EXHIBIT 2.3
STOCKHOLDER AGREEMENT
(CIGNA MEZZANINE PARTNERS III, L.P.)
This Stockholder Agreement (this "Agreement") dated as of May 28, 1998
is between Pogo Producing Company, a Delaware corporation ("Pogo") and CIGNA
Mezzanine Partners III, L.P., a limited partnership organized under the laws of
the State Delaware (the "Stockholder").
WHEREAS, Pogo, Alphac, Inc., a Delaware corporation and a wholly owned
subsidiary of Pogo ("Sub"), and Arch Petroleum Inc. ("Arch"), a Delaware
corporation, are entering into an Agreement and Plan of Merger dated as of the
date hereof (as amended from time to time pursuant thereto, the "Merger
Agreement");
WHEREAS, the Stockholder is the beneficial owner of 187,454.5 shares
of Exchangeable Convertible Preferred Stock, par value $0.01 per share, of Arch
(the "Arch Preferred Stock"), $128,900 principal amount of the Arch's 9.75%
Convertible Subordinated Notes due 2004 (the "Series A Notes"), and $1,160,100
of Arch's Adjustable Rate Series B Subordinated Notes due 2004 (the "Series B
Notes" and, collectively with the Series A Notes, the "Notes") (such shares of
Preferred Common Stock, together with any shares of capital stock of Arch
acquired by the Stockholder after the date hereof and during the term of this
Agreement, whether by conversion of the Arch Preferred Stock, conversion of the
Notes, or otherwise, being collectively referred to herein as the "Stockholder
Shares"); and
WHEREAS, as a condition to the willingness of Pogo to enter into the
Merger Agreement, and as an inducement to it to do so, the Stockholder hereby
makes the agreements as set forth in this Agreement for the benefit of Pogo.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereby agree as follows (terms defined in the Merger
Agreement and used but not defined herein having the meanings assigned to such
terms in the Merger Agreement):
1
ARTICLE I
COVENANTS OF THE STOCKHOLDER
Section 1.01. Agreement to Vote. At any meeting of the stockholders
of Arch held prior to the earlier of (I) the Effective Time of the Merger and
(ii) the termination of the Merger Agreement (such earlier time being herein
referred to as the "Voting Termination Date"), however called, and at every
adjournment or postponement thereof prior to the Voting Termination Date, or in
connection with any written consent of the stockholders of Arch given prior to
the Voting Termination Date, the Stockholder shall vote or cause to be voted the
Stockholder Shares in favor of the approval of the Merger and each of the other
transactions contemplated by the Merger Agreement and in favor of the approval
and adoption of the Merger Agreement, and any actions required in furtherance
hereof and thereof. The Stockholder shall not enter into any agreement or
understanding with any person prior to the Voting Termination Date, directly or
indirectly, to vote, grant any proxy or give instructions with respect to the
voting of the Stockholder Shares in any manner inconsistent with the preceding
sentence.
Section 1.02. Proxies and Voting Agreements. The Stockholder hereby
revokes any and all previous proxies granted with respect to matters set forth
in Section 1.01. Prior to the Voting Termination Date, the Stockholder shall
not, directly or indirectly, except as contemplated hereby, grant any proxies or
powers of attorney with respect to matters set forth in Section 1.01, deposit
any of the Stockholder Shares or enter into a voting agreement with respect to
any of the Stockholder Shares.
Section 1.03. No Solicitation.
(a) From and after the date hereof until the termination of the Merger
Agreement, the Stockholder will not, and will not authorize or permit any of its
officers, directors, employees, general partners, agents, affiliates over which
it has control or other representatives (collectively, "Stockholder
Representatives") to, directly or indirectly, solicit or encourage (including by
way of providing information) any prospective acquiror or the invitation or
submission of any inquiries, proposals or offers or any other efforts or
attempts that constitute, or may reasonably be expected to lead to, an
Acquisition Proposal.
(b) The Stockholder shall immediately cease and cause to be terminated
any existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by the Stockholder or any
Stockholder Representatives with respect to any Acquisition Proposal existing on
the date hereof.
(c) Prior to the termination of the Merger Agreement, the Stockholder
will promptly notify Pogo of any requests for information made to the
Stockholder or any Stockholder Representative or the receipt of any Acquisition
Proposal made to the Stockholder or any Stockholder Representative, including
the identity of the person or group engaging in such
2
discussions or negotiations, requesting such information or making such
Acquisition Proposal, and the material terms and conditions of any Acquisition
Proposal.
(d) Prior to the termination of the Merger Agreement, the Stockholder
shall not enter into any agreement with any person that provides for, or in any
way facilitates, an Acquisition Proposal.
(e) Notwithstanding anything contained herein to the contrary, the
provisions of this Section 1.03 do not prohibit any Stockholder Representative
who is also an Arch Representative from taking actions permitted by Section 4.2
of the Merger Agreement.
Section 1.04. Transfer of Stockholder Shares by the Stockholder.
Prior to the record date for the Arch stockholder meeting to vote on the Merger
Agreement, the Stockholder will not sell, transfer, assign, convey or otherwise
dispose of any of the Stockholder Shares; except dividends or distributions to
the stockholders of the Stockholder if such persons agree in writing to be bound
by the terms hereof and provided further, that such transfer does not, in the
opinion of a tax advisor reasonably acceptable to Pogo, violate the terms of
Section 1.05(b) hereof.
Section 1.05. Other Actions.
(a) Prior to the termination of this Stockholders Agreement, the
Stockholder shall not take any action that would in any way restrict, limit,
impede or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement.
(b) The Stockholder agrees that from and after the date of this
Stockholder Agreement but prior to the termination of this Agreement, the
Stockholder will not sell or in any other way reduce such party's risk relative
to any Stockholder Shares, Notes, shares of Pogo Common Stock, or securities
convertible into Pogo Common Stock controlled, owned or held by such Stockholder
prior to the Merger, nor will it sell, or in any other way reduce its risk
relative to any shares of Pogo Common Stock received in exchange for the
Stockholder Shares in the Merger (within the meaning of Section 201.01 of the
SEC's Financial Reporting Release No. 1) or any securities convertible into Pogo
Common Stock, until the earlier of (i) such time as financial results (including
combined sales and net income) covering at least 30 days of Pogo's post-merger
operations have been published, except as permitted by Staff Accounting Bulletin
No. 76 (or any successor thereto) issued by the SEC and (ii) 60 days after the
first full calendar month of Pogo's post-merger operations (the "Restricted
Period").
(c) The Stockholder agrees that, at the Effective Time, it shall
convert the Notes owned by it into such number of shares of Pogo Common Stock as
is equal to (i) the unpaid principal amount of such Notes divided by (ii) $2.75
per share of Arch Common Stock, multiplied by (ii) the Common Exchange Ratio.
In addition, the Stockholder agrees to accept cash in lieu of any fractional
interest that it would otherwise be entitled to pursuant to the foregoing
conversion, calculated in the manner set forth in the Merger Agreement. To the
extent that the agreement set
3
forth in the immediately preceding sentence requires an amendment to the Notes,
the Notes shall be deemed amended as of the Effective Time to reflect such
changes. The conversion price for the Notes will also be subject, if applicable,
as described in Section 11.3 of the Securities Purchase Agreement, dated as of
October 15, 1994, by and between the holder of such Note and Arch (the
"Securities Purchase Agreement") as a result of any events that occur because of
actions taken by Arch or Pogo from and after the date of this Agreement.
(d) The Stockholder agrees that, at the Effective Time, it shall
convert all of the Stockholder Shares controlled owned, or held by it in
accordance with, and for the consideration described in, the Merger Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
OF THE STOCKHOLDER
The Stockholder represents, warrants and covenants to Pogo that:
Section 2.01. Ownership. Except as disclosed on Schedule 2.01, as of
the date hereof, the Stockholder is the beneficial and record owner of the
Stockholder Shares, the Stockholder has the sole right to vote the Stockholder
Shares and there are no restrictions on rights of disposition or other lien,
pledge, security interest, charge or other encumbrance or restriction pertaining
to the Stockholder Shares. None of the Stockholder Shares is subject to any
voting trust or other agreement, arrangement or restriction with respect to the
voting of the Stockholder Shares, and no proxy, power of attorney or other
authorization has been granted with respect to any of the Stockholder Shares.
Section 2.02. Authority and Non-Contravention. The Stockholder is a
limited partnership duly formed and validly existing under the laws of the State
of Delaware. CIGNA Investments, Inc. ("CII") as authorized agent of Cigna
Mezzanine Partners III, Inc., the general partner of the Stockholder, has all
requisite power and authority to enter into this Agreement on behalf of
Stockholder and perform Stockholder's obligations hereunder. Such actions by
the Stockholder (a) require no action by or in respect of, or filing with, any
Governmental Entity with respect to the Stockholder, other than any required
filings under Section 13 of the Exchange Act or under the HSR Act, and (b) do
not and will not contravene or constitute default under any provision of
applicable law or regulation or any agreement, judgment, injunction, order,
decree or other instrument binding on the Stockholder or result in the
imposition of any lien, pledge, security interest, charge or other encumbrance
or restriction on any of the Stockholder Shares (other than as provided in this
Agreement with respect to Stockholder Shares).
Section 2.03. Binding Effect. This Agreement has been duly executed
and delivered by CII, as authorized agent of Cigna Mezzanine Partners III, Inc.,
the general partner of the Stockholder and is the valid and binding agreement of
the Stockholder, enforceable against the
4
Stockholder in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and by equitable principles to which the remedies of
specific performance and injunctive and similar forms of relief are subject.
Section 2.04. Total Shares. The 187,454.5 shares of Arch Preferred
Stock are the only shares of capital stock of Arch owned beneficially or of
record as of the date hereof by the Stockholder, and the Stockholder does not
have any option to purchase or right to subscribe for or otherwise acquire any
securities of Arch other than upon conversion of the Notes and has no other
interest in or voting rights with respect to any other securities of Arch.
Section 2.05. Finder's Fees. No investment banker, broker or finder
is entitled to a commission or fee from Arch, Pogo or Sub in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder.
Section 2.06. Reasonable Efforts. Prior to the Voting Termination
Date, the Stockholder shall use reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with Pogo in doing, all things necessary, proper or advisable to consummate and
make effective the Merger and the other transactions contemplated by the Merger
Agreement and this Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF POGO
Pogo represents, warrants and covenants to the Stockholder that:
Section 3.01. Corporate Power and Authority. Pogo has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Pogo of this
Agreement and the consummation by Pogo of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of Pogo.
Section 3.02. Binding Effect. This Agreement has been duly executed
and delivered by Pogo and is a valid and binding agreement of Pogo, enforceable
against Pogo in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and by equitable principles to which the remedies of
specific performance and injunctive and similar forms of relief are subject.
Section 3.03. Cooperation. Subject to Section 5.16 of the Merger
Agreement and the rules and requirements of applicable securities laws, Pogo
shall use reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the Stockholder in
doing, all things necessary, proper or advisable to allow the Stockholder to
publicly
5
sell shares of Pogo Common Stock received in the Merger after the Restricted
Period without any unreasonable delay or restrictions.
ARTICLE IV
MISCELLANEOUS
Section 4.01. Expenses. Each party hereto shall pay its own expenses
incident to preparing for entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
Section 4.02. Further Assurances. From time to time, at the request
of the other party, each party shall execute and deliver or cause to be executed
and delivered such additional documents and instruments and take all such
further action as may be necessary or reasonably desirable to consummate the
transactions contemplated by this Agreement.
Section 4.03. Specific Performance. (a) The Stockholder agrees that
Pogo would be irreparably damaged if for any reason the Stockholder fails to
perform any of the Stockholder's obligations under this Agreement, and that Pogo
would not have an adequate remedy at law for money damages in such event.
Accordingly, Pogo shall be entitled to seek specific performance and injunctive
and other equitable relief to enforce the performance of this agreement by the
Stockholder. This provision is without prejudice to any other rights that Pogo
may have against the Stockholder for any failure to perform its obligations
under this Agreement; (b) Pogo agrees that the Stockholder would be irreparably
damaged if for any reason Pogo fails to perform any of Pogo's obligations under
this Agreement, and that the Stockholder would not have an adequate remedy at
law for money damages in such event. Accordingly, the Stockholder shall be
entitled to seek specific performance and injunctive and other equitable relief
to enforce the performance of this agreement by Pogo. This provision is without
prejudice to any other rights that the Stockholder may have against Pogo for any
failure to perform its obligations under this Agreement.
Section 4.04. Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be given, dated and received when so delivered
personally, telegraphed or telecopied or, if mailed, five business days after
the date of mailing to the following address or telecopy number, or to such
other address or addresses as such person may subsequently designate by notice
given hereunder:
6
(a) if to Pogo or Sub, to:
Pogo Producing Company
0 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxxxx Xxxxxxxx
Xxxxx & Xxxxx, L.L.P.
0000 Xxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
(b) if to Stockholder, to:
Cigna Mezzanine Partners III, L.P.
c/o CIGNA Investments, Inc.
000 Xxxxxxx Xxxxx Xxxx, X-000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Private Securities Division (S-307)
Facsimile: 000-000-0000
with an additional copy to:
Xxxxxxx X. Xxxxxx
CIGNA Corporation
000 Xxxxxxx Xxxxx Xxxx, X-000
Xxxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
Section 4.05. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the word "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Unless the context otherwise requires, "or" is
disjunctive but not necessarily exclusive, and words in the singular include the
plural and in the plural include the singular. The term "person" is to be
interpreted broadly to include any individual, corporation, partnership, trust,
limited liability company, government or other entity and any group (as used
with respect to Section 13(d) of the Exchange Act).
7
Section 4.06. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when a counterparts has been signed by each of the
parties and delivered to the other party, it being understood that all parties
need not sign the same counterpart.
Section 4.07. Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 4.08. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
Section 4.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) except to the
stockholders of the Stockholder as permitted herein without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.
Section 4.10. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
shall terminate upon the termination of the Merger Agreement in accordance with
the terms thereof. This Agreement may be terminated by Stockholder if (i) the
Effective Time fails to occur by November 30, 1998 (provided that the right to
terminate this Agreement under this clause (i) shall not be available to
Stockholder if the failure by Stockholder to fulfill any covenant or agreement
under this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date; provided, further, that if the failure
of the Effective Time to have occurred is attributable to any court of competent
jurisdiction, or some other governmental body or regulatory authority having
issued an order, decree or ruling or taken any other action temporarily
restraining, enjoining or otherwise prohibiting the Merger, then the
Stockholder's right to terminate this Agreement under this clause (i) shall not
be exercisable until the earlier of (x) one day after such order, decree or
ruling has been dissolved or (y) February 28, 1999); or (ii) sections 2.1(b),
2.1(c), 2.1(d), 2.3(a), 5.6, 5.18 or 6.1(b) of the Merger Agreement are amended
or waived without the consent of Stockholder.
Section 4.11. Certain Events. The Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Stockholder Shares
beneficially owned by such Stockholder and shall be binding upon any person to
which legal or beneficial ownership of such shares shall pass, whether by
operation of law or otherwise.
8
Section 4.12. Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid but if any provision or portion of any provision of
this Agreement is held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability will not affect any other
provision or portion of any provision, and this Agreement will be reformed,
construed and enforced as if such invalid, illegal or unenforceable provision or
portion of any provision had never been contained herein. The parties shall
endeavor in good faith negotiations to replace any invalid, illegal or
unenforceable provision with a valid provision the effects of which come as
close as possible to those of such invalid, illegal or unenforceable provision.
Section 4.13. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
[The Remainder of This Page Has Been Intentionally Left Blank]
9
IN WITNESS WHEREOF, Pogo and the Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
CIGNA MEZZANINE PARTNERS III, L.P.
CIGNA MEZZANINE PARTNERS III, INC.,
GENERAL PARTNER
By: CIGNA Investments, Inc.,
as authorized agent
By /s/ Xxxxxx X. Xxxx
---------------------------------
Name Xxxxxx X. Xxxx
--------------------------------
Title Vice President
--------------------------------
POGO PRODUCING COMPANY
By /s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx
Vice President-Law
and Corporate Secretary
10
SCHEDULE 2.01
1. None.
11
