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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DOMINION RESOURCES, INC.,
CONSOLIDATED NATURAL GAS COMPANY
AND
XXXXX XXXXXXX NATURAL GAS CORP.
Dated as of September 9, 2001
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.4 Certificate of Incorporation . . . . . . . . . . . . . . . . 6
Section 1.5 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.6 Board of Directors and Officers. . . . . . . . . . . . . . . 6
ARTICLE II
CONVERSION OF COMPANY SHARES
Section 2.1 Effect On Capital Stock. . . . . . . . . . . . . . . . . . . 6
Section 2.2 Exchange of Certificates for Shares . . . . . . . . . . . . 7
Section 2.3 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4 Adjustments to Prevent Dilution. . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Existence; Good Standing; Corporate Authority. . . . . . . . 10
Section 3.2 Authorization, Validity and Effect of Agreements . . . . . . 10
Section 3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.6 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.7 SEC Documents and Financial Statements . . . . . . . . . . . 12
Section 3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.9 Absence of Certain Changes . . . . . . . . . . . . . . . . . 13
Section 3.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 16
Section 3.12 Labor and Employment Matters . . . . . . . . . . . . . . . . 17
Section 3.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . 17
Section 3.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 19
Section 3.15 Intellectual Property. . . . . . . . . . . . . . . . . . . . 19
Section 3.16 Oil and Gas Reserves . . . . . . . . . . . . . . . . . . . . 19
Section 3.17 Financial and Commodity Hedging. . . . . . . . . . . . . . . 20
Section 3.18 Indebtedness and Certain Contracts . . . . . . . . . . . . . 20
Section 3.19 Title to Properties. . . . . . . . . . . . . . . . . . . . . 20
Section 3.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.21 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.22 Opinion of Financial Advisors. . . . . . . . . . . . . . . . 21
Section 3.23 Board Recommendation; Vote Required. . . . . . . . . . . . . 22
Section 3.24 Holding Company; Investment Company; Utility . . . . . . . . 22
Section 3.25 Certain Approvals. . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1 Existence; Good Standing; Corporate Authority. . . . . . . . 23
Section 4.2 Authorization, Validity and Effect of Agreements . . . . . . 23
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.5 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 4.7 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.8 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.9 No Vote Required . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.10 Absence of Changes . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Merger. . . . 26
Section 5.2 Conduct of Business of Parent. . . . . . . . . . . . . . . . 28
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 No Solicitation by the Company . . . . . . . . . . . . . . . 29
Section 6.2 Shareholders' Meeting. . . . . . . . . . . . . . . . . . . . 31
Section 6.3 Filings; Reasonable Best Efforts . . . . . . . . . . . . . . 31
Section 6.4 Access to Information. . . . . . . . . . . . . . . . . . . . 33
Section 6.5 Notification of Certain Matters. . . . . . . . . . . . . . . 33
Section 6.6 Registration Statement; Proxy Statement. . . . . . . . . . . 34
Section 6.7 Listing Application. . . . . . . . . . . . . . . . . . . . . 34
Section 6.8 Agreements of Affiliates . . . . . . . . . . . . . . . . . . 35
Section 6.9 Indemnification and Insurance. . . . . . . . . . . . . . . . 35
Section 6.10 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . 36
Section 6.11 Reorganization . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.12 Public Statements. . . . . . . . . . . . . . . . . . . . . . 39
Section 6.13 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . 39
Section 6.14 Company Name and Trademarks. . . . . . . . . . . . . . . . . 39
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger . 39
Section 7.2 Conditions to Obligation of the Company to Effect the Merger 40
Section 7.3 Conditions to Obligation of Parent to Effect the Merger. . . 41
ARTICLE VIII
TERMINATION
Section 8.1 Termination by Mutual Consent. . . . . . . . . . . . . . . . 41
Section 8.2 Termination by Parent or the Company . . . . . . . . . . . . 41
Section 8.3 Termination by the Company . . . . . . . . . . . . . . . . . 42
Section 8.4 Termination by Parent. . . . . . . . . . . . . . . . . . . . 42
Section 8.5 Effect of Termination. . . . . . . . . . . . . . . . . . . . 43
Section 8.6 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations, Warranties and Agreements. . 44
Section 9.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.3 Assignment; Binding Effect; Benefit. . . . . . . . . . . . . 45
Section 9.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.7 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 46
Section 9.8 Counterparts; Facsimile Transmission of Signatures . . . . . 46
Section 9.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Section 9.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.11 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.12 Incorporation of Exhibits. . . . . . . . . . . . . . . . . . 47
Section 9.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.14 Enforcement of Agreement . . . . . . . . . . . . . . . . . . 47
Section 9.15 Obligation of Sub. . . . . . . . . . . . . . . . . . . . . . 48
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
September 9, 2001, is among DOMINION RESOURCES, INC., a Virginia corporation
("Parent"), CONSOLIDATED NATURAL GAS COMPANY, a Delaware corporation and a
direct and wholly owned subsidiary of Parent ("Sub"), and XXXXX XXXXXXX
NATURAL GAS CORP., an Oklahoma corporation (the "Company").
RECITALS
A. The respective Boards of Directors of each of Parent, Sub and the
Company have determined that the merger of the Company with and into Sub (the
"Merger"), in the manner contemplated herein, is advisable and in the best
interests of their respective corporations and shareholders, and, by
resolutions duly adopted, have approved and adopted this Agreement.
B. It is intended for federal income tax purposes that the Merger
qualify as a reorganization within the meaning of section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
promulgatd thereunder (the "Treasury Regulations").
C. As a condition and inducement to the willingness of Parent to enter
into this Agreement, certain principal shareholders of the Company have
entered into an agreement with Parent and Sub pursuant to which such
shareholders have (i) agreed, among other things, to vote their Company Shares
in favor of the Merger and (ii) granted to Parent and Sub an irrevocable proxy
to vote their Company Shares upon the terms and conditions set forth therein
(the "Principal Shareholders Agreement").
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), the Company
shall be merged with and into Sub in accordance with this Agreement, and the
separate corporate existence of the Company shall thereupon cease. Sub
(sometimes hereinafter referred to as the "Surviving Corporation") shall be
the surviving corporation in the Merger and shall be a wholly owned subsidiary
of Parent. The Merger shall have the effects specified in the Delaware
General Corporation Law ("DGCL") and the Oklahoma General Corporation Act (the
"OGCA"). At the election of Parent, any direct wholly owned subsidiary of
Parent may be substituted for Sub as a constituent corporation in the Merger.
In such event, the parties hereto agree to execute an appropriate amendment to
this Agreement in order to reflect such substitution.
Section 1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (i) at
the offices of McGuireWoods LLP, One Xxxxx Center, Richmond, Virginia, at 9:00
a.m., local time, on the first business day immediately following the day on
which the last to be fulfilled or waived of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to fulfillment or waiver of those
conditions) shall be fulfilled or waived in accordance herewith or (ii) at
such other time, date or place as Parent and the Company may agree in writing.
The date on which the Closing occurs is hereinafter referred to as the
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"Closing Date."
Section 1.3 Effective Time. If all the conditions to the Merger set
forth in Article VII shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated as provided in
Article VIII, on the Closing Date, certificates of merger (the "Certificates
of Merger") meeting the requirements of Section 251 of the DGCL and Section
1082 of the OGCA shall be properly executed and filed with the Secretary of
State of the State of Delaware and the Secretary of State of the State of
Oklahoma, respectively. The Merger shall become effective upon the filing of
the Certificates of Merger with the Secretaries of State of the State of
Delaware and Oklahoma in accordance with the DGCL and the OGCA, or at such
later time that the parties hereto shall have agreed upon and designated in
such filing as the effective time of the Merger (the "Effective Time").
Section 1.4 Certificate of Incorporation. The certificate of
incorporation of Sub in effect immediately prior to the Effective Time shall
be the certificate of incorporation of the Surviving Corporation, until duly
amended in accordance with applicable law.
Section 1.5 Bylaws. The bylaws of Sub in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation, until
duly amended in accordance with applicable law.
Section 1.6 Board of Directors and Officers. The board of directors of
the Surviving Corporation shall consist of the board of directors of Sub, as
it existed immediately prior to the Effective Time. The officers of Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE II
CONVERSION OF COMPANY SHARES
Section 2.1 Effect On Capital Stock. At the Effective Time, the Merger
shall have the following effects on the capital stock of the Company and Sub,
without any action on the part of the holder of any capital stock of the
Company or Sub:
(a) Conversion of the Company Shares. Subject to the provisions
of this Section 2.1 and Section 2.3, each share of common stock, $0.01 par
value, of the Company (each a "Company Share" and collectively the "Company
Shares") issued and outstanding immediately prior to the Effective Time (but
not including any Dissenting Shares (as defined below) and any Company Shares
that are owned by (i) Parent, Sub or any other direct or indirect Subsidiary
of Parent or (ii) by the Company (the "Excluded Company Shares")) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive (i) $20.00 in cash (the "Cash
Consideration"), (ii) 0.3226 (the "Exchange Ratio") of a Parent Common Share
(the "Share Consideration" and, together with the Cash Consideration, the
"Merger Consideration") and (iii), in the event the Effective Time does not
occur on or before the record date for the regular quarterly dividend on
Parent Common Shares payable in December 2001 (the "December 2001 Dividend")
and/or March 2002 (the "March 2002 Dividend"), as the case may be, and such
failure was not the result of a failure by the Company to perform or observe
in any material respect any of its obligations under this Agreement, an amount
in cash equal to the December 2001 Dividend and/or the March 2002 Dividend, as
the case may be, payable in respect of a Parent Common Share multiplied by the
Exchange Ratio (which sum shall be part of the Cash Consideration). "Parent
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Common Share" shall mean the common shares, no par value, of Parent.
(b) Cancellation of Excluded Company Shares. Each Excluded
Company Share issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the
holder thereof, no longer be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist.
(c) Sub. At the Effective Time, each share of common stock,
$2.75 par value, of Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding as shares of common stock of the
Surviving Corporation, and the Surviving Corporation shall continue as a
wholly owned subsidiary of Parent.
Section 2.2 Exchange of Certificates for Shares.
(a) Exchange Procedures. Prior to the Effective Time, Parent
shall designate a bank or trust company reasonably acceptable to the Company
to act as agent for the holders of Company Shares in connection with the
Merger (the "Exchange Agent") to receive the Merger Consideration to which
holders of such shares shall become entitled pursuant to Section 2.1(a).
Prior to the Effective Time, Parent will deposit with the Exchange Agent
certificates representing Parent Common Shares and cash sufficient to make all
payments pursuant to Sections 2.1(a) and 2.2(d) and, when and as needed,
Parent shall deposit with the Exchange Agent cash sufficient to make all
payments pursuant to Section 2.2(b). As promptly as practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of record as of the Effective Time of a certificate which
immediately prior to the Effective Time represented Company Shares (each a
"Certificate") (other than holders of a Certificate in respect of Excluded
Company Shares) (i) a letter of transmittal specifying that delivery of the
Certificates shall be effected, and that risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or, in lieu
of such Certificates, affidavits of loss together with either a reasonable
undertaking to indemnify Parent or the Surviving Corporation, if Parent
believes that the person providing the indemnity is sufficiently creditworthy,
or, if Parent does not so believe, indemnity bonds) to the Exchange Agent,
such letter of transmittal to be in such form and have such other provisions
as Parent and the Surviving Corporation may reasonably agree, and (ii)
instructions for exchanging the Certificates and receiving the Merger
Consideration to which such holder shall be entitled therefor pursuant to
Section 2.1(a). Subject to Section 2.2(g), 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 (i) a certificate representing that number of
whole Parent Common Shares that such holder is entitled to receive pursuant to
Section 2.1(a) and (ii) a check in the aggregate amount (after giving effect
to any required tax withholdings) of (A) the cash that such holder is entitled
to receive pursuant to Section 2.1(a) plus (B) any cash in lieu of fractional
shares determined in accordance with Section 2.2(d) plus (C) any cash
dividends and any other dividends or other distributions that such holder has
the right to receive pursuant to the provisions of Section 2.2(b). The
Certificate so surrendered shall forthwith be canceled. No interest will be
paid or accrued on any amount payable upon due surrender of any Certificate.
In the event of a transfer of ownership of Company Shares that occurred prior
to the Effective Time, but is not registered in the transfer records of the
Company, the Merger Consideration may be issued and/or paid to such a
transferee if the Certificate formerly representing such Company Shares is
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presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. If any certificate for Parent Common Shares
is to be 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 Person requesting such exchange shall pay any transfer or other taxes
required by reason of the issuance of certificates for Parent Common Shares in
a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of Parent or the Exchange
Agent that such tax has been paid or is not applicable.
(b) Distributions with Respect to Unexchanged Shares. Whenever
a dividend or other distribution is declared by Parent in respect of Parent
Common Shares, the record date for which is at or after the Effective Time,
that declaration shall include dividends or other distributions in respect of
all Parent Common Shares issuable pursuant to this Agreement. No dividends or
other distributions so declared in respect of such Parent Common Shares shall
be paid to any holder of any unsurrendered Certificate until such Certificate
is surrendered for exchange in accordance with this Section 2.2. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be issued or paid, less the amount of any withholding taxes that
may be required thereon, to the holder of the certificates representing whole
Parent Common Shares issued in exchange for such Certificate, without
interest, (i) at the time of such surrender, the dividends or other
distributions with a record date that is at or after the Effective Time and a
payment date on or prior to the date of surrender of such whole Parent Common
Shares and not previously paid and (ii) at the appropriate payment date, the
dividends or other distributions payable with respect to such whole Parent
Common Shares with a record date at or after the Effective Time but with a
payment date subsequent to surrender. For purposes of dividends or other
distributions in respect of Parent Common Shares, all Parent Common Shares to
be issued pursuant to the Merger shall be deemed issued and outstanding as of
the Effective Time.
(c) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Company Shares
that were outstanding immediately prior to the Effective Time.
(d) No Fractional Shares. No certificates or scrip or Parent
Common Shares representing fractional Parent Common Shares shall be issued
upon the surrender for exchange of Certificates and such fractional interests
will not entitle the owner thereof to vote or to have any rights of a
shareholder of Parent or a holder of Parent Common Shares. Notwithstanding
any other provision of this Agreement, each holder of Company Shares exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a Parent Common Share (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
Parent Common Share multiplied by (ii) the closing price of Parent Common
Shares as reported on the New York Stock Exchange Composite Transaction Tape
on the Closing Date.
(e) Termination of Exchange Period; Unclaimed Merger
Consideration. Any Parent Common Shares and any portion of the cash,
dividends or other distributions with respect to the Parent Common Shares
deposited by Parent with the Exchange Agent (including the proceeds of any
investments thereof) that remain unclaimed by the shareholders of the Company
180 days after the Effective Time shall be paid to Parent upon demand. Any
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shareholders of the Company who have not theretofore complied with this
Article II shall thereafter be entitled to look only to Parent (subject to
abandoned property, escheat and other similar laws) for payment of their
Merger Consideration and any cash, dividends and other distributions in
respect thereof issuable and/or payable pursuant to Section 2.1, Section
2.2(b) and Section 2.2(d) upon due surrender of their Certificates (or, in
lieu of such Certificates, affidavits of loss together with either a
reasonable undertaking to indemnify Parent or the Surviving Corporation, if
Parent believes that the Person providing the indemnity is sufficiently
creditworthy, or, if Parent does not so believe, indemnity bonds), in each
case, without any interest thereon. Notwithstanding the foregoing, none of
Parent, the Surviving Corporation, the Exchange Agent or any other Person
shall be liable to any former holder of Company Shares for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed, and if Parent believes that the Person providing the
indemnity is sufficiently creditworthy, the making of a reasonable undertaking
to indemnify Parent or the Surviving Corporation, or, if Parent does not so
believe, the posting by such Person of a bond in the form customarily required
by Parent to indemnify against any claim that may be made against it with
respect to such Certificate, Parent will issue the Parent Common Shares and
the Exchange Agent will distribute such Merger Consideration, dividends and
other distributions in respect thereof issuable or payable in exchange for
such lost, stolen or destroyed Certificate pursuant to Section 2.1, Section
2.2(b) and Section 2.2(d), in each case, without interest.
(g) Affiliates. Notwithstanding anything in this Agreement to
the contrary, Certificates surrendered for exchange by any Rule 145 Affiliate
(as determined pursuant to Section 6.8) of the Company shall not be exchanged
until Parent has received a written agreement from such Person as provided in
Section 6.8.
Section 2.3 Dissenters' Rights. Company Shares that are outstanding
immediately prior to the Effective Time and that are held by shareholders who
shall have not voted in favor of the Merger and who shall have made written
demand for payment of the fair value for such shares in accordance with
Section 1091 of the OGCA (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration.
Such shareholders shall be entitled to receive payment of the fair value of
the Company Shares held by them in accordance with the OGCA, except that all
Dissenting Shares held by shareholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
Company Shares under the OGCA shall thereupon be deemed to have been converted
into and to be exchangeable, as of the Effective Time, for Merger
Consideration in the manner provided in Section 2.1(a).
Section 2.4 Adjustments to Prevent Dilution. In the event that prior to
the Effective Time, there shall have been declared or effected a
reclassification, stock split (including a reverse split), stock dividend,
stock distribution or similar event made with respect to the Company Shares or
the Parent Common Shares, the Merger Consideration shall be equitably adjusted
to reflect such event.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as publicly disclosed by the Company in the Company Reports (as
defined in Section 3.7) filed with the SEC prior to the date of this Agreement
and except as set forth in the disclosure letter (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein, provided that any disclosure set forth with
respect to any particular section shall be deemed to be disclosed in reference
to all other applicable sections of this Agreement if the disclosure in
respect of the particular section is sufficient on its face without further
inquiry reasonably to inform Parent of the information required to be
disclosed in respect of the other sections to avoid a breach under the
representation and warranty or covenant corresponding to such other sections)
previously delivered by the Company to Parent (the "Company Disclosure
Letter"), the Company hereby represents and warrants to Parent as follows:
Section 3.1 Existence; Good Standing; Corporate Authority. The Company
is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Oklahoma. The Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
any jurisdiction in which the character of the properties owned or leased by
it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified and in
good standing would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect (as defined in Section 9.10).
The Company has all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as now conducted. The
copies of the Company's articles of incorporation and bylaws previously made
available to Parent are true and correct and contain all amendments as of the
date hereof.
Section 3.2 Authorization, Validity and Effect of Agreements. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and all other agreements and documents contemplated hereby, to
which it is a party. The consummation by the Company of the transactions
contemplated hereby has been duly authorized by all requisite corporate
action, other than, with respect to the Merger, the approval and adoption of
this Agreement by the Company's shareholders. Assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub,
this Agreement constitutes the valid and legally binding obligation of the
Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to creditors' rights generally or general principles of equity.
Section 3.3 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 Company Shares, and 10,000,000 shares of the Company
preferred stock, $0.01 par value ("Company Preferred Stock"). As of August
31, 2001, there were (i) 43,758,077 Company Shares issued and outstanding
(excluding 359,315 treasury shares), (ii) no shares of Company Preferred Stock
issued and outstanding and (iii) 1,911,552 Company Shares subject to
outstanding employee or director stock options, of which the weighted average
exercise price was approximately $23.30 per share. All issued and outstanding
Company Shares (i) are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, (ii) were not issued in violation
of the terms of any agreement or other understanding binding upon the Company
and (iii) were issued in compliance with all applicable charter documents of
the Company and all applicable federal and state securities laws, rules and
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regulations. Except as set forth in this Section 3.3 and except for any
Company Shares issued pursuant to the plans listed in Section 3.11 of the
Company Disclosure Letter, as of the date of this Agreement there are no
outstanding shares of capital stock and there are no options, warrants, calls,
subscriptions, shareholder rights plan or similar instruments, convertible
securities, or other rights, agreements or commitments which obligate the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock or other voting securities of the Company or any of its
Subsidiaries. The Company has no outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of the Company on any matter on which the shareholders of the
Company are entitled to vote.
Section 3.4 Subsidiaries. Section 3.4 of the Company Disclosure Letter
sets forth for each Subsidiary of the Company, its name and jurisdiction of
incorporation or organization and indicates whether such Subsidiary is a
Significant Subsidiary, in each case as of the date of this Agreement. For
purposes of this Agreement, "Significant Subsidiary" shall mean significant
subsidiary as defined in Rule 1-02 of Regulation S-X of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Each of the Company's
Subsidiaries is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing (where applicable) under the
laws of its jurisdiction of incorporation or organization, has the corporate
or partnership power and authority to own, operate and lease its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
power and authority would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect, and is duly qualified to
do business and is in good standing (where applicable) in each jurisdiction in
which the ownership, operation or lease of its property or the conduct of its
business requires such qualification, except where the failure to be so
qualified or to be in good standing would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. All of
the outstanding shares of capital stock of, or other ownership interests in,
each of the Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable, and is owned, directly or indirectly, by the Company
free and clear of all liens, pledges, security interests, claims, preferential
purchase rights or other rights, interests or encumbrances ("Liens"). Other
than joint ventures, operating agreements and similar arrangements typical in
the Company's industry entered into in the ordinary course of business,
neither the Company nor any of the Company's Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any other person that would
reasonably be expected to be material to the Company and the Company's
Subsidiaries taken as a whole.
Section 3.5 No Violation. Neither the Company nor any of its
Subsidiaries is, or has received notice that it would be with the passage of
time, in violation of any term, condition or provision of (i) its charter
documents or bylaws, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license or other instrument or (iii)
any order of any court, governmental authority or arbitration board or
tribunal, or any law, ordinance, governmental rule or regulation to which the
Company or any of its Subsidiaries or any of their respective properties or
assets is subject, or is delinquent with respect to any report required to be
filed with any governmental entity, except, in the case of matters described
in clause (ii) or (iii), as would not reasonably be expected to have,
12
individually or in the aggregate, a Company Material Adverse Effect. Except
where it would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders, franchises and
approvals of all governmental authorities necessary for the lawful conduct of
their respective businesses (the "Company Permits") and the Company and its
Subsidiaries are in compliance with the terms of the Company Permits. No
investigation by any governmental authority with respect to the Company or any
of its Subsidiaries is pending or, to the knowledge of the Company,
threatened, other than those that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.6 No Conflict.
(a) Neither the execution and delivery by the Company of this
Agreement nor the consummation by the Company of the transactions contemplated
hereby in accordance with the terms hereof will: (i) conflict with or result
in a breach of any provisions of the charter documents or bylaws of the
Company; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or give rise to a
right of purchase under, or accelerate the performance required by, or result
in the creation of any Lien upon any of the properties of the Company or its
Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in the loss of a material benefit
to the Company or any of its Subsidiaries under any of the terms, conditions
or provisions of, any note, bond, mortgage, indenture, deed of trust, Company
Permit, lease, contract, agreement, joint venture or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by
which the Company or any of its Subsidiaries or any of their properties is
bound or affected; or (iii) subject to the governmental filings and other
matters referred to in paragraph (b) of this Section 3.6, contravene or
conflict with or constitute a violation of any provision of any law, rule,
regulation, judgment, order or decree binding upon or applicable to the
Company or any of its Subsidiaries, except, in the case of matters described
in clause (ii) or (iii), as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this
Agreement nor the consummation by the Company of the transactions contemplated
hereby in accordance with the terms hereof will require any consent, approval
or authorization of, or filing or registration with, any governmental or
regulatory authority, other than (i) the filings provided for in Article I and
appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business and (ii) filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act, the Securities Act of 1933, as amended (the
"Securities Act") or applicable state securities and "Blue Sky" laws ((i) and
(ii) collectively, the "Regulatory Filings"), except for any consent, approval
or authorization the failure of which to obtain and for any filing or
registration the failure of which to make would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.7 SEC Documents and Financial Statements. The Company has made
available to Parent, each registration statement, report, proxy statement or
information statement (other than preliminary materials) filed by the Company
with the Securities and Exchange Commission ("SEC") since January 1, 2000,
13
each in the form (including exhibits and any amendments thereto) filed with
the SEC prior to the date hereof (collectively, the "Company Reports"), and
the Company has filed all forms, reports and documents required to be filed by
it with the SEC pursuant to relevant securities statutes, regulations,
policies and rules since such time. As of their respective dates, the Company
Reports (i) were prepared in accordance with the applicable requirements of
the Securities Act, the Exchange Act, and the rules and regulations thereunder
and complied with the then applicable accounting requirements and (ii) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading except for such statements, if any, as have been modified by
subsequent filings with the SEC prior to the date hereof. Each of the
consolidated balance sheets included in or incorporated by reference into the
Company Reports (including the related notes and schedules) fairly presents in
all material respects the consolidated financial position of the Company and
its Subsidiaries as of its date and each of the consolidated statements of
earnings, cash flows and stockholders' equity included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presents in all material respects the results of operations, cash flows
or changes in stockholders' equity, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to such exceptions as may be permitted by Form 10-Q
under the Exchange Act), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein.
Section 3.8 Litigation. There are no actions, suits or proceedings
pending against the Company or any of its Subsidiaries or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries, at law
or in equity, or before or by any federal, state or foreign commission, board,
bureau, agency or instrumentality, other than those that would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. There are no outstanding judgments, decrees, injunctions,
awards or orders against the Company or any of its Subsidiaries, other than
those that would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.9 Absence of Certain Changes. Since June 30, 2001, the
Company has conducted its business in all material respects only in the
ordinary and usual course of business, and during such period there have not
been (i) events, conditions, actions, occurrences or omissions that would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect; (ii) any change by the Company or any of its
Subsidiaries in any of its accounting methods, principles or practices or any
of its tax accounting methods or elections, except for changes required by law
or generally accepted accounting principles; (iii) any declaration, setting
aside or payment of any dividend or other distribution in respect of the
capital stock of the Company, or any direct or indirect redemption, purchase
or any other acquisition by the Company of any such stock; (iv) any change in
the capital stock or in the number of shares or classes of the Company's
authorized or outstanding capital stock (other than as a result of issuances
under the Employee Benefit Plans or issued as permitted hereunder); (v) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, except in the ordinary course of
business; or (vi) any event, condition, action, occurrence or omission that is
prohibited on or after the date of this Agreement under Section 5.1(b) of this
14
Agreement (other than clauses (i), (xiv) or (xx) of Section 5.1(b)), and (vii)
neither the Company nor any of its Subsidiaries has incurred any liabilities
or obligations of any nature, whether accrued, contingent or absolute or
otherwise (including without limitation under royalty arrangements), except
for those arising in the ordinary course of business consistent with past
practice and that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.10 Taxes.
(a) The Company and its Subsidiaries have timely filed (after
taking into account any extensions to file) all federal, state, local, and
other tax returns, estimates and reports required to be filed on or before the
Effective Time by the Company and each of its Subsidiaries under applicable
laws and all such tax returns and reports were true, complete and correct, and
the Company and its Subsidiaries have paid all other taxes (including any
additions to taxes and penalties and interest thereon) required to be paid on
or before the date hereof, except for such failures to file or pay or failures
to be true and correct as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The Company
and its Subsidiaries have withheld and paid over all taxes required to have
been withheld and paid over, and complied with all information reporting and
backup withholding requirements, including the maintenance of required records
with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party, except for
such failures to withhold or pay over and such failures to comply as would
not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. There are no encumbrances on any of the
assets, rights or properties of the Company or any of its Subsidiaries with
respect to taxes, other than liens for taxes not yet due and payable or for
taxes that the Company or any of its Subsidiaries is contesting in good faith
through appropriate proceedings, except for such encumbrances that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(b) No audit of the tax returns of the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened. No
deficiencies or adjustments have been asserted against the Company or any of
its Subsidiaries as a result of or in connection with examinations by any
state, local, federal or foreign taxing authority which would, individually
and in the aggregate, reasonably be expected to have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is subject to
any private letter ruling of the Internal Revenue Service or comparable
rulings of other tax authorities that will be binding on the Company or any of
its Subsidiaries with respect to any period following the Effective Time.
(c) There are no agreements, waivers of statutes of limitations,
or other arrangements providing for extensions of time in respect of the
assessment or collection of any unpaid taxes against the Company or any of its
Subsidiaries The Company and each of its Subsidiaries have disclosed on their
federal income tax returns all positions taken therein that could, if not so
disclosed, give rise to a substantial understatement penalty within the
meaning of Section 6662 of the Code.
(d) Neither the Company nor any of its Subsidiaries is a party
to any safe harbor lease within the meaning of Section 168(f)(8) of the Code,
as in effect prior to amendment by The Tax Equity and Fiscal Responsibility
Act of 1982. None of the property owned by the Company or any of its
15
Subsidiaries is "tax-exempt use property" within the meaning of Section 168(h)
of the Code. Neither the Company nor any of its Subsidiaries is required to
make any adjustment under Code Section 481(a) by reason of a change in
accounting method or otherwise except possibly by reason of the Merger.
Neither the Company nor any of its Subsidiaries has been a member of an
affiliated group of corporations filing a consolidated federal income tax
return (other than a group the common parent of which was the Company) or has
any liability for the taxes of another person arising pursuant to Treasury
Regulation Section 1.1502-6 or analogous provision of state, local or foreign
law, or as a transferee or successor, or by contract, tax sharing agreement,
tax indemnification agreement, or otherwise. Neither the Company nor any of
its Subsidiaries has filed a consent under Section 341(f) of the Code with
respect to the Company or any of its Subsidiaries or agreed to have Section
341(f)(2) of the Code apply to a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by the Company or any of its Subsidiaries. There
is no contract, agreement, plan or arrangement to which the Company or any of
its Subsidiaries is a party as of the date of this Agreement, including but
not limited to the provisions of this Agreement, covering any employee or
former employee of the Company that, individually or collectively, would
reasonably be expected to give rise to the payment of any amount that would
not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code, or in
respect of which an excise tax would be payable under Section 4999 of the
Code. None of the Company or any of its Subsidiaries has been a "distributing
corporation" or a "controlled corporation" in a distribution to which Section
355 of the Code applies (x) in the two years prior to the date of this
Agreement or (y) in a distribution which could otherwise constitute a "plan"
or "series of related transactions" (within the meaning of Section 355(e) of
the Code) in conjunction with the Merger.
(e) The Company is not a party to, nor does it have any
obligation under, any tax sharing, tax indemnification or tax allocation
agreement or arrangement.
(f) The Company has not taken, or agreed to take any action, and
has no knowledge of any condition, that would prevent the Merger from
qualifying as a reorganization under section 368(a) of the Code.
(g) None of the Company or any of its Subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code at any time during the five year period ending at the
Effective Time.
(h) None of the Company's or any of its Subsidiaries' material
assets constitutes either an interest in, or property of, an unincorporated
organization that files a tax return as a partnership for federal income tax
purposes. None of the Company or any of its Subsidiaries owns an interest in
any controlled foreign corporation (as defined in Section 957 of the Code),
passive foreign investment company (as defined in section 1297 of the Code) or
other Person the income of which is required to be included in the income of
the Company or any of its Subsidiaries.
(i) For purposes of this Agreement, "tax" or "taxes" means all
federal, state, county, local, foreign or other net income, gross income,
gross receipts, sales, use, ad valorem, transfer, accumulated earnings,
personal holding, excess profits, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
disability, capital stock, or windfall profits taxes, customs duties or other
taxes, fees, assessments or governmental charges of any kind whatsoever,
16
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority (domestic or foreign).
Section 3.11 Employee Benefit Plans.
(a) Other than as set forth in Section 3.11(a) of the Company
Disclosure Letter, there are no Employee Benefit Plans established, maintained
or contributed to by the Company. An "Employee Benefit Plan" means any
employee benefit plan, program, policy, practice, agreement or other
arrangement providing benefits to any current or former employee, officer or
director of the Company or any of its Subsidiaries or any beneficiary or
dependent thereof that is sponsored or maintained by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries contributes or
is obligated to contribute, whether or not written, including without
limitation any employee welfare benefit plan within the meaning of Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), any employee pension benefit plan within the meaning of Section
3(2) of ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, program or
policy.
(b) With respect to each Employee Benefit Plan, the Company has
made available to Parent a true, correct and complete copy of: (i) each
writing constituting a part of such Employee Benefit Plan (or to the extent no
copy exists, a materially accurate description); (ii) for the three most
recent plan years, Annual Report (Form 5500 Series), if any; (iii) the current
summary plan description and any material modifications thereto, if required
to be furnished under ERISA; and (iii) the most recent determination letter
from the Internal Revenue Service, if any.
(c) Each Employee Benefit Plan that is intended to be a
"qualified plan" within the meaning of Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service that has
not been revoked, and to the knowledge of the Company, no event has occurred
and no condition exists that could reasonably be expected to result in the
revocation of any such determination letter.
(d) Except as would not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect, all contributions
required to be made to any Employee Benefit Plan (or to any person pursuant to
the terms thereof) have been made or the amount of such payment or
contribution obligation has been reflected in the Company Reports filed with
the SEC prior to the date of this Agreement.
(e) Except as would not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect, with respect to
each Employee Benefit Plan, the Company and its Subsidiaries have complied,
and are now in compliance, with all provisions of ERISA, the Code and all laws
and regulations applicable to such Employee Benefit Plans and each Employee
Benefit Plan has been established and administered in accordance with its
terms.
(f) No Employee Benefit Plan is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan with the meaning of
Section 4001(a)(3) of ERISA) and no liability (other than for premiums to the
PBGC) under Title IV of ERISA has been or is expected to be incurred by the
Company or any of its Subsidiaries.
17
(g) The Company and its Subsidiaries have no material liability
or life, health or medical benefits to former employees or beneficiaries or
dependents thereof, except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA.
(h) Except as expressly provided in this Agreement, the
consummation of the transactions contemplated by this Agreement will not,
either alone or in connection with termination of employment, (i) entitle any
current or former director, employee or officer of the Company or the its
Subsidiaries to severance pay or any other material payment, except as
expressly provided in this Agreement, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer or (iii) increase any benefit payable under any Employee Benefit Plan.
(i) Except as would not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect, there are no
pending or, to the knowledge of the Company, threatened claims, actions or
suits by or on behalf of any Employee Benefit Plan or by any employee or
beneficiary covered under any such Employee Benefit Plan, involving any such
Employee Benefit Plan (other than claims in the ordinary course of business)
and, to the knowledge of the Company, no facts or circumstances exist that
could reasonably be expected to give rise to any such claims, actions or
suits.
(j) Neither the Company nor any of its Subsidiaries has
outstanding loans to any employees of the Company or its Subsidiaries, other
than expense advances in the ordinary course of business and consistent with
past practices.
Section 3.12 Labor and Employment Matters. Neither the Company nor any
of its Subsidiaries: (i) is a party to or otherwise bound by any collective
bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization, nor is any such contract or agreement
presently being negotiated, nor, to the knowledge of the Company, is there,
nor has there been in the last five years, a representation campaign
respecting any of the employees of the Company or any of its Subsidiaries,
and, to the knowledge of the Company, there are no campaigns being conducted
to solicit cards from employees of Company or any of its Subsidiaries to
authorize representation by any labor organization; (ii) is a party to, or
bound by, any consent decree with, or citation by, any governmental agency
relating to employees or employment practices which would reasonably be
expected to have a Company Material Adverse Effect; or (iii) is the subject of
any proceeding asserting that it has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization
nor, as of the date of this Agreement, is there pending or, to the knowledge
of the Company, threatened, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries which,
with respect to any event described in this clause (iii), would, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
Section 3.13 Environmental Matters. Except for such matters that would
not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect:
(a) To the knowledge of the Company, there is no condition
existing on any real property or other asset owned, leased or operated by the
Company or any of its Subsidiaries or resulting from operations conducted
18
thereon that would reasonably be expected to give rise to any liability to the
Company or any of its Subsidiaries under Environmental Laws or constitute a
violation of any Environmental Laws, and the Company and each of its
Subsidiaries is otherwise in compliance with all applicable Environmental
Laws.
(b) None of the Company or any of its Subsidiaries, no current
or former real property or other asset owned, leased or operated by the
Company or any of its Subsidiaries, nor the operations currently or formerly
conducted thereon or in relation thereto by the Company or any of its
Subsidiaries or by any prior owner, lessee or operator of such real property
or other asset, is subject to any pending or, to the knowledge of the Company,
threatened action, suit, investigation, inquiry or proceeding relating to any
Environmental Laws by or before any court or other governmental authority.
(c) All material permits, notices and authorizations, if any,
required to be obtained or filed in connection with the operation or use of
any real property or other asset owned, leased or operated by the Company or
any of its Subsidiaries, including without limitation past or present
treatment, storage, disposal or release of a Hazardous Substance or solid
waste into the environment, have been duly obtained or filed, and the Company
is in compliance in all material respects with the terms and conditions of all
such permits, notices and authorizations. The Company does not know of any
reason that would preclude it from renewing or obtaining a reissuance of the
material permits and other authorizations required pursuant to applicable
Environmental Laws required to operate or use any of the Company's or its
Subsidiaries' material assets for their current purposes or uses.
(d) Hazardous Substances have not been Released, disposed of or
arranged to be disposed of by the Company or any of its Subsidiaries, in
violation of, or in a manner or to a location that would reasonably be
expected to give rise to liability under, any Environmental Laws.
(e) None of the Company or any of its Subsidiaries has assumed,
contractually or, to the knowledge of the Company, by operation of law, any
liabilities or obligations of third parties under any Environmental Laws,
except in connection with the acquisition of assets or entities associated
therewith.
(f) "Environmental Laws" means any federal, state and local
energy, public utility, health, safety and environmental laws, regulations,
orders, permits, licenses, approvals, ordinances, rule of common law, and
directives relating to the environment, preservation or reclamation of natural
resources, health and safety or the use, management, disposal, Release or
threatened Release of or exposure to, Hazardous Substances or noxious odors,
including without limitation the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the
Occupational Health and Safety Act, the Toxic Substances Control Act, the
Endangered Species Act, the Oil Pollution Act and any similar foreign, state
or local law.
(g) "Hazardous Substance" means (i) any "hazardous substance,"
as defined by CERCLA, (ii) any "hazardous waste," as defined by RCRA, or (iii)
any pollutant or contaminant or hazardous, dangerous or toxic chemical or
material or any other substance including, but not limited to asbestos, buried
contaminants, regulated chemicals, flammable explosives, radioactive materials
(including without limitation naturally occurring radioactive materials),
polychlorinated biphenyls, natural gas, natural gas liquids, liquified natural
gas, condensates, petroleum (including without limitation crude oil and
19
petroleum products), regulated by, or that could result in the imposition of
liability under, any Environmental Law or other applicable law of any
applicable governmental authority relating to or imposing liability or
standards of conduct concerning any hazardous, toxic, or dangerous waste,
substance or material, all as amended or hereafter amended.
(h) "Release" means any spilling, leaking, pumping, pouring,
emitting, purging, emptying, discharging, injecting, escaping, leaching,
dumping, migrating or disposing into the environment (including the
abandonment or discarding of barrels, containers, and other closed receptacles
containing any Hazardous Substance).
Section 3.14 Compliance with Laws. The Company and its Subsidiaries are
in compliance with any applicable law, rule or regulation of any United States
federal, state, local or foreign government or agency thereof except where the
failure to comply would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. No notice, charge, claim,
action or assertion has been received by the Company or any of its
Subsidiaries or, to the Company's knowledge, has been filed, commenced or
threatened against the Company or any of its Subsidiaries alleging any such
violation, in each case that would reasonably be expected to have a Company
Material Adverse Effect. All licenses, permits and approvals required under
such laws, rules and regulations are in full force and effect, except where
the failure to be in full force and effect would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Notwithstanding the foregoing, no representation or warranty in this Section
3.14 is made with respect to permits issued under or matters relating to
Environmental Laws, which are covered exclusively by the provisions set forth
in Section 3.13, or with respect to permits to conduct exploratory operations
that have not been commenced as of the date of this Agreement.
Section 3.15 Intellectual Property. The Company and its Subsidiaries own
or possess all necessary licenses (including seismic licenses) or other valid
rights to use all patents, patent rights, trademarks, trademark rights and
proprietary information used or held for use in connection with their
respective businesses as currently being conducted, free and clear of Liens,
except where the failure to own or possess such licenses and other rights
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, and to the knowledge of the Company, there
are no assertions or claims challenging the validity of any of the foregoing
which would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. Except in the ordinary course of business,
neither the Company nor any of its Subsidiaries has granted to any other
person any license to use any of the foregoing. The conduct of the Company's
and its Subsidiaries' respective businesses as currently conducted does not
conflict with any patents, patent rights, licenses (including seismic
licenses), trademarks, trademark rights, trade names, trade name rights or
copyrights of others in a way which would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. There is
no infringement of any proprietary right owned by or licensed by or to the
Company or any of its Subsidiaries in a way which would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.16 Oil and Gas Reserves. The Company has furnished to Parent
the Company's estimate of Company's and its Subsidiaries' oil and gas reserves
as of January 1, 2001, as reviewed by Xxxxx Xxxxx Company ("Company Reserve
Report"). Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, the factual,
20
non-interpretive data on which the Company Reserve Report was based for
purposes of estimating the oil and gas reserves set forth in the Company
Reserve Report was accurate in all material respects.
Section 3.17 Financial and Commodity Hedging. The Company Reports
accurately summarize, in all material respects the outstanding hydrocarbon and
financial hedging positions attributable to the production of the Company and
its Subsidiaries (including fixed price contracts, collars, swaps, caps,
xxxxxx and puts) as of the date reflected therein, and there have been no
changes since the date thereof.
Section 3.18 Indebtedness and Certain Contracts.
(a) Set forth in Section 3.18(b) of the Company Disclosure
Letter is the aggregate amount of outstanding indebtedness for borrowed money
of the Company or its Subsidiaries as of the date of this Agreement under all
loan or credit agreements, notes, bonds, mortgages, indentures and other
agreements evidencing such indebtedness.
(b) Neither the Company nor any of its Subsidiaries is a party
to or bound by any agreement or other arrangement that would, after the
Effective Time, to the knowledge of the Company, materially limit or restrict
Parent or any of its Subsidiaries or any of their respective affiliates or any
successor thereto, from engaging or competing in the oil and gas exploration
and production business in any significant geographic area, except for joint
ventures, area of mutual interest agreements entered into in connection with
prospect reviews and similar arrangements entered into in the ordinary course
of business.
(c) Neither the Company nor any of its Subsidiaries is a party
to or bound by (i) any non-competition agreement, confidentiality, joint
venture, area of mutual interest or any other agreement or obligation which
purports to limit the manner in which, or the localities in which, the
business of the Company and its Subsidiaries, taken as a whole, or Parent and
its Subsidiaries, taken as a whole, is conducted or (ii) any executory
agreement or obligation which pertains to the acquisition or disposition of
any asset, or which provides any third party any lien, claim, right of first
refusal or first offer or preferential right with regard thereto, except, in
the case of either clause (i) or (ii), for such agreements or obligations that
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries has received
any material advance, take-or-pay, production or other similar payments that
entitle purchasers of production to receive deliveries of hydrocarbons without
paying therefor, and, on a net, Company-wide basis, the Company is neither
materially underproduced nor overproduced under gas balancing or similar
arrangements.
(e) There are no contracts, agreements or binding arrangements
between the Company or any of its Subsidiaries, on the one hand, and S. A.
Xxxxx Xxxxxxx et Cie or any of its affiliates, on the other hand.
Section 3.19 Title to Properties. Except for goods and other property
sold, used or otherwise disposed of since December 31, 2000 in the ordinary
course of business, the Company has defensible title to all oil and gas
properties forming the basis for the reserves reflected in the Company Reserve
Report as attributable to interests owned by the Company and its Subsidiaries,
21
and to all other properties, interests in properties and assets, real and
personal, reflected in its Annual Report on Form 10-K for the year ended
December 31, 2000 (the "2000 10-K"), free and clear of any Lien, except: (i)
Liens reflected in the 2000 10-K; (ii) Liens for current taxes not yet due and
payable; and (iii) such imperfections of title, easements, Liens, or other
matters and failures to title as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The leases
and other agreements pursuant to which the Company or any of its Subsidiaries
leases or otherwise acquires or obtains operating rights affecting any real or
personal property are in good standing, valid, and effective except where the
failure to be in good standing, valid and effective would not, individually or
the aggregate, reasonably be expected to have a Company Material Adverse
Effect; and there is not, under any such leases, any existing or prospective
default or event of default or event which with notice or lapse of time, or
both, would constitute a default by the Company or any of its Subsidiaries
that would reasonably be expected to have a Company Material Adverse Effect.
All operating equipment of the Company and its Subsidiaries has in all
material respects been maintained in reasonable operating condition and
repair, ordinary wear and tear excepted, and is in all material respects
sufficient to permit the Company and its Subsidiaries to conduct their
operations in the ordinary course of business in a manner consistent with
their past practices, except for any such deficiency as would not reasonably
be expected to have a Company Material Adverse Effect. No claim, notice or
order from any Governmental Authority has been received by the Company or any
Subsidiary due to hydrocarbon production in excess of allowables or similar
violations which could result in curtailment of production after the Closing
Date, reformation, amendment, cancellation or other alteration of any unit or
taking (whether permanent, temporary, whole, or partial) of any part of the
assets of the Company or any Subsidiary by reason of eminent domain or
otherwise, except any such violations which would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect.
There are no xxxxx on any lease in which the Company currently has or
previously had an interest that have been permanently plugged and abandoned
that were not plugged and abandoned in accordance in all material respects
with applicable laws or contracts, except any such violations which would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. The Company has the ability and right to obtain
access to, produce, treat, transport, process and otherwise market
hydrocarbons from all of the oil and gas properties for which reserves are
shown in the Company Reserve Report, except any such inability which would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
Section 3.20 Insurance. The Company and its Subsidiaries maintain
insurance coverage adequate and customary in the industry for the operation of
their respective businesses.
Section 3.21 No Brokers. Except for Xxxxxx Brothers, Inc. ("Xxxxxx"),
whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with Xxxxxx, a copy of which has been provided to Parent,
no agent, broker, person or firm acting on behalf of the Company or under its
authority is or will be entitled to any advisory, commission or broker's or
finder's fee from any of the parties hereto in connection with any of the
transactions contemplated herein.
Section 3.22 Opinion of Financial Advisors. The board of directors of
the Company has received the opinion of Xxxxxx to the effect that, as of the
date of this Agreement, the Merger Consideration is fair, from a financial
22
point of view, to the holders of the Company Shares (other than Parent); it
being understood and acknowledged by Parent that such opinion has been
rendered for the benefit of the board of directors of the Company, and is not
intended to, and may not, be relied upon by Parent, its affiliates or their
respective Subsidiaries. The Company has been authorized by Xxxxxx to include
such opinion in its entirety in the Proxy Statement/Prospectus, so long as
such inclusion is in form and substance reasonably satisfactory to Xxxxxx and
its counsel.
Section 3.23 Board Recommendation; Vote Required.
(a) The board of directors of the Company has by resolutions
duly adopted by the unanimous vote of its entire board of directors at a
meeting of such board duly called and held on September 9, 2001, determined
that the Merger is fair to and in the best interests of the Company and its
shareholders, approved and declared advisable this Agreement, the Merger and
the other transactions contemplated hereby and recommended that the
shareholders of the Company approve and adopt this Agreement and the Merger.
(b) The affirmative vote of shareholders of the Company required
for approval and adoption of this Agreement and the Merger is and will be no
greater than a majority of the outstanding Company Shares (the "Company
Requisite Vote") and no other vote of any holder of the Company's securities
is required for the approval and adoption of this Agreement or the Merger.
Section 3.24 Holding Company; Investment Company; Utility. None of the
real property of the Company or any of its Subsidiaries has been or is
certified by the Federal Energy Regulatory Commission ("FERC") under Section
7(c) of the NGA or is now subject to FERC jurisdiction under the Natural Gas
Act nor has it been or is it now providing service pursuant to Section 311 of
the Natural Gas Policy Act. The Company or its Subsidiaries, as the case may
be, has complied with Texas law relating to its Texas gas gathering system,
except to the extent any failure to comply would not, individually or in the
aggregate, be reasonably expected to have a Company Material Adverse Effect.
Section 3.25 Certain Approvals. The Company has opted out of Section
1090.3 of the OGCA and the Company's board of directors has taken any and all
necessary and appropriate action to render inapplicable to the Merger and the
transactions contemplated by this Agreement and the Principal Shareholders
Agreement the provisions of any other "fair price," "moratorium," control
share acquisition, interested shareholder or other similar antitakeover
provision or regulation and any restrictive provision of any antitakeover
provision in the certificate of incorporation or bylaws of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Except as publicly disclosed by Parent in the Parent Reports (as defined
in Section 4.6) filed with the SEC prior to the date of this Agreement and
except as set forth in the disclosure letter (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent specified therein, provided that any disclosure set forth with respect
to any particular section shall be deemed to be disclosed in reference to all
other applicable sections of this Agreement if the disclosure in respect of
the particular section is sufficient on its face without further inquiry
reasonably to inform the Company of the information required to be disclosed
in respect of the other sections to avoid a breach under the representation
and warranty or covenant corresponding to such other sections) previously
23
delivered by Parent to the Company (the "Parent Disclosure Letter"), Parent
and Sub hereby represent and warrant to the Company as follows:
Section 4.1 Existence; Good Standing; Corporate Authority. Parent is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Virginia. Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent and Sub is duly qualified to do business as a foreign
corporation and is in good standing under the laws of any jurisdiction in
which the character of the properties owned or leased by it therein or in
which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified and in good standing would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect (as defined in Section 9.10). Each of Parent and Sub
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted. As of the date
hereof, the copies of each of Parent's and Sub's certificate of incorporation
and bylaws previously made available to the Company are true and correct and
contain all amendments.
Section 4.2 Authorization, Validity and Effect of Agreements. Each of
Parent and Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all other agreements and documents contemplated
hereby, to which it is a party. The consummation by each of Parent and Sub of
the transactions contemplated hereby, including the issuance and delivery by
Parent of Parent Common Shares pursuant to the Merger, has been duly
authorized by all requisite corporate action. Assuming the valid
authorization, execution and delivery of this Agreement by the Company, this
Agreement constitutes the valid and legally binding obligation of each of
Parent and Sub, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to creditors' rights generally and general principles of equity.
Section 4.3 Capitalization. The authorized capital stock of Parent
consists of 500,000,000 Parent Common Shares and 20,000,000 preferred shares,
no par value. 665,000 of the preferred shares have been designated as Series
A Mandatorily Convertible Preferred Stock. As of September 5, 2001, (i) there
were 248,362,308 Parent Common Shares issued and outstanding, (ii) there were
665,000 shares of Series A Mandatorily Convertible Preferred Stock issued and
outstanding, all of which were owned by a trust of which Parent is the
beneficial owner, (iii) 20,661,169 Parent Common Shares were subject to
outstanding employee stock options (including 333 options exercised but not
yet settled) and (iv) 8,250,000 Premium Income Equity Security stock purchase
units ("PIES") were outstanding which require the holders to purchase up to
8,088,300 Parent Common Shares by November 16, 2004. All issued and
outstanding Parent Common Shares and preferred shares (i) are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, (ii)
were not issued in violation of the terms of any agreement or other
understanding binding upon Parent and (iii) were issued in compliance with all
applicable charter documents of Parent and all applicable federal and state
securities laws, rules and regulations. The Parent Common Shares to be issued
in connection with the Merger, when issued in accordance with this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. As of the date of this Agreement, except as set forth
in this Section 4.3 and except for any Parent Common Shares issued pursuant to
employee benefit plans, upon conversion of the Series A Mandatorily
Convertible Preferred Stock and in connection with the PIES, there are no
outstanding shares of capital stock and there are no options, warrants, calls,
24
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate Parent or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other voting securities of
Parent. As of the date of this Agreement, Parent has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of Parent on any matter.
Section 4.4 No Violation. Neither Parent nor any of its Subsidiaries
is, or has received notice that it would be with the passage of time, in
violation of any term, condition or provision of (i) its charter documents or
bylaws, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
contract, agreement, lease, license or other instrument or (iii) any order of
any court, governmental authority or arbitration board or tribunal, or any
law, ordinance, governmental rule or regulation to which Parent or any of its
Subsidiaries or any of their respective properties or assets is subject, or is
delinquent with respect to any report required to be filed with any
governmental entity, except, in the case of matters described in clause (ii)
or (iii), as would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Except as would not reasonably
be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect, Parent and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders, franchises and approvals of all governmental
authorities necessary for the lawful conduct of their respective businesses
(the "Parent Permits") and Parent and its Subsidiaries are in compliance with
the terms of the Parent Permits. No investigation by any governmental
authority with respect to Parent or any of its Subsidiaries is pending or, to
the knowledge of Parent, threatened, other than those that would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.5 No Conflict
(a) Neither the execution and delivery by Parent and Sub of this
Agreement nor the consummation by Parent and Sub of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict
with or result in a breach of any provisions of the charter documents or
bylaws of Parent or Sub; (ii) violate, or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or give rise to a
right of purchase under, or accelerate the performance required by, or result
in the creation of any Lien upon any of the properties of Parent or its
Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in the loss of a material benefit
to Parent or any of its Subsidiaries under any of the terms, conditions or
provisions of, any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement, joint venture or other
instrument or obligation to which Parent or any of its Subsidiaries is a
party, or by which Parent or any of its Subsidiaries or any of their
properties is bound or affected; or (iii) subject to the governmental filings
and other matters referred to in paragraph (b) of this Section 4.5, contravene
or conflict with or constitute a violation of any provision of any law, rule,
regulation, judgment, order or decree binding upon or applicable to Parent or
any of its Subsidiaries, except, in the case of matters described in clause
(ii) or (iii), as would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.
25
(b) Neither the execution and delivery by Parent or Sub of this
Agreement nor the consummation by Parent or Sub of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, other than Regulatory Filings, and
listing of the Parent Common Shares to be issued in the Merger on the New York
Stock Exchange, except for any consent, approval or authorization the failure
of which to obtain and for any filing or registration the failure of which to
make would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
Section 4.6 SEC Documents. Parent has made available to the Company
each registration statement, report, proxy statement or information statement
(other than preliminary materials) filed by Parent with the SEC since January
1, 2000, each in the form (including exhibits and any amendments thereto)
filed with the SEC prior to the date hereof (collectively, the "Parent
Reports"), and Parent has filed all forms, reports and documents required to
be filed by it with the SEC pursuant to relevant securities statutes,
regulations, policies and rules since such time. As of their respective
dates, the Parent Reports (i) were prepared in accordance with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder and complied with the then applicable accounting
requirements and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under
which they were made, not misleading except for such statements, if any, as
have been modified by subsequent filings with the SEC prior to the date
hereof. Each of the consolidated balance sheets included in or incorporated
by reference into the Parent Reports (including the related notes and
schedules) fairly presents in all material respects the consolidated financial
position of Parent and its Subsidiaries as of its date and each of the
consolidated statements of income, cash flows and stockholders' equity
included in or incorporated by reference into the Parent Reports (including
any related notes and schedules) fairly presents in all material respects the
results of operations, cash flows or changes in stockholders' equity, as the
case may be, of Parent and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to such exceptions as may be
permitted by Form 10-Q under the Exchange Act), in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein.
Section 4.7 Financing. Parent has available to it sources of financing
sufficient to satisfy its obligation to make the payment of the aggregate Cash
Consideration required under this Agreement when such payment is required
pursuant to this Agreement.
Section 4.8 No Brokers. Except for Xxxxxxx Xxxxx & Co. ("Xxxxxxx"),
whose fees and expenses will be paid by Parent in accordance with Parent's
agreement with Xxxxxxx, no agent, broker, person or firm acting on behalf of
Parent or under its authority is or will be entitled to any advisory,
commission or broker's or finder's fee from any of the parties hereto in
connection with any of the transactions contemplated herein.
Section 4.9 No Vote Required. No vote is required by the holders of any
class or series of Parent's or Sub's (other than Parent) capital stock to
approve the adoption of this Agreement or the Merger or pursuant to the rules
and regulations of the New York Stock Exchange as a result of this Agreement
or the transactions contemplated hereby.
26
Section 4.10 Absence of Changes. Since June 30, 2001, there have not
been any events, conditions, actions, occurrences or omissions that would
reasonably be expected to have a Parent Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that from the date hereof to the Effective Time
or the earlier termination of this Agreement pursuant to Article VIII, except
as set forth in Section 5.1 of the Company Disclosure Letter or as expressly
contemplated by any other provision of this Agreement, unless Parent shall
otherwise agree in writing (such agreement by Parent not to be unreasonably
withheld or delayed):
(a) The businesses of the Company and each of its Subsidiaries
shall be conducted only in the ordinary, regular and usual course, consistent
with past practices, and the Company and each of its Subsidiaries shall use
all reasonable efforts to maintain and preserve intact their respective
business organizations, to maintain significant beneficial business
relationships with suppliers, contractors, distributors, customers, licensors,
licensees and others having business relationships with it, keep available the
services of its current key officers and employees, and use reasonable best
efforts to maintain with financially responsible insurance companies insurance
in such amounts and against such risks and losses as are customary for such
party; and
(b) Without limiting the generality of Section 5.1(a), except as
set forth in Section 5.1 of the Company Disclosure Letter, the Company shall
not directly or indirectly, and shall cause its Subsidiaries not to, do any of
the following:
(i) acquire, sell, encumber, lease, transfer or dispose of
any assets, rights or securities that are material to the Company
or its Subsidiaries or terminate, cancel, materially modify or
enter into any material commitment, transaction, line of business
or other agreement, in each case out of the ordinary course of
business consistent with past practice or acquire by merging or
consolidating with or by purchasing a substantial equity interest
in or a substantial portion of the assets of, or by any other
manner, any business, corporation, partnership, association or
other business organization or division thereof;
(ii) amend or propose to amend its certificate of
incorporation or bylaws or, in the case of its Subsidiaries,
their respective constituent documents;
(iii) split, combine or reclassify any outstanding shares
of, or interests in, its capital stock;
(iv) declare, set aside or pay any dividend or
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(v) other than pursuant to the terms of Employee Benefit
Plans, redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any shares of its capital stock or
any options, warrants or rights to acquire capital stock of the
Company;
27
(vi) except for the Company Shares issuable upon exercise
of options outstanding on the date hereof as disclosed in
Section 3.3, issue, sell, pledge, dispose of or encumber, or
authorize, propose or agree to the issuance, sale, pledge or
disposition or encumbrance by the Company or any of its
Subsidiaries of, any shares of, or any options, warrants or
rights of any kind to acquire any shares of, or any securities
convertible into or exchangeable for any shares of, its capital
stock of any class, or any other securities in respect of, in
lieu of, or in substitution for any class of its capital stock
outstanding on the date hereof;
(vii) modify the terms of any existing indebtedness for
borrowed money or incur any indebtedness for borrowed money or
issue any debt securities, except indebtedness incurred in the
ordinary course of business consistent with past practice for
working capital management purposes pursuant to the terms of
existing lines of credit and the Company's bank credit
agreement;
(viii) assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any
other person, or make any loans or advances, except to or for the
benefit of the Company's Subsidiaries or except for those not in
excess of $5,000,000 in the aggregate;
(ix) authorize, recommend or propose to shareholders any
material change in its capitalization;
(x) take any action with respect to the grant or
increase of severance or termination pay;
(xi) adopt or establish any new employee benefit plan or,
terminate or amend in any material respect any employee benefit
plan or, other than in the ordinary course of business consistent
with past practice, increase the compensation or fringe benefits
of any employee (except as required by any existing employee
benefit plans or employment agreements or applicable law) or pay
any material benefit not required by any existing employee
benefit plan (other than payment of annual bonuses for the year
2001 on or after February 15, 2002 in the aggregate amount of no
more than $3.4 million);
(xii) other than in the ordinary course of business
consistent with past practice, enter into or amend in any
material respect (other than as required by existing employee
benefit plans or employment agreements or by applicable law) any
employment, consulting, severance or indemnification agreement
entered into or made by the Company or any of its Subsidiaries
with any of their respective directors, officers, agents,
consultants or employees, or any collective bargaining agreement
or other obligation to any labor organization or employee
incurred or entered into by the Company or any of its
Subsidiaries (other than as required by existing employee benefit
plans or employment agreements or by applicable law);
(xiii) (A) settle or compromise any material claim for
taxes, (B) compromise, settle or otherwise resolve litigation
28
involving a payment of more than $5,000,000 in any one case by or
to the Company or any of its Subsidiaries or (C) other than in
the ordinary course of business, pay or discharge any claims,
liens or liabilities involving more than $5,000,000 individually
or $10,000,000 in the aggregate, which are not reserved for on
the balance sheet included in the Company Reports;
(xiv) make or commit to make capital expenditures in
excess of $5,000,000 net to the Company and its Subsidiaries for
any individual authorization for expenditures, or, without having
notified Parent, make or commit to make capital expenditures in
excess of $1,000,000 net to the Company and its Subsidiaries (and
less than $5,000,000 net) for any individual authorization for
expenditures, except, in each case, with respect to emergency
operations on any well, pipeline or other facility ;
(xv) make any material changes in tax accounting methods
except as required by applicable law or generally accepted
accounting principles;
(xvi) write off any accounts or notes receivable in excess
of $5,000,000 except in the ordinary course of business;
(xvii) take any action that would reasonably be
expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code;
(xviii) enter into or amend any agreement with any
holder of Company Shares with respect to holding, voting or
disposing of shares;
(xix) by resolution of its board of directors cause the
acceleration of rights, benefits or payments under any Employee
Benefit Plans other than as a result of the transactions
contemplated by this Agreement;
(xx) except for gas sales agreements with Parent or any
of its Subsidiaries, enter into any additional fixed price
forward sales contracts or fixed price purchase or sale contracts
that would result in physical delivery of its oil or gas
production for the year 2001, 2002 or 2003, as the case may be,
or any fixed price financial swaps, collars, options or other
hedging arrangements with respect to (A) its oil production or
(B) more than 10% of its budgeted gas production for the year
2001, 2002 or 2003, as the case may be, and, in any event, for a
term longer than 12 months;
(xxi) for the five full trading days immediately following
the parties' execution of this Agreement, sell gas-related
financial derivatives in excess of fifty (50) NYMEX gas contracts
equivalents per month for the calendar years 2002 and 2003; or
(xxii) take or agree in writing or otherwise to take
any of the actions precluded by clauses (i) through (xxi) of this
Section 5.1.
Section 5.2 Conduct of Business of Parent. Except as contemplated by
this Agreement, during the period from the date hereof to the Effective Time
29
or earlier termination of this Agreement, neither Parent nor any of its
Subsidiaries (including Sub), without the prior written consent of the Company
(which consent will not unreasonably be withheld or delayed), shall:
(i) acquire, by merging or consolidating with, or by
purchasing an equity interest in or the assets of, or by any
other manner, any business or corporation, partnership or other
business organization or division thereof, or otherwise acquire
any assets of any other entity (other than the purchase of assets
from suppliers, clients or vendors in the ordinary course of
business and consistent with past practice) unless, at the time
it enters into a definitive agreement with respect to such
transaction, Parent has a good faith belief that such transaction
would not prevent or materially delay the consummation of the
transactions contemplated by this Agreement;
(ii) adopt or propose to adopt any amendments to its
articles of incorporation which would have a material adverse
impact on the consummation of the transactions contemplated by
this Agreement;
(iii) take any action that would reasonably be expected to
prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code;
(iv) with respect to Parent only, split, combine or
reclassify any shares of its capital stock, declare, set aside
or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its
capital stock, make any other actual, constructive or deemed
distribution in respect of its capital stock or otherwise make
any payments to shareholders in their capacity as such, except
for the payment of ordinary cash dividends in respect of the
Parent Common Shares, unless the Exchange Ratio and Per Share
Amount (as defined in Section 6.10) are proportionately increased
or decreased, as applicable, in which case the prior written
consent of the Company shall not be required, but the Company
shall be entitled to written notice of such event;
(v) adopt a plan of complete or partial liquidation or
dissolution of Parent; or
(vi) take or agree in writing or otherwise to take any of
the actions precluded by clauses (i) through (v) of this Sections
5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 No Solicitation by the Company.
(a) The Company agrees that it and its Subsidiaries (i) will not
(and it will not permit their officers, directors, employees, agents or
representatives, including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries to) (A) solicit, initiate or
encourage (including by way of furnishing material non-public information) any
inquiry, proposal or offer, whether or not in writing (including any proposal
30
or offer to its shareholders), with respect to a third party tender offer,
merger, consolidation, business combination or similar transaction involving
all or more than 10% of the assets of the Company and its Subsidiaries taken
as a whole or 10% or more of any class of capital stock of the Company, or any
acquisition, directly or indirectly, of 10% or more of the capital stock or
assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, or any combination of the
foregoing (any such proposal, offer or transaction being hereinafter referred
to as a "Company Acquisition Proposal"), (B) participate or engage in any
discussions or negotiations concerning, furnish to any person any information
with respect to, or take any action to facilitate any inquiries or the making
of any proposal or offer that constitutes or may reasonably be expected to
lead to, a Company Acquisition Proposal or (C) approve or recommend any
Company Acquisition Proposal, accept any Company Acquisition Proposal or enter
into a letter of intent, agreement in principle or agreement with respect to
any Company Acquisition Proposal (or resolve to or publicly propose to do any
of the foregoing); and (ii) will immediately cease and cause to be terminated
any existing negotiations with any third parties conducted heretofore with
respect to any of the foregoing; provided that, subject to Section 6.1(b), (A)
nothing contained in clause (i) above shall prohibit the Company or its board
of directors from disclosing to the Company's shareholders a position with
respect to a tender offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act, provided that the board of directors of
the Company shall not recommend that the shareholders of the Company tender
their Company Shares in connection with any such tender or exchange offer
unless the board of directors shall have determined in good faith, after
consultation with its financial advisors and outside counsel, that the
relevant Company Acquisition Proposal is a Superior Proposal and (B) prior to
the Shareholders' Meeting, if the Company receives an unsolicited bona fide
written Company Acquisition Proposal from a third party that the board of
directors of the Company determines in good faith (after receiving the advice
of a financial adviser of nationally recognized reputation) is reasonably
likely to be a Superior Proposal (as defined below), the Company and its
representatives may conduct such discussions or provide such information as
the board of directors of the Company shall determine, but only if, prior to
such provision of information or conduct of such discussions (x) such third
party shall have entered into a confidentiality agreement not materially less
favorable to the Company than the existing confidentiality agreement dated
June 5, 2001, between the Parent and the Company (the "Parent/Company
Confidentiality Agreement") (and containing additional provisions that
expressly permit the Company to comply with the provisions of this Section
6.1) and (y) the board of directors of the Company determines in its good
faith judgment, after consultation with outside counsel, that it is required
to do so in order to comply with its fiduciary duties. For purposes of this
Agreement, "Superior Proposal" means any unsolicited bona fide written Company
Acquisition Proposal which (i) contemplates (A) a merger or other business
combination, reorganization, share exchange, recapitalization, liquidation,
dissolution, tender offer, exchange offer or similar transaction involving the
Company as a result of which the Company's shareholders prior to such
transaction in the aggregate cease to own at least 50% of the voting
securities of the ultimate parent entity resulting from such transaction or
(B) a sale, lease, exchange, transfer or other disposition (including, without
limitation, a contribution to a joint venture) of at least 50% of the value of
the assets of the Company and its Subsidiaries, taken as a whole, and (ii) is
on terms which the board of directors of the Company determines (after
consultation with its financial advisor and outside counsel), taking into
account, among other things, all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, (A) would, if
31
consummated, result in a transaction that is more favorable to its
shareholders from a financial point of view (in their capacities as such) than
the transactions contemplated by this Agreement (including the terms of any
proposal by the Parent to modify the terms of the transactions contemplated by
this Agreement) and (B) is reasonably likely to be financed and otherwise
completed without undue delay.
(b) The Company will promptly (but in any event within 24 hours)
notify Parent of any requests referred to in Section 6.1(a) for information or
the receipt of any Company Acquisition Proposal, including the identity of the
person or group engaging in such discussions or negotiations, requesting such
information or making such Company Acquisition Proposal, and the material
terms and conditions of any Company Acquisition Proposal, and shall keep
Parent informed on a timely basis (but in any event within 24 hours) of any
material changes with respect thereto. Prior to taking any action referred to
in the proviso of Section 6.1(a), if the Company intends to participate in any
such discussions or negotiations or provide any such information to any such
third party, the Company shall give prompt prior notice to Parent of each such
action.
(c) Nothing in this Section 6.1 shall permit the Company to
enter into any agreement with respect to a Company Acquisition Proposal during
the term of this Agreement, it being agreed that, during the term of this
Agreement, the Company shall not enter into any agreement with any person that
provides for, or in any way facilitates, a Company Acquisition Proposal, other
than a confidentiality agreement not materially less favorable to the Company
than the Parent/Company Confidentiality Agreement.
Section 6.2 Shareholders' Meeting. The Company, acting through its
board of directors, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and Bylaws, (i) duly call, give notice of,
convene and hold a meeting of its shareholders as soon as practicable
following the date hereof for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "Shareholders'
Meeting") and (ii) subject to its fiduciary duties under applicable law after
consultation with outside counsel, (A) include in the Proxy
Statement/Prospectus (as defined in Section 6.6) the unanimous recommendation
of the board of directors that the shareholders of the Company vote in favor
of the approval and adoption of this Agreement and the transactions
contemplated hereby and (B) use its reasonable best efforts to obtain the
necessary approval and adoption of this Agreement and the transactions
contemplated hereby by its shareholders. Notwithstanding the Company's
failure to include the recommendation contemplated by clause (A) of the
preceding sentence (in the circumstances permitted thereby), unless this
Agreement shall have been terminated pursuant to Article VIII, the Company
shall submit this Agreement to its shareholders at the Shareholders' Meeting
for the purpose of adopting this Agreement and nothing contained herein shall
be deemed to relieve the Company of such obligation.
Section 6.3 Filings; Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided, the
Company and Parent each agrees to use its reasonable best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement as promptly as is practicable, including:
32
(i) promptly make their respective filings under the HSR
Act with respect to the Merger and thereafter shall promptly make
any other required submissions under the HSR Act and respond to
any requests for additional information, and cause the waiting
periods under the HSR Act to terminate or expire at the earliest
possible date after the date of filing;
(ii) satisfy the conditions to closing in Article VII
(including, in the case of the Company, obtaining the opinion
described in Section 7.2(b) and, in the case of Parent, obtaining
the opinion described in Section 7.3(b)) and to cooperate with
one another in (A) determining which filings are required to be
made prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained
prior to the Effective Time from governmental or regulatory
authorities of the United States, the several states, and foreign
jurisdictions in connection with the execution and delivery of
this Agreement and the consummation of the Merger and the
transactions contemplated hereby; and (B) timely making all such
filings and timely seeking all such consents, approvals, permits
or authorizations;
(iii) promptly notify each other of any communication
concerning this Agreement or the Merger to that party from any
governmental authority and permit the other party to review in
advance any proposed communication concerning this Agreement or
the Merger to any governmental entity;
(iv) not agree to participate in any meeting or
discussion with any governmental authority in respect of any
filings, investigation or other inquiry concerning this Agreement
or the Merger unless it consults with the other party in advance
and, to the extent permitted by such governmental authority,
gives the other party the opportunity to attend and participate
thereat;
(v) furnish the other party with copies of all
correspondence, filings and communications (and memoranda setting
forth the substance thereof) between them and their affiliates
and their respective representatives on the one hand, and any
government or regulatory authority or members or their respective
staffs on the other hand, with respect to this Agreement and the
Merger; and
(vi) furnish the other party with such necessary
information and reasonable assistance as such other parties and
their respective affiliates may reasonably request in connection
with their preparation of necessary filings, registrations or
submissions of information to any governmental or regulatory
authorities, including without limitation, any filings necessary
or appropriate under the provisions of the HSR Act.
(b) Without limiting Section 6.3(a), Parent and the Company
shall:
(i) each use its reasonable best efforts to avoid the
entry of, or to have vacated or terminated, any decree, order or
judgment, including without limitation defending through
33
litigation on the merits any claim asserted in any court by any
party, that would restrain, prevent or delay the Closing; and
(ii) each use reasonable best efforts to avoid or
eliminate each and every impediment under any antitrust,
competition or trade regulation law that may be asserted by any
governmental entity with respect to the Merger so as to enable
the Closing to occur as soon as reasonably possible following the
termination of all applicable waiting periods under the HSR Act.
(c) Notwithstanding anything to the contrary in this Agreement,
(i) the Company shall not, without Parent's prior written consent, commit to
any divestitures, licenses, hold separate arrangements or similar matters,
including covenants affecting business operating practices (or allow its
Subsidiaries to commit to any divestitures, licenses, hold separate
arrangements or similar matters), and the Company shall commit to, and shall
use reasonable best efforts to effect (and shall cause its Subsidiaries to
commit to and use reasonable best efforts to effect), any such divestitures,
licenses, hold separate arrangements or similar matters as Parent shall
request, but solely if such divestitures, licenses, hold separate arrangements
or similar matters are contingent on consummation of the Merger and (ii)
neither Parent nor any of its Subsidiaries shall be required (pursuant to
Section 6.3(a)(ii) or otherwise) to agree (with respect to (x) Parent or its
Subsidiaries or (y) the Company or its Subsidiaries) to any divestitures,
licenses, hold separate arrangements or similar matters, including covenants
affecting business operating practices, if such divestitures, licenses,
arrangements or similar matters, individually or in the aggregate, would
reasonably be expected to have a Parent Material Adverse Effect or a Company
Material Adverse Effect.
Section 6.4 Access to Information. From the date hereof through
Effective Time, the Company and Parent shall allow all designated officers,
attorneys, accountants and other representatives of the other party access at
all reasonable times upon reasonable notice to the records and files,
correspondence, audits and properties, as well as to all information relating
to commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs of the Company and its Subsidiaries or
Parent and its Subsidiaries, including inspection of such properties; provided
that no investigation pursuant to this Section 6.4 shall affect any
representation or warranty given by any party hereunder, and provided further
that notwithstanding the provision of information or investigation by any
party, no party shall be deemed to make any representation or warranty except
as expressly set forth in this Agreement. Notwithstanding the foregoing,
neither party shall be required to provide any information which it reasonably
believes it may not provide to the other party by reason of applicable law,
rules or regulations, which that party reasonably believes constitutes
information protected by attorney/client privilege, or which it is required to
keep confidential by reason of contract or agreement with third parties. The
parties hereto will make reasonable and appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. The Company and Parent agree that they will not, and will
cause their representatives not to, use any information obtained pursuant to
this Section 6.4 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement.
Section 6.5 Notification of Certain Matters. Each of the Company and
Parent agrees to give prompt notice to the other of, and to use its respective
reasonable best efforts to prevent or promptly remedy, to the extent within
34
their control, (i) the occurrence or failure to occur, or the impending or
threatened occurrence or failure to occur, of any event which occurrence or
failure to occur would reasonably be expected to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect at the Effective Time and (ii) any material failure on
its part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided that the delivery of any
notice pursuant to this Section 6.5 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 6.6 Registration Statement; Proxy Statement.
(a) Each of Parent and the Company shall cooperate and promptly
prepare and Parent shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 under the Securities Act (the "Registration
Statement"), with respect to the Parent Common Shares issuable in the Merger.
A portion of the Registration Statement shall also serve as the proxy
statement (the "Proxy Statement/Prospectus") with respect to the Shareholders'
Meeting. The respective parties will cause the Proxy Statement/Prospectus and
the Registration Statement to comply as to form in all material respects with
the applicable provisions of the Securities Act, the Exchange Act and the
rules and regulations thereunder. Each of Parent and the Company shall use
its reasonable best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. Each of Parent and the
Company shall use its reasonable best efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state securities
law or "Blue Sky" permits or approvals required to carry out the transactions
contemplated by this Agreement. Parent will advise the Company, promptly
after it receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Parent
Common Shares issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. The Company will advise Parent, promptly after it
receives notice thereof, of any request by the SEC for amendment of the Proxy
Statement/Prospectus or comments thereon and responses thereto or requests by
the SEC for additional information.
(b) The Company will use its reasonable best efforts to cause
the Proxy Statement/Prospectus to be mailed to its shareholders as promptly as
practicable after the Registration Statement is declared effective by the SEC.
(c) Each of Parent and the Company agrees that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the
time of the respective meetings of shareholders of Parent and of the Company,
or, in the case of information provided by it for inclusion in the
Registration Statement or any amendment or supplement thereto, at the time it
is filed or becomes effective, (i) will comply as to form in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the SEC thereunder and (ii) will not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 6.7 Listing Application. Parent shall use its reasonable best
35
efforts to cause the Parent Common Shares to be issued in the Merger and the
Parent Common Shares to be issued upon exercise of Substituted Options and
Assumed Options (as such terms are defined in Section 6.10(f)) to be approved
for listing, subject to official notice of issuance, on the New York Stock
Exchange prior to the Effective Time.
Section 6.8 Agreements of Affiliates. Not less than thirty (30) days
before the Effective Time, the Company shall cause to be prepared and
delivered to Parent a list identifying all persons who the Company believes
may be deemed, at the time of the Shareholders' Meeting, to be "affiliates" of
the Company, for purposes of Rule 145 under the Securities Act (the "Rule 145
Affiliates"). Parent shall be entitled to place restrictive legends on any
Parent Common Shares received by such Rule 145 Affiliates relating to transfer
restrictions imposed by Rule 145 under the Securities Act. The Company shall
use its reasonable best efforts to cause each person who is identified as a
Rule 145 Affiliate in such list to deliver to Parent, at or prior to the
Effective Time, a written agreement, in the form attached hereto as Exhibit A.
Section 6.9 Indemnification and Insurance.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify, defend and hold harmless to the fullest
extent permitted under applicable law each person who is, or has been at any
time prior to the Effective Time, an officer or director of the Company (or
any Subsidiary or division thereof) and each person who served at the request
of the Company as a director, officer, trustee or fiduciary of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise (individually, an "Indemnified Party" and,
collectively, the "Indemnified Parties") against all losses, claims, damages,
liabilities, costs or expenses (including attorneys' fees), judgments, fines,
penalties and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their capacities as such,
whether commenced, asserted or claimed before or after the Effective Time. In
the event of any such claim, action, suit, proceeding or investigation (an
"Action"), (i) Parent shall cause the Surviving Corporation to pay, as
incurred, the fees and expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to Parent, in advance of the
final disposition of any such Action to the fullest extent permitted by
applicable law, and, if required, upon receipt of any undertaking required by
applicable law, and (ii) Parent will, and will cause the Surviving Corporation
to, cooperate in the defense of any such matter; provided that neither Parent
nor the Surviving Corporation shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld
or delayed), and provided further that neither Parent nor the Surviving
Corporation shall be obligated pursuant to this Section 6.9(a) to pay the fees
and disbursements of more than one counsel for all Indemnified Parties in any
single Action, unless, in the good faith judgment of any of the Indemnified
Parties, there is or may be a conflict of interests between two or more of
such Indemnified Parties, in which case there may be separate counsel for each
similarly situated group.
(b) The parties agree that the rights to indemnification,
including provisions relating to advances of expenses incurred in defense of
any action or suit, in the certificate of incorporation, bylaws and any
indemnification agreement of the Company and its Subsidiaries with respect to
matters occurring through the Effective Time, shall survive the Merger and
shall continue in full force and effect for a period of six years from the
36
Effective Time; provided that all rights to indemnification in respect of any
Action pending or asserted or claim made within such period shall continue
until the disposition of such Action or resolution of such claim.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain officers' and directors' liability
insurance covering the Indemnified Parties who are or at any time prior to the
Effective Time were covered by the Company's existing officers' and directors'
liability insurance ("D&O Insurance") policies on terms substantially no less
advantageous to the Indemnified Parties than such existing insurance with
respect to acts or omissions, or alleged acts or omissions, prior to the
Effective Time (whether claims, actions or other proceedings relating thereto
are commenced, asserted or claimed before or after the Effective Time);
provided that after the Effective Time, the Surviving Corporation shall not be
required to pay annual premiums in excess of 200% of the last annual premium
paid by the Company prior to the date hereof (the amount of which premiums are
set forth in the Company Disclosure Letter) (the "Maximum Premium"), but in
such case shall purchase as much coverage as reasonably practicable for such
amount. Parent shall have the right to cause coverage to be extended under
the Company's D&O Insurance by obtaining "tail" coverage for such six-year
period on terms and conditions no less advantageous than the Company's
existing D&O Insurance, and such "tail" policy shall satisfy the provisions of
this Section 6.9(c).
(d) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, under the OGCA, under existing indemnification agreements, or
otherwise, all of which will be assumed by the Surviving Corporation and
remain in effect for a period of at least six years following the Effective
Time.
(e) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that
the successors and assigns of Parent, as the case may be, shall assume the
obligations set forth in this Section 6.9.
(f) The provisions of this Section 6.9 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
Section 6.10 Employee Benefits.
(a) From and after the Effective Time, the Surviving Corporation
shall assume and honor, all Employee Benefit Plans including all employment
agreements with officers of the Company in accordance with their terms as in
effect immediately before the consummation of the Merger, subject to any
amendment or termination thereof that may be permitted by such terms; provided
that the foregoing shall not be construed as prohibiting Parent or the
Surviving Corporation from terminating the employment of any employee of the
Surviving Corporation after the Effective Time. It is acknowledged and agreed
that the approval of the Merger by the Company Requisite Vote will constitute
a "change of control" for purposes of all those Employee Benefit Plans
containing "change of control" provisions including existing change of control
agreements between the Company and certain of its officers ("CIC Agreements").
37
Notwithstanding any provisions in the CIC Agreements to the contrary, the
amounts payable thereunder shall be paid on the Closing Date.
(b) For 12 months following the Effective Time, the Surviving
Corporation shall continue to provide to those individuals who are employed by
the Company as of the Effective Time and who remain employed following the
Effective Time by the Surviving Corporation or any Subsidiary of the Surviving
Corporation ("Affected Employees"), compensation and employee benefits which,
in the aggregate, are no less favorable than the compensation and benefits
provided by the Company to such employees immediately prior to consummation of
the Merger; provided that (i) as of January 1, 2002, Affected Employees shall
become eligible to participate in the employee benefit plans, programs,
policies and arrangements of Parent or any Subsidiary of Parent (the "Parent
Plans") on the same basis as similarly situated employees of the Parent, and
(ii) the Parent Plans shall be deemed to satisfy this Section 6.10(b).
Additionally, any employee of Company who is not covered by a CIC Agreement
whose employment is terminated by the Surviving Corporation on or after the
Effective Time other than for cause will be eligible for the severance
benefits under the Parent Severance Program effective January 27, 2000 which
provides for, among other things, two months advance notice prior to
termination, severance payments of one month's salary for each year of service
or partial year of more than six months with the Company and the Surviving
Corporation (including credited service with the Company as provided in
Section 6.10(c) below), up to six months of paid COBRA coverage, outplacement
services and minimum and maximum severance payment periods of 2 and 18 months,
respectively.
(c) The Surviving Corporation shall give Affected Employees full
credit for their continuous service with the Company and its Subsidiaries
(including deemed service credited by such entities) for purposes of
eligibility to participate and vesting (but not benefit accruals under any
defined benefit pension plan) under all employee benefit plans, programs,
policies or arrangements which are maintained by Parent or any Subsidiary of
Parent or the Surviving Corporation for such Affected Employees to the same
extent recognized by the Company immediately prior to the Effective Time under
similar Employee Benefit Plans.
(d) Parent and the Surviving Corporation shall (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans that such employees may be eligible
to participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such employees under the
Employee Benefit Plans and that have not been satisfied as of the Effective
Time and (ii) provide each Affected Employee with credit for any co-payments
and deductibles paid prior to the Effective Time (in the calendar year of the
Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements for the year in which the Effective Time occurs under any welfare
plans that such employees are eligible to participate in after the Effective
Time.
(e) The Surviving Corporation shall sponsor the Company's 401(k)
Plan as of the Effective Time. The Surviving Corporation either shall
continue to sponsor such 401(k) Plan or shall merge such Plan into the 401(k)
Plan of Parent with the result that the participants in the Company's 401(k)
Plan shall be entitled to repay any outstanding participant loans pursuant to
the terms of the Company's 401(k) Plan and to avoid any deemed distribution.
38
(f) With respect to each outstanding option to acquire Company
Shares (the "Company Options") under the Company's Stock Option Plan, (the
"Stock Option Plan") :
(i) Prior to the Effective Time, the Company will offer
to all employees and directors of the Company holding Company
Options the opportunity to elect to amend their Company Options
so that they may be converted into Substituted Options (as
defined below). Prior to approval of the Merger by shareholders
of the Company, the Company shall cause the Committee to exercise
its authority under the Stock Option Plan to make a determination
that optionees will not be permitted to surrender for
cancellation their outstanding Company Options for a cash payment
following a Change in Control (as defined in the Stock Option
Plan).
(ii) Parent shall take all necessary action to provide
that, at the Effective Time, for each Company employee and
director who holds a Company Option and who elects to receive a
Substituted Option, each then outstanding Company Option will
automatically be converted into an option of equivalent value in
Parent Common Shares (the "Substituted Option") as follows. Each
Company Option will be converted into a Substituted Option to
purchase a number of Parent Common Shares equal to the product of
(A) the number of shares of Company Shares that could have been
purchased under such Company Option immediately prior to the
Effective Time multiplied by (B) the quotient of (1) the Per
Share Amount (as defined below) divided by (2) the Average Price
(as defined below) (rounded to the nearest whole number of Parent
Common Shares). The exercise price per share of the Substituted
Option shall be equal to the quotient of (C) the per-share option
exercise price specified in the Company Option divided by (D) the
quotient of (1) the Per Share Amount divided by (2) the Average
Price (rounded up to the nearest whole cent). The "Per Share
Amount" shall mean the sum of the (E) the Cash Consideration and
(F) the product of the Exchange Ratio and the Average Price. The
Average Price shall mean the average (rounded to the nearest
1/10,000) of the volume weighted averages (rounded to the nearest
1/10,000) of the trading prices of Parent Common Shares on the
New York Stock Exchange, as reported by Bloomberg Financial
markets (or such other source as the parties shall agree in
writing), for the ten consecutive Trading Days ending on the
third Trading Day immediately before the Effective Time.
Trading Day shall mean any day on which securities are traded on
the New York Stock Exchange.
(iii) Parent shall take all necessary action to
provide that, at the Effective Time, for each Company employee
and director holding a Company Option who does not elect to
accept a Substituted Option, each then outstanding Company Option
will automatically be converted into an option ("Assumed Option")
to acquire the Merger Consideration (including the cash payment
to be made pursuant to Section 2.2(d) in lieu of a fraction of a
Parent Common Share), and the per share exercise price shall be
appropriately adjusted, as if such Company Option had been
exercised immediately prior to the Effective Time.
39
(iv) Except as provided above, the terms and conditions
of the Substituted Options and the Assumed Options shall be the
same as the terms of the Company Options and the existing
individual agreements with the holders thereof.
(g) If the Effective Time occurs prior to the payment of 2001
annual bonuses to employees as provided in Section 5.1(b)(xi), the Surviving
Corporation shall pay such bonuses as set forth on a schedule delivered by
Company to Parent prior to Closing. The aggregate amount of 2001 annual
bonuses set forth on such schedule shall not exceed $3.4 million multiplied by
(A) the quotient of the number of days of calendar 2001 elapsed prior to the
Effective Time divided by (B) 365. Bonuses set forth on the schedule shall be
paid by the Surviving Corporation to employees who are parties to CIC
Agreements (as defined in Section 6.10(a) hereof) on the Closing Date. All
other employees listed on the schedule who do not prior thereto voluntarily
terminate employment with the Surviving Corporation or who are not terminated
by the Surviving Corporation for cause shall be paid their 2001 annual bonuses
on or before February 15, 2002.
Section 6.11 Reorganization. From and after the date hereof and until
the Effective Time, none of Parent, the Company or any of their respective
Subsidiaries shall knowingly (i) take any action, or fail to take any
reasonable action, as a result of which the Merger would fail to qualify as a
reorganization within the meaning of section 368(a) of the Code or (ii) enter
into any contract, agreement, commitment or arrangement to take or fail to
take any such action. Following the Effective Time, Parent shall not
knowingly take any action or knowingly cause any action to be taken which
would cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code.
Section 6.12 Public Statements. The parties will consult with each other
and will mutually agree upon any press releases or public announcements
pertaining to this Agreement or the transactions contemplated hereby and shall
not issue any such press releases or make any such public announcements prior
to such consultation and agreement, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any national
securities exchange.
Section 6.13 Fees and Expenses. Except as set forth in Section 8.5, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
Section 6.14 Company Name and Trademarks. As soon as practicable after
the Effective Time, the Surviving Corporation shall cease using the Company's
name and logo in any manner. At the Effective Time, the Company shall assign
its rights to such name to S. A. Xxxxx Xxxxxxx et Cie or one or more of its
affiliates subject to the terms of a licensing agreement permitting the
Surviving Corporation to use the name and trademark for a limited transitional
period not to exceed one year.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
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(a) The Company Requisite Vote shall have been obtained.
(b) The waiting period applicable to the consummation of the
Merger shall have expired or been terminated under the HSR Act.
(c) None of the parties hereto shall be subject to any decree,
order or injunction of a court of competent jurisdiction, U.S. or foreign,
which prohibits the consummation of the Merger; and no statute, rule or
regulation shall have been enacted by any governmental authority of competent
jurisdiction which prohibits or makes unlawful the consummation of the Merger.
(d) The Registration Statement shall have become effective and
no stop order with respect thereto shall be in effect and no proceedings for
that purpose shall have been commenced or threatened by the SEC.
(e) The Parent Common Shares to be issued pursuant to the Merger
shall have been authorized for listing on the New York Stock Exchange, subject
to official notice of issuance.
Section 7.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject
to the fulfillment or waiver by the Company at or prior to the Closing Date of
the following conditions:
(a) (i) Parent shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed
on or prior to the Closing Date and (ii) the representations and warranties of
Parent and Sub contained in this Agreement and in any document delivered in
connection herewith (A) to the extent qualified by Parent Material Adverse
Effect or any other materiality qualification shall be true and correct and
(B) to the extent not qualified by Parent Material Adverse Effect or any other
materiality qualification shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the Closing Date
(except for representations and warranties made as of a specified date, which
need be true and correct only as of the specified date) ; provided that the
condition set forth in clause (ii) shall be deemed to have been satisfied
unless such breaches of representations and warranties (without regard to
Parent Material Adverse Effect or any other materiality qualification or
threshold), individually or in the aggregate, would reasonably be expected to
have a Parent Material Adverse Effect; and the Company shall have received a
certificate of Parent, executed on its behalf by its President or a Senior
Vice President of Parent, dated the Closing Date, certifying to such effect.
(b) The Company shall have received the opinion of Xxxxx &
Xxxxxxx, counsel to the Company, in form and substance reasonably satisfactory
to the Company, on the basis of certain facts, representations and assumptions
set forth in such opinion, dated the Closing Date, a copy of which shall be
furnished to Parent, to the effect that (i) the Merger will qualify for United
States federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and Parent, Sub and the Company will be "parties"
to a reorganization within the meaning of Section 368(b) of the Code, (ii) no
gain or loss will be recognized by the Company in connection with the Merger
and (iii) a shareholder of the Company that is a United States Person (within
the meaning of Section 7701(a)(30) of the Code) and that receives both (A)
Parent Common Shares and (B) cash in the Merger in exchange for Company Shares
will recognize realized gain only to the extent of the lesser of such realized
gain or the cash received in the exchange (but will not recognize any loss).
In rendering such opinion, such counsel shall be entitled to receive and rely
41
upon representations of officers of the Company, Sub and Parent as to such
matters as such counsel may reasonably request.
Section 7.3 Conditions to Obligation of Parent to Effect the Merger.
The obligations of Parent and Sub to effect the Merger shall be subject to the
fulfillment or waiver by Parent at or prior to the Closing Date of the
following conditions:
(a) (i) The Company shall have performed in all material
respects its covenants and agreements contained in this Agreement required to
be performed on or prior to the Closing Date and (ii) the representations and
warranties of the Company contained in this Agreement and in any document
delivered in connection herewith (A) to the extent qualified by Company
Material Adverse Effect or any other materiality qualification shall be true
and correct and (B) to the extent not qualified by Company Material Adverse
Effect or any other materiality qualification shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date); provided
that the condition set forth in clause (ii) shall be deemed to have been
satisfied unless such breaches of representations and warranties (without
regard to Company Material Adverse Effect or any other materiality
qualification or threshold), individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect; and Parent
shall have received a certificate of the Company, executed on its behalf by
its President or a Vice President of the Company, dated the Closing Date,
certifying to such effect.
(b) Parent shall have received the opinion of McGuireWoods LLP,
counsel to Parent, in form and substance reasonably satisfactory to Parent, on
the basis of certain facts, representations and assumptions set forth in such
opinion, dated the Closing Date, a copy of which will be furnished to the
Company, to the effect that (i) the Merger will qualify for United States
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and Parent, Sub and the Company will be "parties" to a
reorganization within the meaning of Section 368(b) of the Code and (ii) no
gain or loss will be recognized in connection with the Merger by any
corporation which is a party to the reorganization. In rendering such
opinion, such counsel shall be entitled to receive and rely upon
representations of officers of the Company, Sub and Parent as to such matters
as such counsel may reasonably request.
ARTICLE VIII
TERMINATION
Section 8.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Effective Time by the mutual written
consent of the Company and Parent.
Section 8.2 Termination by Parent or the Company. This Agreement may be
terminated by action of the board of directors of the Company (upon payment of
the Termination Amount (as defined below), if payable pursuant to Section
8.5(a)) or by action of the board of directors of Parent, if:
(i) the Merger shall not have been consummated by March
31, 2002; provided that the right to terminate this Agreement
pursuant to this clause (i) shall not be available to any party
whose failure to perform or observe in any material respect any
42
of its obligations under this Agreement in any manner shall have
been the cause of, or resulted in, the failure of the Merger to
occur on or before such date; provided further that such time
period shall be tolled for any period during which any party
shall be subject to a non-final order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation
of the Merger; or
(ii) if the Company Requisite Vote shall not have been
obtained at the Shareholders' Meeting (including adjournment and
postponement thereof); or
(iii) a United States federal or state court of competent
jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have
become final and non-appealable; provided that the party seeking
to terminate this Agreement pursuant to this clause (iii) shall
have complied with Section 6.3 and with respect to other matters
not covered by Section 6.3 shall have used its reasonable best
efforts to remove such injunction, order or decree.
Section 8.3 Termination by the Company. This Agreement may be
terminated prior to the Effective Time, by action of the board of directors of
the Company after consultation with its legal advisors, if:
(i) prior to the Shareholders' Meeting, the Company
receives a Superior Proposal as described in Section 6.1(a) and
resolves to accept such Superior Proposal, but only if the
Company has acted in all material respects in accordance with,
and has otherwise complied in all material respects with the
terms of, Section 6.1, including the notice provisions therein;
provided that the Company has paid or concurrently pays Parent
the sums required by Section 8.5(a) hereof; or
(ii) (A) there has been a breach by Parent or Sub of any
representation, warranty, covenant or agreement set forth in this
Agreement or if any representation or warranty of Parent or Sub
shall have become untrue, in either case such that the conditions
set forth in Section 7.2(a) will not be satisfied at the Closing
Date and (B) such breach is not curable, or, if curable, is not
cured within 30 days after written notice of such breach is given
to Parent by the Company; provided that the right to terminate
this Agreement pursuant to this clause (ii) shall not be
available to the Company if it, at such time, is in material
breach of any representation, warranty, covenant or agreement set
forth in this Agreement such that the conditions set forth in
Section 7.3(a) will not be satisfied at the Closing Date.
Section 8.4 Termination by Parent. This Agreement may be terminated at
any time prior to the Effective Time, by action of the board of directors of
Parent after consultation with its legal advisors, if:
(i) the board of directors of the Company shall have
withdrawn, modified or changed, in a manner adverse to Parent,
the board's approval or recommendation of the Merger or
43
recommended approval of a Company Acquisition Proposal, or
resolved to do any of the foregoing;
(ii) the Company shall have breached Section 6.1 in any
material respect, and Parent shall have been adversely affected
thereby;
(iii) the Company shall have exempted for purposes of
Section 1090.3 of the OGCA any acquisition of Company Shares by
any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or its affiliates; or
(iv) (A) there has been a breach by the Company of any
representation, warranty covenant or agreement set forth in this
Agreement or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions
set forth in Section 7.3(a) will not be satisfied at the Closing
Date and (B) such breach is not curable, or, if curable, is not
cured within 30 days after written notice of such breach is given
by Parent to the Company; provided that the right to terminate
this Agreement pursuant to this clause (iv) shall not be
available to Parent if it, at such time, is in material breach of
any representation, warranty, covenant or agreement set forth in
this Agreement such that the conditions set forth in Section
7.2(a) will not be satisfied at the Closing Date.
Section 8.5 Effect of Termination.
(a) If this Agreement is terminated (i) by the Company or Parent
pursuant to clause (i) or (ii) of Section 8.2 or clause (iv) of section 8.4
and (A) (1) in the case of a termination pursuant to clause (i) of Section 8.2
or clause (iv) of Section 8.4, such termination results from the breach by the
Company in a material respect of any of its material agreements or covenants
set forth in this Agreement and at the time of such breach, any person shall
have made a Company Acquisition Proposal that had become public and then
remained pending or shall have publicly announced and not withdrawn an
intention (whether or not conditional) to make a Company Acquisition Proposal,
or (2) in the case of a termination pursuant to clause (ii) of Section 8.2, at
the time of the Shareholders' Meeting, any person shall have made a Company
Acquisition Proposal that had become public and then remained pending or shall
have publicly announced and not withdrawn an intention (whether or not
conditional) to make a Company Acquisition Proposal, (B) Parent was not in
material breach of this Agreement, (C) the condition set forth in Section
7.1(a) was not satisfied at the time of such termination, (D) the board of
directors at no time withdrew, modified or changed, in any manner adverse to
Parent, the board's approval or recommendation of the Merger or recommended
approval of a Company Acquisition Proposal, or resolved to do any of the
foregoing and (E) within 12 months after such termination the Company shall
consummate or enter into a definitive agreement which is ultimately
consummated with the proponent of such Company Acquisition Proposal or with
another party pursuant to a proposal which is superior to such proposal, (ii)
by the Company pursuant to clause (i) of Section 8.3 or (iii) by Parent
pursuant to clause (i), (ii) or (iii) of Section 8.4; then, the Company shall
pay Parent $70 million (the "Termination Amount") upon termination of this
Agreement. All payments shall be made in cash by wire transfer to an account
designated by Parent on (1) in the case of clause 8.5(a)(ii) the date of
termination of this Agreement, (2) in the case of clause 8.5(a)(iii), the date
which is the third business day following the date of termination of this
44
Agreement if this Agreement is terminated by Parent, and (3) in the case of
clause 8.5(a)(i), the date on which the Company Acquisition Proposal referred
to in clause (E) thereof is consummated. The Company acknowledges that the
agreements contained in this Section 8.5(a) are an integral part of the
transactions contemplated by this Agreement and constitute liquidated damages
and not a penalty, and that, without these agreements, Parent would not enter
into this Agreement; accordingly, if the Company fails promptly to pay any
amount due pursuant to this Section 8.5(a), and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the
Company for the payment set forth in this Section 8.5(a), the Company shall
pay to Parent its costs and expenses (including attorneys' fees) in connection
with such suit, together with interest on such amount from the date payment
was required to be made until the date such payment is actually made at the
annual prime lending rate of Citigroup, N.A. in effect from time to time from
the date such payment was required to be made, plus one percent (1%).
(b) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, all obligations of
the parties hereto shall terminate, except the obligations of the parties
pursuant to this Section 8.5 and Sections 3.21, 4.8, 6.13 and the provisions
of the Parent/Company Confidentiality Agreement and except for the provisions
of Article IX, provided that nothing herein shall relieve any party from any
liability for any breach by such party of any of its covenants or agreements
set forth in this Agreement and all rights and remedies of such non-breaching
party under this Agreement in the case of such a breach, at law or in equity,
shall be preserved.
Section 8.6 Extension; Waiver. At any time prior to the Effective
Time, each party may by action taken by its board of directors, to the extent
legally allowed, (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 made to such party
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Merger;
provided that the agreements contained in Article II and in Sections 6.8, 6.9,
6.10, 6.11, 6.13 and 6.14 and this Article IX and the agreements delivered
pursuant to this Agreement shall survive the Merger, unless otherwise provided
herein.
Section 9.2 Notices. All notices required to be given hereunder shall
be in writing and shall be deemed to have been given if (i) delivered
personally or by documented courier or delivery service, (ii) transmitted by
facsimile during normal business hours or (iii) mailed by registered or
certified mail (return receipt requested and postage prepaid) to the following
listed persons at the addresses and facsimile numbers specified below, or to
such other persons, addresses or facsimile numbers as a party entitled to
notice shall give, in the manner hereinabove described, to the others entitled
to notice:
45
(a) if to Parent or Sub:
Dominion Resources, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Vice President and General Counsel
Facsimile No.: 000-000-0000
with a copy to:
McGuireWoods LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxxx
(b) if to the Company:
Xxxxx Xxxxxxx Natural Gas Corp.
00000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxx
with a copy to:
Xxxxx & Xxxxxxx
0000 Xxx-Xxxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx
If given personally or by documented courier or delivery service, or
transmitted by facsimile, a notice shall be deemed to have been given when it
is received. If given by mail, it shall be deemed to have been given on the
third business day following the day on which it was posted.
Section 9.3 Assignment; Binding Effect; Benefit. Except as provided in
Section 1.1 hereof, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Except as provided in Section 6.9,
notwithstanding anything contained in this Agreement to the contrary, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
Section 9.4 Entire Agreement. This Agreement, the Gas Sale Agreement
between Xxxxx Xxxxxxx Natural Gas Corp. and Dominion Exploration and
Production, Inc. dated as of the date of this Agreement, the Parent/Company
Confidentiality Agreement (other than the third paragraph thereof, which are
hereby terminated and of no further force or effect), the exhibits to this
Agreement, the Company Disclosure Letter and the Parent Disclosure Letter
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
46
parties with respect thereto. No addition to or modification of any provision
of this Agreement shall be binding upon any party hereto unless made in
writing and signed by all parties hereto.
Section 9.5 Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their boards of directors, at any
time before or after approval of matters presented in connection with the
Merger by the shareholders of the Company, but after any such shareholder
approval, no amendment shall be made which by law requires the further
approval of shareholders of the Company without obtaining such further
approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 9.6 Governing Law. Except to the extent that the OGCA or the
DGCL governs this Agreement, this agreement shall be governed by and construed
in accordance with the laws of the State of New York regardless of laws that
might otherwise govern under applicable principles of conflicts of laws.
Section 9.7 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
Section 9.8 Counterparts; Facsimile Transmission of Signatures.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, and delivered by means of facsimile
transmission or otherwise, each of which when so executed and delivered shall
be deemed to be an original and all of which when taken together shall
constitute but one and the same agreement. If any party hereto elects
toexecute and deliver a counterpart signature page by means of facsimile
transmission, it shall deliver an original of such counterpart to each of the
other parties hereto within ten days of the date hereof, but in no event will
the failure to do so affect in any way the validity of the facsimile signature
or its delivery.
Section 9.9 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
Section 9.10 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and words denoting
any gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa.
(b) The words "include", "includes" and "including" are not
limiting.
(c) The phrase "to the knowledge of" and similar phrases
relating to knowledge of the Company or Parent, as the case may be, shall mean
the actual knowledge of its executive officers.
(d) "Material Adverse Effect" with respect to the Company or
Parent shall mean a material adverse effect on or change in (i) the business,
47
assets and liabilities (taken together) or financial condition of a party and
its Subsidiaries on a consolidated basis or (ii) the ability of the party to
consummate the transactions contemplated by this Agreement or fulfill the
conditions to closing set forth in Article VII; provided that (x) any adverse
effect or change that is caused by or results from conditions affecting the
United States economy generally or the economy of any nation or region in
which the Company or Parent, as the case may be, or any of their Subsidiaries
conducts business on a consolidated basis, (y) any adverse effect or change
that is caused by or results from conditions generally affecting the
industries (including the natural gas industry) in which the Company or
Parent, as the case may be, conducts its business, including, without
limitation, the price of natural gas and (z) any adverse effect or change that
is caused by or results from the announcement or pendency of this Agreement,
the Merger or the transactions contemplated hereby, shall not be taken into
account in determining whether there has been a "Material Adverse Effect" with
respect to the Company or Parent, as the case may be.
(e) "Person" or "person" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust or other
entity or organization.
(f) "Subsidiary" when used with respect to any person means any
person, whether incorporated or unincorporated, of which such person directly
or indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the board of directors or others performing similar functions with respect to
such corporation or other organization (or 50% or more of its equity
interests), or any organization of which such party is a general partner.
Section 9.11 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver
by any party hereto of a breach of any provision hereunder shall not operate
or be construed as a waiver of any prior or subsequent breach of the same or
any other provision hereunder.
Section 9.12 Incorporation of Exhibits. The Company Disclosure Letter,
the Parent Disclosure Letter and all exhibits attached hereto and referred to
herein are hereby incorporated herein and made a part hereof for all purposes
as if fully set forth herein.
Section 9.13 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 9.14 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
48
and to enforce specifically the terms and provisions hereof in any court with
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
Section 9.15 Obligation of Sub. Whenever this Agreement requires Sub
(or its successors) to take any action prior to the Effective Time, such
requirement shall be deemed to include an undertaking on the part of Parent to
cause Sub to take such action and a guarantee of the performance thereof.
[END OF PAGE]
49
[SIGNATURE PAGE FOLLOWS]
50
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first
written above.
DOMINION RESOURCES, INC.
By:
------------------------------
Name: Xxxx. X. Xxxxx
Title: Chairman, President and
Chief Executive Officer
CONSOLIDATED NATURAL GAS COMPANY
By:
------------------------------
Name: Xxxx. X. Xxxxx
Title: Chairman, President and
Chief Executive Officer
XXXXX XXXXXXX NATURAL GAS CORP.
By:
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
51
EXHIBIT "A"
, 200
-------- -- -
Dominion Resources, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxxxx X. Xxxxxxxxx:
I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" of Xxxxx Xxxxxxx Natural Gas Corp., an Oklahoma corporation (the
"Company"), as such term is 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 (the "Securities Act"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of September 9, 2001, as it may be
amended, supplemented or modified from time to time (the "Merger Agreement"),
among the Company, Dominion Resources, Inc., a Virginia corporation
("Parent"), and Consolidated Natural Gas Company ("Sub"), a Delaware
corporation, the Company will be merged into Sub (the "Merger"). Capitalized
terms used herein but not defined herein shall have the meanings ascribed to
such terms in the Merger Agreement.
In consideration of the agreements contained herein, Parent's reliance on
this letter in connection with the consummation of the Merger and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, I hereby represent, warrant and agree that I will not
make any sale, transfer or other disposition of any Parent Common Shares
received by me pursuant to the Merger in violation of the Securities Act or
the Rules and Regulations thereunder. I have been advised that the issuance
of the Parent Common Shares pursuant to the Merger will have been registered
with the Commission under the Securities Act on a Registration Statement on
Form S-4. I have also been advised, however, that since I may be deemed to be
an affiliate of the Company at the time the Merger was submitted for a vote of
the shareholders of the Company, the Parent Common Shares received by me may
be disposed by me only (i) pursuant to an effective registration under the
Securities Act, (ii) in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Securities Act, or (iii) in
reliance upon an exemption from registration that is available under the
Securities Act.
I also understand that instructions will be given to Parent's transfer
agent with respect to the Parent Common Shares to be received by me pursuant
to the Merger and that there will be placed on the certificates representing
such Parent Common Shares, or any substitutes therefor, a legend stating in
substance as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES AND MAY ONLY BE SOLD
OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE REQUIREMENTS OF
RULE 145 OR PURSUANT TO A REGISTRATION STATEMENT UNDER THAT ACT
OR AN EXEMPTION FROM SUCH REGISTRATION."
It is understood and agreed that the legend set forth above shall be
52
removed upon surrender of certificates bearing such legend by delivery of
substitute certificates without such legend after one year has elapsed from
the consummation date of the Merger or prior thereto, if I shall have
delivered to Parent an opinion of counsel, in form and substance reasonably
satisfactory to Parent, to the effect that (i) the sale or disposition of the
shares represented by the surrendered certificates may be effected without
registration of the offering, sale and delivery of such shares under the
Securities Act, and (ii) the shares to be so transferred may be publicly
offered, sold and delivered by the transferee thereof without compliance with
the registration provisions of the Securities Act.
I further understand and agree that Parent is under no obligation to
register the sale, transfer or other disposition of the Parent Common Shares
by me or on my behalf under the Securities Act.
Execution of this letter should not be considered an admission on our
part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
This letter agreement constitutes the complete understanding between
Parent and me concerning the subject matter hereof. Any notice required to be
sent to either party hereunder shall be sent by registered or certified mail,
return receipt requested, using the addresses set forth herein or such other
address as shall be furnished in writing by the parties. This letter
agreement shall be governed by and construed and interpreted in accordance
with the laws of the State of New York.
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time
this letter shall become a binding agreement between us.
Very truly yours,
Accepted this day of
-----
------------------------
DOMINION RESOURCES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
