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EXHIBIT (d)(1)
Execution Copy
XXXX OIL COMPANY
(hereinafter, "HOC")
and
XXXX OIL CANADIAN ACQUISITION III CORPORATION
(hereinafter, "Offeror")
and
CHIEFTAIN INTERNATIONAL, INC.
(hereinafter, "Chieftain")
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PRE-ACQUISITION AGREEMENT
June 18, 2001
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TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION
1.1 Definitions............................................................1
1.2 Singular, Plural, etc..................................................7
1.3 Deemed Currency........................................................7
1.4 Headings, etc..........................................................7
1.5 Date for any Action....................................................7
1.6 Governing Law..........................................................8
1.7 Attornment.............................................................8
1.8 Incorporation of Schedules.............................................8
ARTICLE II
THE OFFER
2.1 The Offer..............................................................8
2.2 Chieftain Directors' Circular.........................................11
2.3 Offer Documents.......................................................12
2.4 Outstanding Share Options.............................................13
2.5 Rights Plan...........................................................14
2.6 Funding Preferred Shares..............................................14
ARTICLE III
PUBLICITY AND SOLICITATION
3.1 Publicity.............................................................14
ARTICLE IV
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction..............................................15
4.2 Information Circular, etc.............................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOC AND OFFEROR
5.1 Organization and Qualification........................................16
5.2 Authority Relative to this Agreement..................................16
5.3 No Violations.........................................................16
5.4 Availability of Funds.................................................18
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CHIEFTAIN
6.1 Organization and Qualification........................................18
6.2 Authority Relative to this Agreement..................................18
6.3 No Violations.........................................................18
6.4 Capitalization........................................................20
6.5 No Material Adverse Effect............................................20
6.6 No Undisclosed Material Liabilities...................................20
6.7 Personnel Obligations.................................................21
6.8 Financial Advisory and Other Fees.....................................21
6.9 Reports...............................................................21
6.10 Subsidiaries..........................................................23
6.11 Compliance with Law...................................................23
6.12 Governmental Regulation...............................................23
6.13 Material Agreements...................................................23
6.14 Employee Benefit Plans................................................23
6.15 [Intentionally deleted]...............................................27
6.16 Books and Records.....................................................27
6.17 Litigation, etc.......................................................27
6.18 Environmental.........................................................28
6.19 Tax Matters...........................................................28
6.20 Confidentiality Agreements............................................30
6.21 Regarding the Assets..................................................30
6.22 Financial and Commodity Hedging.......................................30
ARTICLE VII
CONDUCT OF BUSINESS
7.1 Conduct of Business by Chieftain......................................30
7.2 [Intentionally Deleted]...............................................33
7.3 Conduct of Business by HOC and Offeror................................33
7.4 Integration of Operations.............................................34
ARTICLE VIII
COVENANTS OF CHIEFTAIN
8.1 Notice of Material Change.............................................34
8.2 Non-Completion Fee....................................................34
8.3 No Solicitation.......................................................35
8.4 Chieftain Board of Directors..........................................37
8.5 Structure of Transaction..............................................37
8.6 Shareholder Claims....................................................38
8.7 Preservation of Data Room.............................................38
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ARTICLE IX
COVENANTS OF HOC AND OFFEROR
9.1 Employment Agreements.................................................38
ARTICLE X
MUTUAL COVENANTS
10.1 Other Filings.........................................................38
10.2 Additional Agreements.................................................38
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination...........................................................39
11.2 Effect of Termination.................................................41
11.3 Amendment.............................................................42
11.4 Waiver................................................................42
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices...............................................................42
12.2 Miscellaneous.........................................................43
12.3 Indemnification, Etc..................................................44
12.4 Assignment............................................................45
12.5 Expenses..............................................................45
12.6 Severability..........................................................45
12.7 HOC Guarantee.........................................................46
12.8 Counterpart Execution.................................................46
12.9 Entire Agreement; No Third Party Beneficiaries........................46
SCHEDULE A - CONDITIONS TO THE OFFER
SCHEDULE B - OPTIONS OUTSTANDING
SCHEDULE C - FORM OF PRESS RELEASE
SCHEDULE D - FORM OF OPTION RELEASE
SCHEDULE E - EXCEPTION ITEMS
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PRE-ACQUISITION AGREEMENT
THIS PRE-ACQUISITION AGREEMENT (the "Agreement") is made and entered
into as of this 18th day of June, 2001, by and between Xxxx Oil Company, a
corporation formed under the laws of the State of Delaware with its head and
principal office in the City of Dallas, in the State of Texas ("HOC"), Xxxx Oil
Canadian Acquisition III Corporation, a corporation duly incorporated under and
governed by the laws of the Province of Alberta with an office in the City of
Calgary, in the Province of Alberta ("Offeror") and Chieftain International,
Inc., a corporation duly incorporated under and governed by the laws of the
Province of Alberta with its head and principal office in the City of Edmonton,
in the Province of Alberta ("Chieftain"). Except as otherwise set forth in this
Agreement, capitalized terms shall have the meanings set forth in Article 1.
BACKGROUND:
1. HOC has agreed to make a take-over bid for Chieftain by offering to
purchase all of the issued and outstanding common shares of Chieftain,
including all common shares issued upon the conversion of the Funding
Preferred Shares (as defined in Section 1.1 below) and upon the
exercise of share options;
2. HOC will make such take-over bid through its wholly-owned subsidiary
Offeror;
3. HOC has agreed to be responsible for and guarantee the obligations of
Offeror as contemplated herein;
4. The board of directors of Chieftain has unanimously determined to
recommend acceptance of Offeror's offer to the securityholders of
Chieftain, to cooperate with Offeror and to take all reasonable action
to support the Offer (as defined in Section 1.1 below) and
5. The board of directors of Chieftain has determined that it would be in
the best interests of Chieftain and its security holders to enter into
this Agreement;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained and other good and valuable consideration (the receipt and adequacy
whereof are hereby acknowledged), the parties hereto agree as follows.
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith the following words and terms will have the
indicated meanings:
"Act" means the Business Corporations Act (Alberta) as the same has been and may
hereafter from time to time be amended;
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"affiliate" has the meaning set forth in the Act;
"Agreement", "this Agreement", "herein", "hereto", and "hereof" and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time and, where applicable, to the appropriate Schedules hereto;
"Business Day" means any day excepting a Saturday or Sunday or a day recognized
as a holiday in Edmonton, Alberta or New York, New York;
"Chieftain" means Chieftain International, Inc.;
"Chieftain Governing Documents" means the Certificate and Articles of
Incorporation and By-laws of Chieftain;
"Chieftain Options" means the outstanding options to acquire Chieftain Shares
under the Share Option Plan;
"Chieftain Rights" means the rights attached to the Chieftain Shares, which
rights were distributed pursuant to the Rights Plan;
"Chieftain Shares" means common shares in the share capital of Chieftain
together with the associated Chieftain Rights;
"Corporate Laws" means all applicable corporate laws, including the Act;
"Data Room" means the data rooms established by Chieftain in Dallas, Texas and
Edmonton, Alberta in connection with its efforts to solicit proposals for the
acquisition of Chieftain as such were in place on April 9, 2001;
"diluted basis" means, with respect to the number of outstanding Chieftain
Shares at any time, such number of outstanding Chieftain Shares calculated
assuming conversion of all Funding Preferred Shares into Chieftain Shares and
assuming that all outstanding options, warrants or other securities that are
exercisable or exchangeable for or convertible into Chieftain Shares are so
exercised, exchanged or converted at such time, but without giving effect to
potential dilution attributable to the Chieftain Rights;
"Disclosed Information" means all information disclosed in writing to HOC or
Offeror pursuant to the HOC Confidentiality Agreement including information made
available to HOC or Offeror (or their respective representatives) in the Data
Room;
"Effective Time" means the time that Offeror shall have acquired ownership of
and paid for at least the Minimum Required Shares pursuant to the terms of the
Offer;
"Engineering Report" means the engineering report as of December 31, 2000,
prepared by Netherland, Xxxxxx & Associates, Inc.;
"Expiry Time" means the Initial Expiry Time unless the Offer has been extended,
in which case it means the expiry time of the Offer, as extended from time to
time;
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"Funding Preferred Shares" means the $1.8125 Convertible Redeemable Preferred
shares of Chieftain International Funding Corp., which preferred shares are
convertible into Chieftain Shares;
"Government Authority" means any foreign, national, state, provincial or local
government, any political subdivision or any governmental, judicial, public or
statutory instrumentality, tribunal, agency (including these pertaining to
health, safety or the environment), authority, body or entity, or other
regulatory bureau, authority, body or entity having legal jurisdiction over the
activity or person in question;
"HOC" means Xxxx Oil Company;
"HOC Confidentiality Agreement" means the confidentiality agreement dated March
30, 2001, between HOC and Chieftain;
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Anti Trust Improvements Act of 0000
(Xxxxxx Xxxxxx);
"in writing" means written information including documents, files, records,
books and other materials made available, delivered or produced to HOC or
Offeror by or on behalf of Chieftain in the course of the review undertaken by
HOC or Offeror in respect of Chieftain;
"Initial Expiry Time" means 5:00 p.m. Edmonton Time on the first Business Day
which falls after the 35th day following the commencement of the Offer in
accordance with Securities Laws;
"Lands" means all lands or interests therein in which Chieftain or any
subsidiary thereof holds interests in or rights to explore, drill for or recover
Petroleum Substances;
"Material Adverse Effect" means any result, occurrence, fact, change, event or
effect (whether or not (a) foreseeable or known as of the date of the Offer or
(b) covered by insurance) that, individually or in the aggregate with any such
other results, occurrences, facts, changes, events, or effects, is or could
reasonably be expected to be (whether or not such result, occurrence, fact,
change, event or effect has, during the period or at the time in question,
manifested itself in Chieftain's historical financial statements) materially
adverse to the historical or near-term or long-term projected (i) business, (ii)
operations, licenses, permits, rights or privileges, (iii) assets, (vi)
liabilities, (v) financial condition, (vi) results of operations, (vii)
prospects or (viii) capitalization, in each case, of Chieftain and its
subsidiaries taken as whole; provided that a Material Adverse Effect shall not
include an adverse effect resulting from (x) conditions affecting the oil and
gas industry as a whole or (y) the determination that any well is a dry hole;
"Minimum Condition" means the condition set forth in the first paragraph of
Schedule A;
"Minimum Required Shares" means at least that number of the outstanding
Chieftain Shares required pursuant to the Minimum Condition unless Offeror shall
have waived the Minimum Condition in which case "Minimum Required Shares" means
that number of the outstanding Chieftain Shares which Offeror takes up on the
Take-up Date, provided that such number of Chieftain Shares shall not be less
than a majority of the issued and outstanding Chieftain Shares on a diluted
basis;
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"Offer" has the meaning set forth in Section 2.1(a);
"Offer Documents" has the meaning set forth in Section 2.3(a);
"Offeror" means Xxxx Oil Canadian Acquisition III Corporation, a wholly-owned
subsidiary of HOC;
"Oil and Gas Assets" means all of the right, title, estate and interest of
Chieftain and its subsidiaries in and to all property, assets and rights
associated with the Petroleum and Natural Gas Rights or the Tangibles (other
than the Petroleum and Natural Gas Rights and the Tangibles themselves)
including, but not in limitation of the generality of the foregoing, the entire
interest of Chieftain and its subsidiaries in:
(a) the Title and Operating Documents;
(b) all rights of Chieftain to use or occupy the surface of lands
(including, but not limited to, the Lands) which are used in
connection with the Petroleum and Natural Gas Rights or the
Tangibles, including rights to enter upon and occupy the surface
of lands on which the Tangibles and the Xxxxx are located and
rights to use the surface of lands to gain access thereto; and
(c) all Xxxxx;
"Permitted Encumbrances" means:
(a) liens for taxes, assessments or governmental charges which are
not due or delinquent or the validity of which is being
diligently contested in good faith by Chieftain;
(b) liens incurred or created in the ordinary course of business as
security in favor of any other person who is conducting the
development or operation of the property to which such liens
relate for Chieftain's share of the costs and expenses of such
development or operation which are not due or delinquent;
(c) mechanics', builders' or materialmen's liens in respect of
services rendered or goods supplied for which payment is not due
or the validity of which is being diligently contested in good
faith by Chieftain;
(d) easements, rights of way, servitudes or other similar rights in
land (including, without limitation, rights of way and servitudes
for railways; sewers; drains; gas and oil pipelines; gas and
water mains; and electric light, power, telephone, telegraph and
cable television conduits, poles, wires and cables);
(e) the right reserved or vested in any municipality or governmental
or other public authority by the terms of any lease, license,
franchise, grant or permit or by any statutory provision, to
terminate any such lease, license, franchise grant or permit to
require annual or other periodic payments as a condition of the
continuance thereof;
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(f) governmental requirements of general application, including,
without limitation, those respecting production rates or other
operational matters;
(g) the royalties and other encumbrances either described in the
Engineering Report or of that same type with respect to Oil and
Gas Assets not referred to in the Engineering Report;
(h) the reservations, limitations, provisos and conditions in any
original grants of any of the Lands or interests therein and
statutory exceptions to title; and
(i) the terms and conditions of leases and any unit agreements or
pooling agreements entered into with respect to the Lands;
"Petroleum and Natural Gas Rights" means the undivided interests attributed to
Chieftain and its subsidiaries (including, without limitation, the interests
described in the Engineering Report) in:
(a) rights (whether fee simple interests, leasehold interests or
other interests) to drill for and produce, save and market
Petroleum Substances from the Lands;
(b) royalties, net profits and interests entitling the holder thereof
to a share of the Petroleum Substances produced from the Lands or
lands pooled or unitized therewith or to a payment calculated by
reference to the quantity of such production, the proceeds from
the sale thereof or the profits therefrom; and
(c) rights to acquire the foregoing;
"Petroleum Substances" means petroleum, natural gas and related hydrocarbons
(except coal) and all other substances (including sulphur and sulphur compounds)
produced in association therewith;
"Personnel Obligations" means any obligations or liabilities of Chieftain or any
of its subsidiaries to pay any amount to its or their officers, directors,
employees and consultants, other than for salary, bonuses under its or their
existing bonus arrangements and directors' fees in the ordinary course, in each
case in amounts consistent with historic practices and obligations or
liabilities in respect of insurance or indemnification contemplated by this
Agreement or arising in the ordinary and usual course of business and, without
limiting the generality of the foregoing, Personnel Obligations shall include
the obligations of Chieftain or any of its subsidiaries to directors, officers,
employees and consultants:
(i) for payments on, after or in connection with (including any
severance, termination or bonus payments) any change in
control of Chieftain pursuant to any change in control
agreements, policies or arrangements; and
(ii) for special incentive bonus payments and commitments; and
(iii) for supplemental retention payments; and
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(iv) for payments in respect of stock appreciation rights, as
contemplated by the Disclosed Information;
"Rights Plan" means the Shareholder Rights Plan Agreement dated as of February
23, 1994 between Chieftain and CIBC Mellon Trust Company as amended effective as
of May 17, 2001;
"SEC" means the United States Securities and Exchange Commission;
"Second Stage Transaction" has the meaning set forth in Section 4.1;
"Securities Authorities" means the appropriate securities commissions or similar
regulatory authorities in Canada and each of the provinces and territories
thereof and in the United States and each of the states thereof;
"Securities Laws" has the meaning set forth in Section 2.2(b);
"Share Option Plan" means the share option plan of Chieftain as first adopted on
February 22, 1989, and as amended from time to time, most recently on March 15,
2000;
"subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which: (a) such party
or any other subsidiary of such party is a general partner; (b) 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 is,
directly or indirectly, owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and any one or more of its subsidiaries;
or (c) such party and/or any other subsidiary of such party beneficially owns,
directly or indirectly, at least 25% of the equity interests;
"Superior Proposal" has the meaning set forth in Section 8.3(i)(B);
"Take-over Proposal" means a proposal or offer by a third party (other than by
HOC or Offeror), whether or not subject to a due diligence condition and whether
or not in writing, to acquire in any manner, directly or indirectly, beneficial
ownership of all or substantially all of the assets of Chieftain or to acquire
in any manner, directly or indirectly, beneficial ownership or control or
direction over more than 20% of the outstanding voting shares of Chieftain
whether by an arrangement, amalgamation, merger, consolidation or other business
combination or by means of a sale of shares, sale of assets, tender offer or
exchange offer or similar transaction involving Chieftain including, without
limitation, any single or multi-step transaction or series of related
transactions which is structured to permit such third party to acquire
beneficial ownership of all or substantially all of the assets of Chieftain or
to acquire in any manner, directly or indirectly, more than 20% of the
outstanding voting shares of Chieftain (other than the business combination
transaction contemplated by this Agreement);
"Take-up Date" means the date that Offeror first takes up and acquires Chieftain
Shares pursuant to the Offer;
"Tangibles" means all equipment and facilities used or held for use in respect
of the production, gathering, dehydration, processing, treatment, measurement,
storage or transportation of
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Petroleum Substances from the Lands or lands pooled or unitized therewith,
including, without limitation, wellheads, pumps, pumpjacks, dehydrators,
separators, meters, generators, flowlines, gathering lines, batteries, tanks,
pipelines, compressors and gas processing plants;
"Title and Operating Documents" means (i) leases; (ii) all agreements relating
to the ownership or operation of the Oil and Gas Assets entered into in the
normal course of business or set forth in the Disclosed Information, including,
without limitation: operating procedures; unit agreements and unit operating
agreements; agreements for the construction, ownership and operation of gas
plants, pipelines, gas gathering systems and similar facilities; pooling
agreements; royalty agreements, farmin agreements, farmout agreements and
participation agreements, trust agreements; agreements respecting the gathering,
measurement, processing, compression or transportation of Petroleum Substances;
gas and oil sales contracts; seismic data licensing agreements; well operating
contracts; and surface leases, pipeline easements, road use agreements and other
contracts granting the right to use the surface of Lands; and (iii) all permits,
licenses and approvals issued or granted by Government Authorities pertaining to
the ownership or operation of the Oil and Gas Assets or the gathering,
processing, treatment, storage, measurement, transportation or sale, of the
production of Petroleum Substances from the Oil and Gas Assets; and
"Xxxxx" means all producing, shut-in, suspended, abandoned, capped, injection
and disposal xxxxx, in which Chieftain or any subsidiary thereof has an
interest, including, without limitation, those xxxxx described or referred to in
the Engineering Report.
1.2 SINGULAR, PLURAL, ETC.
Words importing the singular number include the plural and vice versa
and words importing gender include the masculine, feminine and neuter genders.
1.3 DEEMED CURRENCY
In the absence of a specific designation of any currency any
undescribed dollar amount herein shall be deemed to refer to United States
dollars.
1.4 HEADINGS, ETC.
The division of this Agreement into Articles and Sections, the
provision of a table of contents hereto and the insertion of the recitals and
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement and, unless otherwise stated,
all references in this Agreement or in the Schedules to Articles, Sections and
Schedules refer to Articles, Sections and Schedules of and to this Agreement or
of the Schedules in which such reference is made.
1.5 DATE FOR ANY ACTION
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereunder is not a Business Day, such action
shall be required to be taken on the next succeeding day which is a Business
Day.
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1.6 GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of Alberta and the laws of Canada applicable therein.
1.7 ATTORNMENT
The parties hereby irrevocably and unconditionally consent to and
submit to the courts of the Province of Alberta for any actions, suits or
proceedings arising out of or relating to this Agreement or the matters
contemplated hereby (and agree not to commence any action, suit or proceeding
relating thereto except in such courts) and further agree that service of any
process, summons, notice or document by single registered mail to the addresses
of the parties set forth in this Agreement shall be effective service of process
for any action, suit or proceeding brought against either party in such court.
The parties hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the matters contemplated hereby in the courts of the Province of Alberta and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding so brought has
been brought in an inconvenient forum.
1.8 INCORPORATION OF SCHEDULES
Schedules A to E attached hereto and described below shall, for all
purposes hereof, form an integral part of this Agreement.
Schedule A Conditions to the Offer
Schedule B Options Outstanding
Schedule C Form of Press Release
Schedule D Form of Option Release
Schedule E Exception Items
ARTICLE II
THE OFFER
2.1 THE OFFER
(a) Subject to the terms and conditions of this Agreement, Offeror
shall, as soon as practicable and in any event, before 5:00
p.m. (Edmonton time) on June 29, 2001, commence an offer, in
accordance with Securities Laws, to purchase all of the
outstanding Chieftain Shares, which includes all Chieftain
Shares that may become outstanding after the date of the Offer
on the conversion of any Funding Preferred Shares and the
exercise of Chieftain Options, for cash consideration of U.S.
$29.00 for each Chieftain Share, which offer shall be made in
accordance with Securities Laws and Corporate Laws and be
subject only to the conditions set forth in Schedule A hereto
(the "Offer", which term shall include any amendments to, or
extensions of, such Offer, including, without limitation,
increasing the consideration, removing or waiving any
condition, as permitted, or extending the date by which
Chieftain Shares may be tendered). The
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documentation (which shall include a Schedule TO, an offer to
purchase, takeover bid circular, related letter of transmittal
and notice of guaranteed delivery) relating to the Offer (the
"Offer Documents") shall be prepared in accordance with
Securities Laws and Corporate Laws. Offeror shall, on a
confidential basis, provide Chieftain with a draft of the
Offer Documents prior to mailing for Chieftain's review and
comment, with the intent that Chieftain will have a reasonable
opportunity to review and provide comments in respect of the
Offer Documents. It is understood that the content of the
Offer Documents will be determined by Offeror, provided that
such Offer Documents will not contain any information or
statements that are inconsistent with matters that are
specifically addressed or provided for in this Agreement or as
otherwise contemplated hereby.
(b) The Offer shall expire at the Initial Expiry Time, except that
the Offer may be extended, up to a period of time ending the
first Business Day immediately following the date that is the
90th day after the Initial Expiring Time (the "Expiration
Date"), at the sole discretion of Offeror, if any of the
conditions thereto is not satisfied at the Initial Expiry
Time, any subsequent Expiry Time or if Offeror shall have
taken up the Minimum Required Shares under the Offer. If the
Offeror acquires the Minimum Required Shares pursuant to the
Offer, but the number of Chieftain Shares acquired at such
time is less than the Minimum Condition, it will publicly
announce such fact and extend the Offer one or more times in
its sole discretion for at least the minimum period (not to
exceed the Expiration Date) permitted by Securities Laws.
Upon the satisfaction or waiver of the conditions of the
Offer, Offeror shall, within three (3) Business Days, accept
for payment and pay for all Chieftain Shares validly tendered
(and not properly withdrawn) pursuant to the Offer. Each of
Offeror and Chieftain shall use all commercially reasonable
efforts to satisfy (or cause the satisfaction of) the
conditions of the Offer, subject to the terms and conditions
thereof.
Notwithstanding the foregoing, if the Minimum Condition or any
of the conditions described in clause (ii) or (iii) in the
introductory paragraph of Schedule A or clause (f) of Schedule
A have not been satisfied or waived on the Initial Expiry
Time, subject to Offeror's rights of termination hereunder,
Offeror shall extend the Offer from time to time for such
periods of time not to exceed the Expiration Date, as is
necessary to satisfy or fulfill such conditions, but only if
HOC and Offeror have made a bona fide determination, acting
reasonably, that there is a reasonable prospect that such
conditions may be satisfied within such period.
(c) It is agreed that Offeror may, in its sole discretion:
(i) waive, in whole or in part, any term or condition of
the Offer at any time and from time to time, provided
that if Offeror takes up and pays for any Chieftain
Shares it shall acquire not less than the Minimum
Required Shares; and
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(ii) amend any term or condition of the Offer, provided that
Offeror shall not:
(A) change the number of Chieftain Shares for which
the Offer is made;
(B) decrease the value or change the form of the
consideration to be paid for each Chieftain
Share, provided that Offeror shall be permitted
to increase the consideration to be paid for each
Chieftain Share; or
(C) modify or impose additional conditions to the
Offer in a manner that is, in the opinion of
Chieftain, acting reasonably, adverse to the
holders of Chieftain Shares (it being understood
that an extension of the Offer in the
circumstances described in Section 2.1(b) or
Section 2.6 or a permitted waiver of any
condition thereto will not be considered to be
adverse to the holders of Chieftain Shares).
(d) Offeror will instruct the depositary under the Offer to advise
Chieftain from time to time, not less frequently than daily
commencing five Business Days prior to the Initial Expiry Time
until the day immediately prior to the Expiry Time and
thereafter on an hourly basis, if requested by Chieftain and
in such manner as Chieftain may reasonably request, as to the
number of Chieftain Shares that have been tendered (and not
withdrawn) under the Offer.
(e) The obligation of Offeror to make the Offer as set forth in
Section 2.1(a) shall be conditional upon the following:
(i) no circumstance, fact, change, occurrence or event,
other than one caused by HOC or Offeror, shall have
occurred or come into existence that, in the opinion of
HOC and Offeror acting reasonably, has caused or would
likely result in one or more of the conditions of the
Offer described in Schedule A not to be satisfied;
(ii) the obligations of Offeror hereunder shall not have
been terminated pursuant to Section 11.1
(iii) the board of directors of Chieftain shall have
recommended that holders of Chieftain Shares accept the
Offer and shall not have withdrawn such recommendation
or changed such recommendation in a manner that has
substantially the same effect as if it had been
withdrawn;
(iv) the board of directors of Chieftain shall have prepared
and approved in final form, for distribution by
Chieftain, Recommendation Documents (A) recommending
acceptance of the Offer and (B) containing a copy of
the fairness opinion of CIBC World Markets, Inc., dated
the date of such circular, opining that the
consideration to be received pursuant to the Offer is
fair, from a financial point of view, to the holders of
Chieftain Shares;
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(v) no cease trade order, injunction or other prohibition
or order at law or under applicable regulation shall be
threatened or exist against Offeror making the Offer or
taking up or paying for the Chieftain Shares deposited
under the Offer or requiring Offeror to purchase or
Offer to acquire any other securities; and
(vi) Chieftain shall have provided to Offeror a certificate
of the President or other officer of Chieftain
acceptable to Offeror, in such officer's capacity as an
officer of Chieftain and not in such officer's personal
capacity, dated the date of the Offer to the effect
that Chieftain has complied in all material respects
with its covenants and obligations under the Agreement
and that the representations and warranties of
Chieftain contained in the Agreement are true and
correct in all material respects as of such date with
the same force and effect as if given on and as of the
date of such certificate.
The foregoing conditions are for the sole benefit of
Offeror and may be waived in whole or in part by
Offeror at any time.
(f) Offeror hereby agrees that Funding Preferred Shares that are
duly surrendered for conversion, conditional upon Offeror
taking up Chieftain Shares under the Offer and with
appropriate instructions that the Chieftain Shares issuable
upon such conversion are to be tendered pursuant to the Offer
(the "Conditional Pref. Conversion"), shall be deemed to have
been converted immediately prior to the take up of Chieftain
Shares by Offeror under the Offer, and Offeror shall accept,
as validly tendered under the Offer as of the Take-up Date,
all Chieftain Shares that are issued pursuant to the
Conditional Pref. Conversion.
(g) Chieftain agrees to provide Offeror a certificate of the
President or other officer of Chieftain acceptable to Offeror,
in such officer's capacity as an officer of Chieftain and not
in such officer's personal capacity, dated the date of the
first Take-up Date under the Offer to the effect that
Chieftain, as of such date, has complied in all material
respects with its covenants and obligations under the
Agreement and that the representations and warranties of
Chieftain contained in this Agreement are true and correct in
all material respects as of such date with the same force and
effect as if given on and as of the date of such certificate.
2.2 CHIEFTAIN DIRECTORS' CIRCULAR
(a) Chieftain hereby consents to the Offer as set forth in Section
2.1 and represents that its board of directors has (i)
unanimously approved the Offer and this Agreement, (ii) after
receiving the advice of its financial advisor, determined that
the consideration to be received pursuant to the Offer is
fair, from a financial point of view, to the holders of
Chieftain Shares, (iii) after receiving the advice of its
financial advisor, unanimously resolved to recommend
acceptance of the Offer by the holders of Chieftain Shares and
(iv) has unanimously resolved to recommend that holders of
Funding Preferred Shares convert such shares into
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Chieftain Shares pursuant to a Conditional Pref. Conversion
for acceptance of the Offer. Chieftain hereby consents to the
inclusion in the Offer Documents of the above recommendations.
(b) Chieftain shall prepare a Solicitation/Recommendation
Statement on Schedule 14d-9, a Schedule 14(f) and a directors'
circular prepared in accordance with Securities Laws and
Corporate Laws (the "Recommendation Documents"). The
Recommendation Documents will set forth (among other things)
the recommendation of the board of directors of Chieftain as
described in Section 2.2(a). Chieftain shall provide Offeror
with a draft copies of the Recommendation Documents prior to
their finalization and in reasonably sufficient time for
Offeror's review and comment, and the parties shall use all
commercially reasonable efforts to cause the Recommendation
Documents to be mailed together with the Offer Documents
without any delay in the time the Offer Documents would
otherwise be mailed. Chieftain shall cause the Recommendation
Documents, when filed with Securities Authorities and when
mailed to holders of Chieftain Shares, to contain (or to be
amended in a timely manner to contain) all information which
is required to be included therein in accordance with the Act
and any applicable Canadian provincial securities laws, United
States securities laws, state securities or "blue-sky" laws of
the states of the United States and any other applicable law
(collectively, the "Securities Laws") and all Corporate Laws.
Notwithstanding the foregoing, no agreement or representation
hereby is made or shall be made by Chieftain with respect to
information supplied by HOC or Offeror, expressly for
inclusion in the Recommendation Documents.
(c) After reasonable inquiry, Chieftain has been advised that all
of the directors and senior officers of Chieftain intend to
tender their Chieftain Shares under the Offer and to exercise
their options to acquire Chieftain Shares or have them dealt
with as contemplated by Section 2.4.
(d) Chieftain represents that it has obtained written advice from
CIBC World Markets Inc. that the consideration to be offered
to Chieftain's shareholders pursuant to the Offer is fair from
a financial point of view to holders of Chieftain Shares. The
fairness opinion of CIBC World Markets Inc. will be attached
to or referred to in, and dated the date of, the
Recommendation Documents.
2.3 OFFER DOCUMENTS
(a) Offeror shall file or cause to be filed with the appropriate
Securities Authorities the Offer Documents. Offeror shall
cause the Offer Documents, when filed with Securities
Authorities and when mailed to holders of Chieftain Shares, to
contain (or to be amended in a timely manner to contain) all
information which is required to be included therein in
accordance with the Securities Laws and all Corporate Laws.
Notwithstanding the foregoing, no agreement or representation
hereby is made or shall be made by HOC or Offeror with respect
to information supplied by
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Chieftain expressly for inclusion in, or with respect to
Chieftain's information derived from Chieftain by reference
in, the Offer Documents.
(b) Chieftain agrees to provide such assistance as Offeror or its
agents may reasonably request in connection with communicating
the Offer and any amendments and supplements thereto to the
holders of Chieftain Shares and to such other persons as are
entitled to receive the Offer under Securities Laws, including
providing lists and updated or supplemental lists of the
shareholders of Chieftain and of the holders of Chieftain
Options and other securities convertible into or exchangeable
for Chieftain Shares and mailing labels with respect to all
such security holders as soon as possible after the date of
this Agreement but in any event no later than the close of
business in Edmonton on five days before the proposed mailing
date, and updates or supplements thereto from time to time as
may be reasonably requested by Offeror
2.4 OUTSTANDING SHARE OPTIONS
(a) Chieftain shall use its best efforts to provide that persons
holding options pursuant to the Share Option Plan who may do
so under Securities Laws and in accordance with the Share
Option Plan (or pursuant to this Section 2.4) shall be
entitled to exercise all of their options and tender all
Chieftain Shares issued in connection therewith under the
Offer. The Chieftain board of directors shall not, prior to
completion of the Offer, grant additional options pursuant to
the Share Option Plan or otherwise. It is agreed by HOC and
Offeror that all Chieftain Options that are duly surrendered
for exercise, conditional on Offeror taking up Chieftain
Shares under the Offer and with appropriate instructions that
the Chieftain Shares issuable upon such exercise are to be
tendered pursuant to the Offer (the "Conditional Option
Exercise"), shall be exercised immediately prior to the
take-up of Chieftain Shares by Offeror under the Offer.
Furthermore, Offeror shall accept as validly tendered under
the Offer as of the Take-up Date all Chieftain Shares which
are to be issued pursuant to the Conditional Option Exercise.
(b) Prior to the Initial Expiry Time, Chieftain shall use its best
efforts enter into Option Releases in the form of Schedule D
hereto with each holder of Chieftain Options pursuant to which
the parties thereto shall agree that, upon Offeror taking up
any Chieftain Shares pursuant to the terms of the Offer, each
holder of Chieftain Options that has not previously exercised
such Chieftain Options shall receive in consideration of the
termination of all such holder's unexercised Chieftain Options
the difference, if any, between the exercise price of their
Chieftain Options and the purchase price for the Chieftain
Shares under the Offer.
(c) Chieftain shall:
(i) encourage and facilitate all persons holding Chieftain
Options to acquire Chieftain Shares to exercise those
Chieftain Options and tender all Chieftain Shares
issued in connection therewith to the Offer prior to
the Expiry Time of the Offer; and
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(ii) cause the vesting of option entitlements under the
Share Option Plan to accelerate prior to or
concurrently with the completion of the Offer, such
that all outstanding Chieftain Options shall be
exercisable and fully vested prior to the Expiry Time.
2.5 RIGHTS PLAN
(a) Chieftain represents to Offeror that the board of directors of
Chieftain has taken all action necessary to (i) render the
Chieftain Rights inapplicable to this Agreement, the Offer and
the Second Stage Transaction and (ii) ensure that (A) neither
HOC nor any of its affiliates or associates is or will become
an "Acquiring Person" (as defined in the Chieftain Rights
Plan) by reason of this Agreement, the Offer and the Second
Stage Transaction, (B) the "Separation Time" (as defined in
the Chieftain Rights Plan) shall not occur by reason of this
Agreement, the Offer and the Second Stage Transaction and (C)
the Chieftain Rights shall expire immediately prior to the
Expiry Time.
(b) Chieftain shall take all action necessary or requested in
writing by HOC in order to render the Chieftain Rights
inapplicable to the Offer and the Second Stage Transaction.
Except as set forth herein or as approved in writing by HOC,
Chieftain shall not (i) amend the Chieftain Rights Plan, (ii)
redeem the Chieftain Rights or (iii) take any action with
respect to, or make any determination under, the Chieftain
Rights Plan.
2.6 FUNDING PREFERRED SHARES
If (a) Offeror takes up and pays for Chieftain Shares pursuant to the
terms of the Offer, and thereby acquires at least the Minimum Required Shares,
or (b) the Minimum Condition is not fulfilled as of the Initial Expiry Time (but
such would have been fulfilled if all outstanding Funding Preferred Shares were
subject to a Conditional Pref. Conversion), then Chieftain shall, and shall
cause Chieftain International Funding Corp. to, take all action as may be
necessary to redeem all outstanding Funding Preferred Shares within the shortest
time period allowed pursuant to the terms of the Funding Preferred Shares. In
the event of clause (b) above, Offeror shall extend the Offer for such period of
time (not to exceed the Expiration Date) as may be necessary to allow Chieftain
to effect such redemption; provided that no such extension shall prejudice
Offeror's rights of termination hereunder.
ARTICLE III
PUBLICITY AND SOLICITATION
3.1 PUBLICITY
(a) So long as this Agreement is in effect, each of HOC, Offeror
and Chieftain shall advise, consult and cooperate with the
other party prior to issuing, or permitting any of its
directors, officers, employees or agents to issue, any press
release or other written public or private statement to the
press with respect to this Agreement and the transactions
contemplated hereby from the date hereof until the Expiry
Time. HOC, Offeror and Chieftain shall not issue any such
press
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release or make any such written public or private statement
prior to such consultation, except as may be required by
applicable law or by obligations pursuant to any listing
agreement with a stock exchange and only after using its
reasonable efforts to consult the other party taking into
account the time constraints to which it is subject as a
result of such law or obligation.
(b) Chieftain and Offeror agree that a joint press release shall
be issued immediately following the execution of this
Agreement which release will be in the form attached hereto as
Schedule C.
ARTICLE IV
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 SECOND STAGE TRANSACTION
If Offeror takes up and pays for Chieftain Shares pursuant to the terms
of the Offer, and thereby acquires at least the Minimum Required Shares, Offeror
agrees to use its best efforts to acquire, and Chieftain agrees to use its best
efforts to assist Offeror in acquiring, the balance of the Chieftain Shares by
way of a compulsory acquisition, statutory arrangement, amalgamation, merger,
reorganization, consolidation, recapitalization or other type of acquisition
transaction or transactions ("Second Stage Transaction") carried out for
consideration per Chieftain Share which
(i) consists of the same kind of consideration paid pursuant to
the Offer, and
(ii) is not less than the consideration paid pursuant to the
Offer.
4.2 INFORMATION CIRCULAR, ETC.
Without limiting Section 4.1, Chieftain agrees that if Offeror is
required to effect a Second Stage Transaction which requires approval of
Chieftain's shareholders in a meeting of Chieftain's shareholders, Chieftain
shall take all action necessary in accordance with Securities Laws, other
applicable Canadian laws, the Chieftain Governing Documents and the requirements
of the Toronto Stock Exchange, the American Stock Exchange or any other
regulatory authority having jurisdiction to duly call, give notice of, convene
and hold a meeting of its shareholders as promptly as practicable to consider
and vote upon the action proposed by Offeror In the event of such a meeting or
meetings, Chieftain shall use all commercially reasonable efforts to mail to its
shareholders an Information Circular with respect to the meeting of Chieftain's
shareholders. The term "Information Circular" shall mean such proxy or other
required informational statement or circular, as the case may be, and all
related materials at the time required to be mailed to Chieftain's shareholders
and all amendments or supplements thereto, if any. Offeror and Chieftain each
shall use all commercially reasonable efforts to obtain and furnish the
information required to be included in any Information Circular. The information
provided and to be provided by Offeror and Chieftain for use in the Information
Circular, on both the date the Information Circular is first mailed to
Chieftain's shareholders and on the date any such meeting is held, shall 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 therein, in
light of the circumstances under which they are made, not misleading and will
comply in all material
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respects with all applicable requirements of law. Offeror and Chieftain each
agree to correct promptly any such information provided by it for use in any
Information Circular which shall have become false or misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOC AND OFFEROR
HOC and Offeror jointly and severally hereby represent and warrant to
Chieftain as follows and acknowledge that Chieftain is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
5.1 ORGANIZATION AND QUALIFICATION
Each of HOC and Offeror is a corporation duly incorporated and
organized and validly existing under the laws of its respective jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its respective business as it is now being conducted.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT
Each of HOC and Offeror has the requisite corporate authority to enter
into this Agreement and to carry out its respective obligations hereunder. The
execution and delivery of this Agreement and the consummation by each of HOC and
Offeror of the transactions contemplated hereby have been duly authorized by
each of the HOC and Offeror boards of directors and no other corporate
proceedings on their part are or will be necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of HOC and Offeror and constitutes legal, valid and
binding obligations of each of HOC and Offeror enforceable against them in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of equity.
5.3 NO VIOLATIONS
(a) Neither the execution and delivery of this Agreement by HOC
and Offeror, the consummation by them of the transactions
contemplated hereby nor compliance by them with any of the
provisions hereof will:
(i) violate, conflict with, or result in breach of any
provision of, require any consent, approval or notice
under, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a
default) or result in a right of termination or
acceleration under, or result in a creation of any
lien, security interest, charge or encumbrance upon any
of the properties or assets of HOC or Offeror or any of
their subsidiaries under any of the terms, conditions
or provisions of (x) the charter or bylaws of HOC or
Offeror or (y) any material note, bond, mortgage,
indenture, loan agreement, deed of trust, agreement,
lien, contract or other instrument or obligation to
which HOC or Offeror or any of their subsidiaries is a
party or to which any of them, or any of their
respective properties or assets,
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may be subject or by which HOC or Offeror or any of
their subsidiaries is bound; or
(ii) subject to compliance with the statutes and regulations
referred to in Section 5.3(b), violate any judgment,
ruling, order, writ, injunction, determination, award,
decree, statute, ordinance, rule or regulation
applicable to HOC or Offeror or any of their
subsidiaries (except, in the case of each of clauses
(i) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or
encumbrances which, or any consents, approvals or
notices which if not given or received, would not have
any material adverse effect on the business, operations
or financial condition of HOC or Offeror and their
respective subsidiaries taken as a whole or on the
ability of HOC or Offeror to consummate the
transactions contemplated hereby); or
(iii) cause the suspension or revocation of any
authorization, consent, approval or license currently
in effect which would have a material adverse effect on
the business, operations and financial condition of HOC
or Offeror and their subsidiaries taken as a whole.
(b) Other than pursuant to or in compliance with the provisions of
Corporate Laws, Securities Laws, the rules of the Toronto
Stock Exchange and the American Stock Exchange and any
pre-merger notification statutes and the statutes referred to
in (ii) below,
(i) there is no legal impediment to the consummation of the
business combination transaction contemplated by this
Agreement by B. Co; and
(ii) except for filings or registrations which, if not made,
or for authorizations, consents or approvals, which, if
not received, would not have a material adverse effect
on the ability of HOC or Offeror to consummate the
transaction contemplated hereby, no filing or
registration with, or authorization, consent or
approval of, any domestic or foreign public body or
authority is necessary by HOC or Offeror in connection
with the making or the consummation of the Offer other
than (i) compliance with and filings under the HSR Act,
(ii) compliance with the Competition Act (Canada) and
the Investment Canada Act (Canada), (iii) the filing
with the SEC of (A) the Offer Documents and (B) such
reports under Section(s) 13 and 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
as may be required in connection with this Agreement,
the Offer and the Second Stage Transaction, and (iv)
the filing with the Securities Authorities in Canada of
the Offer Documents.
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5.4 AVAILABILITY OF FUNDS
The aggregate cash consideration payable pursuant to the Offer is
available to Offeror so that Offeror is in a position to pay for all Chieftain
Shares tendered pursuant to the Offer in accordance with the terms of the Offer
and to pay all related fees and expenses.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CHIEFTAIN
Chieftain hereby represents and warrants to HOC and Offeror as follows
and acknowledges that HOC and Offeror are relying upon these representations and
warranties in connection with the entering into of this Agreement:
6.1 ORGANIZATION AND QUALIFICATION
Each of Chieftain and its subsidiaries is a corporation or company duly
incorporated and organized and validly subsisting under the laws of its
jurisdiction of incorporation and has the requisite corporate power and capacity
to own its properties and carry on its business as now owned and being
conducted. Each of Chieftain and its subsidiaries is duly registered to do
business and is in good standing in each jurisdiction in which the character of
its properties, owned or leased, or the nature of its activities make such
registration necessary, except where the failure to be so registered or in good
standing would not have a Material Adverse Effect on Chieftain.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT
Chieftain has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by Chieftain's board of directors, and no other
corporate proceedings on the part of Chieftain are necessary to authorize this
Agreement (except for obtaining shareholder approval in respect of any Second
Stage Transaction) and the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Chieftain and constitutes a legal, valid and
binding obligation of Chieftain enforceable against Chieftain in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general principles of equity.
6.3 NO VIOLATIONS
(a) Except as set forth in the Disclosed Information, neither the
execution and delivery of this Agreement by Chieftain, the
consummation of the transactions contemplated hereby nor
compliance by Chieftain with any of the provisions hereof
will:
(i) violate, conflict with, or result in breach of any
provision of, require any consent, approval or notice
under, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a
default) or result in a right of termination or
acceleration under, or result in a creation
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of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Chieftain or
any subsidiary thereof under, any of the terms,
conditions or provisions of (x) the Chieftain Governing
Documents or (y) any material note, bond, mortgage,
indenture, loan agreement, deed of trust, agreement,
lien, contract or other instrument or obligation to
which Chieftain or any subsidiary thereof is a party or
to which Chieftain or any subsidiary thereof, or any of
their respective properties or assets, may be subject
or by which Chieftain or any subsidiary thereof is
bound, other than the unsecured loan made in favor of
Chieftain by CIBC (and other members of the banking
syndicate);
(ii) subject to compliance with the statutes and regulations
referred to in Section 6.3(b), violate any judgment,
ruling, order, writ, injunction, determination, award,
decree, statute, ordinance, rule or regulation
applicable to Chieftain or any subsidiary thereof
(except, in the case of each of clauses (i) and (ii)
above, for such violations, conflicts, breaches,
defaults, terminations which, or any consents,
approvals or notices which if not given or received,
would not have any Material Adverse Effect or a
material adverse effect on the ability of Chieftain to
perform its obligations hereunder) or
(iii) cause the suspension or revocation of any
authorization, consent, approval or license currently
in effect which would have a Material Adverse Effect or
a material adverse effect on the ability of Chieftain
to perform its obligations hereunder.
(b) Other than pursuant to or in compliance with the provisions of
Corporate Laws, Securities Laws, the rules of the Toronto
Stock Exchange and the American Stock Exchange and any
pre-merger notification statutes,
(i) there is no legal impediment to the performance by
Chieftain of its obligations under this Agreement; and
(ii) except for filings or registrations which, if not made,
or for authorizations, consents or approvals, which, if
not received, would not have a material adverse effect
on the ability of Chieftain to consummate the business
combination transaction contemplated hereby, no filing
or registration with, or authorization, consent or
approval of, any domestic or foreign public body or
authority is necessary by Chieftain in connection with
the making or the consummation of the Offer, other than
(i) compliance with and filings under the HSR Act, (ii)
an advance ruling certificate under Section 102 of the
Competition Act (Canada) and the expiration of the
waiting period under Section 123 of the Competition Act
(Canada), (iii) the filing with the SEC of (A) the
Offer Documents and (B) such reports under Section(s)
13 and 16 of the Exchange Act, as may be required in
connection with this Agreement, the Offer and the
Second Stage
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Transaction, and (iv) the filing with the Securities
Authorities in Canada of the Offer Documents.
6.4 CAPITALIZATION
As of the date hereof, the authorized share capital of Chieftain
consists of an unlimited number of Chieftain Shares, an unlimited number of
first preferred shares and an unlimited number of second preferred shares. As of
the date hereof, 16,034,477 Chieftain Shares are issued and outstanding. As of
the date hereof, options to acquire an aggregate of 1,205,571 Chieftain Shares
are outstanding under the Share Option Plan, details of which, including the
number of such options at each exercise price, are set forth in Schedule B
hereto. As at the date hereof, 2,726,700 Funding Preferred Shares are
outstanding, each of which is convertible into 1.25 Chieftain Shares. Except as
set forth above there are no share options, warrants or other rights, agreements
or commitments of any character whatsoever (contingent or otherwise) requiring
the issuance, sale or transfer by Chieftain of any shares of Chieftain
(including the Chieftain Shares) or any securities convertible into, or
exchangeable or exercisable for, or otherwise evidencing a right to acquire, any
shares of Chieftain (including the Chieftain Shares) or any subsidiary of
Chieftain, nor except as set forth in the Disclosed Information are there any
outstanding stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the book value, income or
other attribute of Chieftain. All outstanding Chieftain Shares have been duly
authorized and validly issued, are fully paid and non-assessable and are not
subject to, nor were they issued in violation of, any preemptive rights, and all
Chieftain Shares issuable upon exercise of outstanding share options in
accordance with their respective terms will be duly authorized and validly
issued, fully paid and non-assessable and will not be subject to any preemptive
rights. Except as set forth in the Disclosed Information, there are no
shareholder agreements, voting trust or other agreements or understandings to
which Chieftain or any subsidiary thereof is a party or by which any of them is
bound relating to the voting of any shares of the capital stock of Chieftain or
any subsidiary thereof.
6.5 NO MATERIAL ADVERSE EFFECT
Since March 31, 2001, no event, change, effect or development, has
occurred in respect of Chieftain that individually, or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect.
6.6 NO UNDISCLOSED MATERIAL LIABILITIES
Except:
(a) as set forth in the Disclosed Information or as disclosed or
reflected in the audited financial statements of Chieftain as
at December 31, 2000 and the unaudited interim financial
statements of Chieftain as at March 31, 2001 contained in the
quarterly report on Form 10-Q for the period ended March 31,
2001; and
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(b) for liabilities and obligations
(i) incurred since March 31, 2001 in the ordinary course of
business and consistent with past practice; or
(ii) pursuant to the terms of this Agreement;
Chieftain has not incurred any liabilities of any nature, whether accrued,
contingent or otherwise that have constituted or could be reasonably likely to
have a Material Adverse Effect.
6.7 PERSONNEL OBLIGATIONS
Except as set forth in the Disclosed Information there is no
management, employment, consulting or other agreement, contract or commitment,
whether oral or in writing, to which Chieftain or any subsidiary thereof is a
party that provides for (i) the employment of any person or providing for
retention of management, executive or consulting services, or (ii) the payment
of Personnel Obligations upon (A) a change in control of Chieftain or (B) any
termination of such management, employment, consulting or other relationship.
There are no Personnel Obligations other than as set forth in the Disclosed
Information. Except as set forth in the Disclosed Information neither Chieftain
nor any subsidiary thereof has any presently effective indemnification
obligation (whether or not a claim has been asserted thereunder) to any of its
present or former directors, officers, employees or agents.
6.8 FINANCIAL ADVISORY AND OTHER FEES
Chieftain has not retained nor will it retain any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement, any transaction contemplated
hereby or any transaction presently ongoing or contemplated, except that CIBC
World Markets Inc. (the "Financial Advisor") has been retained as Chieftain's
financial advisor in connection with certain matters including the transactions
contemplated hereby. Chieftain has delivered or will deliver concurrently with
execution hereof to Offeror a true and complete copy of its agreement with the
Financial Advisor and, based upon the terms of the Offer as contemplated as of
the date hereof, the aggregate payment thereunder shall not exceed $5.1 million
not including GST or expenses.
6.9 REPORTS
(a) Chieftain has heretofore made available to HOC or Offeror true
and complete copies of:
(i) Chieftain's Annual Report on Form 10-K and Annual
Information Form for the 2000 financial year,
Information Circular relating to its 2001 annual and
special meeting of shareholders, 2000 Annual Report to
shareholders (including the audited financial
statements dated December 31, 2000), quarterly report
on 10Q for the period ended March 31, 2001 and
unaudited interim financial statements for the period
ended March 31, 2001; and
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(ii) all prospectuses or other offering documents used by
Chieftain in the offering of its securities and filed
with Securities Authorities since January 1, 1997.
As of their respective dates, such forms, statements, prospectuses and other
offering documents (including all exhibits and schedules thereto and documents
incorporated by reference therein) 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 therein, in light of the circumstances under
which they were made, not misleading and complied in all material respects with
all applicable requirements of law. The audited financial statements and
unaudited interim financial statements of Chieftain publicly issued by
Chieftain, previously delivered to HOC or Offeror, or included or incorporated
by reference in such form, statements, prospectuses and other offering documents
were prepared in accordance with generally accepted accounting principles in
Canada (except (i) as otherwise indicated in such financial statements and the
notes thereto or, in the case of audited statements, in the related report of
Chieftain's independent accountants or (ii) in the case of unaudited interim
financial statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present the financial position,
results of operations and changes in financial position of Chieftain as of the
dates thereof and for the periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end audit adjustments).
(b) Chieftain has made all filings required by the continuous
disclosure requirements of Securities Laws. Chieftain will
deliver to Offeror as soon as they become available true and
complete copies of any report or statement filed by it with
Securities Authorities subsequent to the date hereof. As of
their respective dates, such reports and statements (excluding
any information therein provided by Offeror, as to which
Chieftain makes no representation) will 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 therein, in light of the circumstances under which
they are made, not misleading and will comply in all material
respects with all applicable requirements of law. The
financial statements of Chieftain issued by Chieftain or to be
included in such reports and statements (excluding any
information therein provided by the Offeror, as to which
Chieftain makes no representation) will be prepared in
accordance with generally accepted accounting principles in
Canada (except (i) as otherwise indicated in such financial
statements and the notes thereto or, in the case of audited
statements, in the related report of Chieftain's independent
accountants or (ii) in the case of unaudited interim financial
statements, to the extent they may not include footnotes or
may be condensed or summary statements) and will present
fairly the financial position, results of operations and
changes in financial position of Offeror as of the dates
thereof and for the periods indicated therein (subject, in the
case of any unaudited interim financial statements, to normal
year-end audit adjustments).
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6.10 SUBSIDIARIES
Except for its direct or indirect interest in Chieftain International
Funding Ltd., Chieftain International (Bermuda) Ltd., Chieftain International
(U.S.) Inc., Chieftain International Funding Corp., Chieftain International
North Sea Limited, and Chieftain Exploration (UK) Limited, Chieftain has no
direct or indirect subsidiaries. Other than the Funding Preferred Shares,
Chieftain owns, directly or indirectly, all of the outstanding equity securities
of each of the above-named entities free and clear of all liens, claims and
encumbrances.
6.11 COMPLIANCE WITH LAW
Chieftain and each subsidiary thereof has complied with and is in
compliance with all governmental permits, laws and regulations applicable to the
operation of its business, except where such non-compliance would not,
considered individually or in the aggregate, have a Material Adverse Effect or
would materially affect the ability of Chieftain to consummate the transactions
contemplated hereby.
6.12 GOVERNMENTAL REGULATION
Chieftain is not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940
or any state public utilities laws.
6.13 MATERIAL AGREEMENTS
There are no agreements, permits, licenses, approvals, certificates and
other rights and authorizations material to the conduct of the business of
Chieftain and its subsidiaries except as contained in the Data Room and, to the
knowledge of Chieftain, all such agreements, permits, licenses, approvals,
certificates and other rights and authorizations are valid and subsisting and
neither Chieftain nor any subsidiary thereof is in material default under any
such agreements, permits, licenses, approvals, certificates and other rights and
authorizations.
6.14 EMPLOYEE BENEFIT PLANS
(a) The Disclosed Information includes true and correct copies of
the following:
(i) each "employee benefit plan," as such term is defined
in section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (including,
but not limited to, employee benefit plans, such as
foreign plans, which are not subject to the provisions
of ERISA), (each, a "Plan"), and
(ii) each personnel policy, stock option plan, stock
purchase plan, stock appreciation rights, phantom stock
plan, collective bargaining agreement, bonus plan or
arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or
agreement, deferred compensation agreement or
arrangement, executive compensation or supplemental
income arrangement, consulting agreement, employment
agreement and
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each other employee benefit plan, agreement,
arrangement, program, practice or understanding which
is not described in Section 6.14(a)(i) (each, a
"Benefit Program or Agreement"),
which is sponsored, maintained or contributed to by Chieftain
or any of its subsidiaries for the benefit of the employees of
Chieftain or any of its subsidiaries, former employees of
Chieftain or any of its subsidiaries, directors of Chieftain
or any of its subsidiaries, former directors of Chieftain or
any of its subsidiaries, or any agents, consultants, or
similar representatives providing services to or for Chieftain
or any of its subsidiaries, or has been so sponsored,
maintained or contributed to within six years prior to the
date hereof for the benefit of such individuals.
(b) True, correct and complete copies of each of the Plans,
related trusts, insurance or group annuity contracts and each
other funding or financing arrangement relating to any Plan,
including all amendments thereto, have been furnished to
Offeror There has also been furnished to Offeror, with respect
to each Plan required to file such report and description, the
most recent report on Form 5500 and the summary plan
description. True, correct and complete copies or descriptions
of all Benefit Programs or Agreements have also been furnished
to Offeror A schedule of employer expenses with respect to
each Plan, Benefit Program or Agreement for the current plan
year and past plan year has been furnished to Offeror along
with any administration agreement associated with any Plan.
Offeror has also been furnished a recent actuarial report or
valuation for each Plan subject to Title IV of ERISA and each
Plan which constitutes a Canadian defined benefit Plan.
Additionally, the most recent determination letter from the
Internal Revenue Service for each of the Plans intended to be
qualified under section 401 of the Internal Revenue Code of
1986, as amended (the "Code"), and any outstanding
determination letter application for such plans has been
furnished and any equivalent qualification ruling with regard
to any Canadian retirement Plan has been furnished.
(c) Except as otherwise disclosed in the Disclosed Information,
(i) Chieftain and each of its subsidiaries has
substantially performed all obligations, whether
arising by operation of domestic or foreign law or by
contract, required to be performed by it in connection
with the Plans and the Benefit Programs or Agreements,
and to the knowledge of Chieftain, there have been no
defaults or violations by any other party to the Plans
or Benefit Programs or Agreements;
(ii) All reports and disclosures relating to the Plans
required to be filed with or furnished to governmental
agencies, Plan participants or Plan beneficiaries have
been filed or furnished in accordance with applicable
law in a timely manner, and each Plan and each Benefit
Program or Agreement has been administered in
substantial compliance with its governing documents;
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(iii) Each of the Plans intended to be qualified under
section 401 of the Code, satisfies the requirements of
such section and has received a favorable determination
letter from the Internal Revenue Service regarding such
qualified status and has not, since receipt of the most
recent favorable determination letter, been amended or,
to the knowledge of Chieftain, operated in a way which
would adversely affect such qualified status;
(iv) Each plan intended to constitute a Canadian registered
retirement savings Plan has complied with all
applicable laws;
(v) Each Plan and Benefit Program or Agreement has been
administered in compliance with its terms, the
applicable provisions of ERISA, the Code and all other
applicable laws including but not limited to, all
Canadian laws including Canadian Pension Benefits Act
and the Alberta Employment Pension Plans Act and the
terms of any applicable collective bargaining
agreements;
(vi) There are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge
of Chieftain, threatened against, or with respect to,
any of the Plans or Benefit Programs or Agreements or
their assets;
(vii) All contributions required to be made to the Plans
pursuant to their terms and provisions have been made
timely;
(viii) As to any Plan subject to Title IV of ERISA, there
has been no event or condition which presents the risk
of Plan termination, no accumulated funding deficiency,
whether or not waived, within the meaning of section
302 of ERISA or section 412 of the Code has been
incurred, no reportable event within the meaning of
section 4043 of ERISA (for which the disclosure
requirements of Regulation section 4043.1 et seq.,
promulgated by the Pension Benefit Guaranty Corporation
("PBGC") have not been waived) has occurred, no notice
of intent to terminate the Plan has been given under
section 4041 of ERISA, no proceeding has been
instituted under section 4042 of ERISA to terminate the
Plan, no liability to the PBGC has been incurred, and
the assets of the Plan equal or exceed the actuarial
present value of the benefit liabilities, within the
meaning of section 4041 of ERISA, under the Plan, based
upon reasonable actuarial assumptions and the asset
valuation principles established by the PBGC;
(ix) All retirement Plans are sufficiently funded such that
upon termination of the Plan, Plan funds would be
sufficient to pay all liabilities;
(x) No act, omission or transaction has occurred which
would result in imposition on Chieftain or any of its
subsidiaries of (1) a breach of fiduciary duty
liability damages under section 409 of ERISA, (2) a
civil penalty assessed pursuant to subsections (c), (i)
or (l) of section 502 of
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ERISA, or (3) a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code;
(xi) To the knowledge of Chieftain, there is no matter
pending (other than routine qualification determination
filings) with respect to any of the Plans before the
Internal Revenue Service, the Department of Labor, the
PBGC or the Canada Customs and Revenue Agency;
(xii) Each trust funding a Plan, which trust is intended to
be exempt from federal income taxation pursuant to
section 501(c)(9) of the Code, satisfies the
requirements of such section and has received a
favorable determination letter from the Internal
Revenue Service regarding such exempt status and has
not, since receipt of the most recent favorable
determination letter, been amended or operated in a way
which would adversely affect such exempt status;
(xiii) With respect to any employee benefit plan, within the
meaning of section 3(3) of ERISA, which is not
contained in the Data Room but which is sponsored,
maintained or contributed to, or has been sponsored,
maintained or contributed to within six years prior to
the date hereof, by any corporation, trade, business or
entity under common control with Chieftain or any of
its subsidiaries, within the meaning of section 414(b),
(c) or (m) of the Code or section 4001 of ERISA
("Commonly Controlled Entity"), (1) no withdrawal
liability, within the meaning of section 4201 of ERISA,
has been incurred, which withdrawal liability has not
been satisfied, (2) no liability to the PBGC has been
incurred by any Commonly Controlled Entity, which
liability has not been satisfied, (3) no accumulated
funding deficiency, whether or not waived, within the
meaning of section 302 of ERISA or section 412 of the
Code has been incurred, and (4) all contributions
(including installments) to such plan required by
section 302 of ERISA and section 412 of the Code have
been timely made; and
(xiv) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
will not (1) require Chieftain or any of its
subsidiaries to make a larger contribution to, or pay
greater benefits under, any Plan or Benefit Program or
Agreement than it otherwise would or (2) create or give
rise to any additional vested rights or service credits
under any Plan or Benefit Program or Agreement.
(xv) Except as set forth in the Disclosed Information,
neither Chieftain nor any of its subsidiaries is a
party to any agreement, nor have any of them
established any policy or practice, requiring them to
make a payment or provide any other form of
compensation or benefit to any person performing
services for Chieftain or any of its subsidiaries which
would not be payable or provided in the absence of the
consummation of the transactions contemplated by this
Agreement.
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(d) Except as set forth in the Disclosed Information, neither
Chieftain nor any of its subsidiaries is a party to or is
bound by any severance agreement.
(e) Each Plan which is an "employee welfare benefit plan", whether
established pursuant to the laws of the United States or
Canada, may be unilaterally amended or terminated in its
entirety without liability except as to benefits accrued
thereunder prior to such amendment or termination.
(f) Except as set forth in the Disclosed Information, no Plan or
Benefit Program or Agreement provides retiree medical or
retiree life insurance benefits to any person and neither
Chieftain nor any of its subsidiaries is contractually or
otherwise obligated (whether or not in writing) to provide any
person with life insurance or medical benefits upon retirement
or termination of employment, other than as required by the
provisions of section 601 through 608 of ERISA and section
4980B of the Code.
(g) Neither Chieftain nor any of its subsidiaries contributes to
any Plan maintained by an organized labor group.
(h) Except as set forth in the Disclosed Information, no Plan or
Benefit Program or Agreement provides that payments pursuant
to such Plan or Benefit Program or Agreement may be made in
securities of Chieftain or any of its subsidiaries or a
Commonly Controlled Entity, nor does any trust maintained
pursuant to any Plan or Benefit Program or Agreement hold any
securities of Chieftain or a Commonly Controlled Entity.
(i) None of the employees of Chieftain nor any of its subsidiaries
are subject to union or collective bargaining agreements.
Except as set forth in the Disclosed Information, neither
Chieftain nor any of its subsidiaries has at any time had or,
to the knowledge of Chieftain, been threatened with any work
stoppages or other labor disputes or controversies with
respect to its employees which had a Material Adverse Effect.
6.15 [INTENTIONALLY DELETED]
6.16 BOOKS AND RECORDS
The corporate records and minute books of Chieftain have been
maintained in accordance with all applicable statutory requirements and are
complete and accurate in all material respects.
6.17 LITIGATION, ETC.
Except as disclosed in writing to HOC or Offeror or made available in
the Data Room, there are no actions, suits or proceedings pending, or to the
knowledge of Chieftain threatened, against Chieftain before or by any federal,
provincial, state, local, foreign, municipal or other governmental department,
commission, board, bureau, agency, court or instrumentality, which
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action, suit or proceeding involves a possibility of any judgment against or
liability of Chieftain or other person, which, if successful, would have a
Material Adverse Effect, or materially adversely affect the ability of Chieftain
to perform its obligations hereunder.
6.18 ENVIRONMENTAL
Except as set forth in the Disclosed Information;
(a) Chieftain is not aware of, and has not received:
(i) any order or directive which relates to environmental
matters and which requires any material work, repairs,
construction, or capital expenditures; or
(ii) any demand or notice with respect to the material
breach of any environmental, health or safety law
applicable to Chieftain or any of its business
undertakings, including, without limitation, any
regulations respecting the use, storage, treatment,
transportation, or disposition of environmental
contaminants;
(b) Chieftain has not received notice of and is not aware of any
material environmental liabilities related to its assets,
other than obligations in the ordinary course of business to
abandon xxxxx when they have ceased to be productive, remove
production equipment when they are no longer being used and
restore and reclaim the surface sites thereof;
(c) all material environmental and health and safety permits,
licenses, approvals, consents, certificates and other
authorizations of any kind or nature ("Environmental Permits")
necessary for the ownership, operation, development,
maintenance, or use of any of the assets have been obtained
and maintained in effect; and
(d) Chieftain, its assets and the ownership, operation,
development, maintenance and use thereof are in material
compliance with all environmental laws and with all terms and
conditions of all Environmental Permits.
For purposes of this section, Chieftain provides each of the
representations and warranties to its knowledge, without inquiry, with respect
to those operations and assets which it does not operate.
6.19 TAX MATTERS
(a) For purposes of this Agreement, the following definitions
shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other
additions that may become payable in respect thereof,
imposed by any federal, provincial, state, local or
foreign government or any agency or political
subdivision of any such
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government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income
taxes and provincial income taxes), capital taxes,
payroll and employee withholding taxes, labor taxes,
employment insurance, social insurance or security
taxes, sales and use taxes, goods and services taxes,
ad valorem taxes, value added taxes, severance taxes,
excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, windfall profits
taxes, environmental taxes, transfer taxes, workers'
compensation, Canada Pension Plan premiums, customs
duties and other governmental charges, and other
obligations of the same or of a similar nature to any
of the foregoing, which Chieftain or any of its
subsidiaries is required to pay, withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements
and returns relating to, or required to be filed in
connection with, any Taxes.
(b) All Returns required to be filed by or on behalf of Chieftain
or any subsidiary have been duly filed on a timely basis and
such Returns are true, complete and correct in all material
respects. All Taxes shown to be payable on the Returns or on
subsequent assessments with respect thereto have been paid in
full on a timely basis, and no further Taxes are payable by
Chieftain or any subsidiaries with respect to items or periods
covered by such Returns. With respect to United States federal
and state income Taxes, extensions have been granted for the
filing of Returns in respect of the taxable year ending
December 31, 2000. Payments of estimated U.S. federal and
state income Taxes and deposits in respect of the foregoing
extensions have been timely made in accordance with
Chieftain's best estimate of the Taxes due.
(c) Chieftain and its subsidiaries have paid or provided adequate
accruals in its financial statements for the period ended
March 31, 2001 for Taxes, including income taxes, labor taxes
and related future taxes, in conformity with generally
accepted accounting principles applicable in Canada..
(d) For all periods covered by the filed tax Returns disclosed in
the Disclosed Information, HOC or Offeror has been furnished
by Chieftain true and complete copies of:
(i) all relevant portions of all income tax audit reports,
statements of deficiencies, closing or other agreements
received by, or on behalf of, Chieftain or any
subsidiary relating to Taxes; and
(ii) all federal, provincial, state, local or foreign income
or franchise tax returns for Chieftain or any of its
subsidiaries.
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(e) No material deficiencies exist or have been asserted with
respect to Taxes of Chieftain or any of its subsidiaries.
Neither Chieftain nor any of its subsidiaries is a party to
any action or proceeding for assessment or collection of
Taxes, nor has such event been asserted or threatened against
Chieftain or any of its assets. No waiver or extension of any
statute of limitations is in effect with respect to Taxes or
Returns of Chieftain or any subsidiary. Except as disclosed in
the Disclosed Information, the Returns of Chieftain and its
subsidiaries have not been audited by a government or taxing
authority within the last three (3) years, nor is any such
audit in process, pending or threatened.
(f) Chieftain and each of its subsidiaries has withheld, collected
and remitted on a timely basis all amounts in respect of Taxes
required to be withheld, collected or remitted by it.
(g) Neither Chieftain nor any of its subsidiaries has entered into
any compensatory agreement which under certain circumstances
could result in a limited deductible expense or a
nondeductible expense pursuant to Section 280G or Section
162(m) of the Internal Revenue Code of 1986, as amended.
6.20 CONFIDENTIALITY AGREEMENTS
Chieftain has entered into confidentiality agreements with persons
other than HOC or Offeror regarding the confidentiality of information provided
to such persons or reviewed by such persons in the Data Room. Chieftain has not
negotiated any Take-over Proposal with any person who has not entered into such
a confidentiality agreement or provided access to the Data Room to any person
who has not entered into such a confidentiality agreement.
6.21 REGARDING THE ASSETS
The Oil and Gas Assets are free and clear of all liens, charges and
encumbrances other than Permitted Encumbrances.
6.22 FINANCIAL AND COMMODITY HEDGING
As of the date hereof, neither Chieftain nor any of its subsidiaries
has any outstanding hydrocarbon or financial hedging positions (including fixed
price controls, collars, swaps, caps, xxxxxx or puts).
ARTICLE VII
CONDUCT OF BUSINESS
7.1 CONDUCT OF BUSINESS BY CHIEFTAIN
Except as expressly otherwise provided in this Agreement, Chieftain
covenants and agrees that, during the period from the date of this Agreement
until the earlier of either:
(i) the Effective Time; or
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(ii) this Agreement is terminated by its terms, unless
Offeror shall otherwise agree in writing, except as
required by law or as otherwise expressly permitted or
specifically contemplated by this Agreement:
(a) the business of Chieftain (and each subsidiary thereof) shall
be conducted only in, and Chieftain (and each subsidiary
thereof) shall not take any action except in, the usual and
ordinary course of business and consistent with past practice,
and Chieftain (and each subsidiary thereof) shall use all
commercially reasonable efforts to maintain and preserve its
business organization, assets, employees and advantageous
business relationships;
(b) Chieftain (and each subsidiary thereof) shall not directly or
indirectly do or permit to occur any of the following:
(i) amend the its governing documents;
(ii) declare, set aside or pay any dividend or other
distribution or payment (whether in cash, shares or
property) in respect of its shares owned by any person
other than the inter-corporate dividends paid on a
regular quarterly basis by Chieftain International
(U.S.) Inc. in respect of its Class B preferred shares
to Chieftain International Funding Corp. and in respect
of the Funding Preferred Shares;
(iii) issue, grant, sell or pledge or agree to issue, grant,
sell or pledge any shares of Chieftain (or any
subsidiary thereof), or securities convertible into or
exchangeable or exercisable for, or otherwise
evidencing a right to acquire, shares of Chieftain (or
any subsidiary thereof), other than Chieftain Shares
issuable pursuant to the terms of the Chieftain Options
and upon the conversion of the Funding Preferred
Shares;
(iv) redeem, purchase or otherwise acquire any of its
outstanding shares or other securities including,
without limitation, under an issuer bid;
(v) split, combine or reclassify any of its shares;
(vi) adopt a plan of liquidation or resolutions providing
for the liquidation, dissolution, merger, consolidation
or reorganization of Chieftain;
(vii) reduce its stated capital; or
(viii) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the
foregoing, except as permitted above;
(c) Chieftain shall not, without prior consultation with and the
consent of Offeror, such consent not to be unreasonably
withheld, directly or indirectly do (and Chieftain represents
that, other than as disclosed in writing to Offeror or
disclosed in Schedule E, since March 31, 2001, neither
Chieftain nor any of its subsidiaries has done) any of the
following:
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(i) sell, pledge, dispose of or encumber any assets having
an individual value in excess of $2 million
individually or $5 million in the aggregate;
(ii) acquire (by merger, amalgamation, consolidation or
acquisition of shares or assets) any corporation,
partnership or other business organization or division
thereof, or make any investment either by purchase of
shares or securities, contributions of capital or
property transfer;
(iii) acquire any assets with an acquisition cost which would
exceed (A) $3 million individually or (B) $6 million in
the aggregate, with the exception of purchases at lease
sales and freehold lease acquisitions where Offeror has
been consulted with prior to such acquisition;
(iv) incur any indebtedness for borrowed money other than
pursuant to existing facilities (up to a maximum of $15
million), or any other material liability or obligation
or issue any debt securities or assume, guarantee,
endorse or otherwise as an accommodation become
responsible for, the obligations of any other
individual or entity, or make any loans or advances,
other than the Personnel Obligations and fees payable
to legal and accounting advisors in the ordinary course
and fees payable to legal, accounting, engineering and
financial advisors in connection with the matters and
transactions contemplated by this Agreement;
(v) authorize, recommend or propose any release or
relinquishment of any material contract right;
(vi) waive, release, grant or transfer any material rights
of value or modify or change in any material respect
any existing material license, lease, contract,
production sharing agreement, government land
concession or other material document;
(vii) enter into or terminate any xxxxxx, swaps or other
financial instruments or like transactions;
(viii) enter into any agreements with directors or officers of
Chieftain (or any subsidiary thereof) or their
respective affiliates; or
(ix) authorize or propose any of the foregoing, or enter
into or modify any contract, agreement, commitment or
arrangement to do any of the foregoing;
(d) Chieftain (and each subsidiary thereof) will not without prior
consultation with and the consent of Offeror, such consent not
to be unreasonably withheld, enter into new commitments of a
capital expenditure nature or incur any new contingent
liabilities other than ordinary course expenditures, including
Chieftain's (and each subsidiary thereof's) share of AFE's
approved after the date hereof and Chieftain's (and each
subsidiary thereof's) share of the cost of drilling any
individual xxxxx involving a cost of up to $3 million on an
individual basis,
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and an aggregate cost of up to $3 million except: (A) as may
be necessary for the maintenance of existing facilities,
machinery and equipment in good operating condition and repair
in the ordinary course of business; or (B) as may be required
by law;
(e) Chieftain (and each subsidiary thereof) shall not create any
new Personnel Obligations and, except for payment of the
existing Personnel Obligations (from which Chieftain (and any
subsidiary thereof) shall make appropriate withholdings as
required by applicable Tax laws), Chieftain shall not grant to
any officer or director an increase in compensation in any
form, grant any general salary increase, grant to any employee
any increase in compensation in any form, make any loan to any
officer or director, or take any action with respect to the
grant of any severance or termination pay arising from the
Offer or a change of control of Chieftain or the entering into
of any employment agreement with, any senior officer or
director, or with respect to any increase of benefits payable
under its current severance or termination pay policies; and
(f) Neither Chieftain nor any subsidiaries thereof shall adopt or
amend or make any contribution to any bonus, profit sharing,
option, deferred compensation, insurance, incentive
compensation, other compensation or other similar plan,
agreement, trust, fund or arrangements for the benefit of
employees, except as is necessary to comply with the law or
with respect to existing provisions of any such plans,
programs, arrangements or agreements.
7.2 [INTENTIONALLY DELETED]
7.3 CONDUCT OF BUSINESS BY HOC AND OFFEROR
HOC and Offeror each covenant and agree that, during the period from
the date of this Agreement until this Agreement is terminated in accordance with
its terms, unless Chieftain shall otherwise agree in writing, except as required
by law or as otherwise expressly permitted or specifically contemplated by this
Agreement:
(a) each of HOC and Offeror and their respective subsidiaries will
not take any actions which would or might be reasonably
expected to materially impede or otherwise frustrate the
completion of the Offer; and
(b) each of HOC and Offeror shall and shall cause each of its
respective subsidiaries to not take any action that would
render, or that reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue
in any material respect.
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7.4 INTEGRATION OF OPERATIONS
(a) From and after the mailing of the Offer, Offeror and its
representatives will be permitted reasonable access to
Chieftain's management personnel and employees to permit
Offeror to be in a position to expeditiously integrate the
business and operations of Chieftain with that of Offeror
immediately upon but not prior to, the Effective Time provided
such reasonable access does not cause any unreasonable
disruptions to Chieftain's business or operations prior to the
Effective Time.
(b) All information provided to HOC or Offeror pursuant to this
Section 7.4 shall be subject to the HOC Confidentiality
Agreement.
ARTICLE VIII
COVENANTS OF CHIEFTAIN
8.1 NOTICE OF MATERIAL CHANGE
From the date hereof until the termination of this Agreement, Chieftain
shall promptly notify Offeror in writing of:
(a) any material change (actual, anticipated, contemplated or, to
the knowledge of Chieftain, threatened), financial or
otherwise in the business, affairs, operations, assets,
liabilities (contingent or otherwise) or capital of Chieftain;
(b) any change in the facts relating to any representation or
warranty set forth in Article 6 which change is or may be of
such a nature as to render any such representation or warranty
misleading or untrue in a material respect; or
(c) any material fact which arises and which would have been
required to be stated herein had the fact arisen on or prior
to the date of this Agreement.
Chieftain shall in good faith discuss with Offeror any change in
circumstances (actual, anticipated, contemplated or, to the knowledge of
Chieftain, threatened), financial or otherwise which is of such a nature that
there may be a reasonable question as to whether notice need be given to Offeror
pursuant to this section.
8.2 NON-COMPLETION FEE
If at any time after the execution of this Agreement:
(a) the Board of Directors of Chieftain has withdrawn or, in any
manner adverse to Offeror, redefined, modified or changed any
of its recommendations or determinations referred to in
Section 2.2(a) prior to the Expiry Time of the Offer, or shall
have resolved to do so;
(b) any bona fide Take-over Proposal for the Chieftain Shares is
publicly announced or commenced, and the Board of Directors of
Chieftain shall have failed to
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publicly reaffirm and maintain its recommendation of the Offer
to Chieftain's shareholders within the time period required by
Rule 14e-2 of the Exchange Act;
(c) the Board of Directors of Chieftain shall have recommended
that Chieftain's shareholders deposit their Chieftain Shares
under, vote in favor of, or otherwise accept, a Take-over
Proposal;
(d) Chieftain shall have given a notice of termination under
Section 11.1(m); or
(e) a Take-over Proposal is publicly announced, proposed, offered
or made to Chieftain's shareholders or to Chieftain prior to
the Expiry Time of the Offer, the Offer has expired and has
not been consummated, in whole or in part, by reason in whole,
or in part, of the Minimum Condition not having been satisfied
and such Take-over Proposal, with or without amendment is
thereafter completed.
Chieftain shall, upon the occurrence of any such event, pay to HOC the
amount of $20 million (the "Fee"). The Fee shall be paid by wire transfer of
same-day funds and shall be due and payable (i) within two (2) Business Days
upon the occurrence of any event described in clauses (a), (b), (c), or (e),
above and (ii) prior to and as a condition to the termination of this Agreement
pursuant to Section 11.1(m) as contemplated by clause (d) above. Any payment
pursuant to this Section 8.2 shall be without prejudice to the rights or
remedies available to Offeror upon breach of Section 8.3 of this Agreement.
8.3 NO SOLICITATION
Chieftain shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion,
negotiation or other procedures with any parties conducted heretofore by
Chieftain (including restricting access to the Data Room to HOC, Offeror and
their representatives), or its officers, directors, employees, financial
advisors, legal counsel, representatives and agents ("Representatives") with
respect to a Take-over Proposal (as defined herein) whether or not initiated by
Chieftain, and in connection therewith Chieftain shall not release any third
party from any confidentiality or standstill agreement to which Chieftain and
such third party is a party or amend any of the foregoing and shall enforce all
rights thereunder, including, without limitation, the return of information
regarding Chieftain previously provided to such parties and the destruction of
all materials including or incorporating any information regarding Chieftain.
From and after the date hereof, Chieftain will not, and will not authorize or
permit any of its Representatives to, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) or participate in or
take any other action to facilitate any inquiries or the making of any proposal
which constitutes or may reasonably be expected to lead to a Take-over Proposal
from any person, or engage in any discussion, negotiations or inquiries relating
thereto or accept any Take-over Proposal; provided, however, that Chieftain may:
(i) engage in discussions or negotiations with a third
party who (without any solicitation, initiation or
encouragement, directly or indirectly, by Chieftain or
its Representatives after the date hereof) seeks to
initiate such discussions or negotiations and may
furnish such third party with
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information concerning Chieftain and its business,
properties and assets which has previously been
provided to HOC or Offeror if, and only to the extent
that:
(A) Chieftain reports the receipt of a proposal or
inquiry from the third party to Offeror within
48 hours of receiving such proposal or inquiry;
(B) the third party has first made a bona fide
written Take-over Proposal that is financially
superior to the Offer and has demonstrated that
such proposal constitutes a commercially
feasible transaction which could be carried out
within a time frame that is reasonable in the
circumstances and that the funds or other
consideration necessary for the Take-over
Proposal are available (as determined in good
faith in each case by Chieftain's board of
directors) (a "Superior Proposal") and
Chieftain's board of directors has concluded in
good faith, after considering applicable law and
receiving an opinion of outside counsel or the
advice of outside counsel that is reflected in
the minutes of a meeting of the board of
directors to the effect that the board of
directors of Chieftain is required to do so in
order to properly discharge its fiduciary duties
under applicable law;
(C) prior to furnishing such information to or
entering into discussions or negotiations with
such person or entity, Chieftain provides
immediate notice orally and in writing to
Offeror specifying that it is furnishing
information to or entering into discussions or
negotiations with such person or entity with
respect to a Superior Proposal, receives from
such person or entity an executed
confidentiality agreement having confidentiality
and standstill terms substantially similar to
those contained in the HOC Confidentiality
Agreement, and provides Offeror with a summary
of the material terms of such Superior Proposal
and any material amendments thereto and
confirming in writing the determination of
Chieftain's board of directors that the
Take-over Proposal if completed would constitute
a Superior Proposal;
(D) Chieftain provides timely notice to Offeror at
such time as it or such person or entity
terminates any such discussions or negotiations;
and
(E) Chieftain immediately provides to Offeror any
information provided to any such person or
entity whether or not previously made available
to Offeror;
(ii) comply with Rules 14d-9 and 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer,
if applicable, and similar rules
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under applicable Canadian securities laws relating to
the provision of the Recommendation Documents, and make
appropriate disclosure with respect thereto to
Chieftain's shareholders; and
(iii) accept, recommend, approve or implement a Superior
Proposal from a third party, but only (in the case of
this clause (iii)) if prior to such acceptance,
recommendation, approval or implementation, Chieftain's
board of directors shall have concluded in good faith,
after considering provisions of applicable law and
after giving effect to all proposals to adjust the
terms and conditions of this Agreement and the Offer
which may be offered by Offeror during the four (4)
Business Days notice period set forth below and after
receiving the advice of legal counsel, and Chieftain
tenders payment of the Fee and terminates this
Agreement in accordance with Section 11.1(m).
Chieftain shall give Offeror orally and in writing at least four (4)
Business Days advance notice of any decision by the board of directors of
Chieftain to accept, recommend, approve or implement a Superior Proposal which
notice shall identify the party making the Superior Proposal and shall provide a
true and complete copy thereof and any amendments thereto together with a
written notice from the board of directors regarding the value in financial
terms that the board of directors has, in consultation with its financial
advisors, determined should be ascribed to any non-cash consideration offered in
connection with such Superior Proposal. In addition Chieftain shall, and shall
cause its respective financial and legal advisors to, negotiate in good faith
with Offeror to make such adjustments in the terms and conditions of this
Agreement and the Offer as would enable Chieftain to proceed with the Offer as
amended rather than the Superior Proposal. In the event Offeror proposes to
amend this Agreement and the Offer to provide substantially equivalent or
superior value to that provided under the Superior Proposal within the four (4)
Business Days time period specified above, then Chieftain shall not enter into
any agreement regarding the Superior Proposal or otherwise take any of the
actions described in clause (iii) above.
8.4 CHIEFTAIN BOARD OF DIRECTORS
Immediately following the acquisition by Offeror of more than a
majority of the outstanding Chieftain Shares pursuant to the Offer, the board of
directors of Chieftain shall be reconstituted through resignations of certain of
the Chieftain directors and the appointment of Offeror nominees in their stead.
Chieftain shall, in accordance with the foregoing and subject to the provisions
of the Act, use its best efforts to secure the resignations of all Chieftain
directors to be effective at such time as may be required by Offeror and to
cause the election of the Offeror nominees to fill the vacancies so created in
order to effect the foregoing without the necessity of a shareholder meeting.
8.5 STRUCTURE OF TRANSACTION
As may be requested by Offeror, Chieftain shall use reasonable
commercial efforts in cooperating with Offeror in structuring the acquisition by
Offeror of Chieftain in a tax efficient manner, provided that no such
cooperation shall be required where such structuring will have a
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material adverse effect on the business, operations or financial condition of
Chieftain or the shareholders of Chieftain or cause any breach of or default
under this Agreement by Chieftain.
8.6 SHAREHOLDER CLAIMS
Chieftain shall not settle or compromise any claim brought by any
present, former or purported holder of any securities of Chieftain or any of its
subsidiaries in connection with the transactions contemplated by this Agreement
prior to the Effective Time without the prior written consent of Offeror
8.7 PRESERVATION OF DATA ROOM
Chieftain agrees to preserve the Data Room and the information therein
(without any amendment or changes to such information), with such information to
be maintained at its current location, and reasonable access shall be provided
to the Offeror upon reasonable request for purposes of identifying the
information relating to the index of information and to facilitate efforts under
Section 7.4.
ARTICLE IX
COVENANTS OF HOC AND OFFEROR
9.1 EMPLOYMENT AGREEMENTS
From and after the Effective Time, HOC and Offeror shall, and shall
cause Chieftain and any successor to Chieftain to, honor and comply with the
terms of those existing employment agreements and change in control agreements,
plans, policies or arrangements of Chieftain which Chieftain has disclosed to
HOC or Offeror in writing prior to the date hereof.
ARTICLE X
MUTUAL COVENANTS
10.1 OTHER FILINGS
Offeror and Chieftain shall, as promptly as practicable hereafter,
prepare and file any filings required under the Competition Act (Canada), the
Investment Canada Act (Canada), Securities Laws, the by-laws, rules and policies
of The Toronto Stock Exchange and the rules of the American Stock Exchange and
the HSR Act or any other applicable law relating to the transactions
contemplated herein.
10.2 ADDITIONAL AGREEMENTS
Subject to the terms and conditions herein provided and to fiduciary
obligations under applicable law as advised by counsel, each of the parties
hereto agrees to use all commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement and to cooperate with each other in
connection with the foregoing, including using commercially reasonable efforts:
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(i) to obtain all necessary waivers, consents and approvals
from other parties to material agreements, leases and
other contracts or agreements (including, without
limitation, the agreement of any persons as may be
required pursuant to any agreement, arrangement or
understanding relating to Chieftain's operations);
(ii) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any
federal, provincial or foreign law or regulations;
(iii) to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the
transactions contemplated hereby;
(iv) to cause to be lifted or rescinded any injunction or
restraining order or other order adversely affecting
the ability of the parties to consummate the
transactions contemplated hereby;
(v) to effect all necessary registrations and other filings
and submissions of information requested by Government
Authorities; and
(vi) to fulfill all conditions and satisfy all provisions of
this Agreement and the Offer.
For purposes of the foregoing, the obligation to use "commercially
reasonable efforts" to obtain waivers, consents and approvals to loan
agreements, leases and other contracts shall not include any obligation to agree
to a materially adverse modification of the terms of such documents or to prepay
or incur additional material obligations to such other parties.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 TERMINATION
This Agreement may be terminated by written notice promptly given to
the other party hereto, at any time prior to the time Offeror first takes up and
pays for Chieftain Shares:
(a) by mutual agreement by HOC, Offeror and Chieftain;
(b) by either Offeror or Chieftain if a court of competent
jurisdiction or a Government Authority shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the business
combination transaction contemplated by this Agreement and
such order, decree, ruling or other action shall have become
final and non-appealable;
(c) by Chieftain, if Offeror has not mailed the Offer Documents to
Chieftain's Shareholders on or before 5:00 p.m. (Edmonton
time) on June 29, 2001; provided that the failure of Offeror
to mail the Offer Documents by such time is not the result of
a breach of this Agreement by Chieftain;
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(d) by Offeror if immediately prior to June 29, 2001 any condition
to making the Offer set forth in Section 2.1(e) is not
satisfied or waived;
(e) subject to the last paragraph of Section 2.1(b), by Offeror,
if the conditions to the Offer set forth in Schedule A have
not been satisfied or waived by Offeror at or immediately
prior to the Expiry Time and Offeror has not elected to waive
such condition or extend such time;
(f) by Chieftain, if Offeror has not taken up and paid for the
Chieftain Shares deposited under the Offer on or before the
date which is the fifth Business Day after the Expiration
Date;
(g) by Chieftain, if the Offer terminates or expires at the Expiry
Time without Offeror taking up and paying for any of the
Chieftain Shares;
(h) by Offeror if any event described in clauses (a), (b), (c) or
(e) of Section 8.2) shall have occurred;
(i) by Offeror, so long as neither HOC nor Offeror is then in
material breach of its obligations hereunder, if there has
been a breach of any representation or warranty (when made or
at the time of termination as if made on such date of
termination, except to the extent it relates to a particular
date) on the part of Chieftain (provided that any
representation or warranty of Chieftain contained herein that
is subject to a "materiality," "Material Adverse Effect" or
similar qualification shall not be so qualified for purposes
of determining the existence of any breach thereof on the part
of Chieftain) and which breach has not been cured within three
(3) Business Days following receipt by Chieftain written of
notice of such breach, except for such breaches that could
not, individually or in the aggregate with any other breaches
on the part of Chieftain, have a Material Adverse Effect;
(j) by Offeror, so long as neither HOC nor Offeror is then in
material breach of its obligations hereunder, if there has
been a breach of Section 8.3 or a material breach of any other
covenant or agreement on the part of Chieftain set forth in
this Agreement (provided that any covenant or agreement of
Chieftain contained herein the performance of which is subject
to a "materiality," "Material Adverse Effect" or similar
qualification shall not (except as otherwise provided in this
Section 11.1(j)) be so qualified for purposes of determining
the existence of any nonperformance thereof on the part of
Chieftain), and which breach (other than a breach of any
covenant or agreement set forth in Section 8.3) has not been
cured within three (3) Business Days following receipt by
Chieftain of written notice of such breach;
(k) by Chieftain, so long as Chieftain is not then in material
breach of its obligations hereunder, if there has been a
breach of any representation or warranty (when made or at the
time of termination as if made on such date of termination,
except to the extent it relates to a particular date) on the
part of HOC or Offeror (provided that any representation or
warranty of HOC or Offeror contained herein
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that is subject to a "materiality" or similar qualification
shall not be so qualified for purposes of determining the
existence of any breach thereof on the part of HOC or Offeror)
and which breach has not been cured within three (3) Business
Days following receipt by HOC or Offeror of written notice of
such breach, except for such breaches that, individually or in
the aggregate with any other breaches on the part of HOC or
Offeror, would not materially and adversely affect the ability
of the parties hereto to consummate the transactions
contemplated hereby;
(l) by Chieftain, so long as Chieftain is not then in material
breach of its obligations hereunder, if there has been a
material breach of any covenant or agreement on the part of
HOC or Offeror set forth in this Agreement (provided that any
covenant or agreement of HOC or Offeror contained herein the
performance of which is subject to a "materiality" or similar
qualification shall not (except as otherwise provided in this
Section 11.1(l)) be so qualified for purposes of determining
the existence of any nonperformance thereof on the part of HOC
or Offeror) and which breach has not been cured within three
(3) Business Days following receipt by HOC or Offeror of
written notice of such breach;
(m) by Chieftain if (i) Chieftain's board of directors has
received a Superior Proposal, (ii) Chieftain has notified
Offeror in writing of the existence of a Superior Proposal,
(iii) at least four (4) Business Days following receipt by
Offeror of the notice referred to in clause (ii) immediately
above has expired, (iv) taking into account any revised
proposal made by Offeror since receipt of the notice referred
to in clause (iii) immediately above, such Superior Proposal
remains a Superior Proposal and (v) Chieftain has tendered
payment of the Fee to Offeror or its designee
(n) by Offeror if there shall have occurred any event, change,
effect or development that individually or in the aggregate,
has had or is reasonably likely to have a Material Adverse
Effect.
11.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement as provided in
Section 11.1, this Agreement shall forthwith have no further force or effect and
there shall be no obligation on the part of HOC, Offeror or Chieftain or any of
their respective shareholders, directors or officers, except for liability
arising from a willful breach of this Agreement or common law fraud, provided,
however, that the provisions of Section 8.2, Section 12.5 and this Section 11.2,
shall survive the termination of this Agreement and provided that a termination
of this Agreement shall not relieve any party hereto from any liability for
damages incurred as a result of a breach by such party of its representations,
warranties, covenants, agreements or other obligations hereunder occurring prior
to such termination.
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11.3 AMENDMENT
This Agreement may be amended by mutual agreement between the parties
hereto. This Agreement may not be amended except by an instrument in writing
signed by the appropriate officers on behalf of each of the parties hereto.
11.4 WAIVER
Offeror, on the one hand, and Chieftain, on the other hand, may (i)
extend the time for the performance of any of the obligations or other acts of
the other, (ii) waive compliance with any of the other's agreements or the
fulfillment of any conditions to its own obligations contained herein or (iii)
waive inaccuracies in any of the other's representations or warranties contained
herein or in any document delivered by the other party hereto; provided,
however, that any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or sent if delivered personally or sent by facsimile or sent
by prepaid overnight courier to the parties at the following addresses (or at
such other addresses as shall be specified by the parties by like notice):
(a) if to Offeror or HOC:
Xxxx Oil Canadian Acquisition III Corporation Xxxxx 0000, 000
0xx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: President
Fax No.: 403/000-0000
Xxxx Oil Company
0000 Xxxx xx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx, Senior Vice President
Fax No.: 214/000-0000
with a copy to:
Xxxx Oil Company
0000 Xxxx xx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Vice President and General Counsel
Fax No.: 214/000-0000
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with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: A. Xxxxxxx Xxxxx
Fax No.:(000) 000-0000
with a copy to:
Davies Xxxx Xxxxxxxx & Xxxxxxxx LLP
0 Xxxxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: D. Xxxxx XxXxxxxxxx
Fax No.: (000) 000-0000
(b) if to Chieftain:
Chieftain International, Inc.
1201 TD Tower
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention:
President and Chief Executive Officer (Confidential)
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx X. Xxxxx, Q.C.
Fax No.: (000) 000-0000
12.2 MISCELLANEOUS
This Agreement:
(i) together with the HOC Confidentiality Agreement,
constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written
and oral, between the parties, with respect to the
subject matter hereof; and
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(ii) shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and
assigns.
The parties hereto shall be entitled to rely upon delivery of
an executed facsimile copy of the Agreement, and such
facsimile copy shall be legally effective to create a valid
and binding agreement among the parties hereto. Chieftain
agrees in favor of HOC and Offeror that the standstill
provisions of the HOC Confidentiality Agreement are waived and
terminated to the extent necessary to permit Offeror to
purchase Chieftain's Shares in accordance with Securities Laws
and for so long as the Offer remains outstanding. The parties
hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the Province of
Alberta having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
12.3 INDEMNIFICATION, ETC.
(a) From and after the Effective Time, HOC shall, to the fullest
extent permitted by law, cause Chieftain and its subsidiaries,
Offeror and any surviving or continuing corporation resulting
from the Second Stage Transaction to honor all obligations to
indemnify (including any obligations to advance funds for
expenses) the current or former directors or officers of
Chieftain and its subsidiaries for acts or omissions by such
directors and officers occurring prior to the time that the
Second Stage Transaction is completed to the extent that such
obligations of Chieftain exist on the date of this Agreement,
whether pursuant to the Chieftain Governing Documents,
individual indemnity agreements or otherwise, and such
obligations shall survive the Offer and the Second Stage
Transaction and shall continue in full force and effect in
accordance with the terms of the Chieftain Governing
Documents, such individual indemnity agreements and other
agreements and instruments from the Effective Time until the
expiration of the applicable limitations period with respect
to any claims against such directors or officers arising out
of such acts or omissions.
(b) For a period of six years following the Effective Time, HOC
shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by
Chieftain (provided that HOC may substitute therefor policies
with reputable and financially sound carriers of at least the
same coverage and amounts containing terms and conditions
which are no less advantageous) with respect to claims arising
from or related to facts or events which occurred at or before
the Effective Time; provided, however, that HOC shall not be
obligated to make annual premium payments for such insurance
to the extent such premiums exceed 200% of the annual premiums
paid as of the date hereof by Chieftain for such insurance
(such 200%) amount, the "Maximum Premium"). If such insurance
coverage cannot be obtained at all, or can only be obtained at
an
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annual premium in excess of the Maximum Premium, HOC shall
maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to
the Maximum Premium.
(c) From and after the Effective Time, to the fullest extent
permitted by law, Chieftain, Offeror or the surviving or
continuing corporation in the Second Stage Transaction shall
indemnify, defend and hold harmless the present and former
officers and directors of Chieftain and its subsidiaries and
any employee of Chieftain or its subsidiaries who acts as a
fiduciary under any benefit plan established by Chieftain or
any subsidiary (each an "Indemnified Party") against all
losses, claims, damages, liabilities, fees and expenses
(including attorneys' fees and disbursements), judgments,
fines and amounts paid in settlement (in the case of
settlements, with the approval of the indemnifying party
(which approval shall not be unreasonably withheld))
(collectively, "Losses"), as incurred (payable monthly upon
written request which request shall include reasonable
evidence of the Losses set forth therein) to the extent
arising from, relating to, or otherwise in respect of, any
actual or threatened action, suit, proceeding or
investigation, in respect of actions or omissions occurring at
or prior to the time when the Second Stage Transaction is
completed in connection with such Indemnified Party's duties
as an officer or director of Chieftain or any of its
subsidiaries, including in respect to this Agreement, the
Offer, the Second Stage Transaction and the other
transactions; provided, however, that an Indemnified Party
shall not be entitled to indemnification under this Section
12.3(c) for Losses arising out of actions or omissions by the
Indemnified Party constituting (i) a breach of this Agreement,
(ii) criminal conduct or (iii) any violation of Securities
Laws.
12.4 ASSIGNMENT
Except as expressly permitted by the terms hereof, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties. Offeror may assign all or any part of its rights or obligations
under this Agreement to a direct or indirect wholly-owned subsidiary of HOC.
12.5 EXPENSES
All fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such cost or expense, whether or not the Offer is consummated.
12.6 SEVERABILITY
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
Any provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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12.7 HOC GUARANTEE
Except for the obligations arising under Section 12.3, HOC hereby
unconditionally and irrevocably guarantees the performance of all covenants and
obligations of Offeror and any assignee under Section 12.4 in this Agreement.
HOC waives diligence, presentment, demand of payment, any right to require
proceeding first against Offeror and any assignee under Section 12.4, protest
notice and all demands whatsoever. HOC agrees that its guarantee will not be
discharged except by complete performance of the covenants and obligations of
Offeror under this Agreement or any assignee under Section 12.4.
12.8 COUNTERPART EXECUTION
This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute one agreement.
12.9 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any other right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 12.3, which is intended to be for the benefit of the persons covered
thereby and may be enforced by such person.
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[Signature Page - Pre-Acquisition Agreement]
IN WITNESS WHEREOF, HOC, Offeror and Chieftain have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
CHIEFTAIN INTERNATIONAL, INC.
By: /s/ X.X. XXXXXX
----------------------------------------------
Name: X.X. Xxxxxx
----------------------------------------------
Title: President & CEO
----------------------------------------------
XXXX OIL COMPANY
By: /s/ XXXXX XXXXX
----------------------------------------------
Name: Xxxxx Xxxxx
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Title: Senior Vice President -- Business Development
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XXXX OIL CANADIAN ACQUISITION III
CORPORATION
By: /s/ XXXXX XXXXX
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Name: Xxxxx Xxxxx
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Title: Senior Vice President
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52
SCHEDULE A
CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Offeror
shall not be required to accept for payment, take up, purchase or, subject to
Securities Laws or any applicable rules and regulations of the SEC, (relating to
Offeror's obligations to pay for or return tendered Chieftain Shares promptly
after the termination or withdrawal of the Offer), to pay for any Chieftain
Shares tendered pursuant to the Offer unless (i) there shall have been validly
tendered and not withdrawn prior to the Expiry Time that number of Chieftain
Shares which would represent at least 66 2/3% of the outstanding Chieftain
Shares (calculated on a diluted basis) (the "Minimum Condition"), (ii) any
waiting period under the HSR Act applicable to the purchase of the Chieftain
Shares pursuant to the Offer shall have expired or been terminated and (iii) the
Director of Investigation and Research (the "Director") appointed under the
Competition Act (Canada) shall have issued an advance ruling certificate under
Section 102 of the Competition Act (Canada) in respect of the business
combination transaction contemplated by the Offer, or the applicable waiting
period under Section 123 of the Competition Act (Canada) shall have expired
without the Director having given notice that he intends to make an application
to the Competition Tribunal for an order under Section 92 of the Competition Act
(Canada) in respect of the business combination transaction contemplated by the
Offer; and no proceeding shall be taken or threatened under the merger
provisions of Part VIII or under Section 45 of the Competition Act (Canada) in
respect of the Offer. Furthermore, notwithstanding any other term of the Offer
or this Agreement, Offeror shall not be required to commence the Offer, accept
for payment or, subject as aforesaid, pay for any Chieftain Shares not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, without the consent of Chieftain if, at any time on or after the date of
this Agreement and before the otherwise scheduled expiration date for the Offer,
any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or
proceeding by any Government Authority or person, (i)
challenging the acquisition by HOC or Offeror of any Chieftain
Shares, seeking to restrain or prohibit the making or
consummation of the Offer or the Second Stage Transaction, or
seeking to obtain from Chieftain, HOC or Offeror any damages
that are material in relation to Chieftain and its
subsidiaries taken as whole, (ii) seeking to prohibit or limit
the ownership or operation by Chieftain, HOC or any of their
respective subsidiaries of any material portion of the
business or assets of Chieftain and its subsidiaries or HOC
and its subsidiaries, or to compel Chieftain, HOC or any of
their respective subsidiaries to dispose of or hold separate
any material portion of the business or assets of Chieftain
and its subsidiaries or HOC and its subsidiaries, as a result
of the Offer or the Second Stage Transaction, (iii) seeking to
impose limitations on the ability of HOC or Offeror to acquire
or hold, or exercise full rights of ownership of, any
Chieftain Shares, including the right to vote the Chieftain
Shares purchased by it on all matters properly presented to
the shareholders of Chieftain or (iv) seeking to prohibit HOC
or any of its subsidiaries from effectively controlling in any
material respect the business or operations of Chieftain and
its subsidiaries;
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(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be threatened, proposed,
sought, enacted, entered, enforced, promulgated, amended or
issued with respect to, or deemed applicable to, or any
consent or approval withheld with respect to, (i) HOC,
Chieftain or any of their respective subsidiaries or (ii) the
Offer, the Second Stage Transaction by any Government
Authority that has a substantial likelihood of resulting,
directly or indirectly, in any of the consequences referred to
in paragraph (a) above;
(c) since March 31, 2001, there shall have occurred any event,
change, effect or development that, individually or in the
aggregate, has had or is reasonably likely to have, a Material
Adverse Effect;
(d) if there has been a breach of any representation or warranty
(when made or at such time, except to the extent it relates to
a particular date) on the part of Chieftain (provided that any
representation or warranty of Chieftain contained herein that
is subject to a "materiality," "Material Adverse Effect" or
similar qualification shall not be so qualified for purposes
of determining the existence of any breach thereof on the part
of Chieftain) except for such breaches that could not,
individually or in the aggregate with any other breaches on
the part of Chieftain, have a Material Adverse Effect on
Chieftain;
(e) Chieftain shall have failed to perform in any material respect
any obligation or to comply in any material respect with any
agreement or covenant of Chieftain to be performed or complied
with by it under this Agreement (provided that any covenant or
agreement of Chieftain contained herein the performance of
which is subject to a "materiality", "Material Adverse Effect"
or similar qualification shall not (except as otherwise
provided in this clause (e)) be so qualified for purposes of
determining the existence of any nonperformance thereof on the
part of Chieftain);
(f) if there is outstanding any regulatory approvals or regulatory
consents (including, without limitation, those required under
the Investment Canada Act and those of any stock exchanges or
other securities or regulatory authorities) the obtaining of
which is considered by Offeror as being necessary to complete
the Offer;
(g) there shall have occurred any actual or threatened change of
any nature whatsoever (including any proposal by the Minister
of Finance (Canada) to amend the Income Tax Act (Canada) or
any announcement, governmental or regulatory initiative,
condition, event or development involving a change or a
prospective change) that, in the sole judgment of Offeror,
directly or indirectly, has or may have material adverse
significance with respect to the business or operations of
Chieftain or its subsidiaries taken as a whole, or with
respect to the regulatory regime applicable to their business
and operations or with respect to completing any compulsory
acquisition or subsequent acquisition transaction;
(h) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any
United States or Canadian national securities
A-2
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exchange or in the over-the-counter market, (ii) a declaration
of a banking moratorium or any suspension of payments in
respect of banks in the United States or Canada (whether or
not mandatory), (iii) a commencement of a war, armed
hostilities or other international or national calamity
directly or indirectly involving the United States or Canada,
(iv) any limitation (whether or not mandatory) by any United
States or Canadian governmental or regulatory authority on the
extension of credit by banks or other financial institutions,
or (v) in the case of any of the foregoing existing as of the
date of the Offer, a material acceleration or worsening
thereof;
(i) all of the outstanding options to purchase Chieftain Shares
shall not have been either exercised, surrendered or
terminated or otherwise are subject to an Option Release;
(j) Section 2.5 of the Agreement shall have been breached in any
manner, any person shall have become an "Acquiring Person" as
defined in the Chieftain Rights Plan or the "Separation Time"
as defined in the Chieftain Rights Plan shall have occurred;
(k) this Agreement shall have been terminated in accordance with
its terms;
(l) HOC shall not have received an opinion, addressed jointly to
it and to Chieftain, from Cravath, Swaine & Xxxxx (or other
recognized United States tax counsel reasonably acceptable to
HOC) or other evidence from Chieftain reasonably satisfactory
to HOC in its sole judgement to the effect that no Taxes will
be imposed on Chieftain, Chieftain International (U.S.) Inc.,
Chieftain International Funding Corp. or any affiliates of any
of the foregoing as a result of (i) the Conditional Pref.
Conversion, (ii) the deemed or actual conversion of the
Funding Preferred Shares into Chieftain Shares, or (iii) the
tender and purchase of Chieftain Shares that are, or are to
be, issued pursuant to the Conditional Pref. Conversion; or
(m) an event shall have occurred that has resulted in an
adjustment to the "conversion price" under the terms of the
Funding Preferred Shares.
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SCHEDULE B
OPTIONS OUTSTANDING
CHIEFTAIN INTERNATIONAL, INC.
SHARE OPTIONS OUTSTANDING
The following table lists all share options outstanding as of March 31, 2001
-------------------------------------------------------------------------------
Share Option Share Options Proceeds from
Price Outstanding Exercise
-------------------------------------------------------------------------------
(000s)
$11.430 $ 39,000 $ 445,770
13.500 114,167 1,541,255
13.630 198,502 2,705,582
15.250 55,000 838,750
15.375 180,000 2,779,800
18.000 25,000 450,000
18.310 15,000 274,650
19.000 66,000 1,254,000
20.250 228,000 4,617,000
20.875 23,334 487,097
20.940 5,000 104,700
21.320 191,768 4,088,494
22.500 11,000 247,500
23.000 40,000 920,000
23.750 13,000 308,750
----------- ------------
TOTAL 1,205,571 $ 21,063,348
=========== ============
-------------------------------------------------------------------------------
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SCHEDULE C
FORM OF PRESS RELEASE
PRESS RELEASE
XXXX OIL COMPANY AGREES TO ACQUIRE
CHIEFTAIN INTERNATIONAL, INC. FOR U.S. $29.00 PER SHARE
DALLAS, TEXAS (JUNE 19, 2001)--Xxxx Oil Company of Dallas, Texas, and
Chieftain International, Inc. of Edmonton, Alberta, announced today that they
have entered into a definitive agreement under which a wholly-owned Canadian
subsidiary of Xxxx Oil will make an offer to pay U.S. $29.00 per share for all
of the common shares of Chieftain, including shares issuable on the exercise of
outstanding stock options and on the conversion of the outstanding preferred
shares of Chieftain's subsidiary, Chieftain International Funding Corp. The
offer will be mailed as soon as practicable and will expire 35 days after
mailing. It will be subject to the deposit under the offer of at least 66 2/3%
of the shares of Chieftain on a fully-diluted basis, all necessary regulatory
approvals and other customary conditions. The value of the offer, assuming all
shares are purchased on a fully-diluted basis, is approximately U.S. $600
million (approximately Cdn. $915 million).
The directors of Chieftain have received an opinion from CIBC World
Markets Inc., its financial advisor, that the consideration under the offer is
fair, from a financial point of view, to Chieftain's shareholders.
The offer has the unanimous support of the board of directors of
Chieftain. Chieftain's board has also resolved to waive the application of
Chieftain's shareholder rights plan to the Xxxx offer. The agreement provides
that Chieftain will pay Xxxx Oil a non-completion fee of U.S. $20 million in
certain circumstances.
Xxx X. Xxxx, the chairman and chief executive of Xxxx Oil Company,
stated, "We have the highest respect for the officers and directors of Chieftain
and the job they have done in terms of building their company over the years.
Chieftain's people and operations are first class in every respect. The
acquisition of Chieftain is a very positive development for Xxxx Oil Company."
Xxxxxxx X. Xxxxxx, Chieftain's president and chief executive officer,
stated, "This all cash offer at a time of market uncertainty represents a
transaction beneficial to the Chieftain shareholders and has been strongly
endorsed by our directors. Throughout the negotiations the Xxxx organization has
recognized the value of Chieftain."
Xxxxx X. Xxxxxxxx, the president of Xxxx Oil Company, said, "We are
very pleased with this acquisition. Chieftain has historically had great success
with the drill bit in one of our core areas of exploration - the Gulf of Mexico.
As a result, Chieftain, today, has a high quality portfolio of producing
reserves. Further, they have added additional reserves as a result of their
exploratory drilling in the first half of 2001. Chieftain also brings with it an
outstanding inventory of exploration acreage and prospects. These exploration
assets will complement Xxxx Oil Company's current efforts in the Gulf of Mexico
where we have also had a number of successes over the years."
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Xxxx Oil Company has engaged X.X. Xxxxxx Securities Inc. as its
financial advisor. X.X. Xxxxxx Securities Inc. and RBC Dominion Securities Inc.
will be appointed dealer managers for the offer in the United States and Canada,
respectively.
Privately held and based in Dallas, Texas, Xxxx Oil Company is engaged
in the exploration, production, refining, marketing and transportation of oil
and gas. The company's major areas of operation are in the Gulf Coast area of
the United States, the Republic of Yemen, Western Canada and Peru. In Peru, the
company is a major participant in the Camisea block, which contains the largest
proven reserves of natural gas in South America.
Chieftain is an independent natural gas and oil exploration and
production company active primarily in the U.S. Gulf of Mexico, in southeast
Utah and the U.K. sector of the North Sea. Headquartered in Edmonton, Alberta,
Chieftain's exploration offices are located in Dallas, Texas, and New Orleans,
Louisiana.
Chieftain's common shares trade on the Toronto Stock Exchange and the
American Stock Exchange under the symbol "CID." The preferred shares of
Chieftain International Funding Corp., each of which is exchangeable for 1.25
Chieftain common shares, trade on the American Stock Exchange under the symbol
"XXX.XX."
This release contains forward-looking statements that are subject to
risk factors associated with the oil and gas business. Chieftain believes that
the expectations reflected in these statements are reasonable, but may be
affected by a variety of factors including, but not limited to: price
fluctuations, currency fluctuations, drilling and production results,
imprecision of reserve estimates, loss of market, industry competition,
environmental risk, political risks and capital restrictions.
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell securities of Chieftain. The tender offer will be made pursuant
to a tender offer statement and related materials. Investors and security
holders are strongly advised to read both the tender offer statement and the
solicitation/recommendation statement or, as applicable, the directors' circular
regarding the tender offer when they become available because they will contain
important information. The tender offer statement will be filed by Xxxx Oil
Company and its acquisition subsidiary, Xxxx Oil Canadian Acquisition III
Corporation with the Securities and Exchange Commission (the "SEC") and with the
Canadian provincial securities regulatory authorities, if required, and
solicitations/recommendation statement and the directors' circular will be filed
by Chieftain respectively with the SEC and with the Canadian provincial
securities regulatory authorities. Investors and security holders may obtain a
free copy of these statements (when available) and other documents filed by
Chieftain at the SEC's website, xxx.xxx.xxx, and from Chieftain, upon request.
FOR FURTHER INFORMATION CONTACT:
Xxx Xxxxxxxxxx Xxxxxx X. Ondrack or Xxxxxxx X. Xxxx
Xxxx Oil Company Chieftain International, Inc.
1445 Xxxx at Field 0000 XX Xxxxx
Xxxxxx, Xxxxx 00000-0000 10088-102 Avenue
Telephone: (000) 000-0000 Edmonton, Alberta TSJ 2Z1
Telephone: (000) 000-0000
X-0
00
XXXXXXXX X
FORM OF OPTION RELEASE
OPTION SURRENDER AGREEMENT,
RELEASE AND WAIVER
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
To: Chieftain International, Inc., a corporation incorporated under the laws of
the province of Alberta (the "Company"):
I. AGREEMENT, RELEASE AND WAIVER
A. THE OFFER. The undersigned acknowledges that pursuant to the
Pre-Acquisition Agreement (the "Agreement"), dated as of June 18, 2001, by and
among the Company, Xxxx Oil Company, a Delaware corporation ("Parent") and Xxxx
Oil Canadian Acquisition III Corporation, a corporation incorporated under the
laws of the province of Alberta (the "Offeror "), the Offeror shall be making a
tender offer (the "Offer") for all outstanding shares in the share capital of
the Company (the "Shares").
B. CANCELLATION OPTION.
1. The undersigned is the holder of the number of options (the
"Options") set forth on Annex A hereto which have been issued to the undersigned
pursuant to the Company's share option plan (the "Share Option Plan"). To the
extent that the undersigned is the holder of any Options that have not been
surrendered for exercise pursuant to the Share Option Plan prior to the
Effective Time (as defined in the Agreement), the undersigned hereby agrees that
as of immediately after the Effective Time, all of such Options shall be
terminated. In consideration of such termination, the Company shall pay (subject
to any applicable withholding taxes) to the undersigned in respect of each such
terminated Option an amount (to the extent that such amount is positive) equal
to (x) the product of (i) the number of Shares issuable under such terminated
Option times (ii) the per share price paid pursuant to the Offer, minus (y) the
per Share exercise price under such Option.
2. The undersigned also acknowledges that all payments to be
made pursuant to this agreement will be paid by check promptly after the
Effective Time. The undersigned further acknowledges that the Company is not
required to make any payments to the undersigned pursuant to this agreement
unless his or her Options are outstanding (whether vested or unvested) at the
Effective Time. In addition, the undersigned acknowledges that all payments to
be made pursuant to this agreement may be subject to applicable withholding
taxes and other similar charges.
3. The undersigned, on behalf of himself or herself, and on
behalf of all spouses, heirs, predecessors, successors, assigns, representatives
or agents of the undersigned (including, without limitation, any trust of which
the undersigned is the trustee or which is for
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the benefit of the undersigned or a member of his or her family), to the
greatest extent permitted by law, hereby acknowledges that the payments to be
made pursuant to this agreement are in full satisfaction of any and all rights
the undersigned may have under the Share Option Plan with respect to Options
being surrendered hereby.
C. FURTHER ASSURANCES. The undersigned, upon request, will execute and
deliver any additional documents deemed by the Company to be reasonably
necessary or desirable to complete the surrender of the Options surrendered
hereby.
D. EFFECTIVENESS OF SURRENDER. This surrender is irrevocable by the
undersigned but will not be effective if the Agreement is terminated in
accordance with its terms.
F. EXERCISE. Nothing herein shall prevent the undersigned from
exercising his Options prior to the Effective Time including a Conditional
Option Exercise as contemplated by the Agreement.
-----------------------------
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SCHEDULE OF OWNERSHIP
[TO BE COMPLETED BY THE COMPANY]
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SCHEDULE E
EXCEPTIONS SCHEDULE
Subsequent to March 31, 2001, a distribution in the amount of $1.2
million was made in respect of the Chieftain International, Inc. Supplementary
Employee Retirement Plan and a distribution of $2.1 million was made in respect
of the directors' consulting/retirement agreement program.
E-1
