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EXHIBIT 2.2
PRE-ACQUISITION AGREEMENT
BETWEEN
DEVON ENERGY CORPORATION
AND
XXXXXXXX EXPLORATION LTD.
Dated as of August 31, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE 1 INTERPRETATION..........................................................................................1
1.1 Definitions.....................................................................................1
1.2 Singular, Plural, etc...........................................................................4
1.3 Deemed Currency.................................................................................4
1.4 Headings, etc...................................................................................4
1.5 Date for any Action.............................................................................5
1.6 Governing Law...................................................................................5
1.7 Attornment......................................................................................5
1.8 Accounting Matters..............................................................................5
1.9 Knowledge.......................................................................................5
1.10 Incorporation of Schedules......................................................................5
ARTICLE 2 THE OFFER...............................................................................................6
2.1 The Offer.......................................................................................6
2.2 Xxxxxxxx Directors' Circular....................................................................8
2.3 Offer Documents.................................................................................8
2.4 Outstanding Stock Options.......................................................................9
2.5 Rights Plan.....................................................................................9
2.6 Employee Obligations and Other Employment Obligations..........................................10
ARTICLE 3 PUBLICITY AND SOLICITATION.............................................................................11
3.1 Publicity......................................................................................11
3.2 Solicitation...................................................................................12
ARTICLE 4 TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER.........................................................12
4.1 Second Stage Transaction.......................................................................12
4.2 Information Circular, Etc......................................................................12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF DEVON................................................................13
5.1 Organization and Qualification.................................................................13
5.2 Authority Relative to this Agreement...........................................................13
5.3 No Violations..................................................................................13
5.4 Funds Available................................................................................14
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF XXXXXXXX.............................................................14
6.1 Organization and Qualification.................................................................14
6.2 Authority Relative to this Agreement...........................................................14
6.3 No Violations..................................................................................14
6.4 Capitalization.................................................................................15
6.5 No Material Adverse Change.....................................................................16
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6.6 No Undisclosed Material Liabilities............................................................16
6.7 Impairment.....................................................................................16
6.8 Salaries and Bonuses of Certain Officers and Employees.........................................16
6.9 Financial Advisor..............................................................................16
6.10 Conduct of Business............................................................................16
6.11 Reports........................................................................................16
6.12 Subsidiaries...................................................................................17
6.13 Compliance with Law............................................................................17
6.14 Material Agreements............................................................................18
6.15 Disclosure.....................................................................................18
6.16 Employment Agreements..........................................................................18
6.17 U.S. Securities Law Matters....................................................................18
6.18 Employee Benefit Plans.........................................................................18
6.19 Books and Records..............................................................................19
6.20 Litigation, Etc................................................................................19
6.21 Environmental..................................................................................19
6.22 Tax Matters....................................................................................19
6.23 Reporting Issuer Status........................................................................20
6.24 Debt and Working Capital.......................................................................20
6.25 Confidentiality Agreements.....................................................................20
6.26 Insurance......................................................................................21
ARTICLE 7 CONDUCT OF BUSINESS....................................................................................21
7.1 Conduct of Business by Xxxxxxxx................................................................21
7.2 Provision of Information.......................................................................22
ARTICLE 8 COVENANTS OF XXXXXXXX..................................................................................23
8.1 Notice of Material Change......................................................................23
8.2 Non-Completion Fee.............................................................................23
8.3 No Solicitation................................................................................24
8.4 Xxxxxxxx Board of Directors....................................................................25
8.5 Structure of Transaction.......................................................................25
8.6 Financial and Other Information................................................................26
ARTICLE 9 COVENANTS OF DEVON.....................................................................................26
9.1 Availability of Funds..........................................................................26
9.2 Other Covenants................................................................................26
ARTICLE 10 MUTUAL COVENANTS......................................................................................27
10.1 Other Filings..................................................................................27
10.2 Additional Agreements..........................................................................27
ARTICLE 11 TERMINATION, AMENDMENT AND WAIVER.....................................................................27
11.1 Termination....................................................................................27
11.2 Effect of Termination..........................................................................28
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11.3 Amendment......................................................................................28
11.4 Waiver.........................................................................................28
ARTICLE 12 GENERAL PROVISIONS....................................................................................29
12.1 Notices........................................................................................29
12.2 Miscellaneous..................................................................................29
12.3 Directors' and Officers' Insurance.............................................................30
12.4 Indemnities....................................................................................30
12.5 Assignment.....................................................................................30
12.6 Expenses.......................................................................................31
12.7 Confidentiality Agreement......................................................................31
12.8 Survival of Representations and Warranties.....................................................31
12.9 Severability...................................................................................31
12.10 Counterpart Execution..........................................................................32
SCHEDULE A - CONDITIONS TO THE OFFER
SCHEDULE B - FORM OF PRE-TENDER AGREEMENT
SCHEDULE C - FORM OF JOINT PRESS RELEASE
SCHEDULE D - EMPLOYEE OBLIGATIONS
SCHEDULE E - PAYMENTS IN LIEU OF STOCK OPTIONS
SCHEDULE F - SEVERANCE FORMULA
SCHEDULE G - ANNUAL SALARIES AND 2000 BONUSES OF CERTAIN OFFICERS AND EMPLOYEES
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PRE-
ACQUISITION AGREEMENT
THIS AGREEMENT made as of the 31st day of August, 2001,
BETWEEN:
DEVON ENERGY CORPORATION, a corporation duly incorporated
under and governed by the laws of the State of Delaware and
having an office in the City of Oklahoma City, in the State of
Oklahoma (hereafter referred to as "Devon")
- and -
XXXXXXXX EXPLORATION LTD., a corporation duly continued under
and governed by the laws of Canada and having its head and
principal office in the City of Calgary, in the Province of
Alberta (hereafter referred to as "Xxxxxxxx")
WHEREAS the Board of Directors of each of Devon and Xxxxxxxx
has determined that it is in the best interests of their respective corporations
and shareholders that Devon and Xxxxxxxx combine their business interests with
the result that there shall be one economic enterprise and that such combination
be effected through an offer by Devon to purchase all of the outstanding shares
of Xxxxxxxx;
AND WHEREAS the Board of Directors of Xxxxxxxx has determined
to unanimously recommend acceptance of the Devon offer to the shareholders of
Xxxxxxxx;
AND WHEREAS Devon is willing to make an offer subject to the
terms and conditions of this Agreement;
NOW THEREFORE IN CONSIDERATION OF the mutual covenants
hereinafter contained and other good and valuable consideration (the receipt and
adequacy whereof is hereby acknowledged), the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless there is something in the subject
matter or context inconsistent therewith:
"ACT" means the Canada Business Corporations Act as the same has been and may
hereafter from time to time be amended;
"AFFILIATES" has the meaning set forth in the Act;
"AGREEMENT", "THIS AGREEMENT", "HEREIN", "HERETO", and "HEREOF" and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time and, where applicable, to the appropriate Schedules hereto;
"XXXXXXXX" means Xxxxxxxx Exploration Ltd.;
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"XXXXXXXX DEFERRED BONUS PLAN" means the deferred bonus plan of Xxxxxxxx
available to Xxxxxxxx employees;
"XXXXXXXX EMPLOYEE PROFIT SHARING PLAN" means the employee profit sharing plan
of Xxxxxxxx amended and restated as of February 10, 1999;
"XXXXXXXX GOVERNING DOCUMENTS" means the Certificate and Articles of Continuance
and By-laws of Xxxxxxxx;
"XXXXXXXX GROUP RRSP PLAN" means the group registered retirement savings plan
available to Xxxxxxxx employees;
"XXXXXXXX OPTIONS" means the outstanding options to acquire Xxxxxxxx Shares
under the Stock Option Plan;
"XXXXXXXX SHARE APPRECIATION RIGHTS PLAN" means the share appreciation rights
plan of Xxxxxxxx dated March 29, 2000;
"XXXXXXXX SHARES" means common shares in the share capital of Xxxxxxxx;
"XXXXXXXX SUBSIDIARIES" means Home Oil Company Limited, Xxxxxxxx Resources Ltd.,
Xxxxxxxx Oil & Gas Inc., Numac Energy Inc., and Xxxxxxxx Exploration (a general
partnership);
"XXXXXXXX YEAR END BONUS ARRANGEMENTS" has the meaning set forth in Section
2.6(d);
"BUSINESS DAY" means any day excepting a Saturday, Sunday or statutory holiday
in Calgary,
Alberta;
"CANADIAN GAAP" means Canadian generally accepted accounting principles applied
on a consistent basis;
"DEVON" means Devon Energy Corporation;
"DILUTED BASIS" means, with respect to the number of outstanding Xxxxxxxx Shares
at any time, such number of outstanding Xxxxxxxx Shares calculated assuming that
all outstanding options and other rights (other than the Rights) to purchase
Xxxxxxxx Shares are exercised;
"DISCLOSURE LETTER" means the letter dated August 31, 2001 delivered
concurrently with this Agreement setting forth all exceptions to the
representations and warranties of Xxxxxxxx in this Agreement;
"EFFECTIVE TIME" means the time that Devon shall have acquired ownership of and
paid for at least the Minimum Required Shares pursuant to the terms of the
Offer;
"EMPLOYEE OBLIGATIONS" means the obligations of Xxxxxxxx to its officers or
employees for severance or termination payments in connection with a termination
of employment or change of control of Xxxxxxxx pursuant to any written
agreements, in each case as listed in Schedule D hereto;
"EXPIRY TIME" means the Initial Expiry Time unless the Offer has been extended,
in which case it means the expiry time of the Offer as extended from time to
time;
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"INITIAL EXPIRY TIME" means 1:01 a.m. (Calgary time) on the first Business Day
which falls after the 35th day following the day of the mailing of the Offer
Documents to the shareholders of Xxxxxxxx (where the first day of this period is
the day immediately following the day of mailing);
"MATERIAL" means, where used in relation to Xxxxxxxx and its subsidiaries, a
fact, asset, liability, transaction or circumstance concerning the business,
assets, rights, liabilities, capitalization, operations, prospects or financial
condition of Xxxxxxxx and its subsidiaries, taken as a whole, that: (i) would be
reasonably likely to have a significant effect on the market price or value of
the Xxxxxxxx Shares; or (ii) that would prevent or materially delay completion
of the Offer in accordance with this Agreement, or any compulsory acquisition or
Second Stage Transaction;
"MATERIAL ADVERSE CHANGE" means any change (or any condition, event or
development involving a prospective change) in the business, operations, results
of operations, assets, capitalization, financial condition, licenses, permits,
concessions, rights, liabilities, prospects or privileges, whether contractual
or otherwise, of Xxxxxxxx or any of its subsidiaries which is, or could
reasonably be expected to be, materially adverse to the business of Xxxxxxxx and
its subsidiaries considered as a whole other than a change: (i) which arises out
of a matter that has prior to the date hereof been publicly disclosed or
otherwise disclosed in the Disclosure Letter; (ii) resulting from conditions
affecting the oil and gas industry as a whole; or (iii) resulting from general
economic, financial, currency exchange, securities or commodity market
conditions in Canada or elsewhere; or (iv) resulting from changes in the market
price of crude oil or natural gas;
"MINIMUM CONDITION" means the condition set forth in paragraph (a) of Schedule
A;
"MINIMUM REQUIRED SHARES" means at least that number of the outstanding Xxxxxxxx
Shares required pursuant to the Minimum Condition unless Devon shall have waived
the Minimum Condition in which case "Minimum Required Shares" means that number
of the outstanding Xxxxxxxx Shares which Devon takes up on the Take-up Date,
provided that such number of Xxxxxxxx Shares shall not be less than 50% of the
issued and outstanding Xxxxxxxx Shares on a diluted basis;
"OFFER" has the meaning set forth in Section 2.1(a);
"OFFER DOCUMENTS" has the meaning set forth in Section 2.3(a);
"OFFICER OBLIGATIONS" means any obligations or liabilities of Xxxxxxxx or any
subsidiary of Xxxxxxxx to pay any amount to its officers, directors, or
employees, other than for: (i) salary, vacation pay, payments contemplated in
Sections 2.4(b) and 2.6 (f), bonuses under the Xxxxxxxx Deferred Bonus Plan and
the Xxxxxxxx Year End Bonus Plan, (ii) benefits under the Xxxxxxxx Employee
Profit Sharing Plan, the Xxxxxxxx Group RRSP Plan and other benefits
contemplated by Section 6.18; (iii) the Xxxxxxxx Share Appreciation Rights Plan;
and (iv) directors' fees in the ordinary course, in each case in amounts
consistent with historic practices (except as contemplated in Section 2.6) and,
without limiting the generality of the foregoing, Officer Obligations shall
include the obligations of Xxxxxxxx or any of its subsidiaries to officers or
employees for severance or termination payments on the change of control of
Xxxxxxxx pursuant to any involuntary severance and termination agreements in the
case of officers and pursuant to Xxxxxxxx'x xxxxxxxxx policy in the case of
employees, and in each case as listed in Schedules D and G;
"RIGHTS" means the rights issued to holders of Xxxxxxxx Shares pursuant to the
Rights Plan;
"RIGHTS PLAN" means the Shareholder Rights Plan Agreement dated as of August 18,
1999 between Xxxxxxxx and Montreal Trust Company of Canada;
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"SECOND STAGE TRANSACTION" has the meaning set forth in Section 4.1;
"SECURITIES AUTHORITIES" means the appropriate securities commissions or similar
regulatory authorities in Canada and each of the provinces and territories
thereof and in the United States and each of the states thereof;
"SECURITIES LAWS" has the meaning set forth in Section 2.3(a);
"STOCK OPTION PLAN" means the Employee Stock Option Plan of Xxxxxxxx amended and
restated as of February 13, 2000;
"SUBSIDIARY" has the meaning set forth in the Securities Act, (
Alberta);
"SUPERIOR PROPOSAL" has the meaning set forth in Section 8.3;
"TAKE-OVER PROPOSAL" means a proposal or offer (other than by Devon), whether or
not subject to a due diligence condition, whether or not in writing, to acquire
in any manner, directly or indirectly, beneficial ownership of all or a material
portion of the assets of Xxxxxxxx or any material Xxxxxxxx Subsidiary or to
acquire in any manner, directly or indirectly, beneficial ownership or control
or direction over more than 20% of the outstanding voting shares of Xxxxxxxx
whether by an arrangement, amalgamation, merger, consolidation or other business
combination, by means of a sale of shares of capital stock, sale of assets,
tender offer or exchange offer or similar transaction involving Xxxxxxxx or any
Xxxxxxxx Subsidiary including without limitation any single or multi-step
transaction or series of related transactions which is structured to permit such
third party to acquire beneficial ownership of all or a material portion of the
assets of Xxxxxxxx or any Xxxxxxxx Subsidiary or to acquire in any manner,
directly or indirectly, more than 20% of the outstanding voting shares of
Xxxxxxxx (other than the transactions contemplated by this Agreement); and
"TAKE-UP DATE" means the date that Devon first takes up and acquires Xxxxxxxx
Shares pursuant to the Offer.
1.2 SINGULAR, PLURAL, ETC.
Words importing the singular number include the plural and
vice versa and words importing gender include the masculine, feminine and neuter
genders.
1.3 DEEMED CURRENCY
In the absence of a specific designation of any currency any
undescribed dollar amount herein shall be deemed to refer to Canadian dollars.
1.4 HEADINGS, ETC.
The division of this Agreement into Articles and Sections, the
provision of a table of contents hereto and the insertion of the recitals and
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement and, unless otherwise stated,
all references in this Agreement or in the Schedules to Articles, Sections and
Schedules refer to Articles, Sections and Schedules of and to this Agreement or
of the Schedules in which such reference is made.
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1.5 DATE FOR ANY ACTION
In the event that any date on which any action is required to
be taken hereunder by any of the parties hereunder is not a Business Day, such
action shall be required to be taken on the next succeeding day which is a
Business Day.
1.6 GOVERNING LAW
This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of
Alberta and the laws of Canada
applicable therein.
1.7 ATTORNMENT
The parties hereby irrevocably and unconditionally consent to
and submit to the courts of the Province of
Alberta for any actions, suits or
proceedings arising out of or relating to this Agreement or the matters
contemplated hereby (and agree not to commence any action, suit or proceeding
relating thereto except in such courts) and further agree that service of any
process, summons, notice or document by single registered mail to the addresses
of the parties set forth in this Agreement shall be effective service of process
for any action, suit or proceeding brought against either party in such court.
The parties hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the matters contemplated hereby in the courts of the Province of
Alberta and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding so brought has
been brought in an inconvenient forum.
1.8 ACCOUNTING MATTERS
Unless otherwise stated, all accounting terms used in this
Agreement in respect of Xxxxxxxx shall have the meanings attributable thereto
under Canadian GAAP and all determinations of an accounting nature in respect of
Xxxxxxxx required to be made shall be made in a manner consistent with Canadian
GAAP and past practice.
1.9 KNOWLEDGE
Where in this Agreement a representation or warranty is made
on the basis of the knowledge or awareness of Xxxxxxxx, such knowledge or
awareness consists only of the actual knowledge or awareness, as of the date of
this Agreement, of the senior executive officers of Xxxxxxxx, but does not
include the knowledge or awareness of any other individual or any constructive,
implied or imputed knowledge.
1.10 INCORPORATION OF SCHEDULES
Schedules A to G attached hereto and described below shall,
for all purposes hereof, form an integral part of this Agreement.
Schedule A Conditions to the Offer
Schedule B Form of Pre-tender Agreement
Schedule C Form of Joint Press Release
Schedule D Employee Obligations
Schedule E Payments in Lieu of Stock Options
Schedule F Severance Formula
Schedule G Annual Salaries and 2000 Bonuses of Certain
Officers and Employees
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ARTICLE 2
THE OFFER
2.1 THE OFFER
(a) Subject to the terms and conditions of this Agreement, Devon shall mail
to holders of Xxxxxxxx Shares and Xxxxxxxx Options as soon as
practicable but in any event not later than 11:59 p.m. (Calgary time)
on September 12, 2001, an offer to purchase all of the outstanding
Xxxxxxxx Shares (including the associated Rights) including any
Xxxxxxxx Shares which may become outstanding pursuant to the exercise
of outstanding Xxxxxxxx Options, for a price of $40.00 in cash for each
Xxxxxxxx Share which offer shall be made in accordance with this
Agreement, the Act and Securities Laws and be subject to the conditions
set forth in Schedule A hereto (the "Offer", which term shall include
any amendments to, or extensions of, such Offer, including, without
limitation, increasing the consideration, removing or waiving any
condition or extending the date by which Xxxxxxxx Shares may be
tendered). Devon and Xxxxxxxx shall cooperate in making on a timely
basis any filings with respect to the Offer, including amendments
thereafter on a timely basis as required by Securities Laws. The Offer
shall be prepared in both the English and French languages and in
accordance with this Agreement, the Act and Securities Laws. Devon
shall provide Xxxxxxxx with a draft copy of the Offer Documents prior
to mailing for its review and comment.
(b) Devon may make the Offer itself or through any direct or indirect
subsidiary. In the event that a Devon subsidiary makes or participates
in the making of the Offer, the term "Devon" as used herein shall
include such subsidiary, other than in Article 5 where the term "Devon"
shall not include such subsidiary, but Devon shall continue to be
liable to Xxxxxxxx, as principal obligor, for such subsidiary's
obligations hereunder and for any default by such subsidiary in the
performance of its obligations hereunder.
(c) The Offer shall expire at the Initial Expiry Time, except that the
Offer may be extended, at the sole discretion of Devon, if the
conditions thereto set forth in Schedule A hereto are not satisfied on
the date and time at which the Offer expires and if Devon determines,
acting reasonably, that there is a reasonable prospect that the
conditions of the Offer may not be satisfied prior to the Expiry Time.
In addition, in the event that any appropriate regulatory approval is
not obtained prior to the time the Offer is scheduled to terminate,
unless such approval has been denied, Devon agrees that it will extend
the Offer for a period of not less than 10 days past the Initial Expiry
Time pending receipt of such approval, provided that Devon shall not be
required to extend the Offer past December 31, 2001 or such later date
as may be mutually agreed in writing by Xxxxxxxx and Devon.
Subject to the satisfaction or waiver of the conditions set forth in
Schedule A hereto, Devon shall within three days accept for payment and
pay for all Xxxxxxxx Shares validly tendered (and not properly
withdrawn) pursuant to the Offer. Each of Devon and Xxxxxxxx shall use
all commercially reasonable efforts to consummate the Offer, subject to
the terms and conditions thereof.
(d) It is agreed that Devon may, in its sole discretion, waive any term or
condition of the Offer for its benefit provided that if Devon takes up
and pays for any Xxxxxxxx Shares it shall acquire not less than the
Minimum Required Shares. Devon agrees that it shall not amend any term
or condition of
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the Offer (which for greater certainty, does not include waiving, in
whole or part, a condition of the Offer) in a manner that is materially
adverse to the holders of Xxxxxxxx Shares without the prior written
consent of Xxxxxxxx other than to: (i) comply with Section 2.1(c); (ii)
extend the Offer, if, at the initial or extended date on which the
Offer is scheduled to terminate, any of the conditions to the Offer
shall not be satisfied or waived by Devon, until such time as such
conditions are satisfied or waived by Devon; (iii) extend the Offer for
any period required by any rule, regulation, interpretation or position
of the Securities Authorities applicable to the Offer or any period
required by applicable law; or (iv) comply with the legal obligations
of Devon with respect to any amendment, modification or change of the
Offer.
Notwithstanding and without limiting the foregoing, Devon may at any
time following the Initial Expiry Time, reduce the Minimum Condition to
a percentage greater than 50% and shall, subject to the conditions of
the Offer being satisfied or waived, take up and pay for all Xxxxxxxx
Shares validly deposited to the Offer, provided that, after Devon
reduces the Minimum Condition, Devon extends the Offer by a 10 day
period and agrees to extend the Offer for not less than two additional
successive 10 day periods if, upon the expiry of any extension, the
Minimum Condition has not been satisfied. Any agreement of Devon
referred to in the foregoing sentence shall continue after the
Effective Time until such agreement shall have been performed or this
Agreement is terminated.
Devon shall provide a draft of any proposed amendment, modification or
change to the Offer to Xxxxxxxx.
(e) Devon will instruct the depositary under the Offer to advise Xxxxxxxx
from time to time, not less frequently than every five Business Days
until the day immediately prior to the Expiry Time and thereafter on an
hourly basis, if requested by Xxxxxxxx and in such manner as Xxxxxxxx
may reasonably request, as to the number of Xxxxxxxx Shares that have
been tendered (and not withdrawn) under the Offer.
(f) Devon's obligation to make the Offer as set forth in Section 2.1(a) is
conditional upon the execution and delivery to Devon, concurrently with
the execution of this Agreement, of a pre-tender agreement in the form
or substantially in the form of the agreement attached hereto as
Schedule B by each of the Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer of Xxxxxxxx. Xxxxxxxx will use its
reasonable commercial efforts to cause each of the directors and
officers of Xxxxxxxx (other than the Chief Executive Officer, Chief
Financial Officer and Chief Operating Officer of Xxxxxxxx) to execute
and deliver to Devon, as soon as reasonably practical, a pre-tender
agreement in the form or substantially in the form of the agreement
attached hereto as Schedule B. The directors' circular shall reflect
the execution and delivery by the Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer of Xxxxxxxx and, to the
extent applicable, the other directors and officers of Xxxxxxxx the
pre-tender agreements referred to in this Section 2.1(f).
(g) Notwithstanding any of the other terms of this Agreement, Devon shall
not be required to make the Offer if, on or before the date Devon would
otherwise be required to make the Offer under the terms of this
Agreement:
(i) any of the representations or warranties of Xxxxxxxx contained
herein shall not be true and correct in all material respects
or Xxxxxxxx shall not have complied in all material respects
with each of its covenants set out herein; or
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(ii) the Board of Directors of Xxxxxxxx shall have withdrawn its
positive recommendation of the Offer; or
(iii) a Material Adverse Change shall have occurred, or a person
shall have commenced or threatened to bring a bona fide action
for injunctive relief against the performance of this
Agreement or the completion of the Offer, or another event
shall have occurred or circumstances shall exist which would
make it impossible or impractical to satisfy one or more of
the conditions of the Offer set forth in Schedule A hereto.
The foregoing conditions are for the sole benefit of Devon and may be
waived by Devon at any time.
2.2 XXXXXXXX DIRECTORS' CIRCULAR
(a) Xxxxxxxx hereby consents to the Offer as set forth in Section 2.1 and
confirms that its Board of Directors has unanimously approved the Offer
and this Agreement, has determined that the Offer is fair, from a
financial point of view, to the holders of Xxxxxxxx Shares and has
resolved to unanimously recommend acceptance of the Offer by the
holders of Xxxxxxxx Shares, subject to Section 8.3. Xxxxxxxx shall
prepare and make available for mailing with the Offer, in both the
English and French languages, sufficient copies of a directors'
circular prepared in accordance with Securities Laws. The directors'
circular will set forth (among other things) the recommendation of the
Board of Directors of Xxxxxxxx as described above. Xxxxxxxx shall
provide Devon with a draft copy of the directors' circular prior to its
finalization for Devon's review and comment.
(b) Xxxxxxxx represents that the Board of Directors of Xxxxxxxx has been
advised that the directors of Xxxxxxxx intend to tender all their
Xxxxxxxx Shares under the Offer.
(c) Xxxxxxxx represents that it has obtained advice from BMO Xxxxxxx Xxxxx
Inc. that the consideration to be offered to Xxxxxxxx'x shareholders
pursuant to the Offer is fair to holders of Xxxxxxxx Shares from a
financial point of view and that such financial advisor will provide an
opinion to such effect on or before September 7, 2001. The fairness
opinion will be attached to or referred to in the directors' circular
referred to in Section 2.2(a).
2.3 OFFER DOCUMENTS
(a) Devon shall file or cause to be filed with the appropriate Securities
Authorities an Offer to Purchase and Take-over Bid Circular and the
related Letter of Transmittal and Notice of Guaranteed Delivery
pursuant to which the Offer will be made (collectively, the "Offer
Documents"). The Offer Documents, when filed with the Securities
Authorities and when mailed to holders of Xxxxxxxx Shares, shall
contain (or shall be amended in a timely manner to contain) all
information which is required to be included therein in accordance with
the Act and any applicable Canadian provincial securities laws, United
States securities laws, the "blue sky" or securities laws of the states
of the United States and any other applicable law (collectively, the
"Securities Laws").
(b) Xxxxxxxx agrees to provide such assistance as Devon or its agents may
reasonably request in connection with communicating the Offer and any
amendments and supplements thereto to the holders of the Xxxxxxxx
Shares and to such other persons as are entitled to receive the Offer
under Securities Laws, including providing lists and updated or
supplemental lists of the shareholders of Xxxxxxxx and of the holders
of Xxxxxxxx Options and other securities convertible into or
exchangeable for Xxxxxxxx Shares and mailing labels with respect to all
such holders of securities
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as soon as possible after the date of this Agreement but in any event
no later than the close of business in Calgary on September 6, 2001 and
updates or supplements thereto from time to time as may be requested by
Devon.
2.4 OUTSTANDING STOCK OPTIONS
(a) Subject to the receipt of any necessary regulatory approvals, persons
holding options pursuant to the Stock Option Plan who may do so under
Securities Laws and in accordance with the Stock Option Plan shall be
entitled to exercise all of their options and tender all Xxxxxxxx
Shares issued in connection therewith under the Offer. The Xxxxxxxx
Board of Directors shall not, prior to completion of the Offer, grant
additional options pursuant to the Stock Option Plan. It is agreed by
Devon that all Xxxxxxxx Options which have been tendered to Xxxxxxxx
for exercise, conditional on Devon taking up Xxxxxxxx Shares under the
Offer ("Conditional Option Exercise"), shall be deemed to have been
exercised concurrently with the take-up of Xxxxxxxx Shares by Devon.
Furthermore, Devon shall accept as validly tendered under the Offer as
of the Take-up Date all Xxxxxxxx Shares which are to be issued pursuant
to the Conditional Option Exercise, provided that the holders of such
options indicate that such shares are tendered pursuant to the Offer
and provided that such holder agrees to surrender their remaining
unexercised options to Xxxxxxxx for cancellation for no consideration
effective immediately after the Take-up Date.
(b) Xxxxxxxx and Devon agree that to the extent holders of Xxxxxxxx Options
do not exercise such Xxxxxxxx Options and tender the Xxxxxxxx Shares
they receive upon such exercise, Xxxxxxxx may agree with all remaining
holders of Xxxxxxxx Options that, in lieu of such persons exercising
their Xxxxxxxx Options, Xxxxxxxx will pay to such persons the
difference between the exercise price of their Xxxxxxxx Options and the
purchase price for the Xxxxxxxx Shares under the Offer immediately
after the Expiry Time of the Offer in exchange for the termination of
their Xxxxxxxx Options and provided that such holders agree to
surrender their remaining unexercised options to Xxxxxxxx for
cancellation for no consideration effective immediately after the
Take-up Date.
(c) Devon and Xxxxxxxx acknowledge and agree that, pursuant to the Stock
Option Plan, all outstanding and unvested Xxxxxxxx Options shall
immediately vest at the Effective Time.
2.5 RIGHTS PLAN
(a) Xxxxxxxx represents to Devon that its Board of Directors has
irrevocably resolved to waive the application of the Rights Plan to the
Offer immediately prior to the Expiry Time and to any other actions
taken by Devon in furtherance of acquiring all of the Xxxxxxxx Shares
and covenants to Devon to take all action necessary pursuant to the
Rights Plan to effect such waiver no earlier than the Expiry Time, and
to ensure that the Separation Time (as defined in the Rights Plan) does
not occur.
(b) Xxxxxxxx covenants and agrees with Devon and represents to Devon that
its Board of Directors has resolved not to waive the application of the
Rights Plan or to redeem any of the outstanding Rights or take any
other action which would limit the application of the Rights Plan to
any transaction other than a Take-over Proposal that expires no sooner
than the Initial Expiry Time.
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2.6 EMPLOYEE OBLIGATIONS AND OTHER EMPLOYMENT OBLIGATIONS
(a) Devon shall honor or cause Xxxxxxxx to honor all Employee Obligations
and all other employment obligations referred to in this Section 2.6.
Devon acknowledges that Xxxxxxxx shall hold the benefits of this
Section 2.6 in trust for the benefit of the officers and employees of
Xxxxxxxx.
(b) Xxxxxxxx shall terminate the Xxxxxxxx Employee Profit Sharing Plan
subject to and coincident with the take-up of Xxxxxxxx Shares by Devon
under the Offer on the Take-up Date and shall make whatever
arrangements may be necessary to permit the participants in such plan
to tender the Xxxxxxxx Shares to be allocated to them on termination of
such plan under the Offer.
(c) Subject to and following the take-up of Xxxxxxxx Shares by Devon under
the Offer on the Take-up Date, Devon covenants and agrees that,
effective upon the termination of the Xxxxxxxx Employee Profit Sharing
Plan pursuant to Section 2.6(b) and up to and including the date (the
"Rollover Date") which is the earlier of (i) the date that such
participant is covered under Devon's employee profit sharing plan and
(ii) December 31, 2001, Devon shall cause Xxxxxxxx to make all
necessary arrangements so that all participants in such plan prior to
the Take-up Date shall continue to have the same payroll amounts
withheld by Xxxxxxxx. On the Rollover Date, Devon shall cause Xxxxxxxx
to pay all such accumulated contributions to such participants together
with an amount equal to (i) in the case of participants who continue to
be employed by Xxxxxxxx on the Rollover Date, the actual contributions
made by such participants up to and including the Rollover Date and
(ii) in the case of participants who are terminated on or prior to the
Rollover Date, the maximum amount such participants could have
contributed under the Xxxxxxxx Employee Profit Sharing Plan up to and
including the Rollover Date had they not been terminated, provided,
however, where a participant has been terminated for just cause,
Xxxxxxxx shall only be required to pay an amount equal to such
participant's actual contributions.
(d) On or prior to the earlier of: (i) the take-up of Xxxxxxxx Shares by
Devon under the Offer on the Take-up Date; and (ii) December 15, 2001,
Xxxxxxxx shall have the right to allocate and pay out to employees of
Xxxxxxxx bonus amounts in the aggregate amount of up to $9 million
constituting the bonus amounts determined by Xxxxxxxx to have been
earned prior to such date by such employees under Xxxxxxxx'x customary
year end bonus practices as in effect at the date of this Agreement
(the "Xxxxxxxx Year End Bonus Arrangements").
(e) Xxxxxxxx shall terminate the Xxxxxxxx Share Appreciation Rights Plan
subject to and coincident with the take-up of Xxxxxxxx Shares by Devon
under the Offer on the Take-up Date and Xxxxxxxx shall make whatever
arrangements may be necessary to permit the participants in such plan
to exercise all of their "Rights" (as defined in the Xxxxxxxx Share
Appreciation Rights Plan) and to receive an appreciation amount for
each such "Right" on the Take-up Date. For purposes of the foregoing
and notwithstanding the definition of "Appreciation Amount" contained
in the Xxxxxxxx Share Appreciation Rights Plan, the appreciation amount
in respect of each "Right" so exercised shall be equal to the
difference obtained by subtracting the Base Value of the "Right" (as
determined in accordance with the terms of the Xxxxxxxx Share
Appreciation Rights Plan) from the greater of: (i) the closing price
for the Xxxxxxxx Shares on The Toronto Stock Exchange as determined in
accordance with the terms of the Xxxxxxxx Share Appreciation Rights
Plan; and (ii) the consideration offered by Devon for Xxxxxxxx Shares
under the Offer.
(f) On or prior to the take-up of Xxxxxxxx Shares by Devon under the Offer
on the Take-up Date, Xxxxxxxx shall have the right to pay to those
individuals listed in Schedule E hereto the amounts listed therein
which have been determined by Xxxxxxxx to be due and owing to such
individuals in
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lieu of stock options promised and not delivered to such individuals in
connection with employment offers.
(g) Subject to and following the take-up of Xxxxxxxx Shares by Devon under
the Offer on the Take-up Date, Devon covenants and agrees to cause
Xxxxxxxx to continue to apply Xxxxxxxx'x customary practices related to
the payment of accrued vacation pay on termination of employment as in
effect at the date of this Agreement.
(h) Subject to and following the take-up of Xxxxxxxx Shares by Devon under
the Offer on the Take-up Date, Devon covenants and agrees to cause
Xxxxxxxx to apply Xxxxxxxx'x current practices related to severance and
termination payments payable to its employees as described in Schedule
F hereto until at least December 31, 2001.
(i) Devon acknowledges that Xxxxxxxx has granted deferred bonuses to
eligible employees of Xxxxxxxx pursuant to the Xxxxxxxx Deferred Bonus
Plan in an aggregate amount of not more than $700,000, 50% of which is
payable on the first anniversary date of the award with the balance
payable on the second anniversary date. Devon further acknowledges that
in order to be entitled to receive payment under such plan, an employee
must be employed at the time of payment except that an employee
terminated without cause is entitled to be paid all deferred bonus
amounts on the date of termination. Subject to and following the
take-up of Xxxxxxxx Shares by Devon under the Offer on the Take-up
Date, Devon covenants and agrees to cause Xxxxxxxx to pay the
aforementioned deferred bonuses in accordance with the foregoing terms.
(j) Subject to and following the take-up of Xxxxxxxx Shares by Devon under
the Offer on the Take-up Date, Devon covenants and agrees to:
(i) cause Xxxxxxxx to continue the Xxxxxxxx Group RRSP Plan until
at least December 31, 2001; and
(ii) cause Xxxxxxxx to pay to employees terminated for any reason
except just cause all amounts accrued in connection with such
plan to the date of termination of employment.
ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 PUBLICITY
(a) Each of Devon and Xxxxxxxx shall advise, consult and cooperate with the
other party prior to issuing, or permitting any of its subsidiaries,
directors, officers, employees or agents to issue any press release or
other written statement to the press with respect to this Agreement or
the transactions contemplated hereby. Devon and Xxxxxxxx shall not
issue any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law or by
obligations pursuant to any listing agreement with a stock exchange and
only after using its best efforts to consult the other party taking
into account the time constraints to which it is subject as a result of
such law or obligation.
(b) Xxxxxxxx and Devon agree that a joint press release substantially in
the form of Schedule C shall be issued immediately following the
execution of this Agreement.
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3.2 SOLICITATION
Investment firms to be selected by Devon will act as dealer
managers (the "Dealer Managers") in connection with the Offer and solicit
acceptances of the Offer. The Dealer Managers will form a soliciting dealer
group comprised of members of the Investment Dealers Association of Canada and
of the stock exchanges in Canada and their United States broker dealer
affiliates to solicit acceptances of the Offer.
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 SECOND STAGE TRANSACTION
If Devon takes up and pays for Xxxxxxxx Shares pursuant to the
terms of the Offer, and thereby acquires at least the Minimum Required Shares,
Devon agrees to use all commercially reasonable efforts to acquire, and Xxxxxxxx
agrees to use all commercially reasonable efforts to assist Devon in acquiring,
the balance of the Xxxxxxxx Shares by way of a statutory arrangement,
amalgamation, merger, reorganization, consolidation, recapitalization or other
type of acquisition transaction or transactions ("Second Stage Transaction")
carried out for consideration per Xxxxxxxx Share not less than the consideration
paid pursuant to the Offer (it being understood that Devon shall be under no
obligation to pay more than that amount). Nothing herein shall be construed to
prevent Devon from acquiring, directly or indirectly, additional Xxxxxxxx Shares
in the open market or in privately negotiated transactions, in another take-over
bid, tender or exchange offer, or otherwise in accordance with Securities Laws
(including by way of compulsory acquisition) following completion of the Offer.
4.2 INFORMATION CIRCULAR, ETC.
Without limiting Section 4.1, Xxxxxxxx agrees that if Devon is
required to effect a Second Stage Transaction which requires approval of
Xxxxxxxx'x shareholders in a meeting of Xxxxxxxx'x shareholders, Xxxxxxxx shall
take all action necessary in accordance with Securities Laws, other applicable
Canadian laws, the Xxxxxxxx Governing Documents and the requirements of The
Toronto Stock Exchange, the New York Stock Exchange or any other regulatory
authority having jurisdiction to duly call, give notice of, convene and hold a
meeting of its shareholders as promptly as practicable to consider and vote upon
the action proposed by Devon. In the event of such a meeting or meetings,
Xxxxxxxx shall use all commercially reasonable efforts to mail to its
shareholders an Information Circular with respect to the meeting of Xxxxxxxx'x
shareholders. The term "Information Circular" shall mean such proxy or other
required informational statement or circular, as the case may be, and all
related materials at the time required to be mailed to Xxxxxxxx'x shareholders
and all amendments or supplements thereto, if any. Devon and Xxxxxxxx each shall
use all commercially reasonable efforts to obtain and furnish the information
required to be included in any Information Circular. The information provided
and to be provided by Devon and Xxxxxxxx for use in the Information Circular, on
both the date the Information Circular is first mailed to Xxxxxxxx'x
shareholders and on the date any such meeting is held, shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading and will comply in all
material respects with all applicable requirements of law. Devon and Xxxxxxxx
each agree to correct promptly any such information provided by it for use in
any Information Circular which shall have become false or misleading.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF DEVON
As of the date hereof, Devon hereby represents and warrants to
Xxxxxxxx as follows and acknowledges that Xxxxxxxx is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
5.1 ORGANIZATION AND QUALIFICATION
Devon is a corporation duly incorporated and organized and
validly existing under the laws of Delaware and has the requisite corporate
power and authority to carry on its business as it is now being conducted.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT
Devon has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation by Devon of the transactions contemplated
hereby have been duly authorized by its Board of Directors and no other
corporate proceedings on its part are or will be necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Devon and constitutes a legal, valid and binding
obligation of Devon enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and to general
principles of equity.
5.3 NO VIOLATIONS
(a) Neither the execution and delivery of this Agreement by Devon, the
consummation by it of the transactions contemplated hereby nor
compliance by it with any of the provisions hereof will: (i) violate,
conflict with, or result in breach of any provision of, require any
consent, approval or notice under, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) or result in a right of termination or acceleration under, or
result in a creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Devon or any of its
subsidiaries under, any of the terms, conditions or provisions of (x)
the charter or bylaws of Devon or (y) any material note, bond,
mortgage, indenture, loan agreement, deed of trust, agreement, lien,
contract or other instrument or obligation to which Devon or any of its
subsidiaries is a party or to which any of them, or any of their
respective properties or assets, may be subject or by which Devon or
any of its subsidiaries is bound; or (ii) subject to compliance with
the statutes and regulations referred to in Section 5.3(b), violate any
judgment, ruling, order, writ, injunction, determination, award,
decree, statute, ordinance, rule or regulation applicable to Devon or
any of its subsidiaries (except, in the case of each of clauses (i) and
(ii) above, for such violations, conflicts, breaches, defaults,
terminations which, or any consents, approvals or notices which if not
given or received, would not have any material adverse effect on the
business, operations or financial condition of Devon and its
subsidiaries taken as a whole or on the ability of Devon to consummate
the transactions contemplated hereby).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, Investment Canada Act (Canada), the Competition Act
(Canada), the rules of The Toronto Stock Exchange and the New York
Stock Exchange, the United States Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and any
pre-merger notification statutes, (i) there is no legal impediment to
Devon's consummation of the transactions contemplated by this Agreement
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and (ii) no filing or registration with, or authorization, consent or
approval of, any domestic or foreign public body or authority is
necessary by Devon in connection with the making or the consummation of
the Offer, except for such filings or registrations which, if not made,
or for such authorizations, consents or approvals, which, if not
received, would not have a material adverse effect on the ability of
Devon to consummate the transactions contemplated hereby.
5.4 FUNDS AVAILABLE
The aggregate cash consideration payable pursuant to the Offer
is available to Devon so that Devon is in a position to pay for all Xxxxxxxx
Shares tendered pursuant to the Offer in accordance with the terms of the Offer.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF XXXXXXXX
As of the date hereof, Xxxxxxxx hereby represents and warrants
to Devon as follows and acknowledges that it is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
6.1 ORGANIZATION AND QUALIFICATION
Xxxxxxxx is a corporation duly continued and organized and
validly existing under the laws of Canada and has the requisite corporate power
and authority to carry on its business as it is now being conducted. Each of the
Xxxxxxxx Subsidiaries is a corporation duly incorporated and organized and
validly subsisting under the laws of the jurisdiction of its incorporation or a
partnership duly constituted, as the case may be, and has the requisite
corporate or partnership power and authority to carry on its business as now
being conducted. Xxxxxxxx and each Xxxxxxxx Subsidiary is duly registered to do
business and is in good standing in each jurisdiction in which the character of
its properties, owned or leased, or the nature of its activities make such
registration necessary, except where the failure to be so registered or in good
standing would not have a material adverse effect on Xxxxxxxx and the Xxxxxxxx
Subsidiaries taken as a whole.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT
Xxxxxxxx has the requisite corporate authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by Xxxxxxxx'x Board of Directors, and no other
corporate proceedings on the part of Xxxxxxxx are necessary to authorize this
Agreement (except for obtaining shareholder approval in respect of any Second
Stage Transaction) and the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Xxxxxxxx and constitutes a legal, valid and
binding obligation of Xxxxxxxx enforceable against Xxxxxxxx in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general principles of equity.
6.3 NO VIOLATIONS
(a) Neither the execution and delivery of this Agreement by Xxxxxxxx, the
consummation of the transactions contemplated hereby nor compliance by
Xxxxxxxx with any of the provisions hereof will: (i) violate, conflict
with, or result in breach of any provision of, require any consent,
approval or notice under, or constitute a default (or an event which,
with notice or lapse of time or both,
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would constitute a default) or result in a right of termination or
acceleration under, or result in a creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Xxxxxxxx or any of the Xxxxxxxx Subsidiaries under, any of the terms,
conditions or provisions of (x) the Xxxxxxxx Governing Documents or (y)
any material note, bond, mortgage, indenture, loan agreement, deed of
trust, agreement, lien, contract or other instrument or obligation to
which Xxxxxxxx or any of the Xxxxxxxx Subsidiaries is a party or to
which any of them, or any of their respective properties or assets, may
be subject or by which Xxxxxxxx or any of the Xxxxxxxx Subsidiaries is
bound; or (ii) subject to compliance with the statutes and regulations
referred to in Section 6.3(b), violate any judgment, ruling, order,
writ, injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to Xxxxxxxx or any of the Xxxxxxxx
Subsidiaries (except, in the case of each of clauses (i) and (ii)
above, for such violations, conflicts, breaches, defaults, terminations
which, or any consents, approvals or notices which if not given or
received, would not have any material adverse effect on the business,
operations or financial condition of Xxxxxxxx and the Xxxxxxxx
Subsidiaries taken as a whole or on the ability of Xxxxxxxx to
consummate the transactions contemplated hereby).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, Investment Canada Act (Canada), the Competition Act
(Canada), the rules of The Toronto Stock Exchange and the New York
Stock Exchange, the HSR Act and any pre-merger notification statutes,
(i) there is no legal impediment to Xxxxxxxx'x consummation of the
transactions contemplated by this Agreement and (ii) no filing or
registration with, or authorization, consent or approval of, any
domestic or foreign public body or authority is necessary by Xxxxxxxx
in connection with the making or the consummation of the Offer, except
for such filings or registrations which, if not made, or for such
authorizations, consents or approvals, which, if not received, would
not have a material adverse effect on the ability of Xxxxxxxx to
consummate the transactions contemplated hereby.
6.4 CAPITALIZATION
As of the date hereof, the authorized share capital of
Xxxxxxxx consists of an unlimited number of common shares, an unlimited number
of preferred shares and an unlimited number of junior preferred shares. As of
August 30, 2001, not more than 131,370,000 Xxxxxxxx Shares are issued and
outstanding and no preferred shares are issued or outstanding. As of the date
hereof, options to acquire an aggregate of 7,383,920 Xxxxxxxx Shares have been
granted under the Stock Option Plan, up to 17,000 Xxxxxxxx Shares will be issued
pursuant to the Xxxxxxxx Employee Profit Sharing Plan and 1,503,877 share
appreciation rights have been granted pursuant to the Xxxxxxxx Share
Appreciation Rights Plan. Except as set forth above and except in connection
with the arrangements contemplated in Section 2.6, there are no securities of
Xxxxxxxx outstanding and no options, warrants or other rights, agreements or
commitments of any character whatsoever requiring the issuance, sale or transfer
by Xxxxxxxx of any shares of Xxxxxxxx (including the Xxxxxxxx Shares) or any
securities convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, any shares of Xxxxxxxx (including the Xxxxxxxx
Shares), nor are there any outstanding stock appreciation rights, phantom equity
or similar rights, agreements, arrangements or commitments based upon the book
value, income or other attributes of Xxxxxxxx. All outstanding Xxxxxxxx Shares
have been duly authorized and validly issued, are fully paid and non-assessable
and are not subject to, nor were they issued in violation of, any preemptive
rights, and all Xxxxxxxx Shares issuable upon exercise of outstanding stock
options and pursuant to the Xxxxxxxx Employee Profit Sharing Plan in accordance
with their respective terms will be duly authorized and validly issued, fully
paid and non-assessable and will not be subject to any preemptive rights.
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6.5 NO MATERIAL ADVERSE CHANGE
Since September 30, 2000, there has not been any Material
Adverse Change.
6.6 NO UNDISCLOSED MATERIAL LIABILITIES
Except: (a) as disclosed or reflected in the audited financial
statements of Xxxxxxxx as at September 30, 2000 or in the Disclosure Letter; and
(b) for liabilities and obligations: (i) incurred in the ordinary course of
business and consistent with past practice; or (ii) pursuant to the terms of
this Agreement, neither Xxxxxxxx nor any of its subsidiaries has incurred any
liabilities of any nature, whether accrued, contingent or otherwise (or which
would be required by Canadian GAAP to be reflected on a consolidated balance
sheet of Xxxxxxxx and its subsidiaries) that have constituted or would be
reasonably likely to constitute a Material Adverse Change.
6.7 IMPAIRMENT
Neither the making of the Offer nor the successful completion
of the Offer will result in a Material Adverse Change pursuant to or as a result
of the provisions of any agreement or arrangement to which Xxxxxxxx is a party.
6.8 SALARIES AND BONUSES OF CERTAIN OFFICERS AND EMPLOYEES
The annual salary currently payable and the 2000 bonus paid to
certain officers and employees of Xxxxxxxx are set forth in Schedule G.
6.9 FINANCIAL ADVISOR
Xxxxxxxx has not retained nor will it retain any financial
advisor, broker, agent or finder or paid or agreed to pay any financial advisor,
broker, agent or finder on account of this Agreement, any transaction
contemplated hereby or any transaction presently ongoing or contemplated, except
BMO Xxxxxxx Xxxxx Inc. have been retained as Xxxxxxxx'x financial advisor in
connection with certain matters including the transactions contemplated hereby.
Xxxxxxxx has delivered to Devon a true and complete copy of its agreement with
BMO Xxxxxxx Xxxxx Inc.
6.10 CONDUCT OF BUSINESS
Except as disclosed in the Disclosure Letter, since September
30, 2000, neither Xxxxxxxx nor any of its subsidiaries has taken any action that
would be in violation of Section 7.1 if such provision had been in effect since
such date, other than violations which would not have any material adverse
effect on the business, operations or financial condition of Xxxxxxxx and its
subsidiaries considered as a whole or would not materially affect Xxxxxxxx'x
ability to consummate the transactions contemplated hereby.
6.11 REPORTS
(a) Xxxxxxxx has heretofore delivered to Devon true and complete copies of
(i) Xxxxxxxx'x 2000 Annual Information Form, Xxxxxxxx'x Information
Circular relating to its 2001 annual and special meeting of
shareholders, Xxxxxxxx'x 2000 Annual Report to shareholders and interim
reports for the periods ending December 31, 2000, March 31, 2001 and
June 30, 2001; (ii) all prospectuses or other offering documents used
by Xxxxxxxx in the offering of its securities or filed with Securities
Authorities since September 30, 2000; and (iii) the consolidated
audited financial statements
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of Xxxxxxxx dated September 30, 2000. As of their respective dates,
such forms, statements, prospectuses and other offering documents
(including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and
complied in all material respects with all applicable requirements of
law. The audited financial statements and unaudited interim financial
statements of Xxxxxxxx and its consolidated subsidiaries publicly
issued by Xxxxxxxx, previously delivered to Devon, or included or
incorporated by reference in such forms, statements, prospectuses and
other offering documents were prepared in accordance with Canadian GAAP
(except (i) as otherwise indicated in such financial statements and the
notes thereto or, in the case of audited statements, in the related
report of Xxxxxxxx'x independent accountants or (ii) in the case of
unaudited interim financial statements, to the extent they may not
include footnotes or may be condensed or summary statements), and
fairly present the consolidated financial position, results of
operations and changes in financial position of Xxxxxxxx and its
consolidated subsidiaries as of the dates thereof and for the periods
indicated therein (subject, in the case of any unaudited interim
financial statements, to normal year-end audit adjustments).
(b) Xxxxxxxx will deliver to Devon as soon as they become available true
and complete copies of any report or statement filed by it with
Securities Authorities subsequent to the date hereof. As of their
respective dates, such reports and statements (excluding any
information therein provided by Devon, as to which Xxxxxxxx makes no
representation) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading and will comply in all
material respects with all applicable requirements of law. The
consolidated financial statements of Xxxxxxxx issued by Xxxxxxxx or to
be included in such reports and statements (excluding any information
therein provided by Devon, as to which Xxxxxxxx makes no
representation) will be prepared in accordance with Canadian GAAP
(except (i) as otherwise indicated in such financial statements and the
notes thereto or, in the case of audited statements, in the related
report of Xxxxxxxx'x independent accountants or (ii) in the case of
unaudited interim financial statements, to the extent they may not
include footnotes or may be condensed or summary statements) and will
present fairly the consolidated financial position, results of
operations and changes in financial position of Xxxxxxxx as of the
dates thereof and for the periods indicated therein (subject, in the
case of any unaudited interim financial statements, to normal year-end
audit adjustments).
6.12 SUBSIDIARIES
All of the shares (or partnership interests) of the Xxxxxxxx
Subsidiaries are beneficially wholly-owned, directly or indirectly, by Xxxxxxxx
with valid and marketable title thereto, free and clear of any and all liens,
charges, security interests, adverse claims, encumbrances and demands of any
nature or kind whatsoever.
6.13 COMPLIANCE WITH LAW
Xxxxxxxx and each of its subsidiaries has complied with and is
in compliance with all laws and regulations applicable to the operation of its
business, except where such non-compliance would not, considered individually or
in the aggregate, have a material adverse effect on the business, affairs,
operations, assets, prospects or financial condition of Xxxxxxxx and its
subsidiaries, taken as a whole, or on the ability of Xxxxxxxx to consummate the
transactions contemplated hereby.
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6.14 MATERIAL AGREEMENTS
There are no agreements material to the conduct of Xxxxxxxx'x
and its subsidiaries' businesses except as listed in the Disclosure Letter, and
all such agreements are valid and subsisting and Xxxxxxxx or its subsidiary, as
applicable, is not in material default under any such agreements.
6.15 DISCLOSURE
Xxxxxxxx has disclosed to Devon in the Disclosure Letter any
information regarding any event, circumstance or action taken or failed to be
taken which could reasonably be expected to materially adversely affect the
business, operations, assets, capitalization, financial condition, prospects,
rights or liabilities of or relating to Xxxxxxxx and its subsidiaries taken as a
whole.
6.16 EMPLOYMENT AGREEMENTS
Except as disclosed in Schedule D, neither Xxxxxxxx nor any
subsidiary is a party to any written employment or consulting agreement or any
verbal employment or consulting agreement with a term of more than one year or
any written agreement which provides for a payment by Xxxxxxxx or any subsidiary
on a change of control of Xxxxxxxx or xxxxxxxxx of employment (such agreements
being referred to as the "Employment Agreements").
6.17 U.S. SECURITIES LAW MATTERS
To Xxxxxxxx'x knowledge, less than 40% (calculated in
accordance with Schedule 14D-1F or Rule 14d-1 under the United States Securities
Exchange Act of 1934, as amended (the "US Exchange Act")) of the outstanding
Xxxxxxxx Shares are held by US holders (as defined in Schedule 14D-1F of the US
Exchange Act). Xxxxxxxx is eligible to file with the Securities and Exchange
Commission a solicitation/recommendation statement in compliance with Rules
14d-1(b) and 14e-2(c) under the US Exchange Act on Schedule 14D-9F. Xxxxxxxx is
a foreign private issuer, as that term is defined in Rule 3b-4 of the US
Exchange Act. Xxxxxxxx is not an investment company registered or required to be
registered under the United States Investment Company Act of 1940, as amended.
6.18 EMPLOYEE BENEFIT PLANS
Neither Xxxxxxxx nor any subsidiary has any employee benefit
plans and has made no promises with respect to increased benefits under such
plans, other than: (i) the Stock Option Plan; (ii) the Xxxxxxxx Employee Profit
Sharing Plan; (iii) the Xxxxxxxx Deferred Bonus Plan; (iv) the Xxxxxxxx Share
Appreciation Rights Plan; (v) the Xxxxxxxx Year End Bonus Arrangements; (vi) the
Xxxxxxxx Group RRSP Plan and Xxxxxxxx'x individual registered retirement savings
plan; (vii) the Home Oil Company Limited pension plan and the Numac Pension
Plan, (viii) with respect to those matters contemplated in Section 2.6; and (ix)
existing health, dental, vision and short and long term disability plans, life
insurance and accidental death and dismemberment of general application and
agreements and promises contemplated by the Officer Obligations. All
contributions (including premiums) required by law or contract to and including
June 30, 2001 to have been paid or accrued, under or with respect to such plans,
have been paid or accrued as at that date, as the case may be, except where
failure to make any such contribution could not reasonably be expected to result
in a Material Adverse Change.
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6.19 BOOKS AND RECORDS
The corporate records and minute books of Xxxxxxxx and each
subsidiary have been maintained in accordance with all applicable statutory
requirements and are complete and accurate in all material respects.
6.20 LITIGATION, ETC.
There are, at the date hereof, no actions, suits or
proceedings pending, or to the knowledge of Xxxxxxxx threatened, affecting
Xxxxxxxx or any subsidiary before or by any federal, provincial, state, local,
foreign, municipal or other governmental department, commission, board, bureau,
agency, court or instrumentality, which action, suit or proceeding involves a
possibility of any judgment against or liability of Xxxxxxxx or any subsidiary
or other person which, if successful, would have a material adverse effect on
the business, affairs, operations, assets, prospects or financial condition of
Xxxxxxxx and its subsidiaries, taken as a whole, or on the ability of Xxxxxxxx
or Devon to consummate the transactions contemplated hereby.
6.21 ENVIRONMENTAL
Neither Xxxxxxxx nor any subsidiary is aware of, or has
received:
(a) any order or directive which relates to environmental matters and which
requires any material work, repairs, construction, or capital
expenditures; or
(b) any demand or notice with respect to the material breach of any
environmental, health or safety law applicable to Xxxxxxxx or any
subsidiary or any of their business undertakings, including, without
limitation, any regulations respecting the use, storage, treatment,
transportation, or disposition of environmental contaminants.
6.22 TAX MATTERS
(a) For purposes of this Agreement, the following definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or other additions that may
become payable in respect thereof, imposed by any federal,
provincial, state, local or foreign government or any agency
or political subdivision of any such government, which taxes
shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not
limited to, federal income taxes and provincial income taxes),
capital, payroll and employee withholding taxes, labour taxes,
employment insurance, social insurance taxes, sales and use
taxes, ad valorem taxes, value added taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp
taxes, environmental taxes, transfer taxes, workers'
compensation and other governmental charges, and other
obligations of the same or of a similar nature to any of the
foregoing, which Xxxxxxxx or any of its subsidiaries is
required to pay, withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and
returns relating to, or required to be filed in connection
with, any Taxes.
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(b) All Returns required to be filed by or on behalf of Xxxxxxxx or any
subsidiary have been duly filed on a timely basis and such Returns are
true, complete and correct in all material respects. All Taxes shown to
be payable on the Returns or on subsequent assessments with respect
thereto have been paid in full on a timely basis, and no other Taxes
are payable by Xxxxxxxx or any material subsidiaries with respect to
items or periods covered by such Returns.
(c) Xxxxxxxx and each subsidiary has paid or provided adequate accruals in
its financial statements for the year ended dated September 30, 2000
for Taxes, including income taxes, labour taxes and related deferred
taxes, in conformity with Canadian GAAP.
(d) For all periods ending on and after September 30, 1997, Devon has been
furnished by Xxxxxxxx true and complete copies of: (i) material
portions of income tax audit reports, statements of deficiencies,
closing or other agreements received by Xxxxxxxx and the Xxxxxxxx
Subsidiaries or on behalf of Xxxxxxxx and the Xxxxxxxx Subsidiaries
relating to Taxes; and (ii) all material federal, provincial, state,
local or foreign income or franchise tax returns for Xxxxxxxx and the
Xxxxxxxx Subsidiaries.
(e) No material deficiencies exist or have been asserted with respect to
Taxes of Xxxxxxxx or any subsidiary. Except as disclosed in the
Disclosure Letter, neither Xxxxxxxx nor any subsidiary is a party to
any action or proceeding for assessment or collection of Taxes, nor has
such event been asserted or to Xxxxxxxx'x knowledge threatened against
Xxxxxxxx or any subsidiary or any of their respective assets. Except as
disclosed in the Disclosure Letter, no waiver or extension of any
statute of limitations is in effect with respect to Taxes or Returns of
Xxxxxxxx or any subsidiary. There is no audit in process, pending or,
to the knowledge of Xxxxxxxx and any subsidiary, threatened by a
governmental or taxing authority relating to the Returns of Xxxxxxxx
and any subsidiary for the last three years.
(f) Xxxxxxxx has provided adequate accruals in its financial statements for
the year ended September 30, 2000 (or, in either case, such amounts are
fully funded) for all pension or other employee benefit obligations of
Xxxxxxxx or any subsidiary arising under or relating to each of the
pension or retirement income plans or other employee benefit plans or
agreements or policies maintained by or binding on Xxxxxxxx or any of
its subsidiaries.
6.23 REPORTING ISSUER STATUS
Xxxxxxxx is a "reporting issuer" in material compliance with
all applicable securities laws of provinces of Canada and the Xxxxxxxx Shares
are only listed on The Toronto Stock Exchange and the New York Stock Exchange.
6.24 DEBT AND WORKING CAPITAL
As at June 30, 2001, Xxxxxxxx'x consolidated debt (other than
trade debt) does not exceed $1.48 billion and its working capital deficiency is
not greater than $220 million.
6.25 CONFIDENTIALITY AGREEMENTS
All agreements entered into by Xxxxxxxx with persons other
than Devon regarding the confidentiality of information provided to such persons
or reviewed by such persons with respect to the sale of Xxxxxxxx or any merger,
arrangement or amalgamation of Xxxxxxxx with another party are in substantially
the form of the confidentiality agreement executed by Devon on August 25, 2001
(the
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"Confidentiality Agreement"). Xxxxxxxx has not negotiated any Take-over Proposal
with any person who has not entered into such a confidentiality agreement.
6.26 INSURANCE
Policies of insurance in force as of the date hereof naming
Xxxxxxxx as an insured adequately cover all risks reasonably and prudently
foreseeable in the operation and conduct of the business of Xxxxxxxx and its
subsidiaries. All such policies of insurance shall remain in force and effect
and shall not be canceled or otherwise terminated as a result of the
transactions contemplated hereby or by the Offer.
ARTICLE 7
CONDUCT OF BUSINESS
7.1 CONDUCT OF BUSINESS BY XXXXXXXX
Xxxxxxxx covenants and agrees that, during the period from the
date of this Agreement until the earlier of either: (i) the Effective Time; or
(ii) this Agreement is terminated by its terms, unless Devon shall otherwise
agree in writing, except as required by law or in connection with a Take-over
Proposal or as otherwise expressly permitted or specifically contemplated by
this Agreement:
(a) the business of Xxxxxxxx and its subsidiaries shall be conducted only
in, and Xxxxxxxx and its subsidiaries shall not take any action except
in, the usual and ordinary course of business and consistent with past
practice, and Xxxxxxxx shall use all commercially reasonable efforts to
maintain and preserve its business organization, assets, employees and
advantageous business relationships;
(b) Xxxxxxxx shall not directly or indirectly do or permit to occur any of
the following: (i) amend the Xxxxxxxx Governing Documents; (ii)
declare, set aside or pay any dividend or other distribution or payment
(whether in cash, shares or property) in respect of its shares owned by
any person other than the payment of semi-annual cash dividends which
will commence on October 1, 2001; (iii) issue, grant, sell or pledge or
agree to issue, grant, sell or pledge any shares of Xxxxxxxx or its
subsidiaries, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, shares of
Xxxxxxxx or its subsidiaries, other than Xxxxxxxx Shares issuable
pursuant to the terms of the Xxxxxxxx Options and the Xxxxxxxx Employee
Profit Sharing Plan; (iv) redeem, purchase or otherwise acquire any of
its outstanding shares or other securities; (v) split, combine or
reclassify any of its shares; (vi) adopt a plan of liquidation or
resolutions providing for the liquidation, dissolution, merger,
consolidation or reorganization of Xxxxxxxx; or (vii) enter into or
modify any contract, agreement, commitment or arrangement with respect
to any of the foregoing, except as permitted above;
(c) neither Xxxxxxxx nor any of its subsidiaries has, other than as
disclosed in the Disclosure Letter, and shall, without prior
consultation with and the consent of Devon, such consent not to be
unreasonably withheld, directly or indirectly do any of the following:
(i) sell, pledge, dispose of or encumber any assets having an
individual value in excess of $1 million; (ii) acquire (by merger,
amalgamation, consolidation or acquisition of shares or assets) any
corporation, partnership or other business organization or division
thereof, or make any investment either by purchase of shares or
securities, contributions of capital (other than to wholly owned
subsidiaries) or property transfer; (iii) acquire any assets with an
acquisition cost which would exceed (A) $1 million individually or (B)
$5,000,000 in the aggregate, with the exception of purchases at crown
lease sales and freehold lease acquisitions; (iv) incur any
indebtedness for borrowed money in excess of
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existing facilities, or any other material liability or obligation or
issue any debt securities or assume, guarantee, endorse or otherwise as
an accommodation become responsible for, the obligations of any other
individual or entity, or make any loans or advances, other than the
Officer Obligations and the arrangements contemplated in Section 2.6
and fees payable to legal advisors in the ordinary course and fees
payable to legal and financial advisors in respect of the Offer; (v)
authorize, recommend or propose any release or relinquishment of any
material contract right; (vi) waive, release, grant or transfer any
material rights of value or modify or change in any material respect
any existing material license, lease, contract, production sharing
agreement, government land concession or other material document:
(viii) enter into or terminate any xxxxxx, swaps or other financial
instruments or like transactions (other than in accordance with their
terms); (ix) enter into commitments of a capital expenditure nature or
incur any contingent liability other than in accordance with the 2001
operating budget and the 2002 first quarter operating forecast, copies
of which have been made available to Devon (and Xxxxxxxx shall not
amend such budgets); (x) enter into any non-arm's length transactions
including with any employees of Xxxxxxxx or any of its subsidiaries or
transfer any property or assets of Xxxxxxxx or any of its subsidiaries
to any employees, except: (i) as may be necessary for the maintenance
of existing facilities, machinery and equipment in good operating
condition and repair in the ordinary course of business; or (ii) as may
be required by law; or (x) authorize or propose any of the foregoing,
or enter into or modify any contract, agreement, commitment or
arrangement to do any of the foregoing;
(d) neither Xxxxxxxx nor any of its subsidiaries shall create any new
Officer Obligations and, except for payment of the existing Officer
Obligations (from which Devon shall make appropriate withholdings as
required by applicable tax laws), neither Xxxxxxxx nor any of its
subsidiaries shall grant to any officer or director an increase in
compensation in any form, grant any general salary increase other than
in accordance with the requirements of any existing collective
bargaining or union contracts, grant to any other employee any increase
in compensation in any form other than routine increases in the
ordinary course of business consistent with past practices, make any
loan to any officer or director, or take any action with respect to the
grant of any severance or termination pay arising from the Offer or a
change of control of Xxxxxxxx or the entering into of any employment
agreement with, any senior officer or director, or with respect to any
increase of benefits payable under its current severance or termination
pay policies; and
(e) neither Xxxxxxxx nor any of its subsidiaries shall adopt or amend or
make any contribution to any bonus, profit sharing, option, pension,
retirement, deferred compensation, insurance, incentive compensation,
other compensation or other similar plan, agreement, trust, fund or
arrangements for the benefit of employees, except as is necessary to
comply with the law or with respect to existing provisions of any such
plans, programs, arrangements or agreements.
7.2 PROVISION OF INFORMATION
(a) Immediately upon acceptance of this Agreement, Xxxxxxxx shall provide
to Devon information which would allow Devon, subject to the existing
confidentiality restrictions pursuant to the Confidentiality Agreement,
to enable Devon to quickly and efficiently integrate the business and
affairs of Xxxxxxxx with Devon at the Effective Time and Xxxxxxxx shall
permit:
(i) Devon and its representatives to have reasonable access to
Xxxxxxxx'x premises, field operations, records, computer
systems, properties, books, contracts, records, employees and
management personnel;
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(ii) Devon and its representatives reasonable access to interview
employees of Xxxxxxxx for the purpose of determining which
employees will be retained after the Effective Time; and
(iii) Devon and its representatives to be informed of the operations
of Xxxxxxxx to ensure there is compliance with Section 7.1
hereof.
It is acknowledged that the purpose of this clause is to permit Devon to be in a
position to expeditiously integrate the business and operations of Xxxxxxxx with
that of Devon immediately upon but not prior to, the Effective Time without
causing any unreasonable disruptions to Xxxxxxxx'x business or operations prior
to the Effective Time.
ARTICLE 8
COVENANTS OF XXXXXXXX
8.1 NOTICE OF MATERIAL CHANGE
From the date hereof until the termination of this Agreement,
Xxxxxxxx shall promptly notify Devon in writing of:
(a) any material change (actual, anticipated, contemplated or, to the
knowledge of Xxxxxxxx, threatened, financial or otherwise) in the
business, affairs, operations, assets, liabilities (contingent or
otherwise) or capital of Xxxxxxxx and its subsidiaries considered as a
whole;
(b) any change in any representation or warranty set forth in Article 6
which change is or may be of such a nature as to render any such
representation or warranty misleading or untrue in a material respect;
or
(c) any material fact in respect of Xxxxxxxx which arises and which would
have been required to be stated herein had the fact arisen on or prior
to the date of this Agreement.
Xxxxxxxx shall in good faith discuss with Devon any change in
circumstances (actual, anticipated, contemplated or, to the knowledge of
Xxxxxxxx, threatened, financial or otherwise) which is of such a nature that
there may be a reasonable question as to whether notice need to be given to
Devon pursuant to this section.
8.2 NON-COMPLETION FEE
If at any time after the execution of this Agreement (and
provided there is no material breach or non-performance by Devon of a material
provision of this Agreement in any respect):
(a) the Board of Directors of Xxxxxxxx has withdrawn or, in any manner
adverse to Devon, redefined, modified or changed any of its
recommendations or determinations referred to in Section 2.2, or shall
have resolved to do so;
(b) any bona fide Take-over Proposal for the Xxxxxxxx Shares is publicly
announced or commenced, and the Board of Directors of Xxxxxxxx shall
have failed to publicly reaffirm and maintain its recommendation of the
Offer to Xxxxxxxx'x shareholders within 10 days after the public
announcement or commencement of any such Take-over Proposal;
(c) the Board of Directors of Xxxxxxxx shall have recommended that
Xxxxxxxx'x shareholders deposit their Xxxxxxxx Shares under, vote in
favour of, or otherwise accept, a Take-over Proposal;
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(d) Xxxxxxxx shall have entered into any agreement with any person with
respect to a Take-over Proposal prior to the Expiry Time of the Offer,
excluding a confidentiality agreement entered into in compliance with
Section 8.3; or
(e) a Take-over Proposal is publicly announced, proposed, offered or made
to Xxxxxxxx'x shareholders or to Xxxxxxxx prior to the Expiry Time of
the Offer and such Take-over Proposal has been completed,
Xxxxxxxx shall upon the occurrence of any such event and in
any event within one Business Day pay to Devon the amount of $210 million. Such
payment shall be made in immediately available funds to an account designated by
Devon. On the date of the earliest of any of the events specified in Sections
8.2(a) to (e), Xxxxxxxx shall be deemed to hold such amount in trust for Devon.
In the event that a Take-over Proposal is publicly announced, proposed, offered
or made to holders of Xxxxxxxx Shares as contemplated by Section 8.2(e),
Xxxxxxxx agrees to deliver to Devon, at least 3 Business Days prior to the
scheduled expiry of such Take-over Proposal, an irrevocable letter of credit, in
form satisfactory to Devon, acting reasonably, drawable within one Business Day
after Devon shall have delivered to the issuing party a written certificate
confirming the occurrence of an event specified in Section 8.2(e) or such other
form of security as is satisfactory to Devon, acting reasonably.
Any payment pursuant to Section 8.2 shall be without prejudice
to the rights or remedies available to Devon upon the breach of any provision of
this Agreement provided that Xxxxxxxx shall only be obligated to only one
payment pursuant to this Section 8.2.
8.3 NO SOLICITATION
Xxxxxxxx shall immediately cease and cause to be terminated
any existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by Xxxxxxxx, any of its
subsidiaries or their officers, directors, employees, financial advisors,
representatives and agents ("Representatives") with respect to a Take-over
Proposal (as defined herein) whether or not initiated by Xxxxxxxx and in
connection therewith, Xxxxxxxx shall not release any third party from any
confidentiality or standstill agreement to which Xxxxxxxx and such third party
is a party or amend any of the foregoing and shall exercise all rights to
require the return of information regarding Xxxxxxxx. From and after the date
hereof, Xxxxxxxx and its subsidiaries will not, and will not authorize or permit
any of their Representatives to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information) or participate in or take
any other action to facilitate any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to a Take-over Proposal from
any person, or engage in any discussion, negotiations or inquiries relating
thereto or accept any Take-over Proposal; provided, however, that Xxxxxxxx may:
(i) engage in discussions or negotiations with a third party who (without any
solicitation, initiation or encouragement, directly or indirectly, by Xxxxxxxx,
any of its subsidiaries or the Representatives after the date hereof) seeks to
initiate such discussions or negotiations and may furnish such third party
information concerning Xxxxxxxx and its business, properties and assets which
has previously been provided to Devon if, and only to the extent that: (A) the
third party has first made a bona fide written Take-over Proposal that is
financially superior to the Offer and has demonstrated that such proposal
constitutes a commercially feasible transaction which could be carried out
within a time frame that is reasonable in the circumstances and that the funds
or other consideration necessary for the Take-over Proposal are available or
reasonably likely to be available (as determined in good faith in each case by
Xxxxxxxx'x Board of Directors after receiving the advice of its financial
advisors) (a "Superior Proposal") and Xxxxxxxx'x Board of Directors has
concluded in good faith, after considering applicable law and receiving the
advice of outside counsel that such action is required by the Xxxxxxxx Board of
Directors to comply with fiduciary duties under applicable law; (B) prior to
furnishing
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such information to or entering into discussions or negotiations with such
person or entity, Xxxxxxxx provides immediate notice orally and in writing to
Devon specifying the identity of such person or entity and that it is furnishing
information to or entering into discussions or negotiations with such person or
entity in respect to a Superior Proposal, receives from such person or entity an
executed confidentiality agreement having confidentiality and standstill terms
substantially similar to those contained in the Confidentiality Agreement
executed by Devon, and immediately provides Devon with a complete copy of such
Superior Proposal and any amendments thereto and confirming in writing the
determination of Xxxxxxxx'x board that the Take-over Proposal if completed would
constitute a Superior Proposal; (C) Xxxxxxxx provides immediate notice to Devon
at such time as it or such person or entity terminates any such discussions or
negotiations; and (D) Xxxxxxxx immediately provides to Devon any information
provided to any such person or entity whether or not previously made available
to Devon; (ii) comply with applicable Securities Laws relating to the provision
of directors' circulars, and make appropriate disclosure with respect thereto to
Xxxxxxxx'x shareholders; and (iii) accept, recommend, approve or implement a
Superior Proposal from a third party, but only (in the case of this clause
(iii)) if prior to such acceptance, recommendation, approval or implementation,
Xxxxxxxx'x Board of Directors shall have concluded in good faith, after
considering provisions of applicable law and after giving effect to all
proposals to adjust the terms and conditions of this Agreement and the Offer
which may be offered by Devon during the 2 Business Days notice period set forth
below and after receiving the advice of outside counsel, that such action is
required by the Xxxxxxxx Board of Directors to comply with fiduciary duties
under applicable law and Xxxxxxxx terminates this Agreement in accordance with
Sections 8.2 and 11.1(f) and concurrently therewith has paid the fees payable
thereunder. Xxxxxxxx shall give Devon orally and in writing at least 2 Business
Days advance notice of any decision by the Board of Xxxxxxxx to accept,
recommend, approve or implement a Superior Proposal which notice shall identify
the party making the Superior Proposal and shall provide a true and complete
copy thereof and any amendments thereto. In addition Xxxxxxxx shall, and shall
cause its respective financial and legal advisors to, negotiate in good faith
with Devon to make such adjustments in the terms and conditions of this
Agreement and the Offer as would enable Xxxxxxxx to proceed with the Offer as
amended rather than the Superior Proposal. In the event Devon proposes to amend
this Agreement and the Offer to provide substantially equivalent or superior
value to that provided under the Superior Proposal within the 2 Business Day
time period specified above, then Xxxxxxxx shall not enter into any agreement
regarding the Superior Proposal.
8.4 XXXXXXXX BOARD OF DIRECTORS
The Board of Directors of Xxxxxxxx immediately following the
acquisition by Devon of more than 50% of the outstanding Xxxxxxxx Shares
pursuant to the Offer shall be reconstituted through resignations of all
existing Xxxxxxxx directors and the appointment of Devon nominees in their
stead. Xxxxxxxx shall, in accordance with the foregoing and subject to the
provisions of the Act, assist Devon to secure the resignations of all Xxxxxxxx
directors to be effective at such time as may be required by Devon and to use
its best efforts to cause the election of the Devon nominees to fill the
vacancies so created in order to effect the foregoing without the necessity of a
shareholder meeting.
8.5 STRUCTURE OF TRANSACTION
Xxxxxxxx shall, to the extent reasonable, cooperate with Devon
in structuring the acquisition by Devon of Xxxxxxxx in a tax efficient manner,
including without limitation, by completing to the satisfaction of Devon, acting
reasonably, a possible internal corporate reorganization of Xxxxxxxx involving
the transfer of certain assets to one or more partnerships and/or the transfer
of certain assets or unincorporated business divisions to separate wholly-owned
Canadian subsidiary corporations.
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8.6 FINANCIAL AND OTHER INFORMATION
Xxxxxxxx shall make available to Devon, and consents to the
use of, all financial statements and other information of Xxxxxxxx which may be
required to be disclosed in the Offer or in other Devon documents, including any
proxy statement of Devon and any registration statement filed by Devon with the
United States Securities and Exchange Commission, and amendments thereto, as
required under applicable law. Such financial statements shall be prepared in
accordance with Canadian GAAP. If required under applicable law, Xxxxxxxx shall
make available to Devon, and shall assist in the preparation of and consents to
the use of, reconciliations of such financial statements to generally accepted
accounting principles in the United States, prepared in accordance with Item 18
of Form 20-F under the United States Securities Exchange Act of 1934, as
amended. If required by applicable law, such financial statements shall be
audited by Xxxxxxxx'x auditors. Xxxxxxxx shall request that its auditors, to the
extent required under applicable law, provide their consent to the use of their
report and the use of their name in connection with any disclosure by Devon of
such financial statements. Devon agrees to reimburse Xxxxxxxx for its reasonable
third party expenses in connection with complying with this Section 8.6.
ARTICLE 9
COVENANTS OF DEVON
9.1 AVAILABILITY OF FUNDS
Devon covenants and agrees that at all times when the Offer is
outstanding, Devon shall not take any action, or fail to take any action, which
would or could result in the representation and warranty set out in Section 5.4
being untrue in any material respect at any time while the Offer is outstanding.
9.2 OTHER COVENANTS
Devon covenants and agrees that, from and including the date
hereof until the termination of this Agreement, unless Xxxxxxxx agrees otherwise
in writing:
(a) Devon shall use its reasonable commercial efforts to consummate the
Offer, subject only to the terms and conditions hereof and thereof;
(b) Devon shall use its reasonable commercial efforts to obtain all of the
regulatory approvals, waivers and consents set out in paragraph (b) of
Schedule A; and
(c) Devon shall honour all employment agreements, severance agreements and
other arrangements disclosed in Schedules D, E and F. Devon
acknowledges that Xxxxxxxx shall hold the benefits of this section in
trust for the benefit of such employees and Devon shall not take any
action or permit any of its subsidiaries to take any action that would
render, or may reasonably be expected to render, any representation or
warranty made by it in this Agreement untrue in any material respect at
any time prior to expiry of the Offer or termination of this Agreement,
whichever first occurs.
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ARTICLE 10
MUTUAL COVENANTS
10.1 OTHER FILINGS
Devon and Xxxxxxxx shall, as promptly as practicable
hereafter, prepare and file any filings required under the Competition Act
(Canada), Investment Canada Act (Canada), any Securities Law, the rules of The
Toronto Stock Exchange and the New York Stock Exchange, the United States
Securities Exchange Act of 1934, as amended, state securities or "blue-sky" laws
of the states of the United States, as amended, the HSR Act or any other
applicable law relating to the transactions contemplated herein.
10.2 ADDITIONAL AGREEMENTS
Subject to the terms and conditions herein provided and to
fiduciary obligations under applicable law as advised by counsel in writing,
each of the parties hereto agrees to use all commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement and to
cooperate with each other in connection with the foregoing, including using
commercially reasonable efforts: (i) to obtain all necessary waivers, consents
and approvals from other parties to material agreements, leases and other
contracts (including, without limitation, the agreement of any persons as may be
required pursuant to any agreement, arrangement or understanding relating to
Xxxxxxxx'x operations); (ii) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal, provincial or
foreign law or regulations; (iii) to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby; (iv) to cause to be lifted or rescinded any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby; (v) to effect all necessary
registrations and other filings and submissions of information requested by
governmental authorities; and (vi) to fulfill all conditions and satisfy all
provisions of this Agreement and the Offer. For purposes of the foregoing, the
obligation to use "commercially reasonable efforts" to obtain waivers, consents
and approvals to loan agreements, leases and other contracts shall not include
any obligation to agree to a materially adverse modification of the terms of
such documents or to prepay or incur additional material obligations to such
other parties.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 TERMINATION
This Agreement, other than the provisions set forth in
Sections 8.2, 11.2 and 12.6, may be terminated by written notice promptly given
to the other party hereto, at any time prior to the time Devon first takes up
and pays for Xxxxxxxx Shares:
(a) by mutual agreement by Devon and Xxxxxxxx; or
(b) by Xxxxxxxx, if Devon has not mailed the Offer Documents to holders of
Xxxxxxxx Shares on or before 12:00 midnight (Calgary time) on September
12, 2001; or
(c) by Devon, if the conditions to the Offer have not been satisfied or
waived by Devon on or before the Expiry Time; or
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(d) by either Devon or Xxxxxxxx, if Devon has not taken up and paid for the
Xxxxxxxx Shares deposited under the Offer on or before the date which
is 90 days, or if a Take-over Proposal is publicly announced, proposed,
offered or made to Xxxxxxxx'x shareholders, 180 days, following the day
of mailing of the Offer Documents; or
(e) by either Devon or Xxxxxxxx, if the Offer terminates or expires at the
Expiry Time without Devon taking up and paying for any of the Xxxxxxxx
Shares as a result of the failure of any condition to the Offer to be
satisfied or waived unless the failure of such condition shall be due
to the failure of the party seeking to terminate this Agreement to
perform the obligations required to be performed by it under this
Agreement; or
(f) by either Devon or Xxxxxxxx, if the fee referred to in Section 8.2
becomes payable and payment is made or is immediately available to
Devon; or
(g) by either Devon or Xxxxxxxx, if there has been a misrepresentation,
breach or nonperformance by the other party of any representation,
warranty or covenant contained in this Agreement which would have or
would be reasonably likely to have a material adverse effect on the
party seeking to terminate, provided the breaching party has been given
notice of and 3 Business Days to cure any such misrepresentation,
breach or non-performance.
11.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement as provided
in Section 11.1, this Agreement shall forthwith have no further force or effect
and there shall be no obligation on the part of Devon or Xxxxxxxx hereunder
except as set forth in Sections 8.2 (provided that the right of payment (in the
case of Section 8.2(e), being the public announcement or commencement of such
Take-over Proposal) arose prior to the termination of this Agreement), 8.6
(insofar as it relates to the reimbursement of expenses) and 12.6 and this
Section 11.2, which provisions shall survive the termination of this Agreement.
Nothing herein shall relieve any party from liability for any breach of this
Agreement.
11.3 AMENDMENT
This Agreement may be amended by mutual agreement between the
parties hereto. This Agreement may not be amended except by an instrument in
writing signed by the appropriate officers on behalf of each of the parties
hereto.
11.4 WAIVER
Devon, on the one hand, and Xxxxxxxx, on the other hand, may
(i) extend the time for the performance of any of the obligations or other acts
of the other, (ii) waive compliance with any of the other's agreements or the
fulfillment of any conditions to its own obligations contained herein or (iii)
waive inaccuracies in any of the other's representations or warranties contained
herein or in any document delivered by the other party hereto; provided,
however, that any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
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ARTICLE 12
GENERAL PROVISIONS
12.1 NOTICES
All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or sent if delivered personally or sent by cable,
telegram, telecopier or telex or sent by prepaid overnight carrier to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
(a) if to Devon:
00 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Duke X. Xxxxx
Senior Vice President and General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx LLP
#0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Grant A. Zawalsky
Telecopy No.: (000) 000-0000
(b) if to Xxxxxxxx:
#0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: X.X. Xxxxxxxx
Chairman and Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx LLP
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: C. Xxxxx Xxxxxxxxxx and Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
12.2 MISCELLANEOUS
This Agreement: (i) except for the Confidentiality Agreement,
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, between the parties, with respect to the
subject matter hereof; and (ii) shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. The parties
hereto shall be entitled to rely upon delivery of an executed facsimile copy of
the Agreement, and such facsimile copy shall be legally
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effective to create a valid and binding agreement among the parties hereto. The
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the Province of
Alberta having jurisdiction, this being in addition
to any other remedy to which they are entitled at law or in equity.
12.3 DIRECTORS' AND OFFICERS' INSURANCE
Devon agrees that, if it acquires the Minimum Required Shares
under the Offer, it shall cause Xxxxxxxx or any successor of Xxxxxxxx to
maintain Xxxxxxxx'x current director and officer liability insurance coverage,
or obtain "run on" director and officer liability insurance or coverage under
Devon's director and officer liability insurance policy (all on terms not less
favourable than those under Xxxxxxxx'x current director and officer liability
insurance coverage) for the current and former directors and officers of
Xxxxxxxx and its subsidiaries covering claims made prior to or within 6 years
following the Effective Time. Devon's obligation hereunder shall be limited to
purchasing such insurance as is available at a cost of not more than 250% of the
current annual premiums for director and officer liability insurance paid by
Xxxxxxxx.
12.4 INDEMNITIES
Devon agrees that, if it acquires the Minimum Required Shares
under the Offer, it shall cause each of Xxxxxxxx and its subsidiaries to fulfill
its obligations pursuant to indemnities provided or available to past and
present officers and directors of Xxxxxxxx and its subsidiaries pursuant to the
provisions of the articles, bylaws or similar constating documents of Xxxxxxxx
and its subsidiaries, applicable corporate legislation and any written indemnity
agreements between any of Xxxxxxxx or its subsidiaries and its past and present
directors and officers in the forms provided to Devon; provided that this
Section 12.4 shall not restrict or prohibit Devon from dissolving Xxxxxxxx,
reorganizing the capital of Xxxxxxxx, amalgamating Xxxxxxxx with one or more
corporations, transferring all or substantially all of the assets of Xxxxxxxx to
another entity, causing Xxxxxxxx to assume the liabilities of another entity or
otherwise reorganizing or restructuring Xxxxxxxx or its business (a
"Reorganization"). Devon covenants that it shall, upon such Reorganization,
cause any successor of Xxxxxxxx to assume Xxxxxxxx'x obligations under such
indemnities. Devon further covenants that it shall ensure that Xxxxxxxx and any
successor of Xxxxxxxx shall have the necessary financial resources (whether
through its net assets or otherwise) to satisfy aggregate indemnification
liability of $250 million. In the event that Xxxxxxxx or any successor of
Xxxxxxxx is required to make any payment under such indemnities, the $250
million referred to in the preceding sentence shall be reduced by the amount so
paid provided that the foregoing shall not affect the obligations of Xxxxxxxx or
such successor under such indemnities.
12.5 ASSIGNMENT
Except as expressly permitted by the terms hereof, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto without the prior written consent of
the other parties. Devon may assign all or any part of its rights or obligations
under this Agreement to a direct or indirect wholly-owned subsidiary of Devon,
provided that if such assignment takes place, Devon shall continue to be liable
to Xxxxxxxx for any default in performance by the assignee.
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12.6 EXPENSES
Except as provided in Section 8.2, all fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such cost or expense,
whether or not the Offer is consummated.
12.7 CONFIDENTIALITY AGREEMENT
With respect to the Offer, including market purchases
permitted under Applicable Law, Xxxxxxxx hereby consents to the Offer and Devon
is hereby released from any of the restrictions set forth in Section 9 of the
Confidentiality Agreement. The parties further agree that this Agreement
constitutes a "Definitive Agreement" as that term is defined in the
Confidentiality Agreement.
12.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Devon and Xxxxxxxx
contained in this Agreement shall not survive the completion of the Offer and
shall expire and be terminated at the earlier of the Effective Time and the date
on which this Agreement is terminated in accordance with its terms.
12.9 SEVERABILITY
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
Any provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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12.10 COUNTERPART EXECUTION
This Agreement may be executed in any number of counterparts
and each such counterpart shall be deemed to be an original instrument but all
such counterparts together shall constitute one agreement.
IN WITNESS WHEREOF, Devon and Xxxxxxxx have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
DEVON ENERGY CORPORATION
Per: /s/ J. XXXXX XXXXXXX
-------------------------------------
Per:
-------------------------------------
XXXXXXXX EXPLORATION LTD.
Per: /s/ X.X. XXXXXXXX
-------------------------------------
Per: /s/ XXXXX XXX
-------------------------------------
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SCHEDULE A
CONDITIONS TO THE OFFER
The capitalized terms used in this Schedule A have the
meanings set forth in the attached Pre-
Acquisition Agreement dated August 31,
2001 (the "Agreement") between Devon and Xxxxxxxx, except that the term
"Offeror" shall be deemed to refer to Devon.
Notwithstanding any other provision of the Offer, but subject
to the provisions of the Agreement, the Offeror reserves the right to withdraw
or terminate the Offer and not take up and pay for, or to extend the period of
time during which the Offer is open and postpone taking up and paying for, any
Xxxxxxxx Shares deposited under the Offer unless all of the following conditions
are satisfied or waived by the Offeror:
(a) at the Expiry Time, and at the time the Offeror first takes up and pays
for Xxxxxxxx Shares under the Offer, there shall have been validly
deposited under the Offer and not withdrawn at least 66 2/3% of the
outstanding Xxxxxxxx Shares (calculated on a diluted basis);
(b) all requisite regulatory approvals, consents and expiries of waiting
periods (including, without limitation, under the Competition Act
(Canada), Investment Canada Act (Canada), the HSR Act and those of any
stock exchanges or other securities or regulatory authorities) shall
have been obtained or occurred on terms and conditions satisfactory to
the Offeror, acting reasonably, and all applicable statutory or
regulatory waiting periods shall have expired or been terminated;
(c) (i) no act, action, suit, proceeding, objection or opposition
shall have been threatened or taken before or by any domestic
or foreign court or tribunal or governmental agency or other
regulatory authority or administrative agency or commission by
any elected or appointed public official or by any private
person in Canada or elsewhere, whether or not having the force
of law, and (ii) no law, regulation or policy (including
applicable tax laws and regulations in those jurisdictions in
which Xxxxxxxx or any of its subsidiaries carries on business)
shall have been proposed, enacted, promulgated, amended or
applied, which in either case, in the sole judgment of the
Offeror acting reasonably;
(A) has the effect or may have the effect to cease trade,
enjoin, prohibit or impose material limitations,
damages or conditions on the purchase by, or the sale
to, the Offeror of the Xxxxxxxx Shares or the right
of the Offeror to own or exercise full rights of
ownership of the Xxxxxxxx Shares;
(B) has had, or if the Offer was consummated would result
in, a material adverse effect on Xxxxxxxx and its
subsidiaries taken as a whole or, in the case of (ii)
above, would have a material adverse effect on the
Offeror;
(C) has a material adverse effect on the completion of
any compulsory acquisition or any amalgamation,
statutory arrangement or other transaction involving
the Offeror and/or an affiliate of the Offeror and
Xxxxxxxx and/or the holders of Xxxxxxxx Shares for
the purposes of Xxxxxxxx becoming, directly or
indirectly, a wholly-owned subsidiary of the Offeror
or affecting an amalgamation or merger of Xxxxxxxx'x
business and assets with or into the Offeror and/or
an affiliate of the Offeror (a "Second Stage
Transaction");
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(d) there shall not exist any prohibition at law against the Offeror making
the Offer or taking up and paying for all of the Xxxxxxxx Shares under
the Offer or completing any compulsory acquisition or Second Stage
Transaction in respect of any Xxxxxxxx Shares not acquired under the
Offer;
(e) in the sole judgment of the Offeror, acting reasonably, (i) Xxxxxxxx
shall not have breached, or failed to comply with, in any material
respect, any of its covenants or other obligations under the Agreement,
and (ii) all representations and warranties of Xxxxxxxx contained in
the Agreement shall have been true and correct in all material respects
as of the date of the Agreement and shall not have ceased to be true
and correct in any material respect thereafter, provided that Xxxxxxxx
has been given notice of and 3 Business Days to cure any
misrepresentation, breach or non-performance and has failed to cure any
such misrepresentation, breach or non-performance;
(f) Devon shall have determined in its reasonable judgment that there does
not exist and has not occurred any Material Adverse Change; and
(g) the Offeror shall have determined in its sole judgment that, on terms
satisfactory to the Offeror that: (i) the Board of Directors of
Xxxxxxxx shall not have waived the application of the Rights Plan to
the purchase of securities by any third party prior to the Expiry Date
of the Offer (ii) a cease trading order or an injunction shall not have
been issued that has the effect of prohibiting or preventing the
exercise of the Rights or the issue of common shares of Xxxxxxxx upon
the exercise of the Rights in relation to any offer that expires prior
to the Expiry Date and such cease trading order or injunction shall be
in full force and effect; (iii) a court of competent jurisdiction shall
not have ordered that the Rights are illegal, of no force or effect or
may not be exercised in relation to any offer which expires prior to
the Expiry Date; (iv) the Rights and the Rights Plan shall not
otherwise have been held unexercisable or unenforceable in relation to
any offer which expires prior to the Expiry Date; or (v) the Rights
Plan does not makes it inadvisable for the Offeror to proceed with the
Offer and/or with taking up and paying for all of the Xxxxxxxx Shares
under the Offer, a compulsory acquisition and any Second Stage
Transaction.
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SCHEDULE B
FORM OF PRE-TENDER AGREEMENT
August 31, 2001
Dear Sir:
RE: OFFER BY DEVON TO PURCHASE ALL OF THE XXXXXXXX SHARES
Reference is made to the Pre-
Acquisition Agreement dated August 31,
2001 (the "Pre-
Acquisition Agreement") between Devon and Xxxxxxxx pursuant to
which Devon has agreed to make an offer to purchase all of the issued and
outstanding Xxxxxxxx Shares. Unless otherwise defined herein, all capitalized
terms referred to herein shall have the meanings attributed thereto in the
Pre-
Acquisition Agreement.
We understand that you (the "Selling Shareholder") or your affiliates
beneficially own, directly or indirectly, or exercise control or direction over,
the number of Xxxxxxxx Shares set forth in your acceptance at the end of this
letter agreement.
Any references in this letter agreement to Xxxxxxxx Shares owned by the
Selling Shareholder shall mean such number of Xxxxxxxx Shares and, where the
context requires, shall include all Xxxxxxxx Shares issued to the Selling
Shareholder after the date hereof pursuant to the exercise of Xxxxxxxx Options.
This letter agreement sets out the terms and conditions upon which the
Selling Shareholder has agreed, among other things, to support the Offer and to
deposit under the Offer, or cause to be deposited under the Offer, all of the
Xxxxxxxx Shares (including Xxxxxxxx Shares issuable upon the exercise of
Xxxxxxxx Options) held by the Selling Shareholder that are, or will be,
beneficially owned or controlled by the Selling Shareholder.
1. COVENANTS OF SELLING SHAREHOLDER
By the acceptance of this letter agreement, the Selling Shareholder
hereby agrees, subject to the terms of paragraph 3 of this letter agreement,
from the date hereof until the earlier of the termination of this letter
agreement and the Expiry Time:
(a) not to sell, assign, convey or otherwise dispose of any of the Xxxxxxxx
Shares owned by such Selling Shareholder and not to permit any
affiliate of such Selling Shareholder to sell, assign, convey or
otherwise dispose of any of the Xxxxxxxx Shares owned by it;
(b) unconditionally and irrevocably to accept and to cause any affiliate of
such Selling Shareholder to unconditionally and irrevocably accept the
Offer made by Devon by depositing the Xxxxxxxx Shares presently owned
or hereafter acquired (including any Xxxxxxxx Shares hereafter acquired
pursuant to the exercise of any options to purchase Xxxxxxxx Shares) by
such Selling Shareholder or affiliate prior to the Expiry Time and in
accordance with the terms and conditions of the Offer;
(c) to sell or surrender for cancellation to Xxxxxxxx pursuant to Section
2.4(b) or exercise all options held by the Selling Shareholder to
acquire Xxxxxxxx Shares (the "Options") to deposit or cause to be
deposited any Xxxxxxxx Shares hereafter acquired by the Selling
Shareholder pursuant
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to the exercise of Options, and to forthwith surrender all remaining
Options to Xxxxxxxx for no additional consideration immediately
following the Effective Time;
(d) not to exercise any statutory or other rights of withdrawal with
respect to any Xxxxxxxx Shares owned by such Selling Shareholder or any
affiliate of such Selling Shareholder once deposited pursuant to the
Offer unless this letter agreement is terminated prior to Devon taking
up the Xxxxxxxx Shares under the Offer; and
(e) not to exercise any shareholder rights or remedies available at common
law or pursuant to the Canada Business Corporations Act or applicable
securities legislation to delay, hinder, upset or challenge the Offer.
2. COVENANTS OF DEVON
(a) Devon shall make the Offer in accordance with the terms and conditions
of the Pre-
Acquisition Agreement and shall comply with the terms and
conditions of Article 2 and Sections 12.3 and 12.4 thereof in respect
of the Offer.
(b) Devon shall, subject to the satisfaction or waiver of the conditions
set forth in the Offer, take up and pay for all Xxxxxxxx Shares owned
by the Selling Shareholder or any affiliate of the Selling Shareholder
deposited pursuant to the Offer, all in accordance with the terms and
conditions of the Offer and the provisions of the Pre-
Acquisition
Agreement.
3. FIDUCIARY DUTIES
Nothing herein shall restrict or limit the actions of any director or
officer required to be taken in the discharge of his fiduciary duties as a
director or officer of Xxxxxxxx.
4. EXPENSES
Devon and the Selling Shareholder agree to pay their own respective
expenses incurred in connection with this letter agreement. Each of the parties
hereto agrees to indemnify the other against any claim for a finder's fee or
other compensation validly made by any broker which has an agreement with such
indemnifying party for the payment of such fee or compensation. This paragraph 4
shall survive the termination of this letter agreement pursuant to paragraph 5.
5. TERMINATION
It is understood and agreed that the respective rights and obligations
hereunder of Devon and the Selling Shareholder shall cease and this letter
agreement shall terminate:
(a) if, prior to the expiry of the Offer, another bona fide Take-over
Proposal is announced, proposed, offered or made to the holders of
Xxxxxxxx Shares or Xxxxxxxx which, in the opinion of Xxxxxxxx'x Board
of Directors after consultation with its financial advisors, would
constitute a Superior Proposal and which permits the Board of Directors
of Xxxxxxxx to withdraw, modify or change any recommendation regarding
the Offer in accordance with Section 2.2(a) of the Pre-
Acquisition
Agreement; or
(b) if the Xxxxxxxx Board of Directors otherwise withdraws, modifies or
changes any recommendation with respect to the Offer; or
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(c) if Devon waives the Minimum Condition, decreases the consideration
offered pursuant to the Offer or otherwise modifies or amends the Offer
in a manner materially adverse to holders of Xxxxxxxx Shares, provided
that an extension of the Offer shall not constitute an adverse
modification or amendment to the Offer; or
(d) in the event that the Pre-
Acquisition Agreement is terminated pursuant
to Section 11.1 thereof.
In the event of termination of this letter agreement, the Selling
Shareholder may withdraw all of the Xxxxxxxx Shares deposited in accordance with
the terms and conditions of the Offer, this letter agreement shall forthwith be
of no further force and effect and there shall be no obligation or liability on
the part of either the Selling Shareholder or Devon, except as set forth in
paragraph 4 and this paragraph 5 which provisions shall survive the termination
of this letter agreement. Nothing herein shall relieve any party from liability
for any breach of this letter agreement.
6. AMENDMENT
Except as expressly set forth herein, this letter agreement constitutes
the whole of the agreement between the parties and may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
7. ASSIGNMENT
Except as expressly set forth herein, no party to this letter agreement
may assign any of its rights or obligations under this letter agreement without
the prior written consent of the other party.
8. DISCLOSURE
Prior to first public disclosure of the existence and terms and
conditions of this letter, none of the parties hereto shall disclose the
existence of this letter agreement, or any details hereof, to any person other
than Xxxxxxxx, its directors and officers, without the prior written consent of
the other parties hereto, except to the extent required by law. The existence
and terms and conditions of this letter agreement may be disclosed by Devon and
Xxxxxxxx in the press release issued in connection with the execution of the
Pre-Acquisition Agreement and the Offer Documents and the Directors Circular
prepared by Xxxxxxxx.
9. ENUREMENT
This letter agreement will be binding upon and enure to the benefit of
Devon, the Selling Shareholder and their respective executors, administrators,
successors and permitted assigns.
10. APPLICABLE LAW
This letter agreement shall be governed and construed in accordance
with the laws of the Province of
Alberta and the federal laws of Canada
applicable therein and each of the parties hereto irrevocably attorns to the
jurisdictions of the courts of the Province of
Alberta.
11. COUNTERPARTS
This letter agreement may be signed in counterparts which together
shall be deemed to constitute one valid and binding agreement and delivery of
such counterparts may be effected by means of telecopier.
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Yours truly,
DEVON ENERGY CORPORATION
Per:
---------------------------------------
ACCEPTANCE
The foregoing is hereby accepted as of and with effect from the 31st
day of August, 2001 and the undersigned hereby confirms that the undersigned
beneficially owns ____________________ Xxxxxxxx Shares and options to acquire a
further __________________________ Xxxxxxxx Shares.
------------------------------- -----------------------------------
Witness Name:
Title:
