AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 5, 2001
AMONG
APCO ARGENTINA INC.
APCO DELAWARE, INC.
AND
GLOBEX ENERGY, INC.
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 The Merger.................................................1
1.2 Closing....................................................2
1.3 Effective Time.............................................2
1.4 Effects of the Merger......................................2
1.5 Certificate of Incorporation; Memorandum of Association....2
1.6 Bylaws; Articles of Association............................2
1.7 Directors and Officers of the Company After the
Effective Time.............................................3
1.8 Effect on Capital Stock....................................3
1.9 Certain Adjustments........................................4
1.10 Option Restructuring.......................................4
1.11 Dissenter's Rights.........................................5
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund..............................................5
2.2 Exchange Procedures........................................5
2.3 Distributions with Respect to Unexchanged Shares...........6
2.4 No Further Ownership Rights in Company Common
Stock or Company Preferred Stock...........................6
2.5 No Fractional Parent Ordinary Shares.......................6
2.6 Termination of Exchange Fund...............................7
2.7 No Liability...............................................7
2.8 Investment of the Exchange Fund............................7
2.9 Lost Certificates..........................................8
2.10 Withholding Rights.........................................8
2.11 Further Assurances.........................................8
2.12 Stock Transfer Books.......................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Parent...................9
3.2 Representations and Warranties of the Company.............22
3.3 Representations and Warranties of Merger Sub..............36
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Parent.......................................36
4.2 Covenants of the Company..................................39
4.3 Governmental Filings......................................42
4.4 Control of Other Party's Business.........................42
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Stockholders Meetings.....42
5.2 Principal Executive Offices of Parent After the
Effective Time............................................44
5.3 Access to Information/Employees...........................44
5.4 Reasonable Best Efforts...................................45
5.5 Acquisition Proposals.....................................46
5.6 Employee Benefits Matters.................................47
5.7 Fees and Expenses.........................................47
5.8 Directors' and Officers' Indemnification and Insurance....47
5.9 Public Announcements......................................48
5.10 Accountant's Letters......................................48
5.11 Listing of Shares of Parent Ordinary Shares...............48
5.12 Dividends.................................................49
5.13 Acambuco Joint Venture....................................49
5.14 Certain Tax Matters.......................................49
5.15 Section 16 Matters........................................49
5.16 Termination of Company Stockholders Agreement;
Shareholders Agreement....................................49
5.17 Transitional Services Agreement...........................50
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to
Effect the Merger.........................................50
6.2 Additional Conditions to Obligations of Parent and
Merger Sub................................................51
6.3 Additional Conditions to Obligations of the Company.......52
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination...............................................53
7.2 Effect of Termination.....................................54
7.3 Amendment.................................................54
7.4 Extension; Waiver.........................................54
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and
Agreements................................................55
8.2 Notices...................................................55
8.3 Interpretation............................................56
8.4 Counterparts..............................................56
8.5 Entire Agreement; No Third Party Beneficiaries............56
8.6 Governing Law.............................................56
8.7 Severability..............................................56
8.8 Assignment................................................57
8.9 Submission to Jurisdiction; Waivers.......................57
8.10 Enforcement...............................................57
8.11 Definitions...............................................57
LIST OF EXHIBITS
Exhibit Title
1.5(b) Parent Memorandum of Association Amendment
1.6(b) Parent Articles of Association Amendment
3.2(d) Company Financial Statements
6.1(f) Form of Shareholders Agreement
6.1(g) Form of Preferred Provider Services Agreement
6.2(c)(1) Form of Skadden Tax Opinion
6.2(c)(2) Parent Representation Letter
6.2(c)(3) Company Representation Letter
6.3(c)(1) Form of Fulbright Tax Opinion
AGREEMENT AND PLAN OF MERGER, dated as of April 5, 2001 (this
"Agreement"), by and among Apco Argentina Inc., a Cayman Islands
corporation ("Parent"), Apco Delaware, Inc., a Delaware corporation and a
direct wholly-owned subsidiary of Parent ("Merger Sub"), and Globex Energy,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent and the Company deem
it advisable and in the best interests of each corporation and its
respective stockholders that Parent and the Company engage in a business
combination in order to advance the long-term strategic business interests
of Parent and the Company;
WHEREAS, the combination of Parent and the Company shall be
effected by the terms of this Agreement through the merger as outlined
below;
WHEREAS, in furtherance thereof, the respective Boards of
Directors of Parent and the Company have approved the Merger (as defined
below), upon the terms and subject to the conditions set forth in this
Agreement, pursuant to which each (i) share of common stock, no par value
per share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (as defined below), other than
shares owned or held directly or indirectly by Parent or directly or
indirectly by the Company, will be converted into ordinary shares, par
value $.01 per share, of Parent ("Parent Ordinary Shares") as set forth in
Section 1.8(a) and (ii) share of Class A Preferred Stock, no par value per
share, of the Company ("Company Preferred Stock") issued and outstanding
immediately prior to the Effective Time, other than shares owned or held
directly or indirectly by Parent or directly or indirectly by the Company,
will be converted into Parent Ordinary Shares as set forth in Section
1.8(b).
WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations promulgated thereunder; and
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
in this Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Merger Sub shall be merged with and into the
Company at the Effective Time (the "Merger"). Following the Merger, the
separate corporate existence of Merger Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation").
1.2 CLOSING. Upon the terms and subject to the conditions set
forth in Article VI and the termination rights set forth in Article VII,
the closing of the Merger (the "Closing") will take place on the first
Business Day after the satisfaction or waiver (subject to applicable law)
of the conditions (excluding conditions that, by their nature, cannot be
satisfied until the Closing Date) set forth in Article VI, unless this
Agreement has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to in writing by the parties hereto (the
actual time and date of the Closing being referred to herein as the
"Closing Date"). The Closing shall be held at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
unless another place is agreed to in writing by the parties hereto.
1.3 EFFECTIVE TIME. As soon as practicable following the
satisfaction or waiver (subject to applicable law) of the conditions set
forth in Article VI, at the Closing the parties shall (i) file a
certificate of merger (the "Certificate of Merger") in such form as is
required by and executed in accordance with the relevant provisions of the
DGCL and (ii) make all other filings or recordings required under the DGCL.
The Merger shall become effective at such time as the Certificate of Merger
is duly filed with the Delaware Secretary of State or at such subsequent
time as Parent and the Company shall agree and as shall be specified in the
Certificate of Merger (the date and time the Merger becomes effective being
the "Effective Time").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.5 CERTIFICATE OF INCORPORATION; MEMORANDUM OF ASSOCIATION.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter changed or
amended as provided therein or by applicable law.
(b) The Memorandum of Association of Parent shall be amended
effective as of the Effective Time, as set forth in Exhibit 1.5(b) hereto,
to change Parent's name to "Globex Energy, Inc.". The amendment to the
Memorandum of Association of Parent contemplated by this Section 1.5(b) is
referred to herein as the "Memorandum Amendment".
1.6 BYLAWS; ARTICLES OF ASSOCIATION. (a) The bylaws of the
Company, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(b) The Articles of Association of Parent shall be amended
effective as of the Effective Time, as set forth in Exhibit 1.6(b) hereto,
to provide that the Board of Directors of Parent shall be divided into
three staggered classes, designated Class I, Class II and Class III, each
serving a term of three years. The term of office of Class I, Class II and
Class III directors shall be as follows: (i) at the first annual general
meeting of shareholders following the Closing Date, the term of office of
the Class I directors shall expire and the Class I directors nominated for
election at such annual general meeting shall be elected for a full term of
three years, (ii) at the second annual general meeting of shareholders
following the Closing Date, the term of office of the Class II directors
shall expire and the Class II directors nominated for election at such
annual general meeting shall be elected for a full term of three years and
(iii) at the third annual general meeting of shareholders following the
Closing Date, the term of office of the Class III directors shall expire
and the Class III directors nominated for election at such annual general
meeting shall be elected for a full term of three years. The amendment to
the Articles of Association of Parent contemplated by this Section 1.6(b)
is referred to herein as the "Articles Amendment."
1.7 DIRECTORS AND OFFICERS OF THE COMPANY AFTER THE EFFECTIVE
TIME. From and after the Effective Time, the officers and directors of
Merger Sub shall be the officers and directors of the Surviving
Corporation, in each case until their respective successors are duly
elected and qualified. At the Closing, the Company shall deliver to the
Parent evidence reasonably satisfactory to Parent of the resignations of
the directors and officers of the Company, such resignations to become
effective at the Effective Time.
1.8 EFFECT ON CAPITAL STOCK. (a) At the Effective Time, by
virtue of the Merger and without any action on the part of the holder
thereof, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Company
Common Stock owned by Parent or Merger Sub or held by the Company, all of
which shall be canceled as provided in Section 1.8(c)), shall be converted
into 1.896 validly issued, fully paid and non-assessable Parent Ordinary
Shares (the "Common Exchange Ratio").
(b) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each share of Company
Preferred Stock issued and outstanding immediately prior to the Effective
Time (other than shares of Company Preferred Stock owned by Parent or
Merger Sub or held by the Company, all of which shall be canceled as
provided in Section 1.8(c)), shall be converted into 3,846.154 validly
issued, fully paid and non-assessable Parent Ordinary Shares (the
"Preferred Exchange Ratio", and together with the Common Exchange Ratio and
any cash in lieu of fractional Parent Ordinary Shares to be paid pursuant
to Section 2.5, the "Merger Consideration").
(c) As a result of the Merger and without any action on the
part of the holders thereof, at the Effective Time, all shares of Company
Common Stock and Company Preferred Stock shall cease to be outstanding and
shall be canceled and retired and shall cease to exist, and each holder of
a certificate which immediately prior to the Effective Time represented any
such shares of Company Common Stock or Company Preferred Stock (each a
"Certificate") shall thereafter cease to have any rights with respect to
such shares of Company Common Stock or Company Preferred Stock, as the case
may be, except as provided herein or by law.
(d) Each share of Company Common Stock and each share of
Company Preferred Stock issued and owned by Parent or Merger Sub or held by
the Company at the Effective Time shall, by virtue of the Merger, cease to
be outstanding and shall be canceled and retired and no Ordinary Shares of
Parent or other consideration shall be delivered in exchange therefor.
(e) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each share of common stock,
par value $1.00 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time, shall be converted into one validly issued,
fully paid and non-assessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
1.9 CERTAIN ADJUSTMENTS. Other than in connection with the
Acambuco Contribution (as defined in Section 5.13), if, between the date of
this Agreement and the Effective Time, the outstanding Parent Ordinary
Shares, Company Common Stock or Company Preferred Stock shall have been
changed into a different number of shares or different class by reason of
any issuance, reclassification, recapitalization, stock split, split-up,
combination or exchange of shares or a stock dividend or dividend payable
in any other securities shall be declared with a record date within such
period, or any similar event shall have occurred, the Common Exchange Ratio
and the Preferred Exchange Ratio, as the case may be, shall be
appropriately adjusted to provide to the holders of Company Common Stock
and Company Preferred Stock, as the case may be, the same economic effect
as contemplated by this Agreement prior to such event.
1.10 OPTION RESTRUCTURING. Prior to the Effective Time, the
Company shall take all necessary and desirable action such that immediately
prior to the Effective Time (i) all options, warrants, convertible
securities or other rights to acquire capital stock of the Company shall be
exercised or terminated and accordingly, no options, warrants, convertible
securities or other rights to acquire capital stock of the Company shall be
outstanding (the "Option Restructuring"). Any options, warrants,
convertible securities or other rights to acquire capital stock of the
Company outstanding immediately prior to the Effective Time shall terminate
upon the Effective Time. Schedule 1.10 sets forth a complete and accurate
list, as of the date hereof and as of immediately after the Option
Restructuring (but immediately prior to the Effective Time), of (i) the
stockholders of the Company and the number and class of shares of capital
stock of the Company owned by each such stockholder and (ii) the holders of
options, warrants, convertible securities or other rights to acquire
capital stock of the Company, the exercise price for such options,
warrants, convertible securities or other rights to acquire capital stock
of the Company, the class of capital stock of the Company such options,
warrants, convertible securities or other rights to acquire capital stock
are exercisable into and whether or not such options, warrants, convertible
securities or other rights to acquire capital stock of the Company are
exercisable. The Company has received from each holder of options,
warrants, convertible securities or other rights to acquire capital stock
of the Company an agreement (the "Option Exercise Agreement") that such
holder will exercise such options, warrants, convertible securities or
other rights to acquire capital stock of the Company prior to the Effective
Time and that to the extent such options, warrants, convertible securities
or other rights to acquire capital stock of the Company are not exercised
such options, warrants, convertible securities or other rights to acquire
capital stock of the Company shall terminate and be cancelled upon the
Effective Time. The Company has provided Parent a complete and accurate
copy of each Option Exercise Agreement. The Option Restructuring and all
actions taken in connection with implementing the Option Restructuring
shall be subject to the prior approval of Parent, such approval not to be
unreasonably withheld.
1.11 DISSENTER'S RIGHTS. Notwithstanding anything in this
Agreement to the contrary, any shares of Company Common Stock or Company
Preferred Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has delivered a written demand for appraisal of
such shares in accordance with Section 262 of the DGCL, if such Section 262
provides for appraisal rights for such shares in the Merger ("Dissenting
Shares"), shall not be converted into the right to receive the Merger
Consideration, unless and until such holder fails to perfect or effectively
withdraws or otherwise loses his right to appraisal and payment under the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses his right to appraisal, such Dissenting
Shares shall thereupon be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration to which
such holder is entitled, without interest or dividends thereon. Any amounts
paid to holders of Dissenting Shares in an appraisal proceeding will be
paid by the Surviving Corporation out of its own funds and will not be
paid, directly or indirectly, by Parent.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND. Prior to the Effective Time, Parent shall
appoint Bank of New York (or one of its affiliates) to act as exchange
agent hereunder for the purpose of exchanging Certificates for the Merger
Consideration (the "Exchange Agent"). At or prior to the Effective Time,
Parent shall deposit with the Exchange Agent, in trust for the benefit of
holders of shares of Company Common Stock and Company Preferred Stock,
certificates representing the Parent Ordinary Shares issuable pursuant to
Section 1.8 in exchange for outstanding shares of Company Common Stock and
Company Preferred Stock. Parent agrees to make available to the Exchange
Agent from time to time as needed, cash sufficient to pay cash in lieu of
fractional shares pursuant to Section 2.5 and any dividends and other
distributions pursuant to Section 2.3. Any cash and certificates of Parent
Ordinary Shares deposited with the Exchange Agent shall hereinafter be
referred to as the "Exchange Fund."
2.2 EXCHANGE PROCEDURES. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder
of a Certificate (i) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent, and which letter shall be in customary form and have such other
provisions as Parent may reasonably specify (such letter to be reasonably
acceptable to the Company prior to the Effective Time) and (ii)
instructions for effecting the surrender of such Certificates in exchange
for the applicable Merger Consideration. Upon surrender of a Certificate to
the Exchange Agent together with such letter of transmittal, duly executed
and completed in accordance with the instructions thereto, and such other
documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor (A)
one or more Parent Ordinary Shares (which shall be in uncertificated
book-entry form unless a physical certificate is requested) representing,
in the aggregate, the whole number of shares that such holder has the right
to receive pursuant to Section 1.8 (after taking into account all shares of
Company Common Stock and Company Preferred Stock then held by such holder)
and (B) a check in the amount equal to the cash that such holder has the
right to receive pursuant to the provisions of this Article II, including
cash in lieu of any fractional Parent Ordinary Shares pursuant to Section
2.5 and dividends and other distributions pursuant to Section 2.3. No
interest will be paid or will accrue on any cash payable pursuant to
Section 2.3 or Section 2.5. In the event of a transfer of ownership of
Company Common Stock or Company Preferred Stock which is not registered in
the transfer records of the Company, one or more Parent Ordinary Shares
evidencing, in the aggregate, the proper number of Parent Ordinary Shares,
a check in the proper amount of cash in lieu of any fractional Parent
Ordinary Shares pursuant to Section 2.5 and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.3, may
be issued with respect to such Company Common Stock or Company Preferred
Stock to such a transferee if the Certificate representing such shares of
Company Common Stock or Company Preferred Stock 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.
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made with respect to Parent
Ordinary Shares with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the Parent
Ordinary Shares that such holder would be entitled to receive upon
surrender of such Certificate and no cash payment in lieu of fractional
Parent Ordinary Shares shall be paid to any such holder pursuant to Section
2.5 until such holder shall surrender such Certificate in accordance with
Section 2.2. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid to such holder of Parent
Ordinary Shares issuable in exchange therefor, without interest, (a)
promptly after the time of such surrender, the amount of any cash payable
in lieu of fractional Parent Ordinary Shares to which such holder is
entitled pursuant to Section 2.5 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such whole Parent Ordinary Shares, and (b) at the
appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and
a payment date subsequent to such surrender payable with respect to such
Parent Ordinary Shares.
2.4 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK OR
COMPANY PREFERRED STOCK. All Parent Ordinary Shares issued and cash paid
upon conversion of shares of Company Common Stock and Company Preferred
Stock in accordance with the terms of Article I and this Article II
(including any cash paid pursuant to Section 2.3 or 2.5) shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock and Company Preferred Stock.
2.5 NO FRACTIONAL PARENT ORDINARY SHARES. (a) No certificates
or scrip or Parent Ordinary Shares representing fractional Parent Ordinary
Shares or book-entry credit of the same shall be issued upon the surrender
for exchange of Certificates and such fractional share interests will not
entitle the owner thereof to vote or to have any rights of a shareholder of
Parent or a holder of Parent Ordinary Shares.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock and Company Preferred Stock
exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a Parent Ordinary Share (after taking into account
all Certificates delivered by such holder) shall receive, in lieu thereof,
cash (without interest) in an amount equal to the product of (i) such
fractional part of a Parent Ordinary Share multiplied by (ii) the closing
price for a Parent Ordinary Share on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") on the date of the Effective
Time or, if such date is not a Business Day, the Business Day immediately
following the date on which the Effective Time occurs.
(c) As promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional interests, the
Exchange Agent shall so notify Parent, and Parent shall cause the Surviving
Corporation to deposit such amount with the Exchange Agent and shall cause
the Exchange Agent to forward payments to such holders of fractional
interests subject to and in accordance with the terms hereof.
2.6 TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for six
months after the Effective Time shall be delivered to Parent or otherwise
on the instruction of Parent, and any holders of the Certificates who have
not theretofore complied with this Article II shall thereafter look only to
Parent for the Merger Consideration with respect to the shares of Company
Common Stock and Company Preferred Stock formerly represented thereby to
which such holders are entitled pursuant to Section 1.8 and Section 2.2,
any cash in lieu of fractional Parent Ordinary Shares to which such holders
are entitled pursuant to Section 2.5 and any dividends or distributions
with respect to Parent Ordinary Shares to which such holders are entitled
pursuant to Section 2.3. Any such portion of the Exchange Fund remaining
unclaimed by holders of shares of Company Common Stock and Company
Preferred Stock five years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to
or become property of any Governmental Entity (as defined in Section
3.1(c)(iii)) shall, to the extent permitted by law, become the property of
the Surviving Corporation free and clear of any claims or interest of any
Person previously entitled thereto.
2.7 NO LIABILITY. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any Person
in respect of any Merger Consideration from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
2.8 INVESTMENT OF THE EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Parent on a
daily basis; provided, that no such gain or loss thereon shall affect the
amounts payable to the Company stockholders pursuant to Article I and the
other provisions of this Article II. Any interest and other income
resulting from such investments shall promptly be paid to Parent.
2.9 LOST CERTIFICATES. If 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
required by the Surviving Corporation, the posting by such Person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration
with respect to the shares of Company Common Stock and Company Preferred
Stock formerly represented thereby, any cash in lieu of fractional Parent
Ordinary Shares, and unpaid dividends and distributions on Parent Ordinary
Shares deliverable in respect thereof, pursuant to this Agreement.
2.10 WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock or Company Preferred Stock such amounts as it is
required to deduct and withhold with respect to the making of such payment
under the Code and the rules and regulations promulgated thereunder, or any
provision of state, local or foreign tax law. To the extent that amounts
are so withheld by the Surviving Corporation or Parent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock or
Company Preferred Stock, in respect of which such deduction and withholding
was made by the Surviving Corporation or Parent, as the case may be.
2.11 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Sub, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Sub, any other
actions and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the
Merger.
2.12 STOCK TRANSFER BOOKS. The stock transfer books of the
Company shall be closed immediately upon the Effective Time and there shall
be no further registration of transfers of shares of Company Common Stock
or Company Preferred Stock thereafter on the records of the Company. On or
after the Effective Time, any Certificates presented to the Exchange Agent
or Parent for any reason shall be converted into the Merger Consideration
with respect to the shares of Company Common Stock or Company Preferred
Stock formerly represented thereby (including any cash in lieu of
fractional Parent Ordinary Shares to which the holders thereof are entitled
pursuant to Section 2.5) and any dividends or other distributions to which
the holders thereof are entitled pursuant to Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set
forth in the Parent disclosure schedule delivered by Parent to the Company
prior to the execution of this Agreement (the "Parent Disclosure Schedule")
(each section of which qualifies the correspondingly numbered
representation and warranty or covenant), Parent represents and warrants to
the Company as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Parent and its Subsidiaries (as defined in Section
8.11) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, has the requisite power
and authority to own, lease and operate its properties and to carry
on its business as now being conducted, except where the failures to
be so organized, existing and in good standing or to have such power
and authority, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Parent, and is duly
qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary other than in such
jurisdictions where the failures so to qualify or to be in good
standing, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent. The copies of
the Memorandum of Association and Articles of Association of Parent
which were previously furnished or made available to the Company are
true, complete and correct copies of such documents as in effect on
the date of this Agreement.
(ii) The Parent Disclosure Schedule sets forth a complete and
accurate list of Parent's Subsidiaries. All the outstanding shares of
capital stock of, or other equity interests in, each such Subsidiary
have been validly issued and are fully paid and non-assessable and
are, except as set forth in the Parent Disclosure Schedule, owned
directly or indirectly by Parent, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever (collectively "Liens") and free of any
other restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership
interests), except for restrictions imposed by applicable securities
laws. Except as set forth in the Parent SEC Reports (as defined in
Section 3.1(d)) filed prior to the date hereof or in the Parent
Disclosure Schedule, neither Parent nor any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association
or entity (other than Subsidiaries), that is or would reasonably be
expected to be material to Parent.
(b) Capital Structure.
(i) As of the date hereof, the authorized capital stock of
Parent consisted of 15,000,000 Parent Ordinary Shares of which
7,360,311 shares were issued and outstanding and no shares were held
in the treasury of Parent. All issued and outstanding shares of the
capital stock of Parent are, and when Parent Ordinary Shares are
issued in the Merger will be, duly authorized, validly issued, fully
paid and non-assessable and free of any preemptive rights. As of the
date hereof, there are no outstanding options, warrants convertible
securities or other rights to acquire capital stock of Parent. The
Parent Disclosure Schedule sets forth a complete and accurate list of
each Subsidiary of the Parent and the number of authorized, issued
and outstanding shares of capital stock of each of such Subsidiary.
(ii) No bonds, debentures, notes or other indebtedness of
Parent having the right to vote on any matters on which holders of
capital stock of Parent may vote are issued or outstanding.
(iii) As of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Parent
or any of its Subsidiaries is a party or by which any of them is
bound obligating Parent or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, shares of capital
stock or other voting securities of Parent or any of its Subsidiaries
or obligating Parent or any of its Subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of
this Agreement, there are no outstanding obligations of Parent or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of Parent or any of its Subsidiaries.
(c) Authority; No Conflicts.
(i) Parent has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby, subject to obtaining the requisite stockholder
approval of: (i) the issuance of the Parent Ordinary Shares to be
issued in the Merger (the "Share Issuance"), (ii) the Memorandum
Amendment, and (iii) the Articles Amendment (collectively, the
"Parent Stockholder Approval"). The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of Parent, subject to obtaining the Parent Shareholder
Approval. This Agreement has been duly executed and delivered by
Parent and constitutes a valid and binding agreement of Parent,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
(ii) The execution and delivery of this Agreement by Parent
does not, and the consummation by Parent of the Merger and the other
transactions contemplated hereby will not, conflict with, or result
in any violation of, or constitute a default (with or without notice
or lapse of time, or both) under, or give rise to a right of, or
result by its terms in the, termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or the creation of a lien, pledge, security interest, charge
or other encumbrance on, or the loss of, any assets (any such
conflict, violation, default, right of termination, amendment,
cancellation or acceleration, loss or creation, a "Violation")
pursuant to: (A) any provision of the Memorandum of Association and
Articles of Association of Parent or any similar governing documents
of any material Subsidiary of Parent, or (B) except as, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Parent, any loan or credit agreement,
note, mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any Subsidiary of Parent or their
respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational,
national, state, municipal, local or foreign government, any
instrumentality, subdivision, court, administrative agency or
commission or other authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (a "Governmental
Entity"), is required by or with respect to Parent or any Subsidiary
of Parent in connection with the execution and delivery of this
Agreement by Parent or the consummation of the Merger and the other
transactions contemplated hereby, except for those required under or
in relation to (A) state securities or "blue sky" laws (the "Blue Sky
Laws"), (B) the Securities Act, (C) the Exchange Act, (D) the DGCL
with respect to the filing of the Certificate of Merger, (E) rules
and regulations of NASDAQ, (F) antitrust or other competition laws of
jurisdictions other than the United States, and (G) such consents,
approvals, orders, authorizations, registrations, declarations and
filings the failures of which to make or obtain, individually or in
the aggregate, would not reasonably be expected to have a Material
Adverse Effect on Parent. Consents, approvals, orders,
authorizations, registrations, declarations and filings required
under or in relation to any of the foregoing clauses (A) through (F)
are hereinafter referred to as "Necessary Consents."
(d) Reports and Financial Statements.
(i) Parent has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it with the Securities Exchange
Commission (the "SEC") since January 1, 1996 (collectively, including
all exhibits thereto, the "Parent SEC Reports"). None of the Parent
SEC Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement or the
Closing Date, then on the date of such filing), contained or will
contain any untrue statement of a material fact or omitted or will
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. Each of the
financial statements (including the related notes) included in the
Parent SEC Reports presents fairly, in all material respects, the
consolidated financial position and consolidated results of
operations and cash flows of Parent and its consolidated Subsidiaries
as of the respective dates or for the respective periods set forth
therein, all in conformity with United States generally accepted
accounting principles ("GAAP") consistently applied during the
periods involved except as otherwise noted therein, and subject, in
the case of the unaudited interim financial statements, to the
absence of notes and normal year-end adjustments that have not been
and are not expected to be material in amount.
(ii) Except as disclosed in the Parent SEC Reports filed prior
to the date hereof, since December 31, 2000, Parent and its
Subsidiaries have not incurred any liabilities that are of a nature
that would be required to be disclosed on a balance sheet of Parent
and its Subsidiaries or the footnotes thereto prepared in conformity
with GAAP, other than (A) liabilities incurred in the ordinary course
of business or (B) liabilities that, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Parent.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
Parent for inclusion or incorporation by reference in (A) the Form
S-4 (as defined in Section 5.1) will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at
the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading and (B) the Joint Proxy
Statement/Prospectus (as defined in Section 5.1) will, on the date it
is first mailed to Company stockholders or Parent shareholders or at
the time of the Company Stockholders Meeting or the Parent
Shareholders Meeting (each as defined in Section 5.1), contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The Form S-4 and the Joint Proxy
Statement/Prospectus will comply as to form in all material respects
with the requirements of the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by Parent with respect
to statements made or incorporated by reference in the Form S-4 or
the Joint Proxy Statement/Prospectus based on information supplied by
the Company for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of Parent, by
resolutions duly adopted by unanimous vote at a meeting duly called and
held and not subsequently rescinded or modified in any way (the "Parent
Board Approval"), has duly (i) determined that this Agreement and the
Merger are advisable and are fair to and in the best interests of Parent
and its shareholders, (ii) approved this Agreement, the Merger, the
Memorandum Amendment, the Articles Amendment and the Share Issuance and
(iii) recommended that the shareholders of Parent approve the Share
Issuance, the Memorandum Amendment and the Articles Amendment and directed
that the Share Issuance, the Memorandum Amendment and the Articles
Amendment be submitted for consideration by Parent's shareholders at the
Parent Shareholders Meeting.
(g) Vote Required. The affirmative vote by a majority of the
votes cast by holders of Parent Ordinary Shares is the only vote necessary
to approve the Share Issuance. The only votes necessary to approve the
Memorandum Amendment are an affirmative vote by special resolution of at
least two-thirds of the votes cast by the holders of Parent Ordinary Shares
at a general meeting. The affirmative vote by special resolution of at
least two-thirds of the votes cast by the holders of Parent Ordinary Shares
at a general meeting is the only vote necessary to approve the Articles
Amendment.
(h) Litigation; Compliance with Laws.
(i) Except as disclosed in the Parent SEC Reports filed prior
to the date of this Agreement or as set forth in the Parent
Disclosure Schedule, there are no suits, actions or proceedings
(collectively "Actions") pending or, to the knowledge of Parent,
threatened, against or affecting Parent or any Subsidiary of Parent,
nor are there any judgments, decrees, injunctions, rules or orders of
any Governmental Entity or arbitrator outstanding against Parent or
any Subsidiary of Parent, in each case which are material to Parent.
(ii) Except as disclosed in the Parent SEC Reports filed prior
to the date of this Agreement or as set forth in the Parent
Disclosure Schedule, Parent and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for and material to the
operation of the businesses of Parent and its Subsidiaries, taken as
a whole (the "Parent Permits"). Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement or as set forth in
the Parent Disclosure Schedule, Parent and its Subsidiaries are in
compliance in all material respects with the terms of the Parent
Permits. Except as disclosed in the Parent SEC Reports filed prior to
the date of this Agreement, or as set forth in the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries is in violation
of, and Parent and its Subsidiaries have not received any notices of
violations with respect to, any laws, ordinances or regulations of
any Governmental Entity, except for violations which, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on Parent.
(i) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, except as disclosed in the Parent SEC Reports filed
prior to the date of this Agreement, and except as permitted by Section
4.1, since December 31, 2000, (i) Parent and its Subsidiaries have
conducted their business only in the ordinary course and (ii) there has not
been any action taken by Parent or its Subsidiaries during the period from
December 31, 2000 through the date of this Agreement that, if taken during
the period from the date of this Agreement through the Effective Time,
would constitute a breach of Section 4.1. Except as disclosed in Parent SEC
Documents or as set forth in the Parent Disclosure Schedule, since December
31, 2000 there have not been any changes, circumstances, or events which
individually or in the aggregate have had, or would reasonably be expected
to have a Material Adverse Effect on the Parent.
(j) Environmental Matters. Except as set forth in the Parent
SEC Reports filed prior to the date hereof, except as set forth in the
Parent Disclosure Schedule and with such exceptions as, individually or in
the aggregate, have not had, and would not reasonably be expected to have,
a Material Adverse Effect on Parent, no notice, notification, demand,
request for information, citation, summons, complaint or order has been
received by, and no investigation, action, claim, suit, proceeding or
review is pending or, to the knowledge of Parent or any of its
Subsidiaries, threatened by any Person against, Parent or any of its
Subsidiaries, and no penalty has been assessed against Parent or any of its
Subsidiaries, in each case, with respect to any matters relating to or
arising out of any Environmental Law; Parent and its Subsidiaries are and
have been in compliance with all Environmental Laws; there are no
liabilities of or relating to Parent or any of its Subsidiaries relating to
or arising out of any Environmental Law of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and
there is no existing condition, situation or set of circumstances which
would reasonably be expected to result in such a liability; and there has
been no environmental investigation, study, audit, test, review or other
analysis conducted of which Parent has knowledge in relation to the current
or prior business of Parent or any of its Subsidiaries or any property or
facility now or previously owned, leased or operated by Parent or any of
its Subsidiaries which has not been previously delivered to the Company.
For purposes of this Agreement, the term "Environmental Laws" means
any federal, state, local or foreign statutes, laws (including common law),
judicial decisions, regulations, ordinances, rules, judgments, orders,
codes, injunctions, permits, governmental agreements or governmental
restrictions relating to human health and safety, the environment or to
hazardous materials, toxic materials, pollutants, contaminants, wastes, or
chemicals (including petroleum and petroleum products).
(k) Intellectual Property. Except as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on Parent and except as disclosed in the Parent SEC Reports filed
prior to the date of the Agreement: (i) Parent and each of its Subsidiaries
owns, or is licensed to use (in each case, free and clear of any Liens),
all Intellectual Property (as defined below) used in and necessary for the
conduct of its business as currently conducted; (ii) the use of any
Intellectual Property by Parent and its Subsidiaries does not infringe on
or otherwise violate the rights of any Person and is in accordance with any
applicable license pursuant to which Parent or any Subsidiary acquired the
right to use any Intellectual Property; (iii) to the knowledge of Parent,
no Person is challenging, infringing on or otherwise violating any right of
Parent or any of its Subsidiaries with respect to any Intellectual Property
owned by or licensed to Parent or its Subsidiaries; and (iv) neither Parent
nor any of its Subsidiaries has received any written notice or otherwise
has knowledge of any pending claim, order or proceeding with respect to any
Intellectual Property used by Parent and its Subsidiaries and to its
knowledge no Intellectual Property owned or licensed by Parent or its
Subsidiaries is being used or enforced in a manner that would reasonably be
expected to result in the abandonment, cancellation or unenforceability of
such Intellectual Property. For purposes of this Agreement, "Intellectual
Property" shall mean trademarks, service marks, brand names, certification
marks, trade dress and other indications of origin, the goodwill associated
with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including divisions,
continuations, continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction; trade
secrets and other similar confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings
and other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; any similar
intellectual property or proprietary rights.
(l) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of Parent, except Bank of
America Securities LLC whose fees and expenses will be paid by Parent in
accordance with Parent's agreement with such firm, a copy of which has been
provided to the Company.
(m) Opinion of Parent Financial Advisor. Parent has received
the opinion of Banc of America Securities LLC, dated the date of this
Agreement, to the effect that, as of such date, the Merger Consideration in
the aggregate is fair to Parent, from a financial point of view, a copy of
which opinion will be promptly delivered to the Company.
(n) Taxes. Except as disclosed in the Parent SEC Reports filed
prior to the date of this Agreement, all Federal, state, local and foreign
Tax Returns required to be filed by Parent and its Subsidiaries have been
timely filed and are complete and correct in all material respects. Except
as disclosed in the Parent SEC Reports filed prior to the date of this
Agreement, all Taxes shown on such Tax Returns as being due or claimed to
be due from Parent and its Subsidiaries in a written statement from an
authorized governmental authority have been paid other than those being
contested in good faith and by appropriate proceedings timely instituted
and diligently pursued and for which adequate reserves have been
established on the books and records of Parent and its Subsidiaries, as the
case may be, in accordance with GAAP. For purposes of this Agreement: (i)
"Tax" (and, with correlative meaning, "Taxes") means any Federal, state,
local or foreign income, gross receipts, property, sales, use, value added,
license, excise, franchise, employment, payroll, withholding, alternative
or add on minimum, ad valorem, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest, addition or penalty, imposed
by any governmental authority or any obligation to pay Taxes imposed on any
entity for which a party to this Agreement is liable as a result of any
indemnification provision or other contractual obligation or as a result of
any transferee liability, and (ii) "Tax Return" means any return, report,
declaration, or similar statement required to be filed with respect to any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
(o) Agreements, Contracts and Commitments.
(i) The Parent Disclosure Schedule sets forth a true, complete
and correct list of all the following agreements, arrangements or
understandings, whether written or oral, to which Parent or any of
its Subsidiaries is a party, (A) agreements relating to indebtedness
for borrowed money (whether incurred, assumed, guaranteed, secured by
any asset or otherwise) for amounts in excess of $1,000,000, (B)
agreements for the lease of real or personal property to or from any
person with lease payments in excess of $100,000 per year, (C)
partnership agreements, joint venture agreements or other similar
agreements relating to similar business arrangements, (D)
confidentiality or noncompetition agreements other than with respect
to confidentiality agreements entered into in the ordinary course of
business for the benefit of Parent's or its Subsidiaries' vendors or
customers, (E) profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plans or
arrangements for the benefit of current or former employees or
directors of Parent and its Subsidiaries, (F) collective bargaining
or similar agreements, (G) agreements for the employment or retention
of any individual on a full-time, part-time, consulting, or other
basis not terminable on less than thirty (30) days notice without
penalty or cost, (H) agreements under which it has advanced or loaned
any amount in excess of $10,000 to any of the employees or affiliates
of Parent, except for reimbursable business expenses (as determined
in accordance with Parent's established employee reimbursement
policies and consistent with past practices), (I) agreements for the
purchase or receipt of materials, software, supplies, goods,
services, equipment or other assets that provide for either annual or
aggregate payments by Parent or its Subsidiaries of $100,000 or more
(other than Hydrocarbon Agreements), (J) sales, distribution, vendor
or other similar agreements or arrangements providing for the sale,
transfer or barter by Parent or its Subsidiaries of materials,
supplies, goods, services, equipment, or other assets that provide
for either annual or aggregate payments to Parent of $100,000 or more
(other than Hydrocarbon Agreements), (K) agreements or term sheets
relating to the acquisition or disposition of any business or assets
of Parent (whether by merger, sale of stock, sale of assets or
otherwise), excluding documentation relating to this Agreement and
agreements or terms sheets in existence prior to December 31, 1998,
(L) Hydrocarbon Agreements and (M) other agreements which are
material to Parent (collectively the "Parent Material Agreements").
(ii) Parent has delivered to the Company a true, complete and
correct copy of each Parent Material Agreement.
(iii) Each Parent Material Agreement is in full force and
effect, has not been modified or amended and constitutes the legal,
valid and binding obligation of Parent or its Subsidiaries, as the
case may be, enforceable in accordance with its terms and will
continue to be so on identical terms immediately following the
consummation of the transactions contemplated by this Agreement, and
Parent or its Subsidiaries, as the case may be, are not in default
under any of such agreements, nor has any event or circumstance
occurred that, with notice or lapse of time or both, would constitute
any event of default by Parent or its Subsidiaries, as the case may
be. No other party to any of the Parent Material Agreements (A) is,
to the knowledge of Parent, in default in the performance of any
covenant or obligation to be performed by it pursuant to any such
Parent Material Agreement or (B) has given notice that it intends to
terminate, or alter in any way adverse to Parent, its performance
under such Parent Material Agreement.
(p) Employee Benefit Plans.
(i) The Parent Disclosure Schedule contains a true and
complete list of each deferred compensation and each bonus or other
incentive compensation, stock purchase, stock option and other equity
compensation or ownership plan, program, agreement or arrangement, each
severance or termination pay, medical, surgical, hospitalization, life
insurance and other "welfare" plan, fund or program (within the meaning of
Section 3(1) of ERISA); each profit-sharing, stock bonus or other "pension"
plan, fund or program (within the meaning of Section 3(2) of ERISA); each
employment, retention, consulting, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or required
to be contributed to by Parent or by any trade or business, whether or not
incorporated (a "Parent ERISA Affiliate"), that, together with Parent would
be deemed a "single employer" within the meaning of Section 4001(b) of
ERISA, or to which Parent or a Parent ERISA Affiliate is party, whether
written or oral, for the benefit of any employee or director or former
employee or director (or any of their respective beneficiaries), of Parent
or any of its Subsidiaries (the "Parent Benefit Plans").
(ii) With respect to each Parent Benefit Plan, Parent has
heretofore delivered or made available to the Company true and complete
copies of each of the following documents: (A) a copy of the Parent Benefit
Plan and any amendments thereto; (B) a copy of the two most recent annual
reports on Internal Revenue Service Form 5500 and actuarial reports, if
required under ERISA; (C) a copy of the most recent Summary Plan
Description (including supplements) required under ERISA with respect
thereto; (D) if the Parent Benefit Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding agreement
and the latest financial statements thereof and all related agreements; and
(E) the most recent determination letter received from the Internal Revenue
Service with respect to each Parent Benefit Plan intended to qualify under
Section 401(a) of the Code.
(iii) No liability under Title IV or Section 302 of ERISA
has been incurred by Parent or any Parent ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
Parent or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due).
(iv) No Parent Benefit Plan has, to the knowledge of
Parent, engaged in a "prohibited transaction" (as defined in Section 4975
of the Code or Section 406 of ERISA).
(v) With respect to each Parent Benefit Plan subject to
Title IV of ERISA (the "Title IV Parent Benefit Plans"), the present value
of accrued benefits under such plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by
such plan's actuary with respect to such plan did not exceed, as of its
latest valuation date, the then current value of the assets of such plan
allocable to such accrued benefits.
(vi) No Title IV Parent Benefit Plan or any trust
established thereunder has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of each
Title IV Parent Benefit Plan ended prior to the Closing Date nor has there
been any application for waiver of the minimum funding standards imposed by
Section 412 of the Code. All contributions required to be made with respect
to any Parent Benefit Plan on or prior to the Closing Date have been timely
made or are reflected on the balance sheet.
(vii) No Parent Benefit Plan is a "multiemployer plan",
as defined in Section 3(37) of ERISA, nor is any Parent Benefit Plan a plan
described in Section 4063(a) of ERISA.
(viii)Each Parent Benefit Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code, the rules
and regulations thereunder and all applicable collective bargaining
agreements and each Parent Benefit Plan intended to be "qualified" under
Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service to such effect. To the knowledge of
Parent, there is no fact, condition or set of circumstances existing that
could adversely affect such favorable determination. To the knowledge of
Parent, there are no investigations pending in respect of any Parent
Benefit Plan by any governmental entity.
(ix) No Parent Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees (or their beneficiaries) of Parent or any of
its Subsidiaries for periods extending beyond their respective dates of
retirement or other termination of service, other than (A) coverage
mandated by applicable law, (B) death benefits under any "pension plan" or
(C) benefits the full cost of which is borne by the current or former
employee (or his beneficiary).
(x) Except as set forth in the Parent Disclosure
Schedule, no amounts payable or that could become payable under the Parent
Benefit Plans may fail to be deductible for Federal income tax purposes by
virtue of either Section 280G or 162(m) of the Code.
(xi) Except as set forth in the Parent Disclosure
Schedule, the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (A)
entitle any current or former employee, director or officer of Parent or
any of its Subsidiaries to severance pay, unemployment compensation or any
other payment, (B) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee, director or officer or
(C) require the immediate funding or financing of any compensation or
benefits.
(xii) Each Parent Benefit Plan that has been adopted or
maintained by Parent or any of its Subsidiaries, whether formally or
informally, for the benefit of employees of Parent or any of its
Subsidiaries outside of the United States (a "Parent Foreign Benefit Plan")
has been established, maintained and administered in material compliance
with its terms and conditions and with the requirements prescribed by any
and all regulatory laws that are applicable to such Parent Foreign Benefit
Plan. No Parent Foreign Benefit Plan has unfunded liabilities that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Affect on Parent.
(xiii)There are no pending, threatened or anticipated
claims by or on behalf of any Parent Benefit Plan, by any employee or
beneficiary covered under any such Parent Benefit Plan, or otherwise
involving any such Parent Benefit Plan (other than routine claims for
benefits).
(q) Labor Matters. Parent has complied, in all material
respects, with all applicable laws of the United States, or of any state or
local government or any subdivision thereof or of any foreign government
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including ERISA, the Code, the Immigration
Reform and Control Act, the Worker Adjustment and Retraining Notification
Act (the "WARN Act"), any laws respecting employment discrimination, sexual
harassment, disability rights or benefits, equal opportunity, plant closure
issues, affirmative action, workers' compensation, employee benefits,
severance payments, continuation of health insurance ("COBRA"), labor
relations, employee leave issues, wage and hour standards, occupational
safety and health requirements and unemployment insurance and related
matters, and is not engaged in any unfair labor practices.
(r) Title to Assets. Except as set forth in the Parent SEC
Reports or the Parent Disclosure Schedule, Parent or one of its
Subsidiaries has Defensible Title to all of its Oil and Gas Interests.
Except as set forth in the Parent SEC Reports or the Parent Disclosure
Schedule, each Oil and Gas Interest included or reflected in the Parent
Ownership Interests entitles Parent to receive, directly or indirectly, not
less than the undivided interest set forth in (or derived from) the Parent
Ownership Interests of all Hydrocarbons produced, saved and sold from or
attributable to such Oil and Gas Interest, and the portion of the costs and
expenses of operation and development of such Parent Oil and Gas Interest
that is borne or to be borne, directly or indirectly, by Parent is not
greater than the undivided interest set forth in (or derived from) the
Parent Ownership Interests. Except for Permitted Encumbrances, Parent and
each of its Subsidiaries has Defensible Title to its material assets (other
than the Oil and Gas Interests of Parent). All leases pursuant to which
Parent or its Subsidiaries lease any material assets are in full force and
effect, and Parent has not received any notice of default under any such
lease. The Parent Disclosure Schedule sets forth a complete and accurate
list of all material real property, other than Oil and Gas Interests, that
is owned or leased by Parent or its Subsidiaries.
(s) Parent Engineering Report. All information supplied to the
engineering firm preparing the applicable report by or on behalf of Parent
that was material to the evaluation of Parent's Oil and Gas Interests in
connection with the preparation of the Parent Engineering Report was (at
the time supplied or as modified or amended prior to the issuance of the
Parent Engineering Report) true and correct in all material respects.
Except for changes in classification or values of oil and gas reserves or
property interests that occurred in the ordinary course of business since
December 31, 1999 and except for changes (including changes in commodity
prices) generally affecting the oil and gas industry, there has been no
material adverse change with respect to the matters addressed in the Parent
Engineering Report.
(t) Oil and Gas Operations. Except as set forth in the Parent
SEC Reports, to the knowledge of Parent, as to xxxxx not operated by
Parent, and without qualification as to knowledge, as to xxxxx operated by
Parent:
(i) As of the respective dates reflected thereon, (A) none of
the xxxxx included in the Oil and Gas Interests of Parent has been
overproduced such that it is subject or liable to being shut-in or to
any overproduction penalty, (B) Parent has not received any
deficiency payment under any gas contract for which any Person has a
right to take deficiency gas from Parent, and (C) Parent has not
received any payment for production which is subject to refund or
recoupment out of future production;
(ii) There have been no changes proposed in the production
allowables for any xxxxx included in the Oil and Gas Interests of
Parent that would reasonably be expected to have a Material Adverse
Effect on Parent;
(iii) All xxxxx included in the Oil and Gas Interests of Parent
have been drilled and, if completed, operated, and produced in
accordance with customary oil and gas field practices and in
compliance in all material respects with applicable oil and gas
leases and applicable laws, rules, and regulations;
(iv) Parent has neither agreed to nor is it now obligated to
abandon any well operated by it and included in the Oil and Gas
Interests of Parent that is or will not be abandoned and reclaimed in
accordance with applicable laws, rules, and regulations and customary
oil and gas industry practices;
(v) Proceeds from the sale of Hydrocarbons produced from and
attributable to Parent's Oil and Gas Interests are being received by
Parent in a timely manner and are not being held in suspense for any
reason (except for amounts, individually or in the aggregate, not in
excess of $50,000 and held in suspense in the ordinary course of
business); and
(vi) No Person has any call on, option to purchase, or similar
rights with respect to Parent's Oil and Gas Interests or to the
production attributable thereto, and upon consummation of the
transactions contemplated by this Agreement, Parent will have the
right to market production from Parent's Oil and Gas Interests on
terms no less favorable than the terms upon which such company is
currently marketing such production.
(u) Hydrocarbon Sales and Purchase Agreements. Except as set
forth in the Parent SEC Reports:
(i) None of the Hydrocarbon Agreements of Parent or its
Subsidiaries has required since December 31, 1999, or will require as
of or after the Effective Time, Parent or its Subsidiaries (A) to
have sold or delivered, or to sell or deliver, Hydrocarbons for a
price materially less than the market value price that would have
been, or would be, received pursuant to any arm's-length contract for
a term of one month with an unaffiliated third-party purchaser or (B)
to have purchased or received, or to purchase or receive,
Hydrocarbons for a price materially greater than the market value
price that would have been, or would be, paid pursuant to an
arm's-length contract for a term of one month with an unaffiliated
third- party seller;
(ii) Each of the Hydrocarbon Agreements of Parent and its
Subsidiaries is valid, binding, and in full force and effect, and no
party is in material breach or default of any Hydrocarbon Agreement
of Parent or its Subsidiaries, and to the knowledge of Parent, no
event has occurred that with notice or lapse of time (or both) would
constitute a material breach or default or permit termination,
modification, or acceleration under any Hydrocarbon Agreement of
Parent or its Subsidiaries;
(iii) There are no claims from any third party for any price
reduction or increase or volume reduction or increase under any of
the Hydrocarbon Agreements of Parent or its Subsidiaries, and Parent
and its Subsidiaries have not made any claims for any price reduction
or increase or volume reduction or increase under any of the
Hydrocarbon Agreements of Parent or its Subsidiaries;
(iv) Payments for Hydrocarbons sold pursuant to each
Hydrocarbon Sales Agreement of Parent and its Subsidiaries have been
made (subject to adjustment in accordance with such Hydrocarbon Sales
Agreements) materially in accordance with prices or price-setting
mechanisms set forth in such Hydrocarbon Sales Agreements;
(v) No purchaser under any Hydrocarbon Sales Agreement of
Parent or its Subsidiaries has notified Parent or its Subsidiaries
(or, to the knowledge of Parent, the operator of any property) of its
intent to cancel, terminate, or renegotiate any Hydrocarbon Sales
Agreement of Parent or its Subsidiaries or otherwise to fail and
refuse to take and pay for Hydrocarbons in the quantities and at the
price set out in any Hydrocarbon Sales Agreement, whether such
failure or refusal was pursuant to any force majeure, market out, or
similar provisions contained in such Hydrocarbon Sales Agreement or
otherwise; and
(vi) The Hydrocarbon Agreements of Parent and its Subsidiaries
are of the type customarily found in the oil and gas industry, and do
not, individually or in the aggregate, contain unduly burdensome
provisions that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on Parent.
(v) Financial and Commodity Hedging. Parent has no currently
outstanding Hydrocarbon or financial hedging positions (including fixed
price controls, collars, swaps, caps, xxxxxx or puts).
(w) Restrictions on Business Activities. Neither Parent nor any
of its employees is a party to or bound by any noncompetition agreement or
any other similar agreement or obligation which purports to limit in any
respect the manner in which, or the localities in which, all or any portion
of the business of Parent or its Subsidiaries is conducted or would be
proposed to be conducted but for such restriction. There is no agreement
(noncompetition, field of use, or otherwise), judgment, injunction, order
or decree to which Parent or any of its Subsidiaries is a party or
otherwise binding upon Parent which has or reasonably would be expected to
have the effect of prohibiting or impairing any business practice of Parent
or any of its Subsidiaries, any acquisition of property (tangible or
intangible) by Parent or any of its Subsidiaries or the conduct of business
by Parent or any of its Subsidiaries.
(x) Indemnification Obligations. There are no actions,
proceedings or other events pending or threatened against any officer or
director of Parent which could give rise to any indemnification obligation
of Parent to its officers and directors under its Memorandum of
Association, Articles of Association or any agreement between Parent and
any of its officers or directors.
(y) Entre Lomas Oil and Gas Concession. (i) Except as set forth
on the Parent Disclosure Schedule or the Parent SEC Documents, to the best
of Parent's knowledge after due inquiry, Petrolera Xxxxx Companc S.A.
("Petrolera") (A) operates the Entre Lomas oil and gas concession ("Entre
Lomas Concession") in accordance with customary oil and gas field practices
of Argentina, (B) has Defensible Title to all of its Oil and Gas Interests
relating to the Entre Lomas Concession, (C) has obtained and maintained all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for or material to the operation
of the Entre Lomas Concession and Petrolera has not received any notices of
violations with respect to any laws, ordinances or regulations of any
Governmental Entity, or any Environmental Laws, except for violations
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on Parent, (D) has no Actions pending or
threatened, against or affecting it or affecting the Entre Lomas
Concession, nor are there any judgments, decrees, injunctions, rules or
orders of any Governmental Entity or arbitrator outstanding against it or
the Entre Lomas Concession, in each case which are material to the
operation and business of Parent's interests in the Entre Lomas Concession
and (E) has no contracts, requires no consents and is subject to no
litigation which would prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(ii) To the best of Parent's knowledge, the Parent Disclosure
Schedule sets forth each agreement, arrangement or understanding relating
to the Entre Lomas Concession which is material to the operations and
business of Parent's interests in the Entre Lomas Concession. Except as set
forth on the Parent Disclosure Schedule, to the best of Parent's knowledge,
neither Petrolera nor any other party is in violation of any such material
agreement, arrangement or understanding, whether written or oral, nor has
any event or circumstance occurred that, with notice or lapse of time or
both, would constitute a violation by a party thereto. To the best of
Parent's knowledge, each such material agreement, arrangement or
understanding is in full force and effect and constitutes the legal, valid
and binding obligation of the parties thereto, enforceable in accordance
with its terms and will continue to be so immediately following the
consummation of the transactions contemplated by this Agreement. Parent has
previously provided to the Company accurate and complete copies of such
material agreements, arrangements and understandings.
3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
set forth in the Company Disclosure Schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant), the Company represents and
warrants to Parent as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of the Company and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization, has the requisite power and
authority to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failures to be
so organized, existing and in good standing or to have such power and
authority, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, and is
duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failures so to qualify or to be
in good standing, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the
Company. The copies of the Certificate of Incorporation and By-Laws
of the Company which were previously furnished or made available to
Parent are true, complete and correct copies of such documents as in
effect on the date of this Agreement.
(ii) The Company Disclosure Schedule sets forth a complete and
accurate list of the Company's Subsidiaries. All the outstanding
shares of capital stock of, or other equity interests in, each such
Subsidiary have been validly issued and are fully paid and non-
assessable and are, except as set forth in the Company Disclosure
Schedule, owned directly or indirectly by the Company, free and clear
of all Liens and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such
capital stock or other ownership interests), except for restrictions
imposed by applicable securities laws. Neither the Company nor any of
its Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other
business association or entity (other than Subsidiaries), that is or
would reasonably be expected to be material to the Company.
(b) Capital Structure.
(i) As of the date hereof, the authorized capital stock of the
Company consisted of: (A) 2,222,222 shares of Company Common Stock,
of which 1,077,999.78 shares were issued and outstanding and 31,111
shares were held in the treasury of the Company; and (B) 500 shares
of Company Preferred Stock, all of which were issued and outstanding.
All issued and outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and non-assessable and
free of any preemptive rights. As of the date hereof, there are
outstanding no options, warrants, convertible securities or other
rights of the Company other than options and other rights to acquire
capital stock of the Company representing in the aggregate the right
to purchase 33,110.11 shares of Company Common Stock (collectively,
the "Company Stock Options") under the plans listed in Section 3.2 of
the Company Disclosure Schedule (the "Company Stock Option Plans").
Section 3.2(b) of the Company Disclosure Schedule sets forth a
complete and correct list, as of the date hereof, of (A) each
stockholder of the Company and the number and class of capital stock
of the Company owned by such stockholder and (B) the number of shares
of Company Common Stock subject to Company Stock Options or other
rights to purchase or receive Company Common Stock granted under any
Company Benefit Plan (as defined below) or otherwise, the holders of
such Company Stock Options or other rights, the dates of grant and
the exercise prices thereof. The Company Disclosure Schedule sets
forth a complete and accurate list of each Subsidiary of the Company
and the number of authorized, issued and outstanding shares of
capital stock of each of such Subsidiary.
(ii) Immediately after the Option Restructuring and immediately
prior to the Effective Time, the authorized capital stock of the
Company will consist of 2,222,222 shares of Company Common Stock, of
which 1,092,724.42 shares will be issued and outstanding and 500
shares of Company Preferred Stock, all of which will be issued and
outstanding. Immediately after the Option Restructuring, and
immediately prior to the Effective Time, all issued and outstanding
shares of the capital stock of the Company will be duly authorized,
validly issued, fully paid and non-assessable and free of any
preemptive rights. Immediately after the Option Restructuring and
immediately prior to the Effective Time, there will be no outstanding
options, warrants, convertible securities or other rights to acquire
capital stock from the Company.
(iii) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote on any matters on which holders of
capital stock of the Company may vote are issued or outstanding.
(iv) Except as otherwise set forth in this Section 3.2(b), as
of the date of this Agreement, there are no, and as of immediately
after the Option Restructuring and immediately prior to the Effective
Time there will be no, securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is a party or by which
any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, shares of capital stock or other voting securities
of the Company or any of its Subsidiaries or obligating the Company
or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement, there
are no, and as of immediately after the Option Restructuring and
immediately prior to the Effective Time, there will be no,
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock
of the Company or any of its Subsidiaries.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby, subject in the case of the consummation of the
Merger to the adoption of this Agreement by the Required Company Vote
(as defined in Section 3.2(g)). The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of the Company, subject in the case of the consummation of
the Merger to the adoption of this Agreement by the Required Company
Vote. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
(ii) The execution and delivery of this Agreement by the
Company does not, and the consummation by the Company of the Merger
and the other transactions contemplated hereby will not, conflict
with, or result in a Violation pursuant to: (A) any provision of the
Certificate of Incorporation or By-laws of the Company or any similar
governing documents of any material Subsidiary of the Company, (B)
the Company Stockholders Agreement (as defined below), or (C) except
as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, any loan
or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any Subsidiary of the
Company or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to the Company or any Subsidiary of the
Company in connection with the execution and delivery of this
Agreement by the Company or the consummation of the Merger and the
other transactions contemplated hereby, except the Necessary Consents
and such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company.
(d) Company Financial Statements.
(i) The audited consolidated financial statements of the
Company for the fiscal years 1999, 1998, 1997, 1996 and 1995 and the
unaudited consolidated interim financial statements of the Company
for the nine month period ended September 30, 2000 (including any
related notes, schedules and opinions to each such financial
statement) are attached hereto as Exhibit 3.2(d) (collectively, the
"Company Financial Statements"). The Company Financial Statements
present fairly, in all material respects, the consolidated financial
position and consolidated results of operations and cash flows of the
Company and its consolidated Subsidiaries as of the respective dates
and for the respective periods set forth therein, all in conformity
with GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited
interim financial statements, to the absence of notes and normal
year-end adjustments that have not been and are not expected to be
material in amount.
(ii) Since September 30, 2000, the Company and its Subsidiaries
have not incurred any liabilities that are of a nature that would be
required to be disclosed on a balance sheet of the Company and its
Subsidiaries or the footnotes thereto prepared in conformity with
GAAP, other than (A) liabilities incurred in the ordinary course of
business or (B) liabilities that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
the Company.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in (A) the Form
S-4 will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (B)
the Joint Proxy Statement/Prospectus will, on the date it is first
mailed to the Company stockholders or Parent shareholders or at the
time of the Company Stockholders Meeting or the Parent Shareholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Form S-4 and the
Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by the Company with
respect to statements made or incorporated by reference in the Form
S-4 or the Joint Proxy Statement/Prospectus based on information
supplied by Parent or Merger Sub for inclusion or incorporation by
reference therein.
(f) Board Approval. The Board of Directors of the Company, by
resolutions duly adopted by unanimous vote of those voting at a meeting
duly called and held and not subsequently rescinded or modified in any way
(the "Company Board Approval"), has duly (i) determined that this Agreement
and the Merger are advisable and are fair to and in the best interests of
the Company and its stockholders, (ii) approved this Agreement and the
Merger, and (iii) recommended that the stockholders of the Company adopt
this Agreement and approve the Merger, and directed that this Agreement and
the transactions contemplated hereby (including the Merger) be submitted
for consideration by the Company's stockholders at the Company Stockholders
Meeting. The Company Board Approval constitutes approval of this Agreement
and the Merger for purposes of Section 203 of the DGCL. To the knowledge of
the Company, except for Section 203 of the DGCL (which has been rendered
inapplicable), no state takeover statute is applicable to this Agreement,
the Merger or the other transactions contemplated hereby or thereby.
(g) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock and Company
Preferred Stock voting together as a class to adopt this Agreement and
approve the Merger (the "Required Company Vote") is the only vote of the
holders of any class or series of the Company capital stock necessary to
adopt this Agreement and approve the Merger and the other transactions
contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) There are no Actions pending or, to the knowledge of the
Company, threatened, against or affecting the Company or any
Subsidiary of the Company, nor are there any judgments, decrees,
injunctions, rules or orders of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company, in
each case which are material to the Company.
(ii) The Company and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for and material to the operation of
the businesses of the Company and its Subsidiaries, taken as a whole
(the "Company Permits"). The Company and its Subsidiaries are in
compliance in all material respects with the terms of the Company
Permits. Neither the Company nor its Subsidiaries is in violation of,
and the Company and its Subsidiaries have not received any notices of
violations with respect to, any laws, ordinances or regulations of
any Governmental Entity, except for violations which, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Company.
(i) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby and except as permitted by Section 4.2, since December
31, 1999, (i) the Company and its Subsidiaries have conducted their
business only in the ordinary course and (ii) there has not been any action
taken by the Company or any of its Subsidiaries during the period from
December 31, 1999 through the date of this Agreement that, if taken during
the period from the date of this Agreement through the Effective Time,
would constitute a breach of Section 4.2. Since December 31, 1999, there
have not been any changes, circumstances or events which, individually or
in the aggregate, have had, or would reasonably be expected to have, a
Material Adverse Effect on the Company.
(j) Environmental Matters. Except as, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect on the Company, no notice, notification, demand,
request for information, citation, summons, complaint or order has been
received by, and no investigation, action, claim, suit, proceeding or
review is pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened by any Person against, the Company or any of its
Subsidiaries, and no penalty has been assessed against the Company or any
of its Subsidiaries, in each case, with respect to any matters relating to
or arising out of any Environmental Law; the Company and its Subsidiaries
are and have been in compliance with all Environmental Laws; there are no
liabilities of or relating to the Company or any of its Subsidiaries
relating to or arising out of any Environmental Law of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of
circumstances which would reasonably be expected to result in such a
liability; and there has been no environmental investigation, study, audit,
test, review or other analysis conducted of which the Company has knowledge
in relation to the current or prior business of the Company or any of its
Subsidiaries or any property or facility now or previously owned, leased or
operated by the Company or any of its Subsidiaries which has not been
previously delivered to Parent.
(k) Intellectual Property. Except as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company, (i) the Company and each of its Subsidiaries owns,
or is licensed to use (in each case, free and clear of any Liens), all
Intellectual Property used in and necessary for the conduct of its business
as currently conducted; (ii) the use of any Intellectual Property by the
Company and its Subsidiaries does not infringe on or otherwise violate the
rights of any Person and is in accordance with any applicable license
pursuant to which the Company or any Subsidiary acquired the right to use
any Intellectual Property; (iii) to the knowledge of the Company, no Person
is challenging, infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any Intellectual
Property owned by and/or licensed to the Company or its Subsidiaries; and
(iv) neither the Company nor any of its Subsidiaries has received any
written notice or otherwise has knowledge of any pending claim, order or
proceeding with respect to any Intellectual Property used by the Company
and its Subsidiaries and to its knowledge no Intellectual Property owned
and/or licensed by the Company or its Subsidiaries is being used or
enforced in a manner that would reasonably be expected to result in the
abandonment, cancellation or unenforceability of such Intellectual
Property.
(l) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of the Company except McDonald
Investments Inc., whose fees and expenses will be paid by the Company in
accordance with the Company's agreement with such firm, a copy of which has
been provided to Parent.
(m) Taxes. All Federal, state, local and foreign Tax Returns
required to be filed by Company and its Subsidiaries have been timely filed
and are complete and correct in all material respects. All Taxes shown on
such Tax Returns as being due or claimed to be due from Company and its
Subsidiaries in a written statement from an authorized governmental
authority have been paid other than those being contested in good faith and
by appropriate proceedings timely instituted and diligently pursued and for
which adequate reserves have been established on the books and records of
Parent and its Subsidiaries, as the case may be, in accordance with GAAP.
(n) Agreements, Contracts and Commitments.
(i) The Company Disclosure Schedule sets forth a true, complete
and correct list of all the following agreements, arrangements or
understandings, whether written or oral, to which the Company or any
of its Subsidiaries is a party, (A) agreements relating to
indebtedness for borrowed money (whether incurred, assumed,
guaranteed, secured by any asset or otherwise) for amounts in excess
of $1,000,000, (B) agreements for the lease of real or personal
property to or from any person with lease payments in excess of
$100,000 per year, (C) partnership agreements, joint venture
agreements or other similar agreements relating to similar business
arrangements, (D) confidentiality or noncompetition agreements other
than with respect to confidentiality agreements entered into in the
ordinary course of business for the benefit of the Company's or its
Subsidiaries' vendors or customers, (E) profit sharing, stock option,
stock purchase, stock appreciation, deferred compensation, severance,
or other plans or arrangements for the benefit of current or former
employees or directors of the Company and its Subsidiaries, (F)
collective bargaining or similar agreements, (G) agreements for the
employment or retention of any individual on a full-time, part-time,
consulting, or other basis not terminable on less than thirty (30)
days notice without penalty or cost, (H) agreements under which it
has advanced or loaned any amount in excess of $10,000 to any of the
employees or affiliates of the Company, except for reimbursable
business expenses (as determined in accordance with the Company's
established employee reimbursement policies and consistent with past
practices), (I) agreements for the purchase or receipt of materials,
software, supplies, goods, services, equipment or other assets that
provide for either annual or aggregate payments by the Company or its
Subsidiaries of $100,000 or more (other than Hydrocarbon Agreements),
(J) sales, distribution, vendor or other similar agreements or
arrangements providing for the sale, transfer or barter by the
Company or its Subsidiaries of materials, supplies, goods, services,
equipment, or other assets that provide for either annual or
aggregate payments to the Company of $100,000 or more (other than
Hydrocarbon Agreements), (K) agreements or term sheets relating to
the acquisition or disposition of any business or assets of the
Company (whether by merger, sale of stock, sale of assets or
otherwise), excluding documentation relating to this Agreement and
agreements or terms sheets in existence prior to December 31, 1998,
(L) Hydrocarbon Agreements; and (M) other agreements which are
material to the Company (collectively the "Company Material
Agreements").
(ii) The Company has delivered to Parent a true, complete and
correct copy of each Company Material Agreement.
(iii) Each Company Material Agreement is in full force and
effect, has not been modified or amended and constitutes the legal,
valid and binding obligation of the Company or its Subsidiaries, as
the case may be, enforceable in accordance with its terms and will
continue to be so on identical terms immediately following the
consummation of the transactions contemplated by this Agreement, and
the Company or its Subsidiaries, as the case may be, are not in
default under any of such agreements, nor has any event or
circumstance occurred that, with notice or lapse of time or both,
would constitute any event of default by the Company or its
Subsidiaries, as the case may be. No other party to any of the
Company Material Agreements (A) is, to the knowledge of the Company,
in default in the performance of any covenant or obligation to be
performed by it pursuant to any such Company Material Agreement or
(B) has given notice that it intends to terminate, or alter in any
way adverse to the Company, its performance under such Company
Material Agreement. Except as set forth in the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party
to any contract, agreement or arrangement which provides for payments
in the event of a change of control.
(o) Employee Benefit Plans.
(i) The Company Disclosure Schedule contains a true and
complete list of each deferred compensation and each bonus or other
incentive compensation, stock purchase, stock option and other equity
compensation or ownership plan, program, agreement or arrangement, each
severance or termination pay, medical, surgical, hospitalization, life
insurance and other "welfare" plan, fund or program (within the meaning of
Section 3(1) of ERISA); each profit-sharing, stock bonus or other "pension"
plan, fund or program (within the meaning of Section 3(2) of ERISA); each
employment, retention, consulting, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or required
to be contributed to by the Company or by any trade or business, whether or
not incorporated (a "Company ERISA Affiliate"), that, together with the
Company would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA, or to which the Company or a Company ERISA Affiliate is
party, whether written or oral, for the benefit of any employee or director
or former employee or director (or any of their respective beneficiaries),
of the Company or any of its Subsidiaries (the "Company Benefit Plans").
(ii) With respect to each Company Benefit Plan, the
Company has heretofore delivered or made available to Parent true and
complete copies of each of the following documents: (A) a copy of the
Company Benefit Plan and any amendments thereto; (B) a copy of the two most
recent annual reports on Internal Revenue Service Form 5500 and actuarial
reports, if required under ERISA; (C) a copy of the most recent Summary
Plan Description (including supplements) required under ERISA with respect
thereto; (D) if the Company Benefit Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding agreement
and the latest financial statements thereof and all related agreements; and
(E) the most recent determination letter received from the Internal Revenue
Service with respect to each Company Benefit Plan intended to qualify under
Section 401(a) of the Code.
(iii) No liability under Title IV or Section 302 of ERISA
has been incurred by the Company or any Company ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a
material risk to Parent or any Company ERISA Affiliate of incurring any
such liability, other than liability for premiums due the PBGC (which
premiums have been paid when due).
(iv) No Company Benefit Plan has, to the knowledge of
Parent, engaged in a "prohibited transaction" (as defined in Section 4975
of the Code or Section 406 of ERISA).
(v) With respect to each Company Benefit Plan subject to
Title IV of ERISA (the "Title IV Company Benefit Plans"), the present value
of accrued benefits under such plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by
such plan's actuary with respect to such plan did not exceed, as of its
latest valuation date, the then current value of the assets of such plan
allocable to such accrued benefits.
(vi) No Title IV Company Benefit Plan or any trust
established thereunder has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of each
Title IV Company Benefit Plan ended prior to the Closing Date nor has there
been any application for waiver of the minimum funding standards imposed by
Section 412 of the Code. All contributions required to be made with respect
to any Company Benefit Plan on or prior to the Closing Date have been
timely made or are reflected on the balance sheet.
(vii) No Company Benefit Plan is a "multiemployer plan",
as defined in Section 3(37) of ERISA, nor is any Company Benefit Plan a
plan described in Section 4063(a) of ERISA.
(viii)Each Company Benefit Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code, the rules
and regulations thereunder and all applicable collective bargaining
agreements and each Company Benefit Plan intended to be "qualified" under
Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service to such effect. To the knowledge of the
Company, there is no fact, condition or set of circumstances existing that
could adversely affect such favorable determination. To the knowledge of
the Company, there are no investigations pending in respect of any Company
Benefit Plan by any governmental entity.
(ix) No Company Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees (or their beneficiaries) of the Company or
any of its Subsidiaries for periods extending beyond their respective dates
of retirement or other termination of service, other than (A) coverage
mandated by applicable law, (B) death benefits under any "pension plan" or
(C) benefits the full cost of which is borne by the current or former
employee (or his beneficiary).
(x) Except as set forth in the Company Disclosure
Schedule, no amounts payable or that could become payable under the Company
Benefit Plans may fail to be deductible for Federal income tax purposes by
virtue of either Section 280G or 162(m) of the Code.
(xi) Except as set forth in the Company Disclosure
Schedule, the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (A)
entitle any current or former employee, director or officer of the Company
or any of its Subsidiaries to severance pay, unemployment compensation or
any other payment, (B) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee, director or
officer or (C) require the immediate funding or financing of any
compensation or benefits.
(xii) Each Company Benefit Plan that has been adopted or
maintained by the Company or any of its Subsidiaries, whether formally or
informally, for the benefit of employees of Company or any of its
Subsidiaries outside of the United States (a "Company Foreign Benefit
Plan") has been established, maintained and administered in material
compliance with its terms and conditions and with the requirements
prescribed by any and all regulatory laws that are applicable to such
Company Foreign Benefit Plan. No Company Foreign Benefit Plan has unfunded
liabilities that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Affect on the Company.
(xiii)There are no pending, threatened or anticipated
claims by or on behalf of any Company Benefit Plan, by any employee or
beneficiary covered under any such Company Benefit Plan, or otherwise
involving any such Company Benefit Plan (other than routine claims for
benefits).
(p) Labor Matters. The Company has complied, in all material
respects, with all applicable laws of the United States, or of any state or
local government or any subdivision thereof or of any foreign government
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including, ERISA, the Code, the Immigration
Reform and Control Act, the WARN Act, any laws respecting employment
discrimination, sexual harassment, disability rights or benefits, equal
opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, COBRA, labor
relations, employee leave issues, wage and hour standards, occupational
safety and health requirements and unemployment insurance and related
matters, and is not engaged in any unfair labor practices.
(q) Title to Assets. Except as set forth in the Company
Disclosure Schedule, the Company or one of its Subsidiaries has Defensible
Title to all of its Oil and Gas Interests. Except as set forth in the
Company Disclosure Schedule, each Oil and Gas Interest included or
reflected in the Company Ownership Interests entitles the Company to
receive, directly or indirectly, not less than the undivided interest set
forth in (or derived from) the Company Ownership Interests of all
Hydrocarbons produced, saved and sold from or attributable to such Oil and
Gas Interest, and the portion of the costs and expenses of operation and
development of such Company Oil and Gas Interest that is borne or to be
borne, directly or indirectly, by the Company is not greater than the
undivided interest set forth in (or derived from) the Company Ownership
Interests. Except for Permitted Encumbrances, the Company and each of its
Subsidiaries has Defensible Title to its material assets (other than the
Oil and Gas Interests of the Company). All leases pursuant to which the
Company or its Subsidiaries lease any material assets are in full force and
effect, and the Company has not received any notice of default under any
such lease. The Company Disclosure Schedule sets forth a complete and
accurate list of all material real property, other than Oil and Gas
Interests, that is owned or leased by the Company
(r) Company Engineering Report. All information supplied to the
engineering firm preparing the applicable report by or on behalf of the
Company that was material to the evaluation of the Company 's Oil and Gas
Interests in connection with the preparation of the Company Engineering
Report was (at the time supplied or as modified or amended prior to the
issuance of the Company Engineering Report) true and correct in all
material respects. Except for changes in classification or values of oil
and gas reserves or property interests that occurred in the ordinary course
of business since December 31, 1999 and except for changes (including
changes in commodity prices) generally affecting the oil and gas industry,
there has been no material adverse change with respect to the matters
addressed in the Company Engineering Report.
(s) Oil and Gas Operations. To the knowledge of the Company, as
to xxxxx not operated by the Company, and without qualification as to
knowledge, as to xxxxx operated by the Company:
(i) As of the respective dates reflected thereon, (A) none of
the xxxxx included in the Oil and Gas Interests of the Company has
been overproduced such that it is subject or liable to being shut-in
or to any overproduction penalty, (B) the Company has not received
any deficiency payment under any gas contract for which any Person
has a right to take deficiency gas from the Company and (C) the
Company has not received any payment for production which is subject
to refund or recoupment out of future production;
(ii) There have been no changes proposed in the production
allowables for any xxxxx included in the Oil and Gas Interests of the
Company that would reasonably be expected to have a Material Adverse
Effect on the Company;
(iii) All xxxxx included in the Oil and Gas Interests of the
Company have been drilled and, if completed, operated, and produced
in accordance with customary oil and gas field practices and in
compliance in all material respects with applicable oil and gas
leases and applicable laws, rules, and regulations;
(iv) The Company has neither agreed to nor is it now obligated
to abandon any well operated by it and included in the Oil and Gas
Interests of the Company that is or will not be abandoned and
reclaimed in accordance with applicable laws, rules, and regulations
and customary oil and gas industry practices;
(v) Proceeds from the sale of Hydrocarbons produced from and
attributable to the Company 's Oil and Gas Interests are being
received by the Company in a timely manner and are not being held in
suspense for any reason (except for amounts, individually or in the
aggregate, not in excess of $50,000 and held in suspense in the
ordinary course of business); and
(vi) No Person has any call on, option to purchase, or similar
rights with respect to the Company 's Oil and Gas Interests or to the
production attributable thereto, and upon consummation of the
transactions contemplated by this Agreement, the Company will have
the right to market production from the Company 's Oil and Gas
Interests on terms no less favorable than the terms upon which such
company is currently marketing such production.
(t) Hydrocarbon Sales and Purchase Agreements.
(i) None of the Hydrocarbon Agreements of the Company or its
Subsidiaries has required since December 31, 1999, or will require as
of or after the Effective Time, the Company or its Subsidiaries (A)
to have sold or delivered, or to sell or deliver, Hydrocarbons for a
price materially less than the market value price that would have
been, or would be, received pursuant to any arm's-length contract for
a term of one month with an unaffiliated third-party purchaser or (B)
to have purchased or received, or to purchase or receive,
Hydrocarbons for a price materially greater than the market value
price that would have been, or would be, paid pursuant to an
arm's-length contract for a term of one month with an unaffiliated
third-party seller;
(ii) Each of the Hydrocarbon Agreements of the Company and its
Subsidiaries is valid, binding, and in full force and effect, and no
party is in material breach or default of any Hydrocarbon Agreement
of the Company or its Subsidiaries, and to the knowledge of the
Company, no event has occurred that with notice or lapse of time (or
both) would constitute a material breach or default or permit
termination, modification, or acceleration under any Hydrocarbon
Agreement of the Company or its Subsidiaries;
(iii) There are no claims from any third party for any price
reduction or increase or volume reduction or increase under any of
the Hydrocarbon Agreements of the Company or its Subsidiaries, and
the Company and its Subsidiaries have not made any claims for any
price reduction or increase or volume reduction or increase under any
of the Hydrocarbon Agreements of the Company or its Subsidiaries;
(iv) Payments for Hydrocarbons sold pursuant to each
Hydrocarbon Sales Agreement of the Company and its Subsidiaries have
been made (subject to adjustment in accordance with such Hydrocarbon
Sales Agreements) materially in accordance with prices or
price-setting mechanisms set forth in such Hydrocarbon Sales
Agreements;
(v) No purchaser under any Hydrocarbon Sales Agreement of the
Company or its Subsidiaries has notified the Company or its
Subsidiaries (or, to the knowledge of the Company , the operator of
any property) of its intent to cancel, terminate, or renegotiate any
Hydrocarbon Sales Agreement of the Company or its Subsidiaries or
otherwise to fail and refuse to take and pay for Hydrocarbons in the
quantities and at the price set out in any Hydrocarbon Sales
Agreement, whether such failure or refusal was pursuant to any force
majeure, market out, or similar provisions contained in such
Hydrocarbon Sales Agreement or otherwise; and
(vi) The Hydrocarbon Agreements of the Company are of the type
customarily found in the oil and gas industry and do not,
individually or in the aggregate, contain unduly burdensome
provisions that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on the Company.
(u) Financial and Commodity Hedging. The Company has no
currently outstanding Hydrocarbon or financial hedging positions (including
fixed price controls, collars, swaps, caps, xxxxxx or puts).
(v) Restrictions on Business Activities. Except as set forth in
the Company Disclosure Schedule, neither the Company nor any of its
employees is a party to or bound by any noncompetition agreement or any
other similar agreement or obligation which purports to limit in any
respect the manner in which, or the localities in which, all or any portion
of the business of the Company or its Subsidiaries is conducted or would be
proposed to be conducted but for such restriction. There is no agreement
(noncompetition, field of use, or otherwise), judgment, injunction, order
or decree to which the Company or any of its Subsidiaries is a party or
otherwise binding upon the Company which has or reasonably would be
expected to have the effect of prohibiting or impairing any business
practice of the Company or any of its Subsidiaries, any acquisition of
property (tangible or intangible) by the Company or any of its Subsidiaries
or the conduct of business by the Company or any of its Subsidiaries.
(w) Indemnification Obligations. There are no actions,
proceedings or other events pending or threatened against any officer or
director of the Company which could give rise to any indemnification
obligation of the Company to its officers and directors under its
Certificate of Incorporation, Bylaws or any agreement between the Company
and any of its officers or directors.
(x) Registered Securities. The Company does not have any
securities registered, or required to be registered, under Section 12 of
the Exchange Act.
(y) Alba and Stag Oil and Gas Concessions. (i) Except as set
forth on the Company Disclosure Schedule, to the best of the Company's
knowledge after due inquiry, (A) Apache Energy Limited ("Apache") operates
the oil and gas field relating to Production License No. WA-15-L (the "Stag
Concession") and CMS Oil and Gas (E.G.) Ltd. ("CMS") operates the oil and
gas field relating to the Alba Production Sharing Contract Area (the "Alba
Concession") in each case in accordance with customary oil and gas field
practices of the countries in which such concession is operated, (B) each
of Apache and CMS have Defensible Title to all of their Oil and Gas
Interests relating to the Stag Concession and Alba Concession,
respectively, (C) each of Apache and CMS have obtained and maintained all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for or material to the operation
of the Stag Concession and Alba Concession, as the case may be, and each of
Apache and CMS, as the case may be, have not received any notices of
violations with respect to any laws, ordinances or regulations of any
Governmental Entity, or any Environmental Laws, except for violations
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Company, (D) each of Apache and
CMS have no Actions pending or threatened, against or affecting either of
them, the Stag Concession or the Alba Concession, nor are there any
judgments, decrees, injunctions, rules or orders of any Governmental Entity
or arbitrator outstanding against either of them or affecting the Stag
Concession or the Alba Concession in each case which are material to the
operation and business of the Company's interest in the Stag Concession or
the Alba Concession, and (E) each of Apache and CMS have no contracts,
require no consents and are subject to no litigation which would prevent or
materially delay the consummation of the transactions contemplated by this
Agreement.
(ii) To the best of the Company's knowledge, the Company
Disclosure Schedule sets forth each agreement, arrangement or understanding
relating to the Stag Concession and Alba Concession which is material to
the operation and business of the Company's interest in the Stag Concession
and the Alba Concession, as the case may be. Except as set forth on the
Company Disclosure Schedule, to the best of the Company's knowledge,
neither Apache nor CMS, as the case may be, nor any other party is in
violation of any such material agreement, arrangement or understanding,
whether written or oral, nor has any event or circumstance occurred that,
with notice or lapse of time or both, would constitute a violation by a
party thereto. To the best of the Company's knowledge, each such material
agreement, arrangement or understanding is in full force and effect and
constitutes the legal, valid and binding obligation of the parties thereto,
enforceable in accordance with its terms and will continue to be so
immediately following the consummation of the transactions contemplated by
this Agreement. The Company has previously provided to Parent accurate and
complete copies of such material agreements, arrangements and
understandings.
3.3 REPRESENTATIONS AND WARRANTIES OF MERGER SUB. Merger Sub
represents and warrants to the Company as follows:
(a) Organization. Merger Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of
Delaware. Merger Sub is a direct wholly-owned subsidiary of Parent.
(b) Corporate Authorization. Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance by Merger Sub of this Agreement and the consummation by
Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Merger Sub.
This Agreement has been duly executed and delivered by Merger Sub and
constitutes a valid and binding agreement of Merger Sub, enforceable
against it in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors generally or by general
equity principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(c) Non-Contravention. The execution, delivery and performance
by Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or conflict
with the certificate of incorporation or bylaws of Merger Sub.
(d) No Business Activities. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub,
the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF PARENT.
(a) Conduct of Business by Parent. During the period from the
date of this Agreement and continuing until the Effective Time, Parent
agrees as to itself and its Subsidiaries that (except as expressly
contemplated or permitted by this Agreement, including the Parent
Disclosure Schedules, or as required by applicable law or a Governmental
Entity of competent jurisdiction or to the extent that the Company shall
otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed) Parent and its Subsidiaries shall carry on their
respective businesses in the ordinary and usual course of business,
consistent with past practice and in compliance with all applicable laws
and regulations and, to the extent consistent therewith, use reasonable
best efforts to preserve intact their respective current business
organizations, use reasonable best efforts to keep available the services
of their respective current directors, officers, employees, independent
contractors and consultants and preserve their relationships with those
persons, customers, suppliers and vendors having business dealings with
them to the end that their respective goodwill and ongoing business shall
be unimpaired at the Effective Time and without limiting the generality of
the foregoing, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant
to Article VII hereof or the Effective Time, except as expressly
contemplated or permitted by this Agreement, including the Parent
Disclosure Schedules, or as required by applicable law or a Governmental
Entity of competent jurisdiction or to the extent that the Company shall
otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed, Parent shall not, and shall cause its Subsidiaries not
to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of capital stock of Parent or any of
its Subsidiaries, except for dividends or other distributions made by
Parent in the ordinary course of business consistent with past
practices, (B) split, combine or reclassify capital stock of Parent
or any of its Subsidiaries or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of capital stock of Parent or any of its Subsidiaries, (C)
purchase, redeem or otherwise acquire any shares of capital stock or
any other securities of Parent or any of its Subsidiaries, (D) pay or
set aside a "sinking fund" for the payment of any principal amount of
outstanding debt securities of Parent or any of its Subsidiaries, or
(E) consummate or enter into an agreement to recapitalize Parent or
any of its Subsidiaries;
(ii) issue, deliver, sell, transfer, pledge or otherwise
encumber or subject to any Lien any shares of capital stock of Parent
or any of its Subsidiaries, any other voting securities or any
securities convertible into, or any rights, warrants, options or
calls to acquire, any capital stock of Parent or any of its
Subsidiaries;
(iii) amend the Parent Memorandum of Association, Parent
Articles of Association or any similar governing documents of any
Subsidiary of Parent;
(iv) reincorporate the jurisdiction of Parent from the Cayman
Islands;
(v) merge, consolidate or reorganize Parent or any of its
Subsidiaries with any other person (other than the Merger of Merger
Sub with and into the Company);
(vi) form, join, participate or agree to form, join or
participate in the business, operations, sales, distribution, or
development of any other person or contribute assets, employees, cash
or customers or other resources to any such arrangement, other than
in the ordinary course of business consistent with past practices;
(vii) acquire or agree to acquire by merging or consolidating
with, or by purchasing assets of, or by any other manner, any
business or any person, other than purchases of raw materials or
supplies in the ordinary course of business consistent with past
practice;
(viii)sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, other than sale of inventories and other Hydrocarbons in the
ordinary course of business consistent with past practices;
(ix) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities, warrants, calls or other rights to acquire any debt
securities of Parent or any of its Subsidiaries or any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings incurred in
the ordinary course of business consistent with past practice or (B)
make any loans, advances or capital contributions to, or investments
in, any other person;
(x) make, commit or otherwise agree to make any capital
expenditure or expenditures, or enter into any agreement or
agreements providing for payments which, individually, are in excess
of $3 million or, in the aggregate, are in excess of $5 million;
(xi) settle or compromise or agree to settle or compromise any
Tax liability or make any Tax election;
(xii) pay, discharge, settle or satisfy any material claims,
liabilities, obligations or litigation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, in the ordinary course of
business consistent with past practices;
(xiii)enter into, adopt or amend in any material respect or
terminate any benefit plan or similar policy or agreement involving
Parent or any of its Subsidiaries and one or more of their respective
directors, officers, employees or agents;
(xiv) except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not
materially increase benefits or compensation expenses of Parent or
its Subsidiaries, or by the terms of any employment agreement or
other arrangement in existence on the date hereof which have been set
forth on the Parent Disclosure Schedule, increase the compensation of
any director, officer, employee or agent of or consultant to Parent
or its Subsidiaries or pay any benefit or amount not required by a
plan or arrangement as in effect on the date of this Agreement to any
such person;
(xv) transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Intellectual Property of
Parent or its Subsidiaries other than in the ordinary course of
business consistent with past practice;
(xvi) change in any respect its method of Tax accounting or Tax
practice, or its accounting policies, methods or procedures;
(xvii)enter into any agreement with any director, officer,
employee or stockholder of Parent or its Subsidiaries or amend,
modify or change the terms and conditions of any such agreement;
(xviii) modify, amend, alter or change terms, provisions or
rights and obligations of any Parent Material Agreement;
(xix) take any action or omit to take any action which,
individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on Parent;
(xx) take any action or omit to take any action which would
reasonably be expected to materially delay or materially adversely
affect the ability of any of the parties to obtain any approval of
any Governmental Entity required to consummate the transactions
contemplated hereby;
(xxi) take any action that would prevent or impede the Merger
from qualifying as a reorganization under the provisions of Section
368(a) of the Code or fail to take any action necessary to permit the
Merger to qualify as such a reorganization;
(xxii)take any action that would cause the representations and
warranties set forth in Section 3.1 hereof to no longer be true and
correct;
(xxiii) authorize, or commit or agree to take, any of the
foregoing actions.
4.2 COVENANTS OF THE COMPANY.
(a) Conduct of Business by the Company. During the period from
the date of this Agreement and continuing until the Effective Time, the
Company agrees as to itself and its Subsidiaries that (except as expressly
contemplated or permitted by this Agreement, including the Company
Disclosure Schedules, or required by applicable law or by a Governmental
Entity of competent jurisdiction or to the extent that Parent shall
otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed) the Company and its Subsidiaries shall carry on their
respective businesses in the ordinary and usual course of business,
consistent with past practice and in compliance with all applicable laws
and regulations and, to the extent consistent therewith, use reasonable
best efforts to preserve intact their respective current business
organizations, use reasonable best efforts to keep available the services
of their respective current directors, officers, employees, independent
contractors and consultants and preserve their relationships with those
persons, customers, suppliers and vendors having business dealings with
each of them to the end that their respective goodwill and ongoing business
shall be unimpaired at the Effective Time and without limiting the
generality of the foregoing, during the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement pursuant to Article VII hereof or the Effective Time, except as
expressly contemplated or permitted by this Agreement, including the
Company Disclosure Schedules, or as required by applicable law or a
Governmental Entity of competent jurisdiction or to the extent that Parent
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed, the Company shall not, and shall cause its
Subsidiaries not to,:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of capital stock of The Company or any
of its Subsidiaries, (B) split, combine or reclassify capital stock
of The Company or any of its Subsidiaries or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of The Company or any of its
Subsidiaries, (C) purchase, redeem or otherwise acquire any shares of
capital stock or any other securities of The Company or any of its
Subsidiaries, (D) pay or set aside a "sinking fund" for the payment
of any principal amount of outstanding debt securities of The Company
or any of its Subsidiaries, or (E) consummate or enter into an
agreement to recapitalize The Company or any of its Subsidiaries;
(ii) issue, deliver, sell, transfer, pledge or otherwise
encumber or subject to any Lien any shares of capital stock of The
Company or any of its Subsidiaries, any other voting securities or
any securities convertible into, or any rights, warrants, options or
calls to acquire, any capital stock of The Company or any of its
Subsidiaries;
(iii) amend the Company Certificate of Incorporation, the
Company By-Laws or any similar governing documents of any Subsidiary
of the Company;
(iv) reincorporate the jurisdiction of the Company from State
of Delaware;
(v) merge, consolidate or reorganize the Company or any of its
Subsidiaries with any other person (other than the Merger of Merger
Sub with and into the Company);
(vi) form, join, participate or agree to form, join or
participate in the business, operations, sales, distribution, or
development of any other person or contribute assets, employees, cash
or customers or other resources to any such arrangement, other than
in the ordinary course of business consistent with past practices;
(vii) acquire or agree to acquire by merging or consolidating
with, or by purchasing assets of, or by any other manner, any
business or any person, other than purchases of raw materials or
supplies in the ordinary course of business consistent with past
practice;
(viii)sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, other than sale of inventories and other Hydrocarbons in the
ordinary course of business consistent with past practices;
(ix) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities, warrants, calls or other rights to acquire any debt
securities of the Company or any of its Subsidiaries or any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings incurred in
the ordinary course of business consistent with past practice or (B)
make any loans, advances or capital contributions to, or investments
in, any other person;
(x) make, commit or otherwise agree to make any capital
expenditure or expenditures, or enter into any agreement or
agreements providing for payments which, individually, are in excess
of $3 million or, in the aggregate, are in excess of $5 million;
(xi) settle or compromise or agree to settle or compromise any
Tax liability or make any Tax election;
(xii) pay, discharge, settle or satisfy any material claims,
liabilities, obligations or litigation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, in the ordinary course of
business consistent with past practices;
(xiii)enter into, adopt or amend in any material respect or
terminate any benefit plan or similar policy or agreement involving
the Company or any of its Subsidiaries and one or more of their
respective directors, officers, employees or agents;
(xiv) except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not
materially increase benefits or compensation expenses of the Company
or its Subsidiaries, or by the terms of any employment agreement or
other arrangement in existence on the date hereof which have been set
forth on the Company Disclosure Schedule, increase the compensation
of any director, officer, employee or agent of or consultant to the
Company or its Subsidiaries or pay any benefit or amount not required
by a plan or arrangement as in effect on the date of this Agreement
to any such person;
(xv) transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Intellectual Property of
the Company or its Subsidiaries other than in the ordinary course of
business consistent with past practice;
(xvi) change in any respect its method of Tax accounting or Tax
practice, or its accounting policies, methods or procedures;
(xvii)enter into any agreement with any director, officer,
employee or stockholder of the Company or its Subsidiaries or amend,
modify or change the terms and conditions of any such agreement;
(xviii) modify, amend, alter or change terms, provisions or
rights and obligations of any Company Material Agreement;
(xix) take any action or omit to take any action which,
individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on the Company;
(xx) take any action or omit to take any action which would
reasonably be expected to materially delay or materially adversely
affect the ability of any of the parties to obtain any approval of
any Governmental Entity required to consummate the transactions
contemplated hereby;
(xxi) take any action that would prevent or impede the Merger
from qualifying as a reorganization under the provisions of Section
368(a) of the Code or fail to take any action necessary to permit the
Merger to qualify as such a reorganization;
(xxii)take any action that would cause the representations and
warranties set forth in Section 3.2 hereof to no longer be true and
correct;
(xxiii) authorize, or commit or agree to take, any of the
foregoing actions.
4.3 GOVERNMENTAL FILINGS. Each party shall (a) confer on a
regular and frequent basis with the other and (b) report to the other (to
the extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. Parent and the Company shall file all
reports required to be filed by each of them with all Governmental Entities
between the date of this Agreement and the Effective Time and shall (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) deliver to the other party copies of all such reports,
announcements and publications promptly after the same are filed.
4.4 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in
this Agreement shall give the Company, directly or indirectly, the right to
control or direct Parent's operations prior to the Effective Time. Nothing
contained in this Agreement shall give Parent, directly or indirectly, the
right to control or direct the Company's operations prior to the Effective
Time. Prior to the Effective Time, each of the Company and Parent shall
exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETINGS. (a)
As promptly as reasonably practicable following the date hereof, Parent and
the Company shall prepare and file with the SEC mutually acceptable proxy
materials which shall constitute the Joint Proxy Statement/Prospectus (such
proxy statement/prospectus, and any amendments or supplements thereto, the
"Joint Proxy Statement/Prospectus") and Parent shall prepare and file a
registration statement on Form S-4 or such other applicable form with
respect to the issuance of Parent Ordinary Shares in the Merger (the "Form
S-4"). The Joint Proxy Statement/Prospectus will be included in and will
constitute a part of the Form S-4 as Parent's prospectus. The Form S-4 and
the Joint Proxy Statement/Prospectus shall comply as to form in all
material respects with the applicable provisions of the Securities Act and
the Exchange Act and the rules and regulations thereunder. Each of Parent
and the Company shall use reasonable best efforts to have the Form S-4
declared effective by the SEC and to keep the Form S-4 effective as long as
is necessary to consummate the Merger and the transactions contemplated
thereby. Parent and the Company shall, as promptly as practicable after
receipt thereof, provide the other party copies of any written comments and
advise the other party of any oral comments, with respect to the Joint
Proxy Statement/Prospectus received from the SEC. Parent will provide the
Company with a reasonable opportunity to review and comment on any
amendment or supplement to the Form S-4 prior to filing such with the SEC,
and will provide the Company with a copy of all such filings made with the
SEC. Notwithstanding any other provision herein to the contrary, no
amendment or supplement (including by incorporation by reference) to the
Joint Proxy Statement/Prospectus or the Form S-4 shall be made without the
approval of both parties, which approval shall not be unreasonably withheld
or delayed; provided, that with respect to documents filed by a party which
are incorporated by reference in the Form S-4 or Joint Proxy
Statement/Prospectus, this right of approval shall apply only with respect
to information relating to the other party. Parent will use reasonable best
efforts to cause the Joint Proxy Statements/Prospectus to be mailed to
Parent's shareholders, and the Company will use reasonable best efforts to
cause the Joint Proxy Statement/Prospectus to be mailed to the Company's
stockholders, in each case after the Form S-4 is declared effective under
the Securities Act. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to
be taken under any applicable state securities laws in connection with the
Share Issuance and the Company shall furnish all information concerning the
Company and the holders of Company Common Stock and Company Preferred Stock
as may be reasonably requested in connection with any such action. Each
party will advise the other party, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective, the issuance
of any stop order, the suspension of the qualification of the Parent
Ordinary Shares issuable in connection with the Merger for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Joint
Proxy Statement/Prospectus or the Form S-4.
If at any time prior to the Effective Time any information relating to
Parent or the Company, or any of their respective affiliates, officers or
directors, should be discovered by Parent or the Company which should be
set forth in an amendment or supplement to any of the Form S-4 or the Joint
Proxy Statement/Prospectus so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other party hereto and, to the extent
required by law, rules or regulations, an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC
and disseminated to the stockholders of Parent and the Company.
(b) The Company shall duly take all lawful action to call, give
notice of, convene and hold a meeting of its stockholders on a date as soon
as reasonably practicable (the "Company Stockholders Meeting") for the
purpose of obtaining the Required Company Vote with respect to the
transactions contemplated by this Agreement and shall take all lawful
action to solicit the adoption of this Agreement and approval of the Merger
by the Required Company Vote; and the Board of Directors of the Company
shall recommend adoption of this Agreement and approval of the Merger by
the stockholders of the Company to the effect as set forth in Section
3.2(f) (the "Company Recommendation"), and shall not withdraw, modify or
qualify (or propose to withdraw, modify or qualify) (a "Change") in any
manner adverse to Parent such recommendation or take any action or make any
statement in connection with the Company Stockholders Meeting inconsistent
with such recommendation (collectively, a "Change in Company
Recommendation"); provided the foregoing shall not prohibit accurate
disclosure to the extent required by applicable law (and such disclosure
shall not be deemed to be a Change in Company Recommendation) of factual
information regarding the business, financial condition or results of
operations of Parent or the Company or the fact that an Acquisition
Proposal has been made, the identity of the party making such proposal or
the material terms of such proposal (provided, that the Board of Directors
of the Company does not withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to Parent its
recommendation) in the Form S-4 or the Joint Proxy Statement/Prospectus or
otherwise.
(c) Parent shall duly take all lawful action to call, give
notice of, convene and hold a meeting of its stockholders on a date as soon
as reasonably practicable (the "Parent Stockholders Meeting") for the
purpose of obtaining the Parent Stockholder Approval and shall take all
lawful action to solicit the approval of the Share Issuance, the Memorandum
Amendment and the Articles Amendment and the Board of Directors of Parent
shall recommend approval of the Share Issuance and adoption of the
Memorandum Amendment and the Articles Amendment by the shareholders of
Parent to the effect as set forth in Section 3.1(f) (the "Parent
Recommendation"), and shall not Change in any manner adverse to the Company
such recommendation or take any action or make any statement in connection
with the Parent Stockholders Meeting inconsistent with such recommendation
(collectively, a "Change in the Parent Recommendation"); provided the
foregoing shall not prohibit accurate disclosure to the extent required by
applicable law (and such disclosure shall not be deemed to be a Change in
the Parent Recommendation) of factual information regarding the business,
financial condition or operations of Parent or the Company or the fact that
an Acquisition Proposal has been made, the identity of the party making
such proposal or the material terms of such proposal (provided, that the
Board of Directors of Parent does not withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to the
Company its recommendation) in the Form S-4 or the Joint Proxy
Statement/Prospectus or otherwise.
5.2 PRINCIPAL EXECUTIVE OFFICES OF PARENT AFTER THE EFFECTIVE
TIME. The principal executive offices of Parent after the Effective Time
shall be located in Houston, Texas.
5.3 ACCESS TO INFORMATION/EMPLOYEES. Upon reasonable notice,
each party shall (and shall cause its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financial advisors and other
representatives of the other party reasonable access during normal business
hours, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments, records, officers and employees
and, during such period, such party shall (and shall cause its Subsidiaries
to) furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed, published,
announced or received by it during such period pursuant to the requirements
of Federal or state securities laws, as applicable (other than documents
which such party is not permitted to disclose under applicable law), and
(b) all other information concerning it and its business, properties and
personnel as such other party may reasonably request; provided, however,
that either party may restrict the foregoing access to the extent that (i)
any law, treaty, rule or regulation of any Governmental Entity applicable
to such party requires such party or its Subsidiaries to restrict or
prohibit access to any such properties or information or (ii) the
information is subject to confidentiality obligations to a third party. Any
such information obtained pursuant to this Section 5.3 ("Confidential
Information") will be used solely for the purpose of consideration or
performance of the transactions contemplated by this Agreement or any other
agreement related hereto and will be kept confidential by the party
obtaining such information and all persons obtaining such information on
such party's behalf or who obtain such information from such party.
Confidential Information shall not include information that (A) is or
becomes generally available to the public other than as a result of
disclosure by a party or its Representatives, or (B) is or becomes
available to a party (other than the disclosing party) or its
Representatives that is not known by the non-disclosing party to have any
obligation not to disclose such information. Notwithstanding the foregoing,
Confidential Information may be disclosed by a party (x) to its directors,
officers, employees, representatives (including financial advisors,
attorneys and accountants) or agents (collectively "Representatives") who
need to know such information if the party informs such Representatives of
the confidential nature of such information and directs them to treat such
information confidentially and to use such information for no purpose other
than as specifically permitted by the Agreement and (y) if the party is
legally required to make such disclosure as a result of a court order,
subpoena or similar legal process, provided that prior to such disclosure,
the disclosing party gives to the other party prompt written notice of its
receipt of such order or subpoena or similar document so that the other
party has a reasonable opportunity prior to disclosure to obtain a
protective order (if disclosure of Confidential Information is so required,
the disclosing party shall disclose only that portion of such information
that is so required and shall assist the other party in obtaining
protective orders or undertakings that confidential treatment will be
accorded to any such information furnished). In the event of termination of
this Agreement, each party will promptly return to the other party all
Confidential Information in its possession (including all written materials
prepared or supplied by or on its behalf containing or reflecting any
Confidential Information) and will not retain any copies, extracts or other
reproductions in whole or in part of any Confidential Information. Any work
papers, memoranda or other writings prepared by a party or its
Representatives derived from or incorporating any Confidential Information
shall be destroyed promptly upon termination of this Agreement, with such
destruction confirmed to the other party in writing. Any oral Confidential
Information will continue to be subject to the terms of this Section 5.3.
Each party shall be responsible for the breach of the terms of this Section
5.3 by its Representative. Any investigation by Parent or the Company shall
not affect the representation and warranties of the Company and Parent, as
the case may be.
5.4 REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions of this Agreement, each party will 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 under this Agreement and
applicable laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable after
the date hereof, including (i) preparing and filing as promptly as
practicable all documentation to effect all necessary applications,
notices, petitions, filings, tax ruling requests and other documents and to
obtain as promptly as practicable all consents, waivers, licenses, orders,
registrations, approvals, permits, tax rulings and authorizations necessary
or advisable to be obtained from any third party and/or any Governmental
Entity in order to consummate the Merger or any of the other transactions
contemplated by this Agreement and (ii) taking all reasonable steps as may
be necessary to obtain all such material consents, waivers, licenses,
registrations, permits, authorizations, tax rulings, orders and approvals.
Nothing in this Agreement shall require any of Parent and its Subsidiaries
or the Company and its Subsidiaries to sell, hold separate or otherwise
dispose of or conduct their business in a specified manner, or agree to
sell, hold separate or otherwise dispose of or conduct their business in a
specified manner, or permit the sale, holding separate or other disposition
of, any assets of Parent, the Company or their respective Subsidiaries or
the conduct of their business in a specified manner, whether as a condition
to obtaining any approval from a Governmental Entity or any other Person or
for any other reason, if such sale, holding separate or other disposition
or the conduct of their business in a specified manner is not conditioned
on the Closing or, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Parent and its Subsidiary
(including the Surviving Corporation and its Subsidiaries), taken together,
after giving effect to the Merger.
(b) Subject to Section 5.4(a), if any objections are asserted
with respect to the transactions contemplated hereby under any Regulatory
Law or if any suit is instituted by any Governmental Entity or any private
party challenging any of the transactions contemplated hereby as violative
of any Regulatory Law, each of Parent and the Company shall use its
reasonable best efforts to resolve any such objections or challenge as such
Governmental Entity or private party may have to such transactions under
such Regulatory Law so as to permit consummation of the transactions
contemplated by this Agreement. For purposes of this Agreement, "Regulatory
Law" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are designed or
intended to prohibit, restrict or regulate (i) foreign investment or (ii)
actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition.
5.5 ACQUISITION PROPOSALS. Without limitation on any of such
party's other obligations under this Agreement (including under Article IV
hereof), each of Parent and the Company agrees that neither it nor any of
its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall use its reasonable best efforts to
cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or
any of its Subsidiaries) not to, directly or indirectly, initiate, solicit,
encourage or knowingly facilitate (including by way of furnishing
information) any inquiries or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving it, or any purchase or sale of the assets (including
stock of Subsidiaries) of such party and its Subsidiaries, taken as a
whole, having an aggregate value equal to $5,000,000 or more, or any
purchase or sale of, or tender or exchange offer for, 10% or more of the
equity securities of such party (any such proposal or offer (other than a
proposal or offer made by the other party or an affiliate thereof) being
hereinafter referred to as an "Acquisition Proposal"). Each of Parent and
the Company further agrees that neither it nor any of its Subsidiaries nor
any of the officers and directors of it or its Subsidiaries shall, and that
it shall use its reasonable best efforts to cause its and its Subsidiaries'
employees, agents and representatives (including any investment banker,
attorney or accountant retained by it or any of its Subsidiaries) not to,
directly or indirectly, have any discussion with or provide any
confidential information or data to any Person relating to an Acquisition
Proposal, or engage in any negotiations concerning an Acquisition Proposal,
or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or accept an Acquisition Proposal. Notwithstanding
anything in this Agreement to the contrary, Parent and its Board of
Directors shall be permitted to comply with Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
Parent or the Company, as the case may be, shall promptly notify the other
party of any such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought
to be initiated or continued with, any of it or its Subsidiaries or with
any of its or its Subsidiaries' officers, directors, employees, agents or
other representatives indicating, in connection with such notice, the name
of such Person and the material terms and conditions of any inquiries,
proposals or offers. Each of Parent and the Company agrees that it will
promptly keep the other party informed of the status and terms of any such
proposals or offers. Each of Parent and the Company agrees that it will,
and will cause its officers, directors, employees, agents and other
representatives to, immediately cease and cause to be terminated any
activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any
Acquisition Proposal. Each of Parent and the Company agrees that it will
use reasonable best efforts to promptly inform its officers, directors,
employees, agents and other representatives of the obligations undertaken
in this Section 5.5.
5.6 EMPLOYEE BENEFITS MATTERS. The Company shall prior to the
Effective Time cause the Global Exploration Inc. Restricted Management
Stock Bonus Plan, the Global Exploration Inc. 1998 Stock Option and any
other plans, agreements or arrangements (other than the Option Exercise
Agreements) relating to options, warrants, convertible securities or other
rights to acquire capital stock of the Company to be terminated and be of
no further force and effect.
5.7 FEES AND EXPENSES. Whether or not the Merger is
consummated, all Expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring
such Expenses, except (a) if the Merger is consummated, the Surviving
Corporation or its relevant Subsidiary shall pay, or cause to be paid, any
and all property or transfer taxes imposed on the Company or its
Subsidiaries, (b) Expenses incurred in connection with the filing, printing
and mailing of the Joint Proxy Statement/Prospectus, which shall be paid
50% by Parent and 50% by the Company, and (c) Expenses of The Xxxxxxxx
Companies, Inc.'s counsel in connection with preparation of this Agreement
and the transactions contemplated thereby shall be paid by Parent. As used
in this Agreement, "Expenses" includes all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including the
preparation, printing, filing and mailing of the Joint Proxy
Statement/Prospectus and the solicitation of stockholder approvals and all
other matters related to the transactions contemplated hereby.
5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. The
Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, (i) indemnify and hold harmless, and provide advancement of
expenses to, all past and present directors, officers and employees of the
Company and its Subsidiaries (in all of their capacities) (a) to the same
extent such persons are indemnified or have the right to advancement of
expenses as of the date of this Agreement by the Company pursuant to the
Company's certificate of incorporation, bylaws and indemnification
agreements, if any, in existence on the date hereof with any directors,
officers and employees of the Company and its Subsidiaries and (b) without
limitation to clause (a), to the fullest extent permitted by law, in each
case for acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval
of this Agreement and the consummation of the transactions contemplated
hereby), (ii) include and cause to be maintained in effect in the Surviving
Corporation's (or any successor's) certificate of incorporation and bylaws
for a period of six years after the Effective Time, the current provisions
regarding elimination of liability of directors, indemnification of
officers, directors and employees and advancement of expenses contained in
the certificate of incorporation and bylaws of the Company and (iii) cause
to be maintained for a period of six years after the Effective Time the
current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by the Company (provided that the
Surviving Corporation (or any successor) may substitute therefor policies
of at least the same coverage and amounts containing terms and conditions
which are, in the aggregate, no less advantageous to the insured) with
respect to claims arising from facts or events that occurred on or before
the Effective Time.
5.9 PUBLIC ANNOUNCEMENTS. Parent and the Company shall use
reasonable best efforts to develop a joint communications plan and each
party shall use reasonable best efforts (i) to ensure that all press
releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications
plan, and (ii) unless otherwise required by applicable law or by
obligations pursuant to any listing agreement with or rules of any
securities exchange, to consult with each other before issuing any press
release or, to the extent practical, otherwise making any public statement
with respect to this Agreement or the transactions contemplated hereby.
5.10 ACCOUNTANT'S LETTERS. (a) Parent shall use reasonable best
efforts to cause to be delivered to the Company two letters from Parent's
independent public accountants, one dated approximately the date on which
the Form S-4 shall become effective and one dated the Closing Date, each
addressed to Parent and the Company, in form reasonably satisfactory to the
Company and customary in scope for comfort letters delivered by independent
public accountants in connection with registration statements similar to
the Form S-4.
(b) The Company shall use reasonable best efforts to cause to
be delivered to Parent two letters from the Company's independent public
accountants, one dated approximately the date on which the Form S-4 shall
become effective and one dated the Closing Date, each addressed to the
Company and Parent, in form reasonably satisfactory to Parent and customary
in scope for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
5.11 LISTING OF SHARES OF PARENT ORDINARY SHARES. Parent shall
use its reasonable best efforts to cause the Parent Ordinary Shares to be
issued in the Merger and Parent Ordinary Shares to be reserved for issuance
upon exercise of the Company Rollover Options to be approved for listing on
the NASDAQ, subject to official notice of issuance, prior to the Closing
Date.
5.12 DIVIDENDS. After the date of this Agreement, each of
Parent and the Company shall coordinate with the other the payment of
dividends, if any, with respect to Parent Ordinary Shares, Company Common
Stock and Company Preferred Stock and the record dates and payment dates
relating thereto, it being the intention of the parties hereto that holders
of Parent Ordinary Shares, Company Common Stock and Company Preferred Stock
shall not receive two dividends, or fail to receive one dividend, for any
single calendar quarter with respect to their shares of Parent Ordinary
Shares and/or Company Common Stock and/or Company Preferred Stock or any
Parent Ordinary Shares that any such holder receives in exchange for such
shares of Company Common Stock in the Merger.
5.13 ACAMBUCO JOINT VENTURE. Immediately prior to the Effective
Time, all of the outstanding shares of capital stock of Northwest Argentina
Corporation, a Utah corporation and the record holder of a one and one-half
percent (1 1/2 %) interest in the "Acambuco" Area Joint Venture Agreement,
shall be contributed to Parent in exchange for Parent's issuance of 58,769
Parent Ordinary Shares to Xxxxxxxx Western Holdings Company, Inc. (the
"Acambuco Contribution"). The Acambuco Contribution is conditioned on the
receipt of any necessary approvals and consents (governmental or third
party) required to consummate such contribution.
5.14 CERTAIN TAX MATTERS.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, take any action, or fail to take any action (including,
but not limited to, the failure to file appropriate Tax reports or Tax
information statements) that would prevent, impede or be inconsistent with
the Merger qualifying as a reorganization under Section 368(a) of the Code.
(b) Each of Parent and Merger Sub shall not, and shall not
permit any of their Subsidiaries to, take any action, or fail to take any
action (including, but not limited, to the failure to file appropriate Tax
reports or Tax information statements) that would prevent, impede or be
inconsistent with the Merger qualifying as a reorganization under Section
368(a) of the Code.
5.15 SECTION 16 MATTERS. Parent shall take all such steps as
may be required to cause acquisitions of Parent equity securities
(including derivative securities, if applicable) in connection with this
Agreement by each individual who, at the Effective Time, will become a
director or officer of Parent, to be exempt under Rule 16b-3 promulgated
under the Exchange Act, such steps taken in accordance with the No-Action
Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP and the Company shall cooperate with and provide all
necessary assistance to Parent in connection therewith.
5.16 TERMINATION OF COMPANY STOCKHOLDERS AGREEMENT; SHAREHOLDERS
AGREEMENT.
Prior to the Effective Time, the Company shall take all
necessary and desirable action such that immediately on or prior to the
Effective Time (i) the Stockholders Voting Agreement, dated October 29,
1996 between the Company and the stockholders of the Company (the "Company
Stockholders Agreement"), and any other similar agreements or arrangements
shall be terminated and no longer in effect and (ii) the stockholders of
the Company immediately prior to the Effective Time who will become
shareholders of Parent as a result of the Merger shall have entered into
the Shareholders Agreement (as defined below).
5.17 TRANSITIONAL SERVICES AGREEMENT.
At the Effective Time, Parent shall enter into a transitional
services agreement with Xxxxxxxx International Services Company or one or
its affiliates ("Xxxxxxxx Services") relating to administrative services
which Xxxxxxxx Services have previously provided to Parent, such
transitional administrative services agreement to be reasonably acceptable
to the Company.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of the Company, Parent and Merger Sub to effect
the Merger are subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. (i) The Company shall have obtained
the Required Company Vote in connection with the adoption of this Agreement
and approval of the Merger by the stockholders of the Company and (ii)
Parent shall have obtained the required shareholder approval of the Share
Issuance, the Memorandum Amendment and the Articles Amendment by the
shareholders of Parent.
(b) No Injunctions or Restraints, Illegality. No judgment,
decree, statute, law, ordinance, rule or regulation shall have been
entered, enacted, adopted or promulgated, and no temporary restraining
order, preliminary or permanent injunction or other order issued by a court
or other Governmental Entity of competent jurisdiction shall be in effect,
(i) having the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger or (ii) which otherwise, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on Parent and its Subsidiaries (including the Surviving Corporation and its
Subsidiaries), taken together after giving effect to the Merger.
(c) Governmental and Regulatory Approvals. Other than the
filing provided for under Section 1.3, all consents, approvals and actions
of, filings with and notices to any Governmental Entity required of Parent,
the Company or any of their Subsidiaries to consummate the Merger, the
Share Issuance and the other transactions contemplated hereby, the failure
of which to be obtained or taken, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Parent and its
Subsidiaries (including the Surviving Corporation and its Subsidiaries),
taken together after giving effect to the Merger, shall have been obtained;
provided, however, that the provisions of this Section 6.1(c) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.4 shall have been the cause of, or shall have resulted in, the
failure to obtain such consent or approval.
(d) NASDAQ Listing. The Parent Ordinary Shares to be issued in
the Merger and such other shares to be reserved for issuance in connection
with the Merger shall have been authorized for listing on the NASDAQ.
(e) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Form S-4 shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(f) Shareholders Agreement. Xxxxxxxx Global Energy (Cayman)
Limited and the stockholders of the Company immediately prior to the
Effective Time who will become shareholders in Parent as a result of the
Merger shall have entered into the Shareholders Agreement (the
"Shareholders Agreement") in the form attached hereto as Exhibit 6.1(f).
(g) Preferred Provider Services Agreement. Xxxxxxxx
International Company and Parent shall have entered into the Preferred
Provider Services Agreement in the form attached hereto as Exhibit 6.1(g).
(h) Parent Board. The number of directors on the Board of
Directors of Parent shall have been increased to nine and such Board of
Directors shall be comprised as set forth in Section 2(b) of the
Shareholders Agreement.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to effect the Merger are
subject to the satisfaction of, or waiver by Parent, on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Company set forth in this Agreement that is qualified
as to Material Adverse Effect shall be true and correct, and each of the
representations and warranties of the Company set forth in this Agreement
that is not so qualified 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 as though made on and as of the Closing Date (except to the
extent in either case that such representations and warranties speak as of
another date), and Parent shall have received a certificate of the chief
executive officer and the chief operating officer of the Company to such
effect.
(b) Performance of Obligations of the Company. The Company
shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date and Parent shall have received a
certificate of the chief executive officer and the chief financial officer
of the Company to such effect.
(c) Tax Opinion. Parent shall have received from Skadden, Arps,
Slate, Xxxxxxx & Xxxx, LLP and its affiliated law practice entities,
special tax counsel to Parent, on or before the date the Form S-4 shall
become effective and, subsequently, on the Closing Date, a written opinion
dated as of such dates substantially in the form of Exhibit 6.2(c)(1). In
rendering such opinion, counsel to Parent shall be entitled to rely upon
information, representations and assumptions provided by Parent and the
Company substantially in the form of Exhibits 6.2(c)(2) and 6.2(c)(3)
(allowing for such amendments to the representations as counsel to Parent
deems reasonably necessary).
(d) Option Restructuring. The Option Restructuring shall have
occurred.
(e) No Material Adverse Effect. Since the date of this
Agreement, there shall not have been any event, change, circumstance or
effect which, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect on the Company.
(f) Dissenting Shares. As of the Company's Stockholders Meeting
and as of immediately prior to the Closing, no stockholder of the Company
shall have demanded or otherwise notified the Company that such stockholder
intends to seek dissenters' rights in accordance with the DGCL.
(g) Revolving Credit Facility. Any consents or other approvals
required or that may be required under the Company Credit Agreement as a
result of the Merger, this Agreement or the other transactions contemplated
hereby shall have been obtained.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are subject to the
satisfaction of, or waiver by the Company, on or prior to the Closing Date
of the following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Parent set forth in this Agreement that is qualified as
to Material Adverse Effect shall be true and correct, and each of the
representations and warranties of Parent set forth in this Agreement that
is not so qualified 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 as
though made on and as of the Closing Date (except to the extent in either
case that such representations and warranties speak as of another date),
and the Company shall have received a certificate of the chief executive
officer and the chief financial officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have
performed or complied in all material respects with all agreements and
covenants required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate of
the chief executive officer and the chief financial officer of Parent to
such effect.
(c) Tax Opinion. The Company shall have received from Fulbright
& Xxxxxxxx L.L.P., counsel to the Company, on or before the date the Form
S-4 shall become effective and, subsequently, on the Closing Date, a
written opinion dated as of such dates substantially in the form of Exhibit
6.3(c)(1). In rendering such opinion, counsel to the Company shall be
entitled to rely upon information, representations and assumptions provided
by Parent and the Company substantially in the form of Exhibits 6.2(c)(2)
and 6.2(c)(3) (allowing for such amendments to the representations as
counsel to the Company deems reasonably necessary).
(d) No Material Adverse Effect. Since the date of this
Agreement, there shall not have been any event, change, circumstance or
effect which, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect on Parent.
(e) Registration of Argentine Branch. The registration with the
appropriate Argentine governmental authority of Parent's Argentine Branch
shall have been completed and such registration shall not have resulted in
proposed fines, proposed taxes or other costs to Parent of $10,000,000 or
more.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided
below, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company or Parent:
(a) By mutual written consent of Parent and the Company;
(b) By either the Company or Parent, if the Effective Time
shall not have occurred on or before October 31, 2001 (the "Termination
Date"); provided, however, that the right to terminate this Agreement under
this Section 7.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement (including such party's
obligations set forth in Section 5.4) has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before the Termination
Date and provided further that if on the Termination Date the conditions to
Closing set forth in Section 6.1(c) shall not have been fulfilled but all
other conditions to Closing shall be fulfilled or shall be capable of being
fulfilled then the Termination Date shall be automatically extended to
December 31, 2001;
(c) By either the Company or Parent, if any Governmental Entity
(i) shall have issued an order, decree or ruling or taken any other action
(which the parties shall have used their reasonable best efforts to resist,
resolve or lift, as applicable, in accordance with Section 5.4) permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other
action shall have become final and nonappealable or (ii) shall have failed
to issue an order, decree or ruling or to take any other action (which
order, decree, ruling or other action the parties shall have used their
reasonable best efforts to obtain, in accordance with Section 5.4), in the
case of each of (i) and (ii) which is necessary to fulfill the conditions
set forth in Section 6.1(c), as applicable, and such denial of a request to
issue such order, decree, ruling or take such other action shall have
become final and nonappealable; provided, however, that the right to
terminate this Agreement under this Section 7.1(c) shall not be available
to any party whose failure to comply with Section 5.4 has been the cause of
such action or inaction;
(d) By either the Company or Parent, if the approvals of the
stockholders of either Parent or the Company contemplated by this Agreement
shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or of any adjournment
thereof at which the vote was taken;
(e) By either Parent or the Company, if there shall have been a
breach by the other of any of its representations, warranties, covenants or
obligations contained in this Agreement, which breach would result in the
failure to satisfy the conditions set forth in Section 6.2(a) or Section
6.2(b) (in the case of a breach by the Company) or Section 6.3(a) or
Section 6.3(b) (in the case of a breach by Parent), and in any such case
such breach shall be incapable of being cured or, if capable of being
cured, shall not have been cured within 30 days after written notice
thereof shall have been received by the party alleged to be in breach;
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent or the Company or their respective
officers or directors except with respect to Section 3.1(l), Section
3.2(l), Section 5.3, Section 5.7, this Section 7.2 and Article VIII, which
provisions shall survive such termination, and except that, notwithstanding
anything to the contrary contained in this Agreement, neither Parent nor
the Company shall be relieved or released from any liabilities or damages
arising out of its material breach of this Agreement.
7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company and Parent,
but, after any such approval, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or conditions
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 a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and other agreements in
this Agreement or in any instrument delivered pursuant to this Agreement,
including any rights arising out of any breach of such representations,
warranties, covenants and other agreements, shall survive the Effective
Time, except for those covenants and agreements contained herein and
therein (including Section 5.8) that by their terms apply or are to be
performed in whole or in part after the Effective Time and this Article
VIII.
8.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of
delivery if delivered personally, or by telecopy or telefacsimile, upon
confirmation of receipt, (b) on the first Business Day following the date
of dispatch if delivered by a recognized next-day courier service, or (c)
on the tenth Business Day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid.
All notices hereunder shall be delivered as set forth below, or pursuant to
such other instructions as may be designated in writing by the party to
receive such notice:
(a) if to Parent or Merger Sub, to:
Attention: Xxxxxxx X. Xxxxxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Attention: Xxxxx Xxxxxxx, Esq.
Xxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & XxXxxxxx
One Prudential Plaza
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) if to the Company to:
Attention: Xxxx Xxxxxxxx
000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Attention: Xxxxxx X. Xxxxxx, Esq.
Fulbright & Xxxxxxxx LLP
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
8.3 INTERPRETATION. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of
or Exhibit or Schedule to this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. (a) This
Agreement and the other agreements of the parties referred to herein
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
8.6 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware (without
giving effect to choice of law principles thereof).
8.7 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the
greatest extent possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other party, and any attempt to
make any such assignment without such consent shall be null and void,
except that Merger Sub may assign, in its sole discretion, any or all of
its rights, interests and obligations under this Agreement to any direct
wholly owned Subsidiary of Parent without the consent of the Company, but
no such assignment shall relieve Merger Sub of any of its obligations under
this Agreement. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of Parent and the
Company irrevocably agrees that any legal action or proceeding with respect
to this Agreement or for recognition and enforcement of any judgment in
respect hereof brought by the other party hereto or its successors or
assigns may be brought and determined in the Chancery or other Courts of
the State of Delaware, and each of Parent and the Company hereby
irrevocably submits with regard to any such action or proceeding for itself
and in respect to its property, generally and unconditionally, to the
nonexclusive jurisdiction of the aforesaid courts. Each of Parent and the
Company hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any
reason other than the failure to lawfully serve process (b) that it or its
property is exempt or immune from jurisdiction of any such court or from
any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to the fullest
extent permitted by applicable law, that (i) the suit, action or proceeding
in any such court is brought in an inconvenient forum, (ii) the venue of
such suit, action or proceeding is improper and (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such courts.
8.10 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms. It is accordingly
agreed that the parties shall be entitled to specific performance of the
terms hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.11 DEFINITIONS. As used in this Agreement:
(a) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(b) "Business Day" means any day on which banks are not
required or authorized to close in the City of New York.
(c) "Company Credit Agreement" means the Credit Agreement,
dated as of October 30, 1998 among Global Exploration, Inc., Globex
International, and Globex Far East, as the Borrowers, and Certain
Commercial Lending Institutions, as the Lenders, and Canadian Imperial Bank
of Commerce, as Issuer and as Agent for the Lenders and CIBC Xxxxxxxxxxx
Corp., as Arranger, as amended.
(d) "Company Engineering Report" means the reserve reports
listed on Schedule 8.11(d) covering the Company Ownership Interests.
(e) "Company Ownership Interests" means the ownership interests
of the Company listed on Schedule 8.11(e) in the Oil and Gas Interests of
the Company.
(f) "Defensible Title" means such right, title and interest
that is (a) evidenced by an instrument or instruments filed of record in
accordance with the conveyance and recording laws of the applicable
jurisdiction to the extent necessary to prevail against competing claims of
bona fide purchasers for value without notice, and (b) subject to Permitted
Encumbrances, free and clear of all Liens, claims, infringements, burdens
and other defects.
(g) "Hydrocarbons" means oil, condensate, gas, casinghead gas
and other liquid or gaseous hydrocarbons.
(h) "Hydrocarbon Agreement" means any of the Hydrocarbon Sales
Agreements and Hydrocarbon Purchase Agreements.
(i) "Hydrocarbon Purchase Agreement" means any material sales
agreement, purchase contract, or marketing agreement that is currently in
effect and under which Parent, the Company or their respective
Subsidiaries, as applicable, is a buyer of Hydrocarbons for resale (other
than purchase agreements entered into in the ordinary course of business
with a term of three months or less, terminable without penalty on 30 days'
notice or less, which provide for a price not greater than the market value
price that would be paid pursuant to an arm's-length contract for the same
term with an unaffiliated third-party seller, and which do not obligate the
purchaser to take any specified quantity of Hydrocarbons or to pay for any
deficiencies in quantities of Hydrocarbons not taken).
(j) "Hydrocarbon Sales Agreement" means any material sales
agreement, purchase contract, or marketing agreement that is currently in
effect and under which Parent, the Company or their respective
Subsidiaries, as applicable, is a seller of Hydrocarbons (other than "spot"
sales agreements entered into in the ordinary course of business with a
term of three months or less, terminable without penalty on 30 days' notice
or less, and which provide for a price not less than the market value price
that would be received pursuant to an arm's-length contract for the same
term with an unaffiliated third party purchaser).
(k) "known" or "knowledge" means, with respect to any party,
the knowledge of such party's executive officers after reasonable inquiry.
(l) "Material Adverse Effect" means, with respect to any entity
any event, change, circumstance or effect that is or is reasonably likely
to be materially adverse to (i) the business, financial condition or
results of operations of such entity and its Subsidiaries taken as a whole,
other than any event, change, circumstance or effect relating (x) to the
economy or financial markets in general or (y) in general to the industries
in which such entity operates and not specifically relating to such entity
or (ii) the ability of such entity to consummate the transactions
contemplated by this Agreement.
(m) "Oil and Gas Interest(s)" means: (a) direct and indirect
interests in and rights with respect to oil, gas, mineral and related
properties and assets of any kind and nature, direct or indirect, including
working, royalty and overriding royalty interests, mineral interests,
leasehold interests, production payments, operating rights, net profits
interests, other non-working interests and non-operating interests; (b)
interests in and rights with respect to Hydrocarbons and other minerals or
revenues therefrom and contracts in connection therewith and claims and
rights thereto (including oil and gas leases, operating agreements,
unitization and pooling agreements and orders, division orders, transfer
orders, mineral deeds, royalty deeds, oil and gas sales, exchange and
processing contracts and agreements and, in each case, interests
thereunder), surface interests, fee interests, reversionary interests,
reservations and concessions; (c) easements, rights of way, licenses,
permits, leases, and other interests associated with, appurtenant to, or
necessary for the operation of any of the foregoing; and (d) interests in
equipment and machinery (including well equipment and machinery), oil and
gas production, gathering, transmission, compression, treating, processing
and storage facilities (including tanks, tank batteries, pipelines and
gathering systems), pumps, water plants, electric plants, gasoline and gas
processing plants, refineries and other tangible personal property and
fixtures associated with, appurtenant to, or necessary for the operation of
any of the foregoing.
(n) "the other party" means, with respect to the Company,
Parent and means, with respect to Parent, the Company.
(o) "Parent Engineering Report" means the reserve reports
listed on Schedule 8.11(o) covering the Parent Ownership Interests.
(p) "Parent Ownership Interests" means the ownership interests
listed on Schedule 8.11(p) of Parent in the Oil and Gas Interests of
Parent.
(q) "Permitted Encumbrances" means: (a) Liens for Taxes,
assessments or other governmental charges or levies if the same shall not
at the particular time in question be due and delinquent or are being
contested in good faith by appropriate proceedings; (b) Liens of carriers,
warehousemen, mechanics, laborers, materialmen, landlords, vendors, workmen
and operators and other similar Liens arising by operation of law in the
ordinary course of business; (c) Liens incurred in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other social security legislation (other than ERISA) which,
individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect on the Company; (d) Liens incurred in
the ordinary course of business to secure the performance of bids, tenders,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance and repayment bonds and other obligations of a like nature
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on Parent or the Company, as applicable;
(e) Liens, easements, rights-of-way, restrictions, servitudes, permits,
conditions, covenants, exceptions, reservations and other similar
encumbrances incurred in the ordinary course of business or existing on
property and not materially impairing the value of the assets of Parent or
the Company, as applicable, or interfering with the ordinary conduct of the
business of Parent or the Company, as applicable, or rights to any of their
assets; and (f) Liens created or arising by operation of law to secure a
party's obligations as a purchaser of oil and gas.
(r) "Person" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated
organization, other entity or group (as defined in the Exchange Act).
(s) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership) or (ii) at least a majority of
the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or
by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
APCO ARGENTINA INC.
By: /S/ Xxxx X. Xxxxxxxxx, Xx.
--------------------------
Name: Xxxx X. Xxxxxxxxx, Xx.
Title: President
APCO DELAWARE, INC.
By: /S/ Xxxx X. Xxxxxxxxx, Xx.
--------------------------
Name: Xxxx X. Xxxxxxxxx, Xx.
Title: President
GLOBEX ENERGY, INC.
By: /s/ C. Xxxx Xxxxxx
---------------------
Name: C. Xxxx Xxxxxx
Title: President and CEO
