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EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BETWEEN
XXXXXXXXX ENERGY, INC.
AND
UTI ENERGY CORP.
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER..............................................................................................1
SECTION 1.1 The Merger..................................................................................1
SECTION 1.2 Effective Time..............................................................................1
SECTION 1.3 Effects of the Merger.......................................................................2
SECTION 1.4 Certificate of Incorporation................................................................2
SECTION 1.5 Bylaws......................................................................................2
SECTION 1.6 Directors...................................................................................2
SECTION 1.7 Conversion of Securities....................................................................2
SECTION 1.8 Surviving Corporation to Make Certificates Available........................................3
SECTION 1.9 Dividends; Transfer Taxes...................................................................4
SECTION 1.10 No Fractional Shares.......................................................................4
SECTION 1.11 Return of Exchange Fund....................................................................5
SECTION 1.12 Adjustment of Exchange Ratio...............................................................5
SECTION 1.13 No Further Ownership Rights in UTI Common Stock............................................5
SECTION 1.14 Closing of UTI Transfer Books..............................................................5
SECTION 1.15 Further Assurances.........................................................................5
SECTION 1.16 Closing....................................................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PEC..................................................................6
SECTION 2.1 Organization, Standing and Power............................................................6
SECTION 2.2 Capital Structure...........................................................................6
SECTION 2.3 Authority; Non-Contravention................................................................7
SECTION 2.4 SEC Documents...............................................................................9
SECTION 2.5 Engineering Reports.........................................................................9
SECTION 2.6 S-4 Registration Statement and Joint Proxy Statement.......................................10
SECTION 2.7 Absence of Material Adverse Change.........................................................10
SECTION 2.8 No Undisclosed Material Liabilities........................................................12
SECTION 2.9 Accounting and Tax Matters.................................................................12
SECTION 2.10 Taxes.....................................................................................12
SECTION 2.11 Title to Property.........................................................................13
SECTION 2.12 Employee Benefit Plans....................................................................13
SECTION 2.13 Labor Matters.............................................................................15
SECTION 2.14 Environmental Matters.....................................................................16
SECTION 2.15 Agreements................................................................................17
SECTION 2.16 Litigation................................................................................17
SECTION 2.17 Governmental Licenses and Permits; Compliance with Law....................................17
SECTION 2.18 Required Vote of PEC Stockholders.........................................................18
SECTION 2.19 PEC Action................................................................................18
SECTION 2.20 Opinion of Financial Advisors.............................................................18
SECTION 2.21 Brokers...................................................................................18
SECTION 2.22 Takeover Statutes.........................................................................18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF UTI................................................................19
SECTION 3.1 Organization, Standing and Power...........................................................19
SECTION 3.2 Capital Structure..........................................................................19
SECTION 3.3 Authority; Non-Contravention...............................................................19
SECTION 3.4 SEC Documents..............................................................................20
SECTION 3.5 Intentionally left blank...................................................................21
SECTION 3.6 S-4 Registration Statement and Joint Proxy Statement.......................................21
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SECTION 3.7 Absence of Material Adverse Change.........................................................21
SECTION 3.8 No Undisclosed Material Liabilities........................................................23
SECTION 3.9 Accounting and Tax Matters.................................................................23
SECTION 3.10 Taxes.....................................................................................23
SECTION 3.11 Title to Property.........................................................................24
SECTION 3.12 Employee Benefit Plans; Employment Agreements.............................................24
SECTION 3.13 Labor Matters.............................................................................26
SECTION 3.14 Environmental Matters.....................................................................26
SECTION 3.15 Agreements................................................................................27
SECTION 3.16 Litigation................................................................................27
SECTION 3.17 Governmental Licenses and Permits; Compliance with Law....................................28
SECTION 3.18 Required Vote of UTI Stockholders.........................................................28
SECTION 3.19 UTI Action................................................................................28
SECTION 3.20 Section 203 of the DGCL Not Applicable....................................................28
SECTION 3.21 Opinion of Financial Advisor..............................................................28
SECTION 3.22 Brokers...................................................................................28
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................29
SECTION 4.1 Conduct of Business Pending the Merger.....................................................29
SECTION 4.2 No Solicitation............................................................................31
SECTION 4.3 No Solicitation............................................................................32
SECTION 4.4. Accounting and Tax Matters.................................................................34
ARTICLE V ADDITIONAL AGREEMENTS..................................................................................34
SECTION 5.1 Stockholder Approval.......................................................................34
SECTION 5.2 S-4 Registration Statement and Joint Proxy Statement.......................................35
SECTION 5.3 Access to Information......................................................................35
SECTION 5.4 Compliance with the Securities Act; Pooling of Interests...................................36
SECTION 5.5 Nasdaq National Market.....................................................................36
SECTION 5.6 Expenses...................................................................................36
SECTION 5.7 UTI Stock Options; UTI Stock Plans.........................................................37
SECTION 5.8 UTI Warrants...............................................................................37
SECTION 5.9 Reasonable Efforts.........................................................................38
SECTION 5.10 Public Announcements......................................................................38
SECTION 5.11 Indemnification; Directors and Officers Insurance.........................................38
SECTION 5.12 Employee Benefits.........................................................................39
SECTION 5.13 Takeover Statutes.........................................................................39
SECTION 5.14 Tax Matters...............................................................................40
SECTION 5.15 Registration Rights Relating to UTI Common Stock..........................................40
SECTION 5.16 Letter of UTI's Accountants...............................................................40
SECTION 5.17 Letter of PEC's Accountants...............................................................40
SECTION 5.18 Legal Conditions to Merger................................................................40
SECTION 5.19 Third Party Standstill Agreements.........................................................42
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER....................................................................42
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger.................................42
SECTION 6.2 Conditions to Obligations of UTI...........................................................43
SECTION 6.3 Conditions to Obligations of PEC...........................................................46
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................................................48
SECTION 7.1 Termination By Mutual Consent..............................................................48
SECTION 7.2 Termination by Either PEC or UTI...........................................................48
SECTION 7.3 Termination by UTI.........................................................................49
SECTION 7.4 Termination By PEC.........................................................................49
SECTION 7.5 Effect of Termination and Abandonment......................................................50
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SECTION 7.6 Amendment..................................................................................51
SECTION 7.7 Waiver.....................................................................................52
ARTICLE VIII GENERAL PROVISIONS..................................................................................52
SECTION 8.1 Survival...................................................................................52
SECTION 8.2 Notices....................................................................................52
SECTION 8.3 Interpretation.............................................................................53
SECTION 8.4 Counterparts...............................................................................53
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries.............................................53
SECTION 8.6 Governing Law..............................................................................53
SECTION 8.7 Assignment.................................................................................53
SECTION 8.8 Severability...............................................................................54
SECTION 8.9 Enforcement of This Agreement..............................................................54
SECTION 8.10 Jurisdiction and Venue....................................................................54
EXHIBIT I(A) Affiliate Agreement
EXHIBIT I(B) Affiliate Agreement
EXHIBIT II UTI Energy Corp. Stock Option Assumption Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 4, 2001
(this "Agreement"), between XXXXXXXXX ENERGY, INC., a Delaware corporation
("PEC"), and UTI ENERGY CORP., a Delaware corporation ("UTI") (PEC and UTI being
hereinafter collectively referred to as the "Constituent Corporations").
WITNESSETH:
WHEREAS, the respective Boards of Directors of PEC and UTI
have approved and declared fair to and advisable and in the best interests of
their respective stockholders the merger of PEC and UTI (the "Merger"), upon the
terms and subject to the conditions set forth herein, whereby the issued and
outstanding shares of Common Stock, par value $0.001 per share, of UTI ("UTI
Common Stock") not owned directly by UTI, will be converted into shares of
Common Stock, par value $.01 per share, of PEC ("PEC Common Stock" or "Surviving
Corporation Common Stock");
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests, but such accounting treatment is
not a condition to the Merger; and
WHEREAS, PEC and UTI desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), UTI shall be merged with and into PEC at the
Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of UTI shall cease and PEC shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of UTI in accordance with the DGCL.
SECTION 1.2 Effective Time. The Merger shall become effective
when the Certificate of Merger (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL, is filed with the Secretary
of State of the State of Delaware, provided, however, that, upon mutual consent
of the Constituent Corporations, the Certificate of Merger
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may provide for a later date of effectiveness of the Merger not more than 30
days after the date the Certificate of Merger is filed. When used in this
Agreement, the term "Effective Time" shall mean the later of the date and time
at which the Certificate of Merger is accepted for record 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 herein.
SECTION 1.3 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.4 Certificate of Incorporation. The Certificate of
Incorporation, as amended, of PEC, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law, except that Article First shall be amended to change the name of
the Surviving Corporation to Xxxxxxxxx-UTI Energy, Inc. and Article Fourth shall
be amended to increase the number of authorized shares of PEC common Stock from
50,000,000 shares to 150,000,000 shares, with the first sentence of Article
Fourth amended to read in its entirety as follows:
"The total number of shares of stock that the
Corporation shall have authority to issue is one hundred and
fifty-one million (151,000,000) shares, of which one hundred
and fifty million (150,000,000 shares shall be Common Stock,
having a par value of $0.01 per share, and one million
(1,000,000) shares shall be Preferred Stock, having a par
value of $0.01 per share."
SECTION 1.5 Bylaws. The Bylaws of PEC, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter changed or amended as provided therein by
applicable law.
SECTION 1.6 Directors. At the Effective Time, the number of
directors comprising the full Board of Directors of the Surviving Corporation
shall be increased to eleven members, with six members to be designated by the
PEC Board of Directors and five members to be designated by the UTI Board of
Directors, with such eleven members to be the directors of the Surviving
Corporation until their respective successors have been duly elected or
appointed in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation or by applicable law.
SECTION 1.7 Conversion of Shares. As of the Effective Time, by
virtue of the Merger and without any action on the part of any stockholder of
UTI:
(a) All shares of UTI Common Stock that are held in the
treasury of UTI shall be canceled and no capital stock of PEC or other
consideration shall be delivered in exchange therefor.
(b) Subject to the provisions of Sections 1.10 and 1.12
hereof, each share of UTI Common Stock issued and outstanding immediately prior
to the Effective Time (other than shares to be canceled in accordance with
Section 1.7(a)) shall be converted into 1.0 share (the
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"Exchange Ratio") of validly issued, fully paid and nonassessable share of
Common Stock, par value $0.01 per share, of Surviving Corporation Common Stock.
Pursuant to the Rights Agreement between PEC and Continental Stock Transfer &
Trust Company, as Rights Agent, dated January 2, 1997 ("PEC Rights Agreement"),
each share of Surviving Corporation Common Stock shall be accompanied by a right
under the Surviving Corporation Rights Agreement. All such shares of UTI Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be canceled and retired and each holder of a Certificate (as defined in Section
1.8(a)) representing any such shares shall cease to have any rights with respect
thereto, except the right to receive certain dividends and other distributions
as contemplated by Section 1.9 and shares of Surviving Corporation Common Stock
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 1.8.
(c) Each then outstanding share of Surviving Corporation
Common Stock shall continue to be an issued and outstanding share of Surviving
Corporation Common Stock, and any share of Surviving Corporation Common Stock
held in PEC's treasury immediately prior to the Effective Time and not issued in
the Merger shall continue to be held in the treasury of PEC at the Effective
Time.
SECTION 1.8 Surviving Corporation to Make Certificates
Available.
(a) Exchange of Certificates. PEC and UTI shall authorize
Continental Stock Transfer & Trust Company, New York, New York (or such other
person or persons as shall be reasonably acceptable to PEC and UTI) to act as
Exchange Agent hereunder (the "Exchange Agent"). As soon as practicable after
the Effective Time, Surviving Corporation shall deposit with the Exchange Agent
for the benefit of the holders of certificates, which immediately prior to the
Effective Time represented shares of UTI Common Stock (the "Certificates"),
certificates representing the shares of Surviving Corporation Common Stock (such
shares of Surviving Corporation Common Stock, together with any dividends or
distributions with respect thereto payable as provided in Section 1.9, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
1.7(c) in exchange for outstanding shares of UTI Common Stock and associated
rights.
(b) Exchange Procedures. Promptly after the Effective Time,
the Exchange Agent shall mail to each holder of record of a Certificate whose
shares were converted pursuant to Section 1.7 into shares of Surviving
Corporation Common Stock a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon actual and proper delivery of the Certificates to the Exchange
Agent and shall contain instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Surviving
Corporation Common Stock and shall be in such form and contain such other
provisions as PEC and UTI may reasonably specify). Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Surviving Corporation Common Stock which such holder has the right to
receive pursuant to this Article I, and the Certificate so surrendered shall
forthwith be canceled. Until surrendered as contemplated by this Section 1.8,
each Certificate shall, at and after the Effective Time, be deemed to represent
only the right to
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receive, upon surrender of such Certificate, the certificate representing the
appropriate number of shares of Surviving Corporation Common Stock, cash in lieu
of fractional shares, if any, as provided in Section 1.10 and certain dividends
and other distributions as contemplated by Section 1.9.
SECTION 1.9 Dividends; Transfer Taxes. No dividends or other
distributions that may be declared on or after the Effective Time on Surviving
Corporation Common Stock or are payable to the holders of record thereof on or
after the Effective Time will be paid to persons entitled by reason of the
Merger to receive certificates representing Surviving Corporation Common Stock
until such persons surrender their Certificates, as provided in Section 1.8, and
no cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 1.10 until such holder of such Certificate shall so
surrender such Certificate. Subject to the effect of applicable law, there shall
be paid to the record holder of the certificates representing such Surviving
Corporation Common Stock (i) at the time of such surrender or as promptly as
practicable thereafter, the amount of any dividends or other distributions
theretofore paid with respect to whole shares of such Surviving Corporation
Common Stock and having a record date on or after the Effective Time and a
payment date prior to such surrender and (ii) at the appropriate payment date or
as promptly as practicable thereafter, the amount of dividends or other
distributions payable with respect to whole shares of Surviving Corporation
Common Stock and having a record date on or after the Effective Time but prior
to surrender and a payment date subsequent to surrender. In no event shall the
person entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions. If any cash or
certificate representing shares of Surviving Corporation Common Stock is to be
paid to or issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
issuance of certificates for such shares of Surviving Corporation Common Stock
in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable.
SECTION 1.10 No Fractional Shares. No certificates or scrip
representing fractional shares of Surviving Corporation Common Stock shall be
issued upon the surrender for exchange of Certificates pursuant to this Article
I, and no PEC dividend or other distribution or stock split or combination shall
relate to any fractional security, and such fractional interests shall not
entitle the owner thereof to vote or to any rights of a security holder of PEC.
In lieu of any such fractional securities, each holder of shares of UTI Common
Stock who would otherwise have been entitled to receive a fraction of a share of
Surviving Corporation Common Stock (after taking into account all shares of UTI
Common Stock then held of record by such holder) shall receive cash (without
interest) in an amount equal to the product of such fractional part of a share
of UTI Common Stock multiplied by the Closing Price. As used in this Agreement,
(i) "Closing Price" means the average of the midpoint of the daily high and low
trading prices of Surviving Corporation Common Stock, rounded to four decimal
places, as reported under Nasdaq National Market Issues Reports in The Wall
Street Journal for each of the first 20 consecutive Trading Days in the period
commencing twenty-five (25) Trading Days prior to the date of the Closing
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and (ii) "Trading Day" means a day on which the National Association of
Securities Dealers, Inc. National Market ("Nasdaq National Market") is open for
trading.
SECTION 1.11 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of UTI for
one year after the Effective Time shall be delivered to Surviving Corporation,
upon demand of Surviving Corporation, and any former stockholders of UTI who
have not theretofore complied with this Article I shall thereafter look only to
Surviving Corporation for payment of their claim for Surviving Corporation
Common Stock, any cash in lieu of fractional shares of Surviving Corporation
Common Stock and any dividends or distributions with respect to Surviving
Corporation Common Stock. None of PEC, UTI nor the Surviving Corporation shall
be liable to any holder of shares of UTI Common Stock for shares (or dividends
or distributions with respect thereto) or cash in lieu of fractional shares of
Surviving Corporation Common Stock delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
SECTION 1.12 Adjustment of Exchange Ratio. In the event of any
reclassification, recapitalization, stock split, stock combination, stock
dividend or share exchange with respect to PEC Common Stock or UTI Common Stock,
as the case may be, (or if a record date with respect to any of the foregoing
should occur) prior to the Effective Time, appropriate and proportionate
adjustments, if any, shall be made to the Exchange Ratio, and all references to
the Exchange Ratio in this Agreement shall be deemed to be to the Exchange Ratio
as so adjusted.
SECTION 1.13 No Further Ownership Rights in UTI Common Stock.
All shares of Surviving Corporation Common Stock issued upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any cash
paid pursuant to Sections 1.9 or 1.10) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the shares of UTI Common Stock,
subject, however, to the Surviving Corporation's obligation to pay any dividends
or make any other distribution with a record date prior to the Effective Time
which may have been declared or made by UTI on such shares of UTI Common Stock
in accordance with the terms of this Agreement.
Section 1.14 Closing of UTI Transfer Books. At the Effective
Time, the stock transfer books of UTI shall be closed and no transfer of shares
of UTI Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged as provided in this Article I.
SECTION 1.15 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or
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proper to vest, perfect or confirm its right, title or interest in, to or under
any of the rights, privileges, powers, franchises, properties or assets of such
Constituent Corporation and otherwise to carry out the purposes of this
Agreement.
SECTION 1.16 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxx & Xxxxxxxxx LLP, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000,
at 10:00 a.m. local time, on the second business day after the day on which the
last of the conditions set forth in Article VI hereof shall have been fulfilled
or waived or at such other time and place as PEC and UTI shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PEC
PEC represents and warrants to UTI as follows:
SECTION 2.1 Organization, Standing and Power. PEC is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each Subsidiary of PEC is a limited liability
company or a limited liability limited partnership duly organized validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite limited liability company or limited
partnership power and authority, as the case may be, to own and operate its
properties and to carry on its business as now being conducted. PEC and each of
its Subsidiaries is duly qualified to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on PEC. For purposes of this Agreement
(a) "Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to PEC or UTI, as the case may be, any change or effect that is or, so
far as can reasonably be determined, is likely to be materially adverse to the
assets, properties, condition (financial or otherwise), business or results of
operations of PEC and its Subsidiaries taken as a whole or UTI and its
Subsidiaries taken as a whole, as the case may be, and (b) "Subsidiary" means
any corporation, partnership, joint venture, limited liability company or other
legal entity of which PEC or UTI, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity. Section 2.1 of the disclosure
statement of PEC dated as of the date hereof previously furnished to UTI (the
"PEC Disclosure Schedule") contains a list of PEC's Subsidiaries.
SECTION 2.2 Capital Structure. As of the date hereof, the
authorized capital stock of PEC consists of 50,000,000 shares of PEC Common
Stock and 1,000,000 shares of Preferred Stock, par value $0.01 per share ("PEC
Preferred Stock"). Except as set forth in Section 2.2 of the PEC Disclosure
Schedule, all of the outstanding equity securities of each Subsidiary of PEC is
owned by PEC directly or indirectly, free and clear of any Lien (as defined
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in Section 2.10), including any restriction on the right to vote, sell or
otherwise dispose of such equity securities. At the close of business on
February 2, 2001, (i) 38,014,326 shares of PEC Common Stock were validly issued
and outstanding, fully paid and nonassessable and free of preemptive rights,
(ii) 1,792,520 shares of PEC Common Stock were reserved for issuance upon the
exercise of options for PEC Common Stock then outstanding under the PEC 1993
Stock Incentive Plan and Non-Employee Directors' Stock Option Plan
(collectively, the "PEC Stock Plans"), (iii) 30,900 additional shares of PEC
Common Stock were reserved for issuance under the PEC Stock Plans, (iv) 127,000
shares of PEC Common Stock were reserved for issuance upon the exercise of
warrants granted as partial consideration for certain acquired drilling assets
(the "PEC Warrants") (v) 300,000 shares of PEC Common Stock were held by PEC in
its treasury, and (vi) no shares of PEC Preferred Stock were issued and
outstanding or reserved for issuance. There are no outstanding stock
appreciation rights ("SARs"). PEC Common Stock is designated as a national
market security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. All of the shares of Surviving Corporation Common
Stock issuable in exchange for UTI Common Stock at the Effective Time in
accordance with this Agreement and issuable upon exercise of Substituted Options
(as defined in Section 5.7) or Substituted Warrants (as defined in Section 5.8)
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. Except for options granted pursuant
to the PEC Stock Plans, the PEC Warrants and the Rights issued pursuant to the
PEC Rights Agreement, there are no options, warrants, rights, commitments,
agreements, arrangements or undertakings of any kind to which PEC or any of its
Subsidiaries is a party or by which any of them is bound obligating PEC or any
of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional equity securities or other voting securities of PEC or of
any of its Subsidiaries. True and correct copies of all agreements, instruments
and other governing documents relating to the PEC Stock Plans and the PEC Rights
Agreement have been furnished to UTI.
SECTION 2.3 Authority; Non-Contravention. The Board of
Directors of PEC has declared the Merger and an amendment to PEC's Certificate
of Incorporation to increase the number of authorized shares of PEC Common Stock
to 150,000,000 shares (the "Charter Amendment") fair to and advisable and in the
best interests of the stockholders of PEC. PEC has all requisite power and
authority to enter into this Agreement and, subject to the approval of the
Merger and the Charter Amendment by the stockholders of PEC, to consummate the
Merger and the other transactions contemplated hereby. The execution and
delivery by PEC of this Agreement and any Stock Option Assumption Agreements (as
defined in Section 5.7) or Warrant Assumption Agreements (as defined in Section
5.8) and the consummation by PEC of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of PEC, subject to such approval of the Merger and the Charter Amendment by the
stockholders of PEC. This Agreement has been duly executed and delivered by PEC
and (assuming the valid authorization, execution and delivery of this Agreement
by UTI) constitutes a valid and binding obligation of PEC enforceable against
PEC in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). The Merger, the Charter Amendment and the filing of a
registration statement with the SEC by PEC on Form S-4 under the Securities Act
of 1933, as amended (together with the rules and
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regulations promulgated thereunder, the "Securities Act"), for the purpose of
registering the shares of PEC Common Stock to be issued in the Merger (together
with any amendments or supplements thereto, the "S-4 Registration Statement"),
and the filing of a registration statement with the SEC by PEC on Form S-8 under
the Securities Act for the purpose of registering the shares of PEC Common Stock
issuable upon exercise of the Substituted Options (as hereinafter defined in
Section 5.7) have been duly authorized by PEC's Board of Directors. Except as
set forth in Section 2.3 of the PEC Disclosure Schedule, the execution and
delivery of this Agreement or any Stock Option Assumption Agreements or Warrant
Assumption Agreements, do not or will not, as the case may be, and the
consummation of the transactions contemplated hereby and thereby and compliance
with the provisions hereof and thereof 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 the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of PEC or any of its Subsidiaries under, any provision of
(i) the Restated Certificate of Incorporation, as amended, or Bylaws (true and
complete copies of which as of the date hereof have been delivered to UTI) of
PEC or any provision of the comparable charter or organization 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 PEC or any of its Subsidiaries or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to PEC or
any of its Subsidiaries or any of their respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such conflicts, violations,
defaults, rights, losses, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
on PEC, materially impair the ability of PEC to perform its obligations
hereunder or under the Stock Option Assumption Agreements or Warrant Assumption
Agreements, or prevent the consummation of any of the transactions contemplated
hereby or thereby. Except as set forth in Section 2.3 of the PEC Disclosure
Schedule, no filing or registration with, or authorization, consent or approval
of, any domestic (federal and state), foreign or supranational court,
commission, governmental body, regulatory agency, authority or tribunal (a
"Governmental Entity") is required by or with respect to PEC or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
PEC or is necessary for the consummation by PEC of the Merger and the other
transactions contemplated by this Agreement and the issuance of PEC Common Stock
pursuant to the Stock Option Assumption Agreements or Warrant Assumption
Agreements, except for (i) in connection, or in compliance, with the provisions
of the Securities Act and the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), (ii) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and recording of the Certificate of Merger in the
appropriate county in Delaware after the filing thereof with the Secretary of
State of the State of Delaware and the filing or recording of appropriate
documents with the relevant authorities of other states in which UTI is
qualified to do business, (iii) such filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, (iv) such filings as may be
required in connection with applicable taxes, (v) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under the corporation, takeover or "Blue Sky" laws of various states,
(vi) such filings and approvals as may be required under Xxxx-Xxxxx-Xxxxxx
Antitrust
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Improvements Act of 0000 (xxx "XXX Xxx"), and (vii) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on PEC, materially impair the ability of PEC to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
SECTION 2.4 SEC Documents. PEC has filed all required
documents with the SEC since January 1, 1998 (the "PEC SEC Documents"). As of
their respective dates, the PEC SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and none of the PEC 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 consolidated financial statements of
PEC included in the PEC SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) 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 PEC and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and statements of 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). There is no
liability or obligation of any kind, whether accrued, absolute, fixed or
contingent, of PEC or any Subsidiary of PEC which is required by generally
accepted accounting principles to be reflected or reserved against or otherwise
disclosed in the most recent financial statements of PEC included in the PEC SEC
Documents which is not so reflected or reserved against that individually or in
the aggregate would have a Material Adverse Effect on PEC. For purposes of this
Agreement, "PEC Balance Sheet" means the consolidated balance sheet as of
September 30, 2000, set forth in PEC's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000, and "PEC Balance Sheet Date" means September
30, 2000.
SECTION 2.5 Engineering Reports. All information supplied to
M. Xxxxx Xxxxxxx, an independent petroleum engineer, by or on behalf of PEC and
its Subsidiaries that was material to such engineer's review of PEC's estimates
of oil and gas reserves attributable to the Oil and Gas Interests (as defined
below) of PEC and its Subsidiaries in connection with the preparation of the oil
and gas reserve engineering report concerning the Oil and Gas Interests of PEC
and its Subsidiaries as of December 31, 1999, reviewed by M. Xxxxx Xxxxxxx (the
"PEC Engineering Report") was (at the time supplied or as modified or amended
prior to the issuance of the PEC Engineering Report) true and correct in all
material respects. For purposes of this Agreement "Oil and Gas Interests" means,
when used with respect to PEC and each of its Subsidiaries, direct and indirect
interests in and rights with respect to oil, gas, helium, carbon dioxide,
mineral, and related properties and assets of any kind and nature, direct or
indirect, including working, royalty and overriding royalty interests,
production payments, operating rights, net profit interests, other nonworking
interests, and nonoperating interests; all interests in and rights with respect
to oil, condensate, gas, casing-head gas, helium, carbon dioxide and other
liquid or gaseous hydrocarbons (collectively, "Hydrocarbons") and other minerals
or revenues therefrom and all contracts in connection therewith and claims and
rights thereto (including all
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oil and gas leases, operating agreements, unitization and pooling agreements and
orders, division orders, transfer orders, mineral deeds, royalty deeds, oil and
gas sales, exchange and processing contracts and agreements, and in each case,
interests thereunder), surface interests, fee interests, reversionary interests,
reservations, and concessions; all easements, rights of way, licenses, permits,
leases, and other interests associated with, appurtenant to, or necessary for
the operation of any of the foregoing; and all interests in equipment and
machinery (including well equipment and machinery), oil and gas production,
gathering, transmissions, treating, processing, and storage facilities
(including tanks, tank batteries, pipelines, and gathering systems), pumps,
water plants, electric plants, gasoline and gas processing plants, refineries,
and other tangible personal property and fixtures associated with, appurtenant
to, or necessary for the operation of any of the foregoing. Except for changes
in classification or values of oil and gas reserve or property interests that
occurred in the ordinary course of business since December 31, 1999, and except
for changes (including changes in commodity prices) generally affecting the oil
and gas industry on a nationwide basis, there has been no Material Adverse
Change in respect of PEC regarding the matters addressed in the PEC Engineering
Report.
SECTION 2.6 S-4 Registration Statement and Joint Proxy
Statement. None of the information to be supplied by PEC for inclusion or
incorporation by reference in the S-4 Registration Statement or the joint proxy
statement (together with any amendments or supplements thereto, the "Joint Proxy
Statement") relating to the Stockholder Meetings (as defined in Section 5.1)
will (i) in the case of the S-4 Registration Statement, at the time it becomes
effective and at the Effective Time, 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 not misleading or (ii) in the
case of the Joint Proxy Statement, at the time of the mailing of the Joint Proxy
Statement and at the time of the Stockholder Meetings, 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. If at any time
prior to the Effective Time any event with respect to PEC, its officers and
directors or any of its Subsidiaries shall occur which is required to be
described in the Joint Proxy Statement or the S-4 Registration Statement, such
event shall be so described, and an amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the stockholders of
UTI and PEC. The S-4 Registration Statement will comply (with respect to PEC and
its Subsidiaries) as to form in all material respects with the provisions of the
Securities Act, and the Joint Proxy Statement will comply (with respect to PEC
and its Subsidiaries) as to form in all material respects with the provisions of
the Exchange Act. No representation or warranty is made by PEC in this Section
2.6 with respect to statements made or incorporated by reference therein based
on information supplied by UTI for inclusion or incorporation by reference in
the Joint Proxy Statement or S-4 Registration Statement.
SECTION 2.7 Absence of Material Adverse Change. Except as
disclosed in the PEC SEC Documents filed with the SEC prior to the date hereof,
since the PEC Balance Sheet Date, PEC and its Subsidiaries have conducted their
business in the ordinary course consistent with past practice and there has not
been:
(a) through the date of this Agreement, any event, occurrence
or development which, individually or in the aggregate, has caused or would be
reasonably likely to cause a
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Material Adverse Change with respect to PEC (other than changes in generally
accepted accounting principles or interpretations thereof that the oil and gas
contract drilling industry or oil and gas industry generally or changes in
general economic conditions that affect either of those industries on a
nationwide basis);
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of PEC or any
repurchase, redemption or other acquisition by PEC or any Subsidiary of PEC of
any amount of outstanding shares of capital stock or other equity securities of,
or other ownership interests in, PEC or any Subsidiary of PEC;
(c) any amendment of any term of any outstanding security of
PEC or any Subsidiary of PEC that would materially increase the obligations of
PEC or such Subsidiary under such security;
(d) (x) any incurrence or assumption by PEC or any Subsidiary
of PEC of any indebtedness for borrowed money other than under existing credit
facilities (or any renewals, replacements or extensions thereof that do not
materially increase the commitments thereunder) in the ordinary course of
business consistent with past practices (it being understood that any
indebtedness incurred prior to the date hereof in respect of capital
expenditures shall be considered to have been in the ordinary course of business
consistent with past practice), or (y) any guarantee, endorsement or other
incurrence or assumption of liability (whether directly, contingently or
otherwise) by PEC or any Subsidiary of PEC for the obligations of any other
Person (other than any Subsidiary of PEC), other than in the ordinary course of
business consistent with past practice or in connection with obligations of PEC
and its Subsidiaries assumed at the Effective Time;
(e) any creation or assumption by PEC or any Subsidiary of PEC
of any Lien on any material asset of PEC or any Subsidiary of PEC other than in
the ordinary course of business consistent with past practices;
(f) any making of any loan, advance or capital contribution to
or material investment in any Person by PEC or any Subsidiary of PEC other than
(i) loans, advances or capital contributions to or investments in wholly-owned
Subsidiaries of PEC;
(g) (i) any contract or agreement entered into by PEC or any
Subsidiary of PEC on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business or (ii) any modification,
amendment, assignment, termination or relinquishment by PEC or any Subsidiary of
PEC of any contract, license or other right (including any insurance policy
naming it as a beneficiary or a loss payable payee) that would be reasonably
likely to have a Material Adverse Effect on PEC, other than, in the case of (i)
and (ii), transactions, commitments, contracts or agreements in the ordinary
course of business consistent with past practices and those contemplated by this
Agreement; and
(h) any material change in any method of account or accounting
principles or practice by PEC or any Subsidiary of PEC, except for any such
change required by reason of change in generally accepted accounting principles.
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SECTION 2.8 No Undisclosed Material Liabilities. There have
been no liabilities or obligations (whether pursuant to contracts or otherwise)
of any kind whatsoever incurred by PEC or any Subsidiary of PEC since September
30, 2000, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities or obligations (i) disclosed or provided for
in the PEC Balance Sheet or in the notes thereto, (ii) disclosed in the PEC SEC
Documents filed prior to the date hereof or (iii) disclosed in Section 2.8 to
the PEC Disclosure Schedule;
(b) liabilities or obligations which, individually and in the
aggregate, have not had and are not reasonably likely to have a Material Adverse
Effect on PEC; or
(c) liabilities or obligations under this Agreement or
incurred in connection with the transactions contemplated hereby.
SECTION 2.9 Accounting and Tax Matters. As of the date hereof,
neither PEC nor any of its Affiliates has taken or agreed to take any action,
nor do the executive officers of PEC have any knowledge of any fact or
circumstance, that would prevent PEC from accounting for the business
combination to be effected by the Merger as a "pooling of interests" or prevent
the Merger and the other transactions contemplated by this Agreement from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code. For purposes of this Agreement, the term "Affiliate," when used with
respect to any Person, means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. As used in
the definition of "Affiliate," the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this Agreement, "Person" means an
individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Entity (as hereinafter defined).
SECTION 2.10 Taxes. Except as otherwise set forth in Section
2.10 of the PEC Disclosure Schedule, (i) all federal and all material state,
local and foreign Tax Returns required to be filed by PEC, each of its
Subsidiaries and any consolidated, affiliated, combined or unitary group of
which any such entity is or was a member have been timely filed (taking in
account any extensions), (ii) all Tax Returns referred to in clause (i) are true
and correct in all material respects and have been completed in all material
respects in accordance with applicable laws, (iii) all Taxes shown to be due on
the Tax Returns referred in clause (i) and all Taxes otherwise due from PEC,
each of its Subsidiaries or any group of such entities have been timely paid or
such Taxes have been adequately provided for on PEC's consolidated balance
sheet; (iv) neither PEC nor any of its Subsidiaries has waived any statute of
limitations in respect of Taxes of PEC, such Subsidiary or any group of such
entities; (v) the Tax Returns referred to in clause (i) relating to federal
income Taxes have been examined by the Internal Revenue Service or the period
for assessment of Taxes in respect of which such Tax Returns were required to be
filed has expired through the taxable period set forth in Section 2.10 of the
PEC Disclosure Schedule; (vi) no issues that have been raised in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; (vii) all deficiencies asserted
or assessments made as a result of any examination of the Tax Returns
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referred to in clause (i) by a taxing authority have been paid in full or
adequately provided for on PEC's consolidated balance sheet; (viii) neither PEC
nor any Subsidiary of PEC is a party to a Tax allocation agreement, Tax sharing
agreement, Tax indemnity agreement or similar agreement or arrangement; and (ix)
PEC, each of its Subsidiaries and each of such entities have complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has in all respects timely withheld
from employee wages and paid over except where such failure to comply or to
withhold would not have a Material Adverse Effect. For purposes of this
Agreement, (a) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, transfer, severance or excise tax, or
any other tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty, imposed by any
governmental authority and (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
SECTION 2.11 Title to Property. Except as set forth in Section
2.11 of the PEC Disclosure Schedule, PEC or its Subsidiaries has good and, with
respect to real property, valid title to all of the material assets reflected on
the consolidated financial statements of PEC included in the PEC SEC Documents
as being owned by it or its Subsidiaries and all of the material assets
thereafter acquired by it or its Subsidiaries (except to the extent that such
assets have thereafter been disposed of in the ordinary course of business
consistent with past practice), subject to no liens, mortgages, pledges,
security interests, encumbrances, claims or charges of any kind (collectively,
"Liens") except for (i) Liens for taxes not yet delinquent or the validity of
which is being contested in good faith and (ii) any Liens arising by operation
of law securing obligations not yet overdue. Notwithstanding the foregoing,
title to the Oil and Gas Interests of PEC and its Subsidiaries is of the type
customarily acceptable to prudent investors in Oil and Gas Interests in the area
where such Oil and Gas Interests of PEC and its Subsidiaries are located.
SECTION 2.12 Employee Benefit Plans.
(a) Except as set forth in Section 2.12 of the PEC Disclosure
Schedule, there are no material employee benefit plans (including without
limitation any plans, arrangements, practices, contracts, or any employment and
severance agreements, incentive compensation, bonus, stock option, stock
appreciation rights and stock purchase plans for the benefit of directors,
former directors or former employees or officers), arrangements, practices,
contracts or agreements (including employment agreements and severance
agreements, incentive compensation, bonus, stock option, stock appreciation
rights and stock purchase plans) of any type (including plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
maintained by, sponsored by or contributed by PEC, any of its Subsidiaries or
any trade or business, whether or not incorporated, that together with PEC would
be deemed a "controlled group" within the meaning of Section 4001(a)(14) of
ERISA or Section 414 of the Code (an "ERISA PEC Affiliate," or with respect to
which PEC, or any of its Subsidiaries or any of its ERISA PEC Affiliates have or
may have a liability (the "PEC Benefit Plans"). Except as disclosed in Section
2.12 of the PEC Disclosure Schedule, (i) neither PEC nor any ERISA PEC Affiliate
has any formal or informal plan or commitment, whether legally binding or not,
to
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create any additional PEC Benefit Plan or modify or change any existing PEC
Benefit Plan that would affect any employee or terminated employee of PEC or any
ERISA PEC Affiliate; and (ii) since September 30, 2000, there has been no
change, amendment, modification to, or adoption of, any PEC Benefit Plan, in
each case, that has had, or would be reasonably likely to have, a Material
Adverse Effect on PEC. PEC has made available to UTI each PEC Benefit Plan.
(b) With respect to each PEC Benefit Plan, except as disclosed
in Section 2.12 of the PEC Disclosure Schedule, and except as would not,
individually or in the aggregate, have a Material Adverse Effect on PEC or an
ERISA PEC Affiliate: (i) if intended to qualify under Section 401(a), 401(k) or
403(a) of the Code, such plan so qualifies, and its trust is exempt from
taxation under Section 501(a) of the Code; (ii) such plan has been administered
in accordance with its terms and applicable law; (iii) no breaches of fiduciary
duty have occurred unless exempt under Section 408 of ERISA; (iv) no prohibited
transaction within the meaning of Section 406 of ERISA has occurred; (v) as of
the date of this Agreement, no Lien imposed under the Code or ERISA exists; and
(vi) all contributions and premiums due (including any extensions for such
contributions and premiums) have been made in full.
(c) None of the PEC Benefit Plans has incurred any
"accumulated funding deficiency," as such term is defined in Section 412 of the
Code, whether or not waived.
(d) Neither PEC nor any ERISA PEC Affiliate has incurred any
liability under Title IV of ERISA (including Sections 4063-4064 and 4069 of
ERISA) that has not been satisfied in full except as, individually or in the
aggregate, would not have or would not be reasonably likely to have a Material
Adverse Effect on PEC or an ERISA PEC Affiliate or that has not been reflected
on PEC's consolidated financial statements.
(e) With respect to any PEC Benefit Plan that is a "welfare
plan" (as defined in Section 3(1) of ERISA), no such plan provides medical or
death benefits with respect to current or former employees of PEC or any of its
Subsidiaries or an ERISA PEC Affiliate beyond their termination of employment,
other than as may be required under Part 6 of Title I of ERISA.
(f) Except as set forth in Section 2.12 of the PEC Disclosure
Schedule, neither PEC nor any of its subsidiaries is a party to an agreement
that provides for the payment of an account that would constitute a "parachute
payment" within the meaning of 2806 of the Code, and the consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay or any tax "gross-up" payments with respect to the imposition of
any tax pursuant to Section 4999 of the Code.
(g) Except as set forth in Section 2.12 of the PEC Disclosure
Schedule, there is no PEC Benefit Plan that is a "multiemployer plan," as such
term is defined in Section 3(37) of ERISA, or which is covered by Section 4063
or 4064 of ERISA and no PEC Benefit Plan is subject to Title IV of ERISA.
(h) No PEC Benefit Plan is subject to any lawsuit or
threatened lawsuit or an ongoing audit investigation or other administrative
processing of the Internal Revenue Service,
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the Department of Labor, or any other federal, state or local governmental
entity or is scheduled to be subject to such an audit, investigation or
proceeding. Each PEC Benefit Plan can be unilaterally amended and or terminated
at any time by PEC.
(i) Except as set forth in Section 2.12 of the PEC Disclosure
Schedule, the consummation of the transactions contemplated in this Agreement
will not trigger the payment of severance, termination, or dismissal pay, or the
like, nor shall it accelerate the vesting, exercisability, or payment of any
amounts under any plan, program, or agreement providing compensation for or to
any officer, director, or employee of PEC.
SECTION 2.13 Labor Matters. (i) Neither PEC nor any of its
Subsidiaries is a party to any collective bargaining agreement or other material
contract or agreement with any labor organization or other representative of
employees nor is any such contract being negotiated; (ii) there is no material
unfair labor practice charge or complaint pending nor, to the knowledge of the
executive officers of PEC, threatened, with regard to employees of PEC or any
Subsidiary; (iii) there is no labor strike, material slowdown, material work
stoppage or other material labor controversy in effect, or, to the knowledge of
the executive officers of PEC, threatened against PEC or any of its
Subsidiaries; (iv) as of the date hereof, no representation question exists, nor
to the knowledge of the executive officers of PEC are there any campaigns being
conducted to solicit cards from the employees of PEC or any Subsidiary of PEC to
authorize representation by any labor organization; (v) neither PEC nor any
Subsidiary of PEC is a party to, or is otherwise bound by, any consent decree
with any governmental authority relating to employees or employment practices of
PEC or any Subsidiary of PEC; (vi) neither PEC nor any of its Subsidiaries has
incurred any liability under, and have complied in all respects with, the Worker
Adjustment Retraining Notification Act, and no fact or event exists that could
give rise to liability under such Act; (vii) PEC and each Subsidiary of PEC are
in compliance with all applicable agreements, contracts and policies relating to
employment, employment practices, wages, hours and terms and conditions of
employment of the employees, except where the failure to be in compliance with
each such agreement, contract and policy would not, either singly or in the
aggregate, have a Material Adverse Effect on PEC; (viii) there is no complaint,
lawsuit or proceeding in any forum by any Governmental Entity, by or on behalf
of any present or former employee, any applicant for employment or any classes
of the foregoing alleging breach of any express or implied contract of
employment, any law or regulation governing employment or the termination
thereof or other discriminatory, wrongful or tortuous conduct in connection with
the employment relationship against PEC or any of its Subsidiaries pending, or,
to the knowledge of PEC or any of its Subsidiaries, threatened, that has, or
would have, a Material Adverse Effect on PEC; (ix) PEC and each of its
Subsidiaries are in compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment, wages, hours of
work and occupational safety and health, except for non-compliance that does not
have, and would not have, a Material Adverse Effect on PEC; and (x) there is no
proceeding, claim, suit, action or governmental investigation pending, or to the
knowledge of PEC or any of its Subsidiaries, threatened, in respect to which any
current or former director, officer, employee or agent of PEC or any of its
Subsidiaries is or may be entitled to claim indemnification from PEC or any of
its Subsidiaries (A) pursuant to their respective charters or bylaws (B) as
provided in any indemnification agreement to which PEC or any Subsidiary of PEC
is a party; or (C) pursuant to applicable law that has, or would have, a
Material Adverse Effect on PEC.
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SECTION 2.14 Environmental Matters.
(a) Except to the extent that the inaccuracy of any of the
following, individually or in the aggregate, would not have a Material Adverse
Effect on PEC or as disclosed in Section 2.14 of the PEC Disclosure Schedule:
(i) PEC and its Subsidiaries hold, and are in
compliance with and have been in compliance with for the last three
years, all Environmental Permits, and are otherwise in compliance and
have been in compliance for the last three years with, all applicable
Environmental Laws and there is no condition that is reasonably likely
to prevent or materially interfere prior to the Effective Time with
compliance by PEC and its Subsidiaries with Environmental Laws;
(ii) no modification, revocation, reissuance,
alteration, transfer or amendment of any Environmental Permit, or any
review by, or approval of, any third party of any Environmental Permit
is required in connection with the execution or delivery of this
Agreement or the consummation by PEC of the transactions contemplated
hereby or the operation of the business of PEC or any of its
Subsidiaries on the date of the Closing;
(iii) neither PEC nor any of its Subsidiaries has
received any Environmental Claim, nor has any Environmental Claim been
threatened against PEC or any of its Subsidiaries;
(iv) neither PEC nor any of its Subsidiaries has
entered into, agreed to or is subject to any outstanding judgment,
decree, order or consent arrangement with any governmental authority
under any Environmental Laws, including without limitation those
relating to compliance with any Environmental Laws or to the
investigation, cleanup, remediation or removal of Hazardous Materials;
(v) there are no circumstances that are reasonably
likely to give rise to liability under any agreements with any person
pursuant to which PEC or any Subsidiary of PEC would be required to
defend, indemnify, hold harmless, or otherwise be responsible for any
violation by or other liability or expense of such person, or alleged
violation by or other liability or expense of such person, arising out
of any Environmental Law; and
(vi) there are no other circumstances or conditions
that are reasonably likely to give rise to liability of PEC or any of
its Subsidiaries under any Environmental Laws.
(b) For purposes of this Agreement, the terms below shall have
the following meanings:
"Environmental Claim" means any written complaint, notice,
claim, demand, action, suit or judicial, administrative or arbitral proceeding
by any person to PEC or any of its Subsidiaries (or, for purposes of Section
3.14, UTI) asserting liability or potential liability (including without
limitation, liability or potential liability for investigatory costs, cleanup
costs,
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governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Laws or Environmental
Permits, or (iii) otherwise relating to obligations or liabilities of PEC or any
of its Subsidiaries (or, for purposes of Section 3.14, UTI) under any
Environmental Law.
"Environmental Permits" means all permits, licenses,
registrations, exemptions and other governmental authorizations required under
Environmental Laws for PEC or any of its Subsidiaries (or, for purposes of
Section 3.14, UTI) to conduct its operations as presently conducted.
"Environmental Laws" means all applicable foreign, federal,
state and local statutes, rules, regulations, ordinances, orders, decrees and
common law relating in any manner to pollution, protection of the environment or
the use, storage, treatment or disposal of Hazardous Materials, to the extent
and in the form that such exist at the date hereof or at any relevant date prior
to the date hereof.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials and substances, including but
not limited to radioactive materials, regulated pursuant to any Environmental
Laws.
SECTION 2.15 Agreements. Except agreements and arrangements
made in the ordinary course of business, neither PEC nor any of its Subsidiaries
is bound by any material contract (as defined in Item 601(b)(10) of SEC
Regulation S-K) to be performed after the date hereof that has not been filed
with or incorporated by reference in the PEC SEC Documents filed with the SEC
prior to the date of this Agreement.
SECTION 2.16 Litigation. Except as set forth in Section 2.16
of the PEC Disclosure Schedule and except as disclosed prior to the date hereof
in the PEC SEC Documents, there is no suit, action, investigation or proceeding
pending or, to the knowledge of the executive officers of PEC, threatened
against PEC or any of its Subsidiaries at law or in equity before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or before any arbitrator
of any kind, that would have a Material Adverse Effect on PEC or, with respect
to such matters that are pending or threatened, materially impair the ability of
PEC to perform its obligations hereunder or to consummate the transactions
contemplated hereby, and there is no judgment, decree, injunction, rule or order
of any court, governmental department, commission, board, bureau, agency,
instrumentality or arbitrator to which PEC or any of its Subsidiaries is subject
that would have a Material Adverse Effect on PEC or, with respect to such items
that are outstanding and applicable as of the date hereof, materially impair the
ability of PEC to perform its obligations hereunder or to consummate the
transactions contemplated hereby.
SECTION 2.17 Governmental Licenses and Permits; Compliance
with Law. Neither PEC nor any of its Subsidiaries has received notice of any
revocation or modification of
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any federal, state, local or foreign governmental license, certification,
tariff, permit, authorization or approval, the revocation or modification of
which would have a Material Adverse Effect on PEC. To the knowledge of the
executive officers of PEC, the conduct of the business of each of PEC and its
Subsidiaries complies with all statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees or arbitration awards applicable thereto, except for
violations or failures to comply, if any, that, individually or in the
aggregate, would not have a Material Adverse Effect on PEC.
SECTION 2.18 Required Vote of PEC Stockholders. The
affirmative vote of the holders of not less than a majority of the outstanding
shares of PEC Common Stock is required to approve the Merger and the Charter
Amendment. No other vote of the stockholders of PEC is required by law, the
Restated Certificate of Incorporation, as amended, or Bylaws of PEC or otherwise
in order for PEC to consummate the Merger and the other transactions
contemplated hereby.
SECTION 2.19 PEC Action. The Board of Directors of PEC (at a
meeting duly called and held) unanimously (1) determined that the Merger is fair
to and advisable and in the best interests of PEC and its stockholders, (b)
approved this Agreement, the Merger and the Charter Amendment, (c) resolved to
recommend approval of the Merger and adoption of the Charter Amendment by PEC's
stockholders, and (d) directed that the Merger and the Charter Amendment be
submitted to PEC's stockholders.
SECTION 2.20 Opinion of Financial Advisors. On the date
hereof, PEC has received the respective written opinion of Xxxxxxx Xxxxx & Co.
to the effect that the Exchange Ratio to be received by the stockholders of PEC
is fair to the stockholders of PEC from a financial point of view, and such
opinion has not been withdrawn.
SECTION 2.21 Brokers. No broker, investment banker or other
person, other xxxx Xxxxxxx Xxxxx & Co., the fees and expenses of which will be
paid by PEC, is entitled to any broker's, finder'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 PEC. PEC has previously
delivered to UTI a true, correct and complete copy of any engagement or fee
agreement between PEC and Xxxxxxx Xxxxx & Co.
SECTION 2.22 Takeover Statutes. To the best of PEC's
knowledge, no takeover statute applicable to PEC or any of its Subsidiaries is
applicable to the Merger or the other transactions contemplated hereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UTI
UTI represents and warrants to PEC as follows:
SECTION 3.1 Organization, Standing and Power. UTI and each of
its Subsidiaries is a corporation, a limited liability company or a limited
partnership, and in each case, duly incorporated or organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate limited liability company or limited partnership
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. UTI and each of its Subsidiaries is duly
qualified to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect on UTI. Section 3.1 of the disclosure statement of UTI dated as of the
date hereof previously furnished to PEC (the "UTI Disclosure Schedule") a list
of UTI's Subsidiaries.
SECTION 3.2 Capital Structure. Except as set forth in Section
3.2 of the UTI Disclosure Schedule, all of the outstanding equity securities of
each Subsidiary of UTI is owned by UTI, directly or indirectly, free and clear
of any Liens, including any restriction on the right to vote, sell or otherwise
dispose of such equity securities. At the close of business on February 2, 2001,
(i) 37,569,461 shares of UTI Common Stock were validly issued and outstanding
fully paid and non-assessable and free of preemptive rights, (ii) a total of
4,287,426 shares of UTI Common Stock were reserved for issuance upon exercise of
then outstanding UTI Stock Options (as defined in Section 5.7) and UTI Warrants
(as defined in Section 5.8), (iii) a total of 1,182,434 additional shares of UTI
Common Stock were reserved for issuance under the UTI Stock Plans (as defined in
Section 5.7), (iv) 1,206,548 shares of UTI Common Stock were held by UTI in its
treasury, and (v) no shares of UTI Preferred Stock were issued and outstanding
and 50,000 were reserved for issuance. There are no outstanding stock
appreciation rights ("SARs"). All outstanding equity securities of UTI are
validly issued, fully paid and non-assessable and not subject to preemptive
rights. Except for UTI Stock Options and UTI Warrants outstanding as of the date
of this Agreement and the additional shares of UTI Common Stock reserved for
issuance under the UTI Stock Plans, there are no options, warrants, rights,
commitments, agreements, arrangements or undertakings of any kind to which UTI
or any of its Subsidiaries is a party or by which any of them is bound
obligating UTI or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional equity securities or other voting
securities of UTI or its Subsidiaries. True and correct copies of all
agreements, instruments and other governing documents relating to the UTI Stock
Options, UTI Stock Warrants and UTI Stock Plans have been furnished to PEC.
SECTION 3.3 Authority; Non-Contravention. The Board of
Directors of UTI has declared the Merger fair to and advisable and in the best
interest of the stockholders of UTI, and UTI has all requisite power and
authority to enter into this Agreement and, subject to approval of the Merger by
the stockholders of UTI, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by UTI and the consummation by UTI of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of UTI, subject to such approval of the Merger by
the stockholders of UTI. This Agreement has been duly executed and delivered by
UTI and (assuming the valid authorization, execution and delivery of this
Agreement by PEC) constitutes a valid and binding obligation of UTI enforceable
against UTI in accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or affecting
the enforcement of creditors'
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rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). Except as set
forth in Section 3.3 of the UTI Disclosure Schedule, the execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof 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 the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of UTI or any of its Subsidiaries under,
any provision of (i) the Restated Certificate of Incorporation, as amended, or
Bylaws of UTI (true and complete copies of which as of the date hereof have been
delivered to PEC) or any provision of 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 UTI or any of its Subsidiaries or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to UTI or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, liens, losses, security interests,
charges or encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on UTI, materially impair the ability of UTI to perform
its obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby. Except as set forth in Section 3.3 of the UTI Disclosure
Schedule, no filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to UTI or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
UTI or is necessary for the consummation by UTI of the Merger and the other
transactions contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the Securities Act and the Exchange Act, (ii)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware and recording of the Certificate of Merger in the appropriate county
in Delaware after the filing thereof with the Secretary of State of the State of
Delaware and the filing or recording of appropriate documents with the relevant
authorities of other states in which UTI or any of its Subsidiaries is qualified
to do business, (iii) such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, (iv) such filings as may be
required in connection with applicable taxes, (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the corporation, takeover or "Blue Sky" laws of various
states, (vi) such filings and approvals as may be required under the HSR Act
and, if any, similar laws in Canada, and (vi) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the aggregate, have a
Material Adverse Effect on UTI, materially impair the ability of UTI to perform
its obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
SECTION 3.4 SEC Documents. UTI has filed all required
documents with the SEC since January 1, 1998 (the "UTI SEC Documents"). As of
their respective dates, the UTI SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and none of the UTI SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which
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they were made, not misleading. The consolidated financial statements of UTI
included in the UTI SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of UTI and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and changes in financial position 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). There is no
liability or obligation of any kind, whether accrued, absolute, fixed or
contingent, which is required by generally accepted accounting principles to be
reflected or reserved against or otherwise disclosed in the most recent
financial statements of UTI included in the UTI SEC Documents which is not so
reflected or reserved against that individually or in the aggregate would have a
Material Adverse Effect on UTI. For purposes of this Agreement, "UTI Balance
Sheet" means the consolidated balance sheet as of September 30, 2000, set forth
in UTI's Quarterly Report on Form 10-Q of the quarter ended September 30, 2000,
and "UTI Balance Sheet Date" means September 30, 2000.
SECTION 3.5 Intentionally left blank.
SECTION 3.6 S-4 Registration Statement and Joint Proxy
Statement. None of the information supplied or to be supplied by UTI for
inclusion or incorporation by reference in the S-4 Registration Statement or the
Joint Proxy Statement will (i) in the case of the S-4 Registration Statement, at
the time it becomes effective and at the Effective Time, 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 not
misleading or (ii) in the case of the Joint Proxy Statement, at the time of the
mailing of the Joint Proxy Statement and at the time of the Stockholder
Meetings, 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 the light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event with
respect to UTI, its officers and directors or any of its Subsidiaries should
occur which is required to be described in an amendment of, or a supplement to,
the Joint Proxy Statement or the S-4 Registration Statement, such event shall be
so described, and an amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the stockholders of UTI and PEC.
The S-4 Registration Statement will comply (with respect to UTI or its
Subsidiaries) as to form in all material respects with the provisions of the
Securities Act, and the Joint Proxy Statement will comply (with respect to UTI)
as to form in all material respects with the provisions of the Exchange Act. No
representation or warranty is made by UTI in this Section 3.6 with respect to
statements made or incorporated therein by reference based on information
supplied by UTI for inclusion or incorporation by reference in the Joint Proxy
Statement or S-4 Registration Statement.
SECTION 3.7 Absence of Material Adverse Change. Except as
disclosed in Section 3.7 of the UTI Disclosure Schedule and except as disclosed
in the UTI SEC Documents filed with the SEC prior to the date hereof, since the
UTI Balance Sheet Date, UTI and its Subsidiaries have conducted their business
in the ordinary course consistent with past practice and there has not been:
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(a) through the date of this Agreement, any event, occurrence
or development which, individually or in the aggregate, has caused or would be
reasonably likely to cause a Material Adverse Change with respect to UTI (other
than changes in generally accepted accounting principles or interpretations
thereof that affect the gas contract drilling industry or the oil and gas
industry generally or changes in general economic conditions that affect either
of these industries on a nationwide basis);
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of UTI, or any
repurchase, redemption or other acquisition by UTI or any Subsidiary of UTI of
any amount of outstanding shares of capital stock or other equity securities of,
or other ownership interests in, UTI or any Subsidiary of UTI;
(c) any amendment of any term of any outstanding security of
UTI or any Subsidiary of UTI that materially would increase the obligations of
UTI or such Subsidiary under such security;
(d) (x) any incurrence or assumption by UTI or any Subsidiary
of UTI of any indebtedness for borrowed money other than under existing credit
facilities (or any renewals, replacements or extensions that do not materially
increase the aggregate commitments thereunder) in the ordinary course of
business consistent with past practices (it being understood that any
indebtedness incurred prior to the date hereof in respect of capital
expenditures shall be considered to have been in the ordinary course of business
consistent with past practice), or (y) any guarantee, endorsement or other
incurrence of assumption or liability (whether directly, contingently or
otherwise) by UTI or any Subsidiary of UTI of the obligations of any other
Person (other than any wholly-owned Subsidiary or UTI), other than in the
ordinary course of business consistent with past practice;
(e) any creation or assumption by UTI or any Subsidiary of UTI
of any Lien on any material asset of UTI or any Subsidiary of UTI other than in
the ordinary course of business consistent with past practices;
(f) any making of any loan, advance or capital contribution to
or material investment in any Person by UTI or any Subsidiary of UTI other than
loans, advances or capital contributions to or investments in wholly-owned
Subsidiaries of UTI;
(g) (i) any contract or agreement entered into by UTI or any
Subsidiary of UTI on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business or (ii) any modification,
amendment, assignment, termination or relinquishment by UTI or any Subsidiary of
UTI of any contract, license or other right (including any insurance policy
naming it as a beneficiary or a loss payable payee) that would be reasonably
likely to have a Material Adverse Effect on UTI, other than, in the case of (i)
and (ii), transactions, commitments, contracts or agreements in the ordinary
course of business consistent with past practices and those contemplated by this
Agreement;
(h) any material change in any method of account or accounting
principles or practice by UTI or any Subsidiary of UTI, except for any such
change required by reason of a change in generally accepted accounting
principles;
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(i) any (i) grant of any severance or termination pay to any
director, officer or employee of UTI or any of its Subsidiaries, (ii) entering
into of any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of UTI or any of its Subsidiaries, (iii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements or (iv)
increase in compensation, bonus or other benefits payable to directors, officers
or employees of UTI or any of its Subsidiaries other than, in the case of clause
(iv) only, increases prior to the date hereof in compensation, bonus or other
benefits payable to employees of UTI, or any of its Subsidiaries in the ordinary
course of business consistent with past practice or merit increases in salaries
of employees at regularly scheduled times in customary amounts consistent with
past practices.
SECTION 3.8 No Undisclosed Material Liabilities. There have
been no liabilities or obligations (whether pursuant to contracts or otherwise)
of any kind whatsoever incurred by UTI or any Subsidiary of UTI since September
30, 2000, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities or obligations (i) disclosed or provided for
in the UTI Balance Sheet; (ii) or in the notes thereto or in the UTI SEC
Documents filed prior to the date hereof, or (iii) disclosed in Section 3.8 of
the UTI Disclosure Schedule;
(b) liabilities or obligations which, individually and in the
aggregate, have not had and are not reasonably likely to have a Material Adverse
Effect on UTI; or
(c) liabilities or obligations under this Agreement or
incurred in connection with the transactions contemplated hereby.
SECTION 3.9 Accounting and Tax Matters. As of the date hereof,
neither UTI nor any of its Affiliates has taken or agreed to take any action,
nor do the executive officers of UTI have any knowledge of any fact or
circumstance, that would prevent the Surviving Corporation from accounting for
the business combination to be effected by the Merger as a "pooling of
interests" or prevent the Merger and other transactions contemplated by this
Agreement from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code.
SECTION 3.10 Taxes. Except as otherwise set forth in Section
3.10 of the UTI Disclosure Schedule, (i) all federal and all material state,
local and foreign Tax Returns required to be filed by UTI, each of its
Subsidiaries and any consolidated, affiliated, combined or unitary group of
which any such entity is or was a member have been timely filed (taking in
account any extensions), (ii) all Tax Returns referred to in clause (i) are true
and correct in all material respects and have been completed in all material
respects in accordance with applicable laws, (iii) all Taxes shown to be due on
the Tax Returns referred in clause (i) and all Taxes otherwise due from UTI,
each of its Subsidiaries or any group of such entities have been timely paid or
such Taxes have been adequately provided for on UTI's consolidated balance
sheet; (iv) neither UTI nor any of its Subsidiaries has waived any statute of
limitations in respect of Taxes of UTI, such Subsidiary or any such group of
such entities; (v) the Tax Returns referred to in clause (i) relating to federal
income Taxes have been examined by the Internal Revenue Service or the
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period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired through the taxable period set forth in Section
3.10 of the UTI Disclosure Schedule; (vi) no issues have been raised in writing
by the relevant taxing authority in connection with the examination of the Tax
Returns referred to in clause (i) are currently pending; (vii) all deficiencies
asserted or assessments made as a result of any examination of the Tax Returns
referred to in clause (i) by a taxing authority have been paid in full or
adequately provided for on UTI's consolidated balance sheet; (viii) neither UTI
nor any Subsidiary of UTI is a party to a Tax allocation agreement, Tax sharing
agreement, Tax indemnity agreement or similar agreement or arrangement; and (ix)
UTI, each of its Subsidiaries and each of such entities have complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has in all respects timely withheld
from employee wages and paid over except where such failure to comply or to
withhold would not have a Material Adverse Effect.
SECTION 3.11 Title to Property. Except as set forth in Section
3.11 of the UTI Disclosure Schedule, UTI or its Subsidiaries has good and, with
respect to real property, valid title to all of the material assets reflected on
the consolidated financial statements of UTI included in the UTI SEC Documents
as being owned by it or its Subsidiaries and all of the material assets
thereafter acquired by it or its Subsidiaries (except to the extent that such
assets have thereafter been disposed of in the ordinary course of business
consistent with past practice), subject to no Liens, except for (i) Liens for
taxes not yet delinquent or the validity of which is being contested in good
faith and (ii) any Liens arising by operation of law securing obligations not
yet overdue.
SECTION 3.12 Employee Benefit Plans; Employment Agreements.
(a) Except as set forth in Section 3.12 of the UTI Disclosure
Schedule, there are no material employee benefit plans (including without
limitation any plans, arrangements, practices, contracts, or any employment and
severance agreements, incentive compensation, bonus, stock option, stock
appreciation rights and stock purchase plans for the benefit of directors or
former directors), arrangements, practices, contracts or agreements (including
employment agreements and severance agreements, incentive compensation, bonus,
stock option, stock appreciation rights and stock purchase plans) of any type
(including plans described in Section 3(3) of ERISA maintained by, sponsored by
or contributed to by UTI, any of its Subsidiaries or any trade or business
whether or not incorporated that together with UTI would be deemed a controlled
group within the meaning of Section 4001(a)(14) of ERISA or Section 414 of the
Code (an "ERISA UTI Affiliate") or with respect to which UTI or any of its
Subsidiaries or an ERISA UTI Affiliate has or may have a liability (the "UTI
Benefit Plans"). Except as disclosed in Section 3.12 of the UTI Disclosure
Schedule: (i) neither UTI nor any ERISA UTI Affiliate has any formal or informal
plan or commitment, whether legally binding or not, to create any additional UTI
Benefit Plan or modify or change any existing UTI Benefit Plan that would affect
any employee or terminated employee of UTI or any ERISA UTI Affiliate; and (ii)
since September 30, 2000, there has been no change, amendment, modification to,
or adoption of, any UTI Benefit Plan, in each case, that has had, or would be
reasonably likely to have, a Material Adverse Effect on UTI or an ERISA UTI
Affiliate. UTI has made available to PEC each UTI Benefit Plan.
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(b) With respect to each UTI Benefit Plan, except as disclosed
in Section 3.12 of he UTI Disclosure Schedule and except as would not,
individually or in the aggregate, have a Material Adverse Effect on UTI or an
ERISA UTI Affiliate: (i) if intended to qualify under Section 401(a), 401(k) or
403(a) of the Code, such plan so qualifies, and its trust is exempt from
taxation under Section 501(a) of the Code; (ii) such plan has been administered
in accordance with its terms and applicable law; (iii) no breaches of fiduciary
duty have occurred; (iv) no prohibited transaction within the meaning of Section
406 of ERISA has occurred unless exempt under Section 408 of ERISA; (v) as of
the date of this Agreement, no lien imposed under the Code of ERISA exists; and
(vi) all contributions and premiums due (including any extensions for such
contributions and premiums) have been made in full.
(c) None of the UTI Benefit Plans has incurred any
"accumulated funding deficiency," as such term is defined in Section 412 of the
Code, whether or not waived.
(d) Neither UTI nor any ERISA UTI Affiliate has incurred any
liability under Title IV of ERISA (including Sections 4063-406 and 4069 of
ERISA) that has not been satisfied in full except as, individually or in the
aggregate, would not have or would not be reasonably likely to have a Material
Adverse Effect on UTI or an ERISA UTI Affiliate or that has not been reflected
on UTI's consolidated financial statements.
(e) With respect to any UTI Benefit Plan that is a "welfare
plan" (as defined in Section 3(1) of ERISA), except as specifically disclosed in
Section 3.12 of the UTI Disclosure Schedule, no such plan provides medical or
death benefits with respect to current or former employees of UTI, or an ERISA
UTI Affiliate any of its Subsidiaries beyond their termination of employment,
other than as may be required under Part 6 of Title I of ERISA.
(f) Except as set forth in Section 3.12 of the UTI Disclosure
Schedule, neither UTI nor any of its Subsidiaries is a party to an agreement
that provides for the payment of an account that would constitute a "parachute
payment" within the meaning of 2806 of the Code and, the consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay or any tax "gross-up" payments with respect to the imposition of
any tax pursuant to Section 4999 of the Code.
(g) Except as disclosed in Section 3.12 of the UTI Disclosure
Schedule, there is no UTI Benefit Plan that is a "multiemployer plan," as such
term is defined in Section 3(37) of ERISA, or which is covered by Section 4063
or 4064 of ERISA and no UTI Benefit Plan is subject to Title IV of ERISA.
(h) No UTI Benefit Plan is subject to any lawsuit or
threatened lawsuit or any ongoing audit, investigation or other administrative
proceeding of the Internal Revenue Service, the Department of Labor or any other
federal, state or local governmental utility or is scheduled to be subject to
such an audit investigation procedure. Each UTI Benefit Plan can be unilaterally
amended and or terminated at any time by UTI.
(i) Except as set forth in Section 3.12 of the UTI Disclosure
Schedule, the consummation of the transactions contemplated in this Agreement
will not trigger the payment of severance, termination, or dismissal pay, or the
like, nor shall it accelerate the vesting,
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exerciseability, or payment of any amounts under any plan, program or agreement
providing compensation for or to any officer, director, or employee of UTI.
SECTION 3.13 Labor Matters. Except as set forth in Section
3.13 of the UTI Disclosure Document, (i) neither UTI nor any of its Subsidiaries
is a party to any collective bargaining agreement or other material contract or
agreement with any labor organization or other representative of employees nor
is any such contract being negotiated; (ii) there is no material unfair labor
practice charge or complaint pending nor, to the knowledge of the executive
officers of UTI, threatened, with regard to employees of UTI or any Subsidiary
of UTI; (iii) there is no labor strike, material slowdown, material work
stoppage or other material labor controversy in effect, or, to the knowledge of
the executive officers of UTI, threatened against UTI or any of its Significant
Subsidiaries; (iv) as of the date hereof, no representation question exists, nor
to the knowledge of the executive officers of UTI are there any campaigns being
conducted to solicit cards from the employees of UTI or any Subsidiary of UTI to
authorize representation by any labor organization; (v) neither UTI nor any
Subsidiary of UTI is party to, or is not otherwise bound by, any consent decree
with any governmental authority relating to employees or employment practices of
UTI or any Subsidiary of UTI; (vi) neither UTI nor any of its Subsidiaries has
incurred any liability under, and has complied in all respects with, the Worker
Adjustment Retraining Notification Act, and no fact or event exists that could
give rise to liability under such Act; (vii) UTI and each of its Subsidiaries is
in compliance with all applicable agreements, contracts and policies relating to
employment, employment practices, wages, hours and terms and conditions of
employment of the employees, except where the failure to be in compliance with
each such agreement, contract and policy would not, either singly or in the
aggregate, have a Material Adverse Effect on UTI; (viii) there is no complaint,
lawsuit or proceeding in any forum by any Governmental Entity, by or on behalf
of any present or former employee, any applicant for employment or any classes
of the foregoing alleging breach of any express or implied contract of
employment, any law or regulation governing employment of the termination
thereof or other discriminatory, wrongful or tortuous conduct in connection with
the employment relationship against UTI or any of its Subsidiaries pending, or,
to the knowledge of UTI or any of its Subsidiaries, threatened, that has, or
would have, a Material Averse Effect on UTI; (ix) UTI and each of its
Subsidiaries are in compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment, wages, hours of
work and occupational safety and health, except for non-compliance that does not
have, and would not have, a Material Adverse Effect on UTI; and (x) there is no
proceeding, claim, suit, action or governmental investigation pending or, to the
knowledge of UTI or any of its Subsidiaries, threatened, in respect to which any
current or former director, officer, employee or agent of UTI or any of its
Subsidiaries is or may be entitled to claim indemnification from UTI or any of
its Subsidiaries (A) pursuant to their respective charters or bylaws; (B) as
provided in any indemnification agreement to which UTI or any Subsidiary of UTI
is a party, or (C) pursuant to applicable law that has, or would have, a
Material Adverse Effect on UTI.
SECTION 3.14 Environmental Matters. Except to the extent that
the inaccuracy of any of the following, individually or in the aggregate, would
not have a Material Adverse Effect on UTI or as disclosed in Section 3.14 of the
UTI Disclosure Schedule:
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(i) UTI and its Subsidiaries hold, and are in compliance with
and have been in compliance with for the last three years, all Environmental
Permits, and are otherwise in compliance and have been in compliance for the
last three years with, all applicable Environmental Laws and there are no
conditions that are reasonably likely to prevent or materially interfere prior
to the Effective Time with compliance by UTI and its Subsidiaries with
Environmental Laws;
(ii) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review by, or approval
of, any third party of any Environmental Permit is required in connection with
the execution or delivery of this Agreement or the consummation by UTI of the
transactions contemplated hereby or the operation of the business of UTI or any
of its Subsidiaries on the date of the Closing;
(iii) neither UTI nor any of its Subsidiaries has received any
Environmental Claim, nor has any Environmental Claim been threatened against UTI
or any of its Subsidiaries;
(iv) neither UTI nor any of its Subsidiaries has entered into,
agreed to or is not subject to any outstanding judgment, decree, order or
consent arrangement with any governmental authority under any Environmental
Laws, including without limitation those relating to compliance with any
Environmental Laws or to the investigation, cleanup, remediation or removal of
Hazardous Materials;
(v) there are no circumstances that are reasonably likely to
give rise to liability under any agreements with any person pursuant to which
UTI or any Subsidiary of UTI would be required to defend, indemnify, hold
harmless, or otherwise be responsible for any violation by or other liability or
expense of such person, or alleged violation by or other liability or expense of
such person, arising out of any Environmental Law; and
(vi) there are no other circumstances or conditions that are
reasonably likely to give rise to liability of UTI or any of its Subsidiaries
under any Environmental Laws.
SECTION 3.15 Agreements. Except agreements and arrangements
made in the ordinary course of business, neither UTI nor any of its Subsidiaries
is bound by any material contract (as defined in Item 601(b)(10) of SEC
Regulation S-K) to be performed after the date hereof that has not been filed
with or incorporated by reference in the UTI SEC Documents filed with the SEC
prior to the date of this Agreement.
SECTION 3.16 Litigation. Except as set forth on Schedule 3.16
of UTI Disclosure Schedule and except as disclosed prior to the date hereof in
UTI SEC Documents, there is no suit, action, investigation or proceeding pending
or, to the knowledge of the executive officers of UTI, threatened against UTI or
any of its Subsidiaries at law or in equity before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind, that
would have a Material Adverse Effect on UTI or, with respect to such matters
that are pending or threatened as of the date hereof, materially impair the
ability of UTI to perform its obligations hereunder or to consummate the
transactions contemplated hereby, and there is no judgment, decree, injunction,
rule or order of any court, governmental department, commission, board,
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bureau, agency, instrumentality or arbitrator to which UTI or any of its
Subsidiaries is subject that would have a Material Adverse Effect on UTI or,
with respect to such items that are outstanding and applicable as of the date
hereof, materially impair the ability of UTI to perform its obligations
hereunder or to consummate the transactions contemplated hereby.
SECTION 3.17 Governmental Licenses and Permits; Compliance
with Law. Except as disclosed, prior to the date hereof in the UTI SEC
Documents, since September 30, 2000, neither UTI nor any of its Significant
Subsidiaries has received notice of any revocation or modification of any
federal, state, local or foreign governmental license, certification, tariff,
permit, authorization or approval, the revocation or modification of which would
have a Material Adverse Effect on UTI. To the knowledge of the executive
officers of UTI, the conduct of the business of each of UTI and its Subsidiaries
complies with all statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or arbitration awards applicable thereto, except for violations
or failures to comply, if any, that, individually or in the aggregate, would not
have a Material Adverse Effect on UTI.
SECTION 3.18 Required Vote of UTI Stockholders. The
affirmative vote of the holders of not less than a majority of the outstanding
shares of the UTI Common Stock is required to adopt this Agreement and approve
the Merger. No other vote of the stockholders of UTI is required by law, the
Restated Certificate of Incorporation, as amended, or Bylaws of UTI or otherwise
to adopt this Agreement and approve the Merger and the other transactions
contemplated hereby.
SECTION 3.19 UTI Action. The Board of Directors of UTI (at a
meeting duly called and held) unanimously (a) determined that the Merger is fair
to and advisable and in the best interests of UTI and its stockholders, (b)
approved this Agreement and the Merger, (c) resolved to recommend adoption of
this Agreement and approval of the Merger by UTI's stockholders and (d) directed
that this Agreement be submitted to UTI's stockholders.
SECTION 3.20 Section 203 of the DGCL Not Applicable. The Board
of Directors of UTI has approved the Merger and this Agreement and such approval
is sufficient to render inapplicable to the Merger and the other transactions
contemplated hereby the restrictions contained in Section 203 of the DGCL.
SECTION 3.21 Opinion of Financial Advisor. On the date hereof,
UTI has received the written opinion of Xxxxxx Brothers Inc. to the effect that
the Exchange Ratio is fair to the holders of the UTI Common Stock from a
financial point of view.
SECTION 3.22 Brokers. No broker, investment banker or other
person, other than Xxxxxx Brothers Inc., the fees and expenses of each which
will be paid by UTI, is entitled to any broker's, finder'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 UTI. UTI has previously
delivered to PEC a true, correct and complete copy of any engagement or fee
agreement between UTI and Xxxxxx Brothers Inc.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Conduct of Business Pending the Merger.
(a) Actions. During the period from the date of this Agreement
through the Effective Time, unless PEC or UTI, as the case may be, shall consent
thereto in writing (which consent will not be unreasonably withheld), each of
UTI and PEC shall, and each shall cause its respective Subsidiaries to, in all
material respects carry on its respective businesses in the ordinary course and
consistent with past practice (including with respect to the contract drilling
segment of their operations, drilling rates and length and types of contracts)
and, to the extent consistent therewith and with the terms of this Agreement,
use all reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it to the end that its goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality of
the foregoing, prior to the Effective Time, except as otherwise expressly
contemplated by this Agreement (including, but not limited to, Section 4.2) or
Section 4.1 of the UTI Disclosure Schedule or the PEC Disclosure Schedule, as
the case may be, each of UTI and PEC shall not, and each shall cause its
Subsidiaries not to, without the prior written consent of the other party to
this Agreement:
(i) (x) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its respective capital stock, or otherwise make any payments to
its respective stockholders in their capacity as such, other than
dividends payable to UTI declared by any of UTI's Subsidiaries or to
PEC declared by any of PEC's Subsidiaries (y) 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, or (z) purchase, redeem or otherwise
acquire any shares of capital stock of each of UTI or PEC, or any of
their respective Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities, except in connection with the terms of their respective
stock option plans in existence on September 30, 2000;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its or its Subsidiaries' capital stock, any
other voting securities or equity equivalent or any securities
convertible into, or grant any rights, warrants or options to acquire,
any such shares, voting securities or convertible securities or equity
equivalent (other than, in the case of UTI or PEC, the issuance of UTI
Common Stock or PEC Common Stock, as the case may be, during the period
from the date of this Agreement through the Effective Time (x) upon the
exercise of UTI Stock Options, UTI Warrants or PEC stock options, as
the case may be, outstanding as of the date of this Agreement in
accordance with their current terms, or (y) in accordance with the
terms, existing at the date of this Agreement of the UTI Stock Plans
and the PEC Stock Plans);
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(iii) amend its Certificate of Incorporation or amend in any
material respects its Bylaws, other than the Charter Amendment and an
amendment to PEC's Bylaws to satisfy the condition contained in Section
6.2(h);
(iv) acquire, merge or consolidate with, or purchase a portion
of the assets of or equity in, any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire any assets, in each case that involves a single
transaction exceeding $1,000,000 or more than one transaction exceeding
$5,000,000 in the aggregate, or commence any proceedings with respect
thereto, or engage in any negotiations with any person or entity
concerning any such transaction, except as previously disclosed in
writing to PEC or UTI, as the case may be; provided, however, that UTI
and PEC may acquire Oil and Gas Interests and land drilling rigs and
related equipment in the ordinary course of business consistent with
past practice;
(v) except in the ordinary course of business, sell, lease or
otherwise dispose of or agree to sell, lease or otherwise dispose of,
any business or line of business or any of its assets, in each case
that are material, individually or in the aggregate, to UTI and its
Subsidiaries, or to PEC and its Subsidiaries taken as a whole,
respectively;
(vi) make any capital expenditures, except in the ordinary
course of business and as previously disclosed in writing to PEC or
UTI, as the case may be;
(vii) (A) pay, discharge, or satisfy any material claims,
liabilities, or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or
satisfaction of its liabilities or its obligations in the ordinary
course of business or in accordance with their terms as in effect on
the date hereof, (B) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, restructuring, recapitalization or reorganization; (C)
enter into any collective bargaining agreement, successor collective
bargaining agreement or amended collective bargaining agreement; (D)
change any accounting principle used by it, except for such changes
required to be implemented prior to the Effective Time pursuant to
generally accepted accounting principles or rules of the SEC; or (E)
settle or compromise any litigation brought against it, other than
settlements or compromises of any litigation where the amount paid in
settlement or compromise (including, without limitation, the cost to
PEC and its Subsidiaries or UTI and its Subsidiaries, as the case may
be, of complying with any provision of such settlement or compromise
other than cash payments) does not exceed $200,000, exclusive of
amounts covered by insurance;
(viii) (A) enter into any new, or amend any existing,
severance agreement or arrangement, deferred compensation arrangement
or employment agreement with any officer, director or employee, except
that, PEC and UTI may hire additional employees to the extent deemed by
their respective management to be in the best interests of PEC or UTI,
as the case may be, provided, that neither UTI nor PEC may enter into
any employment or severance agreement or any deferred compensation
arrangement with any such additional employees, (B) adopt any new, or
amend any existing, incentive, retirement or welfare benefit
arrangements, plans or programs for the benefit of current, former or
retired employees (other than amendments required by law or to maintain
the
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tax qualified status of such plans under the Code), or (C) grant any
increases in employee compensation, other than in the ordinary course
or pursuant to promotions, in each case consistent with past practice
(which shall include normal individual periodic performance reviews and
related compensation and benefit increases and bonus payments
consistent with past practices);
(ix) except in the ordinary course of business consistent with
past practice (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness in excess of $4,000,000 or issue or
sell any debt securities or guarantee any debt securities of others or
(z) make any loans, advances (other than joint interest xxxxxxxx) or
capital contributions to, or investments in, any other person, other
than to UTI or any wholly-owned Subsidiary of UTI or to PEC or any
wholly-owned Subsidiary of PEC, respectively;
(x) authorize or enter into any agreement to do any of the
foregoing; or
(xi) make any material elections relating to Taxes or
compromise any material Tax liability
(b) Advice of Changes. Each of UTI and PEC shall promptly
advise the other such party orally and in writing of any change or event which
would prohibit the Merger or the other transactions contemplated hereby.
SECTION 4.2 No Solicitation. During the period from the date
of this Agreement until the Effective Time and except as expressly permitted by
the following provisions of this Section 4.2, UTI will not, and will not permit
or cause any of its Subsidiaries or any of the officers and directors of it or
its Subsidiaries to, and shall direct and use its best efforts to cause its
Subsidiaries and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, initiate, solicit, or
knowingly encourage or otherwise intentionally facilitate any inquiries or the
making of any proposal or offer (other than the Merger) with respect to a
merger, reorganization, share exchange, consolidation or similar transaction
involving, or any purchase of all or a substantial portion of the assets or any
equity securities of it or any of its Subsidiaries (any such proposal or offer
being hereinafter referred to as a "UTI Acquisition Proposal"). UTI will not,
and will not permit or cause any of its Subsidiaries or any of the officers and
directors of it or its Subsidiaries to and shall direct and use its best efforts
to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to a UTI Acquisition Proposal, whether
made before or after the date of this Agreement, or otherwise intentionally
facilitate any effort or attempt to make or implement a UTI Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent UTI or its Board of Directors from complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a UTI Acquisition Proposal or at any time
prior to the time that the Merger shall have been approved by the stockholders
of UTI at the UTI Stockholder Meeting (as defined below in Section 5.1(a)) (A)
providing information in response to a request therefor by a Person who has made
an unsolicited bona fide written UTI
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Acquisition Proposal if the Board of Directors receives from the Person so
requesting such information an executed confidentiality agreement the terms of
which are (without regard to the terms of the UTI Acquisition Proposal) (x) no
less favorable to UTI and (y) no less restrictive on the Person requesting such
information than those contained in the confidentiality agreement between UTI
and PEC dated as of the date of this Agreement (the "Confidentiality
Agreement"); (B) engaging in any negotiations or discussions with any Person who
has made an unsolicited bona fide written UTI Acquisition Proposal; or (C)
recommending such a UTI Acquisition Proposal to the stockholders of UTI, if and
only to the extent that, (i) in each such case referred to in clause (A), (B) or
(C) above, the Board of Directors of UTI determines in good faith after
consultation with outside legal counsel that such action is necessary in order
for its directors to comply with their respective fiduciary duties under
applicable law and (ii) in each case referred to in clause (B) or (C) above, the
Board of Directors of UTI determines in good faith (after consultation with its
financial advisor) that such UTI Acquisition Proposal, if accepted, is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the Person making the proposal and
would, if consummated, result in a transaction more favorable to UTI's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable UTI Acquisition Proposal being referred
to in this Agreement as a "Superior Proposal"). UTI will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. UTI
agrees that it will take the necessary steps to promptly inform the individuals
or entities referred to in the first sentence hereof of the obligations
undertaken in this Section 4.2 and in the Confidentiality Agreement. UTI will
promptly notify PEC if after the date hereof any such inquiries, proposals or
offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, any of
its representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep PEC informed, on a current basis, on the status and terms
of any such proposals or offers and the status of any such negotiations or
discussions. UTI also will promptly request each Person that has heretofore
executed a confidentiality agreement in connection with its consideration of a
UTI Acquisition Proposal to return or destroy all confidential information
heretofore furnished to such Person by or behalf of it or any of its
Subsidiaries. Notwithstanding the foregoing, nothing in this Section 4.2 shall
be deemed to prevent UTI from selling or disposing of the capital stock or
assets of any Subsidiary (or any actions in preparation or contemplation
thereof) to the extent such sale or disposition is permitted by Section 4.1(a).
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in this Section 4.2 by an officer or director, employee
or representative of it or any of its Subsidiaries shall be deemed a breach of
this Section 4.2 by UTI.
SECTION 4.3 No Solicitation. During the period from the date
of this Agreement until the Effective Time and except as expressly permitted by
the following provisions of this Section 4.3, PEC will not, and will not permit
or cause any of its Subsidiaries or any of the officers and directors of it or
its Subsidiaries to, and shall direct and use its best efforts to cause its
Subsidiaries and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, initiate, solicit, or
knowingly encourage or otherwise intentionally facilitate any inquiries or the
making of any proposal or offer (other than the Merger) with
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respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving, or any purchase of all or a substantial portion of the
assets or any equity securities of it or any of its Subsidiaries (any such
proposal or offer being hereinafter referred to as a "PEC Acquisition
Proposal"). PEC will not, and will not permit or cause any of its Subsidiaries
or any of the officers and directors of it or its Subsidiaries to and shall
direct and use its best efforts to cause its and its Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to a
PEC Acquisition Proposal, whether made before or after the date of this
Agreement, or otherwise intentionally facilitate any effort or attempt to make
or implement a PEC Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent PEC or its Board of Directors from
complying with Rule 14e-2 promulgated under the Exchange Act with regard to a
PEC Acquisition Proposal or at any time prior to the time that the Merger shall
have been approved by the stockholders of PEC at the PEC Stockholder Meeting (as
defined below in Section 5.1(b)) (A) providing information in response to a
request therefor by a Person who has made an unsolicited bona fide written PEC
Acquisition Proposal if the Board of Directors receives from the Person so
requesting such information an executed confidentiality agreement the terms of
which are (without regard to the terms of the PEC Acquisition Proposal) (x) no
less favorable to PEC and (y) no less restrictive on the Person requesting such
information than those contained in the confidentiality agreement between PEC
and UTI dated as of the date of this Agreement (the "Confidentiality
Agreement"); (B) engaging in any negotiations or discussions with any Person who
has made an unsolicited bona fide written PEC Acquisition Proposal; or (C)
recommending such a PEC Acquisition Proposal to the stockholders of PEC, if and
only to the extent that, (i) in each such case referred to in clause (A), (B) or
(C) above, the Board of Directors of PEC determines in good faith after
consultation with outside legal counsel that such action is necessary in order
for its directors to comply with their respective fiduciary duties under
applicable law and (ii) in each case referred to in clause (B) or (C) above, the
Board of Directors of PEC determines in good faith (after consultation with its
financial advisor) that such PEC Acquisition Proposal, if accepted, is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the Person making the proposal and
would, if consummated, result in a transaction more favorable to PEC's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable PEC Acquisition Proposal being referred
to in this Agreement as a "Superior Proposal"). PEC will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. PEC
agrees that it will take the necessary steps to promptly inform the individuals
or entities referred to in the first sentence hereof of the obligations
undertaken in this Section 4.3 and in the Confidentiality Agreement. PEC will
promptly notify UTI if after the date hereof any such inquiries, proposals or
offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, any of
its representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep UTI informed, on a current basis, on the status and terms
of any such proposals or offers and the status of any such negotiations or
discussions. PEC also will promptly request each Person that has heretofore
executed a confidentiality agreement in connection with its consideration of a
PEC Acquisition
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Proposal to return or destroy all confidential information heretofore furnished
to such Person by or behalf of it or any of its Subsidiaries. Notwithstanding
the foregoing, nothing in this Section 4.3 shall be deemed to prevent PEC from
selling or disposing of the capital stock or assets of any Subsidiary (or any
actions in preparation or contemplation thereof) to the extent such sale or
disposition is permitted by Section 4.1(a). Without limiting the foregoing, it
is understood that any violation of the restrictions set forth in this Section
4.3 by an officer or director, employee or representative of it or any of its
Subsidiaries shall be deemed a breach of this Section 4.3 by PEC.
SECTION 4.4. Accounting and Tax Matters. During the period
from the date of this Agreement through the Effective Time, unless the other
parties shall otherwise agree in writing, none of PEC or any Subsidiary of PEC,
nor UTI or any subsidiary of UTI shall (a) knowingly take or fail to take any
action which action or failure to act would jeopardize the treatment of UTI's
combination with PEC as a pooling of interests for accounting purposes or (b)
knowingly take or fail to take any action which action or failure to act would
jeopardize qualification of the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Stockholder Approval.
(a) UTI shall promptly call a meeting of its stockholders (the
"UTI Stockholder Meeting") for the purpose of voting upon the Merger and shall
use its reasonable best efforts to obtain stockholder approval of the Merger.
The UTI Stockholder Meeting shall be held as soon as practicable following the
date upon which the S-4 Registration Statement becomes effective, and UTI,
through its Board of Directors, subject to fiduciary duties under applicable
law, will recommend to its stockholders the approval of the Merger, will not
rescind or modify its declaration that the Merger is fair to and advisable and
in the best interest of UTI and its stockholders and will take all lawful action
to solicit such approval; provided that UTI's Board of Directors may rescind or
modify such declaration following receipt of a Superior Proposal.
(b) PEC shall promptly call a meeting of its stockholders (the
"PEC Stockholder Meeting" and, together with the UTI Stockholder Meeting, the
"Stockholder Meetings") for the purpose of voting upon the Merger and the
Charter Amendment and shall use its reasonable best efforts to obtain
stockholder approval of such matters. PEC will, through its Board of Directors
(unless the Board of Directors shall conclude in good faith, after consultation
with and based upon the written advice of its outside legal counsel (which
advice need not constitute an opinion), that not recommending the Merger and
Charter Amendment, or withdrawing or modifying any such recommendation, is
necessary in order for the Board of Directors not to breach its fiduciary
obligations under applicable law), recommend to its stockholders the approval of
the Merger and Charter Amendment and not rescind its declaration that such
transactions are fair to and advisable and in the best interest of PEC and its
stockholders and take all lawful action to solicit such approval; provided that
PEC's Board of Directors may rescind or modify such declaration following
receipt of a Superior Proposal. The
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PEC Stockholder Meeting shall be on the date of UTI Stockholder Meeting or, if
such date is not practicable, on the closest date practicable.
SECTION 5.2 S-4 Registration Statement and Joint Proxy
Statement. PEC and UTI shall prepare and file with the SEC as soon as
practicable a proxy statement for use at the Stockholder Meetings (the "Joint
Proxy Statement"), and PEC shall prepare and file with the SEC as soon as
practicable the S-4 Registration Statement (including the Joint Proxy Statement
as a prospectus therein) and shall use all reasonable efforts to have the S-4
Registration Statement declared effective by the SEC as soon as practicable. PEC
shall also take any action required to be taken under state securities or "Blue
Sky" laws in connection with the issuance of the Surviving Corporation Common
Stock pursuant to the Merger and the exercise of the Substituted Options (as
defined in Section 5.7) and the Substituted Warrants (as defined in Section 5.8)
after the Effective Time. UTI and PEC shall furnish each other all information
concerning UTI and the holders of UTI Common Stock or PEC and the holders of PEC
Common Stock, as the case may be, required for use in the S-4 Registration
Statement and the Joint Proxy Statement, and UTI and PEC each shall take such
other actions as the other may reasonably request in connection with the
preparation of the S-4 Registration Statement and the Joint Proxy Statement and
the actions to be taken pursuant to this Section 5.2.
SECTION 5.3 Access to Information.
(a) UTI shall, and shall cause each of its Subsidiaries to,
afford to PEC, and to PEC's accountants, counsel, financial advisers and other
representatives, reasonable access and permit them to make such inspections as
they may reasonably require during the period from the date of this Agreement
through the Effective Time to all their respective properties, books, contracts,
commitments and records and, during such period, UTI shall, and shall cause each
of its Subsidiaries to furnish promptly to PEC (i) access to each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state laws and (ii) all other
information concerning UTI, its business, properties and personnel as PEC may
reasonably request. UTI shall be entitled to have a representative present at
any such inspection. Notwithstanding the foregoing, UTI shall not be obligated
to provide any information if UTI shall have been advised by legal counsel that
the provision of such information may violate Federal or State antirust laws.
Except as required by law, PEC will hold, and will cause its affiliates,
associates and representatives to hold, any nonpublic information in confidence
until such time as such information otherwise becomes publicly available and
shall use its reasonable best efforts to ensure that such affiliates, associates
and representatives do not disclose such information to others without the prior
written consent of UTI. In the event of termination of this Agreement for any
reason, PEC shall promptly return or destroy all nonpublic documents so obtained
from UTI and any copies made of such documents for PEC. PEC shall not, and shall
cause its affiliates, associates and representatives not to, use any nonpublic
information regarding UTI and its Subsidiaries in any way detrimental to UTI and
its Subsidiaries.
(b) PEC shall, and shall cause each of its Subsidiaries to,
afford to UTI, and to UTI's accountants, counsel, financial advisers and other
representatives, reasonable access and permit them to make such inspections as
they may reasonably require during the period from the date of this Agreement
through the Effective Time to all their respective properties, books,
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contracts, commitments and records and, during such period, PEC shall, and shall
cause each of its Subsidiaries to, furnish promptly to UTI (i) access to each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state laws and (ii) all
other information concerning PEC, its business, properties and personnel as UTI
may reasonably request. PEC shall be entitled to have a representative present
at any such inspection. Notwithstanding the foregoing, PEC shall not be
obligated to provide any information if PEC shall have been advised by legal
counsel that the provision of such information may violate Federal or State
antirust laws. Except as required by law, UTI will hold, and will cause its
affiliates, associates and representatives to hold, any nonpublic information in
confidence until such time as such information otherwise becomes publicly
available and shall use its reasonable best efforts to ensure that such
affiliates, associates and representatives do not disclose such information to
others without the prior written consent of PEC. In the event of termination of
this Agreement for any reason, UTI shall promptly return or destroy all
nonpublic documents so obtained from PEC and any copies made of such documents
for UTI. UTI shall not, and shall cause its affiliates, associates and
representatives not to, use any nonpublic information regarding PEC in any way
detrimental to PEC and its Subsidiaries.
(c) No investigation pursuant to this Section 5.3 shall affect
any representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 5.4 Compliance with the Securities Act; Pooling of
Interests. Each of PEC and UTI shall deliver to the other party, no later than
20 days after the date of this Agreement, a letter identifying each person whom
it reasonably believes is an "affiliate" of such party for purposes of Rule 145
under the Securities Act. Thereafter and until the date of UTI Stockholder
Meeting or the PEC Stockholder Meeting, as the case may be, each of PEC and UTI
shall identify to the other party each additional person whom it reasonably
believes to have thereafter become an "affiliate." Each of PEC and UTI shall use
its reasonable best efforts to cause each person who is identified as an
"affiliate" pursuant to the two immediately preceding sentences to deliver to
PEC (for itself and as the Surviving Corporation) and UTI, not later than the
date 30 days prior to the expected Effective Time, a written agreement,
substantially in the form of Exhibit I(A) or (B) to this Agreement, as
applicable.
SECTION 5.5 Nasdaq National Market. PEC shall use its
reasonable best efforts to list on the Nasdaq National Market, upon official
notice of issuance, the shares of Surviving Corporation Common Stock to be
issued in connection with the Merger and pursuant to the Substituted Options and
UTI Stock Plans (as defined in Section 5.7) and Substituted Warrants (as defined
in SECTION 5.8).
SECTION 5.6 Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Exchange Agent, in connection with
the transactions contemplated in Article I. Except as otherwise provided in
Sections 7.5(b) and 7.5(c), whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense, except that the expenses incurred in connection with the
filing fees for the S-4 Registration Statement and the HSR filing and printing
and mailing the
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Joint Proxy Statement and the S-4 Registration Statement shall be shared equally
by PEC and UTI.
SECTION 5.7 UTI Stock Options; UTI Stock Plans. No later than
the Effective Time, each option to purchase shares of UTI Common Stock (a "UTI
Stock Option") which is outstanding immediately prior to the Effective Time
pursuant to UTI's stock option plans in effect on the date of this Agreement
(the "UTI Stock Plans") shall become and represent an option to purchase the
number of shares of Surviving Corporation Common Stock (a "Substituted Option")
(decreased to the nearest full share) determined by multiplying (i) the number
of shares of UTI Common Stock subject to such UTI Stock Option immediately prior
to the Effective Time by (ii) the Exchange Ratio, at an exercise price per share
of Surviving Corporation Common Stock (rounded down to the nearest whole cent)
equal to the exercise price per share of UTI Common Stock immediately prior to
the Effective Time divided by the Exchange Ratio. PEC shall pay cash to holders
of UTI Stock Options in lieu of issuing fractional shares of Surviving
Corporation Common Stock upon the exercise of Substituted Options for shares of
Surviving Corporation Common Stock. After the Effective Time, except as provided
above in this Section 5.7, each Substituted Option shall be exercisable upon the
same terms and conditions as were applicable under the related UTI Stock Option
after giving effect to any existing provision in UTI Stock Plans that provide
for the automatic acceleration of vesting upon consummation of change in control
of UTI. In the case of any UTI Stock Option to which Section 421 of the Code
applies by reason of its qualification under any of Sections 422 and 424 of the
Code ("qualified stock options"), the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such Substituted Option shall be determined in such manner so as to comply with
Section 424 of the Code. PEC agrees to take such action as may be required under
UTI Stock Plans to effectuate the foregoing, including reservation, issuance and
listing of Surviving Corporation Common Stock as is necessary to effectuate the
transactions contemplated by this Section 5.7, including execution and delivery,
prior to or at the Effective Time, of the UTI Energy Corp. Stock Option
Assumption Agreement (the "Stock Option Assumption Agreement"), substantially in
the form attached hereto as Exhibit II, to holders of UTI Stock Options.
Promptly after the Effective Time, Surviving Corporation shall
prepare and file with the SEC a Registration Statement on Form S-8 (the "S-8
Registration Statement") covering the Substituted Options. If necessary to
permit reoffers and resales by optionees, PEC shall also prepare a "reoffer
prospectus" (as that term is used in General Instruction C-1 of Form S-8) and
file the reoffer prospectus with a post-effective amendment to the S-8
Registration Statement and cause any such post-effective amendment to become
effective and remain effective for such period as is necessary to permit such
reoffers and resales.
SECTION 5.8 UTI Warrants. No later than the Effective Time,
each warrant to purchase shares of UTI Common Stock (a "UTI Warrant"), which is
outstanding immediately prior to the Effective Time shall become and represent
at the Effective Time a fully-vested, immediately exercisable warrant to
purchase a number of shares of PEC Common Stock (a "Substituted Warrant")
(decreased to the nearest full share) determined by multiplying (i) the number
of shares of UTI Common Stock subject to such UTI Warrants immediately prior to
the Effective Time by (ii) the Exchange Ratio, at an exercise price per share of
PEC's Common Stock (rounded down to the nearest whole cent) equal to the
exercise price per share of PEC
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Common Stock immediately prior to the Effective Time divided by the Exchange
Ratio. PEC shall pay cash to holder of UTI Warrants in lieu of issuing
fractional shares of PEC Common Stock upon the exercise of Substituted Warrants
for shares of PEC Common Stock. PEC agrees to take such action as may be
required under the UTI Warrants to effectuate the foregoing, including execution
and delivery prior to or at the Effective Time, of the UTI Energy Corp. Warrant
Assumption Agreement (the "Warrant Assumption Agreement"), in the form agreeable
to the parties, to each holder of UTI Warrants.
SECTION 5.9 Reasonable Efforts. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
all reasonable 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 party in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement and the prompt satisfaction of the conditions
hereto, including (a) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, including, but not limited to, any
filing under the Improvements Act, (b) the obtaining of all necessary consents,
approvals or waivers from third parties, (c) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (d) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement; provided, however, that neither of the parties
shall be under any obligation to take any action to the extent that the Board of
Directors of such party shall conclude in good faith, after consultation with
and based upon the written advice of the respective outside legal counsel to UTI
and PEC (which advice in each case need not constitute an opinion), that such
action would cause a breach of that board of directors' fiduciary obligations
under applicable law.
SECTION 5.10 Public Announcements. Before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, PEC and UTI will consult with each
other, and will undertake reasonable efforts to agree upon the terms of such
press release, 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 the
Nasdaq National Market.
SECTION 5.11 Indemnification; Directors and Officers
Insurance. From and after the Effective Time, PEC agrees to indemnify and hold
harmless all past and present officers and directors of UTI to the full extent
such persons may be indemnified by UTI pursuant to UTI's Restated Certificate of
Incorporation, as amended, and Bylaws for acts or omissions occurring at or
prior to the Effective Time and shall promptly advance reasonable litigation
expenses incurred by such officers and directors (the "Indemnified Party") in
connection with investigating, preparing and defending any action arising out of
such acts or omissions. In addition, PEC will provide for a period of not less
than six years from the Effective Time, UTI's current directors and officers
with an insurance and indemnification policy that provides
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coverage for events occurring through the Effective Time (the "D&O Insurance")
that is no less favorable than the existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided; however, that PEC shall not be required to pay an annual premium for
the D&O Insurance in excess of two times the last annual premium paid by UTI
prior to the date hereof, which annual premium UTI represents and warrants to
have been $150,000 in the aggregate), but in such case shall purchase as much
coverage as possible for such amount. If the Surviving Corporation or any of its
successors or assigns (i) consolidated with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving Corporation,
which shall be financially responsible persons or entities, assume the
obligations set forth in this Section 5.11. The provisions of this Section 5.11
are intended to be for the benefit of and shall be enforceable by, the parties
hereto and each Indemnified Party and his or her heirs and representatives.
SECTION 5.12 Employee Benefits. At the Effective Time, all UTI
Benefit Plans, other than the UTI Stock Plans, the UTI Energy Corporation 401(k)
Plan and any other qualified plan, shall terminate, and subject to all
applicable laws, and all vested rights and benefits of such benefit plans and
programs shall be distributed to the eligible recipients in accordance with the
terms of such plans of UTI; with respect to the UTI Energy Corporation 401(k)
Plan, the parties may elect prior to the Effective Time to freeze benefit
accruals thereunder as of the Effective Time. The officers and employees of UTI
who continue as employees of the PEC and its Subsidiaries, shall be provided
with employee benefits under plans and programs which, in the aggregate, are no
less favorable than those provided pursuant to the plans and programs of PEC and
its Subsidiaries in effect on the date hereof for the benefit of all officers
and employees of PEC or any of its Subsidiaries (including but not limited to
stock option, life insurance, medical, profit sharing (including 401(k)),
severance, salary continuation and fringe benefits). For purposes of eligibility
to participate in and vesting in benefits provided to officers and employees,
individuals who are officers and employees of UTI at the Effective Time who
continue as employees of the Surviving Corporation, will be immediately eligible
to participate in any qualified plan maintained and sponsored by PEC or its
Subsidiaries and will be credited with vesting service for their years of
service with UTI and its Subsidiaries and years of service with prior employers
to the extent service with prior employers is taken into account under analogous
plans of UTI. PEC and its Subsidiaries will take such actions as are necessary
so that each employee of UTI who continues as an employee of PEC or one of its
Subsidiaries shall not be subject to preexisting condition exclusions or waiting
periods for welfare benefit plan coverages under any PEC Benefit Plan and shall
receive full credit for any copayments and deductibles already incurred under a
UTI Benefit Plan during the applicable year in which the Effective Time occurs.
SECTION 5.13 Takeover Statutes. If any "fair price,"
"moratorium," "control share acquisition" or other antitakeover statute or
regulation enacted under state or federal laws in the United States, including,
without limitation, Section 203 of the DGCA Code (each, a "Takeover Statute,"
and collectively, "Takeover Statutes"), is or may become applicable to the
Merger, UTI or the transactions contemplated thereby, UTI and the members of the
its Board of Directors will grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms
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contemplated hereby and thereby and otherwise act to eliminate or minimize the
effects of any Takeover Statute on any of the transactions contemplated hereby
or thereby.
SECTION 5.14 Tax Matters. (a) Each of PEC and UTI shall use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code, and neither UTI nor PEC (nor any of
their respective Subsidiaries) will take or omit to take any action (whether
before, at or after the Effective Time) that would cause the Merger not to be so
treated. PEC and UTI will furnish such certificates as may be reasonably
requested by legal counsel to PEC and UTI in connection with the rendering of
the opinions described in Sections 6.2(f) and 6.3(d).
(b) The parties and their Subsidiaries will characterize the
Merger as a reorganization with the meaning of Section 368(a)(1)(A) of the Code
in all federal, state and local Tax Returns and other filings.
SECTION 5.15 Registration Rights Relating to UTI Common Stock.
Surviving Corporation shall assume the registration rights covering an
equivalent number of shares of Surviving Corporation Common Stock relating to
the 4,832,774 shares of UTI Common Stock (including the 121,500 shares of UTI
Common Stock underlying the UTI Warrants) covered by the registration rights
agreements to which UTI is a party as of the date of this Agreement (treating
for that purpose UTI as the Issuer and UTI Common Stock as the Registrable
Securities thereunder, and construing the other provisions thereof accordingly).
SECTION 5.16 Letter of UTI's Accountants. UTI shall use its
best efforts to cause to be delivered to PEC a letter of Ernst & Young LLP,
UTI's independent public accountants, dated a date within two business days
before the date on which the S-4 shall become effective and addressed to PEC and
UTI, in form and substance reasonably satisfactory to PEC and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the S-4. In connection with
UTI's efforts to obtain such letter, if requested by UTI, PEC shall provide a
representation letter to Ernst & Young LLP complying with SAS 72, if then
required.
SECTION 5.17 Letter of PEC's Accountants. PEC shall use its
best efforts to cause to be delivered to UTI a letter of PricewaterhouseCoopers
L.L.P., PEC's independent public accountants, dated a date within two business
days before the date on which the S-4 shall become effective and addressed to
UTI and PEC, in form and substance reasonably satisfactory to UTI and customary
in scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the S-4. In connection
with PEC's efforts to obtain such letter, if requested by PEC, UTI shall provide
a representation letter to PricewaterhouseCoopers L.L.P. complying with SAS 72,
if then required.
SECTION 5.18 Legal Conditions to Merger.
(a) Except as otherwise provided herein, each of UTI, PEC will
take all reasonable actions necessary to comply promptly with all legal
requirements that may be imposed on such party with respect to the Merger
(including, without limitation, furnishing all information required under the
HSR Act and in connection with approvals of or filings with any
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other Governmental Entity) and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with the Merger. Each of
UTI and PEC will, and will cause its respective Subsidiaries to, take all
actions necessary to obtain (and will cooperate with each other in obtaining)
any consent, acquiescence, authorization, order or approval of, or any exemption
or nonopposition by, any Governmental Entity or court required to be obtained or
made by UTI, PEC or any of their Subsidiaries in connection with the Merger or
the taking of any action contemplated thereby or by this Agreement, including
complying with any requests or orders made by the Justice Department or the
Federal Trade Commission in connection with the Merger.
(b) Each of the parties hereto shall file a premerger
notification and report form under the HSR Act with respect to the Merger as
promptly as reasonably possible following execution and delivery of this
Agreement. Each of the parties agrees to use reasonable efforts to promptly
respond to any request for additional information pursuant to Section (e)(1) of
the HSR Act. Except as otherwise required by United States regulatory
considerations, UTI will furnish to PEC copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof (collectively,
"UTI HSR Documents") between UTI, or any of its respective representatives, on
the one hand, and any governmental entity, or members of the staff of such
agency or authority, on the other hand, with respect to this Agreement or the
Merger; provided; however, that (i) with respect to documents and other
materials filed by or on behalf of UTI with the Antitrust Division of the
Department of Justice, the Federal Trade Commission, or any state attorneys
general that are available for review by PEC, copies will not be required to be
provided to PEC and (ii) with respect to any UTI HSR Documents (A) that contain
any information which, in the reasonable judgment of legal counsel to UTI,
Fulbright & Xxxxxxxx L.L.P. should not be furnished to PEC because of antitrust
considerations or (B) relating to a request for additional information pursuant
to Section (3)(1) of the HSR Act, the obligation of UTI to furnish any such UTI
HSR Documents to PEC shall be satisfied by the delivery of such UTI HSR
Documents on a confidential basis to Xxxxx & Xxxxxxxxx LLP, legal counsel to
PEC, pursuant to a confidentiality agreement in form and substance reasonably
satisfactory to PEC. Except as otherwise required by United States regulatory
considerations, PEC will furnish to UTI copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof (collectively,
"PEC HSR Documents")) between PEC or any of its representatives, on the one
hand, and any Governmental Entity, or member of the staff of such agency or
authority, on the other hand, and any Governmental Entity, or member of the
staff of such agency or authority, on the other hand, with respect to this
Agreement or the Merger; provided, however, that (iii) with respect to documents
and other materials filed by or on behalf of PEC with the Antitrust Division of
the Department of Justice, the Federal Trade Commission, or any state attorneys
general that are available for review by UTI, copies will not be required to be
provided to UTI; and (iv) with respect to any PEC HSR Documents (A) that contain
information which, in the reasonable judgment of Xxxxx & Xxxxxxxxx LLP, should
not be furnished to UTI because of antitrust considerations or (B) relating to a
request for additional information pursuant to Section (3)(1) of the HSR Act,
the obligation of PEC to furnish any such PEC HSR Documents to UTI shall be
satisfied by the delivery of such PEC HSR Documents on a confidential basis to
Fulbright & Xxxxxxxx L.L.P. pursuant to a confidentiality agreement in form and
substance reasonably satisfactory to UTI.
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(c) Nothing contained in this Agreement shall be construed so
as to require PEC or the UTI, or any of their respective Subsidiaries or
affiliates, to sell, license, dispose of, or hold separate, or to operate in any
specified manner, any material assets or businesses of PEC, UTI or the Surviving
Corporation (or to require PEC, UTI or any of their respective Subsidiaries or
affiliates to agree to any of the foregoing). The obligations of each party
under Section 5.9 to use reasonable efforts with respect to antitrust matters
shall be limited to compliance with the reporting provisions of the HSR Act and
with its obligations under this Section 5.18.
SECTION 5.19 Third Party Standstill Agreements. During the period
from the date of this Agreement through the effective time of the Merger,
neither UTI, PEC nor any Subsidiaries of UTI or PEC to the extent the same
involves a significant transaction involving UTI or PEC shall terminate, amend,
modify or waive any provision of any standstill or similar agreement to which it
is a party. During such period, UTI, PEC and any Subsidiaries of UTI, or PEC
shall enforce to the fullest extent permitted under applicable law, the
provisions of any such agreement, including, but not limited to, by obtaining
injunctions to prevent any breaches of such agreement and to enforce
specifically the terms and provisions thereof in any court having jurisdiction.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment or waiver (where permissible) at or prior to the
Effective Time of each of the following conditions:
(a) Stockholder Approval. The Merger shall have been adopted
by the affirmative vote of the holders not less than a majority of the
outstanding shares of UTI Common Stock, and the Agreement and the Charter
Amendment shall have been adopted by the affirmative vote of the holders of not
less than a majority of the outstanding shares of PEC Common Stock.
(b) Nasdaq National Market Listing. The Surviving Corporation
Common Stock issuable in the Merger and pursuant to the Substituted Options and
Substituted Warrants shall have been authorized for listing on the Nasdaq
National Market, upon official notice of issuance.
(c) HSR Act. The applicable waiting period under the HSR Act
shall have expired or been terminated.
(d) S-4 Registration Statement. The S-4 Registration Statement
shall have become effective in accordance with the provisions of the Securities
Act. No stop order suspending the effectiveness of the S-4 Registration
Statement shall have been issued by the SEC and remain in effect. All necessary
state securities or "Blue Sky" authorizations shall have been received.
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(e) No Order. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of prohibiting the Merger or the transactions contemplated hereby;
provided that, in the case of any such decree, injunction or other order, each
of the parties shall have used reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as practicable any
decree, injunction or other order that may be entered.
SECTION 6.2 Conditions to Obligations of UTI. The obligation
of UTI to effect the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the following additional conditions; provided that UTI may
waive any of such conditions in its sole discretion:
(a) Performance of Agreements and Covenants. PEC shall have
performed in all material respects each of its agreements contained in this
Agreement required to be performed on or prior to the Effective Time, and UTI
shall have received a certificate signed on behalf of PEC by appropriate
officers of PEC to such effect.
(b) Representations and Warranties. Each of the
representations and warranties of PEC contained in this Agreement that is
qualified by materiality shall be true and correct on and as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Effective Time as if made on and as of such date
and each of the representations and warranties that is not so qualified shall be
true and correct in all material respects on and as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Effective Time as if made on and as of such date,
and UTI shall have received a certificate signed on behalf of PEC by appropriate
officers of PEC to such effect.
(c) Third-Party Consents. All required authorizations,
consents or approvals of any third party (other than a governmental entity), the
failure to obtain which would have a Material Adverse Effect on PEC (assuming
the Merger had taken place), shall have been obtained.
(d) The Stock Option Assumption Agreements referred to in
Section 5.7 shall have been executed and delivered by the PEC.
(e) The Warrant Assumption Agreements referred to in Section
5.8 shall have been executed and delivered by PEC.
(f) Tax Opinion of Fulbright & Xxxxxxxx L.L.P. UTI shall have
received the opinion of Fulbright & Xxxxxxxx L.L.P., counsel to UTI, dated the
Effective Time, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization transaction described in Section 368(a) of the
Code. In rendering such opinion, such counsel may require and rely upon
representations of fact contained in certificates of UTI and PEC.
(g) Opinion of Xxxxx & Xxxxxxxxx LLP. UTI shall have received
an opinion from Xxxxx & Xxxxxxxxx LLP, counsel to PEC, dated the Effective Time,
substantially to the effect that:
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(i) The incorporation, existence and good standing of PEC are
as stated in this Agreement; the authorized shares of PEC are as stated
in this Agreement; all outstanding shares of Surviving Corporation
Common Stock are duly and validly authorized and issued, fully paid and
nonassessable and have not been issued in violation of any preemptive
right of any stockholders.
(ii) PEC has full corporate power and authority to execute,
deliver and perform this Agreement and this Agreement has been duly
authorized, executed and delivered by PEC and (assuming due and valid
authorization, execution and delivery by UTI) constitutes the legal,
valid and binding agreement of PEC, enforceable against PEC in
accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by
the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iii) PEC has full corporate power and authority to execute,
deliver and perform each of the Stock Option Assumption Agreements and
each of the Warrant Assumption Agreements and each such Stock Option
Assumption Agreement and Warrant Assumption Agreement has been duly
authorized, executed and delivered by PEC and (assuming due and valid
execution and delivery by the other party to such Stock Option
Assumption Agreement and Warrant Assumption Agreement) each constitutes
the legal, valid and binding agreement of PEC, enforceable against PEC
in accordance with its terms, except to the extent enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by
the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) The execution and performance by PEC of this Agreement
and the various Stock Option Assumption Agreements and Warrant
Assumption Agreements will not violate the Restated Certificate of
Incorporation, as amended, or Bylaws of PEC and, to the knowledge of
such counsel, will not violate, result in a breach of or constitute a
default under any material lease, mortgage, contract, agreement,
instrument, law, rule, regulation, judgment, order or decree to which
PEC is a party or by which it or any of its properties or assets may be
bound.
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body
which has not been obtained is required on behalf of PEC for the
consummation of the transactions contemplated by this Agreement, the
Stock Option Assumption Agreements or the Warrant Assumption
Agreements.
(vi) To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened against or affecting PEC or
its Subsidiaries by any Governmental Entity which seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
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(vii) (A) At the time the S-4 Registration Statement became
effective, the S-4 Registration Statement and the Joint Proxy Statement
(other than the financial statements and related notes, financial data,
statistical data and supporting schedules included therein, and
information relating to or supplied by UTI as to which such counsel
expresses no opinion) complied as to form in all material respects with
the requirements of the Securities Act and the Exchange Act.
(B) In the course of the preparation of the S-4
Registration Statement and the Joint Proxy Statement such
counsel has considered the information set forth therein in
light of the matters required to be set forth therein, and has
participated in conferences with officers and representatives
of UTI and PEC, including their respective counsel and
independent public accountants, during the course of which the
contents of the S-4 Registration Statement and the Joint Proxy
Statement and related matters were discussed. Such counsel has
not independently checked the accuracy or completeness of, or
otherwise verified, and accordingly is not passing upon, and
does not assume responsibility for, the accuracy, completeness
or fairness of the statements contained in the S-4
Registration Statement or the Joint Proxy Statement; and such
counsel has relied as to materiality, to a large extent, upon
the judgment of officers and representatives of UTI and PEC.
However, as a result of such consideration and participation,
nothing has come to such counsel's attention which causes such
counsel to believe that the S-4 Registration Statement (other
than the financial statements and related notes, financial
data, statistical data and supporting schedules included
therein, and information relating to or supplied by UTI as to
which such counsel expresses no belief), at the time it became
effective, 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 not
misleading or that the Joint Proxy Statement (other than the
financial statements and related notes, financial data,
statistical data and supporting schedules included therein,
and information relating to or supplied by UTI, as to which
such counsel expresses no belief), at the time the S-4
Registration Statement became effective, at the time of
mailing or at the time of the Stockholder Meetings, included
any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
(viii) The shares of PEC Common Stock to be issued pursuant to
this Agreement, and any shares of Surviving Corporation Common Stock
issuable upon exercise of the Substituted Options or Substituted
Warrants will be, when so issued, duly authorized, validly issued and
outstanding, fully paid and nonassessable and have not been issued in
violation of any preemptive right of any stockholder.
(ix) The shares of PEC Common Stock included in the S-4
Registration Statement and the shares of Surviving Corporation Common
Stock issuable upon exercise of the Substituted Options and Substituted
Warrants have been listed on the Nasdaq National Market subject to
official notice of issuance.
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In rendering such opinion, counsel for PEC may rely as to matters of fact upon
the representations of officers of PEC contained in any certificate delivered to
such counsel and certificates of public officials. Such opinion shall be limited
to the General Corporation Law of the State of Delaware and the laws of the
United States of America and the State of Texas.
(h) PEC Board of Directors. PEC's Board of Directors shall
have taken all necessary and appropriate actions to cause the number of
directors comprising the full Board of Directors of PEC at the Effective Time to
be increased by 4 and the vacancies thus created to be filled at the Effective
Time by the election of 5 new directors, each of whom shall have been designated
by UTI prior to the Effective Time.
SECTION 6.3 Conditions to Obligations of PEC. The obligations
of PEC to effect the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the following additional conditions, provided that PEC may
waive any such conditions in its sole discretion:
(a) Performance of Agreements and Covenants. UTI shall have
performed in all material respects each of its agreements contained in this
Agreement required to be performed on or prior to the Effective Time, and PEC
shall have received a certificate signed on behalf of UTI by appropriate
officers of UTI to such effect.
(b) Each of the representations and warranties of UTI
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Time as if made on and as of such date and each of the representations and
warranties that is not so qualified shall be true in all material respects on
and as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Time as if made on and as of such date, and PEC shall have received a
certificate signed on behalf of UTI by appropriate officers of UTI to such
effect.
(c) Third-Party Consents. All required authorizations,
consents or approvals of any third party (other than a Governmental Entity), the
failure to obtain which would have a Material Adverse Effect on PEC (assuming
the Merger had taken place), shall have been obtained.
(d) Tax Opinion of Xxxxx & Xxxxxxxxx LLP. PEC shall have
received the opinion of Xxxxx & Xxxxxxxxx LLP, counsel to the PEC, dated the
Effective Time, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization transaction described in Section 368(a) of the
Code. In rendering such opinion, such counsel may require and rely upon
representations of fact contained in certificates of UTI and PEC.
(e) Opinion of Fulbright & Xxxxxxxx L.L.P. PEC shall have
received an opinion of counsel from Fulbright & Xxxxxxxx L.L.P., counsel to UTI,
dated the Effective Time, substantially to the effect that:
(i) The incorporation, existence, and good standing of UTI are
as stated in this Agreement; the authorized shares of UTI Common Stock
are as stated in this Agreement; all outstanding shares of UTI Common
Stock are duly and validly authorized and
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issued, fully paid and non-assessable and have not been issued in
violation of any preemptive right of stockholders. (ii) UTI has full
corporate power and authority to execute, deliver and perform this
Agreement and this Agreement has been duly authorized, executed and
delivered by UTI, and (assuming the due and valid authorization,
execution and delivery by PEC and Sub) constitutes the legal, valid and
binding agreement of UTI enforceable against UTI in accordance with its
terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(iii) The execution and performance by UTI of this Agreement
will not violate the Restated Certificate of Incorporation, as amended,
or Bylaws of UTI and will not violate, result in a breach of, or
constitute a default under, any material lease, mortgage, contract,
agreement, instrument, law, rule, regulation, judgment, order or decree
known to such counsel to which UTI is a party or to which they or any
of their properties or assets may be bound.
(iv) To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened against or affecting UTI,
by any Governmental Entity which seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement.
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body
which has not been obtained is required on behalf of UTI for
consummation of the transactions contemplated by this Agreement.
(vi) (A) At the time the S-4 Registration Statement became
effective, the Joint Proxy Statement (other than the financial
statements and related notes, financial data, statistical data and
supporting schedules included therein, and information relating to or
supplied by PEC or UTI as to which such counsel expresses no opinion)
complied as to form in all material respects with the requirements of
the Exchange Act.
(B) In the course of the preparation of the Joint
Proxy Statement such counsel has considered the information
set forth therein in light of the matters required to be set
forth therein, and has participated in conferences with
officers and representatives of UTI and PEC, including their
respective counsel and independent public accountants, during
the course of which the contents of the Joint Proxy Statement
and related matters were discussed. Such counsel has not
independently checked the accuracy or completeness of, or
otherwise verified, and accordingly is not passing upon, and
does not assume responsibility for, the accuracy, completeness
or fairness of the statements contained in the Joint Proxy
Statement; and such counsel has relied as to materiality, to a
large extent, upon the judgment of officers and
representatives of UTI and PEC. However, as a result of such
consideration and participation, nothing has come to such
counsel's
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attention which causes such counsel to believe that the Joint
Proxy Statement (other than the financial statements and
related notes, financial data, statistical data and supporting
schedules included therein, and information relating to or
supplied by or PEC, as to which such counsel expresses no
belief, at the time it became effective, 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 not misleading or that the Joint Proxy
Statement (other than the financial statements and related
notes, financial data, statistical data and supporting
schedules included therein, and information relating to or
supplied by PEC or Sub, as to which such counsel expresses no
belief), at the time the S-4 Registration Statement became
effective, at the time of mailing or at the time of the
Stockholder Meetings, included any untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, counsel for UTI may rely as to
matters of fact upon the representations of officers of UTI contained in any
certificate delivered to such counsel and certificates of public officials.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of UTI and PEC
referred to in Section 5.1(a) and (b), by mutual written consent of UTI and PEC
by action of their respective Boards of Directors.
SECTION 7.2 Termination by Either PEC or UTI. This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of either PEC or UTI if (i)
the Merger shall not have been consummated by June 30, 2001,whether such date is
before or after the date of approval by the stockholders of UTI or PEC (the
"Termination Date"); provided, however, that if either PEC or UTI determines
that additional time is necessary in connection with obtaining any governmental
consents, the Termination Date may be extended by PEC or UTI from time to time
by written notice to the other party to a date not beyond August 31, 2001, (ii)
the approval of UTI's stockholders required by Section 5.1(a) shall not have
been obtained at the UTI Stockholder Meeting or at any adjournment or
postponement thereof, (iii) the approval of PEC's stockholders as required by
Section 5.1(b) shall not have been obtained at the PEC Stockholder Meeting or at
any adjournment or postponement thereof or (iv) any order permanently
restraining, enjoining or otherwise prohibiting consummation of the Merger shall
become final and non-appealable (whether before or after the approval by the
stockholders of UTI or PEC); provided that the right to terminate this Agreement
pursuant to clause (i) above shall not be available to any party that has
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
of the Merger to be consummated.
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SECTION 7.3 Termination by UTI. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of UTI referred to in
Section 5.1(a), by action of the Board of Directors of UTI:
(a) if (i) UTI is not in material breach of Section 4.2, (ii)
the Merger shall not have been approved by the stockholders of UTI at the UTI
Stockholder Meeting, (iii) the Board of Directors of UTI authorizes UTI, subject
to complying with the terms of this Agreement, to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal and UTI
notifies PEC in writing that it intends to enter into such an agreement
attaching the most current version of such agreement to such notice, (iv) PEC
does not make, within five business days of receipt of UTI's written
notification of its intention to enter into a binding agreement for a Superior
Proposal, an offer that the Board of Directors of UTI determines, in good faith
after consultation with its financial advisors, is at least as favorable, from a
financial point of view, to the stockholders of UTI as the Superior Proposal and
(v) if so requested in writing by PEC prior to UTI's termination pursuant to
this Section 7.3(a), UTI, prior to such termination, pays to PEC in immediately
available funds the fees required to be paid pursuant to Section 7.5(b). UTI
agrees (x) that it will not enter into a binding agreement referred to in clause
(iii) above until at least the sixth business day after it has provided the
notice to PEC required thereby and (y) to notify PEC promptly if its intention
to enter into a written agreement referred to in its notification shall change
at any time after giving such notification; or
(b) if there is a breach by PEC of any representation,
warranty, covenant or agreement contained in this Agreement that cannot be cured
and would cause a condition set forth in Section 6.2(a) or (b) to be incapable
of being satisfied; or
(c) if (i) the Merger shall not have been approved by the
stockholders of PEC at the PEC Stockholder Meeting, (ii) UTI is not in material
breach of Section 4.2, (iii) UTI has not entered into a binding agreement for a
Superior Proposal or the Board of Directors of UTI shall not have withdrawn or
adversely modified its approved or recommended action of this Agreement or
failed to confirm its recommendation of this Agreement or the Merger within five
business days after a written request by PEC to do so, and (iv) UTI is not in
breach of any representations, warranties or covenants contained in this
Agreement that cannot be cured and would cause a condition set forth in Section
6.3(a) or (b) to be incapable of being satisfied.
SECTION 7.4 Termination by PEC. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by the stockholders of PEC at the PEC
Stockholder Meeting, by action of the Board of Directors of PEC:
(a) if (i) PEC is not in material breach of Section 4.3, (ii)
the Merger shall not have been approved by the stockholders of PEC at the PEC
Stockholder Meeting, (iii) the Board of Directors of PEC authorizes PEC, subject
to complying with the terms of this Agreement, to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal and PEC
notifies UTI in writing that it intends to enter into such an agreement
attaching
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the most current version of such agreement to such notice, (iv) UTI does not
make, within five business days of receipt to PEC's written notification of its
intention to enter into a binding agreement for a Superior Proposal, an offer
that the Board of Directors of PEC determines, in good faith after consultation
with its financial advisors, is at least as favorable, from a financial point of
view, to the stockholders of PEC as the Superior Proposal, and (v) if so
requested in writing by UTI prior to PEC's termination pursuant to this Section
7.4(a), PEC, prior to termination, pays to UTI in immediately available funds
the fees required to be paid pursuant to Section 7.5(c). PEC agrees (x) that it
will not enter into a binding agreement referred to in clause (iii) above until
at least the sixth business day after it has provided the notice to UTI required
thereby and (y) to notify UTI promptly of its intention to enter into a written
agreement referred to in its notification shall change at any time after giving
such notification; or
(b) if there is a breach by UTI of any representation,
warranty, covenant or agreement contained in this Agreement that cannot be cured
and would cause a condition set forth in Section 6.3(a) or (b) to be incapable
of being satisfied; or
(c) if (i) the Merger shall not have been approved by the
stockholders of UTI at the UTI Stockholder Meeting, (ii) PEC is not in material
breach of Section 4.3, (iii) PEC has not entered into a binding agreement for a
Superior Proposal or the Board of Directors of PEC shall not have withdrawn or
adversely modified its approved or recommended action of this Agreement or
failed to confirm its recommendation of this Agreement or the Merger within five
business days after a written request by UTI to do so, and (iv) PEC is not in
breach of any representations, warranties or covenants contained in this
Agreement that cannot be cured and would cause a condition set forth in Section
6.2(a) or (b) to be incapable of being satisfied.
SECTION 7.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VII, this Agreement (other
than as set forth in Section 8.1) shall become void and of no effect with no
liability on the party of any party hereto (or of any of its directors,
officers, employees, agents, legal and financial advisors or other
representatives); provided, however, except as otherwise provided herein, no
such termination shall relieve any party hereto of any liability or damages
resulting from any willful or grossly negligent breach of this Agreement.
(b) In the event that (i) a UTI Acquisition Proposal shall
have been made to UTI or any of its Subsidiaries or any of its stockholders or
any Person shall have publicly announced an intention (whether or not
conditional) to make a UTI Acquisition Proposal with respect to UTI or any of
its Subsidiaries and thereafter this Agreement is terminated by either PEC or
UTI pursuant to Section 7.2(ii), or (ii) this Agreement is terminated by UTI
pursuant to Section 7.3(a), then UTI shall promptly, but in no event later than
two days after the date PEC makes a written request for payment, pay PEC a
termination fee of $32,500,000 and shall promptly, but in no event later than
two days after being notified of such by PEC, pay to PEC an amount equal to all
of the charges and expenses incurred by PEC in connection with this Agreement
and the transactions contemplated by this Agreement up to a maximum amount of
$2,500,000, in each case payable by wire transfer of same day funds.
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(c) In the event that (i) a PEC Acquisition Proposal shall
have been made to PEC or any of its Subsidiaries or any of its stockholders or
any Person shall have publicly announced an intention (whether or not
conditional) to make a PEC Acquisition Proposal with respect to PEC or any of
its Subsidiaries and thereafter this Agreement is terminated by either UTI or
PEC pursuant to Section 7.2(iii), or (ii) this Agreement is terminated by PEC
pursuant to Section 7.4(a), then PEC shall promptly, but in no event later than
two days after the date UTI makes a written request for payment, pay UTI a
termination fee of $32,500,000 and shall promptly, but in no event later than
two days after being notified of such by UTI, pay to UTI an amount equal to all
of the charges and expenses incurred by UTI in connection with this Agreement
and the transactions contemplated by this Agreement up to a maximum amount of
$2,500,000, in each case payable by wire transfer of same day funds.
(d) In the event that this Agreement is terminated by UTI
pursuant to Section 7.3 (c), then PEC shall promptly, but in no event later that
two days after the date UTI makes a written request for payment, pay UTI a
termination fee of $2,500,000 and shall promptly, but in no event later than two
days after being notified as such by UTI, pay to UTI an amount equal to all of
the out of pocket charges and expenses incurred by UTI in connection with this
Agreement and the transactions contemplated for this Agreement up to a maximum
of $2,500,000 in each case payable by wire transfer.
(e) In the event that this Agreement is terminated by PEC
pursuant to Section 7.4 (c), then UTI shall promptly, but in no event later that
two days after the date PEC makes a written request for payment, pay PEC a
termination fee of $2,500,000 and shall promptly, but in no event later than two
days after being notified as such by PEC, pay to PEC an amount equal to all of
the out of pocket charges and expenses incurred by PEC in connection with this
Agreement and the transactions contemplated for this Agreement up to a maximum
of $2,500,000 in each case payable by wire transfer.
(f) UTI and PEC each acknowledge that the agreements contained
in Sections 7.5(b), (c), (d) and (e) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, UTI and PEC
would not enter into this Agreement; accordingly, if UTI fails to promptly pay
the amount due pursuant to Section 7.5(b) or (e), or PEC fails to promptly pay
the amount due pursuant to Section 7.5(c) or (d) and, in order to obtain such
payment, PEC or UTI, as the case may be, commences a suit which results in a
judgment against PEC or UTI, as the case may be, for the fee set forth in this
Section 7.5, UTI shall pay to PEC or PEC shall pay to UTI, as the case may be,
its costs and expenses (including attorneys' fees) in connection with such suit,
together with interest from the date of termination of this Agreement on the
amounts owed at the prime rate of Xxxxx Fargo Bank in effect from time to time
during such period plus two percent.
SECTION 7.6 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the Merger by the
stockholders of UTI or PEC, but, after any such approval by stockholders of UTI,
no amendment shall be made which changes the Exchange Ratio as provided in
Section 1.7 or which in any way materially adversely affects the rights of such
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stockholders, without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
SECTION 7.7 Waiver. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Survival. This Article VIII and the agreements of
UTI and PEC contained in Section 5.7 (UTI Stock Options; UTI Stock Plans);
Section 5.8 (UTI Warrants); Section 5.11 (Indemnification; Directors and
Officers Insurance); Section 5.12 (Employee Benefits) and Section 5.15
(Registration Rights Relating to UTI Common Stock) shall survive consummation of
the Merger. This Article VIII, Section 5.6 (Expenses) and Section 7.5 (Effect of
Termination and Abandonment) shall survive termination of this Agreement. All
other representations, warranties, covenants and agreements in this Agreement
shall not survive consummation of the Merger or termination of this Agreement.
SECTION 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
sent by overnight courier or telecopied (with a confirmatory copy sent by
overnight courier) or sent by registered or certified mail, postage prepaid, 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 PEC, to
Xxxxxxxxx Energy, Inc.
0000 Xxxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Chairman and Chief Executive
Officer
with copies to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
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(b) if to UTI, to
UTI Energy Corp.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000X
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Drum
President and Chief Executive
Officer
with copies to:
Xxxxxxx Xxxxxx, Esq.
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
SECTION 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof', "herein" and "hereunder" and
similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. 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."
SECTION 8.4 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.
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, (including any exhibits hereto) the PEC Disclosure Schedule, the
UTI Disclosure Schedule and the Confidentiality Agreement dated as of the date
of this Agreement between PEC and UTI, (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (b) except for the
provisions of Section 5.11 (Indemnification; Directors and Officers Insurance)
is not intended to confer upon any person other than the parties any rights or
remedies hereunder; provided, however, that attorneys for the parties hereto may
rely upon the representations and warranties contained herein and in the
certificates delivered pursuant to Sections 6.2(b) and 6.3(b).
SECTION 8.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 8.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. This Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
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SECTION 8.8 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 or
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 be consummated as originally contemplated
to the fullest extent possible.
SECTION 8.9 Enforcement of This Agreement. The parties 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, this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 8.10 Jurisdiction and Venue. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Western District of Texas or any court of the State of Delaware in
any action, suit or proceeding arising from or in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non conveniens or
any other objection to venue therein).
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IN WITNESS WHEREOF, PEC and UTI have caused this Agreement to
be signed by their respective officers thereunto duly authorized all as of the
date first written above.
XXXXXXXXX ENERGY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
UTI ENERGY CORP.
By: /s/ Xxxxxx X. Drum
-------------------------------------
Xxxxxx X. Drum
President and Chief Executive Officer
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EXHIBIT I(A)
Gentlemen:
I have been advised that as of the date hereof I may be deemed
to be an "affiliate" of UTI Energy Corp., a Delaware corporation ("UTI"), as the
term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule
145 of the Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (together with the rules and regulations promulgated hereunder, the
"Securities Act"), and/or (ii) used in and for purposes of Accounting Series,
Releases 130 and 135, as amended, of the Commission. Pursuant to the terms of
the Agreement and Plan of Merger, dated as of February 4, 2001(the "Merger
Agreement"). UTI will be merged with and into Xxxxxxxxx Energy, Inc., a Delaware
corporation ("PEC"), in consideration of Surviving Corporation Common Stock (as
hereinafter defined), with PEC as the surviving corporation (the "Surviving
Corporation").
As used herein, "UTI Common Stock" means the Common Stock, par
value $0.001 per share, of UTI and "Surviving Corporation Common Stock" means
the Common Stock, par value $0.01 per share, of PEC.
I represent, warrant, and covenant to PEC that in the event I
receive any Surviving Corporation Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
any Surviving Corporation Common Stock acquired by me in the Merger in violation
of the Securities Act.
B. I have carefully read this letter and the Merger Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of Surviving Corporation Common
Stock, to the extent I felt necessary, with my counsel or counsel for Surviving
Corporation.
C. I have been advised that the issuance of Surviving
Corporation Common Stock to me pursuant to the Merger has been or will be
registered with the Commission under the Securities Act on a Registration
Statement on Form S-4. However, I have also been advised that, because at the
time the Merger will be submitted for a vote of the shareholders of UTI, I may
be deemed to be an affiliate of UTI, the distribution by me of any Surviving
Corporation Common Stock acquired by me in the Merger will not be registered
under the Securities Act and that I may not sell, transfer, or otherwise dispose
of any Surviving Corporation Common Stock acquired by me in the Merger unless
(i) such sale, transfer, or other disposition has been registered under the
Securities Act, (ii) such sale, transfer, or other disposition is made in
conformity with the volume and other limitations of Rule 145 promulgated by the
Commission under the Securities Act, or (iii) in the opinion of counsel
reasonably acceptable to Surviving
EXH I(A) - 1
61
Corporation such sale, transfer, or other disposition is otherwise exempt from
registration under the Securities Act.
D. I understand that Surviving Corporation is under no
obligation to register under the Securities Act the sale, transfer, or other
disposition by me or on my behalf of any Surviving Corporation Common Stock
acquired by me in the Merger or to take any other action necessary in order to
make an exemption from such registration available.
E. I also understand that stop transfer instructions will be
given to Surviving Corporation's transfer agent with respect to Surviving
Corporation Common Stock and that there will be placed on the certificates for
any Surviving Corporation Common Stock acquired by me in the Merger, or any
substitutions therefore, a legend stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares represented by
this certificate may only be transferred in accordance with
the terms of an agreement dated as of February 4, 2001,
between the registered holder hereof and the issuer of this
certificate, a copy of which agreement will be mailed to the
holder hereof without charge within five days after receipt of
written request therefore."
F. I also understand that unless the transfer by me of my
Surviving Corporation Common Stock has been registered under the Securities Act
or is a sale made in conformity with the provisions of Rule 145, Surviving
Corporation reserves the right to put the following legend on the certificates
issued to my transferred:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares may not be sold, pledged, or
otherwise transferred except in accordance with an exemption
from the registration requirements of the Securities Act of
1933."
It is understood and agreed that the legends set forth in
paragraph E and F above shall be removed by the delivery of substitute
certificates without such legend if the undersigned shall have delivered to
Surviving Corporation a copy of a letter from the staff of the Commission, or an
opinion of counsel in form and substance reasonably satisfactory to Surviving
Corporation, to the effect that such legend is not required for purposes of the
Securities Act.
I understand that (a) Surviving Corporation will supply me
with any information necessary to enable me to make routine sales of any
Surviving Corporation Common Stock acquired by me in the Merger as may be
permitted, by and in accordance with, the provisions of
EXH I(A) - 2
62
Rule 144 under the Securities Act or any similar rule of the Commission
hereafter applicable, and (b) Surviving Corporation will comply with all
requirements of the Securities Exchange Act of 1934 rules and regulations
promulgated thereunder, (the "Exchange Act") with respect to the filing by
Surviving Corporation of annual, periodic and other reports on a timely basis in
a manner sufficient to allow sales of any such Surviving Corporation Common
Stock by me during the three year period following the Effective Time (as
defined in the Merger Agreement) if such sales are otherwise permitted by law or
regulation. Upon my written request, Surviving Corporation shall furnish me with
a written statement representing that it has complied with the reporting
requirements enumerated in Rule 144(c)(1), or if Surviving Corporation is not
then subject to Section 13 or 15(d) of the Exchange Act, that it has made
publicly available the information concerning Surviving Corporation required by
Rule 144(c)(2).
I further represent to and covenant with PEC and the Surviving
Corporation that I will not, within the 30 days prior to the Effective Time (as
defined in the Agreement), sell, transfer, or otherwise dispose of any shares
PEC Common Stock and that I will not sell, transfer, or otherwise dispose of any
shares of Surviving Corporation Common Stock (whether or not acquired by me in
the Merger) until after such time as results covering at least 30 days of
post-closing combined operations have been published by PEC and the Surviving
Corporation, in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the Commission on
Form 10-K, 10-Q, or 8-K, or any other public filing or announcement which
includes the combined results of operations. Furthermore, I understand that
Surviving Corporation will give stop transfer instructions to its transfer agent
in order to prevent the breach of the representations, warranties, and covenants
made by me in this paragraph. I also understand that the Merger is intended to
be treated for accounting purposes as a "pooling of interests," and I agree
that, PEC advises me in writing that additional restrictions apply to my
EXH I(A) - 3
63
ability to sell, transfer, or otherwise dispose of Surviving Corporation Common
Stock in order to be entitled to use the pooling of interest accounting method,
I will abide by such restrictions.
Very truly yours,
By:
-------------------------------------
Name:
Accepted this day of
February ___, 2001
UTI ENERGY CORP.
By:
-----------------------------------
Its:
----------------------------------
XXXXXXXXX ENERGY, INC.
By:
-----------------------------------
Its:
----------------------------------
EXH I(A) - 4
64
EXHIBIT I(B)
Gentlemen:
I have been advised that as of the date hereof I may be deemed
to be an "affiliate" of Xxxxxxxxx Energy, Inc., Delaware corporation ("PEC"), as
the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (together with the rules and regulations promulgated
hereunder, the "Securities Act"), and/or (ii) used in and for purposes of
Accounting Series, Releases 130 and 135, as amended, of the Commission. Pursuant
to the terms of the Agreement and Plan of Merger, dated as of February 4, 2001
(the "Merger Agreement"), UTI Energy Corp. ("UTI"), a Delaware corporation, will
be merged (the "Merger") with and into Xxxxxxxxx Energy, Inc., a Delaware
corporation ("PEC"), in consideration of Surviving Corporation Common Stock (as
hereinafter defined) with PEC as the Surviving Corporation (the "Surviving
Corporation").
As used herein, "Surviving Corporation Common Stock" means the
Common Stock, par value $0.01 per share, of Surviving Corporation.
I represent, warrant, and covenant to PEC that in the event I
receive any Surviving Corporation Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
any Surviving Corporation Common Stock acquired by me in the Merger in violation
of the Securities Act.
B. I have carefully read this letter and the Merger Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of Surviving Corporation Common
Stock, to the extent I felt necessary, with my counsel or counsel for PEC.
C. I have been advised that the issuance of Surviving
Corporation Common Stock to me pursuant to the Merger has been or will be
registered with the Commission under the Securities Act on a Registration
Statement on Form S-4. However, I have also been advised that, because at the
time the Merger will be submitted for a vote of the shareholders of UTI, I may
be deemed to be an affiliate of PEC, the distribution by me of any Surviving
Corporation Common Stock acquired by me in the Merger will not be registered
under the Securities Act and that I may not sell, transfer, or otherwise dispose
of any Surviving Corporation Common Stock acquired by me in the
EXH I(B) - 1
65
Merger unless (i) such sale, transfer, or other disposition has been registered
under the Securities Act, (ii) such sale, transfer, or other disposition is made
in conformity with the volume and other limitations of Rule 145 promulgated by
the Commission under the Securities Act, or (iii) in the opinion of counsel
reasonably acceptable to Surviving Corporation such sale, transfer, or other
disposition is otherwise exempt from registration under the Securities Act.
D. I understand that Surviving Corporation is under no
obligation to register under the Securities Act the sale, transfer, or other
disposition by me or on my behalf of any Surviving Corporation Common Stock
acquired by me in the Merger or to take any other action necessary in order to
make an exemption from such registration available.
E. I also understand that stop transfer instructions will be
given to Surviving Corporation's transfer agent with respect to Surviving
Corporation Common Stock and that there will be placed on the certificates for
any Surviving Corporation Common Stock acquired by me in the Merger, or any
substitutions therefore, a legend stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares represented by
this certificate may only be transferred in accordance with
the terms of an agreement dated as of February 4, 2001,
between the registered holder hereof and the issuer of this
certificate, a copy of which agreement will be mailed to the
holder hereof without charge within five days after receipt of
written request therefore."
F. I also understand that unless the transfer by me of my
Surviving Corporation Common Stock has been registered under the Securities Act
or is a sale made in conformity with the provisions of Rule 145, PEC reserves
the right to put the following legend on the certificates issued to my
transferred:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares may not be sold, pledged, or
otherwise transferred except in accordance with an exemption
from the registration requirements of the Securities Act of
1933."
It is understood and agreed that the legends set forth in
paragraphs E and F above shall be removed by the delivery of substitute
certificates without such legend if the undersigned shall have delivered to
Surviving Corporation a copy of a letter from the staff of the
EXH I(B) - 2
66
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to Surviving Corporation, to the effect that such legend is not
required for purposes of the Securities Act.
I understand that (a) Surviving Corporation will supply me
with any information necessary to enable me to make routine sales of any
Surviving Corporation Common Stock acquired by me in the Merger as may be
permitted, by and in accordance with, the provisions of Rule 144 under the
Securities Act or any similar rule of the Commission hereafter applicable, and
(b) PEC will comply with all requirements of the Securities Exchange Act of 1934
rules and regulations promulgated thereunder, (the "Exchange Act") with respect
to the filing by Surviving Corporation of annual, periodic and other reports on
a timely basis in a manner sufficient to allow sales of any such Surviving
Corporation Common Stock by me during the three year period following the
Effective Time (as defined in the Merger Agreement) if such sales are otherwise
permitted by law or regulation. Upon my written request, Surviving Corporation
shall furnish me with a written statement representing that it has complied with
the reporting requirements enumerated in Rule 144(c)(1), or if Surviving
Corporation is not then subject to Section 13 or 15(d) of the Exchange Act, that
it has made publicly available the information concerning PEC required by Rule
144(c)(2).
I further represent to and covenant with PEC and the Surviving
Corporation that I will not, within the 30 days prior to the Effective Time (as
defined in the Agreement), sell, transfer, or otherwise dispose of any shares of
PEC Common Stock and that I will not sell, transfer, or otherwise dispose of any
shares of Surviving Corporation Common Stock (whether or not acquired by me in
the Merger) until after such time as results covering at least 30 days of
post-closing combined operations have been published by Surviving Corporation,
in the form of a quarterly earnings report, an effective registration statement
filed with the Commission, a report to the Commission on Form 10-K, 10-Q, or
8-K, or any other public filing or announcement which includes the combined
results of operations. Furthermore, I understand that Surviving Corporation will
give stop transfer instructions to its transfer agent in order to prevent the
breach of the representations, warranties, and covenants made by me in this
paragraph. I also understand that the Merger is intended to be treated for
accounting purposes as "pooling of interests," and I agree that, if PEC advises
me in writing that additional restrictions apply to my ability to sell,
transfer, or otherwise dispose of Surviving Corporation Common Stock in order to
be entitled to use the pooling of interest accounting method, I will abide by
such restrictions.
Very truly yours,
By:
--------------------------------
Name:
Accepted this day of
February ___, 2001.
XXXXXXXXX ENERGY, INC.
By:
-----------------------------------
Its:
----------------------------------
EXH I(B) - 3
67
EXHIBIT II
XXXXXXXXX ENERGY, INC.
UTI ENERGY CORP. STOCK OPTION ASSUMPTION AGREEMENT
AGREEMENT, dated as of ___________, 2001 (this "Agreement"),
between Xxxxxxxxx Energy, Inc., a Delaware corporation ("PEI"), and
______________, an individual ("Participant").
RECITALS:
UTI Energy Corp. ("UTI") and Participant have entered into one
or more stock option agreements ("UTI Option Agreement") relating to options
("Options") granted to Participant under the UTI Stock Plans (as defined in the
Merger Agreement hereinafter defined) pursuant to which Participant is presently
entitled to purchase up to _____ shares of Common Stock of UTI as shown in the
schedule attached to this Agreement.
UTI and PEI, have entered into an Agreement and Plan of Merger dated
as of February ___, 2001 (the "Merger Agreement"), pursuant to which UTI will
merge with and into PEI in consideration to the UTI stockholders of shares of
PEI Common Stock (the "Merger"). Pursuant to Section 5.7 of the Merger
Agreement, at the Effective Time (as defined in the Merger Agreement) of the
Merger, all options to acquire shares of UTI Common Stock outstanding
immediately before the Effective Time shall be assumed by PEI.
By this Agreement, the parties desire to confirm the
assumption contemplated by Section 5.7 of the Merger Agreement as it relates to
Options granted under the UTI Stock Plans.
AGREEMENT
PEI and Participant agree as follows:
1. ASSUMPTION OF OPTION. By this Agreement, PEI assumes, and
Participant agrees to the assumption by PEI of, all of the obligations of UTI to
Participant under the UTI Option Agreement except that:
(a) Each reference therein to "shares" shall mean shares of
PEI Common Stock, $0.01 par value per share;
(b) Each reference therein to a number of shares shall be a
reference to a number of shares determined by multiplying such number by 1.0
(the "Exchange Ratio);
EXH II(B) - 1
68
(c) Each reference therein to an exercise price per share
shall be a reference to a price determined by dividing the exchange price in the
UTI Option Agreement by the Exchange Ratio; and
(d) Each reference therein to the Committee shall mean the
Compensation Committee of the Board of Directors of PEI.
(The results of the computations in (b) and (c) above as
applied to the Participant's Options presently outstanding under the UTI Stock
Plans appear in the Schedule to this Agreement.)
2. UTI STOCK PLANS. By this Agreement, PEI assumes the UTI
Stock Plans subject to the provisions of Section 1 above.
3. RECOGNITION OF VESTING, EXERCISES AND LAPSES. PEI
acknowledges that upon assumption the Options will have the same terms and
conditions as were applicable under the Options after giving effect to any
existing provision in such Options or applicable UTI Stock Plans that provides
for the automatic acceleration of vesting upon consummation of the Merer and a
change in control of UTI, and Participant acknowledges that any lapses or
exercises of Options thereunder to date shall be recognized.
4. REGISTRATION. Promptly following the date hereof, PEI will
file a Registration Statement on Form S-8 under the Securities Act of 1933 with
the Securities and Exchange Commission covering the Options being assumed
hereunder by PEI and agrees to thereafter file a "reoffer prospectus" within the
meaning of Instruction C-1 to Form S-8 with a Post-Effective Amendment to such
Registration Statement if necessary in order to permit the reoffer or resale by
Participant of PEI Common Stock acquired upon exercise of the Options.
5. MISCELLANEOUS. This Agreement shall be construed in
accordance with the laws of the State of Texas. Except as required to give
effect to this Agreement, PEI and Participant confirm the terms of the UTI
Option Agreements.
IN WITNESS WHEREOF, PEI and Participant have caused this
Agreement to be signed as of the date first above written.
XXXXXXXXX ENERGY, INC.
By:
-------------------------------------
Name:
----------------------------------------
Participant
EXH II(B) - 2
69
SCHEDULE TO
UTI Energy Corp. Stock Option
Assumption Agreement Dated ____________, 2001,
between PEI and
____________________
Options on
PEI Common
Options on UTI Common Stock Stock
------------------------------------------------------------------------------------------- -----------------------
No. of
Shares
No. of Shares No. of Shares Underlying
Date Term of Underlying Price at which Available as of Options
Name of Plan Granted Option Options Granted Granted __/__/01 Assumed Price
------------ ------- ------- --------------- -------------- --------------- ---------- -----
$______ $______
EXH II(B) - 3
70
Exhibits and Schedules omitted pursuant to
Item 601(b)(2) of Regulation S-K.
