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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
WESTPORT RESOURCES CORPORATION
AND
BELCO OIL & GAS CORP.
Dated as of June 8, 2001
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TABLE OF CONTENTS
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ARTICLE I THE MERGER.....................................................................................1
Section 1.1 The Merger.............................................................................1
Section 1.2 Effective Time of the Merger...........................................................1
Section 1.3 Tax Treatment..........................................................................2
Section 1.4 Accounting Treatment...................................................................2
ARTICLE II THE SURVIVING CORPORATION.....................................................................2
Section 2.1 Articles of Incorporation..............................................................2
Section 2.2 Bylaws.................................................................................2
Section 2.3 Directors and Officers.................................................................2
ARTICLE III CONVERSION OF SHARES.........................................................................2
Section 3.1 Conversion of Capital Stock............................................................2
Section 3.2 Surrender and Payment..................................................................5
Section 3.3 Stock Plans............................................................................7
Section 3.4 No Fractional Shares...................................................................9
Section 3.5 Closing................................................................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BELCO.......................................................9
Section 4.1 Organization and Qualification.........................................................9
Section 4.2 Capitalization........................................................................11
Section 4.3 Authority.............................................................................12
Section 4.4 Consents and Approvals; No Violation..................................................12
Section 4.5 Belco SEC Reports.....................................................................13
Section 4.6 Belco Financial Statements............................................................13
Section 4.7 Absence of Undisclosed Liabilities....................................................14
Section 4.8 Absence of Certain Changes............................................................14
Section 4.9 Taxes.................................................................................15
Section 4.10 Property..............................................................................18
Section 4.11 Litigation............................................................................19
Section 4.12 Employee Benefit Plans; ERISA.........................................................19
Section 4.13 Environmental Liability...............................................................20
Section 4.14 Compliance with Applicable Laws.......................................................22
Section 4.15 Insurance.............................................................................22
Section 4.16 Labor Matters; Employees..............................................................22
Section 4.17 Reserve Reports.......................................................................23
Section 4.18 Permits...............................................................................24
Section 4.19 Material Contracts....................................................................24
Section 4.20 Required Stockholder Vote or Consent..................................................25
Section 4.21 Proxy Statement/Prospectus; Registration Statement....................................25
Section 4.22 Intellectual Property.................................................................26
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Section 4.23 Hedging; Derivatives..................................................................26
Section 4.24 Brokers...............................................................................26
Section 4.25 Tax-Free Reorganization...............................................................27
Section 4.26 Fairness Opinion......................................................................27
Section 4.27 Takeover Laws.........................................................................27
Section 4.28 No Existing Discussions...............................................................27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF WESTPORT....................................................27
Section 5.1 Organization and Qualification........................................................27
Section 5.2 Capitalization........................................................................29
Section 5.3 Authority.............................................................................29
Section 5.4 Consents and Approvals; No Violation..................................................30
Section 5.5 Westport SEC Reports..................................................................31
Section 5.6 Westport Financial Statements.........................................................31
Section 5.7 Absence of Undisclosed Liabilities....................................................32
Section 5.8 Absence of Certain Changes............................................................32
Section 5.9 Taxes.................................................................................32
Section 5.10 Property..............................................................................34
Section 5.11 Litigation............................................................................35
Section 5.12 Employee Benefit Plans; ERISA.........................................................36
Section 5.13 Environmental Liability...............................................................37
Section 5.14 Compliance with Applicable Laws.......................................................38
Section 5.15 Insurance.............................................................................39
Section 5.16 Labor Matters; Employees..............................................................39
Section 5.17 Reserve Reports.......................................................................40
Section 5.18 Material Contracts....................................................................40
Section 5.19 Permits...............................................................................41
Section 5.20 Required Stockholder Vote or Consent..................................................41
Section 5.21 Proxy Statement/Prospectus; Registration Statement....................................42
Section 5.22 Intellectual Property.................................................................42
Section 5.23 Hedging; Derivatives..................................................................42
Section 5.24 Brokers...............................................................................42
Section 5.25 Tax Matters...........................................................................42
Section 5.26 Fairness Opinion......................................................................43
Section 5.27 Takeover Laws.........................................................................43
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER.......................................................43
Section 6.1 Conduct of Business by Belco Pending the Merger.......................................43
Section 6.2 Conduct of Business by Westport Pending the Merger....................................46
ARTICLE VII ADDITIONAL AGREEMENTS.......................................................................47
Section 7.1 Access and Information................................................................47
Section 7.2 No Solicitation of Transactions.......................................................47
Section 7.3 Directors' and Officers' Indemnification and Insurance................................49
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Section 7.4 Further Assurances....................................................................50
Section 7.5 Expenses..............................................................................51
Section 7.6 Cooperation...........................................................................51
Section 7.7 Publicity.............................................................................51
Section 7.8 Filings...............................................................................52
Section 7.9 Employee Matters; Benefit Plans.......................................................52
Section 7.10 Board Membership......................................................................53
Section 7.11 Stockholders Meetings.................................................................53
Section 7.12 Preparation of the Proxy Statement/Prospectus and Registration Statement..............54
Section 7.13 Stock Exchange Listing................................................................55
Section 7.14 Notice of Certain Events..............................................................55
Section 7.15 Affiliate Agreements..................................................................56
Section 7.16 Tax Treatment.........................................................................56
Section 7.17 Stockholder Litigation................................................................56
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER...................................................56
Section 8.1 Conditions to the Obligation of Each Party............................................56
Section 8.2 Conditions to the Obligations of Westport.............................................57
Section 8.3 Conditions to the Obligations of Belco................................................57
ARTICLE IX SURVIVAL.....................................................................................58
Section 9.1 Survival of Representations and Warranties............................................58
Section 9.2 Survival of Covenants and Agreements..................................................58
ARTICLE X TERMINATION AND WAIVER........................................................................58
Section 10.1 Termination...........................................................................58
Section 10.2 Effect of Termination.................................................................59
ARTICLE XI MISCELLANEOUS................................................................................61
Section 11.1 Notices...............................................................................61
Section 11.2 Separability..........................................................................62
Section 11.3 Assignment............................................................................62
Section 11.4 Interpretation........................................................................62
Section 11.5 Counterparts..........................................................................62
Section 11.6 Entire Agreement......................................................................62
Section 11.7 Governing Law.........................................................................62
Section 11.8 Attorneys' Fees.......................................................................62
Section 11.9 No Third Party Beneficiaries..........................................................62
Section 11.10 Disclosure Schedules..................................................................63
Section 11.11 Amendments and Supplements............................................................63
Section 11.12 Extensions, Waivers, Etc..............................................................63
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EXHIBITS
2.1 Form of Surviving Corporation Articles of Incorporation
2.2 Form of Surviving Corporation Bylaws
2.3 Surviving Corporation Officers and Directors
7.15 Form of Affiliate Agreement
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GLOSSARY OF DEFINED TERMS
Acquisition Proposal.......................... 7.2(c)
Agreement................................... Preamble
Audit...................................... 4.9(a)(i)
Belco....................................... Preamble
Belco Balance Sheet.......................... 4.10(a)
Belco Benefit Plans.......................... 4.12(a)
Belco Common Stock............................ 3.1(a)
Belco Common Stock Exchange Ratio............. 3.1(a)
Belco Disclosure Schedule.......................... 4
Belco Engagement Letter......................... 4.24
Belco ERISA Affiliate........................ 4.12(a)
Belco Exchange Fund........................ 3.2(a)(i)
Belco Financial Statements....................... 4.6
Belco Material Adverse Effect................. 4.1(c)
Belco Material Contracts..................... 4.19(a)
Belco Preferred Stock......................... 3.1(c)
Belco Reserve Report......................... 4.17(a)
Belco SEC Reports................................ 4.5
Belco Stockholders' Approval.................... 4.20
Belco Special Meeting........................ 7.11(a)
Belco Stock Options........................... 3.3(b)
Belco Stock Plans............................. 3.3(b)
Business Day.................................. 3.2(b)
Cap........................................... 7.3(b)
Certificates of Merger........................... 1.2
Closing Date..................................... 3.5
Closing.......................................... 3.5
Code........................................ Preamble
Confidentiality Agreement........................ 7.1
Customary Post Closing Consents............... 4.4(b)
Delaware Certificate of Merger................... 1.2
DGCL............................................. 1.1
Effective Time................................... 1.2
Enforceability Exception......................... 4.3
Environmental Laws........................... 4.13(a)
ERISA........................................ 4.12(a)
Exchange Act.................................. 4.4(b)
Exchange Agent................................ 3.2(a)
Expense Fee.................................. 10.2(b)
Expenses...................................... 7.5(b)
GAAP............................................. 4.6
Governmental Authority........................ 4.4(b)
Hazardous Substances......................... 4.13(b)
HSR Act....................................... 4.4(b)
Hydrocarbons................................. 4.17(a)
Indemnified Party................................ 7.3
Intellectual Property........................... 4.22
Internal Reserve Report...................... 4.17(a)
Liens......................................... 4.2(b)
Merger...................................... Preamble
Nevada Articles of Merger........................ 1.2
NRS.............................................. 1.1
NYSE............................................ 7.13
Oil and Gas Interests........................ 4.17(a)
Old Belco Common Stock Certificate............ 3.1(a)
Old Belco Common Stock........................ 3.1(a)
Old Belco Common Stock Merger
Consideration............................... 3.1(a
PBGC......................................... 4.12(b)
PCBs......................................... 4.13(e)
Permits......................................... 4.18
Permitted Amount.............................. 6.1(h)
Person........................................ 3.2(e)
Proxy Statement/Prospectus...................... 4.21
Registration Statement.......................... 4.21
Replacement Plans............................. 7.9(a)
Retained Employees............................ 7.9(a)
SEC.............................................. 4.5
Securities Act................................... 4.5
Subsidiary.................................... 4.1(c)
Superior Proposal............................. 7.2(a)
Surviving Corporation............................ 1.1
Tax Authority............................ 4.9(a)(iii)
Tax Returns............................... 4.9(a)(iv)
Taxes..................................... 4.9(a)(ii)
Termination Date............................. 10.1(b)
Termination Fee.............................. 10.2(b)
Voting Agreements........................... Preamble
WARN Act..................................... 4.16(b)
Westport.................................... Preamble
Westport Award................................ 7.9(a)
Westport Balance Sheet....................... 5.10(a)
Westport Benefit Plans....................... 5.12(a)
Westport Common Stock Certificate............. 3.1(b)
Westport Common Stock Exchange Ratio.......... 3.1(b)
Westport Common Stock Merger Consideration.... 3.1(b)
Westport Common Stock......................... 3.1(b)
Westport Disclosure Schedule....................... 5
Westport ERISA Affiliate..................... 5.12(a)
Westport Exchange Fund.................... 3.2(a)(ii)
Westport Financial Statements.................... 5.6
Westport Material Adverse Effect.............. 5.1(c)
Westport Material Contracts.................. 5.18(a)
Westport Reserve Report...................... 5.17(a)
Westport SEC Reports............................. 5.5
Westport Special Meeting..................... 7.11(b)
Westport Stock Options........................ 3.3(a)
Westport Stock Plans.......................... 3.3(a)
Westport Stockholders' Approval................. 5.20
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of June
8, 2001, is by and between Westport Resources Corporation, a Delaware
corporation ("Westport"), and Belco Oil & Gas Corp., a Nevada corporation
("Belco").
WHEREAS, the respective Boards of Directors of Westport and Belco deem
it advisable and in the best interests of their respective stockholders that
Westport merge with and into Belco (the "Merger") upon the terms and subject to
the conditions set forth herein, and such Boards of Directors have approved the
Merger; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) Belco has entered into voting agreements with each of ERI
Investments, Inc., a Delaware corporation and Westport Energy, LLC, a Delaware
limited liability company, under which such parties have, among other things,
agreed to support the Merger upon the terms and conditions set forth therein,
and (ii) Westport has entered into voting agreements with each of Xxxxxx X.
Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxx, Xxxxx Investment Group, LLC, The
Xxxxxx X. and Xxxxx X. Xxxxxx Family Foundation, Belfer Corp., Xxxxx Holdings
Partnership, L.P., Trust for the benefit of Xxxxxxxxx Xxxxx Belfer (T-6), Xxxxxx
X. Xxxxxx 1990 Family Trust and Vantz Limited Partnership, under which such
parties have, among other things, agreed to support the Merger upon the terms
and conditions set forth therein (collectively, the "Voting Agreements"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2 hereof) Westport shall
merge with and into Belco and the separate corporate existence of Westport shall
thereupon cease and Belco shall be the surviving corporation in the Merger
(sometimes referred to herein as the "Surviving Corporation"). The Merger shall
have the effects set forth in 92A of the Nevada Revised Statutes (the "NRS") and
Section 259 of the Delaware General Corporation Law (the "DGCL"), including,
without limitation, the Surviving Corporation's succession to and assumption of
all rights and obligations of Westport.
Section 1.2 Effective Time of the Merger. The Merger shall become
effective (the "Effective Time") upon the later of (i) the filing of properly
executed Articles of Merger (the "Nevada Articles of Merger") relating to the
Merger with the Secretary of State of the State of Nevada in accordance with
Chapter 92A of the NRS, (ii) the filing of a properly executed Certificate of
Merger relating to the Merger (the "Delaware Certificate of Merger," and
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with the Nevada Articles of Merger, the "Certificates of Merger"), with the
Secretary of State of the State of Delaware in accordance with the DGCL or (iii)
at such later time as the parties shall agree and set forth in such Certificates
of Merger. The filing of the Certificates of Merger referred to above shall be
made as soon as practicable on the Closing Date set forth in Section 3.5.
Section 1.3 Tax Treatment. It is intended that the Merger shall
constitute a reorganization under section 368(a) of the Code.
Section 1.4 Accounting Treatment. It is intended that the Merger shall
be accounted for as a purchase transaction for financial accounting purposes.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation. The articles of incorporation of
Belco in effect immediately prior to the Effective Time shall be the articles of
incorporation of the Surviving Corporation at and after the Effective Time until
thereafter amended in accordance with the terms thereof and the NRS, provided,
that at the Effective Time such articles of incorporation shall be amended in
the form attached as Exhibit 2.1 hereto.
Section 2.2 Bylaws. The bylaws of Belco as in effect immediately prior
to the Effective Time shall be the bylaws of the Surviving Corporation at and
after the Effective Time, and thereafter may be amended in accordance with their
terms and as provided by the articles of incorporation of the Surviving
Corporation and the NRS; provided, that at the Effective Time such bylaws shall
be amended in the form attached as Exhibit 2.2 hereto.
Section 2.3 Directors and Officers. The directors and officers of the
Surviving Corporation shall be as set forth in Exhibit 2.3 at and after the
Effective Time, until their respective successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's articles of incorporation and
bylaws.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
capital stock described below:
(a) Each share of the common stock, par value $0.01 per share,
of Belco (the "Old Belco Common Stock") issued and outstanding immediately prior
to the Effective Time (other than shares to be cancelled in accordance with
Section 3.1(d)) shall be converted into the right to receive 0.4125 of a share
(the "Belco Common Stock Exchange Ratio") of the common stock, par value $0.01
per share, of the Surviving Corporation ("Belco Common Stock"). All such Old
Belco Common Stock, when so converted, shall no longer be outstanding and shall
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automatically be canceled and retired and shall cease to exist, and the holder
of a certificate ("Old Belco Common Stock Certificate") that, immediately prior
to the Effective Time, represented outstanding shares of Old Belco Common Stock
shall cease to have any rights with respect thereto, except the right to
receive, upon the surrender of such Old Belco Common Stock Certificate in
accordance with Section 3.2, Belco Common Stock (the "Old Belco Common Stock
Merger Consideration") and any cash in lieu of fractional shares of Surviving
Corporation Common Stock to which such holder is entitled pursuant to this
Section 3.1(a), without interest. Until surrendered as contemplated by this
Section 3.1(a), each Old Belco Common Stock Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender Belco Common Stock Merger Consideration and any cash in lieu of
fractional shares of Belco Common Stock as contemplated by this Section 3.1(a).
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time the outstanding shares of Old Belco Common Stock or Westport
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Belco Common
Stock Exchange Ratio shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(b) Each share of the common stock, par value $0.01 per share,
of Westport (the "Westport Common Stock") issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled in accordance
with Section 3.1(d)) shall be converted into the right to receive one share (the
"Westport Common Stock Exchange Ratio") of Belco Common Stock. All such Westport
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and the holder
of a certificate ("Westport Common Stock Certificate") that, immediately prior
to the Effective Time, represented outstanding shares of Westport Common Stock
shall cease to have any rights with respect thereto, except the right to
receive, upon the surrender of such Westport Common Stock Certificate in
accordance with Section 3.2, Belco Common Stock (the "Westport Common Stock
Merger Consideration") to which such holder is entitled pursuant to this Section
3.1(b), without interest. Until surrendered as contemplated by this Section
3.1(b), each Westport Common Stock Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon such surrender
the Westport Common Stock Merger Consideration as contemplated by this Section
3.1(b). Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time the outstanding shares of Westport Common Stock or Belco
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Westport Common
Stock Exchange Ratio shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(c) Each share of the 6 1/2% Convertible Preferred Stock, par
value $0.01 per share, of Belco (the "Belco Preferred Stock") issued and
outstanding immediately prior to the Effective Time shall remain outstanding and
shall not be affected by the Merger.
(d) All shares of Belco Common Stock that (i) are owned by
Belco as treasury stock or (ii) owned by Westport or any of its wholly-owned
Subsidiaries shall be cancelled and retired and shall cease to exist and no
stock of Belco or other consideration shall be delivered in
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exchange therefor. All shares of Westport Common Stock that immediately prior to
the Effective Time (i) are owned by Westport as treasury stock or (ii) owned by
Belco or any of its wholly-owned Subsidiaries shall be cancelled and retired and
shall cease to exist and no stock of Belco or other consideration shall be
delivered in exchange therefor.
(e) No dividends or other distributions declared or made after
the Effective Time with a record date after the Effective Time with respect to
Belco Common Stock shall be paid to the holder of any unsurrendered Westport
Common Stock Certificate or Old Belco Common Stock Certificate with respect to
the Westport Common Stock Merger Consideration or Old Belco Common Stock Merger
Consideration represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any holder pursuant to Section 3.4 below until the
holder of record of such Westport Common Stock Certificate or Old Belco Common
Stock Certificate shall surrender such Westport Common Stock Certificate or Old
Belco Common Stock Certificate in accordance with Section 3.2. Subject to the
effect of applicable laws (including, without limitation, escheat and abandoned
property laws), following surrender of any such Westport Common Stock
Certificate or Old Belco Common Stock Certificate there shall be paid to the
record holder of the certificate or certificates representing the Westport
Common Stock Merger Consideration or Old Belco Common Stock Merger
Consideration, as the case may be, issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of cash payable in lieu
of a fractional share of Old Belco Common Stock to which such holder is entitled
pursuant to Section 3.4 below, and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such Westport Common Stock Merger Consideration or Old Belco Common
Stock Merger Consideration in each case after giving effect to any required tax
withholding, and (ii) if the payment date for any dividend or distribution
payable with respect to such Westport Common Stock Merger Consideration or Old
Belco Common Stock Merger Consideration has not occurred prior to the surrender
of such Westport Common Stock Certificate or Old Belco Common Stock Certificate,
at the appropriate payment date therefor, the amount of dividends or other
distributions with a record date after the Effective Time but prior to the
surrender of such Westport Common Stock Certificate or Old Belco Common Stock
Certificate and a payment date subsequent to the surrender of such Westport
Common Stock Certificate or Old Belco Common Stock Certificate, as applicable.
(f) All Belco Common Stock issued upon the surrender of
Westport Common Stock Certificates or Old Belco Common Stock Certificates in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such certificates and the Westport
Common Stock or Old Belco Common Stock, as the case may be, formerly represented
thereby, and from and after the Effective Time there shall be no further
registration of transfers effected on the stock transfer books of the Surviving
Corporation of shares of Westport Common Stock or Old Belco Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Westport Common Stock Certificates or Old Belco Common Stock
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article III.
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Section 3.2 Surrender and Payment.
(a) Prior to the Effective Time, Belco shall appoint an agent
reasonably acceptable to Westport (the "Exchange Agent") for the purpose of
exchanging Old Belco Common Stock Certificates formerly representing Old Belco
Common Stock and Westport Common Stock Certificates formerly representing
Westport Common Stock. At or prior to the Effective Time, Belco shall deposit
with the Exchange Agent:
(i) for the benefit of the holders of Old Belco
Common Stock, for exchange in accordance with this Section 3.2 through the
Exchange Agent, (A) as of the Effective Time, certificates representing the Old
Belco Common Stock Merger Consideration to be issued pursuant to Section 3.1(a)
and (B) from time to time as necessary, cash to be paid in lieu of fractional
shares pursuant to Section 3.4 (such certificates for the Old Belco Common Stock
Merger Consideration and such cash being hereinafter referred to as the "Belco
Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the Old Belco Common Stock Merger Consideration and cash in lieu of
fractional shares in exchange for surrendered Old Belco Common Stock
Certificates formerly representing Old Belco Common Stock pursuant to Section
3.1 out of the Belco Exchange Fund. Except as contemplated by Section 3.2(f),
the Belco Exchange Fund shall not be used for any other purpose.
(ii) for the benefit of the holders of Westport
Common Stock, for exchange in accordance with this Section 3.2 through the
Exchange Agent, as of the Effective Time, certificates representing the Westport
Common Stock Merger Consideration to be issued pursuant to Section 3.1(b) (such
certificates for the Westport Common Stock Merger Consideration being
hereinafter referred to as the "Westport Exchange Fund"). The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the Westport Common Stock
Merger Consideration in exchange for surrendered Westport Common Stock
Certificates formerly representing Westport Common Stock pursuant to Section 3.1
out of the Westport Exchange Fund. Except as contemplated by Section 3.2(f), the
Westport Exchange Fund shall not be used for any other purpose.
(b) Promptly after the Effective Time, but in any event not
later than five Business Days (as defined below) thereafter, Belco will send, or
will cause the Exchange Agent to send, to each holder of an Old Belco Common
Stock Certificate or Certificates or Westport Common Stock Certificate or
Certificates that immediately prior to the Effective Time represented
outstanding Old Belco Common Stock or Westport Common Stock, as applicable, a
letter of transmittal and instructions for use in effecting the exchange of (i)
such Old Belco Common Stock Certificates for certificates representing the Old
Belco Common Stock Merger Consideration and, if applicable, cash in lieu of
fractional shares or (ii) such Westport Common Stock Certificates for
certificates representing the Westport Common Stock Merger Consideration.
Provision also shall be made for holders of Old Belco Common Stock Certificates
or Westport Common Stock Certificates to procure in person immediately after the
Effective Time a letter of transmittal and instructions and to deliver in person
immediately after the Effective Time such letter of transmittal and Old Belco
Common Stock Certificates or Westport Common Stock Certificates, as the case may
be, in exchange for the Old Belco Common Stock Merger Consideration or Westport
Common Stock Merger Consideration and, if applicable, cash in lieu of fractional
shares. For purposes of this Agreement, "Business Day"
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means any day that is not a Saturday, a Sunday or other day on which banks are
required or authorized by law to be closed in the city of New York.
(c) After the Effective Time, Old Belco Common Stock
Certificates shall represent the right, upon surrender thereof to the Exchange
Agent, together with a duly executed and properly completed letter of
transmittal relating thereto, to receive in exchange therefor that number of
whole shares of Belco Common Stock, and, if applicable, cash that such holder
has the right to receive pursuant to Sections 3.1 and 3.4 after giving effect to
any required tax withholding, and the Old Belco Common Stock Certificate or
Certificates so surrendered shall be canceled. No interest will be paid or will
accrue on any cash amount payable upon the surrender of any such Old Belco
Common Stock Certificates.
(d) After the Effective Time, Westport Common Stock
Certificates shall represent the right, upon surrender thereof to the Exchange
Agent, together with a duly executed and properly completed letter of
transmittal relating thereto, to receive in exchange therefor that number of
whole shares of Belco Common Stock, and, if applicable, cash that such holder
has the right to receive pursuant to Section 3.1 after giving effect to any
required tax withholding, and the Westport Common Stock Certificate or
Certificates so surrendered shall be canceled. No interest will be paid or will
accrue on any cash amount payable upon the surrender of any such Westport Common
Stock Certificates.
(e) If any shares of Belco Common Stock are to be issued
and/or cash to be paid to a Person other than the registered holder of the Old
Belco Common Stock Certificate or Certificates or Westport Common Stock
Certificate or Certificates surrendered in exchange therefor, it shall be a
condition to such issuance that the Old Belco Common Stock Certificate or
Certificates or Westport Common Stock Certificate or Certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such issuance shall pay to the Exchange Agent any transfer
or other taxes required as a result of such issuance to a Person other than the
registered holder or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. Belco or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Old Belco Common Stock Certificates
or Westport Common Stock Certificates such amounts as Belco or the Exchange
Agent are 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 so withheld by Belco or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Old Belco Common Stock Certificates or Westport
Common Stock Certificates, as the case may be, in respect of whom such deduction
and withholding were made by Belco or the Exchange Agent. For purposes of this
Agreement, "Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a governmental or political subdivision or any agency or
instrumentality thereof.
(f) Any Old Belco Common Stock Merger Consideration and any
cash in the Belco Exchange Fund and any Westport Common Stock Merger
Consideration in the Westport Exchange Fund that remain unclaimed by the holders
of Old Belco Common Stock or Westport Common Stock, as the case may be, one year
after the Effective Time shall be returned to Belco,
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upon demand, and any such holder who has not exchanged such holder's Old Belco
Common Stock Certificates or Westport Common Stock Certificates, as the case may
be, in accordance with this Section 3.2 prior to that time shall thereafter look
only to Belco, as general creditors thereof, to exchange such Old Belco Common
Stock Certificates or Westport Common Stock Certificates, as the case may be, or
to pay amounts to which they are entitled pursuant to Section 3.1. If
outstanding Old Belco Common Stock Certificates or Westport Common Stock
Certificates, as the case may be, are not surrendered prior to six years after
the Effective Time (or, in any particular case, prior to such earlier date on
which any Old Belco Common Stock Merger Consideration or Westport Common Stock
Merger Consideration issuable in respect of such Old Belco Common Stock
Certificates or Westport Common Stock Certificates, or the dividends and other
distributions, if any, described below would otherwise escheat to or become the
property of any governmental unit or agency), the Old Belco Common Stock Merger
Consideration or Westport Common Stock Merger Consideration issuable in respect
of such Old Belco Common Stock Certificates or Westport Common Stock
Certificates, as the case may be, and the amount of dividends and other
distributions, if any, which have become payable and which thereafter become
payable on the Old Belco Common Stock Merger Consideration or Westport Common
Stock Merger Consideration evidenced by such Old Belco Common Stock Certificates
or Westport Common Stock Certificates, as the case may be, as provided herein
shall, to the extent permitted by applicable law, become the property of Belco,
free and clear of all claims or interest of any Person previously entitled
thereto. Notwithstanding the foregoing, none of Belco, Westport or the Surviving
Corporation shall be liable to any holder of Old Belco Common Stock Certificates
or Westport Common Stock Certificates for any amount paid, or the Old Belco
Common Stock Merger Consideration or Westport Common Stock Merger Consideration,
cash or dividends delivered, to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) If any Old Belco Common Stock Certificates or Westport
Common Stock Certificates shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Old Belco Common
Stock Certificates or Westport Common Stock Certificates to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by such
Person of a bond in such reasonable amount as Belco may direct as indemnity
against any claim that may be made against it with respect to such Old Belco
Common Stock Certificates or Westport Common Stock Certificates, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Old Belco Common
Stock Certificates or Westport Common Stock Certificates the Old Belco Common
Stock Merger Consideration or Westport Common Stock Merger Consideration, as the
case may be, and, if applicable, cash and unpaid dividends and other
distributions on any Old Belco Common Stock Merger Consideration or Westport
Common Stock Merger Consideration deliverable in respect thereof pursuant to
this Agreement.
Section 3.3 Stock Plans.
(a) At the Effective Time, automatically and without any
action on the part of the holder thereof, each outstanding employee or director
stock option of Westport outstanding at the Effective Time (the "Westport Stock
Options") granted under the EPGC 2000 Stock Option Plan, the EPGC Directors'
Stock Option Plan or Westport's 2000 Stock Incentive Plan (collectively, the
"Westport Stock Plans") shall be assumed by Belco and become an option to
purchase that number of shares of Belco Common Stock obtained by multiplying the
number of
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shares of Westport Common Stock issuable upon the exercise of such option by the
Westport Common Stock Exchange Ratio at an exercise price per share equal to the
per share exercise price of such option divided by the Westport Common Stock
Exchange Ratio and otherwise upon the same terms and conditions as such
outstanding options to purchase Westport Common Stock; provided, however, that
in the case of any option to which Section 421 of the Code applies by reason of
the qualifications under Section 422 or 423 of such Code, the exercise price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall comply with Section 424(a) of the
Code.
(b) At the Effective Time, the Westport Stock Plans shall be
assumed and adopted by Belco. At the Effective Time, automatically and without
any action on the part of the holder thereof, each outstanding employee or
director stock option of Belco outstanding at the Effective Time (the "Belco
Stock Options") granted under Belco's 1996 Stock Incentive Plan or Belco's 1996
Non-Employee Directors Stock Option Plan (collectively, the "Belco Stock Plans")
shall become an option to purchase that number of shares of Belco Common Stock
obtained by multiplying the number of share of Old Belco Common Stock issuable
upon the exercise of such option by the Belco Common Stock Exchange Ratio at an
exercise price per share equal to the per share exercise price of such option
divided by the Belco Common Stock Exchange Ratio and otherwise upon the same
terms and conditions a such outstanding options to purchase Old Belco Common
Stock; provided, however, that in the case of any option to which Section 421 of
the Code applies by reason of the qualifications under Section 422 or 423 of
such Code, the exercise price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall comply with
Section 424(a) of the Code; provided further, that the number of shares of Belco
Common Stock that may be purchased upon exercise of such Belco Stock Option
shall not include any fractional share and, upon exercise of such Belco Stock
Option, a cash payment shall be made for any fractional share based upon the
closing sales price of a share of Belco Common Stock as reported under "NYSE
Composite Transaction Reports" in the Wall Street Journal on the New York Stock
Exchange on the trading day immediately preceding the date of exercise. At the
Effective Time, automatically and without any action on the part of the holder
thereof, each Belco Stock Option shall, notwithstanding anything in the Belco
Stock Plans or any agreement governing the Belco Stock Options to the contrary,
become fully vested and exercisable and shall remain outstanding as of the
Effective Time and be subject to the same terms and conditions as provided in
the agreement under which such Belco Stock Option was granted, except as
otherwise provided in this Section 3.3(b).
(c) Belco shall take all corporate actions necessary to
reserve for issuance a sufficient number of shares of Belco Common Stock for
delivery upon exercise of (i) Westport Stock Options assumed by Belco pursuant
to Section 3.3(a) above and (ii) Belco Stock Options.
(d) As promptly as practicable after the Effective Time, Belco
shall file a Registration Statement on Form S-8 (or any successor or other
appropriate forms, as the case may be) with respect to the shares of Belco
Common Stock subject to Westport Stock Options and shall use all reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
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(e) At the Effective Time, the restrictions on disposition and
forfeiture provisions on all restricted shares of Belco Common Stock granted
under the Belco Stock Plans shall terminate without further action.
Section 3.4 No Fractional Shares. No fractional shares of Belco Common
Stock shall be issued in the Merger and fractional share interests shall not
entitle the owner thereof to vote or to any rights of a stockholder of Belco.
All holders of fractional shares of Belco Common Stock shall be entitled to
receive, in lieu thereof, an amount in cash (rounded to the nearest whole cent)
determined by multiplying the fraction of a share of Belco Common Stock to which
such holder would otherwise have been entitled by the closing sales price of a
share of Belco Common Stock as reported under "NYSE Composite Transaction
Reports" in The Wall Street Journal on the trading day prior to the Effective
Time.
Section 3.5 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx
00000, at 10:00 a.m., local time, on the day (the "Closing Date") on which all
of the conditions set forth in Article VIII hereof are satisfied or waived, or
at such other date and time as Westport and Belco shall otherwise agree.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BELCO
Belco represents and warrants to Westport that the statements contained
in this Article IV are true and correct, except as specifically set forth herein
or in the disclosure schedule delivered by Belco to Westport on the date of this
Agreement (the "Belco Disclosure Schedule"). The Belco Disclosure Schedule shall
be arranged in paragraphs corresponding to the numbered and lettered sections
contained in this Agreement. Belco represents and warrants to Westport as
follows:
Section 4.1 Organization and Qualification.
(a) Belco is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, is duly qualified to
do business as a foreign corporation and is in good standing in the
jurisdictions set forth in Section 4.1(a) of the Belco Disclosure Schedule,
which include each jurisdiction in which the character of Belco's properties or
the nature of its business makes such qualification necessary, except where the
failure to be so qualified or in good standing would not result in a Belco
Material Adverse Effect (as defined below). Belco has all requisite corporate or
other power and authority to own, use or lease its properties and to carry on
its business as it is now being conducted. Belco has made available to Westport
a complete and correct copy of its articles of incorporation and bylaws, each as
amended to date, and Belco's articles of incorporation and bylaws as so
delivered are in full force and effect. Belco is not in default in any respect
in the performance, observation or fulfillment of any provision of its articles
of incorporation or bylaws.
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(b) Section 4.1(b) of the Belco Disclosure Schedule lists the
name and jurisdiction of organization of each Subsidiary of Belco and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to do
business as a foreign corporation or other organization as of the date hereof.
Each of Belco's Subsidiaries that is a corporation has been duly organized, is
validly existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions listed in Section 4.1(b) of the Belco
Disclosure Schedule, which includes each jurisdiction in which the character of
such Subsidiary's properties or the nature of its business makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not result in a Belco Material Adverse Effect. Each of
Belco's Subsidiaries that is not a corporation has been duly organized, is
validly existing and in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business as a foreign entity and is in
good standing in the jurisdictions listed in Section 4.1(b) of the Belco
Disclosure Schedule, which includes each jurisdiction in which the character of
such Subsidiary's properties or the nature of its business makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not result in a Belco Material Adverse Effect. Each of
Belco's Subsidiaries has the requisite corporate or other power and authority to
own, use or lease its properties and to carry on its business as it is now being
conducted and as it is now proposed to be conducted. Belco has made available to
Westport a complete and correct copy of the articles of incorporation and bylaws
(or similar organizational documents) of each of Belco's Subsidiaries, each as
amended to date, and the articles of incorporation and bylaws (or similar
organizational documents) as so delivered are in full force and effect. No
Subsidiary of Belco is in default in any respect in the performance, observation
or fulfillment of any provision of its articles of incorporation or bylaws (or
similar organizational documents). Other than Belco's Subsidiaries, Belco does
not beneficially own or control, directly or indirectly, 5% or more of any class
of equity or similar securities of any Person.
(c) For purposes of this Agreement, (i) a "Belco Material
Adverse Effect" shall mean any change, effect, event, occurrence or state of
facts that is or could reasonably be expected to be materially adverse to the
condition (financial or otherwise), business, properties or results of
operations of Belco and its Subsidiaries taken as a whole or that could
reasonably be expected to materially impair the ability of Belco to perform its
obligations under this Agreement or to consummate the Merger; provided that none
of the following, alone or in combination, shall constitute a Belco Material
Adverse Effect or be considered in determining whether a Belco Material Adverse
Effect has occurred or will occur: any change, effect, event, occurrence, state
of facts or development arising out of, resulting from or relating to (x) the
economy in general, (y) the oil and gas exploration and production industry in
general (including, without limitation, changes in commodity prices, general
market prices and regulatory changes) or (z) the transactions contemplated by
this Agreement or the announcement thereof; and (ii) "Subsidiary" shall mean,
with respect to any party, any Person, of which (x) at least a majority of the
securities or other interests having by their terms voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such Person is directly or indirectly beneficially owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries, or (y) such party or any Subsidiary
of such party is a general partner of a partnership or a manager of a limited
liability company.
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Section 4.2 Capitalization.
(a) The authorized capital stock of Belco consists of
120,000,000 shares of Belco Common Stock and 10,000,000 shares of preferred
stock, par value $.01 per share, of which 4,370,000 shares have been designated
and issued as Belco Preferred Stock. As of the date of this Agreement, (i)
32,955,650 shares of Belco Common Stock were issued and outstanding of which
150,500 shares are shares of restricted stock subject to forfeiture provisions,
(ii) 2,930,000 shares of Belco Preferred Stock were issued and outstanding,
(iii) stock options to acquire 1,945,350 shares of Belco Common Stock were
outstanding under all stock option plans and agreements of Belco or its
Subsidiaries. All of the outstanding shares of Belco Common Stock and Belco
Preferred Stock are validly issued, fully paid and nonassessable, and free of
preemptive rights. Except as set forth above, and pursuant to this Agreement and
the Belco Preferred Stock, there are no outstanding subscriptions, options,
rights, warrants, convertible securities, stock appreciation rights, phantom
equity, or other agreements or commitments obligating Belco to issue, transfer,
sell, redeem, repurchase or otherwise acquire any shares of its capital stock of
any class or the capital stock of any Subsidiary or to provide funds to or make
any material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees of
bank obligations of Subsidiaries entered into in the ordinary course of business
or obligating Belco to grant, extend, accelerate the vesting of or enter into or
make payment with respect to any such subscription, option, right, warrant,
convertible security, stock appreciation right, phantom equity or other such
commitment or agreement. To the knowledge of Belco, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of Belco other than the Voting Agreements. Section 4.2(a) of
the Belco Disclosure Schedule shows the number of shares of Belco Common Stock
reserved for future issuance pursuant to stock options granted and outstanding
as of the date hereof under all stock option plans of Belco or its subsidiaries,
including the name of the holder of each option, the number of shares of Belco
Common Stock subject to each such option, the vesting schedule and exercise
price per share and the maximum term of that option. Section 4.2(a) of the Belco
Disclosure Schedule also indicates the number of shares of Belco Common Stock
issued as restricted stock or pursuant to outstanding share awards under any
plan of Belco or its Subsidiaries and the applicable service or performance
milestones or other restrictions on earning those shares.
(b) Except as set forth in Section 4.2(b) of the Belco
Disclosure Schedule, Belco is, directly or indirectly, the record and beneficial
owner of all of the outstanding shares of capital stock of each Belco
Subsidiary, there are no irrevocable proxies with respect to any such shares,
and no equity securities of any Belco Subsidiary are or may become required to
be issued by reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable or exercisable for, shares of any capital stock
of any Belco Subsidiary, and there are no contracts, commitments, understandings
or arrangements by which Belco or any Belco Subsidiary is or may be bound to
issue additional shares of capital stock of any Belco Subsidiary or securities
convertible into or exchangeable or exercisable for any such shares or
obligating any Belco Subsidiary to grant, extend, accelerate the vesting of or
enter into or make payment with respect to any subscription, option, right,
warrant, convertible security, stock appreciation right, phantom equity or other
such commitment or agreement. Except as set forth in Section 4.2(b) of the Belco
Disclosure Schedule, all of such shares so owned by Belco are validly issued,
fully paid and nonassessable
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and are owned by it free and clear of all liens, mortgages, pledges, security
interests, encumbrances, claims or charges of any kind (collectively, "Liens").
Section 4.3 Authority. Belco has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to obtaining the
Belco Stockholders' Approval as contemplated by Section 7.11, to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by Belco's Board of Directors, and no other
corporate proceedings on the part of Belco are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other than
obtaining the Belco Stockholders' Approval as contemplated by Section 7.11
hereof. This Agreement has been duly and validly executed and delivered by Belco
and, assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a valid and binding obligation of Belco enforceable
against Belco in accordance with its terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting the rights of creditors and of general principles of equity (the
"Enforceability Exception"). A copy of the resolutions adopted by the Belco
Board of Directors approving this Agreement and the Merger is contained in
Section 4.3 of the Belco Disclosure Schedule.
Section 4.4 Consents and Approvals; No Violation. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance by Belco of its obligations hereunder will not:
(a) subject to obtaining the Belco Stockholders' Approval as
contemplated by Section 7.11 hereof, conflict with any provision of the articles
of incorporation or bylaws of Belco or the certificates of incorporation or
bylaws (or other similar organizational documents) of any of its Subsidiaries;
(b) subject to obtaining the Belco Stockholders' Approval as
contemplated by Section 7.11 hereof, require any consent, waiver, approval,
order, authorization or permit of, or registration, filing with or notification
to, any governmental or regulatory authority or agency (a "Governmental
Authority"), except for (i) applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
of the Nevada Articles of Merger with the Nevada Secretary of State and the
Delaware Certificate of Merger with the Delaware Secretary of State, (iii) the
filing of the Registration Statement and the Proxy Statement/Prospectus (as each
is defined in Section 4.21 hereof) with the SEC in accordance with the Exchange
Act of 1934, as amended (the "Exchange Act"), (iv) such consents, approvals,
orders, authorizations and regulations, declarations and filings as may be
required under applicable state securities or blue sky laws, (v) such
governmental or tribal consents, qualifications or filings as are customarily
obtained or made following the transfer of interests in oil and gas properties
("Customary Post Closing Consents") and (vi) approvals and registrations that,
if not obtained or made, would not be reasonably expected to have a Belco
Material Adverse Effect;
(c) except as set forth in Section 4.4(c) of the Belco
Disclosure Schedule, result in any violation of or the breach of or constitute a
default (with or without notice or lapse of time or both) under, or give rise to
any right of termination, forfeiture, cancellation or
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acceleration, transfer fees or guaranteed payments or a loss of a material
benefit under, or require a consent, waiver or approval under any of the terms,
conditions or provisions of any Belco Material Contracts (as defined in Section
4.19), except for any such conflicts, violations, breaches, defaults,
terminations, cancellations or accelerations that, individually or in the
aggregate, would not reasonably be expected to have a Belco Material Adverse
Effect. Section 4.4(c) of the Belco Disclosure Schedule sets forth a correct and
complete list of Belco Material Contracts under which consents, waivers or
notifications are required prior to the consummation of the transactions
contemplated by this Agreement, which have not previously been obtained;
(d) conflict with or violate the provisions of any order,
writ, injunction, judgment, decree, statute, rule or regulation applicable to
Belco or any Subsidiary of Belco or any of their properties or assets except for
such conflicts or violations which, individually or in the aggregate, would not
result in a Belco Material Adverse Effect;
(e) result in the creation of any Lien upon any material
properties or assets or on any shares of capital stock of Belco or any of its
Subsidiaries under any agreement or instrument to which Belco or any of its
Subsidiaries is a party or by which Belco or any of its Subsidiaries or any of
their material properties or assets is bound; or
(f) except as set forth in Section 4.4(f) of the Belco
Disclosure Schedule, result in any holder of any securities of Belco being
entitled to appraisal, dissenters' or similar rights.
Section 4.5 Belco SEC Reports. Belco has timely filed with the
Securities and Exchange Commission (the "SEC"), and has heretofore made
available (provided that all documents filed by Belco electronically with the
SEC and publicly available prior to the date hereof shall be deemed available)
to Westport true and complete copies of, each form, registration statement,
report, schedule, proxy or information statement and other document (including
exhibits and amendments thereto), including without limitation its Annual
Reports to Stockholders incorporated by reference in certain of such reports,
required to be filed by it or its predecessors with the SEC since December 31,
1998 under the Securities Act of 1933, as amended (the "Securities Act") or the
Exchange Act (collectively, the "Belco SEC Reports"). As of the respective dates
such Belco SEC Reports were filed each of the Belco SEC Reports, including
without limitation any financial statements or schedules included therein, (a)
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and the applicable
rules and regulations promulgated thereunder, and (b) did not at the time they
were filed (or if amended or superceded by a filing prior to the date of this
Agreement, then as and on the date so amended or superceded) 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. None of Belco's
Subsidiaries is subject to the periodic reporting requirements of the Exchange
Act or is otherwise required to file any forms, reports or other documents with
the SEC.
Section 4.6 Belco Financial Statements. Each of the consolidated
financial statements of Belco contained in the Belco SEC Reports (including any
related notes and schedules) (the "Belco Financial Statements") have been
prepared from, and are in accordance with, the books
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and records of Belco and its consolidated Subsidiaries, comply in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as may be
indicated in the notes thereto and subject, in the case of quarterly financial
statements, to normal and recurring year end adjustments) and fairly present the
consolidated financial position of Belco and its Subsidiaries as of the date
thereof and the consolidated results of operations and cash flows (and changes
in financial position, if any) of Belco and its Subsidiaries for the periods
presented therein (subject to normal year end adjustments and the absence of
financial footnotes in the case of any unaudited interim financial statements).
Section 4.7 Absence of Undisclosed Liabilities. Except as disclosed in
the Belco SEC Reports filed and publicly available prior to the date of this
Agreement or in Section 4.7 of the Belco Disclosure Schedule, neither Belco nor
any of its Subsidiaries has incurred any liabilities or obligations of any
nature (contingent or otherwise) that, individually or in the aggregate, would
reasonably be likely to have a Belco Material Adverse Effect.
Section 4.8 Absence of Certain Changes. Except as disclosed in the
Belco SEC Reports filed and publicly available prior to the date of this
Agreement, as set forth in Section 4.8 of the Belco Disclosure Schedule or as
contemplated by this Agreement, since December 31, 2000 Belco and its
Subsidiaries have conducted their business in all material respects in the
ordinary course consistent with past practices and there has not been (a) any
change or development, or combination of changes or developments that,
individually or in the aggregate, would be reasonably likely to have a Belco
Material Adverse Effect, (b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
Belco, or any repurchase, redemption or other acquisition by Belco or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, Belco or any of its Subsidiaries, (c) any
amendment of any term of any outstanding security of Belco or any of its
Subsidiaries, (d) any change in any method of accounting or accounting practice
by Belco or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in generally accepted accounting principles or to
conform a Subsidiary's accounting policies and practices to those of Belco, (e)
any split, combination or reclassification of any of Belco's capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of Belco's capital stock,
(f) (i) any granting by Belco or any of its Subsidiaries to any current or
former director, executive officer or other employee of Belco or its
Subsidiaries of any increase in compensation, bonus or other benefits, except
for, with respect to any events occurring prior to the date hereof, increases in
base compensation or bonuses in the ordinary course of business consistent with
past practice and set forth on Section 4.8 of the Belco Disclosure Schedule and,
with respect to events occurring after the date hereof, as permitted by Section
6.1 or as was required under any employment agreements in effect as of the date
of the most recent audited financial statements included in the Belco SEC
Reports filed and publicly available prior to the date hereof, (ii) any granting
by Belco or any of its Subsidiaries to any such current or former director,
executive officer or employee of any increase in severance or termination pay,
(iii) any entry by Belco or any of its Subsidiaries into, or any amendments of,
any employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any current or former director, executive officer
or employee, or (iv) any amendment to, or modification of, any Belco
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Stock Option, (g) any tax election or any settlement of any income tax liability
or tax attributes that individually or in the aggregate is reasonably likely to
adversely affect the tax liability or tax attributes of Belco or any of its
Subsidiaries in any material respect or any settlement or compromise of any
material income tax liability, (h) any incurrence of indebtedness for money
borrowed by Belco or any of its Subsidiaries other than debt incurred in the
ordinary course of business in a manner consistent with past practice, (i) any
creation of a material Lien howsoever arising, in respect of or over any of the
material assets of Belco or any of its Subsidiaries, (j) other than, with
respect to acquisitions or dispositions occurring after the date hereof, as
would be permitted by Section 6.1, any material acquisition or disposition of
assets by Belco or any of its Subsidiaries, including the sale, lease, farm-out,
license or other disposition of any material properties or assets, except for
(i) sales of Hydrocarbons in the ordinary course of business, (ii) acquisitions
or dispositions set forth in Section 4.8 of the Belco Disclosure Schedule, (iii)
except as set forth in Section 4.8 of the Belco Disclosure Schedule,
dispositions of interests in exploratory prospects in exchange for interests in
other prospects from third parties which Belco in good faith believes to have an
equivalent value, consistent with past practices and (iv) sales of equipment
and/or replacements thereof in the ordinary course of business, (k) any
modification, assignment, termination or relinquishment of rights under any
Belco Material Contract by Belco or any of its Subsidiaries other than such
modification, assignment, termination or relinquishment in the ordinary course
of business consistent with past practice, (l) any damage, destruction or
casualty loss, whether or not covered by insurance, that individually or in the
aggregate would be reasonably likely to have a Belco Material Adverse Effect (it
being understood that the availability of any insurance coverage shall be taken
into account in determining whether such damage, destruction or loss would be
reasonably likely to have a Belco Material Adverse Effect) or (m) any making of
a loan or an advance by Belco or any of its Subsidiaries not in the ordinary
course of business.
Section 4.9 Taxes. Except as otherwise disclosed in Section 4.9 of the
Belco Disclosure Schedule and for matters that would not be reasonably likely,
individually or in the aggregate, to have a Belco Material Adverse Effect:
(a) As used in this Agreement,
(i) "Audit" shall mean any audit, assessment of
Taxes, other examination by any Tax Authority, proceeding or appeal of such
proceeding relating to Taxes;
(ii) "Taxes" shall mean any federal, state, local, or
foreign income, gross receipts, license, payroll, parking, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 50A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, ad valorem,
value added, alternative or add-on minimum, estimated tax, or other tax or
assessment of a similar nature of any kind whatsoever (whether imposed directly
or through withholding), including any interest, penalty, or addition thereto,
whether disputed or not, and including any obligations under any agreements or
arrangements with any other Person with respect to such amounts, or any
liability arising as a transferee or successor-in-interest.
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(iii) "Tax Authority" shall mean the Internal Revenue
Service and any other domestic or foreign Governmental Authority responsible for
the administration, imposition, collection, or administration of any Taxes; and
(iv) "Tax Returns" shall mean all federal, state,
local and foreign tax returns, declarations, statements, reports, schedules,
forms and information returns, including any schedules or attachments thereto,
and including any amendment thereof.
(b) Belco and each of its Subsidiaries have timely filed (or
have had timely filed on their behalf) or will file or cause to be timely filed,
all material Tax Returns required by applicable law to be filed by any of them
prior to or as of the Closing Date. All such Tax Returns and amendments thereto
are or will be true, complete and correct in all material respects.
(c) Belco and each of its Subsidiaries have paid (or have had
paid on their behalf), or where payment is not yet due, have established (or
have had established on their behalf and for their sole benefit and recourse),
or will establish or cause to be established on or before the Closing Date, an
adequate accrual for the payment of all material Taxes due with respect to any
period ending prior to or as of the Closing Date.
(d) No Audit by a Tax Authority is pending or threatened with
respect to any Tax Returns filed by, or Taxes due from, Belco or any Subsidiary.
No issue has been raised by any Tax Authority in any Audit of Belco or any of
its Subsidiaries that if raised with respect to any other period not so audited
could be expected to result in a material proposed deficiency for any period not
so audited. No material deficiency or adjustment for any Taxes has been
threatened, proposed, asserted or assessed against Belco or any of its
Subsidiaries. There are no liens for Taxes upon the assets of Belco or any of
its Subsidiaries, except liens for current Taxes not yet delinquent.
(e) Neither Belco nor any of its Subsidiaries has given or
been requested to give any waiver of statutes of limitations relating to the
payment of Taxes or have executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date.
(f) There are no Tax allocation or sharing agreements or
arrangements affecting any of Belco and its Subsidiaries. No payments are due or
will become due by any of Belco and its Subsidiaries pursuant to any such
agreement or arrangement or any tax indemnification agreement.
(g) Neither Belco nor any of its Subsidiaries (i) has been a
member of an affiliated group filing a consolidated federal income Tax return
(other than a group the common parent of which was Belco) or (ii) has any
liability for the Taxes of any Person (other than any of Belco and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.
(h) Section 4.9(h) of the Belco Disclosure Schedule lists (i)
all Tax Returns filed with respect to Belco for the prior three tax years, (ii)
the taxable years of Belco for which the statutes of limitations with respect to
Taxes have not expired, and (iii) those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated.
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(i) Belco has delivered to Westport complete and correct
copies of all Tax Returns, examination reports and statements of deficiencies
assessed against or agreed to by Belco for the prior three tax years.
(j) None of Belco or any of its Subsidiaries has been or is in
material violation of any federal, state, local or foreign tax law or the rules
and regulations of any Taxing Authority.
(k) Neither Belco nor any of its Subsidiaries have entered
into any agreement or arrangement with any Tax Authority that requires any of
Belco and its Subsidiaries to take any action or to refrain from taking any
action.
(l) No closing agreement pursuant to section 7121 of the Code
(or any predecessor provision) or any similar provision of any state, local, or
foreign law has been entered into by or with respect to Belco.
(m) No claim has ever been made by a Tax Authority in a
jurisdiction where Belco does not file Tax Returns that it is or may be subject
to taxation by that jurisdiction.
(n) The unpaid Taxes of Belco do not exceed the reserve for
tax liability (rather than any reserve for deferred taxes established to reflect
timing differences between book and tax income) set forth on the face of the
Belco Financial Statements (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of Belco in filing its Tax Returns.
(o) No election under any of sections 108, 168, 338, 441, 463,
472, 1017, 1033 or 4977 of the Code (or any predecessor provisions) has been
made or filed by or with respect to Belco. No consent to the application of
section 341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to Belco or any of Belco's assets.
(p) Neither Belco nor any of its Subsidiaries will be required
to include any amount in income for any taxable period as a result of a change
in accounting or pursuant to any agreement with any Tax Authority with respect
to any prior taxable period. There is no application pending with any Taxing
Authority requesting permission for any changes in any accounting method of
Belco. The Internal Revenue Service has not proposed any such adjustment or
change in accounting method with respect to Belco or any of its Subsidiaries.
(q) Belco has not made any payments, and is not obligated to
make any payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that would not be
deductible by Belco by reason of either or both of sections 162(m) and 263 of
the Code.
(r) Except as set forth on Section 4.9(r) of the Belco
Disclosure Schedule, Belco will not, as a result of the transactions
contemplated by this Agreement, be obligated to make a payment after the Closing
Date to an individual that would be a "parachute payment" as defined in Section
280G of the Code without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
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(s) All monies required to be withheld by Belco and paid to
any Tax Authority for all Taxes have been collected or withheld and either paid
to the respective Tax Authority or set aside in accounts for such purpose.
Section 4.10 Property.
(a) Except for goods and other property sold, used or
otherwise disposed of since March 31, 2001 in the ordinary course of business,
Belco and its Subsidiaries have Good and Marketable Title (each as defined
below), for oil and gas purposes, in and to all the proved reserves reflected in
Belco Reserve Report and the Internal Reserve Report (as defined in Section
4.17) as owned by Belco and its Subsidiaries, and defensible title for oil and
gas purposes to all other properties, interests in properties and assets, real
and personal, reflected in the unaudited balance sheet of Belco as of March 31,
2001 (the "Belco Balance Sheet") as owned by Belco and its Subsidiaries, free
and clear of any Liens, except: (i) Liens associated with obligations reflected
in Belco Reserve Report, the Internal Reserve Report or Belco Balance Sheet;
(ii) Liens for current taxes not yet due and payable, (iii) materialman's,
mechanic's, repairman's, employee's, contractor's, operator's, and other similar
liens, charges or encumbrances arising in the ordinary course of business (A) if
they have not been perfected pursuant to law, (B) if perfected, they have not
yet become due and payable or payment is being withheld as provided by law, or
(C) if their validity is being contested in good faith by appropriate action,
(iv) all rights to consent by, required notices to, filings with, or other
actions by any Governmental Authority in connection with the sale or conveyance
of oil and gas leases or interests if they are customarily obtained subsequent
to the sale or conveyance, and (v) such imperfections of title, easements and
Liens as would not reasonably be expected to have, individually or in the
aggregate, a Belco Material Adverse Effect. All leases and other agreements
pursuant to which Belco or any of its Subsidiaries leases or otherwise acquires
or obtains operating rights affecting any real or personal property are in good
standing, valid and effective and all royalties, rentals and other payments due
by Belco to any lessor of any such oil and gas leases have been paid, except in
each case, as would not, individually or in the aggregate, reasonably be
expected to have a Belco Material Adverse Effect. All major items of operating
equipment of Belco and its Subsidiaries are in good operating condition and in a
state of reasonable maintenance and repair, ordinary wear and tear excepted,
except as would not, individually or in the aggregate, reasonably be expected to
have a Belco Material Adverse Effect.
(b) The term "Good and Marketable Title" shall, for purposes
of this Section 4.10, with respect to Belco and its Subsidiaries, mean such
title that: (1) is deducible of record (from the records of the applicable
parish or county or (A) in the case of federal leases, from the records of the
applicable office of the Minerals Management Service or Bureau of Land
Management, (B) in the case of Indian leases, from the applicable office of the
Bureau of Indian Affairs, (C) in the case of state leases, from the records of
the applicable state land office) or is assignable to Belco or its Subsidiaries
out of an interest of record (as so defined) by reason of the performance by
Belco or its Subsidiaries of all operations required to earn an enforceable
right to such assignment; (2) is free from reasonable doubt to the end that a
prudent purchaser engaged in the business of the ownership, development and
operation of producing oil and gas properties with knowledge of all of the facts
and their legal bearing would be willing to accept and pay full value for the
same and a prudent lender would be willing to lend against it as collateral
without discount for title matters; (3) entitles Belco or its Subsidiaries to
receive not less than the interest
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set forth in the Belco Reserve Report or the Internal Reserve Report with
respect to each proved property evaluated therein under the caption "Net Revenue
Interest" or "NRI" without reduction during the life of such property except as
stated in the Belco Reserve Report or the Internal Reserve Report; (4) obligates
Belco and its Subsidiaries to pay costs and expenses relating to each such
proved property in an amount not greater than the interest set forth under the
caption "Working Interest" or "WI" in the Belco Reserve Report or the Internal
Reserve Report with respect to such property without increase over the life of
such property except as shown on the Belco Reserve Report or the Internal
Reserve Report; and (5) does not restrict the ability of Belco or its
Subsidiaries to utilize the properties as currently intended.
Section 4.11 Litigation. Except as disclosed in the Belco SEC Reports
filed and publicly available prior to the date of this Agreement or Section 4.11
of the Belco Disclosure Schedule and for matters that would not have a Belco
Material Adverse Effect, there is no suit, claim, arbitration, action,
proceeding, investigation or review pending or, to Belco's knowledge, threatened
against Belco or any Subsidiaries of Belco. Neither Belco nor any of its
Subsidiaries has been permanently or temporarily enjoined by any order, judgment
or decree of any court or any other Governmental Authority from engaging in or
continuing any conduct or practice in connection with the business, assets or
properties of Belco or such Subsidiary nor, to the knowledge of Belco, is Belco
or any Subsidiary of Belco under investigation by any Governmental Authority.
Except as disclosed in the Belco SEC Reports filed and publicly available prior
to the date of this Agreement or Section 4.11 of the Belco Disclosure Schedule,
there is not in existence any order, judgment, injunction, award, stipulation or
decree of any court or other tribunal or other agency or by arbitration
enjoining or requiring Belco or any of its Subsidiaries to take any action of
any kind with respect to its business, assets or properties. Notwithstanding the
foregoing, no representation or warranty in this Section 4.11 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 4.13.
Section 4.12 Employee Benefit Plans; ERISA.
(a) Section 4.12(a) of the Belco Disclosure Schedule contains
a true and complete list of the employee benefit plans or arrangements of any
type (including but not limited to plans described in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
sponsored, maintained or contributed to by Belco or any trade or business,
whether or not incorporated, which together with Belco would be deemed a "single
employer" within the meaning of Section 414(b), (c) or (m) of the Code or
section 4001(b)(1) of ERISA (a "Belco ERISA Affiliate") within six years prior
to the Effective Time ("Belco Benefit Plans"). Copies of all Belco Benefit Plans
(including all amendments and related trusts, insurance policies and similar
funding vehicles), summary plan descriptions, determination letters, and most
recent Form 5500's have been provided or made available to Westport.
(b) With respect to each Belco Benefit Plan, except as set
forth in Section 4.12(b) of the Belco Disclosure Schedule: (i) if intended to
qualify under section 401(a) or 401(k) of the Code, such plan satisfies the
requirements of such sections, has received a favorable determination letter
from the Internal Revenue Service with respect to its qualification, and its
related trust has been determined to be exempt from tax under section 501(a) of
the Code and, to the knowledge of Belco, nothing has occurred since the date of
such letter to adversely
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affect such qualification or exemption; (ii) each such plan has been
administered in substantial compliance with its terms and applicable law, except
for any noncompliance with respect to any such plan that could not reasonably be
expected to result in a Belco Material Adverse Effect; (iii) neither Belco nor
any Belco ERISA Affiliate has engaged in, and Belco and each Belco ERISA
Affiliate do not have any knowledge of any Person that has engaged in, any
transaction or acted or failed to act in any manner that would subject Belco or
any Belco ERISA Affiliate to any liability for a breach of fiduciary duty under
ERISA that could reasonably be expected to result in a Belco Material Adverse
Effect; (iv) no disputes are pending or, to the knowledge of Belco or any Belco
ERISA Affiliate, threatened; (v) neither Belco nor any Belco ERISA Affiliate has
engaged in, and Belco and each Belco ERISA Affiliate do not have any knowledge
of any Person that has engaged in, any transaction in violation of Section
406(a) or (b) of ERISA or Section 4975 of the Code for which no exemption exists
under Section 408 of ERISA or Section 4975(c) of the Code or Section 4975(d) of
the Code that could reasonably be expected to result in a Belco Material Adverse
Effect; (vi) there have been no "reportable events" within the meaning of
Section 4043 of ERISA for which the 30 day notice requirement of ERISA has not
been waived by the Pension Benefit Guaranty Corporation (the "PBGC"); (vii) all
contributions due have been made on a timely basis (within, where applicable,
the time limit established under section 302 of ERISA or Code section 412);
(viii) no notice of intent to terminate such plan has been given under section
4041 of ERISA and no proceeding has been instituted under section 4042 of ERISA
to terminate such plan; and (ix) except for defined benefit plans (if
applicable), such plan may be terminated on a prospective basis without any
continuing liability for benefits other than benefits accrued to the date of
such termination. All contributions made or required to be made under any Belco
Benefit Plan meet the requirements for deductibility under the Code, and all
contributions which are required and which have not been made have been properly
recorded on the books of Belco or a Belco ERISA Affiliate.
(c) No Belco Benefit Plan is a "multi-employer plan" (as
defined in section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of section 413(c) of the Code). No event has occurred with respect
to Belco or a Belco ERISA Affiliate in connection with which Belco could be
subject to any liability, lien or encumbrance with respect to any Belco Benefit
Plan or any employee benefit plan described in section 3(3) of ERISA maintained,
sponsored or contributed to by a Belco ERISA Affiliate under ERISA or the Code.
(d) Except as set forth in Section 4.12(d) of the Belco
Disclosure Schedule, no employees of Belco or any of its Subsidiaries are
covered by any severance or retention plan or similar arrangement.
Section 4.13 Environmental Liability. Except as set forth in Section
4.13 of the Belco Disclosure Schedule:
(a) The businesses of Belco and its Subsidiaries have been and
are operated in material compliance with all federal, state and local
environmental protection, health and safety or similar laws, statutes,
ordinances, restrictions, licenses, rules, regulations, permit conditions and
legal requirements, including without limitation the Federal Clean Water Act,
Oil Pollution Act, Safe Drinking Water Act, Resource Conservation & Recovery
Act, Clean Air Act, Outer Continental Shelf Lands Act, Comprehensive
Environmental Response, Compensation and
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Liability Act, and Emergency Planning and Community Right to Know Act, each as
amended and currently in effect (together, "Environmental Laws").
(b) Neither Belco nor any of its Subsidiaries has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, discharge, release, disposal, transport or handling of any chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum, petroleum products or any substance regulated under any Environmental
Law ("Hazardous Substances") at any of its properties or facilities, except in
material compliance with all Environmental Laws, and, to Belco's knowledge, no
generation, manufacture, processing, distribution, use, treatment, handling,
storage, discharge, release, disposal, transport or handling of any Hazardous
Substances has occurred at any property or facility owned, leased or operated by
Belco or any of its Subsidiaries except in material compliance with all
Environmental Laws.
(c) Neither Belco nor any of its Subsidiaries has received any
written notice from any Governmental Authority or third party or, to the
knowledge of Belco, any other communication alleging or concerning any material
violation by Belco or any of its Subsidiaries of, or responsibility or liability
of Belco or any of its Subsidiaries under, any Environmental Law. There are no
pending, or to the knowledge of Belco, threatened, claims, suits, actions,
proceedings or investigations with respect to the businesses or operations of
Belco or any of its Subsidiaries alleging or concerning any material violation
of or responsibility or liability under any Environmental Law that, if adversely
determined, could reasonably be expected to have a Belco Material Adverse
Effect, nor does Belco have any knowledge of any fact or condition that could
give rise to such a claim, suit, action, proceeding or investigation.
(d) Belco and its Subsidiaries are in possession of all
material approvals, permits, licenses, registrations and similar type
authorizations from all Governmental Authorities under all Environmental Laws
with respect to the operation of the businesses of Belco and its Subsidiaries;
there are no pending or, to the knowledge of Belco, threatened, actions,
proceedings or investigations seeking to modify, revoke or deny renewal of any
of such approvals, permits, licenses, registrations and authorizations; and
Belco does not have knowledge of any fact or condition that is reasonably likely
to give rise to any action, proceeding or investigation to modify, revoke or
deny renewal of any of such approvals, permits, licenses, registrations and
authorizations.
(e) Without in any way limiting the generality of the
foregoing, to the knowledge of Belco, (i) all offsite locations where Belco or
any of its Subsidiaries has transported, released, discharged, stored, disposed
or arranged for the disposal of pollutants, contaminants, hazardous wastes or
toxic substances are licensed disposal sites as required by law, (ii) all
underground storage tanks, and the operating status, capacity and contents of
such tanks, located on any property owned, leased or operated by Belco or any of
its Subsidiaries are identified in Section 4.13 of the Belco Disclosure Schedule
and (iii) no polychlorinated biphenyls ("PCBs") or PCB-containing items are used
or stored at any property owned, leased or operated by Belco or any of its
Subsidiaries except in compliance with Environmental Laws.
(f) There has been no discharge, release or disposal at any of
the properties owned or operated by Belco, its Subsidiaries, or a predecessor in
interest, or to the knowledge of
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Belco, at any disposal or treatment facility which received Hazardous Substances
generated by Belco, its Subsidiaries, or any predecessor in interest which could
reasonably be expected to result in liabilities that have a Belco Material
Adverse Effect.
(g) To Belco's knowledge, no pending claims have been asserted
or threatened to be asserted against Belco or its Subsidiaries for any personal
injury (including wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous Substances used, handled, generated, transported or
disposed by Belco or its Subsidiaries at property owned or operated by Belco or
its Subsidiaries, except as could not reasonably be expected to result in
liabilities that have a Belco Material Adverse Effect.
Section 4.14 Compliance with Applicable Laws. Neither Belco nor any of
its Subsidiaries has received any written notice from any Governmental Authority
that any such business has been or is being conducted in violation of or default
with respect to any applicable federal, state, local or foreign statute, law,
rule, order, decree or regulation, including, without limitation, any filing or
reporting requirement thereunder with respect to the conduct of its business, or
the ownership or operation of its business, except for violations or defaults
which, individually or in the aggregate, would not reasonably be expected to
result in a Belco Material Adverse Effect; provided, however, notwithstanding
the foregoing, no representation or warranty in this Section 4.14 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 4.13.
Section 4.15 Insurance. Section 4.15 of the Belco Disclosure Schedule
lists each of the insurance policies relating to Belco or its Subsidiaries which
are currently in effect. Belco has made available to Westport a true and correct
copy of each such policy or the binder therefor. With respect to each such
insurance policy or binder, none of Belco or any of its Subsidiaries is in
breach or default thereunder (including with respect to the payment of premiums
or the giving of notices), and to Belco's knowledge there has not been any
occurrence or any event which (with notice or the lapse of time or both) would
constitute such a breach or default or permit termination, modification or
acceleration under the policy, except for such breaches or defaults which,
individually or in the aggregate, would not reasonably be expected to result in
a Belco Material Adverse Effect. Section 4.15 of the Belco Disclosure Schedule
describes any self-insurance arrangements affecting Belco or its Subsidiaries.
The insurance policies listed in Section 4.15 of the Belco Disclosure Schedule
include all policies which are required in connection with the operation of the
businesses of Belco and its Subsidiaries as currently conducted by applicable
laws and all agreements relating to Belco and its Subsidiaries.
Section 4.16 Labor Matters; Employees.
(a) Except as set forth in Section 4.16(a) of the Belco
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of Belco, threatened
against or affecting Belco or any of its Subsidiaries and, during the past five
years, there has not been any such action, (ii) none of Belco or any of its
Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to with
any labor organization or employee association applicable to employees of Belco
or any of its Subsidiaries, (iii) none of the employees of Belco or any of its
Subsidiaries are represented by any labor organization and none
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of Belco or any of its Subsidiaries have any knowledge of any current union
organizing activities among the employees of Belco or any of its Subsidiaries
nor does any question concerning representation exist concerning such employees,
(iv) Belco and its Subsidiaries have each at all times been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no unfair labor practice charge or
complaint against any of Belco or any of its Subsidiaries pending or, to the
knowledge of Belco, threatened before the National Labor Relations Board or any
similar state or foreign agency, (vi) there is no grievance or arbitration
proceeding arising out of any collective bargaining agreement or other grievance
procedure relating to Belco or any of its Subsidiaries, (vii) neither the
Occupational Safety and Health Administration nor any corresponding state agency
has threatened to file any citation, and there are no pending citations,
relating to Belco or any of its Subsidiaries, and (viii) there is no employee or
governmental claim or investigation, including any charges to the Equal
Employment Opportunity Commission or state employment practice agency,
investigations regarding Fair Labor Standards Act compliance, audits by the
Office of Federal Contractor Compliance Programs, sexual harassment complaints
or demand letters or threatened claims.
(b) Since the enactment of the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN Act"), none of Belco or any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of any of Belco or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting any
site of employment or facility of Belco or any of its Subsidiaries, nor has
Belco or any of its Subsidiaries been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger application
of any similar state or local law, in each case that could reasonably be
expected to have a Belco Material Adverse Effect.
Section 4.17 Reserve Reports.
(a) All information (including, without limitation, the
statement of the percentage of reserves from the oil and gas xxxxx and other
interests evaluated therein to which Belco or its Subsidiaries are entitled and
the percentage of the costs and expenses related to such xxxxx or interests to
be borne by Belco or its Subsidiaries) set forth in the internal reserve report
prepared by Belco and issued on February 21, 2001 concerning the proved Oil and
Gas Interests of Belco and its Subsidiaries as of December 31, 2000 (the
"Internal Reserve Report") was, as of the date of such report and is, as of the
date of this Agreement, true and correct in all material respects and Belco has
no knowledge of any material errors in such information that existed at or
subsequent to the time of such issuance. Xxxxxx and Xxxxx, Ltd. audited the
Internal Reserve Report with respect to 84% of Belco's proved reserves and a
true and correct copy of such audit dated as of December 31, 2000 has been
provided to Westport (the "Belco Reserve Report"). For purposes of this
Agreement "Oil and Gas Interests" means direct and indirect interests in and
rights with respect to oil, gas, mineral, coalbed methane and related properties
and assets of any kind and nature, direct or indirect, including working,
leasehold and mineral interests and operating rights and royalties, overriding
royalties, production payments, net profit interests and other non-working
interests and non-operating interests; all interests in rights with respect to
oil,
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condensate, gas, casinghead gas and other liquid or gaseous hydrocarbons
(collectively, "Hydrocarbons") and other minerals or revenues therefrom, all
contracts in connection therewith and claims and rights thereto (including all
oil and gas leases, operating agreements, unitization and pooling agreements and
orders, division orders, transfer orders, mineral deeds, royalty deeds, oil and
gas sales, exchange and processing contracts and agreements, and in each case,
interests thereunder), surface interests, fee interests, reversionary interests,
reservations, and concessions; all easements, rights of way, licenses, permits,
leases, and other interests associated with, appurtenant to, or necessary for
the operation of any of the foregoing; and all interests in equipment and
machinery (including xxxxx, well equipment and machinery), oil and gas
production, gathering, transmission, treating, processing, and storage
facilities (including tanks, tank batteries, pipelines, and gathering systems),
pumps, water plants, electric plants, gasoline and gas processing plants,
refineries, and other tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the foregoing. Except
for changes generally affecting the oil and gas industry (including changes in
commodity prices), there has been no change in respect of the matters addressed
in the Internal Reserve Report that would have a Belco Material Adverse Effect.
(b) Set forth in Section 4.17(b) of the Belco Disclosure
Schedule is a list of all material Oil and Gas Interests that were included in
the Internal Reserve Report that have been disposed of prior to the date of this
Agreement.
(c) Except as set forth in Section 4.17(c)of the Belco
Disclosure Schedule, the Belco Reserve Report or the Internal Reserve Report,
the Oil and Gas Interests of Belco and its Subsidiaries are not limited in any
material respect by terms fixed by a certain number of years (other than primary
terms under oil and gas leases) or by provisions applicable to the Oil and Gas
Interests of Belco and its Subsidiaries which increase the royalty, overriding
royalty interest, net profits interest, or similar lease burdens.
Section 4.18 Permits. Immediately prior to the Effective Time and
except for Customary Post-Closing Consents, Belco or its Subsidiaries will hold
all of the permits, licenses, certificates, consents, approvals, entitlements,
plans, surveys, relocation plans, environmental impact reports and other
authorizations of Governmental Authorities ("Permits") required or necessary to
construct, own, operate, use and/or maintain their properties and conduct their
operations as presently conducted, except for such Permits, the lack of which,
individually or in the aggregate, would not have a Belco Material Adverse
Effect; provided, however, that notwithstanding the foregoing, no representation
or warranty in this Section 4.18 is made with respect to Permits issued pursuant
to Environmental Laws, which are covered exclusively by the provisions set forth
in Section 4.13.
Section 4.19 Material Contracts.
(a) Set forth in Section 4.19(a) of the Belco Disclosure
Schedule is a list of each contract, lease, indenture, agreement, arrangement or
understanding to which Belco or any of its Subsidiaries is subject that is of a
type that would be required to be included as an exhibit to a Form S-1
Registration Statement pursuant to the rules and regulations of the SEC if such
a registration statement was filed by Belco on the date hereof and no previous
filings had been made (collectively, the "Belco Material Contracts").
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(b) Except as set forth in Section 4.19(a) or 4.19(b) of the
Belco Disclosure Schedule, the Oil and Gas Interests of Belco and its
Subsidiaries are not subject to (i) any instrument or agreement evidencing or
related to indebtedness for borrowed money, whether directly or indirectly, or
(ii) any agreement not entered into in the ordinary course of business in which
the amount involved is in excess of $1,500,000. Except for such matters that,
individually or in the aggregate, would not be reasonably expected to have a
Belco Material Adverse Effect, with respect to Belco Material Contracts, (A) all
Belco Material Contracts are in full force and effect and are the valid and
legally binding obligations of Belco or its Subsidiaries, as the case may be,
and are enforceable in accordance with their respective terms subject to the
Enforceability Exception; (B) Belco is not in material breach or default (nor
does there exist any condition which upon the passage of time or the giving of
notice or both would reasonably be expected to cause such a breach or default)
with respect to, and to the knowledge of Belco, no other party to any Belco
Material Contract is in material breach or default with respect to, its
obligations thereunder, including with respect to payments or otherwise; (C) no
party to any Belco Material Contract has given written notice of any action to
terminate, cancel, rescind or procure a judicial reformation thereof; and (D) no
Belco Material Contract contains any provision that prevents Belco or any of its
Subsidiaries from owning, managing and operating the Oil and Gas Interests of
Belco and its Subsidiaries in accordance with historical practices.
(c) As of the date of this Agreement, except as set forth in
the Belco Reserve Report or the Internal Reserve Report or as set forth on
Schedule 4.19(c) of the Belco Disclosure Schedule, with respect to
authorizations for expenditure executed on or after March 31, 2001, (i) there
are no material outstanding calls for payments that are due or that Belco or its
Subsidiaries are committed to make that have not been made; (ii) there are no
material operations with respect to which Belco or its Subsidiaries have become
a non-consenting party; and (iii) there are no commitments for the material
expenditure of funds for drilling or other capital projects other than projects
with respect to which the operator is not required under the applicable
operating agreement to seek consent.
Section 4.20 Required Stockholder Vote or Consent. The only vote of the
holders of any class or series of Belco's capital stock that is necessary to
consummate the Merger and the other transactions contemplated by this Agreement
is the approval by the holders of a majority of the outstanding shares of Belco
Common Stock, on the applicable record date, of (i) this Agreement, which
contemplated transactions include, among others, the amendment of the Belco
articles of incorporation in the form set forth on Exhibit 2.1 hereto and the
appointment of the persons to Belco's board of directors as set forth in Exhibit
2.3 hereto, and (ii) the increase in the number of shares of Belco Common Stock
approved for issuance under the Westport 2000 Stock Incentive Plan (the "Belco
Stockholders' Approval"). No other vote of the stockholders of Belco is required
by applicable law, the articles of incorporation or bylaws of Belco or otherwise
in order for Belco to consummate the Merger and the transactions contemplated
hereby.
Section 4.21 Proxy Statement/Prospectus; Registration Statement. None
of the information to be supplied by Belco for inclusion in (a) the joint proxy
statement relating to the Belco Special Meeting and the Westport Special Meeting
(in each case, as defined below) (also constituting the prospectus in respect of
Belco Common Stock into which shares of Westport Common Stock will be converted)
(the "Proxy Statement/Prospectus"), to be filed by Belco and Westport with the
SEC, and any amendments or supplements thereto, or (b) the Registration
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Statement on Form S-4 (the "Registration Statement") to be filed by Belco with
the SEC in connection with the Merger, and any amendments or supplements
thereto, will, at the respective times such documents are filed, and, in the
case of the Proxy Statement/Prospectus, at the time the Proxy
Statement/Prospectus or any amendment or supplement thereto is first mailed to
stockholders of Belco, at the time such stockholders vote or consent on approval
of this Agreement and at the Effective Time, and, in the case of the
Registration Statement, when it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be made therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
Section 4.22 Intellectual Property. Belco or its Subsidiaries own, or
are licensed or otherwise have the right to use, all patents, patent rights,
trademarks, rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights, technology, know-how, processes, seismic license or software
agreements and other proprietary intellectual property rights and computer
programs ("Intellectual Property") currently used in the conduct of the business
of Belco and its Subsidiaries, except where the failure to so own or otherwise
have the right to use such intellectual property would not, individually or in
the aggregate, be reasonably expected to have a Belco Material Adverse Effect.
No Person has notified either Belco or any of its Subsidiaries in writing that
their use of the Intellectual Property infringes on the rights of any Person,
subject to such claims and infringements as do not, individually or in the
aggregate, give rise to any liability on the part of Belco and its Subsidiaries
that could have a Belco Material Adverse Effect, and, to Belco's knowledge, no
Person is infringing on any right of Belco or any of its Subsidiaries with
respect to any such Intellectual Property. No claims are pending or, to Belco's
knowledge, threatened that Belco or any of its Subsidiaries is infringing the
rights of any Person with regard to any Intellectual Property.
Section 4.23 Hedging; Derivatives. As of the date of this Agreement,
Section 4.23 of the Belco Disclosure Schedule sets forth for the periods shown
obligations of Belco and each of its Subsidiaries for the delivery of
Hydrocarbons attributable to any of the properties of Belco or any of its
Subsidiaries in the future on account of prepayment, advance payment,
take-or-pay or similar obligations without then or thereafter being entitled to
receive full value therefor. Except as set forth in Section 4.23 of the Belco
Disclosure Schedule, as of the date of this Agreement, neither Belco nor any of
its Subsidiaries is bound by futures, hedge, swap, collar, put, call, floor,
cap, option, interest rate swap or other contracts that are intended to benefit
from, relate to or reduce or eliminate the risk of fluctuations in the price of
commodities, including Hydrocarbons, or securities.
Section 4.24 Brokers. No broker, finder or investment banker (other
than Xxxxxx Xxxxxxx & Co., Inc., the fees and expenses of which will be paid by
Belco) is entitled to any brokerage, finder's fee or other fee or commission
payable by Belco or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
Belco or any of its Subsidiaries. True and correct copies of all agreements and
engagement letters currently in effect with Xxxxxx Xxxxxxx & Co., Inc. (the
"Belco Engagement Letter") have been provided to Westport.
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Section 4.25 Tax-Free Reorganization. To its knowledge, after
consulting with its Tax counsel, neither Belco nor any of its affiliates has
taken or agreed to take any action that could reasonably be expected to prevent
the Merger from constituting a transaction qualifying as a reorganization under
section 368(a) of the Code.
Section 4.26 Fairness Opinion. The Board of Directors of Belco has
received a written opinion from Xxxxxx Xxxxxxx & Co., Inc. dated the date of
this Agreement to the effect that, as of the date of such opinion, the Belco
Common Stock Exchange Ratio is fair to the holders of Belco Common Stock from a
financial point of view. A true and complete copy of such opinion has been given
to Westport.
Section 4.27 Takeover Laws. Belco and the Board of Directors of Belco
have each taken all action required to be taken by it in order to exempt this
Agreement, and the transactions contemplated hereby from, and this Agreement and
the transactions contemplated hereby are exempt from, the requirements of any
"moratorium," "control share," "fair price," "affiliate transaction," "business
combination" or other antitakeover laws and regulations the State of Nevada. The
bylaws of Belco have been amended so that Belco is not subject to the Nevada
Control Share Act.
Section 4.28 No Existing Discussions. As of the date of this Agreement,
Belco has ceased, and has instructed its directors, officers, financial
advisors, representatives, employees and agents to cease, all direct and
indirect discussions and negotiations with any other party that were ongoing
immediately prior to the date hereof with respect to an Acquisition Proposal (as
defined in Section 7.2).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF WESTPORT
Westport represents and warrants to Belco that the statements contained
in this Article V are true and correct, except as specifically set forth herein
or in the disclosure schedule delivered by Westport to Belco on the date of this
Agreement (the "Westport Disclosure Schedule"). The Westport Disclosure Schedule
shall be arranged in paragraphs corresponding to the numbered and lettered
sections contained in this Agreement. Westport represents and warrants to Belco
as follows:
Section 5.1 Organization and Qualification.
(a) Westport is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is duly qualified
to do business as a foreign corporation and is in good standing in the
jurisdictions set forth in Section 5.1(a) of the Westport Disclosure Schedule,
which include each jurisdiction in which the character of Westport's properties
or the nature of its business makes such qualification necessary, except where
the failure to be so qualified or in good standing would not result in a
Westport Material Adverse Effect (as defined below). Westport has all requisite
corporate or other power and authority to own, use or lease its properties and
to carry on its business as it is now being conducted.
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Westport has made available to Belco a complete and correct copy of its
certificate of incorporation and bylaws, each as amended to date, and Westport's
certificate of incorporation and bylaws as so delivered are in full force and
effect. Westport is not in default in any respect in the performance,
observation or fulfillment of any provision of its certificate of incorporation
or bylaws.
(b) Section 5.1(b) of the Westport Disclosure Schedule lists
the name and jurisdiction of organization of each Subsidiary of Westport and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to do
business as a foreign corporation or other organization as of the date hereof.
Each of Westport's Subsidiaries that is a corporation has been duly organized,
is validly existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions listed in Section 5.1(b) of the Westport
Disclosure Schedule, which includes each jurisdiction in which the character of
such Subsidiary's properties or the nature of its business makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not result in a Westport Material Adverse Effect. Each of
Westport's Subsidiaries that is not a corporation has been duly organized, is
validly existing and in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business as a foreign entity and is in
good standing in the jurisdictions listed in Section 5.1(b) of the Westport
Disclosure Schedule, which includes each jurisdiction in which the character of
such Subsidiary's properties or the nature of its business makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not result in a Westport Material Adverse Effect. Each of
Westport's Subsidiaries has the requisite corporate or other power and authority
to own, use or lease its properties and to carry on its business as it is now
being conducted and as it is now proposed to be conducted. Westport has made
available to Belco a complete and correct copy of the certificate of
incorporation and bylaws (or similar organizational documents) of each of
Westport's Subsidiaries, each as amended to date, and the certificate of
incorporation and bylaws (or similar organizational documents) as so delivered
are in full force and effect. No Subsidiary of Westport is in default in any
respect in the performance, observation or fulfillment of any provision of its
certificate of incorporation or bylaws (or similar organizational documents).
Other than Westport's Subsidiaries or as set forth in Section 5.1(b) of the
Westport Disclosure Schedule, Westport does not beneficially own or control,
directly or indirectly, 5% or more of any class of equity or similar securities
of any Person.
(c) For purposes of this Agreement, a "Westport Material
Adverse Effect" shall mean any change, effect, event, occurrence or state of
facts that is or could reasonably be expected to be materially adverse to the
condition (financial or otherwise), business, properties or results of
operations of Westport and its Subsidiaries, taken as a whole or that could
reasonably be expected to materially impair the ability of Westport to perform
its obligations under this Agreement or to consummate the Merger; provided that
none of the following, alone or in combination, shall constitute a Westport
Material Adverse Effect or be considered in determining whether a Westport
Material Adverse Effect has occurred or will occur: any change, effect, event,
occurrence, state of facts or development arising out of, resulting from or
relating to (x) the economy in general, (y) the oil and gas exploration and
production industry in general (including, without limitation, changes in
commodity prices, general market prices and
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regulatory changes) or (z) the transactions contemplated by this Agreement or
the announcement thereof.
Section 5.2 Capitalization.
(a) The authorized capital stock of Westport consists of
70,000,000 shares of Westport Common Stock, and 5,000,000 shares of preferred
stock of Westport, par value $0.01 per share. As of the date of this Agreement,
(i) 38,462,591 shares of Westport Common Stock were issued and outstanding of
which 26,550 shares are shares of restricted stock subject to forfeiture
provisions, (ii) no shares of preferred stock outstanding and (iii) stock
options to acquire 2,218,238 shares of Westport Common Stock were outstanding
under all stock option plans and agreements of Westport and its Subsidiaries.
All of the outstanding shares of Westport Common Stock are validly issued, fully
paid and nonassessable, and free of preemptive rights. Except as set forth
above, and other than this Agreement, there are no outstanding subscriptions,
options, rights, warrants, convertible securities, stock appreciation rights,
phantom equity, or other agreements or commitments obligating Westport to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock of any class or the capital stock of any Subsidiary or to provide
funds to or make any material investment (in the form of a loan, capital
contribution or otherwise) in any such Subsidiary or any other entity other than
guarantees of bank obligations of Subsidiaries entered into in the ordinary
course of business or obligating Westport to grant, extend, accelerate the
vesting of or enter into or make payment with respect to any such subscription,
option, right, warrant, convertible security, stock appreciation right, phantom
equity or other such commitment or agreement. To the knowledge of Westport,
there are no voting trusts, proxies or other voting agreements or understandings
with respect to the shares of capital stock of Westport, other than (i) the
Voting Agreements and (ii) that certain Shareholders Agreement dated as of March
9, 2000, by and among Westport and certain other parties.
(b) Except as set forth on Section 5.2(b) of the Westport
Disclosure Schedule, Westport is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock of each
Westport Subsidiary, there are no irrevocable proxies with respect to any such
shares, and no equity securities of any Westport Subsidiary are or may become
required to be issued by reason of any options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable or exercisable for, shares of any
capital stock of any Westport Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which Westport or any Westport
Subsidiary is or may be bound to issue additional shares of capital stock of any
Westport Subsidiary or securities convertible into or exchangeable or
exercisable for any such shares or obligating any Westport Subsidiary to grant,
extend, accelerate the vesting of or enter into or make payment with respect to
any subscription, option, right, warrant, convertible security, stock
appreciation right, phantom equity or other such commitment or agreement. Except
as set forth in Section 5.2(b) of the Westport Disclosure Schedule, all of such
shares so owned by Westport are validly issued, fully paid and nonassessable and
are owned by it free and clear of all Liens.
Section 5.3 Authority. Westport has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to Westport
obtaining the Westport
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Stockholders' Approval as contemplated by Section 7.11, to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by Westport's Board of Directors, and no other
corporate proceedings on the part of Westport are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other than
obtaining the Westport Stockholders' Approval as contemplated by Section 7.11
hereof. This Agreement has been duly and validly executed and delivered by
Westport, and, assuming the due authorization, execution and delivery hereof by
the other parties hereto, constitutes a valid and binding obligation of Westport
enforceable against Westport in accordance with its terms, subject to the
Enforceability Exception. A copy of the resolutions adopted by Westport's Board
of Directors approving this Agreement and the Merger is contained in Section 5.3
of the Westport Disclosure Schedule.
Section 5.4 Consents and Approvals; No Violation. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance by Westport of its obligations hereunder will not:
(a) subject to obtaining the Westport Stockholders' Approval
as contemplated by Section 7.11 hereof, conflict with any provision of the
certificate of incorporation or bylaws of Westport or the certificates of
incorporation or bylaws (or other similar organizational documents) of any of
its Subsidiaries;
(b) subject to obtaining the Westport Stockholders' Approval
as contemplated by Section 7.11 hereof, require any consent, waiver, approval,
order, authorization or permit of, or registration, filing with or notification
to, any Governmental Authority, except for (i) applicable requirements of the
HSR Act, (ii) the filing of the Nevada Articles of Merger with the Nevada
Secretary of State and the Delaware Certificate of Merger with the Delaware
Secretary of State, (iii) the filing of the Proxy Statement/Prospectus with the
SEC in accordance with the Securities Act and the Exchange Act, (iv) such
consents, approvals, orders, authorizations and regulations, declarations and
filings as may be required under applicable state securities or blue sky laws,
(v) Customary Post-Closing Consents and (vi) approvals and registrations that,
if not obtained or made, would not be reasonably expected to have a Westport
Material Adverse Effect;
(c) except as set forth in Section 5.4(c) of the Westport
Disclosure Schedule, result in any violation of or the breach of or constitute a
default (with or without notice or lapse of time or both) under, or give rise to
any right of termination, forfeiture, cancellation or acceleration, transfer
fees or guaranteed payments or a loss of a material benefit under, or require a
consent, waiver or approval under any of the terms, conditions or provisions of
any Westport Material Contracts (as defined in Section 5.18), except for any
such conflicts, violations, breaches, defaults, terminations, cancellations or
accelerations that, individually or in the aggregate, would not reasonably be
expected to have a Westport Material Adverse Effect. Section 5.4(c) of the
Westport Disclosure Schedule sets forth a correct and complete list of the
Westport Material Contracts under which consents, waivers or notifications are
required prior to the consummation of the transactions contemplated by this
Agreement, which have not previously been obtained;
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(d) conflict with or violate the provisions of any order,
writ, injunction, judgment, decree, statute, rule or regulation applicable to
Westport or any Subsidiary of Westport or any of their properties or assets,
except for such conflicts or violations which, individually or in the aggregate,
would not result in a Westport Material Adverse Effect;
(e) result in the creation of any Lien upon any material
properties or assets or on any shares of capital stock of Westport or any of its
Subsidiaries under any agreement or instrument to which Westport or any of its
Subsidiaries is a party or by which Westport or any of its Subsidiaries or any
of their material properties or assets is bound; or
(f) result in any holder of any securities of Westport being
entitled to appraisal, dissenters' or similar rights.
Section 5.5 Westport SEC Reports. Westport has timely filed with the
SEC, and has heretofore made available (provided that all documents filed by
Westport electronically with the SEC and publicly available prior to the date
hereof shall be deemed available) to Belco true and complete copies of, each
form, registration statement, report, schedule, proxy or information statement
and other document (including exhibits and amendments thereto), including
without limitation its Annual Reports to Shareholders incorporated by reference
in certain of such reports, required to be filed with the SEC since October 19,
2000 under the Securities Act or the Exchange Act (collectively, the "Westport
SEC Reports"). As of the respective dates such Westport SEC Reports were filed
each of the Westport SEC Reports, including, without limitation, any financial
statements or schedules included therein, (a) complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and the applicable rules and regulations promulgated
thereunder, and (b) did not at the time they were filed (or if amended or
superceded by a filing prior to the date of this Agreement, then as and on the
date so amended or superceded) 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. None of Westport's Subsidiaries is subject to
the periodic reporting requirements of the Exchange Act or is otherwise required
to file any forms, reports or other documents with the SEC.
Section 5.6 Westport Financial Statements. Each of the consolidated
financial statements of Westport contained in the Westport SEC Reports
(including any related notes and schedules) (the "Westport Financial
Statements") have been prepared from, and are in accordance with, the books and
records of Westport and its consolidated Subsidiaries, comply in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto and subject,
in the case of quarterly financial statements, to normal and recurring year end
adjustments) and fairly present the consolidated financial position of Westport
and its Subsidiaries as of the date thereof and the consolidated results of
operations and cash flows (and changes in financial position, if any) of
Westport and its Subsidiaries for the periods presented therein (subject to
normal year end adjustments and the absence of financial footnotes in the case
of any unaudited interim financial statements).
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Section 5.7 Absence of Undisclosed Liabilities. Except as disclosed in
the Westport SEC Reports filed and publicly available prior to the date of this
Agreement or in Section 5.7 of the Westport Disclosure Schedule, neither
Westport nor any of its Subsidiaries has incurred any liabilities or obligations
of any nature (contingent or otherwise) that, individually or in the aggregate,
would reasonably be likely to have a Westport Material Adverse Effect.
Section 5.8 Absence of Certain Changes. Except as disclosed in the
Westport SEC Reports filed and publicly available prior to the date of this
Agreement, as set forth in Section 5.8 of the Westport Disclosure Schedule or as
contemplated by this Agreement, since December 31, 2000 Westport and its
Subsidiaries have conducted their business in all material respects in the
ordinary course consistent with past practices and there has not been (a) any
change or development, or combination of changes or developments that,
individually or in the aggregate, would be reasonably likely to have a Westport
Material Adverse Effect, (b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
Westport, or any repurchase, redemption or other acquisition by Westport or any
of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, Westport or any of its
Subsidiaries, (c) any amendment of any term of any outstanding security of
Westport or any of its Subsidiaries, (d) any change in any method of accounting
or accounting practice by Westport, or any of its Subsidiaries, except for any
such change required by reason of a concurrent change in generally accepted
accounting principles or to conform a Subsidiary's accounting policies and
practices to those of Westport, (e) any split, combination or reclassification
of any of Westport's capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Westport's capital stock, (f) any tax election or any settlement
of any income tax liability or tax attributes that individually or in the
aggregate is reasonably likely to adversely affect the tax liability or tax
attributes of Westport or any of its Subsidiaries in any material respect or any
settlement or compromise of any material income tax liability, (g) any
modification, assignment, termination or relinquishment of rights under any
Westport Material Contract by Westport or any of its Subsidiaries other than
such modification, assignment, termination or relinquishment in the ordinary
course of business consistent with past practice, or (h) any damage, destruction
or casualty loss, whether or not covered by insurance, that individually or in
the aggregate would be reasonably likely to have a Westport Material Adverse
Effect (it being understood that the availability of any insurance coverage
shall be taken into account in determining whether such damage, destruction or
loss would be reasonably likely to have a Westport Material Adverse Effect).
Section 5.9 Taxes. Except as otherwise disclosed in Section 5.9 of the
Westport Disclosure Schedule and for matters that would not be reasonably
likely, individually or in the aggregate, to have a Westport Material Adverse
Effect:
(a) Westport and each of its Subsidiaries have timely filed
(or have had timely filed on their behalf) or will file or cause to be timely
filed, all material Tax Returns required by applicable law to be filed by any of
them prior to or as of the Closing Date. All such Tax Returns and amendments
thereto are or will be true, complete and correct in all material respects.
(b) Westport and each of its Subsidiaries have paid (or have
had paid on their behalf), or where payment is not yet due, have established (or
have had established on their
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behalf and for their sole benefit and recourse), or will establish or cause to
be established on or before the Closing Date, an adequate accrual for the
payment of all material Taxes due with respect to any period ending prior to or
as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with
respect to any Tax Returns filed by, or Taxes due from, Westport or any
Subsidiary. No issue has been raised by any Tax Authority in any Audit of
Westport or any of its Subsidiaries that if raised with respect to any other
period not so audited could be expected to result in a material proposed
deficiency for any period not so audited. No material deficiency or adjustment
for any Taxes has been threatened, proposed, asserted or assessed against
Westport or any of its Subsidiaries. There are no liens for Taxes upon the
assets of Westport or any of its Subsidiaries, except liens for current Taxes
not yet delinquent.
(d) Neither Westport nor any of its Subsidiaries has given or
been requested to give any waiver of statutes of limitations relating to the
payment of Taxes or have executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date.
(e) There are no Tax allocation or sharing agreements or
arrangements affecting any of Westport and its Subsidiaries. No payments are due
or will become due by any of Westport and its Subsidiaries pursuant to any such
agreement or arrangement or any tax indemnification agreement.
(f) Neither Westport nor any of its Subsidiaries (i) has been
a member of an affiliated group filing a consolidated federal income Tax return
(other than a group the common parent of which was Westport) or (ii) has any
liability for the Taxes of any Person (other than any of Westport and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.
(g) Section 5.9(g) of the Westport Disclosure Schedule lists
(i) all Tax Returns filed with respect to Westport for the prior three tax
years, (ii) the taxable years of Westport for which the statutes of limitations
with respect to Taxes have not expired, and (iii) those years for which
examinations have been completed, those years for which examinations are
presently being conducted, and those years for which examinations have not yet
been initiated.
(h) Westport has delivered to Belco complete and correct
copies of all Tax Returns, examination reports and statements of deficiencies
assessed against or agreed to by Westport for the prior three tax years.
(i) None of Westport or any of its Subsidiaries has been or is
in material violation of any federal, state, local or foreign tax law or the
rules and regulations of any Tax Authority.
(j) Neither Westport nor any of its Subsidiaries have entered
into any agreement or arrangement with any Tax Authority that requires any of
Westport and its Subsidiaries to take any action or to refrain from taking any
action.
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(k) No closing agreement pursuant to section 7121 of the Code
(or any predecessor provision) or any similar provision of any state, local, or
foreign law has been entered into by or with respect to Westport.
(l) No claim has ever been made by a Tax Authority in a
jurisdiction where Westport does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(m) The unpaid Taxes of Westport do not exceed the reserve for
tax liability (rather than any reserve for deferred taxes established to reflect
timing differences between book and tax income) set forth on the face of the
Westport Financial Statements (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of Westport in filing its Tax Returns.
(n) Except as set forth on Section 5.9(n) of the Westport
Disclosure Schedule, No election under any of sections 108, 168, 338, 441, 463,
472, 1017, 1033 or 4977 of the Code (or any predecessor provisions) has been
made or filed by or with respect to Westport. No consent to the application of
section 341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to Westport or any of Westport's assets.
(o) Neither Westport nor any of its Subsidiaries will be
required to include any amount in income for any taxable period as a result of a
change in accounting or pursuant to any agreement with any Tax Authority with
respect to any prior taxable period. There is no application pending with any
Tax Authority requesting permission for any changes in any accounting method of
Westport. The Internal Revenue Service has not proposed any such adjustment or
change in accounting method with respect to Westport or any of its Subsidiaries.
(p) Westport has not made any payments, and is not obligated
to make any payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that would not be
deductible by Westport by reason of either or both of sections 162(m) and 263 of
the Code.
(q) Except as set forth on Section 5.9(q) of the Westport
Disclosure Schedule, Westport will not, as a result of the transactions
contemplated by this Agreement, be obligated to make a payment after the Closing
Date to an individual that would be a "parachute payment" as defined in section
280G of the Code without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
(r) All monies required to be withheld by Westport and paid to
any Tax Authority for all Taxes have been collected or withheld and either paid
to the respective Tax Authority or set aside in accounts for such purpose.
Section 5.10 Property.
(a) Except for goods and other property sold, used or
otherwise disposed of since March 31, 2001 in the ordinary course of business,
Westport and its Subsidiaries have Good and Marketable Title (as defined below),
for oil and gas purposes, in and to all the proved reserves reflected in the
Westport Reserve Report (as defined in Section 5.17) as owned by the Westport
and its Subsidiaries, and defensible title for oil and gas purposes to all other
properties,
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interests in properties and assets, real and personal, reflected in the
unaudited balance sheet of Westport as of March 31, 2001 (the "Westport Balance
Sheet") as owned by Westport and its Subsidiaries, free and clear of any Liens,
except: (i) Liens associated with obligations reflected in the Westport Reserve
Report or the Westport Balance Sheet; (ii) Liens for current taxes not yet due
and payable, (iii) materialman's, mechanic's, repairman's, employee's,
contractor's, operator's, and other similar liens, charges or encumbrances
arising in the ordinary course of business (A) if they have not been perfected
pursuant to law, (B) if perfected, they have not yet become due and payable or
payment is being withheld as provided by law, or (C) if their validity is being
contested in good faith by appropriate action, (iv) all rights to consent by,
required notices to, filings with, or other actions by any Governmental
Authority in connection with the sale or conveyance of oil and gas leases or
interests if they are customarily obtained subsequent to the sale or conveyance,
and (v) such imperfections of title, easements and Liens as would not reasonably
be expected to have, individually or in the aggregate, a Westport Material
Adverse Effect. All leases and other agreements pursuant to which Westport or
any of its Subsidiaries leases or otherwise acquires or obtains operating rights
affecting any real or personal property are in good standing, valid and
effective and all royalties, rentals and other payments due by Westport to any
lessor of any such oil and gas leases have been paid, except in each case, as
would not, individually or in the aggregate, reasonably be expected to have a
Westport Material Adverse Effect. All major items of operating equipment of
Westport and its Subsidiaries are in good operating condition and in a state of
reasonable maintenance and repair, ordinary wear and tear excepted, except as
would not, individually or in the aggregate, reasonably be expected to have a
Westport Material Adverse Effect.
(b) The term "Good and Marketable Title" shall, for purposes
of this Section 5.10, with respect to Westport and its Subsidiaries, mean such
title that: (1) is deducible of record (from the records of the applicable
parish or county or (A) in the case of federal leases, from the records of the
applicable office of the Minerals Management Service or Bureau of Land
Management, (B) in the case of Indian leases, from the applicable office of the
Bureau of Indian Affairs, (C) in the case of state leases, from the records of
the applicable state land office) or is assignable to Westport or its
Subsidiaries out of an interest of record (as so defined) by reason of the
performance by Westport or its Subsidiaries of all operations required to earn
an enforceable right to such assignment; (2) is free from reasonable doubt to
the end that a prudent purchaser engaged in the business of the ownership,
development and operation of producing oil and gas properties with knowledge of
all of the facts and their legal bearing would be willing to accept and pay full
value for the same and a prudent lender would be willing to lend against it as
collateral without discount for title matters; (3) entitles Westport or its
Subsidiaries to receive not less than the interest set forth in the Westport
Reserve Report with respect to each proved property evaluated therein under the
caption "Net Revenue Interest" or "NRI" without reduction during the life of
such property except as stated in the Westport Reserve Report, (4) obligates
Westport and its Subsidiaries to pay costs and expenses relating to each such
proved property in an amount not greater than the interest set forth under the
caption "Working Interest" or "WI" in the Westport Reserve Report with respect
to such property without increase over the life of such property except as shown
on the Westport Reserve Report; and (5) does not restrict the ability of
Westport or its Subsidiaries to utilize the properties as currently intended.
Section 5.11 Litigation. Except as disclosed in the Westport SEC
Reports filed and publicly available prior to the date of this Agreement or
Section 5.11 of the Westport Disclosure
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Schedule and for matters that would not have a Westport Material Adverse Effect,
there is no suit, claim, arbitration, action, proceeding, investigation or
review pending or, to Westport's knowledge, threatened against Westport or any
Subsidiaries of Westport. Neither Westport nor any of its Subsidiaries, has been
permanently or temporarily enjoined by any order, judgment or decree of any
court or any other Governmental Authority from engaging in or continuing any
conduct or practice in connection with the business, assets or properties of
Westport or such Subsidiary, nor, to the knowledge of Westport, is Westport or
any Subsidiary of Westport under investigation by any Governmental Authority.
Except as disclosed in the Westport SEC Reports filed and publicly available
prior to the date of this Agreement or Section 5.11 of the Westport Disclosure
Schedule, there is not in existence any order, judgment, injunction, award,
stipulation or decree of any court or other tribunal or other agency or by
arbitration enjoining or requiring Westport or any of its Subsidiaries to take
any action of any kind with respect to its business, assets or properties.
Notwithstanding the foregoing, no representation or warranty in this Section
5.11 is made with respect to Environmental Laws, which are covered exclusively
by the provisions set forth in Section 5.13.
Section 5.12 Employee Benefit Plans; ERISA.
(a) Section 5.12(a) of the Westport Disclosure Schedule
contains a true and complete list of the employee benefit plans or arrangements
of any type (including but not limited to plans described in section 3(3) of
ERISA), sponsored, maintained or contributed to by Westport or any trade or
business, whether or not incorporated, which together with Westport would be
deemed a "single employer" within the meaning of Section 414(b), (c) or (m) of
the Code or section 4001(b)(1) of ERISA (a "Westport ERISA Affiliate") within
six years prior to the Effective Time ("Westport Benefit Plans"). Copies of all
Westport Benefit Plans (including all amendments and related trusts, insurance
policies and similar funding vehicles), summary plan descriptions, determination
letters, and most recent Form 5500's have been provided or made available to
Belco.
(b) With respect to each Westport Benefit Plan: (i) if
intended to qualify under section 401(a) or 401(k) of the Code, such plan
satisfies the requirements of such sections, has received a favorable
determination letter from the Internal Revenue Service with respect to its
qualification, and its related trust has been determined to be exempt from tax
under section 501(a) of the Code and, to the knowledge of Westport, nothing has
occurred since the date of such letter to adversely affect such qualification or
exemption; (ii) each such plan has been administered in substantial compliance
with its terms and applicable law, except for any noncompliance with respect to
any such plan that could not reasonably be expected to result in a Westport
Material Adverse Effect; (iii) neither Westport nor any Westport ERISA Affiliate
has engaged in, and Westport and each Westport ERISA Affiliate do not have any
knowledge of any Person that has engaged in, any transaction or acted or failed
to act in any manner that would subject Westport or any Westport ERISA Affiliate
to any liability for a breach of fiduciary duty under ERISA that could
reasonably be expected to result in a Westport Material Adverse Effect; (iv) no
disputes are pending, or, to the knowledge of Westport or any Westport ERISA
Affiliate, threatened; (v) neither Westport nor any Westport ERISA Affiliate has
engaged in, and Westport and each Westport ERISA Affiliate do not have any
knowledge of any Person that has engaged in, any transaction in violation of
Section 406(a) or (b) of ERISA or Section 4975 of the Code for which no
exemption exists under Section 408 of ERISA or Section 4975(c) of the Code or
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Section 4975(d) of the Code that could reasonably be expected to result in a
Westport Material Adverse Effect; (vi) there have been no "reportable events"
within the meaning of Section 4043 of ERISA for which the 30 day notice
requirement of ERISA has not been waived by the PBGC; (vii) all contributions
due have been made on a timely basis (within, where applicable, the time limit
established under section 302 of ERISA or Code section 412); (viii) no notice of
intent to terminate such plan has been given under Section 4041 of ERISA and no
proceeding has been instituted under section 4042 of ERISA to terminate such
plan; and (ix) except for defined benefit plans (if applicable), such plan may
be terminated on a prospective basis without any continuing liability for
benefits other than benefits accrued to the date of such termination. All
contributions made or required to be made under any Westport Benefit Plan meet
the requirements for deductibility under the Code, and all contributions which
are required and which have not been made have been properly recorded on the
books of Westport or a Westport ERISA Affiliate.
(c) No Westport Benefit Plan is a "multi-employer plan" (as
defined in section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of section 413(c) of the Code). No event has occurred with respect
to Westport or a Westport ERISA Affiliate in connection with which Westport
could be subject to any liability, lien or encumbrance with respect to any
Westport Benefit Plan or any employee benefit plan described in Section 3(3) of
ERISA maintained, sponsored or contributed to by a Westport ERISA Affiliate
under ERISA or the Code.
(d) Except as set forth in Section 5.12(d) of the Westport
Disclosure Schedule, no employees of Westport or any of its Subsidiaries are
covered by any severance or retention plan or similar arrangement.
Section 5.13 Environmental Liability. Except as set forth in Section
5.13 of the Westport Disclosure Schedule:
(a) The businesses of Westport and its Subsidiaries have been
and are operated in material compliance with all Environmental Laws.
(b) Neither Westport nor any of its Subsidiaries has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, discharge, release, disposal, transport or handling of any Hazardous
Substances at any of its properties or facilities except in material compliance
with all Environmental Laws, and, to Westport's knowledge, no generation,
manufacture, processing, distribution, use, treatment, handling, storage,
discharge, release, disposal, transport or handling of any Hazardous Substances
has occurred at any property or facility owned, leased or operated by Westport
or any of its Subsidiaries except in material compliance with all Environmental
Laws.
(c) Neither Westport nor any of its Subsidiaries has received
any written notice from any Governmental Authority or third party or, to the
knowledge of Westport, any other communication alleging or concerning any
material violation by Westport or any of its Subsidiaries of, or responsibility
or liability of Westport or any of its Subsidiaries under, any Environmental
Law. There are no pending, or to the knowledge of Westport, threatened, claims,
suits, actions, proceedings or investigations with respect to the businesses or
operations of
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Westport or any of its Subsidiaries alleging or concerning any material
violation of or responsibility or liability under any Environmental Law that, if
adversely determined, could reasonably be expected to have a Westport Material
Adverse Effect, nor does Westport have any knowledge of any fact or condition
that could give rise to such a claim, suit, action, proceeding or investigation.
(d) Westport and its Subsidiaries are in possession of all
material approvals, permits, licenses, registrations and similar type
authorizations from all Governmental Authorities under all Environmental Laws
with respect to the operation of the businesses of Westport and its
Subsidiaries; there are no pending or, to the knowledge of Westport, threatened,
actions, proceedings or investigations seeking to modify, revoke or deny renewal
of any of such approvals, permits, licenses registrations and authorizations;
and Westport does not have knowledge of any fact or condition that is reasonably
likely to give rise to any action, proceeding or investigation to modify, revoke
or deny renewal of any of such approvals, permits, licenses, registrations and
authorizations.
(e) Without in any way limiting the generality of the
foregoing, to the knowledge of Westport, (i) all offsite locations where
Westport or any of its Subsidiaries has transported, released, discharged,
stored, disposed or arranged for the disposal of pollutants, contaminants,
hazardous wastes or toxic substances are licensed disposal sites as required by
law, (ii) all underground storage tanks, and the operating status, capacity and
contents of such tanks, located on any property owned, leased or operated by
Westport or any of its Subsidiaries are identified in Section 5.13 of the
Westport Disclosure Schedule and (iii) no PCBs or PCB-containing items are used
or stored at any property owned, leased or operated by Westport or any of its
Subsidiaries except in compliance with Environmental Laws.
(f) There has been no discharge, release or disposal at any of
the properties owned or operated by Westport, its Subsidiaries, or a predecessor
in interest, or to the knowledge of Westport, at any disposal or treatment
facility which received Hazardous Substances generated by Westport, its
Subsidiaries, or any predecessor in interest which could reasonably be expected
to result in liabilities that have a Westport Material Adverse Effect.
(g) To Westport's knowledge, no pending claims have been
asserted or threatened to be asserted against Westport or its Subsidiaries for
any personal injury (including wrongful death) or property damage (real or
personal) arising out of exposure to Hazardous Substances used, handled,
generated, transported or disposed by Westport or its Subsidiaries at property
owned or operated by Westport or its Subsidiaries, except as could not
reasonably be expected to result in liabilities that have a Westport Material
Adverse Effect.
Section 5.14 Compliance with Applicable Laws. Neither Westport nor any
of its Subsidiaries has received any written notice from any Governmental
Authority that any such business has been or is being, conducted in violation of
or default with respect to any applicable federal, state, local or foreign
statute, law, rule, order, decree or regulation, including, without limitation
any filing or reporting requirement thereunder with respect to the conduct of
its business, or the ownership or operation of its business, except for
violations or defaults which, individually or in the aggregate, would not
reasonably be expected to result in a Westport Material Adverse Effect;
provided, however, notwithstanding the foregoing, no representation or
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warranty in this Section 5.14 is made with respect to Environmental Laws, which
are covered exclusively by the provisions set forth in Section 5.13.
Section 5.15 Insurance. Section 5.15 of the Westport Disclosure
Schedule lists each of the insurance policies relating to Westport or its
Subsidiaries which are currently in effect. Westport has made available to Belco
a true and correct copy of each such policy or the binder therefor. With respect
to each such insurance policy or binder, none of Westport or any of its
Subsidiaries is in breach or default thereunder (including with respect to the
payment of premiums or the giving of notices), and to Westport's knowledge,
there has not been any occurrence or any event which (with notice or the lapse
of time or both) would constitute such a breach or default or permit
termination, modification or acceleration under the policy, except for such
breaches or defaults which, individually or in the aggregate, would not
reasonably be expected to result in a Westport Material Adverse Effect. Section
5.15 of the Westport Disclosure Schedule describes any self-insurance
arrangements affecting Westport or its Subsidiaries. The insurance policies
listed in Section 5.15 of the Westport Disclosure Schedule include all policies
which are required in connection with the operation of the businesses of
Westport and its Subsidiaries as currently conducted by applicable laws and all
agreements relating to Westport and its Subsidiaries.
Section 5.16 Labor Matters; Employees.
(a) Except as set forth in Section 5.16(a) of the Westport
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of Westport,
threatened against or affecting Westport or any of its Subsidiaries and, during
the past five years, there has not been any such action, (ii) none of Westport
or any of its Subsidiaries is a party to or bound by any collective bargaining
or similar agreement with any labor organization, or work rules or practices
agreed to with any labor organization or employee association applicable to
employees of Westport or any of its Subsidiaries, (iii) none of the employees of
Westport or any of its Subsidiaries are represented by any labor organization
and none of Westport or any of its Subsidiaries have any knowledge of any
current union organizing activities among the employees of Westport or any of
its Subsidiaries nor does any question concerning representation exist
concerning such employees, (iv) Westport and its Subsidiaries have each at all
times been in material compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment, wages, hours of
work and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no unfair labor practice charge or
complaint against any of Westport or any of its Subsidiaries pending or, to the
knowledge of Westport, threatened before the National Labor Relations Board or
any similar state or foreign agency, (vi) there is no grievance or arbitration
proceeding arising out of any collective bargaining agreement or other grievance
procedure relating to Westport or any of its Subsidiaries, (vii) neither the
Occupational Safety and Health Administration nor any corresponding state agency
has threatened to file any citation, and there are no pending citations,
relating to Westport or any of its Subsidiaries, and (viii) there is no employee
or governmental claim or investigation, including any charges to the Equal
Employment Opportunity Commission or state employment practice agency,
investigations regarding Fair Labor Standards Act compliance, audits by the
Office of Federal Contractor Compliance Programs, sexual harassment complaints
or demand letters or threatened claims.
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(b) Except as set forth in Section 5.16(b) of the Westport
Disclosure Schedule, since the enactment of the WARN Act, none of Westport or
any of its Subsidiaries has effectuated (i) a "plant closing" (as defined in the
WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of Westport or
any of its Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of Westport or any of its
Subsidiaries, nor has Westport or any of its Subsidiaries been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law, in each case
that could reasonably be expected to have a Westport Material Adverse Effect.
Section 5.17 Reserve Reports.
(a) All information (including, without limitation, the
statement of the percentage of reserves from the oil and gas xxxxx and other
interests evaluated therein to which Westport or its Subsidiaries are entitled
and the percentage of the costs and expenses related to such xxxxx or interests
to be borne by Westport or its Subsidiaries) supplied to Netherland, Xxxxxx &
Associates, Inc. and Xxxxx Xxxxx Company Petroleum Engineers by or on behalf of
Westport and its Subsidiaries that was material to such firms' estimates of
proved oil and gas reserves attributable to the Oil and Gas Interests of
Westport and its Subsidiaries in connection with the preparation of the proved
oil and gas reserve reports concerning the Oil and Gas Interests of Westport and
its Subsidiaries as of December 31, 2000 by such engineering firms
(collectively, the "Westport Reserve Report") was (at the time supplied or as
modified or amended prior to the issuance of the Westport Reserve Report) true
and correct in all material respects and Westport has no knowledge of any
material errors in such information that existed at the time of such issuance.
Except for changes (including changes in commodity prices) generally affecting
the oil and gas industry, there has been no change in respect of the matters
addressed in the Westport Reserve Report that would have a Westport Material
Adverse Effect.
(b) Set forth in Section 5.17(b) of the Westport Disclosure
Schedule is a list of all material Oil and Gas Interests that were included in
the Westport Reserve Report that have been disposed of prior to the date of this
Agreement.
(c) Except as set forth in Section 5.17(c) of the Westport
Disclosure Schedule or the Westport Reserve Report, the Oil and Gas Interests of
Westport and its Subsidiaries are not limited in any material respect by terms
fixed by a certain number of years (other than primary terms under oil and gas
leases) or by provisions applicable to the Oil and Gas Interests of Westport and
its Subsidiaries which increase the royalty, overriding royalty interest, net
profits interest, or similar lease burdens.
Section 5.18 Material Contracts.
(a) Set forth in Section 5.18(a) of the Westport Disclosure
Schedule is a list of each contract, lease, indenture, agreement, arrangement or
understanding to which Westport or any of its Subsidiaries is subject that is of
a type that would be required to be included as an exhibit to a Form S-1
Registration Statement pursuant to the rules and regulations of the SEC if such
a registration statement was filed by Westport on the date hereof and no
previous filings had been made (collectively, the "Westport Material
Contracts").
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(b) Except as set forth in Section 5.18(a) or 5.18(b) of the
Westport Disclosure Schedule, the Oil and Gas Interests of Westport and its
Subsidiaries are not subject to (i) any instrument or agreement evidencing or
related to indebtedness for borrowed money, whether directly or indirectly, or
(ii) any agreement not entered into in the ordinary course of business in which
the amount involved is in excess of $1,500,000. Except for matters that,
individually or in the aggregate, would not be reasonably expected to have a
Westport Material Adverse Effect, with respect to the Westport Material
Contracts, (A) all Westport Material Contracts are in full force and effect and
are the valid and legally binding obligations of Westport or its Subsidiaries,
as the case may be, and are enforceable in accordance with their respective
terms subject to the Enforceability Exception; (B) Westport is not in material
breach or default (nor does there exist any condition which upon the passage of
time or the giving of notice or both would reasonably be expected to cause such
a breach or default) with respect to, and to the knowledge of Westport, no other
party to any Westport Material Contract is in material breach or default with
respect to, its obligations thereunder, including with respect to payments or
otherwise; (C) no party to any Westport Material Contract has given written
notice of any action to terminate, cancel, rescind or procure a judicial
reformation thereof; and (D) no Westport Material Contract contains any
provision that prevents Westport or any of its Subsidiaries from owning,
managing and operating the Oil and Gas Interests of Westport and its
Subsidiaries in accordance with historical practices.
(c) As of the date of this Agreement, except as set forth in
the Westport Reserve Report and except as set forth in Section 5.18(c) of the
Westport Disclosure Schedule, with respect to authorizations for expenditure
executed on or after March 31, 2001, (i) there are no material outstanding calls
for payments that are due or which Westport or its Subsidiaries are committed to
make that have not been made; (ii) there are no material operations with respect
to which Westport or its Subsidiaries have become a non-consenting party; and
(iii) there are no commitments for the material expenditure of funds for
drilling or other capital projects other than projects with respect to which the
operator is not required under the applicable operating agreement to seek
consent.
Section 5.19 Permits. Immediately prior to the Effective Time and
except for Customary Post-Closing Consents, Westport or its Subsidiaries will
hold all of the Permits required or necessary to construct, run, operate, use
and/or maintain their properties and conduct their operations as presently
conducted, except for such Permits, the lack of which, individually or in the
aggregate, would not have a Westport Material Adverse Effect; provided, however,
that notwithstanding the foregoing, no representation or warranty in this
Section 5.19 is made with respect to Permits issued pursuant to Environmental
Laws, which are covered exclusively by the provisions set forth in Section 5.13.
Section 5.20 Required Stockholder Vote or Consent. The only vote of the
holders of any class or series of Westport's capital stock that is necessary to
consummate the Merger and the other transactions contemplated by this Agreement
is the approval and adoption of this Agreement by the holders of a majority of
the outstanding shares of Westport Common Stock on the applicable record date
(the "Westport Stockholders' Approval"). No other vote of the stockholders of
Westport is required by applicable law, the certificate of incorporation or
bylaws of Westport in order for Westport to consummate the Merger and the
transactions contemplated hereby.
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Section 5.21 Proxy Statement/Prospectus; Registration Statement. None
of the information to be supplied by Westport for inclusion in (a) the Proxy
Statement/Prospectus to be filed by Belco and Westport with the SEC, and any
amendments or supplements thereto, or (b) the Registration Statement to be filed
by Belco with the SEC in connection with the Merger, and any amendments or
supplements thereto, will, at the respective times such documents are filed,
and, in the case of the Proxy Statement/Prospectus, at the time the Proxy
Statement/Prospectus or any amendment or supplement thereto is first mailed to
stockholders of Belco and Westport, at the time such stockholders vote on
approval of this Agreement and at the Effective Time, and, in the case of the
Registration Statement, when it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be made therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
Section 5.22 Intellectual Property. Westport or its Subsidiaries own,
or are licensed or otherwise have the right to use, all Intellectual Property
currently used in the conduct of the business of Westport and its Subsidiaries,
except where the failure to so own or otherwise have the right to use such
intellectual property would not, individually or in the aggregate, be reasonably
expected to have a Westport Material Adverse Effect. No Person has notified
either Westport or any of its Subsidiaries in writing that their use of the
Intellectual Property infringes on the rights of any Person, subject to such
claims and infringements as do not, individually or in the aggregate, give rise
to any liability on the part of Westport and its Subsidiaries that could have a
Westport Material Adverse Effect, and, to Westport's knowledge, no Person is
infringing on any right of Westport or any of its Subsidiaries with respect to
any such Intellectual Property. No claims are pending or, to Westport's
knowledge, threatened that Westport or any of its Subsidiaries is infringing the
rights of any Person with regard to any Intellectual Property.
Section 5.23 Hedging; Derivatives. As of the date of this Agreement,
Section 5.23 of the Westport Disclosure Schedule sets forth for the periods
shown obligations of Westport and each of its Subsidiaries for the delivery of
Hydrocarbons attributable to any of the properties of Westport or any of its
Subsidiaries in the future on account of prepayment, advance payment,
take-or-pay or similar obligations without then or thereafter being entitled to
receive full value therefor. Except as set forth in Section 5.23 of the Westport
Disclosure Schedule, as of the date of this Agreement, neither Westport nor any
of its Subsidiaries is bound by futures, hedge, swap, collar, put, call, floor,
cap, option, interest rate swap or other contracts that are intended to benefit
from, relate to or reduce or eliminate the risk of fluctuations in the price of
commodities, including Hydrocarbons or securities.
Section 5.24 Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston Corporation, the fees and expenses of which will
be paid by Westport) is entitled to any brokerage, finder's fee or other fee or
commission payable by Westport or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Westport or any of its Subsidiaries. True and correct copies of all
agreements and engagement letters currently in effect with Credit Suisse First
Boston Corporation have been provided to Belco.
Section 5.25 Tax Matters. To its knowledge, after consulting with its
Tax counsel, neither Westport nor any of its affiliates has taken or agreed to
take any action that could
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reasonably be expected to prevent the Merger from constituting a transaction
qualifying as a reorganization under section 368(a) of the Code.
Section 5.26 Fairness Opinion. The Board of Directors of Westport has
received a written opinion from Credit Suisse First Boston Corporation dated the
date of this Agreement to the effect that, as of the date of such opinion, the
Belco Common Stock Exchange Ratio is fair to Westport from a financial point of
view. A true and complete copy of such opinion has been given to Belco.
Section 5.27 Takeover Laws. Westport and the Board of Directors of
Westport have each taken all action required to be taken by it in order to
exempt this Agreement, and the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby are exempt from, the
requirements of any "moratorium," "control share," "fair price," "affiliate
transaction," "business combination" or other antitakeover laws and regulations
of the State of Delaware.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by Belco Pending the Merger. From the
date hereof until the Effective Time, unless Westport shall otherwise agree in
writing, or except as set forth in the Belco Disclosure Schedule or as otherwise
contemplated by this Agreement, Belco and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use all
reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and key employees, subject to the terms of this Agreement. From
the date hereof until the Effective Time, Belco shall provide Westport with any
notice required under Section 7.14 and upon request by Westport from time to
time Belco shall provide Westport copies of reports generated by Belco in the
ordinary course of its business. Except as set forth in the Belco Disclosure
Schedule or as otherwise permitted under this Agreement, and without limiting
the generality of the preceding sentence, from the date hereof until the
Effective Time, without the written consent of Westport (which consent shall not
be unreasonably withheld):
(a) Neither Belco nor its Subsidiaries will adopt or propose
any change to its articles of incorporation or bylaws (or similar organizational
documents);
(b) Belco will not, and will not permit any of its
Subsidiaries to (i) declare, set aside or pay any dividend or other distribution
with respect to any shares of capital stock of Belco or its Subsidiaries (except
for normal quarterly dividends on the Belco Preferred Stock and intercompany
dividends from direct or indirect wholly-owned subsidiaries), (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
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(c) Belco will not, and will not permit any of its
Subsidiaries to, merge or consolidate with any other Person or acquire assets
of, or an equity interest in, any other Person, or enter a new line of business
or commence business operations outside of its existing area of operations;
(d) Except as set forth in Section 6.1(d) of the Belco
Disclosure Schedule, Belco will not, and will not permit any of its Subsidiaries
to, sell, lease, license or otherwise surrender, relinquish or dispose of any
assets or properties (other than among Belco and its direct and indirect
wholly-owned Subsidiaries) with an aggregate fair market value exceeding $5.0
million (other than sales of Hydrocarbons in the ordinary course of business);
(e) Belco will not settle or compromise any material Audit,
make or change any material Tax election or file any materially amended Tax
Return;
(f) Except as otherwise permitted by this Agreement, Belco
will not issue any securities (whether through the issuance or granting of
options, warrants, rights or otherwise and except pursuant to existing
obligations disclosed in the Belco SEC Reports filed and publicly available
prior to the date of this Agreement or the Belco Disclosure Schedule), enter
into any amendment of any term of any outstanding security of Belco or of any of
its Subsidiaries;
(g) Belco will not, and will not permit any of its
Subsidiaries to, enter into any settlement or consent with respect to any
pending litigation other than settlements in the ordinary course of business;
(h) Neither Belco nor any of its Subsidiaries shall incur,
assume, guarantee or prepay any indebtedness for borrowed money, other than (i)
under Belco's existing credit facility in the ordinary course of business or
(ii) intercompany indebtedness between Belco and any of its wholly-owned
Subsidiaries or between such wholly-owned Subsidiaries; provided that with
respect to any borrowings under Belco's existing credit facility, Belco may
borrow up to $150 million (the "Permitted Amount") without the consent of
Westport, and once Belco has borrowed the Permitted Amount under its existing
credit facility, Belco shall consult with Westport prior to each additional
borrowing under such facility of an increment (in the aggregate) of $1.0 million
or more.
(i) Belco will not change any method of accounting or
accounting practice by Belco or any of its Subsidiaries, except for any such
change required by applicable law or GAAP;
(j) Belco will not take any action that would give rise to a
claim under the WARN Act or any similar state law or regulation because of a
"plant closing" or "mass layoff" (each as defined in the WARN Act);
(k) Belco will not amend or otherwise change the terms of the
Belco Engagement Letter, except to the extent that any such amendment or change
would result in terms more favorable to Belco;
(l) Except as set forth in Section 6.1(l) of the Belco
Disclosure Schedule, neither Belco nor any of its Subsidiaries will become bound
or obligated to participate in any
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operation, or consent to participate in any operation, with respect to any Oil
and Gas Interests that will individually cost in excess of $750,000, net to
Belco unless the operation is a currently existing obligation of Belco or any of
its Subsidiaries or necessary to extend, preserve or maintain an Oil and Gas
Interest.
(m) Neither Belco nor any of its Subsidiaries will (i) enter
into any futures, hedge, swap, collar, put, call, floor, cap, option, interest
rate swap or other contracts that are intended to benefit from or reduce or
eliminate the risk of fluctuations in the price of commodities, including
Hydrocarbons, or securities or (ii) enter into any fixed price commodity sales
agreements with a duration of more than three months;
(n) Belco will not, and will not permit any of its
Subsidiaries to (i) take, or agree or commit to take, any action that would make
any representation and warranty of Belco hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time or (ii) omit, or
agree or commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at any
such time;
(o) Except as provided in Section 3.3, neither Belco nor any
of its Subsidiaries shall (A) adopt, amend (other than amendments that reduce
the amounts payable by Belco or any Subsidiary, or amendments required by law to
preserve the qualified status of a Belco Benefit Plan) or assume an obligation
to contribute to any employee benefit plan, severance plan or retention plan or
arrangement of any type or collective bargaining agreement or enter into any
employment, severance or similar contract with any Person (including, without
limitation, contracts with management of Belco or any Subsidiaries that might
require that payments be made upon the consummation of the transactions
contemplated hereby) or amend or modify any such existing contracts, (B) engage
in any transaction (either acting alone or in conjunction with any Belco Benefit
Plan or trust created thereunder) in connection with which Belco or any
Subsidiary could be subjected (directly or indirectly) to either a civil penalty
assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code, (C) terminate any
Belco Benefit Plan in a manner, or take any other action with respect to any
Belco Benefit Plan, that could result in the liability of the Belco or any
Subsidiary to any Person, (D) take any action that could adversely affect the
qualification of any Belco Benefit Plan or its compliance with the applicable
requirements of ERISA, (E) fail to make any required contribution to any Belco
Benefit Plan or fail to make full payment when due of all amounts which, under
the provisions of any Belco Benefit Plan, any agreement relating thereto or
applicable law, Belco or any Subsidiary are required to pay as contributions
thereto, (F) fail to file, on a timely basis, all reports and forms required by
federal regulations with respect to any Belco Benefit Plan or (G) increase the
compensation, bonus or benefits payable to any employee or former employee;
(p) Neither Belco nor any of its Subsidiaries will enter into
any commitment or agreement to license or purchase seismic data that will (i)
result in a transfer fee as a result of the consummation of the transactions
contemplated by this Agreement or (ii) cost in excess of $150,000, other than
pursuant to agreements or commitments existing on the date of this Agreement;
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(q) Belco will not accelerate, amend or change the period of
exercisability of options, restricted stock or other awards granted under any
employee stock plan or make any election under any of its stock plans to pay
cash in exchange for terminating awards under such plans;
(r) Neither Belco nor any of its Subsidiaries shall modify or
terminate any of Belco Material Contracts or waive or relinquish any right
thereunder, other than modifications not adverse to Belco and its Subsidiaries;
(s) Neither Belco nor any of its Subsidiaries shall adopt a
plan of complete or partial liquidation, dissolution, or reorganization;
(t) Neither Belco nor any of its Subsidiaries shall enter into
any contract, agreement, arrangement or understanding that materially limits or
otherwise materially restricts Belco or any of its Subsidiaries or any successor
thereto, or that would, after the Effective Time, limit or restrict the
Surviving Corporation and its Affiliates (including Westport) or any successor
thereto, from engaging in or competing in any line of business or in any
geographic area (except for confidentiality agreements relating to specific
prospects); and
(u) Belco will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
Section 6.2 Conduct of Business by Westport Pending the Merger. From
the date hereof until the Effective Time, unless Belco shall otherwise agree in
writing, or except as set forth in the Westport Disclosure Schedule or as
otherwise contemplated by this Agreement, Westport shall conduct, and shall
cause its Subsidiaries to conduct, its business in the ordinary course
consistent with past practice and shall use, and shall cause each of its
Subsidiaries to use, all reasonable efforts to preserve intact its business
organizations and relationships with third parties and to keep available the
services of its present officers and key employees, subject to the terms of this
Agreement. Except as set forth in the Westport Disclosure Schedule or as
otherwise permitted under this Agreement, and without limiting the generality of
the preceding sentence, from the date hereof until the Effective Time, without
the written consent of Belco (which consent shall not be unreasonably withheld):
(a) Westport will not, and will not permit its Subsidiaries
to, adopt or propose any change to its certificate of incorporation or bylaws
(or similar organizational documents);
(b) Westport will not, and will not permit any of its
Subsidiaries to (i) declare, set aside or pay any dividend or other distribution
with respect to any shares of capital stock or (ii) reclassify, combine or
split, any of its capital stock or issue or authorize the issuance of any other
securities in respect of, or in lieu of or in substitution for shares of its
capital stock; provided, however, that Westport shall be entitled to effect a
stock split so long as an appropriate adjustment is made to the Belco Common
Stock Exchange Ratio;
(c) Adopt a plan of complete or partial liquidation,
dissolution, or reorganization;
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(d) Change any method of accounting or accounting practices by
Westport or any of its Subsidiaries, except for any such change required by
GAAP; and
(e) Westport will not, and will not permit any of its
Subsidiaries to, enter into any acquisition or divestiture or other transaction
that would reasonably be expected to delay the consummation of the Merger;
(f) Westport will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
Notwithstanding anything to the contrary contained in this Agreement, but,
subject to Section 6.2(e) above, Westport shall not be restricted from issuing
shares of capital stock in connection with any acquisition.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The parties shall upon reasonable
notice each afford to the other and to the other's financial advisors, legal
counsel, accountants, consultants, financing sources, and other authorized
representatives reasonable access during normal business hours throughout the
period prior to the Effective Time to all of its books, records, properties,
contracts, leases, plants and personnel and, during such period, each shall
furnish promptly to the other (a) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of federal or
state securities laws, and (b) all other information as such other party
reasonably may request, provided that no investigation pursuant to this Section
7.1 shall affect any representations or warranties made herein or the conditions
to the obligations of the respective parties to consummate the Merger. Each
party shall hold in confidence all nonpublic information until such time as such
information is otherwise publicly available and, if this Agreement is
terminated, each party will deliver to the other all documents, work papers and
other materials (including copies) obtained by such party or on its behalf from
the other party as a result of this Agreement or in connection herewith, whether
so obtained before or after the execution hereof. Notwithstanding the foregoing,
the Confidentiality Agreement dated February 9, 2001 between Westport and Belco
(the "Confidentiality Agreement") shall survive the execution and delivery of
this Agreement.
Section 7.2 No Solicitation of Transactions.
(a) Belco agrees that (i) it and its officers, directors and employees
shall not, (ii) Belco Subsidiaries and Belco Subsidiaries' officers and
directors shall not and (iii) it shall use reasonable best efforts to ensure
that its and Belco Subsidiaries' agents and representatives shall not, (A)
directly or indirectly, initiate, solicit or knowingly encourage or facilitate
any inquiries relating to or the making of any Acquisition Proposal or (B)
directly or indirectly, continue, enter into or engage in any negotiations or
discussions concerning any Acquisition Proposal with or furnish any information
relating to Belco or any Belco Subsidiary or provide access to the properties,
books and records or any confidential information or data of Belco or any Belco
Subsidiary to, any Person relating to an Acquisition Proposal. Notwithstanding
the
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foregoing, nothing contained in this Agreement shall prevent Belco or its Board
of Directors from (i) taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act,
(ii) prior to the Belco Stockholders' Approval being obtained, providing access
to properties, books and records and providing information or data in response
to a request therefor by a Person who has made an unsolicited bona fide written
Acquisition Proposal if the Board of Directors of Belco receives from the Person
so requesting such information an executed confidentiality agreement on terms
substantially similar to those contained in the Confidentiality Agreement
(except for such changes specifically necessary in order for Belco to be able to
comply with its obligations under this Agreement) (provided that all such
written information is also provided on a prior or substantially concurrent
basis to Westport), or (iii) prior to the Belco Stockholders' Approval being
obtained, engaging in any negotiations or discussions with any Person who has
made an unsolicited bona fide written Acquisition Proposal; if and only to the
extent that in connection with the foregoing clauses (ii) and (iii), (1) Belco's
Board of Directors (after consultation with its independent legal counsel)
determines in good faith that such action is legally advisable for the Board of
Directors to comply with its fiduciary duties to Belco's stockholders under
applicable law, (2) such Acquisition Proposal is not subject to any financing
contingencies or is, in the good faith judgment of Belco's Board of Directors
(after consultation with its financial advisor), reasonably capable of being
financed by such other Person, and (3) Belco's Board of Directors determines in
good faith after consultation with its independent legal counsel and financial
advisor (taking into account among other things the legal, financial, regulatory
and other aspects of the proposal, the Person making the proposal, the
likelihood of consummation and the time to complete such transaction) that such
Acquisition Proposal is reasonably capable of being completed and, if
consummated, may reasonably be expected to result in a transaction more
favorable to Belco's stockholders than the transaction contemplated by this
Agreement (any such more favorable Acquisition Proposal being referred to in
this Agreement as a "Superior Proposal"). Belco agrees that it will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any
Acquisition Proposal and will use its reasonable best efforts to cause any such
Person (or its agents or advisors) in possession of confidential information
about Belco or any Belco Subsidiary that was furnished by or on behalf of Belco
to return or destroy all such information. Belco shall also notify Westport
promptly (but in no event later than 24 hours) after receipt of any Acquisition
Proposal or any indication of interest in making an Acquisition Proposal after
the date hereof, which notice shall include the identity of the Person making
such Acquisition Proposal or indication and the material terms and conditions of
such Acquisition Proposal or indication (including any subsequent material
amendment or modification to such terms and conditions). Belco shall keep
Westport informed in all material respects of the status and details of any such
Acquisition Proposal.
(b) Neither the Board of Directors of Belco nor any committee
thereof shall (i) withdraw (or modify in a manner adverse to Westport) or
propose publicly to withdraw (or modify in a manner adverse to Westport) the
recommendation or declaration of advisability by the Board of Directors of Belco
or any such committee of this Agreement or the Merger, or recommend, or propose
publicly to recommend, the approval or adoption of any Acquisition Proposal
(other than an Acquisition Proposal made by Westport), (ii) adopt or approve, or
propose publicly to adopt or approve, any Acquisition Proposal (other than an
Acquisition Proposal made by Westport), (iii) cause or permit Belco to enter
into any letter of intent,
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memorandum of understanding, agreement in principle, acquisition agreement,
merger agreement, option agreement, joint venture agreement, partnership
agreement or similar agreement which relates to or is reasonably likely to lead
to, any Acquisition Proposal (other than a confidentiality agreement referred to
in Section 7.2(a)) or (iv) agree or resolve to take any of the actions
prohibited by clauses (i), (ii) or (iii) of this sentence. Notwithstanding
anything in this Section 7.2 to the contrary, if, at any time prior to Belco
Stockholder's Approval being obtained, Belco's Board of Directors determines in
good faith, after consultation with its financial advisors and independent legal
counsel, in response to an Acquisition Proposal that was unsolicited and that
did not otherwise result from a breach of Section 7.2, that such proposal is a
Superior Proposal, Belco or its Board of Directors may terminate this Agreement
pursuant to Section 10.1(f) and may take such actions as may be reasonably
necessary to facilitate compliance with the match provisions thereof.
(c) For purposes of this Agreement, "Acquisition Proposal"
means any proposal or offer with respect to (i) any tender offer or exchange
offer, (ii) any merger, consolidation, share exchange, business combination,
sale of substantially all of the assets, reorganization, recapitalization,
liquidation, dissolution or other similar transaction involving Belco or of any
Belco Subsidiary or Belco Subsidiaries whose assets, individually or in the
aggregate, constitute more than 15% of the consolidated assets or earning power
of Belco, (iii) any acquisition or purchase, direct or indirect, of more than
15% of the consolidated assets of Belco or (iv) any acquisition or purchase,
direct or indirect, that, if consummated, would result in any Person
beneficially owning securities constituting more than 15% of any class or series
of equity or voting securities of Belco or of any Belco Subsidiary or Belco
Subsidiaries whose assets, individually or in the aggregate, constitute more
than 15% of the consolidated assets or earning power of Belco (other than the
transactions contemplated by this Agreement).
Section 7.3 Directors' and Officers' Indemnification and Insurance.
(a) For six years after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of Westport, Belco or their respective
Subsidiaries or an employee of Westport, Belco or any of their respective
Subsidiaries who acts as a fiduciary under any of Westport's Benefit Plans or
Belco's Benefit Plans (each an "Indemnified Party") against all losses, claims,
damages, liabilities, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the prior written consent of the Surviving Corporation, which will not be
unreasonably withheld)) arising in whole or in part out of actions or omissions
in their capacity as such occurring at or prior to the Effective Time to the
full extent permitted under Nevada law (or the laws of such other state in which
the Surviving Corporation may subsequently be domesticated) or the Surviving
Corporation's articles of incorporation and bylaws and Westport's and Belco's
written indemnification agreements in effect at the date hereof, including
provisions therein relating to the advancement of expenses incurred in the
defense of any action or suit; provided, that in the event any claim or claims
are asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until disposition of any
and all such claims; and provided, further, that any determination required to
be made with respect to whether an Indemnified Party's conduct complies with the
standards set
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forth under Nevada law (or the laws of such other state in which the Surviving
Corporation may subsequently be domesticated), the Surviving Corporation's
articles of incorporation or bylaws or such agreements, as the case may be,
shall be made by independent counsel mutually acceptable to the Surviving
Corporation and the Indemnified Party; and provided, further, that nothing
herein shall impair any rights or obligations of any Indemnified Party. In the
event that any claim or claims are brought against any Indemnified Party
(whether arising before or after the Effective Time), such Indemnified Party may
select counsel for the defense of such claim, which counsel shall be reasonably
acceptable to Westport or Belco, as applicable (if selected prior to the
Effective Time), and the Surviving Corporation (if selected after the Effective
Time).
(b) The Surviving Corporation shall maintain Westport's and
Belco's existing officers' and directors' liability insurance policies for a
period of not less than six years after the Effective Time, but only to the
extent related to actions or omissions prior to the Effective Time; provided,
that (i) the Surviving Corporation may substitute therefor policies of at least
the same coverage and amounts containing terms no less advantageous to such
former directors or officers; (ii) such substitution shall not result in gaps or
lapses of coverage with respect to matters occurring prior to the Effective Time
and (iii) the Surviving Corporation shall not be required in order to maintain
such policies to pay an annual premium in excess of 200% of the greater of (1)
the aggregate last annual premium paid by each of Westport and Belco with
respect to their existing policies and (2) the aggregate annual premium for each
of Westport and Belco with respect to their policies for the year in which the
Closing occurs (the "Cap"); and provided further, that, if equivalent coverage
cannot be obtained, or can be obtained only by paying an annual premium in
excess of the Cap, then the Surviving Corporation shall maintain policies that
provide the maximum coverage available at an annual premium equal to the Cap.
(c) Notwithstanding any other provisions hereof, the
obligations of the Surviving Corporation contained in this Section 7.3 shall be
binding upon the successors and assigns of the Surviving Corporation. In the
event the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person or (ii) transfers all or
substantially all of its properties or assets to any Person, then, and in each
case, proper provision shall be made so that successors and assigns of the
Surviving Corporation honor the indemnification obligations set forth in this
Section 7.3.
(d) The obligations of the Surviving Corporation under this
Section 7.3 shall survive the consummation of the Merger and shall not be
terminated or modified in such a manner as to adversely affect any Indemnified
Party to whom this Section 7.3 applies without the consent of such affected
Indemnified Party (it being expressly agreed that the Indemnified Parties to
whom this Section 7.3 applies shall be third party beneficiaries of this Section
7.3, each of whom may enforce the provisions of this Section 7.3).
Section 7.4 Further Assurances. Subject to the terms and conditions of
this Agreement, each party hereto agrees to use all reasonable efforts to obtain
all consents, approvals and waivers of any Governmental Authority or any other
Person and to do or cause to be done all other things necessary for the
consummation of the transactions contemplated by this Agreement. The parties
agree to take such further action to deliver or cause to be delivered to each
other at the Closing and at such other times thereafter as shall be reasonably
agreed by such additional agreements or instruments as any of them may
reasonably request for the purpose of
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carrying out this Agreement and the transactions contemplated hereby. The
parties shall afford each other access to all information, documents, records
and personnel who may be necessary for any party to comply with laws or
regulations (including without limitation the filing and payment of Taxes and
handling Tax Audits), to fulfill its obligations with respect to indemnification
hereunder or to defend itself against suits or claims of others. Westport and
Belco shall duly preserve all files, records or any similar items of Westport or
Belco received or obtained as a result of the Merger with the same care and for
the same period of time as it would preserve its own similar assets.
Section 7.5 Expenses.
(a) Except as provided in Section 10.2, all Expenses (as
defined below) incurred by the parties hereto shall be borne solely and entirely
by the party that has incurred such Expenses; provided that all Expenses
(including any fees and expenses of accountants, experts, and consultants, but
excluding the fees and expenses of legal counsel and investment bankers) related
to preparing, printing, filing and mailing the Registration Statement, the Proxy
Statement/Prospectus and all SEC and other regulatory filing fees incurred in
connection with the Registration Statement, Proxy Statement/Prospectus (other
than the HSR Act), shall be borne solely and entirely by Westport; provided,
further, that, except as set forth in Section 10.2, if this Agreement is
terminated for any reason, then the allocable share of Westport and Belco for
all Expenses (including any fees and expenses of accountants, experts, and
consultants, but excluding the fees and expenses of legal counsel and investment
bankers) related to preparing, printing, filing and mailing the Registration
Statement, the Proxy Statement/Prospectus and all SEC and other regulatory
filing fees incurred in connection with the Registration Statement, Proxy
Statement/Prospectus and the HSR Act (including filing fees under the HSR Act
paid or payable by Westport's stockholders), shall be allocated one-half each.
(b) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket costs, fees and expenses (including, without
limitation, all reasonable fees and expenses of counsel, accountants, investment
bankers, financial advisors, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with, arising out
of or related to this Agreement, the Merger or the consummation of all of the
transactions contemplated hereby (including, without limitation, the
preparation, printing, filing and mailing of the Registration Statement, the
Proxy Statement/Prospectus, the solicitation of stockholder approvals and
requisite HSR filings).
Section 7.6 Cooperation. Subject to compliance with applicable law,
from the date hereof until the Effective Time, each of the parties hereto shall
confer on a regular and frequent basis with one or more representatives of the
other parties to report operational matters of materiality and the general
status of ongoing operations and shall promptly provide the other party or its
counsel with copies of all filings made by such party with any Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby.
Section 7.7 Publicity. Neither Belco, Westport 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 hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement
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with a national securities exchange and will use reasonable efforts to provide
copies of such release or other announcement to the other party hereto, and give
due consideration to such comments as such other party may have, prior to such
release.
Section 7.8 Filings. Each party hereto shall make all filings required
to be made by such party in connection herewith or desirable to achieve the
purposes contemplated hereby, and shall cooperate as needed with respect to any
such filing by any other party hereto.
Section 7.9 Employee Matters; Benefit Plans.
(a) The Surviving Corporation shall take all reasonable
actions necessary or appropriate to permit the employees who as of the Effective
Time were employed by Belco and who continue to be employed by the Surviving
Corporation after the Effective Time (the "Retained Employees") to continue to
participate from and after the Effective Time in the employee benefit plans or
arrangements in which such Retained Employees were participating immediately
prior to the Effective Time. Notwithstanding the foregoing, the Surviving
Corporation may permit any such employee benefit plan or arrangement to be
terminated or discontinued on or after the Effective Time, provided that the
Surviving Corporation shall (a) take all reasonable actions necessary or
appropriate to permit the Retained Employees participating in such employee
benefit plan or arrangement to immediately thereafter participate in employee
benefit plans or arrangements substantially comparable to those maintained with
respect to other Surviving Corporation employees other than the Retained
Employees (the "Replacement Plans"), (b) with respect to a Replacement Plan that
is a group health plan (i) credit such Retained Employees, for the year during
which participation in the Replacement Plan begins, with any deductibles and
copayments already incurred during such year under the terminated or
discontinued group health plan and (ii) waive any preexisting condition
limitations applicable to the Retained Employees (and their eligible dependents)
under the Replacement Plan to the extent that a Retained Employee's (or
dependent's) condition would not have operated as a preexisting condition under
the terminated or discontinued group health plan, and (c)(1) cause each
Replacement Plan that is an employee pension benefit plan (as such term is
defined in Section 3(2) of ERISA) intended to be qualified under Section 401 of
the Code to be amended to provide that the Retained Employees shall receive
credit for participation and vesting purposes under such plan for their period
of employment with Belco and its Subsidiaries and their predecessors to the
extent such predecessor employment was recognized by Belco and its Subsidiaries
and (2) credit the Retained Employees under each other Replacement Plan that is
not described in the preceding clause for their period of employment with Belco,
its Subsidiaries and their predecessors to the extent such predecessor
employment was recognized by Belco or its Subsidiaries. At the Effective Time,
each outstanding award (including restricted stock, phantom stock, stock
equivalents and stock units) ("Westport Award") under any employee incentive or
benefit plans, programs or arrangements and non-employee director plans
presently maintained by Westport which provide for grants of equity-based awards
shall be amended or converted into a similar instrument of the Surviving
Corporation, in each case with such adjustments to the terms of such Westport
Awards as are appropriate to preserve the value inherent in such Westport Awards
with no detrimental effects on the holders thereof.
(b) Prior to the Closing, the Board of Directors of Westport
shall, by resolution duly adopted by such Board of Directors or a duly
authorized committee thereof,
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approve and adopt, for purposes of exemption from "short-swing" profit liability
under Section 16(b) of the Exchange Act, (i) the disposition and the conversion
at the Effective Time of the shares of Westport Common Stock held by officers,
directors and affiliates of Westport into shares of Belco Common Stock as a
result of the conversion of shares in the Merger (ii) the assumption by Belco of
the Westport Stock Options of the officers, directors and affiliates of Westport
and (iii) the deemed grant of options to purchase Belco Common Stock under the
Westport Stock Options (as converted pursuant to Section 3.3) for purposes of
Section 16(b) of the Exchange Act. Such resolution shall set forth the name of
applicable "insiders" for purposes of Section 16 of the Exchange Act and, for
each "insider," the number of shares of Westport Common Stock to be converted
into shares of Belco Common Stock at the Effective Time, the number and material
terms of the Westport Stock Options to be assumed by Belco at the Effective
Time, and that the approval is being granted to exempt the transaction under
Rule 16b-3 under the Exchange Act.
(c) If any shares of Westport Common Stock are, immediately
prior to the Effective Time, unvested or subject to any other restrictions under
the Westport Stock Plans or any restricted stock purchase or stock issuance
agreement to which Westport is a party and the vesting schedule or restrictions
applicable to those shares are not to vest or lapse on an accelerated basis in
connection with the Merger, then the shares of Belco Common Stock issued in
exchange for such shares of Westport Common Stock in the Merger shall also be
unvested and subject to the same vesting schedule in effect for the unvested
shares of Westport Common Stock immediately prior to the Effective Time. The
certificates representing such shares of Belco Common Stock may accordingly bear
the appropriate restrictive legends.
Section 7.10 Board Membership. The Surviving Corporation shall use all
reasonable efforts to cause the persons named as director nominees on Exhibit
2.3 (which Exhibit shall include two nominees designated by Belco) to be elected
to the Surviving Corporation's Board of Directors, effective as of the Effective
Time. At the Closing, the directors and officers of Belco immediately prior to
the Effective Time shall resign.
Section 7.11 Stockholders Meetings.
(a) Belco shall, as promptly as reasonably practicable after
the date hereof (i) take all steps reasonably necessary to call, give notice of,
convene and hold a special meeting of its stockholders (the "Belco Special
Meeting") for the purpose of securing the Belco Stockholders' Approval, (ii)
distribute to its stockholders the Proxy Statement/Prospectus in accordance with
applicable federal and state law and with its articles of incorporation and
bylaws, which Proxy Statement/Prospectus shall contain the recommendation of the
Board of Directors of Belco that its stockholders approve this Agreement and the
transactions contemplated hereby, (iii) except as otherwise permitted pursuant
to Section 7.2, use all reasonable efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the transactions
contemplated hereby and to secure the Belco Stockholders' Approval, and (iv)
cooperate and consult with Westport with respect to each of the foregoing
matters; provided, that nothing contained in this Section 7.11(a) shall prohibit
the Belco Board of Directors from failing to make or from withdrawing or
modifying its recommendation to Belco stockholders hereunder if the Board of
Directors of Belco, after consultation with
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independent legal counsel, determines in good faith that such action is legally
advisable for such Board of Directors to comply with its fiduciary duties to its
stockholders under applicable law.
(b) Westport shall, as promptly as reasonably practicable
after the date hereof (i) take all steps reasonably necessary to call, give
notice of, convene and hold a special meeting of its stockholders (the "Westport
Special Meeting") for the purpose of securing the Westport Stockholders'
Approval, (ii) distribute to its stockholders the Proxy Statement/Prospectus in
accordance with applicable federal and state law and its certificate of
incorporation and bylaws, which Proxy Statement/Prospectus shall contain the
recommendation of the Westport Board of Directors that its stockholders adopt
this Agreement and (iii) use all reasonable efforts to solicit from its
stockholders proxies in favor of approval of adoption of this Agreement and to
secure the Westport Stockholders' Approval, and (iv) cooperate and consult with
Belco with respect to each of the foregoing matters.
(c) Belco and Westport shall coordinate and cooperate with
respect to the timing of the Belco Special Meeting and the Westport Special
Meeting and shall use their reasonable best efforts to hold such meetings on the
same day and as soon as practicable after the date hereof.
Section 7.12 Preparation of the Proxy Statement/Prospectus and
Registration Statement.
(a) As promptly as practicable after the execution of this
Agreement, Belco and Westport shall prepare and file with the SEC the Proxy
Statement/Prospectus (it being understood and agreed that both parties will use
their reasonable best efforts to accomplish this preparation and filing within
three (3) weeks after the date hereof), and Belco shall prepare and file with
the SEC the Registration Statement in which the Proxy Statement/Prospectus will
be included as a prospectus, provided that Belco may delay the filing of the
Registration Statement until approval of the Proxy Statement/Prospectus by the
SEC. Westport and Belco will use their reasonable best efforts to respond to the
comments of the SEC in connection with the Proxy Statement/Prospectus and the
Registration Statement, to furnish all information required to prepare the Proxy
Statement/Prospectus and to cause the Registration Statement to become effective
as soon after such filing is practicable and keep the Registration Statement
effective as long as necessary to consummate the Merger. Belco will use its
reasonable best efforts to cause the Proxy Statement/Prospectus to be mailed to
Belco's stockholders, and Westport will use its reasonable best efforts to cause
the Proxy Statement/Prospectus to be mailed to Westport's stockholders, in each
case as promptly as practicable after the Registration Statement is declared
effective under the Securities Act. If necessary, after the definitive Proxy
Statement/Prospectus shall have been mailed, Westport and Belco shall promptly
circulate amended, supplemented or supplemental proxy materials and, if required
in connection therewith, re-solicit proxies. Westport shall advise Belco and
Belco shall advise Westport, as applicable, promptly after it receives notice
thereof, of the time when the Registration Statement shall become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Belco Common Stock for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information. Solely for
the purpose of preparing the Joint Proxy Statement/Prospectus, Westport
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and Belco will cause the Belco Reserve Report and the Westport Reserve Report,
respectively, to be updated to June 30, 2001 by Netherland, Xxxxxx & Associates,
Inc. and Xxxxx Xxxxx Company Petroleum Engineers, in the case of the Westport
Reserve Report, and by Xxxxxx & Xxxxx, Ltd., in the case of the Belco Reserve
Report. Westport and Belco will cause the updated version of the Westport
Reserve Report and the Belco Reserve Report, respectively, to be delivered to
the other party promptly upon completion of such update.
(b) Following receipt by Xxxxxx Xxxxxxxx LLP, Westport's
independent auditors, of an appropriate request from Belco pursuant to SAS No.
72, Westport shall use all reasonable efforts to cause to be delivered to Belco
a letter of Xxxxxx Xxxxxxxx LLP, dated a date within two business days before
the effective date of the Registration Statement, and addressed to Belco, in
form and substance reasonably satisfactory to Belco and customary in scope and
substance for "cold comfort" letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
Proxy Statement/Prospectus.
(c) Following receipt by Xxxxxx Xxxxxxxx LLP, Belco's
independent auditors, of an appropriate request from Westport pursuant to SAS
No. 72, Belco shall use all reasonable efforts to cause to be delivered to
Westport a letter of Xxxxxx Xxxxxxxx LLP, dated a date within two business days
before the effective date of the Registration Statement, and addressed to
Westport, in form and substance satisfactory to Westport and customary in scope
and substance for "cold comfort" letters delivered by independent public
accountants in connection with registration statements and proxy statements
similar to the Proxy Statement/Prospectus.
Section 7.13 Stock Exchange Listing. Belco shall use all reasonable
efforts to cause the Belco Common Stock to be issued in the Merger to be
approved for listing on the New York Stock Exchange (the "NYSE") prior to the
Effective Time, subject to official notice of issuance.
Section 7.14 Notice of Certain Events. Each party to this Agreement
shall promptly as reasonably practicable notify the other parties hereto of:
(1) any notice or other communication from any Person alleging
that the consent of such Person (or other Person) is or may be required
in connection with the transactions contemplated by this Agreement;
(2) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement;
(3) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against,
relating to or involving or otherwise affecting it or any of its
Subsidiaries which, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Sections 4.11,
4.13, 5.11 or 5.13 or which relate to the consummation of the
transactions contemplated by this Agreement;
(4) any notice of, or other communication relating to, a
default or event that, with notice or lapse of time or both, would
become a default, received by it or any of its Subsidiaries subsequent
to the date of this Agreement, under any Belco Material Contract or
Westport Material Contract; and
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(5) any Belco Material Adverse Effect or Westport Material
Adverse Effect or the occurrence of any event which is reasonably
likely to result in a Belco Material Adverse Effect or a Westport
Material Adverse Effect, as the case may be.
Section 7.15 Affiliate Agreements. Westport shall identify in a letter
to Belco all Persons who are, on the date hereof or prior to the Effective Time,
"affiliates" of Westport, as such term is used in Rule 145 under the Securities
Act. Westport shall use all reasonable efforts to cause such affiliates to
deliver to Belco not later than 5 days prior to the Effective Time, a written
agreement substantially in the form attached hereto as Exhibit 7.15.
Section 7.16 Tax Treatment. Each party hereto shall use all reasonable
efforts to cause the Merger to qualify, and shall not take, and shall use all
reasonable efforts to prevent any Subsidiary of such party from taking, any
actions which could prevent the Merger from qualifying, as a reorganization
under the provisions of section 368(a) of the Code.
Section 7.17 Stockholder Litigation. Each of Westport and Belco shall
give the other the reasonable opportunity to participate in the defense of any
stockholder litigation against Westport or Belco, as applicable, and its
directors relating to the transactions contemplated by this Agreement and no
settlement of any action against a party shall be agreed to without that party's
consent.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to the Obligation of Each Party. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) The Belco Stockholders' Approval and the Westport
Stockholders' Approval shall have been obtained.
(b) No action, suit or proceeding instituted by any
Governmental Authority shall be pending and no statute, rule or regulation and
no injunction, order, decree or judgment of any court or Governmental Authority
of competent jurisdiction shall be in effect, in each case which would prohibit,
restrain, enjoin or restrict the consummation of the Merger or has the effect of
making the Merger illegal.
(c) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceeding for such purpose shall be pending before or threatened by the
SEC.
(d) The shares of Belco Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
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(f) Other than the Certificates of Merger which shall be filed
in accordance with Section 1.2, all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Authority the failure of which to file, obtain or
occur would have a Belco Material Adverse Effect or a Westport Material Adverse
Effect shall have been filed, been obtained or occurred.
Section 8.2 Conditions to the Obligations of Westport. The obligation
of Westport to effect the Merger is subject to the satisfaction at or prior to
the Effective Time of the following conditions unless waived in writing by
Westport:
(a) Belco 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 and the representations and warranties of Belco contained in
this Agreement, to the extent qualified with respect to materiality shall be
true and correct in all respects, and to the extent not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and as of such time,
except as expressly contemplated by Belco Disclosure Letter or this Agreement
and except that the accuracy of representations and warranties that by their
terms speak as of the date of this Agreement or some other date will be
determined as of such date, and Westport shall have received a certificate of
the Chief Executive Officer and either the Chief Financial Officer or Chief
Operating Officer of Belco as to the satisfaction of this condition.
(b) Westport shall have received an opinion from Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P. prior to the effectiveness of the Registration
Statement to the effect that (i) the Merger will constitute a reorganization
under section 368(a) of the Code, (ii) Westport and Belco will each be a party
to that reorganization, and (iii) no gain or loss will be recognized by the
stockholders of Westport upon the receipt of shares of Belco Common Stock in
exchange for shares of Westport Common Stock pursuant to the Merger. In
rendering such opinion, Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. may receive
and rely upon customary factual representations and covenants of Belco and
Westport.
(c) The directors and officers of Belco immediately prior to
the Effective Time shall have resigned.
Section 8.3 Conditions to the Obligations of Belco. The obligation of
Belco to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions unless waived in writing by Belco:
(a) Westport 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 and the representations and warranties of Westport contained
in this Agreement, to the extent qualified with respect to materiality shall be
true and correct in all respects, and to the extent not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and as of such time,
except as expressly contemplated by the Westport Disclosure Letter or this
Agreement and except that the accuracy of representations and warranties that by
their terms speak as of the date of this
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Agreement or some other date will be determined as of such date, and Belco shall
have received a certificate of the Chief Executive Officer and either the Chief
Financial Officer or Chief Operating Officer of Westport as to the satisfaction
of this condition.
(b) Belco shall have received an opinion from Xxxxxx & Xxxxxx
L.L.P. prior to the effectiveness of the Registration Statement to the effect
that (i) the Merger will constitute a reorganization under section 368(a) of the
Code, (ii) Belco and Westport will each be a party to that reorganization, (iii)
no gain or loss will be recognized by Westport or Belco by reason of the Merger
and (iv) no gain or loss will be recognized by the stockholders of Old Belco
Common Stock upon the receipt of shares of Belco Common Stock in exchange for
shares of Old Belco Common Stock pursuant to the Merger except with respect to
any cash received in lieu of fractional share interests. In rendering such
opinion, Xxxxxx & Xxxxxx L.L.P. may receive and rely upon customary factual
representations and covenants of Belco and Westport.
ARTICLE IX
SURVIVAL
Section 9.1 Survival of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement shall
not survive the Effective Time.
Section 9.2 Survival of Covenants and Agreements. The covenants and
agreements of the parties to be performed after the Effective Time contained in
this Agreement shall survive the Effective Time.
ARTICLE X
TERMINATION AND WAIVER
Section 10.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the Belco Stockholders' Approval or the Westport Stockholders' Approval
have been obtained:
(a) by the mutual written consent of Westport and Belco;
(b) by either Westport or Belco if the Effective Time shall
not have occurred on or before December 31, 2001 (the "Termination Date"),
provided that the party seeking to terminate this Agreement pursuant to this
Section 10.1(b) shall not have breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the failure to consummate the Merger on or before the Termination Date;
(c) by Westport or Belco, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) would, if uncured at Closing,
cause the conditions set forth in Section 8.2(a) (in the case of termination by
Westport) or Section 8.3(a) (in the case of termination by Belco) not to be
satisfied, and (ii) shall not have been cured within twenty (20) Business Days
following receipt by the breaching party of written notice of such breach from
the other party.
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(d) by either Westport or Belco if any Governmental Authority
or court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law or Governmental Order making the consummation of the
Merger illegal or otherwise prohibiting the Merger and such Governmental Order
shall have become final and nonappealable, provided that the party seeking to
terminate this Agreement shall have used its reasonable best efforts to remove
or lift such Governmental Order;
(e) by Westport (i) if the Board of Directors of Belco (or any
committee thereof) (x) withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Westport or (y) shall have
recommended to the stockholders of Belco any Acquisition Proposal (other than an
Acquisition Proposal made by Westport); (ii) if Belco shall have entered into an
agreement with respect to an Acquisition Proposal (other than an Acquisition
Proposal made by Westport); or (iii) Belco shall have willfully breached any of
its obligations under Sections 7.2 or 7.11;
(f) by Belco, if, prior to the Belco Stockholders' Approval
having been obtained, Belco simultaneously enters into a definitive agreement
for a Superior Proposal in accordance with (and has otherwise complied with) the
terms of Section 7.2 hereof and of this Section 10.1(f), including the notice
provisions therein, and Belco makes the payment of the Termination Fee as
required pursuant to Section 10.2 of this Agreement and of the Expense Fee for
which Belco is responsible under Section 10.2 of this Agreement; provided,
however, that Belco shall not be permitted to terminate this Agreement pursuant
to this Section 10.1(f) unless it has complied with Section 7.2 and provided
Westport, three Business Days prior to such termination, a detailed written
summary of the terms and conditions of such Acquisition Proposal (such three
Business Day period shall end at the same time of day on the third Business Day
as such detailed written summary was provided to Westport by Belco); provided
further, that prior to any such termination, Belco shall, and shall cause its
respective financial and legal advisors to, negotiate in good faith with
Westport to make such adjustments in the terms and conditions of this Agreement
as would result in the pending Acquisition Proposal no longer being a Superior
Proposal; or
(g) by Westport or Belco, if, at the Belco Special Meeting
(including any adjournment or postponement), the Belco Stockholders' Approval
shall not have been obtained, or if, at the Westport Special Meeting (including
any adjournment or postponement), the Westport Stockholders' Approval shall not
have been obtained.
The party desiring to terminate this Agreement pursuant to Section 10.1(a)
through (g) shall give written notice of such termination to the other party in
accordance with Section 11.1.
Section 10.2 Effect of Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval by the stockholders of Belco:
(a) In the event of termination of the Agreement pursuant to
this Article X, all obligations of the parties shall terminate, except the
obligations of the parties pursuant to this Section 10.2 and except for the
provisions of Sections 7.1, 7.5, 9.1, 9.2, 11.2, 11.6, 11.7, and 11.8, provided
that nothing herein shall relieve any party from liability for any breaches
hereof.
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(b) In the event that this Agreement is terminated pursuant to
Section 10.1(e) or Section 10.1(f), then Belco shall promptly (and in any event
within one Business Day after such termination or, in the case of any such
termination by Belco, simultaneously with such termination (such termination not
to be effective unless such payment is made)) pay Westport an amount equal to a
termination fee of $12.5 million (the "Termination Fee"), plus up to $2.5
million of Westport's documented aggregate Expenses (the "Expense Fee").
(c) In the event (i) an Acquisition Proposal shall have been
made to Belco or any of its Subsidiaries or an Acquisition Proposal shall have
been made directly to the stockholders of Belco generally or shall have
otherwise become publicly known or any Person shall have publicly announced an
intention (whether or not conditional) to make an Acquisition Proposal, (ii) (A)
this Agreement is terminated by Westport or Belco pursuant to Section 10.1(b)
(and the Acquisition Proposal shall not have been abandoned prior to such
termination) or (B) this Agreement is terminated by Westport or Belco pursuant
to Section 10.1(g) for failure to obtain the Belco Stockholders' Approval (and
(1) the Acquisition Proposal shall not have been abandoned prior to such
stockholder vote and (2) the Westport Stockholders' Approval shall have been
obtained) and (iii) within twelve months after such termination Belco or any of
its Subsidiaries enters into a definitive agreement with respect to, or
consummates, any Acquisition Proposal, then Belco shall promptly (and in any
event within one Business Day after entering into such agreement or consummating
an Acquisition Proposal), pay Westport an amount equal to the Termination Fee
plus the Expense Fee. Solely for purposes of this Section 10.2(c), (x) all
references to 15% in the definition of Acquisition Proposal shall be 35%, and
(y) clause (iv) of the definition of Acquisition Proposal shall be revised to
read: "any acquisition or purchase, direct or indirect, of any class or series
of equity securities of Belco or any Belco Subsidiary or Belco Subsidiaries
resulting in any Person beneficially owning, directly or indirectly, more than
35% of the consolidated assets or earning power of Belco."
(d) Notwithstanding anything to the contrary contained herein,
receipt by Westport of the amounts payable pursuant to Section 10.2(b) or
Section 10.2(c) shall constitute full settlement of any and all liabilities of
Belco for damages under this Agreement in respect of a termination of this
Agreement pursuant to Section 10.1(e) or 10.1(f) other than with respect to
liabilities arising out of or attributable to the willful breach by Belco of any
covenant or agreement in this Agreement.
(e) Upon termination of this Agreement, the Voting Agreements
will also terminate pursuant to their terms.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices or communications hereunder shall be
in writing (including facsimile or similar writing) addressed as follows:
To Westport:
Westport Resources Corporation
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx,
Vice President and General Counsel
Facsimile No.: (000) 000-0000
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
Facsimile No.: (000) 000-0000
To Belco:
Belco Oil & Gas Corp.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
Facsimile No.: (000) 000-0000
Belco Oil & Gas Corp.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxx,
President and Chief Operating Officer
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxx L.L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
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Any such notice or communication shall be deemed given (i) when made, if made by
hand delivery, and upon confirmation of receipt, if made by facsimile, (ii) one
Business Day after being deposited with a next-day courier, postage prepaid, or
(iii) three Business Days after being sent certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as above (or to such
other address as such party may designate in writing from time to time).
Section 11.2 Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
Section 11.3 Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors, and assigns; provided, however, that neither this
Agreement nor any rights hereunder shall be assignable or otherwise subject to
hypothecation and any assignment in violation hereof shall be null and void.
Section 11.4 Interpretation. 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.
Section 11.5 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same Agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to each party.
Section 11.6 Entire Agreement. This Agreement (including the Belco
Disclosure Schedule and the Westport Disclosure Schedule), the Voting Agreements
and the Confidentiality Agreement represent the entire agreement of the parties
with respect to the subject matter hereof and shall supersede any and all
previous contracts, arrangements or understandings between the parties hereto
with respect to the subject matter hereof.
Section 11.7 Governing Law. Except to the extent that Nevada law is
mandatorily applicable to the Merger and the rights of shareholders of Belco and
Westport, this Agreement shall be construed, interpreted, and governed in
accordance with the laws of Delaware, without reference to rules relating to
conflicts of law.
Section 11.8 Attorneys' Fees. If any action at law or equity, including
an action for declaratory relief, is brought to enforce or interpret any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and expenses from the other party, which fees and
expenses shall be in addition to any other relief which may be awarded.
Section 11.9 No Third Party Beneficiaries. Except as provided in
Section 7.3, no Person other than the parties hereto is an intended beneficiary
of this Agreement or any portion hereof.
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Section 11.10 Disclosure Schedules. The disclosures made on any
disclosure schedule, including the Belco Disclosure Schedule and the Westport
Disclosure Schedule, with respect to any representation or warranty shall be
deemed to be made with respect to any other representation or warranty requiring
the same or similar disclosure to the extent that the relevance of such
disclosure to other representations and warranties is evident from the face of
the disclosure schedule. The inclusion of any matter on any disclosure schedule
will not be deemed an admission by any party that such listed matter is material
or that such listed matter has or would have a Belco Material Adverse Effect or
a Westport Material Adverse Effect, as applicable.
Section 11.11 Amendments and Supplements. At any time before or after
approval of the matters presented in connection with the Merger by the
respective stockholders of Westport and the Belco and prior to the Effective
Time, this Agreement may be amended or supplemented in writing by Westport and
the Belco with respect to any of the terms contained in this Agreement, except
as otherwise provided by law; provided, however, that following approval of the
issuance of Westport Common Stock contemplated hereby by the stockholders of
Westport there shall be no amendment or change to the provisions hereof with
respect to the Common Stock Exchange Ratio that is adverse to the stockholders
of Westport without further approval by the stockholders of Westport, and
following approval of this Agreement by the stockholders of the Belco there
shall be no amendment or change to the provisions hereof with respect to the
Common Stock Exchange Ratio that is adverse to the stockholders of the Belco
without further approval by the stockholders of the Belco.
Section 11.12 Extensions, Waivers, Etc. At any time prior to the
Effective Time, either party may:
(a) extend the time for the performance of any of the
obligations or acts of the other party;
(b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto; or
(c) subject to the proviso of Section 11.11 waive compliance
with any of the agreements or conditions of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by Westport or the
Belco in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WESTPORT RESOURCES CORPORATION
By: /s/ Xxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxx X. Xxxx
-----------------------------------------
Title: Chief Executive Officer
----------------------------------------
BELCO OIL & GAS CORP.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
-----------------------------------------
Title: President and COO
----------------------------------------