AGREEMENT AND PLAN OF MERGER by and among STONE ENERGY CORPORATION (PARENT) STONE ENERGY OFFSHORE, L.L.C. (MERGER SUB) and BOIS D’ARC ENERGY, INC. (COMPANY) dated as of April 30, 2008
Exhibit
2.1
__________________________________________________
AGREEMENT
AND PLAN OF MERGER
by
and among
STONE
ENERGY CORPORATION (PARENT)
STONE
ENERGY OFFSHORE, L.L.C. (MERGER SUB)
and
BOIS
D’ARC ENERGY, INC. (COMPANY)
dated
as of
April
30, 2008
__________________________________________________
TABLE
OF CONTENTS
ARTICLE
I
THE
MERGER
| 1.1 | The Merger | 1 |
| 1.2 | Effective Time of the Merger | 1 |
|
1.3
|
Closing |
2
|
| 1.4 | Certificate of Formation | 2 |
| 1.5 | Limited Liability Company Agreement | 2 |
| 1.6 | Directors and Officers | 2 |
ARTICLE
II
EFFECT
OF THE MERGER ON THE CAPITAL STOCK
OF
THE COMPANY AND MERGER SUB; EXCHANGE OF CERTIFICATES
| 2.1 |
Effect
of the Merger
|
2
|
| 2.2 | No Dissenters' Rights | 3 |
| 2.3 | Treatment of Stock Options; Restricted Stock | 3 |
| 2.4 | Exchange of Certificates | 5 |
| 2.5 | Stock Transfer Books | 8 |
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
| 3.1 |
Organization
|
8
|
| 3.2 | Capitalization | 9 |
| 3.3 | Authorization; Validity of Agreement | 10 |
| 3.4 | No Violations; Consents and Approvals | 11 |
| 3.5 | SEC Reports and Financial Statements | 12 |
| 3.6 | Oil and Gas | 13 |
| 3.7 | Absence of Certain Changes | 16 |
| 3.8 | Absence of Undisclosed Liabilities | 17 |
| 3.9 | Disclosure Documents | 17 |
| 3.10 | Employee Benefit Plans; ERISA | 17 |
| 3.11 | Litigation; Compliance with Law | 19 |
| 3.12 | Intellectual Property | 20 |
| 3.13 | Material Contracts | 22 |
| 3.14 | Taxes | 23 |
| 3.15 | Environmental Matters | 25 |
| 3.16 | Company Assets | 26 |
| 3.17 | Insurance | 26 |
| 3.18 | Labor Matters; Employees | 26 |
(ii)
| 3.19 | Affiliate Transactions | 27 |
| 3.20 | Derivative Transactions and Hedging | 28 |
| 3.21 | Natural Gas Act | 28 |
| 3.22 | Disclosure Controls and Procedures | 28 |
| 3.23 | Investment Company | 28 |
| 3.24 | No Rights Agreement | 28 |
| 3.25 | Takeover Laws | 29 |
| 3.26 | Required Vote by Company Stockholders | 29 |
| 3.27 | Recommendation of Company Board of Directors; Opinion of Financial Advisor | 29 |
| 3.28 | Brokers | 29 |
| 3.29 | Reorganization | 29 |
| 3.30 | No Other Representations or Warranties | 30 |
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
PARENT AND MERGER SUB
| 4.1 |
Organization
|
30
|
| 4.2 | Capitalization | 31 |
| 4.3 | Authorization; Validity of Agreement | 32 |
| 4.4 | No Violations; Consents and Approvals | 32 |
| 4.5 | SEC Reports and Financial Statements | 33 |
| 4.6 | Oil and Gas Reserves | 35 |
| 4.7 | Absence of Certain Changes | 37 |
| 4.8 | Absence of Undisclosed Liabilities | 37 |
| 4.9 | Disclosure Documents | 37 |
| 4.10 | Employee Benefit Plans; ERISA | 38 |
| 4.11 | Litigation; Compliance with Law | 39 |
| 4.12 | Intellectual Property | 41 |
| 4.13 | Material Contracts | 42 |
| 4.14 | Taxes | 43 |
| 4.15 | Environmental Matters | 45 |
| 4.16 | Parent Assets | 46 |
| 4.17 | Insurance | 46 |
| 4.18 | Labor Matters; Employees | 46 |
| 4.19 | Affiliate Transactions | 47 |
| 4.20 | Derivative Transactions and Hedging | 47 |
| 4.21 | Natural Gas Act | 48 |
| 4.22 | Disclosure Controls and Procedures | 48 |
| 4.23 | Investment Company | 48 |
| 4.24 | Rights Agreement | 48 |
| 4.25 | Recommendation of Parent Board of Directors; Opinion of Financial Advisor | 48 |
| 4.26 | Required Vote by Parent Stockholders | 49 |
| 4.27 | Stockholder Agreements | 49 |
(iii)
| 4.28 | Brokers | 49 |
| 4.29 | Reorganization | 49 |
| 4.30 | No Other Representations or Warranties | 49 |
ARTICLE
V
COVENANTS
| 5.1 |
Interim
Operations of the Company
|
49
|
| 5.2 | Interim Operations of Parent | 53 |
| 5.3 | Acquisition Proposals | 55 |
| 5.4 | Access to Information and Properties | 62 |
| 5.5 | Further Action; Commercially Reasonable Efforts | 63 |
| 5.6 | Proxy Statement; S-4; Company Special Meeting; Parent Special Meeting | 64 |
| 5.7 | Notification of Certain Matters | 65 |
| 5.8 | Directors’ and Officers’ Insurance and Indemnification | 66 |
| 5.9 | Publicity | 66 |
| 5.10 | Stock Exchange Listing | 66 |
| 5.11 | Employee Benefits | 67 |
| 5.12 | Certain Tax Matters | 68 |
| 5.13 | Section 16 Matters | 69 |
ARTICLE
VI
CONDITIONS
| 6.1 |
Conditions
to Each Party’s Obligation to Effect the Merger
|
69
|
| 6.2 | Conditions to the Obligation of the Company to Effect the Merger | 70 |
| 6.3 | Conditions to Obligations of Parent and Merger Sub to Effect the Merger | 71 |
ARTICLE
VII
TERMINATION
| 7.1 |
Termination
|
72
|
| 7.2 | Effect of Termination | 73 |
ARTICLE
VIII
MISCELLANEOUS
| 8.1 |
Fees
and Expenses
|
73
|
| 8.2 | Amendment; Waiver | 75 |
| 8.3 | Survival | 76 |
| 8.4 | Notices | 76 |
| 8.5 | Rules of Construction and Interpretation; Definitions | 77 |
| 8.6 | Headings; Schedules | 82 |
| 8.7 | Counterparts | 82 |
| 8.8 | Entire Agreement | 82 |
| 8.9 | Severability | 82 |
| 8.10 | Governing Law | 82 |
| 8.11 | Assignment | 82 |
| 8.12 | Parties in Interest | 83 |
| 8.13 | Specific Performance | 83 |
| 8.14 | Jurisdiction | 83 |
(iv)
TABLE
OF DEFINED TERMS
| Acceptable Confidentiality Agreement | 78 |
Company
Termination Fee
|
74
|
|
| Acquisition Agreement | 57 | Confidentiality Agreements | 63 | |
| Acquisition Proposal | 61 | D&O | 66 | |
| Advisers Act | 28 | Delaware Secretary of State | 1 | |
| Agreement | 1 | Derivative Transaction | 78 | |
| Antitrust Division | 63 | DLLCA | 1 | |
| Articles of Merger | 1 | Effective Time | 1 | |
| Business Day | 78 | Employment and Withholding Taxes | 79 | |
| Certificate | 3 | Environmental Claim | 79 | |
| Certificate of Merger | 1 | Environmental Laws | 79 | |
| Claim | 78 | ERISA | 17 | |
| Cleanup | 78 | Exchange Act | 12 | |
| Closing | 2 | Exchange Agent | 5 | |
| Closing Date | 2 | Exchange Fund | 5 | |
| Code | 1 | FERC | 28 | |
| Committee | 3 | FTC | 63 | |
| Company | 1 | GAAP | 13 | |
| Company Adverse Recommendation Change | 56 | Governmental Entity | 12 | |
| Company Assets | 26 | Hazardous Material | 79 | |
| Company Balance Sheet | 13 | HSR Act | 12 | |
| Company Benefit Plans | 18 | Hydrocarbons | 14 | |
| Company Board | 11 | Intellectual Property | 20 | |
| Company Common Stock | 2 | Interim Company Reserve Report | 64 | |
| Company Credit Agreement | 10 | Investment Company Act | 28 | |
| Company Disclosure Letter | 8 | Knowledge | 80 | |
| Company Employee | 68 | Laws | 11 | |
| Company Employee Agreement | 18 | Liens | 80 | |
| Company ERISA Affiliate | 17 | Litigation | 80 | |
| Company IP Rights | 21 | Mass Layoff | 27 | |
| Company Leased Real Property | 78 | Material Adverse Effect | 80 | |
| Company Leases | 78 | Merger | 1 | |
| Company Material Contract | 23 | Merger Consideration | 3 | |
| Company Notice of Change | 57 | Merger Sub | 1 | |
| Company Oil and Gas Agreements | 15 | Nevada Secretary of State | 1 | |
| Company Option | 3 | NGA | 28 | |
| Company Owned Real Property | 78 | NRS | 1 | |
| Company Permits | 20 | Oil and Gas Interests | 14 | |
| Company Preferred Stock | 9 | Option Amount | 3 | |
| Company Real Property | 78 | Option Amount Cash Percentage | 4 | |
| Company Required Vote | 29 | Option Amount Stock Percentage | 4 | |
| Company Reserve Report | 13 | Parent | 1 | |
| Company Restricted Stock | 4 | Parent Adverse Recommendation Change | 59 | |
| Company SEC Documents | 12 | Parent Assets | 46 | |
| Company Special Meeting | 65 | Parent Balance Sheet | 34 | |
(v)
| Parent Benefit Plans | 38 | Parent Termination Fee | 74 | |
| Parent Board | 48 | Per Share Cash Consideration | 3 | |
| Parent Common Stock | 2 | Per Share Stock Consideration | 3 | |
| Parent Credit Agreement | 32 | Permitted Liens | 81 | |
| Parent Disclosure Letter | 30 | Person | 81 | |
| Parent Employee Agreement | 38 | Plant Closing | 27 | |
| Parent ERISA Affiliate | 38 | Proxy Statement | 17 | |
| Parent IP Rights | 41 | Registered Company IP | 21 | |
| Parent Leased Real Property | 81 | Registered Parent IP | 41 | |
| Parent Leases | 81 | Release | 81 | |
| Parent Material Contract | 42 | Representatives | 55 | |
| Parent Notice of Change | 60 | Return | 81 | |
| Parent Oil and Gas Agreements | 36 | S-4 | 17 | |
| Parent Owned Real Property | 81 | Xxxxxxxx-Xxxxx Act | 12 | |
| Parent Permits | 40 | SEC | 12 | |
| Parent Preferred Stock | 31 | Section 2.3 Parent Common Stock Value | 4 | |
| Parent Proposal | 49 | Securities Act | 9 | |
| Parent Real Property | 81 | Stock Plan | 3 | |
| Parent Required Vote | 49 | Stockholder Agreements | 49 | |
| Parent Reserve Report | 35 | Subsidiary | 81 | |
| Parent Rights | 31 | Superior Proposal | 61 | |
| Parent Rights Agreement | 31 | Surviving Entity | 1 | |
| Parent SEC Documents | 34 | Tax | 82 | |
| Parent Special Meeting | 65 | Termination Date | 72 | |
| Parent Stock Options | 31 | WARN ACT | 27 |
(vi)
This
Agreement and Plan of Merger (this “Agreement”)
dated April 30, 2008, by and among Stone Energy Corporation, a Delaware
corporation (“Parent”),
Stone Energy Offshore, L.L.C., a Delaware limited liability company and wholly
owned Subsidiary of Parent (“Merger
Sub”), and Bois d’Arc Energy, Inc., a Nevada corporation (the “Company”). Certain
capitalized terms not defined herein are defined in Section 8.5 of this
Agreement.
WHEREAS,
the respective boards of directors of each of Parent, Merger Sub and the Company
have unanimously (i) approved and declared advisable the merger of the
Company with and into Merger Sub, upon the terms and subject to the conditions
set forth in this Agreement, and (ii) approved this Agreement;
WHEREAS,
for U.S. federal income tax purposes, it is intended that the Merger will
qualify as a reorganization under the provisions of Section 368(a) of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”);
and
WHEREAS,
Parent, Merger Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and to
prescribe various conditions to the Merger.
NOW,
THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants and agreements contained in this
Agreement, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE
I
THE
MERGER
1.1 The
Merger. Upon
the terms and subject to the satisfaction or (to the extent permitted by
applicable Law) waiver of the conditions set forth in Article VI, at the
Effective Time (as defined below), the Company shall merge with and into Merger
Sub (the “Merger”), the
separate existence of the Company shall thereupon cease and Merger Sub shall be
the surviving entity in the Merger (sometimes referred to herein as the “Surviving
Entity”) as a wholly owned Subsidiary of Parent. The Merger
shall have the effects set forth in the Delaware Limited Liability Company Act
(the “DLLCA”)
and the Nevada Revised Statutes (the “NRS”),
including the Surviving Entity’s succession to and assumption of all rights and
obligations of Merger Sub and the Company.
1.2 Effective
Time of the Merger. Upon
the terms and subject to the provisions of this Agreement, at the Closing,
Parent, Merger Sub and the Company will cause (i) an appropriate Certificate of
Merger (the “Certificate of
Merger”) to be executed and filed with the Secretary of State of the
State of Delaware (the “Delaware
Secretary of State”) in such form and executed as provided in the DLLCA
and (ii) appropriate Articles of Merger (the “Articles of
Merger”) to be executed and filed with the Secretary of State of the
State of Nevada (the “Nevada Secretary
of State”) in such form and executed as provided in the
NRS. The Merger shall become effective (the “Effective
Time”) upon the later of (i) the date and time of filing of a properly
executed Certificate of Merger with the Delaware Secretary of State in
accordance with the DLLCA and properly executed Articles of Merger with the
Nevada Secretary of State in accordance with the NRS, and (ii) such time as the
parties shall agree and as specified in the Certificate of Merger and Articles
of Merger. The filing of the Certificate of Merger and Articles of
Merger referred to above shall be made as soon as practicable on the Closing
Date set forth in Section 1.3.
1.3 Closing. The
closing (the “Closing”)
of the transactions contemplated by this Agreement will take place at 10:00 a.m.
(local time) on a date to be specified by the parties, which shall be no later
than the second Business Day after satisfaction or (to the extent permitted by
applicable Law) waiver of the conditions set forth in Article VI (other than any
such conditions which by their nature cannot be satisfied until the Closing
Date, which shall be required to be so satisfied or (to the extent permitted by
applicable Law) waived on the Closing Date), at the offices of Xxxxxx &
Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxxxx, Xxxxx 00000 unless another time, date or
place is agreed to in writing by the parties hereto (such date upon which the
Closing occurs, the “Closing
Date”).
1.4 Certificate
of Formation. Pursuant
to the Merger, the Certificate of Formation of Merger Sub in effect immediately
prior to the Effective Time shall be the Certificate of Formation of the
Surviving Entity until thereafter changed or amended in accordance with the
Limited Liability Company Agreement of the Surviving Entity and the
DLLCA.
1.5 Limited
Liability Company Agreement. Pursuant
to the Merger, the Limited Liability Company Agreement of Merger Sub in effect
immediately prior to the Effective Time shall be the Limited Liability Company
Agreement of the Surviving Entity at and after the Effective Time until
thereafter amended in accordance with the terms thereof and the
DLLCA.
1.6 Directors
and Officers. At
and after the Effective Time, the directors and officers of Merger Sub shall be
the directors and officers, respectively, of the Surviving Entity until their
respective successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Entity’s Limited Liability Company Agreement and the DLLCA.
ARTICLE
II
EFFECT
OF THE MERGER ON THE CAPITAL STOCK
OF
THE COMPANY AND MERGER SUB; EXCHANGE OF CERTIFICATES
2.1 Effect
of the Merger. At
the Effective Time, by virtue of the Merger and without any action on the part
of any party or the holder of any of their securities:
(a) Membership Interests of
Merger Sub. The issued and outstanding membership interests of
Merger Sub shall remain issued and outstanding and unchanged, and the sole
member shall remain the sole member of Merger Sub.
(b) Capital Stock of the
Company. Subject to the other provisions of this Article II,
each share of common stock of the Company, par value $0.01 per share (the “Company Common
Stock”), issued
and outstanding immediately prior to the Effective Time (excluding any shares of
Company Common Stock described in Section 2.1(d)) shall be converted into the
right to receive (i) 0.165 shares of the common stock of Parent, par value $0.01
per share (the “Parent Common
Stock”), together with the Parent Rights associated therewith (the “Per Share Stock
Consideration”), and (ii) cash in an amount equal to $13.65, without
interest (the “Per Share Cash
Consideration;” the Per Share Cash Consideration together with the Per
Share Stock Consideration are herein referred to as the “Merger
Consideration”).
2
(c) Certificates. All
such shares of Company Common Stock, when so converted, shall cease to be
outstanding and shall automatically be canceled and cease to
exist. Each holder of a certificate (a “Certificate”)
previously representing any such shares shall cease to have any rights with
respect thereto, except the right to receive (i) the Merger Consideration, (ii)
any dividends or other distributions in accordance with Section 2.4, and (iii)
any cash to be paid in lieu of any fractional shares of Parent Common Stock in
accordance with Section 2.4, in each case to be issued or paid in consideration
therefor upon the surrender of such Certificates in accordance with Section
2.4.
(d) Treasury
Stock. All shares of Company Common Stock held by the Company
as treasury shares or by Parent or Merger Sub or by any Subsidiary of Parent,
Merger Sub or the Company immediately prior to the Effective Time shall
automatically be canceled and cease to exist as of the Effective Time and no
consideration shall be delivered or deliverable therefor.
(e) Impact of Stock Splits,
Etc. If, between the date of this Agreement and the Effective
Time, the shares of Parent Common Stock or Company Common Stock shall be changed
or proposed to be changed into a different number or class of shares by reason
of the occurrence of or record date with respect to any reclassification,
recapitalization, split-up, combination, exchange of shares or similar
readjustment, in any such case within such period, or a stock dividend thereon
shall be declared with a record date within such period, appropriate adjustments
shall be made to the Per Share Stock Consideration, and only with respect to
changes in the outstanding shares of Company Common Stock, to the Per Share Cash
Consideration. Nothing in this Section 2.1(e) shall be construed to
permit any party to take any action that is otherwise prohibited or restricted
by any other provision of this Agreement.
2.2 No
Dissenters’ Rights. Pursuant
to Section 92A.390 of the NRS, no dissenters’ rights or rights of appraisal will
apply in connection with the Merger.
2.3 Treatment
of Stock Options; Restricted Stock.
(a) Prior to
the Effective Time, the Company, the Company Board and the Compensation
Committee of the Company Board (the “Committee”)
shall take all actions necessary under the Company’s Amended and Restated
Long-Term Incentive Plan (the “Stock
Plan”) to cause each option to purchase shares of Company Common Stock
granted under the Stock Plan that is outstanding immediately prior to the
Effective Time (a “Company
Option”) to be cancelled at the Effective Time by virtue of the Merger
and without any action on the part of the holder thereof, the Company, Parent or
Merger Sub. Each Company Option shall be converted into the right to
receive, from the Surviving Entity, within two Business Days following the
Effective Time, an amount (the “Option
Amount”) (less any applicable withholding Taxes and without interest)
equal to the excess of (A) the number of shares of Company Common Stock subject
to such Company Option multiplied by the Merger Consideration; provided however
that for purposes of this Section 2.3(a) only, the Per Share Stock Consideration
portion of the Merger Consideration shall be determined using the average
closing sales price of Parent Common Stock as reported by The Wall Street
Journal for the five trading days immediately preceding the
two Business Days prior to the date on which the Effective Time shall occur
(such value, the “Section 2.3
Parent Common Stock Value”, over (B) the per share exercise price of such
Company Option multiplied by the number of shares of Company Common Stock
subject to such Company Option. The Option Amount Cash Percentage of
the Option Amount shall be paid in cash. The Option Amount Stock
Percentage of the Option Amount shall be paid in the form of Parent Common Stock
utilizing the Section 2.3 Parent Common Stock Value. The “Option Amount
Cash Percentage”shall be the quotient (expressed as a percentage) of the
Per Share Cash Consideration divided by the sum of the Per Share Cash
Consideration and the Section 2.3 Parent Common Stock Value. The
“Option
Amount Stock Percentage” shall equal 100% less the Option Amount Cash
Percentage. As of the Effective Time, all Company Options shall
automatically cease to exist, and each holder of a Company Option shall cease to
have any rights with respect thereto, except, with respect to Company Options,
the right to receive payment of the Option Amount. Prior to the
Effective Time, the Company, the Company Board and the Committee shall take all
actions necessary under the Stock Plan, the award agreements thereunder and
otherwise to effectuate the provisions of this Section 2.3(a), including
providing notice to the holders of Company Options of such
provisions
3
(b) Subject
to the terms and upon the conditions herein, as of the Effective Time, the
restrictions on each restricted share of Company Common Stock (the “Company
Restricted Stock”) granted and then outstanding under the Stock Plan
shall, and without any action on the part of the holder thereof, the Company,
Parent or Merger Sub, lapse, and each such share of Company Restricted Stock
shall be fully vested in each holder thereof at such time, and each such share
of Company Restricted Stock will be treated at the Effective Time the same as,
and have the same rights and be subject to the same conditions, as each share of
Company Common Stock not subject to any restrictions; provided, that upon
vesting the holder may satisfy the applicable withholding Tax obligations by
returning to the Surviving Entity or Parent a sufficient number of shares of
Company Common Stock equal in value to such obligation. Prior to the
Effective Time, the Company, the Company Board and the Committee shall take all
actions necessary under the Stock Plan, the award agreements thereunder and
otherwise to effectuate this Section 2.3(a).
(c) Except as
contemplated by clauses (a) and (b) above, the Surviving Entity and Parent shall
be entitled to deduct and withhold, or cause the Exchange Agent to deduct and
withhold, from the consideration otherwise payable pursuant to this Section 2.3
to any holders of Company Options or Company Restricted Stock such amounts as it
may be required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign Tax
Law. To the extent that amounts are so withheld by the Surviving
Entity, Parent or the Exchange Agent, as the case may be, the withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holders of Company Options or Company Restricted Stock, as applicable, in
respect of which the deduction and withholding was made by the Surviving Entity,
Parent or the Exchange Agent, as the case may be. The Surviving Entity and
Parent agree that no wage withholding shall be made with respect to Restricted
Stock with respect to which a valid and timely election has been made under
Section 83(b) of the Code unless required by applicable Law.
4
2.4 Exchange
of Certificates.
(a) Exchange
Agent. Prior to the Effective Time, Parent shall deposit, or
shall cause to be deposited, with the Company’s transfer agent or a bank or
trust company designated by Parent and reasonably satisfactory to the Company
(the “Exchange
Agent”), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II, through the Exchange
Agent, sufficient cash and Parent Common Stock to make pursuant to this Article
II all deliveries of cash and Parent Common Stock as required by this Article
II. Parent agrees to make available to the Exchange Agent, from time
to time as needed, cash sufficient to pay any dividends and other distributions
pursuant to Section 2.4(c) and to make payments in lieu of fractional shares
pursuant to Section 2.4(e). Any cash and Parent Common Stock
deposited with the Exchange Agent (including as payment for fractional shares in
accordance with Section 2.4(e) and any dividends or other distributions in
accordance with Section 2.4(c)) shall hereinafter be referred to as the “Exchange
Fund.” The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the Merger Consideration contemplated to be paid for shares of Company
Common Stock pursuant to this Agreement out of the Exchange
Fund. Except as contemplated by Sections 2.4(c) and 2.4(e) hereof,
the Exchange Fund shall not be used for any other purpose.
(b) Exchange
Procedures. Promptly after the Effective Time, Parent shall
instruct the Exchange Agent to mail to each record holder, as of the Effective
Time, of an outstanding Certificate that immediately prior to the Effective Time
represented shares of Company Common Stock (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 shall be in customary form and agreed to by Parent and the
Company prior to the Effective Time) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration
payable in respect of the shares of Company Common Stock represented by such
Certificates. Promptly after the Effective Time, upon surrender of
Certificates for cancellation to the Exchange Agent together with such letters
of transmittal, properly completed and duly executed, and such other documents
as may be required pursuant to such instructions, the holders of such
Certificates shall be entitled to receive in exchange therefor (A) shares of
Parent Common Stock representing, in the aggregate, the whole number of shares
of Parent Common Stock that such holder has the right to receive pursuant to
Section 2.1 (after taking into account all shares of Company Common Stock then
held by such holder) and (B) a check in the amount equal to the aggregate amount
of cash that such holder has the right to receive pursuant to Section 2.1 and
this Article II, including cash payable in lieu of any fractional shares of
Parent Common Stock pursuant to Section 2.4(e) and dividends and other
distributions pursuant to Section 2.4(c). No interest shall be paid
or accrued on any Merger Consideration, cash in lieu of fractional shares or on
any unpaid dividends and distributions payable to holders of
Certificates. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the Merger Consideration payable in respect of such shares of Company
Common Stock may be paid to a transferee if the Certificate representing such
shares of Company Common Stock is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and the Person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other Taxes required by reason of the delivery of the Merger Consideration in
any name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such Taxes have been paid or are not payable. Until surrendered as
contemplated by this Section 2.4, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration payable in respect of the shares of Company
Common Stock represented by such Certificate, cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.4(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.4(c).
5
(c) Distributions with Respect
to Unexchanged Parent Common Stock. No dividends or other
distributions declared or made with respect to Parent Common Stock with a record
date after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the Parent Common Stock that such holder would be
entitled to receive upon surrender of such Certificate and no cash payment in
lieu of fractional shares of Parent Common Stock shall be paid to any such
holder until such holder shall surrender such Certificate in accordance with
this Section 2.4. Subject to applicable Law, following surrender of
any such Certificate, there shall be paid to such holder of Parent Common Stock
issuable in exchange therefor, without interest, (i) promptly after the time of
such surrender, the amount of any cash due pursuant to Section 2.1 and cash
payable in lieu of fractional shares of Parent Common Stock to which such holder
is entitled pursuant to Section 2.4(e) and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to the Parent Common Stock and payable with respect to such Parent
Common Stock, and (ii) 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 Common Stock.
(d) Further Rights in
Company Common Shares. The Merger Consideration
issued upon conversion of a share of Company Common Stock in accordance with the
terms hereof (including any cash paid pursuant to Section 2.4(c) or Section
2.4(e)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such share of Company Common Stock.
(e) Fractional
Shares. No certificates or scrip or Parent Common Stock
representing fractional shares of Parent Common Stock 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 as a holder of any Parent Common
Stock. Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged in the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (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) the average of the closing sale prices of Parent Common Stock
on the NYSE as reported by The Wall Street
Journal for the five trading days immediately preceding the two Business
Days prior to the date on which the Effective Time shall occur and (ii) the
fraction of a share of Parent Common Stock that such holder would otherwise be
entitled to receive pursuant to Section 2.1 hereof. 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, or shall cause the Surviving Entity 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.
6
(f) Termination of Exchange
Fund. Any portion of the Exchange Fund which remains
undistributed to the holders of Company Common Stock after 180 days
following the Effective Time occurs shall be delivered to Parent upon
demand and, from and after such delivery to Parent, any former holders of
Company Common Stock who have not theretofore complied with this Article II
shall thereafter look only to Parent for the Merger Consideration payable in
respect of such shares of Company Common Stock, any cash in lieu of fractional
shares of Parent Common Stock to which they are entitled pursuant to Section
2.4(e) and any dividends or other distributions with respect to Parent Common
Stock to which they are entitled pursuant to Section 2.4(c), in each case,
without any interest thereon. Any amounts remaining unclaimed by
holders of shares of Company Common Stock immediately prior to such time as such
amounts would otherwise escheat to or become the property of any governmental
entity shall, to the extent permitted by applicable Law, become the property of
Parent free and clear of any Liens, claims or interest of any Person previously
entitled thereto.
(g) No
Liability. Neither Parent nor the Surviving Entity shall be
liable to any holder of shares of Company Common Stock for any such shares of
Parent Common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(h) 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
Parent, the posting by such Person of a bond, in such reasonable amount as
Parent may direct, as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent shall pay in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration payable in
respect of the shares of Company Common Stock represented by such
Certificate, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.4(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.4(c), in each case, without any interest
thereon.
(i) Withholding. Each
of Parent, the Surviving Entity and the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock such amounts as Parent, the
Surviving Entity or the Exchange Agent is required to deduct and withhold under
the Code or any provision of state, local, or foreign Tax Law, with respect to
the making of such payment. To the extent that amounts are so
withheld by Parent, the Surviving Entity or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of Company Common Stock in respect of whom such deduction and
withholding was made by Parent, the Surviving Entity or the Exchange Agent, as
the case may be.
7
(j) Book
Entry. All shares of Parent Common Stock to be issued in the
Merger shall be issued in book entry form, without physical
certificates.
2.5 Stock
Transfer Books. At
the close of business on the date on which the Effective Time occurs, the stock
transfer books of the Company shall be closed and thereafter there shall be no
further registration of transfers of shares of Company Common Stock theretofore
outstanding on the records of the Company. From and after the close
of business on the date on which the Effective Time occurs, any Certificates
presented to the Exchange Agent, Parent or the Surviving Entity for any reason
shall be converted into the Merger Consideration payable in respect of the
shares of Company Common Stock represented by such Certificates, any
cash in lieu of fractional shares of Parent Common Stock to which the holders
thereof are entitled pursuant to Section 2.4(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.4(c), in each case, without any interest thereon.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except as
set forth in the disclosure letter delivered by the Company to Parent at or
prior to the execution and delivery of this Agreement (the “Company
Disclosure Letter”) (each section of which qualifies the correspondingly
numbered representation, warranty or covenant to the extent specified therein
and such other representations, warranties or covenants to the extent a matter
in such section is disclosed in such a way as to make its relevance to such
other representation, warranty or covenant reasonably apparent), the Company
represents and warrants to Parent as follows:
3.1 Organization.
(a) Each of
the Company and its Subsidiaries is a corporation or other entity duly
organized, validly existing, and in good standing (to the extent such concept
exists in such jurisdiction) under the Laws of the jurisdiction of its
incorporation or organization, and has all requisite corporate or other power
and authority to own, lease, use and operate its properties and to carry on its
business as it is now being conducted.
(b) Each of
the Company and each of its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction (to the extent such
concepts exist in such jurisdictions) where the character of the property owned,
operated or leased by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed or to be in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(c) The
Company has previously made available to Parent a complete, true and correct
copy of each of its articles of incorporation and bylaws, in each case as
amended (if so amended) to the date of this Agreement, and has made available
the certificate of incorporation, bylaws or other organizational documents of
each of its Subsidiaries, in each case as amended (if so amended) to the date of
this Agreement. Neither the Company nor any of its Subsidiaries is in
violation of its articles or certificate of incorporation, bylaws or other
organizational documents.
8
(d) Section
3.1(d) of the Company Disclosure Letter sets forth a complete, true and correct
list of all of the Subsidiaries of the Company, together with the jurisdiction
of incorporation or organization of each Subsidiary, the percentage of
outstanding capital stock or other equity interest of each Subsidiary held by
the Company or any other subsidiary and the names of the directors, managers and
officers of each Subsidiary. Except as disclosed in Section
3.1(d) of the Company Disclosure Letter, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity. The respective certificates or articles of incorporation and
bylaws or other organizational documents of the Subsidiaries of the Company do
not contain any provision limiting or otherwise restricting the ability of the
Company to control its Subsidiaries in any material respect.
(e) All names
by which the Company previously conducted business or was known are as listed in
Section 3.1(e) of the Company Disclosure Letter.
3.2 Capitalization.
(a) The
authorized capital stock of the Company consists of 100,000,000 shares of
Company Common Stock and 10,000,000 shares of preferred stock, par value $.01
per share (the “Company Preferred
Stock”). As of April 29, 2008, 66,449,000 shares of Company
Common Stock were issued and outstanding (including 650,000 shares of unvested
Company Restricted Stock issued under the Stock Plan). As of the date
of this Agreement, (i) there are no shares of Company Preferred Stock
issued and outstanding or held in the treasury of the Company, and
(ii) 1,632,890 shares of Company Common Stock are reserved for issuance in
respect of future grants under the Stock Plan. As of April 15, 2008,
there are outstanding Company Options to purchase an aggregate of 3,250,000
shares of Company Common Stock. Since April 15, 2008, (i) no shares
of Company Common Stock have been issued, except pursuant to Company Options
outstanding on April 15, 2008, and (ii) no Company Options have been
granted. Neither the Company nor any of its Subsidiaries directly or
indirectly owns any shares of Company Common Stock. No bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into or exchangeable for securities having the right to vote) on any matters on
which stockholders of the Company may vote are issued or
outstanding. All issued and outstanding shares of the Company’s
capital stock are, and all shares that may be issued or granted pursuant to the
exercise of Company Options will be, when issued or granted in accordance with
the respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. The issuance and sale of all of
the shares of capital stock described in this Section 3.2 have been in
compliance with United States federal and state securities
Laws. Neither the Company nor any of its Subsidiaries has agreed to
register any securities under the Securities Act of 1933, as amended (together
with the rules and regulations thereunder, the “Securities
Act”), or under any state securities Law or granted registration rights
to any individual or entity. Except for the Company Options, as of
the date of this Agreement, there are no outstanding or authorized (x) options,
warrants, preemptive rights, subscriptions, calls or other rights, convertible
securities, agreements, claims or commitments of any character obligating the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock or other equity interest in the Company or any of its Subsidiaries
or securities convertible into or exchangeable for such shares or equity
interests, (y) contractual obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any capital stock of the Company or
any of its Subsidiaries or any such securities or agreements listed in clause
(x) of this sentence, or (z) voting trusts or similar agreements to which
the Company or any of its Subsidiaries is a party with respect to the voting of
the capital stock of the Company or any of its Subsidiaries. The
Company has previously provided to Parent true and correct information with
respect to each Company Option outstanding as of the date of this Agreement
including: (i) the name of the holder; (ii) the particular plan pursuant to
which the Company Option was granted; (iii) the number of shares of Company
Common Stock subject to such Company Option; (iv) with respect to each Company
Option, the exercise price per share of Company Common Stock; (v) the date
on which such Company Option was granted or issued; (vi) the applicable
vesting schedule; (vii) the date on which such Company Option expires; and
(viii) whether the exercisability of such Company Option will be
accelerated in any way by the transactions contemplated by this
Agreement. Immediately after the consummation of the Merger, there
will not be any outstanding subscriptions, options, warrants, calls, preemptive
rights, subscriptions, or other rights, convertible or exchangeable securities,
agreements, claims or commitments of any character by which the Company or any
of its Subsidiaries will be bound calling for the purchase or issuance of any
shares of the capital stock of the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or any other such
securities or agreements.
9
(b) (i) All
of the issued and outstanding shares of capital stock (or equivalent equity
interests of entities other than corporations) of each of the Company’s
Subsidiaries are owned, directly or indirectly, by the Company free and clear of
any Liens, other than (x) statutory Liens for Taxes not yet due and
payable, (y) such restrictions as may exist under applicable Law, and
(z) Liens granted pursuant to the Company’s Credit Agreement, dated
May 11, 2005, as amended, among the Company and each of the lenders party
thereto (the “Company Credit
Agreement”), and all such shares or other ownership interests have been
duly authorized, validly issued and are fully paid and non-assessable and free
of preemptive rights, with no personal liability attaching to the ownership
thereof, and (ii) neither the Company nor any of its Subsidiaries owns any
shares of capital stock or other securities of, or interest in, any other
Person, except for the securities of the Subsidiaries of the Company, or is
obligated to make any capital contribution to or other investment in any other
Person.
(c) Except
for the Company Credit Agreement, no indebtedness of the Company or any of its
Subsidiaries contains any restriction (other than customary notice provisions)
upon (i) the prepayment of any indebtedness of the Company or any of its
Subsidiaries, (ii) the incurrence of indebtedness by the Company or any of its
Subsidiaries, or (iii) the ability of the Company or any of its Subsidiaries to
grant any Lien on the properties or assets of the Company or any of its
Subsidiaries.
3.3 Authorization;
Validity of Agreement. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, subject
to approval of this Agreement by the Company Required Vote. The
adoption of this Agreement, the approval of the Merger, the execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company (the “Company
Board”). The Company Board has directed that this Agreement
and the transactions contemplated hereby be submitted to the Company’s
stockholders for approval at a meeting of such stockholders and has recommended
that the stockholders of the Company approve this Agreement. Except
for the Company Required Vote, no other corporate proceedings on the part of the
Company are necessary to authorize the execution, delivery and performance of
this Agreement by the Company and the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming due authorization, execution
and delivery of this Agreement by Parent and Merger Sub, constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforcement may be subject to or limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other Laws, now
or hereafter in effect, affecting creditors’ rights generally and (ii) the
effect of general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). The Company Board
has taken all action necessary to render the provisions of Sections 78.411 to
78.444, inclusive, of the NRS, that would prohibit the Merger or any other
“combination” (as defined in NRS 78.416), inapplicable to this Agreement, the
Merger and the other transactions contemplated by this Agreement, and the
Stockholder Agreements.
10
3.4 No
Violations; Consents and Approvals.
(a) Except as
set forth in Section 3.4(a) of the Company Disclosure Letter, neither the
execution, delivery and performance of this Agreement by the Company, nor the
consummation by the Company of the Merger or any other transactions contemplated
hereby, will (i) violate or conflict with any provision of the articles of
incorporation or the bylaws of the Company, or the articles or certificate of
incorporation, bylaws or similar governing documents of any of the Company’s
Subsidiaries, (ii) violate, conflict with, result in a breach of any provision
of or the loss of any benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination, cancellation, modification or
amendment under, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of the
Company or any of its Subsidiaries under, or result in the acceleration or
trigger of any payment, time of payment, vesting or increase in the amount of
any compensation or benefit payable pursuant to, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, lease, license, contract, collective bargaining agreement,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
assets or properties may be bound, or (iii) assuming the consents, approvals,
orders, authorizations, registrations, filings or permits referred to in Section
3.4(b) are duly and timely obtained or made and the Company Required Vote has
been obtained, conflict with or violate any federal, state, provincial, local or
foreign order, writ, injunction, judgment, settlement, award, decree, statute,
law, rule or regulation (collectively, “Laws”)
applicable to the Company, any of its Subsidiaries or any of their respective
properties or assets; except in the case of clauses (ii) and (iii), for (A) the
Company Credit Agreement, (B) certain seismic license agreements and (C) such
conflicts, violations, breaches, defaults, losses, obligations, payments, rights
(if exercised) or Liens which individually or in the aggregate have not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect
on the Company.
11
(b) No
material filing or registration with, declaration or notification to, or order,
authorization, consent or approval of, any federal, state, provincial, local or
foreign court, arbitral, legislative, administrative, executive or regulatory
authority or agency (a “Governmental
Entity”) or any other Person is required to be obtained or made by the
Company or any of its Subsidiaries in connection with the execution, delivery
and performance of this Agreement by the Company or the consummation by the
Company of the Merger or any other transactions contemplated hereby, except for
(i) compliance with any applicable requirements of the Exchange Act, (ii)
compliance with any applicable requirements of the Securities Act, (iii)
compliance with any applicable state securities or “blue sky” or
takeover Laws, (iv) the adoption of this Agreement by the Company Required Vote,
(v) such filings, authorizations or approvals, or expiration or termination of
applicable waiting periods, as may be required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the “HSR Act”),
(vi) the filing of the Certificate of Merger with the Delaware Secretary of
State and the Articles of Merger with the Nevada Secretary of State, (vii)
compliance with any applicable requirements under stock exchange rules, (viii)
consents or approvals of any Governmental Entity, which are normally obtained
after the consummation of this type of transaction, and (ix) any such filing,
registration, declaration, notification, order, authorization, consent or
approval that the failure to obtain or make individually or in the aggregate
would not be reasonably likely to have or result in a Material Adverse Effect on
the Company.
3.5 SEC
Reports and Financial Statements.
(a) The
Company has timely filed with the Securities and Exchange Commission (the “SEC”) all
forms and documents required to be filed by it since May 10, 2005 under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), including (A) its Annual Reports on Form 10-K, (B) its Quarterly
Reports on Form 10-Q, (C) all proxy statements relating to meetings of
stockholders of the Company (in the form mailed to stockholders), and (D) all
other forms, reports and registration statements required to be filed by the
Company with the SEC since May 10, 2005. The documents described
in clauses (A)-(D) above, in each case as amended (whether filed prior to, on or
after the date of this Agreement), are referred to in this Agreement
collectively as the “Company SEC
Documents.” As of their respective dates or, if amended and
publicly available prior to the date of this Agreement, as of the date of such
amendment with respect to those disclosures that are amended, the Company SEC
Documents, including the financial statements and schedules provided therein or
incorporated by reference therein, (x) did not contain any untrue statement of a
material fact or omit to state a 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 and (y) complied in all material
respects with the applicable requirements of the Exchange Act, the Securities
Act, the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx
Act”) and other applicable Laws, as the case may be, and the applicable
rules and regulations of the SEC thereunder. None of the Subsidiaries
of the Company is subject to the periodic reporting requirements of the Exchange
Act or required to file any form, report or other document with the SEC, the
NYSE, any stock exchange or any other comparable Governmental
Entity.
12
(b) The
December 31, 2007 consolidated balance sheet of the Company (the “Company Balance
Sheet”) and the related consolidated statements of operations, changes in
stockholders’ equity and cash flows (including, in each case, the related notes,
where applicable), as reported in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2007 filed with the SEC under the Exchange
Act, fairly present (within the meaning of the Xxxxxxxx-Xxxxx Act), and the
financial statements to be filed by the Company with the SEC after the date of
this Agreement will fairly present (subject, in the case of unaudited
statements, to recurring audit adjustments normal in nature and amount), in all
material respects, the consolidated financial position and the consolidated
results of operations, cash flows and changes in stockholders’ equity of the
Company and its Subsidiaries as of the respective dates or for the respective
fiscal periods therein set forth; each of such statements (including the related
notes, where applicable) complies, and the financial statements to be filed by
the Company with the SEC after the date of this Agreement will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements to be
filed by the Company with the SEC after the date of this Agreement will be,
prepared in accordance with United States generally accepted accounting
principles (“GAAP”)
consistently applied during the periods involved, except as indicated in the
notes thereto. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements and reflect only actual
transactions. Ernst & Young LLP is an independent public
accounting firm with respect to the Company and has not resigned or been
dismissed as independent public accountants of the Company. Ernst
& Young LLP has not indicated to the Company that it has any material
disagreements with the Company’s accounting policies.
(c) The
Company has not received any notice from the SEC that its accounting policies
are subject to review or investigation, except for those comments previously
issued by the SEC that have already been resolved.
(d) Since
May 10, 2005, (A) the exercise price of each Company Option has been no
less than the Fair Market Value (as defined under the terms of the respective
Stock Plan under which such Company Option was granted) of a share of Company
Common Stock as determined on the date of grant of such Company Option, and (B)
all grants of Company Options were validly issued and properly approved by the
Company Board (or a duly authorized committee or subcommittee thereof) in
material compliance with applicable Law and recorded in the Company’s financial
statements referred to in Section 3.5(b) in accordance with GAAP, and no such
grants involved any “back dating,” “forward dating” or similar practices with
respect to the effective date of grant.
3.6 Oil
and Gas.
(a) The
Company has furnished to Parent a reserve report prepared by Xxx Xxxxxxx
and Associates, Inc. containing estimates of the oil and gas reserves that are
owned by the Company and its Subsidiaries as of December 31, 2007 (the
“Company
Reserve Report”). The factual, non-interpretive
data relating to the Oil and Gas Interests of the Company and its
Subsidiaries on which the Company Reserve Report was based for purposes of
estimating the oil and gas reserves set forth therein, to the knowledge of the
Company, was accurate in all material respects at the time such data was
provided to the reserve engineers for the Company Reserve Report. The
Company Reserve Report conforms to the guidelines with respect thereto of the
SEC. Except for changes (including changes in Hydrocarbon
commodity prices) generally affecting the oil and gas industry and normal
depletion by production, there has been no change in respect of the matters
addressed in the Company Reserve Report that would reasonably be expected to
have a Material Adverse Effect on the Company. Since January 1, 2005,
all of the Company’s and its Subsidiaries’ xxxxx have been drilled and (if
completed) completed, operated and produced in compliance in all respects with
applicable oil and gas leases and applicable Laws, except where any
noncompliance would not reasonably be expected to have a Material Adverse Effect
on the Company. To the Company’s knowledge, neither the Company nor
any of its Subsidiaries is in violation of any applicable Law or contract
requiring the Company or such Subsidiary to plug and abandon any well because
the well is not currently capable of producing in commercial quantities or for
any other reasons. With respect to any Oil and Gas Interests of the
Company and its Subsidiaries that are not operated by the Company or any of its
Subsidiaries, the Company makes the representations and warranties set forth in
this Section 3.6 only to its actual knowledge
without having made specific inquiry of the operators with respect
hereto.
13
(b) For
purposes of this Agreement, “Oil and Gas
Interests” means direct and indirect interests in and rights with respect
to oil, gas or minerals, including working, leasehold and mineral interests and
operating rights and royalties, overriding royalties, production payments, net
profit interests and other non-working interests and non-operating interests;
all interests in rights with respect to oil, condensate, gas, casinghead gas and
other liquid or gaseous hydrocarbons (collectively, “Hydrocarbons”)
and other minerals or revenues therefrom, all contracts in connection therewith
and claims and rights thereto (including all 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; all 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 all interests in equipment and machinery (including xxxxx,
well equipment and machinery), oil and gas production, gathering, transmission,
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.
(c) Set forth
in Section 3.6(c) of the Company Disclosure Letter is a list of all material Oil
and Gas Interests that were included in the Company Reserve Report that have
been disposed of prior to the date hereof.
(d) Except as
set forth in Section 3.6(d) of the Company Disclosure Letter, proceeds from the
sale of Hydrocarbons produced from the Company’s Oil and Gas Interests are
being received by the Company and the Subsidiaries in a timely manner and are
not being held in suspense for any reason (except in the ordinary course of
business or which would not reasonably be expected to have a Material Adverse
Effect).
14
(e) Except as
set forth in Section 3.6(e) of the Company Disclosure Letter, none of the
Company or its Subsidiaries has received any material deficiency payment under
any gas contract for which any Person has a right to take deficiency gas from
the Company or any of its Subsidiaries, nor has the Company or any of its
Subsidiaries received any material payment for production which is subject to
refund or recoupment out of future production.
(f) The
Company has previously provided or made available to Parent true and complete
copies of all Company Oil and Gas Agreements, together with all amendments,
extensions and other modifications thereof. To the knowledge of the
Company, all Company Oil and Gas Agreements are in good standing, valid and
effective and all royalties, rentals and other payment due by the Company to any
lessor of any such oil and gas leases have been paid, except in each case, as
has not had, and would not reasonably be expected to have, a Material Adverse
Effect. For purposes of this Agreement, “Company
Oil and Gas
Agreements” means the following types of agreements or contracts to which
the Company or any of its Subsidiaries is a party, whether as an original party,
by succession or assignment or otherwise: oil and gas leases, farm-in
and farm-out agreements, agreements providing for an overriding royalty
interest, agreements providing for a royalty interest, agreements providing for
a net profits interest, crude oil or natural gas sales or purchase contracts,
joint operating agreements, unit operating agreements, unit agreements, field
equipment leases, and agreements restricting the Company or any of its
Subsidiaries’ ability to operate, obtain, explore for or develop interests in a
particular geographic area. Set forth in Section 3.6(f) of the
Company Disclosure Letter is a list of all Company Oil and Gas Agreements that
contain restrictions on the Company’s or any of its Subsidiaries’ ability to
operate, obtain, explore for or develop interests in a particular geographic
area.
(g) The Oil
and Gas Interests of the Company and its Subsidiaries are not subject to (i) any
instrument or agreement evidencing or related to indebtedness for borrowed
money, whether directly or indirectly, except for the Company Credit Agreement
and Permitted Liens, or (ii) any agreement not entered into in the ordinary
course of business (other than the Overriding Royalty Interest Incentive Plan)
in which the amount involved is in excess of $1 million. In addition,
except as set forth in the Company SEC Documents filed and publicly available
prior to the date hereof, no Company Material Contract contains any provision
that prevents the Company or any of its Subsidiaries from owning, managing and
operating the Oil and Gas Interests of the Company and its Subsidiaries in
accordance with historical practices.
(h) Except as
set forth in Section 3.6(h) of the Company Disclosure Letter, as of March 31,
2008, (i) there are no outstanding calls for payments in excess of $1
million that are
due or that the Company or its Subsidiaries are committed to make that have not
been made; (ii) there are no material operations with respect to which the
Company or its Subsidiaries have become a non-consenting party; and (iii) there
are no commitments for the material expenditure of funds for drilling or other
capital projects other than projects with respect to which the operator is not
required under the applicable operating agreement to seek consent.
(i) Except as
set forth in Section 3.6(i) of the Company Disclosure Letter, there are no
provisions applicable to the material Oil and Gas Interests reflected in the
Company Reserve Report that increase the royalty percentage of the lessor
thereunder in a manner that is not accounted for in such Company Reserve Report;
and none of the Oil and Gas Interests of the Company and its Subsidiaries are
limited by terms fixed by a certain number of years (other than primary terms
under oil and gas leases).
15
(j) Except as
set forth in Section 3.6(j) of the Company Disclosure Letter, there are no calls
(exclusive of market calls) on the Company’s oil or natural gas production,
and the Company has no obligation to deliver oil or natural gas pursuant to any
take-or-pay, prepayment or similar arrangement without receiving full payment
therefor, excluding gas imbalances disclosed in Section 3.6(e) of the Company
Disclosure Letter.
3.7 Absence
of Certain Changes.
(a) Since
December 31, 2007, (i) the Company and its Subsidiaries have conducted their
respective business only in the ordinary course consistent with past practice in
all material respects, and (ii) there has not occurred or continued to exist any
event, change, occurrence, effect, fact, circumstance or condition which,
individually or in the aggregate, has had, or is reasonably likely to have or
result in, a Material Adverse Effect on the Company.
(b) Since
December 31, 2007 to the date of this Agreement, neither the Company nor any of
its Subsidiaries has (i) (A) increased or agreed to increase the wages,
salaries, compensation, pension, or other fringe benefits or perquisites payable
to any officer, employee or director from the amount thereof in effect as of
December 31, 2007 other than in the ordinary course of business consistent with
past practices, (B) except as set forth in Section 3.7(b) of the Company
Disclosure Letter, granted any severance or termination pay or entered into any
contract to make or grant any severance or termination pay (other than in the
ordinary course of business substantially consistent with past practices or
pursuant to pre-existing plans or arrangements), (C) entered into or made any
loans to any of its officers, directors or employees or made any change in its
borrowing or lending arrangements for or on behalf of any of such Persons
whether pursuant to an employee benefit plan or otherwise (except for loans
pursuant to the terms of the Company’s or its affiliates’ retirement plans and
routine travel advances), or (D) adopted or amended any new or
existing Company Benefit Plan, (ii) declared, set aside or paid any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company’s capital stock, (iii) effected or authorized any split, combination
or reclassification of any of the Company’s capital stock or any issuance
thereof or issued any other securities in respect of, in lieu of or in
substitution for shares of the Company’s capital stock, except for issuances of
Company Common Stock (1) upon the exercise of Company Options or vesting of
Company Awards, in each case in accordance with their terms at the time of
exercise or (2) in connection with recruitment activities in the ordinary course
of business consistent with past practice, (iv) changed in any material respect,
or has knowledge of any reason that would have required or would require
changing in any material respect, any accounting methods (or underlying
assumptions), principles or practices of the Company or its Subsidiaries,
including any material reserving, renewal or residual method, practice or
policy, except as required by GAAP or by applicable Law, (v) made any
material Tax election or settled or compromised any material income Tax
liability, (vi) made any material change in the policies and procedures of the
Company or its Subsidiaries in connection with trading activities, (vii) sold,
leased, exchanged, transferred or otherwise disposed of any material Company
Asset other than in the ordinary course of business consistent with past
practices, (viii) revalued, or has knowledge of any reason that would have
required or would require revaluing, any of the Company Assets in any material
respect, including writing down the value of any of the Company Assets or
writing off notes or accounts receivable other than in the ordinary course of
business consistent with past practices, or (ix) made any agreement or
commitment (contingent or otherwise) to do any of the foregoing.
16
3.8 Absence
of Undisclosed Liabilities. Since
December 31, 2007, neither the Company nor any of its Subsidiaries has incurred
any liabilities or obligations (accrued, contingent or otherwise), except for
(i) liabilities incurred in the ordinary course of business consistent with past
practice that individually or in the aggregate have not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on the
Company, (ii) liabilities in respect of Litigation (which are the subject of
Section 3.11(a)), and (iii) liabilities under Environmental Laws (which are the
subject of Section 3.15). Neither the Company nor any of its
Subsidiaries is in default in respect of the terms and conditions of any
indebtedness or other agreement which individually or in the aggregate has had,
or would be reasonably likely to have or result in, a Material Adverse Effect on
the Company.
3.9 Disclosure
Documents. None
of the information to be supplied by the Company for inclusion in (i) the joint
proxy statement relating to the Company Special Meeting and the Parent Special
Meeting (in each
case, as defined below) (also constituting the prospectus in respect of Parent
Common Stock into which the Company Common Stock will be converted) (together
with any amendments or supplements thereto, the “Proxy
Statement”), to be filed by the Company and Parent with the SEC, and any
amendments or supplements thereto, or (ii) the Registration Statement on Form
S-4 (together with any amendments or supplements thereto, the “S-4”) to
be filed by Parent with the SEC in connection with the Merger, and any
amendments or supplements thereto, will, at the respective times such documents
are filed, and, in the case of the Proxy Statement, at the time the Proxy
Statement or any amendment or supplement thereto is first mailed to the Company
stockholders and Parent stockholders, at the time of the Company Special Meeting
and the Parent Special Meeting and at the Effective Time, and, in the case of
the S-4, when 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
made therein or necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The
Proxy Statement will comply in all material respects with the provisions of the
Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to information provided by Parent or Merger Sub for
inclusion in the Proxy Statement.
3.10 Employee
Benefit Plans; ERISA.
(a) Section
3.10(a)(1) of the Company Disclosure Letter contains a true and complete list of
all the individual or group employee benefit and compensation plans or
arrangements of any type (including, without limitation, all bonus,
equity-based, change of control, incentive and plans described in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)),
sponsored, maintained or contributed to by the Company or any trade or business,
whether or not incorporated, which together with the Company would be deemed a
“single employer” within the meaning of Section 414(b), (c) or (m) of the Code
or Section 4001(b)(1) of ERISA (a “Company ERISA
Affiliate”) or with respect to which any Company ERISA Affiliate has any
obligations or liability (“Company Benefit
Plans”), and Section 3.10(a)(2) of the Company Disclosure Letter lists
each material individual employment, severance or similar agreement with respect
to which the Company or any Company ERISA Affiliate has any current or future
obligation or liability (“Company Employee
Agreement”). With respect to each Company Benefit Plan, the
Company has made available to Parent a true, correct and complete copy of such
Company Benefit Plan, and, to the extent applicable, trust agreements, insurance
contracts and other funding vehicles, the most recent Annual Reports (Form 5500
Series) and accompanying schedules, summary plan descriptions, and the most
recent determination letter from the Internal Revenue Service. The
Company has made available to Parent a true, correct and complete copy of each
Company Employee Agreement.
17
(b) With
respect to each Company Benefit Plan: (i) if intended to qualify under Section
401(a) or 401(k) of the Code, such Company Benefit Plan satisfies the
requirements of such sections and its prototype sponsor has received an opinion
letter from the Internal Revenue Service with respect to its qualification, and
its related trust has been determined to be exempt from tax under Section 501(a)
of the Code and, to the knowledge of the Company, nothing has occurred since the
date of such letter to adversely affect such qualification or exemption; (ii)
each Company Benefit Plan has been administered in substantial compliance with
its terms and applicable Law; (iii) neither the Company nor any Company ERISA
Affiliate has engaged in, and the Company and each Company ERISA Affiliate do
not have any knowledge of any Person that has engaged in, any transaction or
acted or failed to act in any manner that would subject the Company or any
Company ERISA Affiliate to any liability for a breach of fiduciary duty under
ERISA; (iv) no disputes are pending or, to the knowledge of the Company or any
Company ERISA Affiliate, threatened other than ordinary claims for benefits; (v)
neither the Company nor any Company ERISA Affiliate has engaged in, and the
Company and each Company ERISA Affiliate do not have any knowledge of any Person
that has engaged in, any transaction in violation of Section 406(a) or (b) of
ERISA or Section 4975 of the Code for which no exemption exists under Section
408 of ERISA or Section 4975(c) of the Code or Section 4975(d) of the Code; (vi)
all contributions and premiums due have been made on a timely basis; and (vii)
each Company Benefit Plan may be amended or terminated unilaterally by the
Company at any time without any continuing liability for benefits other than
benefits accrued to the date of such amendment or termination. All
contributions made or required to be made under any Company Benefit Plan meet
the requirements for deductibility under the Code, and all contributions and
premiums which are required and which have not been made have been properly
recorded on the books of the Company or a Company ERISA Affiliate.
(c) No
Company Benefit Plan is (i) a “multiemployer plan” (as defined in Section
4001(a)(3) of ERISA), (ii) a “multiple employer plan” (within the meaning of
Section 413(c) of the Code), (iii) subject to Title IV or Section 302 of ERISA
or Section 412 of the Code or (iv) a multiple employer welfare arrangement,
under Section 3(40) of ERISA. No event has occurred with respect to
the Company or a Company ERISA Affiliate in connection with which the Company
could be subject to any liability (except for regular contributions and benefit
payments in the ordinary course of plan business) or Lien with respect to any
Company Benefit Plan.
(d) Except as
set forth in Section 3.10(d) of the Company Disclosure Letter, (i) no
present or former employees of the Company or any of its Subsidiaries are
covered by any Company Employee Agreements or Company Benefit Plans that provide
or will provide any severance pay, post-termination health or life insurance
benefits (except as required pursuant to Section 4980B of the Code or
Part 6 of Title I of ERISA) or any similar benefits, (ii) neither
the execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement shall cause any payments or benefits to any
employee, officer or director of the Company or any of its Subsidiaries to be
either subject to an excise Tax or non-deductible to the Company under Sections
4999 and 280G of the Code, respectively, whether or not some other subsequent
action or event would be required to cause such payment or benefit to be
triggered, and (iii) neither the execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement shall result in,
cause the accelerated vesting or delivery of, or increase the amount or value
of, any payment or benefit to any employee, officer or director of the Company
or any of its Subsidiaries, whether or not some other subsequent action or event
would be required to cause such payment or benefit to be triggered, accelerated,
delivered or increased.
18
(e) None of
the Company Benefit Plans is subject to the laws of any country other than the
United States.
(f) There are
no Company equity-based grants, options or awards outstanding other than those
granted under the Company Stock Plan.
3.11 Litigation;
Compliance with Law.
(a) Except
for such Litigation that individually or in the aggregate has not had, and would
not be reasonably likely to have or result in, a Material Adverse Effect on the
Company, (i) there is no Litigation pending or, to the knowledge of the Company,
threatened in writing against, relating to or naming as a party thereto the
Company or any of its Subsidiaries, any of their respective properties or assets
or any of the Company’s officers or directors (in their capacities as such),
(ii) there is no order, judgment, decree, injunction or award of any
Governmental Entity against and/or binding upon the Company, any of its
Subsidiaries or any of the Company’s officers or directors (in their capacities
as such), and (iii) there is no Litigation that the Company or any of its
Subsidiaries has pending against other parties, where such Litigation is
intended to enforce or preserve material rights of the Company or any of its
Subsidiaries.
(b) Except as
individually or in the aggregate has not had, and would not be reasonably likely
to have or result in, a Material Adverse Effect on the Company, each of the
Company and its Subsidiaries has complied, and is in compliance with, all Laws
and Company Permits that affect the respective businesses of the Company or any
of its Subsidiaries, the Company Real Property and/or the Company Assets, and
the Company and its Subsidiaries have not been and are not in violation of any
such Law or Company Permit; nor has any notice, charge, Claim or action been
received in writing by the Company or any of its Subsidiaries or been filed,
commenced, or to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries alleging any violation of the foregoing, except for such
violations or allegations of violations as individually or in the aggregate have
not had, and would not be reasonably likely to have or result in, a Material
Adverse Effect on the Company.
19
(c) Without
limiting the generality of clause (b) above and mindful of the principles of the
United States Foreign Corrupt Practices Act and other similar applicable foreign
Laws, neither the Company nor any of its Subsidiaries, nor, in any such case,
any of their respective Representatives has (i) made, offered or authorized any
payment or given or offered anything of value directly or indirectly (including
through a friend or family member with personal relationships with government
officials) to an official of any government for the purpose of influencing an
act or decision in his official capacity or inducing him to use his influence
with that government with respect to the Company or any of its Subsidiaries in
violation of the United States Foreign Corrupt Practices Act or other similar
applicable foreign Laws, (ii) made, offered or authorized any payment to any
Governmental Entity, political party or political candidate for the purpose of
influencing any official act or decision, or inducing such Person to use any
influence with that government with respect to the Company or any of its
Subsidiaries in violation of the United States Foreign Corrupt Practices Act or
other similar applicable foreign Laws or (iii) taken any action that would be
reasonably likely to subject the Company or any of its Subsidiaries to any
material liability or penalty under any and all Laws of any Governmental
Entity.
(d) The
Company and its Subsidiaries hold all licenses, permits, certifications,
variances, consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of Governmental Entities or
other Persons necessary for the ownership, leasing, operation, occupancy and use
of the Company Real Property, the Company Assets, and the conduct of their
respective businesses as currently conducted (“Company
Permits”), except where the failure to hold such Company Permits
individually or in the aggregate has not had, and would not be reasonably likely
to have or result in, a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has received
notice that any Company Permit will be terminated or modified or cannot be
renewed in the ordinary course of business, and the Company has no knowledge of
any reasonable basis for any such termination, modification or nonrenewal, in
each case except for such terminations, modifications or nonrenewals that
individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the
Company. The execution, delivery and performance of this Agreement
and the consummation of the Merger or any other transactions contemplated hereby
do not and will not violate any Company Permit, or result in any termination,
modification or nonrenewal thereof, except in each case for such violations,
terminations, modifications or nonrenewals that individually or in the aggregate
have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on the Company.
(e) This
Section 3.11 does not relate to matters with respect to (i) Company Benefit
Plans, ERISA and other employee benefit matters (which are the subject of
Section 3.10), (ii) Tax Laws and other Tax matters (which are the subject of
Section 3.14), (iii) Environmental Laws (which are the subject of Section
3.15), and (iv) labor matters (which are the subject of Section
3.18).
3.12 Intellectual
Property.
(a) For
purposes of this Agreement, the term “Intellectual
Property” means any and all (i) seismic data, trademarks, service marks,
brand names, Internet domain names, logos, symbols, trade dress, trade names,
trade secrets, know-how, and other proprietary rights and information,
including, but not limited to, all geologic and geographical data and
interpretations thereof, including geologic maps, isopachs, structure maps and
any other maps, and other indicia of source of origin, all applications and
registrations for the foregoing, and all goodwill associated therewith and
symbolized thereby, including all renewals of the same; (ii) inventions and
discoveries, whether patentable or not, and all patents, registrations,
invention disclosures and applications therefor, including divisions,
continuations, continuations-in-part and renewal applications, and including
renewals, extensions and reissues; and (iii) copyrights in and to published and
unpublished works of authorship, whether copyrightable or not (including
software), and registrations and applications therefor, and all renewals,
extensions, restorations and reversions thereof; and in each of cases (i) to
(iii) inclusive, whether registered, unregistered or capable of
registration.
20
(b) Except as
set forth in Section 3.12(b) of the Company Disclosure Letter or as individually
or in the aggregate would not be reasonably likely to have or result in, a
Material Adverse Effect on the Company:
(i) the
Company, or one of its Subsidiaries, is the sole and exclusive owner of, or
possesses adequate licenses or other rights to use, all Intellectual Property
used in the present conduct of the businesses of the Company and its
Subsidiaries (“Company IP
Rights”), free and clear of all security interests (except Permitted
Liens) including but not limited to liens, charges, mortgages, title retention
agreements or title defects;
(ii) to the
Company’s knowledge, no consent, co-existence or settlement agreements,
judgments, or court orders limit or restrict the Company’s or any of its
Subsidiaries’ ownership rights in and to any Intellectual Property owned by
them;
(iii) the
conduct of the business of the Company and its Subsidiaries as presently
conducted does not, to the knowledge of the Company, infringe or misappropriate
any third Person’s Intellectual Property; or
(iv) to the
knowledge of the Company, no third Person is infringing
or misappropriating any Intellectual Property owned by the Company or
its Subsidiaries, and to the knowledge of the Company there is no litigation
pending or threatened in writing by or against the Company or any of its
Subsidiaries, nor, to the knowledge of the Company, has the Company or any of
its Subsidiaries received any written charge, claim, complaint, demand, letter
or notice, that asserts a claim (a) alleging that any or all of the Company IP
Rights infringe or misappropriate any third party’s Intellectual Property, or
(b) challenging the ownership, use, validity, or enforceability of any Company
IP Right.
(c) All
Intellectual Property owned by the Company or its Subsidiaries that is the
subject of an application for registration or a registration (“Registered
Company IP”) is to the knowledge of the Company, in force, and all
application, renewal and maintenance fees in relation to all Registered Company
IP have been paid to date, except for any Registered Company IP that the Company
has abandoned, not renewed or allowed to expire.
21
(d) Except
for such matters as individually or in the aggregate have not had and would not
be reasonably likely to have or result in a Material Adverse Effect on the
Company, to the Company’s knowledge (i) there does not exist, nor has the
Company or any of its Subsidiaries received written notice of, any breach of or
violation or default under, any of the terms, conditions or provisions of any
material contracts related to Company IP Rights, and (ii) neither the Company
nor any of its Subsidiaries has received written notice of the desire of the
other party or parties to any such material contracts relating to Company IP
Rights to exercise any rights such party or parties have to cancel, terminate or
repudiate such material contract relating to Company IP Rights or exercise
remedies thereunder.
3.13 Material
Contracts.
(a) Except
for such agreements or arrangements listed in Section 3.13(a) of the Company
Disclosure Letter or that are included as exhibits to the Company SEC Documents
filed and publicly available prior to the date of this Agreement, and except for
this Agreement, as of the date of this Agreement, neither the Company nor any of
its Subsidiaries is a party to or bound by any material contract, arrangement,
commitment or understanding (whether written or oral) (i) which is an employment
agreement between the Company, on the one hand, and its officers and key
employees, on the other hand, (ii) which, upon the consummation of the Merger or
any other transaction contemplated by this Agreement, will (either alone or upon
the occurrence of any additional acts or events, including the passage of time)
result in any material payment or benefit (whether of severance pay or
otherwise) becoming due, or the acceleration or vesting of any right to any
material payment or benefits, from Parent, Merger Sub, the Company or the
Surviving Entity or any of their respective Subsidiaries to any officer,
director, consultant or employee of any of the foregoing, (iii) which is a
material contract (as defined in Item 601(b)(10)(i) or 601(b)(10)(ii) of
Regulation S-K of the SEC) to be performed after the date of this Agreement,
(iv) which expressly limits the ability of the Company or any Subsidiary of the
Company, or would limit the ability of the Surviving Entity (or any of its
affiliates) after the Effective Time, to compete in or conduct any line of
business or compete with any Person or in any geographic area or during any
period of time, in each case, if such limitation is or is reasonably likely to
be material to the Company and its Subsidiaries, taken as a whole, or, following
the Effective Time, to the Surviving Entity and its affiliates, taken as a
whole, (v) which is a material joint venture agreement, joint operating
agreement, partnership agreement or other similar contract or agreement
involving a sharing of profits and expenses with one or more third Persons, (vi)
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) or (vii) which is a stockholder
rights agreement or which otherwise provides for the issuance of any securities
in respect of this Agreement or the Merger. Each contract,
arrangement, commitment or understanding (A) included as an exhibit to the
Company SEC Documents filed and publicly available prior to the date of this
Agreement, or (B) listed in Section 3.13(a) of the Company Disclosure Letter
described in this Section 3.13(a), whether or not included as an exhibit to the
Company SEC Documents, is referred to herein as a “Company Material
Contract,” and for purposes of Section 5.1(t) and the bringdown of
Section 3.13(b) pursuant to Section 6.3(a), “Company Material Contract” shall
include as of the date entered into any such contract, arrangement, commitment
or understanding that is entered into after the date of this
Agreement. The Company has previously made available to Parent true,
complete and correct copies of each Company Material Contract that is not
included as an exhibit to the Company SEC Documents. For the
avoidance of doubt, the Company’s charter constitutes a Company Material
Contract.
22
(b) Each
Company Material Contract is valid and binding and in full force and effect and
the Company and each of its Subsidiaries have performed all obligations required
to be performed by them to date under each Company Material Contract, except
where such failure to be valid and binding or in full force and effect or such
failure to perform individually or in the aggregate has not had and would not be
reasonably likely to have or result in a Material Adverse Effect on the
Company. Except for such matters as individually or in the aggregate
have not had and would not be reasonably likely to have or result in a Material
Adverse Effect on the Company, to the Company’s knowledge, (i) there does not
exist, nor has the Company or any of its Subsidiaries received written notice
of, any breach of or violation or default under, any of the terms, conditions or
provisions of any Company Material Contract and (ii) neither the Company nor any
of its Subsidiaries has received written notice of the desire of the other party
or parties to any such Company Material Contract to exercise any rights such
party has to cancel, terminate or repudiate such Company Material Contract or
exercise remedies thereunder. Each Company Material Contract is
enforceable by the Company or a Subsidiary of the Company in accordance with its
terms, except as such enforcement may be subject to or limited by (x)
bankruptcy, insolvency, reorganization, moratorium or other Laws, now or
hereafter in effect, affecting creditors’ rights generally and (y) the effect of
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity) or except where such unenforceability
individually or in the aggregate has not had, and would not be reasonably likely
to have or result in, a Material Adverse Effect on the Company.
3.14 Taxes.
(a) (i) All
material Returns required to be filed by or with respect to the Company and its
Subsidiaries have been filed in accordance with all applicable Laws and all such
Returns are true, correct and complete in all material respects, (ii) the
Company and its Subsidiaries have timely paid all material Taxes due or claimed
to be due, except for those Taxes being contested in good faith and for which
adequate reserves have been established in the financial statements of the
Company, (iii) all material Employment and Withholding Taxes and any other
material amounts required to be withheld by the Company or any of its
Subsidiaries with respect to Taxes have been withheld and either duly and timely
paid to the proper Governmental Entity or properly set aside in accounts for
such purpose in accordance with applicable Laws, (iv) all material sales or
transfer Taxes required to be collected by the Company or any of its
Subsidiaries have been duly and timely collected, or caused to be collected, and
either duly and timely remitted to the proper Governmental Entity or properly
set aside in accounts for such purpose in accordance with applicable Laws, (v)
the charges, accruals and reserves for Taxes with respect to the Company and its
Subsidiaries reflected in the Company Balance Sheet are adequate under GAAP to
cover Tax liabilities accruing through the date thereof, (vi) no deficiencies
for any material Taxes have been asserted or assessed, or, to the knowledge of
the Company, proposed, against the Company or any of its Subsidiaries that have
not been paid in full, except for those Taxes being contested in good faith and
for which adequate reserves have been established in the financial statements of
the Company, and (vii) there is no action, suit, proceeding, investigation,
audit or claim underway, pending or, to the knowledge of the Company, threatened
or scheduled to commence, against or with respect to the Company or any of its
Subsidiaries in respect of any material Tax, except as set forth in Section
3.14(a)(vii) of the Company Disclosure Letter.
23
(b) Neither
the Company nor any of its Subsidiaries has been included in any “consolidated,”
“unitary” or “combined” Return (other than Returns which include only the
Company and any Subsidiaries of the Company) provided for under the Laws of the
United States, any foreign jurisdiction or any state or locality or could be
liable for the Taxes of any other Person as a successor or
transferee.
(c) There are
no Tax sharing, allocation, indemnification (other than indemnification
provisions included in agreements entered into in the ordinary course of
business) or similar agreements in effect as between the Company or any of its
Subsidiaries or any predecessor or affiliate of any of them and any other party
under which the Company or any of its Subsidiaries could be liable for any Taxes
of any party other than the Company or any Subsidiary of the
Company.
(d) Neither
the Company nor any of its Subsidiaries has, as of the Closing Date, entered
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of material Taxes or the time with respect to the filing
of any Return relating to any material Taxes.
(e) There are
no Liens for material Taxes on any asset of the Company or its Subsidiaries,
except for Permitted Liens.
(f) Neither
the Company nor any of its Subsidiaries has requested or is the subject of or
bound by any private letter ruling, technical advice memorandum, closing
agreement or similar ruling, memorandum or agreement with any taxing authority
with respect to any material Taxes, nor is any such request
outstanding.
(g) Each of
the Company and its Subsidiaries has disclosed on its Returns all positions
taken therein that could give rise to a substantial understatement of Tax within
the meaning of Section 6662 of the Code.
(h) Neither
the Company nor any of its Subsidiaries has entered into, has any liability in
respect of, or has any filing obligations with respect to, any transaction that
constitutes a “reportable transaction,” as defined in Section 1.6011-4(b)(1) of
the Treasury Regulations.
(i) Neither
the Company nor any of its Subsidiaries will be required to include any material
item of income in, or exclude any material item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date under Section 481(c) of the Code (or any
corresponding or similar provision of state, local or foreign Tax Law) or (ii)
“closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax Law) executed
on or prior to the Closing Date.
24
(j) Except as
set forth in Section 3.14(j) of the Company Disclosure Letter, since January 1,
2005, none of the Company nor any of its Subsidiaries has been a distributing
corporation or a controlled corporation for purposes of Section 355 of the
Code.
(k) The
Company has made available to Parent correct and complete copies of (i) all U.S.
federal Returns of the Company and its Subsidiaries relating to taxable periods
ending on or after May 11, 2005, filed through the date hereof, (ii) any audit
report (or notice of proposed adjustment to the extent not included in an audit
report) within the last three years relating to any material Taxes due from or
with respect to the Company or any of its Subsidiaries and (iii) any substantive
and non-privileged correspondence and memoranda relating to the matters
described in clauses (i) and (ii) of this Section 3.14(k).
3.15 Environmental
Matters.
(a) The
Company and each of its Subsidiaries is in compliance with all applicable
Environmental Laws except where failure to be in compliance, individually or in
the aggregate, would not be reasonably likely to have or result in, a Material
Adverse Effect on the Company.
(b) There is
no Environmental Claim pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or, to the knowledge of the
Company, against any Person whose liability for any Environmental Claim the
Company or any of its Subsidiaries has retained or assumed either contractually
or by operation of Law, except for any such Environmental Claims which,
individually or in the aggregate, would not be reasonably likely to have or
result in, a Material Adverse Effect on the Company.
(c) To the
knowledge of the Company, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the Release of any
Hazardous Material, which would be reasonably likely to form the basis of any
Environmental Claim against the Company or any of its Subsidiaries or, to the
knowledge of the Company, against any Person whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law which, individually or in
the aggregate, would be reasonably likely to have or result in, a Material
Adverse Effect on the Company.
(d) There is
no Cleanup of Hazardous Materials being conducted or planned at any property
currently or, to the knowledge of the Company, formerly owned or operated by the
Company or any of its Subsidiaries, except for such Cleanups which, individually
or in the aggregate, would not be reasonably likely to have or result in, a
Material Adverse Effect on the Company.
(e) To the
knowledge of the Company, no Company Asset has been involved in any Release or
threatened Release of a Hazardous Material, except for such Releases which
individually or in the aggregate would not be reasonably likely to have or
result in a Material Adverse Effect on the Company.
25
(f) The
Company and its Subsidiaries have obtained and are in compliance with all
material approvals, permits, licenses, registrations and similar authorizations
from all Governmental Entities under all Environmental Laws required for the
operation of the businesses of the Company and its Subsidiaries as currently
conducted and, to the knowledge of the Company, there are no pending or
threatened, actions or proceedings alleging violations of or seeking to modify,
revoke or deny renewal of any such material approvals, permits, licenses,
registrations and similar authorizations.
3.16 Company
Assets. The
Company has good and defensible title to all oil and gas properties forming the
basis for the reserves reflected in the Company Reserve Report as attributable
to Oil and Gas Interests owned by the Company and
its Subsidiaries and has good and valid title to, or valid leasehold
interests or other contractual rights in, all other tangible
properties and assets (real, personal or mixed) of the Company and its
Subsidiaries (such oil and gas properties and other properties and assets are
herein referred to as the “Company
Assets”), with respect to both the oil and gas properties and all other
Company Assets, free and clear of all Liens except for (a) Permitted Liens and
(b) Liens associated with obligations reflected in the Company Reserve
Report. The Company and its Subsidiaries (as the case may be) have
maintained all of the Company Assets owned on the date hereof in working order
and operating condition, subject only to ordinary wear and tear.
3.17 Insurance. Section
3.17 of the Company Disclosure Letter contains a true, complete and correct list
of all insurance policies maintained by or on behalf of the Company and its
Subsidiaries as of the date of this Agreement. The Company has made
available to Parent a true, complete and correct copy of each such insurance
policy or the binder therefor. Such policies are, and at the Closing
policies or replacement policies having substantially similar coverages will be,
in full force and effect, and all premiums due thereon have been or will be
paid. The Company and its Subsidiaries have complied in all material
respects with the terms and provisions of such policies. The
insurance policies listed in Section 3.17 of the Company Disclosure Letter
include all policies that are required in connection with the operation of the
businesses of the Company and its Subsidiaries as currently conducted by
applicable Laws and all agreements relating to the Company and its
Subsidiaries.
3.18 Labor
Matters; Employees.
(a) (i) There
is no labor strike, dispute, slowdown, work stoppage or lockout actually pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries and, during the past five years, there has not been
any such action, (ii) none of the Company or any of its Subsidiaries is a party
to or bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company or any
of its Subsidiaries, (iii) none of the employees of the Company or any of its
Subsidiaries are represented by any labor organization and none of the Company
or any of its Subsidiaries have any knowledge of any current union organizing
activities among the employees of the Company or any of its Subsidiaries nor
does any question concerning representation exist concerning such employees,
(iv) the Company and its Subsidiaries have each at all times been in material
compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
Law, ordinance or regulation, (v) there is no unfair labor practice charge or
complaint against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency, (vi) there is no grievance or
arbitration proceeding arising out of any collective bargaining agreement or
other grievance procedure relating to the Company or any of its Subsidiaries,
(vii) neither the Occupational Safety and Health Administration nor any other
federal or state agency has threatened to file any citation, and there are no
pending citations, relating to the Company or any of its Subsidiaries, and
(viii) there is no employee or governmental claim or investigation, including
any charges to the Equal Employment Opportunity Commission or state employment
practice agency, investigations regarding Fair Labor Standards Act compliance,
audits by the Office of Federal Contractor Compliance Programs, Workers’
Compensation claims, sexual harassment complaints or demand letters or
threatened claims.
26
(b) Since the
enactment of the Worker Adjustment and Retraining Notification Act of 1988
(“WARN
Act”), none of the Company or any of its Subsidiaries has effectuated (i)
a “plant
closing” (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Company or any of its Subsidiaries, or (ii) a “mass
layoff” (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any of its Subsidiaries, nor has the Company or any
of its Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local Law, in each case that could reasonably be expected to
have a Material Adverse Effect on the Company.
(c) Section
3.18(c) of the Company Disclosure Letter contains a complete and correct list of
the names of all directors and officers of the Company as of the date of this
Agreement, together with such Person’s position or function. Section
3.18(c) of the Company Disclosure Letter also contains each such officer’s
annual base salary or wages, incentive compensation bonus in respect of 2007,
target bonus percentage and amount for 2008, and currently estimated severance
payment due as a result of this Merger assuming such Person’s employment is
terminated in connection therewith.
3.19 Affiliate
Transactions. Section
3.19 of the Company Disclosure Letter contains a complete and correct list of
all material agreements, contracts, transfers of assets or liabilities or other
commitments or transactions (other than Company Benefit Plans described in
Section 3.10 of the Company Disclosure Letter), whether or not entered into in
the ordinary course of business, to or by which the Company or any of its
Subsidiaries, on the one hand, and any of their respective affiliates (other
than the Company or any of its direct or indirect wholly owned Subsidiaries) on
the other hand, are or have been a party or otherwise bound or affected, and
that (a) are currently pending, in effect or have been in effect at any time
since December 31, 2005 or (b) involve continuing liabilities and obligations
that, individually or in the aggregate, have been, are or will be material to
the Company and its Subsidiaries taken as a whole.
27
3.20 Derivative
Transactions and Hedging. Section
3.20 of the Company Disclosure Letter contains a complete and correct list of
all Derivative Transactions (including each outstanding commodity or financial
hedging position) entered into by the Company or any of its Subsidiaries or for
the account of any of its customers as of the date of this
Agreement. All such Derivative Transactions were, and any Derivative
Transactions entered into after the date of this Agreement will be, entered into
in accordance with applicable Laws, and in accordance with the investment,
securities, commodities, risk management and other policies, practices and
procedures employed by the Company and its Subsidiaries, and were, and will be,
entered into with counterparties believed at the time and still believed to be
financially responsible and able to understand (either alone or in consultation
with their advisers) and to bear the risks of such Derivative
Transactions. The Company and each of its Subsidiaries have, and will
have, duly performed all of their respective obligations under the Derivative
Transactions to the extent that such obligations to perform have accrued, and,
to the knowledge of the Company, there are and will be no breaches, violations,
collateral deficiencies, requests for collateral or demands for payment, or
defaults or allegations or assertions of such by any party
thereunder.
3.21 Natural
Gas Act. Any
gas gathering system constituting a part of the properties of the Company or its
Subsidiaries has as its primary function the provision of natural gas gathering
services, as the term “gathering” is interpreted under Section 1(b) of the
Natural Gas Act (the “NGA”);
none of the properties have been or are certificated by the Federal Energy
Regulatory Commission (the “FERC”)
under Section 7(c) of the NGA or to the knowledge of the Company are now subject
to FERC jurisdiction under the NGA; and none of the properties have been or are
providing service pursuant to Section 311 of the NGA.
3.22 Disclosure
Controls and Procedures. The
Company has established and maintains “disclosure controls and procedures” (as
defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act) that are
reasonably designed to ensure that all material information (both financial and
non-financial) required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC and
that all such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of the Company required under the Exchange Act with
respect to such reports. Neither the Company nor its independent
auditors have identified any “significant deficiencies” or “material weaknesses”
in the Company’s or any of its Subsidiaries’ internal controls as contemplated
under Section 404 of the Xxxxxxxx-Xxxxx Act.
3.23 Investment
Company. Neither
the Company nor any of its Subsidiaries is an “investment company,” a company
“controlled” by an “investment company,” or an “investment adviser” within the
meaning of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), or the Investment Advisers Act of 1940, as amended (the
“Advisers
Act”).
3.24 No
Rights Agreement. The
Company does not have any stockholder rights agreement or any similar type of
anti-takeover agreement.
28
3.25 Takeover
Laws. Except
for Section 78.438 of the NRS (which has been rendered inapplicable by
action of the Company Board prior to the execution hereof), no “moratorium,”
“acquisition of controlling interest,” “control share,” “fair price,”
“combinations with interested stockholders,” “affiliate transaction,” “business
combination,” or other similar anti-takeover statutes, laws or regulations of
any state, including the State of Nevada (and including the NRS), or any
applicable anti-takeover provision in the articles of incorporation or bylaws of
the Company is, or at the Effective Time will be, applicable to this Agreement,
the Merger, the other transactions contemplated by this Agreement or the
Stockholder Agreements.
3.26 Required
Vote by Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock entitled to vote thereon (the “Company Required
Vote”) to adopt this Agreement is the only vote of the holders of capital
stock of the Company required by the NRS or the articles of incorporation or the
bylaws of the Company or otherwise to adopt this Agreement.
3.27 Recommendation
of Company Board of Directors; Opinion of Financial Advisor.
(a) The
Company Board, at a meeting duly called and held, duly adopted resolutions
unanimously (i) determining that this Agreement and the transactions
contemplated hereby are advisable and in the best interests of the Company and
the stockholders of the Company, (ii) approving and adopting this Agreement and
transactions contemplated hereby, (iii) recommending approval of this Agreement
by the stockholders of the Company and (iv) directing that the approval of this
Agreement be submitted to the stockholders of the Company for consideration in
accordance with this Agreement, which resolutions, as of the date of this
Agreement, have not been subsequently rescinded, modified or withdrawn in any
way.
(b) The
Company Board has received an opinion of Xxxxxxx Xxxxx & Associates,
Inc., to the effect that, as of the date of this Agreement, the Merger
Consideration to be received by the holders of shares of Company Common Stock
(other than Parent, the Company or any of their Subsidiaries), in the aggregate,
in the Merger is fair, from a financial point of view, to such
holders. A true, complete and correct copy of such opinion will
promptly be delivered to Parent by the Company solely for informational purposes
after receipt thereof.
3.28 Brokers. Except
for Xxxxxxx Xxxxx & Associates, Inc. and Scotia Waterous (USA), Inc., no
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries. The Company is solely responsible for the fees and
expenses of Xxxxxxx Xxxxx & Associates, Inc. and Scotia Waterous (USA), Inc.
as and to the extent set forth in the engagement letters dated June 5, 2007 and
June 8, 2007, respectively, and the Company has previously provided to Parent a
true and correct copy of the engagement letters.
3.29 Reorganization. Neither
the Company nor, to the knowledge of the Company, any of its affiliates has
taken or agreed to take any action that would prevent the Merger from
constituting a reorganization within the meaning of Section 368(a) of the
Code.
29
3.30 No
Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, neither
the Company nor any other Person makes any other express or implied
representation or warranty on behalf of the Company or any of its affiliates in
connection with this Agreement or the transactions contemplated
hereby.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
PARENT AND MERGER SUB
Except as
set forth in the disclosure letter delivered by Parent to the Company at or
prior to the execution and delivery of this Agreement (the “Parent Disclosure
Letter”) (each section of which qualifies the correspondingly numbered
representation, warranty or covenant to the extent specified therein and such
other representations, warranties or covenants to the extent a matter in such
section is disclosed in such a way as to make its relevance to such other
representation, warranty or covenant reasonably apparent), Parent and Merger Sub
jointly and severally represent and warrant to the Company as
follows:
4.1 Organization.
(a) Each of
Parent, Merger Sub and Parent’s Subsidiaries is a corporation or other entity
duly organized, validly existing and in good standing (to the extent such
concept exists in such jurisdiction or with respect to such other entities)
under the Laws of the jurisdiction of its incorporation or organization, and has
all requisite corporate or other power and authority to own, lease, use and
operate its properties and to carry on its business as it is now being
conducted.
(b) Each of
Parent, Merger Sub and Parent’s Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction (to the extent such
concepts exist in such jurisdictions) where the character of the property owned,
operated or leased by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed or to be in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. Since the date of its formation, Merger Sub has not engaged
in any activities other than in connection with or as contemplated by this
Agreement, and Merger Sub does not have any Subsidiaries.
(c) Parent
has previously made available to the Company a complete, true and correct copy
of each of its certificate of incorporation and bylaws or other organizational
documents of each of Parent’s Subsidiaries, in each case as amended (if so
amended) to the date of this Agreement, and has made available the certificate
of incorporation, bylaws or other organizational documents of each of Parent’s
Subsidiaries, in each case as amended (if so amended) to the date of this
Agreement. Neither Parent nor Merger Sub nor any of the Parent’s
Subsidiaries is in violation of its certificate of incorporation, bylaws or
other organizational documents.
(d) Section
4.1(d) of the Parent Disclosure Letter sets forth a complete, true and correct
list of all of the Subsidiaries of Parent and their respective jurisdictions of
incorporation or organization. The respective certificates or
articles of incorporation and bylaws or other organizational documents of the
Subsidiaries of Parent do not contain any provision limiting or otherwise
restricting the ability of Parent to control its Subsidiaries in any material
respect.
30
4.2 Capitalization.
(a) The
authorized capital stock of Parent consists of 100,000,000 shares of Parent
Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share,
issuable in series (“Parent Preferred
Stock”), none of which are issued and outstanding. As of April
25, 2008, 28,486,182 shares of Parent Common Stock were issued and outstanding
(including 478,267 shares of unvested Parent restricted stock and 16,582
shares of Parent Common Stock held in the treasury of Parent). As of
the date of this Agreement, 698,497 shares of Parent Common Stock are
reserved for issuance under Parent stock incentive plans. As of April
25, 2008, there are outstanding stock options to acquire Parent Common Stock
(the “Parent Stock
Options”) covering an aggregate of 763,323 shares of Parent Common
Stock. Since April 25, 2008, (i) no shares of Parent Common Stock
have been issued, except pursuant to Parent Stock Options outstanding on April
25, 2008, and (ii) no Parent Stock Options have been granted. No
bonds, debentures, notes or other indebtedness having the right to vote (or
convertible into or exchangeable for securities having the right to vote) on any
matters on which stockholders of Parent may vote are issued or
outstanding. All issued and outstanding shares of Parent’s capital
stock are, and all shares that may be issued or granted pursuant to the exercise
of Parent Stock Options will be, when issued or granted in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. The issuance and sale of all of
the shares of capital stock described in this Section 4.2 have been in
compliance with United States federal and state securities
Laws. Except as may be provided in the Rights Agreement dated as of
October 15, 1998, between Parent and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (as amended, the “Parent Rights
Agreement”), neither Parent nor any of its Subsidiaries has agreed to
register any securities under the Securities Act, or under any state securities
Law or granted registration rights to any individual or
entity. Except for Parent Stock Options and the Junior Participating
Preferred Stock purchase rights (the “Parent
Rights”) issued pursuant to the Parent Rights Agreement, as of the date
of this Agreement, there are no outstanding or authorized (x) options, warrants,
preemptive rights, subscriptions, calls or other rights, convertible securities,
agreements, claims or commitments of any character obligating Parent or any of
its Subsidiaries to issue, transfer or sell any shares of capital stock or other
equity interest in Parent or any of its Subsidiaries or securities convertible
into or exchangeable for such shares or equity interests, (y) contractual
obligations of Parent or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any capital stock of Parent or any of its Subsidiaries or any
such securities or agreements listed in clause (x) of this sentence, or (z)
voting trusts or similar agreements to which Parent or any of its Subsidiaries
is a party with respect to the voting of the capital stock of Parent or any of
its Subsidiaries. The Parent Common Stock issued pursuant to the
Merger, when issued in accordance with the terms of this Agreement, will be duly
authorized, validly issued and fully paid and non-assessable and not subject to
preemptive rights, with no personal liability attaching to the ownership
thereof. Such Parent Common Stock, where so issued, will be issued
free and clear of any Liens, other than (x) statutory Liens for Taxes not yet
done and payable and (y) such restrictions as may expect under applicable
Law.
31
(b) (i) All
of the issued and outstanding shares of capital stock (or equivalent equity
interests of entities other than corporations) of each of Parent’s Subsidiaries
are owned, directly or indirectly, by Parent free and clear of any Liens, other
than (x) statutory Liens for Taxes not yet due and payable, (y) such
restrictions as may exist under applicable Law, and (z) Liens granted pursuant
to Parent’s Credit Agreement, dated as of November 1, 2007, among Parent and
each of the lenders party thereto (collectively, the “Parent Credit
Agreement”), and all such shares or other ownership interests have been
duly authorized, validly issued and are fully paid and non-assessable and free
of preemptive rights, with no personal liability attaching to the ownership
thereof, and (ii) neither Parent nor any of its Subsidiaries owns any shares of
capital stock or other securities of, or interest in, any other Person, except
for the securities of the Subsidiaries of Parent, or is obligated to make any
capital contribution to or other investment in any other Person.
(c) All of
the issued and outstanding membership interests of Merger Sub are, and at the
Effective Time will be, owned by Parent or a direct or indirect wholly owned
Subsidiary of Parent.
4.3 Authorization;
Validity of Agreement. Parent
and Merger Sub have the requisite corporate or limited liability company power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject, with respect to the consummation of
the Merger, to the receipt of the Parent Required Vote. The
execution, delivery and performance by Parent and Merger Sub of this Agreement
and the consummation by Parent and Merger Sub of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate or other
action, except for the Parent Required Vote. Except for the Parent
Required Vote, no corporate or other proceedings on the part of either Parent or
Merger Sub are necessary to authorize the execution, delivery and performance of
this Agreement by either of Parent or Merger Sub and the consummation of the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery of this Agreement by the Company,
constitutes a valid and binding obligation of each of Parent and Merger Sub
enforceable against such party in accordance with its terms, except as such
enforcement may be subject to or limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other Laws, now or hereafter in effect, affecting
creditors’ rights generally and (ii) the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
4.4 No
Violations; Consents and Approvals.
(a) Neither
the execution, delivery and performance of this Agreement by Parent or Merger
Sub, nor the consummation by Parent or Merger Sub of the Merger or any other
transactions contemplated hereby will (i) violate any provision of the
certificate of incorporation, certificate of formation, articles of association,
limited liability company agreement or the bylaws of Parent or Merger Sub, as
applicable, or the certificate of incorporation, articles of association, bylaws
or similar governing documents, as applicable, of any of Parent’s Subsidiaries,
(ii) except for the Parent Credit Agreement (which exception shall no longer be
applicable on or prior to Closing), violate, conflict with, result in a breach
of any provision of or the loss of any benefit under, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of termination,
cancellation, modification or amendment under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective
properties or assets of Parent or Merger Sub, or any of Parent’s other
Subsidiaries, under, or result in the acceleration or trigger of any payment,
time of payment, vesting or increase in the amount of any compensation or
benefit payable pursuant to, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, guarantee, other evidence of indebtedness,
lease, license, contract, collective bargaining agreement, agreement or other
instrument or obligation to which Parent or Merger Sub, or any of Parent’s other
Subsidiaries, is a party or by which any of them or any of their respective
assets or properties may be bound, or (iii) assuming the consents, approvals,
orders, authorizations, registrations, filings or permits referred to in Section
4.4(b) are duly and timely obtained or made and the Parent Required Vote and the
adoption of this Agreement and the transactions contemplated hereby by Parent as
the sole member of Merger Sub, conflict with or violate any Laws applicable to
Parent or Merger Sub, or any of Parent’s other Subsidiaries, or any of their
respective properties or assets; except in the case of clauses (ii) and (iii),
for such conflicts, violations, breaches, defaults, losses, obligations,
payments, rights (if exercised) or Liens which individually or in the aggregate
have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on Parent or Merger Sub.
32
(b) No
material filing or registration with, declaration or notification to, or order,
authorization, consent or approval of, any Governmental Entity or any other
Person is required to be obtained or made by Parent or Merger Sub, or any of
Parent’s other Subsidiaries, in connection with the execution, delivery and
performance of this Agreement by Parent or Merger Sub, or the consummation by
Parent or Merger Sub of the Merger or any other transactions contemplated
hereby, except for (i) compliance with any applicable requirements of the
Exchange Act, (ii) compliance with any applicable requirements of the Securities
Act, (iii) compliance with any applicable state securities or “blue sky” or
takeover Laws, (iv) the approval of the Parent Proposal by the Parent Required
Vote, (v) such filings, authorizations or approvals, or expiration or
termination of applicable waiting periods, as may be required under the HSR Act,
(vi) the filing of the Certificate of Merger with the Delaware Secretary of
State and the Articles of Merger with the Nevada Secretary of State, (vii)
compliance with any applicable requirements under stock exchange rules, (viii)
consents or approvals of any Governmental Entity, which are normally obtained
after the consummation of this type of transaction, and (ix) any such
filing, registration, declaration, notification, order, authorization, consent
or approval that the failure to obtain or make individually or in the aggregate
would not be reasonably likely to have or result in a Material Adverse Effect on
Parent.
4.5 SEC
Reports and Financial Statements.
(a) Except as
set forth in Section 4.5(a) of the Parent Disclosure Letter, Parent has timely
filed with the SEC all forms and documents required to be filed by it since
January 1, 2005 under the Exchange Act, including (A) its Annual Reports on Form
10-K, (B) its Quarterly Reports on Form 10-Q, (C) all proxy statements relating
to meetings of stockholders of Parent (in the form mailed to stockholders), and
(D) all other forms, reports and registration statements required to be filed by
Parent with the SEC since January 1, 2005. The documents described in
clauses (A)-(D) above, in each case as amended (whether filed prior to, on or
after the date of this Agreement), are referred to in this Agreement
collectively as the “Parent SEC
Documents.” As of their respective dates or, if amended and
publicly available prior to the date of this Agreement, as of the date of such
amendment with respect to those disclosures that are amended, the Parent SEC
Documents, including the financial statements and schedules provided therein or
incorporated by reference therein, (x) did not contain any untrue statement of a
material fact or omit to state a 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 and (y) complied in all material
respects with the applicable requirements of the Exchange Act, the Securities
Act, the Xxxxxxxx-Xxxxx Act and other applicable Laws, as the case may be, and
the applicable rules and regulations of the SEC thereunder. None of
the Subsidiaries of Parent is subject to the periodic reporting requirements of
the Exchange Act or required to file any form, report or other document with the
SEC, the NYSE, any stock exchange or any other comparable Governmental
Entity.
33
(b) The
December 31, 2007 consolidated balance sheet of Parent (the “Parent Balance
Sheet”) and the related consolidated statements of operations and
comprehensive income (loss), changes in stockholders’ equity and cash flows
(including, in each case, the related notes, where applicable), as reported in
Parent’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007
filed with the SEC under the Exchange Act, fairly present (within the meaning of
the Xxxxxxxx-Xxxxx Act), and the financial statements to be filed by Parent with
the SEC after the date of this Agreement will fairly present, in all material
respects, the consolidated financial position and the consolidated results of
operations, cash flows and changes in stockholders’ equity of Parent and its
Subsidiaries as of the respective dates or for the respective fiscal periods
therein set forth; each of such statements (including the related notes, where
applicable) complies, and the financial statements to be filed by Parent with
the SEC after the date of this Agreement will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been, and the financial statements to be filed by Parent with
the SEC after the date of this Agreement will be, prepared in accordance with
GAAP consistently applied during the periods involved, except as indicated in
the notes thereto. The books and records of Parent and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements and reflect only actual
transactions. Ernst & Young LLP is an independent public
accounting firm with respect to Parent and has not resigned or been dismissed as
independent public accountants of Parent. Ernst & Young has not
indicated to Parent that it has any material disagreements with Parent’s
accounting policies.
(c) Parent
has not received any notice from the SEC that its accounting policies are
subject to review or investigation, except for those comments previously issued
by the SEC that have been resolved.
(d) Since
January 1, 2005, (A) the exercise price of each Parent Stock Option has been no
less than the Fair Market Value (as defined under the terms of the respective
Parent stock plan under which such Parent Stock Option was granted) of a share
of Parent Common Stock as determined on the date of grant of such Parent Stock
Option, and (B) all grants of Parent Stock Options were validly issued and
properly approved by the Parent Board (or a duly authorized committee or
subcommittee thereof) in material compliance with applicable Law and recorded in
Parent’s financial statements referred to in Section 4.5(b) in accordance with
GAAP, and no such grants involved any “back dating,” “forward dating” or similar
practices with respect to the effective date of grant.
34
4.6 Oil
and Gas Reserves.
(a) Parent
has furnished to the Company a reserve report prepared by Netherland, Xxxxxx
& Associates, Inc. containing estimates of the oil and gas reserves that are
owned by Parent and its Subsidiaries as of December 31, 2007 (the “Parent Reserve
Report”). The factual, non-interpretive data relating to the
Oil and Gas Interests of Parent and its Subsidiaries on which the Parent Reserve
Report was based for purposes of estimating the oil and gas reserves set forth
therein, to the knowledge of Parent, was accurate in all material respects at
the time such data was provided to the reserve engineers for the Parent Reserve
Report. The Parent Reserve Report conforms to the guidelines with
respect thereto of the SEC. Except for changes (including changes in
Hydrocarbon commodity prices) generally affecting the oil and gas industry and
normal depletion by production, there has been no change in respect of the
matters addressed in the Parent Reserve Report that would reasonably be expected
to have a Material Adverse Effect on Parent. Since January 1, 2005,
all of Parent’s and its Subsidiaries’ xxxxx have been drilled and (if completed)
completed, operated and produced in compliance in all respects with applicable
oil and gas leases and applicable Laws, except where any noncompliance would not
reasonably be expected to have a Material Adverse Effect on
Parent. To Parent’s knowledge, neither Parent nor any of its
Subsidiaries is in violation of any applicable Law or contract requiring Parent
or such Subsidiary to plug and abandon any well because the well is not
currently capable of producing in commercial quantities or for any other
reasons. With respect to any Oil and Gas Interests of Parent and its
Subsidiaries that are not operated by Parent or any of its Subsidiaries, Parent
makes the representations and warranties set forth in this Section 4.6 only to
its actual knowledge without having made specific inquiry of the operators with
respect hereto.
(b) Set forth
in Section 4.6(b) of the Parent Disclosure Letter is a list of all material Oil
and Gas Interests that were included in the Parent Reserve Report that have been
disposed of prior to the date hereof.
(c) Except as
set forth in Section 4.6(c) of the Parent Disclosure Letter, proceeds from the
sale of Hydrocarbons produced from Parent’s Oil and Gas Interests are being
received by Parent and its Subsidiaries in a timely manner and are not being
held in suspense for any reason (except in the ordinary course of business or
which would not reasonably be expected to have a Material Adverse
Effect).
(d) Except as
set forth in Section 4.6(d) of the Parent Disclosure Letter, none of Parent or
its Subsidiaries has received any material deficiency payment under any gas
contract for which any Person has a right to take deficiency gas from Parent or
any of its Subsidiaries, nor has Parent or any of its Subsidiaries received any
material payment for production which is subject to refund or recoupment out of
future production.
35
(e) Parent
has previously provided or made available to the Company true and complete
copies of all Parent Oil and Gas Agreements, together with all amendments,
extensions and other modifications thereof. To the knowledge of
Parent, all Parent Oil and Gas Agreements are in good standing, valid and
effective and all royalties, rentals and other payment due by Parent to any
lessor of any such oil and gas leases have been paid, except in each case, as
has not had, and would not reasonably be expected to have, a Material Adverse
Effect. For purposes of this Agreement, “Parent
Oil
and Gas Agreements” means the following types of agreements or contracts
to which Parent or any of its Subsidiaries is a party, whether as an original
party, by succession or assignment or otherwise: oil and gas leases, farm-in and
farm-out agreements, agreements providing for an overriding royalty interest,
agreements providing for a royalty interest, agreements providing for a net
profits interest, crude oil or natural gas sales or purchase contracts, joint
operating agreements, unit operating agreements, unit agreements, field
equipment leases, and agreements restricting Parent or any of its Subsidiaries’
ability to operate, obtain, explore for or develop interests in a particular
geographic area. Set forth in Section 4.6(e) of the Parent Disclosure
Letter is a list of all Parent Oil and Gas Agreements that contain restrictions
on Parent’s or any of its Subsidiaries’ ability to operate, obtain, explore for
or develop interests in a particular geographic area.
(f) The Oil
and Gas Interests of Parent and its Subsidiaries are not subject to (i) any
instrument or agreement evidencing or related to indebtedness for borrowed
money, whether directly or indirectly, except for the Parent Credit Agreement
and Permitted Liens, or (ii) any agreement not entered into in the ordinary
course of business in which the amount involved is in excess of $1
million. In addition, except as set forth in the Parent SEC Documents
filed and publicly available prior to the date hereof, no Parent Material
Contract contains any provision that prevents Parent or any of its Subsidiaries
from owning, managing and operating the Oil and Gas Interests of Parent and its
Subsidiaries in accordance with historical practices.
(g) Except as
set forth in Section 4.6(g) of the Parent Disclosure Letter, as of the date of
this Agreement, (i) there are no outstanding calls for payments in excess of $1
million that are due or that Parent or its Subsidiaries are committed to make
that have not been made; (ii) there are no material operations with respect to
which Parent or its Subsidiaries have become a non-consenting party; and (iii)
there are no commitments for the material expenditure of funds for drilling or
other capital projects other than projects with respect to which the operator is
not required under the applicable operating agreement to seek
consent.
(h) Except as
set forth in Section 4.6(h) of the Parent Disclosure Letter, there are no
provisions applicable to the material Oil and Gas Interests reflected in the
Parent Reserve Report that increase the royalty percentage of the lessor
thereunder in a manner that is not accounted for in such Parent Reserve Report;
and none of the Oil and Gas Interests of Parent and its Subsidiaries are limited
by terms fixed by a certain number of years (other than primary terms under oil
and gas leases).
(i) Except as
set forth in Section 4.6(i) of the Parent Disclosure Letter, there are no calls
(exclusive of market calls) on Parent’s oil or natural gas production, and
Parent has no obligation to deliver oil or natural gas pursuant to any
take-or-pay, prepayment or similar arrangement without receiving full payment
therefor, excluding gas imbalances disclosed in Section 4.6(d) of the Parent
Disclosure Letter.
36
4.7 Absence
of Certain Changes.
(a) Since
December 31, 2007, (i) Parent and its Subsidiaries have conducted their
respective business only in the ordinary course consistent with past practice in
all material respects, and (ii) there has not occurred or continued to exist any
event, change, occurrence, effect, fact, circumstance or condition which,
individually or in the aggregate, has had, or is reasonably likely to have or
result in, a Material Adverse Effect on Parent.
(b) Except as
set forth in Section 4.7(b) of the Parent Disclosure Letter, since December 31,
2007 to the date of this Agreement, neither Parent nor any of its Subsidiaries
has (i) declared, set aside or paid any dividend or other distribution (whether
in cash, stock or property) with respect to any of Parent’s capital stock, (ii)
effected or authorized any split, combination or reclassification of any of
Parent’s capital stock or any issuance thereof or issued any other securities in
respect of, in lieu of or in substitution for shares of Parent’s capital stock,
except for issuances of Parent Common Stock (1) upon the exercise of Parent
Stock Options, in each case in accordance with their terms at the time of
exercise or (2) in connection with recruitment activities in the ordinary course
of business consistent with past practice, (iii) changed in any material
respect, or has knowledge of any reason that would have required or would
require changing in any material respect, any accounting methods (or underlying
assumptions), principles or practices of Parent or its Subsidiaries, including
any material reserving, renewal or residual method, practice or policy, except
as required by GAAP or by applicable Law, (iv) made any material Tax election or
settled or compromised any material income Tax liability, (v) made any material
change in the policies and procedures of Parent or its Subsidiaries in
connection with trading activities, (vi) sold, leased exchanged, transferred or
otherwise disposed of any material Parent Asset other than in the ordinary
course of business consistent with past practices, (vii) revalued, or has
knowledge of any reason that would have required or would require revaluing, any
of the Parent Assets in any material respect, including writing down the value
of any of Parent Assets or writing off notes or accounts receivable other than
in the ordinary course of business consistent with past practices, (viii) except
as required to comply with applicable Law, adopted or amended any new or
existing Parent Benefit Plan, or (ix) made any agreement or commitment
(contingent or otherwise) to do any of the foregoing.
4.8 Absence
of Undisclosed Liabilities. Since
December 31, 2007 and except as set forth in Section 4.8 of the Parent
Disclosure Letter, none of Parent or Merger Sub, nor any of Parent’s other
Subsidiaries, has incurred any liabilities or obligations (accrued, contingent
or otherwise), except for (i) liabilities incurred in the ordinary course of
business consistent with past practice that individually or in the aggregate
have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on Parent, (ii) liabilities in respect of Litigation
(which are the subject of Section 4.11(a)), and (iii) liabilities under
Environmental Laws (which are the subject of Section 4.15). None of
Parent or Merger Sub, nor any of Parent’s other Subsidiaries, is in default in
respect of the terms and conditions of any indebtedness or other agreement which
individually or in the aggregate has had, or would be reasonably likely to have
or result in, a Material Adverse Effect on Parent.
4.9 Disclosure
Documents. None
of the information to be supplied by Parent for inclusion in (i) the Proxy
Statement to be
filed by the Company and Parent with the SEC, and any amendments or supplements
thereto, or (ii) the S-4 to be filed by Parent with the SEC in connection with
the Merger, and any amendments or supplements thereto, will, at the respective
times such documents are filed, and, in the case of the Proxy Statement, at the
time the Proxy Statement or any amendment or supplement thereto is first mailed
to the Company stockholders and Parent stockholders, at the time of the Company
Special Meeting and the Parent Special Meeting and at the Effective Time, and,
in the case of the S-4, when 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 made therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement and the S-4 will comply in all
material respects with the provisions of the Securities Act and the Exchange
Act, as the case may be, and the rules and regulations thereunder, except that
no representation or warranty is made by Parent or Merger Sub with respect to
information provided by the Company for inclusion in the Proxy Statement and the
S-4.
37
4.10 Employee
Benefit Plans; ERISA.
(a) Section
4.10(a)(1) of the Parent Disclosure Letter contains a true and complete list of
all the individual or group employee benefit and compensation plans or
arrangements of any type (including, without limitation, all bonus,
equity-based, change of control, incentive and plans described in Section 3(3)
of ERISA), sponsored, maintained or contributed to by Parent or any trade or
business, whether or not incorporated, which together with Parent would be
deemed a “single employer” within the meaning of Section 414(b), (c) or (m) of
the Code or Section 4001(b)(1) of ERISA (a “Parent ERISA
Affiliate”) or with respect to which any Parent ERISA Affiliate has any
obligations or liability (“Parent Benefit
Plans”), and Section 4.10(a)(2) of the Parent Disclosure Letter lists
each material individual employment, severance or similar agreement with respect
to which Parent or any Parent ERISA Affiliate has any current or future
obligation or liability (“Parent Employee
Agreement”). With respect to each Parent Benefit Plan, Parent
has made available to the Company a true, correct and complete copy of such
Parent Benefit Plan, and, to the extent applicable, trust agreements, insurance
contracts and other funding vehicles, the most recent Annual Reports (Form 5500
Series) and accompanying schedules, summary plan descriptions, and the most
recent determination letter from the Internal Revenue Service.
(b) With
respect to each Parent Benefit Plan: (i) if intended to qualify under
Section 401(a) or 401(k) of the Code, such Parent Benefit Plan satisfies the
requirements of such sections and has received a favorable determination letter
from the Internal Revenue Service with respect to its qualification, and its
related trust has been determined to be exempt from tax under Section 501(a) of
the Code and, to the knowledge of Parent, nothing has occurred since the date of
such letter to adversely affect such qualification or exemption; (ii) each
Parent Benefit Plan has been administered in substantial compliance with its
terms and applicable Law; (iii) neither Parent nor any Parent ERISA Affiliate
has engaged in, and Parent and each Parent ERISA Affiliate do not have any
knowledge of any Person that has engaged in, any transaction or acted or failed
to act in any manner that would subject Parent or any Parent ERISA Affiliate to
any liability for a breach of fiduciary duty under ERISA; (iv) no disputes are
pending or, to the knowledge of Parent or any Parent ERISA Affiliate, threatened
other than ordinary claims for benefits; (v) neither Parent nor any Parent ERISA
Affiliate has engaged in, and Parent and each Parent ERISA Affiliate do not have
any knowledge of any Person that has engaged in, any transaction in violation of
Section 406(a) or (b) of ERISA or Section 4975 of the Code for which no
exemption exists under Section 408 of ERISA or Section 4975(c) of the Code or
Section 4975(d) of the Code; (vi) all contributions and premiums due have been
made on a timely basis; and (vii) each Parent Benefit Plan may be amended or
terminated unilaterally by Parent at any time without any continuing liability
for benefits other than benefits accrued to the date of such amendment or
termination. All contributions and premiums made or required to be
made under any Parent Benefit Plan meet the requirements for deductibility under
the Code, and all contributions which are required and which have not been made
have been properly recorded on the books of Parent or a Parent ERISA
Affiliate.
38
(c) No Parent
Benefit Plan is (i) a “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA), (ii) a “multiple employer plan” (within the meaning of Section 413(c) of
the Code), (iii) subject to Title IV or Section 302 of ERISA or Section 412 of
the Code or (iv) a multiple employer welfare arrangement under Section
3(40) of ERISA. No event has occurred with respect to Parent or a
Parent ERISA Affiliate in connection with which Parent could be subject to any
liability (except for regular contributions and benefit payments in the ordinary
course of plan business), lien or encumbrance with respect to any Parent Benefit
Plan.
(d) Except as
set forth in Section 4.10(d) of the Parent Disclosure Letter, (i) no
present or former employees of Parent or any of its Subsidiaries are covered by
any Parent Employee Agreements or Parent Benefit Plans that provide or will
provide any severance pay, post-termination health or life insurance benefits
(except as required pursuant to Section 4980B of the Code or Part 6 of
Title I of ERISA) or any similar benefits, (ii) neither the execution
of this Agreement nor the consummation of the transactions contemplated by this
Agreement shall cause any payments or benefits to any employee, officer or
director of Parent or any of its Subsidiaries to be either subject to an excise
Tax or non-deductible to Parent under Sections 4999 and 280G of the Code,
respectively, whether or not some other subsequent action or event would be
required to cause such payment or benefit to be triggered, and (iii) neither the
execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement shall result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
employee, officer or director of Parent or any of its Subsidiaries, whether or
not some other subsequent action or event would be required to cause such
payment or benefit to be triggered, accelerated, delivered or
increased.
(e) None of
the Parent Benefit Plans is subject to the laws of any country other than the
United States.
(f) There are
no Parent equity-based grants, options or awards outstanding other than those
granted under the Parent Stock Plan.
4.11 Litigation;
Compliance with Law.
(a) Except
for such Litigation set forth in the Parent SEC Documents filed and publicly
available prior to the date of this Agreement or that individually or in the
aggregate has not had, and would not be reasonably likely to have or result in,
a Material Adverse Effect on Parent, (i) there is no Litigation pending or, to
the knowledge of Parent, threatened in writing against, relating to or naming as
a party thereto Parent or Merger Sub, or any of Parent’s other Subsidiaries, any
of their respective properties or assets or any of Parent’s officers or
directors (in their capacities as such), (ii) there is no order, judgment,
decree, injunction or award of any Governmental Entity against and/or binding
upon Parent, any of its Subsidiaries or any of Parent’s officers or directors
(in their capacities as such) and (iii) there is no Litigation that Parent or
Merger Sub, or any of Parent’s other Subsidiaries, has pending against other
parties, where such Litigation is intended to enforce or preserve material
rights of Parent or any of its Subsidiaries.
39
(b) Except as
set forth in the Parent SEC Documents filed and publicly available prior to the
date of this Agreement or as individually or in the aggregate has not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect
on Parent, each of Parent and its Subsidiaries has complied, and is in
compliance with, all Laws and Parent Permits which affect the respective
businesses of Parent or any of its Subsidiaries, the Parent Real Property and/or
Parent Assets, and Parent and its Subsidiaries have not been and are not in
violation of any such Law or Parent Permit; nor has any notice, charge, Claim or
action been received in writing by Parent or any of its Subsidiaries or been
filed, commenced, or to the knowledge of Parent, threatened against Parent or
any of its Subsidiaries alleging any violation of the foregoing, except for such
violations or allegations of violations as individually or in the aggregate have
not had, and would not be reasonably likely to have or result in, a Material
Adverse Effect on Parent.
(c) Without
limiting the generality of clause (b) above and mindful of the principles of the
United States Foreign Corrupt Practices Act and other similar applicable foreign
Laws, neither Parent nor any of its Subsidiaries, nor, in any such case, any of
their respective Representatives has (i) made, offered or authorized any payment
or given or offered anything of value directly or indirectly (including through
a friend or family member with personal relationships with government officials)
to an official of any government for the purpose of influencing an act or
decision in his official capacity or inducing him to use his influence with that
government with respect to Parent or any of its Subsidiaries in violation of the
United States Foreign Corrupt Practices Act or other similar applicable foreign
Laws, (ii) made, offered or authorized any payment to any Governmental Entity,
political party or political candidate for the purpose of influencing any
official act or decision, or inducing such Person to use any influence with that
government with respect to Parent or any of its Subsidiaries in violation of the
United States Foreign Corrupt Practices Act or other similar applicable foreign
Laws or (iii) taken any action that would be reasonably likely to subject Parent
or any of its Subsidiaries to any material liability or penalty under any and
all Laws of any Governmental Entity.
(d) Parent
and its Subsidiaries hold all licenses, permits, certifications, variances,
consents, authorizations, waivers, grants, franchises, concessions, exemptions,
orders, registrations and approvals of Governmental Entities or other Persons
necessary for the ownership, leasing, operation, occupancy and use of the Parent
Real Property, Parent Assets and the conduct of their respective businesses as
currently conducted (“Parent
Permits”), except where the failure to hold such Parent Permits
individually or in the aggregate has not had, and would not be reasonably likely
to have or result in, a Material Adverse Effect on Parent. Neither
Parent nor any of its Subsidiaries has received notice that any Parent Permit
will be terminated or modified or cannot be renewed in the ordinary course of
business, and Parent has no knowledge of any reasonable basis for any such
termination, modification or nonrenewal, in each case except for such
terminations, modifications or nonrenewals that individually or in the aggregate
have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on Parent. The execution, delivery and
performance of this Agreement and the consummation of the Merger or any other
transactions contemplated hereby do not and will not violate any Parent Permit,
or result in any termination, modification or nonrenewal thereof, except in each
case for such violations, terminations, modifications or nonrenewals that
individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on Parent.
40
(e) This
Section 4.11 does not relate to matters with respect to (i) Parent Benefit
Plans, ERISA and other employee benefit matters (which are the subject of
Section 4.10), (ii) Tax Laws and other Tax matters (which are the subject
of Section 4.14), (iii) Environmental Laws (which are the subject of Section
4.15) and (iv) labor matters (which are the subject of Section
4.18).
4.12 Intellectual
Property.
(a) Except as
set forth in Section 4.12(a) of the Parent Disclosure Letter or as individually
or in the aggregate would not be reasonably likely to have or result in, a
Material Adverse Effect on Parent:
(i) Parent,
or one of its Subsidiaries, is the sole and exclusive owner of, or possesses
adequate licenses or other rights to use, all Intellectual Property used in the
present conduct of the businesses of Parent and its Subsidiaries (“Parent IP
Rights”), free and clear of all security interests (except Permitted
Liens) including but not limited to liens, charges, mortgages, title retention
agreements or title defects;
(ii) to
Parent’s knowledge, no consent, co-existence or settlement agreements,
judgments, or court orders limit or restrict Parent’s or any of its
Subsidiaries’ ownership rights in and to any Intellectual Property owned by
them;
(iii) the
conduct of the business of Parent and its Subsidiaries as presently conducted
does not, to the knowledge of Parent, infringe or misappropriate any third
Person’s Intellectual Property; or
(iv) to
the knowledge of Parent, no third Person is infringing
or misappropriating any Intellectual Property owned by Parent or its
Subsidiaries, and to the knowledge of Parent there is no litigation pending or
threatened in writing by or against Parent or any of its Subsidiaries, nor, to
the knowledge of Parent, has Parent or any of its Subsidiaries received any
written charge, claim, complaint, demand, letter or notice, that asserts a claim
(a) alleging that any or all of the Parent IP Rights infringe or misappropriate
any third party’s Intellectual Property, or (b) challenging the ownership, use,
validity, or enforceability of any Parent IP Right.
(b) All
Intellectual Property owned by Parent or its Subsidiaries that is the subject of
an application for registration or a registration (“Registered Parent
IP”) is to the knowledge of Parent, in force, and all application,
renewal and maintenance fees in relation to all Registered Parent IP have been
paid to date, except for any Registered Parent IP that Parent has abandoned, not
renewed or allowed to expire.
41
(c) Except
for such matters as individually or in the aggregate have not had and would not
be reasonably likely to have or result in a Material Adverse Effect on Parent,
to Parent’s knowledge (i) there does not exist, nor has Parent or any of its
Subsidiaries received written notice of, any breach of or violation or default
under, any of the terms, conditions or provisions of any material contracts
related to Parent IP Rights, and (ii) neither Parent nor any of its Subsidiaries
has received written notice of the desire of the other party or parties to any
such material contracts relating to Parent IP Rights to exercise any rights such
party or parties have to cancel, terminate or repudiate such material contract
relating to Parent IP Rights or exercise remedies thereunder.
4.13 Material
Contracts.
(a) Except
for such agreements or arrangements listed in Section 4.13(a) of the Parent
Disclosure Letter or that are included as exhibits to the Parent SEC Documents
filed and publicly available prior to the date of this Agreement, and except for
this Agreement, as of the date of this Agreement, neither Parent nor any of its
Subsidiaries is a party to or bound by any material contract, arrangement,
commitment or understanding (whether written or oral) (i) which is an employment
agreement between Parent, on the one hand, and its officers and key employees,
on the other hand, (ii) which, upon the consummation of the Merger or any other
transaction contemplated by this Agreement, will (either alone or upon the
occurrence of any additional acts or events, including the passage of time)
result in any material payment or benefit (whether of severance pay or
otherwise) becoming due, or the acceleration or vesting of any right to any
material payment or benefits, from Parent, Merger Sub, the Company or the
Surviving Entity or any of their respective Subsidiaries to any officer,
director, consultant or employee of any of the foregoing, (iii) which is a
material contract (as defined in Item 601(b)(10)(i) or 601(b)(10)(ii) of
Regulation S-K of the SEC) to be performed after the date of this Agreement,
(iv) which expressly limits the ability of Parent or any Subsidiary of Parent,
or would limit the ability of the Surviving Entity (or any of its affiliates)
after the Effective Time, to compete in or conduct any line of business or
compete with any Person or in any geographic area or during any period of time,
in each case, if such limitation is or is reasonably likely to be material to
Parent and its Subsidiaries, taken as a whole, or, following the Effective Time,
to the Surviving Entity and its affiliates, taken as a whole, (v) which is a
material joint venture agreement, joint operating agreement, partnership
agreement or other similar contract or agreement involving a sharing of profits
and expenses with one or more third Persons, (vi) the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement (including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan) or (vii) which is a stockholder rights agreement or which otherwise
provides for the issuance of any securities in respect of this Agreement or the
Merger. Each contract, arrangement, commitment or understanding (A)
included as an exhibit to the Parent SEC Documents filed and publicly available
prior to the date of this Agreement, or (B) listed in Section 4.13(a) of the
Parent Disclosure Letter described in this Section 4.13(a), whether or not
included as an exhibit to the Parent SEC Documents, is referred to herein as a
“Parent
Material Contract,” and for purposes of the bringdown of Section 4.13(b)
pursuant to Section 6.2(a), “Parent Material Contract” shall include as of the
date entered into any such contract, arrangement, commitment or understanding
that is entered into after the date of this Agreement. Parent has
previously made available to the Company true, complete and correct copies of
each Parent Material Contract that is not included as an exhibit to the Parent
SEC Documents. For the avoidance of doubt, Parent’s charter
constitutes a Parent Material Contract.
42
(b) Each
Parent Material Contract is valid and binding and in full force and effect and
Parent and each of its Subsidiaries have performed all obligations required to
be performed by them to date under each Parent Material Contract, except where
such failure to be valid and binding or in full force and effect or such failure
to perform individually or in the aggregate has not had and would not be
reasonably likely to have or result in a Material Adverse Effect on
Parent. Except for such matters as individually or in the aggregate
have not had and would not be reasonably likely to have or result in a Material
Adverse Effect on Parent, to Parent’s knowledge, (i) there does not exist, nor
has Parent or any of its Subsidiaries received written notice of, any breach of
or violation or default under, any of the terms, conditions or provisions of any
Parent Material Contract and (ii) neither Parent nor any of its Subsidiaries has
received written notice of the desire of the other party or parties to any such
Parent Material Contract to exercise any rights such party has to cancel,
terminate or repudiate such Parent Material Contract or exercise remedies
thereunder. Each Parent Material Contract is enforceable by Parent or
a Subsidiary of Parent in accordance with its terms, except as such enforcement
may be subject to or limited by (x) bankruptcy, insolvency, reorganization,
moratorium or other Laws, now or hereafter in effect, affecting creditors’
rights generally and (y) the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity) or
except where such unenforceability individually or in the aggregate has not had,
and would not be reasonably likely to have or result in, a Material Adverse
Effect on Parent.
4.14 Taxes.
(a) (i) All
material Returns required to be filed by or with respect to Parent and its
Subsidiaries have been filed in accordance with all applicable Laws and all such
Returns are true, correct and complete in all material respects, (ii) Parent and
its Subsidiaries have timely paid all material Taxes due or claimed to be due,
except for those Taxes being contested in good faith and for which adequate
reserves have been established in the financial statements of Parent and except
as set forth in Section 4.14(a)(ii) of the Parent Disclosure Letter, (iii) all
material Employment and Withholding Taxes and any other material amounts
required to be withheld by Parent or any of its Subsidiaries with respect to
Taxes have been withheld and either duly and timely paid to the proper
Governmental Entity or properly set aside in accounts for such purpose in
accordance with applicable Laws, (iv) all material sales or transfer Taxes
required to be collected by Parent or any of its Subsidiaries have been duly and
timely collected, or caused to be collected, and either duly and timely remitted
to the proper Governmental Entity or properly set aside in accounts for such
purpose in accordance with applicable Laws, (v) the charges, accruals and
reserves for Taxes with respect to Parent and its Subsidiaries reflected in
Parent Balance Sheet are adequate under GAAP to cover Tax liabilities accruing
through the date thereof, (vi) no deficiencies for any material Taxes have been
asserted or assessed, or, to the knowledge of Parent, proposed, against Parent
or any of its Subsidiaries that have not been paid in full, except for those
Taxes being contested in good faith and for which adequate reserves have been
established in the financial statements of Parent, and (vii) there is no action,
suit, proceeding, investigation, audit or claim underway, pending or, to the
knowledge of Parent, threatened or scheduled to commence, against or with
respect to Parent or any of its Subsidiaries in respect of any material
Tax.
43
(b) Neither
Parent nor any of its Subsidiaries has been included in any “consolidated,”
“unitary” or “combined” Return (other than Returns which include only Parent and
any Subsidiaries of Parent) provided for under the Laws of the United States,
any foreign jurisdiction or any state or locality or could be liable for the
Taxes of any other Person as a successor or transferee.
(c) There are
no Tax sharing, allocation, indemnification (other than indemnification
provisions included in agreements entered into in the ordinary course of
business) or similar agreements in effect as between Parent or any of its
Subsidiaries or any predecessor or affiliate of any of them and any other party
under which Parent or any of its Subsidiaries could be liable for any Taxes of
any party other than Parent or any Subsidiary of Parent.
(d) Neither
Parent nor any of its Subsidiaries has, as of the Closing Date, entered into an
agreement or waiver extending any statute of limitations relating to the payment
or collection of material Taxes or the time with respect to the filing of any
Return relating to any material Taxes.
(e) There are
no Liens for material Taxes on any asset of Parent or its Subsidiaries, except
for Permitted Liens.
(f) Neither
Parent nor any of its Subsidiaries has requested or is the subject of or bound
by any private letter ruling, technical advice memorandum, closing agreement or
similar ruling, memorandum or agreement with any taxing authority with respect
to any material Taxes, nor is any such request outstanding.
(g) Each of
Parent and its Subsidiaries has disclosed on its Returns all positions taken
therein that could give rise to a substantial understatement of Tax within the
meaning of Section 6662 of the Code.
(h) Neither
Parent nor any of its Subsidiaries has entered into, has any liability in
respect of, or has any filing obligations with respect to, any transaction that
constitutes a “reportable transaction,” as defined in Section 1.6011-4(b)(1) of
the Treasury Regulations.
(i) Neither
Parent nor any of its Subsidiaries will be required to include any material item
of income in, or exclude any material item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a
result of any (i) change in method of accounting for a taxable period ending on
or prior to the Closing Date under Section 481(c) of the Code (or any
corresponding or similar provision of state, local or foreign Tax Law) or (ii)
“closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax Law) executed
on or prior to the Closing Date.
(j) Since
January 1, 2005, none of Parent nor any of its Subsidiaries has been a
distributing corporation or a controlled corporation for purposes of Section 355
of the Code.
44
(k) Parent
has made (or will, upon request, make) available to the Company correct and
complete copies of (i) all U.S. federal Returns of Parent and its Subsidiaries
relating to taxable periods ending on or after December 31, 2004, filed through
the date hereof, (ii) any audit report (or notice of proposed adjustment to the
extent not included in an audit report) within the last three years relating to
any material Taxes due from or with respect to Parent or any of its Subsidiaries
and (iii) any substantive and non-privileged correspondence and memoranda
relating to the matters described in clauses (i) and (ii) of this Section
4.14(k).
4.15 Environmental
Matters.
(a) Parent
and each of its Subsidiaries is in compliance with all applicable Environmental
Laws except where failure to be in compliance, individually or in the aggregate,
would not be reasonably likely to have or result in, a Material Adverse Effect
on Parent.
(b) There is
no Environmental Claim pending or, to the knowledge of Parent, threatened
against Parent or any of its Subsidiaries or, to the knowledge of Parent,
against any Person whose liability for any Environmental Claim Parent or any of
its Subsidiaries has retained or assumed either contractually or by operation of
Law, except for any such Environmental Claims which, individually or in the
aggregate, would not be reasonably likely to have or result in, a Material
Adverse Effect on Parent.
(c) To the
knowledge of Parent, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the Release any
Hazardous Material, which would be reasonably likely to form the basis of any
Environmental Claim against Parent or any of its Subsidiaries or, to the
knowledge of Parent, against any Person whose liability for any Environmental
Claim Parent or any of its Subsidiaries has retained or assumed either
contractually or by operation of law which, individually or in the aggregate,
would be reasonably likely to have or result in, a Material Adverse Effect on
Parent.
(d) There is
no Cleanup of Hazardous Materials being conducted or planned at any property
currently or, to the knowledge of Parent, formerly owned or operated by Parent
or any of its Subsidiaries, except for such Cleanups which, individually or in
the aggregate, would not be reasonably likely to have or result in, a Material
Adverse Effect on Parent.
(e) To the
knowledge of Parent, no Parent Asset has been involved in any Release or
threatened Release of a Hazardous Material, except for such Releases which
individually or in the aggregate would not be reasonably likely to have or
result in a Material Adverse Effect on Parent.
(f) Parent
and its Subsidiaries have obtained and are in compliance with all material
approvals, permits, licenses, registrations and similar authorizations from all
Governmental Entities under all Environmental Laws required for the operation of
the businesses of Parent and its Subsidiaries as currently conducted and, to the
knowledge of Parent, there are no pending or threatened, actions or proceedings
alleging violations of or seeking to modify, revoke or deny renewal of any such
material approvals, permits, licenses, registrations and similar
authorizations.
45
4.16 Parent
Assets. Parent
has good and defensible title to all oil and gas properties forming the basis
for the reserves reflected in the Parent Reserve Report as attributable to Oil
and Gas Interests owned by Parent and its Subsidiaries and has good and valid
title to, or valid leasehold interests or other contractual rights in, all other
tangible properties and assets (real, personal or mixed) of Parent and its
Subsidiaries (such oil and gas properties and other properties and assets are
herein referred to as the “Parent
Assets”), with respect to both the oil and gas properties and all other
Parent Assets, free and clear of all Liens except for (a) Permitted Liens and
(b) Liens associated with obligations reflected in the Parent Reserve
Report. Parent and its Subsidiaries (as the case may be) have
maintained all of the Parent Assets owned on the date hereof in working order
and operating condition, subject only to ordinary wear and tear.
4.17 Insurance. Section
4.17 of the Parent Disclosure Letter contains a true, complete and correct list
of all insurance policies maintained by or on behalf of Parent and its
Subsidiaries as of the date of this Agreement. Parent has made
available to Parent a true, complete and correct copy of each such insurance
policy or the binder therefor. Such policies are, and at the Closing
policies or replacement policies having substantially similar coverages will be,
in full force and effect, and all premiums due thereon have been or will be
paid. Parent and its Subsidiaries have complied in all material
respects with the terms and provisions of such policies. The
insurance policies listed in Section 4.17 of the Parent Disclosure Letter
include all policies that are required in connection with the operation of the
businesses of Parent and its Subsidiaries as currently conducted by applicable
Laws and all agreements relating to Parent and its Subsidiaries.
4.18 Labor
Matters; Employees.
(a) (i) There
is no labor strike, dispute, slowdown, work stoppage or lockout actually pending
or, to the knowledge of Parent, threatened against or affecting Parent or any of
its Subsidiaries and, during the past five years, there has not been any such
action, (ii) none of Parent or any of its Subsidiaries is a party to or bound by
any collective bargaining or similar agreement with any labor organization, or
work rules or practices agreed to with any labor organization or employee
association applicable to employees of Parent or any of its
Subsidiaries, (iii) none of the employees of Parent or any of its Subsidiaries
are represented by any labor organization and none of Parent or any of its
Subsidiaries have any knowledge of any current union organizing activities among
the employees of Parent or any of its Subsidiaries nor does any question
concerning representation exist concerning such employees, (iv) Parent and its
Subsidiaries have each at all times been in material compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable Law, ordinance or regulation,
(v) there is no unfair labor practice charge or complaint against Parent or any
of its Subsidiaries pending or, to the knowledge of Parent, threatened before
the National Labor Relations Board or any similar state or foreign agency, (vi)
there is no grievance or arbitration proceeding arising out of any collective
bargaining agreement or other grievance procedure relating to Parent or any of
its Subsidiaries, (vii) neither the Occupational Safety and Health
Administration nor any other federal or state agency has threatened to file any
citation, and there are no pending citations, relating to Parent or any of its
Subsidiaries, and (viii) there is no employee or governmental claim or
investigation, including any charges to the Equal Employment Opportunity
Commission or state employment practice agency, investigations regarding Fair
Labor Standards Act compliance, audits by the Office of Federal Contractor
Compliance Programs, Workers’ Compensation claims, sexual harassment complaints
or demand letters or threatened claims.
46
(b) Since the
enactment of the WARN Act, none of Parent or any of its Subsidiaries has
effectuated (i) a plant closing affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of
Parent or any of its Subsidiaries, or (ii) a mass layoff affecting any site of
employment or facility of Parent or any of its Subsidiaries, nor has Parent or
any of its Subsidiaries been affected by any transaction or engaged in layoffs
or employment terminations sufficient in number to trigger application of any
similar state or local Law, in each case that could reasonably be expected to
have a Material Adverse Effect on Parent.
(c) Section
4.18(c) of the Parent Disclosure Letter contains a complete and correct list of
the names of all directors and officers of Parent as of the date of this
Agreement, together with such Person’s position or function. Parent
has previously provided to the Company true and correct information with respect
to each such officer’s annual base salary or wages, incentive compensation bonus
in respect of 2007, target bonus percentage and amount for 2008, and currently
estimated severance payment due as a result of this Merger assuming such
Person’s employment is terminated in connection therewith.
4.19 Affiliate
Transactions. Section
4.19 of the Parent Disclosure Letter contains a complete and correct list of all
material agreements, contracts, transfers of assets or liabilities or other
commitments or transactions (other than Parent Benefit Plans described in
Section 4.10 of the Parent Disclosure Letter), whether or not entered into in
the ordinary course of business, to or by which Parent or any of its
Subsidiaries, on the one hand, and any of their respective affiliates (other
than Parent or any of its direct or indirect wholly owned Subsidiaries) on the
other hand, are or have been a party or otherwise bound or affected, and that
(a) are currently pending, in effect or have been in effect at any time since
December 31, 2005 or (b) involve continuing liabilities and obligations that,
individually or in the aggregate, have been, are or will be material to Parent
and its Subsidiaries taken as a whole.
4.20 Derivative
Transactions and Hedging. Section
4.20 of the Parent Disclosure Letter contains a complete and correct list of all
Derivative Transactions (including each outstanding commodity or financial
hedging position) entered into by Parent or any of its Subsidiaries or for the
account of any of its customers as of the date of this Agreement. All
such Derivative Transactions were, and any Derivative Transactions entered into
after the date of this Agreement will be, entered into in accordance with
applicable Laws, and in accordance with the investment, securities, commodities,
risk management and other policies, practices and procedures employed by Parent
and its Subsidiaries, and were, and will be, entered into with counterparties
believed at the time and still believed to be financially responsible and able
to understand (either alone or in consultation with their advisers) and to bear
the risks of such Derivative Transactions. Parent and each of its
Subsidiaries have, and will have, duly performed all of their respective
obligations under the Derivative Transactions to the extent that such
obligations to perform have accrued, and, to the knowledge of Parent, there are
and will be no breaches, violations, collateral deficiencies, requests for
collateral or demands for payment, or defaults or allegations or assertions of
such by any party thereunder.
47
4.21 Natural
Gas Act. Any
gas gathering system constituting a part of the properties of Parent or its
Subsidiaries has as its primary function the provision of natural gas gathering
services, as the term “gathering” is interpreted under Section 1(b) of the NGA;
none of the properties have been or are certificated by FERC under Section 7(c)
of the NGA or to the knowledge of Parent are now subject to FERC jurisdiction
under the NGA; and none of the properties have been or are providing service
pursuant to Section 311 of the NGA.
4.22 Disclosure
Controls and Procedures. Parent
has established and maintains “disclosure controls and procedures” (as defined
in Rules 13a-14(c) and 15d-14(c) of the Exchange Act) that are reasonably
designed to ensure that all material information (both financial and
non-financial) required to be disclosed by Parent in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC and
that all such information is accumulated and communicated to Parent’s management
as appropriate to allow timely decisions regarding required disclosure and to
make the certifications of the Chief Executive Officer and Chief Financial
Officer of Parent required under the Exchange Act with respect to such
reports. Neither Parent nor its independent auditors have identified
any “significant deficiencies” or “material weaknesses” in Parent’s or any of
its Subsidiaries’ internal controls as contemplated under Section 404 of the
Xxxxxxxx-Xxxxx Act.
4.23 Investment
Company. Neither
Parent nor any of its Subsidiaries is an “investment company,” a company
“controlled” by an “investment company,” or an “investment adviser” within the
meaning of the Investment Company Act or the Advisers Act.
4.24 Rights
Agreement. Parent
has taken all action so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby do not and will not result
in the grant of any rights to any Person under the Parent Rights Agreement or
enable or require the Parent Rights to be exercised, distributed or triggered
except for the Parent Rights to be provided as part of the Merger
Consideration.
4.25 Recommendation
of Parent Board of Directors; Opinion of Financial Advisor.
(a) The Board
of Directors of Parent (the “Parent
Board”), at a meeting duly called and held, duly adopted resolutions
unanimously (i)
determining that this Agreement, the transactions contemplated hereby and the
Parent Proposal are advisable to, and in the best interests of, Parent and the
stockholders of Parent, (ii) approving this Agreement, the transactions
contemplated hereby and the Parent Proposal, (iii) recommending approval and
adoption of the Parent Proposal to the stockholders of Parent and (iv) directing
that the Parent Proposal be submitted to Parent’s stockholders for consideration
in accordance with this Agreement, which resolutions, as of the date of this
Agreement, have not been subsequently rescinded, modified or withdrawn in any
way.
(b) The
Parent Board has received an opinion of Tudor, Pickering, Xxxx & Co.
Securities, Inc. to the effect that, as of the date of this Agreement, the
Merger Consideration to be paid by Parent in the Merger, in the aggregate, is
fair, from a financial point of view, to Parent. A true, complete and
correct copy of such opinion will promptly be delivered to the Company by Parent
solely for informational purposes after receipt thereof.
48
4.26 Required
Vote by Parent Stockholders. The
affirmative vote of the holders of a majority of votes cast at a meeting at
which a majority of the outstanding shares of Parent Common Stock are present
and voting (the “Parent Required
Vote”) to authorize the issuance of Parent Common Stock pursuant to this
Agreement under Rule 312.02 of the NYSE (the “Parent
Proposal”) is
the only vote of the holders of capital stock of Parent necessary to
approve the transactions contemplated by this Agreement.
4.27 Stockholder
Agreements. Neither
Parent nor Merger Sub has entered into or received any voting or similar
agreement from any stockholder of the Company with respect to this Agreement or
the transactions contemplated hereby, except that, concurrently and
simultaneously with the execution and delivery of this Agreement, Parent has
entered into a stockholder agreement with each of Xxxxxxxx Resources, Inc.,
Xxxxx and Xxxxx Xxxxxx, and Xxxx Xxxxxxx (the “Stockholder
Agreements”). Forms of the Stockholder Agreements are set
forth in Section 4.27 of the Parent Disclosure Letter.
4.28 Brokers. Except
for Tudor, Pickering, Xxxx & Co. Securities, Inc., no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or any of its
Subsidiaries. Parent is solely responsible for the fees and expenses of Tudor,
Pickering, Xxxx & Co. Securities, Inc. as and to the extent set forth in
their respective engagement or fee letters.
4.29 Reorganization. Neither
Parent nor, to the knowledge of Parent, any of its Affiliates, has taken or
agreed to take any action that would prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
4.30 No
Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV, neither
Parent nor any other Person makes any other express or implied representation or
warranty on behalf of Parent or any of its affiliates in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE
V
COVENANTS
5.1 Interim
Operations of the Company. The
Company covenants and agrees as to itself and its Subsidiaries that during the
period from the date of this Agreement until the Effective Time or the date, if
any, on which this Agreement is earlier terminated pursuant to Section 7.1,
except as (w) set forth in Section 5.1 of the Company Disclosure Letter, (x)
expressly contemplated or permitted by this Agreement, including without
limitation Section 5.3 of this Agreement or (y) consented to in writing by
Parent after the date of this Agreement and prior to the Effective
Time:
49
(a) the
business of the Company and its Subsidiaries shall be conducted only in, and the
Company and its Subsidiaries shall not take any action except in, the ordinary
course of business consistent with past practice, and the Company shall use its
reasonable best efforts to preserve intact its business organization and
goodwill and the business organization and goodwill of its Subsidiaries and to
keep available the services of their current officers and key employees and
preserve and maintain existing relationships with customers, suppliers,
officers, employees and creditors and other persons with which the Company or
any Subsidiary has significant business relationships;
(b) the
Company shall not, nor shall it permit any of its Subsidiaries to, (i) enter
into any new line of business, or (ii) incur or commit to any capital
expenditures, or any obligations or liabilities in connection with any capital
expenditures, in excess of $2 million per obligation other than capital
expenditures and obligations or liabilities incurred or committed to prior to
the date hereof or incurred or committed to as may be reasonably required to
conduct emergency operations on any well, pipeline or other
facility;
(c) the
Company shall deliver promptly to Parent updates on the operations of the
Company at least monthly;
(d) the
Company shall not, nor shall it permit any of its Subsidiaries to, amend its
articles of incorporation or bylaws or similar organizational
documents;
(e) the
Company shall not, nor shall it permit any of its Subsidiaries to, declare, set
aside, make or pay any dividend or other distribution, whether payable in cash,
stock or any other property or right, with respect to its capital stock or other
equity interests, except for dividends by any Subsidiary to the Company or any
other wholly-owned Subsidiary of the Company;
(f) the
Company shall not, nor shall it permit any of its Subsidiaries to (i) adjust,
split, combine, subdivide or reclassify any capital stock or other equity
interests or issue, grant, sell, transfer, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class or of any other such securities or
agreements of the Company or any of its Subsidiaries, other than issuances (1)
of shares of Company Common Stock pursuant to the Company Options outstanding on
the date of this Agreement or (2) by a wholly owned Subsidiary of the Company of
such Subsidiary’s capital stock or other equity interests to the Company or any
other wholly owned Subsidiary of the Company, or (ii) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock or any other
securities or agreements of the type described in clause (i) of this
Section 5.1(e);
(g) the
Company shall not, nor shall it permit any of its Subsidiaries to,
(i) grant any increase in the compensation (including base salary and
target bonus) or benefits payable to any officer or director of the Company or
any of its Subsidiaries, (ii) except in connection with promotions on a
basis consistent with past practices, grant any increase in the compensation or
benefits payable to any employee who is not an officer of the Company or any of
its Subsidiaries or to any director of the Company or any of its Subsidiaries,
(iii) except as required to comply with applicable Law or any agreement in
existence on the date of this Agreement or as expressly provided in this
Agreement, adopt, enter into, amend or otherwise increase, or accelerate the
payment or vesting of the amounts, benefits or rights payable or accrued or to
become payable or accrued under any collective bargaining, bonus, profit
sharing, thrift, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement or (iv) enter into or amend any employment or consulting agreement
or, except in accordance with existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the Company
or any of its Subsidiaries (except for nonsubstantive changes made for the
purposes of complying with Section 409A of the Code) or otherwise approved in
advance in writing by Parent;
50
(h) the
Company shall not, nor shall it permit any of its Subsidiaries to, change its
methods of accounting in effect at December 31, 2007, except changes in
accordance with GAAP and applicable Law as concurred with by the Company’s
independent auditors;
(i) the
Company shall not, nor shall it permit any of its Subsidiaries to, acquire or
agree to acquire (including, without limitation, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or by
any other manner) any Person, any other business organization, division or
business of such Person or, other than in the ordinary course of business
consistent with past practice, any assets;
(j) the
Company shall not, nor shall it permit any of its Subsidiaries to, sell, lease,
farmout, exchange, transfer, assign or otherwise dispose of, or agree or commit
to sell, lease, farmout, exchange, transfer, assign, or otherwise dispose of,
any of the Company Assets, except for the sale of Hydrocarbons in the ordinary
course of business consistent with past practice;
(k) the
Company shall not, nor shall it permit any of its Subsidiaries to, mortgage,
pledge, hypothecate, grant any security interest in, or otherwise subject to any
other Lien other than Permitted Liens, any of the Company Assets;
(l) except
for Taxes, to which Section 5.1(n) shall apply, the Company shall not, nor shall
it permit any of its Subsidiaries to, (i) except as set forth in clause (ii)
below, pay, discharge or satisfy any Claims (including claims of stockholders),
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) except for the payment, discharge or satisfaction, in
the ordinary course of business and consistent with past practice, of
liabilities or obligations reflected or reserved against in the Company Balance
Sheet or liabilities or obligations in accordance with the terms of the Company
Material Contracts and any contract entered into in the ordinary course of
business and consistent with past practice to which the Company or any of its
Subsidiaries is a party as in effect on the date of this Agreement or entered
into after the date of this Agreement in the ordinary course of business
consistent with past practice and not in violation of this Agreement, in each
case to which the Company or any of its Subsidiaries is a party, or (ii)
compromise, settle, grant any waiver or release relating to any Litigation,
other than settlements or compromises of Litigation covered by insurance or
where the amount paid or to be paid does not exceed $1 million for any
individual Claim or series of related Claims, or $1 million in the
aggregate for all Claims;
51
(m) the
Company shall not, nor shall it permit any of its Subsidiaries to, engage in any
transaction with (except pursuant to agreements in effect at the time of this
Agreement insofar as such agreements are disclosed in Section 3.19 of the
Company Disclosure Letter), or enter into any agreement, arrangement, or
understanding, directly or indirectly, with any of the Company’s affiliates;
provided, that for the avoidance of doubt, for purposes of this clause (m), the
term “affiliates”
shall not include any employees of the Company or any of its Subsidiaries, other
than the directors and executive officers thereof and employees who share the
same household with such directors and executive officers;
(n) the
Company shall not, nor shall it permit any of its Subsidiaries to, make any
change to any material Tax method of accounting, make or change any material Tax
election, authorize or undertake any indemnities for Taxes, extend any period
for assessment of any Tax, file any request for ruling or determination, amend
any material Return (including by way of a claim for refund) or settle or
compromise any material Tax liability, except where such action would not have a
material effect on the Tax position of the Company and its Subsidiaries, taken
as a whole;
(o) the
Company shall not, nor shall it permit any of its Subsidiaries to, take any
action that would reasonably be expected to (i) result in any of the conditions
to the Merger set forth in Article VI not being satisfied, (ii) result in a
Material Adverse Effect on the Company or (iii) materially impair or delay
consummation of the Merger or the other transactions contemplated
hereby;
(p) the
Company shall not, nor shall it permit any of its Subsidiaries to, adopt or
enter into a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger) or any agreement
relating to an Acquisition Proposal, except for Acceptable Confidentiality
Agreements and except as permitted in Section 5.1(i);
(q) the
Company shall not, nor shall it permit any of its Subsidiaries to, (i) incur or
assume any indebtedness except indebtedness incurred, and letters of credit
issued, under the Company Credit Agreement in the ordinary course of business,
(ii) modify any material indebtedness or other liability to increase the
Company’s (or any of its Subsidiaries’) obligations with respect thereto, (iii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
(other than a wholly owned Subsidiary of the Company), (iv) make any loans,
advances or capital contributions to, or investments in, any other Person (other
than to wholly owned Subsidiaries of the Company, or by such Subsidiaries to the
Company), or (v) enter into any contract, commitment or transaction, except in
the ordinary course of business and consistent with past practice and in no
event exceeding $2 million in the aggregate, except as permitted under
Section 5.1(b);
(r) the
Company shall not, nor shall it permit any of its Subsidiaries to, enter into
any agreement, understanding or commitment that materially restrains, limits or
impedes the ability of the Company or any Subsidiary of the Company, or would
limit the ability of the Surviving Entity or any affiliate of the Surviving
Entity after the Effective Time, to compete in or conduct any line of business
or compete with any Person or in any geographic area or during any period of
time;
52
(s) the
Company shall not, nor shall it permit any of its Subsidiaries to, enter into
any material joint venture, partnership or other similar arrangement or
materially amend or modify in an adverse manner the terms of (or waive any
material rights under) any existing material joint venture, partnership or other
similar arrangement (other than any such action between its wholly owned
Subsidiaries);
(t) the
Company shall not, nor shall it permit any of its Subsidiaries to, terminate any
Company Material Contract to which it is a party or waive or assign any of its
rights or Claims under any Company Material Contract in a manner that is
materially adverse to the Company or, except in the ordinary course of business
consistent with past practice, modify or amend in any material respect any
Company Material Contract;
(u) the
Company shall not make, enter into or assume any Derivative Transaction or enter
into any agreement to sell Hydrocarbons other than in the ordinary course of
business at market pricing;
(v) modify
any existing agreement or enter into any new agreement with the Company’s
financial advisors or similar consultants, including without limitation, Xxxxxxx
Xxxxx & Associates, Inc. and Scotia Waterous (USA), Inc.;
(w) the
Company shall not, nor shall it permit any of its Subsidiaries to, publicly
announce an intention, or enter into an agreement, contract, commitment or
arrangement, to do any of the foregoing; and
(x) the
Company shall, and shall cause its Subsidiaries to, at their sole cost and
expense, maintain all insurance policies and replacement insurance policies
having substantially similar coverages as the insurance policies in Section 3.17
of the Company Disclosure Letter.
5.2 Interim
Operations of Parent. Parent
covenants and agrees that during the period from the date of this Agreement
until the Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 7.1, except as (w) set forth in Section 5.2 of
the Parent Disclosure Letter, (x) expressly contemplated or permitted by this
Agreement, including without limitation Section 5.3 of this Agreement or (y)
consented to in writing by the Company after the date of this Agreement and
prior to the Effective Time:
(a) the
business of Parent and its Subsidiaries shall be conducted only in, and Parent
and its Subsidiaries shall not take any action except in, the ordinary course of
business consistent with past practice; provided, however, that neither the
foregoing nor anything to the contrary in this Agreement (including without
limitation Section 5.2(h) of this Agreement) shall be deemed to prohibit Parent
or any of its Subsidiaries from engaging in any acquisition or divestiture
transaction that does not constitute an Acquisition Proposal for Parent and
would not reasonably be expected to have a Material Adverse Effect on Parent or
materially impair or delay the consummation of the transactions contemplated by
this Agreement;
53
(b) Parent
shall not, nor shall it permit any Subsidiary of Parent that is not wholly owned
by Parent to, declare, set aside, make or pay any dividend or other
distribution, whether payable in cash, stock or any other property or right,
with respect to its capital stock or other equity interests;
(c) Parent
shall not, nor shall it permit any of its Subsidiaries to (i) adjust, split,
combine, subdivide or reclassify any capital stock or other equity interests or
issue, grant, sell, transfer, pledge, dispose of or encumber any additional
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class or of any other such securities or agreements of
Parent or any of its Subsidiaries, other than issuances (1) of shares of Parent
Common Stock pursuant to the Parent Options outstanding on the date of this
Agreement or (2) by a wholly owned Subsidiary of Parent of such Subsidiary’s
capital stock or other equity interests to the Parent or any other wholly owned
Subsidiary of Parent, or (ii) redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock or any other securities or agreements of the
type described in clause (i) of this Section 5.2(c), other than purchases of
shares of Parent Common Stock pursuant to Parent’s previously announced stock
repurchase program;
(d) Parent
shall not change its methods of accounting in effect at December 31, 2007,
except changes in accordance with GAAP or applicable Law as concurred with by
Parent’s independent auditors;
(e) Parent
shall not amend its certificate of incorporation or bylaws in a manner that
adversely affects the terms of the Parent Common Stock;
(f) Parent
shall not, and shall use its reasonable best efforts to cause its affiliates and
associates not to acquire ownership or become a “beneficial owner” for the
purposes of Section 78.414 of the NRS of any shares of any voting securities of
the Company, other than shares so owned as of the date of this Agreement or any
shares beneficially owned as a result of Parent and Merger Sub entering into the
Stockholder Agreements or acquired pursuant to this Agreement;
(g) Parent
shall not, nor shall it permit any of its Subsidiaries to, take any action that
would reasonably be expected to (i) result in any of the conditions to the
Merger set forth in Article VI not being satisfied, (ii) result in a Material
Adverse Effect on Parent or (iii) materially impair or delay consummation of the
Merger or the other transactions contemplated hereby;
(h) Parent
shall not, nor shall it permit any of its Subsidiaries to, adopt or enter into a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of Parent or any of its
Subsidiaries (other than the Merger) or any agreement relating to an Acquisition
Proposal, except for Acceptable Confidentiality Agreements;
54
(i) Parent
shall not, nor shall it permit any of its Subsidiaries to, make any change to
any material Tax method of accounting, make or change any material Tax election,
authorize or undertake any indemnities for Taxes, extend any period for
assessment of any Tax, file any request for ruling or determination, amend any
material Return (including by way of a claim for refund) or settle or compromise
any material Tax liability, except where such action would not have a material
effect on the Tax position of Parent and its Subsidiaries taken as a whole;
and
(j) Parent
shall not, nor shall Parent permit any of its Subsidiaries to, publicly announce
an intention, or enter into an agreement, contract, commitment or arrangement,
to do any of the foregoing.
5.3 Acquisition
Proposals.
(a) The
Company agrees that, except as expressly contemplated by this Agreement, neither
it nor any of its Subsidiaries shall, and the Company shall, and shall cause its
Subsidiaries to, cause their respective officers, directors, investment bankers,
attorneys, accountants, financial advisors, agents and other representatives
(collectively, “Representatives”)
not to, (i) directly or indirectly initiate, solicit or knowingly encourage or
facilitate (including by way of furnishing non-public information) any inquiries
regarding or the making or submission of any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal with respect to the
Company, (ii) participate or engage in discussions or negotiations with, or
disclose any non-public information relating to the Company or any of its
Subsidiaries or afford access to the properties, books or records of the Company
or any of its Subsidiaries to any Person that has made an Acquisition Proposal
with respect to the Company or to any Person that the Company, any of its
Subsidiaries or any of their respective Representatives knows or has reason to
believe is contemplating making an Acquisition Proposal with respect to the
Company, or (iii) accept an Acquisition Proposal with respect to the Company or
enter into any agreement, including any letter of intent or agreement in
principle (other than an Acceptable Confidentiality Agreement in circumstances
contemplated in the penultimate sentence of this Section 5.3(a)), (x) providing
for, constituting or relating to an Acquisition Proposal with respect to the
Company or (y) that would require, or would have the effect of causing, the
Company to abandon, terminate or fail to consummate the Merger or the other
transactions contemplated by this Agreement. Any violation of the
foregoing restrictions by any of the Company’s Subsidiaries or by any
Representative of the Company or any of its Subsidiaries, whether or not such
Representative is so authorized and whether or not such Representative is
purporting to act on behalf of the Company or any of its Subsidiaries or
otherwise, shall be deemed to be a breach of this Agreement by the
Company. Notwithstanding anything to the contrary in this Agreement,
the Company and the Company Board may take any actions described in clause (ii)
of this Section 5.3(a) with respect to a Person at any time prior to obtaining
the Company Required Vote if, prior to such vote, (w) the Company receives a
bona fide written Acquisition Proposal with respect to the Company from such
Person (and such Acquisition Proposal was not initiated, solicited, knowingly
encouraged or facilitated by the Company or any of its Subsidiaries or any of
their respective Representatives after the date of this Agreement), (x) the
Company Board determines in good faith (after consultation with its financial
advisors and outside legal counsel) that such proposal constitutes or is
reasonably likely to lead to a Superior Proposal from the Person that made the
applicable Acquisition Proposal with respect to the Company, (y) the Company
Board determines in good faith (after consultation with its outside legal
counsel) that failure to take such action would be inconsistent with its
fiduciary duties to the Company and the stockholders of the Company under
applicable Law, and (z) the Company Board determines in good faith (after
consultation with its financial advisors and outside legal counsel) that the
Person making such Acquisition Proposal is reasonably expected to have the
ability to consummate such Acquisition Proposal, provided that the Company shall
not deliver any information to such Person without entering into an Acceptable
Confidentiality Agreement; no actions taken in accordance with this sentence
shall constitute a violation of clause (i) of this Section
5.3(a). Nothing contained in this Section 5.3 shall prohibit the
Company or the Company Board from taking and disclosing to the Company’s
stockholders a position with respect to an Acquisition Proposal with respect to
the Company pursuant to Rule 14d-9 and 14e-2(a) promulgated under the Exchange
Act or from making any similar disclosure, in either case to the extent required
by applicable Law.
55
(b) The
Company agrees that in addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.3, as promptly as practicable after receipt
thereof (but in no event more than 24 hours after the Company’s receipt
thereof), the Company shall advise Parent in writing of any request for
information from a Person that has made, or the Company reasonably believes may
be contemplating, an Acquisition Proposal with respect to the Company or any
Acquisition Proposal with respect to the Company received from any Person, or
any inquiry made or discussions or negotiations sought to be initiated or
continued with respect to any Acquisition Proposal with respect to the Company,
and the material terms and conditions of such request, Acquisition Proposal,
inquiry, discussions or negotiations, and the Company shall promptly provide to
Parent copies of any written materials received by the Company in connection
with any of the foregoing and any correspondence related thereto, and the
identity of the Person or group making any such request, Acquisition Proposal or
inquiry or with whom any discussions or negotiations are taking
place. The Company agrees that it shall provide to Parent any
non-public information concerning the Company or its Subsidiaries provided to
any other Person or group in connection with any Acquisition Proposal with
respect to the Company which was not previously provided to Parent as promptly
as practicable after it provides such information to such other
Person. The Company shall keep Parent fully and promptly informed of
the status of any Acquisition Proposals with respect to the Company (including
the identity of the parties and price involved and any material changes to any
terms and conditions thereof). The Company agrees not to release any
third party from or waive any provisions of, any confidentiality agreement
related to any potential Acquisition Proposal or any standstill agreement, in
each case in favor of the Company.
(c) Neither
(i) the Company Board nor any committee thereof shall directly or indirectly (A)
withdraw (or amend or modify in a manner adverse to Parent or Merger Sub), or
publicly propose to withdraw (or amend or modify in a manner adverse to Parent
or Merger Sub), the approval, recommendation or declaration of advisability by
the Company Board or any such committee thereof of this Agreement, the Merger or
the other transactions contemplated by this Agreement or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Acquisition
Proposal with respect to the Company (any action described in this clause (i)
being referred to as a “Company Adverse
Recommendation Change”) nor (ii) shall the Company or any of its
Subsidiaries execute or enter into, any agreement, including any letter of
intent, memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement, arrangement or understanding, (A)
constituting or related to, or that is intended to or could reasonably be
expected to lead to, any Acquisition Proposal (other than an Acceptable
Confidentiality Agreement permitted pursuant to Section 5.3(a)) (each an “Acquisition
Agreement”) with respect to the Company or (B) requiring it to abandon,
terminate or fail to consummate the Merger or any other transaction contemplated
by this Agreement. Notwithstanding anything to the contrary in this Agreement,
at any time prior to obtaining the Company Required Vote, and subject to the
Company’s compliance at all times with the provisions of this Section 5.3 and
Section 5.6, the Company Board may make a Company Adverse Recommendation Change
and (as a result of such Company Adverse Recommendation Change) cancel the
Company Special Meeting: (x) if, not in connection with an
Acquisition Proposal with respect to the Company, the Company Board determines
in good faith, after consultation with its outside legal counsel and financial
advisors, that the failure to make a Company Adverse Recommendation Change would
be inconsistent with its fiduciary duties to the Company and the stockholders of
the Company under applicable Law; or (y) if in connection with an Acquisition
Proposal with respect to the Company that the Company Board determines in good
faith, after consultation with its outside legal counsel and financial advisors,
constitutes a Superior Proposal and the Company Board determines in good faith,
after consultation with its outside legal counsel and financial advisors, that
the failure to make a Company Adverse Recommendation Change would be
inconsistent with its fiduciary duties to the Company and the stockholders of
the Company under applicable Law; provided, however, that the Company Board may
not make any Company Adverse Recommendation Change until five Business Days
after Parent’s receipt of written notice from the Company (a “Company Notice of
Change”) advising Parent that the Company Board has
determined:
56
(1) in the
case of clause (x) of this Section 5.3(c), that the Company Board intends to
make such Company Adverse Recommendation Change and containing the material
facts and information constituting the basis for such determination by the
Company Board that the failure to make a Company Adverse Recommendation Change
would be inconsistent with its fiduciary duties to the Company and the
stockholders of the Company (it being understood and agreed that any material
change to such facts and information shall require a new Company Notice of
Change and a new five Business Day period). During such five Business Day
period, the Company shall, at the request of Parent, negotiate in good faith
with Parent with respect to any changes or modifications to this Agreement that
would allow the Company Board not to make such Company Adverse Recommendation
Change consistent with its fiduciary duties; provided that a determination by
the Company Board in good faith, after consultation with its outside legal
counsel and financial advisors, that, after taking into account any such changes
or modifications, the failure to make a Company Adverse Recommendation Change
would be inconsistent with its fiduciary duties to the Company and the
stockholders of the Company shall not require a new Company Notice of Change or
a new five Business Day notice period; and
(2) in the
case of clause (y) of this Section 5.3(c), that such Acquisition Proposal with
respect to the Company constitutes a Superior Proposal, that the Company Board
intends to make such Company Adverse Recommendation Change and containing all
information required by Sections 5.3(a) and 5.3(b), together with copies of any
written offer or proposal in respect of such Superior Proposal unless previously
provided and a summary of the terms and conditions of such proposal (it being
understood and agreed that any material amendment to the financial terms or
other material terms of such Superior Proposal shall require a new Company
Notice of Change and a new five Business Day notice period). During such five
Business Day period, the Company shall, at the request of Parent, negotiate in
good faith with Parent with respect to any revised offer from Parent in respect
of the terms of the transactions contemplated by this Agreement. In making a
determination that such Acquisition Proposal with respect to the Company
constitutes a Superior Proposal and that the failure to make a Company Adverse
Recommendation Change would be inconsistent with its fiduciary duties to the
Company and the stockholders of the Company, the Company Board shall take into
account any changes or modifications to the terms of this Agreement proposed by
Parent (in response to a Company Notice of Change or otherwise); provided that a
determination by the Company Board in good faith, after consultation with its
outside legal counsel and financial advisors, that, after taking into account
any such changes or modifications, such Acquisition Proposal with respect to the
Company continues to constitute a Superior Proposal and that the failure to make
a Company Adverse Recommendation Change would be inconsistent with its fiduciary
duties to the Company and the stockholders of the Company shall not require a
new Company Notice of Change or a new five Business Day notice
period.
57
(d) Parent
agrees that, except as expressly contemplated by this Agreement, neither it nor
any of its Subsidiaries shall, and Parent shall, and shall cause its
Subsidiaries to, cause their respective Representatives not to, (i) directly or
indirectly initiate, solicit or knowingly encourage or facilitate (including by
way of furnishing non-public information) any inquiries regarding or the making
or submission of any proposal that constitutes, or may reasonably be expected to
lead to, an Acquisition Proposal with respect to Parent, (ii) participate or
engage in discussions or negotiations with, or disclose any non-public
information relating to Parent or any of its Subsidiaries or afford access to
the properties, books or records of Parent or any of its Subsidiaries to any
Person that has made an Acquisition Proposal with respect to Parent or to any
Person that Parent, any of its Subsidiaries or any of their respective
Representatives knows or has reason to believe is contemplating making an
Acquisition Proposal with respect to Parent, or (iii) accept an Acquisition
Proposal with respect to Parent or enter into any agreement, including any
letter of intent or agreement in principle (other than an Acceptable
Confidentiality Agreement in circumstances contemplated in the penultimate
sentence of this Section 5.3(d)), (x) providing for, constituting or relating to
an Acquisition Proposal with respect to Parent or (y) that would require, or
would have the effect of causing, Parent to abandon, terminate or fail to
consummate the Merger or the other transactions contemplated by this
Agreement. Any violation of the foregoing restrictions by any of
Parent’s Subsidiaries or by any Representative of Parent or any of its
Subsidiaries, whether or not such Representative is so authorized and whether or
not such Representative is purporting to act on behalf of Parent or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this Agreement by
Parent. Notwithstanding anything to the contrary in this Agreement,
Parent and Parent Board may take any actions described in clause (ii) of this
Section 5.3(d) with respect to a Person at any time prior to obtaining the
Parent Required Vote if, prior to such approval, (w) Parent receives a bona fide
written Acquisition Proposal with respect to Parent from such Person (and such
Acquisition Proposal was not initiated, solicited, knowingly encouraged or
facilitated by Parent or any of its Subsidiaries or any of their respective
Representatives after the date of this Agreement), (x) the Parent Board
determines in good faith (after consultation with its financial advisors and
outside legal counsel) that such proposal constitutes or is reasonably likely to
lead to a Superior Proposal from the Person that made the applicable Acquisition
Proposal with respect to Parent, (y) the Parent Board determines in good faith
(after consultation with its outside legal counsel) that failure to take such
action would be inconsistent with its fiduciary duties to Parent and the
stockholders of Parent under applicable Law, and (z) the Parent Board determines
in good faith (after consultation with its financial advisors and outside legal
counsel) that the Person making such Acquisition Proposal is reasonably expected
to have the ability to consummate such Acquisition Proposal, provided that
Parent shall not deliver any information to such Person without entering into an
Acceptable Confidentiality Agreement; no actions taken in accordance with this
sentence shall constitute a violation of clause (i) of this Section
5.3(d). Nothing contained in this Section 5.3 shall prohibit Parent
or the Parent Board from taking and disclosing to Parent’s stockholders a
position with respect to an Acquisition Proposal with respect to Parent pursuant
to Rule 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
similar disclosure, in either case to the extent required by applicable
Law.
58
(e) Parent
agrees that in addition to the obligations of Parent set forth in paragraph (d)
of this Section 5.3, as promptly as practicable after receipt thereof (but in no
event more than 24 hours after Parent’s receipt thereof), Parent shall advise
the Company in writing of any request for information from a Person that has
made, or Parent reasonably believes may be contemplating, an Acquisition
Proposal with respect to Parent or any Acquisition Proposal with respect to
Parent received from any Person, or any inquiry made or discussions or
negotiations sought to be initiated or continued with respect to any Acquisition
Proposal with respect to Parent, and the material terms and conditions of such
request, Acquisition Proposal, inquiry, discussions or negotiations, and Parent
shall promptly provide to the Company copies of any written materials received
by Parent in connection with any of the foregoing and any correspondence related
thereto, and the identity of the Person or group making any such request,
Acquisition Proposal or inquiry or with whom any discussions or negotiations are
taking place. Parent agrees that it shall provide to the Company any
non-public information concerning Parent or its Subsidiaries provided to any
other Person or group in connection with any Acquisition Proposal with respect
to Parent which was not previously provided to the Company as promptly as
practicable after it provides such information to such other
Person. Parent shall keep the Company fully and promptly informed of
the status of any Acquisition Proposals with respect to Parent (including the
identity of the parties and price involved and any material changes to any terms
and conditions thereof). Parent agrees not to release any third party
from, or waive any provisions of, any confidentiality agreement related to any
potential Acquisition Proposal or any standstill agreement, in each case in
favor of Parent.
(f) Neither
(i) the Parent Board nor any committee thereof shall directly or indirectly (A)
withdraw (or amend or modify in a manner adverse to the Company), or publicly
propose to withdraw (or amend or modify in a manner adverse to the Company), the
approval, recommendation or declaration of advisability by the Parent Board or
any such committee thereof of this Agreement, the Merger or the other
transactions contemplated by this Agreement or (B) recommend, adopt or approve,
or propose publicly to recommend, adopt or approve, any Acquisition Proposal
with respect to Parent (any action described in this clause (i) being referred
to as a “Parent Adverse
Recommendation Change”) nor (ii) shall Parent or any of its Subsidiaries
execute or enter into, any agreement, including any letter of intent, memorandum
of understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or
other similar agreement, arrangement or understanding, (A) constituting or
related to, or that is intended to or could reasonably be expected to lead to,
any Acquisition Proposal (other than an Acceptable Confidentiality Agreement
permitted pursuant to Section 5.3(d)) with respect to Parent or (B) requiring it
to abandon, terminate or fail to consummate the Merger or any other transaction
contemplated by this Agreement. Notwithstanding anything to the contrary in this
Agreement, at any time prior to obtaining the Parent Required Vote, and subject
to Parent’s compliance at all times with the provisions of this Section 5.3 and
Section 5.6, the Parent Board may make a Parent Adverse Recommendation Change
and (as a result of such Parent Adverse Recommendation Change) cancel the Parent
Special Meeting: (x) if, not in connection with an Acquisition
Proposal with respect to Parent, the Parent Board determines in good faith,
after consultation with its outside legal counsel and financial advisors, that
the failure to make a Parent Adverse Recommendation Change would be inconsistent
with its fiduciary duties to Parent and the stockholders of Parent under
applicable Law; or (y) if in connection with an Acquisition Proposal with
respect to Parent that the Parent Board determines in good faith, after
consultation with its outside legal counsel and financial advisors, constitutes
a Superior Proposal and the Parent Board determines in good faith, after
consultation with its outside legal counsel and financial advisors, that the
failure to make a Parent Adverse Recommendation Change would be inconsistent
with its fiduciary duties to Parent and the stockholders of Parent under
applicable Law; provided, however, that the Parent Board may not make any Parent
Adverse Recommendation Change until five Business Days after the Company’s
receipt of written notice from Parent (a “Parent Notice of
Change”) advising the Company that the Parent Board has
determined:
59
(1) in the
case of clause (x) of this Section 5.3(f), that the Parent Board intends to make
such Parent Adverse Recommendation Change and containing the material facts and
information constituting the basis for such determination by the Parent Board
that the failure to make a Parent Adverse Recommendation Change would be
inconsistent with its fiduciary duties to Parent and the stockholders of Parent
(it being understood and agreed that any material change to such facts and
information shall require a new Parent Notice of Change and a new five Business
Day period). During such five Business Day period, Parent shall, at the request
of the Company, negotiate in good faith with the Company with respect to any
changes or modifications to this Agreement that would allow the Parent Board not
to make such Parent Adverse Recommendation Change consistent with its fiduciary
duties; provided that a determination by the Parent Board in good faith, after
consultation with its outside legal counsel and financial advisors, that, after
taking into account any such changes or modifications, the failure to make a
Parent Adverse Recommendation Change would be inconsistent with its fiduciary
duties to Parent and the stockholders of Parent shall not require a new Parent
Notice of Change or a new five Business Day notice period; and
(2) in the
case of clause (y) of this Section 5.3(f), that such Acquisition Proposal with
respect to Parent constitutes a Superior Proposal, that the Parent Board intends
to make such Parent Adverse Recommendation Change and containing all information
required by Sections 5.3(d) and 5.3(e), together with copies of any written
offer or proposal in respect of such Superior Proposal unless previously
provided and a summary of the terms and conditions of such proposal (it being
understood and agreed that any material amendment to the financial terms or
other material terms of such Superior Proposal shall require a new Parent Notice
of Change and a new five Business Day notice period). During such five Business
Day period, Parent shall, at the request of the Company, negotiate in good faith
with the Company with respect to any revised offer from the Company in respect
of the terms of the transactions contemplated by this Agreement. In
making a determination that such Acquisition Proposal with respect to Parent
constitutes a Superior Proposal and that the failure to make a Parent Adverse
Recommendation Change would be inconsistent with its fiduciary duties to Parent
and the stockholders of Parent, the Parent Board shall take into account any
changes or modifications to the terms of this Agreement proposed by the Company
(in response to a Parent Notice of Change or otherwise); provided that a
determination by the Parent Board in good faith, after consultation with its
outside legal counsel and financial advisors, that, after taking into account
any such changes or modifications, such Acquisition Proposal with respect to
Parent continues to constitute a Superior Proposal and that the failure to make
a Parent Adverse Recommendation Change would be inconsistent with its fiduciary
duties to Parent and the stockholders of Parent shall not require a new Parent
Notice of Change or a new five Business Day notice period.
60
(g) For
purposes of this Agreement, “Acquisition
Proposal” shall mean, with respect to the Company or Parent, as the case
may be, any proposal, whether or not in writing (other than by Parent or any of
its Subsidiaries with respect to the Company, or by the Company or any of its
Subsidiaries, with respect to Parent), for the (i) direct or indirect
acquisition or purchase of a business or assets that generates or constitutes
25% or more of the net revenues, net income or the assets (based on the book or
fair market value thereof) of such party and its Subsidiaries, taken as a whole
(including capital stock of or ownership interest in any Subsidiary), (ii)
direct or indirect acquisition or purchase of 25% or more of any class of equity
securities or capital stock of such party or any of its Subsidiaries whose
business generates or constitutes 25% or more of the net revenues, net income or
assets (based on the book or fair market value thereof) of such party and its
Subsidiaries, taken as a whole, or (iii) merger, consolidation, restructuring,
transfer of assets or other business combination, sale of shares of capital
stock, tender offer, exchange offer, recapitalization, stock repurchase program
or other similar transaction that if consummated would result in any Person or
Persons beneficially owning 25% or more of any class of equity securities of
such party or any of its Subsidiaries whose business generates or constitutes
25% or more of the net revenues, net income or assets (based on the book or fair
market value thereof) of such party and its Subsidiaries, taken as a whole,
other than the transactions contemplated by this Agreement. The term
“Superior
Proposal” shall mean, with respect to the Company or Parent, as the case
may be, any bona fide written Acquisition Proposal with respect to such party
that was not initiated, solicited, knowingly facilitated or encouraged by such
party or any of its Subsidiaries or any of their respective Representatives in
violation of this Agreement, made by a third party to acquire, directly or
indirectly, pursuant to a tender offer, exchange offer, merger, share, exchange,
asset purchase or other business combination, (A) 50% or more of the assets of
such party and its Subsidiaries, taken as a whole or (B) 50% or more of the
equity securities of such party, in each case on terms which the majority of the
Board of Directors of such party determines (after consultation with its
financial advisors and outside legal counsel) in good faith (A) would result in
a transaction that, if consummated, is more favorable to the stockholders of
such party (in their capacity as stockholders), than the Merger, taking into
account all the terms and conditions of such proposal and this Agreement
(including any changes to the terms of this Agreement offered by the other party
in response to such Superior Proposal or otherwise pursuant to this Section
5.3), and (B) is reasonably capable of being completed on the terms proposed,
taking into account all financial, regulatory, legal and other aspects of such
proposal.
61
(h) For the
avoidance of doubt, any factually accurate and complete public statement by a
party hereto that does nothing more than disclose the receipt of an Acquisition
Proposal with respect to such party that was not initiated, solicited or
knowingly facilitated or encouraged after the date of this Agreement by such
party or any of its Subsidiaries or any of their respective Representatives, and
the terms thereof, shall not be deemed to be a recommendation of such
Acquisition Proposal or the withdrawal, amendment or modification of the
recommendation of the Board of Directors (or any committee thereof) in favor of
this Agreement and the transactions contemplated hereby.
(i) Immediately
after the execution and delivery of this Agreement, each of the Company and
Parent shall, and shall cause their respective Subsidiaries and their respective
Representatives to, cease and terminate any existing activities, discussions or
negotiations with any Person conducted heretofore with respect to any possible
Acquisition Proposal with respect to the Company and Parent,
respectively. Each of the Company and Parent agrees that it shall (i)
take the necessary steps to promptly inform its Representatives involved in the
transactions contemplated by this Agreement of the obligations undertaken in
this Section 5.3 and (ii) request each Person who has heretofore executed a
confidentiality agreement within the last 12 months in connection with such
Person’s consideration of any Acquisition Proposal with respect to it, or any
similar transaction to return or destroy (which destruction shall be certified
in writing by an executive officer of such Person) all confidential information
heretofore furnished to such Person by or on its behalf.
5.4 Access
to Information and Properties.
(a) Upon
reasonable notice and subject to applicable Laws relating to the exchange of
information, each of the Company and Parent shall, and shall cause each of its
Subsidiaries to, afford to the authorized representatives of the other party,
including officers, employees, accountants, counsel (including lenders’
counsel), financial advisors, lenders and other representatives of the other
party, reasonable access, during normal business hours during the period prior
to the Effective Time, to all of its properties, offices, contracts, books,
commitments, records, data and books and personnel and, during such period, it
shall, and shall cause each of its Subsidiaries to, make available to the other
parties all information concerning its business, properties and personnel as the
other parties may reasonably request. No party or any of its
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of its
customers, jeopardize any attorney-client privilege or contravene any Law or
binding agreement entered into prior to the date of this
Agreement. The Company and Parent will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
62
(b) Parent
and the Company will hold any information obtained or contemplated under Section
5.4(a) above in accordance with the provisions of the confidentiality agreement
between the Company and Parent, dated as September 12, 2007, and the
confidentiality agreement between the Company and Parent, dated as of April 16,
2008 (collectively, the “Confidentiality
Agreements”).
(c) No
investigation by Parent or the Company or their respective Representatives made
pursuant to this Section 5.4 shall affect the representations, warranties,
covenants or agreements of the other set forth in this Agreement.
5.5 Further
Action; Commercially Reasonable Efforts.
(a) Upon the
terms and subject to the conditions herein provided, each of the parties hereto
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws or otherwise to consummate and make effective
the transactions contemplated by this Agreement, including using commercially
reasonable efforts to satisfy the conditions precedent to the obligations of any
of the parties hereto, to obtain all necessary authorizations, consents and
approvals, and to effect all necessary registrations and
filings. Each of the parties hereto will furnish to the other parties
such necessary information and reasonable assistance as such other parties may
reasonably request in connection with the foregoing and, subject to applicable
Laws and any applicable privilege relating to the exchange of information, will
provide the other parties with copies of all filings made by such party with any
Governmental Entity (except for filings available publicly on the SEC’s XXXXX
system) or any other information supplied by such party to a Governmental Entity
in connection with this Agreement and the transactions contemplated hereby;
provided that neither party is obligated to share any document submitted to a
Governmental Entity that reflects the negotiations between the parties or the
valuation of some or all of any party’s business.
(b) Each of
Parent, Merger Sub and the Company shall use their respective commercially
reasonable efforts and shall cooperate with the other parties to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated hereby under the laws, rules, guidelines or regulations of any
Governmental Entity. Without limiting the foregoing, the Company and
Parent shall, as soon as practicable, file Notification and Report Forms under
the HSR Act with the Federal Trade Commission (the “FTC”) and
the Antitrust Division of the Department of Justice (the “Antitrust
Division”) and shall use commercially reasonable efforts to respond as
promptly as practicable to all inquiries received from the FTC, the Antitrust
Division for additional information or documentation.
(c) In case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and/or directors of the Surviving Entity shall take or cause to be taken all
such necessary action.
(d) Each of
the parties hereto shall use commercially reasonable efforts to prevent the
entry of, and to cause to be discharged or vacated, any order or injunction of a
Governmental Entity precluding, restraining, enjoining or prohibiting
consummation of the Merger.
63
(e) Notwithstanding
the foregoing provisions of this Section 5.5, neither Parent nor Merger Sub
shall be required to accept, as a condition to obtaining any required approval
or resolving any objection of any Governmental Entity, any requirement to divest
or hold separate or in trust (or the imposition of any other condition or
restriction with respect to) any assets or operations of Parent or Merger Sub or
any of their respective affiliates or any of the respective businesses of the
Company or any of its Subsidiaries, including the Company Assets.
(f) The
Company shall provide to Parent as soon as available but in any event on or
before September 30, 2008 an interim reserve report prepared by the Company
containing estimates of the oil and gas reserves that are owned by the Company
and its Subsidiaries as of June 30, 2008 (the “Interim Company
Reserve Report”). The factual, non-interpretive data
relating to the Oil and Gas Interests of the Company and its Subsidiaries on
which the Interim Company Reserve Report shall be based for purposes of
estimating the oil and gas reserves set forth therein shall be, to the knowledge
of the Company, accurate in all material respects at the time such data is
utilized by the Company for the Interim Reserve Report.
5.6 Proxy
Statement; S-4; Company Special Meeting; Parent Special Meeting.
(a) As
promptly as reasonably practicable after the execution of this Agreement, the
Company and Parent shall cooperate in preparing and each shall cause to be filed
with the SEC, in connection with the Merger, the Proxy Statement in preliminary
form and Parent shall promptly prepare and file with the SEC the S-4, in which
the Proxy Statement will be included as a prospectus, and the parties shall
file, if necessary, any other statement or schedule relating to this Agreement
and the transactions contemplated hereby. Each of the Company, Parent
and Merger Sub shall use their respective reasonable best efforts to furnish the
information required to be included by the SEC in the Proxy Statement, the S-4
and any such statement or schedule. Parent shall use its reasonable
best efforts to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing and the Company shall use its
reasonable best efforts to cooperate with Parent with respect thereto, and each
of the Company and Parent shall as promptly as practicable thereafter mail the
Proxy Statement to its stockholders.
(b) If at any
time prior to the Effective Time, any event or circumstance relating to the
Company, Parent, Merger Sub or any of their respective affiliates, or its or
their respective officers or directors, should be discovered by the Company,
Parent or Merger Sub that should be set forth in an amendment to the S-4 or a
supplement to the Proxy Statement, the Company, Parent or Merger Sub shall
promptly inform the other parties hereto thereof in writing. All
documents that the Company or Parent is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form in
all material respects with applicable requirements of the Securities Act and the
Exchange Act. Parent shall notify the Company promptly of the time
when the S-4 has become effective, of the issuance of any stop order or
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction and the
parties shall notify each other promptly, of the receipt of any comments from
the SEC or the staff of the SEC and of any request by the SEC or the staff of
the SEC for amendments or supplements to the Proxy Statement or the S-4 or for
additional information and shall supply each other with copies of (i) all
correspondence between it or any of its Representatives, on the one hand, and
the SEC or the staff of the SEC, on the other hand, with respect to the Proxy
Statement, the S-4 or the Merger and (ii) all orders of the SEC relating to the
S-4.
64
(c) The
Company, acting through the Company Board, shall, in accordance with its
articles of incorporation and bylaws and with applicable Law, promptly and duly
call, give notice of, convene and hold, as soon as reasonably practicable
following the date upon which the S-4 becomes effective for the purposes of
voting upon the approval of this Agreement and the approval of the consummation
of the transactions contemplated by this Agreement, including the Merger, a
special meeting of its stockholders for the sole purpose of considering and
taking action upon this Agreement (such meeting, including any postponement or
adjournment thereof, the “Company Special
Meeting”), and shall use its reasonable best efforts to hold the Company
Special Meeting no later than 45 days after such date. Except as
otherwise provided in Section 5.3(c), the Company, acting through the Company
Board, shall (i) recommend approval of this Agreement and include in the Proxy
Statement such recommendation and (ii) use its reasonable best efforts to
solicit and obtain such adoption. Notwithstanding the commencement,
public proposal, public disclosure or communication to the Company of any
Acquisition Proposal with respect to the Company or any of its Subsidiaries, or
any other fact or circumstance (except for the occurrence of a Company Adverse
Recommendation Change prior to obtaining the Company Required Vote or
termination of this Agreement pursuant to Section 7.1), this Agreement shall be
submitted to the stockholders of the Company at the Company Special Meeting for
the purpose of adopting this Agreement, with such disclosures as shall be
required by applicable Law.
(d) Parent,
acting through the Parent Board, shall, in accordance with its certificate of
incorporation and bylaws and with applicable Law, promptly and duly call, give
notice of, convene and hold, as soon as reasonably practicable following the
date upon which the S-4 becomes effective for the sole purpose of voting upon
the Parent Proposal, a special meeting of its stockholders (such meeting,
including any postponements or adjournments thereof, the “Parent Special
Meeting”), and shall use its reasonable best efforts to hold the Parent
Special Meeting no later than 45 days after such date. Except as
otherwise provided in Section 5.3(f), Parent, acting through the Parent Board,
shall (i) recommend approval of the Parent Proposal and include in the Proxy
Statement such recommendation and (ii) use its reasonable best efforts to
solicit and obtain such approval. Notwithstanding the commencement,
public proposal, public disclosure or communication to Parent of any Acquisition
Proposal with respect to Parent or any of its Subsidiaries, or any other fact or
circumstance (except for the occurrence of a Parent Adverse Recommendation
Change prior to obtaining the Parent Required Vote or termination of this
Agreement pursuant to Section 7.1), the Parent Proposal shall be submitted to
the stockholders of Parent at the Parent Special Meeting for the purpose of
approval of the Parent Proposal with such disclosures as shall be required by
applicable Law.
5.7 Notification
of Certain Matters. The
Company shall give prompt notice to Parent of any fact, event or circumstance as
to which the Company obtains knowledge that would be reasonably likely to result
in a failure of a condition set forth in Sections 6.3(a) or
6.3(b). Parent and Merger Sub shall give prompt notice to the Company
of any fact, event or circumstance as to which Parent or Merger Sub obtained
knowledge that would be reasonably likely to result in a failure of a condition
set forth in Sections 6.2(a) or 6.2(b).
65
5.8 Directors’
and Officers’ Insurance and Indemnification.
(a) Parent
and Merger Sub agree that all rights to exculpation, advancement of expenses and
indemnification for acts or omissions occurring prior to the Effective Time now
existing in favor of the current and former officers and directors of the
Company as provided in the articles of incorporation or bylaws of the Company or
in the agreements listed in Section 5.8(a) of the Company Disclosure Letter, in
each case in effect as of the date hereof, shall survive the Merger and shall
continue in full force and effect in accordance with their terms and without
amendment thereof.
(b) Parent
shall maintain the directors’ and officers’ (“D&O”)
insurance that serves to reimburse persons currently covered by the Company’s
D&O insurance in full force and effect for the continued benefit of such
persons for a continuous period of not less than three years from the Effective
Time on terms that are not materially different from the Company’s D&O
insurance currently in effect (provided that the Surviving Entity may substitute
therefor policies of at least the same coverage containing terms and conditions
that are not less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that the annual premium for such insurance
shall not exceed 150% of the per annum rate of
premium currently paid by the Company for such insurance on the date of this
Agreement. In the event that the annual premium for such insurance
exceeds such maximum amount, Parent shall purchase as much coverage per policy
year as reasonably obtainable for such maximum amount.
(c) The
indemnification provided for herein shall not be deemed exclusive of any other
rights to which an Indemnified Party is entitled, whether pursuant to law,
contract or otherwise.
(d) In the
event that the Surviving Entity or Parent, or any of their respective successors
or assigns, (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, proper provision shall be
made so that the successors and assigns of the Surviving Entity or Parent, as
the case may be, shall succeed to the obligations set forth in this Section
5.8.
5.9 Publicity. None
of the Company, Parent or Merger Sub, nor any of their respective affiliates,
shall issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other transactions
contemplated by this Agreement without the prior consultation of the other
party, except as may be required by Law or by any listing agreement with, or
regulation of, any securities exchange or regulatory authority if all reasonable
best efforts have been made to consult with the other party. In
addition, the Company shall to the extent reasonably practicable consult with
Parent regarding the form and content of any public disclosure of any material
developments or matters involving the Company, including earnings releases,
reasonably in advance of publication or release.
5.10 Stock
Exchange Listing. Parent
shall use its reasonable best efforts to cause the Parent Common Stock to be
issued in connection with the Merger to be listed on the NYSE, subject to
official notice of issuance as of the Effective Time.
66
5.11 Employee
Benefits.
(a) To the
extent service is relevant for purposes of eligibility, participation or vesting
(but not the accrual of benefits under any defined benefit pension plan) under
any employee benefit plan, program or arrangement established or maintained by
Parent in which Company Employees may participate, such Company Employees shall
be credited for service accrued as of the Effective Time with the Company and
its Subsidiaries to the extent such service was credited under a similar plan,
program or arrangement of the Company.
(b) To the
extent Company Employees and their dependents enroll in any health plan
sponsored by Parent, Parent shall waive any preexisting condition limitation
applicable to such Company Employees to the extent that the employee’s or
dependent’s condition would not have operated as a preexisting condition under
the group health plan maintained by the Company. In addition, Parent
shall cause such health plans (i) to waive all waiting periods otherwise
applicable to Company Employees and their dependents, other than waiting periods
that are in effect with respect to such individuals as of the Effective Time to
the extent not satisfied under the corresponding benefit plans of the Company,
and (ii) to provide each Company Employee and his or her dependents with
corresponding credit for any co-payments and deductibles paid by them under the
corresponding benefit plans of Company during the portion of the respective plan
year prior to the Effective Time.
(c) With
respect to any Company Employees who become employed by Parent after the
Effective Time, Parent will permit such Company Employees to schedule and take
vacation days that have accrued prior to the Effective Time with pay through
December 31, 2008, and Parent shall give service credit for purposes of
determining post Effective Time vacation, sick leave and any other paid time off
entitlements that Parent provides to its employees generally.
(d) If
requested by Parent, the Company shall terminate, immediately prior to the
Effective Time, such Company Benefit Plan(s) that are identified by Parent,
other than the Retention Bonus Plan and the Overriding Royalty Interest
Incentive Plan.
(e) The
Company and Parent shall cooperate with each other in all reasonable respects
relating to any actions to be taken pursuant to this Section
5.11. The Company shall allow Parent reasonable opportunities to meet
with employees of the Company from the date hereof to the Effective Time in
order to discuss and answer questions regarding employment and
benefits.
(f) Nothing
in this Agreement shall constitute an amendment to, or be construed as amending,
any benefit plan, program or agreement sponsored, maintained or contributed to
by Parent or any Subsidiary of Parent. No Company Employee nor any
other Person (other than the parties to this Agreement) is intended to be a
beneficiary of the provisions of this Section 5.11. Nothing in this
Agreement shall require or be construed or interpreted as requiring Parent or
any of its Subsidiaries to continue the employment of any Company Employee after
the Effective Time.
67
For
purposes of this Section 5.11, a “Company
Employee” shall mean an individual who is employed by the Company or any
of its Subsidiaries on the Effective Time and who thereafter remains or becomes
an employee of Parent or a Subsidiary of Parent (including the Surviving
Entity).
5.12 Certain
Tax Matters.
(a) This
Agreement is intended to constitute a “plan of reorganization” within the
meaning of Treasury Regulation Section 1.368-2(g).
(b) Parent
and the Company shall each use its reasonable best efforts to cause the Merger
to qualify as a “reorganization” within the meaning of Section 368(a) of the
Code and to obtain the Tax opinions set forth in Sections 6.2(d) and
6.3(d).
(c) Officers
of Parent, Merger Sub and the Company shall execute and deliver to Xxxxx Lord
Xxxxxxx & Xxxxxxx LLP, tax counsel for the Company, and Xxxxxx & Xxxxxx
L.L.P., tax counsel for Parent, certificates substantially in the form agreed to
by the parties and such firms at such time or times as may reasonably be
requested by such firms, including contemporaneously with the execution of this
Agreement, at the time the S-4 is declared effective by the SEC and the
Effective Time, in connection with such tax counsel’s respective delivery of
opinions pursuant to Sections 6.2(d) and 6.3(d) hereof. Each of
Parent, Merger Sub and the Company shall use its reasonable best efforts not to
take or cause to be taken any action that would cause to be untrue (or fail to
take or cause not to be taken any action which would cause to be untrue) any of
the certifications and representations included in the certificates described in
this Section 5.12(c).
(d) The
Company and Parent shall cooperate in the preparation, execution and filing of
all Returns, questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock transfer
and stamp taxes, and transfer, recording, registration and other fees and
similar Taxes which become payable in connection with the Merger that are
required or permitted to be filed on or before the Effective
Time. Each of Merger Sub and the Company shall pay, without deduction
from any amount payable to holders of Company Common Stock and without
reimbursement from the other party, any such Taxes or fees imposed on it by any
Governmental Entity, which becomes payable in connection with the
Merger.
(e) Neither
Parent nor Company will take (or fail to take) (and following the Merger, Parent
will cause the Surviving Entity not to take or fail to take) any action which
action (or failure to act) would reasonably be expected to cause the Merger to
fail to qualify as a reorganization within the meaning of Section 368(a) of the
Code. With respect to the Merger, Parent will (and following the
Merger will cause the Surviving Entity to) file all required information with
its Returns and maintain all records required for Tax purposes consistent with
the treatment of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
(f) Between
the date hereof and the Closing Date, the Company agrees to (i) prepare all
Returns, other than income tax Returns, for any periods ending prior to the
Closing Date and which are required to be filed within 15 days following such
date (taking extensions to file into account) using tax accounting methods and
principles consistent with those used for preceding tax periods, unless a change
is required by applicable Law or regulation, and (ii) prepare and submit to
Parent income tax Returns, including quarterly income tax estimates, where such
Returns would be required to be filed prior to 30 days following the Closing
Date (taking extensions to file into account). The Company shall make
such income tax Returns available to the Parent for review prior to filing with
the relevant Governmental Entity and shall not refuse any reasonable request by
the Parent with respect to such Returns. Such Returns shall be
prepared and filed, and all related taxes paid, on or prior to the Closing
Date.
68
5.13 Section
16 Matters. Prior
to the Closing Date, Parent and the Company, and their respective Boards of
Directors, shall use their reasonable best efforts to take all actions to cause
any dispositions of Company Common Stock (including derivative securities with
respect to Company Common Stock) or acquisitions of Parent Common Stock
(including derivative securities with respect to Parent Common Stock) resulting
from the transactions contemplated hereby by each individual who is subject to
the reporting requirements of Section 16(a) of the Exchange Act to be exempt
from Section 16(b) of the Exchange Act under Rule 16b-3 promulgated under the
Exchange Act in accordance with the terms and conditions set forth in that
certain No-Action Letter, dated January 12, 1999, issued by the SEC to Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP.
ARTICLE
VI
CONDITIONS
6.1 Conditions
to Each Party’s Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of each of the following conditions
(any or all of which may be waived by the parties hereto in writing, in whole or
in part, to the extent permitted by applicable Law):
(a) (i) This
Agreement shall have been adopted by the Required Company Vote in accordance
with the NRS and (ii) the Parent Proposal shall have been approved by the Parent
Required Vote;
(b) No
statute, rule, order, decree or regulation shall have been enacted or
promulgated, and no action shall have been taken, by any Governmental Entity of
competent jurisdiction which temporarily, preliminarily or permanently
restrains, precludes, enjoins or otherwise prohibits the consummation of the
Merger or makes consummation of the Merger illegal;
(c) The
waiting period (and any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(d) The S-4
shall have been declared effective, and no stop order suspending the
effectiveness of the S-4 shall be in effect and no proceedings for such purpose
shall be pending before or threatened by the SEC; and
69
(e) The
Parent Common Stock issuable to the stockholders of the Company pursuant to the
Merger shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
6.2 Conditions
to the Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
satisfaction on or prior to the Closing Date of each of the following conditions
(any or all of which may be waived by the Company in writing, in whole or in
part, to the extent permitted by applicable Law):
(a) The
representations and warranties of each of Parent and Merger Sub set forth in
this Agreement shall be true and correct (without giving effect to any
limitation as to “materiality” or “Material Adverse Effect” set forth therein)
at and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to “materiality” or
“Material Adverse Effect” set forth therein) individually or in the aggregate
has not had, and would not be reasonably likely to have or result in, a Material
Adverse Effect on Parent. The Company shall have received a
certificate signed on behalf of Parent by each of two senior executive officers
of Parent to the foregoing effect;
(b) Each of
Parent and Merger Sub shall have performed or complied with in all material
respects each of its obligations under this Agreement required to be performed
or complied with by it on or prior to the Closing Date pursuant to the terms of
this Agreement, and the Company shall have received a certificate signed on
behalf of Parent by each of two senior executive officers of Parent to the
foregoing effect;
(c) There
shall not be pending any suit, action or proceeding, in each case, by any
Governmental Entity seeking to (i) prohibit or limit in any material respect the
ownership or operation by the Company, Parent or Merger Sub or any of their
respective affiliates of a substantial portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or to require any such Person to
dispose of or hold separate any material portion of the business or assets of
the Company and its Subsidiaries, taken as a whole, as a result of the Merger or
any of the other transactions contemplated by this Agreement, or (ii) restrain,
preclude, enjoin or prohibit the Merger or any of the other transactions
contemplated by this Agreement; and
(d) The
Company shall have received the opinion of Xxxxx Lord Bissell & Liddell LLP,
counsel to the Company, in form and substance reasonably satisfactory to the
Company, dated the Closing Date, rendered on the basis of facts, representations
and assumptions set forth in such opinion and the certificates obtained from
officers of Parent, Merger Sub and the Company, all of which are consistent with
the state of facts existing as of the Effective Time, to the effect that (i) the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code and (ii) the Company and Parent will each be a “party to the
reorganization” within the meaning of Section 368 of the Code. In
rendering the opinion described in this Section 6.2(d), such counsel shall have
received and may rely upon the certificates and representations referred to in
Section 5.12(c) hereof.
70
6.3 Conditions
to Obligations of Parent and Merger Sub to Effect the Merger. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (any or all of which may be waived by Parent and Merger Sub in
writing, in whole or in part, to the extent permitted by applicable
Law):
(a) The
representations and warranties of the Company set forth in this Agreement shall
be true and correct (without giving effect to any limitation as to “materiality”
or “Material Adverse Effect” set forth therein) at and as of the Closing Date,
as if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to “materiality” or “Material Adverse Effect” set forth
therein) individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on the
Company. Parent shall have received a certificate signed on behalf of
the Company by each of two senior executive officers of the Company to the
foregoing effect;
(b) The
Company shall have performed or complied with in all material respects each of
its obligations under this Agreement required to be performed or complied with
by it at or prior to the Closing Date pursuant to the terms of this Agreement,
and Parent shall have received a certificate signed on behalf of the Company by
each of two senior executive officers of the Company to the foregoing
effect;
(c) There
shall not be pending any suit, action or proceeding, in each case, by any
Governmental Entity seeking to (i) prohibit or limit in any material respect the
ownership or operation by the Company, Parent or Merger Sub or any of their
respective affiliates of a substantial portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or to require any such Person to
dispose of or hold separate any material portion of the business or assets of
the Company and its Subsidiaries, taken as a whole, as a result of the Merger or
any of the other transactions contemplated by this Agreement, or (ii) restrain,
preclude, enjoin or prohibit the Merger or any of the other transactions
contemplated by this Agreement; and
(d) Parent
shall have received the opinion of Xxxxxx & Xxxxxx L.L.P., counsel to
Parent, in form and substance reasonably satisfactory to Parent, dated the
Closing Date, rendered on the basis of facts, representations and assumptions
set forth in such opinion and the certificates obtained from officers of Parent,
Merger Sub and the Company, all of which are consistent with the state of facts
existing as of the Effective Time, to the effect that (i) the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code and
(ii) the Company and Parent will each be a “party to the reorganization”
within the meaning of Section 368 of the Code. In rendering the
opinion described in this Section 6.3(d), Xxxxxx & Xxxxxx L.L.P. shall have
received and may rely upon the certificates and representations referred to in
Section 5.12(c) hereof.
71
ARTICLE
VII
TERMINATION
7.1 Termination. Notwithstanding
anything herein to the contrary, this Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
adoption of this Agreement by the stockholders of the Company or any approval of
the matters constituting the Parent Proposal by the stockholders of
Parent):
(a) by the
mutual consent of Parent and the Company in a written instrument;
(b) by either
the Company or Parent upon written notice to the other, if:
(i) the
Merger shall not have been consummated on or before December 31, 2008 (the
“Termination
Date”); provided, however that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to a party whose
failure to fulfill any material obligation under this Agreement has been the
cause of, or resulted in, the failure of the Merger to have been consummated on
or before such date;
(ii) any
Governmental Entity shall have issued a statute, rule, order, decree or
regulation or taken any other action, in each case permanently restraining,
enjoining or otherwise prohibiting consummation of the Merger or making
consummation of the Merger illegal and such statute, rule, order, decree,
regulation or other action shall have become final and nonappealable; provided,
however, that the right to terminate pursuant to this Section 7.1(b)(ii) shall
not be available to any party whose failure to fulfill any material obligation
under this Agreement has been the cause of or resulted in such action or who is
then in material breach of Section 5.5 with respect to such action;
(iii)
prior to
obtaining the Company Required Vote, a Company Adverse Recommendation Change
shall have occurred;
(iv)
prior to
obtaining the Parent Required Vote, a Parent Adverse Recommendation Change shall
have occurred;
(v) the
stockholders of the Company fail to adopt this Agreement because of the failure
to obtain the Company Required Vote at the Company Special Meeting;
or
(vi) the
Parent Proposal shall not have been approved because of the failure to obtain
the Parent Required Vote at the Parent Special Meeting;
(c) by the
Company, upon written notice to Parent, if (i) Parent shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform would give rise to the failure of a condition set
forth in Sections 6.2(a) or 6.2(b) or (ii) the respective representations and
warranties of Parent contained in this Agreement are or shall become untrue,
which untruth would give rise to the failure of the conditions set forth in
Section 6.2(a); provided, however, that the right of the Company to terminate
this Agreement pursuant to this Section 7.1(c) shall not be available unless
such breach, failure to perform or untruth is incapable of being cured by Parent
prior to the Termination Date or is not cured by Parent within 30 days following
receipt of written notice from the Company of such breach, failure to perform or
untruth;
72
(d) by
Parent, upon written notice to the Company, if (i) the Company shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform would give rise to the failure of
a condition set forth in Sections 6.3(a) or 6.3(b) or (ii) the respective
representations and warranties of the Company contained in this Agreement are or
shall become untrue, which untruth would give rise to the failure of the
conditions set forth in Section 6.3(a); provided, however, that the right of
Parent to terminate this Agreement pursuant to this Section 7.1(d) shall not be
available unless such breach, failure to perform or untruth is incapable of
being cured by the Company prior to the Termination Date or is not cured by the
Company within 30 days following receipt of written notice from Parent of such
breach, failure to perform or untruth;
(e) by
Parent, upon written notice to the Company, if the Company shall have breached
or failed to perform in any material respect any of its covenants or other
agreements contained in Section 5.3; and
(f) by the
Company, upon written notice to the Parent, if Parent shall have breached or
failed to perform in any material respect any of its covenants or other
agreements contained in Section 5.3.
7.2 Effect
of Termination. In
the event of the termination of this Agreement as provided in Section 7.1,
written notice thereof shall forthwith be given by the terminating party to the
other parties specifying the provision of this Agreement pursuant to which such
termination is made, and except with respect to this Section 7.2 and Article
VIII, this Agreement shall forthwith become null and void after the expiration
of any applicable period following such notice. In the event of such
termination, there shall be no liability on the part of Parent, Merger Sub or
the Company, except as set forth in Section 8.1 of this Agreement and except
with respect to the requirement to comply with the Confidentiality Agreements;
provided that this Section 7.2 shall not relieve any party from any liability
with respect to any willful breach of any representation, warranty, covenant or
other obligation under this Agreement.
ARTICLE
VII
MISCELLANEOUS
8.1 Fees
and Expenses.
(a) Whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs or expenses, except as provided in this Article
VIII.
73
(b) (i) If
this Agreement is terminated by either party pursuant to Section 7.1(b)(iii),
then the Company shall pay to Parent a termination fee in the amount of $55
million (the “Company
Termination Fee”), and (ii) if this Agreement is terminated by either
party pursuant to Section 7.1(b)(iv), then Parent shall pay to the Company a
termination fee in the amount of $55 million (the “Parent
Termination Fee”).
(c) In the
event that (i) (x) after the date hereof, an Acquisition Proposal with respect
to the Company has been publicly proposed by any Person (other than Parent or
Merger Sub, or any of their respective affiliates) or any Person publicly has
announced its intention (whether or not conditional) to make an Acquisition
Proposal with respect to the Company or an Acquisition Proposal with respect to
the Company or such intention has otherwise become known to the Company’s
stockholders generally and (y) thereafter this Agreement is terminated by either
the Company or Parent pursuant to Section 7.1(b)(i) or Section 7.1(b)(v), and
(ii) within 365 days after the termination of this Agreement, the Company or any
of its Subsidiaries enters into any definitive agreement providing for an
Acquisition Proposal with respect to the Company, or an Acquisition Proposal
with respect to the Company is consummated, the Company shall pay Parent the
Company Termination Fee upon the first to occur of the events described in this
clause (ii).
(d) In the
event that (i) (x) after the date hereof, an Acquisition Proposal with respect
to Parent has been publicly proposed by any Person (other than the Company or
any of its affiliates) or any Person publicly has announced its intention
(whether or not conditional) to make an Acquisition Proposal with respect to
Parent or an Acquisition Proposal with respect to Parent or such intention has
otherwise become known to Parent’s stockholders generally and (y) thereafter
this Agreement is terminated by either the Company or Parent pursuant to Section
7.1(b)(i) or Section 7.1(b)(vi), and (ii) within 365 days after the termination
of this Agreement, Parent or any of its Subsidiaries enters into any definitive
agreement providing for an Acquisition Proposal with respect to Parent, or an
Acquisition Proposal with respect to Parent is consummated, Parent shall pay the
Company the Parent Termination Fee upon the first to occur of the events
described in this clause (ii).
(e) Any
payment required pursuant to Section 8.1(b) shall be made within one Business
Day after termination of this Agreement by wire transfer of immediately
available funds to an account designated by the party entitled to such
payment. Any payment of the Company Termination Fee pursuant to
Section 8.1(c) or the Parent Termination Fee pursuant to Section 8.1(d) shall be
made prior to or concurrently with the first to occur of the execution of a
definitive agreement providing for an Acquisition Proposal or the consummation
of an Acquisition Proposal. Each party acknowledges that the agreements
contained in this Section 8.1 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the other
party would not enter into this Agreement; accordingly, if either party fails
promptly to pay or cause to be paid the amounts due from it pursuant to this
Section 8.1, and, in order to obtain such payment, the other party commences a
suit that results in a judgment for the amounts set forth in this Section 8.1,
the defaulting party shall pay to the other party its reasonable costs and
expenses (including attorneys’ fees and expenses) in connection with such suit
and any appeal relating thereto, together with interest on the amounts set forth
in this Section 8.1 from the date payment was due at 9% per annum.
74
(f) For
purposes of Sections 8.1(c) and 8.1(d), the term “Acquisition Proposal” shall
have the meaning assigned to such term in Section 5.3(g), except that all
references to “25%” therein shall be deemed to be references to
“40%.”
(g) This
Section 8.1 shall survive any termination of this Agreement. In no
event shall either party be entitled to receive under this Section 8.1 more than
an aggregate amount equal to the Company Termination Fee or Parent Termination
Fee, as applicable.
(h) Notwithstanding
anything to the contrary contained herein, (i) receipt by Parent of a Company
Termination Fee paid pursuant to Section 8.1(b)(i) or Section 8.1(c) shall
constitute full and complete settlement of any and all liabilities and
obligations of the Company under and with respect to this Agreement including
without limitation in respect of any damages that would be, but for this Section
8.1(h), otherwise payable by the Company, and (ii) receipt by the Company of a
Parent Termination Fee pursuant to Section 8.1(b)(ii) or Section 8.1(d) shall
constitute full and complete settlement of any and all
liabilities and obligations of Parent under this Agreement including
without limitation in respect of any damages that would be, but for this Section
8.1(h), otherwise payable by Parent.
8.2 Amendment;
Waiver.
(a) This
Agreement may be amended by the parties to this Agreement, by action taken or
authorized by their respective boards of directors, at any time before or after
approval by the stockholders of the Company of the matters presented in
connection with the Merger, but after any such approval no amendment shall be
made without the approval of the stockholders of the Company if such amendment
alters or changes (i) the Merger Consideration in whole or in part, including
the manner or basis of exchanging or converting the Company Common Stock into
the Merger Consideration, (ii) any term of the certificate of incorporation or
bylaws of Parent or (iii) any terms or conditions of this Agreement if such
alteration or change would adversely affect the holders of any shares of capital
stock of the Company. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
(b) At any
time prior to the Effective Time, the parties to this Agreement may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive in whole or in part any inaccuracies in the
representations and warranties of the other parties contained herein or in any
document, certificate or writing delivered pursuant hereto by the other party or
(iii) waive in whole or in part compliance with any of the agreements or
conditions of the other parties hereto contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by any of the parties hereto of a breach of
or a default under any of the provisions of this Agreement, nor the failure by
any of the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature, or as
a waiver of any of such provisions, rights or privileges
hereunder. The rights and remedies herein provided are cumulative and
none is exclusive of any other, or of any rights or remedies that any party may
otherwise have at Law or in equity.
75
8.3 Survival. The
representations and warranties contained in this Agreement or in any
certificates or other documents delivered prior to or as of the Effective Time
shall survive until (but not beyond) the Effective Time. The
covenants and agreements of the parties hereto (including the Surviving Entity
after the Merger) shall survive the Effective Time without limitation (except
for those which, by their terms, contemplate a shorter survival
period).
8.4 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given upon (a) transmitter’s confirmation of a receipt of a facsimile
transmission, (b) confirmed delivery by a standard overnight carrier or when
delivered by hand, (c) the expiration of five Business Days after the day when
mailed in the United States by certified or registered mail, postage prepaid, or
(d) delivery in Person, addressed at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to the
Company, to:
Bois
d’Arc Energy, Inc.
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxx
Xxxxxxx
with a
copy to (which copy shall not constitute notice):
Xxxxx
Lord Xxxxxxx & Xxxxxxx LLP
0000 Xxxx
Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxx
X. Xxxxxxxx
Xxxxxxx Xxxxxxxxxx
and
(b) if to
Parent or Merger Sub, to:
Stone
Energy Corporation
000 Xxxx
Xxxxxxx Xxxxxx Xx.
Xxxxxxxxx,
XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: General
Counsel
76
with a
copy to (which copy shall not constitute notice):
Xxxxxx
& Xxxxxx L. L. P.
000 Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxx
X. Xxxxx
Xxxxxxx X. Xxxxxx
8.5 Rules
of Construction and Interpretation; Definitions.
(a) When a
reference is made in this Agreement to Articles or Sections, such reference
shall be to an Article or a Section of this Agreement unless otherwise
indicated. Whenever the words “include,” “includes” or “including” are used in
this Agreement they shall be deemed to be followed by the words “without
limitation.” The phrase “made available” when used in this Agreement
shall mean that the information referred to has been made available to the party
to whom such information is to be made available. The word
“affiliates” when used in this Agreement shall have the meaning ascribed to it
in Rule 12b-2 under the Exchange Act. The phrase “beneficial
ownership” and words of similar import when used in this Agreement shall have
the meaning ascribed to it in Rule 13d-3 under the Exchange Act. The
phrase “the date of this Agreement,” “date hereof” and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to
April 30, 2008. All terms defined in this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant thereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any statute defined or
referred to herein means such statute as from time to time amended, modified or
supplemented, including by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted successors
and assigns.
(b) Each of
the parties hereto acknowledges that it has been represented by counsel of its
choice throughout all negotiations that have preceded the execution of this
Agreement and that it has executed the same with the advice of said
counsel. Each party and its counsel cooperated in the drafting and
preparation of this Agreement and the documents referred to herein, and any and
all drafts relating thereto exchanged between the parties shall be deemed the
work product of the parties and may not be construed against any party by reason
of its preparation. Accordingly, any rule of Law or any legal
decision that would require interpretation of any ambiguities in this Agreement
against any party that drafted it is of no application and is hereby expressly
waived.
(c) The
inclusion of any information in the Company Disclosure Letter or the Parent
Disclosure Letter shall not be deemed an admission or acknowledgment, in and of
itself and solely by virtue of the inclusion of such information in the Company
Disclosure Letter or Parent Disclosure Letter, as applicable, that such
information is required to be listed in the Company Disclosure Letter or Parent
Disclosure Letter, as applicable, or that such items are material to the Company
or Parent, as the case may be. The headings, if any, of the
individual sections of each of the Parent Disclosure Letter and Company
Disclosure Letter are inserted for convenience only and shall not be deemed to
constitute a part thereof or a part of this Agreement.
77
(d) The
following terms have the following definitions:
(i) “Acceptable
Confidentiality Agreement” means a confidentiality agreement on terms no
less favorable to the Company or Parent, as the case may be, than the
Confidentiality Agreements.
(ii) “Business
Day” means any day other than Saturday and Sunday and any day on which
banks are not required or authorized to close in the State of Delaware or New
York.
(iii) “Claim”
shall mean any claim, action, suit, proceeding or investigation.
(iv) “Cleanup”
means all actions required to: (i) clean up, remove, treat or remediate
Hazardous Materials in the indoor or outdoor environment; (ii) prevent the
Release of Hazardous Materials so that they do not migrate, endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; or (iv) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation of Hazardous Materials in the indoor
or outdoor environment.
(v) “Company Leased
Real Property” means all interests in real property pursuant to the
Company Leases.
(vi) “Company
Leases” means the real property leases, subleases, licenses and use or
occupancy agreements pursuant to which the Company or any of its Subsidiaries is
the lessee, sublessee, licensee, user, operator or occupant of real property, or
interests therein.
(vii) “Company Owned
Real Property” means the real property, and interests in real property,
owned by the Company and its Subsidiaries.
(viii)
“Company Real
Property” means the Company Owned Real Property and the Company Leased
Real Property.
(ix) “Derivative
Transaction” means any swap transaction, option, warrant, forward
purchase or sale transaction, futures transaction, cap transaction, floor
transaction or collar transaction relating to one or more currencies,
commodities, bonds, equity securities, loans, interest rates, catastrophe
events, weather-related events, credit-related events or conditions or any
indexes, or any other similar transaction (including any option with respect to
any of these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar instruments or
any debt or equity instruments evidencing or embedding any such types of
transactions, and any related credit support, collateral or other similar
arrangements related to such transactions.
78
(x) “Employment and
Withholding Taxes” means any federal, state, provincial, local, foreign
or other employment, unemployment, insurance, social security, disability,
workers’ compensation, payroll, health care or other similar Tax and all Taxes
required to be withheld by or on behalf of each of the Company and any of its
Subsidiaries, or Parent and any of its Subsidiaries as the case may be in
connection with amounts paid or owing to any employee, independent contractor,
creditor or other party, in each case, on or in respect of the business or
assets thereof.
(xi) “Environmental
Claim” means any claim, demand, suit, action, cause of action,
proceeding, investigation or written notice to any Person alleging any potential
liability (including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, personal injuries, or
penalties) arising out of, based on, or resulting from (i) the presence, or
Release into the environment, of any Hazardous Material at any location for
which such Person or its Subsidiaries may bear responsibility or liability, or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any applicable Environmental Law.
(xii) “Environmental
Laws” means all Laws, including applicable common law, relating to
pollution, Cleanup, restoration or protection of the environment (including
ambient air, surface water, groundwater, land surface or subsurface strata and
natural resources) or to the protection of flora or fauna or their habitat or to
human health, including Laws relating to emissions, discharges, Releases or
threatened Releases of Hazardous Materials, or otherwise relating to the
treatment, storage, disposal, transport or handling of Hazardous Materials,
including the Federal Clean Water Act, the Safe Drinking Water Act, the Clean
Air Act, the Outer Continental Shelf Lands Act, the Comprehensive Environmental
Response, Compensation, and Liability Act, the Resource Conservation and
Recovery Act and the Emergency Planning and Community Right to Know Act, each as
amended and currently in effect.
(xiii) “Hazardous
Material” means (i) chemicals, pollutants, contaminants, wastes, toxic
and hazardous substances, and oil and petroleum products, (ii) any substance
that is or contains asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum or petroleum-derived substances or wastes, radon gas or
related materials, lead or lead-based paint or materials, (iii) any substance
that requires investigation, removal or remediation under any Environmental Law,
or is defined, listed, regulated or identified as hazardous, toxic or otherwise
regulated under any Environmental Laws, (iv) any substance that is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous to human health or the environment or (v)
Naturally Occurring Radioactive Material (NORM).
79
(xiv)
“knowledge”
of any Person means the knowledge after due inquiry of all
officers.
(xv)
“Liens”
means any mortgage, pledge, deed of trust, hypothecation, right of others,
claim, security interest, encumbrance, burden, title defect, title retention
agreement, lease, sublease, license, occupancy agreement, easement, covenant,
condition, encroachment, voting trust agreement, interest, option, right of
first offer, negotiation or refusal, proxy, lien, charge or other restrictions
or limitations of any nature whatsoever.
(xvi)
“Litigation”
means any action, claim, suit, proceeding, citation, summons, subpoena, inquiry
or investigation of any nature, civil, criminal or regulatory, in law or in
equity, by or before any Governmental Entity or arbitrator (including worker’s
compensation claims).
(xvii)
“Material Adverse
Effect” means, with respect to Parent or the Company, as the case may be,
the existence of a materially adverse change to the financial condition,
business, assets, properties or results of operations of such party and its
Subsidiaries, taken as a whole, no matter how caused or how arising, except for
any materially adverse change that is caused by or arises from one or more of
(A) changes to economic, political or business conditions affecting the domestic
energy markets generally, except, in each case, to the extent any such changes
or effects materially disproportionately affect such party, (B) the occurrence
of natural disasters of any type, including, without limitation, earthquakes and
tsunamis but not including tropical cyclones (including hurricanes, tropical
storms and tropical depressions), (C) changes in market prices, both
domestically and globally, for any carbon-based energy product and any
write-down for accounting purposes of oil and gas reserves as a result of a
“ceiling test” or property impairment to the extent but only to the extent such
write-down or property impairment is directly attributable to changes in market
prices of oil or gas (but not any change resulting from a default under any
agreement or arrangement as a result of such write-down or property impairment),
(D) the announcement or pendency of this Agreement and the transactions
contemplated hereby, compliance with the terms hereof or the disclosure of the
fact that Parent is the prospective owner of the Company, including any
Litigation arising from any of the foregoing, (E) the existence or occurrence of
war, acts of war, terrorism or similar hostilities, (F) changes in Laws of
general applicability or interpretations thereof by courts or Governmental
Entities, or (G) changes in the market price of either Parent Common Stock or
Company Common Stock (but not any change underlying such changes in price to the
extent such change would otherwise constitute a Parent Material Adverse Effect
or Company Material Adverse Effect, as the case may be).
80
(xviii) “Parent Leased
Real Property” means all interests in real property pursuant to the
Parent Leases.
(xix)
“Parent
Leases” means the real property leases, subleases, licenses and use or
occupancy agreements pursuant to which Parent or any of its Subsidiaries is the
lessee, sublessee, licensee, user, operator or occupant of real property, or
interests therein.
(xx)
“Parent Owned Real
Property” means the real property, and interests in real property, owned
by Parent and its Subsidiaries.
(xxi) “Parent Real
Property” means the Parent Owned Real Property and the Parent Leased Real
Property.
(xxii)
“Permitted
Liens” means (i) Liens reserved against or identified in the Company
Balance Sheet or the Parent Balance Sheet, as the case may be, to the extent so
reserved or reflected or described in the notes thereto, (ii) Liens for Taxes
not yet due and payable, (iii) Liens existing pursuant to credit facilities of
the Company and its Subsidiaries or the Parent and its Subsidiaries, as the case
may be and in each case in effect as of the date of this Agreement and (iv)
those Liens that, individually or in the aggregate with all other Permitted
Liens, do not, and are not reasonably likely to, materially interfere with the
use or value of the properties or assets of the Company and its Subsidiaries or
Parent and its Subsidiaries, as the case may be and in each case taken as a
whole as currently used, or otherwise individually or in the aggregate have or
result in a Material Adverse Effect on the Company or Parent, as the case may
be.
(xxiii)
“Person”
means any natural person, firm, individual, partnership, joint venture, business
trust, trust, association, corporation, company, limited liability company,
unincorporated entity or Governmental Entity.
(xxiv) “Release”
means any releasing, disposing, discharging, injecting, spilling, leaking,
pumping, dumping, emitting, escaping, emptying, dispersal, leaching, migration,
transporting or placing of Hazardous Materials, including into or upon, any
land, soil, surface water, ground water or air, or otherwise entering into the
environment.
(xxv)
“Return”
means any return, estimated tax return, report, declaration, form, claim for
refund or information statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
(xxvi)
“Subsidiary”
means with respect to any Person, any other Person of which (i) such Person is
directly or indirectly the controlling general partner or (ii) 50% or more of
the securities or other interests having by their terms ordinary voting power
for the election of directors or others performing similar functions are
directly or indirectly owned by such Person.
81
(xxvii)
“Tax” means
any federal, state, provincial, local, foreign or other tax, import, duty or
other governmental charge or assessment or deficiencies thereof, including
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales, use, excise, custom duties, transfer, conveyance,
mortgage, registration, stamp, documentary, recording, premium, severance,
environmental, real and personal property, ad valorem, intangibles, rent,
occupancy, license, occupational, employment, unemployment insurance, social
security, disability, workers’ compensation, payroll, health care, withholding,
estimated or other similar tax and including all interest and penalties thereon
and additions to tax.
8.6 Headings;
Schedules. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement. Disclosure of any matter pursuant to any Section of the
Company Disclosure Letter or the Parent Disclosure Letter shall not be deemed to
be an admission or representation as to the materiality of the item so
disclosed.
8.7 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall be considered one and the same
agreement.
8.8 Entire
Agreement. This
Agreement and the Confidentiality Agreements constitute the entire agreement,
and supersede all prior agreements and understandings (written and oral), among
the parties with respect to the subject matter of this Agreement.
8.9 Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated. Upon such determination that any term, provision,
covenant or restriction is invalid, void, unenforceable, overly broad or against
public policy by any court of competent jurisdiction, the parties intend that
such court modify such provision to the extent necessary so as to render it
valid, effective, enforceable, reasonable and not overly broad and such term,
provision, covenant or restriction shall be deemed modified to the extent
necessary to provide the intended benefits to modify this Agreement so as to
effect the original intent of the parties, as evidenced by this Agreement, as
closely as possible in a mutually acceptable manner in order that the
transactions as originally contemplated hereby are fulfilled to the fullest
extent possible.
8.10 Governing
Law. This
Agreement shall be governed, construed and enforced in accordance with the Laws
of the State of Delaware without giving effect to the principles of conflicts of
law thereof, except as otherwise required by mandatory provisions of the Laws of
the State of Nevada.
8.11 Assignment. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties; provided that
each of Parent and Merger Sub may assign this Agreement to any of its
Subsidiaries, or to any lender to each of Parent or Merger Sub, or any
Subsidiary or affiliate thereof as security for obligations to such lender, and
provided, further, that no assignment to any such lender shall in any way affect
Parent’s or Merger Sub’s obligations or liabilities under this
Agreement.
82
8.12 Parties
in Interest. This
Agreement shall be binding upon and inure solely to the benefit of each party to
this Agreement and their permitted assignees, and (other than Sections 5.8 and
8.11) nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement. Without limiting the
foregoing, no direct or indirect holder of any equity interests or securities of
any party to this Agreement (whether such holder is a limited or general
partner, member, stockholder or otherwise), nor any affiliate of any party to
this Agreement, nor any director, officer, employee, representative, agent or
other controlling Person of each of the parties to this Agreement and their
respective affiliates shall have any liability or obligation arising under this
Agreement or the transactions contemplated hereby.
8.13 Specific
Performance. The
parties to this Agreement agree that irreparable damage would occur in the event
that any provision of this Agreement was not performed in accordance with the
terms of this Agreement and that the parties shall be entitled to specific
performance of the terms of this Agreement in addition to any other remedy at
Law or equity.
8.14 Jurisdiction. Each
of the parties hereto agrees that any claim, suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of, under or in
connection with, this Agreement or the transactions contemplated hereby shall be
heard and determined in the federal or state court in the State of Delaware (and
each agrees that no such claim, suit, action or proceeding relating to this
Agreement shall be brought by it or any of its affiliates except in such court),
and the parties hereto hereby irrevocably and unconditionally submit to the
exclusive jurisdiction of such court in any such claim, suit, action or
proceeding and irrevocably and unconditionally waive the defense of an
inconvenient forum to the maintenance of any such claim, suit, action or
proceeding. Each of the parties hereto further agree that, to the
fullest extent permitted by applicable Law, service of any process, summons,
notice or document in any such claim, suit, action or proceeding may
be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 8.4
shall be deemed effective service of process on such party. The
parties hereto hereby agree that a final, non-appealable judgment in any such
claim, suit, action or proceeding shall be conclusive and may be enforced in
other jurisdictions in the world by suit on the judgment or in any other manner
provided by applicable Law.
******
83
IN
WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
STONE ENERGY
CORPORATION
By: /s/ XXXXX X.
XXXXX
Name: Xxxxx X.
Xxxxx
Title: President
and Chief Executive Officer
STONE ENERGY
OFFSHORE, L.L.C.
Through its sole
member,
Stone Energy
Corporation
By: /s/ XXXXX X.
XXXXX
Name: Xxxxx X.
Xxxxx
Title: President
and Chief Executive Officer
BOIS D’ARC ENERGY,
INC.
By: /s/ XXXX X.
XXXXXXX
Name: Xxxx
X. Xxxxxxx
Title: Chief
Executive Officer, President and
Director (Principal
Executive Officer)
