EXHIBIT 2
XXXX-XxXXX STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 14, 1998 (the
"Agreement"), by and between Xxxx-XxXxx Corporation, a Delaware corporation
("Issuer"), and Oryx Energy Company, a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
Grantee with and into Issuer with Issuer as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement, Grantee has requested that Issuer agree, and
Issuer has agreed, to grant Grantee the Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to
enter into the Merger Agreement, Issuer has requested that Grantee agree, and
Grantee has agreed, to grant Issuer an option to purchase shares of Grantee's
common stock on substantially the same terms as the Option.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, Issuer and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 9,434,181 (as adjusted as set forth herein) shares (the "Option
Shares") of Common Stock, par value $1.00 per share, of Issuer (the "Issuer
Common Stock") at a purchase price of $46.94 per Option Share (the "Purchase
Price").
2. Exercise of Option. (a) If not in material breach of the Merger
Agreement or the Oryx Stock Option Agreement, Grantee may exercise the Option,
in whole or in part, at any time or from time to time following the occurrence
of a Purchase Event (as defined below); provided that, except as otherwise
provided herein, the Option shall terminate and be of no further force and
effect upon the earliest to occur of (i) the Effective Time of the Merger, (ii)
12 months after the first occurrence of a Purchase Event or (iii) termination of
the Merger Agreement prior to the occurrence of a Purchase Event (unless such
termination itself constitutes a Purchase Event). Notwithstanding the
termination of the Option, Grantee shall be entitled to purchase those Option
Shares with respect to which it has exercised the Option pursuant to this
Section 2(a) in accordance with the terms hereof prior to the termination of the
Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
1
(b) As used herein, a "Purchase Event" means the termination of the
Merger Agreement under any circumstance which would entitle Grantee to receive
any fee from the Issuer pursuant to Section 7.2(b) of the Merger Agreement.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 20 business days from such Notice Date for
the closing of such purchase (a "Closing"; and the date of such Closing, a
"Closing Date"); provided that such Closing shall be held only if (A) such
purchase would not otherwise violate or cause the violation of applicable law
(including the HSR Act) and (B) no law, rule or regulation shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order, decree or ruling issued by a court or other
Governmental Entity of competent jurisdiction shall be in effect, which
prohibits delivery of such Option Shares (and the parties hereto shall use their
reasonable best efforts to have any such order, injunction, decree or ruling
vacated or reversed). If such Closing cannot be consummated by reason of a
restriction set forth in clause (A) or (B) above, notwithstanding the provisions
of Section 2(a), such Closing Date shall be within 20 business days following
the elimination of such restriction.
3. Payment and Delivery of Certificates. (a) On each Closing Date,
Grantee shall pay to Issuer in immediately available funds by wire transfer to a
bank account designated by Issuer an amount equal to the Purchase Price
multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be free and clear of all Liens, and
Grantee shall deliver to Issuer a letter agreeing that Grantee shall not offer
to sell or otherwise dispose of such Option Shares in violation of applicable
law or the provisions of this Agreement. If, at the time of issuance of any
Option Shares pursuant to an exercise of all or part of the Option hereunder,
Issuer shall not have redeemed the Xxxx-XxXxx Rights (the "Rights"), or shall
have issued any similar securities, then each Option Share issued pursuant to
such exercise shall also represent a corresponding Right or new rights with
terms substantially the same as and at least as favorable to Grantee as are
provided under the Rights Agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as follows:
2
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF OCTOBER 14,
1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Authorized Stock. Issuer hereby represents and warrants to Grantee
that Issuer has taken all necessary corporate and other action to authorize and
reserve and to permit it to issue, and, at all times from the date hereof until
the obligation to deliver Issuer Common Stock upon the exercise of the Option or
any Substitute Option (as hereinafter defined) terminates, will have reserved
for issuance, upon exercise of the Option or any Substitute Option, shares of
Issuer Common Stock necessary for Grantee to exercise the Option or Substitute
Option, and Issuer will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Issuer Common Stock or other
securities which may be issued pursuant to Section 6 upon exercise of the Option
or Substitute Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option or Substitute Option, including all additional shares of
Issuer Common Stock or other securities which may be issuable upon exercise of
the Option or Substitute Option pursuant to Section 6, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid and nonassessable, and
shall be delivered free and clear of all Liens, including any preemptive rights
of any stockholder of Issuer.
5. Purchase Not for Distribution. Grantee hereby represents and
warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option or Substitute Option will not be taken with
a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the event
of any change in Issuer Common Stock by reason of a reclassification,
recapitalization, stock split, split-up, combination, exchange of shares,
3
stock dividend, dividend payable in any other securities, or any similar event,
the type and number of shares or securities subject to the Option, and the
Purchase Price therefor, shall be adjusted appropriately, and proper provision
shall be made in the agreements governing such transaction, so that Grantee
shall receive upon exercise of the Option the number and class of shares or
other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable. If any additional shares of
Issuer Common Stock are issued after the date of this Agreement (other than
pursuant to an event described in the immediately preceding sentence), the
number of shares of Issuer Common Stock subject to the Option shall be adjusted
so that, after such issuance, it equals 19.9% of the number of shares of Issuer
Common Stock then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property, or the shares of Issuer Common
Stock outstanding immediately prior to the consummation of such merger shall
after such merger represent less than 50% of the outstanding voting securities
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below) or (II) any person that controls the Acquiring Corporation
(any such person specified in clause (I) or (II) being referred to as
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option;
provided that the exercise price therefor and number of shares subject thereto
shall be as set forth in this Section 6 and the repurchase rights relating
thereto shall be as set forth in Section 8; provided, further, that the
Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a Purchase Event; and provided, further, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option (subject
to the variations described in the foregoing provisos), such terms shall be as
similar as possible and in no event less advantageous to Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in substantially
the same form as this Agreement
4
(subject to the variations described in the foregoing provisos), which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as defined below) as is equal to the Assigned
Value (as defined below) multiplied by the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable, divided by the Average
Price (as defined below), rounded up to the nearest whole share. The exercise
price per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Purchase Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of outstanding Substitute
Common Stock but for the limitation in the first sentence of this Section 6(e),
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 6(e) over (ii) the value of the
Substitute Option after giving effect to the limitation in te first sentence of
this Section 6(e). This difference shall be determined in good faith by a
nationally recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in Section
6(b) unless the Acquiring Corporation and, if applicable, any beneficial owner
of 50% or more of the outstanding voting stock of the Acquiring Corporation
(after giving effect to the transaction) assume in writing all the obligations
of Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Agreement are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights comparable to the Rights by reason of the issuance or
exercise of the Substitute Option and the shares of Substitute Common Stock are
otherwise in no way distinguishable from or have lesser economic value than
other shares of common stock issued by Substitute Option Issuer (other than any
diminution in value resulting from the fact, if applicable, that the shares of
Substitute Common Stock are restricted securities, as defined in Rule 144 under
the Securities Act or any successor provision)).
(g) For purposes of this Agreement, the following terms have the
following meanings:
5
(1) "Acquiring Corporation" means (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving corporation and (iii) the transferee of all or substantially all
of Issuer's assets.
(2) "Assigned Value" means the highest of (w) the price per share of
Issuer Common Stock at which a tender offer or exchange offer for Issuer
Common Stock has been made after the date hereof and prior to the
consummation of the consolidation, merger or sale referred to in Section
6(b), (x) the price per share to be paid by any third party or the
consideration per share to received by holders of Issuer Common Stock, in
each case pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 6(b), (y) the highest
closing sales price per share for Issuer Common Stock quoted on the NYSE
(or if such Issuer Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the National Association of Securities Dealers
Automated Quotation System or, if the shares of Issuer Common Stock are not
quoted thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the 12-month period
immediately preceding the consolidation, merger or sale referred to in
Section 6(b) and (z) in the event the transaction referred to in Section
6(b) is a sale of all or substantially all of Issuer's assets, an amount
equal to (i) the sum of the price paid in such sale for such assets
(including assumed liabilities) and the current market value of the
remaining assets of Issuer, as determined in good faith by a nationally
recognized investment banking firm selected by Grantee, divided by (ii) the
number of shares of Issuer Common Stock outstanding at such time. In the
event that a tender offer or exchange offer is made for Issuer Common Stock
or an agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for Issuer Common Stock shall
be determined in good faith by a nationally recognized investment banking
firm selected by Grantee.
(3) "Average Price" means the average closing sales price per share of
a share of Substitute Common Stock quoted on the NYSE (or if such
Substitute Common Stock is not quoted on the NYSE, the highest bid price
per share as quoted on the National Association of Securities Dealers
Automated Quotation System or, if the shares of Substitute Common Stock are
not quoted thereon, on the principal trading market on which such shares
are traded as reported by a recognized source) for the twenty trading days
immediately preceding the fifth business day prior to the consolidation,
merger or sale in question, but in no event higher than the closing price
of the shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Substitute Option Issuer is
Issuer, the Average Price shall be computed with respect to a share of
common stock issued by Issuer, the person
6
merging into Issuer or by any company which controls such person, as
Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock (or
similar equity interest) with the greatest voting power in respect of the
election of directors (or persons similarly responsible for the direction
of the business and affairs) of the Substitute Option Issuer.
7. Repurchase of Option and Option Shares. (a) Notwithstanding the
provisions of Section 2(a), at any time commencing upon the first occurrence of
a Repurchase Event (as defined below) and ending 12 months thereafter, Issuer
(or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the Option
(if and to the extent not previously exercised or terminated) at a
price equal to the excess, if any, of (x) the Applicable Price (as
defined below) as of the Section 7 Request Date (as defined below) for
a share of Issuer Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 6(a)), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not
been exercised (the "Option Repurchase Price"); and
(ii) at the request of an owner of Option Shares from time to
time, repurchase such number of Option Shares as such owner shall
designate at a price equal to the Applicable Price as of the Section 7
Request Date multiplied by the number of Option Shares requested to be
repurchased by such owner (the "Option Share Repurchase Price").
(b) If Grantee or an owner of Option Shares exercises its rights under
this Section 7, Issuer shall, within 10 business days after the Section 7
Request Date, pay the Option Repurchase Price or Option Share Repurchase Price,
as the case may be, in immediately available funds, and Grantee or such owner,
as the case may be, shall surrender to Issuer the
Option or Option Shares, as the case may be.
(c) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Applicable Price", as of any date, means the highest of (A) the
highest price per share at which a tender offer or exchange offer has been
made for shares of Issuer Common Stock after the date hereof and on or
prior to such date, (B) the highest price per share to be paid by any third
party for shares of Issuer Common Stock or the consideration per share to
be received by holders of Issuer Common Stock, in each case pursuant to an
agreement for an Acquisition Proposal with Issuer entered into on or prior
to such date or (C) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE
7
(or if Issuer Common Stock is not quoted on the NYSE, the highest bid price
per share as quoted on the National Association of Securities Dealers
Automated Quotations System or, if the shares of Issuer Common Stock are
not quoted thereon, on the principal trading market on which such shares
are traded as reported by a recognized source) during the 60 business days
preceding such date. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (A) or (B) shall be other than
in cash, the value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm selected by
Grantee.
(ii) "Repurchase Event" means the occurrence of a Purchase Event
followed by the consummation of any transaction the proposal of which would
constitute an Acquisition Proposal.
(iii) "Section 7 Request Date" means the date on which Grantee or an
owner of Option Shares exercises its rights under this Section.
8. Repurchase of Substitute Option. (a) At any time after issuance of
the Substitute Option and prior to the expiration of the Substitute Option,
Substitute Option Issuer (or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the
Substitute Option (if and to the extent not previously exercised or
terminated) at a price equal to the excess, if any, of (x) the Highest
Closing Price as of the Section 8 Request Date (as defined below) for a
share of Substitute Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 6(a)), multiplied by the number of shares of
Substitute Common Stock with respect to which the Substitute Option has not
been exercised (the "Substitute Option Repurchase Price"); and
(ii) at the request of an owner of shares of Substitute Common Stock
issued upon exercise of the Substitute Option, repurchase such number of
shares of Substitute Common Stock as such owner shall designate at a price
equal to the Highest Closing Price as of the Section 8 Request Date
multiplied by the number of shares of Substitute Common Stock requested to
be repurchased by such owner (the "Substitute Share Repurchase Price").
(b) If Grantee or an owner of shares of Substitute Common Stock issued
upon exercise of the Substitute Option exercises its rights under this Section
8, Substitute Option Issuer shall, within 10 business days after the Section 8
Request Date, pay the Substitute Option Repurchase Price or Substitute Share
Repurchase Price, as the case may be, in immediately available funds, and
Grantee or such owner, as the case may be, shall surrender to Issuer the Option
or shares of Substitute Common Stock, as the case may be.
8
(c) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Highest Closing Price" means the highest closing sales price for
shares of Substitute Common Stock quoted on the NYSE (or if the Substitute
Common Stock is not quoted on the NYSE, the highest bid price per share as
quoted on the National Association of Securities Dealers Automated
Quotations System or, if the shares of Substitute Common Stock are not
quoted thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the six-month period
preceding the Section 8 Request Date; and
(ii) "Section 8 Request Date" means the date on which Grantee or an
Owner exercises its rights under this Section.
9. Registration Rights. Issuer shall, if requested by Grantee or any
owner of Option Shares (collectively with Grantee, the "Owners") at any time and
from time to time within three years of the first exercise of the Option, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to such Owners upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by such
Owners, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best efforts
to qualify such shares or other securities under any applicable state securities
laws. Issuer shall use all reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of Issuer hereunder to
file a registration statement and to maintain its effectiveness may be suspended
for one or more periods of time not exceeding 30 days in the aggregate if the
Board of Directors of Issuer shall have determined that the filing of such
registration statement or the maintenance of its effectiveness would require
disclosure of nonpublic information that would materially and adversely affect
Issuer. Any registration statement prepared and filed under this Section 9, and
any sale covered thereby, shall be at Issuer's expense except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Owners' counsel related thereto. The Owners shall provide all information
reasonably inclusion in any registration statement to be filed hereunder. If
during the time period referred to in the first sentence of this Section 9
Issuer effects a registration under the Securities Act of Issuer Common Stock
for its own account or for any other stockholders of Issuer (other than on Form
S-4 or Form S-8, or any successor form), it shall allow the Owners the right to
participate in such registration, and such participation shall not affect the
obligation of Issuer to effect two
9
registration statements for the Owners under this Section 9; provided that, if
the managing underwriters of such offering advise Issuer in writing that in
their opinion the number of shares of Issuer Common Stock requested to be
included in such registration exceeds the number which can be sold in such
offering, Issuer shall include the shares requested to be included therein by
the Owners pro rata with the shares intended to be included therein by Issuer.
In connection with any registration pursuant to this Section 9, Issuer and the
Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration.
10. Listing; Reasonable Best Efforts. (a) If Issuer Common Stock or
any other securities to be acquired upon exercise of the Option are then listed
on the NYSE or any other securities exchange or market, Issuer, upon the request
of any Owner, will promptly file an application to list the shares of Issuer
Common Stock or other securities to be acquired upon exercise of the Option on
the NYSE or such other securities exchange or market and will use its best
efforts to obtain approval of such listing as soon as practicable.
(b) Issuer will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to permit the exercise
of the Option or the Substitute Option in accordance with the terms and
conditions hereof, as soon as practicable after the date hereof, including
making any appropriate filing of pursuant to the HSR Act and any other
Regulatory Law, supplying as promptly as practicable any additional information
and documentary material that may be requested pursuant to the HSR Act and any
other Regulatory Law, and taking all other actions necessary to cause the
expiration or termination of the applicable waiting periods under the HSR Act as
soon as practicable.
11. Limitation of Grantee Profit. (a) Notwithstanding any other
provision herein, in no event shall Grantee's Total Profit (as defined below)
exceed $70 million (the "Maximum Profit") and, if it otherwise would exceed such
amount, Grantee, at its sole discretion, shall either (i) reduce the number of
shares subject to the Option, (ii) deliver to Issuer for cancellation shares of
Issuer Common Stock (or other securities into which such Option Shares are
converted or exchanged), (iii) pay cash to Issuer, or (iv) any combination of
the foregoing, so that Grantee's actually realized Total Profit shall not exceed
the Maximum Profit after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean: (i)
the aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option Shares (or securities into which such
shares are converted or exchanged) to any unaffiliated third party within 12
months after the exercise of the Option, over (y) the Grantee's aggregate
purchase price for such Option Shares (or other securities), plus (B) any
amounts received by Grantee on the transfer of the Option (including amounts
payable to Grantee pursuant to Section 7), plus (C) any equivalent amounts with
respect to the Substitute Option, plus
10
(D) any amounts received by Grantee pursuant to Section 7.2 of the Merger
Agreement, minus (ii) the amounts of any cash previously paid to Issuer pursuant
to this Section 11 plus the value of the Option Shares (or other securities)
previously delivered to Issuer for cancellation pursuant to this Section 11.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, any payment provided for in Section 7.2 of the
Merger Agreement; provided that if and to the extent the Total Profit received
by Grantee would exceed the Maximum Profit following receipt of such payment,
Grantee shall be obligated to comply with the terms of Section 11(a) within 30
days of the latest of (i) the date of receipt of such payment, (ii) the date of
receipt of the net cash by Grantee pursuant to the sale of Option Shares (or
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party within 12 months after the exercise of this Option with
respect to such Option Shares, (iii) the date of receipt of net cash from
disposition of the Option and (iv) the date of receipt of equivalent amounts
pursuant to the sale of the Substitute Option or shares of Substitute Common
Stock (or other securities into which such Substitute Common Stock is converted
or exchanged).
(d) For purposes of Section 11(a) and clause (ii) of Section 11(b),
the value of any Option Shares delivered to Issuer shall be the Assigned Value
of such Option Shares and the value of any Substitute Common Stock delivered to
Issuer shall be the Highest Closing Price of such Substitute Common Stock.
12. Loss, Theft, Etc. of Agreement. This Agreement (and the Option
granted hereby) is exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
13. Miscellaneous. (a) Expenses. Except as otherwise provided in
Section 9 hereof or in the Merger Agreement, each of the parties hereto shall
bear and pay all Expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
11
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability.
Except as otherwise set forth in the Merger Agreement, this Agreement, together
with the Merger Agreement, (a) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof and (b) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or a federal or state regulatory
agency to be invalid, void or unenforceable, 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. If
for any reason such court or regulatory agency determines that the Option does
not permit Grantee to acquire, or does not require Issuer (or Substitute Option
Issuer) to repurchase, the full number of shares of Issuer Common Stock (or
Substitute Common Stock) as provided in Sections 2 and 7 (or in the case of
Substitute Common Stock Sections 2 and 8), as adjusted pursuant to Section 6, it
is the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible without
any amendment or modification hereof.
(D) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED THEREIN.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given as set forth in Section 8.2 of the Merger
Agreement.
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Grantee may assign this Agreement in whole to any
affiliate of Grantee at any time. Except as provided in the next sentence,
Grantee may not, without the prior written consent of Issuer (which shall not be
unreasonably withheld), assign this Agreement to any other person. Upon
12
the occurrence of a Purchase Event, Grantee may sell, transfer, assign or
otherwise dispose of, in whole at any time, its rights and obligations
hereunder. In the case of any sale, transfer, assignment or disposition of this
Option, Issuer shall do all things reasonably necessary to facilitate such
transaction. This Agreement shall not be assignable by Issuer except by
operation of law. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Representations and Warranties. The representations and
warranties contained in Sections 3.1(a) and 3.2(a) of the Merger Agreement, and,
to the extent they relate to this Stock Option Agreement, in Sections 3.1(c),
(f), (l) and (m) and 3.2(c), (f) and (m) of the Merger Agreement, are
incorporated herein by reference.
(j) Rights Plan. Until the Option has been exercised or terminated in
full and Grantee no longer holds any Option Shares, Issuer shall not amend,
modify or waive any provision of the Xxxx-XxXxx Rights Agreement (the "Rights
Agreement") or take any other action which would cause Grantee or any of its
"Affiliates" or "Associates" to become an "Acquiring Person", or which would
cause a "Stock Acquisition Date" or "Distribution Date", any event specified in
Section 11(a)(ii) or 13 of the Rights Agreement or any similar event with
respect to the Rights to occur, by reason of the existence or exercise (in whole
or in part) of the Option, the beneficial ownership by Grantee or any of its
"Affiliates" or "Associates" of any of the Option Shares, or the consummation of
the other transactions contemplated hereby (all terms in quotes are used as
defined in the Rights Agreement). This covenant shall also apply to any
Substitute Option or shares of Substitute Common Stock issued in respect
thereof, and to any securities into which any Option Shares or Substitute Common
Stock are converted or exchanged.
(k) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(l) Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity. Both parties further agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such equitable
relief and that this provision is without prejudice to any other rights that the
parties hereto may have for any failure to perform this Agreement.
13
(m) Submission to Jurisdiction; Waivers. Each of Issuer and Grantee
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of Issuer and Grantee hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Issuer and Grantee hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
14
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
XXXX-XxXXX CORPORATION
By:/s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
ORYX ENERGY COMPANY
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chairman/CEO
15
