AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of October 9, 1996, is between The Hallwood Group Incorporated, a Delaware
corporation (the "Purchaser"), and Hallwood Energy Corporation, a Texas
corporation (the "Company"), the Company and Purchaser sometimes being
hereinafter collectively referred to as the "Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company
each have determined that it is in the best interests of their respective
shareholders for Purchaser to acquire the shares of Common Stock, par value
$0.50 per share (the "Shares") that it does not currently directly or indirectly
own upon the terms and subject to the conditions set forth herein; and
WHEREAS, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
The Tender Offer
1.1 Tender Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof and none of the events set forth
in Annex A hereto shall have occurred or be existing, within five business days
of the date hereof, Purchaser will commence a tender offer (the "Offer") for all
of the outstanding Shares that it currently does not directly or indirectly own
at a price of $19.50 per Share in cash, net to the seller, subject to the
conditions set forth in Annex A hereto. Subject to the terms and conditions of
the Offer, Purchaser will promptly pay for all Shares duly tendered that it is
obligated to purchase thereunder. The Company's Board of Directors and a
majority of the Company's Independent Directors (as defined in Section 4.2)
shall recommend acceptance of the Offer to its stockholders in a
Solicitation/Recommendation Statement on Schedule 14D-9 (as such statement may
be amended or supplemented from time to time, the "Schedule 14D- 9") to be filed
with the Securities and Exchange Commission (the "SEC") upon commencement of the
Offer; provided, however, that if the Company's Board of Directors or the
Special Committee (the "Special Committee") composed of the Company's
Independent Directors determines that its fiduciary duties require it to amend
or withdraw its recommendation, such amendment or withdrawal shall not
constitute a breach of this Agreement. Purchaser will not, without the prior
written consent of the Company and the Special Committee, decrease the price per
Share or change the form of consideration payable in the Offer, decrease the
number of Shares sought or change the conditions to the Offer. Purchaser shall
not terminate or withdraw the Offer or extend the expiration date of the Offer
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unless at the expiration date of the Offer the conditions to the Offer set forth
on Annex A hereto shall not have been satisfied or waived.
(b) Purchaser agrees, as to the Offer to Purchase and related
Letter of Transmittal (which together, as either of them may be amended or
supplemented from time to time, constitute the "Offer Documents"), and the
Company agrees, as to the Schedule 14D-9, that such documents shall, in all
material respects, comply with the requirements of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder and other applicable laws. The Company and its counsel,
as to the Offer Documents, and Purchaser and its counsel, as to the Schedule
14D-9, shall be given an opportunity to review such documents prior to their
being filed with the SEC.
(c) In connection with the Offer, the Company will cause its
Transfer Agent to furnish promptly to Purchaser a list, as of a recent date, of
the record holders of Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares and lists of
security positions of Shares held in stock depositories. The Company will
furnish Purchaser with such additional information (including, but not limited
to, updated lists of holders of Shares and their addresses, mailing labels and
lists of security positions) and such other assistance as Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of Shares.
ARTICLE II
The Merger; Closing; Effective Time
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.3) the Company shall
be merged with and into Purchaser and the separate corporate existence of the
Company shall thereupon cease (the "Merger"). The Purchaser shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of Purchaser with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in Section 3.1. The Merger shall
have the effects specified in the Delaware General Corporation Law (the "DGCL")
and the Texas Business Corporation Act (the "TBCA").
2.2 Closing. The closing of the Merger (the "Closing") shall
take place (a) at the offices of Jenkens & Xxxxxxxxx, A Professional
Corporation, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx at 10:00 A.M. on the
first business day on which the last to be fulfilled or waived of the conditions
set forth in Article VIII (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the fulfillment or waiver of
those conditions) shall be fulfilled or waived in accordance with this Agreement
or (b) at such other place and time and/or on such other date as the Company and
Purchaser may agree.
2.3 Effective Time. As soon as practicable following the
Closing, and provided that this Agreement has not been terminated or abandoned
pursuant to Article IX hereof, the Company and Purchaser will cause a (i)
Certificate of Merger (the "Delaware Certificate of Merger") to be executed and
filed with the Secretary of State of Delaware as provided in Section 251 of the
DGCL and (ii) Articles of Merger (the "Texas Articles of Merger") to be executed
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and filed with the Secretary of State of Texas as provided in Art. 5.04 of the
TBCA. The Merger shall become effective on the date on which the Delaware
Certificate of Merger has been duly filed with the Secretary of State of
Delaware and the Texas Articles of Merger have been duly filed with the
Secretary of State of the State of Texas, and such time is hereinafter referred
to as the "Effective Time."
2.4 Merger Without Meeting of Stockholders. Notwithstanding
Section 2.3 hereof, in the event that Purchaser, or any other subsidiary of
Purchaser shall acquire at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, the parties hereto agree, at the request of Purchaser, to
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acceptance for payment and purchase
of Shares by Purchaser pursuant to the Offer without a meeting of stockholders
of the Company in accordance with Section 253 of the DGCL and Art. 5.16 of the
TBCA.
ARTICLE III
Certificate of Incorporation and By-Laws
of the Surviving Corporation
3.1 The Certificate of Incorporation. The Certificate of
Incorporation of Purchaser (the "Certificate") in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the DGCL.
3.2 The By-Laws. The By-Laws of Purchaser in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the DGCL.
ARTICLE IV
Officers and Directors
of the Surviving Corporation
4.1 Officers and Directors. The directors and officers of
Purchaser at the Effective Time shall, from and after the Effective Time, be the
directors and officers, respectively, of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
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4.2 Actions by Directors. For purposes of Section 1.1(a),
Article IX and Sections 10.3 and 10.4, no action taken by the Board of Directors
of the Company prior to the Merger shall be effective unless such action is
approved by the affirmative vote of at least a majority of the directors of the
Company who are not directors or officers of Purchaser or officers of the
Company or any affiliate of either of them (the "Independent Directors").
ARTICLE V
Conversion or Cancellation of Shares in the Merger
5.1 Conversion or Cancellation of Shares. The manner of
converting or canceling shares of the Company in the Merger shall be as follows:
(a) At the Effective Time, each Share of the Common Stock of
the Company issued and outstanding immediately prior to the Effective Time
(other than Shares owned by Purchaser or any other direct or indirect subsidiary
of Purchaser (collectively, the "Purchaser Companies") or Shares that are owned
by the Company or any direct or indirect subsidiary of the Company or Shares
("Dissenting Shares") which are held by stockholders ("Dissenting Stockholders")
properly exercising appraisal rights pursuant to Art. 5.11 and 5.12 of the TBCA,
if applicable (collectively, "Excluded Shares")) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into the
right to receive, without interest, an amount in cash (the "Merger
Consideration") equal to $19.50 or such greater amount which may be paid
pursuant to the Offer. At the Effective Time, all Shares, by virtue of the
Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares (other than
Excluded Shares) shall thereafter cease to have any rights with respect to such
Shares, except the right to receive the Merger Consideration for such Shares
upon the surrender of such certificate in accordance with Section 5.2 or the
right, if any, to receive payment from the Surviving Corporation of the "fair
value" of such Shares as determined in accordance with Art. 5.12 of the TBCA.
(b) At the Effective Time, each Share issued and outstanding
at the Effective Time and owned by any of the Purchaser Companies or held in the
Company's treasury or owned by the Company or any direct or indirect subsidiary
of the Company shall, by virtue of the merger and without any action on the part
of the holder thereof, cease to be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist.
5.2 Payment for Shares. Purchaser shall make available or
cause to be made available to the paying agent appointed by Purchaser with the
Company's prior approval (the "Paying Agent") amounts sufficient in the
aggregate to provide all funds necessary for the Paying Agent to make payments
pursuant to Section 5.1(a) hereof to holders of Shares issued and outstanding
immediately prior to the Effective Time. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each person who was, at the
Effective Time, a holder of record (other than holders of Excluded Shares) of
issued and outstanding Shares a form (mutually agreed to by Purchaser and the
Company) of a letter of transmittal and instructions for use in effecting the
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surrender of the certificates, which, immediately prior to the Effective Time,
represented any of such Shares in exchange for payment therefor. Upon surrender
to the Paying Agent of such certificates, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, the Surviving Corporation shall promptly cause to be paid to the
persons entitled thereto a check in the amount to which such persons are
entitled, after giving effect to any required tax withholdings. No interest will
be paid or will accrue on the amount payable upon the surrender of any such
certificate. If payment is to be made to a person other than the registered
holder of the certificate surrendered, it shall be a condition of such payment
that the certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a person other
than the registered holder of the certificate surrendered or establish to the
satisfaction of the Surviving Corporation or the Paying Agent that such tax has
been paid or is not applicable. One hundred and twenty days following the
Effective Time, the Surviving Corporation shall be entitled to cause the Paying
Agent to deliver to it any funds (including any interest received with respect
thereto) made available to the Paying Agent which have not been disbursed to
holders of certificates formerly representing Shares outstanding on the
Effective Time, and thereafter such holders shall be entitled to look to the
Surviving Corporation only as general creditors thereof with respect to the cash
payable upon due surrender of their certificates. Notwithstanding the foregoing,
neither the Paying Agent nor any party hereto shall be liable to any holder of
certificates formerly representing Shares for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
The Surviving Corporation shall pay all charges and expenses, including those of
the Paying Agent, in connection with the exchange of cash for Shares.
5.3 Dissenters' Rights. If any Dissenting Stockholder shall be
entitled to be paid the "fair value" of such Dissenting Stockholder's Shares, as
provided in Art. 5.12 of the TBCA, the Company shall give Purchaser notice
thereof and Purchaser shall have the right to participate in all negotiations
and proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Purchaser,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any person who otherwise would have been a
Dissenting Stockholder shall have failed to perfect or shall have effectively
withdrawn or lost the right to dissent, the Shares held by such person shall
thereupon be treated as though such Shares had been converted into the Merger
Consideration pursuant to Section 5.1.
5.4 Transfer of Shares After the Effective Time. No transfers
of Shares shall be made on the stock transfer books of the Surviving Corporation
at or after the Effective Time.
ARTICLE VI
Representations and Warranties
6.1 Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchaser that:
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(a) Corporate Organization and Qualification. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification except for where such failure to so
qualify or be in such good standing, which, when taken together with all other
such failures, could not reasonably be expected to have a Material Adverse
Effect (as defined below). Each of the Company and its subsidiaries has the
requisite corporate power and authority to carry on its respective businesses as
they are now being conducted except where the failure to have such power or
authority could not reasonably be expected to have a Material Adverse Effect. As
used in this Agreement, the term "Material Adverse Effect" means a material
adverse effect on the condition (financial or otherwise), properties, assets,
liabilities, business or results of operations of the Company and its
subsidiaries, taken as a whole.
(b) Authorized Capital. The authorized capital stock of the
Company consists of 80,000,000 Shares, of which 777,126 Shares are outstanding
on the date hereof, and 20,000,000 shares of preferred stock, $0.10 par value
per share, 10,000,000 shares of preferred stock, $0.01 par value per share, and
12,000 shares of preferred stock, $1.00 par value per share (collectively, the
"Preferred Shares"), of which no shares are outstanding. All of the outstanding
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no Shares or Preferred Shares reserved for
issuance. Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned, either directly or indirectly, by the Company free and
clear of all liens, pledges, security interests, claims or other encumbrances.
Except as set forth above, there are no shares of capital stock of the Company
authorized, issued or outstanding and there are no preemptive rights nor any
outstanding subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Company or any of its
subsidiaries. After the Effective Time, the Surviving Corporation will have no
obligation to issue, transfer or sell any Shares or shares of common stock of
the Surviving Corporation pursuant to any Company stock or option plans or any
other employee benefit plan of the Company.
(c) Corporate Authority. Subject only to approval of this
Agreement by the holders of a majority of the outstanding Shares, the Company
has the requisite corporate power and authority and has taken all corporate
action necessary in order to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement is a valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors rights and to general equity principles.
(d) Governmental Filings; No Violations.
(i) Other than the filing of a certificate of merger under the
DGCL, the filing of the articles of merger under the TBCA and filings required
to be made pursuant to the Exchange Act (together, the "Regulatory Filings"), no
notices, reports or other filings are required to be made by the Company or any
of its subsidiaries with, nor are any consents, registrations, approvals,
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permits or authorizations required to be obtained by the Company or any of its
subsidiaries from, any governmental, regulatory or administrative authority,
agency, tribunal, commission or other entity, domestic, international or foreign
(collectively, "Governmental Entities" or each a "Governmental Entity"), in
connection with the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby, the
failure to make or obtain any or all of which could reasonably be expected to
have a Material Adverse Effect or could prevent or materially delay the
transactions contemplated by this Agreement,
(ii) The execution and delivery of this Agreement by the
Company do not, and the consummation by the Company of the transactions
contemplated by this Agreement will not, constitute or result in (A) a breach or
violation of, or a default under, the Articles of Incorporation or By-Laws of
the Company or the comparable governing instruments of any of its subsidiaries,
(B) except as disclosed in the Company Reports (as hereinafter defined) filed
with the SEC prior to the date hereof, a breach or violation of, a default under
or the triggering of any payment or other material obligations pursuant to, any
of the Company's existing employee benefit plans or any grant or award made
under any of the foregoing, (C) a breach or violation of, or a default under,
the acceleration of or the creation of a lien, pledge, security interest or
other encumbrance on assets (with or without the giving of notice or the lapse
of time) pursuant to, any provision of any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation ("Contracts") of the
Company or any of its subsidiaries or any law, rule, ordinance or regulation or
judgment, decree, order, award or governmental or non-governmental permit or
license to which the Company or any of its subsidiaries is subject or (D) any
change in the rights or obligations of any party under any of the Contracts,
except, in the case of clause (C) or (D) above, for such breaches, violations,
defaults, accelerations or changes that, alone or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect or that could not
prevent, materially delay or materially burden the transactions contemplated by
this Agreement. Schedule 6.1(d) sets forth, to the best knowledge of the
officers of the Company, a list of any consents required under any Contracts to
be obtained prior to consummation of the transactions contemplated by this
Agreement (whether or not subject to the exception set forth with respect to
clause (C) above). The Company will use its best efforts to obtain the consents
referred to on such Schedule 6.1(d).
(e) Company Reports; Financial Statements. The Company has
made available to Purchaser each registration statement, schedule, report, proxy
statement or information statement prepared by it since December 31, 1995
("Audit Date"), including, without limitation, (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and (ii) the Company's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1996 and June 30,
1996, each in the form (including exhibits and any amendments thereto) filed
with the SEC (collectively, the "Company Reports"). To the best knowledge of the
Company, as of their respective dates, the Company Reports did not, and any
Company Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. To the
best knowledge of the Company, each of the consolidated balance sheets included
in or incorporated by reference into the Company Reports (including the related
notes and schedules) fairly presents the consolidated financial position of the
Company and its subsidiaries as of its date and each of the consolidated
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statements of income and of changes in financial position included in or
incorporated by reference into the Company Reports (including any related notes
and schedules) fairly presents the results of operations, retained earnings and
changes in financial position, as the case may be, of the Company and its
subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Other than the Company Reports and the Company's
proxy statement filed in connection with its 1996 annual meeting of
stockholders, the Company has not filed any other definitive reports or
statements with the SEC since the Audit Date.
(f) Absence of Certain Changes. Except as disclosed in the
Company Reports filed with the SEC prior to the date hereof, since the Audit
Date, the Company and its subsidiaries have conducted their respective
businesses only in, and have not engaged in any material transaction other than
according to, the ordinary and usual course of such businesses and there has not
been: (i) any material adverse change (including, without limitation, any change
arising out of or related to any natural disaster) in the condition (financial
or otherwise), properties, assets, liabilities, business or results of
operations of the Company or any of its subsidiaries or any development or
combination of developments of which the Company or any of its subsidiaries has
knowledge which is reasonably likely to result in any such change; (ii) any
declaration, setting aside or payment of any dividend or other distribution with
respect to the capital stock of the Company; or (iii) any change by the Company
in accounting principles, practices or methods.
(g) Brokers and Finders. Neither the Company nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders, fees in connection
with the transactions contemplated herein, except that Principal Financial
Securities, Inc. (the "Financial Advisor") has been employed as financial
advisor to the Independent Directors and the arrangements with the Financial
Advisor have been disclosed in writing to Purchaser prior to the date hereof.
(h) Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation (each a
"Takeover Statute") is, or at the Effective Time will be, applicable to the
Company, the Shares, the Offer, the Merger or the transactions contemplated by
the Offer or hereby.
(i) Permits. The Company and its subsidiaries have such
certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations, registrations, qualifications and clearances from appropriate
Governmental Entities ("Permits") as are necessary to own, lease or operate
their properties and to conduct their businesses in the manner described in the
Company Reports and as currently owned or leased and conducted and all such
Permits are valid and in full force and effect except such licenses that the
failure to have or to be in full force and effect, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any written notice
that any violations are being or have been alleged in respect of any such Permit
and no proceeding is pending or, to the best of the Company's knowledge, after
due inquiry, threatened, to suspend, revoke or limit any such Permit. To the
best of the Company's knowledge, after due inquiry, the Company and its
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subsidiaries are in compliance in all material respects with their respective
obligations under such Permits, with such exceptions as individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect,
and no event has occurred that allows, or after notice or lapse of time would
allow, revocation, suspension, limitation or termination of such Permits, except
such events as could not reasonably be expected to have a Material Adverse
Effect.
(j) Fairness Opinion. The Board of Directors of the Company
has received an opinion of the Financial Advisor dated the date hereof, to the
effect that the Offer and the Merger are fair, from a financial point of view,
to the holders of Shares (other than Purchaser).
(k) Schedule 14D-9; Offer Documents. The Schedule 14D-9
distributed to the Company's stockholders in connection with the Merger will
not, at the date of filing with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Purchaser for inclusion in the Schedule 14D-9. None of the information supplied
by the Company for inclusion in the Offer Documents or the Rule 13e-3
Transaction Statement on Schedule 13E-3 (together with any supplements or
amendments thereto, the "Schedule 13E-3"), at the respective times such Offer
Documents or the Schedule 13E-3 or any amendments or supplements thereto are
filed with the SEC, will contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. With respect to information contained in the
Company Reports that are supplied by the Company for inclusion or incorporation
in the Offer Documents or the Schedule 13E-3, the representations and warranties
made in the preceding two sentences shall be limited to the best of the
Company's knowledge. The Company agrees to correct promptly any information in
the Schedule 14D-9 or any information provided by it for use in the Offer
Documents or the Schedule 13E-3 if and to the extent that such information shall
have become false or misleading in any material respect; and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to the holders of Shares, in each case
as and to the extent required by applicable federal securities laws.
6.2 Representations and Warranties of Purchaser.
Purchaser represents and warrants to the Company that:
(a) Corporate Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification except for such
failure to so qualify or to be in such good standing, which, when taken together
with all other such failures, could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), properties,
assets, liabilities, business or results of operations of Purchaser and its
subsidiaries, taken as a whole.
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(b) Corporate Authority. Purchaser has the requisite corporate
power and authority and has taken all corporate action necessary in order to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement is a valid and binding agreement of
Purchaser enforceable against Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors rights
and to general equity principles.
(c) Governmental Filings; No Violations.
(i) Other than Regulatory Filings by Purchaser (the "Purchaser
Regulatory Filings"), no notices, reports or other filings are required to be
made by Purchaser with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by Purchaser from, any Governmental
Entity in connection with the execution and delivery of this Agreement by
Purchaser and the consummation of the transactions contemplated hereby by
Purchaser, the failure to make or obtain any or all of which could prevent or
materially delay the transactions contemplated by this Agreement.
(ii) The execution and delivery of this Agreement by Purchaser
do not, and the consummation of the transactions contemplated hereby by
Purchaser will not, constitute or result in a breach or violation of, or a
default under, the Certificate of Incorporation or By-Laws (or similar
organizational documents) of Purchaser.
(d) Funds. Purchaser has or will have at the time of
acceptance for payment of Shares pursuant to the Offer and at the Effective Time
the funds necessary to consummate the Offer and the Merger.
(e) Offer Documents; Schedule 14D-9. The Offer Documents will
not, at the date of filing with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Purchaser with respect to information supplied by the
Company for inclusion in the Offer Documents. None of the information supplied
by Purchaser for inclusion in the Schedule 14D-9 or related materials or the
Schedule 13E-3 at the respective times such Schedules or any amendments or
supplements thereto are filed with the SEC, will contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. Purchaser agrees to correct promptly any information in
the Offer Documents or any information provided by it for use in the Schedule
14D-9 or related materials or the Schedule 13E-3 if and to the extent that it
shall have become false or misleading in any material respect and Purchaser
further agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.
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ARTICLE VII
Covenants
7.1 Interim Operations of the Company. The Company covenants
and agrees that, prior to the Effective Time (unless Purchaser shall otherwise
agree in writing and except as otherwise expressly contemplated by this
Agreement), the business of the Company and its subsidiaries shall be conducted
only in the ordinary and usual course consistent with past practice and, to the
extent consistent therewith, each of the Company and its subsidiaries shall use
its best efforts to preserve its business organization intact (including
maintaining all of its Permits) and maintain its existing relations with
customers, suppliers, employees and business associates and it will take no
action that would adversely affect the ability of the parties to promptly
consummate the transactions contemplated by this Agreement.
7.2 Meetings of the Company's Stockholders. If required
following termination of the Offer, the Company will take all action necessary
to convene a meeting of holders of Shares as promptly as practicable to consider
and vote upon the approval of this Agreement and the Merger. Subject to
fiduciary requirements of applicable law, the Board of Directors of the Company
shall recommend such approval and the Company shall take all lawful action to
solicit such approval. At any such meeting of the Company all of the Shares then
owned by the Purchaser Companies (including all Shares currently owned by the
Purchaser Companies) will be voted in favor of this Agreement. The Company's
proxy or information statement with respect to such meeting of shareholders (the
"Proxy Statement"), at the date thereof and at the date of such meeting, will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was made by the Company in reliance upon and in conformity with written
information concerning the Purchaser Companies furnished to the Company by
Purchaser specifically for use in the Proxy Statement. Purchaser understands
that for purposes of this Section 7.2 that while the Company's projections and
forward-looking information furnished by the Company to Purchaser were prepared
in good faith and represent the Company's best estimate as to the subject matter
thereof, the Company makes no representation or warranty as to the truth,
completeness or accuracy of any projections or forward- looking information
furnished by the Company to Purchaser. The Proxy Statement shall not be filed,
and no amendment or supplement to the Proxy Statement will be made by the
Company, without consultation with Purchaser and its counsel.
7.3 Filings; Other Action. Subject to the terms and conditions
herein provided, the Company and Purchaser shall: (a) promptly make their
respective Regulatory Filings and Purchaser Regulatory Filings and thereafter
make any other required submissions with respect to the Offer and the Merger;
and (b) use their respective best efforts to take promptly, or cause to be taken
promptly, all other action and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable.
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7.4 Access. Upon reasonable notice, the Company shall (and
shall cause each of its subsidiaries to) afford Purchaser's officers, employees,
counsel, accountants and other authorized representatives ("Representatives")
access, during normal business hours throughout the period prior to the
Effective Time, to its properties, books, Contracts and records and, during such
period, the Company shall (and shall cause each of its subsidiaries to) furnish
promptly to Purchaser all information concerning its business, properties and
personnel as Purchaser or its Representatives may reasonably request, provided
that no investigation pursuant to this Section 7.4 shall affect or be deemed to
modify any representation or warranty made by the Company.
7.5 Notification of Certain Matters. The Company shall give
prompt notice to Purchaser of: (a) any notice of, or other communication
relating to, any default or event that, with notice or lapse of time or both,
would become a default, received by the Company or any of its subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any Contract to which the Company or any of its subsidiaries is a party or is
subject where such default could reasonably be expected to have a Material
Adverse Effect; and (b) any material adverse change (including, without
limitation, any change arising out of or related to any natural disaster) in the
condition (financial or otherwise), properties, assets, liabilities, business or
results of operations of the Company or any of its subsidiaries or any
development or combination of developments of which the Company or any of its
subsidiaries has knowledge which could reasonably be expected to result in any
such change. Each of the Company and Purchaser shall give prompt notice to the
other party of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement.
7.6 Publicity. The initial press release issued in connection
with the execution of this Agreement shall be a joint press release and
thereafter the Company and Purchaser shall consult with each other prior to
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and prior to making any filings with any
Governmental Entity or with any national securities exchange with respect
thereto.
7.7 Indemnification; Directors' and Officers Insurance. (a)
From and after the Effective Time, the Surviving Corporation agrees that it will
indemnify and hold harmless each present and former director and/or officer of
the Company, determined as of the Effective Time (the "Indemnified Parties"),
that is made a party or threatened to be made a party to any threatened, pending
or completed, action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she was a
director or officer of the Company or any subsidiary of the Company prior to the
Effective Time and arising out of actions or omissions of the Indemnified Party
in any such capacity occurring at or prior to the Effective Time (a "Claim")
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, amounts paid in settlement pursuant to Section 7.7(b), losses, claims,
damages or liabilities (collectively, "Costs") reasonably incurred in connection
with any Claim, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company would have been permitted under
Texas law. The Surviving Corporation shall also advance expenses (including
attorneys' fees), as incurred by the Indemnified Party to the fullest extent
108
permitted under applicable law provided such Indemnified Party provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 7.7, upon learning of any such Claim, shall
promptly notify the Surviving Corporation thereof, but the failure to so notify
shall not relieve the Surviving Corporation of any liability it may have to such
Indemnified Party if such failure does not materially prejudice the indemnifying
party. In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) the Surviving
Corporation shall have the right to assume the defense thereof and the Surviving
Corporation shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Surviving Corporation elects not to assume such defense or counsel or the
Indemnified Parties advise that there are issues which raise conflicts of
interest between the Surviving Corporation and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that the Surviving Corporation shall be obligated pursuant to this
paragraph (b) to pay for only one firm or counsel for all Indemnified Parties in
any jurisdiction unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest, (ii) the Indemnified
Parties will cooperate in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent, which consent will not be unreasonably withheld; and provided,
further, however, that the Surviving Corporation shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
non-appealable, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. If such indemnity is not
available with respect to any Indemnified Party, then the Surviving Corporation
and the Indemnified Party shall contribute to the amount payable in such
proportion as is appropriate to reflect relative faults and benefits, with any
aspect of "fault" otherwise allocable to the Company being allocated to the
Surviving Corporation.
(c) If a claim for indemnification or advancement under this
Section 7.7 is not paid in full by the Surviving Corporation within thirty days
after a written claim therefor has been received by the Surviving Corporation,
the Indemnified Party may any time thereafter bring suit against the Surviving
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the Indemnified Party shall be entitled to be paid also the
expense of prosecuting such claims.
(d) Neither the failure of the Surviving Corporation
(including its Board of Directors, independent legal counsel or shareholders) to
have made a determination prior to the commencement of such suit that
indemnification of the Indemnified Party is proper in the circumstances because
he or she has met the applicable standard of conduct, nor an actual
determination by the Surviving Corporation (including its Board of Directors,
independent legal counsel, or shareholders) that the Indemnified Party has not
109
met such applicable standard of conduct, shall be a defense to the suit or
create a presumption that the Indemnified Party has not met the applicable
standard of conduct.
(e) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain the Surviving Corporation's existing
directors and officers liability insurance or equivalent liability insurance
("D&O Insurance"), which will provide coverage for those persons who are
directors and officers of the Company as of the Effective Time, so long as the
annual premium therefor is not in excess of 125% of the last annual premium paid
by the Surviving Corporation prior to the date hereof (the "Current Premium").
If the Surviving Corporation determines that it is unable to maintain the
existing or equivalent D&O Insurance that includes coverage for those persons
who are directors and officers of the Company as of the Effective Time for a
premium not in excess of 125% of the Current Premium, but maintains D&O
Insurance for persons who are directors and officers of the Surviving
Corporation, then, for the six-year period after the Effective Time, the
Surviving Corporation will provide D&O Insurance for those persons who are
currently directors and officers of the Company on the same basis as the
Surviving Corporation maintains D&O Insurance for persons who are then directors
and officers of the Surviving Corporation. If the existing D&O Insurance
expires, is terminated or canceled during the six-year period after the
Effective Time and the Surviving Corporation does not then maintain D&O
Insurance for persons who are directors and officers of the Surviving
Corporation, the Surviving Corporation will use its reasonable best efforts to
obtain D&O Insurance for such period providing at least $2,000,000 of coverage
for those persons who are directors and officers of the Company at the Effective
Time.
(f) In lieu of the insurance arrangement referred to in clause
(e) of this Section 7.7, the Surviving Corporation may, on or before the
expiration of the Offer, enter into alternative insurance arrangements, provided
that such arrangements are approved by each of the individuals who are
Independent Directors at any time from the date of this Agreement through the
Effective Time.
7.8 Other Agreements.
(a) Takeover Statute. If any Takeover Statute shall become
applicable to the Merger, the Offer or the other transactions contemplated
hereby, the Company and the members of the Board of Directors of the Company
shall grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby.
(b) Best Efforts and Cooperation. The Company and Purchaser
each shall use (and shall cause its subsidiaries to use) its best efforts to
cause the conditions set forth in Article VIII to be satisfied and to consummate
the Merger and the other transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the Company shall use (and shall cause
its subsidiaries to use) its best efforts (including providing information and
communication) to obtain each of the consents or waivers identified pursuant to
Section 6.1(d)(ii) and to obtain as promptly as practicable all necessary
approvals authorizations and consents of Governmental Entities required to be
obtained in order to consummate the transactions contemplated hereby, and
each of the parties hereto shall cooperate with the others in obtaining all
such consents, waivers, approvals and authorizations.
(c) Purchaser Vote. Purchaser shall vote (or consent with
respect to) or cause to be voted (or a consent to be given with respect to) any
Shares (including all Shares currently owned) beneficially owned by it or any of
its subsidiaries or with respect to which it or any of its subsidiaries has the
power (by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent), in favor of the adoption and approval of this Agreement at any meeting
of stockholders of the Company at which this Agreement shall be submitted for
adoption and approval and at all adjournments or postponements thereof (or, if
applicable, by any action of stockholders of the Company by consent in lieu of a
meeting).
7.9 Certain Amendments to the Certificate of Incorporation and
By-laws of the Surviving Corporation. No amendment to the Certificate of
110
Incorporation or By-laws of the Surviving Corporation shall reduce in any way
the elimination of personal liability of the directors of the Company contained
therein or adversely affect any then existing right of any director or officer
(or former director or officer) to be indemnified with respect to acts,
omissions or events occurring prior to the Effective Time.
ARTICLE VIII
Conditions
8.1 Conditions to Obligations of Parties. The respective
obligations of the parties to consummate the Merger are subject to the
fulfillment of each of the following conditions:
(a) Stockholder Approval. In the event of a Company
stockholder meeting pursuant to Section 7.2, this Agreement shall have been duly
approved by the holders of a majority of the Shares, in accordance with
applicable law and the Articles of Incorporation and By-Laws of the Company;
(b) Purchase of Shares. Purchaser (or one of the
Purchaser Companies) shall have purchased Shares pursuant to the Offer;
(c) Litigation. No court or other Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the Merger;
(d) Consent. The Company shall have obtained the consent of
its principal lender to the Merger or the Purchaser shall have obtained a
refinancing of such obligation on terms satisfactory to the Purchaser in its
sole discretion.
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(e) Annex A. The Minimum Tender Condition shall have been
satisfied and none of the events listed in Annex A shall have occurred.
ARTICLE IX
Termination
9.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares, by the mutual consent
of Purchaser and the Company, by action of their respective Boards of Directors.
9.2 Termination by Either Purchaser or the Company. This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of either Purchaser or the Company if: (a) Purchaser, or any
Purchaser Company, shall have terminated the Offer without purchasing any Shares
pursuant thereto; provided, however, that in the case of termination of this
Agreement by Purchaser, such termination of the Offer is not in violation of the
terms of the Offer; or (b) without fault of the terminating party, the Merger
shall not have been consummated by December 31, 1996, whether or not such date
is before or after the approval by holders of Shares.
9.3 Termination by Purchaser. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of Shares, by action of the Board of Directors
of Purchaser, if: (a) the Company shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement to
be complied with or performed by the Company at or prior to such date of
termination; or (b) the Board of Directors of the Company or the Independent
Directors shall have withdrawn or modified in a manner adverse to Purchaser its
approval or recommendation of the Offer, this Agreement or the Merger or the
Board of Directors of the Company or the Independent Directors, upon request by
Purchaser, shall fail to reaffirm such approval or recommendation, or shall have
resolved to do any of the foregoing.
9.4 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares by action of the Board
of Directors of the Company, if Purchaser (a) shall have failed to comply in any
material respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by Purchaser at or prior to such date
of termination or (b) shall have failed to commence the Offer within the time
required in Section 1.1(a).
9.5 Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article IX, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in Section 10.2 below and except that nothing herein will relieve any
party from any liability or damages for any breach of this Agreement.
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ARTICLE X
Miscellaneous and General
10.1 Payment of Expenses. Whether or not the Merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
Merger.
10.2 Survival. The agreements of the Company and Purchaser
contained in Sections 5.2 (but only to the extent that such Section expressly
relates to actions to be taken after the Effective Time), 5.3, 5.4, 7.7, 7.9,
and 10.1 shall survive the consummation of the Merger. The agreements of the
Company and Purchaser contained in Section 9.5 and this Article X shall survive
the termination of this Agreement. All other representations, warranties,
agreements and covenants in this Agreement shall not survive the consummation of
the Merger or the termination of this Agreement.
10.3 Modification or Amendment. Subject to the applicable
provisions of the DGCL or the TBCA, at any time prior to the Effective Time, the
parties hereto may modify or amend this Agreement, by written agreement executed
and delivered by duly authorized officers of the respective parties.
10.4 Waiver of Conditions. The conditions to each of the
parties obligations to consummate the Merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
10.5 Counterparts. For the convenience of the parties hereto,
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
10.6 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Texas and the Federal courts of the United States of America
located in the State of Texas solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated hereby, and
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that all
claims with respect to such action, suit or proceeding shall be heard and
determined in such a state or Federal court. The parties hereby consent to
113
and grant any such court jurisdiction over the person of such parties and over
the subject matter of such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in Section 10.7 or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 10.6.
10.7 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid:
if to Purchaser:
The Hallwood Group Incorporated
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
with a copy to:
W. Xxxx Xxxxxx, Esq.
Jenkens & Xxxxxxxxx, A Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
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if to the Company:
Hallwood Energy Corporation
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx
Attention: Xxxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
and to:
Xxxxxx X. X. Xxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxx, P.C.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8 Entire Agreement. This Agreement (including any annexes,
exhibits or Schedules hereto) constitutes the entire agreement, and supersedes
all other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.
10.9 No Third Party Beneficiaries. Except as provided in
Sections 7.7 (Indemnification; Directors' and Officers' Insurance) and 7.9
(Certain Amendments to the Certificate of Incorporation and By-laws of the
Surviving Corporation), as to which directors and officers of the Company are
intended by the parties to be beneficiaries, this Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
10.10 Obligations of Purchaser and of the Company. Whenever
this Agreement requires Purchaser or, after the Effective Time, the Surviving
Corporation, to take any action, such requirement shall be deemed to include an
undertaking on the part of Purchaser to cause the Surviving Corporation to take
such action, including providing the requisite funds to purchase Shares or make
any other payment obligation. Whenever this Agreement requires a subsidiary of
the Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such subsidiary to take such action.
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10.11 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.12 Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section or
Schedule, such reference shall be to a Section of or Annex or Schedule to this
Agreement unless otherwise indicated. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation."
10.13 Assignment. This Agreement shall not be assignable by
operation of law or otherwise; provided, however, that Purchaser may designate,
by written notice to the Company, another wholly-owned direct or indirect
subsidiary to be a Constituent Corporation in lieu of Purchaser, in the event of
which, all references herein to Purchaser shall be deemed references to such
other subsidiary, where applicable, except that all representations and
warranties made herein with respect to Purchaser as of the date of this
Agreement shall be deemed representations and warranties made with respect to
such other subsidiary as of the date of such designation.
10.14 Definition of "Subsidiary" and "Person". When a
reference is made in this Agreement to a subsidiary of a party, the word
"subsidiary" means any corporation or other organization whether incorporated or
unincorporated of which at least a majority of the securities or interests
having by the terms thereof ordinary voting power to elect at least a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly 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. When a reference is made in this
Agreement to a person, the word "person" means and includes any natural person,
corporation, partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental or political subdivision,
regulatory body or other entity.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
The Hallwood Group Incorporated
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Vice President
Hallwood Energy Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, President
117
Annex A
Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer, Purchaser shall not be obligated to accept for payment any Shares or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer) or pay for, and
may delay the acceptance for payment of or payment for, any tendered Shares
unless there have been validly tendered and not withdrawn prior to the
expiration date of the Offer a majority of the Shares not currently owned by
Purchaser which, together with any Shares currently beneficially owned directly
or indirectly by Purchaser, also will constitute at least 90% of the total
Shares outstanding and issuable as of the date the Shares are accepted for
payment pursuant to the offer (the "Minimum Tender Condition"), or if on or
after October 9, 1996, and at or before the time of payment for any of such
Shares (whether or not any Shares have theretofore been accepted for payment or
paid for pursuant to the Offer), any of the following events shall occur:
(a) there shall be any statute, rule, regulation, judgment, injunction
or other order, enacted, promulgated, entered, enforced or deemed applicable to
the Offer or the Merger or any other action shall have been taken by any
government, legislative body, court or governmental, regulatory or
administrative agency, authority, tribunal or commission, domestic,
supranational or foreign (each, a "Governmental Entity"), or any other person,
domestic, supranational or foreign (i) challenging the legality of the
acquisition by Purchaser of the Shares; (ii) restraining, delaying or
prohibiting the making or consummation of the Offer or the Merger or obtaining
from the Company or Purchaser any damages in connection therewith; (iii)
relating to assets of, or prohibiting or limiting the ownership or operation by
Purchaser of all or any portion of the business or assets of, the Company or
Purchaser (including the business or assets of their respective affiliates and
subsidiaries) or imposing any limitation on the ability of Purchaser to conduct
such business or own such assets; (iv) imposing limitations on the ability of
Purchaser or (or any affiliate of Purchaser) to acquire or hold or to exercise
full rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by them on all matters properly presented to the
stockholders of the Company; or (v) having a substantial likelihood of any of
the foregoing;
(b) there shall have occurred and be continuing (i) any general
suspension of, or limitation on times or prices for, trading in securities on
any national securities exchange or in the over-the-counter market in the United
States or (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory);
(c) the Company shall have breached or failed to perform in any
material respect any of its covenants, obligations or agreements under the
Agreement, which breach or failure shall not have been cured within the earlier
of 30 days or the time for any payment causing such breach or failure, if
curable, or any representation or warranty of the Company set forth in the
Agreement shall have been inaccurate or incomplete in any material respect when
made or thereafter shall become inaccurate or incomplete in any material
respect;
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(d) any change, including, without limitation, any change arising out
of or related to any natural disaster, shall have occurred or been threatened or
become known (or any condition, event or development shall have occurred or been
threatened or become known involving a prospective change) in the business,
properties, assets, liabilities, condition (financial or otherwise), or results
of operations of the Company or any of its subsidiaries that could reasonably be
expected to be materially adverse to the Company and its subsidiaries taken as a
whole;
(e) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be made or obtained by the
Company, Purchaser or any stockholder of Purchaser with or from any Governmental
Entity in connection with the Offer and the Merger shall not have been made or
obtained except where the failure to make or to obtain, as the case may be, such
consents, registrations, approvals, permits, authorizations, notices, reports or
other filings could not reasonably be expected to have a Material Adverse
Effect;
(f) the Special Committee of the Board of Directors shall have
adversely amended or modified or shall have withdrawn its recommendation of the
Offer or the Merger, or shall have failed to publicly reconfirm such
recommendation upon request by Purchaser, or shall have resolved to do any of
the foregoing; or
(g) the Agreement shall have been terminated in accordance with its
terms or Purchaser shall have reached an agreement or understanding with the
Special Committee providing for termination of the Offer which, in the
reasonable judgment of Purchaser with respect to each and every matter referred
to above, and regardless of the circumstances (including any action or inaction
by Purchaser or any affiliate of Purchaser) giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser regardless of the circumstances (including any action
or inaction by Purchaser or any affiliate of Purchaser) giving rise to any such
conditions or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion, other than the Minimum Tender
Condition, which the Purchaser may waive only with the consent of the Special
Committee. The failure by Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by Purchaser concerning the events described above will
be final and binding on all holders of the Shares.
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