EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered into
as of the 25th day of February, 1996, by and among HS RESOURCES, INC.
("PARENT"), a Delaware corporation; HSR ACQUISITION, INC. ("MERGER SUB"), a
Delaware corporation; and Tide West Oil Company ("TIDE WEST"), a Delaware
corporation.
Recitals
A. The board of directors of each of Parent and Tide West has determined that
it is in the best interests of its respective stockholders to approve the
strategic alliance of Parent and Tide West by means of the merger of Tide West
with and into Merger Sub upon the terms and subject to the conditions set forth
in this Agreement.
B. For federal income tax purposes, it is intended that such merger qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended.
C. Parent, Merger Sub, and Tide West desire to make certain representations,
warranties, covenants and agreements in connection with such merger and also to
prescribe various conditions to such merger.
NOW, THEREFORE, for and in consideration of the recitals and the mutual
covenants and agreements set forth in this Agreement, the parties to this
Agreement hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, each of the following terms
has the meaning given in this Section 1.1 or in the Sections referred to below:
"AFFILIATE" means, with respect to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with such Person.
"AGREEMENT" means this Agreement and Plan of Merger, as amended, supplemented
or modified from time to time.
"ALLOCATED VALUES" means the allocation of values shown on SCHEDULE 1.1(A).
"ALTERNATIVE PROPOSAL" has the meaning specified in Section 5.4(b).
"ALTERNATIVE TRANSACTION" has the meaning specified in Section 5.4(d).
"BANK CREDIT AGREEMENT" means (a) the Second Amended and Restated Credit
Agreement, dated as of June 15, 1995, between Tide West, as borrower, and Union
Bank, Den norske Bank AS, Colorado National Bank, and Texas Commerce Bank,
National Association, as lenders (as amended and supplemented as of the date
hereof), and/or (b) the Credit Agreement, dated as of December 20, 1993, between
TWTT, as borrower, and Union Bank, Den norske Bank AS, and Colorado National
Bank, as lenders (as amended and supplemented as of the date hereof).
"CASH CONSIDERATION" means $8.75 less three percent of the amount by which the
Market Price exceeds $10.50.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or any successor statutes and any regulations
promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System List.
"CERTIFICATE OF MERGER" means the certificate of merger, prepared and executed
in accordance with the applicable provisions of the DGCL, filed with the
Secretary of State of Delaware to reflect the consummation of the Merger.
"CLOSING" means the closing of the Merger and the consummation of the other
transactions contemplated by this Agreement.
"CLOSING DATE" means the date on which the Closing occurs, which date shall be
the first business day following the day on which both the Tide West Meeting and
the Parent Meeting have been held (or such later date as is agreed upon by the
parties).
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" means, collectively, the letter agreements dated
November 28, 1995, and February 17, 1996, between Tide West and Parent relating
to Tide West's furnishing of information to Parent and Parent's furnishing of
information to Tide West in connection with Parent's and Tide West's evaluation
of the possibility of the Merger.
"CONVERSION NUMBER" means 0.6295.
"DGCL" means the Delaware General Corporation Law.
"DEFENSIBLE TITLE" means such right, title and interest that is (a) evidenced
by an instrument or instruments filed of record in accordance with the
conveyance and recording laws of the applicable jurisdiction to the extent
necessary to prevail against competing claims of bona fide purchasers for value
without notice and (b) subject to Permitted Encumbrances, free and clear of all
Liens, claims, infringements, burdens or other defects.
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"DISCLOSURE SCHEDULE" means the DISCLOSURE SCHEDULE attached hereto and any
documents listed on such DISCLOSURE SCHEDULE and expressly incorporated therein
by reference.
"DISSENTING STOCKHOLDER(S)" means holder(s) of Tide West Common Stock who have
validly perfected appraisal rights under Section 262 of the DGCL.
"DRACO" means Draco Petroleum, Inc., an Oklahoma corporation and a wholly-
owned subsidiary of Tide West.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"EFFECTIVE TIME" has the meaning specified in Section 2.7.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign statute, code,
ordinance, rule, regulation, policy, guideline, permit, consent, approval,
license, judgment, order, writ, decree, common law, injunction or other
authorization in effect on the date hereof or at a previous time applicable to
Tide West's operations relating to (a) emissions, discharges, releases or
threatened releases of Hazardous Materials into the natural environment,
including into ambient air, soil, sediments, land surface or subsurface,
buildings or facilities, surface water, groundwater, publicly-owned treatment
works, septic systems or land; (b) the generation, treatment, storage, disposal,
use, handling, manufacturing, transportation or shipment of Hazardous Materials;
(c) occupational health and safety; or (d) otherwise relating to the pollution
of the environment, solid waste handling treatment or disposal, or operation or
reclamation of oil and gas operations or mines.
"EXCHANGE AGENT" means Xxxxxx Savings and Trust, the transfer agent for shares
of Parent Common Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE FUND" has the meaning specified in Section 2.5(a).
"FAILURE AMOUNT" has the meaning specified in Section 6.2(a).
"GAAP" means generally accepted accounting principles, as recognized by the
U.S. Financial Accounting Standards Board (or any generally recognized
successor).
"GOVERNMENTAL ACTION" means any authorization, application, approval, consent,
exemption, filing, license, notice, registration, permit or other requirement
of, to or with any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any national, state, county or municipal
government, domestic or foreign, any agency, board, bureau, commission, court,
department or other instrumentality of any such government, or any arbitrator in
any case that has jurisdiction over any of the Tide West Companies, Parent or
Merger Sub or any of their respective properties or assets.
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"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
"HAZARDOUS MATERIAL" means (a) any "hazardous substance," as defined by
CERCLA; (b) any "hazardous waste" or "solid waste," in either case as defined by
the Resource Conservation and Recovery Act, as amended; (c) any solid,
hazardous, dangerous or toxic chemical, material, waste or substance, within the
meaning of and regulated by any Environmental Law; (d) any radioactive material,
including any naturally occurring radioactive material, and any source, special
or byproduct material as defined in 42 U.S.C. 2011 et seq. and any amendments or
authorizations thereof; (e) any asbestos-containing materials in any form or
condition; (f) any polychlorinated biphenyls in any form or condition; or (g)
petroleum, petroleum hydrocarbons, or any fraction or byproducts thereof.
"HORIZON" means Horizon Gas Partners, L.P., a Delaware limited partnership.
"HYDROCARBON AGREEMENT" means any of the Hydrocarbon Sales Agreements, the
Hydrocarbon Purchase Agreements and the Hydrocarbon Support Agreements.
"HYDROCARBON PURCHASE AGREEMENT" means any sales agreement, purchase contract
or marketing agreement that is currently in effect and under which any of the
Tide West Companies is a buyer of Hydrocarbons for resale (other than purchase
agreements entered into in the ordinary course of business with a term of three
months or less, terminable without penalty on 30 days' notice or less, which
provide for a price not greater than the market value price that would be paid
pursuant to an arm's-length contract for the same term with an unaffiliated
third party seller, and which do not obligate the purchaser to take any
specified quantity of Hydrocarbons or to pay for any deficiencies in quantities
of Hydrocarbons not taken).
"HYDROCARBON SALES AGREEMENT" means any sales agreement, purchase contract or
marketing agreement that is currently in effect and under which any of the Tide
West Companies is a seller of Hydrocarbons (other than "spot" sales agreements
entered into in the ordinary course of business with a term of three months or
less, terminable without penalty on 30 days' notice or less, and which provide
for a price not less than the market value price that would be received pursuant
to an arms'-length contract for the same term with an unaffiliated third party
purchaser).
"HYDROCARBON SUPPORT AGREEMENT" means any gathering, transportation,
treatment, compression, processing or similar agreement that is currently in
effect and to which any of the Tide West Companies is a party (other than
gathering, transportation, treatment, compression, processing and similar
agreements that have been entered into in the ordinary course of business and
which contain market value prices and terms of the type found in gathering,
transportation, treatment, compression, processing and similar agreements
entered into between unaffiliated parties in arm's-length transactions).
"HYDROCARBONS" means oil, condensate, gas, casinghead gas and other liquid or
gaseous hydrocarbons.
"INDEMNIFIED PARTIES" has the meaning specified in Section 5.15.
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"LIEN" means any lien, mortgage, security interest, pledge, deposit,
production payment, restriction, burden, encumbrance, rights of a vendor under
any title retention or conditional sale agreement, or lease or other arrangement
substantially equivalent thereto.
"MAJOR TIDE WEST STOCKHOLDER" means Natural Gas Partners, L.P., a Delaware
limited partnership.
"MARKET PRICE" means the average of the per share closing sales prices of the
Parent Common Stock on the NYSE (as reported by The Wall Street Journal, or if
not so reported, by another authoritative source) over the 10 trading days
immediately preceding the Closing Date.
"MATERIAL" or "MATERIALLY" (whether or not capitalized) means circumstances or
results having an economic effect in excess of $500,000, except as otherwise
specified.
"MATERIAL ADVERSE EFFECT" means (a) when used with respect to Tide West, a
result or consequence that would materially adversely affect the condition
(financial or otherwise), results of operations or business of the Tide West
Companies (taken as a whole) or the aggregate value of their assets, would
materially impair the ability of the Tide West Companies (taken as a whole) to
own, hold, develop and operate their assets, or would impair Tide West's ability
to perform its obligations hereunder or consummate the transactions contemplated
hereby; and (b) when used with respect to Parent, a result or consequence that
would materially adversely affect the condition (financial or otherwise),
results of operations or business of Parent and the Parent Material Subsidiaries
(taken as a whole) or the aggregate value of their assets, would materially
impair the ability of Parent and the Parent Material Subsidiaries (taken as a
whole) to own, hold, develop and operate their assets, or would impair Parent's
or Merger Sub's ability to perform its respective obligations hereunder or
consummate the transactions contemplated hereby.
"MERGER" has the meaning specified in Section 2.1.
"MERGER CONSIDERATION" means the sum of (a) the Cash Consideration plus (b)
the product of the Conversion Number and the Market Price.
"MERGER SUB" means HSR Acquisition, Inc., a Delaware corporation and a wholly-
owned subsidiary of Parent.
"MERGER SUB COMMON STOCK" means the common stock, par value $.001 per share,
of Merger Sub.
"XXXXXXX XXXXX" means Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.
"NYSE" means The New York Stock Exchange, Inc.
"OIL AND GAS INTEREST(S)" means (a) direct and indirect interests in and
rights with respect to oil, gas, mineral and related properties and assets of
any kind and nature, direct or indirect, including working, royalty and
overriding royalty interests, production payments, operating rights, net profits
interests, other non-working interests and non-operating interests; (b)
interests in and
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rights with respect to Hydrocarbons and other minerals or revenues therefrom and
contracts in connection therewith and claims and rights thereto (including oil
and gas leases, operating agreements, unitization and pooling agreements and
orders, division orders, transfer orders, mineral deeds, royalty deeds, oil and
gas sales, exchange and processing contracts and agreements and, in each case,
interests thereunder), surface interests, fee interests, reversionary interests,
reservations and concessions; (c) easements, rights of way, licenses, permits,
leases, and other interests associated with, appurtenant to, or necessary for
the operation of any of the foregoing; and (d) interests in equipment and
machinery (including well equipment and machinery), oil and gas production,
gathering, transmission, compression, treating, processing and storage
facilities (including tanks, tank batteries, pipelines and gathering systems),
pumps, water plants, electric plants, gasoline and gas processing plants,
refineries and other tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the foregoing.
References in this Agreement to the "OIL AND GAS INTERESTS OF TIDE WEST" or
"TIDE WEST'S OIL AND GAS INTERESTS" mean the collective Oil and Gas Interests of
the Tide West Companies.
"OWNERSHIP INTERESTS" means the ownership interests of Tide West in its
assets, as set forth on SCHEDULE 1.1(B).
"PARENT" means HS Resources, Inc., a Delaware corporation.
"PARENT CERTIFICATE" means a certificate representing shares of Parent Common
Stock.
"PARENT COMMON STOCK" means the common stock, par value $.001 per share, of
Parent.
"PARENT FINANCIAL STATEMENTS" means the audited and unaudited consolidated
financial statements of Parent and its subsidiaries (including the related
notes) included (or incorporated by reference) in Parent's Annual Report on Form
10-K for the year ended December 31, 1994, and Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995, in each case as filed with the SEC.
"PARENT MATERIAL SUBSIDIARY(IES)" means Resource Gathering Systems, Inc.,
Resolute Resources, Inc., Elk Exploration, Inc. and HS Partners, Inc.
"PARENT MEETING" means the meeting of the stockholders of Parent called for
the purpose of voting on the Tide West Proposal.
"PARENT PREFERRED STOCK" means the preferred stock, par value $.001 per share,
of Parent.
"PARENT REPRESENTATIVE" means any director, officer, employee, agent, advisor
(including legal, accounting and financial advisors), Affiliate or other
representative of Parent or its subsidiaries.
"PARENT SEC DOCUMENTS" has the meaning specified in Section 4.5.
"PAYOUT BALANCES" has the meaning specified in Section 3.36.
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"PERMITTED ENCUMBRANCES" means (a) Liens for Taxes, assessments or other
governmental charges or levies if the same shall not at the particular time in
question be due and delinquent or (if foreclosure, distraint, sale or other
similar proceedings shall not have been commenced or, if commenced, shall have
been stayed) are being contested in good faith by appropriate proceedings and if
any of the Tide West Companies shall have set aside on its books such reserves
(segregated to the extent required by sound accounting practices) as may be
required by or consistent with GAAP and, whether reserves are set aside or not,
are listed on the DISCLOSURE SCHEDULE; (b) Liens of carriers, warehousemen,
mechanics, laborers, materialmen, landlords, vendors, workmen and operators
arising by operation of law in the ordinary course of business or by a written
agreement existing as of the date hereof and necessary or incident to the
exploration, development, operation and maintenance of Hydrocarbon properties
and related facilities and assets for sums not yet due or being contested in
good faith by appropriate proceedings, if any of the Tide West Companies shall
have set aside on its books such reserves (segregated to the extent required by
sound accounting practices) as may be required by or consistent with GAAP and,
whether reserves are set aside or not, are listed on the DISCLOSURE SCHEDULE;
(c) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance and other social security
legislation (other than ERISA) which would not, individually or in the
aggregate, result in a Material Adverse Effect on the Tide West Companies; (d)
Liens incurred in the ordinary course of business to secure the performance of
bids, tenders, trade contracts, leases, statutory obligations, surety and appeal
bonds, performance and repayment bonds and other obligations of a like nature;
(e) Liens, easements, rights-of-way, restrictions, servitudes, permits,
conditions, covenants, exceptions, reservations and other similar encumbrances
incurred in the ordinary course of business or existing on property and not
materially impairing the value of the assets of any of Tide West Companies or
interfering with the ordinary conduct of the business of any of the Tide West
Companies or rights to any of their assets; (f) Liens arising pursuant to
Section 9.319 of the Texas Business and Commerce Code and all other similar
Liens created or arising by operation of law to secure a party's obligations as
a purchaser of oil and gas; (g) all rights to consent by, required notices to,
filings with, or other actions by Governmental Authorities to the extent
customarily obtained subsequent to closing; (h) farmout, carried working
interest, joint operating, unitization, royalty, overriding royalty, sales and
similar agreements relating to the exploration or development of, or production
from, Hydrocarbon properties entered into in the ordinary course of business and
not in violation of Section 5.1(c), provided the effect thereof on the working
and net revenue interest of Tide West has been properly reflected in the
Ownership Interests; (i) any defects, irregularities or deficiencies in title to
easements, rights-of-way or other surface use agreements that do not materially
adversely affect the value of any asset of any of the Tide West Companies by an
amount in excess of $10,000; (j) preferential rights to purchase and Third-Party
Consents; (k) Liens arising under or created pursuant to either Bank Credit
Agreement; and (l) Liens described on the DISCLOSURE SCHEDULE.
"PERSON" means any natural person, corporation, company, limited or general
partnership, joint stock company, joint venture, association, limited liability
company, trust, bank, trust company, land trust, business trust or other entity
or organization, whether or not a Governmental Authority.
"PROXY STATEMENT/PROSPECTUS" means a joint proxy statement in definitive form
relating to the Tide West Meeting and the Parent Meeting, which proxy statement
will be included as a prospectus in the Registration Statement.
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"REGISTRATION STATEMENT" means the Registration Statement on Form S-4 to be
filed by Parent in connection with the issuance of Parent Common Stock pursuant
to the Merger.
"RESERVE DATA VALUE" means the 10% present value of the proved reserves
contained in Tide West's Oil and Gas Interests, as shown on the October 1, 1995,
reserve report of Tide West.
"RESPONSIBLE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, President or any Vice President of such corporation.
"RETAINED EMPLOYEES" has the meaning specified in Section 5.16.
"XXXXX" means Xxxxx Participants, Ltd., a Texas limited partnership.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE PRICE" means the per share closing sales price of the Parent Common
Stock on the NYSE (as reported by The Wall Street Journal, or if not so
reported, by another authoritative source) on the day immediately preceding the
Closing Date.
"SURVIVING CORPORATION" has the meaning specified in Section 2.2.
"TAX RETURNS" has the meaning specified in Section 3.16(a).
"TAXES" means taxes of any kind, levies or other like assessments, customs,
duties, imposts, charges or fees, including income, gross receipts, ad valorem,
value added, excise, real or personal property, asset, sales, use, federal
royalty, license, payroll, transaction, capital, net worth and franchise taxes,
estimated taxes, withholding, employment, social security, workers compensation,
utility, severance, production, unemployment compensation, occupation, premium,
windfall profits, transfer and gains taxes or other governmental taxes imposed
or payable to the United States or any state, local or foreign governmental
subdivision or agency thereof, and in each instance such term shall include any
interest, penalties or additions to tax attributable to any such Tax, including
penalties for the failure to file any Tax Return or report.
"THIRD-PARTY CONSENT" means the consent or approval of any Person other than
Tide West, Parent or any Governmental Authority.
"TIDE WEST" means Tide West Oil Company, a Delaware corporation.
"TIDE WEST CERTIFICATE" means a certificate representing shares of Tide West
Common Stock.
"TIDE WEST COMMON STOCK" means the common stock, par value $.01 per share, of
Tide West.
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"TIDE WEST COMMON STOCK WARRANT" means a common stock purchase warrant (issued
and outstanding on the date hereof and at the Effective Time or subject to a
Tide West Unit Warrant issued and outstanding on the date hereof and at the
Effective Time) representing the right to purchase one-tenth of a share of Tide
West Common Stock for an exercise price of $3.00, whether issued pursuant to the
Warrant Agreement, dated as of June 21, 1991, between Tide West and American
Securities Transfer, Incorporated (as amended or supplemented as of the date
hereof) or upon exercise of a Tide West Unit Warrant.
"TIDE WEST COMPANIES" means Tide West, TWTT and Draco.
"TIDE WEST EMPLOYEE BENEFIT PLANS" has the meaning specified in Section
3.17(a).
"TIDE WEST FINANCIAL STATEMENTS" means the audited and unaudited consolidated
financial statements of Tide West and its subsidiaries (including the related
notes) included (or incorporated by reference) in Tide West's Annual Report on
Form 10-K for the year ended December 31, 1994, and Quarterly Report on Form 10-
Q for the quarter ended September 30, 1995, in each case as filed with the SEC.
"TIDE WEST GUARANTY" means a guarantee by Tide West of TWTT's obligations
under any Hydrocarbon Agreement or other natural gas purchase agreement.
"TIDE WEST MATERIAL AGREEMENT(S)" means (a) any written or oral agreement,
contract, commitment or understanding to which any of the Tide West Companies is
a party, by which any of the Tide West Companies is directly or indirectly
bound, or to which any asset of any of the Tide West Companies may be subject,
involving total value or consideration in excess of $500,000, (b) either Bank
Credit Agreement, and/or (c) the partnership agreement of Horizon, in each case
as amended and supplemented as of the date hereof.
"TIDE WEST MEETING" means the meeting of the stockholders of Tide West called
for the purpose of voting on the Tide West Proposal.
"TIDE WEST PERMITS" has the meaning specified in Section 3.11.
"TIDE WEST PROPOSAL" means the proposal to approve this Agreement and the
Merger, which proposal is to be presented to the stockholders of Tide West and
Parent in the Proxy Statement/Prospectus.
"TIDE WEST REPRESENTATIVE" means any director, officer, employee, agent,
advisor (including legal, accounting and financial advisors), Affiliate or other
representative of any of the Tide West Companies.
"TIDE WEST SEC DOCUMENTS" has the meaning specified in Section 3.6.
"TIDE WEST STOCK OPTION" means an option (issued and outstanding on the date
hereof and immediately prior to the Effective Time) to acquire shares of Tide
West Common Stock granted pursuant to the Tide West Oil Company 1991 Stock
Option Plan.
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"TIDE WEST UNIT WARRANT" means a purchase warrant (issued and outstanding on
the date hereof and at the Effective Time) representing the right to purchase a
unit for an exercise price of $5.10, with each such unit consisting of two-
tenths of a share of Tide West Common Stock and two Tide West Common Stock
Warrants.
"TIDE WEST WARRANT" means a Tide West Common Stock Warrant or a Tide West Unit
Warrant.
"TWTT" means Tide West Trading & Transport Company, an Oklahoma corporation
and a wholly-owned subsidiary of Tide West.
1.2 REFERENCES AND TITLES. All references in this Agreement to Exhibits,
Schedules, Articles, Sections, subsections and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections and other
subdivisions of or to this Agreement unless expressly provided otherwise.
Titles appearing at the beginning of any Articles, Sections, subsections or
other subdivisions of this Agreement are for convenience only, do not constitute
any part of this Agreement, and shall be disregarded in construing the language
hereof. The words "THIS AGREEMENT," "HEREIN," "HEREBY," "HEREUNDER" and
"HEREOF," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "THIS
ARTICLE," "THIS SECTION" and "THIS SUBSECTION," and words of similar import,
refer only to the Article, Section or subsection hereof in which such words
occur. The word "OR" is not exclusive, and the word "INCLUDING" (in its various
forms) means "INCLUDING WITHOUT LIMITATION." Pronouns in masculine, feminine or
neuter genders shall be construed to state and include any other gender, and
words, terms and titles (including terms defined herein) in the singular form
shall be construed to include the plural and vice versa, unless the context
otherwise requires.
As used in the representations and warranties contained in this Agreement, the
phrase "TO THE KNOWLEDGE" of the representing party shall mean that Responsible
Officers of such representing party, individually or collectively, either (a)
know that the matter being represented and warranted is true and accurate or (b)
have no reason, after reasonable inquiry, to believe that the matter being
represented and warranted is not true and accurate.
ARTICLE 2
THE MERGER
2.1 THE MERGER. Subject to the terms and conditions set forth in this
Agreement, at the Effective Time, Tide West shall be merged with and into Merger
Sub in accordance with the provisions of this Agreement. Such merger is
referred to herein as the "MERGER."
2.2 EFFECT OF THE MERGER. Upon the effectiveness of the Merger, the separate
existence of Tide West shall cease and Merger Sub, as the surviving corporation
in the Merger (the "SURVIVING CORPORATION"), shall continue its corporate
existence under the laws of the State of Delaware. The Merger shall have the
effects specified in this Agreement and the DGCL.
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2.3 GOVERNING INSTRUMENTS, DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION.
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until duly amended in accordance with
its terms and applicable law; provided, however, that Article I thereof shall be
amended and restated to read in its entirety as follows: "Article I: The name of
the corporation is HSRTW, Inc."
(b) The by-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until duly
amended in accordance with their terms and applicable law.
(c) The directors and officers of Merger Sub at the Effective Time shall
be the directors and officers, respectively, of the Surviving Corporation from
the Effective Time until their respective successors have been duly elected or
appointed in accordance with the certificate of incorporation and by-laws of the
Surviving Corporation and applicable law.
2.4 EFFECT ON SECURITIES.
(a) MERGER SUB STOCK. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder thereof, each share of Merger Sub
Common Stock outstanding immediately prior to the Effective Time shall remain
outstanding and continue as one share of capital stock of the Surviving
Corporation and each certificate evidencing ownership of any such shares shall
continue to evidence ownership of the same number of shares of the capital stock
of the Surviving Corporation.
(b) TIDE WEST SECURITIES.
(i) TIDE WEST COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof (but
subject to the provisions of Section 2.5(e)), each share of Tide West
Common Stock that is issued and outstanding immediately prior to the
Effective Time (other than shares of Tide West Common Stock held by
Dissenting Stockholders) shall be converted into the right to receive (A)
shares of validly issued, fully paid and nonassessable Parent Common Stock,
with each such share of Tide West Common Stock being converted into the
fraction of a share of Parent Common Stock equal to the Conversion Number;
and (B) cash in the amount of the Cash Consideration. Each share of Tide
West Common Stock, when so converted, shall automatically be cancelled and
retired, shall cease to exist and shall no longer be outstanding; and the
holder of any certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the shares of
Parent Common Stock to be issued in exchange therefor and the Cash
Consideration (along with any cash in lieu of fractional shares of Parent
Common Stock as provided in Section 2.5(e) and any unpaid dividends and
distributions with respect to such shares of Parent Common Stock as
provided in Section 2.5(c)), without interest, upon the surrender of such
certificate in accordance with Section 2.5. The Cash Consideration shall be
decreased in increments of $.01 and the Conversion Number shall be
correspondingly increased for each such increment by an amount equal to
$.01 divided by the
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Share Price (with the aggregate increase in the Conversion Number rounded
to the fourth decimal point) to the extent necessary to cause "(A)" to be
equal to or greater than 40 percent of "(B)" where (A) is the product of
the Share Price and the number of shares of Parent Common Stock issued in
the Merger (excluding those shares issued to any 5 percent shareholder of
Tide West Common Stock as of the Closing Date that has not represented that
as of such date it has no intention, plan or arrangement to dispose of any
Parent Common Stock received in the Merger), and (B) is the sum of (i) the
product determined in clause (A) (without applying the parenthetical
exclusion in clause (A)), (ii) the amount of cash to be paid to holders of
Tide West Common Stock pursuant to Section 2.4(b)(i) as Cash Consideration,
and (iii) the amount of cash or other property to be paid to holders of
Tide West Common Stock that exercise dissenter's rights as contemplated
under Section 2.4(b)(v) which shall be assumed to be (on a per share basis)
the greater of (I) the sum of the value of the Parent Common Stock (valued
at the Share Price) and the Cash Consideration given per share of Tide West
Common Stock and (II) the sum of $8.75 and the product of .6295 and the
Share Price determined as if the date of this Agreement were the Closing
Date; provided, however, if the adjustments to the Cash Consideration and
-------- -------
the Conversation Number pursuant to the foregoing formulas would result in
the issuance of more than 7,161,312 shares of Parent Common Stock under
this Section 2.4(b)(i), then (i) adjustments to the Cash Consideration and
the Conversion Number pursuant to the foregoing formulas shall first be
determined so as to result in an issuance of 7,161,312 shares of Parent
Common Stock, and (ii) based on the Conversion Number so determined, the
Cash Consideration shall thereafter be reduced to the extent necessary so
as to cause "(A)" to be equal to 40 percent of "(B)" using the actual Share
Price.
(ii) TIDE WEST TREASURY STOCK. At the Effective Time, by virtue
of the Merger, all shares of Tide West Common Stock that are issued and
held as treasury stock shall be cancelled and retired and shall cease to
exist, and no shares of Parent Common Stock, Cash Consideration or other
consideration shall be paid or payable in exchange therefor.
(iii) TIDE WEST STOCK OPTIONS. Each Tide West Stock Option shall be
or become fully vested prior to the Effective Time and, at the option of
the holder thereof, either (A) shall be exercised immediately prior to the
Effective Time; or (b) at the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof, shall be cancelled
and converted into the right to receive, for each share of Tide West Common
Stock with respect to which such Tide West Stock Option is exercisable,
cash in an amount equal to the amount by which the Merger Consideration
exceeds the per share exercise price of such Tide West Stock Option. The
amounts so determined shall be paid to the holders of the Tide West Stock
Options not later than three business days after the Effective Time.
(iv) TIDE WEST WARRANTS. All Tide West Warrants shall remain
outstanding following the Effective Time. At the Effective Time, by virtue
of the Merger and without any action on the part of Tide West or any holder
thereof, each Tide West Warrant shall be assumed by Parent and shall be
exercisable on the same terms and conditions as apply immediately prior to
the Effective Time, except as follows:
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(A) Each Tide West Common Stock Warrant shall be exercisable
for that number of shares of Parent Common Stock and the amount of
Cash Consideration into which the number of shares of Tide West Common
Stock subject to such Tide West Common Stock Warrant immediately prior
to the Effective Time would be converted under Section 2.4(b)(i); and
(B) Each Tide West Unit Warrant shall be exercisable for (1)
that number of shares of Parent Common Stock and the amount of Cash
Consideration into which the number of shares of Tide West Common
Stock subject to such Tide West Unit Warrant immediately prior to the
Effective Time would be converted under Section 2.4(b)(i), plus (2)
two Tide West Common Stock Warrants (with each such Tide West Common
Stock Warrant representing the right to purchase that number of shares
of Parent Common Stock and to receive that amount of Cash
Consideration into which the number of shares of Tide West Common
Stock subject to such Tide West Common Stock Warrant immediately prior
to the Effective Time would be converted under Section 2.4(b)(i)).
(v) Except as provided in this Section 2.4(b) or as otherwise
agreed to by the parties, (A) the provisions of any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Tide West Companies shall become null
and void, and (B) the Tide West Companies shall use all reasonable efforts
to ensure that, following the Effective Time, no holder of options or
rights or any participant in any plan, program or arrangement shall have
any right thereunder to acquire any equity securities of the Tide West
Companies, Merger Sub, Parent or any direct or indirect subsidiary thereof.
(vi) SHARES OF DISSENTING STOCKHOLDERS. Any issued and outstanding
shares of Tide West Common Stock held by a Dissenting Stockholder shall be
converted into the right to receive such consideration as may be determined
to be due to such Dissenting Stockholder pursuant to the DGCL; provided,
--------
however, shares of Tide West Common Stock outstanding at the Effective Time
-------
and held by a Dissenting Stockholder who shall, after the Effective Time,
withdraw his demand for appraisal or lose his right of appraisal as
provided in the DGCL, shall be deemed to be converted, as of the Effective
Time, into the right to receive the shares of Parent Common Stock and the
amount of cash (without interest) specified in Section 2.4(b)(i) in
accordance with the procedures specified in Section 2.5(b). Tide West shall
give Parent (A) prompt notice of any written demands for appraisal,
withdrawals of demands for appraisal and any other instruments served
pursuant to the DGCL received by Tide West, and (B) the opportunity to
direct all negotiations and proceedings with respect to demands for
appraisal under the DGCL. Tide West will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with the
prior written consent of Parent, settle or offer to settle any such
demands.
2.5 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE FUND. Immediately after the Effective Time, Parent shall
deposit with the Exchange Agent, for the benefit of the holders of shares of
Tide West Common Stock and
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for exchange in accordance with this Agreement, certificates representing the
shares of Parent Common Stock to be issued, and funds necessary to pay the Cash
Consideration, in exchange for shares of Tide West Common Stock pursuant to
Section 2.4(b)(i). Such shares of Parent Common Stock, together with any
dividends or distributions with respect thereto (as provided in Section 2.5(c))
and such funds, are referred to herein as the "EXCHANGE FUND." The Exchange
Agent, pursuant to irrevocable instructions consistent with the terms of this
Agreement, shall deliver the Parent Common Stock and the Cash Consideration to
be issued or paid pursuant to Section 2.4(b)(i) out of the Exchange Fund, and
the Exchange Fund shall not be used for any other purpose whatsoever. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the Parent Common Stock held by it from time to time hereunder,
except that it shall receive and hold all dividends or other distributions paid
or distributed with respect thereto for the account of Persons entitled thereto.
(b) EXCHANGE PROCEDURES.
(i) As soon as reasonably practicable after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record of a
Tide West Certificate that, immediately prior to the Effective Time,
represented shares of Tide West Common Stock, which was converted into the
right to receive Parent Common Stock and Cash Consideration pursuant to
Section 2.4(b)(i), a letter of transmittal to be used to effect the
exchange of such Tide West Certificate for a Parent Certificate (and cash
in lieu of fractional shares) and the Cash Consideration, along with
instructions for using such letter of transmittal to effect such exchange.
The letter of transmittal (or the instructions thereto) shall specify that
delivery of any Tide West Certificate shall be effected, and risk of loss
and title thereto shall pass, only upon delivery of such Tide West
Certificate to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify.
(ii) Upon surrender to the Exchange Agent of a Tide West Certificate
for cancellation, together with a duly completed and executed letter of
transmittal and any other required documents (including, in the case of any
Person constituting an "affiliate" of Tide West for purposes of Rule 145(c)
and (d) under the Securities Act, a written agreement from such Person as
described in Section 5.10, if not theretofore delivered to Parent), (A) the
holder of such Tide West Certificate shall be entitled to receive in
exchange therefor a Parent Certificate representing the number of whole
shares of Parent Common Stock and Cash Consideration that such holder has
the right to receive pursuant to Section 2.4(b)(i), any cash in lieu of
fractional shares of Parent Common Stock as provided in Section 2.5(e), and
any unpaid dividends and distributions that such holder has the right to
receive pursuant to Section 2.5(c) (after giving effect to any required
withholding of taxes); and (B) the Tide West Certificate so surrendered
shall forthwith be cancelled. No interest shall be paid or accrued on the
Cash Consideration, cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Tide West Certificates.
(iii) In the event of a transfer of ownership of Tide West
Common Stock that is not registered in the transfer records of Tide West, a
Parent Certificate representing the appropriate number of shares of Parent
Common Stock and the appropriate Cash Consideration (along with any cash in
lieu of fractional shares and any unpaid dividends and
14
distributions that such holder has the right to receive) may be issued or
paid to a transferee if the Tide West Certificate representing such shares
of Tide West Common Stock is presented to the Exchange Agent accompanied by
all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid.
(iv) Until surrendered as contemplated by this Section 2.5(b), each
Tide West Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender a Parent
Certificate representing shares of Parent Common Stock and Cash
Consideration as provided in Section 2.4(b)(i) (along with any cash in lieu
of fractional shares and any unpaid dividends and distributions).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to Parent Common Stock declared or made after
the Effective Time with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Tide West Certificate. Subject to the effect of
applicable laws, (i) at the time of the surrender of a Tide West Certificate for
exchange in accordance with the provisions of this Section 2.5, there shall be
paid to the surrendering holder, without interest, the amount of dividends or
other distributions (having a record date after the Effective Time but on or
prior to surrender and a payment date on or prior to surrender) theretofore paid
with respect to the number of whole shares of Parent Common Stock that such
holder is entitled to receive (less the amount of any withholding taxes that may
be required with respect thereto); and (ii) at the appropriate payment date,
there shall be paid to the surrendering holder, without interest, the amount of
dividends or other distributions (having a record date after the Effective Time
but on or prior to surrender and a payment date subsequent to surrender) payable
with respect to the number of whole shares of Parent Common Stock that such
holder receives (less the amount of any withholding taxes that may be required
with respect thereto).
(d) NO FURTHER OWNERSHIP RIGHTS IN TIDE WEST COMMON STOCK. All shares
of Parent Common Stock issued, and the Cash Consideration paid, upon the
surrender for exchange of shares of Tide West Common Stock in accordance with
the terms hereof (including any cash paid pursuant to Section 2.5(c) or (e))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Tide West Common Stock. After the Effective Time,
there shall be no further registration of transfers on the Surviving
Corporation's stock transfer books of the shares of Tide West Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, a Tide West Certificate is presented to the Surviving
Corporation for any reason, it shall be cancelled and exchanged as provided in
this Section 2.5.
(e) TREATMENT OF FRACTIONAL SHARES. No Parent Certificates or scrip
representing fractional shares of Parent Common Stock shall be issued in the
Merger and, except as provided in this Section 2.5(e), no dividend or other
distribution, stock split or interest shall relate to any such fractional share,
and such fractional share shall not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent. In lieu of any fractional share of
Parent Common Stock to which a holder of Tide West Common Stock would otherwise
be entitled, such holder, upon surrender of a Tide West Certificate as described
in this Section, shall be paid an amount in cash (without interest) determined
by multiplying (i) the Market Price by (ii) the fraction of a share of Parent
Common Stock to which such holder would otherwise be entitled, in which case
Parent shall make available to the
15
Exchange Agent, without regard to any other cash being provided to the Exchange
Agent, the amount of cash necessary to make such payments.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
and cash held by the Exchange Agent in accordance with the terms of this Section
2.5 that remains unclaimed by the former stockholders of Tide West for a period
of one year following the Effective Time shall be delivered to Parent, upon
demand. Thereafter, any former stockholders of Tide West who have not
theretofore complied with the provisions of this Section 2.5 shall look only to
Parent for payment of their claim for Parent Common Stock, the Cash
Consideration, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions with respect to Parent Common Stock (all without
interest).
(g) NO LIABILITY. Neither Parent, Tide West, the Surviving Corporation,
the Exchange Agent nor any other Person shall be liable to any former holder of
shares of Tide West Common Stock for any amount properly delivered to any public
official pursuant to any applicable abandoned property, escheat or similar law.
Any amounts remaining unclaimed by former holders of Tide West Common Stock for
a period of three years following the Effective Time (or such earlier date
immediately prior to the time at which such amounts would otherwise escheat to
or become property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of Parent, free and clear of any claims or
interest of any such holders or their successors, assigns or personal
representatives previously entitled thereto.
(h) LOST, STOLEN, OR DESTROYED TIDE WEST CERTIFICATES. If any Tide West
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Tide West Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such Person
of a bond, in such reasonable amount as Parent may direct, as indemnity against
any claim that may be made against it with respect to such Tide West
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Tide West Certificate the shares of Parent Common Stock and the Cash
Consideration (along with any cash in lieu of fractional shares pursuant to
Section 2.5(e) and any unpaid dividends and distributions pursuant to Section
2.5(c)) deliverable with respect thereto pursuant to this Agreement.
2.6 CLOSING. The Closing shall take place on the Closing Date at such time and
place as is agreed upon by Parent and Tide West.
2.7 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
immediately when the Certificate of Merger is accepted for filing by the
Secretary of State of Delaware or at such time thereafter as is provided in the
Certificate of Merger (the "EFFECTIVE TIME"). As soon as practicable after the
Closing, the Certificate of Merger shall be filed, and the Effective Time shall
occur, on the Closing Date; provided, however, that the Certificate of Merger
may be filed prior to the Closing Date or prior to the Closing so long as it
provides for an effective time that occurs on the Closing Date immediately after
the Closing.
2.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent, Merger Sub,
and Tide West shall use all reasonable efforts to take all such actions as may
be necessary or appropriate in order to effectuate the Merger under the DGCL as
promptly as commercially practicable. If, at
16
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 Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of either of Merger Sub or Tide West,
the officers and directors of the Surviving Corporation are fully authorized, in
the name of the Surviving Corporation or otherwise to take, and shall take, all
such lawful and necessary action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TIDE WEST
Tide West hereby represents and warrants to Parent and Merger Sub as follows:
3.1 ORGANIZATION. Each of the Tide West Companies (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation, (b) has the requisite power and authority to own, lease
and operate its properties and to conduct its business as it is presently being
conducted, and (c) is duly qualified to do business as a foreign corporation,
and is in good standing, in each jurisdiction where the character of the
properties owned or leased by it or the nature of its activities makes such
qualification necessary (except where any failure to be so qualified as a
foreign corporation or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Tide West). Copies of the
certificate or articles of incorporation and by-laws of each of the Tide West
Companies have heretofore been delivered to Parent, and such copies are accurate
and complete as of the date hereof. Tide West has no corporate subsidiaries
other than TWTT and Draco.
3.2 PARTNERSHIPS. Tide West owns a limited partner interest in Horizon,
such limited partner interest representing a "pre-payout" interest in the
capital of Horizon of 95% and a "pre-payout" interest in the distributions,
profits and losses of Horizon of 93%. Draco owns a limited partner interest in
Xxxxx, such limited partner interest representing a "pre-payout" interest in the
capital and in the profits and losses of Xxxxx of 17.93%. None of the Tide West
Companies owns any general or limited partner interest in any general or limited
partnership other than Horizon or Xxxxx (other than joint venture, joint
operating or ownership arrangements or tax partnerships entered into in the
ordinary course of business or other partnerships that, individually or in the
aggregate, are not material to the operations or business of the Tide West
Companies, taken as a whole).
3.3 AUTHORITY AND ENFORCEABILITY. Tide West has the requisite corporate power
and authority to enter into and deliver this Agreement and (with respect to
consummation of the Merger, subject to the valid approval of the Tide West
Proposal by the stockholders of Tide West) to consummate the transactions
contemplated hereby. The Board of Directors of Tide West has taken all necessary
action to approve the transactions contemplated by the Agreement to Vote and
Proxy of even date between Parent and the Major Tide West Stockholder pursuant
to Section 203(a) of the DGCL. The execution and delivery of this Agreement and
(with respect to consummation of the Merger, subject to the valid approval of
the Tide West Proposal by the stockholders of Tide West) the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Tide West, including approval by the
board of directors of Tide West, and no other corporate proceedings on the part
of Tide West are necessary to authorize
17
the execution or delivery of this Agreement or (with respect to consummation of
the Merger, subject to the valid approval of the Tide West Proposal by the
stockholders of Tide West) to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Tide West and
(with respect to the Merger, subject to the valid approval of the Tide West
Proposal by the stockholders of Tide West and assuming that this Agreement
constitutes a valid and binding obligation of Parent and Merger Sub) constitutes
a valid and binding obligation of Tide West enforceable against Tide West in
accordance with its terms.
3.4 NO VIOLATIONS. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby and compliance by
Tide West with the provisions hereof will not, conflict with, result in any
violation of or default (with or without notice or lapse of time or both) under,
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in the creation
of any Lien on any of the properties or assets of any of the Tide West Companies
under, any provision of (a) the certificate or articles of incorporation or by-
laws of any of the Tide West Companies, (b) any loan or credit agreement, note,
bond, mortgage, indenture, lease, permit, concession, franchise, license or
other agreement or instrument applicable to any of the Tide West Companies, or
(c) assuming the consents, approvals, authorizations or permits and filings or
notifications referred to in Section 3.5 are duly and timely obtained or made,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to any of the Tide West Companies or any of their respective
properties or assets, other than (y) in the case of clause (b) above, any such
conflict, violation, default, right, loss or Lien that may arise under either
Bank Credit Agreement or any Tide West Guaranty disclosed on the DISCLOSURE
SCHEDULE, and (z) in the case of clause (b) or (c) above, any such conflict,
violation, default, right, loss or Lien that, individually or in the aggregate,
would not have a Material Adverse Effect on Tide West.
3.5 CONSENTS AND APPROVALS. No consent, approval, order or authorization of,
registration, declaration or filing with, or permit from, any Governmental
Authority is required by or with respect to any of the Tide West Companies in
connection with the execution and delivery of this Agreement by Tide West or the
consummation by Tide West of the transactions contemplated hereby, except for
the following: (a) any such consent, approval, order, authorization,
registration, declaration, filing or permit which the failure to obtain or make
would not, individually or in the aggregate, have a Material Adverse Effect on
Tide West; (b) the filing of the Certificate of Merger with the Secretary of
State of Delaware pursuant to the provisions of the DGCL; (c) the filing of a
pre-merger notification report by Tide West under the HSR Act and the expiration
or termination of the applicable waiting period; (d) the filing with the SEC of
the Proxy Statement/Prospectus and such reports under Section 13(a) of the
Exchange Act and such other compliance with the Exchange Act and the Securities
Act and the rules and regulations of the SEC thereunder as may be required in
connection with this Agreement and the transactions contemplated hereby and the
obtaining from the SEC of such orders as may be so required; (e) such filings
and approvals as may be required by any applicable state securities, "blue sky"
or takeover laws or Environmental Laws; and (f) such filings and approvals as
may be required by any foreign pre-merger notification, securities, corporate or
other law, rule or regulation. No Third-Party Consent is required by or with
respect to any of the Tide West Companies in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (w) any such Third-Party Consent which the failure to obtain
would not, individually or in the aggregate, have a Material Adverse Effect
18
on Tide West, (x) the valid approval of the Tide West Proposal by the
stockholders of Tide West, (y) any consent, approval or waiver required by the
terms of either Bank Credit Agreement, and (z) any consent, approval or waiver
required by the terms of any Tide West Guaranty disclosed on the DISCLOSURE
SCHEDULE.
3.6 SEC DOCUMENTS. Tide West has made available to Parent a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Tide West with the SEC since December 31, 1993, and
prior to the date of this Agreement (the "TIDE WEST SEC DOCUMENTS"), which are
all the documents (other than preliminary material) that Tide West was required
to file with the SEC since such date. As of their respective dates, the Tide
West SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Tide West SEC Documents,
and none of the Tide West SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3.7 FINANCIAL STATEMENTS. The Tide West Financial Statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and fairly present, in accordance with applicable requirements of GAAP
(in the case of the unaudited statements, subject to normal, recurring
adjustments), the consolidated financial position of Tide West and its
subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of Tide West and its subsidiaries for
the periods presented therein.
3.8 CAPITAL STRUCTURE.
(a) The authorized capital stock of Tide West consists of 20,000,000
shares of Tide West Common Stock and 20,000,000 shares of preferred stock, par
value $.01 per share.
(b) There are issued and outstanding (i) 9,787,628 shares of Tide
West Common Stock, (ii) Tide West Stock Options relating to 937,840 shares of
Tide West Common Stock, (iii) 2,796,600 Tide West Common Stock Warrants relating
to 279,660 shares of Tide West Common Stock, and (iv) 140,000 Tide West Unit
Warrants relating to 28,000 shares of Tide West Common Stock and 280,000 Tide
West Common Stock Warrants (which, in turn, relate to 28,000 shares of Tide West
Common Stock). No shares of Tide West Common Stock are held by Tide West as
treasury stock.
(c) Except as set forth in Section 3.8(b), there are outstanding (i)
no shares of capital stock or other voting securities of Tide West, (ii) no
securities of Tide West or any other Person convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of Tide West,
and (iii) no subscriptions, options, warrants, calls, rights (including
preemptive rights), commitments, understandings or agreements to which Tide West
is a party or by which it is bound obligating Tide West to issue, deliver, sell,
purchase, redeem or acquire shares of capital stock or other voting securities
of Tide West (or securities convertible into or
19
exchangeable or exercisable for shares of capital stock or other voting
securities of Tide West) or obligating Tide West to grant, extend or enter into
any such subscription, option, warrant, call, right, commitment, understanding
or agreement.
(d) All outstanding shares of Tide West capital stock are validly
issued, fully paid and nonassessable and not subject to any preemptive right.
(e) All outstanding shares of capital stock and other voting
securities of each of TWTT and Draco are owned by Tide West, free and clear of
all Liens, claims and options of any nature (except for Permitted Encumbrances).
There are outstanding (i) no securities of TWTT, Draco or any other Person
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities of TWTT or Draco, and (ii) no subscriptions, options,
warrants, calls, rights (including preemptive rights), commitments,
understandings or agreements to which either TWTT or Draco is a party or by
which it is bound obligating TWTT or Draco to issue, deliver, sell, purchase,
redeem or acquire shares of capital stock or other voting securities of TWTT or
Draco (or securities convertible into or exchangeable or exercisable for shares
of capital stock or other voting securities of TWTT or Draco) or obligating TWTT
or Draco to grant, extend or enter into any such subscription, option, warrant,
call, right, commitment, understanding or agreement.
(f) Except as otherwise set forth in the DISCLOSURE SCHEDULE, there
is no stockholder agreement, voting trust or other agreement or understanding to
which Tide West is a party or by which it is bound relating to the voting of any
shares of the capital stock of any of the Tide West Companies.
3.9 NO UNDISCLOSED LIABILITIES. There are no liabilities of any of the
Tide West Companies of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, that are reasonably likely to
have a Material Adverse Effect on Tide West, other than (a) liabilities
adequately provided for in the Tide West Financial Statements, (b) liabilities
incurred in the ordinary course of business subsequent to September 30, 1995,
and (c) liabilities under this Agreement.
3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise set forth
in the DISCLOSURE SCHEDULE or as contemplated by this Agreement, to the
knowledge of Tide West, since September 30, 1995, none of the Tide West
Companies has done any of the following:
(a) Discharged or satisfied any Lien or paid any obligation or
liability, absolute or contingent, other than current liabilities incurred and
paid in the ordinary course of business and consistent with past practices;
(b) Paid or declared any dividends or distributions, purchased,
redeemed, acquired or retired any indebtedness, stock or other securities from
its stockholders or other securityholders, made any loans or advances or
guaranteed any loans or advances to any Person (other than loans, advances or
guaranties made in the ordinary course of business and consistent with past
practices), or otherwise incurred or suffered to exist any liabilities (other
than current liabilities incurred in the ordinary course of business and
consistent with past practices);
20
(c) Except for Permitted Encumbrances, suffered or permitted any Lien
to arise or be granted or created against or upon any of its assets;
(d) Cancelled, waived or released any rights or claims against, or
indebtedness owed by, third parties;
(e) Amended its certificate or articles of incorporation or by-laws;
(f) Made or permitted any amendment, supplement, modification or
termination of any Tide West Material Agreement;
(g) Sold, leased, transferred, assigned or otherwise disposed of (i)
any Oil and Gas Interests of Tide West that, individually or in the aggregate,
were assigned a value in the Reserve Data Value of $100,000 or more, or (ii) any
other assets that, individually or in the aggregate, had a value at the time of
such lease, transfer, assignment or disposition of $50,000 or more (and, in each
case where a sale, lease, transfer, assignment or other disposition was made, it
was made for fair consideration in the ordinary course of business); provided,
however, that this Section 3.10(g) shall not apply to Hydrocarbons sold in the
ordinary course of business and consistent with past practices;
(h) Made any investment in or contribution, payment, advance or loan
to any Person (other than investments, contributions, payments or advances, or
commitments with respect thereto, less than $100,000 in the aggregate, made in
the ordinary course of business and consistent with past practices);
(i) Paid, loaned or advanced (other than the payment, advance or
reimbursement of expenses in the ordinary course of business) any amounts to, or
sold, transferred or leased any of its assets to, or entered into any other
transactions with, any of its Affiliates;
(j) Made any material change in any of the accounting principles
followed by it or the method of applying such principles;
(k) Entered into any material transactions (other than this
Agreement) except in the ordinary course of business and consistent with past
practices;
(l) Increased benefits or benefit plan costs or changed bonus,
insurance, pension, compensation or other benefit plans or arrangements or
granted any bonus or increase in wages, salary or other compensation or made any
other change in employment terms to any officers, directors or employees of the
Tide West Companies (except in the ordinary course of business and consistent
with past practices);
(m) Accelerated, terminated, modified, or cancelled any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) involving more than $100,000 to which any of the Tide West
Companies is a party or by which any of them is bound;
21
(n) Issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligations involving more than $100,000 in the aggregate
(other than pursuant to the Bank Credit Agreement);
(o) Delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;
(p) Cancelled, compromised, waived, or released any right or claim
(or series of related rights and claims) either involving more than $100,000 or
outside the ordinary course of business;
(q) Issued, sold, or otherwise disposed of any of its capital stock
or granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital stock;
(r) Made any loan to, or entered into any other transaction with, any
of its directors, officers, or employees outside the ordinary course of
business;
(s) Made or pledged to make any charitable or other capital
contribution outside the ordinary course of business;
(t) Expended or committed to expend capital in excess of $9,000,000;
(u) Made any change in tax elections or the manner taxes are
reported;
(v) Entered into any Hydrocarbon sales or call arrangements not
cancelable on 60 days' notice;
(w) Entered into any swap, hedging or similar arrangements which
remain open on the date hereof except as disclosed on the DISCLOSURE SCHEDULE;
(x) Accelerated the vesting period of any option or warrant;
(y) Otherwise been involved in any other material occurrence, event,
incident, action, failure to act, or transaction outside the ordinary course of
business involving any of the Tide West Companies;
(z) Agreed, whether in writing or otherwise, to do any of the
foregoing; or
(aa) Suffered any Material Adverse Effect (other than changes or
trends, including changes or trends in commodity prices, generally prevalent in
or affecting the oil and gas industry).
3.11 COMPLIANCE WITH LAWS, MATERIAL AGREEMENTS AND PERMITS. None of the
Tide West Companies is in violation of, or in default in any material respect
under, and no event has occurred that (with notice or the lapse of time or both)
would constitute a violation of or default
22
under, (a) its certificate or articles of incorporation or by-laws, (b) any
applicable law, rule, regulation, order, writ, decree or judgment of any
Governmental Authority, or (c) any Tide West Material Agreement, except (in the
case of clause (b) or (c) above) for any violation or default that would not,
individually or in the aggregate, have a Material Adverse Effect on Tide West.
Each of the Tide West Companies has obtained and holds all permits, licenses,
variances, exemptions, orders, franchises, approvals and authorizations of all
Governmental Authorities necessary for the lawful conduct of its business or the
lawful ownership, use and operation of its assets ("TIDE WEST PERMITS"), except
for Tide West Permits which the failure to obtain or hold would not,
individually or in the aggregate, have a Material Adverse Effect on Tide West.
Each of the Tide West Companies is in compliance with the terms of its Tide West
Permits, except where the failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect on Tide West. No investigation or
review by any Governmental Authority with respect to any of the Tide West
Companies is pending or, to the knowledge of Tide West, threatened, other than
those the outcome of which would not, individually or in the aggregate, have a
Material Adverse Effect on Tide West. To the knowledge of Tide West, no party to
any Tide West Material Agreement is in material breach of the terms, provisions
and conditions of such Tide West Material Agreement.
3.12 GOVERNMENTAL REGULATION. Neither Tide West nor any subsidiary of Tide
West is subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, the Investment Company
Act of 1940 or any state public utilities laws.
3.13 LITIGATION. Except as otherwise set forth in the DISCLOSURE SCHEDULE,
(a) no litigation, arbitration, investigation or other proceeding of any
Governmental Authority is pending or, to the knowledge of Tide West, threatened
against any of the Tide West Companies or their respective assets which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on Tide West; (b) Tide West has no knowledge of any facts that are likely
to give rise to any litigation, arbitration, investigation or other proceeding
of any Governmental Authority which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on Tide West; and (c) no
Tide West Company is subject to any outstanding injunction, judgment, order,
decree or ruling (other than routine oil and gas field regulatory orders).
There is no litigation, proceeding or investigation pending or, to the knowledge
of Tide West, threatened against or affecting any of the Tide West Companies
that questions the validity or enforceability of this Agreement or any other
document, instrument or agreement to be executed and delivered by Tide West in
connection with the transactions contemplated hereby.
3.14 NO RESTRICTIONS. Except as otherwise set forth in the DISCLOSURE
SCHEDULE, none of the Tide West Companies is a party to (a) any agreement,
indenture or other instrument that contains restrictions with respect to the
payment of dividends or other distributions with respect to its capital, (b) any
financial arrangement with respect to or creating any indebtedness to any Person
(other than indebtedness reflected in the Tide West Financial Statements or
indebtedness incurred in the ordinary course of business), (c) any agreement,
contract or commitment relating to the making of any advance to, or investment
in, any Person (other than advances in the ordinary course of business), (d) any
guaranty or other contingent liability with respect to any indebtedness or
obligation of any Person (other than guaranties undertaken in the ordinary
course of business and other than the endorsement of negotiable instruments for
collection in the ordinary course of business), or (e) any agreement,
23
contract or commitment limiting in any respect its ability to compete with any
Person or otherwise conduct business of any line or nature.
3.15 TAX AUDITS AND SETTLEMENTS. Except as otherwise set forth in the
DISCLOSURE SCHEDULE, none of the Tide West Companies is a party or subject to
any unresolved or incomplete tax audit settlement.
3.16 TAXES.
(a) Each of the Tide West Companies and any affiliated, combined or
unitary group of which any such corporation is or was a member has (i) timely
filed all federal and all state, local and foreign returns, declarations,
reports, estimates, information returns and statements ("TAX RETURNS") required
to be filed by it with respect to any Taxes, (ii) timely paid all Taxes that are
due and payable (except for Taxes that are being contested in good faith by
appropriate proceedings and for which sufficient reserves have been established)
for which any of the Tide West Companies may be liable, and (iii) complied with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes, and has timely withheld from employee wages and paid over
to the proper governmental authorities all amounts required to be so withheld
and paid over.
(b) Except as otherwise set forth in the DISCLOSURE SCHEDULE, (i) no
audits or other administrative or court proceedings are presently pending with
regard to any federal, state or local income or franchise Taxes for which any of
the Tide West Companies would be liable, and (ii) there are no pending requests
for rulings from any taxing authority, no outstanding subpoenas or requests for
information by any taxing authority with respect to any Taxes, no proposed
reassessments by any taxing authority of any property owned or leased, and no
agreements in effect to extend the time to file any material Tax Return or the
period of limitations for the assessment or collection of any material Taxes for
which any of the Tide West Companies, as the case may be, would be liable.
(c) Except as otherwise set forth in the DISCLOSURE SCHEDULE, (i)
there are no liens on any of the assets of the Tide West Companies for unpaid
taxes, other than liens for Taxes not yet due and payable, (ii) no Tide West
Company has any liability under Treasury Regulation (S) 1.1502-6 or any
analogous state, local or foreign law by reason of having been a member of any
consolidated, combined or unitary group, other than the affiliated group of
which Tide West is the common parent corporation, (iii) no Tide West Company has
ever been included in an affiliated group of corporations within the meaning of
Section 1504 of the Code other than the current affiliated group of which Tide
West is the common parent corporation, and (iv) no Tide West Company is or has
been a party to any tax sharing agreement between related corporations.
(d) The amount of liability for unpaid Taxes of the Tide West
Companies does not, in the aggregate, materially exceed the amount of the
liability accruals for Taxes reflected on the Tide West Financial Statements.
The deferred tax accounts are properly reflected in the Tide West Financial
Statements.
(e) Tide West has made available to Parent complete copies of all Tax
Returns filed by the Tide West Companies with respect to any Taxes and all tax
audit reports, work
24
papers, statements of deficiencies, and closing or other agreements with respect
thereto with respect to tax years 1993 and 1994.
(f) Except as otherwise set forth in the DISCLOSURE SCHEDULE, (i) no
Tide West Company is required to treat any of its assets as owned by another
person for federal income tax purposes or as tax-exempt bond financed property
or tax-exempt use property within the meaning of Section 168 of the Code, (ii)
no Tide West Company has entered into any compensatory agreements which would
result in a nondeductible expense pursuant to Section 280G of the Code, (iii) no
election has been made under Section 338 of the Code and no events have occurred
which would result in a deemed election under Section 338 of the Code with
respect to any Tide West Company, (iv) no election has been made under Section
341(f) of the Code with respect to any Tide West Company, (v) no Tide West
Company has participated in any international boycott as defined in Code
Section 999, (vi) there are no outstanding balances of deferred gain or loss
accounts with respect to any Tide West Company under Treas. Reg. (S)(S) 1.1502-
13 or 1.1502-13T, (vii) no Tide West Company has made or will make any election
under Treas. Reg. (S)1.502-20(g)(1) with respect to the reattribution of net
operating losses, (viii) no Tide West Company is subject to any arrangement
treated as a partnership for federal income tax purposes, and (ix) no Tide West
Company has or has ever conducted branch operations in any foreign country
within the meaning of Treas. Reg.(S) 1.367(a)-6T.
(g) The books and records of Tide West, including the Tax Returns
made available to Parent, contain accurate and complete information with respect
to: (i) all material tax elections in effect with respect to the Tide West
Companies, (ii) the current tax basis of the assets of the Tide West Companies,
(iii) any excess loss accounts of any Tide West Company (iv) the current and
accumulated earnings and profits of Tide West, (v) the net operating losses and
net capital losses of the Tide West Companies, the years that such net operating
and net capital losses expire, and any restrictions to which such net operating
and net capital losses are subject under any provision of the Code or
consolidated return regulations, (vi) tax credit carryovers of the Tide West
Companies, and (vii) any overall foreign losses to the Tide West Companies under
Section 904(f) of the Code.
(h) The management of the Tide West Companies is unaware of any
intention, plan or arrangement on behalf of any holder of Tide West Common Stock
to make any disposition of the Parent Common Stock following the Effective Time.
(i) No shareholder of Tide West that is a foreign corporation or a
nonresident alien individual has owned as much as 5% of the outstanding stock of
Tide West at any time during the five year period ending on the date hereof.
3.17 EMPLOYEE BENEFIT PLANS.
(a) The DISCLOSURE SCHEDULE sets forth a complete and accurate list
of all "employee benefit plans," as defined in Section 3(3) of ERISA, including
severance pay, sick leave, vacation pay, salary continuation for disability,
compensation agreements, retirement, deferred compensation, bonus, long-term
incentive, stock option, stock purchase, hospitalization, medical insurance,
life insurance and scholarship programs maintained by any of the Tide West
Companies or to which any of the Tide West Companies contributed or is obligated
to contribute (the "TIDE
25
WEST EMPLOYEE BENEFIT PLANS"). Except for the Tide West Employee Benefit Plans,
none of the Tide West Companies maintains, or has any fixed or contingent
liability with respect to, any employee benefit, pension or other plan that is
subject to ERISA.
(b) There is no material violation of ERISA with respect to the
filing of applicable reports, documents and notices regarding any Tide West
Employee Benefit Plan with any Governmental Authority or the furnishing of such
documents to the participants or beneficiaries of the Tide West Employee Benefit
Plans. With respect to the Tide West Employee Benefit Plans, there exists no
condition or set of circumstances in connection with the Tide West Companies
that could be expected to result in liability reasonably likely to have a
Material Adverse Effect on the Tide West Companies under ERISA, the Code or any
applicable law. With respect to the Tide West Employee Benefit Plans,
individually and in the aggregate, there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with GAAP, on the financial statements of the Tide West Companies,
which obligations are reasonably likely to have a Material Adverse Effect on the
Tide West Companies.
(c) The Tide West Employee Benefit Plans have been maintained, in all
material respects, in accordance with their terms and in accordance with all
applicable federal and state laws, and neither Tide West, TWTT, Draco, nor any
"party in interest" or "disqualified person" with respect to the Tide West
Employee Benefit Plans, has engaged in any "prohibited transaction" within the
meaning of Section 4975 of the Code.
(d) Except as otherwise set forth in the DISCLOSURE SCHEDULE, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in any payment becoming due to any
employee or group of employees of any of the Tide West Companies.
3.18 EMPLOYMENT CONTRACTS AND BENEFITS. Except as otherwise set forth in
the DISCLOSURE SCHEDULE or otherwise provided for in any Tide West Employee
Benefit Plan, (a) none of the Tide West Companies is subject to or obligated
under any consulting, employment, severance, termination or similar arrangement,
any employee benefit, incentive or deferred compensation plan with respect to
any Person, or any bonus, profit sharing, pension, stock option, stock purchase
or similar plan or other arrangement or other fringe benefit plan entered into
or maintained for the benefit of employees or any other Person, and (b) no
employee of any of the Tide West Companies or any other Person owns, or has any
right granted by any of the Tide West Companies to acquire, any interest in any
of the assets or business of any of the Tide West Companies.
3.19 LABOR MATTERS.
(a) No employees of any of the Tide West Companies are represented by
any labor organization. No labor organization or group of employees of any of
the Tide West Companies has made a demand for recognition or certification as a
union or other labor organization, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened in writing to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or
authority. There are no organizing activities involving
26
any of the Tide West Companies pending with any labor organization or group of
employees of any of the Tide West Companies.
(b) Each of the Tide West Companies is in material compliance with
all laws, rules, regulations and orders relating to the employment of labor,
including all such laws, rules, regulations and orders relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding or Social Security
Taxes and similar Taxes, except where the failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect on Tide West.
3.20 ACCOUNTS RECEIVABLE. Except as otherwise set forth in the DISCLOSURE
SCHEDULE, (a) all of the accounts, notes and loans receivable that have been
recorded on the books of the Tide West Companies are bona fide and represent
accounts, notes and loans receivable validly due for goods sold or services
rendered and are reasonably expected to be collected in full within 90 days
after the applicable invoice or note maturity date (other than such accounts,
notes and loans receivable that, individually or in the aggregate, do not have a
book value as of the date hereof in excess of $500,000); (b) except for
Permitted Encumbrances, all of such accounts, notes and loans receivable are
free and clear of any and all Liens and other adverse claims and charges, and
none of such accounts, notes or loans receivable is subject to any offsets or
claims of offset; and (c) none of the obligors on such accounts, notes or loans
receivable has given notice to any of the Tide West Companies that it will or
may refuse to pay the full amount or any portion thereof.
3.21 INSURANCE. Each of the Tide West Companies maintains, and through the
Closing Date will maintain, insurance with reputable insurers (or pursuant to
prudent self-insurance programs) in such amounts and covering such risks as are
in accordance with normal industry practice for companies engaged in businesses
similar to those of the Tide West Companies and owning properties in the same
general area in which the Tide West Companies conduct their businesses. Each of
the Tide West Companies may terminate each of its insurance policies or binders
at or after the Closing and will incur no penalties or other material costs in
doing so. None of such policies or binders was obtained through the use of false
or misleading information or the failure to provide the insurer with all
information requested in order to evaluate the liabilities and risks insured.
There is no material default with respect to any provision contained in any such
policy or binder, nor has any of the Tide West Companies failed to give any
notice or present any claim under any such policy or binder in due and timely
fashion. There are no billed but unpaid premiums past due under any such policy
or binder. Except as otherwise set forth in the DISCLOSURE SCHEDULE, (a) there
are no outstanding claims under any such policies or binders and, to the
knowledge of Tide West, there has not occurred any event that might reasonably
form the basis of any claim against or relating to any of the Tide West
Companies that is not covered by any of such policies or binders; (b) no notice
of cancellation or non-renewal of any such policies or binders has been
received; and (c) there are no performance bonds outstanding with respect to any
of the Tide West Companies.
3.22 INTANGIBLE PROPERTY. There are no material trademarks, trade names,
patents, service marks, brand names, computer programs, databases, industrial
designs, copyrights or other intangible property that are necessary for the
operation, or continued operation, of the business of any of the Tide West
Companies or for the ownership and operation, or continued ownership and
27
operation, of any of their assets, for which the Tide West Companies do not hold
valid and continuing authority in connection with the use thereof.
3.23 TITLE TO ASSETS. The Tide West Companies (individually or
collectively) have Defensible Title to all Oil and Gas Interests of Tide West
included or reflected in the Ownership Interests and all of their other assets.
Each Oil and Gas Interest included or reflected in the Ownership Interests
entitles the Tide West Companies (individually or collectively) to receive not
less than the undivided interest set forth in (or derived from) the Ownership
Interests of all Hydrocarbons produced, saved and sold from or attributable to
such Oil and Gas Interest, and the portion of the costs and expenses of
operation and development of such Oil and Gas Interest that is borne or to be
borne by the Tide West Companies (individually or collectively) is not greater
than the undivided interest set forth in (or derived from) the Ownership
Interests.
3.24 OIL AND GAS OPERATIONS. Except as otherwise set forth in the
DISCLOSURE SCHEDULE:
(a) All xxxxx included in the Oil and Gas Interests of Tide West have
been drilled and (if completed) completed, operated and produced in accordance
with generally accepted oil and gas field practices and in compliance in all
material respects with applicable oil and gas leases and applicable laws, rules
and regulations, except where any failure or violation could not reasonably be
expected to have a Material Adverse Effect on Tide West; and
(b) Proceeds from the sale of Hydrocarbons produced from Tide West's
Oil and Gas Interests are being received by the Tide West Companies in a timely
manner and are not being held in suspense for any reason (except for amounts,
individually or in the aggregate, not in excess of $100,000 and held in suspense
in the ordinary course of business).
3.25 HYDROCARBON SALES AND PURCHASE AGREEMENTS. The DISCLOSURE SCHEDULE
contains a complete list of the Hydrocarbon Agreements to which any of the Tide
West Companies is a party involving total value or consideration in excess of
$500,000. Except as otherwise set forth in the DISCLOSURE SCHEDULE, to the
knowledge of Tide West, each of the Hydrocarbon Agreements is valid, binding and
in full force and effect, and no party is in material breach or default of any
Hydrocarbon Agreement, and no event has occurred that with notice or lapse of
time (or both) would constitute a material breach or default or permit
termination, modification or acceleration under any Hydrocarbon Agreement.
3.26 FINANCIAL AND COMMODITY HEDGING. The DISCLOSURE SCHEDULE accurately
summarizes the outstanding Hydrocarbon and financial hedging positions of the
Tide West Companies (including fixed price controls, collars, swaps, caps,
xxxxxx and puts) as of the date reflected on the DISCLOSURE SCHEDULE.
3.27 ENVIRONMENTAL MATTERS. Except as set forth in the DISCLOSURE
SCHEDULE, to the knowledge of Tide West:
(a) Each of the Tide West Companies has conducted its business and
operated its assets, and is conducting its business and operating its assets, in
material compliance with all Environmental Laws;
28
(b) None of the Tide West Companies has been notified by any
Governmental Authority or other third party that any of the operations or assets
of any of the Tide West Companies is the subject of any investigation or inquiry
by any Governmental Authority or other third party evaluating whether any
material remedial action is needed to respond to a release or threatened release
of any Hazardous Material or to the improper storage or disposal (including
storage or disposal at offsite locations) of any Hazardous Material;
(c) None of the Tide West Companies and no other Person has filed any
notice under any federal, state or local law indicating that (i) any of the Tide
West Companies is responsible for the improper release into the environment, or
the improper storage or disposal, of any Hazardous Material, or (ii) any
Hazardous Material is improperly stored or disposed of upon any property of any
of the Tide West Companies;
(d) None of the Tide West Companies has any material contingent
liability in connection with (i) the release or threatened release into the
environment at, beneath or on any property now or previously owned or leased by
any of the Tide West Companies, or (ii) the storage or disposal of any Hazardous
Material;
(e) None of the Tide West Companies has received any claim,
complaint, notice, inquiry or request for information involving any matter which
remains unresolved as of the date hereof with respect to any alleged violation
of any Environmental Law or regarding potential liability under any
Environmental Law relating to operations or conditions of any facilities or
property (including off-site storage or disposal of any Hazardous Material from
such facilities or property) currently or formerly owned, leased or operated by
any of the Tide West Companies;
(f) No property now or previously owned, leased or operated by any of
the Tide West Companies is listed on the National Priorities List pursuant to
CERCLA or on the CERCLIS or on any other federal or state list as sites
requiring investigation or cleanup;
(g) None of the Tide West Companies is directly transporting, has
directly transported, is directly arranging for the transportation of, or has
directly transported, any Hazardous Material to any location which is listed on
the National Priorities List pursuant to CERCLA, on the CERCLIS, or on any
similar federal or state list or which is the subject of federal, state or local
enforcement actions or other investigations that may lead to material claims
against such company for remedial work, damage to natural resources or personal
injury, including claims under CERCLA;
(h) There are no sites, locations or operations at which any of the
Tide West Companies is currently undertaking, or has completed, any remedial or
response action relating to any such disposal or release, as required by
Environmental Laws; and
(i) All underground storage tanks and solid waste disposal facilities
owned or operated by the Tide West Companies are used and operated in material
compliance with Environmental Laws.
3.28 BOOKS AND RECORDS. All books, records and files of the Tide West
Companies (including those pertaining to Tide West's Oil and Gas Interests,
xxxxx and other assets, those
29
pertaining to the production, gathering, transportation and sale of
Hydrocarbons, and corporate, accounting, financial and employee records) (a)
have been prepared, assembled and maintained in accordance with usual and
customary policies and procedures and (b) fairly and accurately reflect the
ownership, use, enjoyment and operation by the Tide West Companies of their
respective assets.
3.29 BROKERS. Except as set forth on the DISCLOSURE SCHEDULE, no broker,
finder, investment banker or other Person is or will be, in connection with the
transactions contemplated by this Agreement, entitled to any brokerage, finder's
or other fee or compensation based on any arrangement or agreement made by or on
behalf of Tide West and for which Parent, or any of the Tide West Companies will
have any obligation or liability.
3.30 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the outstanding shares of Tide West Common Stock is the only vote of the holders
of any class or series of Tide West capital stock or other voting securities
necessary to approve this Agreement, the Merger and the transactions
contemplated hereby.
3.31 MAINTENANCE OF MACHINERY. All equipment and machinery owned by any of the
Tide West Companies has had reasonable and prudent maintenance, upkeep and
repair since the date it was acquired by the Tide West Companies.
3.32 GAS IMBALANCES. To the knowledge of Tide West, except as is reflected
on the DISCLOSURE SCHEDULE, Tide West has received no deficiency payments under
gas contracts for which any party has a right to take deficiency gas from Tide
West, nor has Tide West received any payments for production which are subject
to refund or recoupment out of future production.
3.33 CALLS ON PRODUCTION. Except as reflected on the DISCLOSURE SCHEDULE,
no party has a call or preferential right to purchase production from any of
Tide West's Oil and Gas Interests.
3.34 SECTION 29 CREDITS. Tide West is entitled to tax credits under
Section 29 of the Code. The approximate amount of such credits is accurately
reflected in the materials and information provided by Tide West to Parent.
3.35 ROYALTIES. To the knowledge of Tide West as to xxxxx not operated by
Tide West, and without qualification as to knowledge as to all xxxxx operated by
Tide West, all royalties, overriding royalties, compensatory royalties and other
payments due from or in respect of production with respect to the Tide West's
Oil and Gas Interests, have been or will be, prior to the Effective Time,
properly and correctly paid or provided for in all material respects, except for
those for which Tide West has a valid right to suspend.
3.36 PAYOUT BALANCES. To the knowledge of Tide West, and based on
information given to Tide West by third-party operators for all xxxxx not
operated by Tide West, the Payout Balance for any well owned by Tide West is
properly reflected in the DISCLOSURE SCHEDULE as of the respective dates shown
thereon. "PAYOUT BALANCE(S)" means the status, as of the dates of Tide West's
calculations, of the recovery by Tide West or a third party of a cost amount
specified in the contract
30
relating to a well out of the revenue from such well where the net revenue
interest of Tide West therein will be reduced when such amount has been
recovered.
3.37 PLUGGING AND ABANDONMENT LIABILITIES. Except to the extent expressly
set forth in the DISCLOSURE SCHEDULE, Tide West has no obligation as of the date
of this Agreement under applicable statutes and regulations to plug and abandon
any well.
3.38 PREPAYMENTS. Except as reflected in the DISCLOSURE SCHEDULE, no
prepayment for Hydrocarbon sales has been received by Tide West for Hydrocarbons
which have not been delivered as of the date hereof.
3.39 DISCLOSURE AND INVESTIGATION. No representation or warranty of Tide
West set forth in this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant to
Tide West as follows:
4.1 ORGANIZATION. Each of Parent and Merger Sub (a) is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, (b) has the requisite power and authority to own, lease and
operate its properties and to conduct its business as it is presently being
conducted, and (c) is duly qualified to do business as a foreign corporation,
and is in good standing, in each jurisdiction where the character of the
properties owned or leased by it or the nature of its activities makes such
qualification necessary (except where any failure to be so qualified as a
foreign corporation or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Parent). Copies of the certificate
of incorporation and by-laws of each of Parent and Merger Sub have heretofore
been delivered to Tide West, and such copies are accurate and complete as of the
date hereof.
4.2 AUTHORITY AND ENFORCEABILITY. Each of Parent and Merger Sub has the
requisite corporate power and authority to enter into and deliver this Agreement
and (with respect to consummation of the Tide West Proposal, subject to the
approval by the stockholders of Parent) to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and (with
respect to consummation of the Tide West Proposal, subject to the approval by
the stockholders of Parent) the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Parent and Merger Sub, including approval by the board of
directors of Parent and the board of directors and stockholders of Merger Sub,
and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize the execution or delivery of this Agreement or (with
respect to consummation of the Tide West Proposal, subject to the approval by
the stockholders of Parent) to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered
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by Parent and Merger Sub and (with respect to consummation of the Tide West
Proposal, subject to the approval by the stockholders of Parent, and assuming
that this Agreement constitutes a valid and binding obligation of Tide West)
constitutes a valid and binding obligation of each of Parent and Merger Sub
enforceable against each of them in accordance with its terms.
4.3 NO VIOLATIONS. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby and compliance by
Parent and Merger Sub with the provisions hereof will not, conflict with, result
in any violation of or default (with or without notice or lapse of time or both)
under, give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in the creation
of any Lien on any of the properties or assets of Parent or any Parent Material
Subsidiary under, any provision of (a) the certificate of incorporation or by-
laws of Parent or Merger Sub or any provision of the comparable charter or
organizational documents of any Parent Material Subsidiary, (b) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or other agreement or instrument applicable to Parent, Merger
Sub or any Parent Material Subsidiary, or (c) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in Section
4.4 are duly and timely obtained or made, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent, Merger Sub or any
Parent Material Subsidiary or any of their respective properties or assets,
other than, in the case of clause (b) or (c) above, any such conflict,
violation, default, right, loss or Lien that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent.
4.4 CONSENTS AND APPROVALS. No consent, approval, order or authorization
of, registration, declaration or filing with, or permit from, any Governmental
Authority is required by or with respect to Parent or Merger Sub in connection
with the execution and delivery of this Agreement by Parent and Merger Sub or
the consummation by Parent and Merger Sub of the transactions contemplated
hereby, except for the following: (a) any such consent, approval, order,
authorization, registration, declaration, filing or permit which the failure to
obtain or make would not, individually or in the aggregate, have a Material
Adverse Effect on Parent; (b) the filing of the Certificate of Merger with the
Secretary of State of Delaware pursuant to the provisions of the DGCL; (c) the
filing of a pre-merger notification report by Parent under the HSR Act and the
expiration or termination of the applicable waiting period; (d) the filing with
the SEC of the Registration Statement and such reports under Section 13(a) of
the Exchange Act and such other compliance with the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder as may be
required in connection with this Agreement and the transactions contemplated
hereby and the obtaining from the SEC of such orders as may be so required; (e)
the filing with the NYSE of a listing application relating to the shares of
Parent Common Stock to be issued pursuant to the Merger and the obtaining from
the NYSE of its approvals thereof; (f) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover laws or
Environmental Laws; and (g) such filings and approvals as may be required by any
foreign pre-merger notification, securities, corporate or other law, rule or
regulation. No Third-Party Consent is required by or with respect to Parent,
Merger Sub or any Parent Material Subsidiary in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (x) any such Third-Party Consent which the
failure to obtain would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, and (y) the valid approval of the Tide West Proposal
by the stockholders of Parent.
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4.5 SEC DOCUMENTS. Parent has made available to Tide West a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC since December 31, 1994, and prior
to the date of this Agreement (the "PARENT SEC DOCUMENTS"), which are all the
documents (other than preliminary material) that Parent was required to file
with the SEC since such date. As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Parent SEC Documents, and
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.6 FINANCIAL STATEMENTS. The Parent Financial Statements were prepared
in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present, in accordance with applicable requirements of GAAP (in the
case of the unaudited statements, subject to normal, recurring adjustments), the
consolidated financial position of Parent and its subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of Parent and its subsidiaries for the periods presented therein.
4.7 CAPITAL STRUCTURE.
(a) The authorized capital stock of Parent consists of 30,000,000
shares of Parent Common Stock and 15,000,000 shares of Parent Preferred Stock.
The authorized capital stock of Merger Sub consists of 1,000 shares of Merger
Sub Common Stock.
(b) There are issued and outstanding 10,948,513 shares of Parent
Common Stock and no shares of Parent Preferred Stock. 1,490,699 shares of
Parent Common Stock are issuable upon exercise of outstanding stock options and
warrants. 22,718 shares of Parent Common Stock and no shares of Parent
Preferred Stock are held by Parent as treasury stock.
(c) Except as set forth in Section 4.7(b), there are outstanding (i)
no shares of capital stock or other voting securities of Parent, (ii) no
securities of Parent or any other Person convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of Parent,
and (iii) no subscriptions, options, warrants, calls, rights (including
*preemptive rights, commitments, understandings or agreements to which Parent is
a party or by which it is bound) obligating Parent to issue, deliver, sell,
purchase, redeem or acquire shares of capital stock or other voting securities
of Parent (or securities convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities of Parent) or obligating
Parent to grant, extend or enter into any such subscription, option, warrant,
call, right, commitment, understanding or agreement.
(d) All outstanding shares of Parent capital stock are, and (when
issued) the shares of Parent Common Stock to be issued pursuant to the Merger
and upon exercise of the Tide West Stock Options or Tide West Warrants will be,
validly issued, fully paid and nonassessable and not subject to any preemptive
right.
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(e) 1,000 shares of Merger Sub Common Stock are issued and
outstanding, all of which are owned by Parent. All outstanding shares of Merger
Sub Common Stock are validly issued, fully paid and nonassessable and not
subject to any preemptive right.
(f) As of the date hereof there is no, and at the Effective Time
there will not be any, stockholder agreement, voting trust or other agreement or
understanding to which Parent is a party or by which it is bound relating to the
voting of any shares of the capital stock of Parent.
4.8 GOVERNMENTAL REGULATION. Neither Parent nor any of its subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, the Investment Company Act
of 1940 or any state public utilities laws.
4.9 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the knowledge of Parent, threatened against or affecting Parent
or Merger Sub that questions the validity or enforceability of this Agreement or
any other document, instrument or agreement to be executed and delivered by
Parent or Merger Sub in connection with the transactions contemplated hereby.
4.10 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement and
has not engaged in any business or activity (or conducted any operations) of any
kind, entered into any agreement or arrangement with any person or entity, or
incurred, directly or indirectly, any material liabilities or obligations,
except in connection with its incorporation, the negotiation of this Agreement,
the Merger and the transactions contemplated hereby.
4.11 FUNDING. Parent has available adequate funds in an aggregate amount
sufficient to pay (a) all amounts required to be paid to the stockholders of
Tide West upon consummation of the Merger, (b) all amounts required to be paid
in respect of all Tide West Stock Options and Tide West Warrants upon exercise
thereof, and (c) all expenses incurred by Parent and Merger Sub in connection
with this Agreement and the transactions contemplated hereby.
4.12 BROKERS. Except as has been disclosed in writing to Tide West concerning
Parent's arrangement with Xxxxxx Brothers, no broker, finder, investment banker
or other Person is or will be, in connection with the transactions contemplated
by this Agreement, entitled to any brokerage, finder's or other fee or
compensation based on any arrangement or agreement made by or on behalf of
Parent or Merger Sub and for which Parent, Merger Sub or any of the Tide West
Companies will have any obligation or liability.
4.13 DISCLOSURE AND INVESTIGATION. No representation or warranty of Parent
or Merger Sub set forth in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein not misleading.
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ARTICLE 5
COVENANTS
5.1 CONDUCT OF BUSINESS BY TIDE WEST PENDING CLOSING. Tide West covenants
and agrees with Parent and Merger Sub that, from the date of this Agreement
until the Effective Time, each of the Tide West Companies will conduct its
business only in the ordinary and usual course consistent with past practices.
Notwithstanding the preceding sentence, Tide West covenants and agrees with
Parent and Merger Sub that, except as specifically contemplated in this
Agreement, from the date of this Agreement until the Effective Time, without the
prior written consent of Parent:
(a) None of the Tide West Companies will (i) amend its certificate or
articles of incorporation or by-laws; (ii) split, combine or reclassify any of
its outstanding capital stock; (iii) declare, set aside or pay any dividends or
other distributions (whether payable in cash, property or securities) with
respect to its capital stock; (iv) issue, sell or agree to issue or sell any
securities, including its capital stock, any rights, options or warrants to
acquire its capital stock, or securities convertible into or exchangeable or
exercisable for its capital stock (other than shares of Tide West Common Stock
issued pursuant to the exercise of any Tide West Stock Option, shares of Tide
West Common Stock issued pursuant to the exercise of any Tide West Common Stock
Warrant or shares of Tide West Common Stock and Tide West Common Stock Warrants
issued pursuant to the exercise of any Tide West Unit Warrant, each as
outstanding on the date of this Agreement); (v) purchase, cancel, retire, redeem
or otherwise acquire any of its outstanding capital stock or other securities;
(vi) merge or consolidate with, or transfer all or substantially all of its
assets to, another corporation or other business entity; (vii) liquidate, wind-
up or dissolve (or suffer any liquidation or dissolution); or (viii) enter into
any contract, agreement, commitment or arrangement with respect to any of the
foregoing.
(b) None of the Tide West Companies will (i) acquire any corporation,
partnership or other business entity or any interest therein (other than
interests in joint ventures, joint operation or ownership arrangements or tax
partnerships acquired in the ordinary course of business); (ii) sell, lease or
sublease, transfer or otherwise dispose of or mortgage, pledge or otherwise
encumber any Oil and Gas Interests of Tide West that were assigned a value in
the Reserve Data Value in excess of $50,000, individually, or $250,000, in the
aggregate, or any other assets that have a value at the time of such sale,
lease, sublease, transfer or disposition in excess of $50,000, individually, or
$250,000, in the aggregate, (except that this clause shall not apply to the sale
of Hydrocarbons in the ordinary course of business or to encumbrances under
either of the Bank Credit Agreements); (iii) farm-out any Oil and Gas Interest
of Tide West or interest therein; (iv) sell, transfer or otherwise dispose of or
mortgage, pledge or otherwise encumber any securities of any other Person
(including any capital stock or other securities in TWTT or Draco or any
partnership interest in Horizon or Xxxxx); (v) make any material loans, advances
or capital contributions to, or investments in, any Person (other than loans or
advances in the ordinary course of business and consistent with past practices
or capital contributions to either Horizon or Xxxxx required by the terms of its
partnership agreement); (vi) enter into any Tide West Material Agreement or any
other agreement not terminable by any of the Tide West Companies upon notice of
30 days or less and without penalty or other obligation (other than Hydrocarbon
Agreements entered into in the ordinary course of business and
35
consistent with past practices); or (vii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing.
(c) None of the Tide West Companies will (i) permit to be outstanding
at any time under the Bank Credit Agreement indebtedness for borrowed money in
excess of $45,000,000; (ii) incur any indebtedness for borrowed money other than
under the Bank Credit Agreement; (iii) incur any other obligation or liability
(other than liabilities incurred in the ordinary course of business and
consistent with past practices); (iv) assume, endorse (other than endorsements
of negotiable instruments in the ordinary course of business), guarantee or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the liabilities or obligations of any Person (other than Parent
Guaranties entered into in the ordinary course of business and consistent with
past practices); or (v) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
(d) The Tide West Companies will operate, maintain and otherwise deal
with the Oil and Gas Interests of Tide West in accordance with good and prudent
oil and gas field practices and in accordance with all applicable oil and gas
leases and other contracts or agreements and all applicable laws, rules and
regulations.
(e) None of the Tide West Companies shall resign, transfer or
otherwise voluntarily relinquish any right it has as of the date of this
Agreement, as operator of any Oil and Gas Interest of Tide West.
(f) None of the Tide West Companies will (i) enter into, or otherwise
become liable or obligated under or pursuant to, (1) any employee benefit,
pension or other plan (whether or nor subject to ERISA), (2) any other stock
option, stock purchase, incentive or deferred compensation plans or arrangements
or other fringe benefit plan, or (3) any consulting, employment, severance,
termination or similar agreement with any Person, or amend or extend any such
plan, arrangement or agreement; (ii) except for payments made pursuant to any
Tide West Employee Benefit Plan or any plan, agreement or arrangement described
in the DISCLOSURE SCHEDULE, grant, or otherwise become liable for or obligated
to pay, any severance or termination payments, bonuses or increases in
compensation or benefits (other than payments, bonuses or increases that are
mandated by the terms of agreements existing as of the date hereof or that are
paid in the ordinary course of business, consistent with past practices, and not
individually or in the aggregate material in amount) to, or forgive any
indebtedness of, any employee or consultant; or (iii) enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
(g) The Tide West Companies will keep and maintain accurate books,
records and accounts in accordance with GAAP.
(h) None of the Tide West Companies will create, incur, assume or
permit to exist any Lien on any of its assets, except for Permitted
Encumbrances.
(i) The Tide West Companies will (i) pay all Taxes, assessments and
other governmental charges imposed upon any of their assets or with respect to
their franchises, business, income or assets before any penalty or interest
accrues thereon; (ii) pay all claims (including claims
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for labor, services, materials and supplies) that have become due and payable
and which by law have or may become a Lien upon any of their assets prior to the
time when any penalty or fine shall be incurred with respect thereto or any such
Lien shall be imposed thereon; and (iii) comply in all material respects with
the requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, obtain or take all Governmental Actions necessary in the
operation of their businesses, and comply with and enforce the provisions of all
Tide West Material Agreements, including paying when due all rentals, royalties,
expenses and other liabilities relating to their businesses or assets; provided,
however, Tide West will not be in violation of this Section 5.1(i) if any of the
Tide West Companies incur obligations for penalties and interest in connection
with gross production tax reporting in the ordinary course of business; and
provided further, that the Tide West Companies may contest the imposition of any
such Taxes, assessments and other governmental charges, any such claim, or the
requirements of any applicable law, rule, regulation or order or any Tide West
Material Agreement if done so in good faith by appropriate proceedings and if
adequate reserves are established in accordance with GAAP or as may be
determined as sufficient by Tide West's board of directors.
(j) The Tide West Companies will maintain in full force and effect
the policies or binders of insurance described in Section 3.21.
(k) The Tide West Companies will at all times preserve and keep in
full force and effect their corporate existence and rights and franchises
material to their performance under this Agreement.
(l) Tide West will not engage in any practice, take any action or
permit by inaction any of the representations and warranties contained in
Section 3.1, 3.2, 3.4, 3.5, 3.8, 3.11, 3.12, 3.14, 3.17, 3.18, 3.19, 3.27, 3.28,
3.29, 3.31, 3.33, 3.35 or 3.39 to become untrue.
(m) Tide West will not engage in any practice, take any action, or
permit by inaction any of the representations and warranties contained in
Section 3.10 (other than clause (n) thereof) to become untrue, except (i) Tide
West may pay successful deal bonuses to its employees as disclosed in the
DISCLOSURE SCHEDULE, (ii) all currently outstanding Tide West Stock Options will
become fully vested prior to the Effective Time, (iii) Tide West may make or
commit to make capital expenditures as described in the DISCLOSURE SCHEDULE, not
to exceed $3,000,000 in the aggregate, (iv) the Tide West Companies may enter
into fully covered commodity swap, hedging and similar arrangements; and (v)
Tide West may pay, to marketers and executives, bonuses relating to marketing
during the first quarter, consistent with past practices.
5.2 CONDUCT OF BUSINESS BY PARENT PENDING CLOSING. Parent covenants and
agrees with Tide West that, from the date of this Agreement until the Effective
Time, except for transactions disclosed by Parent to Tide West prior to the date
hereof, Parent will conduct its business only in the ordinary and usual course
consistent with past practices. Notwithstanding the preceding sentence, Parent
covenants and agrees with Tide West that, from the date of this Agreement until
the Effective Time, without the prior written consent of Tide West:
(a) Parent will not (i) split, combine or reclassify any of its
outstanding capital stock; (ii) declare, set aside or pay any dividends or other
distributions (whether payable in cash,
37
property or securities) with respect to its capital stock other than a dividend
of rights to holders of Parent Common Stock in connection with the adoption and
implementation of a shareholder rights plan; (iii) merge or consolidate with, or
transfer all or substantially all of its assets to, another corporation or other
business entity; (iv) liquidate, wind-up or dissolve (or suffer any liquidation
or dissolution); or (v) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
(b) Parent will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises material to its
performance under this Agreement.
(c) Parent will not engage in any practice, take any action or permit
by inaction, any of the representations and warranties contained in Section 4.1,
4.3, 4.4, 4.7, 4.8, 4.10, 4.11, 4.12 or 4.13 to become untrue.
5.3 ACCESS TO ASSETS, PERSONNEL AND INFORMATION.
(a) From the date hereof until the Effective Time, Tide West shall
afford to Parent and the Parent Representatives, at Parent's sole risk and
expense, reasonable access to any of the assets, books and records, contracts,
employees, representatives, agents and facilities of the Tide West Companies and
shall, upon request, furnish promptly to Parent (at Parent's expense) a copy of
any file, book, record, contract, permit, correspondence, or other written
information, document or data concerning any of the Tide West Companies (or any
of their respective assets) that is within the possession or control of Tide
West. During such period, Tide West will make available to a reasonable number
of Parent Representatives adequate office space and facilities at the principal
office facility of Tide West in Tulsa, Oklahoma, and will permit a reasonable
number of Parent Representatives to observe, but not participate in, staff
meetings at those facilities and other facilities of any of the Tide West
Companies.
(b) Parent and the Parent Representatives shall have the right to
make an environmental and physical assessment of the assets of the Tide West
Companies and, in connection therewith, shall have the right to enter and
inspect such assets and all buildings and improvements thereon, conduct soil and
water tests and borings and generally conduct such tests, examinations,
investigations and studies as Parent deems necessary, desirable or appropriate
for the preparation of engineering or other reports relating to such assets,
their condition and the presence of Hazardous Materials. Tide West shall be
provided 24 hours prior notice of such activities, and Tide West Representatives
shall have the right to witness all such tests and investigations. Parent shall
(and shall cause the Parent Representatives to) keep any data or information
acquired by any such examinations and the results of any analyses of such data
and information strictly confidential and will not (and will cause the Parent
Representatives not to) disclose any of such data, information or results to any
Person unless otherwise required by law or regulation and then only after
written notice to Tide West of the determination of the need for disclosure.
Parent shall indemnify, defend and hold the Tide West Companies and the Tide
West Representatives harmless from and against any and all claims to the extent
arising out of or as a result of the activities of Parent and the Parent
Representatives on the assets of the Tide West Companies in connection with
conducting such environmental and physical assessment, except to the extent of
and limited by the negligence or willful misconduct of any of the Tide West
Companies or any Tide West Representative.
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(c) From the date hereof until the Effective Time, Parent shall
afford to Tide West and the Tide West Representatives, at Tide West's sole risk
and expense, reasonable access to any of the assets, books and records,
contracts, employees, representatives, agents and facilities of Parent and the
Parent Material Subsidiaries and shall, upon request, furnish promptly to Tide
West (at Tide West's expense) a copy of any file, book, record, contract,
permit, correspondence, or other written information, document or data
concerning Parent or any of the Parent Material Subsidiaries (or any of their
respective assets) that is within the possession or control of Parent.
(d) From the date hereof until the Effective Time, Tide West will
fully and accurately disclose, and will cause each of TWTT and Draco to fully
and accurately disclose, to Parent and the Parent Representatives all
information that is (i) reasonably requested by Parent or any of the Parent
Representatives, (ii) known to any of the Tide West Companies, and (iii)
relevant in any manner or degree to the value, ownership, use, operation,
development or transferability of the assets of any of the Tide West Companies.
(e) From the date hereof until the Effective Time, Parent will fully
and accurately disclose, and will cause each of the Parent Material Subsidiaries
to fully and accurately disclose, to Tide West and the Tide West Representatives
all information that is (i) reasonably requested by Tide West or any of the Tide
West Representatives, (ii) known to Parent or any Parent Material Subsidiary,
and (iii) relevant in any manner or degree to the value, ownership, use,
operation, development or transferability of the assets of Parent or any Parent
Material Subsidiary.
(f) From the date hereof until the Effective Time, each of Parent and
Tide West shall (i) furnish to the other, promptly upon receipt or filing (as
the case may be), a copy of each communication between such party and the SEC
after the date hereof relating to the Merger or the Registration Statement and
each report, schedule, registration statement or other document filed by such
party with the SEC after the date hereof relating to the Merger, and (ii)
promptly advise the other of the substance of any oral communications between
such party and the SEC relating to the Merger or the Registration Statement.
(g) Tide West will (and will cause TWTT, Draco and the Tide West
Representatives to) fully cooperate in all reasonable respects with Parent and
the Parent Representatives in connection with Parent's examinations, evaluations
and investigations described in this Section 5.3, and Parent will (and will
cause the Parent Representatives to) fully cooperate in all reasonable respects
with Tide West and the Tide West Representatives in connection with Tide West's
examinations, evaluations and investigations described in this Section 5.3.
(h) Tide West agrees that it will not (and will cause the Tide West
Representatives not to), and Parent agrees that it will not (and will cause the
Parent Representatives not to), use any information obtained pursuant to this
Section 5.3 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement.
(i) Notwithstanding anything in this Section 5.3 to the contrary, (i)
Tide West shall not be obligated under the terms of this Section 5.3 to disclose
to Parent or the Parent Representatives, or grant Parent or the Parent
Representatives access to, information that is within Tide West's possession or
control but subject to a valid and binding confidentiality agreement with
39
a third party without first obtaining the consent of such third party, and Tide
West, to the extent reasonably requested by Parent, will use its best efforts to
obtain any such consent; and (ii) Parent shall not be obligated under the terms
of this Section 5.3 to disclose to Tide West or the Tide West Representatives,
or grant Tide West or the Tide West Representatives access to, information that
is within Parent's possession or control but subject to a valid and binding
confidentiality agreement with a third party without first obtaining the consent
of such third party, and Parent, to the extent reasonably requested by Tide
Xxxx, xxxx use its best efforts to obtain any such consent.
5.4 NO SOLICITATION.
(a) Immediately following the execution of this Agreement, Tide West
will (and will use its best efforts to cause each of the Tide West
Representatives to) terminate any and all existing activities, discussions and
negotiations with third parties (other than Parent) with respect to any possible
transaction involving the acquisition of the Tide West Common Stock or the
merger or other business combination of Tide West with or into any such third
party.
(b) Tide West will not (and will use its best efforts to cause the
Tide West Representatives not to) solicit, initiate or knowingly encourage the
submission of, any offer or proposal to acquire all or any part of the Tide West
Common Stock or all or any material portion of the assets or business of Tide
West (other than the transactions contemplated by this Agreement), whether by
merger, purchase of assets, tender offer, exchange offer or otherwise (an
"ALTERNATIVE PROPOSAL"); provided, however, that, if Tide West or any Tide West
Representative shall receive an Alternative Proposal, then Tide West
Representatives may discuss such Alternative Proposal with the Person presenting
such Alternative Proposal and provide information to such Person if the board of
directors of Tide West determines in good faith, after considering the advice of
its legal counsel, that it is required to do so in order to discharge properly
its fiduciary duty to Tide West's stockholders.
(c) Tide West will promptly communicate to Parent the terms and
conditions of any Alternative Proposal that it may receive and will keep Parent
informed as to the status of any actions, including any discussions, taken
pursuant to such Alternative Proposal.
(d) If Tide West or any Tide West Representative receives an
Alternative Proposal and the board of directors of Tide West determines in good
faith, after considering the advice of its legal counsel, that it is required to
do so in order to discharge properly its fiduciary duty to Tide West's
stockholders, then Tide West Representatives may negotiate the terms of such
Alternative Proposal and a binding definitive agreement with such Person with
respect thereto (an "ALTERNATIVE TRANSACTION").
(e) Nothing in this Section 5.4 shall permit Tide West to terminate
this Agreement except as specifically provided in Section 7.1.
5.5 TIDE WEST STOCKHOLDERS MEETING. Tide West shall take all action
necessary in accordance with applicable law and its certificate of incorporation
and by-laws to convene a meeting of its stockholders as promptly as practicable
after the date hereof for the purpose of voting on the Tide West Proposal. The
board of directors of Tide West shall recommend approval of the Tide West
Proposal and shall take all lawful action to solicit such approval, including
timely mailing the
40
Proxy Statement/Prospectus to the stockholders of Tide West. Notwithstanding the
above, however, the following shall be conditions to the mailing of the Proxy
Statement/Prospectus:
(a) Tide West shall have received an opinion from Xxxxxxx Xxxxx or
another firm of investment bankers or financial advisors selected by Tide West
(which opinion shall be acceptable in form and substance to Tide West) to the
effect that the consideration to be received in the Merger by the holders of
shares of Tide West Common Stock is fair to such holders from a financial point
of view, and such opinion shall not have been withdrawn, revoked or modified.
(b) Tide West shall have received an opinion (reasonably acceptable
in form and substance to Tide West) from Xxxxxx & Xxxxxxx, A Professional
Corporation (or such other firm as is reasonably acceptable to Tide West) to the
effect that (i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii) each of
Parent, Tide West and Merger Sub will be a party to such reorganization within
the meaning of Section 368(b) of the Code, (iii) no gain or loss will be
recognized by Parent, Tide West or Merger Sub as a result of the Merger, and
(iv) no gain or loss, except with respect to the amount of Cash Consideration
received, will be recognized by a stockholder of Tide West as a result of the
Merger with respect to the shares of Tide West Common Stock converted into
shares of Parent Common Stock by such stockholder, and such opinion shall not
have been withdrawn, revoked or modified. Such opinion may be based upon
representations of the parties and shareholders of the parties.
(c) Tide West shall have received a letter from Xxxxxx Xxxxxxxx &
Co., independent public accountants, addressed to Parent and Tide West, dated as
of the date the Proxy Statement/Prospectus is first mailed to Tide West's
stockholders, in form and substance reasonably satisfactory to Tide West, in
connection with such accountants' review of certain financial and accounting
matters contained in the Proxy Statement/Prospectus and the Registration
Statement.
5.6 PARENT STOCKHOLDERS MEETING. Parent shall take all action necessary
in accordance with applicable law and its certificate of incorporation and
bylaws to convene a meeting of its stockholders as promptly as practicable after
the date hereof for the purpose of voting on the Tide West Proposal. The Board
of Directors of Parent shall recommend approval of the Tide West Proposal and
shall take all lawful action to solicit such approval, including timely mailing
the Proxy Statement/Prospectus to the stockholders of Parent. Notwithstanding
the above, however, the following shall be conditions to the mailing of the
Proxy Statement/Prospectus:
(a) Parent shall have received an opinion from Xxxxxx Brothers or
another firm of investment bankers or financial advisors selected by Parent
(which opinion shall be acceptable in form and substance to Parent) to the
effect that the Merger is fair to the Parent from a financial point of view, and
such opinion shall not have been withdrawn, revoked or modified.
(b) Parent shall have received an opinion of the type described in
Section 5.5(b), from counsel as is reasonably acceptable to Parent and such
opinion shall not have been withdrawn, revoked or modified.
(c) Parent shall have received a letter from Xxxxxx Xxxxxxxx & Co.,
independent public accountants, addressed to Parent and Tide West, dated as of
the date the Proxy
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Statement/Prospectus is first mailed to Parent's stockholders, in form and
substance reasonably satisfactory to Parent, in connection with such
accountants' review of certain financial and accounting matters contained in the
Proxy Statement/Prospectus and the Registration Statement.
5.7 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
(a) Parent and Tide West shall cooperate and promptly prepare the
Registration Statement, and Parent shall file the Registration Statement with
the SEC as soon as practicable after the date hereof and in any event not later
than 45 days after the date hereof. Parent shall use its best efforts, and Tide
West shall cooperate with Parent (including furnishing all information
concerning Tide West and the holders of Tide West Common Stock as may be
reasonably requested by Parent), to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing.
Parent shall use its best efforts, and Tide West shall cooperate with Parent, to
obtain all necessary state securities laws or "blue sky" permits, approvals and
registrations in connection with the issuance of Parent Common Stock pursuant to
the Merger.
(b) Parent and Tide West will cause the Registration Statement
(including the Proxy Statement/Prospectus), at the time it becomes effective
under the Securities Act, to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC thereunder.
(c) Tide West hereby covenants and agrees with Parent that (i) the
Registration Statement (at the time it becomes effective under the Securities
Act and at the Effective Time) will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (provided, however, that
this clause (i) shall apply only to information contained in the Registration
Statement that was supplied by Tide West specifically for inclusion therein);
and (ii) the Proxy Statement/Prospectus (at the time it is first mailed to
stockholders of Tide West and Parent, at the time of the Tide West Meeting and
the Parent Meeting, and at the Effective Time) will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading (provided, however,
that this clause (ii) shall not apply to any information contained in the Proxy
Statement/Prospectus that was supplied by Parent specifically for inclusion
therein). If, at any time prior to the Effective Time, any event with respect to
Tide West, or with respect to other information supplied by Tide West
specifically for inclusion in the Registration Statement, occurs and such event
is required to be described in an amendment to the Registration Statement, Tide
West shall promptly notify Parent of such occurrence and shall cooperate with
Parent in the preparation and filing of such amendment. If, at any time prior to
the Effective Time, any event with respect to Tide West, or with respect to
other information included in the Proxy Statement/Prospectus, occurs and such
event is required to be described in a supplement to the Proxy
Statement/Prospectus, such event shall be so described and such supplement shall
be promptly prepared, filed and disseminated.
(d) Parent hereby covenants and agrees with Tide West that (i) the
Registration Statement (at the time it becomes effective under the Securities
Act and at the Effective Time) will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (provided, however, that
this
42
clause (i) shall not apply to any information contained in the Registration
Statement that was supplied by Tide West specifically for inclusion therein);
and (ii) the Proxy Statement/Prospectus (at the time it is first mailed to
stockholders of Tide West and Parent, at the time of the Tide West Meeting and
the Parent Meeting, and at the Effective Time) will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading (provided, however,
that this clause (ii) shall apply only to information contained in the Proxy
Statement/Prospectus that was supplied by Parent specifically for inclusion
therein). If, at any time prior to the Effective Time, any event with respect to
Parent, or with respect to other information included in the Registration
Statement, occurs and such event is required to be described in an amendment to
the Registration Statement, such event shall be so described and such amendment
shall be promptly prepared and filed. If, at any time prior to the Effective
Time, any event with respect to Parent, or with respect to other information
supplied by Parent specifically for inclusion in the Proxy Statement/Prospectus,
occurs and such event is required to be described in a supplement to the Proxy
Statement/Prospectus, Parent shall promptly notify Tide West of such occurrence
and shall cooperate with Tide West in the preparation, filing and dissemination
of such supplement.
(e) Neither the Registration Statement nor the Proxy
Statement/Prospectus nor any amendment or supplement thereto will be filed or
disseminated to the stockholders of Tide West or Parent without the approval of
both Parent and Tide West. Parent shall advise Tide West, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective under the Securities Act, the issuance of any stop order with respect
to the Registration Statement, the suspension of the qualification of the Parent
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any comments or requests for additional information by the SEC
with respect to the Registration Statement.
5.8 STOCK EXCHANGE LISTING. Parent shall cause the shares of Parent
Common Stock to be issued in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Closing Date.
5.9 ADDITIONAL ARRANGEMENTS. Subject to the terms and conditions herein
provided, each of Tide West and Parent shall take, or cause to be taken, all
action and shall do, or cause to be done, all things necessary, appropriate or
desirable under the HSR Act and any other applicable laws and regulations or
under applicable governing agreements to consummate and make effective the
transactions contemplated by this Agreement, including using its best efforts to
obtain all necessary waivers, consents and approvals and effecting all necessary
registrations and filings. Each of Tide West and Parent shall take, or cause to
be taken, all action or shall do, or cause to be done, all things necessary,
appropriate or desirable to cause the covenants and conditions applicable to the
transactions contemplated hereby to be performed or satisfied as soon as
practicable. In addition, if any Governmental Authority shall have issued any
order, decree, ruling or injunction, or taken any other action that would have
the effect of restraining, enjoining or otherwise prohibiting or preventing the
consummation of the transactions contemplated hereby, each of Tide West and
Parent shall use its reasonable efforts to have such order, decree, ruling or
injunction or other action declared ineffective as soon as practicable.
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5.10 AGREEMENTS OF AFFILIATES. At least 30 days prior to the Effective
Time, Tide West shall cause to be prepared and delivered to Parent a list
identifying all Persons who, at the time of the Tide West Meeting, may be deemed
to be "affiliates" of Tide West as that term is used in paragraphs (c) and (d)
of Rule 145 under the Securities Act. Tide West shall use its best efforts to
cause each Person who is identified as an affiliate of Tide West in such list to
execute and deliver to Parent, on or prior to the Closing Date, a written
agreement, in the form attached hereto as EXHIBIT 5.10 (if such Person has not
executed and delivered an agreement substantially to the same effect
contemporaneously with the execution of this Agreement). Parent shall be
entitled to place legends as specified in such agreements on the Parent
Certificates representing any Parent Common Stock to be issued to such Persons
in the Merger.
5.11 PUBLIC ANNOUNCEMENTS. Prior to the Closing, Tide West and Parent will
consult with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any press release or make any such public
statement prior to obtaining the approval of the other party; provided, however,
that such approval shall not be required where such release or announcement is
required by applicable law; and provided further, that either Tide West or
Parent may respond to inquiries by the press or others regarding the
transactions contemplated by this Agreement, so long as such responses are
consistent with such party's previously issued press releases.
5.12 NOTIFICATION OF CERTAIN MATTERS. Tide West shall give prompt notice
to Parent of (a) any representation or warranty contained in Article 3 being
untrue or inaccurate when made, (b) the occurrence of any event or development
that would cause (or could reasonably be expected to cause) any representation
or warranty contained in Article 3 to be untrue or inaccurate on the Closing
Date, or (c) any failure of Tide West to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder.
Parent shall give prompt notice to Tide West of (x) any representation or
warranty contained in Article 4 being untrue or inaccurate when made, (y) the
occurrence of any event or development that would cause (or could reasonably be
expected to cause) any representation or warranty contained in Article 4 to be
untrue or inaccurate on the Closing Date, or (z) any failure of Parent to comply
with or satisfy any covenant, condition, or agreement to be complied with or
satisfied by it hereunder.
5.13 PAYMENT OF EXPENSES. Each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby, whether or not the Merger
shall be consummated, except that (a) the fee for filing the Registration
Statement with the SEC shall be borne by Parent; (b) the costs and expenses
associated with printing the Proxy Statement/Prospectus shall be borne equally
by Parent and Tide West; and (c) the costs and expenses associated with mailing
the Proxy Statement/Prospectus to the stockholders of (i) Tide West, and
soliciting the votes of the stockholders of Tide West, shall be borne by Tide
West, and (ii) Parent, and soliciting the votes of the stockholders of Parent,
shall be borne by Parent.
5.14 REGISTRATION RIGHTS. Parent and the Major Tide West Stockholder shall
enter into a Registration Rights Agreement, in the form attached hereto as
EXHIBIT 5.14, at the Closing.
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5.15 INSURANCE; INDEMNIFICATION. The Parent shall cause the Director and
Officer Liability Insurance coverage currently maintained by Tide West to
continue in effect for a period of not less than one year following the
Effective Time. From and after the Effective Time, Parent shall indemnify and
hold harmless each person who is, has been at any time prior to the date hereof,
or becomes prior to the Effective Time, an officer or director of any of the
Tide West Companies (collectively, the "INDEMNIFIED PARTIES") against all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees), judgments and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation arising out of or pertaining to acts
or omissions, or alleged acts or omissions, by him in his capacity as an officer
or director of any of the Tide West Companies, which acts or omissions occurred
prior to the Effective Time; provided, however, that Parent shall be under no
obligation to indemnify any Indemnified Party pursuant to this Section 5.15
except to the extent that such Indemnified Party was entitled to indemnification
from any of the Tide West Companies (pursuant to applicable law or contract)
immediately prior to the Effective Time. The procedures associated with such
indemnification shall be the same as those associated with the Indemnified
Parties' indemnification from any of the Tide West Companies, as the case may
be, immediately prior to the Effective Time (provided, however, that Parent
shall be under no obligation to deposit trust funds pursuant to any "change-in-
control" or similar provisions). Tide West hereby agrees that, from and after
the date hereof until the Effective Time, it will not (and it will cause each of
TWTT and Draco not to) amend, modify or otherwise alter any contractual
provision under which any Indemnified Party is entitled to indemnification from
any of the Tide West Companies at the time of the execution of this Agreement.
The provisions of this Section 5.15 are intended to be for the benefit of, and
shall be enforceable by, the parties hereto and each Indemnified Party and their
respective heirs and representatives.
5.16 TIDE WEST EMPLOYEES. After the Effective Time, it is expected that
Parent may, in its sole discretion, offer employment to, or cause the Tide West
Companies to continue the employment of, certain employees of the Tide West
Companies (the "RETAINED EMPLOYEES"). Parent shall provide the Retained
Employees with the same benefits that accrue to employees of Parent and its
subsidiaries. In addition, for a period of 12 months following the Effective
Time, Parent shall, or shall cause the Surviving Corporation to, either (a)
maintain the effectiveness of the Tide West Employee Benefit Plans for the
benefit of the Retained Employees or (b) provide the Retained Employees with the
rights and benefits of Parent's employee benefit plans. With respect to
employees of the Tide West Companies who are not Retained Employees, Parent
shall, for a period of 18 months following the Effective Time, either (a)
maintain the Tide West health benefit plans for the benefit of such persons, or
(b) provide such persons with the rights and benefits of Parent's employee
health benefit plans; provided, that Parent shall not be required to pay the
premiums for coverage under such plans for any such persons, except to the
extent provided in any severance agreement agreed to by the Tide West Companies
and Parent. Parent further agrees that the Retained Employees shall be credited
for their service with the Tide West Companies, and their respective predecessor
entities, for purposes of eligibility and vesting in the employee plans provided
by Parent. The Retained Employees' benefits under Parent's medical benefit plan
shall not be subject to any exclusions for any pre-existing conditions, and
credit shall be received for any deductibles or out-of-pocket amounts previously
paid. Parent shall, or shall cause the Surviving Corporation to, fulfill all
coverage continuation obligations imposed by Section 4980B of the Code and
Section 601 of ERISA for those employees of the Tide West Companies who are not
Retained Employees. The provisions of this Section 5.16 are intended to be for
the benefit of, and shall be enforceable by, the
45
parties hereto and the employees of the Tide West Companies covered by the Tide
West Employee Benefit Plans at the Effective Time and their respective heirs and
representatives.
5.17 RESTRUCTURING OF MERGER. If the condition to Closing set forth in Section
6.3(g) is not either satisfied or waived by Tide West, upon written notice from
Tide West delivered to Parent within 15 days after the approval of the Tide West
Proposal at both the Tide West Meeting and the Parent Meeting, the Merger shall
be restructured under Section 351 of the Code as a "Horizontal Double Dummy"
transaction whereby (a) the holders of Parent Common Stock would receive one
share of common stock ("Newco Common Stock") of a newly created holding company
("Newco") in exchange for each share of Parent Common Stock as a result of a
merger of a newly created subsidiary of Newco with and into Parent, and (b) the
holders of Tide West Common Stock would receive $8.75 and .6295 of a share of
Newco Common Stock for each share of Tide West Common Stock as a result of a
merger of another newly created subsidiary of Newco with and into Tide West. In
such event, this Agreement shall be deemed to be appropriately modified to
reflect such restructuring and the parties hereto shall use their reasonable
best efforts to effect such restructured transaction.
ARTICLE 6
CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction, at or prior to the Closing Date, of the following conditions:
(a) STOCKHOLDER APPROVAL. The Tide West Proposal shall have been duly
and validly approved and adopted by the stockholders of Tide West and Parent,
all as required by the DGCL and the charter and bylaws of Tide West and Parent.
(b) OTHER APPROVALS. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and all filings required to be made prior to the Effective Time with,
and all consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from, any Governmental Authority or other person in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Tide West, Parent and
Merger Sub shall have been made or obtained (as the case may be), except where
the failure to obtain such consents, approvals, permits and authorizations would
not be reasonably likely to result in a Material Adverse Effect on Parent
(assuming the Merger has taken place) or to materially adversely affect the
consummation of the Merger.
(c) SECURITIES LAW MATTERS. The Registration Statement shall have
been declared effective by the SEC under the Securities Act and shall be
effective at the Effective Time, and no stop order suspending such effectiveness
shall have been issued, no action, suit, proceeding or investigation by the SEC
to suspend such effectiveness shall have been initiated and be continuing,
46
and all necessary approvals under state securities laws relating to the issuance
or trading of the Parent Common Stock to be issued in the Merger shall have been
received.
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
invoking this condition, each party shall have complied fully with its
obligations under Section 5.9 and, in addition, shall use all reasonable efforts
to have any such decree, ruling, injunction or order vacated, except as
otherwise contemplated by this Agreement.
(e) ACCOUNTANTS' LETTER. Parent and Tide West shall have received a
letter from Xxxxxx Xxxxxxxx & Co., immediately prior to the Effective Date, in
form and substance reasonably satisfactory to each of Parent and Tide West,
dated as of the Effective Date, which letter shall address matters as are
customary for transactions similar to those contemplated in this Agreement.
(f) NYSE LISTING. The shares of Parent Common Stock issuable pursuant
to the Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The obligations
of Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions, any or all of which may be waived in whole or in part
by Parent and Merger Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Tide West set forth in Article 3 shall be true and correct in all
material respects as of the Closing Date as though made on and as of that time,
and Parent shall have received a certificate signed by the chief executive
officer of Tide West to such effect; provided, however, that the condition set
forth in this Section 6.2(a) shall be deemed to be satisfied even if one or more
of such representations and warranties (without giving effect to the individual
materiality thresholds otherwise included as a part of such representations and
warranties) are not true and correct, so long as the failure of such
representations and warranties (without giving effect to the individual
materiality thresholds otherwise included as a part of such representations and
warranties) to be true and correct (in the aggregate) does not result in (i)
damages or losses to Parent, (ii) a net reduction in the aggregate value of the
assets of the Tide West Companies (with respect to Ownership Interests, as
determined by reference to the Allocated Values) or (iii) reduction in the
aggregate net value of the assets of the Tide West Companies resulting from the
items and matters set forth in Section 3.13 of the DISCLOSURE SCHEDULE, in an
aggregate amount for clauses (i), (ii) and (iii) (the "FAILURE AMOUNT") that
exceeds $10,000,000; provided, that to the extent the Failure Amount exceeds
$5,000,000, the aggregate cash portion of the consideration to be paid to the
holders of shares of Tide West Common Stock in connection with the Merger shall
be reduced by an amount (not to exceed $5,000,000) by which the Failure Amount
exceeds $5,000,000 (and the Cash Consideration per share of Tide West Common
Stock shall be proportionately reduced); provided further, that to the extent
the Failure Amount exceeds $10,000,000, Parent may elect to close the Merger
after effecting the reduction contained in the immediately preceding proviso.
47
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY TIDE WEST. Tide West
shall have performed in all material respects all covenants and agreements
required to be performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received a certificate signed by the chief executive
officer of Tide West to such effect.
(c) LETTERS FROM TIDE WEST AFFILIATES. Parent shall have received
from each Person named in the list referred to in Section 5.10 an executed copy
of the agreement described in Section 5.10.
(d) NO ADVERSE CHANGE. From the date of this Agreement through the
Closing, there shall not have occurred any change in the condition (financial or
otherwise), operations or business of any of the Tide West Companies that would
have or would be reasonably likely to have a Material Adverse Effect on Tide
West (other than changes, including changes in commodity prices, generally
affecting the oil and gas industry).
(e) FAIRNESS OPINION. The fairness opinion described in Section
5.6(a) shall not have been withdrawn, revoked, or modified.
(f) TAX OPINION. The tax opinion described in Section 5.6(b) shall
not have been withdrawn, revoked or modified.
(g) DISSENTING STOCKHOLDERS. The holders of no more than three
percent of the Tide West Common Stock shall have exercised their right to
dissent from the Merger under the DGCL.
(h) LEGAL OPINION. Parent and Merger Sub shall have received an
opinion of Xxxxxx & Xxxxxxx, a Professional Corporation, counsel for Tide West,
dated the Closing Date,
48
in form and substance reasonably acceptable to Parent, covering the subjects set
forth in Sections 3.1, 3.2, 3.3, 3.4 and 3.5.
6.3 CONDITIONS TO OBLIGATION OF TIDE WEST. The obligation of Tide West to
effect the Merger is subject to the satisfaction of the following conditions,
any or all of which may be waived in whole or in part by Tide West:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub set forth in Article 4 shall be true and
correct in all material respects as of the Closing Date as though made on and as
of that time, and Tide West shall have received a certificate signed by the
chief executive officer or the chief financial officer of Parent to such effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY PARENT AND MERGER SUB.
Parent and Merger Sub shall have performed in all material respects all
covenants and agreements required to be performed by them under this Agreement
at or prior to the Closing Date, and Tide West shall have received a certificate
signed by the chief executive officer or the chief financial officer of Parent
to such effect.
(c) FAIRNESS OPINION. The fairness opinion described in Section
5.5(a) shall not have been withdrawn, revoked, or modified.
(d) TAX OPINION. The tax opinion described in Section 5.5(b) shall
not have been withdrawn, revoked, or modified.
(e) NO ADVERSE CHANGE. From the date of this Agreement through the
Closing, there shall not have occurred any change in the condition (financial or
otherwise), operations or business of Parent and its subsidiaries that would
have or would be reasonably likely to have a Material Adverse Effect on Parent
(other than changes, including changes in commodity prices, generally affecting
the oil and gas industry).
(f) LEGAL OPINION. Tide West shall have received an opinion of the
general counsel of Parent, dated the Closing Date, in form and substance
reasonably acceptable to Tide West, covering the subjects set forth in Sections
4.1, 4.2, 4.3 and 4.4.
(g) MAXIMUM NUMBER OF SHARES. The adjustments to the Cash
Consideration and the Conversion Number pursuant to the formulas set forth in
Section 2.4(b)(i) (other than the last proviso thereof) would result in the
issuance of not more than 7,161,312 shares of Parent Common Stock in connection
with the Merger.
49
ARTICLE 7
TERMINATION
7.1 TERMINATION RIGHTS. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the Tide West Proposal by the stockholders of Tide West:
(a) By mutual written consent of Parent and Tide West;
(b) By either Tide West or Parent if (i) the Merger has not been
consummated by July 31, 1996 (provided, however, that the right to terminate
this Agreement pursuant to this clause (i) shall not be available to any party
whose breach of any representation or warranty or failure to perform any
covenant or agreement under this Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date); (ii) any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable (provided, however, that the right to terminate this Agreement
pursuant to this clause (ii) shall not be available to any party until such
party has used all reasonable efforts to remove such injunction, order or
decree); or (iii) the Tide West Proposal shall not have been approved by the
required vote of (A) the Tide West stockholders at the Tide West Meeting or at
any adjournment thereof, or (B) the Parent stockholders at the Parent Meeting or
at any adjournment thereof;
(c) By Parent if (i) there has been a breach of the representations
and warranties made by Tide West in Article 3 of this Agreement (provided,
however, that Parent shall not be entitled to terminate this Agreement pursuant
to this clause (i) unless Parent has given Tide West at least 30 days prior
notice of such breach, Tide West has failed to cure such breach within such 30-
day period, and the condition described in Section 6.2(a), other than the
provision thereof relating to the certificate signed by the chief executive
officer of Tide West, would not be satisfied if the Closing were to occur on the
day on which Parent gives Tide West notice of such termination); or (ii) Tide
West has failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement and such failure has not been, or cannot
be, cured within a reasonable time after notice and demand for cure thereof;
(d) By Tide West if (i) there has been a breach of the representations
and warranties made by Parent and Merger Sub in Article 4 of this Agreement
(provided, however, that Tide West shall not be entitled to terminate this
Agreement pursuant to this clause (i) unless Tide West has given Parent at least
30 days prior notice of such breach, Parent has failed to cure such breach
within such 30-day period, and the condition described in Section 6.3(a), other
than the provision thereof relating to the certificate signed by the chief
executive officer of Parent, would not be satisfied if the Closing were to occur
on the day on which Tide West gives Parent notice of such termination); or (ii)
Parent or Merger Sub has failed to comply in any material respect with any of
its respective covenants or agreements contained in this Agreement, and, in
either such case, such breach or failure has not been, or cannot be, cured
within a reasonable time after notice and a demand for cure thereof;
50
(e) By Tide West if (i) Tide West is prepared to enter into a binding
definitive agreement to effect an Alternative Transaction; and (ii) Tide West
has given Parent at least three business days' prior notice of its intention to
terminate this Agreement pursuant to this Section 7.1(e) (along with a
description of all relevant terms and conditions of such Alternative
Transaction), during which period Parent shall have the opportunity to propose
amendments or modifications to the terms of the Merger; or
(f) By Parent if the board of directors of Tide West shall have failed
to recommend adoption of the Tide West Proposal at the time the Proxy
Statement/Prospectus is first mailed to stockholders of Tide West or shall have
amended or withdrawn any such recommendation and such recommendation is not
reinstated in its prior form within five business days after such amendment or
withdrawal.
7.2 EFFECT OF TERMINATION. If this Agreement is terminated by either
Tide West or Parent pursuant to the provisions of Section 7.1, this Agreement
shall forthwith become void except for, and there shall be no further obligation
on the part of any party hereto or its respective Affiliates, directors,
officers, or stockholders except pursuant to, the provisions of Sections 5.3(c)
(but only to the extent of the confidentiality and indemnification provisions
contained therein), 5.7(c), 5.7(d), 5.13 and 7.3, Article 8 and the
Confidentiality Agreement (which shall continue pursuant to their terms);
provided, however, that a termination of this Agreement shall not relieve any
party hereto from any liability for damages incurred as a result of a breach by
such party of its representations, warranties, covenants, agreements or other
obligations hereunder occurring prior to such termination.
7.3 FEES AND EXPENSES. If this Agreement is terminated pursuant to
Section 7.1(e) or (f), Tide West shall promptly, but in no event later than one
business day after termination of this Agreement, pay to Parent a fee equal to
$5,000,000 in same day funds, plus interest on such amount from the date payable
until paid at a rate of eight percent per annum.
ARTICLE 8
MISCELLANEOUS
8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations or warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the consummation of the
Merger.
8.2 AMENDMENT. This Agreement may be amended by the parties hereto
at any time before or after approval of the Tide West Proposal by the
stockholders of Tide West; provided, however, that after any such approval, no
amendment shall be made that by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by a written instrument signed on behalf of each of the parties hereto.
8.3 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and either delivered personally, by facsimile
transmission or by registered or certified mail (postage prepaid and return
receipt requested) and shall be deemed given when received (or, if mailed, five
business days after the date of mailing) at the following addresses
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or facsimile transmission numbers (or at such other address or facsimile
transmission number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub: HS Resources, Inc., Xxx Xxxxxxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000, Attention: Chief Executive Officer
(facsimile transmission number: 415-433-5811), with a copy (which shall not
constitute notice) to HS Resources, Inc., 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, XX
00000, Attention: General Counsel (facsimile transmission number: 000-000-0000.
(b) If to Tide West: Tide West Oil Company, 0000 Xxxxx Xxxxxxxx,
Xxxxx 000, Xxxxx, Xxxxxxxx 00000-0000, Attention: Xxxxxx X. Xxxxx, President
(facsimile transmission number: 918-481-0992), with a copy (which shall not
constitute notice) to Xxxxxx X. Xxxxx, Xxxxxx & Xxxxxxx, 0000 Xxxxx Xxxxx Tower,
00 Xxxx 0xx Xxxxxx, Xxxxx, Xxxxxxxx 00000 (facsimile transmission number: 918-
586-8548).
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 SEVERABILITY. Any term or provision of this Agreement that is invalid
or 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.
8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the Confidentiality Agreement and the documents and instruments
delivered by the parties in connection with this Agreement) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; and (b) except as provided in Article 2 or Section 5.3(c), 5.15 or 5.16,
is solely for the benefit of the parties hereto and their respective successors,
legal representatives and assigns and does not confer on any other person any
rights or remedies hereunder.
8.7 APPLICABLE LAW. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
8.8 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that,
should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Agreement or makes this Agreement impossible to
52
perform, in which case this Agreement shall terminate pursuant to Article 7.
Except as otherwise contemplated by this Agreement, to the extent that a party
hereto took an action inconsistent herewith or failed to take action consistent
herewith or required hereby pursuant to an order or judgment of a court or other
competent Governmental Authority, such party shall not incur any liability or
obligation unless such party breached its obligations under Section 5.9 or did
not in good faith seek to resist or object to the imposition or entering of such
order or judgment.
8.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
newly-formed direct or indirect wholly-owned corporate subsidiary of Parent.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
8.10 WAIVERS. At any time prior to the Effective Time, the parties
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive performance
of any of the covenants or agreements, or satisfaction of any of the conditions,
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereof shall not operate or be construed as a waiver of
any prior or subsequent breach of the same or any other provisions hereof.
8.11 CONFIDENTIALITY AGREEMENT. Parent agrees to be bound by the
terms of the Confidentiality Agreement as if it were a party thereto. The
Confidentiality Agreement shall remain in full force and effect following the
execution of this Agreement until terminated as described in Section 7.2, is
hereby incorporated herein by reference and shall constitute a part of this
Agreement for all purposes; provided, however, that any standstill provisions
contained therein will, effective as of the Closing, be deemed to have been
waived to the extent necessary for the parties to consummate the Merger in
accordance with the terms of this Agreement. Any and all information received
by Parent pursuant to the terms and provisions of this Agreement shall be
governed by the applicable terms and provisions of the Confidentiality
Agreement.
8.12 INCORPORATION. Exhibits and Schedules referred to herein are
attached to and by this reference incorporated herein for all purposes.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives, on the date first written
above.
"Tide West" "Parent"
TIDE WEST OIL COMPANY HS RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ P. Xxxxxxx Xxxxxx
------------------ ---------------------
Xxxxxx X. Xxxx P. Xxxxxxx Xxxxxx
Vice President President
"Merger Sub"
HSR ACQUISITION, INC.
By: /s/ P. Xxxxxxx Xxxxxx
---------------------
P. Xxxxxxx Xxxxxx
President
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The following exhibits and schedules to the Agreement and Plan of Merger
have been omitted, and the Registrant agrees to furnish supplementally a copy of
any such omitted exhibits and schedules to the Securities and Exchange
Commission upon its request:
Exhibit 5.10 Form of Affiliate Letter
Exhibit 5.14 Registration Rights Agreement
Schedule 1.1(A) Allocated Values
Schedule 1.1(B) Ownership Interests
Disclosure Schedule (including Annexes A-P thereto)
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