and similar phrases mean the actual knowledge of the individuals
described in the Company Disclosure Letter without independent investigation or
inquiry.
2.1 ORGANIZATION.
(a) The Company and each corporation, partnership, joint venture or
other legal entity of which the Company owns, directly or indirectly, 50% or
more of the stock or other
9
equity interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity (the "COMPANY SUBSIDIARIES") is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite power and authority and any necessary
governmental approvals to own, lease and operate its property and to carry on
its business as now being conducted. The Company and each of the Company
Subsidiaries is duly qualified and/or licensed, as may be required, and in good
standing in each of the jurisdictions in which the nature of the business
conducted by it or the character of the property owned, leased or used by it
makes such qualification and/or licensing necessary, except in such
jurisdictions where the failure to be so qualified and/or licensed would not,
individually or in the aggregate, have a Company Material Adverse Effect. A
"COMPANY MATERIAL ADVERSE EFFECT" means any change, effect, fact, event,
condition or development that would have or be reasonably likely to have a
material adverse effect on (i) the condition (financial or otherwise), business,
operations or assets of the Company and the Company Subsidiaries considered as a
single enterprise or (ii) the ability of the Company to consummate the
transactions contemplated by this Agreement. Notwithstanding anything to the
contrary herein, any change, effect, fact, event or condition which adversely
affects the oil and gas exploration and production industry generally or which
arises out of general economic conditions shall not be considered in determining
whether a Company Material Adverse Effect has occurred. The copies of the
certificate of incorporation and bylaws of the Company which are incorporated by
reference as exhibits to the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 are complete and correct copies of such documents as in
effect on the date of this Agreement.
(b) SECTION 2.1(A) of the Company Disclosure Letter lists all of the
Company Subsidiaries and their respective jurisdictions of incorporation. All
the outstanding shares of capital stock of, or other equity interests in, each
Company Subsidiary have been validly issued and are fully paid and nonassessable
and are owned directly or indirectly by the Company, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever ("LIENS") and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). Other than joint ventures, operating
agreements and similar arrangements typical in the Company's industry entered
into in the ordinary course of business, neither the Company nor any of the
Company Subsidiaries directly or indirectly owns any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
other person that is or would reasonably be expected to be material to the
Company and the Company Subsidiaries considered as a single entity. The term
"person" as used in this Agreement will be interpreted broadly to include any
corporation, company, group, partnership or other entity or individual.
2.2 CAPITAL STOCK OF THE COMPANY.
(a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock, of which
18,034,047 are issued and outstanding and 15,000,000 shares of Preferred Stock,
of which none are issued and outstanding. In addition, there are 1,838,801
shares of Company Common Stock held in the treasury of the Company. Such issued
shares of Company Common Stock have been duly
10
authorized, validly issued, are fully paid and nonassessable and free of
preemptive rights. The Company has not, subsequent to December 31, 2000,
declared or paid any dividend, or declared or made any distribution on, or
authorized the creation or issuance of, or issued, or authorized or effected any
split-up or any other recapitalization of, any of its capital stock, or directly
or indirectly redeemed, purchased or otherwise acquired any of its outstanding
capital stock. The Company has not heretofore agreed to take any such action,
and there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
of the Company.
(b) SECTION 2.2(B) of the Company Disclosure Letter lists all
outstanding options, warrants or other rights to subscribe for, purchase or
acquire from the Company or any Company Subsidiary any capital stock of the
Company or securities convertible into or exchangeable for capital stock of the
Company. The foregoing does not include the Rights outstanding under the Rights
Plan. There are no stock appreciation rights ("SARS") attached to the options,
warrants or rights.
(c) Except as otherwise described in this SECTION 2.2 or as described
in SECTION 2.2(B) of the Company Disclosure Letter, neither the Company nor any
of the Company Subsidiaries has or is subject to or bound by any outstanding
option, warrant, call, subscription or other right (including any preemptive or
similar right), agreement, arrangement or commitment which (i) obligates the
Company or any of the Company Subsidiaries to issue, sell or transfer, or
repurchase, redeem or otherwise acquire, any shares of the capital stock or
other equity interests of the Company or any of the Company Subsidiaries, (ii)
obligates the Company or any of the Company Subsidiaries to provide funds to
make any investment (in the form of a loan, capital contribution or otherwise)
in any such Company Subsidiary or any other entity, (iii) restricts the transfer
of any shares of capital stock of the Company or any of the Company
Subsidiaries, or (iv) relates to the holding, voting or disposition of any
shares of capital stock of the Company or any of the Company Subsidiaries. No
bonds, debentures, notes or other indebtedness of the Company or any of the
Company Subsidiaries having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
the stockholders of the Company or any of the Company Subsidiaries may vote are
issued or outstanding.
2.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the requisite corporate power to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement by the Company, the performance by the Company of its
obligations hereunder and the consummation by the Company of the transactions
contemplated herein have been duly authorized by the board of directors of the
Company. The board of directors of the Company has declared advisable and
approved this Agreement such that the restrictions on business combinations set
forth in Section 203 of the Delaware Law and the restrictions on business
transactions set forth in Article 7 of the Company's Certificate of
Incorporation are inapplicable to Parent, Holdco, Acquisition I and Acquisition
II in connection with this Agreement and the transactions contemplated hereby.
No other corporate proceedings on the part of the Company or any of the Company
Subsidiaries are necessary to authorize the execution and delivery of this
11
Agreement, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby, except for
the approval of the Company's stockholders as contemplated in SECTION 5.1. This
Agreement has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
(b) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
herein nor compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of the certificate or articles of
incorporation or bylaws of the Company or any of the Company Subsidiaries, (ii)
result in a violation or breach of any provisions 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, cancellation of, or accelerate the
performance or increase the fees required by, or result in a right of
termination, amendment or acceleration under, a right to require redemption or
repurchase of or otherwise "put" securities, or the loss of a material benefit
under, or result in the creation of a Lien upon any of the properties or assets
of the Company or any Company Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, lease, agreement or other instrument or obligation of any kind to
which the Company or any of the Company Subsidiaries is a party or by which the
Company or any of the Company Subsidiaries or any of their respective properties
or assets, may be bound or (iii) subject to compliance with the statutes and
regulations referred to in SUBSECTION (C) below, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation ("ORDER")
applicable to the Company or any of the Company Subsidiaries or any of their
respective properties or assets, other than any such event described in items
(ii) or (iii) which would not (x) prevent the consummation of the transactions
contemplated hereby or (y) have a Company Material Adverse Effect.
(c) Except for compliance with the provisions of the Delaware Law, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act ("HSR ACT"), the Securities
Exchange Act of 1934 ("'34 ACT"), the Securities Act of 1933 (the "'33 ACT"),
the rules and regulations of the New York Stock Exchange and the "blue sky" laws
of various states and foreign laws, no action by any governmental authority is
necessary for the Company's execution and delivery of this Agreement or the
consummation by the Company of the transactions contemplated hereby except where
the failure to obtain or take such action would not have a Company Material
Adverse Effect.
2.4 SEC REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1998, the Company has filed with the Securities
and Exchange Commission ("SEC") all forms, reports, schedules, registration
statements, definitive proxy statements and other documents (the "COMPANY SEC
REPORTS") required to be filed by the Company with the SEC. As of their
respective dates and, if amended or superseded by a subsequent filing prior to
the date of this Agreement or the Effective Time, then as of the date of such
filing, the Company SEC Reports complied or will comply in all material respects
with the
12
requirements of the '33 Act, the '34 Act and the rules and regulations of the
SEC promulgated thereunder applicable to such Company SEC Reports, and none of
the Company SEC Reports contained or will contain any untrue statement of a
material fact or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. None of the Company
Subsidiaries is required to file any forms, reports or other documents with the
SEC pursuant to Section 12 or 15 of the '34 Act.
(b) The Consolidated Balance Sheets and the related Consolidated
Statements of Operations, Consolidated Statements of Stockholders' Equity and
Consolidated Statements of Cash Flows (including, in each case, any related
notes and schedules thereto) (collectively, the "COMPANY FINANCIAL STATEMENTS")
of the Company contained in the Company SEC Reports have been prepared from the
books and records of the Company and its consolidated subsidiaries, and the
Company Financial Statements present fairly in all material respects the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated subsidiaries as of the dates or
for the periods presented therein in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as otherwise noted therein, including the related
notes, and subject, in the case of quarterly financial statements, to normal and
recurring year-end adjustments in the ordinary course of business.
(c) Since March 31, 2001, neither the Company nor any of the Company
Subsidiaries has incurred any liabilities or obligations of any nature, whether
accrued, contingent or absolute or otherwise (including without limitation under
royalty arrangements), except for those arising in the ordinary course of
business consistent with past practice and that would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
2.5 CERTAIN CHANGES. Since March 31, 2001, the Company and each of the
Company Subsidiaries have conducted their businesses only in the ordinary course
consistent with past practice, and there has not been: (A) any Company Material
Adverse Effect or (B) any action taken by the Company or any of the Company
Subsidiaries that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of SECTION 4.1.
2.6 LITIGATION. There is no suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation (the "COMPANY
CASES") or Order pending or, to the knowledge of the Company, threatened against
the Company or any of the Company Subsidiaries which, considered individually or
in the aggregate, is reasonably likely to have, a Company Material Adverse
Effect nor is there any judgment, decree, injunction, rule or order of any court
or other governmental entity or arbitrator outstanding against the Company or
any of the Company Subsidiaries having, or which, considered individually or in
the aggregate, is reasonably likely to have, a Company Material Adverse Effect.
2.7 DISCLOSURE IN PROXY STATEMENT. No information supplied by the Company
for inclusion in the proxy statement to be sent to the shareholders of the
Company in connection with the Shareholders' Meeting (as defined in SECTION 5.1)
(the "PROXY STATEMENT/PROSPECTUS"),
13
shall, at the date the Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto) is first mailed to shareholders and at the time of the
Shareholders' Meeting and at the Effective Time, be false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Shareholder's Meeting which has become false
or misleading. No information supplied by the Company for inclusion in the S-4
with respect to the issuance of Holdco Common Stock in the Merger will, at the
time the S-4 becomes effective under the '33 Act, 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 not misleading. The
portions of the Proxy Statement/Prospectus and S-4 supplied by the Company
(whether by inclusion or by incorporation by reference therein) will comply as
to form in all material respects with the requirements of the '33 Act and the
'34 Act and the rules and regulations of the SEC thereunder. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent or Holdco which is contained in any of the
foregoing documents.
2.8 BROKER'S OR FINDER'S FEES. Except for Xxxxxx Brothers, Inc. ("XXXXXX"),
whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with Xxxxxx, a copy of which has been provided to Parent, no
agent, broker, person or firm acting on behalf of the Company or under its
authority is or will be entitled to any advisory, commission or broker's or
finder's fee from any of the parties hereto in connection with any of the
transactions contemplated herein.
2.9 EMPLOYEE PLANS.
(a) Other than as set forth on Section 2.9(a) of the Company Disclosure
Letter, there are no Employee Benefit Plans established, maintained or
contributed to by the Company. An "EMPLOYEE BENEFIT PLAN" means any employee
benefit plan, program, policy, practices, agreement or other arrangement
providing benefits to any current or former employee, officer or director of the
Company or any of the Company Subsidiaries or any beneficiary or dependent
thereof that is sponsored or maintained by the Company or any of the Company
Subsidiaries or to which the Company or any of the Company Subsidiaries
contributes or is obligated to contribute, whether or not written, including
without limitation any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (whether or not such plan is subject to ERISA) and any
bonus, incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, program or
policy.
(b) With respect to each Employee Benefit Plan, the Company has made
available to Parent a true, correct and complete copy of: (i) each writing
constituting a part of such Employee Benefit Plan (or to the extent no copy
exists, a materially accurate description); (ii) for the three most recent plan
years, Annual Report (Form 5500 Series), if any; (iii) the current summary plan
description and any material modifications thereto, if required to be furnished
under ERISA; and (iii) the most recent determination letter from the IRS, if
any.
14
(c) Each Employee Benefit Plan that is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service that has not been
revoked, and to the knowledge of the Company, no event has occurred and no
condition exists that could reasonably be expected to result in the revocation
of any such determination letter.
(d) Except as is not reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect, all contributions required
to be made to any Employee Benefit Plan (or to any person pursuant to the terms
thereof) have been made or the amount of such payment or contribution obligation
has been reflected in the Company SEC Reports filed with the SEC prior to the
date of this Agreement.
(e) Except as is not reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect, with respect to each
Employee Benefit Plan, the Company and the Company Subsidiaries have complied,
and are now in compliance, with all provisions of ERISA, the Code and all laws
and regulations applicable to such Employee Benefit Plans and each Employee
Benefit Plan has been established and administered in accordance with its terms.
(f) No Employee Benefit Plan is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan with the meaning of
Section 4001(a)(3) of ERISA) and no liability (other than for premiums to the
PBGC) under Title IV of ERISA has been or is expected to be incurred by the
Company or any of the Company Subsidiaries.
(g) The Company and the Company Subsidiaries have no material
liability for life, health or medical benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
(h) The consummation of the transactions contemplated by this Agreement
will not, either alone or in connection with termination of employment, (i)
entitle any current or former employee or officer of the Company or the Company
Subsidiaries to severance pay or any other material payment, except as expressly
provided in this Agreement, (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or officer or (iii)
give rise to the payment of any amount that would not be deductible under
Section 280G of the Code.
(i) Except as is not reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect, there are no pending or,
to the knowledge of the Company, threatened claims, actions or suits by or on
behalf of any Employee Benefit Plan or by any employee or beneficiary covered
under any such Employee Benefit Plan, involving any such Employee Benefit Plan
(other than claims in the ordinary course of business) and, to the knowledge of
the Company, no facts or circumstances exist that could reasonably be expected
to give rise to any such claims, actions or suits.
(j) The Company does not have any outstanding loans to any employees
of the Company.
15
2.10 BOARD RECOMMENDATION; COMPANY ACTION; REQUISITE VOTE OF THE COMPANY'S
STOCKHOLDERS.
(a) The board of directors of the Company has by resolutions duly
adopted by the unanimous vote of its entire board of directors at a meeting of
such board duly called and held on May 13, 2001, determined that the Company
Merger is fair to and in the best interests of the Company and its stockholders,
approved and declared advisable this Agreement, the Company Merger and the other
transactions contemplated hereby and recommended that the stockholders of the
Company approve and adopt this Agreement and the Company Merger. In connection
with such approval, the Company's board of directors received from Xxxxxx an
opinion to the effect that the consideration to be paid to the stockholders of
the Company in the Company Merger is fair to the stockholders of the Company
from a financial point of view subject to the assumptions and qualifications in
such opinion. The Company has been authorized by Xxxxxx to include such opinion
in its entirety in the Proxy Statement/Prospectus, so long as such inclusion is
in form and substance reasonably satisfactory to Xxxxxx and its counsel.
(b) The affirmative vote of stockholders of the Company required for
approval and adoption of this Agreement and the Company Merger is and will be no
greater than a majority of the outstanding shares of Company Common Stock and no
other vote of any holder of the Company's securities is required for the
approval and adoption of this Agreement or the Company Merger.
2.11 TAXES.
(a) The Company and the Company Subsidiaries have timely filed all
federal, state, local, and other tax returns and reports required to be filed on
or before the Effective Date by the Company and each Company Subsidiary under
applicable laws and have paid all required taxes (including any additions to
taxes, penalties and interest related thereto) due and payable on or before the
date hereof and all such tax returns and reports were true, complete and
correct, except for such failures to file or failures to be true and correct as
would not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect. The Company and the Company Subsidiaries have
withheld and paid over all taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding requirements,
including the maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor or other third party, except for such failures to withhold or pay
over and such failures to comply as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect. There are no
encumbrances on any of the assets, rights or properties of the Company or any
Company Subsidiary with respect to taxes, other than liens for taxes not yet due
and payable or for taxes that the Company or a Company Subsidiary is contesting
in good faith through appropriate proceedings.
(b) No audit of the tax returns of the Company or any Company
Subsidiary is pending or, to the knowledge of the Company, threatened. No
deficiencies have been asserted against the Company or any Company Subsidiary as
a result of examinations by any state, local, federal or foreign taxing
authority and no issue has been raised by any examination conducted by
16
any state, local, federal or foreign taxing authority that, by application of
the same principles, might result in a proposed deficiency for any other period
not so examined. Neither the Company nor any Company Subsidiary is subject to
any private letter ruling of the Internal Revenue Service or comparable rulings
of other tax authorities that will be binding on the Company or any Company
Subsidiary with respect to any period following the Closing Date.
(c) There are no agreements, waivers of statutes of limitations, or
other arrangements providing for extensions of time in respect of the assessment
or collection of any unpaid taxes against the Company or any Company Subsidiary.
The Company and each Company Subsidiary have disclosed on their federal income
tax returns all positions taken therein that could, if not so disclosed, give
rise to a substantial understatement penalty within the meaning of Section 6662
of the Code.
(d) Neither the Company nor any Company Subsidiary is a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by The Tax Equity and Fiscal Responsibility Act of
1982. None of the property owned by the Company nor a Company Subsidiary is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
Neither the Company nor any Company Subsidiary is required to make any
adjustment under Code Section 481(a) by reason of a change in accounting method
or otherwise except possibly by reason of the Merger. Neither the Company nor
any Company Subsidiary has been a member of an affiliated group of corporations
filing a consolidated federal income tax return (other than a group the common
parent of which was the Company) or has any liability for the taxes of another
person arising pursuant to Treasury Regulation ss. 1.1502-6 or analogous
provision of state, local or foreign law, or as a transferee or successor, or by
contract, tax sharing agreement, tax indemnification agreement, or otherwise.
Neither the Company nor any Company Subsidiary has filed a consent under Section
341(f) of the Code with respect to the Company or any Company Subsidiary.
Neither the Company nor any Company Subsidiary has been a party to any
distribution occurring during the two year period prior to the date of this
Agreement in which the parties to such distribution treated the distribution as
one to which Section 355 of the Code applied, except for distributions occurring
among members of the same group of affiliated corporations filing a consolidated
federal income tax return. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, the
production from the xxxxx referred to in Section 3.16.3 of the Company
Disclosure Letter is eligible for credits under Section 29 of the Code with
respect to natural gas produced and sold from such xxxxx before January 1, 2003,
and limited, in the case of each well, to the formation, if any, identified on
Schedule 3.16.3 of the Company Disclosure Letter and the Company and the Company
Subsidiaries are entitled to claim all credits under Section 29 of the Code
arising with respect to all such production subject to any limitations on the
Company's ability to use such credits that may arise under Section 29(b)(6) of
the Code or as a result of the Company's recognizing insufficient taxable income
in a taxable year.
(e) The Company has not taken, or agreed to take any action, and has no
knowledge of any condition, that would prevent the Company Merger and the Parent
Merger, taken together, from qualifying as an exchange described in Section 351
of the Code.
17
2.12 ENVIRONMENTAL. Except for such matters that are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect:
(a) To the knowledge of the Company, there is no condition existing on
any real property or other asset owned, leased or operated by the Company or any
Company Subsidiary or resulting from operations conducted thereon that would
reasonably be expected to give rise to any liability to the Company or any
Company Subsidiary under Environmental Laws or constitute a violation of any
Environmental Laws, and the Company and all Company Subsidiaries are otherwise
in compliance with all applicable Environmental Laws.
(b) None of the Company and the Company Subsidiaries, no current or
former real property or other asset owned, leased or operated by the Company or
any Company Subsidiary, nor the operations currently or formerly conducted
thereon or in relation thereto by the Company or any Company Subsidiary or by
any prior owner, lessee or operator of such real property or other asset, are
subject to any pending or, to the knowledge of the Company, threatened action,
suit, investigation, inquiry or proceeding relating to any Environmental Laws by
or before any court or other governmental authority.
(c) All material permits, notices and authorizations, if any, required
to be obtained or filed in connection with the operation or use of any real
property or other asset owned, leased or operated by the Company or any Company
Subsidiary, including without limitation past or present treatment, storage,
disposal or release of a Hazardous Substance or solid waste into the
environment, have been duly obtained or filed, and the Company is in compliance
in all material respects with the terms and conditions of all such permits,
notices and authorizations.
(d) Hazardous Materials have not been released, disposed of or
arranged to be disposed of by the Company or any Company Subsidiary, in
violation of, or in a manner or to a location that would reasonably be expected
to give rise to liability under, any Environmental Laws.
(e) None of the Company and the Company Subsidiaries has assumed,
contractually or, to the knowledge of the Company, by operation of law, any
liabilities or obligations of third parties under any Environmental Laws, except
in connection with the acquisition of assets or entities associated therewith.
(f) "ENVIRONMENTAL LAWS" means any federal, state and local energy,
public utility, health, safety and environmental laws, regulations, orders,
permits, licenses, approvals, ordinances, rule of common law, and directives
including without limitation the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), the Occupational Health
and Safety Act, the Toxic Substances Control Act, the Endangered Species Act,
the Oil Pollution Act and any similar foreign, state or local law.
(g) "HAZARDOUS SUBSTANCE" means (a) any "hazardous substance," as
defined by CERCLA, (b) any "hazardous waste," as defined by RCRA, or (c) any
pollutant or
18
contaminant or hazardous, dangerous or toxic chemical or material or any other
substance including, but not limited to asbestos, buried contaminants, regulated
chemicals, flammable explosives, radioactive materials (including without
limitation naturally occurring radioactive materials), polychlorinated
biphenyls, natural gas, natural gas liquids, liquified natural gas, condensates,
petroleum (including without limitation crude oil and petroleum products),
regulated by, or that could result in the imposition of liability under, any
Environmental Law or other applicable law of any applicable governmental
authority relating to or imposing liability or standards of conduct concerning
any hazardous, toxic, or dangerous waste, substance or material, all as amended
or hereafter amended.
2.13 COMPLIANCE WITH LAWS. The Company and the Company Subsidiaries are in
compliance in all material respects with any applicable law, rule or regulation
of any United States federal, state, local or foreign government or agency
thereof that materially affects the business, properties or assets of the
Company and the Company Subsidiaries, and no notice, charge, claim, action or
assertion has been received by the Company or any Company Subsidiary or, to the
Company's knowledge, has been filed, commenced or threatened against the Company
or any Company Subsidiary alleging any such violation that would be reasonably
likely to have a Company Material Adverse Effect. All licenses, permits and
approvals required under such laws, rules and regulations are in full force and
effect, except where the failure to be in full force and effect would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect. Notwithstanding the foregoing, no representation or
warranty in this SECTION 2.13 is made with respect to permits issued under or
matters relating to Environmental Laws, which are covered exclusively by the
provisions set forth in SECTION 2.12, or with respect to permits to conduct
exploratory operations that have not been commenced as of the date of this
Agreement.
2.14 EMPLOYMENT MATTERS. Neither the Company nor any Company Subsidiary:
(i) is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is any such contract or agreement presently being negotiated,
nor, to the knowledge of the Company, is there, nor has there been in the last
five years, a representation campaign respecting any of the employees of the
Company or any of the Company Subsidiaries, and, to the knowledge of the
Company, there are no campaigns being conducted to solicit cards from employees
of Company or any of the Company Subsidiaries to authorize representation by any
labor organization; (ii) is a party to, or bound by, any consent decree with, or
citation by, any governmental agency relating to employees or employment
practices which would reasonably be expected to have a Company Material Adverse
Effect; or (iii) is the subject of any proceeding asserting that it has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor, as of the date of this Agreement, is
there pending or, to the knowledge of the Company, threatened, any labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving the Company or
any of the Company Subsidiaries which, with respect to any event described in
this clause (iii), would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
19
2.15 RIGHTS AGREEMENT. The Company has taken all action that may be
necessary under the Rights Agreement, so that the execution of this Agreement by
the parties hereto and the consummation of the Company Merger, the Parent Merger
and the other transactions contemplated hereby shall not cause (a) the Parent,
Holdco, Acquisition I or Acquisition II to become an Acquiring Person (as
defined in the Rights Agreement), or (b) a Distribution Date or a Stock
Acquisition Date (as such terms are defined in the Rights Agreement) to occur.
2.16 OIL AND GAS RESERVES. The Company has furnished to Parent the
Company's estimate of Company's and Company Subsidiaries' oil and gas reserves
as of January 1, 2001, as audited by Netherland, Xxxxxx & Associates, Inc.
("COMPANY RESERVE REPORT"). Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, the
factual, non-interpretive data on which the Company Reserve Report was based for
purposes of estimating the oil and gas reserves set forth in the Company Reserve
Report was accurate in all material respects.
2.17 CERTAIN CONTRACTS AND ARRANGEMENTS. Neither the Company nor any of the
Company Subsidiaries is a party to or bound by any agreement or other
arrangement that limits or otherwise restricts the Company or any of its
Subsidiaries or any of their respective affiliates or any successor thereto, or
that would, after the Effective Time, to the knowledge of the Company,
materially limit or restrict Holdco or the Parent Surviving Corporation or any
of their subsidiaries or any of their respective affiliates or any successor
thereto, from engaging or competing in the oil and gas exploration and
production business in any significant geographic area, except for joint
ventures, area of mutual interest agreements entered into in connection with
prospect reviews and similar arrangements entered into in the ordinary course of
business. Except as would not reasonably be expected to have a Company Material
Adverse Effect, neither the Company nor any Company Subsidiary is in breach or
default under any contract filed or incorporated by reference as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31, 2000
nor, to the knowledge of the Company, is any other party to any such contract in
breach or default thereunder.
2.18 FINANCIAL AND COMMODITY HEDGING. The Company SEC Reports accurately
summarize the outstanding Hydrocarbon and financial hedging positions
attributable to the production of the Company and the Company Subsidiaries
(including fixed price contracts, collars, swaps, caps, xxxxxx and puts) as of
the date reflected therein, and there have been no changes since the date
thereof.
2.19 PROPERTIES. Except for goods and other property sold, used or
otherwise disposed of since January 1, 2001 in the ordinary course of business,
the Company and the Company Subsidiaries have good and defensible title to all
oil and gas properties forming the basis for the reserves reflected in the
Company Reserve Report as attributable to interests owned by the Company and the
Company Subsidiaries, and to all other properties, interests in properties and
assets, real and personal, reflected in the Company SEC Reports filed prior to
the date of this Agreement as owned by the Company and the Company Subsidiaries,
free and clear of any Liens, except: (i) Liens associated with obligations
reflected in the Company Reserve Report or the Company SEC Reports filed prior
to the date of this Agreement, (ii) Liens for current taxes not yet due and
payable, and (iii) such imperfections of title, easements, Liens, or other
matters
20
and failures of title as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. The leases and other
agreements pursuant to which the Company or any of the Company Subsidiaries
leases or otherwise acquires or obtains operating rights affecting any real or
personal property are in good standing, valid and effective, and the rentals due
by the Company or any Company Subsidiary to any lessor of any such oil and gas
leases have been properly paid, except in each case as would not reasonably be
expected to have a Company Material Adverse Effect.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PARENT,
HOLDCO AND ACQUISITION I
Except as publicly disclosed by the Parent in the Parent SEC Reports (as
defined in SECTION 3.4(A) filed with the SEC prior to the date of this Agreement
and except as set forth on the disclosure letter (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein, provided that any disclosure set forth with
respect to any particular section shall be deemed to be disclosed in reference
to all other applicable sections of the disclosure letter if the disclosure in
respect of the particular section is sufficient on its face without further
inquiry reasonably to inform the Company of the information required to be
disclosed in respect of the other sections to avoid a breach under the
representation and warranty or covenant corresponding to such other sections)
previously delivered by the Parent to the Company (the "PARENT DISCLOSURE
LETTER"), the Parent Holdco and Acquisition I hereby jointly and severally
represent and warrant to the Company as follows. "To the knowledge of the
Parent" and similar phrases mean the actual knowledge of the Chief Executive
Officer, Chief Financial Office and General Counsel of Parent.
3.1 ORGANIZATION.
(a) Each of Parent, Holdco and Acquisition I is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Parent, Holdco and Acquisition I has the requisite corporate
power and authority and any necessary government approvals to own, lease and
operate its property and to carry on its business as now being conducted. Each
of Parent, Holdco and Acquisition I is duly qualified and/or licensed, as may be
required, and in good standing in each of the jurisdictions in which the nature
of the business conducted by it or the character of the property owned, leased
or used by it makes such qualification and/or licensing necessary, except in
such jurisdictions where the failure to be so qualified and/or licensed would
not, individually or in the aggregate, have a Parent Material Adverse Effect. A
"PARENT MATERIAL ADVERSE EFFECT" means any change, effect, fact, event,
condition or development that would have or be reasonably likely to have a
material adverse effect on (i) the condition (financial or otherwise), business,
operations or assets of the Parent and the direct and indirect subsidiaries of
the Parent (the "PARENT SUBSIDIARIES") considered as a single enterprise or (ii)
the ability of the Parent to consummate the transactions contemplated by this
Agreement. Notwithstanding anything to the contrary herein, any change, effect,
fact, event or condition which adversely affects the oil and gas exploration and
production industry generally or which arises out of general economic conditions
shall not be considered in determining whether a Parent Material Adverse Effect
has occurred. The copies of the certificate
21
of incorporation of Parent which is incorporated by reference to, and the bylaws
of Parent which are filed as exhibits to, the Company's Annual Report on Form
10-K for the year ended December 31, 2000 are complete and correct copies of
such documents as in effect on the date of this Agreement.
(b) All the outstanding shares of capital stock of, or other equity
interests in, each Parent Subsidiary have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by the Parent, free of
all Liens and free of any other restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests). Neither the Parent nor any of the Parent Subsidiaries
directly or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any other person that is or
would reasonably be expected to be material to the Parent and the Parent
Subsidiaries considered as a single entity.
3.2 CAPITAL STOCK.
(a) As of April 30, 2001, the authorized capital stock of the Parent
consists of 300,000,000 shares of Parent Common Stock, of which 94,966,927 are
issued and outstanding and 40,000,000 shares of Preferred Stock, of which none
are issued and outstanding. There are 6,832,090 shares of Parent Common Stock
held in the treasury of the Company. Such issued shares of Parent Common Stock
have been duly authorized, validly issued, are fully paid and nonassessable and
free of preemptive rights. Also, Sun Pennsylvania Limited Partnership, a wholly
owned entity of the Parent, owns 1,107,692 shares of the Parent's Common Stock.
The Parent has not, subsequent to December 31, 2000, declared or paid any
dividend, or declared or made any distribution on, or authorized the creation or
issuance of, or issued, or authorized or effected any split-up or any other
recapitalization of, any of its capital stock, or directly or indirectly
redeemed, purchased or otherwise acquired any of its outstanding capital stock.
The Parent has not heretofore agreed to take any such action, and there are no
outstanding contractual obligations of the Parent to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of the Parent.
(b) SECTION 3.2(B) of the Parent Disclosure Letter lists the aggregate
number of outstanding options, warrants or other rights to subscribe for,
purchase or acquire from the Parent or any Parent Subsidiary any capital stock
of the Company or securities convertible into or exchangeable for capital stock
of the Parent. There are no SARs attached to the options, warrants or rights.
(c) Except as otherwise described in this SECTION 3.2(C) or as
described in SECTION 3.2(B) of the Parent Disclosure Letter, none of Parent,
Holdco or any of the Parent Subsidiaries has or is subject to or bound by any
outstanding option, warrant, call, subscription or other right (including any
preemptive or similar right), agreement, arrangement or commitment which (i)
obligates Parent or Holdco to issue, sell or transfer, or repurchase, redeem or
otherwise acquire, any shares of the capital stock or other equity interests of
Parent, or Holdco, (ii) restricts the transfer of more than 5% of the shares of
capital stock of Parent or Holdco, or (iii) relates to the holding, voting or
disposition of more than 5% of the shares of capital stock of Parent or Holdco.
No bonds, debentures, notes or other indebtedness of Parent,
22
Holdco or any of the Parent Subsidiaries having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which the stockholders of Parent, Holdco or any of the Parent
Subsidiaries may vote are issued or outstanding.
(d) The authorized capital stock of Holdco and the issued and
outstanding capital stock of Holdco as of the Effective Time will be the same as
that of Parent immediately prior to such date, except as otherwise contemplated
by this Agreement. The shares of Holdco Common Stock to be issued in the Company
Merger will be duly authorized by all necessary corporate action on the part of
Holdco and when issued in accordance with the terms hereof will be validly
issued, fully paid, non-assessable and free of preemptive rights.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE PARENT MERGER AGREEMENT.
(a) Each of Parent, Holdco, Acquisition I and Acquisition II has the
requisite corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Parent,
Holdco, Acquisition I and Acquisition II the performance by Parent, Holdco,
Acquisition I and Acquisition II of their respective obligations hereunder and
the consummation by Parent, Holdco, Acquisition I and Acquisition II of the
transactions contemplated herein have been duly authorized by the respective
boards of directors of Parent, Holdco, Acquisition I and Acquisition II, and no
other corporate proceedings on the part of Parent, Holdco, Acquisition I or
Acquisition II or any of the Parent Subsidiaries are necessary to authorize the
execution and delivery of this Agreement, the performance by Parent, Holdco,
Acquisition I and Acquisition II of their respective obligations hereunder and
the consummation by Parent, Holdco, Acquisition I and Acquisition II of the
transactions contemplated hereby, other than the execution and delivery to each
of Acquisition I and Acquisition II by Holdco of a written consent of sole
stockholder adopting this Agreement, which consent Parent will so execute and
deliver immediately following execution of this Agreement and the Parent Merger
Agreement, respectively. This Agreement has been duly executed and delivered by
Parent, Holdco, Acquisition I and Acquisition II and constitutes a valid and
binding obligation of Parent, Holdco, Acquisition I and Acquisition II,
enforceable in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
transfer, reorganization or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
(b) Neither the execution and delivery of this Agreement by Parent
Holdco, Acquisition I or Acquisition II, nor the consummation by Parent, Holdco,
Acquisition I or Acquisition II of the transactions contemplated herein nor
compliance by Parent Holdco, and Acquisition I or Acquisition II with any of the
provisions hereof will (i) conflict with or result in any breach of the
Certificate or Articles of Incorporation or bylaws of Parent or any of the
Parent Subsidiaries or (ii) result in a violation or breach of any provisions
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 of, or
accelerate the performance or increase the fee required by, or result in a right
of termination, amendment or acceleration under, a right to require redemption
or repurchase of or otherwise "put" securities, or the loss of a material
benefit under or result in the creation of any Lien upon any of the properties
or assets of Parent or any of the Parent Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage,
23
indenture, deed of trust, license, contract, lease, agreement or other
instrument or obligation of any kind to which Parent or any of the Parent
Subsidiaries is a party or by which Parent or any of the Parent Subsidiaries or
any of their respective properties or assets may be bound or (iii) subject to
compliance with the statutes and regulations referred to in SUBSECTION (C)
below, violate any Order applicable to Parent or any of the Parent Subsidiaries
or any of their respective properties or assets other than any such event
described in items (ii) or (iii) which would not (x) prevent the consummation of
the transactions contemplated hereby or (y) have a Parent Material Adverse
Effect.
(c) Except for compliance with the provisions of the Delaware Law, the
HSR Act, the '33 Act, the '34 Act and the "blue sky" laws of various states, no
action by any governmental authority is necessary for Parent's or Holdco's
execution and delivery of this Agreement or the consummation by Parent or Holdco
of the transactions contemplated hereby except where the failure to obtain or
take such action would not have a Parent Material Adverse Effect.
3.4 SEC REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1998, Parent has filed with the SEC all forms,
reports, schedules, registration statements, definitive proxy statements and
other documents (the "PARENT SEC REPORTS") required to be filed by Parent with
the SEC. As of their respective dates and, if amended or superseded by a
subsequent filing prior to the date of this Agreement or the Effective Time,
then as of the date of such filing, the Parent SEC Reports complied or will
comply in all material respects with the requirements of the '33 Act, the '34
Act and the rules and regulations of the SEC promulgated thereunder applicable
to such Parent SEC Reports, and none of Parent SEC Reports contained or will
contain any untrue statement of a material fact or omitted or will omit to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. None of Parent Subsidiaries is required to file any forms,
reports or other documents with the SEC pursuant to Section 12 or 15 of the '34
Act.
(b) The Consolidated Balance Sheets and the related Consolidated
Statements of Operations, Consolidated Statements of Stockholders' Equity and
Consolidated Statements of Cash Flows (including, in each case, any related
notes and schedules thereto) (collectively, the "PARENT FINANCIAL STATEMENTS")
of Parent contained in Parent SEC Reports have been prepared from the books and
records of Parent and its consolidated subsidiaries, and the Parent Financial
Statements present fairly in all material respects the consolidated financial
position and the consolidated results of operations and cash flows of the Parent
and its consolidated subsidiaries as of the dates thereof or for the periods
presented therein in conformity with GAAP applied on a consistent basis during
the periods involved (except as otherwise noted therein, including the related
notes, and subject, in the case of quarterly financial statements, to normal and
recurring year-end adjustments that have not been and are not expected to be
material in amount).
3.5 LITIGATION. There is no suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation (the "PARENT
CASES") or Order pending or, to the knowledge of the Parent, threatened against
or affecting the Parent or any of the Parent
24
Subsidiaries, considered individually or in the aggregate, that is reasonably
likely to have, a Parent Material Adverse Effect nor is there any judgment,
decree, injunction, rule or order of any court or other governmental entity or
arbitrator outstanding against the Parent or any of the Parent Subsidiaries
having, or which considered individually or in the aggregate, is reasonably
likely to have, a Parent Material Adverse Effect.
3.6 FINANCING. On the Closing Date, Parent will have sufficient funds
available to it under its existing credit facilities to permit Holdco to pay the
Cash Consideration. Holdco will take all action required to reserve for issuance
the Holdco Common Stock to be issued in the Company Merger.
3.7 PROXY STATEMENT. No information supplied by Parent or Holdco for
inclusion in the S-4 (including the Proxy Statement/Prospectus) will, at the
time the S-4 (as defined in Section 5.6) becomes effective under the '33 Act, at
the date of mailing and the date of the Shareholders' Meeting, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
Notwithstanding the foregoing, Parent and Holdco make no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained in the Proxy Statement/Prospectus or the S-4.
The portions of the Proxy Statement/Prospectus and the S-4 supplied by Parent or
Holdco (whether by inclusion or by incorporation by reference therein) shall
comply as to form in all material respects with the requirements of the '34 Act
and the rules and regulations thereunder and the '33 Act and the rules and
regulations promulgated thereunder, as applicable.
3.8 BROKER'S OR FINDER'S FEES. Except for X.X. Xxxxxx Securities Inc. ("XX
XXXXXX"), whose fees and expenses will be paid by Parent in accordance with
Parent's Agreement with XX Xxxxxx, no agent, broker, person or firm acting on
behalf of Parent or under its authority is or will be entitled to any advisory,
commission or broker's or finder's fee from any of the parties hereto in
connection with any of the transactions contemplated herein.
3.9 PARENT NOT AN INTERESTED STOCKHOLDER. As of the date hereof, neither
Parent nor any of its Affiliates is, with respect to the Company, an "interested
stockholder" as such term is defined in Section 203 of the Delaware Law or
Article 7 of the Company's Certificate of Incorporation.
3.10 INDEPENDENT EVALUATION. Parent and Holdco are experienced and
knowledgeable in the oil and gas business, including without limitation the
hydrocarbon production, transportation, storage, trading, marketing, selling,
purchasing and hedging business, and is aware of its risks. Parent and Holdco
have been afforded the opportunity to examine the materials made available to it
by the Company with respect to the Company and Company Subsidiaries (the
"BACKGROUND MATERIALS"). The Background Materials include files, or copies
thereof, that the Company and Company Subsidiaries have used in their normal
course of business and other information about the Company and Company
Subsidiaries that the Company and Company Subsidiaries have compiled or
generated; however, Parent and Holdco acknowledge and agree that, except for the
representations and warranties of the Company contained in this Agreement,
neither the Company nor any Company Subsidiary or other person
25
has made any representations or warranties, express or implied, written or oral,
as to the accuracy or completeness of the Background Materials or as to any
other information relating to the Company or Company Subsidiaries furnished to
Parent or Holdco or their representatives by or on behalf of the Company. In
entering into this Agreement, Parent and Holdco acknowledge and affirm that each
has relied and will rely solely on the terms of this Agreement and upon its
independent analysis, evaluation and investigation of, and judgment with respect
to, the business, economic, legal, tax or other consequences of this
transaction.
3.11 TAX MATTERS. Except as publicly disclosed by Parent in the Parent SEC
Reports, and except as would not reasonably be expected to have a Parent
Material Adverse Effect, Parent and its subsidiaries have timely filed all
federal, state, local and other tax returns and reports required to be filed on
or before the Effective Date by Parent and its subsidiaries under applicable
laws and have paid all required taxes (including any additions to taxes,
penalties and interest related thereto) due and payable on or before the date
hereof and all such tax returns and reports were true, complete and correct.
Neither Parent, Acquisition I, Acquisition II nor Holdco has taken or agreed to
take any action, or has knowledge of any condition, that would prevent the
Company Merger and the Parent Merger, taken together, from qualifying as an
exchange described in Section 351 of the Code.
3.12 NO VOTE REQUIRED. No vote is required by the holders of any class or
series of Parent's or Holdco's (other than Parent) capital stock to approve and
adopt this Agreement (including without limitation, the Parent Merger Agreement)
or pursuant to the rules of any national securities exchange as a result of this
Agreement or the transactions contemplated hereby.
3.13 ENVIRONMENTAL. Except for such matters that are disclosed in the
Parent SEC Reports or which are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect:
(a) To the knowledge of the Parent, there is no condition existing on
any real property or other asset of Parent, Holdco or any Parent Subsidiary or
resulting from operations conducted thereon that would reasonably be expected to
give rise to any current or future liability to Parent, Holdco or any Parent
Subsidiary under Environmental Laws or constitute a violation of any
Environmental Laws, and Parent, Holdco and all Parent Subsidiaries are otherwise
in compliance in all material respects with all applicable Environmental Laws.
(b) None of Parent, Holdco and the Parent Subsidiaries, no real
property or other asset of Parent, Holdco or any Parent Subsidiary, nor the
operations conducted thereon by Parent, Holdco or any Parent Subsidiary or by
any prior owner, lessee or operator of such real property or other asset, are
subject to any pending or, to the knowledge of Parent or Holdco, threatened
action, suit, investigation, inquiry or proceeding relating to any Environmental
Laws by or before any court or other governmental authority.
(c) All material permits, notices and authorizations, if any, required
to be obtained or filed in connection with the operation or use of any real
property or other asset of Parent, Holdco or any Parent Subsidiary, including
without limitation past or present treatment,
26
storage, disposal or release of a Hazardous Substance or solid waste into the
environment, have been duly obtained or filed, and Parent and Holdco are in
compliance in all material respects with the terms and conditions of all such
permits, notices and authorizations.
3.14 COMPLIANCE WITH LAWS. Parent, Holdco and the Parent Subsidiaries are
in compliance in all material respects with any applicable law, rule or
regulation of any United States federal, state, local or foreign government or
agency thereof that materially affects the business, properties or assets of
Parent, Holdco and the Parent Subsidiaries, and no notice, charge, claim, action
or assertion has been received by Parent, Holdco or any Parent Subsidiary or, to
the Company's knowledge, has been filed, commenced or threatened against Parent,
Holdco or any Parent Subsidiary alleging any such violation that would be,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect. Notwithstanding the foregoing, no representation or warranty in
this SECTION 3.14 is made with respect to permits issued under or matters
relating to Environmental Laws, which are covered exclusively by the provisions
set forth in SECTION 3.13, or with respect to permits to conduct exploratory
operations that have not been commenced as of the date of this Agreement.
3.15 BENEFICIAL OWNERSHIP. Except as set forth in the Parent SEC Reports,
to the knowledge of the Parent, no person or entity is the beneficial owner,
directly or indirectly, of 5% or more of Parent's issued and outstanding common
stock as of the date hereof.
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE COMPANY MERGER
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE COMPANY MERGER. The
Company covenants and agrees that, prior to the Effective Time, unless Parent
shall otherwise agree in writing (which agreement shall not be unreasonably
withheld) or except in connection with the transactions contemplated by this
Agreement:
(a) Except as set forth in SECTION 4.1 of the Company Disclosure
Letter, the businesses of the Company and the Company Subsidiaries shall be
conducted only in the ordinary and usual course of business and consistent with
past practices, and the Company and the Company Subsidiaries shall use all
reasonable efforts to maintain and preserve intact their respective business
organizations, to maintain significant beneficial business relationships with
suppliers, contractors, distributors, customers, licensors, licensees and others
having business relationships with it and keep available the services of its
current key officers and employees; and
(b) Without limiting the generality of the foregoing SECTION 4.1(A),
except as set forth in SECTION 4.1 of the Company Disclosure Letter, the Company
shall not directly or indirectly, and shall not permit any of the Company
Subsidiaries to, do any of the following:
(i) acquire, sell, encumber, lease, transfer or dispose of any
assets, rights or securities that are material to the Company and the
Company Subsidiaries or terminate, cancel, materially modify or enter into
any material commitment, transaction, line of business or other agreement,
in each case out of the ordinary course of business
27
consistent with past practice or 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, corporation,
partnership, association or other business organization or division
thereof;
(ii) amend or propose to amend its certificate of incorporation or
bylaws or, in the case of the Company Subsidiaries, their respective
constituent documents;
(iii) split, combine or reclassify any outstanding shares of, or
interests in, its capital stock;
(iv) declare, set aside or pay any dividend or distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock;
(v) redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any shares of its capital stock or any
options, warrants or rights to acquire capital stock of the Company;
(vi) except for the Company Common Stock issuable upon exercise of
options outstanding on the date hereof (or granted after the date hereof as
permitted by this Agreement) and except for up to 25,000 shares or stock
options issuable under any 401(k) plan, director compensation or employee
stock plans, issue, sell, pledge, dispose of or encumber, or authorize,
propose or agree to the issuance, sale, pledge or disposition or
encumbrance by the Company or any of the Company Subsidiaries of, any
shares of, or any options, warrants or rights of any kind to acquire any
shares of, or any securities convertible into or exchangeable for any
shares of, its capital stock of any class, or any other securities in
respect of, in lieu of, or in substitution for any class of its capital
stock outstanding on the date hereof;
(vii) modify the terms of any existing indebtedness for borrowed
money or incur any indebtedness for borrowed money or issue any debt
securities, except indebtedness incurred in the ordinary course of business
consistent with past practice, but only if the amount of such additional
indebtedness does not exceed $41,000,000;
(viii) assume, guarantee, endorse or otherwise as an accommodation
become responsible for, the obligations of any other person, or make any
loans or advances, except to or for the benefit of the Company Subsidiaries
or except for those not in excess of $5,000,000 in the aggregate;
(ix) authorize, recommend or propose any material change in its
capitalization;
(x) take any action with respect to the grant of or increase in any
severance or termination pay;
28
(xi) adopt or establish any new employee benefit plan or, except as
provided in Section 5.3(g), amend in any material respect any employee
benefit plan or, other than in the ordinary course of business consistent
with past practice, increase the compensation or fringe benefits of any
employee (except as required by any existing employee benefit plans or
employment agreements or applicable law) or pay any material benefit not
required by any existing employee benefit plan;
(xii) other than in the ordinary course of business consistent with
past practice, enter into or amend in any material respect (other than as
required by existing employee benefit plans or employment agreements or by
applicable law) any employment, consulting, severance or indemnification
agreement entered into or made by the Company or any of the Company
Subsidiaries with any of their respective directors, officers, agents,
consultants or employees, or any collective bargaining agreement or other
obligation to any labor organization or employee incurred or entered into
by the Company or any of the Company Subsidiaries (other than as required
by existing employee benefit plans or employment agreements or by
applicable law);
(xiii) settle or compromise any liability for taxes or compromise,
settle or otherwise resolve other Company Cases involving a payment of more
than $5,000,000 in any one case by or to the Company or any of the Company
Subsidiaries;
(xiv) make or commit to make capital expenditures in excess of 20%
(twenty percent) over the aggregate budgeted amount set forth in the
Company's fiscal 2001 capital expenditure plan previously provided to
Parent; except as may be required to (A) continue operations on the
drilling, completion or plugging of any well or any well operations for
which the Company has consented to participate and is required to continue
to participate pursuant to applicable agreements or (B) conduct emergency
operations on any well pipeline or other facility;
(xv) make any material changes in tax accounting methods except as
required by applicable law;
(xvi) other than in the ordinary course of business, pay or
discharge any claims, liens or liabilities involving more than $5,000,000
individually or $10,000,000 in the aggregate, which are not reserved for on
the balance sheet included in the Company Financial Statements;
(xvii) write off any accounts or notes receivable in excess of
$5,000,000 except in the ordinary course of business;
(xviii) knowingly take, or agree to commit to take, any action that
would or is reasonably likely to result in any of the conditions to the
Mergers not being satisfied, or would make any representation or warranty
of the Company contained herein inaccurate in any material respect at, or
as of any time prior to, the Effective Time, or that would materially
impair the ability of the Company, Parent, Holdco or the holders
29
of shares of Company Common Stock to consummate the Mergers in accordance
with the terms hereof or materially delay such consummation; or
(xix) amend, modify or waive any provision of the Rights Agreement,
or take any action to redeem the Rights or render the Rights inapplicable
to any transaction (other than the transactions contemplated hereby);
(xx) take any action that would prevent the Mergers, taken
together, from qualifying as an exchange described in Section 351 of the
Code; or
(xxi) enter into or modify any contract, agreement, commitment or
arrangement to do any of the foregoing.
4.2 CONDUCT OF BUSINESS OF PARENT. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time or
earlier termination of this Agreement, neither Parent nor any of its
subsidiaries (including Holdco), without the prior written consent of the
Company (which consent will not unreasonably be withheld), shall:
(a) acquire, by merging or consolidating with, or by purchasing an
equity interest in or the assets of or by any other manner, any business or
corporation, partnership or other business organization or division thereof, or
otherwise acquire any assets of any other entity (other than the purchase of
assets from suppliers, clients or vendors in the ordinary course of business and
consistent with past practice) if such transaction would prevent or materially
delay the consummation of the transactions contemplated by this Agreement;
(b) adopt or propose to adopt any amendments to its charter documents
which would have a material adverse impact on the consummation of the
transactions contemplated by this Agreement;
(c) take any action that would prevent the Mergers, taken together,
from qualifying as an exchange described in Section 351 of the Code;
(d) with respect to Parent only, split, combine or reclassify any
shares of its capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, make any other actual, constructive or deemed
distribution in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, except for the payment of ordinary cash
dividends in respect of the Parent Common Stock; unless the Exchange Ratio and
Per Share Amount are proportionately increased or decreased, as applicable, in
which case the prior written consent of the Company shall not be required, but
the Company shall be entitled to written notice of such event;
(e) adopt a plan of complete or partial liquidation or dissolution of
Parent; or
(f) take or agree in writing or otherwise to take any of the actions
precluded by SECTIONS 4.2(A) through 4.2(E).
30
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 SHAREHOLDERS' MEETING. The Company, acting through its board of
directors, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and Bylaws, (i) duly call, give notice of, convene
and hold a meeting of its shareholders as soon as practicable following the date
hereof for the purpose of considering and taking action on this Agreement and
the transactions contemplated hereby (the "SHAREHOLDERS' MEETING") and (ii)
subject to its fiduciary duties under applicable law after consultation with
outside counsel, (A) include in the Proxy Statement/Prospectus (as defined in
SECTION 2.7) the unanimous recommendation of the board of directors that the
shareholders of the Company vote in favor of the approval and adoption of this
Agreement and the transactions contemplated hereby and (B) use its reasonable
best efforts to obtain the necessary approval and adoption of this Agreement and
the transactions contemplated hereby by its shareholders. Notwithstanding the
Company's failure to include the recommendation contemplated by clause (A) of
the preceding sentence (in the circumstances permitted thereby), unless this
Agreement shall have been terminated pursuant to Section 7.1, the Company shall
submit this Agreement to its stockholders at the Shareholders' Meeting for the
purpose of adopting this Agreement and nothing contained herein shall be deemed
to relieve the Company of such obligation.
5.2 REGISTRATION STATEMENT.
(a) As soon as practicable following the date hereof, Holdco or Parent
shall prepare and file with the SEC a registration statement on Form S-4 to
register under the Securities Act the Holdco Common Stock to be issued pursuant
to the Company Merger (the "S-4"). The Proxy Statement/Prospectus will be
included as a prospectus in and will constitute part of the S-4 as Holdco's
prospectus. The Parent, Company and Holdco shall use their reasonable best
efforts to have the S-4 declared effective under the '33 Act as promptly as
practicable after such filing. Parent, Holdco and the Company will cooperate
with each other in the preparation of the Proxy Statement/Prospectus and the
S-4; without limiting the generality of the foregoing, Parent and Holdco, on the
one hand, and the Company, on the other hand, will furnish to each other the
information relating to the party furnishing such information required by the
'34 Act to be set forth in the Proxy Statement/Prospectus and the S-4, and
Company and its counsel shall be given the opportunity to review and comment on
the Proxy Statement/Prospectus and the S-4 prior to the filing thereof with the
SEC. Parent, Holdco and the Company each agree to use its reasonable best
efforts, after consultation with the other parties hereto, to respond promptly
to any comments made by the SEC with respect to the Proxy Statement/Prospectus
and the S-4. The Company will use reasonable best efforts to cause the Proxy
Statement/Prospectus to be mailed to its stockholders as promptly as practicable
after the S-4 is declared effective under the '33 Act. No representation,
covenant or agreement is made by any party hereto with respect to information
supplied by any other party for inclusion in the S-4.
(b) As soon as practicable after the date hereof, the Company, Parent
and Holdco shall promptly and properly prepare and file any other schedules,
statements, reports, or other documents required under the '34 Act (if any) or
any other federal or state securities laws
31
relating to the Company Merger and the transactions contemplated herein (the
"OTHER FILINGS"). Each party shall notify the others promptly of the receipt by
such party of any comments or requests for additional information from any
governmental official with respect to any Other Filing made by such party and
will supply the others with copies of all correspondence between such party and
its representatives, on the one hand, and the appropriate government official,
on the other hand, with respect to the Other Filings made by such party. Each of
the Company, Parent and Holdco shall use reasonable efforts to obtain and
furnish the information required to be included in the Proxy
Statement/Prospectus and any Other Filing and, after consultation with the
other, to respond promptly to any comments made by any governmental official
with respect to any Other Filing.
5.3 EMPLOYEE BENEFIT MATTERS.
(a) From and after the Effective Time, Holdco shall assume and honor,
or shall cause the Surviving Corporation to assume and honor, all Employee
Benefit Plans including all employment agreements with executive officers of the
Company in accordance with their terms as in effect immediately before the
consummation of the Company Merger, subject to any amendment or termination
thereof that may be permitted by such terms; provided, however, that the
foregoing shall not be construed as prohibiting Parent, Holdco or the Company
Surviving Corporation from terminating the employment of any Affected Employee.
It is acknowledged and agreed that the consummation of the Company Merger will
constitute a "change of control" for purposes of those Employee Benefit Plans
including all employment agreements containing "change of control" provisions.
(b) For 12 months following the Effective Time, the Company Surviving
Corporation shall continue to provide to those individuals who are employed by
the Company as of the Effective Time and who remain employed following the
Effective Time by the Company Surviving Corporation or any Subsidiary of the
Company Surviving Corporation ("AFFECTED EMPLOYEES"), compensation and employee
benefits which, in the aggregate, are no less favorable than the compensation
and benefits provided by the Company to such employees immediately prior to
consummation of the Company Merger; provided, however, that (i) as of January 1,
2002, Affected Employees shall become eligible to participate in the employee
benefit plans, programs, policies and arrangements of Parent, Holdco, the
Company Surviving Corporation or any Subsidiary of Parent or the Company
Surviving Corporation (the "PARENT PLANS") on the same basis as similarly
situated employees of the Parent, and (ii) the Parent Plans shall be deemed to
satisfy this SECTION 6.3(B).
(c) The Company Surviving Corporation shall give Affected Employees
full credit for their continuous service with the Company and its Subsidiaries
(including deemed service credited by such entities) for purposes of eligibility
to participate and vesting (but not benefit accruals under any defined benefit
pension plan) under all employee benefit plans, programs, policies or
arrangements which are maintained by Parent, Holdco, the Company Surviving
Corporation or any Subsidiary of Parent or the Company Surviving Corporation for
such Affected Employees to the same extent recognized by the Company immediately
prior to the Effective Time under similar Employee Benefit Plans.
32
(d) Parent, Holdco, and the Company Surviving Corporation shall (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Affected Employees under any welfare benefit plans that such employees may
be eligible to participate in after the Effective Time, other than limitations
or waiting periods that are already in effect with respect to such employees
under the Employee Benefit Plans and that have not been satisfied as of the
Effective Time and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Effective Time (in the calendar
year of the Effective Time) in satisfying any applicable deductible or
out-of-pocket requirements for the year in which the Effective Time occurs under
any welfare plans that such employees are eligible to participate in after the
Effective Time.
(e) On the basis set forth in, and as contemplated by, Section 5.3(e)
of the Company Disclosure Letter, the executive officers of the Company shall be
deemed to have "Good Reason" to terminate their employment, and receive payments
under the agreements between the executive officers and the Company dated March
12, 2001.
(f) The Company Surviving Corporation shall sponsor the Company's
401(k) Plan as of the Effective Time. The Company Surviving Corporation either
shall continue to sponsor such 401(k) Plan or shall merge such Plan into the
401(k) Plan of the Parent Surviving Corporation with the result that the
participants in the Company's 401(k) Plan shall be entitled to repay any
outstanding participant loans pursuant to the terms of the Company's 401(k) Plan
and to avoid any deemed distribution. Notwithstanding any other provision of
this Agreement, the Company may amend its 401(k) plan to permit the Company to
match employee contributions made through the Effective Time in cash, stock, or
a mix thereof in a percentage consistent with past practice.
(g) 2001 bonuses payable pursuant to the Company's key employee
severance agreements shall be calculated on a basis of payment no less than the
bonuses paid in 2001 with respect to 2000.
5.4 CONSENTS AND APPROVALS.
(a) The Company, Parent and Holdco shall each file or cause to be filed
with the Federal Trade Commission and the United States Department of Justice
any notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
hereby. The parties shall consult with each other as to the appropriate time of
filing such notifications and shall use their reasonable best efforts to make
such filings at the agreed upon time, to respond promptly to any requests for
additional information made by either of such agencies, and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date
after the date of filing.
(b) The Company, Parent and Holdco shall cooperate with each other and
(i) promptly prepare and file all necessary documentation, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all reasonable efforts to obtain all
necessary permits, consents, approvals and authorizations of all governmental
bodies and (iv) use all reasonable efforts to obtain all necessary permits,
consents,
33
approvals and authorizations of all other parties, in the case of each of the
foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to
consummate the transactions contemplated by this Agreement or required by the
terms of any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument to which the Company,
Holdco, Parent or any of their respective subsidiaries is a party or by which
any of them is bound; PROVIDED, HOWEVER, that (x) no note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument shall be amended or modified to increase materially
the amount payable thereunder or to be otherwise materially more burdensome to
the Company and the Company Subsidiaries considered as one enterprise in order
to obtain any permit, consent, approval or authorization without first obtaining
the written approval of Parent and (y) without the prior consent of Parent, no
such actions or things shall be done to the extent they would, individually or
in the aggregate, reasonably be expected to have a Holdco Material Adverse
Effect (after giving effect to the Mergers). A "HOLDCO MATERIAL ADVERSE EFFECT")
means any change, effect, fact, event, condition or development that would have
or be reasonably likely to have a material adverse effect on the condition
(financial or otherwise), business, operations or assets of Holdco and the
direct and indirect subsidiaries of Holdco considered as a single enterprise
following the Mergers. The Company shall have the right to review and approve in
advance all characterizations of the information relating to the Company; Parent
shall have the right to review and approve in advance all characterizations of
the information relating to Parent or Holdco; and each of the Company and Parent
shall have the right to review and approve in advance all characterizations of
the information relating to the transactions contemplated by this Agreement, in
each case which appear in any filing (including, without limitation, the Proxy
Statement/Prospectus) made in connection with the transactions contemplated
hereby. The Company, Parent and Holdco agree that they will consult with each
other with respect to the obtaining of all such necessary permits, consents,
approvals and authorizations of all third parties and governmental bodies.
5.5 PUBLIC STATEMENTS. The Company, Parent and Holdco shall consult with
each other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions contemplated
herein and shall not issue any such public announcement or statement prior to
such consultation, except as may be required by law or any listing agreement
with a national securities exchange or trading market.
5.6 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, each of the Company, Parent, Holdco and Acquisition I agrees to use
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to
obtaining all consents, approvals and authorizations required for or in
connection with the consummation by the parties hereto of the transactions
contemplated by this Agreement, and contesting and resisting of any action,
including any legislative, administrative or judicial action, and seeking to
have vacated, lifted, reversed or overturned, any decree, judgment, injunction
or other order (whether temporary, preliminary or permanent) that restricts,
prevents or prohibits the consummation of the transactions contemplated by this
Agreement, including by vigorously pursuing all available avenues of
administrative and judicial appeal and all available legislative
34
action and acceptance by the Company, Holdco and Parent of any and all
divestitures of any assets of the Company, Holdco or Parent or their respective
affiliates or acceptance of an agreement to hold any assets of the Company,
Holdco or Parent separate or to withdraw from doing business in any geographic
area in connection with any lawsuit or other legal proceeding, except to the
extent any such actions or things would be reasonably expected to have a Holdco
Material Adverse Effect (after giving effect to the Mergers). In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, Parent and/or the Company Surviving
Corporation shall cause the proper officers and directors of the Company, Parent
and Holdco to take all such action. In the event any litigation is commenced by
any person involving the Company, Parent or Holdco and relating to the
transactions contemplated by this Agreement, including any other Takeover
Proposal (as defined in SECTION 5.9), the Company, Parent or Holdco shall have
the right, at its own expense, to participate therein.
5.7 NOTIFICATION OF CERTAIN MATTERS. Each of the Company, Parent and Holdco
agrees to give prompt notice to each other of, and to use their respective
reasonable best efforts to prevent or promptly remedy, (i) the occurrence or
failure to occur, or the impending or threatened occurrence or failure to occur,
of any event which occurrence or failure to occur would be likely to cause any
of its representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof through the
Effective Time and (ii) any material failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this SECTION 5.7 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.8 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) The Company shall, and shall cause the Company Subsidiaries and the
officers, directors, employees and agents of the Company and the Company
Subsidiaries, to, afford the officers, employees and agents of Parent and Holdco
complete access at all reasonable times from the date hereof through the
Effective Date to its officers, employees, agents, properties, facilities,
books, records, contracts and other assets and shall furnish Parent and Holdco
all financial, operating and other data and information as Parent and Holdco
through their officers, employees or agents, may reasonably request. Parent and
Holdco shall have the right to make such due diligence investigations as Parent
and Holdco shall deem necessary or reasonable. No additional investigations or
disclosures shall affect the Company's representations and warranties contained
herein, or limit or otherwise affect the remedies available to Parent pursuant
to this Agreement.
(b) Parent and Holdco shall, and Parent shall cause officers of Parent
to, afford the officers and directors of the Company complete access at all
reasonable times from the date hereof through the Effective Date to its and its
subsidiaries' officers, properties, facilities, books, records and contracts and
shall furnish the Company all financial, operating and other data and
information as the Company through its officers, employees or agents, may
reasonably request. The Company shall have the right to make such reasonable due
diligence investigations as the Company shall deem necessary. No additional
investigations or disclosures shall affect
35
Parent's or Holdco's representations and warranties contained herein, or limit
or otherwise affect the remedies available to the Company pursuant to this
Agreement.
(c) The provisions of the confidentiality agreements between Parent
and the Company (the "CONFIDENTIALITY AGREEMENTS") shall remain in full force
and effect in accordance with their respective terms.
5.9 NO SOLICITATION.
(a) The Company agrees that it shall not, nor shall it permit any of
the Company Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of the Company Subsidiaries, directly or
indirectly, to (i) solicit, initiate, or encourage any inquiries relating to, or
the submission of, any Takeover Proposal (as hereinafter defined), (ii) approve
or recommend any Takeover Proposal, accept any Takeover Proposal or enter into
any letter of intent, agreement in principle or agreement with respect to any
Takeover Proposal (or resolve to or publicly propose to do any of the foregoing)
or (iii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal;
PROVIDED, HOWEVER, that (x) nothing contained in subclauses (ii) or (iii) above
shall prohibit the Company or its board of directors from disclosing to the
Company's stockholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the '34 Act, provided
that the board of directors of the Company shall not recommend that the
stockholders of the Company tender their Company Common Stock in connection with
any such tender or exchange offer unless the board of directors shall have
determined in good faith, after consultation with its financial advisors and
outside counsel, that the relevant Takeover Proposal is a Superior Proposal and
(y) prior to the Shareholders' Meeting, if the Company receives an unsolicited
bona fide written Takeover Proposal from a third party that the board of
directors of the Company determines in good faith (after receiving the advice of
a financial adviser of nationally recognized reputation) is reasonably likely to
be a Superior Proposal (as defined below), the Company and its representatives
may conduct such discussions or provide such information as the board of
directors of the Company shall determine, but only if, prior to such provision
of information or conduct of such discussions (A) such third party shall have
entered into a confidentiality agreement not materially less favorable to the
Company than the Confidentiality Agreement (and containing additional provisions
that expressly permit the Company to comply with the provisions of this SECTION
5.9) and (B) the board of directors of the Company determines in its good faith
judgment, after consultation with outside counsel, that it is required to do so
in order to comply with its fiduciary duties. The Company shall promptly notify
the Parent in the event it receives any Takeover Proposal, including the
identity of the party submitting such proposal.
(b) The Company shall promptly (but in no event later than 24 hours
after receipt) notify the Parent of the material terms, conditions and other
aspects of any inquiries, proposals or offers with respect to, or which could
reasonably be expected to lead to, a Takeover Proposal.
36
(c) If, prior to Shareholders' Meeting, the board of directors of the
Company determines in good faith (after receiving the advice of a financial
adviser of nationally recognized reputation and its outside counsel) that an
unsolicited bona fide written Takeover Proposal is a Superior Proposal, the
Company may terminate this Agreement pursuant to SECTION 7.1(F); provided,
however, that the Company shall not terminate this Agreement, and any purported
termination shall be void and of no force or effect, unless (i) the Company
concurrently with such termination pays to Parent the fee payable pursuant to
SECTION 7.3 and enters into a definitive agreement providing for the Superior
Proposal; and (ii) the Company shall have complied with this SECTION 5.9
(d) For purposes of this Agreement, "TAKEOVER PROPOSAL" means any
proposal or offer (whether or not in writing and whether or not delivered to the
stockholders of the Company generally) for a merger or other business
combination, reorganization, share exchange, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of the Company
Subsidiaries or to acquire in any manner (including by tender or exchange
offer), directly or indirectly, a 10% or more equity interest in, any voting
securities of, or assets (including equity interests in other entities) of the
Company and the Company Subsidiaries having an aggregate value equal to 10% or
more of the Company's consolidated asset value, other than the transactions
contemplated by this Agreement. For purposes of this Agreement, "SUPERIOR
PROPOSAL" means any unsolicited bona fide written Takeover Proposal which (i)
contemplates (A) a merger or other business combination, reorganization, share
exchange, recapitalization, liquidation, dissolution, tender offer, exchange
offer or similar transaction involving the Company as a result of which the
Company's stockholders prior to such transaction in the aggregate cease to own
at least 50% of the voting securities of the ultimate parent entity resulting
from such transaction or (B) a sale, lease, exchange, transfer or other
disposition (including, without limitation, a contribution to a joint venture)
of at least 50% of the value of the assets of the Company and the Company
Subsidiaries, taken as a whole, and (ii) is on terms which the board of
directors of the Company determines (after consultation with its financial
advisor and outside counsel), taking into account, among other things, all
legal, financial, regulatory and other aspects of the proposal and the person
making the proposal, (A) would, if consummated, result in a transaction that is
more favorable to its stockholders from a financial point of view (in their
capacities as such) than the transactions contemplated by this Agreement
(including the terms of any proposal by the Parent to modify the terms of the
transactions contemplated by this Agreement) and (B) is reasonably likely to be
financed and otherwise completed without undue delay.
(e) The Company agrees that it will, and will cause its officers,
employees, directors, agents and representatives to, immediately cease any
activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any Takeover
Proposal and will use its reasonable best efforts to cause any such parties (and
its agents or advisors) in possession of confidential information regarding the
Company or any of the Company Subsidiaries that was furnished by or on behalf of
the Company to return or destroy all such information. The Company shall use its
reasonable best efforts to ensure that its officers, directors and key employees
and its investment bankers, attorneys and other representatives, are aware the
provisions of this Section.
37
5.10 INDEMNIFICATION AND INSURANCE.
(a) The Bylaws of the Company Surviving Corporation shall contain the
provisions with respect to indemnification set forth in Article VI of the Third
Amended and Restated Bylaws of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the date of this Agreement were directors, officers,
employees or agents of the Company, unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable
law or under the Company's Certificate of Incorporation or Bylaws or under the
Indemnification Agreements set forth in SECTION 2.10 of the Company Disclosure
Letter and regardless of whether the Company Merger becomes effective, indemnify
and hold harmless, and after the Effective Time, Parent and the Company
Surviving Corporation shall jointly and severally, to the fullest extent
permitted under applicable law, indemnify and hold harmless, each present and
former director, officer, employee, fiduciary and agent of the Company or any of
its Subsidiaries (collectively, the "INDEMNIFIED PARTIES") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission occurring
prior to the Effective Time arising out of or pertaining to the transactions
contemplated by this Agreement for a period of four years after the date hereof.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) the Company or the
Company Surviving Corporation, as the case by be, shall pay the reasonable fees
and expenses of counsel selected by the Indemnified Parties, which counsel shall
be reasonably satisfactory to the Company or the Company Surviving Corporation,
promptly after statements therefor are received provided that any person to whom
expenses are advanced provides a customary undertaking complying with applicable
law to repay such advances if it is ultimately determined that such person is
not entitled to indemnification, (ii) the Company and the Company Surviving
Corporation will cooperate in the defense of any such matter, and (iii) any
determination required to be made in connection with a claim for
indemnification, with respect to whether an Indemnified party's conduct complies
with the standards set forth under Delaware Law and the Company's or the Company
Surviving Corporation's certificate of incorporation or bylaws, shall be made by
independent counsel mutually acceptable to the Company Surviving Corporation and
the Indemnified Party; PROVIDED, HOWEVER, that neither the Company nor the
Company Surviving Corporation shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
and PROVIDED FURTHER, that neither the Company nor the Company Surviving
Corporation shall be obligated pursuant to this SECTION 5.10 to pay the fees and
disbursements of more than one counsel for all Indemnified Parties in any single
action except to the extent that, in the opinion of counsel for the Indemnified
Parties, two or more of such Indemnified Parties have conflicting interests in
the outcome of such action; and PROVIDED FURTHER that, in the event that any
claim or claims for indemnification are asserted or made within such four-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until the disposition of any and all such claims.
38
(c) For six years after the Effective Time, the Company Surviving
Corporation shall provide directors' and officers' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering each
such Indemnified Party covered as of the date hereof or hereafter by the
Company's directors' and officers' liability insurance policy on terms with
respect to coverage and amounts no less favorable than those of such policy in
effect on the date hereof; PROVIDED, HOWEVER, that in no event shall the Company
Surviving Corporation be required to expend in any one year an amount in excess
of 300% of the annual premiums currently paid by the Company for such insurance;
and, PROVIDED, further, that if the annual premiums of such insurance coverage
exceed such amount, the Company Surviving Corporation shall be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount.
(d) In the event the Company Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Company
Surviving Corporation, or at Parent's or Holdco's option, Parent or Holdco,
shall assume the obligations set forth in this SECTION 5.10.
(e) This SECTION 5.10 shall survive any termination of this Agreement
and the consummation of the Company Merger at the Effective Time, is intended to
benefit the Company, the Surviving Corporation and the Indemnified Parties, and
shall be binding on all successors and assigns of the Surviving Corporation.
Parent and Holdco shall cause the Company to honor its obligations pursuant to
this SECTION 6.10.
5.11 ACTIONS REGARDING THE RIGHTS. Immediately prior to the Effective Time,
the Company shall redeem the Rights. Except as specifically provided herein, the
Company shall not modify or waive the terms of its Rights Agreement or take any
action to redeem the Rights.
5.12 OPTIONS. Prior to the Effective Time, the Company shall take all
actions necessary (including obtaining any necessary consents of the holders of
outstanding options) to provide that at the Effective Time (i) each outstanding
option to purchase shares of Company Common Stock (the "COMPANY OPTIONS"),
whether or not then exercisable or vested, shall be canceled and (ii) in
consideration of such cancellation the Company shall pay to holders of such
Company Options an amount in respect thereof equal to the product of (A) the
excess, if any, of the Per Share Amount over the exercise price per share of
such Company Options and (B) the number of shares of Company Common Stock
subject to such Company Options (such payment to be net of the applicable
withholding taxes).
5.13 AFFILIATES. Not less than 30 days prior to the Effective Time, the
Company shall deliver to Parent a letter identifying all persons who, in the
opinion of the Company, may be deemed at the time this Agreement is submitted
for approval by the shareholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the '33 Act, and such list shall be updated as
necessary to reflect any changes from the date thereof. The Company shall
39
use reasonable best efforts to cause each person identified on such list to
deliver to Parent not less than 15 days prior to the Effective Time, a written
agreement in customary form.
5.14 STOCK EXCHANGE LISTING. Parent and Holdco shall use their reasonable
best efforts to cause the shares of Holdco Common Stock to be issued in the
Company Merger to be approved for listing on the New York Stock Exchange,
subject to official notice of issuance, prior to the Effective Time.
5.15 SECTION 16 MATTERS. Prior to the effective times of the Mergers,
Parent, Holdco and the Company shall take all such steps as may be required to
cause any dispositions of capital stock of Parent and the Company (including
derivative securities thereof) or acquisitions of Holdco Common Stock (including
derivative securities thereof) resulting from the transactions contemplated by
this Agreement and by the Parent Merger Agreement by each individual who is
subject to the reporting requirements of Section 16(a) of the '34 Act with
respect to Parent or the Company to be exempt under Rule 16b-3 promulgated under
the '34 Act.
5.16 DIRECTORSHIP. As promptly as practicable following the Effective Time,
Holdco shall take such action as is necessary to elect either Xxxxxxxx Xxxxxx or
Xxxxxxx Xxxxxx to its board of directors and to serve until his successor shall
be duly qualified and elected or until his earlier death, resignation or removal
in accordance with Holdco's certificate of incorporation and bylaws and Delaware
Law.
ARTICLE 6
CONDITIONS
6.1 CONDITIONS TO THE OBLIGATION OF EACH PARTY TO EFFECT THE MERGERS. The
obligations of each party to effect the Mergers shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) this Agreement shall have been adopted by the requisite vote of the
stockholders of the Company required by the Delaware Law and its Certificate of
Incorporation and bylaws;
(b) no preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, nor any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, shall be in effect that would make the Mergers illegal or otherwise
prevent the consummation of the Mergers;
(c) The Holdco Common Stock to be issued in the Mergers shall have been
approved for listing on the New York Stock Exchange, subject to official notice
of issuance; and
(d) The S-4 shall have been declared effective by the SEC under the '33
Act. No stop order suspending the effectiveness of the S-4 shall have been
issued by the SEC and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
40
(e) any waiting period under the HSR Act applicable to the Mergers
shall have expired or been terminated.
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATION OF PARENT, HOLDCO AND
ACQUISITION I. The obligations of Parent, Holdco and Acquisition I to effect the
Company Merger shall be subject to fulfillment at or prior to the Effective Time
of the following additional conditions:
(a) (i) Each representation or warranty of the Company shall be true
and correct except for circumstances which, when considered individually or in
the aggregate, have not had or would not reasonably be expected to have a
Company Material Adverse Effect, in each case as if such representations and
warranties were made at the date of this Agreement and as of the Closing Date
(other than to the extent such representations and warranties are made as of a
specified date, in which case such representations and warranties shall be true
and correct as of such date). There shall not have been a breach in any material
respect by the Company of any material covenant or agreement set forth in the
Merger Agreement which breach shall not have been remedied within 10 days (or by
the Outside Date, if sooner) of written notice specifying such breach in
reasonable detail and demanding that same be remedied (except where such failure
to be true and correct or such breach, taken together with all other such
failures and breaches, would not have a Company Material Adverse Effect);
(b) There shall not be any pending suit, action, investigation or
proceeding brought by any governmental authority before any court (domestic or
foreign) or any action taken, or any statute, rule, regulation, decree, order or
injunction promulgated, enacted, entered into or enforced by any state, federal
or foreign government or governmental agency or authority or by any court
(domestic or foreign) that would reasonably be expected to have the effect of:
(i) making illegal or otherwise restraining or prohibiting the consummation of
the Mergers or materially delaying the Mergers; or (ii) prohibiting or
materially limiting the ownership or operation by the Company or any of its
subsidiaries or Parent, Holdco or any of Parent's affiliates of all or any
material portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and any of its subsidiaries, taken as a whole, or
compelling Parent, Holdco or any of Parent's subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of the Company
and any of its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, as a result of the transactions contemplated by the Merger
Agreement; or
(c) There shall not have occurred and continue to exist any event that
individually or in the aggregate would reasonably be expected to have a Company
Material Adverse Effect (other than matters set forth in the Company Disclosure
Letter).
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATION OF THE COMPANY. The obligations
of the Company to effect the Company Merger shall be subject to fulfillment at
or prior to the Effective Time of the following additional conditions:
(a) (i) Any representation or warranty of Parent, Holdco and
Acquisition I shall be true and correct except for circumstances which, when
considered individually or in the aggregate, have not had or would not
reasonably be expected to have a Parent Material Adverse
41
Effect, in each case as if such representations and warranties were made at the
date of this Agreement and as of the Closing Date (other than to the extent such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true and correct as of such date).
There shall not have been a breach in any material respect by the Parent, Holdco
and Acquisition I of any material covenant or agreement set forth in the Merger
Agreement which breach shall not have been remedied within 10 days (or by the
Outside Date, if sooner) of written notice specifying such breach in reasonable
detail and demanding that same be remedied (except where such failure to be true
and correct or such breach, taken together with all other such failures and
breaches, would not have a Parent Material Adverse Effect); or
(b) There shall not be any pending suit, action, investigation or
proceeding brought by any governmental authority before any court (domestic or
foreign) or any action taken, or any statute, rule, regulation, decree, order or
injunction promulgated, enacted, entered into or enforced by any state, federal
or foreign government or governmental agency or authority or by any court
(domestic or foreign) that would reasonably be expected to have the effect of
making illegal or otherwise restraining or prohibiting the consummation of the
Mergers or materially delaying the Mergers.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Mergers may be
abandoned at any time prior to the Effective Time notwithstanding approval
thereof by the stockholders of the Company:
(a) by mutual written consent of Parent, Holdco and the Company;
(b) by any of Parent, Holdco or the Company if the consummation of the
Company Merger shall not have occurred on or before December 31, 2001 (the
"OUTSIDE DATE"); PROVIDED, HOWEVER, that the right to terminate this Agreement
under this SECTION 7.1(B) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date; PROVIDED
FURTHER that such time periods shall be tolled for any period during which any
party shall be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation of the Company
Merger;
(c) by any of Parent, Holdco or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling each of the parties hereto shall use all reasonable
efforts to lift), in each case 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;
42
(d) by Parent if
(i) the board of directors of the Company (or any committee
thereof) shall have withdrawn, modified or amended in any manner adverse to
Parent its approval of or recommendation in favor of the Merger or shall
have recommended or approved a Takeover Proposal or shall have resolved to
do any of the foregoing;
(ii) any person or "group" (as defined in Section 13(d)(3) of the
'34 Act), other than Parent, Holdco or their affiliates or any group of
which any of them is a member, shall have acquired beneficial ownership (as
determined pursuant to Rule 13d-3 under the '34 Act) of 15% or more of the
Company Common Stock;
(iii) the Company shall have breached SECTION 5.9 in any material
respect, and Parent or Holdco shall have been adversely affected thereby;
(iv) the Company shall have (x) exempted for purposes of Section 203 of the
Delaware Law any acquisition of shares of Company Common Stock by any
person or "group" (as defined in Section 13(d)(3) of the '34 Act), other
than Parent, Holdco or their affiliates, or (y) amended (or agreed to
amend) the Rights Agreement or redeemed (or agreed to redeem) its
outstanding Rights thereunder for the purpose of exempting an acquisition
of shares of Company Common Stock (other than pursuant to this Agreement)
from the Rights Agreement and Rights; or
(v) prior to the Effective Time there shall be a breach of any
representation, warranty, covenant or agreement of the Company in this
Agreement such that the conditions set forth in Section 6.2(a) are not
capable of being satisfied on or before the Outside Date; PROVIDED that the
Parent or Holdco may not terminate this Agreement pursuant to this CLAUSE
(V) if the Parent or Holdco is in material breach of this Agreement; or
(e) by the Company if
(i) prior to the Shareholders' Meeting, the Company receives a
Superior Proposal as described in SECTION 5.9(B) and resolves to accept
such Superior Proposal, but only if the Company has acted in accordance
with, and has otherwise complied with the terms of, SECTION 5.9, including
the notice provisions therein; or
(ii) prior to the Effective Time there shall be a breach of any
representation, warranty, covenant or agreement of the Parent, Holdco or
Acquisition I in this Agreement such that the conditions set forth in
Section 6.3(a) are not capable of being satisfied on or before the Outside
Date; PROVIDED that the Company may not terminate this Agreement pursuant
to this CLAUSE (II) if the Company is in material breach of this Agreement.
7.2 EFFECT OF TERMINATION. Upon the termination of this Agreement pursuant
to SECTION 7.1, this Agreement shall forthwith become null and void except as
set forth in SECTION
43
7.3, which shall survive such termination; PROVIDED THAT, nothing herein
shall relieve any party from liability for any intentional breach of this
Agreement prior to such termination.
7.3 FEES AND EXPENSES.
(a) If (i) the Company terminates this Agreement pursuant to SECTION
7.1(E)(I), or (ii) Parent or Holdco terminates this Agreement pursuant to
SECTION 7.1(D)(I), (III) or (IV), then in each case the Company shall pay, or
cause to be paid, to Parent, concurrently with the time of termination in the
case of a termination pursuant to SECTION 7.1(E)(I) or as promptly as is
reasonably practicable (but in no event later than 2 business days) in the case
of a termination pursuant to SECTION 7.1(D)(I), (iii) or (iv), an amount
("TERMINATION FEE") equal to $40,000,000. In addition, if (i)(x) this Agreement
is terminated pursuant to SECTION 7.1(B) (by the Company), or 7.1(D)(V), (y)
prior to such termination a Takeover Proposal has been publicly announced,
disclosed or communicated and (z) on the date of such termination, Parent is not
in material breach of this Agreement and (ii) within 12 months after such
termination the Company shall consummate or enter into an agreement with the
proponent of such Takeover Proposal or an affiliate of such proponent, then the
Company shall pay the Termination Fee concurrently with the earlier of entering
into any such agreement or consummating such transaction.
(b) Except as set forth in this SECTION 7.3, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, that if this Agreement is terminated and the
Termination Fee is payable as a result thereof pursuant to SECTION 7.3(A), in
addition to the payment of the Termination Fee, the Company shall assume and
pay, or reimburse Parent for, all reasonable out-of-pocket fees and expenses
incurred by Parent (including the fees and expenses of its counsel, financial
advisor and financing sources) in connection with this Agreement and the
transactions contemplated hereby, up to a maximum of $8 million.
7.4 AMENDMENT. This Agreement may be amended by the parties hereto, at any
time before or after approval of this Agreement and the transactions
contemplated herein by the respective boards of directors or stockholders of the
parties hereto; PROVIDED, HOWEVER, that after any such approval by the
stockholders, no amendment which under applicable law may not be made without
stockholder approval shall be made without such stockholder approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
7.5 WAIVER. Any failure of any of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived at any time
prior to the Effective Time by any of the parties entitled to the benefit
thereof only by a written instrument signed by each such party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement or condition shall not
operate as a waiver of or estoppel with respect to, any subsequent or other
failure.
44
ARTICLE 8
GENERAL PROVISIONS
8.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed by certified mail (return receipt requested) or sent by telecopier to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
(a) if to Parent, Holdco or Acquisition I:
Xxxx-XxXxx Corporation
000 Xxxxxx X. Xxxx Xxxxxx
Xxxxxxxx, Xxxx XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Bartlettt
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
(b) if to the Company:
HS Resources, Inc.
Xxx Xxxxxxxx Xxxxx, Xxxxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
HS Resources, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
45
with a copy to:
Xxxxx Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx XX, Esq.
Fax: (000) 000-0000
Notice so given shall (in the case of notice so given by mail) be deemed to be
given when received and (in the case of notice so given by cable, telegram,
telecopier, telex or personal delivery) on the date of actual transmission or
(as the case may be) personal delivery.
8.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in this Agreement shall not survive the Company Merger.
8.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
8.4 COUNTERPARTS; FACSIMILE TRANSMISSION OF SIGNATURES. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, and delivered by means of facsimile transmission or
otherwise, each of which when so executed and delivered shall be deemed to be an
original and all of which when taken together shall constitute but one and the
same agreement. If any party hereto elects to execute and deliver a counterpart
signature page by means of facsimile transmission, it shall deliver an original
of such counterpart to each of the other parties hereto within ten days of the
date hereof, but in no event will the failure to do so affect in any way the
validity of the facsimile signature or its delivery.
8.5 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement and all of the provisions hereto shall be binding
upon and inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations set forth herein shall be
assigned by any party hereto without the prior written consent of the other
parties hereto and any purported assignment without such consent shall be void.
(b) Nothing in this Agreement shall be construed as giving any person,
other than the parties hereto and their heirs, successors, legal representatives
and permitted assigns, any right, remedy or claim under or in respect of this
Agreement or any provision hereof, except that each Indemnified Party is
intended to be a third party beneficiary of SECTION 5.10 and may specifically
enforce its terms.
8.6 SEVERABILITY.
(a) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable under any applicable law, then such contravention or
invalidity shall not
46
invalidate the entire Agreement. Such provision shall be deemed to be modified
to the extent necessary to render it legal, valid and enforceable, and if no
such modification shall render it legal, valid and enforceable, then this
Agreement shall be construed as if not containing the provision held to be
invalid, and the rights and obligations of the parties shall be construed and
enforced accordingly.
8.7 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreements
contain all of the terms of the understandings of the parties hereto with
respect to the subject matter hereof.
[The remainder of this page is intentionally blank]
47
AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE
IN WITNESS WHEREOF, Parent, Holdco, the Company, Acquisition I and
Acquisition II have caused this Agreement to be executed as of the date first
written above.
HS RESOURCES, INC.
By: /S/XXXXXXXX X. XXXXXX
------------------------------------------
Name: Xxxxxxxx X. Xxxxxx
----------------------------------------
Title: Chief Executive Officer
---------------------------------------
XXXX-XxXXX CORPORATION
By: /S/XXXX XXXXXXX
------------------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
KING HOLDCO, INC.
By: /S/XXXX XXXXXXX
------------------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
KING MERGER SUB, INC.
By: /S/XXXX XXXXXXX
------------------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
HAWK MERGER SUB, INC.
By: /S/XXXX XXXXXXX
------------------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
