EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
AMONG
THE XXXXXXXX COMPANIES, INC.,
RESOURCES ACQUISITION CORP.
AND
XXXXXXX RESOURCES CORPORATION
DATED AS OF MAY 7, 2001
TABLE OF CONTENTS
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ARTICLE I
THE OFFER
Section 1.1 The Offer........................................................ 2
Section 1.2 Company Actions.................................................. 4
ARTICLE II
THE MERGER
Section 2.1 The Merger....................................................... 5
Section 2.2 Closing.......................................................... 5
Section 2.3 Effective Time................................................... 5
Section 2.4 Effects of the Merger............................................ 6
Section 2.5 Certificate of Incorporation and Bylaws; Officers and Directors.. 6
Section 2.6 Principal Offices of the Company................................. 6
ARTICLE III
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES
Section 3.1 Effect on Stock.................................................. 6
Section 3.2 Exchange of Certificates......................................... 7
Section 3.3 Tax Consequences................................................. 9
Section 3.4 Adjustment of Exchange Ratio..................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization..................................................... 10
Section 4.2 Subsidiaries..................................................... 10
Section 4.3 Capital Structure................................................ 10
Section 4.4 Authority........................................................ 11
Section 4.5 Consents and Approvals; No Violations............................ 12
Section 4.6 SEC Documents and Other Reports.................................. 13
Section 4.7 Absence of Material Adverse Change............................... 13
Section 4.8 Information Supplied............................................. 14
Section 4.9 Compliance with Laws............................................. 14
Section 4.10 Tax Matters..................................................... 15
Section 4.11 Liabilities..................................................... 15
Section 4.12 Litigation...................................................... 15
Section 4.13 Benefit Plans................................................... 15
Section 4.14 State Takeover Statutes; Bylaws Provision; Rights Agreement..... 17
Section 4.15 Brokers......................................................... 17
Section 4.16 Voting Requirements............................................. 17
Section 4.17 Environmental Matters........................................... 17
Section 4.18 Contracts; Debt Instruments..................................... 19
Section 4.19 Title to Properties............................................. 19
Section 4.20 Intellectual Property........................................... 20
Section 4.21 Condition of Assets.......................................... 20
Section 4.22 Derivative Transactions...................................... 20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 5.1 Organization.................................................. 21
Section 5.2 Capital Structure............................................. 21
Section 5.3 Authority..................................................... 22
Section 5.4 Consents and Approvals; No Violations......................... 22
Section 5.5 SEC Documents and Other Reports............................... 23
Section 5.6 Absence of Material Adverse Change............................ 23
Section 5.7 Information Supplied.......................................... 24
Section 5.8 Compliance with Laws.......................................... 24
Section 5.9 Parent Shares................................................. 24
Section 5.10 Reorganization............................................... 24
Section 5.11 Liabilities.................................................. 25
Section 5.12 Interim Operations of Sub.................................... 25
Section 5.13 Litigation................................................... 25
Section 5.14 California Exposure.......................................... 25
Section 5.15 Brokers...................................................... 25
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business Pending the Merger........................ 25
Section 6.2 No Solicitation; Acquisition Proposals........................ 28
Section 6.3 Third Party Standstill Agreements............................. 30
Section 6.4 Disclosure of Certain Matters; Delivery of Certain Filings.... 30
Section 6.5 Conduct of Business of Sub Pending the Merger................. 31
Section 6.6 Modifications to Recommendations.............................. 31
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Employee Benefits............................................. 32
Section 7.2 Options....................................................... 33
Section 7.3 Shareholder Approval; Preparation of Form S-4 and Proxy
Statement/Prospectus....................................... 35
Section 7.4 Access to Information......................................... 36
Section 7.5 Fees and Expenses............................................. 36
Section 7.6 Public Announcements.......................................... 38
Section 7.7 Transfer Taxes................................................ 38
Section 7.8 State Takeover Laws........................................... 38
Section 7.9 Indemnification; Directors and Officers Insurance............. 38
Section 7.10 Board of Directors........................................... 40
Section 7.11 HSR Act Filings; Reasonable Best Efforts..................... 40
Section 7.12 Stay Bonuses; Severance...................................... 42
Section 7.13 Section 16 Matters........................................... 42
Section 7.14 Tax Treatment................................................ 42
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Section 7.15 Affiliate Letters.............................................. 43
Section 7.16 Litigation..................................................... 43
Section 7.17 Rights Agreement............................................... 43
Section 7.18 Bank Debt...................................................... 43
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger...... 44
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination..................................................... 44
Section 9.2 Effect of Termination........................................... 46
Section 9.3 Amendment....................................................... 46
Section 9.4 Extension; Waiver............................................... 46
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and Warranties and
Agreements................................................... 46
Section 10.2 Notices........................................................ 46
Section 10.3 Interpretation; Definitions.................................... 47
Section 10.4 Counterparts................................................... 54
Section 10.5 Entire Agreement; No Third-Party Beneficiaries................. 54
Section 10.6 Governing Law.................................................. 55
Section 10.7 Assignment..................................................... 55
Section 10.8 Severability................................................... 55
Section 10.9 Enforcement of this Agreement.................................. 55
Section 10.10 Obligations of Subsidiaries................................... 55
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of May 7, 2001 (this "Agreement")
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among The Xxxxxxxx Companies, Inc., a Delaware corporation ("Parent"), Resources
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Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"), and Xxxxxxx Resources Corporation, a Delaware corporation (the
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"Company") (Sub and the Company being hereinafter collectively referred to as
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the "Constituent Corporations"). Except as otherwise set forth herein,
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capitalized (and certain other) terms used herein shall have the meanings set
forth in Section 10.3.
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W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has, in light of and subject
to the terms and conditions set forth herein, determined that a business
combination between Parent and the Company is fair to the Company's stockholders
and in the best interests of such stockholders;
WHEREAS, it is intended that the acquisition be accomplished by Sub
commencing a cash tender offer for 16,730,502 outstanding shares of Common
Stock, par value $0.01 per share, of the Company ("Company Common Stock"),
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together with the associated Company Rights, upon the terms and subject to the
conditions set forth in this Agreement (the shares of Company Common Stock
subject to the Offer, together with the associated Company Rights, are
hereinafter referred to as the "Shares") in an amount of $73.00 per Share (the
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"Offer Consideration") to be followed by a merger of the Company with and into
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Sub (the "Forward Merger");
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WHEREAS, subsequent to the purchase by Sub of Shares in the Offer, each
Share (other than Shares held directly or indirectly by Parent or the Company,
which Shares shall be cancelled) would be converted into the right to receive
1.767 (the "Exchange Ratio") duly authorized, validly issued, fully paid and
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non-assessable shares of common stock, par value $1.00 (the "Parent Common
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Stock" and, together with associated Parent Rights, the "Parent Shares") of
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Parent (the "Merger Consideration");
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WHEREAS, if the Tax Opinion Standard (as defined herein) has not been met,
the parties desire to permit an alternate merger structure providing for the
merger of Sub (or other direct or indirect wholly-owned subsidiary of Parent, as
determined by Parent in its sole discretion) with and into the Company (the
"Reverse Merger"), and the surviving corporation shall thereby become a direct
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or indirect wholly-owned subsidiary of Parent;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Offer, this Agreement and the Merger (as defined herein),
determining that this Agreement is advisable and that the Offer and the Merger
are fair to, and in the best interests of, the Company's stockholders and
recommending that the Company's stockholders accept the Offer, tender their
Shares into the Offer and adopt this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have each approved the Merger, upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and adopted this Agreement and the transactions contemplated
hereby;
WHEREAS, for Federal income tax purposes, it is intended that the Offer and
the Forward Merger shall be treated as an integrated transaction (together, the
"Transaction") and shall qualify as a "reorganization" within the meaning of
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Section 368(a) of the Code and the United States Treasury Regulations; and
WHEREAS, Parent, Sub and the Company each desires to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that this Agreement shall not
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have been terminated in accordance with Section 9.1 and subject to the
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provisions of this Agreement, including the conditions to the Offer set forth in
Exhibit A hereto, as promptly as practicable after the date of the public
announcement by Parent and the Company of this Agreement, Sub shall, and Parent
shall cause Sub to, commence, within the meaning of Rule 14d-2 under the
Exchange Act, the Offer. The obligation of Sub to, and of Parent to cause Sub
to, commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (any one or more of which may be waived in
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whole or in part by Sub in its sole discretion, provided that, without the prior
written consent of the Company, Sub shall not waive the Minimum Condition (as
defined in Exhibit A)). Sub expressly reserves the right to modify the terms of
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the Offer, except that, without the prior written consent of the Company, Sub
shall not (i) reduce the number of Shares sought in the Offer, (ii) decrease the
price per Share, (iii) impose any conditions to the Offer in addition to the
Offer Conditions or modify the Offer Conditions in a manner adverse to the
holders of Shares (other than to waive any Offer Conditions to the extent
permitted by this Agreement), (iv) except as provided in (b) below, extend the
Offer, (v) change the form of consideration payable in the Offer (other than by
adding consideration) or (vi) make any other change or modification in any of
the terms of the Offer in any manner that is adverse to the holders of Shares.
(b) The Offer shall initially be scheduled to expire 20 business days
following the commencement thereof. Parent and Sub agree that Sub will not
terminate the Offer between scheduled expiration dates (except in the event that
this Agreement is terminated pursuant to Section 9.1) and that, in the event
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that Sub would otherwise be entitled to terminate the Offer at any scheduled
expiration date thereof due to the failure of one or more of the Offer
Conditions,
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unless this Agreement shall have been terminated pursuant to Section 9.1, Sub
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shall, and Parent shall cause Sub to, extend the Offer for such period or
periods as shall be determined by Sub until such date as the Offer Conditions
have been satisfied or such later date as required by applicable law; provided,
however, that nothing herein shall require Sub to extend the Offer beyond the
Outside Date. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (i) extend the Offer, if at the scheduled or extended expiration date
of the Offer any of the Offer Conditions shall not be satisfied or waived, until
such time as such conditions are satisfied or waived and (ii) extend the Offer
for any period required by any rule, regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer or as might be required by
the NYSE. Sub shall not provide for a subsequent offering period in accordance
with Rule 14d-11 under the Exchange Act. Subject to the terms and conditions of
the Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept
and pay for 16,730,502 Shares validly tendered and not withdrawn pursuant to the
Offer that Sub is permitted to accept and exchange for under applicable law, as
soon as practicable after the expiration of the Offer, and in any event in
compliance with the obligations respecting prompt payment pursuant to Rule 14e-
1(c) under the Exchange Act; provided, however, that no such payment shall be
made until after Parent and Sub shall have calculated how cash should be
prorated if more than 16,730,502 Shares are validly tendered and not withdrawn
pursuant to the Offer. If this Agreement is terminated by either Parent or Sub
or by the Company, Sub shall, and Parent shall cause Sub to, promptly terminate
the Offer.
(c) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule TO (together with all
supplements and amendments thereto, the "Schedule TO") with respect to the Offer
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and a related letter of transmittal, and Parent and Sub shall cause the Offer
Documents to be disseminated to holders of Shares as and to the extent required
by applicable federal securities laws. Parent and Sub agree that they shall
cause the Schedule TO, the Offer to Purchase and all amendments or supplements
thereto (which together constitute the "Offer Documents") to comply in all
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material respects with the Exchange Act and the rules and regulations thereunder
and other applicable laws. Parent, Sub and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Offer Documents as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given reasonable opportunity to
review and comment upon the Offer Documents prior to their filing with the SEC
or dissemination to the Company's stockholders. Parent and Sub agree to provide
the Company and its counsel any comments Parent, Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments and to cooperate with the Company and its
counsel in responding to such comments.
(d) Parent shall provide or cause to be provided to Sub on a timely
basis all funds necessary to accept for payment, and pay for, any Shares
accepted for payment that are validly tendered and not withdrawn pursuant to the
Offer and that Sub is permitted to accept for payment pursuant to the terms and
conditions of the Offer and under applicable law.
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Section 1.2 Company Actions. (a) The Company hereby approves of and
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consents to the Offer and represents and warrants that the Board of Directors of
the Company, at a meeting duly called and held, duly adopted resolutions by
unanimous vote (i) determining that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are advisable and are
fair to and in the best interest of the Company's stockholders, (ii) approving
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, which approval constitutes approval under Section 203 of the DGCL
such that the Offer, the Merger and this Agreement and the other transactions
contemplated hereby are not and shall not be subject to any restriction of
Section 203 of the DGCL, (iii) waiving the application of Article IV of the
Company's bylaws with respect to this Agreement, the Offer and the Merger
pursuant to Section 7 thereof and (iv) resolving to recommend acceptance of the
Offer and to recommend that stockholders of the Company tender their Shares
pursuant to the Offer and to recommend approval and adoption of this Agreement
and the Merger by the Company's stockholders at the Company Stockholders Meeting
(as defined herein) (the recommendations referred to in this clause (iv) are
collectively referred to in this Agreement as the "Recommendations"). The
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Company represents and warrants that its Board of Directors has received the
opinion, each dated May 7, 2001, of each of Xxxxxxx, Xxxxx & Co. ("Xxxxxxx
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Sachs") and Xxxxxx Xxxxxxx & Co., Inc. ("Xxxxxx Xxxxxxx") that, as of such date
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and on the basis of and subject to the matters described therein, the Offer
Consideration and the Merger Consideration, taken together, was fair to the
Company's stockholders (other than Parent and the Company) from a financial
point of view.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-
9 with respect to the Offer (such Schedule 14D-9, as amended from time to time,
the "Schedule 14D-9") containing the Recommendations (subject to the right of
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the Board of Directors of the Company to make a Subsequent Determination in
accordance with Section 6.6 and shall cause the Schedule 14D-9 to be
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disseminated to the Company's stockholders as and to the extent required by
applicable federal securities laws. Each of the Company, Parent and Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to the Company's stockholders. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to cooperate with Parent, Sub
and their counsel in responding to such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Shares and any securities convertible into Shares, and
shall furnish to
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Sub such information and assistance (including updated lists of stockholders,
security position listings and computer files) as Parent or Sub may reasonably
request in communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Sub and their affiliates, associates and agents shall
hold in confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will promptly, upon request,
deliver, and will use reasonable efforts to cause their affiliates, associates
and agents to deliver, to the Company all copies of such information then in
their possession or control.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
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hereof, and in accordance with the DGCL, the Forward Merger shall be effected
and the Company shall be merged with and into Sub at the Effective Time;
provided, however, that if Parent does not obtain a written opinion of Tax
Counsel (as defined herein) that satisfies the Tax Opinion Standard (as defined
herein), then in Parent's reasonable discretion the Reverse Merger may be
effected, and the surviving corporation shall thereby become a direct or
indirect wholly-owned subsidiary of Parent. Following the Effective Time, if the
Forward Merger is effected, then the separate existence of the Company shall
cease and Sub shall continue as the surviving corporation or, if the Reverse
Merger is effected, then the separate existence of Sub shall cease and the
Company shall continue as the surviving corporation. The surviving corporation
of the Forward Merger or the Reverse Merger, as the case may be, shall be herein
referred as the "Surviving Corporation" and the Forward Merger and Reverse
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Merger shall collectively be referred to as the "Merger." The Surviving
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Corporation shall succeed to and assume all the rights and obligations of Sub
and the Company in accordance with the DGCL.
Section 2.2 Closing. The closing of the Merger will take place at
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10:00 a.m. on a date mutually agreed to by Parent and the Company, which shall
be no later than the second business day after satisfaction or waiver of the
conditions set forth in Article VIII (the "Closing Date"), at the offices of
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Sidley Xxxxxx Xxxxx & Xxxx, Bank One Plaza, 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, unless another date, time or place is agreed to in writing by
the parties hereto.
Section 2.3 Effective Time. The Merger shall become effective when a
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Certificate of Merger (the "Certificate of Merger"), executed in accordance with
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the relevant provisions of the DGCL, is duly filed with the Secretary of State
of the State of Delaware, or at such other time as Sub and the Company shall
agree should be specified in the Certificate of Merger. When used in this
Agreement, the term "Effective Time" shall mean the later of the date and time
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at which the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware or such later time established by the Certificate of
Merger. The filing of the Certificate of Merger shall be made as soon as
practicable after the satisfaction or waiver of the conditions to the Merger set
forth in Article VIII.
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Section 2.4 Effects of the Merger. The Merger shall have the effects
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set forth in the DGCL.
Section 2.5 Certificate of Incorporation and Bylaws; Officers and
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Directors. (a) At the Effective Time, the Certificate of Incorporation of Sub,
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as in effect immediately prior to the Effective Time, shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law; provided, however,
that the Certificate of Incorporation shall provide that the Surviving
Corporation shall initially be named "Xxxxxxx Resources Corporation" and shall
contain indemnification provisions consistent with the obligations set forth in
Section 7.9(a).
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(b) The Bylaws of Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter changed
or amended as provided by the Certificate of Incorporation of the Surviving
Corporation or by applicable law; provided that the Bylaws of the Surviving
Corporation shall contain indemnification provisions consistent with the
obligations set forth in Section 7.9(a).
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(c) The directors of Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(d) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 2.6 Principal Offices of the Company. Parent currently
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anticipates that the Company's current principal offices in Denver, Colorado
will serve as the Rocky Mountain principal offices for Parent's oil and gas
exploration operations after the consummation of the Merger.
ARTICLE III
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Stock. As of the Effective Time, by virtue of
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the Merger and without any action on the part of any of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Capital Stock of Sub. In the event of a Forward Merger, each
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issued and outstanding share of capital stock of Sub shall remain as one validly
issued, fully paid and nonassessable share of Common Stock, no par value, of the
Surviving Corporation. Notwithstanding the foregoing, in the event of a Reverse
Merger, then each issued and outstanding share of capital stock of Sub shall be
converted into and become one validly issued, fully paid and non-assessable
share of Common Stock of the Surviving Corporation.
(b) Treasury Stock and Parent Owned Stock. Each Share that is owned
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by the Company, Parent, Sub (except for Shares that are owned by Sub, in the
event of a Reverse
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Merger) or any other Subsidiary of Parent shall automatically be cancelled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. Each Share issued and outstanding (other
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than Shares to be cancelled in accordance with Section 3.1(b) and other than
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Shares owned by Sub in the event of a Reverse Merger), shall be converted into
the right to receive a number of duly authorized, validly issued, fully paid and
non-assessable Parent Shares equal to the Exchange Ratio (the "Merger
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Consideration"). As of the Effective Time, all such Shares, when so converted,
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shall no longer be outstanding and shall automatically be cancelled and retired,
and each holder of a certificate representing any such Shares shall cease to
have any rights with respect thereto, except the right to receive any dividends
or distributions in accordance with Section 3.2(c), certificates representing
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the Parent Shares into which such Shares are converted and any cash, without
interest, in lieu of fractional shares to be issued or paid in consideration
therefor upon the surrender of such certificate in accordance with Section
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3.2(d).
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(d) Notwithstanding anything expressed or implied to the contrary in
this Agreement, appropriate modifications shall be made to the provisions of
this Agreement (including, without limitation, this Section 3.1) in the event of
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a Reverse Merger involving a direct or indirect wholly-owned subsidiary of
Parent (other than Sub).
Section 3.2 Exchange of Certificates. (a) At the Effective Time, Parent
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shall deposit, or shall cause to be deposited, with a banking or other financial
institution mutually acceptable to Parent and the Company (the "Exchange
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Agent"), for the benefit of the holders of Shares, for exchange in accordance
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with this Article III, certificates representing the Parent Shares to be issued
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in connection with the Merger and cash in lieu of fractional shares (such cash
and certificates for Parent Shares, together with any dividends or distributions
with respect thereto (relating to record dates for such dividends or
distributions after the Effective Time), being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 3.1 and paid pursuant to this
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Section 3.2 in exchange for outstanding Shares.
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(b) Exchange Procedure. As soon as practicable after the Effective
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Time, the Surviving Corporation shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented Shares (the "Certificates"), (i) a letter of
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transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the consideration
contemplated by Section 3.1 and this Section 3.2, including cash in lieu of
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fractional shares. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole Parent Shares and (y) a check
representing the amount of cash in lieu of fractional shares, if any, and unpaid
dividends and distributions with respect to the Parent Shares as provided for in
Section 3.2(c), if any, that such holder has the right to receive in respect of
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the Certificate surrendered pursuant to the provisions of this Article III,
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after giving effect to any required withholding tax, and the Shares represented
by the Certificate so surrendered shall forthwith be canceled. No interest will
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be paid or accrued on the cash payable to holders of Shares. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of Parent Shares,
together with a check for the cash to be paid pursuant to this Section 3.2 may
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be issued to such a transferee if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the transferee shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Parent or the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or under any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding was made by Parent or
the Exchange Agent.
(c) Dividends. Notwithstanding any other provisions of this Agreement,
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no dividends or other distributions declared with a record date after the
Effective Time on Parent Shares shall be paid with respect to any Shares
represented by a Certificate until such Certificate is surrendered for exchange
as provided herein. Following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole Parent Shares issued
in exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole Parent Shares and
not paid, less the amount of any withholding taxes which may be required
thereon, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Parent Shares, less the amount of any withholding taxes which may be
required thereon. Parent will provide the Exchange Agent with the cash necessary
to make the payments contemplated by this Section 3.2(c).
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(d) No Fractional Securities. No fractional Parent Shares shall be
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issued pursuant hereto. In lieu of the issuance of any fractional share of
Parent Shares, cash adjustments will be paid to holders in respect of any
fractional share of Parent Shares that would otherwise be issuable, and the
amount of such cash adjustment shall be equal to the product obtained by
multiplying such stockholder's fractional share of Parent Shares that would
otherwise be issuable to such holder by the closing price per share of Parent
Shares on the NYSE on the Closing Date as reported by The Wall Street Journal
(or, if not reported thereby, any other authoritative source).
(e) No Further Ownership Rights in Shares. All Parent Shares issued
-------------------------------------
upon the surrender for exchange of Certificates in accordance with the terms of
this Article III (including any cash paid pursuant to this Section 3.2) shall be
----------- -----------
deemed to have been issued in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective
-8-
Time, Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be cancelled and exchanged as provided in this
Article III.
-----------
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
----------------------------
(including the proceeds of any investments thereof and any Parent Shares) which
remains undistributed to the holders of Shares for twelve months after the
Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares who have not theretofore complied with this Article III and the
-----------
instructions set forth in the letter of transmittal mailed to such holders after
the Effective Time shall thereafter look only to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) for payment of
their Parent Shares, cash and unpaid dividends and distributions on Parent
Shares deliverable in respect of each Share such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
(g) No Liability. None of Parent, Sub, the Company or the Exchange
------------
Agent shall be liable to any person in respect of any amount properly delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) Lost Certificates. If any Certificate shall have been lost, stolen
-----------------
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
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 Certificate, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration with
respect thereto and, if applicable, any unpaid dividends and distributions on
shares of Parent Shares deliverable in respect thereof and any cash in lieu of
fractional shares, in each case pursuant to this Agreement.
Section 3.3 Tax Consequences. It is intended by the parties hereto that
----------------
the Transaction shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code and the United States Treasury Regulations
thereunder.
Section 3.4 Adjustment of Exchange Ratio. In the event that Parent
----------------------------
changes or establishes a record date for changing the number of Parent Shares
issued and outstanding as a result of a stock split, stock dividend,
recapitalization, subdivision, reclassification, combination or similar
transaction with respect to the outstanding Parent Shares and the record date
therefor shall be prior to the Effective Time, the Exchange Ratio applicable to
the Merger and any other calculations based on or relating to Parent Shares
shall be appropriately adjusted to reflect such stock split, stock dividend,
recapitalization, subdivision, reclassification, combination or similar
transaction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each exception set forth in the Company Letter (as defined herein) to the
representations and warranties in this Article IV and each other response to
this Agreement set forth in the Company Letter is identified by reference to, or
has been grouped under a heading referring to, a specific individual Section of
this Agreement and relates only to such Section, except to the extent that one
section of the Company Letter specifically refers to or reasonably relates to
-9-
another section thereof. Except as set forth in the Company Letter, the Company
represents and warrants to Parent and Sub as follows:
Section 4.1 Organization. The Company and each of its Significant
------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has requisite power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not reasonably be expected to have a Material Adverse Effect
on the Company. The Company and each of its Significant Subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing (individually or in the aggregate) would not reasonably be expected to
have a Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company has made available to
Parent complete and correct copies of its certificate of incorporation and
bylaws and the certificate of incorporation and bylaws (or similar
organizational documents) of each of its Significant Subsidiaries, in each case
as amended through the Closing Date.
Section 4.2 Subsidiaries. Item 4.2 of the disclosure letter delivered
------------ --------
by the Company to Parent and Sub prior to the execution of this Agreement (the
"Company Letter") lists each Subsidiary of the Company and its respective
--------------
jurisdiction of incorporation and indicates whether such Subsidiary is a
Significant Subsidiary. All of the outstanding shares of capital stock or
ownership interest of each such Subsidiary of the Company that is a corporation
have been validly issued and are fully paid and nonassessable. Except as set
forth in Item 4.2 of the Company Letter, all of the outstanding shares of
--------
capital stock or ownership interest of each Subsidiary of the Company are owned
by the Company, by one or more Subsidiaries of the Company or by the Company and
one or more Subsidiaries of the Company, free and clear of all Liens (including
any restriction on the right to vote, sell or otherwise dispose of such capital
stock). Except as set forth in Item 4.2 of the Company Letter and except for the
--------
capital stock of its Subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any Person.
Section 4.3 Capital Structure. (a) The authorized capital stock of the
-----------------
Company consists of 45,000,000 shares of Company Common Stock and 1,000,000
Preferred Shares, par value $.001 per share (the "Company Preferred Stock") of
-----------------------
which 75,000 shares have been designated as Series A Junior Participating
Preferred Stock (the "Company Series A Preferred Shares"). At the close of
---------------------------------
business on May 3, 2001, (i) 33,461,004 shares of Company Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights, (ii) 4,999 shares of Company Common
Stock were held by the Company in its treasury, (iii) 2,302,073 shares of
Company Common Stock were reserved for issuance pursuant to outstanding options
to purchase Company Common Stock (the "Company Stock Options") granted under the
---------------------
Company's 2000 Stock Option Plan, 1999 Stock Option Plan, 1997 Stock Option
Plan, 1994 Stock Option Plan, Plains Petroleum Company 1992 Stock Option Plan,
1990 Xxxxxxx Resources Corporation Nondiscretionary Stock Option Plan, Plains
Petroleum Company 1989 Stock Option Plan and Plains Petroleum Company 1985 Stock
Option Plan for Non-Employee Directors (together, and each as amended, the
"Company Stock Plans") and (iv)
--------------------
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no shares of Company Preferred Stock were issued and outstanding. As of the date
of this Agreement, except for (i) the rights to purchase Company Series A
Preferred Shares (the "Company Rights") issued pursuant to the Rights Agreement
--------------
dated as of August 5, 1997, as amended pursuant to the Amendment to Rights
Agreement dated as of February 25, 1999 and May 7, 2001 (as amended, the
"Company Rights Agreement") between the Company and BankBoston, N.A., as Rights
------------------------
Agent (the "Company Rights Agent") or (ii) as set forth above, no Shares were
--------------------
issued, reserved for issuance or outstanding and there are not any phantom stock
or other contractual rights the value of which is determined in whole or in part
by the value of any capital stock of the Company ("Stock Equivalents"). There
-----------------
are no outstanding stock appreciation rights with respect to the capital stock
of the Company. Each outstanding Share is, and each Share which may be issued
pursuant to the Company Stock Plans will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no outstanding bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matter on which the Company's
stockholders may vote. Except as set forth above or in Item 4.3 of the Company
--------
Letter, as of the date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Significant Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Significant Subsidiaries to issue, deliver or sell or create, or cause to be
issued, delivered or sold or created, additional shares of capital stock or
other voting securities or Stock Equivalents of the Company or of any of its
Significant Subsidiaries or obligating the Company or any of its Significant
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding rights, commitments, agreements, or undertakings of any kind
obligating the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock or other voting securities of the
Company or any of its Subsidiaries or any securities of the type described in
the two immediately preceding sentences.
(b) The Company has delivered or made available to Parent complete and
correct copies of the Company Stock Plans and all forms of Company Stock
Options. Item 4.3 of the Company Letter sets forth a complete and accurate list
--------
of all Company Stock Options outstanding as of the date of this Agreement and
the exercise price of each outstanding Company Stock Option.
Section 4.4 Authority. The Company has the requisite corporate power and
---------
authority to execute and deliver this Agreement and, subject to adoption by the
Company's stockholders of this Agreement with respect to the Merger (if required
by applicable law), to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to adoption by the Company's stockholders of
this Agreement (if required by applicable law). This Agreement has been duly
executed and delivered by the Company and (assuming the valid authorization,
execution and delivery of this Agreement by Parent and Sub) constitutes the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability (i) may be limited by
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bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
Section 4.5 Consents and Approvals; No Violations. Except as set forth in
-------------------------------------
Item 4.5 of the Company Letter, (a) The execution and delivery of this Agreement
--------
do not, and the consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any of its Subsidiaries under, (i) the certificate of incorporation or bylaws
of the Company or the comparable charter or organizational documents of any of
its Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or their
respective properties or assets or (iii) subject to the governmental filings and
other matters referred to in clause (b) of this Section 4.5, any judgment,
-----------
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate could not reasonably be expected to (x) have a Material Adverse Effect
on the Company, (y) materially impair the Company's ability to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
(b) No consent by a Governmental Entity is required by or with respect
to the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the HSR Act and any
applicable filings under similar foreign antitrust or competition laws and
regulations, (ii) the filing with the SEC of (A) the Schedule 14D-9, (B) a proxy
statement relating to the Company Stockholders Meeting (as amended or
supplemented from time to time, the "Proxy Statement"), and (C) such reports,
---------------
schedules, forms and statements under the Exchange Act and the Securities Act,
as may be required in connection with this Agreement and the transactions
contemplated hereby, (iii) such filings as may be required under state
securities or "blue sky" laws, (iv) the filing of the Certificate of Merger with
the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
and (v) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be made or obtained
individually or in the aggregate could not reasonably be expected to (x) have a
Material Adverse Effect on the Company, (y) impair the Company's ability to
perform its obligations under this Agreement or (z) prevent or materially delay
the consummation of the transactions contemplated by this Agreement.
(c) Except as otherwise disclosed in Item 4.5(c) of the Company Letter,
-----------
neither the Company nor any of its Subsidiaries is a party to or subject to any
material agreement, contract, policy, license, Permit, document, instrument,
arrangement or commitment that provides for an express non-competition covenant
with any Person or in any geographic area and
-12-
which limits in any material respect the ability of the Company to compete in
its current business line.
Section 4.6 SEC Documents and Other Reports. The Company has filed with the
-------------------------------
SEC all required reports, schedules, forms, statements and other documents
required to be filed by it since April 1, 1998 under the Securities Act or the
Exchange Act (the "Company SEC Documents"). As of their respective filing
---------------------
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, each
as in effect on the date so filed, and at the time filed with the SEC none of
the Company 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. The financial statements of the Company included in the
Company SEC Documents comply as of their respective dates in all material
respects with the then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except in the case of the unaudited statements, as
permitted by Form 10-Q under the Exchange Act) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein not material in amount).
Section 4.7 Absence of Material Adverse Change. Except as disclosed in
----------------------------------
Item 4.7 of the Company Letter or in the documents filed by the Company with the
--------
SEC and publicly available prior to the date of this Agreement (the "Company
-------
Filed SEC Documents"), since December 31, 2000 the Company and its Subsidiaries
-------------------
have conducted their respective businesses in all material respects only in the
ordinary course consistent with past practice and there has not been (i) any
Material Adverse Change with respect to the Company, (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to its capital stock or any redemption, purchase
or other acquisition of any of its capital stock, (iii) any split, combination
or reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) any change in
accounting methods, principles or practices by the Company, except insofar as
may have been required by a change in GAAP, (v) except in the ordinary course of
business or as required under plans or agreements in effect prior to January 1,
2001, (A) any granting by the Company or any of its Subsidiaries to any current
or former director, officer or employee of the Company or any of its
Subsidiaries of any increase in compensation, (B) any granting by the Company or
any of its Subsidiaries to any such director, officer or employee of any
increase in severance or termination pay (including the acceleration in the
exercisability of options to purchase, the re-pricing of options to purchase, or
in the vesting of, Company Common Stock (or other property)), in excess of 10%
of the potential amount payable under plans in effect as of December 31, 2000,
or (C) any entry by the Company or any of its Subsidiaries into any material
employment, deferred compensation, severance or termination agreement with any
such current or former director, officer, or employee; (vi) any damage,
destruction or loss, whether or not covered by insurance, that has had or could
reasonably be expected to have a Material Adverse Effect on the Company, (vii)
any amendment
-13-
of any material term of any outstanding security of the Company or any of its
Subsidiaries, (viii) any incurrence, assumption or guarantee by the Company or
any of its Subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business consistent with past practice in the amount of more
than $10 million in the aggregate through the date of this Agreement, (ix) any
creation or assumption by the Company or any of its Subsidiaries of any material
Lien on any asset other than in the ordinary course of business consistent with
past practice, (x) any making of any loan, advance or capital contributions to
or investment in any Person other than (A) loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries or entities that
became wholly-owned Subsidiaries made in the ordinary course of business
consistent with past practice, (B) loans or advances made to employees in the
ordinary course of business consistent with past practice and (C) investments
made in the ordinary course of business consistent with past practice, (xi) any
material labor strike or dispute, other than routine individual grievances, or
any material activity or proceeding by a labor union or representative thereof
to organize any employees of the Company or any of its Subsidiaries, which
employees were not subject to a collective bargaining agreement at December 31,
2000, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by
or with respect to such employees, or (xii) any agreement by the Company or any
of its Subsidiaries to perform any action described in clauses (i) through (xi)
above.
Section 4.8 Information Supplied. None of the information supplied or
--------------------
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
---------------------
(iv) the Proxy Statement, will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
or necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Stockholders Meeting which has become
false or misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub specifically for inclusion or
incorporation by reference therein.
Section 4.9 Compliance with Laws. The Company and its Subsidiaries have
--------------------
been, and are, in compliance in all material respects with all applicable
statutes, laws, ordinances, regulations, rules, judgments, decrees or orders of
any Governmental Entity, except for any non-compliance that could not reasonably
be expected to have a Material Adverse Effect on the Company, and neither the
Company nor any of its Subsidiaries has received any notice from any
Governmental Entity or any other Person that either the Company or any of its
Subsidiaries is in violation of, or has violated, any applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees or orders, except for
violations that could not reasonably be expected to have a Material Adverse
Effect on the Company. Each of the Company and its Subsidiaries has in
-14-
effect all Federal, state, local and foreign governmental Permits necessary for
it to own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any such
Permit, except for the absence of Permits and for defaults under Permits which
absence or defaults, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.10 Tax Matters. Except as set forth in Item 4.10 of the Company
----------- ---------
Letter, (i) the Company and each of its Subsidiaries has timely filed (after
taking into account any extensions to file) all Tax Returns required to be filed
by them either on a separate or combined or consolidated basis, except where the
failure to timely file a Tax Return (other than a Federal or state income Tax
Return) would not reasonably be expected to have a Material Adverse Effect on
the Company; (ii) all such Tax Returns are complete and accurate, except where
the failure to be complete or accurate would not reasonably be expected to have
a Material Adverse Effect on the Company; (iii) each of the Company and its
Subsidiaries has paid or caused to be paid all Taxes as shown as due on such Tax
Returns and all material Taxes for which no return was filed, except where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect on the Company; (iv) no deficiencies for any Taxes have been asserted in
writing, proposed in writing or assessed in writing against the Company or any
of its Subsidiaries that have not been paid or otherwise settled or are not
otherwise being challenged under appropriate procedures, except for deficiencies
the assertion, proposing or assessment of which would not reasonably be expected
to have a Material Adverse Effect on the Company; and (v) no written requests
for waivers of the time to assess any material Taxes of the Company or its
Subsidiaries are pending. Neither the Company nor any of its Subsidiaries has
taken or agreed to take any action or knows of any fact, circumstance, plan or
intention that is or would be reasonably likely to prevent the Transaction from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
Section 4.11 Liabilities. Except as set forth in the Company Filed SEC
-----------
Documents, neither the Company nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance sheet of
the Company and its Subsidiaries or in the notes thereto, other than liabilities
and obligations incurred in the ordinary course of business since December 31,
2000 and liabilities which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.12 Litigation. Except as disclosed in Item 4.12 of the Company
---------- ---------
Letter or in the Company Filed SEC Documents, there is no suit, action,
proceeding or investigation pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries that could reasonably
be expected to (i) have a Material Adverse Effect on the Company, (ii)
materially impair the ability of the Company to perform its obligations under
this Agreement or (iii) prevent or materially delay the consummation of the
Offer and/or the Merger; nor is there any outstanding judgment, order, writ,
injunction, rule or decree of any Governmental Entity or arbitrator outstanding
against the Company or any of its Subsidiaries having any such effect.
Section 4.13 Benefit Plans. (a) Except as disclosed in the Company Filed
-------------
SEC Documents or Item 4.13(a) of the Company Letter or as required by law,
------------
neither the Company nor any of its Subsidiaries has adopted or amended in any
material respect any Benefit Plan since
-15-
the date of the most recent audited financial statements included in the Company
Filed SEC Documents. Except as disclosed in Item 4.13(a) of the Company Letter
------------
or in the Company Filed SEC Documents, there exist no material employment,
consulting, severance or termination agreements between the Company or any of
its Subsidiaries and any current or former officer, director, employee or
consultant of the Company or any of its Subsidiaries. The Company has made
available to Parent a copy of each Benefit Plan, including, without limitation,
each Severance Protection Agreement.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, each ERISA Benefit Plan maintained by
the Company or any of its Subsidiaries has been maintained and operated in
compliance with its terms, the applicable requirements of applicable law,
including the Code and ERISA, and each ERISA Benefit Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination letter from the IRS. Except as disclosed in Item 4.13(b)
------------
of the Company Letter, none of the Company, its Subsidiaries or any other person
or entity that together with the Company is treated as a single employer under
Section 414 of the Code (each, an "ERISA Affiliate") has at any time during the
---------------
five-year period preceding the date hereof contributed to any ERISA Benefit Plan
that is a "multiemployer plan" (as defined in Section 3(37) of ERISA) or
maintained any ERISA Benefit Plan that is subject to Title IV of ERISA or
Section 412 of the Code.
(c) Except as disclosed in Item 4.13(c) of the Company Letter, as of
------------
the date of this Agreement there is no pending dispute, arbitration, claim, suit
or grievance involving a Benefit Plan (other than routine claims for benefits
payable under any such Benefit Plan) that would reasonably be expected to have a
Material Adverse Effect on the Company.
(d) No liability under Title IV or Section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than any such
liability that would not have a Material Adverse Effect on the Company. Insofar
as the representation made in this Section 4.13(d) applies to Sections 4064,
4069 or 4204 of Title IV of ERISA, it is made with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of ERISA to
which the Company or any ERISA Affiliate made, or was required to make,
contributions during the five-year period ending on the last day of the most
recent plan year ending prior to the Closing Date.
(e) Except as disclosed in Item 4.13(e) of the Company Letter, no
------------
Benefit Plan provides medical, surgical, hospitalization or death benefits
(whether or not insured) for employees or former employees of the Company or any
of its Subsidiaries for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," (iii) benefits the full cost of which
is borne by the current or former employee (or his or her beneficiary) or (iv)
exceptions which would not have a Material Adverse Effect on the Company.
(f) Item 4.13(f) of the Company Letter sets forth the Company's good
------------
faith estimate of the payments that may be made under the Benefit Plans that
could constitute "excess parachute payments" within the meaning of Section 280G
of the Code.
-16-
Section 4.14 State Takeover Statutes; Bylaws Provision; Rights Agreement.
------------------------------------------------------------
The action of the Board of Directors of the Company in approving the Offer
(including the purchase of Shares pursuant to the Offer), the Merger, this
Agreement and the transactions contemplated by this Agreement is sufficient to
render inapplicable to the Offer, the Merger and this Agreement the provisions
of (i) Section 203 of the DGCL and (ii) Article IV of the Bylaws. The Company
has made available to Parent a complete and correct copy of the Company Rights
Agreement, including all current and proposed amendments and exhibits thereto.
The Board of Directors of the Company has taken all action necessary to amend
the Company Rights Agreement (subject only to the execution of such amendment by
the Company Rights Agent, which execution the Company shall cause to take place
within 48 hours of the date hereof) to provide that: (i) a Distribution Date (as
defined in the Company Rights Agreement) shall not occur, the Company Rights
shall not separate (to the extent the Company Rights Agreement otherwise
provides for such separation) or become exercisable and neither Parent nor Sub
shall become an Acquiring Person (as defined in the Company Rights Agreement) as
a result of the execution or delivery of this Agreement by Parent or Sub, the
public announcement of such execution and delivery or, provided that this
Agreement shall not have been terminated in accordance with Section 9.1 and
-----------
subject to the terms of this Agreement, the public announcement or the
commencement of the Offer or the consummation of the Offer and (ii) the Company
Rights shall cease to be exercisable and the Company Rights Agreement shall
terminate after the consummation of the Offer in accordance with the terms
thereof and the terms and conditions hereof, including the acceptance for
payment of, and the payment for all Shares tendered pursuant to the Offer. To
the Knowledge of the Company, no other "fair price," "moratorium," "control
share acquisition," or other anti-takeover statute or similar statute or
regulation, applies or purports to apply this Agreement, or the Offer, the
Merger or the other transactions contemplated by this Agreement.
Section 4.15 Brokers. No broker, investment banker, financial advisor or
-------
other person, other than Xxxxxxx, Xxxxx and Xxxxxx Xxxxxxx, the fees and
expenses of which will be paid by the Company (and are reflected in an agreement
between Xxxxxxx, Sachs and the Company and an agreement between Xxxxxx Xxxxxxx
and the Company, complete copies of which have been furnished to Parent), is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company or any of its
Subsidiaries. If the transactions contemplated by this Agreement are
consummated, no such engagement letter obligates the Company to continue to use
the services or pay fees or expenses in connection with any future transaction.
Section 4.16 Voting Requirements. Approval of the Merger requires the
-------------------
affirmative vote of a majority of the outstanding Shares (the "Company
-------
Stockholder Approval"). The Company Stockholder Approval is the only vote of
--------------------
the holders of the Company's capital stock necessary to approve and adopt this
Agreement and the transactions contemplated hereby.
Section 4.17 Environmental Matters.
---------------------
Except as disclosed in Item 4.17 of the Company Letter:
---------
(a) The Company and each of its Subsidiaries has been and is in
material compliance with all applicable Environmental Laws, including, but not
limited to, possessing all
-17-
permits, authorizations, licenses, exemptions and other governmental
authorizations required for its operations under applicable Environmental Laws,
except for such non-compliance that could not reasonably be expected to have a
Material Adverse Effect on the Company.
(b) There is no pending or, to the Knowledge of the Company, threatened
written claim, lawsuit, or administrative proceeding against the Company or each
of its Subsidiaries, under or pursuant to any Environmental Law, that could
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor any of its Subsidiaries has received written notice from any
Person, including, but not limited to, any Governmental Entity, alleging that
the Company or any of its Subsidiaries has been or is in violation or
potentially in violation of any applicable Environmental Law or otherwise may be
liable under any applicable Environmental Law, which violation or liability is
unresolved and could reasonably be expected to have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries has received any
written request for information from any Person, including but not limited to
any Governmental Entity, related to liability under or compliance with any
applicable Environmental Law, except for such matters as would not, if they
matured into a claim against the Company or any of its Subsidiaries, have a
Material Adverse Effect on the Company.
(c) With respect to the real property that is currently owned, leased
or operated by the Company or any of its Subsidiaries, there have been no
spills, discharges or releases (as such term is defined by the Comprehensive
Environmental Response, Compensation and Liability Act, 42, U.S.C. 9601, et
--
seq.) of Hazardous Substances or any other contaminant or pollutant on or
---
underneath any of such real property that could reasonably be expected to have a
Material Adverse Effect on the Company.
(d) With respect to real property that was formerly owned, leased or
operated by the Company or any of its Subsidiaries or any of their predecessors
in interest, to the Knowledge of the Company, there were no spills, discharges
or releases (as such term is defined by the Comprehensive Environmental
Response, Compensation and Liability Act, 42, U.S.C. 9601, et seq.) of Hazardous
------
Substances or any other contaminant or pollutant on or underneath any of such
real property during or prior to the Company's or any of its Subsidiaries'
ownership or operation of such real property that could reasonably be expected
to result in a Material Adverse Effect on the Company.
(e) Except as disclosed on Item 4.17(e) of the Company Letter, neither
------------
the Company nor any of its Subsidiaries has entered into any written agreement
or incurred any material legal or monetary obligation that may require them to
pay to, reimburse, guarantee, pledge, defend, indemnify or hold harmless any
Person from or against any liabilities or costs arising out of or related to the
generation, manufacture, use, transportation or disposal of Hazardous
Substances, or otherwise arising in connection with or under Environmental Laws,
other than in each case exceptions which would not reasonably be expected to
have a Material Adverse Effect on the Company.
(f) To the Knowledge of the Company, neither the Company nor any of its
Subsidiaries has disposed or arranged for the disposal of Hazardous Substances
(or any waste or substance containing Hazardous Substances) at any location that
is: (i) listed on the Federal National Priorities List ("NPL") or identified on
---
the CERCLIS, each established pursuant to the
-18-
Comprehensive Environmental Response, Compensation and Liability Act, 42, U.S.C.
9601, et seq.; (ii) listed on any state list of hazardous waste sites that is
------
analogous to the NPL or CERCLIS; or (iii) has been subject to environmental
investigation or remediation, other than, in each case, exceptions which would
not reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.18 Contracts; Debt Instruments. (a) Item 4.18(a) of the Company
--------------------------- ------------
Letter and the Company's Annual Report on Form 10-K for the year ended December
31, 2000 (the "2000 10-K") together set forth a true and complete list of (i)
---------
all material agreements to which the Company or any of its Subsidiaries is a
party; (ii) all agreements relating to the incurring of indebtedness (including
sale and leaseback and capitalized lease transactions and other similar
financing transactions) providing for payment or repayment in excess of $10
million; (iii) the exhibits contained or incorporated by reference in the 2000
10-K contain or incorporate by reference all of the contracts required to be
included therein; (iv) all agreements requiring capital expenditures in excess
of $5 million individually (other than agreements relating to the drilling,
completion and connection of xxxxx in the ordinary course of business (including
all related service contracts) and agreements relating to joint operation,
development and exploration entered into in the ordinary course of business);
and (v) any non-competition agreements or any other agreements or obligations
which purport to limit in any material respect the manner in which, or the
localities in which, all or any substantial portion of the business of the
Company and its Subsidiaries, taken as a whole, is conducted (the agreements,
contracts and obligations specified above, collectively the "Company
-------
Contracts"). All Company Contracts are valid and in full force and effect on
---------
the date hereof except to the extent they have previously expired in accordance
with their terms or if the failure to be in full force and effect, individually
and in the aggregate, would not have a Material Adverse Effect on the Company.
Neither the Company nor any of its Subsidiaries has violated any provision of,
or committed or failed to perform any act which with or without notice, lapse of
time or both would constitute a default under the provisions of, any Company
Contract that could reasonably be expected to have a Material Adverse Effect on
the Company.
(b) Except as described in Item 4.18(b) of the Company Letter or in the
------------
Company SEC Documents, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in any
material payment (including severance, unemployment compensation, tax gross-up,
bonus or otherwise) becoming due to any current or former director, officer,
employee or independent contractor of the Company or any of its Subsidiaries,
from the Company or any of its Subsidiaries under any Company Stock Plan,
Benefit Plan, agreement or otherwise, (ii) materially increase any benefits
otherwise payable under any Company Stock Plan, Benefit Plan, agreement or
otherwise or (iii) result in the acceleration of the time of payment, exercise
or vesting of any such material benefits.
Section 4.19 Title to Properties. Except as set forth in Item 4.19 of the
------------------- ---------
Company Letter:
(a) Each of the Company and its Subsidiaries has good and marketable
title to, or valid leasehold interests in, all its properties and assets, free
and clear of all Liens, except for defects in title, easements, restrictive
covenants and similar encumbrances or impediments that, in the aggregate, do not
and could not reasonably be expected to have a Material Adverse Effect on the
Company.
-19-
(b) Each of the Company and its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are in full force and
effect, except for such non-compliance that could not reasonably be expected to
have a Material Adverse Effect on the Company. To the Knowledge of the Company,
each of the Company and each of its Subsidiaries enjoys peaceful and undisturbed
possession under all such leases, except for such noncompliance that could not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.20 Intellectual Property. (a) As used in this Agreement,
---------------------
"Company Intellectual Property" means all of the following which are necessary
-----------------------------
to conduct the business of the Company and its Subsidiaries as presently
conducted: (i) trademarks, trade dress, service marks, copyrights, logos, trade
names, corporate names and all registrations and applications to register the
same; (ii) patents and pending patent applications; (iii) all computer software
programs, databases and compilations; and (iv) all material licenses and
agreements to which the Company or any of its Subsidiaries is a party which
relate to any of the foregoing.
(b) Except as disclosed in Item 4.20(b) of the Company Letter, the
------------
Company or its Subsidiaries owns or has the right to use all Company
Intellectual Property necessary to conduct the Company's business as presently
conducted, except as would not, individually or in the aggregate, be expected to
have a Material Adverse Effect on the Company.
(c) Except as disclosed in Item 4.20(b) of the Company Letter, to the
------------
Knowledge of the Company, the conduct of the Company's and its Subsidiaries'
business or the use of the Company Intellectual Property does not infringe,
violate, misappropriate or misuse any intellectual property rights or any other
proprietary right of any Person or give rise to any obligations to any Person as
a result of co-authorship, except in each case for exceptions which would not,
individually or in the aggregate, be expected to have a Material Adverse Effect
on the Company.
Section 4.21 Condition of Assets. All of the material property, plant and
-------------------
equipment of the Company and its Subsidiaries, has in all material respects been
maintained in reasonable operating condition and repair, ordinary wear and tear
excepted, and is in all material respects, sufficient to permit the Company and
its Subsidiaries to conduct their operations in the ordinary course of business
in a manner consistent with their past practices.
Section 4.22 Derivative Transactions.
-----------------------
(a) Except as set forth in Section 4.22(a) of the Company Letter,
---------------
neither the Company nor its Subsidiaries has entered into any material
Derivative Transactions (as defined below) since December 31, 2000 that have a
continuing financial liability or obligation. All Derivative Transactions
entered into by the Company or any of its Subsidiaries that are currently open
were entered into in material compliance with applicable rules, regulations and
policies of all regulatory authorities.
(b) For purposes of this Section 4.22, "Derivative Transactions" means
------------ -----------------------
derivative transactions within the coverage of FAS 133, including any swap
transaction, option, warrant, forward purchase or sale transaction, futures
transaction, cap transaction, floor transaction or
-20-
collar transaction relating to one or more currencies, commodities, bonds,
equity securities, loans, interest rates, credit-related events or conditions or
any indexes, or any other similar transaction (including any option with respect
to any of these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar instruments or
any debt or equity instruments evidencing or embedding any such types of
transactions, and any related credit support, collateral, transportation or
other similar arrangements or agreements related to such transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 5.1 Organization. Parent and each of its Significant
------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has requisite power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not reasonably be expected to have a Material Adverse Effect
on Parent. Parent and each of its Significant Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
reasonably be expected to have a Material Adverse Effect on Parent or prevent or
materially delay the consummation of the Offer and/or the Merger. Parent has
delivered to the Company complete and correct copies of its Certificate of
Incorporation and Bylaws and has made available to the Company the charter and
bylaws (or similar organizational documents) of each of its Significant
Subsidiaries.
Section 5.2 Capital Structure. Except as set forth in Item 5.2 of the
----------------- --------
Parent Letter, the authorized capital stock of Parent consists of 960,000,000
shares of common stock (the "Parent Shares") and 30,000,000 shares of preferred
-------------
stock. At the close of business on March 23, 2001, (i) 484,040,320 Parent Shares
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights and (ii) 6,311,910 Parent Shares
were held by Parent in its treasury. As of the close of business on April 24,
2001, there were 25,554,954 Parent Shares reserved for issuance pursuant to
outstanding options to purchase Parent Shares (the "Parent Stock Options")
--------------------
granted under Parent's 1996 Stock Plan, its Stock Plan for Non-Officer
Employees, its 1996 Stock Plan for Non-Employee Directors, and the Xxxxxxxx
International Stock Plan (the "Parent Stock Incentive Plans"), and, as of the
----------------------------
close of business on February 28, 2001, there were 15,122,521 Parent Shares
reserved for the grant of additional awards under Parent Stock Incentive Plans.
The numbers of shares of capital stock and options described in the immediately
preceding sentences have not materially changed as of the date of this
Agreement, except for adjustments made in connection with the April 23, 2001
spin-off of Xxxxxxxx Communications Group, Inc. from Parent. As of the date of
this Agreement, except as set forth above, no Parent Shares were issued,
reserved for issuance or outstanding and there are not any phantom stock or
other contractual rights the value of which is determined in whole or in part by
the value of any capital stock of Parent ("Parent Stock Equivalents"). There
------------------------
are no outstanding stock appreciation rights with respect to the capital
-21-
stock of Parent. Each outstanding Parent Share is, and each Parent Share which
may be issued pursuant to Parent Stock Plans will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no outstanding bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
Parent's stockholders may vote. Except as set forth above or in Item 5.3 of the
--------
Parent Letter, as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Parent or any of its Significant Subsidiaries
is a party or by which any of them is bound obligating Parent or any of its
Significant Subsidiaries to issue, deliver or sell or create, or cause to be
issued, delivered or sold or created, additional shares of capital stock or
other voting securities or Parent Stock Equivalents of Parent or of any of its
Significant Subsidiaries or obligating Parent or any of its Significant
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
As of the date of this Agreement, there are no outstanding contractual
obligations of Parent or any of its Significant Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Parent or any of its
Significant Subsidiaries.
Section 5.3 Authority. Each of Parent and Sub has requisite corporate
---------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Sub and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate and stockholder action on the part of each of Parent and Sub. This
Agreement has been duly executed and delivered by each of Parent and Sub and
(assuming the valid authorization, execution and delivery of this Agreement by
the Company) constitutes the valid and binding obligation of each of Parent and
Sub enforceable against it in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
Section 5.4 Consents and Approvals; No Violations. Except for filings,
-------------------------------------
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Securities Act, the HSR
Act, the DGCL, the laws of other states in which Parent is qualified to do or is
doing business, state takeover laws and foreign and supranational laws relating
to antitrust and anticompetition clearances, and except as may be required in
connection with the Taxes described in Section 7.7, neither the execution and
-----------
delivery of this Agreement, nor the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will conflict with or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon, any of the
properties or assets of Parent or any of its Subsidiaries, (i) the certificate
of incorporation or bylaws of Parent or the comparable charter or organizational
documents of any of Parent's Significant Subsidiaries, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity
(except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not reasonably be expected to have a
Material Adverse Effect on
-22-
Parent or prevent or materially delay the consummation of the Offer and/or the
Merger), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which Parent
or any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, Sub, any of its
Significant Subsidiaries or any of their properties or assets, except in the
case of clauses (iii) or (iv) for violations, breaches or defaults that would
not reasonably be expected to have a Material Adverse Effect on Parent or
prevent or materially delay the consummation of the Offer and/or the Merger.
Section 5.5 SEC Documents and Other Reports. Parent has filed with the
-------------------------------
SEC all documents required to be filed by it since April 1, 1998 under the
Securities Act or the Exchange Act (the "Parent SEC Documents"). As of their
--------------------
respective filing 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, each as in effect on the date so filed, and at the time filed with
the SEC 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. The financial statements of Parent
included in the Parent SEC Documents comply as of their respective dates in all
material respects with the then applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except in the case of the unaudited
statements, as permitted by Form 10-Q under the Exchange Act) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly present the consolidated financial position
of Parent and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Section 5.6 Absence of Material Adverse Change. Except as disclosed in
----------------------------------
Item 5.7 of the Parent Letter or in the documents filed by Parent with SEC and
--------
publicly available prior to the date of the Agreement (the "Parent Filed SEC
----------------
Documents"), since December 31, 2000 Parent and its Subsidiaries have conducted
---------
their respective businesses in all material respects only in the ordinary course
consistent with past practice, and there has not been (i) any Material Adverse
Change with respect to Parent, (ii) except for (a) ordinary quarterly dividends
paid or payable to stockholders of Parent and (b) the distribution of shares of
Xxxxxxxx Communications Group to holders of Parent Shares, any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock or any redemption, purchase or other acquisition of any of its
capital stock, (iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iv) any change in accounting methods, principles or practices
by Parent materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
-23-
Section 5.7 Information Supplied. None of the information supplied or
--------------------
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement, (iv) the Proxy Statement or (v) the Form S-4 will, in the
case of the Offer Documents, the Schedule 14D-9 and the Information Statement,
at the respective times the Offer Documents, the Schedule 14D-9 and the
Information Statement are filed with the SEC or first published, sent or given
to the Company's stockholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or, in the case of the Form S-4, at the time it
becomes effective under the Securities Act, or, in the case of the Proxy
Statement, if any, at the time the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders Meeting which
has become false or misleading, except that no representation or warranty is
made by Parent or Sub in connection with any of the foregoing with respect to
statements made or incorporated by reference therein based on information
supplied by the Company or any of its representatives specifically for inclusion
or incorporation by reference therein. The Offer Documents will comply as to
form in all material respects with the requirements of the Exchange Act, except
that no representation or warranty is made by Parent or Sub in connection with
any of the foregoing with respect to statements made or incorporated by
reference therein based on information supplied by the Company or any of its
representatives specifically for inclusion or incorporation by reference
therein.
Section 5.8 Compliance with Laws. Parent and its Subsidiaries have been
--------------------
and are, in compliance in all material respects with all applicable statutes,
laws, ordinances, regulations, rules, judgments, decrees or orders of any
Governmental Entity, except for any non-compliance that could not reasonably be
expected to have a Material Adverse Effect on Parent, and neither Parent nor any
of its Subsidiaries has received any notice from any Governmental Entity or any
other Person that either Parent or any of its Subsidiaries is in violation of,
or has violated, any applicable statutes, laws, ordinances, regulations, rules,
judgments, decrees or orders, except for violation that could not reasonably be
expected to have a Material Adverse Effect on Parent. Each of Parent and its
Subsidiaries has in effect all Federal, state, local and foreign governmental
Permits necessary for it to own, lease or operate properties and assets and to
carry on its business as now conducted, and there has occurred no default under
any such Permit, except for the absence of Permits and for defaults under
Permits which absence or defaults, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Parent.
Section 5.9 Parent Shares. All of the Parent Shares issuable in exchange
-------------
for Shares in the Merger in accordance with this Agreement will be, when so
issued, duly authorized, validly issued, fully paid and non-assessable and free
of preemptive rights. The issuance of such Parent Shares will be registered
under the Securities Act and registered or exempt from registration under
applicable state securities laws.
Section 5.10 Reorganization. Neither Parent nor any of its Subsidiaries
--------------
has taken or agreed to take any action or knows of any fact, circumstance, plan
or intention that is or would
-24-
be reasonably likely to prevent the Transaction from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 5.11 Liabilities. Except as set forth in the Parent Filed SEC
-----------
Documents, neither Parent nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of Parent and
its Subsidiaries or in the notes thereto, other than liabilities and obligations
incurred in the ordinary course of business since December 31, 2000 and
liabilities which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.
Section 5.12 Interim Operations of Sub. Sub was formed solely for the
-------------------------
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 5.13 Litigation. Except as disclosed in Item 5.13 of the Parent
---------- ---------
Letter or in the Parent Filed SEC Documents, there is no suit, action,
proceeding or investigation pending against Parent or any of its Subsidiaries
that would reasonably be expected to have a Material Adverse Effect on Parent or
prevent or materially delay the consummation of the Offer and/or the Merger.
Except as disclosed in Item 5.13 of the Parent Letter or in the Parent Filed SEC
Documents, neither Parent nor any of its Subsidiaries is subject to any
outstanding judgment, order, writ, injunction or decree that would reasonably be
expected to have a Material Adverse Effect on Parent or prevent or materially
delay the consummation of the Offer and/or the Merger.
Section 5.14 California Exposure. Based on the facts and circumstances
-------------------
known to Parent on the date of this Agreement, Parent believes that the reserves
reflected in its most recent financial statements are adequate in all material
respects in relation to Parent's credit, regulatory or litigation exposure
arising from the sale of natural gas or electricity in the State of California.
Section 5.15 Brokers. No broker, investment banker, financial advisor or
-------
other person, other xxxx Xxxxxxx Xxxxx & Co., the fees and expenses of which
will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business Pending the Merger.
--------------------------------------
(a) Conduct of Business by the Company Pending the Merger. During the
period from the date of this Agreement until the earlier of the Effective Time
or such time as Parent's designees shall constitute a majority of the Board of
Directors of the Company, the Company shall, and shall cause each of its
Subsidiaries to, in all material respects, except as contemplated by this
Agreement, carry on its business in the ordinary course as currently conducted.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement (including, without limitation, as permitted or
required by Section 7.9 or Section 7.11), during
----------- ------------
-25-
such period, the Company shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed):
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, except for dividends
by a Subsidiary of the Company to its parent or (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, other than (i) the
issuance of Shares upon exercise of Company Stock Options outstanding on
the date hereof or (ii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(iii) amend its Restated Certificate of Incorporation or Bylaws or
other similar organizational documents;
(iv) except as disclosed in Item 6.1(a) of the Company Letter, acquire,
-----------
or agree to acquire, in a single transaction or in a series of related
transactions, any business or assets, other than transactions that are in
the ordinary course of business, or which involve assets having a purchase
price not in excess of $5 million individually or $10 million in the
aggregate;
(v) make or agree to make any new capital expenditure other than
expenditures approved by the Board of Directors of the Company and within
the Company's capital budget for fiscal 2001, a true, complete and correct
copy of which has been provided to Parent; provided, however, that no
individual capital expenditure by the Company pursuant to a single
authority for expenditure may exceed $2.5 million;
(vi) except as disclosed in Item 6.1(a) of the Company Letter, sell,
-----------
lease, license, encumber or otherwise dispose of, or agree to sell, lease,
license, encumber or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business or which involve
assets having a current value not in excess of $1 million individually or
$5 million in the aggregate;
(vii) except as disclosed in Item 6.1(a) of the Company Letter: (i)
-----------
increase the salary or wages payable or to become payable to its directors,
officers or employees, except for increases required under employment
agreements existing on the date hereof, and except for increases for
officers and employees not in excess of 10% of such person's salary or
wages as in effect at the date of this Agreement; or (ii) enter into,
modify or amend any employment or severance agreement with, or establish,
adopt, enter into or amend any bonus, profit sharing,
-26-
thrift, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination or severance plan or agreement or
material policy or arrangement for the benefit of, any director, officer or
employee, except as may be required by the terms of any such plan,
agreement, policy or arrangement or to comply with applicable law or as
contemplated by this Agreement;
(viii) except as may be required as a result of a change in law or in
generally accepted accounting principles, make any material change in its
method of accounting;
(ix) make any material Tax election (unless required by law) or enter
into any settlement or compromise of any material Tax liability that, in
either case, could reasonably be expected to have a Material Adverse Effect
on the Company;
(x) (i) mortgage or otherwise encumber or subject to any Lien the
Company's or its Subsidiaries', properties or assets, except in the
ordinary course of business consistent with past practice or pursuant to
existing contracts or commitments, or (ii) except in the ordinary course of
business consistent with past practice or pursuant to existing contracts or
commitments, license any of the Company's Intellectual Property;
(xi) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice and in accordance with their terms,
or (i) liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Company SEC Documents, (ii) liabilities
incurred in the ordinary course of business consistent with past practice,
or (iii) other liabilities or obligations not to exceed in the aggregate
$2,500,000;
(xii) (i) incur any Indebtedness or guarantee any such Indebtedness of
another Person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another Person, enter into
any "Keep Well" or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except for borrowings incurred in
the ordinary course of business (or to refund existing or maturing
indebtedness) consistent with past practice and except for intercompany
indebtedness between the Company and any of its wholly-owned Subsidiaries
or between such Subsidiaries and except for Indebtedness, guarantees and
similar commitments which do not exceed $10 million in the aggregate, or
(ii) make any loans, advances or capital contributions to, or investments
in, any other Person, except in the ordinary course of business or pursuant
to an agreement existing on the date hereof or loans, advances, capital
contributions or investments which do not exceed $10 million in the
aggregate; or
-27-
(xiii) enter into or authorize any contract, agreement or binding
commitment to do any of the foregoing.
(b) Conduct of Business by the Parent Pending the Merger. During the
----------------------------------------------------
period from the date of this Agreement until the Effective Time, Parent shall,
and shall cause each of its Subsidiaries to, in all material respects, except as
contemplated by this Agreement, carry on its business in the ordinary course as
currently conducted. Without limiting the generality of the foregoing, and
except as otherwise contemplated by this Agreement, during such period, Parent
shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of the Company (which consent shall not be unreasonably withheld
or delayed):
(i) make any change in or amendment to Parent's Certificate of
Incorporation that changes any material term or provision of the Parent
Shares;
(ii) make any material change in or amendment to Sub's Certificate of
Incorporation;
(iii) engage in any material repurchase at a premium,
recapitalization, restructuring or reorganization with respect to Parent's
capital stock, including, without limitation, by way of any extraordinary
dividend on, or other extraordinary distributions with respect to, Parent's
capital stock;
(iv) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other manner,
any person or any business or division thereof, or otherwise acquire any
assets, unless such acquisition or the entering into of a definitive
agreement relating to or the consummation of such transaction would not (A)
impose any material delay in the obtaining of, or materially increase the
risk of not obtaining, any authorizations, consents, orders, declarations
or approvals of any Governmental Entity necessary to consummate the Offer,
the Merger or the expiration or termination of any applicable waiting
period, (B) materially increase the risk of any Governmental Entity
entering an order prohibiting the consummation of the Offer or the Merger
or (C) increase the risk of not being able to remove any such order on
appeal or otherwise; or
(v) enter into any contract or agreement to do any of the foregoing.
Section 6.2 No Solicitation; Acquisition Proposals. (a) From the date of
--------------------------------------
this Agreement until the Effective Time or, if earlier, the termination of this
Agreement in accordance with its terms, (1) the Company shall, and the Company
shall cause its and its Subsidiaries' respective Representatives to, immediately
cease and terminate any existing solicitation, initiation, knowing
encouragement, discussion or negotiation with any Third Party conducted
heretofore by the Company, its Subsidiaries or their respective Representatives
with respect to any Acquisition Proposal and (2) the Company shall not, and the
Company shall cause its and its Subsidiaries' respective Representatives not to,
directly or indirectly, (i) solicit, initiate or knowingly encourage (including
by way of furnishing non-public information), or knowingly take any other action
to facilitate, any inquiries or the making or submission of any proposal that
constitutes, or
-28-
may reasonably be expected to lead to, any Acquisition Proposal; (ii) enter into
any agreement with respect to any Acquisition Proposal or enter into any
agreement requiring the Company to abandon, terminate or fail to consummate the
acquisition of Shares pursuant to the Offer or the Merger; (iii) participate or
engage in any discussions or negotiations with, or disclose or provide any non-
public information or data relating to the Company or its Subsidiaries to any
Third Party relating to an Acquisition Proposal (except as required by legal
process), or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or accept an Acquisition Proposal; or (iv) enter into any
letter of intent, agreement or similar document relating to any Acquisition
Proposal.
(b) Notwithstanding the restrictions set forth in Section 6.2(a), if,
at any time prior to the acquisition of Shares pursuant to the Offer, (1) the
Company has received an unsolicited bona fide written proposal from a Third
Party relating to an Acquisition Proposal (under circumstances in which the
Company has complied in all material respects with its obligations under Section
6.2(a)) and (2) the Board of Directors of the Company concludes in good faith
(after consultation with a financial advisor of nationally recognized reputation
and after receiving the advice of its outside counsel) (i) that such Acquisition
Proposal may reasonably constitute a Superior Proposal and (ii) that the failure
to provide such information or participate in such negotiations or discussions
would result in a breach by the Board of Directors of the Company of its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, subject to its giving Parent 24 hours prior written notice of the identity
of such Third Party and, to the extent known, the terms and conditions of such
Acquisition Proposal and of the Company's intention to furnish nonpublic
information to, or enter into discussions or negotiations with, such Third
Party, (x) furnish information with respect to the Company and its Subsidiaries
to any Third Party pursuant to a customary confidentiality agreement containing
terms not materially less restrictive than the terms of the Confidentiality
Agreement dated March 9, 2001, entered into between the Company and Parent, as
the same may be amended, supplemented or modified (the "Confidentiality
---------------
Agreement"), provided that a copy of all such information is delivered
---------
simultaneously to Parent if it has not previously been so furnished to Parent,
and (y) participate in discussions or negotiations regarding such proposal or
take any of the actions described in Section 6.2(a)(2)(i) through (iv),
-------------------- -----
(c) The Company shall within 24 hours notify and advise Parent orally
and in writing of any Acquisition Proposal and the terms and conditions of such
Acquisition Proposal. The Company shall inform Parent on a prompt and current
basis of the status of any discussions regarding, or relating to, any
Acquisition Proposal with a Third Party (including amendments and proposed
amendments) and, as promptly as practicable, of any change in the price,
structure or form of the consideration or material terms of and conditions
regarding the Acquisition Proposal. In fulfilling its obligations under this
paragraph (c) of this Section 6.2, the Company shall provide promptly to Parent
copies of all material written correspondence or material written documents
furnished to the Company or its Representatives by or on behalf of such Third
Party.
(d) The Company agrees that it will promptly inform its and its
Subsidiaries' respective Representatives of the obligations undertaken in this
Section 6.2.
-----------
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(e) Nothing contained in this Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position as required by Rule 14d-9
or Rule 14e-2(a) promulgated under the Exchange Act.
(f) For purposes of this Agreement,
"Acquisition Proposal" means any inquiry, offer, proposal,
--------------------
indication of interest, signed agreement or completed action, as
the case may be, by any Third Party which relates to a
transaction or series of transactions (including any merger,
consolidation, recapitalization, liquidation or other direct or
indirect business combination) involving the Company or the
issuance or acquisition of 20% or more of the outstanding Shares
or any tender or exchange offer that if consummated would result
in any Person, together with all affiliates thereof, Beneficially
Owning 20% or more of the outstanding Shares, or the acquisition,
license, purchase or other disposition of a substantial portion
of the business or assets of the Company outside the ordinary
course of business; and
"Superior Proposal" means any bona fide written Acquisition
-----------------
Proposal (provided that for the purposes of this definition, the
applicable percentages in the definition of Acquisition Proposal
shall be fifty percent (50%) as opposed to twenty percent (20%)),
on its most recently amended or modified terms, if amended or
modified, which the Board of Directors of the Company determines
in its good faith judgment (after receipt of the advice of a
financial advisor of nationally recognized reputation and
receiving advice of its outside counsel), taking into account,
among other things, all legal, financial, regulatory and other
aspects of the proposal and the Third Party making the proposal
(i) would, if consummated, result in a transaction that is more
favorable to the Company's stockholders (in their capacities as
stockholders), from a financial point of view, than the
transactions contemplated by this Agreement and (ii) is
reasonably capable of being completed.
Section 6.3 Third Party Standstill Agreements. During the period from the
---------------------------------
date of this Agreement through the Effective Time, the Company shall enforce and
shall not terminate, amend, modify or waive any standstill provision of any
confidentiality or standstill agreement between the Company and other parties
entered into prior to the date hereof in connection with the process conducted
by the Company to solicit acquisition proposals for the Company.
Section 6.4 Disclosure of Certain Matters; Delivery of Certain Filings.
----------------------------------------------------------
(a) The Company shall give prompt notice to Parent, and Parent or Sub shall give
prompt notice to the Company, of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any material
respect and (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
-30-
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of: (i) any material notice or other
communication from any Person alleging that the consent of such Person is or may
be required in connection with the transactions contemplated by this Agreement;
(ii) any material notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and (iii) any
actions, suits, claims, investigations or proceedings commenced or, to the best
of its knowledge threatened against, relating to or involving or otherwise
affecting it or any of its Subsidiaries which, if pending on the date of this
Agreement would have been required to have been disclosed pursuant to Article IV
or Article V or which relate to the consummation of the transactions
contemplated by this Agreement.
(c) The Company shall promptly advise Parent orally and in writing if
there occurs, to the Knowledge of the Company, any change or event which results
in the executive officers of the Company having a good faith belief that such
change or event has resulted in or is reasonably likely to result in a Material
Adverse Effect on the Company. Parent shall promptly advise the Company orally
and in writing if there occurs, to the Knowledge of Parent, any change or event
which results in the executive officers of Parent having a good faith belief
that such change or event has resulted in or is reasonably likely to result in a
Material Adverse Effect on Parent. The Company shall provide to Parent, and
Parent shall provide to the Company, copies of all filings made by the Company
or Parent, as the case may be, with any Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.
Section 6.5 Conduct of Business of Sub Pending the Merger. During the
---------------------------------------------
period from the date of this Agreement through the Effective Time, Sub shall not
engage in any activity of any nature except as provided in or contemplated by
this Agreement.
Section 6.6 Modifications to Recommendations. Except as expressly
--------------------------------
permitted by this Section 6.6, neither the Board of Directors of the Company nor
-----------
any committee thereof shall (i) withdraw, qualify, modify or amend, in a manner
adverse to Parent, the Recommendations or make any public statement, filing or
release inconsistent with such Recommendations (provided, however, that
following the Board of Directors' consideration and evaluation of an Acquisition
Proposal, it is understood that for the purposes hereof, if the Company adopts a
neutral position or no position with respect to the Acquisition Proposal, it
shall be considered an adverse modification of the Recommendations), (ii)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal or (iii) cause the Company to enter into any acquisition
agreement or other similar agreement related to any Acquisition Proposal (each,
a "Subsequent Determination"), provided that if prior to the consummation of the
------------------------
Offer the Board of Directors of the Company determines in good faith (after it
has received a Superior Proposal and after receipt of advice from outside
counsel) that the failure to make a Subsequent Determination would result in a
breach by the Board of Directors of the Company of its fiduciary duties to the
Company's stockholders under applicable law, the Board of Directors of the
Company may (subject to this and the following sentences) inform the Company's
stockholders that it no longer believes that the Offer and the Merger and the
other transactions contemplated hereby are advisable, but only at a time that is
72 hours following delivery by the Company to Parent of a written notice (a
"Subsequent Determination Notice") (i) advising Parent that the Board of
--------------------------------
Directors of the Company has received a Superior Proposal, (ii) specifying the
terms and conditions of such Superior Proposal, including the amount per share
the Company's
-31-
stockholders will receive per Share (valuing any non-cash consideration at what
the Board of Directors of the Company determines in good faith, after
consultation with its independent financial advisor, to be the fair value of the
non-cash consideration) and including a copy thereof with all accompanying
documentation, (iii) identifying the person making such Superior Proposal and
(iv) stating that the Company intends to make a Subsequent Determination. After
providing such notice, the Company shall provide a reasonable opportunity to
Parent to make such adjustments in the terms and conditions of this Agreement as
would enable the Company to proceed with its Recommendations to its stockholders
without a Subsequent Determination; provided, however, that any such adjustment
to this Agreement shall be at the discretion of Parent at the time.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Employee Benefits. (a) Parent shall take all necessary
-----------------
action so that each person who is an employee of the Company or any of its
Subsidiaries immediately prior to the consummation of the Merger (including each
such person who is on vacation, temporary layoff, approved leave of absence,
sick leave or short- or long-term disability) (a "Retained Employee") shall
-----------------
remain an employee of the Company or the Surviving Corporation or a Subsidiary
of the Company or of the Surviving Corporation, as the case may be, immediately
following the consummation of the Merger. Parent shall take all necessary action
so that each Retained Employee shall after the consummation of the Offer
continue to be credited with the unused vacation and sick leave credited to such
employee through the consummation of the Offer under the applicable vacation and
sick leave policies of the Company and its Subsidiaries, and Parent shall permit
or cause the Company, the Surviving Corporation and their Subsidiaries to permit
such employees to use such vacation and sick leave. Parent shall take all
necessary action so that, for purposes of eligibility and vesting service under
each employee benefit plan and determination of benefits under each paid time
off, vacation, severance, short-term disability and service award plans
maintained by Parent or any of its Subsidiaries in which employees or former
employees of the Company and its Subsidiaries become eligible to participate
upon or after the consummation of the Offer, each such person shall be given
credit for all service with the Company and its Subsidiaries (or all service
credited by the Company or its Subsidiaries) to the same extent as if rendered
to Parent or any of its Subsidiaries .
(b) Except as otherwise provided in this Section, Section 7.2
-----------
or Section 7.12, nothing in this Agreement shall be interpreted as limiting the
------------
power of the Surviving Corporation to amend or terminate any particular Benefit
Plan or any other particular employee benefit plan, program, agreement or policy
or as requiring the Surviving Corporation to offer to continue (other than as
required by its terms) any written employment contract, subject to the terms and
conditions of the applicable plan, program, agreement or policies.
(c) Parent shall honor or cause to be honored by the Company,
the Surviving Corporation and their Subsidiaries all employment agreements,
bonus agreements, severance agreements, severance plans and non-competition
agreements with the persons who are directors, officers and employees of the
Company and its Subsidiaries (it being understood that nothing herein shall be
deemed to mean that the Company, the Surviving Corporation and their
Subsidiaries shall not be required to honor any of their obligations under any
such agreement).
-32-
(d) Parent shall, or shall cause the Company and the Surviving
Corporation to, (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Retained Employees and former employees of the
Company and its Subsidiaries under any welfare or fringe benefit plan in which
such employees and former employees may be eligible to participate after the
consummation of the Offer, other than limitations or waiting periods that are in
effect with respect to such employees and that have not been satisfied under the
corresponding welfare or fringe benefit plan maintained by the Company for the
Retained Employees and former employees prior to the consummation of the Offer,
and (ii) provide each Retained Employee and former employee with credit under
any welfare plans in which such employee or former employee becomes eligible to
participate after the consummation of the Offer for any co-payments and
deductibles paid by such Retained Employee or former employee for the then
current plan year under the corresponding welfare plans maintained by the
Company prior to the consummation of the Offer.
Section 7.2 Options.
-------
(a) Except as set forth in Section 7.2(f), each Company Stock
--------------
Option that is outstanding immediately prior to the date the Offer is
consummated (the "Offer Consummation Date") pursuant to any Company Stock Plan
shall vest and become immediately exercisable at the time of the consummation of
the Offer. On the Offer Consummation Date with respect to Company Stock Options
held by persons who are not subject to the reporting requirements of Section
16(a) of the Exchange Act, and at the Effective Time with respect to Company
Stock Options held by persons who are subject to the reporting requirements of
Section 16(a) of the Exchange Act, each Company Stock Option shall be adjusted
to represent an option to purchase the number of shares of Company Common Stock
(a "Company Adjusted Option") (rounded down to the nearest full share)
determined by multiplying (i) the number of shares of Company Common Stock
subject to such Company Stock Option immediately prior to the Offer Consummation
Date with respect to Company Stock Options held by persons who are not subject
to the reporting requirements of Section 16(a) of the Exchange Act and
immediately prior to the Effective Time with respect to Company Stock Options
held by persons who are subject to the reporting requirements of Section 16(a)
of the Exchange Act, by (ii) 0.5, at an exercise price per share of Company
Common Stock equal to the exercise price per share of Company Common Stock
immediately prior to the Offer Consummation Date. In addition, promptly
following the Offer Consummation Date with respect to holders of Company Stock
Options who are not subject to the reporting requirements of Section 16(a) of
the Exchange Act, and promptly following the Effective Time with respect to
holders of Company Stock Options who are subject to the reporting requirements
of Section 16(a) of the Exchange Act, Parent shall pay to the holder of each
Company Stock Option an amount of cash (rounded up to the nearest cent) equal to
the product of (A) (x) $73.00 minus (y) the exercise price per share of Company
Common Stock immediately prior to the Offer Consummation Date and (B) the number
of shares of Company Common Stock subject to such option multiplied by 0.5
(rounded up to the nearest full share). Each Company Adjusted Option shall be
exercisable upon the same terms and conditions as under the applicable Company
Stock Plan and the applicable option agreement issued thereunder, except as
otherwise provided in this Section 7.2.
(b) At the Effective Time, each Company Adjusted Option shall
be assumed by Parent and become and represent an option to purchase the number
of Parent Shares (a "Parent
-33-
Substitute Option") (rounded to the nearest full share, or if there shall not be
a nearest share, the next greater full share) determined by multiplying (i) the
number of shares of Company Common Stock subject to such Company Adjusted Option
immediately prior to the Effective Time by (ii) 1.767, at an exercise price per
Parent Share (rounded up to the nearest tenth of a cent) equal to (A) the
exercise price per share of Company Common Stock immediately prior to the
Effective Time divided by 1.767. Parent shall pay cash to holders of Parent
Substitute Options in lieu of issuing fractional Parent Shares upon the exercise
of Parent Substitute Options. Each Company Adjusted Option so converted shall be
exercisable upon the same terms and conditions as under the applicable Company
Stock Plan and the applicable option agreement issued thereunder, except as
otherwise provided in this Section 7.2. Parent shall (i) on or prior to the
Effective Time, reserve for issuance the number of Parent Shares that will
become subject to Parent Substitute Options pursuant to this Section 7.2(b),
(ii) from and after the Effective Time, upon exercise of the Parent Substitute
Options in accordance with the terms thereof, make available for issuance all
Parent Shares covered thereby, (iii) at the Effective Time, assume the Company
Stock Plans, with the result that all obligations of the Company under the
Company Stock Plans, including with respect to Company Adjusted Options
outstanding at the Effective Time, shall be obligations of Parent following the
Effective Time, and (iv) as promptly as practicable after the Effective Time,
issue to each holder of an outstanding Company Adjusted Option a document
evidencing the foregoing assumption by Parent.
(c) The parties shall take all actions so that the Company
Adjusted Options converted by Parent qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent
permitted under Section 422 of the Code and to the extent the Company Adjusted
Options qualified as incentive stock options prior to the Effective Time;
provided, however, that nothing in this Section 7.2(c) shall prevent the
acceleration of the vesting or exercisability of any Company Stock Option, as
provided in Section 7.2(a).
(d) Parent shall, as promptly as practicable but in any event
no later than three days after the Effective Time, file a registration statement
on Form S-8 or other applicable form under the Securities Act, covering the
Parent Shares issuable upon the exercise of Parent Substitute Options created
upon the assumption by Parent of Company Adjusted Options under Section 7.2(b),
and will maintain the effectiveness of such registration, and the current status
of the prospectus contained therein, until the exercise or expiration of such
Parent Substitute Options.
(e) The parties will cooperate to take all reasonable steps
necessary to give effect to this Section 7.2.
(f) Notwithstanding the terms of Section 7.2(a), to the extent
--------------
an option holder holds any unexercisable incentive stock options ("Unvested
---------
ISO") on the Offer Consummation Date that do not become exercisable upon the
---
consummation of the Offer pursuant to the terms of the Company Stock Plan(s)
under which such Unvested ISOs were granted, then, to the extent possible, each
such Unvested ISO shall be converted into the right to receive cash in full and
the other options held by such option holder shall be appropriately adjusted
such that the aggregate amount of cash payable to such option holder pursuant to
Section 7.2(a) and this Section 7.2(f) does not exceed the amount that would
-------------- --------------
otherwise be payable pursuant to Section 7.2(a).
--------------
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Section 7.3 Shareholder Approval; Preparation of Form S-4 and Proxy
-------------------------------------------------------
Statement/Prospectus. (a) Parent and the Company shall, as soon as practicable
--------------------
following the acceptance of Shares pursuant to the Offer, prepare and the
Company shall file with the SEC the Proxy Statement and Parent and the Company
shall prepare and Parent shall file with the SEC a registration statement on
Form S-4 (the "Form S-4") for the offer and sale of the Parent Shares pursuant
--------
to the Merger and in which the Proxy Statement will be included as a prospectus.
Each of the Company and Parent shall use all reasonable efforts to have the Form
S-4 declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use all reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after the Form S-4 is declared effective under the Securities Act. Parent shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Shares in the Merger and the Company
shall furnish all information concerning the Company and the holders of capital
stock of the Company as may be reasonably requested in connection with any such
action and the preparation, filing and distribution of the Proxy Statement. No
filing of, or amendment or supplement to, or correspondence to the SEC or its
staff with respect to, the Form S-4 will be made by Parent, or the Proxy
Statement will be made by the Company, without providing the other party a
reasonable opportunity to review and comment thereon. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the Form S-
4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Parent
Shares issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. The Company will advise Parent, promptly after it receives notice
thereof, of any request by the SEC for the amendment of the Proxy Statement or
comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information
relating to the Company or Parent, or any of their respective affiliates,
officers or directors, should be discovered by the Company or Parent which
should be set forth in an amendment or supplement to either of the Form S-4 or
the Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of the Company.
(b) The Company shall establish, prior to or as soon as
practicable following the date upon which the Form S-4 becomes effective, a
record date (which shall be prior to or as soon as practicable following the
date upon which the Form S-4 beco mes effective) for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders
--------------------
Meeting") for the purpose of considering and taking action upon this Agreement
-------
and the Merger and (with the consent of Parent) such other matters as may in the
reasonable judgment of the Company be appropriate for consideration at the
Company Stockholders Meeting. Once the Company Stockholders Meeting has been
called and noticed, the Company shall not postpone or
-35-
adjourn the Company Stockholders Meeting (other than for the absence of a
quorum) without the consent of Parent. Subject to its fiduciary duties under
applicable law, the Board of Directors of the Company shall include the
Recommendations in the Form S-4 and the Proxy Statement as such Recommendations
pertain to the Merger and this Agreement. The Company shall use its reasonable
best efforts to solicit from stockholders of the Company proxies for use at the
Company Stockholders Meeting and in favor of this Agreement and the Merger and
shall take all other actions reasonably necessary or advisable to secure the
vote or consent of stockholders required by the DGCL to effect the Merger.
(c) Parent agrees to cause all Shares owned by Parent or any
Subsidiary of Parent to be voted in favor of the Merger.
Section 7.4 Access to Information. Upon reasonable notice and subject
---------------------
to the terms of the Confidentiality Agreement, each of Company and Parent shall,
and shall cause each of its respective Subsidiaries to, afford to the other
party, and its respective Representatives all reasonable access, during normal
business hours during the period prior to the Effective Time, to all their
respective properties, books, contracts, commitments, records and
Representatives, during such period, each of Company and Parent shall (and shall
cause each of its respective Subsidiaries to) make available to the other party
(a) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of the
Federal or state securities laws or the Federal tax laws and (b) all other
information concerning its business, properties and personnel as the other party
may reasonably request. In the event of a termination of this Agreement for any
reason, each party shall promptly return or destroy, or cause to be returned or
destroyed, all nonpublic information so obtained from the other party or any of
its Subsidiaries.
Section 7.5 Fees and Expenses. (a) If the Offer has not been accepted,
-----------------
the Company agrees to pay Parent a fee equal to $75.5 million as a result of the
occurrence of any of the events set forth below (a "Trigger Event"):
-------------
(i) the Company shall have received an Acquisition
Proposal (other than the cash tender offer by SRM Acquisition
Corp (an affiliate of Shell Oil Company), pursuant to its Offer
to Purchase dated March 12, 2001, as amended to the date of this
Agreement, at a purchase price of $60 per Share (the "Shell
Tender Offer"), it being understood that the Company shall be
deemed to have received an Acquisition Proposal (x) if SRM
Acquisition Corp amends its tender offer by increasing its
tender offer price above $60 per Share (including cash,
securities or any combination thereof offered for Shares) after
the date of the Agreement, or (y) if an Acquisition Proposal
other than the Shell Tender Offer is made by any other affiliate
of Shell Oil Company) after the date of this Agreement (but
prior to the termination hereof), and at any time prior to, or
within 12 months after, the termination of this Agreement
(unless this Agreement is terminated pursuant to Section 9.1(a),
--------------
Section 9.1(b)(iv) or Section 9.1(e)), the Company shall have
------------------ --------------
entered into, or shall have publicly announced its intention to
enter into, an agreement or an agreement in principle with
respect to any Acquisition Proposal;
-36-
(ii) the Company has provided Parent with a Subsequent
Determination Notice or the Board of Directors of the Company
(or any committee thereof) (A) shall have made a Subsequent
Determination, (B) shall include in the Schedule 14D-9 its
Recommendations with modification or qualification in a manner
adverse to Parent, or (C) shall have resolved to, or publicly
announced an intention to, take any of the actions as specified
in this Section 7.5(a)(ii); or
(iii) (A) as of the final expiration date of the Offer,
all conditions to the consummation of the Offer shall have been
met or waived except for satisfaction of the Minimum Condition,
(B) there shall have been made subsequent to the date of this
Agreement (but before such expiration date of the Offer) an
Acquisition Proposal (other than the cash tender offer by SRM
Acquisition Corp (an affiliate of Shell Oil Company), pursuant
to the Shell Tender Offer, it being understood that the Company
shall be deemed to have received an Acquisition Proposal (x) if
SRM Acquisition Corp amends its tender offer by increasing its
tender offer price above $60 per Share (including cash,
securities or any combination thereof offered for Shares) after
the date of the Agreement, or (y) if an Acquisition Proposal
other than the Shell Tender Offer is made by any other affiliate
of Shell Oil Company) and (C) at any time prior to, or within 12
months after, the expiration or termination of the Offer, the
Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or
agreements in principle with respect to any Acquisition
Proposal.
Any fee due under Section 7.5(a) shall be payable by wire
--------------
transfer of same day funds on (A) the date of termination of this Agreement if
this Agreement is terminated by the Company pursuant to Section 9.1(d), (B) the
--------------
date which is the third business date following the date of the termination of
the Agreement if this Agreement is terminated by Parent pursuant to Section
-------
9.1(c) and (C) any fee due under clause (i) or (iii) above shall not be payable
------
until the Company shall have entered into, or shall have publicly announced its
intention to enter into an agreement or agreement in principle with respect to
any Acquisition Proposal.
(b) Except as set forth in this Section 7.5, all fees and
-----------
expenses incurred in connection with the Offer and the Merger, this Agreement
and the transactions cont emplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated; provided, that if this Agreement is terminated as a result of the
occurrence of a Trigger Event, in addition to any amounts paid or payable by the
Company to Parent pursuant to Section 7.5(a), the Company shall assume and pay,
-------------
or reimburse Parent for, all out-of-pocket fees payable and expenses reasonably
incurred by Parent (including the fees and expenses of its counsel) in
connection with this Agreement and the transactions contemplated hereby, up to a
maximum of $15 million.
(c) If the Company shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in subclause (c) or (d)
of clause (3) of Exhibit A, and (B) is incapable of being or has not been cured
by the Company prior to or on the earlier of (x) the date which is 10 calendar
days immediately following written notice by Parent to the Company of such
breach or failure to
-37-
perform and (y) the expiration or termination of the Offer in accordance with
the terms of this Agreement, the Company shall assume and pay, or reimburse
Parent for, all out-of-pocket fees payable and expenses reasonably incurred by
Parent (including the fees and expenses of its counsel) in connection with this
Agreement and the transactions contemplated hereby, up to a maximum of $15
million.
(d) If the Company has terminated this Agreement pursuant to
Section 9.1(e) and such breach of a representation, warranty, covenant or other
--------------
agreement contained in this Agreement is incapable of being or has not been
cured by Parent prior to or on the date which is 10 calendar days immediately
following written notice by the Company to Parent of such breach or failure to
perform, Parent shall reimburse the Company for all out-of-pocket fees payable
and expenses reasonably incurred by the Company (including the fees and expenses
of its counsel) in connection with this Agreement and the transactions
contemplated hereby, up to a maximum of $15 million.
(e) Parent and the Company agree that the agreements contained
in Sections 7.5(a) and 7.5(b) hereof are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty.
Section 7.6 Public Announcements. Parent and the Company 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 such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section 7.7 Transfer Taxes. The Company and Parent shall cooperate
--------------
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement
(together with any related interest, penalties or additions to tax, "Transfer
Taxes"). All Transfer Taxes shall be paid by the Company (without any
reimbursement whatsoever by Parent, its Subsidiaries or other affiliates) and
expressly shall not be a liability of any holder of Company Common Stock.
Section 7.8 State Takeover Laws. If any "fair price" or "control
-------------------
share acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use reasonable efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
Section 7.9 Indemnification; Directors and Officers Insurance.
-------------------------------------------------
(a) Parent shall, or shall cause the Surviving Corporation to, honor for a
period of not less than six years from the Effective Time (or, in the case of
matters occurring at or prior to the Effective Time that have not
-38-
been resolved prior to the sixth anniversary of the Effective Time, until such
matters are finally resolved), all rights to indemnification or exculpation,
existing in favor of a director, officer, employee or agent (an "Indemnified
-----------
Person") of the Company or any of its Subsidiaries (including, without
------
limitation, rights relating to advancement of expenses and indemnification
rights to which such persons are entitled because they are serving as a
director, officer, agent or employee of another entity at the request of the
Company or any of its Subsidiaries), as provided in the Restated Certificate of
Incorporation of the Company, the Bylaws of the Company, in each case, as in
effect on the date of this Agreement, and relating to actions or events through
the Effective Time; provided, however, that the Surviving Corporation shall not
be required to indemnify any Indemnified Person in connection with any
proceeding (or portion thereof) to the extent involving any claim initiated by
such Indemnified Person unless the initiation of such proceeding (or portion
thereof) was authorized by the Board of Directors of the Company or unless such
proceeding is brought by an Indemnified Person to enforce rights under this
Section 7.9; provided further that any determination required to be made with
-----------
respect to whether an Indemnified Person's conduct complies with the standards
set forth under the DGCL, the Restated Certificate of Incorporation of the
Company, the Bylaws of the Company, as the case may be, shall be made by
independent legal counsel selected by such Indemnified Person and reasonably
acceptable to Parent; and provided further that nothing in this Section 7.9
-----------
shall impair any rights of any Indemnified Person. Without limiting the
generality of the preceding sentence, in the event that any Indemnified Person
becomes involved in any actual or threatened action, suit, claim, proceeding or
investigation after the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, promptly advance to such Indemnified Person his or her
legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the providing by such
Indemnified Person of an undertaking to reimburse all amounts so advanced in the
event of a non-appealable determination of a court of competent jurisdiction
that such Indemnified Person is not entitled thereto.
(b) Prior to the Effective Time and subject to the proviso in
the following sentence relating to the cost thereof, the Company shall have the
right to obtain and pay for in full a "tail" coverage directors' and officers'
liability insurance policy ("D&O Insurance") covering a period of not less than
-------------
six years after the Effective Time and providing coverage in amounts and on
terms consistent with the Company's existing D&O Insurance. In the event the
Company is unable to obtain such insurance, Parent shall cause the Surviving
Corporation to maintain the Company's D&O Insurance for a period of not less
than six years after the Effective Time; provided, that the Surviving
Corporation may substitute therefor policies of substantially similar coverage
and amounts containing terms no less advantageous to such former directors or
officers; provided further that if the existing D&O Insurance expires or is
cancelled during such period, Parent or the Surviving Corporation shall use its
best efforts to obtain substantially similar D&O Insurance; and provided further
that the Company shall not, without Parent's consent, expend an amount in excess
of 300% of the last annual premium paid prior to the date hereof to procure the
above described "tail" coverage and neither Parent nor the Surviving Corporation
shall be required to expend, in order to maintain or procure an annual D&O
Insurance policy, in lieu of a tail policy, an amount in excess of 300% of the
last annual premium paid prior to the date hereof, but in such case shall
purchase as much coverage as possible for such amount.
-39-
(c) The provisions of this Section 7.9 are intended to be for
-----------
the benefit of, and shall be enforceable by, each Indemnified Person, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of Parent, the Company and the Surviving Corporation.
Section 7.10 Board of Directors. Promptly after such time as Sub
------------------
purchases Shares pursuant to the Offer (but subject to the satisfaction of the
Minimum Condition), Sub shall be entitled, to the fullest extent permitted by
law, to designate at its option up to that number of directors, rounded to the
nearest whole number, of the Company's Board of Directors, subject to compliance
with Section 14(f) of the Exchange Act, as will make the percentage of the
Company's directors designated by Sub equal to the aggregate voting power of the
shares of Common Stock held by Parent or any of its Subsidiaries; provided,
however, that in the event that Sub's designees are elected to the Board of
Directors of the Company, until the Effective Time, such Board of Directors
shall have at least two directors who are directors on the date of this
Agreement and who are not officers of the Company (the "Independent Directors");
---------------------
and provided, further that, in such event, if the number of Independent
Directors shall be reduced below two for any reason whatsoever, the remaining
Independent Directors shall, to the fullest extent permitted by law, designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of this Agreement or, if no Independent Directors then remain, the
other directors shall designate two persons to fill such vacancies who shall not
be officers or affiliates of the Company or any of its Subsidiaries, or officers
or affiliates of Parent or any of its Subsidiaries, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Following the
election or appointment of Sub's designees pursuant to this Section 7.10 and
------------
prior to the Effective Time, (A) any amendment, or waiver of any term or
condition, of this Agreement or the Restated Certificate of Incorporation or
Bylaws of the Company and (B) any termination of this Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Sub or waiver or assertion of any of the Company's
rights hereunder, and any other consent or action by the Board of Directors with
respect to this Agreement, will require the concurrence of a majority of the
Independent Directors and no other action by the Company, including any action
by any other director of the Company, shall be required for purposes of this
Agreement. To the fullest extent permitted by applicable law, the Company shall
take all actions requested by Parent which are reasonably necessary to effect
the election of any such designee, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees
to make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Sub's designees).
Parent and Sub will be solely responsible for any information with respect to
either of them and their nominees, officers, directors and affiliates required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. In
connection with the foregoing, the Company will promptly, at the option of
Parent, to the fullest extent permitted by law, either increase the size of the
Company's Board of Directors and/or obtain the resignation of such number of its
current directors as is necessary to enable Sub's designees to be elected or
appointed to the Company's Board of Directors as provided above.
Section 7.11 HSR Act Filings; Reasonable Best Efforts. (a) Each of
----------------------------------------
Parent and the Company shall (i) promptly make or cause to be made the filings
required of such party or any of
-40-
its Subsidiaries under the HSR Act and any other Antitrust Laws with respect to
the Offer, the Merger and the other transactions contemplate d by this
Agreement, (ii) comply at the earliest practicable date with any request under
the HSR Act or such other Antitrust Laws for additional information, documents,
or other material received by such party or any of its Subsidiaries from the
Federal Trade Commission or the Department of Justice or any other Governmental
Entity in respect of such filings, the Offer, the Merger or such other
transactions, and (iii) cooperate with the other party in connection with any
such filing and in connection with resolving any investigation or other inquiry
of any such agency or other Governmental Entity under any Antitrust Laws with
respect to any such filing, the Offer, the Merger or such other transactions.
Each of Parent and the Company shall promptly inform the other of any
communication with, and any proposed understanding, undertaking, or agreement
with, any Governmental Entity regarding any such filings, the Offer, the Merger
or such other transactions.
(b) Each of Parent and the Company shall use all reasonable
best efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the Offer, the Merger or any other
transactions provided for in this Agreement under the Antitrust Laws. In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging the Offer, the Merger or
any other transactions provided for in this Agreement as violative of any
Antitrust Law, each of Parent and the Company shall cooperate and use all
reasonable best efforts vigorously to contest and resist any such action or
proceeding and to have vacated, lifted, reversed, or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the Offer, the Merger or any such other transactions. Each of
Parent and the Company shall use all reasonable best efforts to take such action
as may be required to cause the expiration of the notice periods under the HSR
Act or other Antitrust Laws with respect to the Offer, the Merger and such other
transactions as promptly as possible after the execution of this Agreement.
(c) Each of the parties agrees to use all reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger, and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
other necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all other necessary registrations and
filings (including other filings with Governmental Entities, if any), (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the preparation of the Form S-4, the Offer Documents, the Schedule 14D-9
and the Proxy Statement, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement, in each case subject to the
Company Board of Directors' fiduciary duties under applicable law.
(d) Notwithstanding anything to the contrary in this Section
-------
7.11, (i) neither Parent nor any of its Subsidiaries shall be required to divest
----
any of their respective businesses, product lines or assets that could
reasonably be expected to have a Material Adverse Effect on Parent, (ii) neither
Parent nor any of its Subsidiaries shall be required to take or agree to take
any other action or agree to any limitation that could reasonably be expected to
have a Material Adverse Effect on Parent, (iii) neither the Company nor its
Subsidiaries shall be required to
-41-
divest any of their respective businesses, product lines or assets, or to take
or agree to take any other action or agree to any limitation that could
reasonably be expected to have a Material Advers e Effect on the Company, and
(iv) neither Parent nor Sub shall be required to waive any of the conditions to
the Offer set forth in Exhibit A or any of the conditions of to the Merger set
forth in Article VIII.
------------
Section 7.12 Stay Bonuses; Severance. (a) Prior to the Effective
-----------------------
Time, the Company shall be permitted to award bonuses to employees of the
Company or any of its Subsidiaries in an aggregate amount not to exceed
$2,000,000, with such bonuses to be allocated at the direction of its Chief
Executive Officer with the consent of Parent, which consent shall not be
unreasonably withheld or delayed. Such bonuses shall be paid upon the earlier of
90 days following the Effective Time and 30 days following the date of
termination hereof as described in Article IX (the "Payment Date") to each
----------
employee to whom such a bonus has been awarded and who continues to be employed
by the Company (or any successor or affiliate of the Company) on the Payment
Date or whose employment terminates prior to the Payment Date due to death,
Disability, termination by the Company (or any successor or affiliate of the
Company) without Cause, or termination by the employee with Good Reason (as such
capitalized terms are defined in the Company's Severance Protection Plan);
provided, however, that no such bonus shall be paid to any employee who has
entered into a Severance Protection Agreement with the Company and whose
employment terminates prior to the Payment Date entitling such employee to a
severance payment pursuant to Section 3.1(b) of such Severance Protection
Agreement.
(b) Subject to Section 7.1(c), Parent shall maintain or cause
--------------
cause the Company or Surviving Corporation to maintain each of the Company's
severance policy as in effect on the date hereof as set forth in Item 7.12(b) of
------------
the Company Letter or shall replace such policy with a policy providing equal or
more favorable compensation, for a period of at least two years from the
Effective Time.
(c) Each employee of the Company or any of its Subsidiaries
whose employment is terminated upon, or within 18 months following, the
consummation of the Offer, other than an employee who has entered into a
Severance Protection Agreement with the Company, shall receive a cash payment
from the Company or Parent in the amount of $8,000 which may, in the sole
discretion of such employee, be used to obtain outplacement services, to assist
in the transition to subsequent employment or for any other purpose.
Section 7.13 Section 16 Matters. Prior to the Effective Time, Parent
------------------
and the Company shall take all such steps as may reasonably be required to cause
any dispositions of Shares (including derivative securities with respect to the
Shares) or acquisition of Parent Shares (including derivative securities with
respect to the Parent Shares) resulting from the transactions contemplated by
this Agreement by each individual who is subject to the reporting requirements
of Section 16(a) of the Exchange Act with respect to the Company to be exempt
under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in
accordance with the No-Action Letter, dated January 12, 1999, issued by the SEC
regarding such matters.
Section 7.14 Tax Treatment. This Agreement is intended to constitute
-------------
"plan of reorganization" with respect to the Offer and the Forward Merger for
United States Federal income tax purposes. From and after the date of this
Agreement, each party hereto shall use its
-42-
reasonable best efforts to cause the Offer and the Forward Merger to qualify,
and shall not, without the prior written consent of the other parties hereto,
knowingly take any actions or cause any actions to be taken which could
reasonably be expected to prevent the Offer and the Forward Merger from
qualifying as a reorganization under the provisions of Section 368(a) of the
Code. Following the Effective Time, neither the Surviving Corporation nor Parent
nor any of their respective affiliates shall take any action or cause any action
to be taken which could reasonably be expected to cause th e Offer and the
Forward Merger to fail to qualify as a reorganization under Section 368(a) of
the Code. Parent shall use its reasonable best efforts to obtain an opinion of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP (which includes its affiliated law
practice entities), or another nationally recognized United States Federal
income tax counsel or "Big Five" accounting firm ("Tax Counsel") (based on the
-----------
facts and customary representations and assumptions) that the Transaction will
be treated as a "reorganization" within the meaning of Section 368(a) of the
Code (the "Tax Opinion Standard"). Notwithstanding anything express or implied
---------------------
to the contrary in this Agreement, but subject to the provisions of this Section
-------
7.14, if such opinion cannot be obtained, then, in Parent's reasonable
----
discretion, the Reverse Merger shall be effected instead of the Forward Merger.
Section 7.15 Affiliate Letters. As promptly as practicable, the
-----------------
Company shall deliver to Parent a letter identifying all persons who are at the
time this Agreement is submitted for adoption by the stockholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use all reasonable efforts to deliver or cause
to be delivered to Parent, prior to the expiration of the Offer, an Affiliate
Letter in a customary form for transactions of this type.
Section 7.16 Litigation. The Company shall give Parent a reasonable
----------
opportunity to participate in the defense of any litigation against the Company
and/or its directors relating to the transactions contemplated by this Agreement
or any other Acquisition Proposal and will not settle or compromise any such
action without the prior written consent of Parent, which consent shall not be
unreasonably withheld or delayed.
Section 7.17 Rights Agreement. Except as expressly required by this
----------------
Agreement, the Company shall not, without the prior written consent of Parent,
amend the Rights Agreement or take any other action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the Rights
or any action with respect to the Rights Agreement to facilitate an Acquisition
Proposal; provided, however, that the Company may amend or take appropriate
action under the Rights Agreement to delay the occurrence of a Distribution Date
(as defined in the Rights Agreement) in response to the public announcement of
an Acquisition Proposal.
Section 7.18 Bank Debt. The Company agrees to use its reasonable best
---------
efforts to seek the consent of its bank lenders and the issuers of letters of
credit to the Company to permit the consummation of the transactions
contemplated hereby, including, without limitation, the Offer and the Merger,
without necessity to repay the indebtedness of the Company to such lenders or to
replace such letters of credit.
-43-
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 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 fulfillment at or prior to the Effective Time of the following
conditions:
(a) Company Stockholder Approval. The Company Stockholder
----------------------------
Approval shall have been obtained; provided, however, that Parent and Sub shall
vote all of their shares of capital stock of the Company entitled to vote
thereon in favor of the Merger.
(b) No Injunction or Restraint. No statute, rule, regulation,
--------------------------
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
Governmental Entity preventing the consummation of the Merger shall be in
effect; provided, however, that each of the parties shall have used their
reasonable best efforts to prevent the entry of any such temporary restraining
order, injunction or other order, including, without limitation, taking such
action as is required to comply with Section 7.11, and to appeal as promptly as
possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
------------------
payment and paid for Shares pursuant to the Offer; provided, however, that this
condition shall be deemed satisfied if Parent or Sub fails to accept for payment
and pay for Shares pursuant to the Offer in violation of the terms of this
Agreement and/or the Offer.
(d) Form S-4. The Form S-4 shall have become effective under
--------
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(e) Listing Parent Shares. The Parent Shares to be issued in
---------------------
the Merger shall have been approved for listing on the NYSE.
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after approval of this Agreement
and the Merger by the stockholders of the Company or Sub:
(a) by mutual written consent of Parent and the Company
(b) by either of Parent or the Company:
(i) if the Offer shall have expired or been terminated
in accordance with the terms of this Agreement without Parent or
Sub having accepted for payment any Shares pursuant to the
Offer, unless the failure to consummate the Offer is the result
of a willful and material breach of this Agreement by the party
seeking to terminate this Agreement;
-44-
(ii) if the Offer shall not have been consummated on or
before August 31, 2001 (the "Outside Date"), unless the failure
to consummate the Offer is the result of a willful and material
breach of this Agreement by the party seeking to terminate this
Agreement;
(iii) if the Merger shall not have been consummated as a
result of any condition thereto in Article VIII being incapable
of being satisfied; or
(iv) if any statute, rule, regulation, injunction or
decree having the effects set forth in subclause (a) or (b) of
clause (3) of Exhibit A shall be in effect and shall have become
---------
final and nonappealable; or
(c) by Parent, upon the occurrence of the Trigger Event
described in Section 7.5(a)(ii) hereof;
----------
(d) by the Company, if the Company makes a Subsequent
Determination in material compliance with Section 6.2 hereof and pursuant to the
-----------
provisions of Section 6.6 hereof, provided the Company has paid or concurrently
pays Parent the sums (including providing Parent with an undertaking confirming
the Company's obligation to reimburse expenses as required by Section 7.5)
-----------
required by Section 7.5(a) hereof; or
--------------
(e) by the Company (i) if Sub or Parent shall have breached in
any material respect any of their respective covenants, obligations or other
agreements under this Agreement, or (ii) if the representations and warranties
of Parent and Sub set forth in this Agreement that are qualified as to
materiality shall not be true and correct as of the date of the Agreement and as
of the expiration of the date of termination of this Agreement (except to the
extent expressly made as of an earlier date, in which case as of such date), or
any of the representations and warranties set forth in the Agreement that are
not so qualified by materiality shall not be true and correct in any material
respect as of the date of this Agreement and as of the date of termination of
this Agreement (except to the extent expressly made as of an earlier date, in
which case as of such date); provided that this right of termination shall not
be deemed to exist unless any such breaches of representation or warranty
(without regard to any "Materiality" or "Material Adverse Effect" or similar
qualifier or threshold), individually or in the aggregate, has had or could
reasonably be expected to have, a Material Adverse Effect on the Parent;
provided, further that the breach of the covenant, obligation, agreement,
representation or warranty is incapable of being or has not been cured by Parent
or Sub prior to or on the date which is 10 calendar days immediately following
written notice by the Company to Parent of such breach or failure to perform.
(f) by Parent (i) if the Company shall have breached in any
material respect any of its covenants, obligations or other agreements under
this Agreement, or (ii) if the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be true
and correct as of the date of the Agreement and as of the expiration of the date
of termination of this Agreement (except to the extent expressly made as of an
earlier date, in which case as of such date), or any of the representations and
warranties set forth in the Agreement that are not so qualified by materiality
shall not be true and correct in any material respect as of the date of this
Agreement and as of the date of termination of this Agreement
-45-
(except to the extent expressly made as of an earlier date, in which case as of
such date); provided that this right of termination shall not be deemed to exist
unless any such breaches of representation or warranty (without regard to any
"Materiality" or "Material Adverse Effect" or similar qualifier or threshold),
individually or in the aggregate, has had or could reasonably be expected to
have, a Material Adverse Effect on the Company; provided, further that the
breach of the covenant, obligation, agreement, representation or warranty is
incapable of being or has not been cured by the Company prior to or on the date
which is 10 calendar days immediately following written notice by Parent to the
Company of such breach or failure to perform.
Section 9.2 Effect of Termination. In the event of a termination of
---------------------
this Agreement by either the Company or Parent as provided in Section 9.1, this
-----------
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to Section 4.15, Section 5.16,
------------ ------------
Section 7.5, this Section 9.2 and Article X and the last sentences of each of
----------- ----------- ---------
Section 1.2(c) and Section 7.4; provided, however, that nothing herein shall
-------------- -----------
relieve any party for liability for any willful or knowing breach hereof.
Section 9.3 Amendment. Subject to Section 1.1 and Section 7.10, this
--------- ---------- ------------
Agreement may be amended by the parties hereto at any time before or after
obtaining the Company Stockholder Approval, but if the Company Stockholder
Approval shall have been obtained, thereafter no amendment shall be made which
by law requires further approval by the Company's stockholders without obtaining
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9.4 Extension; Waiver. At any time prior to the Effective
-----------------
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (i) subject to the
provisions of Section 7.10, extend the time for the performance of any of the
------------
obligations or other acts of the other parties hereto, (ii) subject to the
provisions of Section 7.10, waive any inaccuracies in the representations and
------------
warranties contained herein or in any document delivered pursuant hereto or
(iii) subject to the provisions of Section 7.10, waive compliance with any of
------------
the agreements or 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. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and Warranties and
--------------------------------------------------
Agreements. None of the representations and warranties in this Agreement or in
----------
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.1 shall not limit any covenant or agreement of the parties
------------
which by its terms contemplates performance after the Effective Time of the
Merger.
Section 10.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or
-46-
sent by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to:
The Xxxxxxxx Companies, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. xxx Xxxxx and Xxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxxx
Telecopy No.: 000-000-0000
(b) if to the Company, to:
Xxxxxxx Resources Corporation
0000 Xxxxxxxx Xxxxxx
Tower 3, Suite 1000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Xx.
Telecopy No.: (000) 000-0000
with copies to:
Sidley Xxxxxx Xxxxx & Xxxx
Bank One Plaza
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx and Xxxx X. Xxxx
Telecopy No.: (000) 000-0000
Section 10.3 Interpretation; Definitions. When a reference is made
---------------------------
in this Agreement to an Article or a Section, such reference shall be to an
Article or a Section of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 10.3 and shall be equally applicable to
------------
both the singular and plural forms. Any agreement referred to below shall mean
such agreement as amended, supplemented or modified
-47-
from time to time to the extent permitted by the applicable provisions thereof
and by this Agreement.
"Acquisition Proposal" shall have the meaning set forth in Section 6.2(f).
-------------------- -------------
"Agreement" means this Agreement and Plan of Merger, dated as of May 7,
---------
2001, among Parent, Sub and the Company.
"Antitrust Laws" means, collectively, the HSR Act, the Xxxxxxx Act, as
--------------
amended, the Xxxxxxx Act, as amended, the Federal Trade Commission Act, as
amended, and any other Federal, state or foreign statutes, rules, regulations,
orders or decrees that are designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
"Beneficial Owner" or "Beneficially Owning" shall have the meaning set
---------------- -------------------
forth in Rule 13d-3 promulgated under the Exchange Act.
"Benefit Plan" means any collective bargaining agreement or any bonus,
------------
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical, employee stock
purchase, stock appreciation, restricted stock or other employee benefit plan,
agreement or arrangement, in each case that is maintained, sponsored,
contributed to or required to be contributed to by the Company or any ERISA
Affiliate for the benefit of providing benefits to any current or former
employee, officer, director or consultant of the Company or any of its
Subsidiaries.
"Certificate of Merger" shall have the meaning set forth in Section 2.3.
--------------------- -----------
"Certificates" shall have the meaning set forth in Section 3.2(b).
------------ --------------
"Closing Date" shall have the meaning set forth in Section 2.2.
------------ -----------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company" shall have the meaning set forth in the introductory paragraph of
-------
this Agreement.
"Company Common Stock" shall have the meaning set forth in the second
--------------------
recital provision of this Agreement.
"Company Contracts" shall have the meaning set forth in Section 4.18(a).
----------------- ---------------
"Company Filed SEC Documents" shall have the meaning set forth in Section
--------------------------- -------
4.7.
---
"Company Intellectual Property" shall have the meaning set forth in Section
----------------------------- -------
4.20.
----
"Company Letter" shall have the meaning set forth in Section 4.2.
-------------- -----------
"Company Preferred Stock" shall have the meaning set forth in Section 4.3.
----------------------- -----------
-48-
"Company Rights" shall have the meaning set forth in Section 4.3.
-------------- -----------
"Company Rights Agent" shall have the meaning set forth in Section 4.3.
-------------------- -----------
"Company Rights Agreement" shall have the meaning set forth in Section 4.3.
------------------------ -----------
"Company SEC Documents" shall have the meaning set forth in Section 4.6.
--------------------- -----------
"Company Series A Preferred Shares" shall have the meaning set forth in
---------------------------------
Section 4.3.
-----------
"Company Stock Options" shall have the meaning set forth in Section 4.3.
--------------------- -----------
"Company Stock Plans" shall have the meaning set forth in Section 4.3.
-------------------
"Company Stockholder Approval" shall have the meaning set forth in Section
---------------------------- -------
4.16.
----
"Company Stockholders Meeting" shall have the meaning set forth in Section
---------------------------- -------
6.2(b).
------
"Confidentiality Agreement" shall have the meaning set forth in Section
------------------------- -------
7.4.
"Consents" means with respect to a Governmental Entity or Person, any
--------
consent, approval, order or authorization of, or registration, declaration or
filing with or exemption by such Governmental Entity or Person, as the case may
be.
"Constituent Corporations" shall have the meaning set forth in the
------------------------
introductory paragraph of this Agreement.
"Consummation of the Offer" means the purchase of Shares pursuant to the
-------------------------
Offer.
"Derivative Transactions" shall have the meaning set forth in Section
----------------------- -------
4.22(b).
-------
"D&O Insurance" shall have the meaning set forth in Section 7.9(b).
------------- --------------
"DGCL" means the General Corporation Law of the State of Delaware.
----
"Effective Time" shall have the meaning set forth in Section 2.3.
-------------- -----------
"Environmental Laws" shall mean all foreign, Federal, state and local laws,
------------------
regulations, rules and ordinances relating to pollution or protection of the
environment or human health and safety, including, without limitation, laws
relating to releases or threatened releases of Hazardous Substances into the
indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater, land, surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Substances; all laws and regulations
with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Substances; all laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources; and common law to the extent it relates to or applies to
exposure to or impact of Hazardous Substances on persons or property.
-49-
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, together with the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall have the meaning set forth in Section 4.13(b).
--------------- ---------------
"ERISA Benefit Plan" means a U.S. Benefit Plan maintained as of the date of
------------------
this Agreement which is also an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) or which is also an "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
together with the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section 3.2(a).
-------------- --------------
"Exchange Fund" shall have the meaning set forth in Section 3.2(a).
------------- --------------
"Exchange Ratio" shall have the meaning set forth in the third recital
--------------
provision of this Agreement (subject to adjustment as contemplated by Section
-------
3.4).
---
"Expenses" means documented and reasonable out-of-pocket fees and expenses
--------
incurred or paid by or on behalf of Parent in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all reasonable fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants to Parent.
"Form S-4" shall have the meaning set forth in Section 7.3.
-------- -----------
"Forward Merger" shall have the meaning set forth in the second recital
--------------
provision of this Agreement.
"GAAP" means United States generally accepted accounting principles.
----
"Xxxxxxx, Xxxxx" shall have the meaning set forth in Section 1.2(a).
-------------- --------------
"Governmental Entity" means any Federal, state, local or foreign government
-------------------
or any court, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic, foreign or
supranational.
"Hazardous Substances" shall mean (a) any petrochemical or petroleum
--------------------
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar meaning and
regulatory effect; or (c) any other chemical, material or substance, exposure to
which is prohibited, limited, or regulated by any applicable Environmental Law.
-00-
"XXX Xxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
-------
as amended.
"Indebtedness" shall mean, with respect to any Person, without duplication,
------------
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, (c)
all letters of credit issued for the account of such Person (excluding letters
of credit issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course of business), (d) all capitalized
lease obligations of such Person, (e) all obligations of such Person under
interest rate or currency swap transactions (valued at the termination value
thereof), and (f) all guarantees and arrangements having the economic effect of
a guarantee of such Person of any indebtedness of any other Person.
"Indemnified Person" shall have the meaning set forth in Section 7.9(a).
------------------ --------------
"Independent Directors" shall have the meaning set forth in Section 7.10.
--------------------- ------------
"Information Statement" shall have the meaning set forth in Section 4.8.
--------------------- -----------
"Knowledge" shall mean the actual knowledge of the executive officers of
---------
the Company or the executive officers of Parent, as the case may be.
"Liens" means any pledges, claims, liens, charges, encumbrances and
-----
security interests of any kind or nature whatsoever.
"Material Adverse Change" or "Material Adverse Effect" means, when used in
----------------------- -----------------------
connection with the Company or Parent, as the case may be, any change or effect
(or any development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, condition (financial or otherwise) or results of operations
of the Company and its Subsidiaries taken as a whole, or Parent and its
Subsidiaries taken as a whole, as the case may be, provided, however, that (i)
any adverse change, effect or development that is caused by or results from
conditions affecting the United States economy generally or the economy of any
nation or region in which the Company or Parent, as the case may be, or its
Subsidiaries conducts business that is material to the business of the Company
or Parent, as the case may be, and its Subsidiaries, taken as a whole, shall not
be taken into account in determining whether there has been (or whether there
could reasonably be foreseen) a "Material Adverse Change" or "Material Adverse
Effect" with respect to the Company or Parent, as the case may be, (ii) any
adverse change, effect or development that is caused by or results from
conditions generally affecting the industries (including the oil and gas
industry) in which the Company or Parent, as the case may be, conducts its
business shall not be taken into account in determining whether there has been
(or whether there could be reasonably be foreseen) a "Material Adverse Change"
or "Material Adverse Effect" with respect to the Company or Parent, as the case
may be, and (iii) any adverse change, effect or development that is caused by or
results from the announcement or pendency of this Agreement, the Offer, the
Merger or the transactions contemplated hereby shall not be taken into account
in determining whether there has been (or whether there could reasonably be
foreseen) a "Material
-00-
Xxxxxxx Xxxxxx" or "Material Adverse Effect" with respect to the Company or
Parent, as the case may be.
"Merger" shall have the meaning set forth in Section 2.1.
------ -----------
"Merger Consideration" shall have the meaning set forth in the third
--------------------
recital provision of this Agreement.
"Minimum Condition" shall have the meaning set forth in Exhibit A of this
----------------- ---------
Agreement.
"NYSE" means the New York Stock Exchange, Inc.
----
"Offer" shall have the meaning set forth in the second recital provision of
-----
this Agreement.
"Offer Conditions" shall have the meaning set forth in Section 1.1(a).
---------------- --------------
"Offer Consideration" shall have the meaning set forth in the second
-------------------
recital provision of this Agreement.
"Offer Documents" shall have the meaning set forth in Section 1.1(c).
--------------- --------------
"Outside Date" shall have the meaning set forth in Section 9.1(b).
------------ --------------
"Parent" shall have the meaning set forth in the introductory paragraph of
------
this Agreement.
"Parent Common Stock" shall have the meaning set forth in the third recital
-------------------
provision of this Agreement.
"Parent Filed SEC Documents" shall have the meaning set forth in Section
-------------------------- -------
5.7.
---
"Parent Letter" means the letter from Parent to the Company dated the date
-------------
hereof, which letter relates to this Agreement and is designated therein as the
Parent Letter.
"Parent Options" shall have the meaning set forth in Section 7.2(b).
-------------- --------------
"Parent Rights" means the rights to purchase Series A Junior Participating
-------------
Preferred Stock issued pursuant to the Parent Rights Agreement.
"Parent Rights Agreement" means the Rights Agreement, dated as of February
-----------------------
6, 1996, between Parent and First Chicago Trust Company of New York, as rights
agent, as amended.
"Parent SEC Documents" shall have the meaning set forth in Section 5.6.
-------------------- -----------
"Parent Shares" shall have the meaning set forth in the second recital
-------------
provision of this Agreement.
"Parent Stock Equivalents" shall have the meaning set forth in Section 5.3.
------------------------ -----------
-52-
"Parent Stock Options" shall have the meaning set forth in Section 5.3.
-------------------- -----------
"Permits" means approvals, authorizations, certificates, filings,
-------
franchises, licenses, notices, permits and rights.
"Person" means an individual, corporation, partnership, limited liability
------
company, joint venture, association, trust, unincorporated organization or other
entity (including any person as defined in Section 13(d)(3) of the Exchange
Act).
"Xxxxxx Xxxxxxx" shall have the meaning set forth in Section 1.2(a).
-------------- --------------
"Proxy Statement" shall have the meaning set forth in Section 4.5(b).
--------------- --------------
"Recommendations" shall have the meaning set forth Section 1.2.
--------------- -----------
"Representative" means with respect to any Person, its officers, directors,
--------------
investment bankers, attorneys, accountants, consultants or other agents,
advisors or representatives.
"Retained Employee" shall have the meaning set forth in Section 7.1(a).
----------------- --------------
"Reverse Merger" shall have the meaning set forth in the fourth recital
--------------
provision of this Agreement.
"Rights Agreement" shall mean that certain Rights Agreement between the
----------------
Company and BankBoston, N.A. dated August 5, 1997, as amended.
"Schedule 14D-9" shall have the meaning set forth in Section 1.2(b).
-------------- --------------
"Schedule TO" shall have the meaning set forth in Section 1.1(c).
----------- --------------
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, together
--------------
with the rules and regulations promulgated thereunder.
"Shares" shall have the meaning set forth in the second recital provision
------
of this Agreement.
"Significant Subsidiary" of any person means a Subsidiary of such person
----------------------
that would constitute a "significant subsidiary" of such person within the
meaning of Rule 1.02(v) of Regulation S-X as promulgated by the SEC.
"Stock Equivalents" shall have the meaning set forth in Section 4.3.
----------------- -----------
"Sub" shall have the meaning set forth in the introductory paragraph of
---
this Agreement.
"Subsequent Determination" shall have the meaning set forth in Section 6.6.
------------------------ -----------
"Subsequent Determination Notice" shall have the meaning set forth in
-------------------------------
Section 6.6.
-----------
-53-
"Subsidiary" or "Subsidiary" of any person means another person, an amount
---------- ----------
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
"Superior Proposal" shall have the meaning set forth in Section 6.2(f).
----------------- --------------
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
--------------------- -----------
"Tax" and "Taxes" means any federal, state, local or foreign net income,
--- -----
gross income, gross receipts, windfall profit, severance, property, production,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum or any other tax, custom, duty, levy, tariff,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Entity.
"Tax Opinion Standard" shall have the meaning set forth in Section 7.14.
-------------------- ------------
"Tax Return" means any return, report or similar statement (including any
----------
related or supporting information) required to be filed with respect to any Tax
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
"Termination Fee" shall have the meaning set forth in Section 7.5(b).
--------------- --------------
"Third Party" means any Person (or group of Persons) other than Parent and
-----------
its affiliates.
"Transaction" shall have the meaning set forth in the eighth recital
-----------
provision of this Agreement.
"Transfer Taxes" shall have the meaning set forth in Section 7.7.
-------------- -----------
"Treasury Regulations" means the final and temporary (but not proposed)
--------------------
income tax regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Trigger Event" shall have the meaning set forth in Section 7.5(a).
------------- --------------
Section 10.4 Counterparts. This Agreement may be executed in counterparts,
------------
all of which shall be considered one and the same agreement, and shall become
effective when one 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.
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. Except for
----------------------------------------------
the Confidentiality Agreement, this Agreement constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the
-54-
subject matter hereof. This Agreement, except for the provisions of Section 7.1,
-----------
Section 7.2, Section 7.9, Section 7.12 and Section 7.13, is not intended to
----------- ----------- ------------ ------------
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 10.6 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 10.7 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. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns. Notwithstanding the
foregoing, Sub shall have the right, effective upon written notice to the
Company, to transfer or assign, in whole or from time to time in part, to Parent
or to one or more other wholly-owned Subsidiaries of Parent, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment shall in no way prejudice the rights of tendering stockholders to
receive payment for their Shares validly tendered and accepted for payment
pursuant to the Offer, adversely affect the ability of the parties to complete
the Transaction or relieve Sub of its obligations hereunder.
Section 10.8 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
Section 10.9 Enforcement of this Agreement. The parties hereto agree
-----------------------------
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, such remedy being in addition to
any other remedy to which any party is entitled at law or in equity.
Section 10.10 Obligations of Subsidiaries. Whenever this Agreement
---------------------------
requires any Subsidiary of Parent (including Sub) or of the Company to take any
action, such requirement shall be deemed to include an undertaking on the part
of Parent or the Company, as the case may be, to cause such Subsidiary to take
such action.
-55-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
THE XXXXXXXX COMPANIES, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman, President and Chief
Executive Officer
RESOURCES ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
XXXXXXX RESOURCES CORPORATION
By: /s/ Xxxxx X. Dea
----------------------------------
Name: Xxxxx X. Dea
Title: Chairman and Chief Executive
Officer
-56-
Exhibit A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, subject to the terms
of the Agreement, Sub shall not be required to accept for payment or pay for,
(subject to any applicable rules and regulations of the SEC, including Rule 14e-
1(c) under the Exchange Act (relating to Sub's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer)) any Shares
tendered, if by the expiration of the Offer (as it may be extended in accordance
with the requirements of Section 1.1), (1) there shall not have been validly
-----------
tendered and not withdrawn prior to the expiration of the Offer 16,730,502
shares of Company Common Stock (the "Minimum Condition"), (2) the applicable
-----------------
waiting period under the HSR Act and any other applicable Antitrust Laws shall
not have expired or been terminated, or (3) at any time on or after the date of
the Agreement and prior to the acceptance for payment of Shares pursuant to the
Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or proceeding by
any Governmental Entity:
(i) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit
the making of the Offer or the Merger, the acceptance for payment of,
or the payment for, some of or all the Shares by Parent or Sub or the
consummation by Parent or Sub of the Merger or seeking to obtain
material damages,
(ii) seeking to restrain or prohibit Parent's or Sub's
ownership or operation (or that of their respective Subsidiaries or
affiliates) of all or any material portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, or of Parent
and its Subsidiaries, taken as a whole, or to compel Parent or any of
its Subsidiaries or affiliates to dispose of or hold separate all or
any material portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or of Parent and its Subsidiaries,
taken as a whole,
(iii) seeking to impose material limitations on the ability of
Parent or any of its Subsidiaries effectively to exercise full rights
of ownership of the Shares, including, without limitation, the right
to vote any Shares acquired or owned by Parent or any of its
Subsidiaries or affiliates on all matters properly presented to the
Company's stockholders, or
(iv) seeking to require divestiture by Parent or any of its
Subsidiaries of any Shares; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree enacted, enforced, promulgated, issued
or deemed applicable to the Agreement, the Offer or the Merger, by any
Governmental Entity that is reasonably likely, directly or indirectly, to result
in any of the consequences referred to in clauses (i) through (iv) of paragraph
(a) above, subject as aforesaid; or
A-1
(c) the Company shall have breached or failed to perform in any
material respect any of its covenants, obligations or agreements under the
Agreement; or
(d) the representations and warranties of the Company set forth in
the Agreement that are qualified as to materiality shall not be true and correct
as of the date of the Agreement and as of the expiration of the Offer (including
any extension thereof) (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), or any of the representations and
warranties set forth in the Agreement that are not so qualified as to
materiality shall not be true and correct in any material respect as of the date
of the Agreement and as of the expiration of the Offer (except to the extent
expressly made as of an earlier date, in which case as of such earlier date);
provided that this condition shall not be deemed to exist unless any such
breaches of representation or warranty (without regard to any "Materiality" or
"Material Adverse Effect" or similar qualifier or threshold), individually or in
the aggregate, has had or could reasonably be expected to have, a Material
Adverse Effect on the Company; or
(e) this Agreement shall have been terminated in accordance with its
terms; or
(f) the Board of Directors of the Company (or any committee thereof)
shall have made a Subsequent Determination;
which, in the good faith judgment of Parent in any such case makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Sub
and may, subject to the terms of this Agreement, be waived by Parent and Sub in
their reasonable discretion in whole at any time or in part from time to time.
The failure by Parent or Sub at any time to exercise its rights under any of the
foregoing conditions shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances, and each
such right shall be deemed an ongoing right which may be asserted at any time or
from time to time. Terms used but not defined herein shall have the meaning
assigned to such terms in the Agreement to which this Exhibit A is a part.
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A-2
