Exhibit 2.1
__________________________________________________
AGREEMENT AND PLAN OF MERGER
by and among
NOBLE ENERGY, INC.
NOBLE ENERGY PRODUCTION, INC.
and
PATINA OIL & GAS CORPORATION
dated as of
December 15, 2004
__________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.....................................................................................1
Section 1.1 The Merger..........................................................................1
Section 1.2 Effective Time......................................................................1
Section 1.3 Closing.............................................................................2
Section 1.4 Certificate of Incorporation; Bylaws................................................2
Section 1.5 Directors and Officers of the Surviving Corporation and Certain
Subsidiaries........................................................................2
Section 1.6 Effect on Capital Stock.............................................................2
Section 1.7 Election Procedures.................................................................5
Section 1.8 Stock Options and Warrants..........................................................7
Section 1.9 Dissenting Shares...................................................................8
ARTICLE II EXCHANGE OF CERTIFICATES......................................................................9
Section 2.1 Exchange of Certificates............................................................9
Section 2.2 Stock Transfer Books...............................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................13
Section 3.1 Organization.......................................................................13
Section 3.2 Capitalization.....................................................................14
Section 3.3 Authorization; Validity of Agreement...............................................15
Section 3.4 No Violations; Consents and Approvals..............................................16
Section 3.5 SEC Reports and Financial Statements...............................................17
Section 3.6 Absence of Certain Changes.........................................................18
Section 3.7 Absence of Undisclosed Liabilities.................................................19
Section 3.8 Proxy Statement; Form S-4; Merger Documents........................................20
Section 3.9 Employee Benefit Plans; ERISA......................................................20
Section 3.10 Litigation; Compliance with Law....................................................23
Section 3.11 Intellectual Property..............................................................24
Section 3.12 Material Contracts.................................................................24
Section 3.13 Taxes..............................................................................25
Section 3.14 Environmental Matters..............................................................27
Section 3.15 Company Real Property; Operating Equipment.........................................29
Section 3.16 Insurance..........................................................................29
Section 3.17 Labor Matters......................................................................30
Section 3.18 Affiliate Transactions.............................................................31
Section 3.19 Derivative Transactions and Hedging................................................31
Section 3.20 Disclosure Controls and Procedures.................................................31
Section 3.21 Oil and Gas........................................................................32
Section 3.22 Investment Company.................................................................33
Section 3.23 Rights Agreement...................................................................33
Section 3.24 Recommendation of Company Board of Directors; Opinion of
Financial Advisor..................................................................33
Section 3.25 Required Vote by Company Stockholders..............................................34
Section 3.26 Brokers............................................................................34
Section 3.27 No Other Representations or Warranties.............................................34
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.......................................35
Section 4.1 Organization.......................................................................35
Section 4.2 Capitalization.....................................................................35
Section 4.3 Authorization; Validity of Agreement...............................................36
Section 4.4 No Violations; Consents and Approvals..............................................37
Section 4.5 SEC Reports and Financial Statements...............................................38
Section 4.6 Absence of Certain Changes.........................................................39
Section 4.7 Absence of Undisclosed Liabilities.................................................40
Section 4.8 Proxy Statement; Form S-4; Merger Documents........................................40
Section 4.9 Parent Employee Benefit Plans; ERISA...............................................41
Section 4.10 Litigation; Compliance with Law....................................................43
Section 4.11 Intellectual Property..............................................................44
Section 4.12 Material Contracts.................................................................45
Section 4.13 Taxes..............................................................................45
Section 4.14 Environmental Matters..............................................................47
Section 4.15 Parent Real Property; Operating Equipment..........................................49
Section 4.16 Insurance..........................................................................49
Section 4.17 Labor Matters......................................................................50
Section 4.18 Affiliate Transactions.............................................................51
Section 4.19 Derivative Transactions and Hedging................................................51
Section 4.20 Disclosure Controls and Procedures.................................................51
Section 4.21 Oil and Gas........................................................................52
Section 4.22 Investment Company.................................................................53
Section 4.23 Interim Operations of Purchaser....................................................53
Section 4.24 Financing..........................................................................53
Section 4.25 Required Vote......................................................................54
Section 4.26 Recommendation of Parent Board of Directors; Opinion of Financial
Advisor............................................................................54
Section 4.27 Brokers............................................................................54
Section 4.28 No Other Representations or Warranties.............................................54
ARTICLE V COVENANTS.....................................................................................55
Section 5.1 Interim Operations of the Company..................................................55
Section 5.2 Interim Operations of Parent.......................................................59
Section 5.3 Acquisition Proposals..............................................................60
Section 5.4 Access to Information and Properties...............................................65
Section 5.5 Further Action; Reasonable Best Efforts............................................66
Section 5.6 Proxy Statement; Form S-4; Stockholders' Meeting...................................68
Section 5.7 Notification of Certain Matters....................................................70
Section 5.8 Directors' and Officers' Insurance and Indemnification.............................70
Section 5.9 Publicity..........................................................................71
Section 5.10 Stock Exchange Listing.............................................................71
Section 5.11 Employee Benefits..................................................................71
Section 5.12 Appointment of Directors...........................................................74
Section 5.13 Rights Agreement...................................................................74
Section 5.14 Certain Tax Matters................................................................74
Section 5.15 Hedging Activities.................................................................75
Section 5.16 SOX 404 Certification..............................................................75
ARTICLE VI CONDITIONS...................................................................................75
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.........................75
Section 6.2 Conditions to the Obligation of the Company to Effect the Merger...................76
Section 6.3 Conditions to Obligations of Parent and Purchaser to Effect
the Merger.........................................................................77
ARTICLE VII TERMINATION.................................................................................79
Section 7.1 Termination........................................................................79
Section 7.2 Effect of Termination..............................................................81
ARTICLE VIII MISCELLANEOUS..............................................................................81
Section 8.1 Fees and Expenses..................................................................81
Section 8.2 Amendment; Waiver..................................................................83
Section 8.3 Survival...........................................................................84
Section 8.4 Notices............................................................................84
Section 8.5 Interpretation; Definitions........................................................85
Section 8.6 Headings; Schedules................................................................91
Section 8.7 Counterparts.........................................................................
Section 8.8 Entire Agreement...................................................................91
Section 8.9 Severability.......................................................................91
Section 8.10 Governing Law; Jurisdiction........................................................91
Section 8.11 Assignment.........................................................................92
Section 8.12 Parties in Interest................................................................92
Section 8.13 Specific Performance...............................................................92
TABLE OF DEFINED TERMS
Acceptable Confidentiality Agreement...........87
Acquisition Agreement..........................61
Acquisition Proposal...........................65
Adverse Recommendation Change..................62
Advisers Act...................................34
affiliates.....................................87
Aggregate Consideration.........................3
Antitrust Division.............................68
Assumed Option..................................8
beneficial ownership...........................87
Business Day...................................87
Cash Designated Shares..........................7
Cash Election Shares............................5
Certificate.....................................4
Certificate of Merger...........................2
Closing.........................................2
Closing Date....................................2
Code...........................................87
Commitment Letter..............................55
Company.........................................1
Company Assets.................................87
Company Balance Sheet..........................26
Company Board..................................16
Company Common Stock...........................14
Company Consolidated Group.....................87
Company Directors..............................87
Company Disclosure Letter......................13
Company Leased Real Property...................87
Company Leases.................................88
Company Material Contract......................25
Company Notice.................................62
Company Notice of Change.......................63
Company Oil and Gas Properties.................88
Company Option..................................8
Company Option Plans............................8
Company Owned Real Property....................88
Company Permits................................24
Company Plans..................................21
Company Preferred Stock........................14
Company Real Property..........................88
Company Required Vote..........................35
Company Reserve Report.........................33
Company Rights.................................15
Company Rights Agreement.......................15
Company SEC Documents..........................18
Company Series A Common Stock..................14
Company Warrants...............................14
Competition Laws...............................88
Confidentiality Agreement......................67
Continuing Employees...........................72
Cravath........................................78
Cut-off Time...................................14
Deemed Stock Amount.............................3
Deferred Compensation Plans....................73
Derivative Transaction.........................88
DGCL............................................1
Dissenting Share................................9
Effective Time..................................2
Election Deadline...............................6
Election Form...................................5
Election Form Record Date.......................5
Employment and Withholding Taxes...............88
Environmental Claim............................89
Environmental Laws.............................89
ERISA..........................................21
ERISA Affiliate................................21
Exchange Act...................................18
Exchange Agent.................................10
Exchange Fund..................................10
Exchange Ratio..................................3
Existing Deferred Compensation Plan............73
Expenses Payment...............................89
Final Parent Stock Price........................3
Financing......................................89
FTC............................................68
GAAP...........................................18
Governmental Entity............................17
Hazardous Substance............................89
Hedge Termination Period.......................84
Hedging Losses.................................84
HSR Act........................................17
Hydrocarbons...................................33
Indemnified Parties............................71
Intellectual Property..........................24
Investment Company Act.........................34
JPMorgan.......................................90
knowledge......................................90
Laws...........................................17
Liens..........................................90
Litigation.....................................90
Mailing Date....................................5
Material Adverse Effect........................90
Merger..........................................1
Merger Consideration............................3
No Election Shares..............................5
Non-U.S. Stockholder...........................90
NYSE............................................3
Parent..........................................1
Parent Adverse Recommendation Change...........64
Parent Assets..................................91
Parent Balance Sheet...........................47
Parent Common Stock............................36
Parent Consolidated Group......................91
Parent Disclosure Letter.......................35
Parent ERISA Affiliate.........................42
Parent Investigation...........................67
Parent Leased Real Property....................91
Parent Leases..................................91
Parent Material Contract.......................46
Parent Notice..................................64
Parent Oil and Gas Properties..................91
Parent Owned Real Property.....................91
Parent Permits.................................45
Parent Plans...................................42
Parent Preferred Stock.........................36
Parent Proposal................................55
Parent Real Property...........................91
Parent Reserve Report..........................53
Parent SEC Documents...........................39
Parent SPD.....................................42
Parent Stock Options...........................36
Parent Stockholders' Meeting...................70
Per Share Cash Consideration....................3
Per Share Consideration.........................4
Per Share Stock Consideration...................4
Permit.........................................91
Permitted Liens................................91
Person.........................................92
Xxxxxx Xxxxxxx.................................34
Pre-Announcement Xxxxxx........................84
Proxy Statement................................69
Purchaser.......................................1
Release........................................92
Required Parent Vote...........................55
Return.........................................92
S-4............................................17
Secretary of State..............................2
Securities Act.................................18
Xxxxxxx Xxxx...................................79
SOX............................................18
SOX 404 Plan...................................33
SPD............................................21
Special Meeting................................70
Specified Company SEC Documents................19
Specified Parent SEC Documents.................40
Stock Designated Shares.........................7
Stock Election Shares...........................5
Subsidiary.....................................92
Superior Proposal..............................66
Surviving Corporation...........................1
Tax............................................92
Technology.....................................24
Termination Date...............................80
Termination Fee................................82
Total Cash Amount...............................4
Total Common Stock Amount.......................4
Total Stock Amount..............................4
Total Stock Consideration.......................4
Unit...........................................93
Valuation Period................................4
WARN Act.......................................31
Well...........................................93
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 15, 2004,
by and among Patina Oil & Gas Corporation, a Delaware corporation (the
"Company"), Noble Energy, Inc., a Delaware corporation ("Parent") and Noble
Energy Production, Inc., a Delaware corporation and wholly owned subsidiary of
Parent ("Purchaser").
WHEREAS, the respective Boards of Directors of Parent,
Purchaser and the Company have each approved this Agreement and the merger of
the Company with and into Purchaser (the "Merger") upon the terms and subject
to the conditions of this Agreement and in accordance with the terms of this
Agreement and the General Corporation Law of the State of Delaware (the
"DGCL");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is fair to, and in the best interests
of, their respective stockholders; and
WHEREAS for U.S. federal income Tax purposes, it is intended
that (a) the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code, (b) this Agreement will constitute a plan of
reorganization and (c) Parent, Purchaser and the Company will each be a party
to such reorganization within the meaning of Section 368(b) of the Code.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to conditions of
this Agreement and in accordance with the DGCL, at the Effective Time, the
Company shall be merged with and into Purchaser. At the Effective Time, the
separate existence of the Company shall cease and Purchaser shall continue as
the surviving corporation (the "Surviving Corporation"). The Merger shall have
the effect as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, upon the Merger, all the rights,
privileges, immunities, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation and all the obligations, duties, debts
and liabilities of the Company and Purchaser shall be the obligations, duties,
debts and liabilities of the Surviving Corporation.
Section 1.2. Effective Time. Upon the terms and subject to the
conditions of this Agreement, as promptly as practicable after the Closing and
on the Closing Date, Purchaser and the Company will cause a certificate of
merger (the "Certificate of Merger") to be duly prepared, executed,
acknowledged and filed with the Secretary of State of the State of Delaware
(the "Secretary of State") as provided in the DGCL. The Merger shall become
effective on the date and at the time when the Certificate of Merger has been
duly filed with the Secretary of State or, subject to the DGCL, such other time
as is agreed upon by the parties and specified in the Certificate of Merger,
and such time is hereinafter referred to as the "Effective Time."
Section 1.3. Closing. Unless this Agreement shall have been terminated
and the transactions contemplated herein abandoned pursuant to Section 7.1 and
subject to the satisfaction or waiver of the conditions set forth in Article
VI, the closing of the Merger (the "Closing") will take place at 10:00 a.m.,
Houston time, on a date to be specified by the parties, which shall be no later
than the second Business Day after satisfaction or waiver (by the party
entitled to waive the condition) of all of the conditions set forth in Article
VI (except for those conditions that by their nature cannot be satisfied until
the Closing, but subject to the satisfaction or waiver of those conditions)
(the "Closing Date"), at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, unless another time,
date and/or place is agreed to in writing by the parties hereto.
Section 1.4. Certificate of Incorporation; Bylaws. Pursuant to the
Merger, (a) the Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable Law, and (b) the Bylaws of the Purchaser,
as in effect immediately prior to the Effective Time, shall be the Bylaws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
Section 1.5. Directors and Officers of the Surviving Corporation and
Certain Subsidiaries.
(a) The directors of Purchaser immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors of
the Surviving Corporation until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of Incorporation and
Bylaws.
(b) The officers of Purchaser immediately prior to the Effective
Time shall, from and after the Effective Time, be the initial officers of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
Section 1.6. Effect on Capital Stock.
(a) At the Effective Time, subject to the other provisions of
this Article I and Section 2.1, each share of the Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares of
Company Common Stock held directly or indirectly by Parent, Purchaser or the
Company or any of their respective Subsidiaries and except for any Dissenting
Shares), together with the Company Rights attached thereto or associated
therewith, shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into and exchangeable for the right to
receive, at the election of the holder thereof as provided in and subject to
the provisions of Section 1.7, either (i) the Per Share Stock Consideration or
(ii) cash in an amount equal to the Per Share Consideration (the "Per Share
Cash Consideration", and together with the Per Share Stock Consideration, the
"Merger Consideration").
For purposes of this Agreement:
"Aggregate Consideration" shall mean the sum of (x) the Total Stock
Consideration and (y) the Total Cash Amount.
"Deemed Stock Amount" shall mean the Total Common Stock Amount;
provided, however, that regardless of the actual number of shares of Company
Common Stock outstanding immediately prior to the Effective Time, in no event
shall the Deemed Stock Amount exceed the sum of (i) 72,820,413, (ii) the
aggregate number of shares of Company Common Stock, if any, issued by the
Company after the Cut-off Time and prior to the date of this Agreement upon the
exercise of the Company Options or Company Warrants (in each case outstanding
as of the Cut-off Time and disclosed in Section 3.2(a) of the Company
Disclosure Letter) in accordance with the terms of such options and (iii) the
aggregate number of shares of Company Common Stock, if any, issued by the
Company after the date of this Agreement and prior to the Effective Time in
accordance with Section 5.1(e).
"Exchange Ratio" shall mean the quotient, rounded to the nearest
ten-thousandth, obtained by dividing the Per Share Consideration by the Final
Parent Stock Price.
"Final Parent Stock Price" shall mean the volume-weighted average of
the trading sale prices per share of Parent Common Stock as reported on the New
York Stock Exchange (the "NYSE") during the Valuation Period.
"Per Share Consideration" shall mean the quotient, rounded to the
nearest ten-thousandth, obtained by dividing the Aggregate Consideration by the
Total Common Stock Amount.
"Per Share Stock Consideration" shall mean a number of shares (which
need not be a whole number) of Parent Common Stock (together with the number of
Parent Rights associated therewith) equal to the Exchange Ratio.
"Total Cash Amount" shall mean the product obtained by multiplying (x)
$37.00 by (y) 40% of the Deemed Stock Amount.
"Total Common Stock Amount" shall mean the total number of shares of
Company Common Stock outstanding immediately prior to the Effective Time.
"Total Stock Amount" shall mean the product obtained by multiplying
(x) 0.62521 by (y) 60% of the Deemed Stock Amount.
"Total Stock Consideration" shall mean the product obtained by
multiplying (x) the Total Stock Amount by (y) the Final Parent Stock Price.
"Valuation Period" shall mean the ten consecutive trading days during
which the shares of Parent Common Stock are traded on the NYSE ending on the
third calendar day immediately prior to the Effective Time, or if such calendar
day is not a trading day, then ending on the trading day immediately preceding
such calendar day.
(b) All of the shares of Company Common Stock, and associated
Company Rights, converted into the Merger Consideration pursuant to this
Article I shall no longer be outstanding and shall automatically be cancelled
and shall cease to exist, and each holder of a certificate (each a
"Certificate") previously representing any such shares of Company Common Stock
shall thereafter cease to have any rights with respect to such securities,
except the right to receive (i) the Merger Consideration, (ii) any dividends
and other distributions in accordance with Section 2.1(c), and (iii) any cash
to be paid in lieu of any fractional share of Parent Common Stock in accordance
with Section 2.1(e).
(c) If, between the date of this Agreement and the Effective
Time, the shares of Parent Common Stock shall be changed or proposed to be
changed into a different number or class of shares by reason of the occurrence
of or record date with respect to any reclassification, recapitalization,
split-up, combination, exchange of shares or similar readjustment, in any such
case within such period, or a stock dividend thereon shall be declared with a
record date within such period, appropriate adjustments shall be made to the
Per Share Cash Consideration and the Per Share Stock Consideration.
(d) At the Effective Time, all shares of Company Common Stock
that are owned directly or indirectly by Parent, Purchaser or the Company or
any of their respective Subsidiaries shall be cancelled and shall cease to
exist and no stock of Parent, cash or other consideration shall be delivered in
exchange therefor; provided, however, that, for the avoidance of doubt, this
Section 1.6(d) shall not apply to shares of Company Common Stock held by or on
behalf of the Deferred Compensation Plan or the New Deferred Compensation Plan,
as to which Section 1.6(a) shall apply. All shares of Parent Common Stock that
are owned by the Company or any of its Subsidiaries shall become authorized
unissued stock of Parent.
(e) Each issued and outstanding share of common stock, par value
$0.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(f) The calculations required by Section 1.6(a) shall be
prepared by Parent promptly after the Closing.
Section 1.7. Election Procedures.
(a) An election form and other appropriate and customary
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates theretofore representing shares of
Company Common Stock shall pass, only upon proper delivery of such Certificates
to the Exchange Agent) in such form as Parent shall specify and as shall be
reasonably acceptable to the Company (the "Election Form") shall be mailed
together with the Proxy Statement or at such other time as the Company and
Parent may agree (the "Mailing Date") to each holder of record of Company
Common Stock as of the close of business on the record date for notice of the
Company Special Meeting (the "Election Form Record Date").
(b) Each Election Form shall permit the holder (or the
beneficial owner through appropriate and customary documentation and
instructions), other than any holder of Dissenting Shares, to specify (i) the
number of shares of such holder's Company Common Stock with respect to which
such holder elects to receive the Per Share Stock Consideration ("Stock
Election Shares"), (ii) the number of shares of such holder's Company Common
Stock with respect to which such holder elects to receive the Per Share Cash
Consideration ("Cash Election Shares"), or (iii) that such holder makes no
election with respect to such holder's Company Common Stock ("No Election
Shares"). Any Company Common Stock with respect to which the Exchange Agent has
not received an effective, properly completed Election Form on or before 5:00
p.m., Houston time, on the 33rd day following the Mailing Date (or such other
time and date as the Company and Parent shall agree) (the "Election Deadline")
(other than any shares of Company Common Stock that constitute Dissenting
Shares as of such time) shall also be deemed to be "No Election Shares."
(c) Parent shall make available one or more Election Forms as
may reasonably be requested from time to time by all Persons who become holders
(or beneficial owners) of Company Common Stock between the Election Form Record
Date and the close of business on the Business Day prior to the Election
Deadline, and the Company shall provide to the Exchange Agent all information
reasonably necessary for it to perform as specified herein.
(d) Any such election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election Form
by the Election Deadline. An Election Form shall be deemed properly completed
only if accompanied by one or more Certificates (or customary affidavits and
indemnification regarding the loss or destruction of such Certificates or the
guaranteed delivery of such Certificates) representing all shares of Company
Common Stock covered by such Election Form, together with duly executed
transmittal materials included in the Election Form. Any Election Form may be
revoked or changed by the Person submitting such Election Form prior to the
Election Deadline. In the event an Election Form is revoked prior to the
Election Deadline, the shares of Company Common Stock represented by such
Election Form shall become No Election Shares and Parent shall cause the
Certificates representing Company Common Stock to be promptly returned without
charge to the Person submitting the Election Form upon written request to that
effect from the holder who submitted the Election Form, except to the extent
(if any) a subsequent election is properly made with respect to any or all of
the applicable shares of Company Common Stock. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in the Election
Forms, and any good faith decisions of the Exchange Agent regarding such
matters shall be binding and conclusive. None of Parent, Purchaser or the
Exchange Agent shall be under any obligation to notify any Person of any defect
in an Election Form.
(e) Within ten Business Days after the Election Deadline, unless
the Effective Time has not yet occurred, in which case as soon after the
Effective Time as practicable (and in no event more than ten Business Days
after the Effective Time), Parent shall cause the Exchange Agent to effect the
allocation among the holders of Company Common Stock of rights to receive
Parent Common Stock or cash in the Merger in accordance with the Election Forms
as follows:
(i) Cash Election Shares More Than Total Cash Amount. If
the aggregate cash amount that would be paid upon the conversion of the
Cash Election Shares in the Merger is greater than the Total Cash Amount,
then:
(1) all Stock Election Shares and No Election Shares
shall be converted into the right to receive the Per Share Stock
Consideration,
(2) the Exchange Agent shall then select from among the
Cash Election Shares, by a pro rata selection process, a sufficient number
of shares ("Stock Designated Shares") such that the aggregate cash amount
that will be paid in the Merger equals as closely as practicable the Total
Cash Amount, and all Stock Designated Shares shall be converted into the
right to receive the Per Share Stock Consideration, and
(3) the Cash Election Shares that are not Stock
Designated Shares will be converted into the right to receive the Per
Share Cash Consideration.
(ii) Cash Election Shares Less Than Total Cash Amount. If
the aggregate cash amount that would be paid upon conversion of the Cash
Election Shares in the Merger is less than the Total Cash Amount, then:
(1) all Cash Election Shares shall be converted into the
right to receive the Per Share Cash Consideration,
(2) the Exchange Agent shall then select first from
among the No Election Shares and then (if necessary) from among the Stock
Election Shares, by a pro rata selection process, a sufficient number of
shares ("Cash Designated Shares") such that the aggregate cash amount that
will be paid in the Merger equals as closely as practicable the Total Cash
Amount, and all Cash Designated Shares shall be converted into the right
to receive the Per Share Cash Consideration, and
(3) the Stock Election Shares and the No Election shares
that are not Cash Designated Shares shall be converted into the right to
receive the Per Share Stock Consideration.
(iii) Cash Election Shares Equal to Total Cash Amount. If
the aggregate cash amount that would be paid upon conversion of the Cash
Election Shares in the Merger is equal to the Total Cash Amount, then
subparagraphs (i) and (ii) above shall not apply and all Cash Election
Shares shall be converted into the right to receive the Per Share Cash
Consideration and all Stock Election Shares and No Election Shares shall
be converted into the right to receive the Per Share Stock Consideration.
Notwithstanding anything in this Agreement to the contrary, for
purposes of determining the allocations set forth in this Section 1.7(e),
Parent shall have the right, but not the obligation, to require that any shares
of Company Common Stock that constitute Dissenting Shares as of the Election
Deadline be treated as Cash Election Shares, although no such shares shall be
subject to any of the pro rata selection processes contemplated by this Section
1.7(e).
(f) The pro rata selection process to be used by the Exchange
Agent shall consist of such equitable pro ration processes as shall be mutually
determined by Parent and the Company.
Section 1.8 Stock Options and Warrants. (a) At the Effective
Time, each option granted by the Company to purchase shares of Company Common
Stock (each a "Company Option") pursuant to any stock option plan, program or
arrangement of the Company, including, without limitation, the Company's 1996
Employee Stock Option Plan (as amended) and 1996 Stock Plan for Non-Employee
Directors (collectively, the "Company Option Plans"), that is outstanding and
unexercised immediately prior to the Effective Time shall cease to represent a
right to acquire shares of Company Common Stock and shall be converted
automatically into options to purchase shares of Parent Common Stock, and
Parent shall assume each such Company Option (hereinafter, "Assumed Option")
subject to the terms of the applicable Company Option Plan and the agreement
evidencing the grant thereunder of such Assumed Option (other than the
provisions thereof providing for termination of such Assumed Option at the
Effective Time); provided, however, that (i) the number of shares of Parent
Common Stock purchasable upon exercise of such Assumed Option shall be equal to
the number of shares of Company Common Stock that were purchasable under such
Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and rounded to the nearest whole share, (ii) the per share
exercise price under such Assumed Option shall be adjusted by dividing the per
share exercise price under such Company Option by the Exchange Ratio, and
rounding to the nearest whole cent and (iii) such Assumed Option shall not
terminate if the holder ceases to be a director, officer, employee or
consultant of the Surviving Corporation or any of its affiliates (including
Parent and its Subsidiaries), unless the applicable Company Option was issued
after December 8, 2004, in which case such Assumed Option shall terminate (A)
immediately upon the Surviving Corporation or any of its affiliates (including
Parent and its Subsidiaries) terminating its employment or retention of such
holder for "Cause" (as defined in the applicable Company Option Plan) or (B)
otherwise, 60 days after the holder ceases to be a director, officer, employee
or consultant of the Surviving Corporation or any of its affiliates (including
Parent and its Subsidiaries). In the case of any Assumed Option that is an
"incentive stock option" (as defined in Section 422 of the Code), the exercise
price, the number of shares of Parent Common Stock purchasable pursuant to such
Assumed Option and the terms and conditions of exercise of such option shall be
determined in order to comply, to the fullest extent possible, with Section
424(a) of the Code. Prior to the Effective Time, Parent shall prepare and file
with the Securities and Exchange Commission (the "SEC") a registration
statement on Form S-8 (or other appropriate form) registering all the shares of
Parent Common Stock subject to the Assumed Options, and such registration
statement shall be kept effective (and the current status of the prospectus or
prospectuses required thereby shall be maintained) as long as any Assumed
Option remains outstanding.
(b) If the Company Warrant is not exercised prior to the
Effective Time, Parent shall assume the Company Warrant in accordance with its
terms at the Effective Time by executing a supplemental agreement with the
holder of the Company Warrant in accordance with the terms of the Company
Warrant.
Section 1.9 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, with respect to each share of Company Common Stock
as to which the holder thereof shall have properly complied with the provisions
of Section 262 of the DGCL as to appraisal rights (each, a "Dissenting Share"),
if any, such holder shall be entitled to payment, solely from the Surviving
Corporation, of the appraisal value of the Dissenting Shares to the extent
permitted by and in accordance with the provisions of Section 262 of the DGCL;
provided, however, that (i) if any holder of Dissenting Shares, under the
circumstances permitted by and in accordance with the DGCL, affirmatively
withdraws his demand for appraisal of such Dissenting Shares, (ii) if any
holder of Dissenting Shares fails to establish his entitlement to appraisal
rights as provided in the DGCL or (iii) if any holder of Dissenting Shares
takes or fails to take any action the consequence of which is that such holder
is not entitled to payment for his shares under the DGCL, such holder or
holders (as the case may be) shall forfeit the right to appraisal of such
shares of Company Common Stock and such shares of Company Common Stock shall
thereupon cease to constitute Dissenting Shares and if such forfeiture shall
occur following the Election Deadline, each such share of Company Common Stock
shall thereafter be deemed to have been converted into and to have become, as
of the Effective Time, the right to receive, without interest thereon, the Per
Share Stock Consideration; provided that Parent shall be entitled to convert
each such share into the right to receive the Per Share Cash Consideration or a
combination of the Per Share Cash Consideration and Per Share Stock
Consideration if Parent shall have received an opinion from Xxxxxxx Xxxx
stating that the Merger shall not fail to satisfy the continuity of interest
requirement under Section 368 of the Code as a result thereof. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of shares of Company Common Stock, and Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not settle, make any payments with respect to, or offer to
settle, any claim with respect to Dissenting Shares without the written consent
of Parent.
ARTICLE II
EXCHANGE OF CERTIFICATES
Section 2.1 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with Wachovia Bank, N.A. or another
bank or trust company designated by Parent and reasonably satisfactory to the
Company (the "Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II, through
the Exchange Agent, sufficient cash and certificates representing shares of
Parent Common Stock to make pursuant to this Article II all deliveries of cash
and Parent Common Stock as is required by Article I. Parent agrees to make
available to the Exchange Agent, from time to time as needed, cash sufficient
to pay any dividends and other distributions pursuant to Section 2.1(c) and to
make payments in lieu of fractional shares pursuant to Section 2.1(e). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger
Consideration contemplated to be paid for shares of Company Common Stock
pursuant to this Agreement out of the Exchange Fund. Except as contemplated by
Sections 2.1(c) and 2.1(e), the Exchange Fund shall not be used for any other
purpose. Any cash and certificates representing Parent Common Stock deposited
with the Exchange Agent (including as payment for fractional shares in
accordance with Section 2.1(e) and any dividends or other distributions in
accordance with Section 2.1(c)) shall hereinafter be referred to as the
"Exchange Fund."
(b) Exchange Procedures. Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail to each holder of record of a
Certificate or Certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in customary form and subject
to the reasonable approval of the Company prior to the Effective Time) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration payable in respect of the shares of Company Common
Stock represented by such Certificates. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
properly completed and duly executed, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) one or more shares of Parent
Common Stock (which shall be in uncertificated book-entry form unless a
physical certificate is requested) representing, in the aggregate, the whole
number of shares of Parent Common Stock, if any, that such holder has the right
to receive pursuant to Section 1.6 (after taking into account all shares of
Company Common Stock previously represented by all Certificates then held by
such holder) and (B) a check in the amount equal to the cash portion of the
Merger Consideration, if any, that such holder has the right to receive
pursuant to Section 1.6 and this Article II, including cash payable in lieu of
any fractional shares of Parent Common Stock pursuant to Section 2.1(e) and
dividends and other distributions pursuant to Section 2.1(c). No interest shall
be paid or accrued on any Merger Consideration, cash in lieu of fractional
shares or on any unpaid dividends and distributions payable to holders of
Certificates. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the Company,
the Merger Consideration payable in respect of such shares of Company Common
Stock may be paid to a transferee if the Certificate representing such shares
of Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and the Person
requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other Taxes required by reason of the delivery of the Merger
Consideration in any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish
to the satisfaction of the Exchange Agent that such Tax has been paid or is not
payable. Until surrendered as contemplated by this Section 2.1, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration payable
in respect of the shares of Company Common Stock represented by such
Certificate, cash in lieu of any fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 2.1(e) and any dividends or
other distributions to which such holder is entitled pursuant to Section
2.1(c).
(c) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made with respect
to shares of Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock that such holder would be entitled to receive
upon surrender of such Certificate and no cash payment in lieu of fractional
shares of Parent Common Stock shall be paid to any such holder until such
holder shall surrender such Certificate in accordance with this Section 2.1.
Following surrender of any such Certificate, there shall be paid to such holder
of shares of Parent Common Stock issuable in exchange therefor, without
interest, (a) promptly after the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such shares of Parent Common Stock, and (b) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such shares
of Parent Common Stock. For purposes of dividends or other distributions in
respect of shares of Parent Common Stock, all shares of Parent Common Stock to
be issued pursuant to the Merger shall be entitled to dividends pursuant to the
immediately preceding sentence as if such shares of Parent Common Stock were
issued and outstanding as of the Effective Time.
(d) Further Rights in Company Common Stock. The Merger
Consideration issued upon conversion of a share of Company Common Stock in
accordance with the terms hereof (including any payments made pursuant to
Section 2.1(c) or Section 2.1(e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such share of Company Common Stock.
(e) Fractional Shares. No certificates or scrip or shares of
Parent Common Stock representing fractional shares of Parent Common Stock or
book-entry credit of the same shall be issued upon the surrender for exchange
of Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to have any rights as a holder of any shares of Parent
Common Stock.
Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) the average of the closing sale prices of Parent Common
Stock on the NYSE as reported by The Wall Street Journal for the five trading
days immediately preceding the date on which the Effective Time shall occur and
(ii) the fraction of a share of Parent Common Stock which such holder would
otherwise be entitled to receive pursuant to Section 1.6. As promptly as
practicable after the determination of the amount of cash, if any, to be paid
to holders of fractional interests, the Exchange Agent shall so notify Parent,
and Parent shall, or shall cause the Surviving Corporation to, deposit such
amount with the Exchange Agent and shall cause the Exchange Agent to forward
payments to such holders of fractional interests subject to and in accordance
with the terms hereof. The parties acknowledge that payment of cash
consideration in lieu of issuing fractional shares of Parent Common Stock was
not separately bargained for consideration but merely represents a mechanical
rounding off for purposes of simplifying the corporate and accounting problems
that would otherwise be caused by the issuance of fractional shares of Parent
Common Stock.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Parent upon demand and,
from and after such delivery to Parent, any holders of Company Common Stock who
have not theretofore complied with this Article II shall thereafter look only
to Parent for the Merger Consideration payable in respect of such shares of
Company Common Stock, any cash in lieu of fractional shares of Parent Common
Stock to which they are entitled pursuant to Section 2.1(e) and any dividends
or other distributions with respect to Parent Common Stock to which they are
entitled pursuant to Section 2.1(c), in each case, without any interest
thereon.
(g) No Liability. Neither Parent nor the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock for any such
shares of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any abandoned property, escheat or similar Law.
(h) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such Person of a bond, in such reasonable amount as
Parent may direct, as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent shall pay in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration payable in
respect of the shares of Company Common Stock represented by such Certificate,
any cash in lieu of fractional shares of Parent Common Stock to which the
holders thereof are entitled pursuant to Section 2.1(e) and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 2.1(c), in each case, without any interest thereon.
(i) Withholding. Each of Parent, the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent, the Surviving Corporation or the
Exchange Agent is required to deduct and withhold under the Code or any
provision of state, local, or foreign Tax Law, with respect to the making of
such payment. To the extent that amounts are so withheld by Parent, the
Surviving Corporation or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Company Common Stock in respect of whom such deduction and withholding was made
by Parent, the Surviving Corporation or the Exchange Agent, as the case may be.
Section 2.2 Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of shares of Company Common Stock
theretofore outstanding on the records of the Company. From and after the
Effective Time, any Certificates presented to the Exchange Agent or Parent for
any reason shall be converted into the Merger Consideration payable in respect
of the shares of Company Common Stock previously represented by such
Certificates, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.1(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.1(c), without any interest thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered by the Company
to Parent at or prior to the execution and delivery of this Agreement (the
"Company Disclosure Letter") (each section of which qualifies the
correspondingly numbered representation, warranty or covenant to the extent
specified therein and such other representations, warranties or covenants to
the extent a matter in such section is disclosed in such a way as to make its
relevance to such other representation, warranty or covenant reasonably
apparent), the Company represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization.
(a) Each of the Company and each of its Subsidiaries is a
corporation or other entity duly organized, validly existing, and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, and has all requisite corporate or other power and authority to
own, lease, use and operate its properties and to carry on its business as it
is now being conducted.
(b) Each of the Company and each of its Subsidiaries is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which such qualification or licensing is
required, except where the failure to be so qualified or licensed individually
or in the aggregate has not had, and would not be reasonably likely to have or
result in, a Material Adverse Effect on the Company.
(c) The Company has previously delivered to Parent a complete
and correct copy of each of its certificate of incorporation and bylaws in each
case as amended (if so amended) to the date of this Agreement, and has made
available the certificate of incorporation, bylaws or other organizational
documents of each of its Subsidiaries, in each case as amended (if so amended)
to the date of this Agreement. Neither the Company nor any of its Subsidiaries
is in violation of its certificate of incorporation, bylaws or similar
governing documents.
(d) Section 3.1(d) of the Company Disclosure Letter sets forth a
true and correct list of all of the Subsidiaries of the Company and their
respective jurisdictions of incorporation or organization. The respective
certificates or articles of incorporation and bylaws or other organizational
documents of the Subsidiaries of the Company do not contain any provision
limiting or otherwise restricting the ability of the Company to control its
Subsidiaries in any material respect.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
250,000,000 shares of the common stock of the Company, par value $.01 per share
(the "Company Common Stock"), of which 2,000,000 shares are designated Series A
Common Stock, par value $.01 per share (the "Company Series A Common Stock"),
and 5,000,000 shares of preferred stock, par value $.01 per share (the "Company
Preferred Stock"), of which 25,000 shares are designated Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Company Series A
Preferred Stock"). As of the close of business on December 14, 2004 (the
"Cut-off Time"), (i) 72,820,413 shares of Company Common Stock were issued and
outstanding, (ii) 6,267,832 shares of Company Common Stock were reserved for
issuance upon the exercise of outstanding Company Options and (iii) 1,000,000
shares of Company Common Stock were reserved for issuance under the outstanding
warrants to purchase shares of Company Common Stock (the "Company Warrants").
From the Cut-off Time to the date of this Agreement, no additional shares of
Company Common Stock have been issued (other than pursuant to Company Options
and Company Warrants which were outstanding as of the Cut-off Time and are
disclosed in Section 3.2(a) of the Company Disclosure Letter as contemplated
below), no additional Company Options or Company Warrants have been issued or
granted, and there has been no increase in the number of shares of Company
Common Stock issuable upon exercise of the Company Options and Company Warrants
from those issuable under such Company Options and Company Warrants as of the
Cut-off Time. As of the date of this Agreement, (i) no shares of Company Common
Stock are held in the treasury of the Company, (ii) there are no shares of the
Company Series A Common Stock issued and outstanding or held in treasury and
(iii) there are no shares of Company Preferred Stock, including the Company
Series A Preferred Stock, issued and outstanding or held in treasury. Neither
the Company nor any of its Subsidiaries directly or indirectly owns any shares
of Company Common Stock. No bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into or exchangeable for securities
having the right to vote) on any matters on which stockholders of the Company
may vote are issued or outstanding. All issued and outstanding shares of the
Company's capital stock are, and all shares that may be issued or granted
pursuant to the exercise of Company Options or the Company Warrants will be,
when issued or granted in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and non-assessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Except for the Company Options, the Company Warrants and the Company
Series A Junior Participating Preferred Stock purchase rights (the "Company
Rights") issued pursuant to the Rights Agreement, dated as of May 25, 2001,
between the Company and Mellon Investor Services LLC (the "Company Rights
Agreement"), there are no outstanding or authorized (x) options, warrants,
preemptive rights, subscriptions, calls or other rights, convertible
securities, agreements, claims or commitments of any character obligating the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock or other equity interest in the Company or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, (y) contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of
the Company or any of its Subsidiaries or any such securities or agreements
listed in clause (x) of this sentence, or (z) voting trusts or similar
agreements to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries. Section 3.2(a) of the Company Disclosure Letter sets forth the
following information with respect to each Company Option and Company Warrant
outstanding as of the Cut-off Time: (i) name of the holder; (ii) number of
shares of Company Common Stock issuable upon exercise thereof; (iii) exercise
price; (iv) issue date; (v) termination date; and (vi) whether such option or
warrant contains any put, redemption or similar feature. At the Effective Time,
there will not be any outstanding subscriptions, options, warrants, calls,
preemptive rights, subscriptions, or other rights, convertible or exchangeable
securities, agreements, claims or commitments of any character by which the
Company or any of its Subsidiaries will be bound calling for the purchase or
issuance of any shares of the capital stock of the Company or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or
any other such securities or agreements.
(b) (i) All of the issued and outstanding shares of capital
stock (or equivalent equity interests of entities other than corporations) of
each of the Company's Subsidiaries are owned, directly or indirectly, by the
Company free and clear of any Liens, other than statutory Liens for Taxes not
yet due and payable and such other restrictions as may exist under applicable
Law, and all such shares or other ownership interests have been duly
authorized, validly issued and are fully paid and non-assessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof, and (ii) neither the Company nor any of its Subsidiaries owns any
shares of capital stock or other securities of, or interest in, any other
Person, except for (A) shares of capital stock or other securities of
non-affiliates that (x) do not constitute more than a 5% interest in such
non-affiliates or (y) have an aggregate value (per issuer) that does not exceed
$100,000 and (B) the securities of the Subsidiaries of the Company or any
Subsidiary of the Company, or is obligated to make any capital contribution to
or other investment in any other Person.
(c) No material indebtedness of the Company or any of its
Subsidiaries contains any restriction upon (i) the prepayment of any
indebtedness of the Company or any of its Subsidiaries, (ii) the incurrence of
indebtedness by the Company or any of its Subsidiaries, or (iii) the ability of
the Company or any of its Subsidiaries to grant any Lien on the properties or
assets of the Company or any of its Subsidiaries.
Section 3.3 Authorization; Validity of Agreement.
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Company (the "Company Board"). Except for the Company Required Vote, no other
corporate proceedings on the part of the Company are necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and, assuming due authorization,
execution and delivery of this Agreement by Parent and Purchaser, is a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforcement may be subject to or
limited by (i) bankruptcy, insolvency or other similar Laws, now or hereafter
in effect, affecting creditors' rights generally and (ii) the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(b) The Company Board has adopted such resolutions as are
necessary so that the provisions of Section 203 of the DGCL are inapplicable to
the Merger or any of the other transactions contemplated by this Agreement.
Except for Section 203 of the DGCL (which has been rendered inapplicable), to
the knowledge of the Company, no "moratorium," "control share," "fair price" or
other antitakeover Laws are applicable to the Merger or any of the other
transactions contemplated by this Agreement.
Section 3.4 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation by the Company of the Merger or
any other transactions contemplated hereby will (i) violate any provision of
the certificate of incorporation or the bylaws of the Company, or the
certificate of incorporation, bylaws or similar governing documents of any of
the Company's Subsidiaries, (ii) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination, cancellation or
amendment under, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of the
Company or any of its Subsidiaries under, or result in the acceleration or
trigger of any payment, time of payment, vesting or increase in the amount of
any compensation or benefit payable pursuant to, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, guarantee, other evidence
of indebtedness, lease, license, contract, collective bargaining agreement,
agreement or other legally binding instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their respective assets or properties may be bound, or (iii) conflict with or
violate any federal, state, local or foreign order, writ, injunction, judgment,
settlement, award, decree, statute, law, rule or regulation (collectively,
"Laws") applicable to the Company, any of its Subsidiaries or any of their
respective properties or assets; except in the case of clause (ii), for such
conflicts, violations, breaches, defaults or Liens which individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company.
(b) No material filing or registration with, declaration or
notification to, or order, authorization, consent or approval of, any federal,
state, local or foreign court, arbitral, legislative, executive or regulatory
authority or agency (a "Governmental Entity") or any other Person is required
in connection with the execution, delivery and performance of this Agreement by
the Company or the consummation by the Company of the Merger or any other
transactions contemplated hereby, except for (i) the filing with the SEC of the
Proxy Statement in definitive form relating to the meetings of the Company's
and Parent's stockholders to be held in connection with this Agreement and the
transactions contemplated hereby, and the filing and declaration of
effectiveness of the registration statement on Form S-4 (the "S-4") in which
the Proxy Statement will be included as a prospectus, (ii) the adoption of this
Agreement and the approval of the Merger by the Company Required Vote, (iii)
such filings, authorizations or approvals as may be required under (A) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder ("HSR Act") or (B) any other Competition Laws, rules
or regulations, (iv) the filing of the Certificate of Merger with the Secretary
of State and (v) such consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings (x) as are customarily
made or obtained in connection with the transfer of interests in or change of
control of ownership of oil and gas properties and (y) the failure of which to
be obtained or made, individually or in the aggregate, has not had, and would
not be reasonably likely to have or result in, a Material Adverse Effect on the
Company.
Section 3.5 SEC Reports and Financial Statements.
(a) The Company has timely filed with the SEC all forms and
other documents (including exhibits and other information incorporated therein)
required to be filed by it since January 1, 2001 (such documents, the "Company
SEC Documents"), including (i) its Annual Reports on Form 10-K for the years
ended December 31, 2001, December 31, 2002 and December 31, 2003, respectively,
(ii) its Quarterly Reports on Form 10-Q for the periods ended March 31, June 30
and September 30, 2004, (iii) all proxy statements relating to meetings of
stockholders of the Company since January 1, 2001 (in the form mailed to
stockholders), and (iv) all other forms, reports and registration statements
required to be filed by the Company with the SEC since January 1, 2001. As of
their respective dates, the Company SEC Documents, including the financial
statements and schedules provided therein or incorporated by reference therein,
(x) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (y) complied in all material respects with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act"), the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act") and the Xxxxxxxx-Xxxxx Act of 2002, and the rules and
regulations promulgated thereunder ("SOX"), as the case may be.
(b) The December 31, 2003 consolidated balance sheet of the
Company and the related consolidated statements of income, changes in
stockholders' equity and cash flows (including, in each case, the related
notes, where applicable), as reported in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2003 filed with the SEC under the
Exchange Act, and the unaudited consolidated balance sheets of the Company and
its Subsidiaries (including the related notes, where applicable) as of
September 30, 2004 and the related (i) unaudited consolidated statements of
income for the three and nine-month periods then ended and (ii) unaudited
consolidated statements of cash flows and changes in stockholders' equity for
the nine-month periods then ended (in each case including the related notes,
where applicable), as reported in the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 2004 filed with the SEC under the Exchange
Act, fairly present, and the financial statements to be filed by the Company
with the SEC after the date of this Agreement will fairly present (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), in all material respects, the consolidated financial
position and the results of the consolidated operations, cash flows and changes
in stockholders' equity of the Company and its Subsidiaries as of the
respective dates or for the respective fiscal periods therein set forth; each
of such statements (including the related notes, where applicable) complies,
and the financial statements to be filed by the Company with the SEC after the
date of this Agreement will comply, with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where applicable) has
been, and the financial statements to be filed by the Company with the SEC
after the date of this Agreement will be, prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of the Company and
its Subsidiaries have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions. Deloitte & Touche LLP is an independent public accounting
firm with respect to the Company and has not resigned or been dismissed as
independent public accountants of the Company.
Section 3.6 Absence of Certain Changes.
(a) Except as disclosed in the Company SEC Documents filed by
the Company with the SEC prior to the date of this Agreement (the "Specified
Company SEC Documents"), to the extent that it is reasonably apparent that the
disclosure in the Specified Company SEC Documents is responsive to the matters
set forth in this Section 3.6(a), since September 30, 2004, (i) the Company and
its Subsidiaries have conducted their respective operations only in the
ordinary course consistent with past practice and (ii) there has not occurred
or continued to exist any event, change, occurrence, effect, fact, circumstance
or condition which, individually or in the aggregate, has had, or would be
reasonably likely to have or result in, a Material Adverse Effect on the
Company.
(b) Except as disclosed in the Specified Company SEC Documents,
to the extent that it is reasonably apparent that the disclosure in the
Specified Company SEC Documents is responsive to the matters set forth in this
Section 3.6(b), since September 30, 2004 to the date of this Agreement, neither
the Company nor any of its Subsidiaries has (i) except as required pursuant to
the terms of the Company Plans as in effect on September 30, 2004 or as
required to comply with applicable Law, (A) increased or agreed to increase the
wages, salaries, compensation, pension, or other fringe benefits or perquisites
payable to any officer, employee or director from the amount thereof in effect
as of September 30, 2004, other than increases in wages, salaries and other
cash compensation in the ordinary course of business consistent with past
practice, (B) granted any severance or termination pay, (C) entered into or
made any loans to any of its officers, directors or employees or made any
change in its borrowing or lending arrangements for or on behalf of any of such
Persons or (D) adopted or amended, or accelerated the payment or vesting of
benefits under, any Company Plan, (ii) declared, set aside or paid any dividend
or other distribution (whether in cash, stock or property) with respect to any
of the Company's capital stock, other than regular quarterly cash dividends on
the Company Common Stock, (iii) effected or authorized any split, combination
or reclassification of any of the Company's capital stock or any issuance
thereof or issued any other securities in respect of, in lieu of or in
substitution for shares of the Company's capital stock, except for issuances of
Company Common Stock upon the exercise of Company Options, in each case in
accordance with their terms at the time of exercise, (iv) changed in any
material respect, or had knowledge of any reason that required any material
change in, any accounting methods (or underlying assumptions), principles or
practices of the Company or its Subsidiaries, including any material reserving,
renewal or residual method, practice or policy, (v) made any material Tax
election or settled or compromised any material income Tax liability, (vi) made
any material change in the policies and procedures of the Company or its
Subsidiaries in connection with trading activities, (vii) sold, leased,
exchanged, transferred or otherwise disposed of any material Company Asset
other than in the ordinary course consistent with past practice, (viii)
revalued, or had knowledge of any reason that required revaluing, any of the
Company Assets in any material respect, including writing down the value of any
of the Company Assets or writing off notes or accounts receivable, in each case
in any material respect and other than in the ordinary course of business
consistent with past practice, or (ix) made any agreement or commitment
(contingent or otherwise) to do any of the foregoing.
Section 3.7 Absence of Undisclosed Liabilities. Except as
disclosed in the Specified Company SEC Documents, to the extent that it is
reasonably apparent that the disclosure in the Specified Company SEC Documents
is responsive to the matters set forth in this Section 3.7, neither the Company
nor any of its Subsidiaries has any liabilities or obligations (accrued,
contingent or otherwise), except for (i) liabilities that individually or in
the aggregate have not had, and would not be reasonably likely to have or
result in, a Material Adverse Effect on the Company, (ii) liabilities in
respect of Litigation (which are the subject of Section 3.10), and (iii)
liabilities under Environmental Laws (which are the subject of Section 3.14).
Neither the Company nor any of its Subsidiaries is in default in respect of the
terms and conditions of any indebtedness or other agreement which individually
or in the aggregate has had, or would be reasonably likely to have or result
in, a Material Adverse Effect on the Company.
Section 3.8 Proxy Statement; Form S-4; Merger Documents. None of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in (a) the S-4 at the time the S-4 becomes effective
under the Securities Act or (b) the Proxy Statement (and any amendment thereof
or supplement thereto) at the date(s) mailed to the stockholders of the Company
and Parent, at the time of the Company Special Meeting, at the time of the
Parent Stockholders' Meeting and at the Effective Time, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Proxy
Statement and the S-4 will comply in all material respects with the provisions
of the Exchange Act, except that no representation is made by the Company with
respect to statements made in the Proxy Statement based on information supplied
to the Company by Parent or Purchaser for inclusion in the Proxy Statement or
the S-4.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Section 3.9(a) of the Company Disclosure Letter contains a
complete and correct list as of the date of this Agreement of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
stock appreciation right or other equity-based incentive, severance,
termination, change in control, retention, employment, hospitalization or other
medical, life or other insurance, disability, other welfare, supplemental
unemployment, profit-sharing, pension, or retirement plan, program, agreement
or arrangement, and each other director or employee compensation or benefit
plan, program, agreement or arrangement, sponsored, maintained or contributed
to by the Company, any of its Subsidiaries or by any trade or business, whether
or not incorporated (an "ERISA Affiliate"), that together with the Company or
any of its Subsidiaries would be deemed a "single employer" within the meaning
of Section 4001(b) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or to which the Company or an ERISA Affiliate is party,
whether written or oral, for the benefit of any current or former officer,
employee or director of the Company, any of its Subsidiaries or any ERISA
Affiliate (the "Company Plans").
(b) With respect to each Company Plan, the Company has
heretofore delivered to Parent complete and correct copies of each of the
following documents (including all amendments to such documents), as
applicable:
(i) the Company Plan or a written description of any
Company Plan not in writing;
(ii) a copy of the most recent annual report or Internal
Revenue Service Form 5500 Series, including all related reports required
therewith;
(iii) a copy of the most recent Summary Company Plan
Description ("SPD"), together with all Summaries of Material Modification
issued with respect to such SPD and all other material employee
communications relating to each Company Plan distributed by the Company or
any of its Subsidiaries from December 31, 2003 to the date of this
Agreement;
(iv) if the Company Plan or any obligations thereunder are
funded through a trust or any other funding vehicle or through insurance,
the trust or other funding agreement and the latest financial statements
thereof or evidence of insurance coverage thereof;
(v) all contracts relating to the Company Plan with respect
to which the Company or any ERISA Affiliate may have any material
liability, including insurance contracts, investment management
agreements, subscription and participation agreements and record keeping
agreements;
(vi) if the Company Plan is intended to qualify under
Section 401(a) of the Code, the most recent determination letter received
from the Internal Revenue Service; and
(vii) all material communications between the Company or
any ERISA Affiliate and any Governmental Entity.
(c) No Company Plan in effect as of the date hereof is subject
to Title IV or Section 302 of ERISA. No liability under Title IV or Section 302
of ERISA has been incurred by the Company or any ERISA Affiliate that has not
been satisfied in full, and no condition exists that would be reasonably likely
to result in the Company or any ERISA Affiliate incurring any such liability,
other than liability for premiums due to the Pension Benefit Guaranty
Corporation (which premiums have been paid when due). Insofar as the
representation made in this Section 3.9(c) applies to Sections 4064, 4069 or
4204 of Title IV of ERISA, such representation is made with respect to any
employee benefit plan, program, agreement or arrangement subject to Title IV of
ERISA to which the Company or any ERISA Affiliate made, or was required to
make, contributions during the five-year period ending on the last day of the
most recent plan year ended prior to the Closing Date.
(d) None of the Company, any ERISA Affiliate, any of the Company
Plans, any trust created thereunder and, to the knowledge of the Company, any
trustee or administrator thereof has engaged in a transaction or has taken or
failed to take any action with respect to a Company Plan in connection with
which the Company, any of its Subsidiaries or any ERISA Affiliate would be
reasonably likely to be subject to a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975(a) or (b),
4976 or 4980B of the Code.
(e) All contributions required to be made by the Company and its
Subsidiaries with respect to any Company Plan on or prior to the Closing Date
have been timely made or are reflected on the consolidated balance sheet of the
Company dated as of September 30, 2004 contained in the Specified Company SEC
Documents. Since September 30, 2004, there has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company or
any ERISA Affiliate relating to, or change in the terms of employee
participation or coverage under, any Company Plan that would increase
materially the expense of maintaining such Company Plan above the level of
expense incurred in respect thereof for the most recent fiscal year ended prior
to the date hereof.
(f) Each of the Company Plans has been operated and administered
by the Company and its Subsidiaries in all material respects in accordance with
applicable Laws, including ERISA and the Code.
(g) With respect to each of the Company Plans that is intended
to be "qualified" within the meaning of Section 401(a) of the Code, the Company
has received a currently effective determination letter from the IRS stating
that it is so qualified, such letter has not been revoked, and, to the
knowledge of the Company, no event has occurred that would be reasonably likely
to affect such qualified status. No fund established under a Company Plan is
intended to satisfy the requirements of Section 501(c)(9) of the Code.
(h) No amounts payable under the Company Plans as a result of
the transactions contemplated hereby will fail to be deductible for federal
income Tax purposes by virtue of Sections 280G or 162(m) of the Code.
(i) No Company Plan provides death, medical, hospitalization or
similar benefits (whether or not insured) with respect to any current or former
employee of the Company, its Subsidiaries or any ERISA Affiliate after
retirement or other termination of service, other than (i) coverage mandated by
applicable Law, (ii) death benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA or (iii) benefits, the full direct
cost of which is borne by the current or former employee (or beneficiary
thereof).
(j) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with any other event, (i)
entitle any current or former employee, officer or director of the Company, any
of its Subsidiaries or any ERISA Affiliate to severance pay, unemployment
compensation or any other similar termination payment under any Company Plan,
or (ii) accelerate the time of payment or vesting of, increase the amount of or
otherwise enhance any benefit due any such employee, officer or director under
any Company Plan.
(k) To the knowledge of the Company, neither the Company nor any
Subsidiary has contributed to a nonconforming group health plan (as defined in
Section 5000(c) of the Code) and no ERISA Affiliate of the Company or any of
its Subsidiaries has incurred a Tax under Section 5000(a) of the Code which is
or could become a liability of the Company or any of its Subsidiaries.
(l) There is no pending or, to the knowledge of the Company,
threatened material Litigation by, on behalf of or against any Company Plan by
any participant (or beneficiary thereof) in such Company Plan or otherwise
involving any such Company Plan (other than routine claims for benefits).
Section 3.10 Litigation; Compliance with Law.
(a) Except as disclosed in the Specified Company SEC Documents,
(i) there is no Litigation pending or, to the knowledge of the Company,
threatened in writing against, relating to or naming as a party thereto the
Company or any of its Subsidiaries, any of their respective properties or
assets or any of the Company's officers or directors (in their capacities as
such), (ii) there is no agreement, order, judgment, decree, injunction or award
of any Governmental Entity against and/or binding upon the Company, any of its
Subsidiaries or any of the Company's officers or directors (in their capacities
as such) that, in the case of either clause (i) or (ii), individually or in the
aggregate has had, or would be reasonably likely to have or result in, a
Material Adverse Effect on the Company, and (iii) there is no Litigation that
the Company or any of its Subsidiaries has pending against other parties, where
such Litigation is intended to enforce or preserve material rights of the
Company or any of its Subsidiaries.
(b) Each of the Company and its Subsidiaries has complied, and
is in compliance, in all material respects with all Laws and Permits which
affect the respective businesses of the Company or any of its Subsidiaries, the
Company Real Property and/or the Company Assets, and the Company and its
Subsidiaries have not been and are not in violation in any material respect of
any such Law or Permit; nor has any notice, charge, claim or action has been
received by the Company or any of its Subsidiaries or been filed, commenced, or
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries alleging any violation of the foregoing.
(c) The Company and its Subsidiaries hold all Permits necessary
for the ownership, leasing, operation, occupancy and use of the Company Real
Property, the Company Assets and the conduct of their respective businesses as
currently conducted ("Company Permits"), except where the failure to hold such
Company Permits individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has received notice
that any Company Permit will be terminated or modified or cannot be renewed in
the ordinary course of business, and the Company has no knowledge of any
reasonable basis for any such termination, modification or nonrenewal, in each
case except for any such terminations, modifications or nonrenewals that
individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company. The
execution, delivery and performance of this Agreement and the consummation of
the Merger or any other transactions contemplated hereby do not and will not
violate any Company Permit, or result in any termination, modification or
nonrenewal thereof, except in each case for any such violations, terminations,
modifications or nonrenewals that individually or in the aggregate have not
had, and would not be reasonably likely to have or result in, a Material
Adverse Effect on the Company.
(d) This Section 3.10 does not relate to matters with respect to
(i) Company Plans, ERISA and other employee benefit matters (which are the
subject of Section 3.9), (ii) Tax Laws and other Tax matters (which are the
subject of Section 3.13), (iii) Environmental Laws and other environmental
matters (which are the subject of Section 3.14), and (iv) labor matters (which
are the subject of Section 3.17).
Section 3.11 Intellectual Property.
(a) The Company and its Subsidiaries own, or possess sufficient
and legally enforceable licenses or other rights to use, any and all United
States and foreign patents, patent applications, patent disclosures, mask
works, computer software, geophysical data, trademarks, trade dress, trade
names, logos, Internet domain names, copyrights and service marks, including
applications to register and registrations for any of the foregoing, as well as
trade secrets, know-how, data and other proprietary rights and information (all
of the foregoing, referred to as "Technology" and together with trademarks,
trade names and service marks, referred to as "Intellectual Property")
necessary for the conduct of the business and operations of the Company and its
Subsidiaries as currently conducted, free and clear of any Liens (except for
any Permitted Liens).
(b) To the knowledge of the Company, the conduct of the business
of the Company and its Subsidiaries does not infringe, conflict with or
otherwise violate in any material respect any Intellectual Property of any
Person, and none of the Company or any of its Subsidiaries has received notice
or has knowledge of any such material infringement, conflict or other
violation.
Section 3.12 Material Contracts.
(a) Except as disclosed in the Specified Company SEC Documents,
to the extent that it is reasonably apparent that the disclosure in the
Specified Company SEC Documents is responsive to the matters set forth in this
Section 3.12(a), as of the date of this Agreement, neither the Company nor any
of its Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement, (ii) which materially restrains,
limits or impedes the Company's or any of its Subsidiaries', or will materially
restrain, limit or impede the Surviving Corporation's, ability to compete with
or conduct any business or any line of business, including geographic
limitations on the Company's or any of its Subsidiaries' or the Surviving
Corporation's activities, (iii) which is a material production sharing
agreement, joint venture or operating agreement, balancing agreement, farm-out
or farm-in agreement, enhanced oil recovery agreement, unitization and pooling
agreement or other similar contract or agreement relating to the exploration,
development and production of oil and natural gas, (iv) which is a material
take-or-pay agreement or other similar agreement that entitles purchasers of
production to receive delivery of Hydrocarbons without paying therefor, or (v)
which is otherwise material to the Company and its Subsidiaries taken as a
whole. Each contract, arrangement, commitment or understanding of the type
described in this Section 3.12(a), whether or not set forth in Section 3.12(a)
of the Company Disclosure Letter or disclosed in the Specified Company SEC
Documents, is referred to herein as a "Company Material Contract." The Company
has previously made available to Parent true, complete and correct copies of
each Company Material Contract.
(b) (i) Each Company Material Contract is valid and binding and
in full force and effect, (ii) the Company and each of its Subsidiaries has
performed all obligations required to be performed by it to date under each
Company Material Contract, (iii) no event or condition exists which constitutes
or, after notice or lapse of time or both, would constitute, a default on the
part of the Company or any of its Subsidiaries under any such Company Material
Contract and (iv) to the knowledge of the Company, no other party to such
Company Material Contract is in default in any respect thereunder, except in
each case where there has not been, and would not be reasonably likely to be,
individually or in the aggregate, a material adverse effect on the rights or
remedies of the Company or its Subsidiaries under such Company Material
Contracts.
Section 3.13 Taxes.
(a) (i) All material Returns required to be filed by or with
respect to the Company, its Subsidiaries and each Company Consolidated Group
have been timely filed in accordance with all applicable Laws and all such
Returns are true, correct and complete in all material respects, (ii) the
Company, its Subsidiaries and each Company Consolidated Group have timely paid
all material Taxes due or claimed to be due, (iii) all material Employment and
Withholding Taxes and any other material amounts required to be withheld with
respect to Taxes have been either duly and timely paid to the proper
Governmental Entity or properly set aside in accounts for such purpose in
accordance with applicable Laws, (iv) the charges, accruals and reserves for
Taxes with respect to the Company, its Subsidiaries and each Company
Consolidated Group reflected in the balance sheet, dated as of December 31,
2003, included in the Company's Annual Report on Form 10-K for the term ended
December 31, 2003 (the "Company Balance Sheet") are adequate under GAAP, (v) no
material deficiencies or other claims for any Taxes asserted or assessed, or,
to the knowledge of the Company, proposed, against the Company or any of its
Subsidiaries has not been resolved in all material respects, and (vi) there is
no material Litigation pending or, to the knowledge of any of the Company or
its Subsidiaries, threatened or scheduled to commence, against or with respect
to the Company or any of its Subsidiaries in respect of any Tax or Return.
(b) The statues of limitations for the federal income Tax
Returns of the Company, its Subsidiaries and each Company Consolidated Group
have expired or otherwise have been closed for all taxable periods ending on or
before December 31, 1996.
(c) Since January 1, 1997, neither the Company nor any of its
Subsidiaries has been a member of any "affiliated group" (as defined in Section
1504(a) of the Code) or has been included in any "consolidated," "unitary" or
"combined" Return (other than Returns which include only the Company and any
Subsidiaries of the Company) provided for under the Laws of the United States,
any foreign jurisdiction or any state or locality and none of the Company nor
any of its Subsidiaries has any liability for the Taxes of any Person (other
than the Company or any of its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision under any state, local or foreign law), or
as a successor or transferee.
(d) As of the date of this Agreement, to the knowledge of the
Company, there are no Non-U.S. Stockholders that hold more than 5% of the
Company Common Stock.
(e) There are no Tax sharing, allocation, indemnification or
similar agreements or arrangements, whether written or unwritten, in effect
under which the Company or any of its Subsidiaries could be liable for any
material Taxes of any Person other than the Company or any Subsidiary of the
Company.
(f) Neither the Company nor any of its Subsidiaries has entered
into an agreement or waiver extending any statute of limitations relating to
the payment or collection of a material amount of Taxes, nor is any request for
such a waiver or extension pending.
(g) There are no Liens for Taxes on any asset of the Company or
its Subsidiaries, except for Permitted Liens.
(h) Neither the Company nor any of its Subsidiaries is the
subject of or bound by any material private letter ruling, technical advice
memorandum, closing agreement or similar material ruling, memorandum or
agreement with any taxing authority.
(i) Neither the Company nor its Subsidiaries has entered into,
has any liability in respect of, or has any filing obligations with respect to,
any "reportable transactions," as defined in Section 1.6011-4(b)(1) of the
Treasury Regulations.
(j) Neither the Company nor any of its Subsidiaries will be
required to include any material item of income in, or exclude any material
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in method
of accounting for a taxable period ending on or prior to the Closing Date under
Section 481(c) of the Code (or any corresponding or similar provision of state,
local or foreign Tax Law), (ii) "closing agreement" as described in Section
7121 of the Code (or any corresponding or similar provision of state, local or
foreign Tax Law) executed on or prior to the Closing Date, or (iii) deferred
intercompany gain or excess loss account described in Treasury Regulations
under Section 1502 of the Code (or any corresponding or similar provision of
state, local or foreign Tax Law).
(k) Neither the Company nor any of its Subsidiaries has taken or
agreed to take any action or knows of any fact, agreement, plan or other
circumstance that would be reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(l) The Company has made available to Parent correct and
complete copies of (i) all U.S. federal income Tax Returns of the Company and
its Subsidiaries relating to taxable periods ending on or after December 31,
2001, filed through the date hereof and (ii) any material audit report within
the last three years relating to any material Taxes due from or with respect to
the Company or any of its Subsidiaries.
(m) No jurisdiction where the Company or any of its Subsidiaries
does not file a Return has made a claim that the Company or any of its
Subsidiaries is required to file a Return for a material amount of Taxes for
such jurisdiction.
(n) Within the last three years, neither the Company nor any of
its affiliates has owned any material assets located outside the United States
or conducted a material trade or business outside the United States.
(o) All of the transactions which the Company has accounted for
as xxxxxx under SFAS 133 have also been treated as hedging transactions for
federal income Tax purposes pursuant to Treasury Regulation Section 1.1221-2
and have been properly identified as such under Treasury Regulation Section
1.1221-2(f).
Section 3.14 Environmental Matters.
(a) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company, the Company and its Subsidiaries
have complied, and are in compliance, with all applicable Environmental Laws,
which compliance includes the possession of all Permits required under
applicable Environmental Laws and compliance with the terms and conditions
thereof and the making and filing with all applicable Governmental Entities of
all reports, forms and documents and the maintenance of all records required to
be made, filed or maintained by it under any Environmental Law. Neither the
Company nor any of its Subsidiaries has received any communication (written or,
if oral, would be reasonably likely to result in a formal claim) from any
Person, whether a Governmental Entity, citizens group, employee or otherwise,
that alleges that the Company or any of its Subsidiaries is not in compliance
in any material respect with Environmental Laws and that has not been resolved
in all material respects.
(b) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company, there are no Environmental Claims
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the knowledge of the Company, against any Person
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law.
(c) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company, neither the Company nor any of
its Subsidiaries is subject to any liability or obligation (accrued, contingent
or otherwise) to cleanup, correct, xxxxx or to take any response, remedial or
corrective action under or pursuant to any Environmental Laws, relating to (i)
environmental conditions on, under, or about any of the properties or assets
owned, leased, operated or used by the Company or any of its Subsidiaries or
any predecessor thereto at the present time or in the past, including the air,
soil, surface water and groundwater conditions at, on, under, from or near such
properties, or (ii) the past or present use, management, handling, transport,
treatment, generation, storage, disposal or Release of any Hazardous
Substances, whether on-site at any Company Real Property, or at any off-site
location. The Company has provided or made available to Parent all material
studies, assessments, reports, data, results of investigations or audits,
analyses and test results, in the possession, custody or control of the Company
or any of its Subsidiaries relating to (x) the environmental conditions on,
under or about any of the properties or assets owned, leased, operated or used
by any of the Company and its Subsidiaries or any predecessor in interest
thereto at the present time or in the past and (y) any Hazardous Substances
used, managed, handled, transported, treated, generated, stored or Released by
any Person on, under, about or from, any of the properties, assets and
businesses of the Company or any of its Subsidiaries.
(d) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company, to the knowledge of the Company,
there are no past or present actions, activities, circumstances, conditions,
events or incidents, including the release, emission, discharge, presence or
disposal of any Hazardous Substance, that would be reasonably likely to form
the basis of any Environmental Claim against the Company or any of its
Subsidiaries or against any Person whose liability for such Environmental Claim
the Company or any of its Subsidiaries has retained or assumed either
contractually or by operation of law.
(e) Without in any way limiting the generality of the foregoing,
there are no underground storage tanks located at any property currently owned,
leased or operated by the Company or any of its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries is required
by virtue of the transactions contemplated by this Agreement, or as a condition
to the effectiveness of any transactions contemplated by this Agreement, (i) to
perform a site assessment for Hazardous Substances at any Company Real Property
or (ii) to remove or remediate any Hazardous Substances from any Company Real
Property.
Section 3.15 Company Real Property; Operating Equipment.
(a) Section 3.15(a) of the Company Disclosure Letter contains a
complete and correct list, as of the date of this Agreement, of all Company
Owned Real Property setting forth information sufficient to specifically
identify such Company Owned Real Property and the legal owner thereof. The
Company and its Subsidiaries have good, valid fee simple title to the Company
Owned Real Property, free and clear of any Liens other than Permitted Liens.
Each Company Lease grants the lessee under the Company Lease the exclusive
right to use and occupy the premises and rights demised thereunder free and
clear of any Lien other than Permitted Liens. Each of the Company and its
Subsidiaries has good and valid title to the leasehold estate or other interest
created under its respective Company Leases free and clear of any Liens other
than Permitted Liens.
(b) The Company Real Property constitutes all the fee, leasehold
and other interests in real property held by the Company and its Subsidiaries,
other than the Company Oil and Gas Properties. The use and operation of the
Company Real Property in the conduct of the business of the Company and its
Subsidiaries does not violate any instrument of record or agreement affecting
the Company Real Property, except for such violations as individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company. No current use by the Company and
its Subsidiaries of the Company Real Property is dependent on a nonconforming
use or other governmental approval.
(c) All material operating equipment owned or leased by the
Company or any of its Subsidiaries are, in the aggregate, in a state of repair
so as to be adequate in all material respects for reasonably prudent operations
in the areas in which they are operated.
Section 3.16 Insurance. Section 3.16 of the Company Disclosure
Letter contains a complete and correct list of all material insurance policies
maintained by or on behalf of any of the Company and its Subsidiaries as of the
date of this Agreement. Such policies are, and at the Closing policies or
replacement policies having substantially similar coverages will be, in full
force and effect, and all premiums due thereon have been or will be paid. The
Company and its Subsidiaries have complied in all material respects with the
terms and provisions of such policies. With respect to any material insurance
claim submitted by the Company or any of its Subsidiaries since January 1,
2003, neither the Company nor any of its Subsidiaries has received any refusal
of coverage, reservation of rights or other notice that the issuer of the
applicable insurance policy or policies is not willing or able to perform its
obligations thereunder.
Section 3.17 Labor Matters.
(a) Neither the Company nor any of its Subsidiaries is, or since
January 1, 2000 has been, a party to or bound by a collective bargaining
agreement or other similar agreement with any labor union or labor organization
applicable to the employees of the Company or any of its Subsidiaries, and no
such agreement is currently being negotiated. Since January 1, 2000, no
representation election petition or application for certification has been
filed by any employees of the Company or any of its Subsidiaries, nor is such a
petition or application pending with the National Labor Relations Board or any
Governmental Entity, and, to the knowledge of the Company, no labor union is
currently engaged in or threatening, organizational efforts with respect to any
employees of the Company or any of its Subsidiaries. Since January 1, 2000, no
labor dispute, strike, slowdown, picketing, work stoppage, lockout or other
collective labor action involving the employees of the Company or any of its
Subsidiaries has occurred or is in progress or, to the knowledge of the
Company, has been threatened against the Company or any of its Subsidiaries.
(b) Except as individually or in the aggregate has not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect
on the Company, each of the Company and its Subsidiaries is in compliance with
all applicable Laws respecting employment and employment practices, terms and
conditions of employment, immigration and wages and hours, and is not engaged
in any unfair or unlawful labor practice.
(c) There is no material Litigation pending, or to the knowledge
of the Company, threatened involving the Company or any of its Subsidiaries and
any of their respective employees or former employees.
(d) To the knowledge of the Company, since January 1, 2003, no
employee of the Company or any of its Subsidiaries has provided or is providing
information to any law enforcement agency regarding the commission or possible
commission of any crime or the violation or possible violation of any material
applicable Law, in each case, by the Company, any of its Subsidiaries or any of
their respective officers or directors.
(e) Since January 1, 2001, neither the Company nor any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the Worker
Adjustment and Retraining Notification Act, as amended (the "WARN Act")),
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of the Company or any of its Subsidiaries;
nor has the Company or any of its Subsidiaries been affected by any transaction
or engaged in layoffs or employment terminations sufficient in number to
trigger application of any state, local or foreign Law or regulation similar to
the WARN Act.
(f) Section 3.17(f) of the Company Disclosure Letter contains a
complete and correct list, as of the date of this Agreement, of the names of
all directors and officers of the Company, together with (i) such Person's
position or function, annual base salary or wages, (ii) any incentive or bonus
arrangement with respect to such Person and (iii) the number of shares of
Company Common Stock owned beneficially or of record, or both, by such Person.
Section 3.18 Affiliate Transactions. Section 3.18 of the Company
Disclosure Letter contains a complete and correct list, as of the date of this
Agreement, of all agreements, contracts, transfers of assets or liabilities or
other commitments or transactions, whether or not entered into in the ordinary
course of business, to or by which the Company or any of its Subsidiaries, on
the one hand, and any of their respective officers or directors (or any of
their respective Affiliates, other than the Company or any of its direct or
indirect wholly owned Subsidiaries) on the other hand, are or have been a party
or otherwise bound or affected, and that (a) are currently pending, in effect
or have been in effect during the past 12 months, (b) involve continuing
liabilities and obligations that, individually or in the aggregate, have been,
are or will be material to the Company and its Subsidiaries, taken as a whole
and (c) are not Company Plans disclosed in Section 3.9(a) of the Company
Disclosure Letter.
Section 3.19 Derivative Transactions and Hedging. Section 3.19
of the Company Disclosure Letter contains a complete and correct list of all
Derivative Transactions (including each outstanding Hydrocarbon or financial
hedging position attributable to the Hydrocarbon production of the Company and
its Subsidiaries) entered into by the Company or any of its Subsidiaries or for
the account of any of its customers as of the date of this Agreement. All such
Derivative Transactions were, and any Derivative Transactions entered into
after the date of this Agreement will be, entered into in accordance with
applicable Laws, and in accordance with the investment, securities,
commodities, risk management and other policies, practices and procedures
employed by the Company and its Subsidiaries. The Company and each of its
Subsidiaries have duly performed in all material respects all of their
respective obligations under the Derivative Transactions to the extent that
such obligations to perform have accrued, and, to the knowledge of the Company,
there are no material breaches, violations, collateral deficiencies, requests
for collateral or demands for payment (except for ordinary course margin
deposit requests), or defaults or allegations or assertions of such by any
party thereunder.
Section 3.20 Disclosure Controls and Procedures. Since January
1, 2003, the Company and each of its Subsidiaries has had in place "disclosure
controls and procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the
Exchange Act) designed and maintained to ensure in all material respects that
(a) transactions are executed in accordance with management's general or
specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principals and to maintain accountability for assets, (c) access to
assets is permitted only in accordance with management's general or specific
authorization, (d) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences, (e) all information (both financial and
non-financial) required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC
and (f) all such information is accumulated and communicated to the Company's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of the Company required under the Exchange Act with
respect to such reports. The Company's disclosure controls and procedures
ensure that information required to be disclosed by the Company in the reports
filed with the SEC under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.
None of the Company's or its Subsidiaries' records, systems, controls, data or
information are recorded, stored, maintained, operated or otherwise wholly or
partly dependent on or held by any means (including any electronic, mechanical
or photographic process, whether computerized or not) which (including all
means of access thereto and therefrom) are not under the exclusive ownership
and direct control of the Company or its Subsidiaries or accountants. The
Company has diligently completed in all material respects its work plan (the
"SOX 404 Plan") relating to documentation, testing and evaluation of the
Company's internal control over financial reporting for purposes of providing
the report required by SOX 404 and related SEC rules. As of the date of this
Agreement, to the knowledge of the Company, (i) there is no reason that it will
not be able, on a timely basis, to complete and include in the Company's Annual
Report on Form 10-K for the year ending December 31, 2004, management's
assessment of the Company's internal controls and procedures for financial
reporting in accordance with Section 404 of SOX and (ii) there is no material
weakness, significant deficiency or control deficiency, in each case as such
term is defined in PCAOB Auditing Std. No. 2.
Section 3.21 Oil and Gas.
(a) The Company has furnished Parent prior to the date of this
Agreement with reports estimating the Company's and its Subsidiaries' proved
oil and gas reserves as of December 31, 2003, as audited by Netherland Xxxxxx &
Co. (the "Company Reserve Report"). The factual, non-interpretive data on which
the Company Reserve Report was based for purposes of estimating the oil and gas
reserves set forth in the Company Reserve Report was accurate in all material
respects.
(b) All operated producing oil and gas xxxxx included in the
Company Reserve Report have been operated and produced and, to the knowledge of
the Company, drilled, in accordance in all material respects with generally
accepted oil and gas field practices and in compliance in all material respects
with applicable oil and gas leases and applicable Law.
(c) All material proceeds from the sale of crude oil, natural
gas liquids and other hydrocarbons produced from crude oil or natural gas
("Hydrocarbons") produced from the Company Oil and Gas Properties are being
received by the Company and its Subsidiaries in a timely manner and are not
being held in suspense for any reason (except in the ordinary course of
business).
(d) Neither the Company nor any of its Subsidiaries has received
any material advance, take-or-pay or other similar payments that entitle
purchasers of production to receive deliveries of Hydrocarbons without paying
therefor, and, on a net, company-wide basis, the Company is neither
underproduced nor overproduced, in either case, to any material extent, under
gas balancing or similar arrangements.
(e) The Company and its Subsidiaries have good and defensible
title to all oil and gas properties forming the basis for the reserves
reflected in the Company Reserve Report as attributable to interests owned by
the Company and its Subsidiaries and free and clear of all Liens, except for
(i) Permitted Liens and (ii) Liens associated with obligations reflected in the
Company Reserve Report. The oil and gas leases and other agreements that
provide the Company and its Subsidiaries with operating rights in the oil and
gas properties reflected in the Company Reserve Report are legal, valid and
binding and in full force and effect, and the rentals, royalties and other
payments due thereunder have been properly and timely paid and there is no
existing default (or event that, with notice or lapse of time or both, would
become a default) under any of such oil and gas leases or other agreements,
except, in each case, as individually or in the aggregate has not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect
on the Company.
(f) No claim, notice or order from any Governmental Entity or
other Person has been received by the Company or any of its Subsidiaries due to
Hydrocarbon production in excess of allowables or similar violations that could
result in curtailment of production after the Closing Date from any unit or oil
and gas properties of the Company or any of its Subsidiaries, except any such
violations which individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on the
Company.
Section 3.22 Investment Company. Neither the Company nor any of
its Subsidiaries is an "investment company," a company "controlled" by an
"investment company," or an "investment adviser" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act"), or
the Investment Advisers Act of 1940, as amended (the "Advisers Act").
Section 3.23 Rights Agreement. The Company has taken all action
so that the entering into of this Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not result in the
grant of any rights to any Person under the Company Rights Agreement or enable
or require the Company Rights to be exercised, distributed or triggered.
Section 3.24 Recommendation of Company Board of Directors;
Opinion of Financial Advisor.
(a) The Company Board, at a meeting duly called and held, duly
adopted resolutions (i) determining that this Agreement and the transactions
contemplated hereby are fair to, and in the best interests of, the stockholders
of the Company, (ii) approving this Agreement and the transactions contemplated
hereby, (iii) resolving to recommend adoption of this Agreement and approval of
the Merger and the other transactions contemplated hereby by the stockholders
of the Company and (iv) directing that the adoption of this Agreement and the
approval of the Merger and the other transactions contemplated hereby be
submitted to the Company's stockholders for consideration in accordance with
this Agreement, which resolutions, as of the date of this Agreement, have not
been subsequently rescinded, modified or withdrawn in any way.
(b) The Company has received an opinion of Xxxxxx Xxxxxxx & Co.,
Inc. ("Xxxxxx Xxxxxxx") to the effect that, as of the date of this Agreement,
the Merger Consideration to be received by the holders of shares of Company
Common Stock (other than Parent, Purchaser or the Company) in the Merger is
fair, from a financial point of view, to such holders, a signed copy of which
has been, or will promptly be, delivered to Parent. The Company has received
the approval of Xxxxxx Xxxxxxx to permit the inclusion of a copy of its written
opinion in its entirety in the Proxy Statement, subject to Xxxxxx Xxxxxxx'x
review of the Proxy Statement.
Section 3.25 Required Vote by Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding Shares
entitled to vote hereon (the "Company Required Vote") is the only vote of any
class of capital stock of the Company required by the DGCL or the certificate
of incorporation or the bylaws of the Company to adopt this Agreement and
approve the Merger and the other transactions contemplated hereby.
Section 3.26 Brokers. Except for Xxxxxx Xxxxxxx, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries, that is or will be payable by the Company or any of its
Subsidiaries. The Company is solely responsible for the fees and expenses of
Xxxxxx Xxxxxxx as and to the extent set forth in the engagement letter dated as
of September 14, 2004. The Company has previously delivered to Parent a true
and correct copy of such engagement letter.
Section 3.27 No Other Representations or Warranties. Except for
the representations and warranties contained in this Article III, neither the
Company nor any other Person makes any other express or implied representation
or warranty on behalf of the Company or any of its affiliates in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Except as set forth in the disclosure letter delivered by Parent
to the Company at or prior to the execution and delivery of this Agreement (the
"Parent Disclosure Letter") (each section of which qualifies the
correspondingly numbered representation, warranty or covenant to the extent
specified therein and such other representations, warranties or covenants to
the extent a matter in such section is disclosed in such a way as to make its
relevance to such other representation, warranty or covenant reasonably
apparent), Parent and Purchaser, jointly and severally, represent and warrant
to the Company as follows:
Section 4.1 Organization.
(a) Each of Parent, Purchaser and their respective Subsidiaries
is a corporation or other entity duly organized, validly existing, and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, and has all requisite corporate or other power and authority to
own, lease, use and operate its properties and to carry on its business as it
is now being conducted.
(b) Each of Parent, Purchaser and their respective Subsidiaries
is duly qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which such qualification or licensing is
required, except where the failure to be so qualified or licensed individually
or in the aggregate has not had, and would not be reasonably likely to have or
result in, a Material Adverse Effect on Parent.
(c) Each of Parent and Purchaser has previously delivered to the
Company a complete and correct copy of each of its certificate of incorporation
and bylaws in each case as amended (if so amended) to the date of this
Agreement, and has made available the certificate of incorporation, bylaws or
other organizational documents of each of its Subsidiaries, in each case as
amended (if so amended) to the date of this Agreement. Neither Parent,
Purchaser nor any of their respective Subsidiaries is in violation of its
certificate of incorporation, bylaws or similar governing documents.
(d) Section 4.1(d) of the Parent Disclosure Letter sets forth a
true and correct list of all of the Subsidiaries of Parent and Purchaser and
their respective jurisdictions of incorporation or organization. The respective
certificates or articles of incorporation and bylaws or other organizational
documents of the Subsidiaries of Parent and Purchaser do not contain any
provision limiting or otherwise restricting the ability of Parent or Purchaser
to control any of their respective Subsidiaries in any material respect.
Section 4.2 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of Parent consists of 100,000,000 shares of common stock, par value $3.33
1/3 per share (the "Parent Common Stock"), 4,000,000 shares of preferred stock,
par value $1.00 per share (the "Parent Preferred Stock"), 630,000 shares of
which have been designated Series A junior participating preferred stock and
125,000 shares of which have been designated Series B mandatorily convertible
preferred stock. As of November 30, 2004, (i) 58,980,650 shares of Parent
Common Stock were issued and outstanding, (ii) 3,549,976 shares of Parent
Common Stock were issued and held in the treasury of Parent, (iii) no shares of
Parent Preferred Stock were issued and outstanding, and (iv) 5,610,347 shares
of Parent Common Stock were reserved for issuance upon exercise of options
under the 1988 Non-Employee Director Stock Option Plan, as amended, and the
1992 Stock Option and Restricted Stock Plan, as amended (the "Parent Stock
Options"). Neither Parent nor any of its Subsidiaries directly or indirectly
owns any shares of Company Common Stock. No bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or exchangeable for
securities having the right to vote) on any matters on which stockholders of
Parent may vote are issued or outstanding. All the issued and outstanding
shares of Parent's capital stock are, and all shares which may be issued or
granted pursuant to the exercise of the Parent Stock Options will be, when
issued or granted in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and non-assessable and free of
preemptive rights, with no personal liability attaching to ownership thereof.
Except as set forth above, there are no existing (x) options, warrants,
preemptive rights, subscriptions, calls or other rights, convertible
securities, agreements, claims or commitments of any character obligating
Parent or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock or other equity interest in Parent or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity
interests, (y) contractual obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of Parent or any of
its Subsidiaries or any such securities or agreements listed in clause (x) of
this sentence, or (z) voting trusts or similar agreements to which Parent or
any of its Subsidiaries is a party with respect to the voting of the capital
stock of Parent or any of its Subsidiaries. At the Effective Time, there will
not be any outstanding subscriptions, options, warrants, calls, preemptive
rights, subscriptions, or other rights, convertible or exchangeable securities,
agreements, claims or commitments of any character by which Parent or any of
its Subsidiaries will be bound calling for the purchase or issuance of any
shares of the capital stock of Parent or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or any other such securities
or agreements.
(b) All of the issued and outstanding shares of capital stock
(or equivalent equity interests of entities other than corporations) of each of
Parent's Subsidiaries are beneficially owned, directly or indirectly, by Parent
free and clear of any Lien, other than statutory Liens for Taxes not yet due
and payable and such restrictions as may exist under applicable Law, and all
such shares or other ownership interests have been duly authorized and validly
issued and are fully paid and non-assessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
Section 4.3 Authorization; Validity of Agreement. Each of Parent
and Purchaser has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Purchaser of this
Agreement and the consummation by Parent and Purchaser of the transactions
contemplated hereby have been duly authorized by the respective Board of
Directors of Parent and Purchaser. Except for the Required Parent Vote, no
other corporate proceedings on the part of Parent or Purchaser are necessary to
authorize the execution, delivery and performance of this Agreement by Parent
and Purchaser and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and Purchaser
and, assuming due authorization, execution and delivery of this Agreement by
the Company, is a valid and binding obligation of each of Parent and Purchaser
enforceable against it in accordance with its terms, except as such enforcement
may be subject to or limited by (i) bankruptcy, insolvency or other similar
Laws, now or hereafter in effect, affecting creditors' rights generally and
(ii) the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
Section 4.4 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this
Agreement by Parent and Purchaser nor the consummation by Parent and Purchaser
of the Merger or any other transactions contemplated hereby will (i) violate
any provision of the certificate of incorporation or the bylaws of Parent or
Purchaser, or the certificate of incorporation, bylaws or similar governing
documents of any of Parent's or Purchaser's respective Subsidiaries, (ii)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination, cancellation or amendment under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of Parent or Purchaser or any
of their respective Subsidiaries under, or result in the acceleration or
trigger of any payment, time of payment, vesting or increase in the amount of
any compensation or benefit payable pursuant to, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, guarantee, other evidence
of indebtedness, lease, license, contract, collective bargaining agreement,
agreement or other legally binding instrument or obligation to which Parent or
Purchaser or any of their respective Subsidiaries is a party or by which any of
them or any of their respective assets or properties may be bound, or (iii)
conflict with or violate any Laws applicable to Parent or Purchaser, any of
their respective Subsidiaries or any of their respective properties or assets;
except in the case of clause (ii), for such conflicts, violations, breaches,
defaults or Liens which individually or in the aggregate have not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect
on Parent.
(b) No material filing or registration with, declaration or
notification to, or order, authorization, consent or approval of, any
Governmental Entity or any other Person is required in connection with the
execution, delivery and performance of this Agreement by Parent and Purchaser
or the consummation by Parent and Purchaser of the Merger or any other
transactions contemplated hereby, except for (i) the filing with the SEC of the
Proxy Statement in definitive form relating to the meetings of the Company's
and Parent's stockholders to be held in connection with this Agreement and the
transactions contemplated hereby, and the filing and declaration of
effectiveness of the S-4 in which the Proxy Statement will be included as a
prospectus, (ii) the adoption of the Parent Proposal by the Required Parent
Vote, (iii) such filings, authorizations or approvals as may be required under
(A) the HSR Act or (B) any other Competition Laws, rules or regulations, (iv)
the filing of the Certificate of Merger with the Secretary of State and (v)
such consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings (x) as are customarily made or obtained in connection
with the transfer of interests in or change of control of ownership of oil and
gas properties and (y) the failure of which to be obtained or made,
individually or in the aggregate, has not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on Parent.
Section 4.5 SEC Reports and Financial Statements.
(a) Parent has timely filed with the SEC all forms and other
documents (including exhibits and other information incorporated therein)
required to be filed by it since January 1, 2001 (such documents, the "Parent
SEC Documents"), including (i) its Annual Reports on Form 10-K for the years
ended December 31, 2001, December 31, 2002 and December 31, 2003, respectively,
(ii) its Quarterly Reports on Form 10-Q for the periods ended March 31, June 30
and September 30, 2004, (iii) all proxy statements relating to meetings of
stockholders of Parent since January 1, 2001 (in the form mailed to
stockholders), and (iv) all other forms, reports and registration statements
required to be filed by Parent with the SEC since January 1, 2001. As of their
respective dates, the Parent SEC Documents, including the financial statements
and schedules provided therein or incorporated by reference therein, (x) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (y) complied in all material respects with the applicable
requirements of the Exchange Act, the Securities Act and SOX, as the case may
be.
(b) The December 31, 2003 consolidated balance sheet of Parent
and the related consolidated statements of income, changes in stockholders'
equity and cash flows (including, in each case, the related notes, where
applicable), as reported in Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 2003 filed with the SEC under the Exchange Act, and the
unaudited consolidated balance sheets of Parent and its Subsidiaries (including
the related notes, where applicable) as of September 30, 2004 and the related
(i) unaudited consolidated statements of income for the three and nine-month
periods then ended and (ii) unaudited consolidated statements of cash flows and
changes in stockholders' equity for the nine-month periods then ended (in each
case including the related notes, where applicable), as reported in Parent's
Quarterly Report on Form 10-Q for the period ended September 30, 2004 filed
with the SEC under the Exchange Act, fairly present, and the financial
statements to be filed by Parent with the SEC after the date of this Agreement
will fairly present (subject, in the case of unaudited statements, to recurring
audit adjustments normal in nature and amount), in all material respects, the
consolidated financial position and the results of the consolidated operations,
cash flows and changes in stockholders' equity of Parent and its Subsidiaries
as of the respective dates or for the respective fiscal periods therein set
forth; each of such statements (including the related notes, where applicable)
complies, and the financial statements to be filed by Parent with the SEC after
the date of this Agreement will comply, with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where applicable) has
been, and the financial statements to be filed by Parent with the SEC after the
date of this Agreement will be, prepared in accordance with GAAP consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q. The books
and records of Parent and its Subsidiaries have been, and are being, maintained
in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions. KPMG LLP is an independent
public accounting firm with respect to Parent and has not resigned or been
dismissed as independent public accountants of Parent.
Section 4.6 Absence of Certain Changes.
(a) Except as disclosed in the Parent SEC Documents filed by
Parent with the SEC prior to the date of this Agreement (the "Specified Parent
SEC Documents"), to the extent that it is reasonably apparent that the
disclosure in the Specified Parent SEC Documents is responsive to the matters
set forth in this Section 4.6(a), since September 30, 2004, (i) Parent and its
Subsidiaries have conducted their respective operations only in the ordinary
course consistent with past practice and (ii) there has not occurred or
continued to exist any event, change, occurrence, effect, fact, circumstance or
condition which, individually or in the aggregate, has had, or would be
reasonably likely to have or result in, a Material Adverse Effect on Parent.
(b) Except as disclosed in the Specified Parent SEC Documents,
to the extent that it is reasonably apparent that the disclosure in the
Specified Parent SEC Documents is responsive to the matters set forth in this
Section 4.6(b), since September 30, 2004 to the date of this Agreement, neither
Parent nor any of its Subsidiaries has (i) except as required pursuant to the
terms of the Parent Plans as in effect on September 30, 2004 or as required to
comply with applicable Law, (A) increased or agreed to increase the wages,
salaries, compensation, pension, or other fringe benefits or perquisites
payable to any officer, employee or director from the amount thereof in effect
as of September 30, 2004, other than increases in wages, salaries and other
cash compensation in the ordinary course of business consistent with past
practice, (B) granted any severance or termination pay, (C) entered into or
made any loans to any of its officers, directors or employees or made any
change in its borrowing or lending arrangements for or on behalf of any of such
Persons or (D) adopted or amended, or accelerated the payment or vesting of
benefits under, any Parent Plan, (ii) declared, set aside or paid any dividend
or other distribution (whether in cash, stock or property) with respect to any
of the Parent's capital stock, other than regular quarterly cash dividends on
the Parent Common Stock, (iii) effected or authorized any split, combination or
reclassification of any of the Parent's capital stock or any issuance thereof
or issued any other securities in respect of, in lieu of or in substitution for
shares of the Parent's capital stock, except for issuances of Parent Common
Stock upon the exercise of Parent Options, in each case in accordance with
their terms at the time of exercise, (iv) changed in any material respect, or
had knowledge of any reason that required any material change in, any
accounting methods (or underlying assumptions), principles or practices of
Parent or its Subsidiaries, including any material reserving, renewal or
residual method, practice or policy, (v) made any material Tax election or
settled or compromised any material income Tax liability, (vi) made any
material change in the policies and procedures of Parent or its Subsidiaries in
connection with trading activities, (vii) sold, leased, exchanged, transferred
or otherwise disposed of any material Parent Asset other than in the ordinary
course consistent with past practice, (viii) revalued, or had knowledge of any
reason that required revaluing, any of the Parent Assets in any material
respect, including writing down the value of any of the Parent Assets or
writing off notes or accounts receivable, in each case in any material respect
and other than in the ordinary course of business consistent with past
practice, or (ix) made any agreement or commitment (contingent or otherwise) to
do any of the foregoing.
Section 4.7 Absence of Undisclosed Liabilities. Except as
disclosed in the Specified Parent SEC Documents, to the extent that it is
reasonably apparent that the disclosure in the Specified Parent SEC Documents
is responsive to the matters set forth in this Section 4.7, neither Parent nor
any of its Subsidiaries has any liabilities or obligations (accrued, contingent
or otherwise), except for (i) liabilities that individually or in the aggregate
have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on Parent, (ii) liabilities in respect of Litigation
(which are the subject of Section 4.10), and (iii) liabilities under
Environmental Laws (which are the subject of Section 4.14). Neither Parent nor
any of its Subsidiaries is in default in respect of the terms and conditions of
any indebtedness or other agreement which individually or in the aggregate has
had, or would be reasonably likely to have or result in, a Material Adverse
Effect on Parent.
Section 4.8 Proxy Statement; Form S-4; Merger Documents. None of
the information supplied or to be supplied by Parent or Purchaser for inclusion
or incorporation by reference in (a) the S-4 at the time the S-4 becomes
effective under the Securities Act or (b) the Proxy Statement (and any
amendment thereof or supplement thereto) at the date(s) mailed to the
stockholders of the Company and Parent, at the time of the Company Special
Meeting, at the time of the Parent Stockholders' Meeting and at the Effective
Time, will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement and the S-4 will comply in all material
respects with the provisions of the Exchange Act, except that no representation
is made by Parent or Purchaser with respect to statements made in the Proxy
Statement based on information supplied to Parent or Purchaser by the Company
for inclusion in the Proxy Statement or the S-4.
Section 4.9 Parent Employee Benefit Plans; ERISA.
(a) Section 4.9(a) of the Parent Disclosure Letter contains a
complete and correct list as of the date of this Agreement of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
stock appreciation right or other equity-based incentive, severance,
termination, change in control, retention, employment, hospitalization or other
medical, life or other insurance, disability, other welfare, supplemental
unemployment, profit-sharing, pension or retirement plan, program, agreement or
arrangement, and each other director or employee compensation or benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to by
Parent, any of its Subsidiaries or by any trade or business, whether or not
incorporated (a "Parent ERISA Affiliate"), that together with Parent or any of
its Subsidiaries would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA, or to which Parent or a Parent ERISA Affiliate is
party, whether written or oral, for the benefit of any current or former
officer, employee or director of Parent, any of its Subsidiaries or any Parent
ERISA Affiliate (the "Parent Plans").
(b) With respect to each Parent Plan, Parent has heretofore
delivered to the Company complete and correct copies of each of the following
documents (including all amendments to such documents), as applicable:
(i) the Parent Plan or a written description of any Parent
Plan not in writing;
(ii) a copy of the most recent annual report or Internal
Revenue Service Form 5500 Series, including all related reports required
therewith;
(iii) a copy of the most recent Summary Parent Plan
Description ("Parent SPD"), together with all Summaries of Material
Modification issued with respect to such Parent SPD and all other material
employee communications relating to each Parent Plan distributed by Parent
or any of its Subsidiaries from December 31, 2003 to the date of this
Agreement;
(iv) if the Parent Plan or any obligations thereunder are
funded through a trust or any other funding vehicle or through insurance,
the trust or other funding agreement and the latest financial statements
thereof or evidence of insurance coverage thereof;
(v) all contracts relating to the Parent Plan with respect
to which Parent or any Parent ERISA Affiliate may have any material
liability, including insurance contracts, investment management
agreements, subscription and participation agreements and record keeping
agreements;
(vi) if the Parent Plan is intended to qualify under
Section 401(a) of the Code, the most recent determination letter received
from the Internal Revenue Service; and
(vii) all material communications between Parent or any
Parent ERISA Affiliate and any Governmental Entity.
(c) No Parent Plan in effect as of the date hereof is subject to
Title IV or Section 302 of ERISA. No liability under Title IV or Section 302 of
ERISA has been incurred by Parent or any Parent ERISA Affiliate that has not
been satisfied in full, and no condition exists that would be reasonably likely
to result in Parent or any Parent ERISA Affiliate incurring any such liability,
other than liability for premiums due to the Pension Benefit Guaranty
Corporation (which premiums have been paid when due). Insofar as the
representation made in this Section 4.9(c) applies to Sections 4064, 4069 or
4204 of Title IV of ERISA, such representation is made with respect to any
employee benefit plan, program, agreement or arrangement subject to Title IV of
ERISA to which Parent or any Parent ERISA Affiliate made, or was required to
make, contributions during the five-year period ending on the last day of the
most recent plan year ended prior to the Closing Date.
(d) None of Parent, any Parent ERISA Affiliate, any of the
Parent Plans, any trust created thereunder and, to the knowledge of Parent, any
trustee or administrator thereof has engaged in a transaction or has taken or
failed to take any action with respect to a Parent Plan in connection with
which Parent, any of its Subsidiaries or any Parent ERISA Affiliate would be
reasonably likely to be subject to a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975(a) or (b),
4976 or 4980B of the Code.
(e) All contributions required to be made by Parent and its
Subsidiaries with respect to any Parent Plan on or prior to the Closing Date
have been timely made or are reflected on the consolidated balance sheet of
Parent dated as of September 30, 2004 contained in the Specified Parent SEC
Documents. Since September 30, 2004, there has been no amendment to, written
interpretation of or announcement (whether or not written) by Parent or any
Parent ERISA Affiliate relating to, or change in the terms of employee
participation or coverage under, any Parent Plan that would increase materially
the expense of maintaining such Parent Plan above the level of expense incurred
in respect thereof for the most recent fiscal year ended prior to the date
hereof.
(f) Each of the Parent Plans has been operated and administered
by Parent and its Subsidiaries in all material respects in accordance with
applicable Laws, including ERISA and the Code.
(g) With respect to each of the Parent Plans that is intended to
be "qualified" within the meaning of Section 401(a) of the Code, Parent has
received a currently effective determination letter from the IRS stating that
it is so qualified, such letter has not been revoked, and, to the knowledge of
Parent, no event has occurred that would be reasonably likely to affect such
qualified status. No fund established under a Parent Plan is intended to
satisfy the requirements of Section 501(c)(9) of the Code.
(h) No amounts payable under the Parent Plans as a result of the
transactions contemplated hereby will fail to be deductible for federal income
Tax purposes by virtue of Sections 280G or 162(m) of the Code.
(i) No Parent Plan provides death, medical, hospitalization or
similar benefits (whether or not insured) with respect to any current or former
employee of Parent, its Subsidiaries or any Parent ERISA Affiliate after
retirement or other termination of service, other than (i) coverage mandated by
applicable Law, (ii) death benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA or (iii) benefits, the full direct
cost of which is borne by the current or former employee (or beneficiary
thereof).
(j) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with any other event, (i)
entitle any current or former employee, officer or director of Parent, any of
its Subsidiaries or any Parent ERISA Affiliate to severance pay, unemployment
compensation or any other similar termination payment under any Parent Plan, or
(ii) accelerate the time of payment or vesting of, increase the amount of or
otherwise enhance any benefit due any such employee, officer or director under
any Parent Plan.
(k) To the knowledge of Parent, neither Parent nor any
Subsidiary has contributed to a nonconforming group health plan (as defined in
Section 5000(c) of the Code) and no Parent ERISA Affiliate or any of its
Subsidiaries has incurred a Tax under Section 5000(a) of the Code which is or
could become a liability of Parent or any of its Subsidiaries.
(l) There is no pending or, to the knowledge of Parent,
threatened material Litigation by, on behalf of or against any Parent Plan by
any participant (or beneficiary thereof) in such Parent Plan or otherwise
involving such Parent Plan (other than routine claims for benefits).
Section 4.10 Litigation; Compliance with Law.
(a) Except as disclosed in the Specified Parent SEC Documents,
(i) there is no Litigation pending or, to the knowledge of Parent, threatened
in writing against, relating to or naming as a party thereto Parent or any of
its Subsidiaries, any of their respective properties or assets or any of
Parent's officers or directors (in their capacities as such), (ii) there is no
agreement, order, judgment, decree, injunction or award of any Governmental
Entity against and/or binding upon Parent, any of its Subsidiaries or any of
Parent's officers or directors (in their capacities as such) that, in the case
of either clause (i) or (ii), individually or in the aggregate has had, or
would be reasonably likely to have or result in, a Material Adverse Effect on
Parent, and (iii) there is no Litigation that Parent or any of its Subsidiaries
has pending against other parties, where such Litigation is intended to enforce
or preserve material rights of Parent or any of its Subsidiaries.
(b) Each of Parent and its Subsidiaries has complied, and is in
compliance, in all material respects with all Laws and Permits which affect the
respective businesses of Parent or any of its Subsidiaries, the Parent Real
Property and/or the Parent Assets, and Parent and its Subsidiaries have not
been and are not in violation in any material respect of any such Law or
Permit; nor has any notice, charge, claim or action has been received by Parent
or any of its Subsidiaries or been filed, commenced, or to the knowledge of
Parent, threatened against Parent or any of its Subsidiaries alleging any
violation of the foregoing.
(c) Parent and its Subsidiaries hold all Permits necessary for
the ownership, leasing, operation, occupancy and use of the Parent Real
Property, the Parent Assets and the conduct of their respective businesses as
currently conducted ("Parent Permits"), except where the failure to hold such
Parent Permits individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on Parent.
Neither Parent nor any of its Subsidiaries has received notice that any Parent
Permit will be terminated or modified or cannot be renewed in the ordinary
course of business, and Parent has no knowledge of any reasonable basis for any
such termination, modification or nonrenewal, in each case except for any such
terminations, modifications or nonrenewals that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on Parent. The execution, delivery and
performance of this Agreement and the consummation of the Merger or any other
transactions contemplated hereby do not and will not violate any Parent Permit,
or result in any termination, modification or nonrenewal thereof, except in
each case for any such violations, terminations, modifications or nonrenewals
that individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on Parent.
(d) This Section 4.10 does not relate to matters with respect to
(i) Parent Plans, ERISA and other employee benefit matters (which are the
subject of Section 4.9), (ii) Tax Laws and other Tax matters (which are the
subject of Section 4.13), (iii) Environmental Laws and other environmental
matters (which are the subject of Section 4.14), and (iv) labor matters (which
are the subject of Section 4.17).
Section 4.11 Intellectual Property.
(a) Parent and its Subsidiaries own, or possess sufficient and
legally enforceable licenses or other rights to use, any and all Technology and
Intellectual Property necessary for the conduct of the business and operations
of Parent and its Subsidiaries as currently conducted, free and clear of any
Liens (except for any Permitted Liens).
(b) To the knowledge of Parent, the conduct of the business of
Parent and its Subsidiaries does not infringe, conflict with or otherwise
violate in any material respect any Intellectual Property of any Person, and
none of Parent or any of its Subsidiaries has received notice or has knowledge
of any such material infringement, conflict or other violation.
Section 4.12 Material Contracts.
(a) Except as disclosed in the Specified Parent SEC Documents,
to the extent that it is reasonably apparent that the disclosure in the
Specified Parent SEC Documents is responsive to the matters set forth in this
Section 4.12(a), as of the date of this Agreement, neither Parent nor any of
its Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement, (ii) which materially restrains,
limits or impedes Parent's or any of its Subsidiaries', or will materially
restrain, limit or impede the Surviving Corporation's, ability to compete with
or conduct any business or any line of business, including geographic
limitations on Parent's or any of its Subsidiaries' or the Surviving
Corporation's activities, (iii) which is a material production sharing
agreement, joint venture or operating agreement, balancing agreement, farm-out
or farm-in agreement, enhanced oil recovery agreement, unitization and pooling
agreement or other similar contract or agreement relating to the exploration,
development and production of oil and natural gas, (iv) which is a material
take-or-pay agreement or other similar agreement that entitles purchasers of
production to receive delivery of Hydrocarbons without paying therefor, or (v)
which is otherwise material to Parent and its Subsidiaries taken as a whole.
Each contract, arrangement, commitment or understanding of the type described
in this Section 4.12(a), whether or not set forth in Section 4.12(a) of the
Parent Disclosure Letter or disclosed in the Specified Parent SEC Documents, is
referred to herein as a "Parent Material Contract." Parent has previously made
available to the Company true, complete and correct copies of each Parent
Material Contract.
(b) (i) Each Parent Material Contract is valid and binding and
in full force and effect, (ii) Parent and each of its Subsidiaries has
performed all obligations required to be performed by it to date under each
Parent Material Contract, (iii) no event or condition exists which constitutes
or, after notice or lapse of time or both, would constitute, a default on the
part of Parent or any of its Subsidiaries under any such Parent Material
Contract and (iv) to the knowledge of Parent, no other party to such Parent
Material Contract is in default in any respect thereunder, except in each case
where there has not been, and would not be reasonably likely to be,
individually or in the aggregate, a material adverse effect on the rights or
remedies of Parent or its Subsidiaries under such Parent Material Contracts.
Section 4.13 Taxes.
(a) (i) All material Returns required to be filed by or with
respect to Parent, its Subsidiaries and each Parent Consolidated Group have
been timely filed in accordance with all applicable Laws and all such Returns
are true, correct and complete in all material respects, (ii) Parent, its
Subsidiaries and each Parent Consolidated Group have timely paid all material
Taxes due or claimed to be due, (iii) all material Employment and Withholding
Taxes and any other material amounts required to be withheld with respect to
Taxes have been either duly and timely paid to the proper Governmental Entity
or properly set aside in accounts for such purpose in accordance with
applicable Laws, (iv) the charges, accruals and reserves for Taxes with respect
to Parent, its Subsidiaries and each Parent Consolidated Group reflected in the
balance sheet, dated as of December 31, 2003, included in Parent's Annual
Report on Form 10-K for the term ended December 31, 2003 (the "Parent Balance
Sheet") are adequate under GAAP, (v) no material deficiencies or other claims
for any Taxes asserted or assessed, or, to the knowledge of Parent, proposed,
against Parent or any of its Subsidiaries has not been resolved in all material
respects, and (vi) there is no material Litigation pending or, to the knowledge
of any of Parent or its Subsidiaries, threatened or scheduled to commence,
against or with respect to Parent or any of its Subsidiaries in respect of any
Tax or Return.
(b) The statues of limitations for the federal income Tax
Returns of Parent, its Subsidiaries and each Parent Consolidated Group have
expired or otherwise have been closed for all taxable periods ending on or
before December 31, 2000.
(c) Since January 1, 2001, neither Parent nor any of its
Subsidiaries has been a member of any "affiliated group" (as defined in Section
1504(a) of the Code) or has been included in any "consolidated," "unitary" or
"combined" Return (other than Returns which include only Parent and any
Subsidiaries of Parent) provided for under the Laws of the United States, any
foreign jurisdiction or any state or locality and none of Parent nor any of its
Subsidiaries has any liability for the Taxes of any Person (other than Parent
or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision under any state, local or foreign law), or as a successor or
transferee.
(d) There are no Tax sharing, allocation, indemnification or
similar agreements or arrangements, whether written or unwritten, in effect
under which Parent or any of its Subsidiaries could be liable for any material
Taxes of any Person other than Parent or any Subsidiary of Parent.
(e) Neither Parent nor any of its Subsidiaries has entered into
an agreement or waiver extending any statute of limitations relating to the
payment or collection of a material amount of Taxes, nor is any request for
such a waiver or extension pending.
(f) There are no Liens for Taxes on any asset of Parent or its
Subsidiaries, except for Permitted Liens.
(g) Neither Parent nor any of its Subsidiaries is the subject of
or bound by any material private letter ruling, technical advice memorandum,
closing agreement or similar material ruling, memorandum or agreement with any
taxing authority.
(h) Neither Parent nor its Subsidiaries has entered into, has
any liability in respect of, or has any filing obligations with respect to, any
"reportable transactions," as defined in Section 1.6011-4(b)(1) of the Treasury
Regulations.
(i) Neither Parent nor any of its Subsidiaries will be required
to include any material item of income in, or exclude any material item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) change in method of
accounting for a taxable period ending on or prior to the Closing Date under
Section 481(c) of the Code (or any corresponding or similar provision of state,
local or foreign Tax Law), (ii) "closing agreement" as described in Section
7121 of the Code (or any corresponding or similar provision of state, local or
foreign Tax Law) executed on or prior to the Closing Date, or (iii) deferred
intercompany gain or excess loss account described in Treasury Regulations
under Section 1502 of the Code (or any corresponding or similar provision of
state, local or foreign Tax Law).
(j) Neither Parent nor any of its Subsidiaries has taken or
agreed to take any action or knows of any fact, agreement, plan or other
circumstance that would be reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(k) Parent has made available to the Company correct and
complete copies of (i) all U.S. federal income Tax Returns of Parent and its
Subsidiaries relating to taxable periods ending on or after December 31, 2001,
filed through the date hereof and (ii) any material audit report within the
last four years relating to any material Taxes due from or with respect to
Parent or any of its Subsidiaries.
(l) No jurisdiction where Parent or any of its Subsidiaries does
not file a Return has made a claim that Parent or any of its Subsidiaries is
required to file a Return for a material amount of Taxes for such jurisdiction.
(m) All of the transactions which Parent has accounted for as
xxxxxx under SFAS 133 have also been treated as hedging transactions for
federal income Tax purposes pursuant to Treasury Regulation Section 1.1221-2
and have been properly identified as such under Treasury Regulation Section
1.1221-2(f).
Section 4.14 Environmental Matters.
(a) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on Parent, Parent and its Subsidiaries have
complied, and are in compliance, with all applicable Environmental Laws, which
compliance includes the possession of all Permits required under applicable
Environmental Laws and compliance with the terms and conditions thereof and the
making and filing with all applicable Governmental Entities of all reports,
forms and documents and the maintenance of all records required to be made,
filed or maintained by it under any Environmental Law. Neither Parent nor any
of its Subsidiaries has received any communication (written or, if oral, would
be reasonably likely to result in a formal claim) from any Person, whether a
Governmental Entity, citizens group, employee or otherwise, that alleges that
Parent or any of its Subsidiaries is not in compliance in any material respect
with Environmental Laws and that has not been resolved in all material
respects.
(b) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on Parent, there are no Environmental Claims
pending or, to the knowledge of Parent, threatened against Parent or any of its
Subsidiaries or, to the knowledge of Parent, against any Person whose liability
for any Environmental Claim Parent or any of its Subsidiaries has retained or
assumed either contractually or by operation of law.
(c) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on Parent, neither Parent nor any of its
Subsidiaries is subject to any liability or obligation (accrued, contingent or
otherwise) to cleanup, correct, xxxxx or to take any response, remedial or
corrective action under or pursuant to any Environmental Laws, relating to (i)
environmental conditions on, under, or about any of the properties or assets
owned, leased, operated or used by Parent or any of its Subsidiaries or any
predecessor thereto at the present time or in the past, including the air,
soil, surface water and groundwater conditions at, on, under, from or near such
properties, or (ii) the past or present use, management, handling, transport,
treatment, generation, storage, disposal or Release of any Hazardous
Substances, whether on-site at any Parent Real Property, or at any off-site
location. Parent has provided or made available to the Company all material
studies, assessments, reports, data, results of investigations or audits,
analyses and test results, in the possession, custody or control of Parent or
any of its Subsidiaries relating to (x) the environmental conditions on, under
or about any of the properties or assets owned, leased, operated or used by any
of Parent and its Subsidiaries or any predecessor in interest thereto at the
present time or in the past and (y) any Hazardous Substances used, managed,
handled, transported, treated, generated, stored or Released by any Person on,
under, about or from, any of the properties, assets and businesses of Parent or
any of its Subsidiaries.
(d) Except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on Parent, to the knowledge of Parent, there are
no past or present actions, activities, circumstances, conditions, events or
incidents, including the release, emission, discharge, presence or disposal of
any Hazardous Substance, that would be reasonably likely to form the basis of
any Environmental Claim against Parent or any of its Subsidiaries or against
any Person whose liability for such Environmental Claim Parent or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law.
(e) Without in any way limiting the generality of the foregoing,
there are no underground storage tanks located at any property currently owned,
leased or operated by Parent or any of its Subsidiaries.
(f) Neither Parent nor any of its Subsidiaries is required by
virtue of the transactions contemplated by this Agreement, or as a condition to
the effectiveness of any transactions contemplated by this Agreement, (i) to
perform a site assessment for Hazardous Substances at any Parent Real Property
or (ii) to remove or remediate any Hazardous Substances from any Parent Real
Property.
Section 4.15 Parent Real Property; Operating Equipment.
(a) Section 4.15(a) of the Parent Disclosure Letter contains a
complete and correct list, as of the date of this Agreement, of all Parent
Owned Real Property setting forth information sufficient to specifically
identify such Parent Owned Real Property and the legal owner thereof. Parent
and its Subsidiaries have good, valid fee simple title to the Parent Owned Real
Property, free and clear of any Liens other than Permitted Liens. Each Parent
Lease grants the lessee under the Parent Lease the exclusive right to use and
occupy the premises and rights demised thereunder free and clear of any Lien
other than Permitted Liens. Each of Parent and its Subsidiaries has good and
valid title to the leasehold estate or other interest created under its
respective Parent Leases free and clear of any Liens other than Permitted
Liens.
(b) The Parent Real Property constitutes all the fee, leasehold
and other interests in real property held by Parent and its Subsidiaries, other
than the Parent Oil and Gas Properties. The use and operation of the Parent
Real Property in the conduct of the business of Parent and its Subsidiaries
does not violate any instrument of record or agreement affecting the Parent
Real Property, except for such violations as individually or in the aggregate
have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on Parent. No current use by Parent and its
Subsidiaries of the Parent Real Property is dependent on a nonconforming use or
other governmental approval.
(c) All material operating equipment owned or leased by Parent
or any of its Subsidiaries are, in the aggregate, in a state of repair so as to
be adequate in all material respects for reasonably prudent operations in the
areas in which they are operated.
Section 4.16 Insurance. Section 4.16 of the Parent Disclosure
Letter contains a complete and correct list of all material insurance policies
maintained by or on behalf of any of Parent and its Subsidiaries as of the date
of this Agreement. Such policies are, and at the Closing policies or
replacement policies having substantially similar coverages will be, in full
force and effect, and all premiums due thereon have been or will be paid.
Parent and its Subsidiaries have complied in all material respects with the
terms and provisions of such policies. With respect to any material insurance
claim submitted by Parent or any of its Subsidiaries since January 1, 2003,
neither Parent nor any of its Subsidiaries has received any refusal of
coverage, reservation of rights or other notice that the issuer of the
applicable insurance policy or policies is not willing or able to perform its
obligations thereunder.
Section 4.17 Labor Matters.
(a) Neither Parent nor any of its Subsidiaries is, or since
January 1, 2000 has been, a party to or bound by a collective bargaining
agreement or other similar agreement with any labor union or labor organization
applicable to the employees of Parent or any of its Subsidiaries, and no such
agreement is currently being negotiated. Since January 1, 2000, no
representation election petition or application for certification has been
filed by any employees of Parent or any of its Subsidiaries, nor is such a
petition or application pending with the National Labor Relations Board or any
Governmental Entity, and, to the knowledge of Parent, no labor union is
currently engaged in or threatening, organizational efforts with respect to any
employees of Parent or any of its Subsidiaries. Since January 1, 2000, no labor
dispute, strike, slowdown, picketing, work stoppage, lockout or other
collective labor action involving the employees of Parent or any of its
Subsidiaries has occurred or is in progress or, to the knowledge of Parent, has
been threatened against Parent or any of its Subsidiaries.
(b) Except as individually or in the aggregate has not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect
on Parent, each of Parent and its Subsidiaries is in compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment, immigration and wages and hours, and is not engaged
in any unfair or unlawful labor practice.
(c) There is no material Litigation pending, or to the knowledge
of Parent, threatened involving Parent or any of its Subsidiaries and any of
their respective employees or former employees.
(d) To the knowledge of Parent, since January 1, 2003, no
employee of Parent or any of its Subsidiaries has provided or is providing
information to any law enforcement agency regarding the commission or possible
commission of any crime or the violation or possible violation of any material
applicable Law, in each case, by Parent, any of its Subsidiaries or any of
their respective officers or directors.
(e) Since January 1, 2001, neither Parent nor any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN
Act), affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of Parent or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of Parent or any of its Subsidiaries; nor
has Parent nor any of its Subsidiaries been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger
application of any state, local or foreign Law or regulation similar to the
WARN Act.
(f) Section 4.17(f) of the Parent Disclosure Letter contains a
complete and correct list, as of the date of this Agreement, of the names of
all directors and officers of Parent, together with the number of shares of
Parent Common Stock owned beneficially or of record, or both, by such Person.
Section 4.18 Affiliate Transactions. Section 4.18 of the Parent
Disclosure Letter contains a complete and correct list, as of the date of this
Agreement, of all agreements, contracts, transfers of assets or liabilities or
other commitments or transactions, whether or not entered into in the ordinary
course of business, to or by which Parent or any of its Subsidiaries, on the
one hand, and any of their respective officers or directors (or any of their
respective Affiliates, other than Parent or any of its direct or indirect
wholly owned Subsidiaries) on the other hand, are or have been a party or
otherwise bound or affected, and that (a) are currently pending, in effect or
have been in effect during the past 12 months, (b) involve continuing
liabilities and obligations that, individually or in the aggregate, have been,
are or will be material to Parent and its Subsidiaries, taken as a whole and
(c) are not Parent Plans.
Section 4.19 Derivative Transactions and Hedging. Section 4.19
of the Parent Disclosure Letter contains a complete and correct list of all
Derivative Transactions (including each outstanding Hydrocarbon or financial
hedging position attributable to the Hydrocarbon production of Parent and its
Subsidiaries) entered into by Parent or any of its Subsidiaries or for the
account of any of its customers as of December 10, 2004. All such Derivative
Transactions were, and any Derivative Transactions entered into after the date
of this Agreement will be, entered into in accordance with applicable Laws, and
in accordance with the investment, securities, commodities, risk management and
other policies, practices and procedures employed by Parent and its
Subsidiaries. Parent and each of its Subsidiaries have duly performed in all
material respects all of their respective obligations under the Derivative
Transactions to the extent that such obligations to perform have accrued, and,
to the knowledge of Parent, there are no material breaches, violations,
collateral deficiencies, requests for collateral or demands for payment (except
for ordinary course margin deposit requests), or defaults or allegations or
assertions of such by any party thereunder.
Section 4.20 Disclosure Controls and Procedures. Since January
1, 2003, Parent and each of its Subsidiaries has had in place "disclosure
controls and procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the
Exchange Act) designed and maintained to ensure in all material respects that
(a) transactions are executed in accordance with management's general or
specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principals and to maintain accountability for assets, (c) access to
assets is permitted only in accordance with management's general or specific
authorization, (d) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences, (e) all information (both financial and
non-financial) required to be disclosed by Parent in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC
and (f) all such information is accumulated and communicated to Parent's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of Parent required under the Exchange Act with respect
to such reports. Parent's disclosure controls and procedures ensure that
information required to be disclosed by Parent in the reports filed with the
SEC under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms. None of
Parent's or its Subsidiaries' records, systems, controls, data or information
are recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means
of access thereto and therefrom) are not under the exclusive ownership and
direct control of Parent or its Subsidiaries or accountants. Parent has
diligently completed in all material respects its SOX 404 Plan. As of the date
of this Agreement, to the knowledge of Parent, (i) there is no reason that it
will not be able, on a timely basis, to complete and include in Parent's Annual
Report on Form 10-K for the year ending December 31, 2004, management's
assessment of Parent's internal controls and procedures for financial reporting
in accordance with Section 404 of SOX and (ii) there is no material weakness,
significant deficiency or control deficiency, in each case as such term is
defined in PCAOB Auditing Std. No. 2.
Section 4.21 Oil and Gas.
(a) Parent has furnished the Company prior to the date of this
Agreement with summaries of International and Domestic Regional Reserve
Estimates estimating Parent's and its Subsidiaries' proved oil and gas reserves
as of December 31, 2003 (the "Parent Reserve Report"). The factual,
non-interpretive data on which the Parent Reserve Report was based for purposes
of estimating the oil and gas reserves set forth in the Parent Reserve Report
was accurate in all material respects.
(b) All operated producing oil and gas xxxxx included in the
Parent Reserve Report have been operated and produced and, to the knowledge of
Parent, drilled, in accordance in all material respects with generally accepted
oil and gas field practices and in compliance in all material respects with
applicable oil and gas leases and applicable Law.
(c) All material proceeds from the sale of Hydrocarbons produced
from Parent Oil and Gas Properties are being received by Parent and its
Subsidiaries in a timely manner and are not being held in suspense for any
reason (except in the ordinary course of business).
(d) Neither Parent nor any of its Subsidiaries has received any
material advance, take-or-pay or other similar payments that entitle purchasers
of production to receive deliveries of Hydrocarbons without paying therefor,
and, on a net, company-wide basis, Parent is neither underproduced nor
overproduced, in either case, to any material extent, under gas balancing or
similar arrangements.
(e) Parent and its Subsidiaries have good and defensible title
to all oil and gas properties forming the basis for the reserves reflected in
the Parent Reserve Report as attributable to interests owned by Parent and its
Subsidiaries and free and clear of all Liens, except for (i) Permitted Liens
and (ii) Liens associated with obligations reflected in the Parent Reserve
Report. The oil and gas leases and other agreements that provide Parent and its
Subsidiaries with operating rights in the oil and gas properties reflected in
the Parent Reserve Report are legal, valid and binding and in full force and
effect, and the rentals, royalties and other payments due thereunder have been
properly and timely paid and there is no existing default (or event that, with
notice or lapse of time or both, would become a default) under any of such oil
and gas leases or other agreements, except, in each case, as individually or in
the aggregate has not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on Parent.
(f) No claim, notice or order from any Governmental Entity or
other Person has been received by Parent or any of its Subsidiaries due to
Hydrocarbon production in excess of allowables or similar violations that could
result in curtailment of production after the Closing Date from any unit or oil
and gas properties of Parent or any of its Subsidiaries, except any such
violations which individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on Parent.
Section 4.22 Investment Company. Neither Parent nor any of its
Subsidiaries, including Purchaser, is an "investment company," a company
"controlled" by an "investment company," or an "investment adviser" within the
meaning of the Investment Company Act, or the Advisers Act.
Section 4.23 Interim Operations of Purchaser. Purchaser was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement and has engaged in no business other than in connection with
entering into this Agreement and engaging in the transactions contemplated by
this Agreement.
Section 4.24 Financing. Parent has received a commitment letter
from JPMorgan whereby such financial institutions have committed, upon the
terms and subject to the conditions set forth therein, to provide debt
financing in the amount of $1,300,000,000. Parent has delivered a complete and
correct copy of the letter referred to in this Section 4.24 as in effect on the
date hereof to the Company, and Parent will deliver to the Company correct and
complete copies of the definitive agreements for the financing of the Merger
(the "Commitment Letter")
Section 4.25 Required Vote. The affirmative vote of the holders
of a majority of votes cast at a meeting at which a majority of the outstanding
shares of Parent Common Stock are present and voting (the "Required Parent
Vote") is the only vote of the holders of any class or series of the capital
stock of Parent necessary to authorize the issuance of Parent Common Stock
pursuant to this Agreement under Rule 312.02 of the NYSE (the "Parent
Proposal").
Section 4.26 Recommendation of Parent Board of Directors;
Opinion of Financial Advisor.
(a) The Parent Board, at a meeting duly called and held, duly
adopted resolutions (i) determining that this Agreement, the transactions
contemplated hereby and the Parent Proposal are fair to, and in the best
interests of, the stockholders of Parent, (ii) approving this Agreement, the
transactions contemplated hereby and the Parent Proposal, (iii) resolving to
recommend approval and adoption of the Parent Proposal to the stockholders of
Parent and (iv) directing that the Parent Proposal be submitted to Parent's
stockholders for consideration in accordance with this Agreement, which
resolutions, as of the date of this Agreement, have not been subsequently
rescinded, modified or withdrawn in any way.
(b) Parent has received an opinion of JPMorgan to the effect
that, as of the date of this Agreement, the Merger Consideration to be paid by
Parent in the Merger is fair, from a financial point of view, to Parent, a
signed copy of which opinion has been, or will promptly be, delivered to the
Company. Parent has received the approval of JPMorgan to permit the inclusion
of a copy of its written opinion in its entirety in the Proxy Statement,
subject to JPMorgan's review of the Proxy Statement.
Section 4.27 Brokers. Except for JPMorgan, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or any of its
Subsidiaries, that is or will be payable by Parent or any of its Subsidiaries.
Parent is solely responsible for the fees and expenses of JPMorgan as and to
the extent set forth in the engagement letter, dated as of November 30, 2004.
Parent has previously delivered to the Company a true and correct copy of such
engagement letter.
Section 4.28 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither Parent,
Purchaser nor any other Person makes any other express or implied
representation or warranty on behalf of Parent, Purchaser or any of their
respective affiliates in connection with this Agreement or the transactions
contemplated hereby.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company.
The Company covenants and agrees as to itself and its Subsidiaries
that during the period from the date of this Agreement until the Effective Time
or the date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1, except as (w) disclosed in Section 5.1 of the Company Disclosure
Letter, (x) expressly contemplated or permitted by this Agreement, (y) required
by applicable Law, or (z) agreed to in writing by Parent, after the date of
this Agreement and prior to the Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary course consistent with past practice, and the
Company shall use its reasonable best efforts to preserve intact its business
organization and goodwill and the business organization and goodwill of its
Subsidiaries and keep available the services of their current officers and
employees and preserve and maintain existing relations with customers,
suppliers, officers, employees and creditors;
(b) the Company shall not, nor shall it permit any of its
Subsidiaries to, (i) enter into any new line of business, or (ii) incur or
commit to any capital expenditures, or any obligations or liabilities in
connection with any capital expenditures during calendar year 2004 other than
capital expenditures and obligations or liabilities incurred or committed to in
an amount not greater in the aggregate than, and during the same time period
set forth in, the Company's current capital budget approved by the Company
Board in February 2004 and October 2004, the amount of which has been furnished
to Parent prior to the date of this Agreement, or (iii) incur or commit to any
capital expenditures, or any obligations or liabilities in connection with any
capital expenditures during calendar year 2005 other than capital expenditures
and obligations or liabilities incurred or committed to in an amount not
greater in the aggregate than, and during the same time period set forth in,
the Company's total capital budget for calendar year 2005 approved by the
Company Board in December 2004, which has been furnished to Parent prior to the
date of this Agreement;
(c) the Company shall not, nor shall it permit any of its
Subsidiaries to, amend its certificate of incorporation or bylaws or similar
organizational documents;
(d) the Company shall not, nor shall it permit any of its
Subsidiaries (other than direct or indirect wholly owned Subsidiaries) to,
declare, set aside or pay any dividend (other than, in the case of the Company,
regular quarterly dividends consistent with past practice and in no event
exceeding $0.06 per share per quarter) or other distribution, whether payable
in cash, stock or any other property or right, with respect to its capital
stock;
(e) the Company shall not, nor shall it permit any of its
Subsidiaries to (i) adjust, split, combine or reclassify any capital stock or
issue, grant, sell, transfer, pledge, dispose of or encumber any additional
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class or of any other such securities or agreements of the
Company or any of its Subsidiaries, other than issuances (A) by the Company of
Company Options and Company Common Stock to employees and directors of the
Company in the ordinary course of the Company's annual compensation procedures,
consistent with past practice and in accordance with Section 5.1(e)(i)(A) of
the Company Disclosure Letter; (B) of Company Options to new hires or promoted
employees in the ordinary course of business consistent with past practice and
in accordance with Section 5.1(e)(i)(B) of the Company Disclosure Letter; (C)
pursuant to the Company Warrants and the Company Options outstanding on the
date of this Agreement or issued after the date of this Agreement in accordance
with clauses (A) or (B) hereof or (D) pursuant to the Company Rights or Company
Rights Agreement in effect on the date of this Agreement, or (ii) except as
required pursuant to the terms of the Company Plans in effect on the date of
this Agreement, redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock or any other securities or agreements of the type
described in clause (i) of this Section 5.1(e);
(f) except as required pursuant to the terms of the Company
Plans in effect on the date of this Agreement, the Company shall not, nor shall
it permit any of its Subsidiaries to, (i) grant any increase in the
compensation or benefits payable or to become payable by the Company or any of
its Subsidiaries to any former or current director, officer or employee of the
Company or any of its Subsidiaries, except for any such increases in the
ordinary course of the Company's annual compensation procedures, consistent
with past practice and in accordance with Section 5.1(f)(i) of the Company
Disclosure Letter; (ii) adopt, enter into, amend or otherwise increase, or
accelerate the payment or vesting of the amounts, benefits or rights payable or
accrued or to become payable or accrued under, any Company Plan (other than
entry into employment agreements with new hires in the ordinary course of
business consistent with past practice; provided that such employment agreement
shall be terminable at will, without penalty (other than severance obligations
that accrue under the Company's Amended and Restated Change in Control Plan as
in effect on the date of this Agreement (the "CIC Plan")) to the Company or any
of its Subsidiaries, or (iii) grant any severance or termination pay to any
officer, director or employee of the Company or any of its Subsidiaries (other
than grants to new hires in the ordinary course consistent with past practice
pursuant to the CIC Plan); (g) the Company shall not, nor shall it permit any
of its Subsidiaries to, change its methods of accounting in effect as of the
date of this Agreement, except in accordance with changes in GAAP as concurred
to by the Company's independent auditors;
(h) the Company shall not, nor shall it permit any of its
Subsidiaries to (i) acquire any Person or other business organization, division
or business by merger, consolidation, purchase of an equity interest or assets,
or by any other manner, or (ii) other than in the ordinary course of business
consistent with past practice or pursuant to agreements in effect on the date
of this Agreement and set forth in Section 3.12 of the Company Disclosure
Letter, acquire any assets;
(i) other than the sale of inventory and Hydrocarbons in the
ordinary course of business consistent with past practice or the sale of any
assets pursuant to agreements in effect on the date of this Agreement and set
forth in Section 3.12 of the Company Disclosure Letter, the Company shall not,
nor shall it permit any of its Subsidiaries to, sell, lease, exchange, transfer
or otherwise dispose of, or agree to sell, lease, exchange, transfer or
otherwise dispose of, any material Company Assets;
(j) the Company shall not, nor shall it permit any of its
Subsidiaries to, mortgage, pledge, hypothecate, grant any security interest in,
or otherwise subject to any other Lien other than Permitted Liens, any of the
Assets;
(k) the Company shall not, nor shall it permit any of its
Subsidiaries to, (i) except as set forth in clause (ii) below, pay, discharge
or satisfy any claims (including claims of stockholders), liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) where such payment, discharge or satisfaction would require any
payment except for the payment, discharge or satisfaction of liabilities or
obligations in accordance with the terms of agreements in effect on the date of
this Agreement or entered into after the date of this Agreement in the ordinary
course of business consistent with past practice and not in violation of this
Agreement, in each case to which the Company or any of its Subsidiaries is
bound and except for any payments, discharges or settlements that do not exceed
$500,000 individually or $2,500,000 in the aggregate, or (ii) compromise,
settle, grant any waiver or release relating to any Litigation, other than
settlements or compromises of litigation where the amount paid or to be paid
does not exceed $500,000 individually or $2,500,000 in the aggregate;
(l) the Company shall not, nor shall it permit any of its
Subsidiaries to, engage in any transaction with (except pursuant to agreements
in effect at the time of this Agreement and set forth in Section 3.9(a) or 3.18
of the Company Disclosure Letter), or enter into any agreement, arrangement, or
understanding with, directly or indirectly, any of the Company's affiliates;
provided, that for the avoidance of doubt, for purposes of this clause (l), the
term "affiliates" shall not include any employees of the Company or any of its
Subsidiaries, other than the directors and executive officers thereof;
(m) the Company shall not, nor shall it permit any of its
Subsidiaries to, make or change any material Tax election, amend any Return in
any material respect or settle or compromise any material Tax liability;
(n) the Company shall not, nor shall it permit any of its
Subsidiaries to, take any action that would, or could reasonably be expected
to, result in any of its representations and warranties set forth in this
Agreement becoming untrue in a manner that would give rise to the failure of
the closing condition set forth in Section 6.3(a);
(o) the Company shall not, nor shall it permit any of its
Subsidiaries to, adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the Merger
or with respect to an inactive wholly-owned Subsidiary of the Company) or any
agreement relating to an Acquisition Proposal, except as provided for in
Section 5.3;
(p) the Company shall not, nor shall it permit any of its
Subsidiaries to, (i) incur or assume any long-term debt, or except in the
ordinary course of business consistent with past practice and in no event
exceeding $30,000,000 in the aggregate, incur or assume any short-term
indebtedness, (ii) modify the terms of any indebtedness to increase the
Company's obligations with respect thereto (iii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person, except in the ordinary
course of business consistent with past practice and in no event exceeding
$500,000 in the aggregate, (iv) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to wholly
owned Subsidiaries of the Company, or by such Subsidiaries to the Company, or
customary loans or advances to employees in accordance with past practice and
in no event exceeding $500,000) in the aggregate, or (v) enter into any
material commitment or transaction, except in the ordinary course of business
consistent with past practice;
(q) the Company shall not, nor shall it permit any of its
Subsidiaries to, enter into any agreement, understanding or commitment that
materially restrains, limits or impedes the Company's or any of its
Subsidiaries' ability to compete with or conduct any business or line of
business, including geographic limitations on the Company's or any of its
Subsidiaries' activities;
(r) except in the ordinary course of business consistent with
past practice, the Company shall not, nor shall it permit any of its
Subsidiaries to, modify or amend in any material respect, or terminate, any
material contract to which it is a party or waive in any material respect or
assign any of its material rights or claims;
(s) the Company shall not, nor shall it permit any of its
Subsidiaries to, fail to maintain in full force and effect the existing
insurance policies covering the Company or its Subsidiaries or their respective
properties, assets and businesses or comparable replacement policies, except to
the extent such policies cease to be available on commercially reasonable
terms; and
(t) the Company shall not, nor shall it permit any of its
Subsidiaries to, enter into an agreement, contract, commitment or arrangement
to do any of the foregoing.
Notwithstanding anything in this Section 5.1 to the contrary, the Company shall
not, nor shall it permit any of its Subsidiaries to, enter into any transaction
or take any other action that would be reasonably likely to have a material
adverse impact on, or materially delay, the consummation of the transactions
contemplated by this Agreement.
Section 5.2 Interim Operations of Parent.
Parent covenants and agrees as to itself and its Subsidiaries
that during the period from the date of this Agreement until the Effective Time
or the date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1, except as (w) disclosed in Section 5.2 of the Parent Disclosure
Letter, (x) expressly contemplated or permitted by this Agreement, (y) required
by applicable Law, or (z) agreed to in writing by the Company, after the date
of this Agreement and prior to the Effective Time:
(a) the business of Parent and its Subsidiaries shall be
conducted only in the ordinary course consistent with past practice;
(b) solely in the case of Parent and any non-wholly owned
Subsidiary of Parent, Parent shall not (i) declare, set aside or pay any
extraordinary or special dividend or other distribution, whether payable in
cash, stock or any other property or right, with respect to its capital stock;
provided, however, that nothing contained herein shall prohibit Parent from
increasing the quarterly cash dividend on Parent Common Stock, or (ii) engage
in any spin-off or split-off without receiving fair consideration (determined
in the good faith judgment of Parent);
(c) Parent shall not, nor shall it permit any of its
Subsidiaries to, change its methods of accounting in effect as of the date of
this Agreement, except in accordance with changes in GAAP as concurred to by
Parent's independent auditors;
(d) Parent shall not, nor shall it permit any of its
Subsidiaries to, take any action that would, or could reasonably be expected
to, result in any of its representations and warranties set forth in this
Agreement becoming untrue in a manner that would give rise to the failure of
the closing condition set forth in Section 6.2(a);
(e) solely in the case of Parent, Parent shall not amend its
certificate of incorporation or bylaws or similar organizational documents in a
manner that adversely affects the terms of the Parent Common Stock;
(f) solely in the case of Parent, Parent shall not adopt or
enter into a plan of complete or partial liquidation or dissolution;
(g) Parent shall not, nor shall it permit any of its
Subsidiaries to, enter into any new line of business, except as may reasonably
relate to Parent's existing businesses; and
(h) Parent shall not, nor shall it permit any of its
Subsidiaries to, enter into an agreement, contract, commitment or arrangement
to do any of the foregoing.
Notwithstanding anything in this Section 5.2 to the contrary, Parent shall not,
nor shall it permit any of its Subsidiaries to, enter into any transaction or
take any other action (including any amendment of Parent's certificate of
incorporation) that would be reasonably likely to have a material adverse
impact on, or materially delay, the consummation of the transactions
contemplated by this Agreement.
Section 5.3 Acquisition Proposals.
(a) The Company agrees that, except as expressly contemplated by
this Agreement, neither it nor any of its Subsidiaries shall, and the Company
shall, and shall cause its Subsidiaries to, cause their respective officers,
directors, investment bankers, attorneys, accountants, financial advisors,
agents and other representatives not to (i) directly or indirectly initiate,
solicit, knowingly encourage or facilitate (including by way of furnishing
information) any inquiries or the making or submission of any proposal that
constitutes, or could reasonably be expected to lead to, an Acquisition
Proposal, (ii) participate or engage in discussions or negotiations with, or
disclose any non-public information or data relating to the Company or any of
its Subsidiaries or afford access to the properties, books or records of the
Company or any of its Subsidiaries to any Person that has made an Acquisition
Proposal or to any Person in contemplation of an Acquisition Proposal, or (iii)
accept an Acquisition Proposal or enter into any agreement, including any
letter of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, option agreement, joint venture agreement,
partnership agreement or other similar agreement, arrangement or understanding,
(A) constituting or related to, or that is intended to or could reasonably be
expected to lead to, any Acquisition Proposal (other than an Acceptable
Confidentiality Agreement permitted pursuant to this Section 5.3) or (B)
requiring, intended to cause, or which could reasonably be expected to cause
the Company to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement (each an "Acquisition Agreement").
Any violation of the foregoing restrictions by any of the Company's
Subsidiaries or by any representatives of the Company or any of its
Subsidiaries, whether or not such representative is so authorized and whether
or not such representative is purporting to act on behalf of the Company or any
of its Subsidiaries or otherwise, shall be deemed to be a breach of this
Agreement by the Company. Notwithstanding anything to the contrary in this
Agreement, the Company and the Company Board may take any actions described in
clause (ii) of this Section 5.3(a) with respect to a third party if at any time
prior to obtaining the Company Required Vote (x) the Company receives a written
Acquisition Proposal from such third party (and such Acquisition Proposal was
not initiated, solicited, knowingly encouraged or facilitated by the Company or
any of its Subsidiaries or any of their respective officers, directors,
investment bankers, attorneys, accountants, financial advisors, agents or other
representatives) and (y) such proposal constitutes, or the Company Board
determines in good faith (after consultation with its financial advisors and
outside legal counsel) that such proposal could reasonably be expected to lead
to, a Superior Proposal, provided that the Company shall not deliver any
information to such third party without entering into an Acceptable
Confidentiality Agreement. Nothing contained in this Section 5.3 shall prohibit
the Company or the Company Board from taking and disclosing to the Company's
stockholders a position with respect to an Acquisition Proposal pursuant to
Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
similar disclosure, in either case to the extent required by applicable Law.
(b) Neither (i) the Company Board nor any committee thereof
shall directly or indirectly (A) withdraw (or amend or modify in a manner
adverse to Parent or Purchaser), or publicly propose to withdraw (or amend or
modify in a manner adverse to Parent or Purchaser), the approval,
recommendation or declaration of advisability by the Company Board or any such
committee thereof of this Agreement, the Merger or the other transactions
contemplated by this Agreement or (B) recommend, adopt or approve, or propose
publicly to recommend, adopt or approve, any Acquisition Proposal (any action
described in this clause (i) being referred to as a "Company Adverse
Recommendation Change") nor (ii) shall the Company or any of its Subsidiaries
execute or enter into an Acquisition Agreement. Notwithstanding the foregoing,
at any time prior to obtaining the Company Required Vote, and subject to the
Company's compliance at all times with the provisions of this Section 5.3 and
Section 5.6, in response to a Superior Proposal, the Company Board may make a
Company Adverse Recommendation Change; provided, however, that the Company
shall not be entitled to exercise its right to make a Company Adverse
Recommendation Change in response to a Superior Proposal (X) until four
Business Days after the Company provides written notice to Parent (a "Company
Notice") advising Parent that the Company Board or a committee thereof has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal, and identifying the Person or group making such
Superior Proposal and (Y) if during such four Business Day period, Parent
proposes any alternative transaction (including any modifications to the terms
of this Agreement), unless the Company Board determines in good faith (after
consultation with its financial advisors and outside legal counsel, and taking
into account all financial, legal, and regulatory terms and conditions of such
alternative transaction proposal) that such alternative transaction proposal is
not at least as favorable to the Company and its stockholders from a financial
point of view as the Superior Proposal (it being understood that any change in
the financial or other material terms of a Superior Proposal shall require a
new Company Notice and a new four Business Day period under this Section
5.3(b)).
(c) Notwithstanding the first sentence of Section 5.3(b), at any
time prior to obtaining the Company Required Vote, and subject to the Company's
compliance at all times with the provisions of this Section 5.3 and Section
5.6, the Company Board may make a Company Adverse Recommendation Change
described in clause (A) of the definition thereof if the Company Board (i)
determines in good faith, after consultation with its outside legal counsel and
any other advisor it chooses to consult, that the failure to make such Company
Adverse Recommendation Change is inconsistent with its fiduciary duties to the
stockholders of the Company, (ii) determines in good faith that the reasons for
making such Company Adverse Recommendation Change are independent of any
pending Acquisition Proposal and (iii) provides written notice to Parent (a
"Company Notice of Change") advising Parent that the Company Board is
contemplating making a Company Adverse Recommendation Change and specifying the
material facts and information constituting the basis for such contemplated
determination; provided, however, that (x) the Company Board may not make such
a Company Adverse Recommendation Change until the third Business Day after
receipt by Parent of the Company Notice of Change and (y) during such three
Business Day period, at the request of Parent, the Company shall negotiate in
good faith with respect to any changes or modifications to this Agreement which
would allow the Company Board not to make such Company Adverse Recommendation
Change consistent with its fiduciary duties.
(d) Parent agrees that, except as expressly contemplated by this
Agreement, neither it nor any of its Subsidiaries shall, and Parent shall, and
shall cause its Subsidiaries to, cause their respective officers, directors,
investment bankers, attorneys, accountants, financial advisors, agents and
other representatives not to (i) directly or indirectly initiate, solicit,
knowingly encourage or facilitate (including by way of furnishing information)
any inquiries or the making or submission of any proposal that constitutes, or
could reasonably be expected to lead to, an Acquisition Proposal, (ii)
participate or engage in discussions or negotiations with, or disclose any
non-public information or data relating to Parent or any of its Subsidiaries or
afford access to the properties, books or records of Parent or any of its
Subsidiaries to any Person that has made an Acquisition Proposal or to any
Person in contemplation of an Acquisition Proposal, or (iii) accept an
Acquisition Proposal or enter into any Acquisition Agreement. Any violation of
the foregoing restrictions by any of Parent's Subsidiaries or by any
representatives of Parent or any of its Subsidiaries, whether or not such
representative is so authorized and whether or not such representative is
purporting to act on behalf of Parent or any of its Subsidiaries or otherwise,
shall be deemed to be a breach of this Agreement by Parent. Notwithstanding
anything to the contrary in this Agreement, Parent and the Parent Board may
take any actions described in clause (ii) of this Section 5.3(d) with respect
to a third party if at any time prior to obtaining the Required Parent Vote (x)
Parent receives a written Acquisition Proposal from such third party (and such
Acquisition Proposal was not initiated, solicited, knowingly encouraged or
facilitated by Parent or any of its Subsidiaries or any of their respective
officers, directors, investment bankers, attorneys, accountants, financial
advisors, agents or other representatives) and (y) such proposal constitutes,
or the Parent Board determines in good faith (after consultation with its
financial advisors and outside legal counsel) that such proposal could
reasonably be expected to lead to, a Superior Proposal, provided that Parent
shall not deliver any information to such third party without entering into an
Acceptable Confidentiality Agreement. Nothing contained in this Section 5.3
shall prohibit Parent or the Parent Board from taking and disclosing to
Parent's stockholders a position with respect to an Acquisition Proposal
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from
making any similar disclosure, in either case to the extent required by
applicable Law.
(e) Neither (i) the Parent Board nor any committee thereof shall
directly or indirectly (A) withdraw (or amend or modify in a manner adverse to
the Company), or publicly propose to withdraw (or amend or modify in a manner
adverse to the Company), the approval, recommendation or declaration of
advisability by the Parent Board or any such committee thereof of this
Agreement, the Merger, the other transactions contemplated by this Agreement or
the Parent Proposal or (B) recommend, adopt or approve, or propose publicly to
recommend, adopt or approve, any Acquisition Proposal (any action described in
this clause (i) being referred to as a "Parent Adverse Recommendation Change")
nor (ii) shall Parent or any of its Subsidiaries execute or enter into, any
Acquisition Agreement. Notwithstanding the foregoing, at any time prior to
obtaining the Required Parent Vote, and subject to Parent's compliance at all
times with the provisions of this Section 5.3 and Section 5.6, in response to a
Superior Proposal, the Parent Board may make a Parent Adverse Recommendation
Change; provided, however, that Parent shall not be entitled to exercise its
right to make a Parent Adverse Recommendation Change in response to a Superior
Proposal (X) until four Business Days after Parent provides written notice to
the Company (a "Parent Notice") advising the Company that the Parent Board or a
committee thereof has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal, and identifying the Person or
group making such Superior Proposal and (Y) if during such four Business Day
period, the Company proposes any alternative transaction (including any
modifications to the terms of this Agreement), unless the Parent Board
determines in good faith (after consultation with its financial advisors and
outside legal counsel, and taking into account all financial, legal, and
regulatory terms and conditions of such alternative transaction proposal) that
such alternative transaction proposal is not at least as favorable to Parent
and its stockholders from a financial point of view as the Superior Proposal
(it being understood that any change in the financial or other material terms
of a Superior Proposal shall require a new Parent Notice and a new four
Business Day period under this Section 5.3(e)).
(f) Notwithstanding the first sentence of Section 5.3(e), at any
time prior to obtaining the Required Parent Vote, and subject to Parent's
compliance at all times with the provisions of this Section 5.3 and Section
5.6, the Parent Board may make a Parent Adverse Recommendation Change described
in clause (A) of the definition thereof after the Parent Board (i) determines
in good faith, after consultation with its outside legal counsel and any other
advisor it chooses to consult, that the failure to make such Parent Adverse
Recommendation Change is inconsistent with its fiduciary duties to the
stockholders of Parent, (ii) determines in good faith that the reasons for
making such Parent Adverse Recommendation Change are independent of any pending
Acquisition Proposal and (iii) provides written notice to the Company (a
"Parent Notice of Change") advising the Company that the Parent Board is
contemplating making a Parent Adverse Recommendation Change and specifying the
material facts and information constituting the basis for such contemplated
determination; provided, however, that (x) the Parent Board may not make such a
Parent Adverse Recommendation Change until the third Business Day after receipt
by the Company of the Parent Notice of Change and (y) during such three
Business Day period, at the request of the Company, Parent shall negotiate in
good faith with respect to any changes or modifications to this Agreement which
would allow the Parent Board not to make such Parent Adverse Recommendation
Change consistent with its fiduciary duties.
(g) The Parties agree that in addition to the obligations of the
Company and Parent set forth in paragraphs (a) through (f) of this Section 5.3,
as promptly as practicable after receipt thereof, the Company or Parent, as
applicable, shall advise Parent or the Company, respectively, in writing of any
request for information or any Acquisition Proposal received from any Person,
or any inquiry, discussions or negotiations with respect to any Acquisition
Proposal, and the terms and conditions of such request, Acquisition Proposal,
inquiry, discussions or negotiations, and the Company or Parent, as applicable,
shall promptly provide to Parent or the Company, respectively, copies of any
written materials received by the Company or Parent, as applicable, in
connection with any of the foregoing, and the identity of the Person or group
making any such request, Acquisition Proposal or inquiry or with whom any
discussions or negotiations are taking place. Each of the Company and Parent
agrees that it shall simultaneously provide to the other any non-public
information concerning itself or its Subsidiaries provided to any other Person
or group in connection with any Acquisition Proposal which was not previously
provided to the other. The Company and Parent shall keep Parent and the
Company, respectively, fully informed of the status of any Acquisition
Proposals (including the identity of the parties and price involved and any
changes to any material terms and conditions thereof). Each of the Company and
Parent agrees not to release any third party from, or waive any provisions of,
any confidentiality or standstill agreement to which it is a party.
(h) For purposes of this Agreement, with respect a party hereto,
"Acquisition Proposal" shall mean any bona fide proposal, whether or not in
writing, for the (i) direct or indirect acquisition or purchase of a business
or assets that constitutes 10% or more of the net revenues, net income or the
assets (based on the fair market value thereof) of such party and its
Subsidiaries, taken as a whole, (ii) direct or indirect acquisition or purchase
of 10% or more of any class of equity securities or capital stock of such Party
or any of its Subsidiaries whose business constitutes 10% or more of the net
revenues, net income or assets of such party and its Subsidiaries, taken as a
whole, or (iii) merger, consolidation, restructuring, transfer of assets or
other business combination, sale of shares of capital stock, tender offer,
exchange offer, recapitalization, stock repurchase program or other similar
transaction that if consummated would result in any Person or Persons
beneficially owning 10% or more of any class of equity securities of such party
or any of its Subsidiaries whose business constitutes 10% or more of the net
revenues, net income or assets of such party and its Subsidiaries, taken as a
whole, other than the transactions contemplated by this Agreement; provided,
however, that for purposes of this Agreement, with respect to Parent, any
transaction (or proposal with respect thereto) that is described in Section
5.2(a) of the Parent Disclosure Letter shall not constitute an Acquisition
Proposal. The term "Superior Proposal" shall mean, with respect to a party
hereto, any bona fide written Acquisition Proposal made by a third party to
acquire (which term shall include a parent to parent merger or other business
combination with a similar result), directly or indirectly, pursuant to a
tender offer, exchange offer, merger, share exchange, consolidation or other
business combination, (A) 50% or more of the assets of such party and its
Subsidiaries, taken as a whole, or (B) 50% or more of the equity securities of
such party, in each case on terms which a majority of the board of directors of
such party determines in good faith (after consultation with its financial
advisors and outside legal counsel, and taking into account all financial,
legal and regulatory terms and conditions of the Acquisition Proposal and this
Agreement, including any alternative transaction (including any modifications
to the terms of this Agreement) proposed by any other party in response to such
Superior Proposal, including any conditions to and expected timing of
consummation, and any risks of non-consummation, of such Acquisition Proposal)
to be superior to such party and its stockholders (in their capacity as
stockholders) from a financial point of view as compared to the transactions
contemplated hereby and to any alternative transaction (including any
modifications to the terms of this Agreement) proposed by any other party
hereto pursuant to this Section 5.3.
(i) Immediately after the execution and delivery of this
Agreement, each party hereto will, and will cause its Subsidiaries and their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents to, cease and terminate any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any possible Acquisition Proposal. Each party agrees that it shall (i) take
the necessary steps to promptly inform its officers, directors, investments
bankers, attorneys, accountants, financial advisors, agents or other
representatives involved in the transactions contemplated by this Agreement of
the obligations undertaken in this Section 5.3 and (ii) request each Person who
has heretofore executed a confidentiality agreement in connection with such
Person's consideration of acquiring such party or any portion thereof to return
or destroy (which destruction shall be certified in writing by an executive
officer of such Person) all confidential information heretofore furnished to
such Person by or on its behalf.
Section 5.4 Access to Information and Properties.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, each of the Company and Parent shall,
and shall cause each of its Subsidiaries to, afford to the authorized
representatives of the other party, including officers, employees, accountants,
counsel and other representatives of the other party, reasonable access, during
normal business hours during the period prior to the Effective Time, to all of
its properties, contracts, books, commitments, records, data and books and
personnel and, during such period, it shall, and shall cause its Subsidiaries
to, make available to the other parties all information concerning its
business, properties and personnel as the other parties may reasonably request.
No party nor any of its Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize any attorney-client privilege
or contravene any Law or binding agreement entered into prior to the date of
this Agreement. The Company and Parent will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) From the date of this Agreement until the Effective Time,
each party and its authorized representatives, including engineers, advisors
and consultants, lenders and financing sources, upon reasonable notice and in a
manner that does not unreasonably interfere with the business of the applicable
party or any of its Subsidiaries, may enter into and upon all or any portion of
the real property owned or leased by the other party in order to investigate
and assess, as such party reasonably deems necessary or appropriate, the
environmental condition of such real property and the other assets or the
businesses of such other party or any of its Subsidiaries (an "Investigation").
An Investigation may include a Phase I environmental site assessment, or
similar investigation; provided, however, that an Investigation shall not
include any sampling or testing of soil and/or ground or surface waters at, on
or under any real property. Each party hereto shall, and shall cause each of
its Subsidiaries to, cooperate with the other parties in conducting any such
Investigation, facilitating further testing or evaluation as may be reasonably
prudent with respect to matters identified in the investigation, allow any
other party reasonable access to such party's and its Subsidiaries' respective
businesses, real property and other assets, together with full permission to
conduct any such Investigation, and provide to any other party all plans, soil
or surface or ground water tests or reports, any environmental investigation
results, reports or assessments previously or contemporaneously conducted or
prepared by or on behalf of such party, its Subsidiaries, or any of their
predecessors that are in the possession of such party or any of its
Subsidiaries, and all information relating to environmental matters regarding
such party's and its Subsidiaries' respective businesses, real property and
other assets that are in the possession of such party or any of its
Subsidiaries.
(c) Parent and the Company will hold any information
contemplated under Sections 5.4(a) and/or (b) above in accordance with the
provisions of the confidentiality agreement between the Company and Parent,
dated as of August 9, 2004 (the "Confidentiality Agreement"); provided,
however, that each party's obligations under the Confidentiality Agreement
shall terminate on the earlier of (i) the date provided therein or (ii) the
Effective Time.
(d) No investigation by Parent or the Company or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth in this Agreement.
Section 5.5 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement, including using
reasonable best efforts to satisfy the conditions precedent to the obligations
of any of the parties hereto, to obtain all necessary authorizations, consents
and approvals, and to effect all necessary registrations and filings, and to
assist Parent and Purchaser in obtaining the Financing. Each of the parties
hereto will furnish to the other parties such necessary information and
reasonable assistance as such other parties may reasonably request in
connection with the foregoing and will provide the other parties with copies of
all filings made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.
(b) Each of Parent, Purchaser and the Company shall use their
respective reasonable best efforts to resolve such objections, if any, as may
be asserted with respect to the transactions contemplated hereby under any
applicable Law. Without limiting the foregoing, the Company and Parent shall,
as soon as practicable, file Notification and Report Forms under the HSR Act
with the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and shall use reasonable best
efforts to respond as promptly as practicable to all inquiries received from
the FTC or the Antitrust Division for additional information or documentation.
(c) Each party shall (i) take all actions necessary to ensure
that no state takeover Law or similar Law is or becomes applicable to this
Agreement, the Merger or any of the other transactions contemplated by this
Agreement and (ii) if any state takeover Law or similar Law becomes applicable
to this Agreement, the Merger or any of the other transactions contemplated by
this Agreement, take all action necessary to ensure that the Merger and the
other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such Law on this Agreement, the Merger and
the other transactions contemplated by this Agreement; provided, however, that
notwithstanding the foregoing, Parent shall not be required to take any action
to exempt any shareholder of the Company from any such Law.
(d) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of the Surviving Corporation shall take or
cause to be taken all such necessary action.
(e) Each of the parties hereto shall use reasonable best efforts
to prevent the entry of, and to cause to be discharged or vacated, any order or
injunction of a Governmental Entity precluding, restraining, enjoining or
prohibiting consummation of the Merger.
(f) Notwithstanding the foregoing provisions of this Section
5.5, neither Parent nor Purchaser shall be required to accept, as a condition
to obtaining any required approval or resolving any objection of any
Governmental Entity, any requirement to divest or hold separate or in trust (or
the imposition of any other condition or restriction with respect to) any of
the respective businesses of Parent, Purchaser, the Company or any of their
respective Subsidiaries, the Company Assets, the Parent Assets, the Company
Real Property or the Parent Real Property.
Section 5.6 Proxy Statement; Form S-4; Stockholders' Meeting.
(a) As promptly as practicable after the execution of this
Agreement, the Company and Parent shall cooperate in preparing and each shall
cause to be filed with the SEC, in connection with the Merger, a joint proxy
statement in preliminary form (together with any amendments or supplements
thereto, the "Proxy Statement") and Parent shall promptly prepare and file with
the SEC the S-4, in which the Proxy Statement will be included as a prospectus,
and the parties shall file, if necessary, any other statement or schedule
relating to this Agreement and the transactions contemplated hereby. Each of
the Company, Parent and Purchaser shall use their respective reasonable best
efforts to furnish the information required to be included by the SEC in the
Proxy Statement, the S-4 and any such statement or schedule. Each of the
Company and Parent shall use its reasonable best efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and each of the Company and Parent shall as promptly as
practicable thereafter mail the Proxy Statement to its stockholders. Parent
shall also use reasonable best efforts to obtain all necessary state securities
Law or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement.
(b) If at any time prior to the Effective Time, any event or
circumstance relating to the Company, Parent and Purchaser or any of their
respective affiliates, or its or their respective officers or directors, should
be discovered by the Company, Parent or Purchaser that should be set forth in
an amendment to the S-4 or a supplement to the Proxy Statement, the Company,
Parent or Purchaser shall promptly inform the other parties hereto thereof in
writing. All documents that the Company or Parent is responsible for filing
with the SEC in connection with the transactions contemplated herein will
comply as to form in all material respects with applicable requirements of the
Securities Act and the Exchange Act. The parties shall notify each other
promptly of the time when the S-4 has become effective, of the issuance of any
stop order or suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or of the receipt of any comments from the SEC or the staff of
the SEC and of any request by the SEC or the staff of the SEC for amendments or
supplements to the Proxy Statement or the S-4 or for additional information and
shall supply each other with copies of (i) all correspondence between it or any
of its Representatives, on the one hand, and the SEC or the staff of the SEC,
on the other hand, with respect to the Proxy Statement, the S-4 or the Merger
and (ii) all orders of the SEC relating to the S-4.
(c) The Company, acting through the Company Board, shall, in
accordance with its certificate of incorporation and bylaws and with applicable
Law, promptly and duly call, give notice of, convene and hold, as soon as
practicable following the date upon which the S-4 becomes effective for the
purposes of voting upon the adoption of this Agreement and the approval of the
consummation of the transactions contemplated by this Agreement, including the
Merger, a special meeting of its stockholders for the sole purpose of
considering and taking action upon this Agreement (such meeting, including any
postponement or adjournment thereof, the "Company Special Meeting"), and shall
use its reasonable best efforts to hold the Company Special Meeting no later
than 45 days after such date. Except as otherwise provided in Section 5.3(b) or
5.3(c), the Company, acting through the Company Board, shall (i) recommend
adoption of this Agreement and include in the Proxy Statement such
recommendation and (ii) use its reasonable best efforts to solicit and obtain
such adoption. Notwithstanding any Company Adverse Recommendation Change or the
commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal with respect to the Company or any of its
Subsidiaries, or any other fact or circumstance, this Agreement shall be
submitted to the stockholders of the Company at the Company Special Meeting for
the purpose of adopting this Agreement, with such disclosures as shall be
required by applicable Law. At any such Company Special Meeting following any
such withdrawal, amendment or modification of the Company Board's
recommendation of this Agreement, the Company may submit this Agreement to its
stockholders without a recommendation or with a negative recommendation
(although the approval of this Agreement by the Company Board may not be
rescinded or amended), in which event the Company Board may communicate the
basis for its lack of a recommendation or negative recommendation to its
stockholders in the Proxy Statement or an appropriate amendment or supplement
thereto.
(d) Parent, acting through the Parent Board, shall, in
accordance with its certificate of incorporation and bylaws and with applicable
Law, promptly and duly call, give notice of, convene and hold, as soon as
practicable following the date upon which the S-4 becomes effective for the
purposes of voting upon the Parent Proposal a special meeting of its
stockholders (such meeting, including any postponements or adjournments
thereof, the "Parent Stockholders' Meeting"), and shall use its reasonable best
efforts to hold the Parent Stockholders' Meeting no later than 45 days after
such date. Except as otherwise provided in Section 5.3(e) or 5.3(f), Parent,
acting through the Parent Board, shall (i) recommend approval of the Parent
Proposal and include in the Proxy Statement such recommendation and (ii) use
its reasonable best efforts to solicit and obtain such approval.
Notwithstanding any Parent Adverse Recommendation Change or the commencement,
public proposal, public disclosure or communication to Parent of any
Acquisition Proposal with respect to Parent or any of its Subsidiaries, or any
other fact or circumstance, the Parent Proposal shall be submitted to the
stockholders of Parent at the Parent Stockholders' Meeting for the purpose of
approval of the Parent Proposal, with such disclosures as shall be required by
applicable Law. At any such Parent Stockholders' Meeting following any such
withdrawal, amendment or modification of the Parent Board's recommendation of
the Parent Proposal, Parent may submit the Parent Proposal to its stockholders
without a recommendation or with a negative recommendation (although the
approval of the Parent Proposal by the Parent Board may not be rescinded or
amended), in which event the Parent Board may communicate the basis for its
lack of a recommendation or negative recommendation to its stockholders in the
Proxy Statement or an appropriate amendment or supplement thereto.
Section 5.7 Notification of Certain Matters. (a) The Company
shall give prompt notice to Parent of any fact, event or circumstance as to
which the Company obtains knowledge that would be reasonably likely to result
in a failure of a condition set forth in Section 6.3(a) or 6.3(b). Parent and
Purchaser shall give prompt notice to the Company of any fact, event or
circumstance as to which Parent or Purchaser obtains knowledge that would be
reasonably likely to result in a failure of a condition set forth in Section
6.2(a) or 6.2(b).
(b) Immediately prior to Closing, the Company shall provide
Parent with a complete list of the number of employee terminations (other than
voluntary resignations and terminations for cause) for the 90-day period prior
to Closing, by facility or geographic site of employment.
Section 5.8 Directors' and Officers' Insurance and
Indemnification.
(a) After the Effective Time, Parent shall (i) indemnify, defend
and hold harmless the present and former officers, directors, employees and
agents of the Company and any of its Subsidiaries in such capacities
("Indemnified Parties") to the fullest extent that the Company or any of its
Subsidiaries would have been required to do so in accordance with the
provisions of each indemnification or similar agreement between the Company or
any of its Subsidiaries and any Indemnified Party, in each case against any
losses, damages, expenses or liabilities resulting from any claim, liability,
loss, damage, cost or expense, asserted against, or incurred by, an Indemnified
Party that is based on the fact that such Indemnified Party is or was a
director, officer, employee or agent of the Company or any of its Subsidiaries
and arising out of actions or omissions or alleged actions or omissions
occurring at or prior to the Effective Time and (ii) take all necessary actions
to ensure that Parent's director's and officer's liability insurance continues
to cover each Company Director and each officer and director of the Company, in
each case so long as they remain employed or retained by Parent or any
affiliate of Parent (including the Surviving Corporation) as an officer or
director and, to the extent Parent's current director's and officer's liability
insurance policy covers consultants, as a consultant, on terms that are no less
favorable as those enjoyed by Parent's other directors and officers.
(b) Prior to the Closing, the Company shall purchase, and after
the Effective Time the Surviving Corporation shall maintain, directors' and
officers' liability insurance covering, for a period of six years after the
Effective Time, the directors and officers of the Company and its Subsidiaries
who are currently covered by the Company's existing directors' and officers'
liability insurance with respect to claims arising from facts or events that
occurred before the Effective Time, on terms and conditions no less favorable
to such directors and officers than those in effect on the date of this
Agreement; provided, however, that the aggregate annual premiums for such
insurance at any time during such period shall not exceed 175% of the per annum
rate of premium currently paid by the Company and its Subsidiaries for such
insurance on the date of this Agreement. It is understood and agreed that in
the event that such insurance cannot be obtained for 175% of the per annum rate
of premium currently paid by the Company, Parent shall nonetheless be obligated
to provide such directors' and officers' liability insurance as may be obtained
for such sum.
Section 5.9 Publicity. Neither the Company, Parent, Purchaser
nor any of their respective affiliates shall issue or cause the publication of
any press release or other announcement with respect to the Merger, this
Agreement or the other transactions contemplated by this Agreement without the
prior consultation of the other party, except as may be required by Law or by
any listing agreement with a national securities exchange if all reasonable
best efforts have been made to consult with the other party.
Section 5.10 Stock Exchange Listing. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger to be approved for listing on the NYSE, subject to official
notice of issuance, as of the Effective Time.
Section 5.11 Employee Benefits. (a) During the period from the
Closing Date until the six month anniversary thereof, Parent shall, or shall
cause its Subsidiaries to, provide to each Person who is employed by the
Company or any of its Subsidiaries immediately prior to the Effective Time (the
"Continuing Employees") compensation (including base salary and incentive and
bonus opportunities, but excluding equity-based compensation) and benefits
(including vacation, paid time-off and severance) that are not materially less
favorable in the aggregate than those provided to the Continuing Employees by
the Company and its Subsidiaries immediately prior to the Effective Time.
(b) The service of each Continuing Employee with the Company or
its Subsidiaries (or any predecessor employer) prior to the Effective Time
shall be treated as service with Parent and its Subsidiaries for purposes of
each Parent Plan (including vacation, paid time-off and severance plans) in
which such Continuing Employee is eligible to participate after the Effective
Time, including for purposes of eligibility, vesting and benefit levels and
accruals (other than defined benefit pension plan accruals).
(c) Following the Effective Time, for purposes of each Parent
Plan in which any Continuing Employee or his or her eligible dependents is
eligible to participate after the Effective Time, Parent shall, or shall cause
its Subsidiaries to, (i) waive any pre-existing condition, exclusion,
actively-at-work requirement or waiting period to the extent such condition,
exclusion, requirement or waiting period was satisfied or waived under the
comparable Company Plan as of the Effective Time(or, if later, any applicable
plan transaction date) and (ii) provide full credit for any co-payments,
deductibles or similar payments made or incurred prior to the Effective Time
for the plan year in which the Effective Time (or such transition date) occurs.
(d) Parent shall, and shall cause its Subsidiaries to, honor, in
accordance with its terms, each Company Plan and all obligations thereunder,
including any rights or benefits arising as a result of the transactions
contemplated hereby (either alone or in combination with any other event), and
Parent hereby acknowledges that the consummation of the Merger constitutes a
change of control or change in control, as the case may be, for all purposes
under such Company Plans.
(e) Notwithstanding anything herein to the contrary, prior to
the Effective Time, the Company shall be entitled to amend and modify the
Company's Amended and Restated Deferred Compensation Plan for Select Employees
(the "Existing Deferred Compensation Plan") and the Company's 2005 Deferred
Compensation Plan for Select Employees (together with the Existing Deferred
Compensation Plan, the "Deferred Compensation Plans"), in each case, solely to
the extent necessary to comply with Section 409A of the Code and any rules,
regulations or other guidance promulgated thereunder by any Governmental
Entity.
(f) Following the Effective Time, (i) Parent shall not, and
shall not permit any of its Subsidiaries or any of its or their respective
officers or employees to, take any action (including the waiver of any term or
condition of either Deferred Compensation Plan) that results, or would be
reasonably likely to result, in the imposition of any Tax or interest penalty
under Section 409A of the Code on any current or former participant in either
Deferred Compensation Plan, including any "material modification" (within the
meaning of Section 885(d)(2)(B) of the American Jobs Creation Act of 2004) of
the Existing Deferred Compensation Plan with respect to amounts deferred in
taxable years beginning before January 1, 2005, and (ii) Parent shall, and
shall cause its Subsidiaries and its and their respective officers and
employees to, take all actions (including any amendment or modification of
either Deferred Compensation Plan) necessary to ensure that each Deferred
Compensation Plan complies, by its terms and in its operation, with any rules,
regulations or other guidance promulgated under Section 409A of the Code by any
Governmental Entity after the date hereof; provided, however, that the
foregoing provisions of clause (ii) shall not apply (A) in the event that there
is no such action that could be taken that would ensure such compliance, in
which case Parent shall so notify the participants in such Deferred
Compensation Plan in order that they may have the opportunity to challenge such
fact, or (B) to the extent that such action is necessary to cause such Deferred
Compensation Plan to comply with Section 409A of the Code or any rule,
regulation or other guidance promulgated thereunder by any Governmental Entity
as in effect immediately prior to the Effective Time; provided, further,
however, that Parent shall be entitled to amend or modify the New Deferred
Compensation Plan to provide that (A) no additional amounts will be contributed
to or deferred under the New Deferred Compensation Plan and (B) to the extent
no Tax or interest penalty under Section 409A of the Code would be imposed on
any participant therein, amounts previously contributed to or deferred under
the New Deferred Compensation Plan will be distributed to the participants
therein, in each case subject to the requirements of Section 5.11(a). Parent
shall indemnify and hold harmless each current and former participant in either
Deferred Compensation Plan on an after-Tax basis from any Tax or interest
penalty imposed under Section 409A of the Code (or any successor or replacement
provision thereto) to the extent imposed as a result of any failure of Parent,
any of its Subsidiaries or any of its or their respective officers or employees
to comply with of this Section 5.11(f), provided that Parent shall not be
obligated to so indemnify and hold harmless any such participant with respect
to any such Tax or interest penalty to the extent such Tax or interest penalty
is imposed as a result of the refusal of such participant to give any consent
or approval required to effect any action required to be taken pursuant to
Section 5.11(f)(ii).
(g) Prior to the Closing Date, Parent and the Company, and their
respective Boards of Directors, shall use their reasonable best efforts to take
all actions to cause any dispositions of Company Common Stock (including
derivative securities with respect to Company Common Stock) or acquisitions of
Parent Common Stock (including derivative securities with respect to Parent
Common Stock) resulting from the transactions contemplated hereby by each
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act to be exempt from Section 16(b) of the Exchange Act under Rule
16b-3 promulgated under the Exchange Act.
(h) Nothing in this Agreement shall be construed as requiring
Parent or any of its Affiliates to employ any Continuing Employee for any
length of time following the Closing Date. Subject to Section 5.11(f), nothing
in this Agreement, express or implied, shall be construed to prevent Parent or
its Affiliates from (i) terminating, or modifying the terms of employment of,
any Continuing Employee following the Closing Date or (ii) terminating or
modifying to any extent any Company Plan or any other employee benefit plan,
program, agreement or arrangement that Parent or its Affiliates may establish
or maintain; provided, however, that to the extent that, and for so long as, a
Continuing Employee remains employed by Parent or any of its Subsidiaries
during the six month period following the Closing, the compensation and
benefits payable to such employee during such period shall be subject to
Section 5.11(a).
(i) Prior to the Effective Time, the Company shall amend the
rabbi trust established in connection with the Existing Deferred Compensation
Plan to provide that (x) as of the Effective Time, the shares of Parent Common
Stock in such rabbi trust issued in exchange for shares of Company Common Stock
pursuant to Section 1.6 will be subject to the claims of Parent's creditors, in
addition to the claims of the Company's creditors, and (y) any shares of Parent
Common Stock not transferred to the Surviving Corporation's employees will
revert to Parent on termination of such rabbi trust.
(j) The company shall take the actions set forth in Section
5.11(j) of the Company Disclosure Letter as soon as practicable after the date
of this Agreement.
(k) The parties hereby agree and acknowledge that Section
5.11(k) of the Company Disclosure Letter sets forth, with respect to each
officer of the Company listed therein, the cash severance payments that would
be due to such officer under the Company's Change in Control Plan (the "CIC")
if such officer were terminated within one year after the Closing without
"cause" (as defined in the CIC) or if such officer resigns within 30 days of a
"Material Change" (as defined in the CIC) during such one-year period.
Section 5.12 Appointment of Directors. Parent shall take all
necessary corporate action to increase the size of the Board of Directors of
Parent by two members and to appoint the Company Directors immediately
following the Effective Time to fill the vacancy on the Board of Directors of
Parent created by such increase. Parent, through the Parent Board and subject
to the Parent Board's fiduciary duties to the stockholders of Parent, shall
take all necessary action to recommend that the Company Directors be elected to
the Parent Board in the proxy statement relating to the first annual meeting of
the stockholders of Parent following the Closing.
Section 5.13 Rights Agreement. The Company Board shall take such
action as is necessary to render the Company Rights inapplicable to the Merger
and the other transactions contemplated by this Agreement.
Section 5.14 Certain Tax Matters.
(a) Parent and the Company shall each use its reasonable best
efforts to cause the Merger to qualify as a "reorganization" within the meaning
of Section 368(a) of the Code and to obtain the Tax opinions set forth in
Sections 6.2(d) and 6.3(d). This Agreement is intended to constitute a "plan of
reorganization" within the meaning of Treas. Reg. Sec. 1.368-2(g).
(b) Officers of Parent, Purchaser and the Company shall execute
and deliver to Cravath, Tax counsel for the Company, and Xxxxxxx Xxxx, Tax
counsel for Parent, certificates substantially in the form agreed to by the
parties and such law firms at such time or times as may reasonably be requested
by such law firms, including prior to the time the S-4 is declared effective by
the SEC and the Effective Time, in connection with such Tax counsel's
respective delivery of opinions pursuant to Sections 6.2(d) and 6.3(d). Each of
Parent, Purchaser and the Company shall use its reasonable best efforts not to
take or cause to be taken any action that would cause to be untrue (or fail to
take or cause not to be taken any action which would cause to be untrue) any of
the certifications and representations included in the certificates described
in this Section 5.14(b).
(c) The Company and Parent shall cooperate in the preparation,
execution and filing of all Tax Returns, questionnaires, applications or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, and transfer, recording,
registration and other fees and similar Taxes which become payable in
connection with the Merger that are required or permitted to be filed on or
before the Effective Time. Each of Purchaser and the Company shall pay, without
deduction from any amount payable to holders of Company Common Stock and
without reimbursement from the other party, any such Taxes or fees imposed on
it by any Governmental Entity, which becomes payable in connection with the
Merger.
Section 5.15 Hedging Activities. At least ten days prior to the
date of the Company Special Meeting, Parent shall provide the Company with a
list of specific Derivative Transactions to which the Company or any of its
Subsidiaries is a party (the "Specified Derivative Transactions") that Parent
intends for the Company and its Subsidiaries to unwind or terminate. Beginning
on the first Business Day after the Company Special Meeting, the Company shall,
or shall cause its Subsidiaries to, unwind or otherwise terminate, on terms
reasonably acceptable to Parent, each Specified Derivative Transaction, such
that (i) each Specified Derivative Transaction is unwound or terminated as
promptly as reasonably practicable, but in any event prior to the end of the
fifth Business Day after the Company Special Meeting and (ii) after such
unwinding or termination, neither the Company nor any of its Subsidiaries, will
have any further obligation in respect of such Specified Derivative
Transaction; provided, that the Company shall not be required to take any of
the foregoing actions unless each of Parent and Purchaser provides a written
agreement and acknowledgement to the Company that all conditions to Closing set
forth in Article VI have been satisfied or waived by Parent and Purchaser
(other than the condition set forth in Section 6.3(b) with respect to actions
taken or required to be taken by the Company under this Agreement after the
Company Special Meeting). Notwithstanding the foregoing, the parties hereby
agree and acknowledge that during the five Business Day period prior to the
Company Special Meeting, the Company may, at its option, begin to unwind or
otherwise terminate any Specified Derivative Transaction on terms reasonably
acceptable to Parent.
Section 5.16 SOX 404 Certification. The Company shall diligently
pursue its SOX 404 Plan and shall complete and include in the Company's Annual
Report on Form 10-K for the year ending December 31, 2004, management's
assessment of the Company's internal controls and procedures for financial
reporting in accordance with Section 404 of SOX.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
Merger.
The respective obligation of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of each of
the following conditions (any or all of which may be waived by the parties
hereto in writing, in whole or in part, to the extent permitted by applicable
Law):
(a) (i) This Agreement and the Merger shall have been adopted
and approved by the Company Required Vote and (ii) the Parent Proposal shall
have been approved and adopted by the Required Parent Vote;
(b) No statute, rule, order, decree or regulation shall have
been enacted or promulgated, and no action shall have been taken, by any
Governmental Entity of competent jurisdiction which temporarily, preliminarily
or permanently restrains, precludes, enjoins or otherwise prohibits the
consummation of the Merger or makes the Merger illegal;
(c) Other than filing the Certificate of Merger in accordance
with the DGCL, all authorizations, consents and approvals of all Governmental
Entities required to be obtained prior to consummation of the Merger shall have
been obtained, except for such authorizations, consents, and approvals the
failure of which to be obtained individually or in the aggregate has not had,
and would not be reasonably likely to have or result in, a Material Adverse
Effect on any party to this Agreement;
(d) The S-4 shall have been declared effective, and no stop
order suspending the effectiveness of the S-4 shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the SEC;
and
(e) The shares of Parent Common Stock issuable to the
stockholders of the Company in the Merger and to the holders of the Assumed
Options and the Company Warrants shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
Section 6.2 Conditions to the Obligation of the Company to
Effect the Merger.
The obligation of the Company to effect the Merger is further
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) (i) The representations and warranties of each of Parent and
Purchaser set forth in Sections 4.2, 4.3 and 4.5(a) shall be true and correct
in all material respects both at and as of the date of this Agreement and at
and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date);
and (ii) the representations and warranties of each of Parent and Purchaser set
forth in this Agreement (other than the representations and warranties set
forth in Sections 4.2, 4.3 and 4.5(a)) shall be true and correct (without
giving effect to any limitation as to "materiality" or "Material Adverse
Effect" set forth therein) both at and as of the date of this Agreement and at
and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) individually or in the aggregate
has not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on Parent. The Company shall have received a
certificate signed on behalf of Parent by each of two senior executive officers
of Parent to the foregoing effect;
(b) Each of Parent and Purchaser shall have performed in all
material respects its obligations under this Agreement required to be performed
by it at or prior to the Effective Time pursuant to the terms of this
Agreement, and the Company shall have received a certificate signed on behalf
of each of Parent and Purchaser by the Chief Executive Officer of each of
Parent and Purchaser to such effect;
(c) There shall not be pending any suit, action or proceeding by
any Governmental Entity seeking to restrain, preclude, enjoin or prohibit the
Merger or any of the other transactions contemplated by this Agreement; and
(d) The Company shall have received the opinion of Cravath,
Swaine & Xxxxx LLP ("Cravath"), counsel to the Company, in form and substance
reasonably satisfactory to the Company, on the date on which the Form S-4 is
filed and on the Closing Date, in each case dated as of such respective date,
rendered on the basis of facts, representations and assumptions set forth in
such opinion and the certificates obtained from officers of Parent, Purchaser
and the Company, all of which are consistent with the state of facts existing
as of the date on which the Form S-4 is filed and the Effective Time, as
applicable, to the effect that (i) the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code and (ii) the Company, Parent
and Purchaser will each be a "party to the reorganization" within the meaning
of Section 368 of the Code. In rendering the opinion described in this Section
6.2(d), Cravath shall have received and may rely upon the certificates and
representations referred to in Section 5.14(b).
Section 6.3 Conditions to Obligations of Parent and Purchaser to
Effect the Merger.
The obligations of Parent and Purchaser to effect the Merger are
further subject to the satisfaction or waiver at or prior to the Effective Time
of the following conditions:
(a) (i) The representations and warranties of the Company set
forth in Sections 3.2, 3.3 and 3.5(a) shall be true and correct in all material
respects both at and as of the date of this Agreement and at and as of the
Closing Date, as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such date); and (ii) the
representations and warranties of the Company set forth in this Agreement
(other than the representations and warranties set forth in Sections 3.2, 3.3
and 3.5(a)) shall be true and correct (without giving effect to any limitation
as to "materiality" or "Material Adverse Effect" set forth therein) both at and
as of the date of this Agreement and at and as of the Closing Date, as if made
at and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "Material Adverse Effect" set forth
therein) individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on the
Company. Parent shall have received a certificate signed on behalf of the
Company by each of two senior executive officers of the Company to the
foregoing effect;
(b) The Company shall have performed in all material respects
each of its obligations under this Agreement required to be performed by it at
or prior to the Effective Time pursuant to the terms of this Agreement, and
Parent shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer or Chief Financial Officer to such effect;
(c) There shall not be pending any suit, action or proceeding by
any Governmental Entity seeking to (i) prohibit or limit in any material
respect the ownership or operation by the Company, Parent, Purchaser or any of
their respective affiliates of a substantial portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, or to require any such
Person to dispose of or hold separate any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, as a result of
the Merger or any of the other transactions contemplated by this Agreement or
(ii) restrain, preclude, enjoin or prohibit the Merger or any of the other
transactions contemplated by this Agreement;
(d) Parent shall have received the opinion of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP ("Xxxxxxx Xxxx"), counsel to Parent, in form and
substance reasonably satisfactory to Parent, on the date on which the Form S-4
is filed and on the Closing Date, in each case dated as of such respective
date, rendered on the basis of facts, representations and assumptions set forth
in such opinion and the certificates obtained from officers of Parent,
Purchaser and the Company, all of which are consistent with the state of facts
existing as of the date on which the Form S-4 is filed or the Effective Time,
as applicable, to the effect that (i) the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code and (ii) the
Company, Parent and Purchaser will each be a "party to the reorganization"
within the meaning of Section 368 of the Code. In rendering the opinion
described in this Section 6.3(d), Xxxxxxx Xxxx shall have received and may rely
upon the certificates and representations referred to in Section 5.14(b);
(e) The number of Dissenting Shares shall not exceed 15% of the
outstanding shares of Company Common Stock; and
(f) All material consents and approvals of any Person that the
Company or any of its Subsidiaries are required to obtain in connection with
the consummation of the Merger, including consents and approvals from parties
to loans, contracts, leases or other agreements, shall have been obtained, and
a copy of each such consent and approval shall have been provided to Parent at
or prior to the Closing, except for such consents and approvals the failure of
which to be obtained individually or in the aggregate would not be reasonably
likely to have or result in a Material Adverse Effect on the Company.
ARTICLE VII
TERMINATION
Section 7.1 Termination.
Notwithstanding anything herein to the contrary, this Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time:
(a) By the mutual consent of Parent and the Company in a written
instrument.
(b) By either the Company or Parent upon written notice to the
other, if:
(i) the Merger shall not have been consummated on or before
August 31, 2005 (the "Termination Date"); provided that the right to
terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be
available to a party whose failure to fulfill any material obligation
under this Agreement or other material breach of this Agreement has been
the cause of, or resulted in, the failure of the Merger to have been
consummated on or before such date;
(ii) any Governmental Entity shall have issued a statute,
rule, order, decree or regulation or taken any other action (which
statute, rule, order, decree, regulation or other action the parties
hereto shall have used their reasonable best efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger or making the Merger illegal and such statute,
rule, order, decree, regulation or other action shall have become final
and nonappealable (provided that the terminating party is not then in
breach of Section 5.5);
(iii) the stockholders of the Company fail to adopt this
Agreement by the Company Required Vote at the Company Special Meeting;
provided that the Company shall not be entitled to terminate this
Agreement pursuant to this Section 7.1(b)(iii) if it has breached any of
its obligations under Section 5.3 or Section 5.6;
(iv) there shall have been a material breach of or any
inaccuracy in any of the representations or warranties set forth in this
Agreement on the part of any of the other parties, which breach is not
cured within 30 days following receipt by the breaching party of written
notice of such breach from the terminating party, or which breach, by its
nature, cannot be cured prior to the Termination Date (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein); provided,
however, that no party shall have the right to terminate this Agreement
pursuant to this Section 7.1(b)(iv) unless the breach of representation or
warranty, together with all other such breaches, would entitle the party
receiving such representation not to consummate the transactions
contemplated by this Agreement under Section 6.3(a) (in the case of a
breach of representation or warranty by the Company) or Section 6.2(a) (in
the case of a breach of representation or warranty by Parent or
Purchaser);
(v) if there shall have been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of any
of the other parties, which breach shall not have been cured within 30
days following receipt by the breaching party of written notice of such
breach from the terminating party, or which breach, by its nature, cannot
be cured prior to the Termination Date (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein); or
(vi) the Parent Proposal shall not have been approved and
adopted by the Required Parent Vote at the Parent Stockholders' Meeting;
provided that Parent shall not be entitled to terminate this Agreement
pursuant to this Section 7.1(b)(vi) if it has breached any of its
obligations under Section 5.3 or 5.6.
(c) By Parent, upon written notice to the Company, if prior to
obtaining the Company Required Vote (i) the Company, or the Company Board, as
the case may be, shall have (A) entered into any Acquisition Agreement or (B)
approved or recommended, or, in the case of a committee, proposed to the
Company Board, to approve or recommend, any Acquisition Proposal, (ii) the
Company or the Company Board or any committee thereof shall have resolved to do
any of the foregoing, (iii) a Company Adverse Recommendation Change shall have
occurred in response to a Superior Proposal or the Company Board or any
committee thereof shall have resolved to make such Company Adverse
Recommendation Change or (iv) a Company Adverse Recommendation Change shall
have occurred for any reason other than a Superior Proposal or the Company
Board or any committee thereof shall have resolved to make such Company Adverse
Recommendation Change.
(d) By the Company, upon written notice to Parent, if prior to
obtaining the Required Parent Vote (i) Parent, or the Parent Board, as the case
may be, shall have (A) entered into any Acquisition Agreement or (B) approved
or recommended, or, in the case of a committee, proposed to the Parent Board,
to approve or recommend, any Acquisition Proposal, (ii) Parent or the Parent
Board or any committee thereof shall have resolved to do any of the foregoing,
(iii) a Parent Adverse Recommendation Change shall have occurred in response to
a Superior Proposal or the Parent Board or any committee thereof shall have
resolved to make such Parent Adverse Recommendation Change or (iv) a Parent
Adverse Recommendation Change shall have occurred for any reason other than a
Superior Proposal or the Parent Board or any committee thereof shall have
resolved to make such Parent Adverse Recommendation Change.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, written notice
thereof shall forthwith be given by the terminating party to the other parties
specifying the provision of this Agreement pursuant to which such termination
is made, and except as provided in this Section 7.2, this Agreement shall
forthwith become null and void after the expiration of any applicable period
following such notice. In the event of such termination, there shall be no
liability on the part of Parent, Purchaser or the Company, except as set forth
in Section 8.1 of this Agreement and except with respect to the requirement to
comply with the Confidentiality Agreement; provided that nothing herein shall
relieve any party from any liability or obligation with respect to any willful
breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs or
expenses, except as provided in Sections 8.1(d) and 8.1(e).
(b) If this Agreement is terminated by Parent pursuant to
Section 7.1(c)(iii), then the Company shall pay to Parent in immediately
available funds a termination fee in an amount equal to U.S.$100 million (the
"Termination Fee").
(c) If this Agreement is terminated by the Company pursuant to
Section 7.1(d)(iii), then Parent shall pay to the Company the Termination Fee
in immediately available funds.
(d) If this Agreement is terminated by Parent pursuant to
Section 7.1(c)(iv) and prior to such termination no Acquisition Proposal with
respect to the Company has been proposed by any Person (other than Parent and
Purchaser or any of their respective affiliates) and no Person has publicly
announced its intention (whether or not conditional) to make such Acquisition
Proposal and such Acquisition Proposal and such intention has not otherwise
become publicly known to the Company's stockholders generally, then the Company
shall pay to Parent the Expenses Payment in immediately available funds.
(e) If this Agreement is terminated by the Company pursuant to
Section 7.1(d)(iv) and prior to such termination no Acquisition Proposal with
respect to Parent has been proposed by any Person and no Person has publicly
announced its intention (whether or not conditional) to make such Acquisition
Proposal and such Acquisition Proposal and such intention has not otherwise
become publicly known to Parent's stockholders generally, then Parent shall pay
to the Company the Expenses Payment in immediately available funds.
(f) In the event that (i) an Acquisition Proposal with respect
to the Company has been proposed by any Person (other than Parent and Purchaser
or any of their respective affiliates) or any Person has publicly announced its
intention (whether or not conditional) to make such Acquisition Proposal or
such Acquisition Proposal or such intention has otherwise become publicly known
to the Company's stockholders generally, (ii) thereafter this Agreement is
terminated by either the Company or Parent pursuant to Section 7.1(b)(i) or
7.1(b)(iii) or by Parent pursuant to Section 7.1(c)(i), (ii) or (iv) and (iii)
within 12 months after the termination of this Agreement, the Company or any of
its Subsidiaries enters into any definitive agreement providing for an
Acquisition Proposal, or an Acquisition Proposal with respect to the Company or
any of its Subsidiaries is consummated, then the Company shall pay to Parent
the Termination Fee in immediately available funds.
(g) In the event that (i) an Acquisition Proposal with respect
to Parent has been proposed by any Person or any Person has publicly announced
its intention (whether or not conditional) to make such Acquisition Proposal or
such Acquisition Proposal or such intention has otherwise become publicly known
to Parent's stockholders generally, (ii) thereafter this Agreement is
terminated by either the Company or Parent pursuant to Section 7.1(b)(i) or
7.1(b)(vi) or by the Company pursuant to Section 7.1(d)(i), (ii) or (iv) and
(iii) within 12 months after the termination of this Agreement, Parent or any
of its Subsidiaries enters into any definitive agreement providing for an
Acquisition Proposal, or an Acquisition Proposal with respect to Parent or any
of its Subsidiaries is consummated, then Parent shall pay to the Company the
Termination Fee in immediately available funds.
(h) If (i) this Agreement is terminated by Parent pursuant to
Section 7.1(c)(iv) within three Business Days of notification by the Company to
Parent of the Company Adverse Recommendation Change (or the resolution to make
a Company Adverse Recommendation Change) giving rise to such termination and
(ii) within three Business Days of such termination (the "Hedge Termination
Period") Parent terminates some or all of the hedging transactions entered into
by Parent prior to December 15, 2004 in connection with the transactions
contemplated by this Agreement ("Pre-Announcement Xxxxxx"), then the Company
will reimburse Parent for up to $45 million of hedging losses on
Pre-Announcement Xxxxxx covering the years 2006-2008 based on actual losses
realized during the Hedge Termination Period (the "Hedging Losses").
(i) For purposes of clause (iii) of Sections 8.1(f) and (g)
only, the term "Acquisition Proposal" shall have the meaning assigned to such
term in Section 5.3(f) except that all references to "10%" therein shall be
deemed to be references to "40%".
(j) Any payment of the Termination Fee or Expenses Payment
pursuant to Section 8.1(b), 8.1(c), 8.1(d) or 8.1(e) shall be made within one
Business Day after termination of this Agreement by wire transfer of
immediately available funds to an account designated by Parent. Any payment of
the Termination Fee pursuant to Section 8.1(f) or 8.1(g) shall be made prior to
the first to occur of the events described in clause (iii) of Section 8.1(f) or
8.1(g), respectively. Any reimbursement of Hedging Losses pursuant to Section
8.1(h) shall be made within one Business Day after notice by Parent to the
Company of the Hedging Losses accompanied by appropriate documentation thereof,
and shall be by wire transfer of immediately available funds to an account
designated by Parent. The parties acknowledge that the agreements contained in
this Section 8.1 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, none of the parties would enter
into this Agreement; accordingly, if the Company or Parent fails promptly to
pay or cause to be paid the amounts due pursuant to this Section 8.1, and, in
order to obtain such payment, Parent or the Company, respectively, commences a
suit that results in a judgment against the Company or Parent, respectively,
for the amounts set forth in this Section 8.1, the Company or Parent shall pay
to Parent or the Company (as the case may be) its reasonable costs and expenses
(including attorneys' fees and expenses) in connection with such suit and any
appeal relating thereto, together with interest on the amounts set forth in
this Section 8.1 at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
(k) This Section 8.1 shall survive any termination of this
Agreement.
Section 8.2 Amendment; Waiver.
(a) This Agreement may be amended by the parties to this
Agreement, by action taken or authorized by their respective boards of
directors, at any time before or after approval by the stockholders of the
Company of the matters presented in connection with the Merger, but after any
such approval no amendment shall be made without the approval of the
stockholders of the Company if such amendment alters or changes (i) the Merger
Consideration, (ii) any term of the Certificate of Incorporation or (iii) any
terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the Company.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
(b) At any time prior to the Effective Time, the parties to this
Agreement may (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
document, certificate or writing delivered pursuant hereto by the other party
or (iii) waive compliance with any of the agreements or conditions of the other
parties hereto contained herein. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party granting such waiver in any
other respect or at any other time. Neither the waiver by any of the parties
hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights
or privileges hereunder. The rights and remedies herein provided are cumulative
and none is exclusive of any other, or of any rights or remedies that any party
may otherwise have at Law or in equity.
Section 8.3 Survival. The representations and warranties
contained in this Agreement or in any certificates or other documents delivered
prior to or as of the Effective Time shall survive until (but not beyond) the
Effective Time. The covenants and agreements of the parties hereto (including
the Surviving Corporation after the Merger) shall survive the Effective Time
without limitation (except for those which, by their terms, contemplate a
shorter survival period).
Section 8.4 Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand, (c) the expiration of five
Business Days after the day when mailed in the United States by certified or
registered mail, postage prepaid, or (d) delivery in Person, addressed at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Company, to:
Patina Oil & Gas Corporation
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxxxxxxxx
with a copy to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-474-3700
Attention: Xxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxxx, III
and
(b) if to Parent or Purchaser, to:
Noble Energy, Inc.
000 Xxxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxxx
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxx Xxxxxx
Xxxxx Xx Xxxxxxx XX
Section 8.5 Interpretation; Definitions. When a reference is
made in this Agreement to Articles or Sections, such reference shall be to an
Article or a Section of this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" when used in this Agreement shall mean that the information
referred to has been made available to the party to whom such information is to
be made available. The word "affiliates" when used in this Agreement shall have
the respective meanings ascribed to them in Rule 12b-2 under the Exchange Act.
The phrase "beneficial ownership" and words of similar import when used in this
Agreement shall have the meaning ascribed to it in Rule 13d-3 under the
Exchange Act. The phrase "the date of this Agreement," "date hereof" and terms
of similar import, unless the context otherwise requires, shall be deemed to
refer to December 15, 2004.
The following terms have the following definitions:
(a) "Acceptable Confidentiality Agreement" means, with respect
to the Company or Parent, an agreement that imposes obligations and
restrictions on the counterparty thereto which are substantially similar to the
terms that are binding on the other party to this Agreement, as applicable,
under the Confidentiality Agreement.
(b) "Business Day" means any day other than Saturday and Sunday
and any day on which banks are not required or authorized to close in the State
of Delaware or New York.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Company Assets" means all of the properties and assets
(real, personal or mixed, tangible or intangible) of the Company and its
Subsidiaries.
(e) "Company Consolidated Group" means any affiliated group
within the meaning of Section 1504(a) of the Code, in which the Company (or any
Subsidiary of the Company) is or has ever been a member or any group of
corporations with which Company files, has filed or is or was required to file
an affiliated, consolidated, combined, unitary or aggregate Tax return.
(f) "Company Directors" means the two individuals currently
serving on the Company Board who are set forth on Schedule 8.5(f).
(g) "Company Leased Real Property" means all interests in real
property pursuant to the Company Leases other than the Company Oil and Gas
Properties and other oil, gas and mineral rights of the Company and its
Subsidiaries.
(h) "Company Leases" means the real property leases subleases,
licenses and use or occupancy agreements pursuant to which Parent or any of its
Subsidiaries is the lessee, sublessee, licensee, user, operator or occupant of
real property, or interests therein other than such leases subleases, licenses
and use or occupancy agreements relating to the Company Oil and Gas Properties
and other oil, gas and mineral rights of the Company and its Subsidiaries.
(i) "Company Oil and Gas Properties" means, with respect to the
Company or any of its Subsidiaries, all of the Company's or any of its
Subsidiaries' right, title and interest in, to and under, or derived from oil
and gas leases and rights, Xxxxx and Units, including all land, facilities,
personal property and equipment, Contracts and information pertaining or
relating thereto.
(j) "Company Owned Real Property" means the real property and
interests in real property owned by the Company and its Subsidiaries other than
the Company Oil and Gas Properties and other oil, gas and mineral rights of the
Company and its Subsidiaries.
(k) "Company Real Property" means the Company Owned Real
Property and the Company Leased Real Property.
(l) "Competition Laws" means Laws that are designed or intended
to prohibit, restrict or regulate actions having the purpose or effect of
monopolization, lessening of competition or restraint of trade and includes the
HSR Act.
(m) "Derivative Transaction" means any swap transaction, option,
warrant, forward purchase or sale transaction, futures transaction, cap
transaction, floor transaction or collar transaction relating to one or more
currencies, commodities, bonds, equity securities, loans, interest rates,
catastrophe events, weather-related events, credit-related events or conditions
or any indexes, or any other similar transaction (including any option with
respect to any of these transactions) or combination of any of these
transactions, including collateralized mortgage obligations or other similar
instruments or any debt or equity instruments evidencing or embedding any such
types of transactions, and any related credit support, collateral or other
similar arrangements related to such transactions.
(n) "Employment and Withholding Taxes" means any federal, state,
local, foreign or other employment, unemployment, insurance, social security,
disability, workers' compensation, payroll, health care or other similar Tax
and all Taxes required to be withheld by or on behalf of each of the Company
and any of its Subsidiaries in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other party, in each
case, on or in respect of the business or assets thereof.
(o) "Environmental Claim" means any claim, demand, suit, action,
cause of action, proceeding, investigation or notice to the Company or any of
its Subsidiaries by any Person or entity alleging any potential liability
(including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, personal injuries, or
penalties) arising out of, based on, or resulting from (i) the presence, or
Release into the environment, of any Hazardous Substance (as hereinafter
defined) at any location, whether or not owned, leased, operated or used by the
Company or its Subsidiaries, or (ii) circumstances forming the basis of any
violation, or alleged violation, of any applicable Environmental Law.
(p) "Environmental Laws" means all Laws, including common law,
relating to pollution, cleanup, restoration or protection of the environment
(including ambient air, surface water, groundwater, land surface or subsurface
strata and natural resources) or to the protection of flora or fauna or their
habitat or to human or public health or safety, including (i) Laws relating to
emissions, discharges, Releases or threatened Releases of Hazardous Substances,
or otherwise relating to the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, including the Comprehensive Environmental Response,
Compensation, and Liability Act and the Resource Conservation and Recovery Act,
and (ii) the Occupational Safety and Health Act.
(q) "Expenses Payment" means $6 million, which is an amount the
parties agree is in respect of the aggregate amount of all out-of-pocket fees
and expenses incurred or paid by the Company or Parent in connection with the
negotiation and performance of this Agreement and the transactions contemplated
by this Agreement.
(r) "Financing" means debt financing in the amounts set forth in
the Commitment Letter and on terms not less favorable to the borrower than
those set forth in the Commitment Letter.
(s) "Hazardous Substance" means (i) chemicals, pollutants,
contaminants, wastes, toxic and hazardous substances, and oil and petroleum
products, (ii) any substance that is or contains asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum or petroleum-derived
substances or wastes, radon gas or related materials or lead or lead-based
paint or materials, (iii) any substance, material or waste that requires
investigation, removal or remediation under any Environmental Law, or is
defined, listed or identified as hazardous, toxic or otherwise dangerous under
any Environmental Laws or (iv) any substance that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous.
(t) "JPMorgan" means X. X. Xxxxxx Securities Inc.
(u) "knowledge" means, with respect to the Company, the actual
knowledge of the individuals listed in Section 3.17(f) of the Company
Disclosure Letter, after due inquiry and (ii) with respect to Parent, the
actual knowledge of the individuals listed in Section 4.17(f) of the Parent
Disclosure Letter, after due inquiry.
(v) "Liens" means any mortgage, pledge, deed of trust,
hypothecation, right of others, claim, security interest, encumbrance, burden,
title defect, title retention agreement, lease, sublease, license, occupancy
agreement, easement, covenant, condition, encroachment, voting trust agreement,
interest, option, right of first offer, negotiation or refusal, proxy, lien,
charge or other restrictions or limitations of any nature whatsoever.
(w) "Litigation" means any action, claim, suit, proceeding,
audit, citation, summons, subpoena, inquiry or investigation of any nature,
civil, criminal or regulatory, in law or in equity, by or before any
Governmental Entity or arbitrator (including worker's compensation claims).
(x) "Material Adverse Effect" means, with respect to Parent or
the Company, as the case may be, (i) a material adverse effect on the business,
results of operations or financial condition of such party and its Subsidiaries
taken as a whole or (ii) any change or effect that prevents or materially
impedes or delays the consummation by such party of the Merger and the other
transactions contemplated hereby; provided, that none of the following shall be
deemed, either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether there has been or
will be, a Material Adverse Effect: (A) changes and effects attributable to
changes in Laws of general applicability or interpretations thereof by courts
or governmental authorities, (B) changes and effects attributable to or
resulting from changes in general industry conditions or general economic
conditions, including changes in commodity prices, except, in each case, to the
extent any such changes or effects disproportionately affect such party and (C)
changes and effects attributable to the announcement or pendency of this
Agreement or the Merger.
(y) "Non-U.S. Stockholder" means a stockholder who is not (i) an
individual who is a citizen or resident of the United States, (ii) a
corporation, or other Person taxable as a corporation, created or organized in
or under the Laws of the Untied States, any state thereof or the District of
Columbia, (iii) an estate, the income of which is subject to U.S. federal
income taxation regardless of its source, (iv) a trust if (x) a court within
the United States is able to exercise primary supervision over the
administration of the trust and (y) one or more U.S. Persons have the authority
to control all substantial decisions of the trust or if the trust has made a
valid election to be treated as a U.S. Person or (v) a partnership, or other
Person treated as a partnership for United States federal income Tax purposes,
to the extent that the beneficial ownership of the Company Common Stock is
attributed to its partners who fall into the categories described in clauses
(i)-(iv) above.
(z) "Parent Assets" means all of the properties and assets
(real, personal or mixed, tangible or intangible) of Parent and its
Subsidiaries.
(aa) "Parent Consolidated Group" means any affiliated group
within the meaning of Section 1504(a) of the Code, in which Parent (or any
Subsidiary of Parent) is or has ever been a member or any group of corporations
with which Parent files, has filed or is or was required to file an affiliated,
consolidated, combined, unitary or aggregate Tax return.
(bb) "Parent Leased Real Property" means all interests in real
property pursuant to the Parent Leases other than the Parent Oil and Gas
Properties and other oil, gas and mineral rights of Parent and its
Subsidiaries.
(cc) "Parent Leases" means the real property leases subleases,
licenses and use or occupancy agreements pursuant to which Parent or any of its
Subsidiaries is the lessee, sublessee, licensee, user, operator or occupant of
real property, or interests therein other than such leases subleases, licenses
and use or occupancy agreements relating to the Parent Oil and Gas Properties
and other oil, gas and mineral rights of Parent and its Subsidiaries.
(dd) "Parent Oil and Gas Properties" means, with respect to
Parent or any of its Subsidiaries, all of Parent's or any of its Subsidiaries'
right, title and interest in, to and under, or derived from oil and gas leases
and rights, Xxxxx and Units, including all land, facilities, personal property
and equipment, Contracts and information pertaining or relating thereto.
(ee) "Parent Owned Real Property" means the real property and
interests in real property owned by Parent and its Subsidiaries other than the
Parent Oil and Gas Properties and other oil, gas and mineral rights of Parent
and its Subsidiaries.
(ff) "Parent Real Property" means the Parent Owned Real Property
and the Parent Leased Real Property.
(gg) "Permit" means any permit, license, waiver, concession,
grant, registration, variance, exemption, authorization, operating certificate,
franchise, order or approval issued by any Governmental Entity.
(hh) "Permitted Liens" " means (i) Liens reserved against or
identified in the Company Balance Sheet or the Parent Balance Sheet, as the
case may be, to the extent so reserved or reflected or described in the notes
thereto, (ii) Liens for Taxes not yet due and payable, (iii) in the case of oil
and gas leases, the lessor's royalty interest(s), and (iv) those Liens that,
individually or in the aggregate with all other Permitted Liens, do not and
would not be reasonably likely to materially interfere with the use or value of
the properties or assets of the Company and its Subsidiaries or Parent and its
Subsidiaries, as the case may be and in each case taken as a whole as currently
used, or otherwise individually or in the aggregate have not had, and would not
reasonably be likely to have or result in, a Material Adverse Effect on the
Company or Parent, as the case may be.
(ii) "Person" means any natural person, firm, individual,
partnership, joint venture, business trust, trust, association, corporation,
company, unincorporated entity or Governmental Entity.
(jj) "Release" means any releasing, disposing, discharging,
injecting, spilling, leaking, pumping, dumping, emitting, escaping, emptying,
dispersal, leaching, migration or placing into, through or upon the
environment, including any land, soil, surface water, ground water or air.
(kk) "Return" means any return, estimated Tax return, report,
declaration, form, claim for refund or information statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
(ll) "Subsidiary" means with respect to any Person, any other
Person of which 50% or more of the securities or other interests having by
their terms ordinary voting power for the election of directors or others
performing similar functions are directly or indirectly owned by such Person.
(mm) "Tax" means (i) any federal, state, local, foreign or other
tax, import, duty or other governmental charge or assessment or deficiencies
thereof, including income, alternative, minimum, accumulated earnings, personal
holding company, franchise, capital stock, net worth, capital, profits,
windfall profits, gross receipts, value added, sales, use, excise, custom
duties, transfer, conveyance, mortgage, registration, stamp, documentary,
recording, premium, severance, environmental, real and personal property, ad
valorem, intangibles, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers' compensation,
payroll, health care, withholding, estimated or other similar tax and including
all interest and penalties thereon and additions to tax; (ii) any liability for
the payment of any amounts described in clauses (i), (ii) or (iii) as a result
of being a member of an affiliated, consolidated, combined, unitary or similar
group or as a result of transferor, successor or similar liability; and (iii)
any liability for the payments of any amounts as a result of being a party to
any Tax Sharing Agreement or as a result of any express or implied obligation
to indemnify any other Person with respect to the payment of any amounts of the
type described in clause (i) or (ii).
(nn) "Unit" means the area covered by a unitization,
communitization or pooling agreement or order applicable to Xxxxx, but only as
to those formations in which a Well or Xxxxx are currently completed and
producing Hydrocarbons.
(oo) "Well" means a well for the purpose of producing
Hydrocarbons or disposing of fluids produced in connection with the production
of Hydrocarbons.
Section 8.6 Headings; Schedules. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Disclosure of any matter pursuant
to any Section of the Company Disclosure Letter or Parent Disclosure Letter
shall not be deemed to be an admission or representation as to the materiality
of the item so disclosed.
Section 8.7 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of
which shall be considered one and the same agreement.
Section 8.8 Entire Agreement. This Agreement and the
Confidentiality Agreement constitute the entire agreement, and supersede all
prior agreements and understandings (written and oral), among the parties with
respect to the subject matter of this Agreement.
Section 8.9 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.10 Governing Law; Jurisdiction. This Agreement shall
be governed, construed and enforced in accordance with the Laws of the State of
Delaware without giving effect to the principles of conflicts of law thereof.
Each of the parties hereto hereby agrees that any claim, suit, action or other
proceeding, directly or indirectly, arising out of, under or relating to this
Agreement shall be heard and determined in the Chancery Court of the State of
Delaware (and each agrees that no such claim, action, suit or other proceeding
relating to this Agreement shall be brought by it or any of its affiliates
except in such court), and the parties hereto hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of any such court in any
such claim, suit, action or other proceeding and irrevocably and
unconditionally waive the defense of an inconvenient forum to the maintenance
of any such claim, suit, action or other proceeding. Each of the parties hereto
further agrees that, to the fullest extent permitted by applicable Law, service
of any process, summons, notice or document by U.S. registered mail to such
Person's respective address set forth in Section 8.4 shall be effective service
of process for any claim, action, suit or other proceeding in Delaware with
respect to any matters to which it has submitted to jurisdiction as set forth
above in the immediately preceding sentence. The parties hereto hereby agree
that a final, non-appealable judgment in any such claim, suit, action or other
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by applicable Law.
Section 8.11 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties; provided that each of Parent and
Purchaser may assign this Agreement to any of its Subsidiaries, or to any
lender to each of Parent and Purchaser or any Subsidiary or affiliate thereof
as security for obligations to such lender, and provided, further, that no
assignment to any such lender shall in any way affect Parent's or Purchaser's
obligations or liabilities under this Agreement.
Section 8.12 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party to this Agreement
and their permitted assignees, and (other than Sections 5.8 and 8.11) nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other Person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement. Without limiting the foregoing, no direct or
indirect holder of any equity interests or securities of any party to this
Agreement (whether such holder is a limited or general partner, member,
stockholder or otherwise), nor any affiliate of any party to this Agreement,
nor any director, officer, employee, representative, agent or other controlling
Person of each of the parties to this Agreement and their respective affiliates
shall have any liability or obligation arising under this Agreement or the
transactions contemplated hereby.
Section 8.13 Specific Performance. The parties to this Agreement
agree that irreparable damage would occur in the event that any provision of
this Agreement was not performed in accordance with the terms of this Agreement
and that the parties shall be entitled to specific performance of the terms of
this Agreement in addition to any other remedy at Law or equity.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
NOBLE ENERGY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
NOBLE ENERGY PRODUCTION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
PATINA OIL & GAS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer