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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEVON ENERGY CORPORATION,
DEVON NEWCO CORPORATION,
DEVON HOLDCO CORPORATION,
DEVON MERGER CORPORATION,
XXXXXXXX MERGER CORPORATION
AND
XXXXXXXX ENERGY & DEVELOPMENT CORP.
DATED AS OF AUGUST 13, 2001
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 THE MERGER.................................................. A-4
Section 1.1 The Merger.................................................. A-4
Section 1.2 The Closing................................................. A-4
Section 1.3 Effective Time.............................................. A-4
Section 1.4 Certificate of Incorporation................................ A-4
Section 1.5 Bylaws...................................................... A-4
Section 1.6 Board of Directors.......................................... A-4
Section 1.7 Alternate Structure Event................................... A-4
ARTICLE 2 DIRECTORS OF PARENT......................................... A-5
Section 2.1 Directors of Parent......................................... A-5
ARTICLE 3 CONVERSION OF COMPANY SHARES................................ A-5
Section 3.1 Effect on Capital Stock..................................... A-5
Section 3.2 Exchange of Certificates for Shares......................... A-6
Section 3.3 Dissenters' Rights.......................................... A-8
Section 3.4 Adjustments to Prevent Dilution............................. A-8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-8
Section 4.1 Existence; Good Standing; Corporate Authority............... A-8
Section 4.2 Authorization, Validity and Effect of Agreements............ A-8
Section 4.3 Capitalization.............................................. A-9
Section 4.4 Significant Subsidiaries.................................... A-9
Section 4.5 No Violation................................................ A-9
Section 4.6 No Conflict................................................. A-10
Section 4.7 SEC Documents............................................... A-10
Section 4.8 Litigation and Liabilities.................................. A-11
Section 4.9 Absence of Certain Changes.................................. A-11
Section 4.10 Taxes....................................................... A-11
Section 4.11 Employee Benefit Plans...................................... A-12
Section 4.12 Labor Matters............................................... A-13
Section 4.13 Environmental Matters....................................... A-13
Section 4.14 Intellectual Property....................................... A-14
Section 4.15 Title to Properties......................................... A-14
Section 4.16 Insurance................................................... A-14
Section 4.17 No Brokers.................................................. A-15
Section 4.18 Opinions of Financial Advisors.............................. A-15
Section 4.19 Contracts; Debt Instruments................................. A-15
Section 4.20 Vote Required............................................... A-15
Section 4.21 Certain Approvals........................................... A-15
Section 4.22 Certain Contracts........................................... A-16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..... A-16
Section 5.1 Existence; Good Standing; Corporate Authority............... A-16
Section 5.2 Authorization, Validity and Effect of Agreements............ A-16
Section 5.3 Capitalization.............................................. A-16
Section 5.4 Significant Subsidiaries.................................... A-17
Section 5.5 No Violation................................................ A-17
Section 5.6 No Conflict................................................. A-18
Section 5.7 SEC Documents............................................... A-18
Section 5.8 Absence of Certain Changes.................................. X-00
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PAGE
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Section 5.9 No Brokers.................................................. A-19
Section 5.10 Opinion of Financial Advisor................................ A-19
Section 5.11 Vote Required............................................... A-19
Section 5.12 Financing................................................... A-20
Section 5.13 Litigation and Liabilities.................................. A-20
Section 5.14 Title to Properties......................................... A-20
ARTICLE 6..... COVENANTS................................................... A-20
Section 6.1 Conduct of Business......................................... A-20
Section 6.2 No Solicitation by the Company.............................. A-22
Section 6.3 Meetings of Stockholders.................................... A-23
Section 6.4 Filings; Reasonable Best Efforts............................ A-23
Section 6.5 Inspection.................................................. A-25
Section 6.6 Publicity................................................... A-25
Section 6.7 Registration Statement...................................... A-25
Section 6.8 Listing Applications........................................ A-26
Section 6.9 Letters of Accountants...................................... A-26
Section 6.10 Agreements of Affiliates.................................... A-26
Section 6.11 Expenses.................................................... A-27
Section 6.12 Indemnification and Insurance............................... A-27
Section 6.13 Employee Benefits........................................... A-28
Section 6.14 Reorganization.............................................. A-30
Section 6.15 Dividends................................................... A-30
ARTICLE 7..... CONDITIONS.................................................. A-30
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................... A-30
Section 7.2 Conditions to Obligation of the Company to Effect the
Merger...................................................... A-31
Section 7.3 Conditions to Obligation of Parent to Effect the Merger..... A-31
ARTICLE 8 TERMINATION................................................. A-32
Section 8.1 Termination by Mutual Consent............................... A-32
Section 8.2 Termination by Parent or the Company........................ A-32
Section 8.3 Termination by the Company.................................. A-32
Section 8.4 Termination by Parent....................................... A-33
Section 8.5 Effect of Termination....................................... A-33
Section 8.6 Extension; Waiver........................................... A-34
ARTICLE 9..... GENERAL PROVISIONS.......................................... A-34
Section 9.1 Nonsurvival of Representations, Warranties and Agreements... A-34
Section 9.2 Notices..................................................... A-34
Section 9.3 Assignment; Binding Effect; Benefit......................... A-35
Section 9.4 Entire Agreement............................................ A-35
Section 9.5 Amendments.................................................. A-35
Section 9.6 Governing Law; Jurisdiction; Waiver of Jury Trial........... A-36
Section 9.7 Counterparts................................................ A-36
Section 9.8 Headings.................................................... A-36
Section 9.9 Interpretation.............................................. A-36
Section 9.10 Waivers..................................................... A-37
Section 9.11 Incorporation of Exhibits................................... A-37
Section 9.12 Severability................................................ A-37
Section 9.13 Enforcement of Agreement.................................... A-37
Section 9.14 Obligation of Merger Sub, Alternate Holdco, Devon Merger Sub
and Xxxxxxxx Merger Sub..................................... X-00
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of August 13, 2001, is among Devon Energy Corporation, a Delaware
corporation ("Parent"); Devon NewCo Corporation, a Delaware corporation and a
direct and wholly owned subsidiary of Parent ("Merger Sub"); Devon Holdco
Corporation, a Delaware corporation and a direct and wholly owned subsidiary of
Parent ("Alternate Holdco"); Devon Merger Corporation, a Delaware corporation
and a direct and wholly owned subsidiary of Alternate Holdco ("Devon Merger
Sub"); Xxxxxxxx Merger Corporation, a
Texas corporation and a direct and wholly
owned subsidiary of Alternate Holdco ("Xxxxxxxx Merger Sub"); and Xxxxxxxx
Energy & Development Corp., a
Texas corporation (the "Company").
RECITALS
WHEREAS, this Agreement (entered into as of October 5, 2001) amends and
restates in its entirety the
Agreement and Plan of Merger, dated as of August
13, 2001 (which shall be deemed to be the date of this Agreement and the date on
which all representations and warranties herein shall be deemed to be made), by
and among Parent, Merger Sub and the Company;
WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub
and the Company have determined that the merger of the Company with and into
Merger Sub (the "Merger"), in the manner contemplated herein, is advisable and
in the best interests of their respective corporations and stockholders and, by
resolutions duly adopted, have approved and adopted this Agreement;
WHEREAS, the respective Boards of Directors of each of Parent, Alternate
Holdco, Devon Merger Sub, Xxxxxxxx Merger Sub and the Company have determined
that, if an Alternate Structure Event (as defined in Section 1.7 (a)) occurs,
the Alternate Mergers (as defined in Section 1.7 (b)) are advisable and in the
best interests of their respective corporations and stockholders and, by
resolutions duly adopted, have approved and adopted this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of section 368(a) of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder (the "Code") or, alternatively, if an Alternate Structure Event
occurs, it is intended that the Alternate Mergers qualify as nonrecognition
transactions under section 351 of the Code; and
WHEREAS, as a condition and inducement to the willingness of Parent to
enter into this Agreement, certain principal stockholders of the Company have
entered into a shareholders agreement with Parent pursuant to which such
stockholders have (i) agreed, among other things, to vote their shares of
Company common stock in favor of the approval of this Agreement and (ii) granted
to Parent an irrevocable proxy to vote their shares of Company common stock upon
the terms and conditions set forth therein (the "Principal Shareholders
Agreement").
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NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), the Company shall
be merged with and into Merger Sub in accordance with this Agreement, and the
separate corporate existence of the Company shall thereupon cease. Merger Sub
shall be the surviving corporation in the Merger and shall be a wholly owned
subsidiary of Parent (sometimes hereinafter referred to as the "Surviving
Corporation"). The Merger shall have the effects specified in the Delaware
General Corporation Law ("DGCL") and the
Texas Business Corporation Act (the
"TBCA"). At the election of Parent, any direct wholly owned subsidiary of Parent
may be substituted for Merger Sub as a constituent corporation in the Merger. In
such event, the parties hereto agree to execute an appropriate amendment to this
Agreement in order to reflect such substitution.
SECTION 1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of Xxxxx, Xxxxx & Xxxxx, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, at
9:00 a.m., local time, on the first business day immediately following the day
on which the last to be fulfilled or waived of the conditions set forth in
Article 7 (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to fulfillment or waiver of those conditions) shall
be fulfilled or waived in accordance herewith or (b) at such other time, date or
place as Parent and the Company may agree in writing. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
SECTION 1.3 Effective Time. If all the conditions to the Merger set forth
in Article 7 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 8, on the
Closing Date, a certificate of merger (the "Certificate of Merger") meeting the
requirements of Section 252 of the DGCL shall be properly executed and filed
with the Secretary of State of the State of Delaware and articles of merger (the
"Articles of Merger") meeting the requirements of Article 5.04 of the TBCA will
be filed with the Secretary of State of the State of
Texas. The Merger shall
become effective upon the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the DGCL and the issuance
of a certificate of merger by the Secretary of State of the State of
Texas in
accordance with the TBCA, or at such later time that the parties hereto shall
have agreed upon and designated in such filing as the effective time of the
Merger (the "Effective Time").
SECTION 1.4 Certificate of Incorporation. The certificate of
incorporation of Merger Sub in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation, until
duly amended in accordance with applicable law.
SECTION 1.5 Bylaws. The bylaws of Merger Sub in effect immediately prior
to the Effective Time shall be the bylaws of the Surviving Corporation, until
duly amended in accordance with applicable law.
SECTION 1.6 Board of Directors. The Board of Directors of the Surviving
Corporation shall consist of the Board of Directors of Merger Sub, as it existed
immediately prior to the Effective Time.
SECTION 1.7 Alternate Structure Event.
(a) Alternate Structure Event. An "Alternate Structure Event" shall have
occurred if, at any time prior to the Effective Time:
(i) all conditions to the Closing set forth in Article 7 have been
fulfilled or waived other than the conditions set forth in Section 7.2(b)or
7.3(b) and other than those conditions that by their nature are to be
satisfied at the Closing; and
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(ii) (A) in the case of the Company, the Company has used its
reasonable best efforts to obtain the opinion contemplated by Section
7.2(b) based on the assumption that the Closing Date would be the first
business day following the satisfaction of the conditions described in
Section 1.7(a)(i), but Xxxxxx & Xxxxxx L.L.P. has nonetheless advised the
Company that it is unable to deliver such an opinion or (B) in the case of
Parent, Parent has used its reasonable best efforts to obtain the opinion
contemplated by Section 7.3(b) based on the assumption that the Closing
Date would be the first business day following the satisfaction of the
conditions described in Section 1.7(a)(i), but Xxxxx, Xxxxx & Xxxxx has
nonetheless advised Parent that it is unable to deliver such an opinion.
(b) Effect of Alternate Structure Event. Upon the occurrence of an
Alternate Structure Event, without any further action on the part of any party
to this Agreement, this Agreement shall be deemed to be amended as follows: (1)
all references to the term "Merger" in this Agreement shall be deemed to be
references to the Alternate Mergers, (2) all references to the term "Parent
Common Stock" when used in the context of Parent Common Stock to be issued in
the Merger shall be deemed to be references to common stock to be issued by
Alternate Holdco in the Xxxxxxxx Merger (as defined in Exhibit B), and (3) this
Agreement shall be otherwise amended as set forth in Exhibit B. The Company and
Parent further agree that, in such event, any other appropriate adjustments
shall be made to the other terms and conditions of this Agreement to reflect the
transactions contemplated by this Section 1.7 with a view to ensuring that the
Company and Parent, and their respective stockholders, are placed in a position
that is as close as possible to the position that they would have been in but
for such restructuring. The mergers contemplated in this Section 1.7 and in
Exhibit B are sometimes referred to as the "Alternate Mergers."
(c) Other Actions Related to Consummation of Alternate
Mergers. Notwithstanding anything to the contrary set forth in this Agreement,
each of the Company and Parent shall cooperate in good faith with one another,
and use its reasonable best efforts, to take or cause to be taken all actions,
and to do or cause to be done, all things necessary, proper or advisable to
ensure that, if an Alternate Structure Event were to occur, the Alternate
Mergers could be consummated at the same time as the Merger would have been
consummated but for the Alternate Structure Event. For the avoidance of doubt,
such actions shall include, without limitation, compliance with the obligations
set forth in Sections 6.7(a) and 6.8.
ARTICLE 2
DIRECTORS OF PARENT
SECTION 2.1 Directors of Parent. At the Effective Time, the Board of
Directors of Parent shall consist of a number of persons as determined by
Parent. One member of the Board of Directors of Parent shall be J. Xxxx Xxxxxxxx
(the "Company Designee"). The Company Designee shall be appointed to fill a
vacancy on the Board of Directors existing immediately prior to the Effective
Time. If, prior to the Effective Time, the Company Designee becomes unavailable
or unwilling to serve, the Company shall designate a substitute designee
acceptable to Parent. If necessary to comply with this Section 2.1, Parent shall
cause to be presented to the meeting of its stockholders contemplated by Section
6.3 of this Agreement a proposal to amend Parent's certificate of incorporation
to increase the number of directors that constitutes the entire Board of
Directors.
ARTICLE 3
CONVERSION OF COMPANY SHARES
SECTION 3.1 Effect on Capital Stock. At the Effective Time, the Merger
shall have the following effects on the capital stock of the Company and Merger
Sub, without any action on the part of the holder of any capital stock of the
Company or Merger Sub:
(a) Conversion of the Company Common Stock. Subject to the provisions
of this Section 3.1 and Section 3.3, each share of Class A common stock,
$0.10 par value per share, of the Company (each a "Company Share" and
collectively the "Company Shares") issued and outstanding
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immediately prior to the Effective Time (but not including any Dissenting
Shares (as defined below) and any Company Shares that are (i) owned (A) by
Parent, Merger Sub or any other direct or indirect Subsidiary of Parent or
(B) by the Company or any direct or indirect Subsidiary of the Company and
(ii) are not held on behalf of third parties (collectively, the "Excluded
Company Shares")) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into (i) the right to receive
$31.00 in cash (the "Cash Consideration") and (ii) 0.585 of a share (the
"Exchange Ratio") of Parent Common Stock (the "Stock Consideration" and,
together with the Cash Consideration, the "Merger Consideration"). "Parent
Common Stock" shall mean the common stock, par value $0.10 per share, of
Parent.
(b) Cancellation of Excluded Company Shares. Each Excluded Company
Share issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, no longer be outstanding, shall be canceled and retired without
payment of any consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of common stock,
par value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one share of common
stock of the Surviving Corporation, and the Surviving Corporation shall
thereby become a wholly owned subsidiary of Parent.
SECTION 3.2 Exchange of Certificates for Shares.
(a) Exchange Procedures. At or prior to the Effective Time, Parent shall
deposit with the Exchange Agent, in trust for the benefit of the holders of
Company Shares, an amount in cash and certificates representing shares of Parent
Common Stock required to effect the conversion of the Company Shares into the
Merger Consideration pursuant to Section 3.1(a). Parent shall make sufficient
funds available to an exchange agent (the "Exchange Agent"), selected by Parent
with the Company's prior approval, which shall not be unreasonably withheld,
from time to time as needed to pay cash in respect of dividends or other
distributions in accordance with Section 3.2(b). Promptly after the Effective
Time, but in no event later than three business days following the Closing Date,
the Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record as of the Effective Time of a certificate representing Company Shares
(each a "Certificate") (other than holders of a Certificate in respect of
Excluded Company Shares) (i) a letter of transmittal specifying that delivery of
the Certificates shall be effected, and that risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or, in lieu of
such Certificates, affidavits of loss together with either a reasonable
undertaking to indemnify Parent or the Company, if Parent believes that the
person providing the indemnity is sufficiently creditworthy, or, if Parent does
not so believe, indemnity bonds) to the Exchange Agent, such letter of
transmittal to be in such form and have such other provisions as Parent and the
Company may reasonably agree, and (ii) instructions for exchanging the
Certificates and receiving the Merger Consideration to which such holder shall
be entitled therefore pursuant to Section 3.1(a). Subject to Section 3.2(g),
upon surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor (i) a certificate representing
that number of whole shares of Parent Common Stock that such holder is entitled
to receive pursuant to Section 3.1(a) and (ii) a check in the aggregate amount
(after giving effect to any required tax withholdings) of (A) the cash that such
holder is entitled to receive pursuant to Section 3.1(a) plus (B) any cash in
lieu of fractional shares determined in accordance with Section 3.2(d) plus (C)
any cash dividends and any other dividends or other distributions that such
holder has the right to receive pursuant to the provisions of this Section 3.2.
The Certificate so surrendered shall forthwith be canceled. No interest will be
paid or accrued on any amount payable upon due surrender of any Certificate. In
the event of a transfer of ownership of Company Shares that occurred prior to
the Effective Time, but is not registered in the transfer records of the
Company, the Merger Consideration may be issued and/or paid to such a transferee
if the Certificate formerly representing such Company Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. If any certificate for shares of Parent Common Stock is to be issued in a
name other than that in which the Certificate
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surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the Person requesting such exchange shall pay any transfer or
other taxes required by reason of the issuance of certificates for shares of
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of Parent or the
Exchange Agent that such tax has been paid or is not applicable.
(b) Distributions with Respect to Unexchanged Shares. Whenever a dividend
or other distribution is declared by Parent in respect of Parent Common Stock,
the record date for which is at or after the Effective Time, that declaration
shall include dividends or other distributions in respect of all shares of
Parent Common Stock issuable pursuant to this Agreement. No dividends or other
distributions so declared in respect of such Parent Common Stock shall be paid
to any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Section 3.2. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be issued or paid, less the amount of any withholding taxes that may be
required thereon, to the holder of the certificates representing whole shares of
Parent Common Stock issued in exchange for such Certificate, without interest,
(i) at the time of such surrender, the dividends or other distributions with a
record date that is at or after the Effective Time and a payment date on or
prior to the date of surrender of such whole shares of Parent Common Stock and
not previously paid and (ii) at the appropriate payment date, the dividends or
other distributions payable with respect to such whole shares of Parent Common
Stock with a record date at or after the Effective Time but with a payment date
subsequent to surrender. For purposes of dividends or other distributions in
respect of shares of Parent Common Stock, all shares of Parent Common Stock to
be issued pursuant to the Merger shall be deemed issued and outstanding as of
the Effective Time.
(c) Transfers. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Company Shares that were
outstanding immediately prior to the Effective Time.
(d) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Common Stock will be issued and any
holder of Company Shares entitled to receive a fractional share of Parent Common
Stock (after taking into account the aggregate number of shares of Parent Common
Stock to be received in exchange for all shares held by such holder) but for
this Section 3.2(d) shall be entitled to receive in lieu thereof an amount in
cash (without interest) determined by multiplying such fraction (rounded to the
nearest one-hundredth of a share) by the average closing price of a share of
Parent Common Stock, as reported in The Wall Street Journal, Southwestern
edition, on the five trading days immediately prior to the last business day
before the Effective Time.
(e) Termination of Exchange Period; Unclaimed Merger Consideration. Any
shares of Parent Common Stock and any portion of the cash, dividends or other
distributions with respect to the Parent Common Stock deposited by Parent with
the Exchange Agent (including the proceeds of any investments thereof) that
remain unclaimed by the stockholders of the Company 180 days after the Effective
Time shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article 3 shall thereafter be entitled to look
only to Parent for payment of their Merger Consideration and any cash, dividends
and other distributions in respect thereof issuable and/or payable pursuant to
Section 3.1, Section 3.2(b) and Section 3.2(d) upon due surrender of their
Certificates (or, in lieu of such Certificates, affidavits of loss together with
either a reasonable undertaking to indemnify Parent or the Company, if Parent
believes that the Person providing the indemnity is sufficiently creditworthy,
or, if Parent does not so believe, indemnity bonds), in each case, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation, the Exchange Agent or any other Person shall be liable to any
former holder of Company Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(f) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed, and if Parent believes that the Person providing the indemnity is
sufficiently creditworthy, the making of a reasonable undertaking to indemnify
Parent or the Company, or, if Parent
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does not so believe, the posting by such Person of a bond in the form
customarily required by Parent to indemnify against any claim that may be made
against it with respect to such Certificate, Parent will issue the shares of
Parent Common Stock and the Exchange Agent will distribute such Merger
Consideration, dividends and other distributions in respect thereof issuable or
payable in exchange for such lost, stolen or destroyed Certificate pursuant to
Section 3.1, Section 3.2(b) and Section 3.2(d), in each case, without interest.
(g) Affiliates. Notwithstanding anything in this Agreement to the
contrary, Certificates surrendered for exchange by any Rule 145 Affiliate (as
determined pursuant to Section 6.10) of the Company shall not be exchanged until
Parent has received a written agreement from such Person as provided in Section
6.10.
SECTION 3.3 Dissenters' Rights. Company Shares that are outstanding
immediately prior to the Effective Time and that are held by stockholders who
shall have not voted in favor of the Merger and who shall have made written
demand for payment of the fair value for such shares in accordance with Section
5.12 of the TBCA (collectively, the "Dissenting Shares") shall not be converted
into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the fair value of the
Company Shares held by them in accordance with the TBCA, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
Company Shares under the TBCA shall thereupon be deemed to have been converted
into and to be exchangeable, as of the Effective Time, for Merger Consideration
in the manner provided in Section 3.1(a).
SECTION 3.4 Adjustments to Prevent Dilution. In the event that prior to
the Effective Time, there shall have been declared or effected a
reclassification, stock split (including a reverse split), stock dividend, stock
distribution or similar event made with respect to the Company Shares or the
Parent Common Stock, the Merger Consideration shall be equitably adjusted to
reflect such event.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered to Parent
concurrently with the execution hereof (the "Company Disclosure Letter") or as
disclosed with reasonable specificity in the Company Reports (as defined in
Section 4.7), the Company represents and warrants to Parent that:
SECTION 4.1 Existence; Good Standing; Corporate Authority. The Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of
Texas. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of any jurisdiction
in which the character of the properties owned or leased by it therein or in
which the transaction of its business makes such qualification necessary, except
where the failure to be so qualified would not have or reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect (as
defined in Section 9.9). The Company has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted. The copies of the Company's articles of incorporation and
bylaws previously made available to Parent are true and correct and contain all
amendments as of the date hereof.
SECTION 4.2 Authorization, Validity and Effect of Agreements. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements and documents contemplated hereby, to which
it is a party. The consummation by the Company of the transactions contemplated
hereby has been duly authorized by all requisite corporate action, other than,
with respect to the Merger or the Xxxxxxxx Merger, as the case may be, the
approval and adoption of this Agreement by the Company's stockholders. This
Agreement constitutes the valid and legally binding obligation of the Company to
the extent it is a party, enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
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SECTION 4.3 Capitalization. The authorized capital stock of the Company
consists of 200,000,000 Company Shares, and 10,000,000 shares of the Company
preferred stock, par value $0.10 per share ("Company Preferred Stock"). As of
August 10, 2001, there were (a) 49,911,612 Company Shares issued and
outstanding, (b) no shares of Company Preferred Stock issued and outstanding,
(c) 2,136,588 Company Shares subject to outstanding employee stock options, of
which the weighted average exercise price was approximately $27.67 per share and
(d) 1,056,257 Company bonus units outstanding, of which the weighted average
Designation Date Price (as defined in the Bonus Unit Plan) was approximately
$31.85 per unit. All issued and outstanding Company Shares (i) are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights, (ii) were not issued in violation of the terms of any agreement or other
understanding binding upon the Company and (iii) were issued in compliance with
all applicable charter documents of the Company and all applicable federal and
state securities laws, rules and regulations. Except as set forth in this
Section 4.3 and except for any Company Shares issued pursuant to the plans
described in the Company Disclosure Letter, there are no outstanding shares of
capital stock and there are no options, warrants, calls, subscriptions,
shareholder rights plan or similar instruments, convertible securities, or other
rights, agreements or commitments which obligate the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of the Company or any of its Subsidiaries. The Company has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter.
SECTION 4.4 Significant Subsidiaries. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Securities Exchange Act (the "Exchange Act"). Each
of the Company's Significant Subsidiaries is a corporation, limited liability
company or partnership duly organized, validly existing and in good standing
(where applicable) under the laws of its jurisdiction of incorporation or
organization, has the corporate or partnership power and authority to own,
operate and lease its properties and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing (where
applicable) in each jurisdiction in which the ownership, operation or lease of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing would not have or reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. All of the outstanding shares
of capital stock of, or other ownership interests in, each of the Company's
Significant Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by the Company free and
clear of all liens, pledges, security interests, claims, preferential purchase
rights or other rights, interests or encumbrances ("Liens"). Schedule 4.4 to the
Company Disclosure Letter sets forth for each Significant Subsidiary of the
Company, its name and jurisdiction of incorporation or organization.
SECTION 4.5 No Violation. Neither the Company nor any of its Subsidiaries
is, or has received notice that it would be with the passage of time, in
violation of any term, condition or provision of (a) its charter documents or
bylaws, (b) any loan or credit agreement, note, bond, mortgage, indenture,
contract, agreement, lease, license or other instrument or (c) any order of any
court, governmental authority or arbitration board or tribunal, or any law,
ordinance, governmental rule or regulation to which the Company or any of its
Subsidiaries or any of their respective properties or assets is subject, or is
delinquent with respect to any report required to be filed with any governmental
entity, except, in the case of matters described in clause (b) or(c), as would
not have or reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except where it would not have a Company
Material Adverse Effect, the Company and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
governmental authorities necessary for the lawful conduct of their respective
businesses (the "Company Permits") and the Company and its Subsidiaries are in
compliance with the terms of the Company Permits. No investigation by any
governmental authority with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company, threatened, other than those that
would not have or reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
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SECTION 4.6 No Conflict.
(a) Neither the execution and delivery by the Company of this Agreement nor
the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof will: (i) conflict with or result in a breach
of any provisions of the charter documents or bylaws of the Company; (ii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of the Company or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, or
otherwise result in a detriment to the Company or any of its Subsidiaries under
any of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, Company Permit, lease, contract, agreement, joint
venture or other instrument or obligation to which the Company or any of its
Subsidiaries is a party, or by which the Company or any of its Subsidiaries or
any of their properties is bound or affected; or (iii) contravene or conflict
with or constitute a violation of any provision of any law, rule, regulation,
judgment, order or decree binding upon or applicable to the Company or any of
its Subsidiaries, except, in the case of matters described in clause (ii) or
(iii), as would not have or reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this Agreement nor
the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof or thereof will require any consent, approval
or authorization of, or filing or registration with, any governmental or
regulatory authority, other than (i) the filings provided for in Article l and
(ii) filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Exchange Act, the Securities Act or
applicable state securities and "Blue Sky" laws and applicable foreign
competition or antitrust laws ((i) and (ii) collectively, the "Regulatory
Filings"), except for any consent, approval or authorization the failure of
which to obtain and for any filing or registration the failure of which to make
would not prevent the consummation of the Merger or the Xxxxxxxx Merger, as the
case may be, or otherwise prevent the Company from performing its obligations
under this Agreement and would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(c) Other than as contemplated by Section 4.6(b), no consents, assignments,
waivers, authorizations or other certificates are necessary in connection with
the transactions contemplated hereby to provide for the continuation in full
force and effect of all of the Company's material contracts or leases or for the
Company to consummate the transactions contemplated hereby, except when the
failure to receive such consents or other certificates would not have or
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(d) Except as set forth on Schedule 4.6(d) to the Company Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in any
payment from the Company or its Subsidiaries (including severance, unemployment
compensation, parachute payment, bonus or otherwise) becoming due to any
director, employee or independent contractor of the Company or any of its
Subsidiaries under any Company Plan (as defined in Section 4.11) or otherwise;
(ii) increase any benefits otherwise payable under any Company Plan or
otherwise; or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
SECTION 4.7 SEC Documents. The Company has made available to Parent each
registration statement, report, proxy statement or information statement (other
than preliminary materials) filed by the Company with the Securities and
Exchange Commission ("SEC") since January 1, 2000, each in the form (including
exhibits and any amendments thereto) filed with the SEC prior to the date hereof
(collectively, the "Company Reports"), and the Company has filed all forms,
reports and documents required to be filed by it with the SEC pursuant to
relevant securities statutes, regulations, policies and rules since such time.
As of their respective dates, the Company Reports (i) were prepared in
accordance with the applicable requirements of the Securities Act of 1933
("Securities Act"), the Exchange Act, and
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the rules and regulations thereunder and complied with the then applicable
accounting requirements and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified by subsequent filings with the SEC prior to the date
hereof. Each of the consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and schedules)
fairly presents the consolidated financial position of the Company and its
Subsidiaries as of its date and each of the consolidated statements of earnings,
cash flows and stockholders' equity included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presents the results of operations, cash flows or changes in stockholders'
equity, as the case may be, of the Company and its Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to such
exceptions as may be permitted by Form 10-Q of the SEC), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein.
SECTION 4.8 Litigation and Liabilities. There are no actions, suits or
proceedings pending against the Company or any of its Subsidiaries or, to the
Company's knowledge, threatened against the Company or any of its Subsidiaries,
at law or in equity, or before or by any federal, state or foreign commission,
board, bureau, agency or instrumentality, other than those that would not have
or reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. There are no outstanding judgments, decrees,
injunctions, awards or orders against the Company or any of its Subsidiaries,
other than those that would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. There are
no obligations or liabilities of any nature, whether or not accrued, contingent
or otherwise and whether or not required to be disclosed, including those
relating to environmental and occupational safety and health matters, or any
other facts or circumstances that could result in any claims against, or
obligations or liabilities of, the Company or any of its affiliates, except for
those that would not have or reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
SECTION 4.9 Absence of Certain Changes. Since December 31, 2000, the
Company has conducted its business only in the ordinary and usual course of
business, and during such period there have not been (i) events, conditions,
actions, occurrences or omissions that would have or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect; (ii) any change by the Company or any of its Subsidiaries in any of its
accounting methods, principles or practices or any of its tax methods, practices
or elections, except for changes required by generally accepted accounting
principles; (iii) any material damage, destruction, or loss to the business or
properties of the Company and its Subsidiaries (whether or not covered by
insurance) taken as a whole; (iv) any declaration, setting aside or payment of
any dividend (other than ordinary quarterly dividends of $0.1325 per share) or
other distribution in respect of the capital stock of the Company, or any direct
or indirect redemption, purchase or any other acquisition by the Company of any
such stock; (v) any change in the capital stock or in the number of shares or
classes of the Company's authorized or outstanding capital stock (other than as
a result of issuances under the Company Plans or exercises of options to
purchase the Company Shares outstanding or issued as permitted hereunder); (vi)
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock purchase
or other employee benefit plan, except in the ordinary course of business; or
(vii) any event, condition, action, occurrence or omission that is prohibited on
or after the date of this Agreement under Section 6.1 of this Agreement.
SECTION 4.10 Taxes.
(a) Each of the Company, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or, since January 1, 1991, was a member has (i) duly filed (or there has been
filed on its behalf) on a timely basis (taking into account any extensions of
time to file before the date hereof) with appropriate governmental authorities
all tax returns, statements, reports, declarations, estimates and forms
("Returns") required to be filed by or with respect to it, except to the
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extent that any failure to file would not have or reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, and
(ii) duly paid or deposited in full on a timely basis or made adequate
provisions in accordance with generally accepted accounting principles (or there
has been paid or deposited or adequate provision has been made on its behalf)
for the payment of all taxes required to be paid by it other than those being
contested in good faith by the Company or a Subsidiary of the Company and except
to the extent that any failure to pay or deposit or make adequate provision for
the payment of such taxes would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) (i) The federal income tax returns of the Company and each of its
Subsidiaries have been examined by the Internal Revenue Service (the "IRS") (or
the applicable statutes of limitation for the assessment of federal income taxes
for such periods have expired) for all periods; (ii) except to the extent being
contested in good faith, all material deficiencies asserted as a result of such
examinations and any other examinations of the Company and its Subsidiaries by
any taxing authority have been paid fully, settled or adequately provided for in
the financial statements contained in the Company Reports; (iii) as of the date
hereof, neither the Company nor any of its Subsidiaries has granted any
requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any taxes with respect to any
Returns of the Company or any of its Significant Subsidiaries that will be
outstanding as of the Effective Time; (iv) neither the Company nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any tax
sharing, allocation or indemnity agreement or any similar agreement or
arrangement that would have or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (v) there
are no tax liens on any assets of the Company or its Subsidiaries except for
taxes not yet currently due, with respect to matters being contested by the
Company in good faith for which adequate reserves are reflected in the financial
statements and those which could not reasonably be expected,individually or in
the aggregate, to result in a Company Material Adverse Effect; and (vi) neither
the Company nor any of its Subsidiaries is a party to an agreement that provides
for the payment of any amount that would constitute a "parachute payment" within
the meaning of section 280G of the Code.
For purposes of this Agreement, "tax" or "taxes" means all federal, state,
county, local, foreign or other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, accumulated earnings, personal holding, excess
profits, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, disability, capital stock, or
windfall profits taxes, customs duties or other taxes, fees, assessments or
governmental charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign).
SECTION 4.11 Employee Benefit Plans. For purposes of this Section 4.11,
the Company Subsidiaries shall include any enterprise which, with the Company,
forms or formed a controlled group of corporations, a group of trades or
business under common control or an affiliated service group, within the meaning
of section 414(b), (c) or (m) of the Code. All employee benefit plans, programs,
arrangements and agreements covering active, former or retired employees of the
Company and the Company Subsidiaries which provide material benefits to such
employees are listed in the Company Disclosure Letter (the "Company Plans"). The
Company has made available to Parent true, complete and correct copies of each
Company Plan, any related trust agreement, annuity or insurance contract or
other funding vehicle, and, except as would not have or reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect:
(a) each Company Plan has been maintained and administered in compliance with
its terms and is, to the extent required by applicable law or contract, fully
funded without having any deficit or unfunded actuarial liability or adequate
provision has been made therefor; (b) all required employer contributions under
any such plans have been made and the applicable funds have been funded in
accordance with the terms thereof, (c) each Company Plan that is required or
intended to be qualified under applicable law or registered or approved by a
governmental agency or authority has been so qualified, registered or approved
by the appropriate governmental agency or authority, and nothing has occurred
since the date of the last qualification, registration or approval to adversely
affect, or cause, the
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appropriate governmental agency or authority to revoke such qualification,
registration or approval; (d) to the extent applicable, the Company Plans
comply, in all respects, with the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Code and any other applicable
tax act and other laws, and any Company Plan intended to be qualified under
section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified and nothing has occurred to cause the loss of such qualified
status; (e) no Company Plan is covered by Title IV of ERISA or section 412 of
the Code; (f) there are no pending or anticipated claims against or otherwise
involving any of the Company Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of the Company
Plan activities) has been brought against or with respect to any Company Plan;
(g) all contributions, reserves or premium payments required to be made as of
the date hereof to the Company Plans have been made or provided for; (h) neither
the Company nor any Company Subsidiary has incurred or reasonably expects to
incur any liability under subtitle C or D of Title IV of ERISA with respect to
any "single-employer plan," within the meaning of section 4001(a)(15) of ERISA,
currently or formerly maintained by the Company, any Company Subsidiary or any
entity which is considered one employer with the Company under section 4001 of
ERISA; (i) neither the Company nor any Company Subsidiary has incurred or
reasonably expects to incur any withdrawal liability under subtitle E of Title
IV of ERISA with respect to any "multi-employer plan," within the meaning of
section 4001(a)(3) of ERISA; and (j) neither the Company nor any Company
Subsidiary has any obligations for retiree health and life benefits under any
Company Plan.
SECTION 4.12 Labor Matters.
(a) Neither the Company nor any of its Subsidiaries is a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization.
(b) Neither the Company nor any of its Subsidiaries is subject to a
dispute, strike or work stoppage with respect to any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization to which it is a party or by which it is bound that would
have or would be reasonably expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(c) To the Company's knowledge, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened involving employees of the Company or any of its Subsidiaries.
SECTION 4.13 Environmental Matters.
(a) Except as would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, there are
not any present or, to the knowledge of the Company, past conditions or
circumstances that interfere with the conduct of the business of the Company and
each of its Subsidiaries in the manner now conducted or which interfere with
compliance with any order of any court, governmental authority or arbitration
board or tribunal, or any law, ordinance, governmental rule or regulation
related to human health or the environment ("Environmental Law");
(b) Except as would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, there are
not any present or, to the knowledge of the Company, past conditions or
circumstances at, or arising out of, any current or, to the knowledge of the
Company, former businesses, assets or properties of the Company or any
Subsidiary of the Company, including but not limited to, on-site or off-site
disposal or release of any chemical substance, product or waste, which
constitute a violation under any Environmental Law or could reasonably be
expected to give rise to: (i) liabilities or obligations for any cleanup,
remediation, disposal or corrective action under any Environmental Law or (ii)
claims arising for personal injury, property damage, or damage to natural
resources;
(c) Except as would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, neither the
Company nor any of its Subsidiaries has (i) received any notice of noncompliance
with, violation of, or liability or potential liability under any Environmental
Law,
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(ii) received any notice regarding any existing, pending or threatened
investigation or inquiry related to alleged violations under any Environmental
Laws or regarding any claims for remedial obligations or contribution under any
Environmental Laws or (iii) entered into any consent decree or order or is
subject to any order of any court or governmental authority or tribunal under
any Environmental Law or relating to the cleanup of any hazardous materials
contamination;
(d) Except as would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, the Company
and its Subsidiaries have in full force and effect all material environmental
permits, licenses, approvals and other authorizations required to conduct their
operations and are operating in material compliance thereunder; and
(e) Except as would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, the Company
does not know of any reason that would preclude it from renewing or obtaining a
reissuance of the material permits, licenses or other authorizations required
pursuant to any applicable Environmental Laws to operate and use any of the
Company's or its Subsidiaries' assets for their current purposes and uses.
SECTION 4.14 Intellectual Property. The Company and its Subsidiaries own
or possess all necessary licenses or other valid rights to use all patents,
patent rights, trademarks, trademark rights and proprietary information used or
held for use in connection with their respective businesses as currently being
conducted, free and clear of Liens, except where the failure to own or possess
such licenses and other rights would not have or would not be reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, and there are no assertions or claims challenging the validity of any of
the foregoing which would have or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Except in
the ordinary course of business, neither the Company nor any of its Subsidiaries
has granted to any other person any license to use any of the foregoing. The
conduct of the Company's and its Subsidiaries' respective businesses as
currently conducted does not conflict with any patents, patent rights, licenses,
trademarks, trademark rights, trade names, trade name rights or copyrights of
others in a way which would have, or would be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect. There is no
infringement of any proprietary right owned by or licensed by or to the Company
or any of its Subsidiaries in a way which would have, or would be reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
SECTION 4.15 Title to Properties. Except for goods and other property
sold, used or otherwise disposed of since December 31, 2000 in the ordinary
course of business for fair value, the Company has defensible title for oil and
gas purposes to all its properties, interests in properties and assets, real and
personal, reflected in its December 31, 2000 financial statements, free and
clear of any Lien, except: (a) Liens reflected in the balance sheet of the
Company as of December 31, 2000; (b) Liens for current taxes not yet due and
payable; and (c) such imperfections of title, easements and Liens that would not
have or be reasonably expected to have, individually or in the aggregate, a
Company Material Adverse Effect. All leases and other agreements pursuant to
which the Company or any of its Subsidiaries leases or otherwise acquires or
obtains operating rights affecting any real or personal property are in good
standing, valid, and effective; and there is not, under any such leases, any
existing or prospective default or event of default or event which with notice
or lapse of time, or both, would constitute a default by the Company or any of
its Subsidiaries that would not have or be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect. All
operating equipment of the Company and its Subsidiaries is in good operating
condition, ordinary wear and tear excepted. The Company has not received any
material advance, take-or-pay or other similar payments that entitle purchasers
of production to receive deliveries of hydrocarbons without paying therefor,
and, on a net, company-wide basis, the Company is neither underproduced nor
overproduced under gas balancing or similar arrangements.
SECTION 4.16 Insurance. The Company and its Subsidiaries maintain
insurance coverage adequate and customary in the industry for the operation of
their respective businesses.
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SECTION 4.17 No Brokers. The company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Parent, Merger Sub or the Company pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that the Company has retained Xxxxxxx, Xxxxx & Co.
and X.X. Xxxxxx Securities Inc. to act as its financial advisors in connection
with the Merger and render the opinions referred to in Section 4.18, the terms
of which have been disclosed in writing to Parent prior to the date hereof.
SECTION 4.18 Opinions of Financial Advisors. The Board of Directors of
the Company has received the opinion of Xxxxxxx, Xxxxx & Co. and X.X. Xxxxxx
Securities Inc. to the effect that, as of the date of this Agreement, the Merger
Consideration is fair, from a financial point of view, to the holders of the
Company Shares (other than Parent); it being understood and acknowledged by
Parent that each such opinion has been rendered for the benefit of the Board of
Directors of the Company, and is not intended to, and may not, be relied upon by
Parent, its affiliates or their respective Subsidiaries.
SECTION 4.19 Contracts; Debt Instruments.
(a) Except as disclosed on Schedule 4.19 of the Company Disclosure Letter,
there are no contracts that are material to the business, properties, assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole ("Material Contracts"). Neither the Company nor any of its
Subsidiaries is in violation of or in default under (nor does there exist any
condition which with the passage of time or the giving of notice or both would
cause such a violation of or default under) any Material Contract to which it is
a party or by which it or any of its properties or assets is bound, except for
violations or defaults that have not and could not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Each Material Contract is in full force and effect, and is a legal,
valid and binding obligation of the Company or a Company Subsidiary and, to the
knowledge of the Company, each of the other parties thereto, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity. No condition exists or event has
occurred which (whether with or without notice or lapse of time or both) would
constitute a default by the Company or a Company Subsidiary or, to the knowledge
of the Company, any other party thereto under any Material Contract or result in
a right of termination of any Material Contract.
(b) Set forth in Schedule 4.19(b) of the Company Disclosure Letter is (i) a
list of all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any indebtedness of the
Company or its Subsidiaries in an aggregate principal amount in excess of
$5,000,000 is outstanding or may be incurred, and (ii) the respective principal
amounts currently outstanding thereunder.
(c) Neither the Company nor any of its Subsidiaries has entered into any
contract and there is no commitment, judgment, injunction, order or decree to
which the Company or any of its Subsidiaries is a party or subject to that has
or could reasonably be expected to have the effect of prohibiting or impairing
the conduct of business by the Company or any of its Subsidiaries or any
contract that may be terminable as a result of Parent's status as a competitor
of any party to such contract or arrangement.
SECTION 4.20 Vote Required. The affirmative vote of holders of two-thirds
of the outstanding Company Shares is the only vote necessary to approve this
Agreement and the transactions contemplated hereby (the "Company Requisite
Vote").
SECTION 4.21 Certain Approvals. The Company's Board of Directors has
taken any and all necessary and appropriate action to render inapplicable to the
Merger, the Alternate Mergers and the transactions contemplated by this
Agreement and the Principal Shareholders Agreement the provisions of Section
13.03 of the TBCA and any other "fair price," "moratorium," control share
acquisition, interested shareholder or other similar antitakeover provision or
regulation and any restrictive provision of any antitakeover provision in the
articles of incorporation or bylaws of the Company.
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SECTION 4.22 Certain Contracts. Neither the Company nor any of its
Subsidiaries is a party to or bound by (i) any non-competition agreement or any
other agreement or obligation which purports to limit the manner in which, or
the localities in which, the current business of the Company and its
Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a
whole, is conducted or (ii) any executory agreement or obligation which pertains
to the acquisition or disposition of any asset, or which provides any third
party any lien, claim or preferential right with regard thereto, except, in the
case of this clause (ii), for such agreements or obligations that would not have
or be reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure letter delivered to the Company
concurrently with the execution hereof (the "Parent Disclosure Letter") or as
disclosed with reasonable specificity in the Parent Reports (as defined in
Section 5.7), Parent and Merger Sub, jointly and severally, represent and
warrant to the Company that:
SECTION 5.1 Existence; Good Standing; Corporate Authority. Each of Parent
and Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Each of Parent and Merger Sub
is duly qualified to do business as a foreign corporation and is in good
standing under the laws of any jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have or reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect (as defined in Section 9.9).
Each of Parent and Merger Sub has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted. As of the date hereof, the copies of each of Parent's and Merger
Sub's certificate of incorporation and bylaws previously made available to the
Company are true and correct and contain all amendments.
SECTION 5.2 Authorization, Validity and Effect of Agreements. Each of
Parent and Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement and all other agreements and documents contemplated
hereby, to which it is a party. The consummation by each of Parent and Merger
Sub of the transactions contemplated hereby, including the issuance and delivery
by Parent of shares of Parent Common Stock pursuant to the Merger, has been duly
authorized by all requisite corporate action, other than, with respect to the
Merger or the Devon Merger, as the case may be, the approval and adoption of
this Agreement by Parent's stockholders. This Agreement constitutes the valid
and legally binding obligation of each of Parent and Merger Sub to the extent it
is a party, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
SECTION 5.3 Capitalization. The authorized capital stock of Parent
consists of 400,000,000 shares of Parent Common Stock, one share of Parent
Special Voting Stock, par value $0.10 per share, and 4,500,000 shares of
Parent's preferred stock, par value $1.00 per share "Parent Preferred Stock").
As of August 10, 2001, there were (a) 125,983,553 shares of Parent Common Stock
issued and outstanding, (b) one share of Parent Special Voting Stock issued and
outstanding, (c) 5,842,587 shares of Parent Common Stock reserved for issuance
under the stock options plans of Parent described in the Parent Disclosure
Letter, (d) 125,444 shares of Parent Common Stock reserved for issuance under
the Parent Restricted Stock Award Plan, (e) 40,646 shares of Parent Common Stock
reserved for issuance under certain conditional stock awards granted to former
employees of PennzEnergy Company, (f) 2,128,248 shares reserved for issuance
upon exchange of outstanding exchangeable shares ("Northstar Exchangeable
Shares") issued by Northstar Energy Corporation, an Alberta corporation
("Northstar"), (g) 1,500,000 shares of Parent Preferred Stock designated as
6.49% Cumulative Preferred Stock, Series A, issued and outstanding and (h)
1,000,000 unissued shares of Parent Preferred Stock designated as Series A
Junior Participating Preferred Stock. All issued and outstanding shares of
Parent Common Stock (i) are duly
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authorized, validly issued, fully paid, nonassessable and, except as set forth
in the Parent Disclosure Letter, free of preemptive rights, (ii) were not issued
in violation of the terms of any agreement or other understanding binding upon
Parent and (iii) were issued in compliance with all applicable charter documents
of Parent and all applicable federal and state securities laws, rules and
regulations. One right to purchase Series A Junior Participating Preferred Stock
of Parent (each, a "Parent Right") issued pursuant to a Rights Agreement, dated
as of August 17, 1999 (the "Parent Rights Agreement"), between Parent and
BankBoston, N.A., is associated with and attached to each outstanding share of
Parent Common Stock. The shares of Parent Common Stock to be issued in
connection with the Merger, when issued in accordance with this Agreement, will
be validly issued, fully paid and nonassessable. As of the date of this
Agreement, except as set forth in this Section 5.3 and except for any shares of
Parent Common Stock issued pursuant to the plans described in the Parent
Disclosure Letter or otherwise issuable as described in the Parent Disclosure
Letter, there are no outstanding shares of capital stock and there are no
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate Parent or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Parent or any of its Subsidiaries. As of the date of this
Agreement, Parent has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Parent on any matter.
SECTION 5.4 Significant Subsidiaries.
(a) Each of Parent's Significant Subsidiaries is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing (where applicable) under the laws of its jurisdiction of incorporation
or organization, has the corporate, limited liability company or partnership
power and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing (where applicable) in each jurisdiction in which the
ownership, operation or lease of its property or the conduct of its business
requires such qualification, except for jurisdictions in which such failure to
be so qualified or to be in good standing would not have or reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. All of the outstanding shares of capital stock of, or other ownership
interests in, each of Parent's Significant Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Parent free and clear of all Liens. Schedule 5.4 to the Parent
Disclosure Letter sets forth for each Significant Subsidiary of Parent its name
and jurisdiction of incorporation or organization.
(b) Devon Energy Production Company, L.P. ("Devon Production"), a
Significant Subsidiary, is a limited partnership (except for tax purposes) duly
organized and validly existing under Oklahoma law, the general partner of which
is Devon Energy Management Company, L.L.C., an Oklahoma limited liability
company which is wholly owned by Devon Energy Corporation (Oklahoma), an
Oklahoma corporation, and has elected to be treated as a sole proprietorship for
federal income tax purposes. Devon Production has one limited partner. All of
the outstanding partnership interests of Devon Production are owned directly or
indirectly by Parent.
(c) All of the outstanding shares of capital stock of Merger Sub are owned
directly by Parent. Merger Sub was formed solely for the purpose of engaging in
the transactions contemplated hereby and has not engaged in any activities other
than in connection with the transactions contemplated by this Agreement.
SECTION 5.5 No Violation. Neither Parent nor any of its Subsidiaries is,
or has received notice that it would be with the passage of time, in violation
of any term, condition or provision of (a) its charter documents or bylaws, (b)
any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license or other instrument or (c) any order of any court,
governmental authority or arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which Parent or any of its Subsidiaries or
any of their respective properties or assets is subject, or is delinquent with
respect to any report required to be filed with any governmental entity, except,
in the case of matters described in
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clause (b) or (c), as would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Except as
would not have a Parent Material Adverse Effect, Parent and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders, franchises and
approvals of all governmental authorities necessary for the lawful conduct of
their respective businesses (the "Parent Permits") and Parent and its
Subsidiaries are in compliance with the terms of the Parent Permits. No
investigation by any governmental authority with respect to Parent or any of its
Subsidiaries is pending or, to the knowledge of Parent, threatened, other than
those that would not have or reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.
SECTION 5.6 No Conflict.
(a) Neither the execution and delivery by Parent and Merger Sub of this
Agreement nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict with
or result in a breach of any provisions of the charter documents or bylaws of
Parent or Merger Sub; (ii) violate, or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or give rise to a
right of purchase under, or accelerate the performance required by, or result in
the creation of any Lien upon any of the properties of Parent or its
Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in a detriment to Parent or any of
its Subsidiaries under any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement, joint venture or other instrument or obligation to which
Parent or any of its Subsidiaries is a party, or by which Parent or any of its
Subsidiaries or any of their properties is bound or affected; or (iii)
contravene or conflict with or constitute a violation of any provision of any
law, rule, regulation, judgment, order or decree binding upon or applicable to
Parent or any of its Subsidiaries, except, in the case of matters described in
clause(ii) or (iii), as would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) Neither the execution and delivery by Parent or Merger Sub of this
Agreement nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, other than Regulatory Filings, and (i) in
the case of the Merger, listing on the AMEX of the Parent Common Stock to be
issued in the Merger and issuable pursuant to the Assumed Options and (ii) in
the case of the Alternate Mergers, listing on the AMEX of the Alternate Holdco
common stock to be issued in the Alternate Mergers and issuable pursuant to
exercise of the Assumed Options and Devon Assumed Options (as defined in Exhibit
B) and exchange of the Northstar Exchange Shares and Zero Coupon Convertible
Debentures (as defined in Exhibit B), except, in each case, for any consent,
approval or authorization the failure of which to obtain and for any filing or
registration the failure of which to make would not prevent the consummation of
the Merger or the Alternate Mergers, as the case may be, or otherwise prevent
Parent from performing its obligations under this Agreement and would not have
or reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(c) Other than as contemplated by Section 5.6(b), no consents, assignments,
waivers, authorizations or other certificates are necessary in connection with
the transactions contemplated hereby to provide for the continuation in full
force and effect of all of Parent's material contracts or leases or for Parent
to consummate the transactions contemplated hereby, except when the failure to
receive such consents or other certificates would not have or reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
SECTION 5.7 SEC Documents. Parent has made available to the Company each
registration statement, report, proxy statement or information statement (other
than preliminary materials) filed by Parent with the SEC since January 1, 2000,
each in the form (including exhibits and any amendments thereto) filed with the
SEC prior to the date hereof (collectively, the "Parent Reports"), and Parent
has filed all forms, reports and documents required to be filed by it with the
SEC pursuant to relevant
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securities statutes, regulations, policies and rules since such time. As of
their respective dates, the Parent Reports (i) were prepared in accordance with
the applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder and complied with the then applicable
accounting requirements and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified by subsequent filings with the SEC prior to the date
hereof. Each of the consolidated balance sheets included in or incorporated by
reference into the Parent Reports (including the related notes and schedules)
fairly presents the consolidated financial position of Parent and its
Subsidiaries as of its date and each of the consolidated statements of
operations, cash flows and stockholders' equity included in or incorporated by
reference into the Parent Reports (including any related notes and schedules)
fairly presents the results of operations, cash flows or changes in
stockholders' equity, as the case may be, of Parent and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to such
exceptions as may be permitted by Form 10-Q of the SEC), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein.
SECTION 5.8 Absence of Certain Changes. Since December 31, 2000, Parent
has conducted its business only in the ordinary and usual course of business,
and during such period there have not been (i) events, conditions, actions,
occurrences or omissions that would have or would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect; (ii)
any change by Parent or any of its Subsidiaries in any of its accounting
methods, principles or practices or any of its tax methods, practices or
elections, except for changes required by generally accepted accounting
principles; or (iii) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock of Parent (except for, and
provided that, Parent may continue to pay or cause to be paid, dividends upon
the shares of Parent Common Stock and the Northstar Exchangeable Shares at a
rate not greater than $.05 per share in any quarter and dividends upon its 6.49%
cumulative preferred stock).
SECTION 5.9 No Brokers. Other than UBS Warburg LLC, Parent has not
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of Parent, Merger Sub or the Company to pay
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
SECTION 5.10 Opinion of Financial Advisor. The Board of Directors of
Parent has received the opinion of UBS Warburg LLC to the effect that, as of the
date of this Agreement, the Merger Consideration is fair, from a financial point
of view, to Parent; it being understood and acknowledged by Parent that such
opinion has been rendered for the benefit of the Board of Directors of Parent,
and is not intended to, and may not, be relied upon by the Company, its
affiliates or their respective Subsidiaries.
SECTION 5.11 Vote Required. The affirmative vote of the holders of a
majority of the votes cast in person or by proxy by holders of Parent Common
Stock and the outstanding Northstar Exchangeable Shares, voting as a single
class with the Parent Special Voting Share voting for the Northstar Exchangeable
Shares as provided in Parent's charter, represented in person or by proxy at a
meeting at which a quorum is present, approving the issuance of shares of Parent
Common Stock required to be issued pursuant to Article 3, is the only vote of
the holders of any class or series of Parent capital stock necessary to approve
this Agreement and the transactions contemplated hereby (the "Parent Requisite
Vote"); provided, however, (a) if a proposal to amend Parent's certificate of
incorporation is presented at the meeting for approval pursuant to Section 2.1
hereof or (b) if the Devon Merger (as defined in Exhibit B) is presented for
shareholder approval, then, in either case, the Parent Requisite Vote will be
the affirmative vote of the holders of a majority of the outstanding shares of
Parent Common Stock and the outstanding Northstar Exchangeable Shares, voting as
a single class with the Parent Special Voting Share voting for the Northstar
Exchangeable Shares as provided in Parent's charter.
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SECTION 5.12 Financing. Parent has available to it sources of financing
sufficient to satisfy its obligation to make the payment of the aggregate cash
consideration when such payment is required pursuant to this Agreement.
SECTION 5.13 Litigation and Liabilities. There are no actions, suits or
proceedings pending against Parent or any of its Subsidiaries or, to Parent's
knowledge, threatened against Parent or any of its Subsidiaries, at law or in
equity, or before or by any federal, state or foreign commission, board, bureau,
agency or instrumentality, other than those that would not have or be reasonably
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. There are no outstanding judgments, decrees, injunctions, awards or
orders against Parent or any of its Subsidiaries, other than those that would
not have or be reasonably expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
SECTION 5.14 Title to Properties. Except for goods and other property
sold, used or otherwise disposed of since December 31, 2000 in the ordinary
course of business for fair value, Parent has defensible title for oil and gas
purposes to all its properties, interests in properties and assets, real and
personal, reflected in its December 31, 2000 financial statements, free and
clear of any Lien, except: (a) Liens reflected in the balance sheet of Parent as
of December 31, 2000; (b) Liens for current taxes not yet due and payable and
(c) such imperfections of title, easements and Liens that would not have or be
reasonably expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
ARTICLE 6
COVENANTS
SECTION 6.1 Conduct of Business. Prior to the Effective Time, except as
set forth in the Company Disclosure Letter or as expressly contemplated by any
other provision of this Agreement, including Schedule 6.13, unless Parent has
consented in writing thereto, the Company:
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(b) shall use its reasonable best efforts, and shall cause each of its
Subsidiaries to use its reasonable best efforts, to preserve intact their
business organizations and goodwill, keep available the services of their
respective officers and employees and maintain satisfactory relationships
with those persons having business relationships with them;
(c) shall not amend its articles of incorporation or bylaws;
(d) shall promptly notify Parent of any material change in its
financial condition or business or any material litigation or material
governmental complaints, investigations or hearings (or communications in
writing indicating that such litigation, complaints, investigations or
hearings may be contemplated), or the breach in any material respect of any
representation or warranty contained herein;
(e) shall promptly deliver or otherwise make available to the other
true and correct copies of any report, statement or schedule filed with the
SEC subsequent to the date of this Agreement;
(f) shall not (i) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on the
date hereof and disclosed in the Company Disclosure Letter, issue any
shares of its capital stock, effect any stock split or otherwise change its
capitalization as it existed on the date hereof; (ii) grant, confer or
award any option, warrant, conversion right or other right not existing on
the date hereof to acquire any shares of its capital stock except the grant
of options to new employees consistent with past practice in an amount not
to exceed 100,000 Company Shares or pursuant to contractual commitments
existing on the date of this Agreement and disclosed in the Company
Disclosure Letter; (iii) increase any compensation or benefits, except in
the ordinary course of business consistent with past practice, or enter
into or amend any employment agreement with any
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of its present or future officers or directors, except with new employees
consistent with past practice, or (iv) adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase plan) or amend
(except as required by law) any existing employee benefit plan in any
material respect, except for changes which are less favorable to
participants in such plans;
(g) shall not, and, in the case of clause (ii) below, shall not permit
any of its Subsidiaries to (i) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of its
capital stock (other than the Company's ordinary quarterly dividends
payable with respect to the Company Common Stock of $0.1325 per share) or
(ii) redeem, purchase or otherwise acquire any shares of its capital stock
or capital stock of any of its Subsidiaries or any option, warrant,
conversion right or other right to acquire such shares, or make any
commitment for any such action;
(h) shall not, and shall not permit any of its Subsidiaries to, sell,
lease or otherwise dispose of any of its assets (including capital stock of
Subsidiaries) which are material to the Company, individually or in the
aggregate, except in the ordinary course of business;
(i) shall not, and shall not permit any of its Subsidiaries to, except
pursuant to contractual commitments in effect on the date hereof and
disclosed in the Company Disclosure Letter and except for amounts that in
the aggregate do not exceed $3,000,000, authorize, propose, agree to, enter
into or consummate any merger, consolidation or business combination
transaction (other than the Merger or the Xxxxxxxx Merger) or acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof;
(j) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(k) shall, and shall cause any of its Subsidiaries to, use reasonable
best efforts to maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are
customary for such party;
(l) shall not, and shall not permit any of its Subsidiaries to, except
where it would not have and would not be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i)
make or rescind any express or deemed election relating to taxes, including
elections for any and all joint ventures, partnerships, limited liability
companies, working interests or other investments where it has the capacity
to make such binding election, (ii) settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to taxes, or (iii) change in any respect any of its
methods of reporting any item for federal income tax purposes from those
employed in the preparation of its federal income tax return for the most
recent taxable year for which a return has been filed, except as may be
required by applicable law;
(m) shall not, nor shall it permit any of its Subsidiaries to, (i)
incur any indebtedness for borrowed money (except under credit lines in
existence as of the date of this Agreement) or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or any of its Subsidiaries or
guarantee any debt securities of others, (ii) except in the ordinary course
of business, enter into any material lease (whether such lease is an
operating or capital lease) or create any material mortgages, liens,
security interests or other encumbrances on the property of Parent or the
Company or any of their Subsidiaries in connection with any indebtedness
thereof, or (iii) make or commit to make aggregate capital expenditures in
excess of $50 million over the fiscal 2001 capital expenditures budget
disclosed in reasonable detail on the Company Disclosure Letter;
(n) subject to Section 6.4, shall not take any action that is likely
to delay materially or adversely affect the ability of any of the parties
hereto to obtain any consent, authorization, order or approval of any
governmental commission, board or other regulatory body or the expiration
of any applicable waiting period required to consummate the Merger;
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(o) shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its
respective Subsidiaries is a party; and during such period shall enforce,
to the fullest extent permitted under applicable law, the provisions of
such agreement, including by obtaining injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States of America or any state having
jurisdiction;
(p) shall not enter into or amend any agreement with any holder of
Company Shares with respect to holding, voting or disposing of shares;
(q) shall not by resolution of its Board of Directors cause the
acceleration of rights, benefits or payments under any Company Plans;
(r) shall not enter into any additional forward sales contracts, fixed
price purchase or sale contracts, fixed price financial swaps, collars,
options or other hedging arrangements with respect to its oil production
and more than 10% of its budgeted gas production for the year 2001, and, in
any event, for a term longer than 12 months; or
(s) shall not, nor shall it permit any of its Subsidiaries to, agree
in writing or otherwise to take any of the foregoing actions.
SECTION 6.2 No Solicitation by the Company.
(a) The Company agrees that it and its Subsidiaries (i) will not (and it
will not permit their officers, directors, employees, agents or representatives,
including any investment banker, attorney or accountant retained by it or any of
its Subsidiaries to) solicit, initiate or encourage (including by way of
furnishing material non-public information) any inquiry, proposal or offer
(including any proposal or offer to its stockholders) with respect to a third
party tender offer, merger, consolidation, business combination or similar
transaction involving any assets or class of capital stock of the Company, or
any acquisition of 10% or more of the capital stock (other than upon exercise of
the options to purchase Company Common Stock that are outstanding as of the date
hereof) or 10% or more of the assets of the Company and its subsidiaries, taken
as a whole, in a single transaction or a series of related transactions, or any
combination of the foregoing (any such proposal, offer or transaction being
hereinafter referred to as a "Company Acquisition Proposal") or participate or
engage in any discussions or negotiations concerning a Company Acquisition
Proposal; and (ii) will immediately cease and cause to be terminated any
existing negotiations with any third parties conducted heretofore with respect
to any of the foregoing; provided that, subject to Section 6.3(b), nothing
contained in this Agreement shall prevent the Company or its Board of Directors
from (A) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a Company Acquisition Proposal or (B) prior to the Cutoff Date (as
defined below), providing information (pursuant to a confidentiality agreement
containing terms identical in all material respects to the terms of the
confidentiality agreement, dated June 21, 2001, entered into between the Company
and Parent (the "Company/Parent Confidentiality Agreement")) to or engaging in
any negotiations or discussions with any person or entity who has made an
unsolicited bona fide Company Acquisition Proposal if (x) in the good faith
judgment of the Company's Board of Directors, taking into account the likelihood
of consummation and after consultation with its financial advisors, such Company
Acquisition Proposal is reasonably likely to result in a transaction more
favorable to the holders of the Company Shares from a financial point of view
than the Merger and (y) the Board of Directors of the Company, after
consultation with its outside legal counsel, determines in good faith that the
failure to do so would be inconsistent with its fiduciary obligations under
applicable law.
(b) The Company will promptly (but in any event within 24 hours) notify
Parent of any requests referred to in Section 6.2(a) for information or the
receipt of any Company Acquisition Proposal, including the identity of the
person or group engaging in such discussions or negotiations, requesting such
information or making such Company Acquisition Proposal, and the material terms
and conditions of any Company Acquisition Proposal, and shall keep Parent
informed on a timely basis (but in any event within 24 hours) of any material
changes with respect thereto. Prior to taking any action referred to in the
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proviso of Section 6.2(a), if the Company intends to participate in any such
discussions or negotiations or provide any such information to any such third
party, the Company shall give prompt prior notice to Parent of each such action.
(c) Nothing in this Section 6.2 shall permit the Company to enter into any
agreement with respect to a Company Acquisition Proposal during the term of this
Agreement, it being agreed that, during the term of this Agreement, the Company
shall not enter into any agreement with any person that provides for, or in any
way facilitates, a Company Acquisition Proposal, other than a confidentiality
agreement containing terms identical in all material respects to the terms of
the Company/Parent Confidentiality Agreement.
(d) For purposes hereof, the "Cutoff Date" means the date the Company
Requisite Vote has been obtained.
SECTION 6.3 Meetings of Stockholders.
(a) The Company will take all action necessary in accordance with
applicable law and its articles of incorporation and bylaws to convene as
promptly as practicable a meeting of its stockholders for purposes of obtaining
the Company Requisite Vote to approve those matters under this Agreement
(whether or not they are contingent on the occurrence of an Alternate Structure
Event) that could require such a vote. Parent will take all action necessary in
accordance with applicable law and its certificate of incorporation and bylaws
to convene as promptly as practicable a meeting of its stockholders for purposes
of obtaining the Parent Requisite Vote to approve those matters under this
Agreement (whether or not they are contingent on the occurrence of an Alternate
Structure Event) that could require such a vote.
(b) The Company and Parent, through their respective Boards of Directors,
shall recommend approval of such matters; provided that the Board of Directors
of the Company or Parent may at any time prior to the Effective Time withdraw,
modify, or change any recommendation regarding this Agreement or the
transactions contemplated hereby, or recommend and declare advisable any other
offer or proposal, if its Board of Directors determines in good faith after
consultation with its outside counsel that the failure to so withdraw, modify,
or change its recommendation would be inconsistent with its fiduciary
obligations under applicable law. Each of the Company and Parent shall be
required to comply with its obligations under Section 6.3(a) whether or not its
Board of Directors withdraws, modifies, or changes its recommendation regarding
this Agreement or the transactions contemplated hereby or recommends any other
offer or proposal.
(c) In the event that stockholders of the Company or Parent fail to approve
this Agreement at a meeting (or any adjournment or postponement thereof) at
which such stockholders considered and voted on this Agreement, the parties
shall negotiate in good faith for at least 20 days to attempt to revise the
structure and terms of the Merger to allow the combination of the respective
businesses of Parent and the Company on terms they regard as likely to be
approved by such stockholders.
SECTION 6.4 Filings; Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided, the Company and
Parent shall:
(i) promptly (but in not more than 20 business days from the date
hereof) make their respective filings under the HSR Act with respect to the
Merger (including any submissions required for the Alternate Mergers) and
thereafter shall promptly make any other required submissions under the HSR
Act;
(ii) use their reasonable best efforts to satisfy the conditions to
closing in Article 7 (including, in the case of the Company, obtaining the
opinion described in Section 7.2(b) and, in the case of Parent, obtaining
the opinion described in Section 7.3(b)) and to cooperate with one another
in (a) determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from
governmental or regulatory authorities of the United States, the several
states, and foreign jurisdictions in connection with the execution and
delivery of this Agreement and the consummation
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of the Merger or the Alternate Mergers and the transactions contemplated
hereby; and (b) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations;
(iii) promptly notify each other of any communication concerning this
Agreement or the Merger or the Alternate Mergers to that party from any
governmental authority and permit the other party to review in advance any
proposed communication concerning this Agreement or the Merger or the
Alternate Mergers to any governmental entity;
(iv) not agree to participate in any meeting or discussion with any
governmental authority in respect of any filings, investigation or other
inquiry concerning this Agreement or the Merger or the Alternate Mergers
unless it consults with the other party in advance and, to the extent
permitted by such governmental authority, gives the other party the
opportunity to attend and participate thereat;
(v) furnish the other party with copies of all correspondence, filings
and communications (and memoranda setting forth the substance thereof)
between them and their affiliates and their respective representatives on
the one hand, and any government or regulatory authority or members or
their respective staffs on the other hand, with respect to this Agreement
and the Merger or the Alternate Mergers; and
(vi) furnish the other party with such necessary information and
reasonable assistance as such other parties and their respective affiliates
may reasonably request in connection with their preparation of necessary
filings, registrations or submissions of information to any governmental or
regulatory authorities, including without limitation, any filings necessary
or appropriate under the provisions of the HSR Act.
(b) Without limiting Section 6.4(a), Parent and the Company shall:
(i) each use its reasonable best efforts to avoid the entry of, or to
have vacated or terminated, any decree, order or judgment that would
restrain, prevent or delay the Closing, including without limitation
defending through litigation on the merits any claim asserted in any court
by any party; and
(ii) each use reasonable best efforts to avoid or eliminate each and
every impediment under any antitrust, competition or trade regulation law
that may be asserted by any governmental entity with respect to the Merger
or the Alternate Mergers so as to enable the Closing to occur as soon as
reasonably possible (and in any event no later than 60 days following the
termination of all applicable waiting periods under the HSR Act, unless the
parties are in litigation with the government, in which case at the
conclusion of such litigation).
(c) Notwithstanding anything to the contrary in this Agreement, (i) the
Company shall not, without Parent's prior written consent, commit to any
divestitures, licenses, hold separate arrangements or similar matters, including
covenants affecting business operating practices (or allow its Subsidiaries to
commit to any divestitures, licenses, hold separate arrangements or similar
matters), and the Company shall commit to, and shall use reasonable best efforts
to effect (and shall cause its Subsidiaries to commit to and use reasonable best
efforts to effect), any such divestitures, licenses, hold separate arrangements
or similar matters as Parent shall request, but solely if such divestitures,
licenses, hold separate arrangements or similar matters are contingent on
consummation of the Merger or the Alternate Mergers and (ii) neither Parent nor
any of its Subsidiaries shall be required (pursuant to Section 6.4(a)(ii) or
otherwise) to agree (with respect to (x) Parent or its Subsidiaries or (y) the
Company or its Subsidiaries) to any divestitures, licenses, hold separate
arrangements or similar matters, including covenants affecting business
operating practices, if such divestitures, licenses, arrangements or similar
matters, individually or in the aggregate, would have or reasonably be expected
to have a Parent Material Adverse Effect or a Company Material Adverse Effect.
(d) Except as provided below, nothing in this Section 6.4 or any other part
of this Agreement shall require Parent to refrain from entering into any
agreement with respect to, or issuing Parent Common Stock or other consideration
in connection with, a business combination with, or an acquisition of, a third
party after the date of this Agreement and prior to the Effective Time (a
"Subsequent Transaction");
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provided, however, that Parent has a good faith belief at the time it enters
into the definitive agreement calling for any such Subsequent Transaction that
such Subsequent Transaction is not reasonably likely to prevent or delay
satisfaction of any of the conditions set forth in Article 7. In the event of a
Subsequent Transaction which would be permissible under the preceding sentence,
Parent shall agree to any divestitures, licenses, hold separate arrangements or
similar matters (including covenants affecting business operating practices)
necessary in order to obtain prompt approval of the transactions contemplated by
this Agreement under applicable competition laws that would not otherwise have
been required in order to obtain such approval but for the Subsequent
Transaction. For the avoidance of doubt, the parties agree that it was not a
breach of this Agreement for Parent to enter into the Pre-Acquisition Agreement,
dated as of August 31, 2001, between Parent and Xxxxxxxx Exploration Ltd.
SECTION 6.5 Inspection. From the date hereof to the Effective Time, the
Company and Parent shall allow all designated officers, attorneys, accountants
and other representatives of the other party access at all reasonable times upon
reasonable notice to the records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs of the Company and its Subsidiaries or Parent and its Subsidiaries,
including inspection of such properties; provided that no investigation pursuant
to this Section 6.5 shall affect any representation or warranty given by any
party hereunder, and provided further that notwithstanding the provision of
information or investigation by any party, no party shall be deemed to make any
representation or warranty except as expressly set forth in this Agreement.
Notwithstanding the foregoing, neither party shall be required to provide any
information which it reasonably believes it may not provide to the other party
by reason of applicable law, rules or regulations, which that party reasonably
believes constitutes information protected by attorney/client privilege, or
which it is required to keep confidential by reason of contract or agreement
with third parties. The parties hereto will make reasonable and appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply. The Company and Parent agree that they will
not, and will cause their representatives not to, use any information obtained
pursuant to this Section 6.5 for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement.
SECTION 6.6 Publicity. The parties will consult with each other and will
mutually agree upon any press releases or public announcements pertaining to
this Agreement or the transactions contemplated hereby and shall not issue any
such press releases or make any such public announcements prior to such
consultation and agreement, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make
such public announcement shall use its reasonable best efforts to consult in
good faith with the other party before issuing any such press releases or making
any such public announcements.
SECTION 6.7 Registration Statement.
(a) Each of Parent, Alternate Holdco and the Company shall cooperate and
promptly prepare and Parent and Alternate Holdco shall file with the SEC as soon
as practicable a Registration Statement on Form S-4 under the Securities Act
(the "Registration Statement") and any amendments required thereto with respect
to the Parent Common Stock issuable in the Merger or the Alternate Holdco common
stock issuable in the Alternate Mergers if an Alternate Structure Event occurs.
A portion of the Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of the stockholders of Parent and of the
Company in connection with the Merger or the Alternate Mergers (the "Proxy
Statement/Prospectus"). The respective parties will cause the Proxy
Statement/Prospectus and the Registration Statement to comply as to form in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. Parent and Alternate
Holdco shall use their reasonable best efforts, and the Company will cooperate
with Parent and Alternate Holdco, to have the Registration Statement declared
effective by the SEC as promptly as practicable. Parent and Alternate Holdco
shall use their reasonable best efforts to obtain, prior to the effective date
of the Registration Statement, all necessary state securities law or "Blue Sky"
permits or approvals required to carry out the transactions contemplated by this
Agreement and will pay all expenses incident thereto.
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Parent will advise the Company, promptly after it receives notice thereof, of
the time when the Registration Statement has become effective or any supplement
or amendment has been filed, the issuance of any stop order, the suspension of
the qualification of the Parent Common Stock issuable in connection with the
Merger or the Alternate Holdco common stock issuable in connection with the
Alternate Mergers for offering or sale in any jurisdiction, or any request by
the SEC for amendment of the Proxy Statement/ Prospectus or the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information.
(b) Each of Parent and the Company will use its reasonable best efforts to
cause the Proxy Statement/Prospectus to be mailed to its stockholders as
promptly as practicable after the date hereof.
(c) Each of Parent and the Company agrees that the information provided by
it for inclusion in the Proxy Statement/Prospectus and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
respective meetings of stockholders of Parent and of the Company, or, in the
case of information provided by it for inclusion in the Registration Statement
or any amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 6.8 Listing Applications. Parent shall use its reasonable best
efforts to cause the Parent Common Stock to be issued in the Merger to be
approved for listing on the AMEX prior to the Effective Time, subject to
official notice of issuance. Parent shall promptly prepare and submit to the
AMEX a supplemental listing application covering the shares of Parent Common
Stock issuable in the Merger and shares issuable pursuant to Assumed Options (as
defined below). Parent and Alternate Holdco shall use their reasonable best
efforts to cause the Alternate Holdco common stock to be issued pursuant to the
Alternate Mergers and upon exercise of the Assumed Options (if an Alternate
Structure Event occurs) to be approved for listing on the AMEX prior to the
Effective Time (as defined in Exhibit B), subject to official notice of
issuance.
SECTION 6.9 Letters of Accountants.
(a) If requested to do so by Parent, the Company shall use its reasonable
best efforts to cause to be delivered to Parent and Alternate Holdco "comfort"
letters of Xxxxxx Xxxxxxxx LLP, the Company's independent public accountants,
dated the effective date of the Registration Statement and the Closing Date,
respectively, and addressed to Parent and Alternate Holdco with regard to
certain financial information regarding the Company included in the Registration
Statement, in form reasonably satisfactory to Parent and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(b) If requested to do so by the Company, Parent shall use its reasonable
best efforts to cause to be delivered to the Company "comfort" letters of KPMG
LLP, Parent's independent public accountants, dated the effective date of the
Registration Statement and the Closing Date,respectively, and addressed to the
Company, with regard to certain financial information regarding Parent included
in the Registration Statement, in form reasonably satisfactory to the Company
and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
SECTION 6.10 Agreements of Affiliates. Prior to the Effective Time, the
Company shall cause to be prepared and delivered to Parent a list identifying
all persons who, at the time of the meeting or the meeting of the Company's
stockholders pursuant to Section 6.3, the Company believes may be deemed to be
"affiliates" of the Company, as that term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act (the "Rule 145 Affiliates"). Parent or
Alternate Holdco, as the case may be, shall be entitled to place restrictive
legends on any shares of Parent Common Stock or Alternate Holdco common stock
received by such Rule 145 Affiliates. The Company shall use its reasonable best
efforts to cause each person who is identified as a Rule 145 Affiliate in such
list to deliver to Parent and Alternate Holdco, at or prior to the Effective
Time, a written agreement, in the form attached hereto as Exhibit A.
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SECTION 6.11 Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, except as expressly provided in Section 8.5.
SECTION 6.12 Indemnification and Insurance.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to indemnify, defend and hold harmless to the fullest extent
permitted under applicable law each person who is, or has been at any time prior
to the Effective Time, an officer or director of the Company (or any Subsidiary
or division thereof) and each person who served at the request of the Company as
a director, officer, trustee or fiduciary of another corporation, partnership,
joint venture, trust, pension or other employee benefit plan or enterprise
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an"Action"), (i) Parent shall cause
the Surviving Corporation to pay, as incurred, the fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to Parent, in advance of the final disposition of any such Action to the fullest
extent permitted by applicable law, and, if required, upon receipt of any
undertaking required by applicable law, and (ii) Parent will, and will cause the
Surviving Corporation to, cooperate in the defense of any such matter; provided,
however, neither Parent nor the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed), and provided further that neither Parent nor
the Surviving Corporation shall be obligated pursuant to this Section 6.12(a) to
pay the fees and disbursements of more than one counsel for all Indemnified
Parties in any single Action, unless, in the good faith judgment of any of the
Indemnified Parties, there is or may be a conflict of interests between two or
more of such Indemnified Parties, in which case there may be separate counsel
for each similarly situated group.
(b) The parties agree that the rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, in the articles of incorporation, bylaws and any indemnification agreement
of the Company and its Subsidiaries with respect to matters occurring through
the Effective Time, shall survive the Merger and shall continue in full force
and effect for a period of six years from the Effective Time; provided, however,
that all rights to indemnification in respect of any Action pending or asserted
or claim made within such period shall continue until the disposition of such
Action or resolution of such claim.
(c) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain officers' and directors' liability insurance covering
the Indemnified Parties who are or at any time prior to the Effective Time were
covered by the Company's existing officers' and directors' liability insurance
("D&O Insurance") policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance with respect to acts or
omissions, or alleged acts or omissions, prior to the Effective Time (whether
claims, actions or other proceedings relating thereto are commenced, asserted or
claimed before or after the Effective Time); provided, that after the Effective
Time, the Surviving Corporation shall not be required to pay annual premiums in
excess of 250% of the last annual premium paid by the Company prior to the date
hereof (the amount of which premiums are set forth in the Company Disclosure
Letter) (the "Maximum Premium"), but in such case shall purchase as much
coverage as reasonably practicable for such amount. Parent shall have the right
to cause coverage to be extended under the Company's D&O Insurance by obtaining
a six-year "tail" policy on terms and conditions no less advantageous than the
Company's existing D&O Insurance, and such "tail" policy shall satisfy the
provisions of this Section 6.12(c).
(d) The rights of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party may have under the articles of
incorporation or bylaws of the Company or any of its
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Subsidiaries, under the TBCA, or otherwise. The provisions of this Section 6.12
shall survive the consummation of the Merger and expressly are intended to
benefit each of the Indemnified Parties.
(e) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Parent, as the case may be, shall assume the
obligations set forth in this Section 6.12.
SECTION 6.13 Employee Benefits
(a) Parent hereby agrees to honor, and agrees to cause its Subsidiaries to
honor, all employee benefit plans, contracts, agreements and commitments of the
Company or any of its Subsidiaries maintained or entered into by the Company or
any of its Subsidiaries prior to the date hereof that apply to any current or
former employee or current or former director of the Company or any of its
Subsidiaries, including, without limitation, the executive change-in-control
severance agreements between the Company and certain of its key employees
(copies of which executive change-in-control severance agreements have been
furnished to Parent); provided, however, that except as provided in Section
6.13(c), Parent reserves the right to modify any such contract, agreement or
commitment in accordance with its terms.
(b) If, within two years after the Effective Time, the benefits applicable
to Continuing Employees are materially modified then, for the remainder of the
two-year period after the Effective Time, Parent hereby agrees to, and agrees to
cause its Subsidiaries to, provide to officers and employees of the Company and
its Subsidiaries who become or remain regular (full-time) employees of Parent or
any of its Subsidiaries ("Continuing Employees") employee benefits, other than
stock options and stock appreciation rights, no less favorable than those
provided by Parent and its Subsidiaries to their similarly situated officers and
employees. Any employee of the Company or any of its Subsidiaries who becomes a
participant in any employee benefit plan, program, policy, or arrangement of
Parent or any of its Subsidiaries after the Effective Time shall be given credit
under such plan, program, policy, or arrangement for all service with the
Company or any of its Subsidiaries, and, if applicable, with Parent or any of
its Subsidiaries, prior to becoming such a participant for purposes of
eligibility and vesting and benefit determination (other than for determining
accrual services under any defined benefit pension plan as defined in Section
3(35) of ERISA).
(c) Parent hereby agrees to, and agrees to cause its Subsidiaries to,
provide the following benefits to Continuing Employees or to former employees of
the Company and its Subsidiaries, as described below:
(i) Parent shall continue retiree medical benefits for each former
employee of the Company and its Subsidiaries who was receiving retiree
medical benefits at the Effective Time in accordance with the terms of the
retiree medical benefit arrangements applicable to that employee.
(ii) Parent shall provide retiree medical benefits for Continuing
Employees who have attained age 55 and have 10 years of service with the
Company and its Subsidiaries at the Effective Time, with such retiree
medical benefits to be provided when such Continuing Employee terminates
employment with Parent or its Subsidiaries and with benefits substantially
equivalent to the retiree medical benefits being provided to former
employees of the Company and its Subsidiaries at the Effective Time and at
the same percentage of contribution rate as in effect at the Effective Time
in accordance with the terms of the retiree medical benefit arrangements in
effect on the date hereof.
(iii) Parent shall provide coverage for severance benefits for
Continuing Employees for a period of at least one year after the Effective
Time, and the eligibility and coverage for, and the amount of, such
severance benefits shall be at least as favorable as is provided by the
Xxxxxxxx Energy & Development Corp. Severance Benefit Plan.
(iv) For a period of at least one year after the Effective Time,
Parent shall continue defined benefit pension benefits for Continuing
Employees by continuing the Xxxxxxxx Energy & Development Corp. Retirement
Plan (the "Company Retirement Plan") and each of the Company's supplemental
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retirement plans (the "Company's Supplemental Retirement Plans") for such
Continuing Employees or by providing benefits under another defined benefit
pension plan sponsored by Parent or its Subsidiaries, and for a period of
at least 13 months after the Effective Time, Parent shall not permit the
form of payment provisions in the Company's Supplemental Retirement Plans
to be amended.
(v) At such time as Parent causes a Continuing Employee to be covered
under a group health plan maintained by Parent or one of its Subsidiaries
(other than the group health plan maintained by the Company at the
Effective Time), Parent shall cause (1) such Continuing Employee and his or
her eligible dependents (including, without limitation, all such Continuing
Employee's dependents covered immediately prior to such time under the
Company's group health plan) to be credited under such Parent group health
plan, for the year during which such coverage under such group health plan
begins, with any deductibles and copayments already incurred during such
year under the Company's group health plan, and (ii) such Parent group
health plan to waive any preexisting condition restrictions to the extent
necessary to provide immediate coverage. Parent shall cause each other
employee welfare benefit plan or program sponsored by Parent or one of its
Subsidiaries that is of a similar type to a plan or program Continuing
Employees participated in prior to the Effective Time to waive any
preexisting condition exclusion with respect to Continuing Employees.
(d) Parent and the Company shall take such actions, including (with respect
to the Company) the amendment of the options ("Stock Options") to purchase
Company Shares, and the plans pursuant to which such options have been issued
("Option Plans"), to permit Parent to assume, and Parent shall assume, effective
at the Effective Time, each Option Plan and each Stock Option that remains
unexercised in whole or in part as of the Effective Time and substitute shares
of Parent Common Stock for the Company Shares purchasable under each such
assumed option ("Assumed Option"), which assumption and substitution shall be
effected as follows:
(i) the number of shares of Parent Common Stock purchasable under the
Assumed Option shall be equal to 1.20 times the number of shares of Company
Common Stock underlying the Assumed Option (without regard to any vesting
schedule and with any fractional amount rounded to the next lowest share);
(ii) the per share exercise price of such Assumed Option shall be an
amount (with fractional amounts rounded to the next highest cent) equal to
the per share exercise price of the Stock Option being assumed divided by
1.20;
(iii) Parent will provide each holder of each Stock Option being
assumed with a statement showing the converted number of shares, the
exercise price, and the expiration date for each Assumed Option; and
(iv) any other provisions of each Assumed Option shall remain in
effect, and Parent shall not permit the acceleration of the exercisability
or require the mandatory surrender of the Assumed Options in connection
with the Merger pursuant to applicable provisions of the Option Plans.
(e) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the Assumed Options, and, as soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or other
appropriate form) with respect to the shares of Parent Common Stock subject to
the Assumed Options, and shall use its reasonable best efforts to maintain the
effectiveness of such registration statement for so long as any of the Assumed
Options remain outstanding.
(f) Parent and the Company shall take such actions to permit Parent to
assume, and Parent shall assume, effective at the Effective Time, each bonus
unit ("Bonus Unit") issued under the Xxxxxxxx Energy & Development Corp. 1997
Bonus Unit Plan ("Bonus Unit Plan") that remains unredeemed in whole or in part
as of the Effective Time and substitute the value of shares of Parent Common
Stock for the value of the shares of Company Common Stock that is used to
determine the amount payable to an employee
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upon redemption of the Bonus Unit ("Assumed Bonus Unit"), which assumption and
substitution shall be effected as follows:
(i) the number of Bonus Units redeemable under the Assumed Bonus Unit
shall be equal to 1.20 times the number of Bonus Units being assumed
(without regard to any vesting schedule and with any fractional amount
rounded to the next lowest share);
(ii) the value of each Assumed Bonus Unit as of the Redemption Date
(as defined in the Bonus Unit Plan) shall be equal to the amount, if any,
by which (A) the closing price of a share of Parent Common Stock on such
date exceeds (B) the "exercise price" of the Assumed Bonus Unit, which
shall be the closing price of Company Common Stock on the Designation Date
(as defined in the Bonus Unit Plan) divided by 1.20 (with fractional
amounts rounded to the next highest cent);
(iii) Parent will provide each holder of Bonus Units being assumed
with a statement showing the converted number of units, the exercise price
of the Assumed Bonus Units, and the expiration date for each Assumed Bonus
Unit; and
(iv) any other provisions of each Assumed Bonus Unit shall remain in
effect, and Parent shall not permit the acceleration of the exercisability
of the Assumed Bonus Units in connection with the Merger pursuant to
Section VII of the Bonus Unit Plan.
(g) Parent agrees that its Board of Directors (or the Compensation
Committee thereof) shall, at or prior to the Effective Time, adopt resolutions
specifically approving, for purposes of Rule 16b-3 under the Securities Exchange
Act of 1934, the receipt, pursuant to this Section 6.13, of Assumed Options and
Assumed Bonus Units.
SECTION 6.14 Reorganization. From and after the date hereof and until the
Effective Time, none of Parent, the Company or any of their respective
Subsidiaries shall knowingly (i) take any action, or fail to take any reasonable
action, as a result of which the Merger would fail to qualify as a
reorganization within the meaning of section 368(a) of the Code or (ii) enter
into any contract, agreement, commitment or arrangement to take or fail to take
any such action. Following the Effective Time, Parent shall not knowingly take
any action or knowingly cause any action to be taken which would cause the
Merger to fail to qualify as a reorganization within the meaning of section
368(a) of the Code (and any comparable provisions of applicable state or local
law). This Section 6.14 shall become inapplicable if an Alternate Structure
Event occurs.
SECTION 6.15 Dividends. The Company shall coordinate with Parent the
declaration, setting of record dates and payment dates of dividends on Company
Shares so that holders of Company Shares do not receive dividends on both
Company Shares and Parent Common Stock received in the Merger in respect of any
calendar quarter or fail to receive a dividend on Company Shares or Parent
Common Stock received in the Merger in respect of any calendar quarter.
ARTICLE 7
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) The Company Requisite Vote shall have been obtained and (ii)
the Parent Requisite Vote shall have been obtained.
(b) (i) The waiting period applicable to the consummation of the
Merger shall have expired or been terminated under the HSR Act and (ii) any
mandatory waiting period or required consent under any applicable foreign
competition or antitrust law or regulation shall have expired or been
obtained except where the failure to observe such waiting period or obtain
a consent referred to in this clause (ii) would not reasonably be expected
to delay or prevent the consummation of the Merger or have a
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material adverse effect on the expected benefits of the transactions
contemplated by this Agreement to Parent.
(c) None of the parties hereto shall be subject to any decree, order
or injunction of a court of competent jurisdiction, U.S. or foreign, which
prohibits the consummation of the Merger; and no statute, rule or
regulation shall have been enacted by any governmental authority which
prohibits or makes unlawful the consummation of the Merger.
(d) The Registration Statement shall have become effective and no stop
order with respect thereto shall be in effect and no proceedings for that
purpose shall have been commenced or threatened by the SEC.
(e) The shares of Parent Common Stock to be issued pursuant to the
Merger and shares issuable pursuant to Assumed Options shall have been
authorized for listing on the AMEX, subject to official notice of issuance.
SECTION 7.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment or waiver by the Company at or prior to the Closing Date of the
following conditions:
(a) Parent shall have performed in all material respects its covenants
and agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of Parent
and Merger Sub contained in this Agreement and in any document delivered in
connection herewith (i) to the extent qualified by Parent Material Adverse
Effect or any other materiality qualification shall be true and correct and
(ii) to the extent not qualified by Parent Material Adverse Effect or any
other materiality qualification shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the
Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct only as of the specified
date), and the Company shall have received a certificate of Parent,
executed on its behalf by its President or a Senior Vice President of
Parent, dated the Closing Date, certifying to such effect.
(b) The Company shall have received the opinion of Xxxxxx & Xxxxxx
L.L.P., counsel to the Company, in form and substance reasonably
satisfactory to the Company, on the basis of certain facts, representations
and assumptions set forth in such opinion, dated the Closing Date, a copy
of which shall be furnished to Parent, to the effect that (i) the Merger
will be treated for federal income tax purposes as a reorganization within
the meaning of section 368(a) of the Code and (ii) no gain or loss will be
recognized by the Company or the stockholders of the Company to the extent
they receive Parent Common Stock in exchange for Company Shares pursuant to
the Merger. In rendering such opinion, such counsel shall be entitled to
receive and rely upon representations of officers of the Company, Merger
Sub and Parent as to such matters as such counsel may reasonably request.
SECTION 7.3 Conditions to Obligation of Parent to Effect the Merger. The
obligations of Parent and Merger Sub to effect the Merger shall be subject to
the fulfillment or waiver by Parent at or prior to the Closing Date of the
following conditions:
(a) The Company shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and
warranties of the Company contained in this Agreement and in any document
delivered in connection herewith (i) to the extent qualified by Company
Material Adverse Effect or any other materiality qualification shall be
true and correct and (ii) to the extent not qualified by Company Material
Adverse Effect or any other materiality qualification shall be true and
correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date (except for representations and
warranties made as of a specified date, which need be true and correct only
as of the specified date), and Parent shall have received a certificate of
the Company, executed on its behalf by its President or a Vice President of
the Company, dated the Closing Date, certifying to such effect.
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(b) Parent shall have received the opinion of Xxxxx, Xxxxx & Xxxxx,
counsel to Parent, in form and substance reasonably satisfactory to Parent,
on the basis of certain facts, representations and assumptions set forth in
such opinion, dated the Closing Date, a copy of which will be furnished to
the Company, to the effect that (i) the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of section
368(a) of the Code and (ii) no gain or loss will be recognized by any
corporation which is a party to the reorganization. In rendering such
opinion, such counsel shall be entitled to receive and rely upon
representations of officers of the Company, Merger Sub and Parent as to
such matters as such counsel may reasonably request.
ARTICLE 8
TERMINATION
SECTION 8.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Effective Time by the mutual written consent
of the Company and Parent.
SECTION 8.2 Termination by Parent or the Company. This Agreement may be
terminated by action of the Board of Directors of the Company or by action of
the Board of Directors of Parent (in either case upon payment of the Termination
Amount (as defined below) if payable), if:
(a) the Merger shall not have been consummated by the date that is
seven months after the date of this Agreement; provided, however, that the
right to terminate this Agreement pursuant to this clause (a) shall not be
available to any party whose failure to perform or observe in any material
respect any of its obligations under this Agreement in any manner shall
have been the cause of, or resulted in, the failure of the Merger to occur
on or before such date; or
(b) after the twentieth day following the date of the meeting
(including adjournments and postponements) of the Company's stockholders
for the purpose of obtaining the Company Requisite Vote, if such Company
Requisite Vote shall not have been obtained; or
(c) after the twentieth day following the date of the meeting
(including adjournments and postponements) of Parent's stockholders for the
purpose of obtaining the Parent Requisite Vote, if such Parent Requisite
Vote shall not have been obtained; or
(d) a United States federal or state court of competent jurisdiction
or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and non-appealable; provided, however, that
the party seeking to terminate this Agreement pursuant to this clause (d)
shall have complied with Section 6.4 and with respect to other matters not
covered by Section 6.4 shall have used its reasonable best efforts to
remove such injunction, order or decree.
SECTION 8.3 Termination by the Company. This Agreement may be terminated
prior to the Effective Time, by action of the Board of Directors of the Company
after consultation with its legal advisors, if:
(a) (i) there has been a breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement set forth in this Agreement
or if any representation or warranty of Parent or Merger Sub shall have
become untrue, in either case such that the conditions set forth in Section
7.2(a) would not be satisfied and (ii) such breach is not curable, or, if
curable, is not cured within 30 days after written notice of such breach is
given to Parent by the Company; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.3(a) shall not be
available to the Company if it, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement
such that the conditions set forth in Section 7.3(a) shall not be
satisfied; or
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(b) the Board of Directors of Parent shall have withdrawn, modified or
changed, in a manner adverse to the Company, the Board's approval or
recommendation of the Merger, or resolved to do so.
SECTION 8.4 Termination by Parent. This Agreement may be terminated at
any time prior to the Effective Time, by action of the Board of Directors of
Parent after consultation with its legal advisors, if:
(a) there has been a breach by the Company of any representation,
warranty covenant or agreement set forth in this Agreement or if any
representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 7.3(a) would not
be satisfied and (ii) such breach is not curable, or, if curable, is not
cured within 30 days after written notice of such breach is given by Parent
to the Company; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.4(a) shall not be available to Parent
if it, at such time, is in material breach of any representation, warranty,
covenant or agreement set forth in this Agreement such that the conditions
set forth in Section 7.2(a) shall not be satisfied; or
(b) the Board of Directors of the Company shall have withdrawn,
modified or changed, in a manner adverse to Parent, the Board's approval or
recommendation of the Merger or recommended approval of a Company
Acquisition Proposal, or resolved to do so.
SECTION 8.5 Effect of Termination.
(a) If this Agreement is terminated (i) by the Company or Parent pursuant
to Section 8.2(a) or 8.2(b) (and in either such case (x) prior to, or at the
time of the meeting for the purpose of obtaining the approval required by
Section 7.1(a)(i) (including adjournments or postponements), any person shall
have made a Company Acquisition Proposal that has become public or shall have
publicly announced an intention (whether or not conditional) to make a Company
Acquisition Proposal, (y) the condition set forth in Section 7.1(a)(i) was not
satisfied at the time of such termination and (z) the condition set forth in
Section 7.1(a)(ii) was satisfied at the time of such termination) or (ii) by
Parent pursuant to Section 8.4(b); then, the Company shall immediately pay
Parent the Termination Amount (as defined below) and, in addition, reimburse
Parent for all expenses incurred by Parent in connection with this Agreement up
to the Reimbursement Maximum Amount (as defined below) upon termination of this
Agreement. All payments shall be made in cash by wire transfer to an account
designated by Parent. The term "Termination Amount" shall mean $100 million and
the term "Reimbursement Maximum Amount" shall mean $10 million. The Company
acknowledges that the agreements contained in this Section 8.5(a) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay any amount due pursuant to
this Section 8.5(a), and, in order to obtain such payment, Parent commences a
suit which results in a judgment against the Company for the payment set forth
in this Section 8.5(a), the Company shall pay to Parent its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on such amount from the date payment was required to be made until the date such
payment is actually made at the annual prime lending rate of The Chase Manhattan
Bank in effect on the date such payment was required to be made plus one percent
(1%) (the "Adjusted Prime Rate").
(b) If this Agreement is terminated (i) by the Company or Parent pursuant
to Section 8.2(a) or 8.2(c) (and in either such case (x) prior to, or at the
time of the meeting for the purpose of obtaining the approval required by
Section 7.1(a)(ii), (including adjournments or postponements), any person shall
have made a Parent Acquisition Proposal (as defined below) that has become
public or shall have publicly announced an intention (whether or not
conditional) to make a Parent Acquisition Proposal, (y) the condition set forth
in Section 7.1(a)(ii) was not satisfied at the time of such termination and (z)
the condition set forth in Section 7.1(a)(i) was satisfied at the time of such
termination) to make a Parent Acquisition Proposal) or (ii) by the Company
pursuant to Section 8.3(b); then Parent shall immediately pay the Company the
Termination Amount and, in addition, reimburse the Company for all expenses
incurred by the Company in connection with this Agreement up to the
Reimbursement Maximum Amount upon termination of this Agreement. All payments
shall be made in cash by wire transfer to an account designated by the Company.
The term "Parent Acquisition Proposal" shall mean any inquiry, proposal or offer
(including any proposal or offer to its stockholders) with respect to a third
party tender
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offer, merger, consolidation, business combination or similar transaction
involving any assets or class of capital stock of Parent, or any acquisition of
10% or more of the capital stock (other than upon exercise of Parent employee
stock options that are outstanding as of the date hereof) or 10% or more of the
assets of Parent and its subsidiaries, taken as a whole, in a single transaction
or a series of related transactions, or any combination of the foregoing. Parent
acknowledges that the agreements contained in this Section 8.5(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, the Company would not enter into this Agreement;
accordingly, if Parent fails promptly to pay any amount due pursuant to this
Section 8.5(b) and, in order to obtain such payment, the Company commences a
suit which results in a judgment against Parent for the payment set forth in
this Section 8.5(b), Parent shall pay to the Company its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on such amount from the date payment was required to be made until the date such
payment is actually made at the Adjusted Prime Rate.
(c) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article 8, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
8.5 and Section 6.11 and except for the provisions of Sections 9.3, 9.4, 9.6,
9.8, 9.9, 9.12, 9.13 and 9.14, provided that nothing herein shall relieve any
party from any liability for any breach by such party of any of its covenants or
agreements set forth in this Agreement and all rights and remedies of such
nonbreaching party under this Agreement in the case of such a breach, at law or
in equity, shall be preserved.
SECTION 8.6 Extension; Waiver. At any time prior to the Effective Time,
each party may by action taken by its Board of Directors, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Merger; provided, however, that the agreements contained in Article
2, Article 3 and in Sections 6.10, 6.11, 6.12, 6.13, 6.14 and this Article 9
(including, if an Alternate Structure Event occurs, the amendments to certain of
such provisions contemplated by Exhibit B) and the agreements delivered pursuant
to this Agreement shall survive the Merger, unless otherwise provided herein.
SECTION 9.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
(a) if to Parent, Merger Sub, Alternate Holdco, Devon Merger Sub or
Xxxxxxxx Merger Sub:
Devon Energy Corporation
00 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: J. Xxxxx Xxxxxxx
Chairman, President and Chief Executive Officer
Telecopy No.: (000) 000-0000
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and
Devon Energy Corporation
00 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Duke X. Xxxxx
Senior Vice President and General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxx
Xxxxx X. Xxxxxxx
(b)if to the Company:
0000 Xxxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxx Xxxxxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
Attn: General Counsel
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: C. Xxxxxxx Xxxxxxxxxx
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
SECTION 9.3 Assignment; Binding Effect; Benefit. Except as provided in
Section 1.1 hereof, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except as provided in Section 6.12 and Section 6.13,
notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 9.4 Entire Agreement. This Agreement, the Parent/Company
Confidentiality Agreement (other than the sixth and seventh paragraphs thereof,
which are hereby terminated and of no further force or effect), the exhibits to
this Agreement, the Company Disclosure Letter, the Parent Disclosure Letter and
any documents delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of this Agreement shall
be binding upon any party hereto unless made in writing and signed by all
parties hereto.
SECTION 9.5 Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of the Company or Parent, but after any such
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stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
SECTION 9.6 Governing Law; Jurisdiction; Waiver of Jury Trial. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF
TEXAS. EACH OF THE COMPANY, MERGER SUB AND PARENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COMPETENT COURTS OF THE STATE OF
TEXAS AND OF THE UNITED STATES OF AMERICA, IN
EITHER CASE LOCATED IN DALLAS COUNTY,
TEXAS (THE "
TEXAS COURTS") FOR ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO
EXCEPT IN SUCH COURTS), WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION IN THE TEXAS COURTS AND AGREES NOT TO PLEAD OR CLAIM IN ANY TEXAS
COURT THAT SUCH LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
SECTION 9.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together shall be deemed to be one and the same instrument.
SECTION 9.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
SECTION 9.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and words denoting
any gender shall include all genders and words denoting natural persons
shall include corporations and partnerships and vice versa.
(b) The words "include", "includes" and "including" are not limiting.
(c) The phrase "to the knowledge of" and similar phrases relating to
knowledge of the Company or Parent, as the case may be, shall mean the
actual knowledge of its executive officers.
(d) "Material Adverse Effect" with respect to the Company or Parent
shall mean a material adverse effect on or change in (a) the business,
assets and liabilities (taken together) or financial condition of a party
and its Subsidiaries on a consolidated basis or (b) the ability of the
party to consummate the transactions contemplated by this Agreement or
fulfill the conditions to closing set forth in Article 7; provided,
however, that the inability to satisfy the condition in Section 7.2(b)
shall not constitute a Company Material Adverse Effect and the inability to
satisfy the condition in Section 7.3(b) shall not constitute a Parent
Material Adverse Effect. "Company Material Adverse Effect" and "Parent
Material Adverse Effect" mean a Material Adverse Effect with respect to the
Company and Parent, respectively.
(e) "Person" or "person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or other entity
or organization.
(f) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
of which such party directly or indirectly owns or controls at least a
majority of the securities or other interests having by their terms
ordinary voting
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power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization,
or any organization of which such party is a general partner.
SECTION 9.10 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
SECTION 9.11 Incorporation of Exhibits. The Company Disclosure Letter,
the Parent Disclosure Letter and all exhibits attached hereto and referred to
herein are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
SECTION 9.12 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
SECTION 9.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Texas Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 9.14 Obligation of Merger Sub, Alternate Holdco, Devon Merger Sub
and Xxxxxxxx Merger Sub. Whenever this Agreement requires Merger Sub, Alternate
Holdco, Devon Merger Sub or Xxxxxxxx Merger Sub (or any of their respective
successors) to take any action prior to the Effective Time, such requirement
shall be deemed to include an undertaking on the part of Parent to cause Merger
Sub, Alternate Holdco, Devon Merger Sub or Xxxxxxxx Merger Sub, as the case may
be, to take such action and a guarantee of the performance thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf as of the day and year first written
above.
DEVON ENERGY CORPORATION
By: /s/ J. XXXXX XXXXXXX
----------------------------------
Name: J. Xxxxx Xxxxxxx
Title: Chairman, President and
Chief Executive Officer
DEVON NEWCO CORPORATION
By: /s/ J. XXXXX XXXXXXX
----------------------------------
Name: J. Xxxxx Xxxxxxx
Title: President
DEVON HOLDCO CORPORATION
By: /s/ J. XXXXX XXXXXXX
----------------------------------
Name: J. Xxxxx Xxxxxxx
Title: President
DEVON MERGER CORPORATION
By: /s/ J. XXXXX XXXXXXX
----------------------------------
Name: J. Xxxxx Xxxxxxx
Title: President
XXXXXXXX MERGER CORPORATION
By: /s/ J. XXXXX XXXXXXX
----------------------------------
Name: J. Xxxxx Xxxxxxx
Title: President
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XXXXXXXX ENERGY & DEVELOPMENT CORP.
By: /s/ XXXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman of the Board and
Chief
Executive Officer
A-39
EXHIBIT A
FORM OF COMPANY AFFILIATE'S LETTER
This SHAREHOLDER AGREEMENT, dated as of , 2001 (this "Agreement")
is among Devon Energy Corporation, a Delaware corporation ("Parent"), Devon
Holdco Corporation, a Delaware corporation ("Alternate Holdco"), and the
undersigned shareholder ("Shareholder") of Xxxxxxxx Energy & Development Corp.,
a Texas corporation (the "Company"). Capitalized terms not otherwise defined in
this Agreement have the meanings ascribed to them in the Merger Agreement.
RECITALS
A. Parent, Devon NewCo Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), Alternate Holdco, Devon Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of Alternate
Holdco, Xxxxxxxx Merger Corporation, a Texas corporation and a wholly owned
subsidiary of Alternate Holdco, and the Company have entered into an Amended and
Restated
Agreement and Plan of Merger, dated as of August 13, 2001 (the "Merger
Agreement"), pursuant to which the Company will merge (the "Merger") with and
into Merger Sub, with Merger Sub surviving the Merger (or, if an Alternate
Structure Event occurs, the parties will consummate the Alternate Mergers);
B. Pursuant to the Merger Agreement, at the Effective Time, outstanding
Company Shares will be converted into (i) the right to receive cash and (ii)
shares of Parent Common Stock (or, if an Alternate Structure Event occurs, at
the Xxxxxxxx Merger Effective Time, outstanding Company Shares will be converted
into (i) the right to receive cash and (ii) shares of Alternate Holdco common
stock);
C. The execution and delivery of this Agreement by Shareholder is a
material inducement to Parent and Alternate Holdco to enter into the Merger
Agreement; and
D. Shareholder has been advised that Shareholder may be deemed to be an
"affiliate" of the Company, as such term is used (i) for purposes of paragraphs
(c) and (d) of Rule 145 of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act").
NOW, THEREFORE, intending to be legally bound, the parties agree as follows:
1. Acknowledgments by Shareholder. Shareholder acknowledges and
understands that the representations, warranties and covenants made by
Shareholder set forth in this Agreement will be relied upon by Parent, Alternate
Holdco, the Company, and their respective affiliates and counsel, and that
substantial losses and damages may be incurred by such persons if Shareholder's
representations, warranties or covenants are breached. Shareholder has carefully
read this Agreement and the Merger Agreement and has consulted with such legal
counsel and financial advisers as Shareholder has deemed appropriate in
connection with the execution of this Agreement.
2. Compliance with Rule 145 and the Act.
(a) Shareholder has been advised that (i) the issuance of shares of Parent
Common Stock in connection with the Merger (or, if an Alternate Structure Event
occurs, the issuance of shares of Alternate Holdco common stock in connection
with the Xxxxxxxx Merger) is expected to be effected pursuant to a Registration
Statement filed by Parent and Alternate Holdco on Form S-4, and the resale of
such shares will be subject to the restrictions set forth in Rule 145 under the
Act unless such shares are otherwise transferred pursuant to an effective
registration statement under the Act or an appropriate exemption from
registration, and (ii) Shareholder may be deemed to be an affiliate of the
Company. Shareholder accordingly agrees not to sell, pledge, transfer or
otherwise dispose of any shares of Parent Common Stock issued to Shareholder in
the Merger or shares of Alternate Holdco common stock issued to Shareholder in
the Xxxxxxxx Merger, as the case may be, unless (i) such sale, pledge, transfer
or other disposition is made in conformity with the requirements of Rule 145
under the Act, (ii) such sale, pledge,
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transfer or other disposition is made pursuant to an effective registration
statement under the Act, or (iii) Shareholder delivers to Parent or Alternate
Holdco, as the case may be, a written opinion of counsel, in form and substance
reasonably acceptable to Parent or Alternate Holdco, as the case may be, to the
effect that such sale, pledge, transfer or other disposition is otherwise exempt
from registration under the Act.
(b) Parent or Alternate Holdco, as the case may be, will give stop transfer
instructions to its transfer agent with respect to any Parent Common Stock
received by Shareholder pursuant to the Merger or Alternate Holdco common stock
received by Shareholder pursuant to the Xxxxxxxx Merger, and there will be
placed on the certificates representing such Parent Common Stock or Alternate
Holdco common stock, or any substitutions therefor, legends stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES, AND MAY ONLY BE TRANSFERRED IN CONFORMITY WITH RULE 145,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR IN ACCORDANCE WITH A
WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, IN FORM
AND SUBSTANCE TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend), and Parent or Alternate Holdco, as the case
may be, shall so instruct its transfer agent, if a registration statement
respecting the sale of the shares has been declared effective under the Act or
if Shareholder delivers to Parent or Alternate Holdco, as the case may be, (i)
satisfactory written evidence that the shares have been sold in compliance with
Rule 145 (in which case, the substitute certificate will be issued in the name
of the transferee), or (ii) an opinion of counsel, in form and substance
reasonably acceptable to Parent or Alternate Holdco, as the case may be, to the
effect that sale of the shares by the holder thereof is no longer subject to
Rule 145.
3. Miscellaneous.
(a) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document. Delivery of an executed counterpart of this Agreement
by facsimile shall be effective to the fullest extent permitted by applicable
law.
(b) This Agreement shall be enforceable by, and shall inure to the benefit
of and be binding upon, the parties and their respective successors and assigns.
As used in this Agreement, the term "successors and assigns" means, where the
context to permits, heirs, executors, administrators, trustees and successor
trustees, and personal and other representatives.
(c) This Agreement shall be deemed to be made in and in all respects shall
be interpreted, construed and governed by and in accordance with the laws of the
State of Texas. The parties irrevocably and unconditionally consent to submit to
the exclusive jurisdiction of the courts of the State of Texas and of the United
States of America, in either case located in Dallas County, Texas (the "Texas
Courts") for any litigation arising out of or relating to this Agreement and the
transactions contemplated by this Agreement (and agree not to commence any
litigation relating thereto except in such Texas Courts), waive any objection to
the laying of venue of any such litigation in the Texas Courts and agree not to
plead or claim in any Texas Court that such litigation brought therein has been
brought in an inconvenient forum.
(d) If any term, provision, covenant, or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void, or unenforceable, the remainder of
the terms, provisions, covenants, and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected,
impaired, or invalidated.
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(e) Counsel to the parties to the Merger Agreement shall be entitled to
rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or any right waived or
any obligations excused, except by a written agreement signed by both parties.
(g) Notwithstanding any other provision contained in this Agreement, this
Agreement and all obligations under this Agreement shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
(h) From and after the Effective Time of the Merger or, if the Alternate
Mergers are consummated, the Xxxxxxxx Merger Effective Time and as long as is
necessary in order to permit Shareholder to sell Parent Common Stock or
Alternate Holdco common stock, as the case may be, held by Shareholder pursuant
to Rule 145 and, to the extent applicable, Rule 144 under the Act, Parent or
Alternate Holdco, as the case may be, will file on a timely basis all reports
required to be filed by it pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, as the same shall be in
effect at the time, and shall otherwise make available adequate public
information regarding Parent or Alternate Holdco, as the case may be, in such
manner as may be required to satisfy the requirements of paragraph (c) of Rule
144 under the Act.
IN WITNESS WHEREOF, this Agreement is executed as of the date first stated
above.
DEVON ENERGY CORPORATION,
a Delaware corporation
By:
----------------------------------
Name:
Title:
DEVON HOLDCO CORPORATION,
a Delaware corporation
By:
----------------------------------
Name:
Title:
SHAREHOLDER
------------------------------------
Name:
Number of Shares Owned:
Number of Shares Issuable upon
Exercise of Stock Options:
A-42
EXHIBIT B
AMENDMENTS TO BECOME EFFECTIVE
UPON ALTERNATE STRUCTURE EVENT
1. Article 1 (other than Section 1.7, which shall remain in full force and
effect) shall be deleted in its entirety and replaced with the following:
ARTICLE 1
THE ALTERNATE STRUCTURE
SECTION 1.1 The Alternate Mergers.
(a) Alternate Mergers Corporations. As promptly as practicable after
occurrence of an Alternate Structure Event, Parent shall cause (1) Alternate
Holdco to amend its certificate of incorporation and bylaws to be substantially
identical in form and substance to the certificate of incorporation and bylaws
of Parent at that time; and (2) Alternate Holdco's board of directors to adopt a
shareholder rights plan substantially identical in form and substance to the
Parent Rights Agreement, as it existed on October 1, 2001. Prior to the
Effective Time (as defined below), Parent shall ensure that Alternate Holdco,
Xxxxxxxx Merger Sub and Devon Merger Sub take no actions and undertake no
operations except as may be necessary in connection with the consummation of the
Alternate Mergers. Parent shall cause Alternate Holdco's corporate name, as of
the Effective Time, to be changed to "Devon Energy Corporation" or such other
name as shall be selected by Parent.
(b) The Xxxxxxxx Merger. Subject to the terms and conditions of this
Agreement, at the Xxxxxxxx Merger Effective Time (as defined in Section 1.3),
Xxxxxxxx Merger Sub shall be merged with and into the Company (the "Xxxxxxxx
Merger") in accordance with this Agreement, and the separate corporate existence
of Xxxxxxxx Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Xxxxxxxx Merger and shall be a wholly owned subsidiary of
Alternate Holdco. The Xxxxxxxx Merger shall have the effects specified in the
Texas Business Corporation Act (the "TBCA").
(c) The Devon Merger. Subject to the terms and conditions of this
Agreement, at the Devon Merger Effective Time (as defined in Section 1.3), Devon
Merger Sub shall be merged with and into Parent (the "Devon Merger") in
accordance with this Agreement, and the separate existence of Devon Merger Sub
shall thereupon cease. Parent shall be the surviving corporation in the Devon
Merger and shall be a wholly owned subsidiary of Alternate Holdco. The Devon
Merger shall have the effects specified in the Delaware General Corporation Law
(the "DGCL").
SECTION 1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Alternate Mergers (the "Closing") shall take place
(a) at the offices of Xxxxx, Xxxxx & Xxxxx, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx
00000, at 9:00 a.m., local time, on the first business day immediately following
the day on which the last to be fulfilled or waived of the conditions set forth
in Article 7 (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to fulfillment or waiver of those
conditions) shall be fulfilled or waived in accordance herewith or (b) at such
other time, date or place as Parent and the Company may agree in writing. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date." The parties shall cause the Xxxxxxxx Merger Effective Time and the Devon
Merger Effective Time to occur concurrently or, if not concurrently, as close in
time as possible. In any event, the parties shall cause both the Xxxxxxxx Merger
Effective Time and the Devon Merger Effective Time to occur during the Closing.
SECTION 1.3 Effective Times. If all the conditions to the Alternate
Mergers set forth in Article 7 shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated as provided in
Article 8, on the Closing Date, articles of merger (the "Articles of Merger")
meeting the requirements of Article 5.04 of the TBCA (with respect to the
Xxxxxxxx Merger) shall be filed with the Secretary of State of the State of
Texas and a certificate of merger (the "Certificate of Merger") meeting the
requirements of Section 251 of the DGCL (with respect to the Devon Merger)
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shall be properly executed and filed with the Secretary of State of the State of
Delaware. The Xxxxxxxx Merger shall become effective upon the issuance of a
certificate of merger by the Secretary of State of the State of Texas in
accordance with the TBCA, or at such later time that the parties hereto shall
have agreed upon and designated in such filing as the effective time of the
Xxxxxxxx Merger (the "Xxxxxxxx Merger Effective Time"). The Devon Merger shall
become effective upon the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, or at such later time that the parties hereto
shall have agreed upon and designated in such filing as the effective time of
the Devon Merger (the "Devon Merger Effective Time"). Except as otherwise
provided in the amendments to this Agreement contemplated by Exhibit B,
references to the "Effective Time" in this Agreement shall be deemed to be
references to the earlier to occur of the Xxxxxxxx Merger Effective Time and the
Devon Merger Effective Time.
SECTION 1.4 Charters.
(a) At the Xxxxxxxx Merger Effective Time, the articles of incorporation of
the Company in effect immediately prior to the Xxxxxxxx Merger Effective Time
shall be amended as set forth in Annex A and, as so amended, shall be the
articles of incorporation of the surviving corporation of the Xxxxxxxx Merger,
until duly amended in accordance with applicable law.
(b) At the Devon Merger Effective Time, the certificate of incorporation of
Parent in effect immediately prior to the Devon Merger Effective Time shall be
amended as set forth in Annex B and, as so amended, shall be the certificate of
incorporation of the surviving corporation of the Devon Merger, until duly
amended in accordance with applicable law.
SECTION 1.5 Bylaws.
(a) The bylaws of the Company in effect immediately prior to the Xxxxxxxx
Merger Effective Time shall be the bylaws of the surviving corporation of the
Xxxxxxxx Merger, until duly amended in accordance with applicable law.
(b) The bylaws of Parent in effect immediately prior to the Devon Merger
Effective Time shall be the bylaws of the surviving corporation of the Devon
Merger, until duly amended in accordance with applicable law.
SECTION 1.6 Boards of Directors.
(a) The Board of Directors of the surviving corporation of the Xxxxxxxx
Merger shall consist of the Board of Directors of Xxxxxxxx Merger Sub, as it
existed immediately prior to the Xxxxxxxx Merger Effective Time.
(b) The Board of Directors of the surviving corporation of the Devon Merger
shall consist of the Board of Directors of Devon Merger Sub, as it existed
immediately prior to the Devon Merger Effective Time.
2. Articles 2 and 3 shall be deleted in their entirety and replaced with
the following:
ARTICLE 2
DIRECTORS OF ALTERNATE HOLDCO
SECTION 2.1 Directors of Alternate Holdco. Immediately prior to the
Effective Time, Parent shall cause the Board of Directors of Alternate Holdco to
be identical to the Board of Directors of Parent at that time, except that J.
Xxxx Xxxxxxxx (the "Company Designee") shall also be appointed to the Board of
Directors of Alternate Holdco. If, prior to the Effective Time, the Company
Designee becomes unavailable or unwilling to serve, the Company shall designate
a substitute designee acceptable to Parent.
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ARTICLE 3
CONVERSION OF COMPANY SHARES
SECTION 3.1 Effect on Capital Stock.
(a) The Xxxxxxxx Merger. At the Xxxxxxxx Merger Effective Time, the
Xxxxxxxx Merger shall have the following effects on the capital stock of the
Company and Xxxxxxxx Merger Sub, without any action on the part of the holder of
any capital stock of the Company or Xxxxxxxx Merger Sub:
(i) Conversion of the Company Common Stock. Subject to the provisions
of this Section 3.1 and Section 3.3, each share of Class A common stock,
$0.10 par value per share, of the Company (each a "Company Share" and
collectively the "Company Shares" issued and outstanding immediately prior
to the Xxxxxxxx Merger Effective Time (but not including any Dissenting
Shares (as defined below) and any Company Shares that are (A) owned (1) by
Alternate Holdco, Parent, Xxxxxxxx Merger Sub or any other direct or
indirect Subsidiary of Alternate Holdco or Parent or (2) by the Company or
any direct or indirect Subsidiary of the Company and (B) are not held on
behalf of third parties (collectively, the "Excluded Company Shares"))
shall, by virtue of the Xxxxxxxx Merger and without any action on the part
of the holder thereof, be converted into (A) the right to receive $31.00 in
cash (the "Cash Consideration") and (B) 0.585 of a share (the "Exchange
Ratio") of the common stock of Alternate Holdco (the "Stock Consideration"
and, together with the Cash Consideration, the "Merger Consideration").
(ii) Cancellation of Excluded Company Shares. Each Excluded Company
Share issued and outstanding immediately prior to the Xxxxxxxx Merger
Effective Time shall, by virtue of the Xxxxxxxx Merger and without any
action on the part of the holder thereof, no longer be outstanding, shall
be canceled and retired without payment of any consideration therefor and
shall cease to exist.
(iii) Xxxxxxxx Merger Sub. At the Xxxxxxxx Merger Effective Time,
each share of common stock of Xxxxxxxx Merger Sub issued and outstanding
immediately prior to the Xxxxxxxx Merger Effective Time shall be converted
into one share of common stock of the surviving corporation of the Xxxxxxxx
Merger, and the surviving corporation of the Xxxxxxxx Merger shall thereby
become a wholly owned subsidiary of Alternate Holdco.
(b) The Devon Merger.
(i) Conversion of the Capital Stock of Parent. At the Devon Merger
Effective Time, the Devon Merger shall have the following effects on the capital
stock of Parent and Devon Merger Sub, without any action on the part of the
holder of any capital stock of Parent or Devon Merger Sub:
(A) Each share of common stock, par value $0.10 per share, of Parent
(each a "Parent Share" and collectively the "Parent Common Stock") issued
and outstanding immediately prior to the Devon Merger Effective Time (other
than Excluded Parent Shares (as defined below)) shall be converted into one
share of Alternate Holdco common stock.
(B) Each share of 6.49% Cumulative Preferred Stock, Series A, par
value $1.00 per share, of Parent (the "Parent 6.49% Preferred Stock")
issued and outstanding immediately prior to the Devon Merger Effective Time
(other than Excluded Parent Shares and Dissenting Parent Preferred Shares
(as defined below)) shall remain outstanding as one share of preferred
stock of the surviving corporation of the Devon Merger having the same
preferences and rights with respect to the surviving corporation of the
Devon Merger as those that the Parent 6.49% Preferred Stock had with
respect to Parent.
(C) The one share of Parent Special Voting Stock issued and
outstanding immediately prior to the Devon Merger Effective Time shall be
converted into one share of special voting stock of Alternate Holdco having
the same preferences and rights with respect to Alternate Holdco as those
that the Parent Special Voting Stock had with respect to Parent.
A-45
(ii) Cancellation of Excluded Parent Shares. Shares of Parent Common Stock
or Parent 6.49% Preferred Stock that are (A) owned (1) by Alternate Holdco,
Parent, Devon Merger Sub or any other direct or indirect Subsidiary of Alternate
Holdco or Parent or (2) by the Company or any direct or indirect Subsidiary of
the Company and (B) are not held on behalf of third parties (collectively, the
"Excluded Parent Shares"), immediately prior to the Devon Merger Effective Time
shall, by virtue of the Devon Merger and without any action on the part of the
holder thereof, no longer be outstanding, shall be cancelled and retired without
payment of consideration therefor and shall cease to exist.
(iii) Devon Merger Sub. At the Devon Merger Effective Time, each share of
common stock of Devon Merger Sub issued and outstanding immediately prior to the
Devon Merger Effective Time shall be converted into one share of common stock of
the surviving corporation of the Devon Merger, and the surviving corporation of
the Devon Merger shall thereby become a wholly owned subsidiary of Alternate
Holdco.
(iv) Devon Options. Alternate Holdco and Parent shall take such actions,
including (with respect to Parent) the amendment of the options ("Devon Stock
Options") to purchase Parent Shares issued pursuant to Parent's stock option
plans ("Devon Option Plans"), and the Devon Option Plans, to permit Alternate
Holdco to assume, and Alternate Holdco shall assume, effective at the Devon
Merger Effective Time, each Devon Option Plan and each Devon Stock Option that
remains unexercised in whole or in part as of the Devon Merger Effective Time
and substitute shares of Alternate Holdco common stock for the Parent Shares
purchasable under each such assumed option ("Devon Assumed Option"), which
assumption and substitution shall be effected as follows:
(A) the number of shares of Alternate Holdco common stock purchasable
under the Devon Assumed Option shall be equal to the number of shares of
Parent Common Stock underlying the Devon Assumed Option (without regard to
any vesting schedule);
(B) the per share exercise price of such Devon Assumed Option shall be
equal to the per share exercise price of the Devon Stock Option being
assumed; and
(C) any other provisions of each Devon Assumed Option shall remain in
effect.
(v) Other Actions. Alternate Holdco shall take such action as may be
necessary to provide for (A) succession of Alternate Holdco for Parent under the
Support Agreement dated as of December 10, 1998 between Parent and Northstar, as
amended, and the Voting and Exchange Trust Agreement dated as of December 10,
1998 between Parent and CIBC Mellon Trust Company, as amended; (B) the making of
changes to, or in the rights of holders of, the Northstar Exchangeable Shares as
are economically equivalent to the changes to, or in the rights of holders of
Parent Common Stock, that are a result of the exchange of Alternate Holdco
common stock for Parent Common Stock in the Devon Merger and (C) the
convertibility of the Zero Coupon Convertible Debentures (as defined below) into
Alternate Holdco common stock, subject to the terms of the Indenture (as defined
below). "Indenture" means the Indenture, dated as of June 27,2000, between
Parent and The Bank of New York, as trustee. "Zero Coupon Convertible
Debentures" means Parent's Zero Coupon Convertible Senior Debentures due 2020
issued pursuant to the Indenture.
(vi) Post-Devon Merger Sale of Alternate Holdco Common Stock to Alternate
Holdco. Immediately after the Devon Merger Effective Time, the surviving
corporation of the Devon Merger shall sell to Alternate Holdco, and Alternate
Holdco shall purchase from such surviving corporation, all of the shares of
Alternate Holdco common stock then held by such surviving corporation for an
amount in cash equal to the aggregate par value of all such shares of Alternate
Holdco common stock.
SECTION 3.2 Exchange of Certificates for Shares.
(a) Exchange Procedures. At or prior to the Effective Time, Alternate
Holdco shall deposit with an exchange agent (the "Exchange Agent"), selected by
Parent with the Company's prior approval, which shall not be unreasonably
withheld, in trust for the benefit of the holders of Company Shares and Parent
Shares, an amount in cash and certificates representing shares of Alternate
Holdco common stock required
A-46
to effect (i) the conversion of the Company Shares into the Merger Consideration
pursuant to Section 3.1(a)(i) and (ii) the conversion of the Parent Shares into
shares of Alternate Holdco common stock pursuant to Section 3.1(b)(i)(A).
Alternate Holdco shall make sufficient funds available to the Exchange Agent
from time to time as needed to pay cash in respect of dividends or other
distributions in accordance with Section 3.2(b). To the extent that Alternate
Holdco lacks funds sufficient to pay the full amount of the Cash Consideration,
Parent shall advance Alternate Holdco such funds. Promptly after the Effective
Time, but in no event later than three business days following the Closing Date,
Alternate Holdco shall cause the Exchange Agent to mail to each holder of record
as of the Xxxxxxxx Merger Effective Time of a certificate representing Company
Shares and to each holder of record as of the Devon Merger Effective Time of a
certificate representing Parent Shares (each a "Certificate") (other than
holders of a Certificate in respect of Excluded Company Shares or Excluded
Parent Shares) (i) a letter of transmittal specifying that delivery of the
Certificates shall be effected, and that risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or, in lieu of
such Certificates, affidavits of loss together with either a reasonable
undertaking to indemnify Alternate Holdco, Parent or the Company, if Alternate
Holdco believes that the person providing the indemnity is sufficiently
creditworthy, or, if Alternate Holdco does not so believe, indemnity bonds) to
the Exchange Agent, such letter of transmittal to be in such form and have such
other provisions as Parent and the Company may reasonably agree, and (ii)
instructions for exchanging the Certificates and receiving the Merger
Consideration to which such holder shall be entitled therefore pursuant to
Section 3.1(a)(i) or the shares of Alternate Holdco common stock to which such
holder shall be entitled therefore pursuant to Section 3.1(b)(i)(A), as the case
may be. Subject to Section 3.2(g), upon surrender of a Certificate formerly
representing Company Shares for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (i) a certificate representing that
number of whole shares of Alternate Holdco common stock that such holder is
entitled to receive pursuant to Section 3.1(a)(i) and (ii) a check in the
aggregate amount (after giving effect to any required tax withholdings) of (A)
the cash that such holder is entitled to receive pursuant to Section 3.1(a)(i)
plus (B) any cash in lieu of fractional shares determined in accordance with
Section 3.2(d) plus (C) any cash dividends and any other dividends or other
distributions that such holder has the right to receive pursuant to the
provisions of this Section 3.2. Upon surrender of a Certificate formerly
representing Parent Shares for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (i) a certificate representing that
number of whole shares of Alternate Holdco common stock that such holder is
entitled to receive pursuant to Section 3.1(b)(i)(A) and (ii) a check in the
aggregate amount (after giving effect to any required tax withholdings) of any
cash dividends and any other dividends or other distributions that such holder
has the right to receive pursuant to the provisions of this Section 3.2. Each
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on any amount payable upon due surrender of any Certificate. In the
event of a transfer of ownership of Company Shares or Parent Shares that
occurred prior to the Xxxxxxxx Merger Effective Time or the Devon Merger
Effective Time, as the case may be, but is not registered in the transfer
records of the Company or Parent, the Merger Consideration may be issued and/or
paid or the shares of Alternate Holdco common stock may be issued, as the case
may be, to such a transferee if the Certificate formerly representing such
Company Shares or Parent Shares is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid. If any certificate for
shares of Alternate Holdco common stock is to be issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Person requesting such exchange
shall pay any transfer or other taxes required by reason of the issuance of
certificates for shares of Alternate Holdco common stock in a name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of Alternate Holdco or the Exchange Agent that such tax has
been paid or is not applicable.
(b) Distributions with Respect to Unexchanged Shares. Whenever a dividend
or other distribution is declared by Alternate Holdco in respect of Alternate
Holdco common stock, the record date for which is at or after the Xxxxxxxx
Merger Effective Time (with respect to Certificates formerly representing
A-47
Company Shares) or after the Devon Merger Effective Time (with respect to
Certificates formerly representing Parent Shares), that declaration shall
include dividends or other distributions in respect of all shares of Alternate
Holdco common stock issuable pursuant to this Agreement. No dividends or other
distributions so declared in respect of such Alternate Holdco common stock shall
be paid to any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Section 3.2. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be issued or paid, less the amount of any withholding taxes that may be
required thereon, to the holder of the certificates representing whole shares of
Alternate Holdco common stock issued in exchange for such Certificate, without
interest, (i) at the time of such surrender, the dividends or other
distributions with a record date that is at or after the Xxxxxxxx Merger
Effective Time or the Devon Merger Effective Time, as the case may be, and a
payment date on or prior to the date of surrender of such whole shares of
Alternate Holdco common stock and not previously paid and (ii) at the
appropriate payment date, the dividends or other distributions payable with
respect to such whole shares of Alternate Holdco common stock with a record date
at or after the Xxxxxxxx Merger Effective Time or the Devon Merger Effective
Time, as the case may be, but with a payment date subsequent to surrender. For
purposes of dividends or other distributions in respect of shares of Alternate
Holdco common stock, (i) all shares of Alternate Holdco common stock to be
issued pursuant to the Xxxxxxxx Merger shall be deemed issued and outstanding as
of the Xxxxxxxx Merger Effective Time and (ii) all shares of Alternate Holdco
common stock to be issued pursuant to the Devon Merger shall be deemed issued
and outstanding as of the Devon Merger Effective Time.
(c) Transfers. After the Xxxxxxxx Merger Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Company Shares that
were outstanding immediately prior to the Xxxxxxxx Merger Effective Time. After
the Devon Merger Effective Time, there shall be no transfers on the stock
transfer books of Parent of the Parent Shares that were outstanding immediately
prior to the Devon Merger Effective Time.
(d) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Alternate Holdco common stock will be issued
and any holder of Company Shares entitled to receive a fractional share of
Alternate Holdco common stock (after taking into account the aggregate number of
shares of Alternate Holdco common stock to be received in exchange for all
shares held by such holder) but for this Section 3.2(d) shall be entitled to
receive in lieu thereof an amount in cash (without interest) determined by
multiplying such fraction (rounded to the nearest one-hundredth of a share) by
the average closing price of a share of Parent Common Stock, as reported in The
Wall Street Journal, Southwestern edition, on the five trading days immediately
prior to the last business day before the Xxxxxxxx Merger Effective Time.
(e) Termination of Exchange Period; Unclaimed Merger Consideration or
Alternate Holdco Common Stock. Any shares of Alternate Holdco common stock and
any portion of the cash, dividends or other distributions with respect to the
Alternate Holdco common stock deposited by Alternate Holdco with the Exchange
Agent (including the proceeds of any investments thereof) that remain unclaimed
by the stockholders of the Company or Parent 180 days after the Effective Time
shall be paid to Alternate Holdco. Any stockholders of the Company or Parent who
have not theretofore complied with this Article 3 shall thereafter be entitled
to look only to Alternate Holdco for payment of their Merger Consideration,
issuance of the shares of Alternate Holdco common stock to which they are
entitled and any cash, dividends and other distributions in respect thereof
issuable and/or payable pursuant to Section 3.1, Section 3.2(b) and Section
3.2(d) upon due surrender of their Certificates (or, in lieu of such
Certificates, affidavits of loss together with either a reasonable undertaking
to indemnify Alternate Holdco , Parent or the Company, if Alternate Holdco
believes that the Person providing the indemnity is sufficiently creditworthy,
or, if Alternate Holdco does not so believe, indemnity bonds), in each case,
without any interest thereon. Notwithstanding the foregoing, none of Alternate
Holdco, Parent, the surviving corporations of the Xxxxxxxx Merger or the Devon
Merger, the Exchange Agent or any other Person shall be liable to any former
holder of Company Shares or Parent Shares for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
A-48
(f) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed, and if Alternate Holdco believes that the Person providing the
indemnity is sufficiently creditworthy, the making of a reasonable undertaking
to indemnify Alternate Holdco, Parent or the Company, or, if Alternate Holdco
does not so believe, the posting by such Person of a bond in the form
customarily required by Alternate Holdco to indemnify against any claim that may
be made against it with respect to such Certificate, Alternate Holdco will issue
the shares of Alternate Holdco common stock and the Exchange Agent will
distribute such Merger Consideration, shares of Alternate Holdco common stock,
dividends and other distributions in respect thereof issuable or payable in
exchange for such lost, stolen or destroyed Certificate pursuant to Section 3.1,
Section 3.2(b) and Section 3.2(d), in each case, without interest.
(g) Affiliates. Notwithstanding anything in this Agreement to the
contrary, Certificates formerly representing Company Shares surrendered for
exchange by any Rule 145 Affiliate (as determined pursuant to Section 6.10) of
the Company shall not be exchanged until Alternate Holdco has received a written
agreement from such Person as provided in Section 6.10. Notwithstanding anything
in this Agreement to the contrary, Certificates formerly representing Parent
Shares surrendered for exchange by any Person who, at the time of the meeting or
meetings of the Parent's stockholders pursuant to Section 6.3, Parent believes
may be deemed to be an "affiliate" (as that term is used in paragraphs (c) and
(d) of Rule 145 of the Securities Act) of Parent shall not be exchanged until
Alternate Holdco has received a written agreement from such Person, in the form
attached hereto as Exhibit C.
SECTION 3.3 Dissenters' Rights.
(a) Dissenting Company Shares. Company Shares that are outstanding
immediately prior to the Xxxxxxxx Merger Effective Time and that are held by
stockholders who shall have not voted in favor of the approval of the Merger
Agreement and who shall have made written demand for payment of the fair value
for such shares in accordance with Section 5.12 of the TBCA (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment of the fair value of the Company Shares held by them in accordance with
the TBCA, except that all Dissenting Shares held by stockholders who shall have
failed to perfect or who effectively shall have withdrawn or lost their rights
to appraisal of such Company Shares under the TBCA shall thereupon be deemed to
have been converted into and to be exchangeable, as of the Xxxxxxxx Merger
Effective Time, for Merger Consideration in the manner provided in Section
3.1(a)(i).
(b) Dissenting Parent Preferred Shares. In accordance with Section 262 of
the DGCL, no appraisal rights shall be available to holders of Parent Common
Stock in connection with the Devon Merger. Holders of shares of Parent 6.49%
Preferred Stock issued and outstanding immediately prior to the Devon Merger
Effective Time who shall have delivered a written demand for appraisal of those
shares in accordance with the DGCL and who, as of the Devon Merger Effective
Time, shall not have effectively withdrawn or lost this right to appraisal (such
shares, "Dissenting Parent Preferred Shares") shall be entitled to those rights
(but only those rights) as are granted by Section 262 of the DGCL. Each holder
of Dissenting Parent Preferred Shares who becomes entitled to payment for those
Dissenting Parent Preferred Shares pursuant to Section 262 of the DGCL shall
receive payment from the surviving corporation of the Devon Merger in accordance
with the DGCL; provided, however, that (A) if any holder of Dissenting Parent
Preferred Shares shall have failed to establish the holder's entitlement to
appraisal rights as provided in Section 262 of the DGCL, (B) if any holder of
Dissenting Parent Preferred Shares shall have effectively withdrawn the holder's
demand for appraisal of the holder's shares or lost the holder's right to
appraisal and payment for the holder's shares under Section 262 of the DGCL or
(C) if neither any holder of Dissenting Parent Preferred Shares nor the
surviving corporation of the Devon Merger shall have filed a petition demanding
a determination of the value of all Dissenting Parent Preferred Shares within
the time provided in Section 262 of the DGCL, the holder shall forfeit the right
to appraisal of those Dissenting Parent Preferred Shares and each Dissenting
Parent Preferred Share shall remain outstanding in accordance with Section
3.1(b)(i)(B).
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SECTION 3.4 Adjustments to Prevent Dilution. In the event that, prior to
the Xxxxxxxx Merger Effective Time or the Devon Merger Effective Time, there
shall have been declared or effected a reclassification, stock split (including
a reverse split), stock dividend, stock distribution or similar event made with
respect to the Company Shares, the Parent Common Stock or the Alternate Holdco
common stock, the Merger Consideration shall be equitably adjusted to reflect
such event.
3. All references to "Parent" in Section 6.12 shall be deemed to be
references to Alternate Holdco, all references to the "Surviving Corporation" in
Section 6.12 shall be deemed to be references to the surviving corporation of
the Xxxxxxxx Merger, all references to the "Merger" in Section 6.12 shall be
deemed to be references to the Xxxxxxxx Merger and all references to the
"Effective Time" in Section 6.12 shall be deemed to be references to the
Xxxxxxxx Merger Effective Time.
4. All references to "Parent" in Section 6.13 shall be deemed to be
references to Alternate Holdco (and, for the avoidance of doubt, all references
to "Continuing Employees" in Section 6.13 shall be deemed to be references to
officers and employees of the Company and its Subsidiaries who become and remain
regular (full-time) employees of Alternate Holdco or any of its Subsidiaries).
5. Sections 6.13(d), (e), (f) and (g) shall be deleted in their entirety
and replaced with the following:
(d) Alternate Holdco and the Company shall take such actions, including
(with respect to the Company) the amendment of the options ("Stock Options") to
purchase Company Shares, and the plans pursuant to which such options have been
issued ("Option Plans"), to permit Alternate Holdco to assume, and Alternate
Holdco shall assume, effective at the Xxxxxxxx Merger Effective Time, each
Option Plan and each Stock Option that remains unexercised in whole or in part
as of the Xxxxxxxx Merger Effective Time and substitute shares of Alternate
Holdco common stock for the Company Shares purchasable under each such assumed
option ("Assumed Option"), which assumption and substitution shall be effected
as follows:
(i) the number of shares of Alternate Holdco common stock purchasable
under the Assumed Option shall be equal to 1.20 times the number of shares
of Company Common Stock underlying the Assumed Option (without regard to
any vesting schedule and with any fractional amount rounded to the next
lowest share);
(ii) the per share exercise price of such Assumed Option shall be an
amount (with fractional amounts rounded to the next highest cent) equal to
the per share exercise price of the Stock Option being assumed divided by
1.20;
(iii) Alternate Holdco will provide each holder of each Stock Option
being assumed with a statement showing the converted number of shares, the
exercise price, and the expiration date for each Assumed Option; and
(iv) any other provisions of each Assumed Option shall remain in
effect, and Alternate Holdco shall not permit the acceleration of the
exercisability or require the mandatory surrender of the Assumed Options in
connection with the Xxxxxxxx Merger pursuant to applicable provisions of
the Option Plans.
(e) Alternate Holdco shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Alternate Holdco common stock for
delivery upon exercise of the Assumed Options and, as soon as practicable after
the Effective Time, Alternate Holdco shall file a registration statement on Form
S-8 (or other appropriate form) with respect to the shares of Alternate Holdco
common stock subject to the Assumed Options, and shall use its reasonable best
efforts to maintain the effectiveness of such registration statement for so long
as any of the Assumed Options remain outstanding.
(f) Alternate Holdco and the Company shall take such actions to permit
Alternate Holdco to assume, and Alternate Holdco shall assume, effective at the
Xxxxxxxx Merger Effective Time, each bonus unit ("Bonus Unit") issued under the
Xxxxxxxx Energy & Development Corp. 1997 Bonus Unit Plan ("Bonus Unit Plan")that
remains unredeemed in whole or in part as of the Xxxxxxxx Merger Effective Time
and substitute the value of shares of Alternate Holdco common stock for the
value of the shares of
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Company Common Stock that is used to determine the amount payable to an employee
upon redemption of the Bonus Unit ("Assumed Bonus Unit"), which assumption and
substitution shall be effected as follows:
(i) the number of Bonus Units redeemable under the Assumed Bonus Unit
shall be equal to 1.20 times the number of Bonus Units being assumed
(without regard to any vesting schedule and with any fractional amount
rounded to the next lowest share);
(ii) the value of each Assumed Bonus Unit as of the Redemption Date
(as defined in the Bonus Unit Plan) shall be equal to the amount, if any,
by which (A) the closing price of a share of Alternate Holdco common stock
on such date exceeds (B) the "exercise price" of the Assumed Bonus Unit,
which shall be the closing price of Company Common Stock on the Designation
Date (as defined in the Bonus Unit Plan) divided by 1.20 (with fractional
amounts rounded to the next highest cent);
(iii) Alternate Holdco will provide each holder of Bonus Units being
assumed with a statement showing the converted number of units, the
exercise price of the Assumed Bonus Units, and the expiration date for each
Assumed Bonus Unit; and
(iv) any other provisions of each Assumed Bonus Unit shall remain in
effect, and Alternate Holdco shall not permit the acceleration of the
exercisability of the Assumed Bonus Units in connection with the Xxxxxxxx
Merger pursuant to Section VII of the Bonus Unit Plan.
(g) Alternate Holdco agrees that its Board of Directors (or the
Compensation Committee thereof) shall, at or prior to the Xxxxxxxx Merger
Effective Time, adopt resolutions specifically approving, for purposes of Rule
16b-3 under the Securities Exchange Act of 1934, the receipt, pursuant to this
Section 6.13, of Assumed Options and Assumed Bonus Units.
6. Section 7.1(e) shall be deleted in its entirety and replaced with the
following:
(e) The shares of Alternate Holdco common stock to be issued pursuant to
the Alternate Mergers and shares issuable pursuant to Assumed Options shall have
been authorized for listing on the AMEX, subject to official notice of issuance.
7. Section 7.2(b) shall be deleted in its entirety and replaced with the
following:
(b) The Company shall have received the opinion of Xxxxxx & Xxxxxx L.L.P.,
counsel to the Company, in form and substance reasonably satisfactory to the
Company, on the basis of certain facts, representations and assumptions set
forth in such opinion, dated the Closing Date, a copy of which shall be
furnished to Parent, to the effect that the receipt by the stockholders of the
Company of Alternate Holdco common stock and cash in exchange for Company Shares
pursuant to the Xxxxxxxx Merger will qualify for federal income tax purposes as
a nonrecognition transaction described in section 351 of the Code, except to the
extent that the stockholders of the Company receive cash in exchange for their
Company Shares in the Xxxxxxxx Merger. In rendering such opinion, such counsel
shall be entitled to receive and rely upon representations of officers of
Alternate Holdco, the Company, Xxxxxxxx Merger Sub and Parent as to such matters
as such counsel may reasonably request.
8. Section 7.3(b) shall be deleted in its entirety and replaced with the
following:
(b) Parent shall have received the opinion of Xxxxx, Xxxxx & Xxxxx, counsel
to Parent, in form and substance reasonably satisfactory to Parent, on the basis
of certain facts, representations and assumptions set forth in such opinion,
dated the Closing Date, a copy of which will be furnished to the Company, to the
effect that the receipt by Parent stockholders of Alternate Holdco common stock
in exchange for Parent Shares pursuant to the Devon Merger will qualify for
federal income tax purposes as a nonrecognition transaction described in section
351 of the Code. In rendering such opinion, such counsel shall be entitled to
receive and rely upon representations of officers of Alternate Holdco, the
Company, Devon Merger Sub and Parent as to such matters as such counsel may
reasonably request.
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EXHIBIT C
FORM OF PARENT AFFILIATE'S LETTER
This SHAREHOLDER AGREEMENT, dated as of , 2001 (this "Agreement")
is between Devon Holdco Corporation, a Delaware corporation ("Alternate
Holdco"), and the undersigned shareholder ("Shareholder") of Devon Energy
Corporation, a Delaware corporation ("Parent"). Capitalized terms not otherwise
defined in this Agreement have the meanings ascribed to them in the Merger
Agreement.
RECITALS
A. Parent, Devon NewCo Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), Alternate Holdco, Devon Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of Alternate
Holdco, Xxxxxxxx Merger Corporation, a Texas corporation and a wholly owned
subsidiary of Alternate Holdco, and Xxxxxxxx Energy & Development Corp., a Texas
corporation (the "Company"), have entered into an Amended and Restated
Agreement
and Plan of Merger, dated as of August 13, 2001 (the "Merger Agreement"),
pursuant to which the Company will merge (the "Merger") with and into Merger
Sub, with Merger Sub surviving the Merger (or, if an Alternate Structure Event
occurs, the parties will consummate the Alternate Mergers);
B. Pursuant to the Merger Agreement, if an Alternate Structure Event
occurs, at the Devon Merger Effective Time, outstanding Parent Shares will be
converted into shares of Alternate Holdco common stock;
C. The execution and delivery of this Agreement by Shareholder is a
material inducement to Parent and Alternate Holdco to enter into the Merger
Agreement; and
D. Shareholder has been advised that Shareholder may be deemed to be an
"affiliate" of Parent, as such term is used (i) for purposes of paragraphs (c)
and (d) of Rule 145 of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act").
NOW, THEREFORE, intending to be legally bound, the parties agree as follows:
1. Acknowledgments by Shareholder. Shareholder acknowledges and
understands that the representations, warranties and covenants made by
Shareholder set forth in this Agreement will be relied upon by Parent, Alternate
Holdco, the Company, and their respective affiliates and counsel, and that
substantial losses and damages may be incurred by such persons if Shareholder's
representations, warranties or covenants are breached. Shareholder has carefully
read this Agreement and the Merger Agreement and has consulted with such legal
counsel and financial advisers as Shareholder has deemed appropriate in
connection with the execution of this Agreement.
2. Compliance with Rule 145 and the Act.
(a) Shareholder has been advised that (i) the issuance of shares of
Alternate Holdco common stock in connection with the Devon Merger is expected to
be effected pursuant to a Registration Statement filed by Parent and Alternate
Holdco on Form S-4, and the resale of such shares will be subject to the
restrictions set forth in Rule 145 under the Act unless such shares are
otherwise transferred pursuant to an effective registration statement under the
Act or an appropriate exemption from registration, and (ii) Shareholder may be
deemed to be an affiliate of Parent. Shareholder accordingly agrees not to sell,
pledge, transfer or otherwise dispose of any shares of Alternate Holdco common
stock issued to Shareholder in the Merger, unless (i) such sale, pledge,
transfer or other disposition is made in conformity with the requirements of
Rule 145 under the Act, (ii) such sale, pledge, transfer or other disposition is
made pursuant to an effective registration statement under the Act, or (iii)
Shareholder delivers to Alternate Holdco a written opinion of counsel, in form
and substance reasonably acceptable to Alternate Holdco to the effect that such
sale, pledge, transfer or other disposition is otherwise exempt from
registration under the Act.
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(b) Alternate Holdco will give stop transfer instructions to its transfer
agent with respect to any Alternate Holdco common stock received by Shareholder
pursuant to the Devon Merger, and there will be placed on the certificates
representing such Alternate Holdco common stock, or any substitutions therefor,
legends stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES, AND MAY ONLY BE TRANSFERRED IN CONFORMITY WITH RULE 145,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR IN ACCORDANCE WITH A
WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, IN FORM
AND SUBSTANCE TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend), and Alternate Holdco shall so instruct its
transfer agent, if a registration statement respecting the sale of the shares
has been declared effective under the Act or if Shareholder delivers to
Alternate Holdco (i) satisfactory written evidence that the shares have been
sold in compliance with Rule 145 (in which case, the substitute certificate will
be issued in the name of the transferee), or (ii) an opinion of counsel, in form
and substance reasonably acceptable to Alternate Holdco to the effect that sale
of the shares by the holder thereof is no longer subject to Rule 145.
3. Miscellaneous.
(a) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document. Delivery of an executed counterpart of this Agreement
by facsimile shall be effective to the fullest extent permitted by applicable
law.
(b) This Agreement shall be enforceable by, and shall inure to the benefit
of and be binding upon, the parties and their respective successors and assigns.
As used in this Agreement, the term "successors and assigns" means, where the
context to permits, heirs, executors, administrators, trustees and successor
trustees, and personal and other representatives.
(c) This Agreement shall be deemed to be made in and in all respects shall
be interpreted, construed and governed by and in accordance with the laws of the
State of Delaware. The parties irrevocably and unconditionally consent to submit
to the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America, in either case located in Wilmington, Delaware (the
"Delaware Courts") for any litigation arising out of or relating to this
Agreement and the transactions contemplated by this Agreement (and agree not to
commence any litigation relating thereto except in such Delaware Courts), waive
any objection to the laying of venue of any such litigation in the Delaware
Courts and agree not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in an inconvenient forum.
(d) If any term, provision, covenant, or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void, or unenforceable, the remainder of
the terms, provisions, covenants, and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected,
impaired, or invalidated.
(e) Counsel to the parties to the Merger Agreement shall be entitled to
rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or any right waived or
any obligations excused, except by a written agreement signed by both parties.
(g) Notwithstanding any other provision contained in this Agreement, this
Agreement and all obligations under this Agreement shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
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(h) From and after the Devon Merger Effective Time and as long as is
necessary in order to permit Shareholder to sell Alternate Holdco common stock
held by Shareholder pursuant to Rule 145 and, to the extent applicable, Rule 144
under the Act, Alternate Holdco will file on a timely basis all reports required
to be filed by it pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as the same shall be in effect at the
time, and shall otherwise make available adequate public information regarding
Alternate Holdco in such manner as may be required to satisfy the requirements
of paragraph (c) of Rule 144 under the Act.
IN WITNESS WHEREOF, this Agreement is executed as of the date first stated
above.
DEVON HOLDCO CORPORATION,
a Delaware corporation
By:
----------------------------------
Name:
Title:
SHAREHOLDER
------------------------------------
Name:
Number of Shares Owned:
Number of Shares Issuable upon
Exercise of Stock Options:
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ANNEX A
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
Article Four shall be deleted in its entirety and replaced with the
following:
"The total authorized capital stock of the corporation shall consist of
1,000 shares of common stock having a par value of $0.10 per share."
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ANNEX B
AMENDMENTS TO PARENT'S CERTIFICATE OF INCORPORATION
1. Article I shall be deleted in its entirety and replaced with the
following:
"The name of this corporation (the "Corporation") is Devon
Intermediate Holding Corporation."
2. Section A of Article IV shall be deleted in its entirety and replaced
with the following:
"A. The Corporation shall be authorized to issue a total of 4,501,001
shares of capital stock divided into classes as follows:
(1) 1,000 shares of Common Stock, par value $0.10 per share
("Common Stock"),
(2) 4,500,000 shares of Preferred Stock, par value $1.00 per share
("Preferred Stock"), and
(3) 1 share of Special Voting Stock, par value $0.10 per share."
3. All provisions of Section A of Article VI shall be deleted in their
entirety, except for the first sentence thereof, which shall remain unchanged.
4. Article V (Election of Directors), Article VII (Stockholder Consent) and
Article XI (Amendment of Corporate Documents) shall be deleted in their entirety
and the remaining Articles shall be renumbered to be in sequential order.
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