Exhibit 2.2
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STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is dated as of December
21, 1995 between Xxxxxxxx X. Xxxxx and Xxxxxx Xxxxx Xxxxx - Trust No. 2-A
("Stockholder") and Key Production Company, Inc., a Delaware corporation
("Key").
Key and Xxxxx Exploration Company, a Delaware corporation ("Xxxxx"),
propose to enter into an Agreement and Plan of Merger (the "Merger Agreement")
on the date of this Agreement pursuant to which a newly formed wholly owned
subsidiary of Key will be merged with and into Xxxxx (the "Merger"). As a
result of the Merger, each outstanding share of Common Stock, $0.10 par value,
of Xxxxx (the "Xxxxx Common Stock") would be converted into the right to receive
.6897 shares of Common Stock, $.25 par value (the "Key Common Stock"), of Key.
Stockholder owns 325,811 shares and the Xxxxxxxx X. Xxxxx, Xx. and
Xxxxxx Xxxxx Irrevocable Trust ("BankOne Trust") owns 893,658 shares of Xxxxx
Common Stock (the "Shares").
Stockholder desires to induce Key to enter into the Merger Agreement
by entering into this Agreement.
Accordingly, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
1. Registration of Key Common Stock. Key shall cause a Registration Statement
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on Form S-3 (the "Resale Registration Statement") covering the resale by
Stockholder and BankOne Trust of the Key Common Stock to be filed with the
Securities and Exchange Commission (the "SEC") promptly after the Effective Time
and shall use its best efforts to have the Resale Registration Statement
declared effective by the SEC as soon thereafter as practicable. Key further
agrees to cause the Resale Registration Statement to remain effective for a
period of two years after the Effective Time. Stockholder and BankOne Trust
agree from time to time not to sell any Key Common Stock pursuant to the Resale
Registration Statement if Stockholder and BankOne Trust have received written
notice from Key in accordance with this Section 1 that the Resale Registration
Statement is not then available to effect resales of the Key Common Stock. Key
may suspend the ability of Stockholder and BankOne Trust to resell Key Common
Stock pursuant to the Resale Registration Statement for up to no more than 30
days if (i) in Key's good faith judgment after consultation with counsel, Key
would thereby be required to disclose information relating to pending corporate
developments or business transactions involving Key or its subsidiaries not
otherwise then required by law to be publicly disclosed and (ii) in the good
faith judgment of Key such disclosure at such time would adversely affect Key in
regard to any such corporate developments or business transactions contemplated
by Key or its subsidiaries. If at any time Key suspends the ability of
Stockholder and BankOne Trust to sell Key Common Stock pursuant to the Resale
Registration Statement, Key shall use its best efforts to permit resales of the
Key Common Stock pursuant to the Resale Registration Statement as soon as
thereafter practicable and Key shall notify Stockholder and BankOne Trust
promptly after the Resale Registration Statement again becomes available for
sales of any Key Common Stock. In no event, however, shall Key have the ability
to restrict the Stockholder's and BankOne Trust's right to sell any Key Common
Stock pursuant to the Resale Registration Statement more than two times in any
12 month period.
2. Covenants of Stockholder.
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(a) During the period from the date of this Agreement until the Termination
Date (as defined in Section 18 hereof), except in accordance with the provisions
of this Agreement and subject to the provisions of Section 2(d), Stockholder
agrees that it will not:
(i) Transfer (as defined in Section 17 hereof) any Shares; provided
that Stockholder may Transfer Shares to any Person without consideration if any
such Shares which are so Transferred shall continue to be subject to the
provisions of Section 6 hereof, and, as a condition to any such Transfer of
Shares, the transferee shall enter into a written agreement with Key, in form
and substance satisfactory to Key, assuming such obligations;
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(ii) deposit any Shares into a voting trust, or grant any proxies or
enter into a voting agreement with respect to any Shares; or
(iii) initiate, solicit or encourage, directly or indirectly,
or engage in any negotiations concerning an Competing Transaction (as defined in
the Merger Agreement), or provide any confidential information or data to, or
have any discussions with, any Person relating to an Competing Transaction, or
otherwise facilitate any effort or attempt to make or implement an Competing
Transaction.
(b) Any additional shares of Xxxxx Common Stock, warrants, options or other
securities or rights exercisable for, exchangeable for or convertible into
shares of Xxxxx Common Stock acquired by Stockholder will become subject to this
Agreement and shall, for all purposes of this Agreement, be considered "Shares."
(c) Subject to the provisions of Section 2(d), Stockholder agrees not to
take any action or omit to take any action which would have the effect of
preventing or disabling Stockholder from performing its obligations under this
Agreement.
(d) Notwithstanding the restrictions set forth in this Section 2, Xxxxxxxx
X. Xxxxx and Xxxxxx Xxxxx Xxxxx may exercise their fiduciary duties in their
capacities as directors and officers of the Company, as opposed to taking action
with respect to the direct or indirect ownership (including, without limitation,
the Transfer or voting) of any Shares, and no such exercise of fiduciary duties
shall be deemed to be a breach of, or a violation of the restrictions set forth
in, this Section 2 and Stockholder shall have no liability hereunder for any
such exercise of fiduciary duties by Xxxxxxxx X. Xxxxx and Xxxxxx Xxxxx Xxxxx in
their capacities as directors or officers of the Company.
3. Right of First Refusal; Voting. At all times during the period beginning at
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the Effective Time (as defined in the Merger Agreement) and ending two years
after the Effective Time, Stockholder shall, prior to effecting any Transfer of
Key Common Stock (a "Sale"), offer Key a right of first refusal to purchase the
Common Stock proposed to be Transferred on the following terms. Stockholder
shall provide Key with written notice (the "Sale Notice") of any proposed Sale,
which Sale Notice shall contain the identity of the purchaser (if known), the
number of shares of Key Common Stock proposed to be Transferred, the proposed
purchase price for such shares and the form of consideration payable for such
shares. The Sale Notice shall also contain an irrevocable offer to sell the
shares subject to such Sale Notice to Key for cash at a price equal to the price
contained in such Sale Notice. Key shall have the right and option, by written
notice delivered to Stockholder (the "Purchase Notice") within two days of
receipt of the Sale Notice, to accept such offer as to all, but not less than
all, of the Key Common
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Stock subject to such Sale Notice. Key shall have the right to assign to any
Person such right to purchase the shares subject to the Sale Notice, provided
that Key shall remain liable for such transferee's performance of and compliance
with the obligations of Key under this Agreement. In the event Key (or its
assignee) elects to purchase the shares subject to the Sale Notice, the closing
of the purchase of the Key Common Stock shall occur at the principal office of
Key (or its assignee) on or before the third day following Stockholder's receipt
of the Purchase Notice. In the event Key does not elect to purchase the shares
subject to the Sale Notice, Stockholder shall be free, for a period of 90 days
following the receipt of notice from Key of its election not to purchase such
shares or, in the absence of any such notice, for a period of 90 days following
the third day after receipt by Key of the Sale Notice, to sell the shares
subject to the Sale Notice in accordance with the terms of, or at a greater
price, and to any Person identified in, the Sale Notice, subject to the
provisions of Section 12 hereof. If such sale is not effected within such 90 day
period such shares shall remain subject to all of the provisions of this
Agreement. Notwithstanding the foregoing, any Stockholder may Transfer any
number of Key Common Stock to any heirs, distributees, guardians,
administrators, executors, legal representatives or similar successors in
interest of such Stockholder, provided that (A) such transferee shall become a
party to this Agreement and agree in writing to perform and comply with all of
the obligations of such Stockholder under this Agreement, and thereupon such
transferee shall be deemed to be a party hereto for all purposes of this
Agreement, and (B) the transferor shall remain liable for such transferee's
performance of and compliance with the obligations of the transferor under this
Agreement, and (ii) Stockholder may Transfer Key Common Stock in a tender offer,
merger, or other similar business combination transaction approved by the Board
of Directors of Key. If the purchase price described in any Sale Notice is not
solely made up of cash or marketable securities, the Sale Notice shall include a
good faith estimate of the cash equivalent of such other consideration, and the
consideration payable by Key or its assignee (if Key elects to purchase (or to
have assignee purchase) the Key Common Stock described in the Sale Notice) in
place of such other consideration shall be cash equal to the amount of such
estimate; provided, however, that if Key in good faith disagrees with such
estimate and states a different good faith estimate in the Purchase Notice, and
if Key and the selling Stockholder cannot agree on the cash equivalent of such
other (i.e., other than cash or marketable securities) consideration, such cash
equivalent shall be determined by a reputable investment banking firm without
material connections with either party. Such investment banking firm shall be
selected by both parties or, if they shall be unable to agree, by an arbitrator
appointed by the American Arbitration Association. The fees and expenses of any
such investment banking firm and/or arbitrator shall be shared equally by Key
and the selling Stockholder, unless otherwise determined by such firm or
arbitrator. In the event of such differing estimates by Key and the selling
Stockholder, periods of time which would otherwise run under this Section 3 from
the date of such Stockholder's receipt of the Purchase Notice shall run instead
from the date on which the parties agree on such cash
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equivalent or, in the absence of such agreement, the date on which such cash
equivalent is determined by such investment banking firm. If the purchase price
described in any Sale Notice shall include marketable securities, the purchase
price payable by Key (or its designee) shall include, to the extent marketable
securities were included as a portion of the consideration provided for in the
Sale Notice, an amount in cash determined by reference to the Current Market
Price of such securities on the day the Purchase Notice is received by the
selling Stockholder. In connection with any proposed privately negotiated sale
by a Stockholder of Key Common Stock representing in excess of five% of the then
outstanding Key Common Stock, Key will cooperate with and permit the proposed
purchaser to conduct a due diligence review reasonable under the circumstances
of Key and its Subsidiaries and their respective business and operations,
including, without limitation, reasonable access during normal business hours to
their executive officers, and, if reasonable under the circumstances, their
properties subject to execution by such purchaser of a customary confidentiality
agreement; provided that Key shall not be required to permit more than two such
due diligence reviews in any twelve-month period.
4. Representations and Warranties of Stockholder. Stockholder represents and
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warrants to Key as follows:
(a) (i) Stockholder is the record and Beneficial Owner of the Shares, (ii)
such Shares are the only securities of Xxxxx owned of record or Beneficially
Owned by Stockholder or in which Stockholder has any interest, and (iii)
Stockholder does not have any option or other right to acquire any other Shares;
(b) Such Stockholder has the right, power and authority to execute and
deliver this Agreement and to perform his obligations hereunder; the execution,
delivery and performance of this Agreement by such Stockholder will not require
the consent of any other Person and will not constitute a violation of, conflict
with or result in a default under (i) any contract, understanding or arrangement
to which such Stockholder is a party or by which such Stockholder is bound, (ii)
any judgment, decree or order applicable to such Stockholder, or (iii) any law,
rule or regulation of any governmental body applicable to such Stockholder; and
this Agreement constitutes a valid and binding agreement on the part of such
Stockholder, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity; and
(c) the Shares are held by such Stockholder free and clear of all adverse
claims, liens, encumbrances and security interests, and none of the Shares are
subject to any voting trust or other agreement or arrangement with respect to
the voting or disposition of the Shares; and there are no outstanding options,
warrants or rights to purchase or acquire, or agreements (except for this
Agreement) relating to, the Shares.
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5. Representations and Warranties of Key. Key hereby represents and warrants
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to Stockholder that: it is a corporation duly formed under the laws of the
State of Delaware; it has all requisite corporate power and authority to enter
into and perform all its obligations under this Agreement; the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on its part;
this Agreement has been duly executed and delivered by it; and this Agreement
constitutes a valid and binding agreement on its part, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
6. Voting of Shares. Subject to the absence of a preliminary or permanent
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injunction or other final order by any United States federal court or state
court barring such action, Stockholder hereby agrees that, from the date of this
Agreement until the Termination Date, at any meeting of the stockholders of
Xxxxx, however called, and in any action by written consent of the stockholders
of the Company, he shall (a) vote all Shares of Stockholder in favor of the
transactions contemplated by the Merger Agreement; (b) vote all Shares of
Stockholder against any action or agreement which would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of Xxxxx under the Merger Agreement; and (c) vote all Shares of
Stockholder against any action or agreement which would impede, interfere with
or attempt to discourage the transactions contemplated by the Merger Agreement,
including, but not limited to: (i) any Competing Transaction involving Xxxxx or
any of its subsidiaries; (ii) any change in the management or board of directors
of Xxxxx, except as otherwise agreed to in writing by Key; (iii) any material
change in the present capitalization or dividend policy of Xxxxx; or (iv) any
other material change in Xxxxx'x corporate structure or business.
Notwithstanding the provisions of this Section 6, Stockholder may exercise his
fiduciary duties in his capacity as a director or officer of the Company, as
opposed to taking action with respect to the direct or indirect ownership
(including, without limitation, the Transfer or voting) of any Shares, and no
such exercise of fiduciary duties shall be deemed to be a breach of, or a
violation of the provisions set forth in, this Section 6 and Stockholder shall
have no liability hereunder for any such exercise of fiduciary duties by
Stockholder in his capacity as a director or officer of the Company.
7. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws. Each of Key and Stockholder hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Delaware and of the United States of America located in the
State of Delaware (the "Delaware Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the
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laying of venue of any such litigation in the Delaware Courts and agrees not to
plead or claim in any Delaware Court that such litigation brought therein has
been brought in an inconvenient forum.
8. Further Assurances. Each party hereto shall perform such further acts and
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execute such further documents as may reasonably be required to carry out the
provisions of this Agreement.
9. Assignment. This Agreement may not be assigned by Stockholder or BankOne
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Trust. Key may assign its right to under this Agreement to one or more of its
Affiliates.
10. Remedies. The parties agree that legal remedies for breach of this
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Agreement will be inadequate and that this Agreement may be enforced by Key by
injunctive or other equitable relief.
11. Affiliate Letter. Stockholder and BankOne Trust hereby agree to execute
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prior to the Effective Time an Affiliate Letter in the form attached to the
Merger Agreement.
12. Tax Representations. Neither Stockholder nor BankOne Trust has any plan
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or intention, and to the best knowledge of Stockholder and BankOne Trust there
is no plan or intention on the part of any of the remaining stockholders of
Xxxxx, to sell, exchange or otherwise dispose of a number of shares of Key
Common Stock to be received in the Merger that would reduce the Xxxxx
stockholders' ownership of Key Common Stock to a number of shares having a
value, as of the Effective Time, of less than 50 percent of the value of all of
the Xxxxx Common Stock (including shares of Xxxxx Common Stock exchanged for
cash in lieu of fractional shares of Key Common Stock) outstanding immediately
prior to the Effective Time.
13. Notices. All notices or other communications required or permitted
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hereunder shall be in writing (except as otherwise provided herein) and shall be
deemed duly given if delivered in person, by confirmed facsimile transmission or
by overnight courier service, addressed as follows:
To Key:
Key Production Company, Inc.
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
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With a copy to:
Holme Xxxxxxx & Xxxx LLC
0000 Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000 With a copy to:
To Stockholder:
Xxxxxxxx X. Xxxxx and Xxxxxx Xxxxx Xxxxx - Trust No. 2-A
0000 Xxxxxxx Xxx
Xxxxxxx, XX 00000
To BankOne Trust:
Xxxxxxxx X. Xxxxx, Xx. and Xxxxxx Xxxxx Irrevocable Trust
Account No. 8336385800
BankOne Texas N.A.
X.X. Xxx 0000
Xxxx Xxxxx, Xxxxx 00000
14. Severability. Any term or provision of this Agreement which is invalid or
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unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, such provision shall be interpreted to be only
so broad as is enforceable.
15. Counterparts. This Agreement may be executed in counterparts, each of
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which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
16. Binding Effect; Benefits. This Agreement shall survive the death or
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incapacity of Stockholder and shall inure to the benefit of and shall be binding
upon the parties
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hereto and their respective heirs, legal representatives, successors and
permitted assigns, to the extent specifically provided herein. Nothing in this
Agreement, expressed or implied, is intended to or shall confer on any Person
other than the parties hereto and their respective heirs, legal representatives
and successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
17. Certain Definitions. Capitalized terms used and not defined herein have
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the respective meanings ascribed to them in the Merger Agreement. In addition,
for purposes of this Agreement:
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to Stockholder,
"Affiliate" shall not include Xxxxx or Key and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by Xxxxx or Key,
as the case may be.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall have the meanings set forth in Rule 13d-3 under the Exchange
Act. Any calculation of the percentage of the Key Common Stock owned by a Person
shall be made in accordance with Regulation 13D under the Exchange Act.
(c) "Current Market Price" shall mean, as applied to any class of stock on
any date, the average of the daily "Closing Prices" (as hereinafter defined) for
the 20 consecutive trading days immediately prior to the date in question. The
term "Closing Price" on any day shall mean the last sales price, regular way,
per share of such stock on such day, or if no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if shares of
such stock are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of such stock are listed or admitted to trading, or, if the
shares of such stock are not listed or admitted to trading on any national
securities exchange on the NASDAQ National Market System or, if the shares of
such stock are not quoted on the NASDAQ National Market System, the average of
the high bid and low asked prices in the over-the-counter market as reported by
the National Association of Securities Dealers Inc.'s Automated Quotation
System.
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(d) "Person" shall have the meaning set forth in Section 13(d)(3) of the
Exchange Act.
(e) "Transfer" shall mean, with respect to a security, the sale, transfer,
pledge, hypothecation, encumbrance, assignment or disposition of such security
or the Beneficial Ownership thereof, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing.
18. Term. The provisions of this Agreement shall terminate upon the date of
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termination of the Merger Agreement (the "Termination Date"), except that
Section 7, 9, 10, 12, 14, 15, 16 and 17 shall survive such termination. If the
Merger is consummated, the provisions of Sections 2, 6 and 11 shall terminate;
all other provisions of this Agreement shall survive the Merger.
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IN WITNESS WHEREOF, Stockholder and Key have entered into this Agreement
as of the date first written above.
KEY PRODUCTION COMPANY, INC.
By: /s/ X. X. Xxxxxxx
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STOCKHOLDER:
Xxxxxxxx X. Xxxxx and Xxxxxx Xxxxx Xxxxx - Trust
No. 2-A
By: /s/ Xxxxxxxx X. Xxxxx
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