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EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
This Amended and Restated Agreement and Plan of Merger (this
"Agreement") is made and entered into as of the 17th day of November, 1997, by
and among Southern Mineral Corporation, a Nevada corporation ("Parent"), SMC
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and Amerac Energy Corporation, a Delaware corporation (the
"Company").
PRELIMINARY STATEMENTS
A. Parent desires to combine its business and operations with the
business and operations of the Company through the merger (the "Merger") of Sub
with and into the Company, with the Company as the surviving corporation,
pursuant to which each share of Company Common Stock (as defined in Section
4.4) outstanding at the Effective Time (as defined in Section 1.2) will be
converted into the right to receive shares of Parent Common Stock (as defined
in Section 3.4) as more fully provided herein.
B. The Company desires to combine its business and operations with the
business and operations of Parent and to become a wholly owned subsidiary of
Parent and for the holders of shares of Company Common Stock ("Company
Stockholders") to have a continuing equity interest in the combined businesses
of Parent and the Company.
C. The parties intend that the Merger constitute a tax-free
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
D. The parties intend that the Merger be accounted for under the
purchase method of accounting.
E. The respective Boards of Directors of Parent, Sub and the Company
have determined that the Merger in the manner contemplated herein is fair to
and in the best interests of their respective stockholders and, by duly adopted
resolutions, have approved and adopted this Agreement.
F. Parent, Sub and the Company have entered into that certain
Agreement and Plan of Merger, dated as of November 17, 1997 (the "Original
Agreement"), and this Agreement amends and restates the Original Agreement in
its entirety.
AGREEMENT
Now, therefore, in consideration of these premises and the
mutual and dependent promises hereinafter set forth, the parties hereto agree
as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the provisions of the Delaware General Corporation Law
(the "DGCL"), Sub shall be merged with and into the Company as soon as
practicable following the satisfaction or waiver of the conditions set forth in
Article VI, but in no event later than two business days thereafter (the date
of such merger being referred to herein as the "Closing Date"). Following the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue its existence under the laws of the State of Delaware. The
Company, in its capacity as the corporation surviving the Merger, is
hereinafter sometimes referred to as the "Surviving Corporation".
1.2 Effective Time. The Merger shall be consummated by filing with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
a certificate of merger (the "Certificate of Merger") in such form as is
required by and executed in accordance with the DGCL. The Merger shall become
effective (the "Effective Time") when the Certificate of Merger has been filed
with the Delaware Secretary of State or at such later time as may be agreed by
Parent and the Company and specified in the Certificate of Merger. Prior to the
filing referred to in this Section 1.2, a closing (the "Closing") shall be held
at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. at 000 Xxxxxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxx 00000, or such other place as the parties may agree.
1.3 Effects of the Merger. The Merger shall have the effects set forth
in the DGCL.
1.4 Certificate of Incorporation and By-laws. The Certificate of
Incorporation of Sub, as in effect immediately prior to the Effective Time,
shall be the initial Certificate of Incorporation of the Surviving Corporation.
The By-laws of Sub, as in effect immediately prior to the Effective Time, shall
be the initial By-laws of the Surviving Corporation.
1.5 Directors and Officers. From and after the Effective Time, the
officers and the directors of Sub shall be the officers and the directors of
the Surviving Corporation, in each case until their respective successors are
duly elected and qualified.
1.6 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable
to carry out the provisions of this Agreement, the proper officers and
directors of Parent and the Company shall take all such necessary action.
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ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Sub or the Company:
(a) Each share of common stock of Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation. Such shares shall thereafter
constitute all of the issued and outstanding capital stock of the Surviving
Corporation.
(b) For purposes of this Agreement, "Aggregate Consideration"
shall mean that number of shares (rounded to the nearest whole share) of common
stock, $.01 par value per share, of Parent ("Parent Common Stock") determined
by dividing (i) $22,500,000.00 (the "Purchase Price") by (ii) the average
closing sale price of a share of Parent Common Stock as quoted on the Nasdaq
Stock Market ("Nasdaq") for the twenty consecutive trading days which precede
the third trading day which is immediately prior to the Closing, as reported
(absent manifest error in the printing thereof) by The Wall Street Journal (the
"Average Closing Sale Price"); provided, however, that if the Aggregate
Consideration as calculated pursuant to the foregoing would be (X) less than
2,727,272 shares of Parent Common Stock, then the Aggregate Consideration shall
be deemed to be 2,727,272 shares of Parent Common Stock or (Y) more than
3,333,333 shares of Parent Common Stock, then the Aggregate Consideration shall
be deemed to be 3,333,333 shares of Parent Common Stock. Each share of Company
Common Stock (other than shares to be canceled in accordance with Section
2.1(c)) issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive that number of shares of Parent Common
Stock calculated by dividing the Aggregate Consideration by the total number of
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time (the "Exchange Ratio").
(c) Each share of capital stock of the Company held in the
treasury of the Company or held by Parent or any of its subsidiaries shall be
canceled and retired and no payment shall be made in respect thereof.
2.2 Exchange Ratio, Fractional Shares. No certificates for fractional
shares of Parent Common Stock shall be issued as a result of the conversion
provided for in Section 2.1(b). To the extent that an outstanding share of
Company Common Stock would otherwise have become a fractional share of Parent
Common Stock, the holder thereof, upon presentation of such fractional interest
represented by an appropriate certificate for Company Common Stock to the
Exchange Agent pursuant to Section 2.3, shall be entitled to receive a cash
payment therefor in an amount equal to the value (determined with reference to
the last reported sales price of Parent Common Stock on Nasdaq on the last full
trading day immediately prior to the Effective Time) of such fractional
interest. Such payment with respect to fractional shares is merely intended to
provide a mechanical rounding off of, and is not a separately bargained for,
consideration. If more than one certificate representing shares of Company
Common Stock shall be surrendered for the account of
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the same holder, the number of shares of Parent Common Stock for which
certificates have been surrendered shall be computed on the basis of the
aggregate number of shares represented by the certificates so surrendered. In
the event that prior to the Effective Time Parent or the Company shall declare
a stock dividend or other distribution payable in shares of its common stock or
securities convertible into shares of its common stock, or effect a stock
split, reclassification, combination or other change with respect to its common
stock, the Exchange Ratio shall be adjusted to reflect such dividend,
distribution, stock split, reclassification, combination or other change.
2.3 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall
make available to an exchange agent designated by Parent and reasonably
acceptable to the Company (the "Exchange Agent"), for the benefit of Company
Stockholders, for exchange in accordance with this Section 2.3, certificates
representing shares of Parent Common Stock issuable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock and shall from time to
time deposit cash in an amount reasonably expected to be paid pursuant to
Section 2.2 (such shares of Parent Common Stock and cash, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive shares of Parent Common Stock
pursuant to Section 2.1(b) hereof (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) a certificate
representing that number of shares of Parent Common Stock which such holder has
the right to receive pursuant to Section 2.1 and (y) a check representing the
amount of cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, which such holder has the right to receive pursuant to
the provisions of this Article II, after giving effect to any required
withholding tax, and the shares represented by the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or accrued on the cash in
lieu of fractional shares, if any, and unpaid dividends and distributions, if
any, payable to holders of shares of Company Common Stock. In the event of a
transfer of ownership of shares of Company Common Stock which is not registered
on the transfer records of the Company, a certificate representing the proper
number of shares of Parent Common Stock, together with a check for the cash to
be paid in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, may be issued to such transferee if the Certificate
representing such shares of Company Common Stock held by such transferee is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.3, each Certificate shall be deemed at any time after
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the Effective Time to represent only the right to receive upon surrender a
certificate representing shares of Parent Common Stock and cash in lieu of
fractional shares, if any, and unpaid dividends and distributions, if any, as
provided in this Article II.
(c) Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no dividends or other
distributions declared or made after the Effective Time with respect to shares
of Parent Common Stock having a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate, and no cash payment in
lieu of fractional shares shall be paid to any such holder, until the holder
shall surrender such Certificate as provided in this Section 2.3. Subject to
the effect of Applicable Law (as defined in Section 3.9), following surrender
of any such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid,
less the amount of any withholding taxes which may be required thereon, and
(ii) at the appropriate payment date subsequent to surrender, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock, less the amount of any
withholding taxes which may be required thereon.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon surrender of Certificates in
accordance with the terms hereof (including any cash paid pursuant to this
Article II) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock represented thereby,
and from and after the Effective Time there shall be no further registration of
transfers on the stock transfer books of the Company of shares of Company
Common Stock. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Section 2.3.
(e) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to Company Stockholders for six
months after the Effective Time shall be delivered to Parent or the Surviving
Corporation, upon demand thereby, and holders of shares of Company Common Stock
who have not theretofore complied with this Section 2.3 shall thereafter look
only to Parent for payment of any claim to shares of Parent Common Stock, cash
in lieu of fractional shares thereof, or dividends or distributions, if any, in
respect thereof.
(f) No Liability. None of Parent, the Surviving Corporation
or the Exchange Agent shall be liable to any person in respect of any shares of
Company Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the Effective Time
of the Merger (or immediately prior to such earlier date on which any cash, any
cash in lieu of fractional shares or any dividends or distributions with
respect to whole shares of Company Common Stock in respect of such Certificate
would otherwise escheat to or become the property of any Governmental Authority
(as defined in Section 3.5)), any such cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by Applicable Law,
become the property of
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Parent, free and clear of all claims or interest of any person previously
entitled thereto.
(g) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Parent, on a
daily basis. Any interest and other income resulting from such investments
shall be paid to Parent. In the event the Exchange Fund shall realize a loss on
any such investment, Parent shall promptly thereafter deposit, or cause to be
deposited, in such Exchange Fund on behalf of the Surviving Corporation cash in
an amount equal to such loss.
2.4 Treatment of Stock Options and Warrants.
(a) Prior to the Effective Time, Parent and the Company shall
take all such actions as may be necessary to cause each unexpired and
unexercised option or right to purchase shares of Company Common Stock granted
(or subject to being granted on a contingent basis) under the Company's various
stock option plans in effect on the date hereof to current or former directors,
officers, employees, consultants or independent contractors of the Company
(each, a "Company Option") to cease to represent the right to purchase Company
Common Stock and to be adjusted at the Effective Time to represent the right
(an "Adjusted Option") to purchase that number of shares of Parent Common Stock
equal to the number of shares of Company Common Stock issuable immediately
prior to the Effective Time upon exercise of the Company Option (without regard
to actual restrictions on exercisability) multiplied by the Exchange Ratio,
with an exercise price equal to the exercise price which existed under the
corresponding Company Option divided by the Exchange Ratio, and with other
terms and conditions that are the same as the terms and conditions of such
Company Option immediately before the Effective Time. In connection with the
issuance of Adjusted Options, Parent shall (i) reserve for issuance the number
of shares of Parent Common Stock that will become subject to Adjusted Options
pursuant to this Section 2.4 and (ii) from and after the Effective Time, upon
exercise of Adjusted Options, make available for issuance all shares of Parent
Common Stock covered thereby, subject to the terms and conditions applicable
thereto.
(b) Parent agrees to file with the Securities and Exchange
Commission (the "Commission") as soon as reasonably practicable after the
Closing Date a registration statement on Form S-8 or other appropriate form
under the Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the "Securities Act"), to register shares of Parent
Common Stock issuable upon exercise of the Adjusted Options and use its
reasonable efforts to cause such registration statement to remain effective
until the exercise or expiration of such options.
(c) Prior to the Effective Time, Parent and the Company shall
take all such actions as may be necessary to cause each unexpired and
unexercised warrant to purchase shares of Company Common Stock granted (or
subject to being granted on a contingent basis) under the Company's various
warrant agreements in effect on the date hereof (each, a "Company Warrant") to
cease to represent the right to purchase Company Common Stock and to be
adjusted at the Effective Time to represent the right (an "Adjusted Warrant")
to purchase that number of shares of Parent Common Stock equal to the number of
shares of Company Common Stock issuable immediately prior to the Effective Time
upon exercise of the Company Warrant (without regard to actual restrictions on
exercisability) multiplied by the Exchange Ratio, with an exercise price equal
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to the exercise price which existed under the corresponding Company Warrant
divided by the Exchange Ratio, and with other terms and conditions that are the
same as the terms and conditions of such Company Warrant immediately before the
Effective Time. In connection with the issuance of Adjusted Warrants, Parent
shall (i) reserve for issuance the number of shares of Parent Common Stock that
will become subject to Adjusted Warrants pursuant to this Section 2.4; (ii)
from and after the Effective Time, upon exercise of Adjusted Warrants, make
available for issuance all shares of Parent Common Stock covered thereby,
subject to the terms and conditions applicable thereto; (iii) comply, and cause
the Surviving Corporation to comply, with the terms and conditions set forth in
the Company Warrants; and (iv) deliver to the holders of Adjusted Warrants such
shares of Parent Common Stock that such holders are entitled to purchase upon
the exercise of Adjusted Warrants. To the extent required by the respective
Company Warrants, prior to the Effective Time, Parent shall deliver its
undertaking to assume, as of the Effective Time, the obligation to deliver to
the holders of warrants under such Company Warrants the shares of Parent Common
Stock that such holders are entitled to purchase upon the exercise of Adjusted
Warrants by written instrument executed and delivered to each Warrant Agent, as
such term is defined in the respective Company Warrants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
In order to induce the Company to enter into this Agreement, Parent
and Sub hereby make the following representations and warranties to the
Company:
3.1 Organization and Standing. Each of Parent and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation with full power and authority to own, lease,
use and operate its properties and to conduct its business as and where now
owned, leased, used, operated and conducted. Each of Parent and its
subsidiaries is duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it or the
property it owns, leases or operates makes such qualification necessary, except
where the failure to be so qualified or in good standing in such jurisdiction
would not have a material adverse effect on Parent.
3.2 Subsidiaries. As of the date hereof, other than immaterial
interests, Parent does not own, directly or indirectly, any equity or other
ownership interest in any corporation, partnership, joint venture or other
entity or enterprise, except as set forth in Section 3.2 to the disclosure
schedule (the "Parent Disclosure Schedule") delivered by Parent to the Company
and dated the date hereof. Except as set forth in Section 3.2 to the Parent
Disclosure Schedule, each of the outstanding shares of capital stock of each of
Parent's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by Parent free and clear
of all liens, pledges, security interests, claims or other encumbrances, other
than the pledge of such shares under Parent's credit agreement with Compass
Bank and liens imposed by law which could not reasonably be expected to have,
in the aggregate, a material adverse effect on Parent. All of the outstanding
shares of the capital stock of Sub will be directly owned by Parent. Other than
as set forth in Section 3.2 to the Parent Disclosure Schedule, there are no
outstanding shares of capital stock or
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subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance,
sale or transfer of any securities of any subsidiary of Parent, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of any subsidiary of Parent; and no subsidiary of
Parent has any obligation of any kind to issue any additional securities or to
pay for securities of any subsidiary of Parent or any predecessor thereof. As
used in this Section 3.2, "capital stock" shall include capital stock or other
ownership interests having by their terms ordinary voting power to elect
directors or others performing similar functions with respect to such entity.
3.3 Corporate Power and Authority.
(a) Parent has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, subject to the approval of the Share Issuance (as defined below) by the
requisite votes of the stockholders of Parent (the "Parent Stockholders") in
accordance with the rules of Nasdaq and this Agreement. The execution and
delivery of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Parent. The Board of Directors of Parent has directed
that the issuance of Parent Common Stock pursuant hereto (the "Share Issuance")
be submitted to the Parent Stockholders for approval at a stockholders meeting
and, except for the approval of the Share Issuance by the Parent Stockholders
in accordance with the rules of Nasdaq, no other corporate proceedings on the
part of Parent are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and constitutes a valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms.
(b) At or prior to Closing, Sub will have full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Sub and the consummation by Sub of the transactions contemplated hereby will
have been duly and validly approved by the Board of Directors of Sub and by
Parent as the sole stockholder of Sub at or prior to Closing, and no other
corporate proceedings on the part of Sub will be necessary to consummate the
transactions contemplated hereby. This Agreement will have been duly and
validly executed and delivered by Sub and will constitute a valid and binding
obligation of Sub, enforceable against Sub in accordance with its terms.
3.4 Capitalization of Parent. Parent's authorized capital stock
consists solely of (a) 20,000,000 shares of Parent Common Stock. As of October
31, 1997, (i) 9,120,741 shares of Parent Common Stock were issued and
outstanding, (ii) 1,810,000 shares of Parent Common Stock were issuable upon
the exercise of options or warrants and 5,012,107 shares of Parent Common Stock
were issuable upon conversion of convertible securities granted or issuable by
Parent. Except as set forth on Section 3.4 of the Parent Disclosure Schedule,
since October 31, 1997, Parent has not issued any shares of its capital stock
except upon the exercise of such options, warrants or convertible securities.
Each outstanding share of Parent capital stock is, and all shares of Parent
Common Stock to be issued in connection with the Merger will be, duly
authorized and validly issued, fully paid and nonassessable and free of any
preemptive rights. As of the date hereof, other than as set forth above, in the
Parent SEC Documents (as defined in Section 3.7) or in Section 3.4
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to the Parent Disclosure Schedule, there are no outstanding shares of capital
stock or subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale or transfer by Parent of any securities of Parent, nor are
there outstanding any securities which are convertible into or exchangeable for
any shares of capital stock of Parent; and Parent has no obligation of any kind
to issue any additional securities or to pay for securities of Parent or any
predecessor. Parent has no outstanding bonds, debentures, notes or other
similar obligations the holders of which have the right to vote generally with
holders of Parent Common Stock.
3.5 Conflicts, Consents and Approvals. Neither the execution and
delivery of this Agreement by Parent or Sub nor the consummation of the
transactions contemplated hereby will:
(a) conflict with, or violate any provision of the Certificate
of Incorporation or By-laws (or any similar organizational document)
of Parent or any subsidiary of Parent;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or otherwise, would constitute a
default) under, or entitle any party (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate, modify or call
a default under, or result in the termination, acceleration or
cancellation of, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets
of Parent or any of its subsidiaries under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which Parent or any of its subsidiaries is
a party or by which any of their respective properties or assets may
be bound;
(c) violate any order, writ, injunction, decree, statute, rule
or regulation, applicable to Parent or any of its subsidiaries or
their respective properties or assets; or
(d) require any action or consent or approval of, or review by,
or registration or filing by Parent or any of its affiliates with any
third party or any court, arbitral tribunal, administrative agency or
commission or other governmental or regulatory body, agency,
instrumentality or authority (a "Governmental Authority"), other than
(i) approval of the Share Issuance by Parent Stockholders, (ii)
actions required, if any, by the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements act of 1976, as amended (the "HSR Act"), (iii) approval
of the quotation of the shares of Parent Common Stock to be issued in
the Merger on NASDAQ, subject to official notice of issuance, and (iv)
registrations or other actions required under federal and state
securities laws as are contemplated by this Agreement;
except for any of the foregoing that are set forth in subsections (b), (c) or
(d) of Section 3.5 to the Parent Disclosure Schedule or, in the case of (b),
(c) and (d), for any of the foregoing that would neither, in the aggregate,
have a material adverse effect on Parent nor prevent the consummation of the
transactions contemplated hereby.
3.6 Absence of Certain Changes. Except as set forth in the Parent SEC
Documents filed with the Commission as of the date hereof, since January 1,
1997, (i) each of Parent and its
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subsidiaries has conducted its business in the ordinary course, consistent with
past practice, (ii) no event, fact or development has occurred or exists which
has or which would reasonably be expected to have, in the aggregate, a material
adverse effect on Parent (but, excluding for such purposes, events that are
generally applicable in the oil and gas exploration and production industry and
the United States, Canada and Latin America economies), and (iii) neither
Parent nor any of its subsidiaries has taken any action which would be
prohibited by Section 5.2(a).
3.7 Parent SEC Documents. Each of Parent and its subsidiaries has
timely filed with the Commission all forms, reports, schedules, statements,
exhibits and other documents required to be filed by it since January 1, 1995
under the Securities Exchange Act of 1934, as amended (together with the rules
and regulations thereunder, the "Exchange Act"), or the Securities Act (such
documents, as supplemented and amended since the time of filing, collectively,
the "Parent SEC Documents"). The Parent SEC Documents, including, without
limitation, any financial statements or schedules included therein, at the time
filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively) (a) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be.
The financial statements (including the related notes) of Parent included in
the Parent SEC Documents were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), and fairly present (subject
in the case of unaudited statements to normal, recurring and year-end audit
adjustments) in all material respects the consolidated financial position of
Parent as of the dates thereof and the consolidated results of its operations
and cash flows for the periods then ended.
3.8 Taxes. Except as set forth in the Parent SEC Documents or in
Section 3.8 to the Parent Disclosure Schedule, (i) each of Parent and its
subsidiaries has duly filed all federal and state income tax returns and all
other material tax returns (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by Parent
or any of its subsidiaries prior to the date hereof and will file, on or before
the Effective Time, all such returns which are required to be filed after the
date hereof and on or before the Effective Time, (ii) all of the foregoing
returns and reports are true and correct in all material respects, and each of
Parent and its subsidiaries has paid or, prior to the Effective Time, will pay
all taxes required to be paid in respect of the periods covered by such returns
or reports to any federal, state, foreign, local or other taxing authority,
(iii) each of Parent and its subsidiaries has paid or made adequate provision
(in accordance with generally accepted accounting principles) in the financial
statements of Parent included in the Parent SEC Documents for all taxes payable
in respect of all periods ending on or prior to September 30, 1997, (iv)
neither Parent nor any of its subsidiaries will have any material liability for
any taxes in excess of the amounts so paid or reserves so established and
neither Parent nor any of its subsidiaries is delinquent in the payment of any
material tax, assessment or governmental charge and none of them has requested
any extension of time within which to file any returns in respect of any fiscal
year which have not since been filed, (v) no deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or assessed in
writing (tentatively or definitely), in each case, by any taxing authority,
against Parent or any of its subsidiaries for which there are not adequate
reserves in its financial statements (in accordance with generally
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accepted accounting principles), (vi) as of the date of this Agreement, there
are no extensions or waivers or pending requests for extensions or waivers of
the time to assess or collect any such tax, (vii) since the tax year 1989 and
except with respect to the tax years 1990 and 1993, the federal income tax
returns of Parent have not been audited by the Internal Revenue Service,
Department of the Treasury ("IRS"), and the federal income tax returns of its
subsidiaries have not been audited by the IRS, (viii) neither Parent nor any of
its subsidiaries is or has been a party to any tax sharing agreement with any
corporation which is not currently a member of the affiliated group of which
Parent is currently a member, (ix) there are no liens for taxes on any assets
of Parent or any of its subsidiaries (other than statutory liens for taxes not
yet due or liens for which adequate reserves have been established in its
financial statements in accordance with generally accepted accounting
principles), (x) Parent and its subsidiaries have withheld and paid (and until
the Effective Time will withhold and pay) all income, social security,
unemployment, and all other material payroll taxes required to be withheld
(including, without limitation, pursuant to Sections 1441 and 1442 of the Code
or similar provisions under foreign law) and paid in connection with amounts
paid to any employee, independent contractor, stockholder, creditor or other
third party, and (xi) Parent has not filed an election under Section 341(f) of
the Code to be treated as a consenting corporation. For purposes of this
Agreement, the term "tax" shall include all federal, state, local and foreign
taxes including interest and penalties thereon and additions to tax. In
addition, the term "tax return" shall mean any return, declaration, statement,
report, schedule, certificate, form information return, or any other document
(including any related or supporting information) required to be supplied to,
or filed with, a taxing authority (foreign or domestic) in connection with
taxes.
3.9 Compliance with Law. Each of Parent and its subsidiaries is in
compliance with, and at all times since January 1, 1995 has been in compliance
with, all applicable laws, statutes, orders, rules, regulations, policies or
guidelines promulgated, or judgments, decisions or orders entered, by any
Governmental Authority (collectively, "Applicable Law") relating to it or its
business or properties, except for any such failures to be in compliance
therewith which, in the aggregate, would not have a material adverse effect on
Parent.
3.10 Registration Statement. None of the information provided by
Parent or any of its subsidiaries for inclusion in the registration statement
on Form S-4 to be filed with the Commission by Parent under the Securities Act,
including the prospectus (as amended, supplemented or modified, the
"Prospectus") relating to shares of Parent Common Stock to be issued in the
Merger and the joint proxy statement and form of proxies relating to the vote
of Company Stockholders with respect to the Merger and the Parent Stockholders
with respect to the Share Issuance (collectively with the Prospectus and as
amended, supplemented or modified, the "Proxy Statement") contained therein
(such registration statement as amended, supplemented or modified, the
"Registration Statement"), at the time the Registration Statement becomes
effective or, in the case of the Proxy Statement, at the date of mailing, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Each of the Registration Statement and Proxy Statement, except for
such portions thereof that relate only to the Company and its subsidiaries,
will comply in all material respects with the provisions of the Securities Act
and the Exchange Act.
3.11 Litigation. Except as set forth in the Parent SEC Documents,
there is no suit, claim,
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action, proceeding or investigation (an "Action") pending or, to the knowledge
of Parent, threatened against Parent or any of its subsidiaries which, in the
aggregate, could reasonably be expected to have a material adverse effect on
Parent. Neither Parent nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree which, in the aggregate, could
reasonably be expected to have a material adverse effect on Parent.
3.12 Brokerage and Finder's Fees. Parent has not incurred and will not
incur, directly or indirectly, any brokerage, finder's or similar fee in
connection with the transactions contemplated by this Agreement. Parent is not
aware of any claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments from Parent in connection with the
negotiation of this Agreement or in connection with the transactions
contemplated hereby.
3.13 Tax-Free Reorganization. To the best knowledge of Parent, neither
Parent nor any of its subsidiaries has taken any action or failed to take any
action which action or failure would prevent the qualification of the Merger as
a reorganization within the meaning of Section 368(a) of the Code.
3.14 Contracts. None of Parent, any of its subsidiaries, or, to the
knowledge of Parent, any other party thereto is in violation of or in default
in respect of, nor has there occurred an event or condition which with the
passage of time or giving of notice (or both) would constitute a default by
Parent under, any contract, agreement, guarantee, lease or executory commitment
(each a "Contract") to which it is a party, except such violations or defaults
under such Contracts which, in the aggregate, would not have a material adverse
effect on Parent.
3.15 Labor Relations. There is no unfair labor practice complaint
against Parent or any of its subsidiaries pending before the National Labor
Relations Board ("NLRB") and there is no labor strike, dispute, slowdown or
stoppage, or any union organizing campaign, actually pending or, to the
knowledge of Parent, threatened against or involving Parent or any of its
subsidiaries, except for any such proceedings which would not have a material
adverse effect on Parent. Except as disclosed in the Parent SEC Documents,
neither Parent nor any of its subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. To the knowledge of Parent, there are
no organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving employees of
Parent or any of its subsidiaries.
3.16 Permits. Each of Parent and its subsidiaries is in possession of
all franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders
(collectively, "Permits") necessary to own, lease and operate its properties
and to carry on its business as it is now being conducted, except for any such
Permits the failure of which to possess, in the aggregate, would not reasonably
be expected to have a material adverse effect on Parent.
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3.17 Environmental Matters.
(a) As used herein, the term "Environmental Laws" means all
applicable federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all applicable authorizations, codes, decrees,
demands or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered, promulgated or
approved thereunder to the extent applicable to the specific operations of
Parent or the Company, as applicable.
(b) Except as set forth in the Parent SEC Documents filed
with the Commission as of the date hereof or in Section 3.17(a) of the Parent
Disclosure Schedule, there are, with respect to Parent, its subsidiaries or any
predecessor of the foregoing, no past or present violations of Environmental
Laws, releases of any materials into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which
may give rise to any common law environmental liability or any liability under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or similar federal, state, local or foreign laws, other than
those which, in the aggregate, would not reasonably be expected to have a
material adverse effect on Parent, and none of Parent and its subsidiaries has
received any notice with respect to any of the foregoing, nor is any Action
pending or, to the knowledge of Parent, threatened, in connection with any of
the foregoing that, if adversely determined, could reasonably be expected to
have a material adverse effect on Parent.
(c) Except as set forth in the Parent SEC Documents filed
with the Commission as of the date hereof, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by Parent or any
of its subsidiaries and no Hazardous Materials were released on or about any
real property previously owned, leased or used by Parent or any of its
subsidiaries during the period the property was so owned, leased or used, other
than those which, in the aggregate, would not reasonably be expected to have a
material adverse effect on Parent.
3.18 Company Stock Ownership. Except as set forth in Section 3.18
to the Parent Disclosure Schedule, neither Parent nor any of its "affiliates" or
"associates" "owns" (as each of such terms is defined in Section 203 of the
DGCL) any shares of Company Common Stock or other securities convertible into
Company Common Stock, except to the extent that entering into this Agreement
constitutes "ownership" of Company Common Stock pursuant to the foregoing.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce Parent and Sub to enter into this Agreement, the
Company hereby makes the following representations and warranties to Parent and
Sub:
4.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full power and authority to own, lease, use and operate its
properties and to conduct its business as and where now owned, leased, used,
operated and conducted. The Company is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business
conducted by it or the property it owns, leases or operates makes such
qualification necessary, except where the failure to be so qualified or in good
standing in such jurisdiction would not have a material adverse effect on the
Company. The copies of the Certificate of Incorporation and By-laws (or similar
organizational documents) of the Company, which have previously been made
available to Parent, are true, complete and correct copies of such documents as
in effect as of the date of this Agreement.
4.2 Subsidiaries. As of the date hereof, other than immaterial
interests, the Company does not own, directly or indirectly, any equity or
other ownership interest in any corporation, partnership, joint venture or
other entity or enterprise, except as set forth in Section 4.2 to the
disclosure schedule (the "Company Disclosure Schedule") delivered by the
Company to Parent and dated the date hereof. Each of the entities listed on
Section 4.2 to the Company Disclosure Schedule (individually a "Subsidiary" and
collectively the "Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation with full power and authority to own, lease, use and operate its
properties and to conduct its business as and where now owned, leased, used,
operated and conducted. Each Subsidiary is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business
conducted by it or the property it owns, leases or operates makes such
qualification necessary, except where the failure to be so qualified or in good
standing in such jurisdiction would not have a material adverse effect on the
Company. The Company is the sole legal, beneficial and record owner, directly
or indirectly, of all outstanding capital stock of the Subsidiaries, all of
which are owned by the Company free and clear of all liens, claims and
encumbrances. The Subsidiaries have no assets or liabilities, and are not
parties to any agreements or contracts, other than those which would not have a
material adverse effect on the Company.
4.3 Corporate Power and Authority. The Company has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to the approval of the Merger and the
adoption and authorization of this Agreement by the stockholders of the Company
in accordance with the DGCL and this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of the Company. The Board of Directors of the Company has
directed that this Agreement and the transactions contemplated hereby be
submitted to the Company Stockholders for adoption at a stockholders meeting
and, except for the adoption of this Agreement by the
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affirmative vote of the holders of a majority of shares of Company Common Stock
in accordance with the Applicable Law, no other corporate proceedings on the
part of the Company are necessary to approve this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
4.4 Capitalization of the Company and its Subsidiaries. The Company's
authorized capital stock consists solely of (a) 20,000,000 shares of common
stock, $0.05 par value per share ("Company Common Stock"), and (b) 10,000,000
shares of preferred stock, $1.00 par value per share ("Company Preferred
Stock"). As of October 31, 1997, (i) 3,891,981 shares of Company Common Stock
were issued and outstanding, (ii) 201,385 shares of Company Common Stock were
issuable upon the exercise of outstanding options, an additional 230,749 shares
of Company Common Stock were issuable upon the exercise of options that are not
currently outstanding but are reserved for issuance upon the designation of
optionees by the Board of Directors of the Company and 154,175 shares of
Company Common Stock were issuable upon the exercise or conversion of
outstanding warrants or convertible securities granted or issuable (on a
contingent basis or otherwise) by the Company, and (iii) no shares of Company
Preferred Stock were issued and outstanding. Since October 31, 1997, except as
disclosed in Section 4.4 of the Company Disclosure Schedule, the Company has
not issued any shares of its capital stock except upon the exercise of such
options, warrants or convertible securities. Each outstanding share of capital
stock of the Company and each Subsidiary is duly authorized and validly issued,
fully paid and nonassessable and free of any preemptive rights. As of the date
hereof, other than as set forth above, in the Company SEC Documents (as defined
in Section 4.7) or in Section 4.4 to the Company Disclosure Schedule, there are
no outstanding shares of capital stock or subscriptions, options, warrants,
puts, calls, agreements, understandings, claims or other commitments or rights
of any type relating to the issuance, sale or transfer by the Company or either
Subsidiary of any securities of the Company or either Subsidiary, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of the Company or either Subsidiary; and neither the
Company nor either Subsidiary has any obligation of any kind to issue any
additional securities or to pay for securities of the Company or either
Subsidiary or any predecessor. The Company has no outstanding bonds,
debentures, notes or other similar obligations the holders of which have the
right to vote generally with holders of Company Common Stock.
4.5 Conflicts; Consents and Approvals. Neither the execution and
delivery of this Agreement by the Company, nor the consummation of the
transactions contemplated hereby will:
(a) conflict with, or violate any provision of the Certificate
of Incorporation or By-laws (or any similar organizational document) of the
Company or either Subsidiary;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
termination, acceleration or cancellation of, or result in the creation of any
lien, security interest, charge or
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encumbrance upon any of the properties or assets of the Company or the
Subsidiaries under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which the Company or any
of the Subsidiaries is a party or by which any of its properties or assets may
be bound;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or its Subsidiaries or any of its
properties or assets; or
(d) require any action or consent or approval of, or review by,
or registration or filing by the Company or its Subsidiaries or any of its
affiliates with any third party or any Governmental Authority, other than (i)
authorization of the Merger and the transactions contemplated hereby by Company
Stockholders, (ii) actions required, if any, by the HSR Act and (iii)
registrations or other actions required under federal and state securities laws
as are contemplated by this Agreement;
except for any of the foregoing that are set forth in subsections (b), (c) or
(d) of Section 4.5 of the Company Disclosure Schedule or, in the case of (b),
(c) and (d), for any of the foregoing that would neither, in the aggregate,
have a material adverse effect on the Company nor prevent the consummation of
the transactions contemplated hereby.
4.6 Absence of Certain Changes. Except as set forth in the Company SEC
Documents filed with the Commission as of the date hereof, since January 1,
1997, (i) each of the Company and its Subsidiaries has conducted its business
in the ordinary course, consistent with past practice, (ii) no event, fact or
development has occurred or exists which has or which would (A) reasonably be
expected to have, in the aggregate, a material adverse effect on the Company
(but excluding for such purposes events that are generally applicable in the
oil and gas exploration and production industry and the United States economy)
or (B) render materially inaccurate any of the factual data or assumptions
utilized by Xxxxx Xxxxx in auditing the Company's reserve report dated July
1997, and (iii) the Company has not taken any action which would be prohibited
by Section 5.3(a).
4.7 Company SEC Documents. The Company has timely filed with the
Commission all forms, reports, schedules, statements, exhibits and other
documents required to be filed by it under the Exchange Act or the Securities
Act (such documents, as supplemented and amended since the time of filing,
collectively, the "Company SEC Documents"). The Company SEC Documents,
including, without limitation, any financial statements or schedules included
therein, at the time filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively) (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be. The financial statements (including the related notes) of the
Company included in the Company SEC Documents were prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto), and
fairly present (subject in the case of unaudited statements to normal,
recurring and year-end audit adjustments) in all material respects the
consolidated financial position of the Company as of the dates thereof and the
consolidated results
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of its operations and cash flows for the periods then ended.
4.8 Taxes. Except as set forth in the Company SEC Documents or in
Section 4.8 to the Company Disclosure Schedule, (i) the Company and each
Subsidiary has duly filed all federal and state income tax returns and all
other material tax returns (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by it
prior to the date hereof and will file, on or before the Effective Time, all
such returns which are required to be filed after the date hereof and on or
before the Effective Time, (ii) all of the foregoing returns and reports are
true and correct in all material respects, and the Company and each Subsidiary
has paid or, prior to the Effective Time, will pay all taxes required to be
paid in respect of the periods covered by such returns or reports to any
federal, state, foreign, local or other taxing authority, (iii) the Company and
each Subsidiary has paid or made adequate provision (in accordance with
generally accepted accounting principles) in the financial statements of the
Company and its Subsidiaries included in the Company SEC Documents for all
taxes payable in respect of all periods ending on or prior to September 30,
1997, (iv) neither the Company nor either Subsidiary will have any material
liability for any taxes in excess of the amounts so paid or reserves so
established and neither the Company nor either Subsidiary is delinquent in the
payment of any material tax, assessment or governmental charge and has not
requested any extension of time within which to file any returns in respect of
any fiscal year which have not since been filed, (v) no deficiencies for any
tax, assessment or governmental charge have been proposed, asserted or assessed
in writing (tentatively or definitely), in each case, by any taxing authority,
against the Company or either Subsidiary for which there are not adequate
reserves in its financial statements (in accordance with generally accepted
accounting principles), (vi) as of the date of this Agreement, there are no
extensions or waivers or pending requests for extensions or waivers of the time
to assess or collect any such tax, (vii) the federal income tax returns of the
Company and its Subsidiaries have not been audited by the IRS, (viii) neither
the Company nor either Subsidiary is or has been a party to any tax sharing
agreement with any corporation which is not currently a member of the
affiliated group of which the Company or either Subsidiary is currently a
member, (ix) there are no liens for taxes on any assets of the Company or
either Subsidiary (other than statutory liens for taxes not yet due or liens
for which adequate reserves have been established in its financial statements
in accordance with generally accepted accounting principles), (x) the Company
and each Subsidiary has withheld and paid (and until the Effective Time will
withhold and pay) all income, social security, unemployment, and all other
material payroll taxes required to be withheld (including, without limitation,
pursuant to Sections 1441 and 1442 of the Code or similar provisions under
foreign law) and paid in connection with amounts paid to any employee,
independent contractor, stockholder, creditor or other third party, and (xi)
neither the Company nor either Subsidiary has filed an election under Section
341(f) of the Code to be treated as a consenting corporation.
4.9 Compliance with Law. The Company and each of its Subsidiaries is
in compliance with, and at all times since December 31, 1994 has been in
compliance with, all Applicable Law relating to it or its business or
properties, except for any such failures to be in compliance therewith which,
in the aggregate, would not have a material adverse effect on the Company.
4.10 Registration Statement. None of the information provided by the
Company for inclusion in the Registration Statement at the time it becomes
effective or, in the case of the Proxy Statement, at the date of mailing, will
contain any untrue statement of a material fact or omit to
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state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. Each of the Registration Statement and Proxy Statement,
except for such portions thereof that relate only to Parent and its
subsidiaries, will comply in all material respects with the provisions of the
Securities Act and the Exchange Act.
4.11 Litigation. Except as set forth in the Company SEC Documents,
there is no Action pending or, to the knowledge of the Company, threatened
against the Company or its Subsidiaries which, in the aggregate, could
reasonably be expected to have a material adverse effect on the Company.
Neither the Company nor either of the Subsidiaries is subject to any
outstanding order, writ, injunction or decree which, in the aggregate, could
reasonably be expected to have a material adverse effect on the Company.
4.12 Brokerage and Finder's Fees. Except for the Company's obligation
to XxXxxxxx & Company Securities, Inc. ("XxXxxxxx") and to Peak Enernomics,
Inc. ("Peak") (a copy of the written agreements relating to such obligations
having previously been provided to Parent), neither the Company nor the
Subsidiaries has incurred and will not incur, directly or indirectly, any
brokerage, finder's or similar fee in connection with the transactions
contemplated by this Agreement. Other than the foregoing obligations to
XxXxxxxx and Peak, the Company is not aware of any claim for payment of any
finder's fees, brokerage or agent's commissions or other like payments from the
Company or the Subsidiaries in connection with the negotiation of this
Agreement or in connection with the transactions contemplated hereby.
4.13 Opinion of Financial Advisor. The Company has received the oral
opinion of XxXxxxxx to the effect that, as of the date hereof, the Exchange
Ratio is fair to the Company Stockholders from a financial point of view.
4.14 Tax-Free Reorganization. To the best knowledge of the Company,
neither the Company nor the Subsidiaries has taken any action or failed to take
any action which action or failure would prevent the qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
4.15 Employee Benefit Plans.
For purposes of this Agreement, the following terms have the
definitions given below:
"Controlled Group Liability" means any and all liabilities
under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of section 601 et
seq. of ERISA and section 4980B of the Code, and (v) corresponding or similar
provisions of foreign laws or regulations, in each case other than pursuant to
the Parent Plans with respect to Parent, or Company Plans (as defined below)
with respect to the Company and its Subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
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"ERISA Affiliate" means, with respect to any entity, trade
or business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
(a) For purposes of this Agreement, "Company Plans" means all
employee benefit plans, programs, policies, practices, and other arrangements
providing benefits to any employee or former employee or beneficiary or
dependent thereof, whether or not written, and whether covering one person or
more than one person, sponsored or maintained by the Company or to which the
Company contributes or is obligated to contribute. Without limiting the
generality of the foregoing, the term "Company Plans" includes all employee
welfare benefit plans within the meaning of Section 3(1) of ERISA and all
employee pension benefit plans within the meaning of Section 3(2) of ERISA.
(b) Section 4.15(b) to the Company Disclosure Schedule lists
all Company Plans. With respect to each Company Plan, the Company has made
available to Parent a true, correct and complete copy of: (i) each writing
constituting a part of such Company Plan, including, without limitation all
plan documents, benefit schedules, trust agreements, and insurance contracts
and other funding vehicles; (ii) the most recent Annual Report (Form 5500
Series) and accompanying schedule, if any; (iii) the current summary plan
description, if any; (iv) the most recent annual financial report, if any; and
(v) the most recent determination letter from the IRS, if any.
(c) The IRS has issued a favorable determination letter with
respect to each Company Plan that is intended to be a "qualified plan" within
the meaning of Section 401(a) of the Code (a "Qualified Company Plan") and
there are no existing circumstances nor any events that have occurred that
could adversely affect the qualified status of any Qualified Company Plan or
the related trust.
(d) All contributions required to be made to any Company Plan
by Applicable Law or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any
Company Plan, for any period through the date hereof have been timely made or
paid in full and through the Closing Date will be timely made or paid in full
or, to the extent not required to be made or paid on or before the date hereof
or the Closing Date, as applicable, have been or will be fully reflected in the
Company's financial statements contained in the Company SEC Documents.
(e) The Company has complied, and is now in compliance, in
all material respects, with all provisions of ERISA, the Code and all laws and
regulations applicable to the Company Plans. There is not now, and there are no
existing, circumstances that standing alone could give rise to, any requirement
for the posting of security with respect to a Company Plan or the imposition of
any lien on the assets of the Company or any of its subsidiaries under ERISA or
the Code.
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(f) Except as set forth in Section 4.15(f) to the Company
Disclosure Schedule, no Company Plan is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code. No Company Plan is a Multiemployer
Plan (as defined in Section 3.16) or a Multiple Employer Plan (as defined in
Section 3.16), nor has the Company or any of its ERISA Affiliates, at any time
within five years before the date hereof, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan.
(g) There does not now exist, and there are no existing,
circumstances that could result in any Controlled Group Liability that would be
a liability of the Company following the Closing, other than normal funding
responsibilities. Without limiting the generality of the foregoing, neither the
Company nor any of its ERISA Affiliates has engaged in any transaction
described in Section 4069 or Section 4204 of ERISA.
(h) Except as set forth in Section 4.15(h) to the Company
Disclosure Schedule and except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA, the Company has no
liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof.
(i) Except as set forth in Section 4.15(i) to the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in, cause
the accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee or director or former employee or former
director of the Company, pursuant to a "change in control" or "change of
control" or otherwise. Without limiting the generality of the foregoing and
except as set forth in Section 4.15(i) to the Company Disclosure Schedule, no
amount paid or payable by the Company in connection with the transactions
contemplated hereby either solely as a result thereof or as a result of such
transactions in conjunction with any other events will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
(j) There are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted against the Company Plans, any fiduciaries
thereof with respect to their duties to the Company Plans or the assets of any
of the trusts under any of the Company Plans which could reasonably be expected
to result in any material liability of the Company to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the Department of Labor or
any Multiemployer Plan.
4.16 Contracts. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, none of the Company or its Subsidiaries or, to the
knowledge of the Company, any other party thereto is in violation of or in
default in respect of, nor has there occurred an event or condition which with
the passage of time or giving of notice (or both) would constitute a default by
the Company or its Subsidiaries under, any Contract to which any of them is a
party, except such violations or defaults under such Contracts which, in the
aggregate, would not have a material adverse effect on the Company.
4.17 Labor Relations. There is no unfair labor practice
complaint against the Company or any Subsidiaries pending before the NLRB and
there is no labor strike, dispute, slowdown or
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stoppage, or any union organizing campaign, actually pending or, to the
knowledge of the Company, threatened against or involving the Company or any
Subsidiaries, except for any such proceedings which would not have a material
adverse effect on the Company. Except as disclosed in the Company SEC
Documents, neither the Company nor any Subsidiary is a party to, or bound by,
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. To the knowledge of the
Company, there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of the Company or any Subsidiary.
4.18 Permits. The Company and each Subsidiary is in possession of all
Permits necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted, except for any such Permits the failure
of which to possess, in the aggregate, would not reasonably be expected to have
a material adverse effect on the Company.
4.19 Environmental Matters.
(a) Except as set forth in the Company SEC Documents filed with
the Commission as of the date hereof or in Section 4.19(a) of the Company
Disclosure Schedule, there are, with respect to the Company, each Subsidiary or
any predecessor thereof, no past or present violations of Environmental Laws,
releases of any materials into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which
may give rise to any common law environmental liability or any liability under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or similar federal, state, local or foreign laws, other than
those which, in the aggregate, would not reasonably be expected to have a
material adverse effect on the Company, and the Company has not received any
notice with respect to any of the foregoing, nor is any Action pending or
threatened in connection with any of the foregoing that, if adversely
determined, could reasonably be expected to have a material adverse effect on
the Company.
(b) Except as set forth in Section 4.19(b) to the Company
Disclosure Schedule or set forth in the Company SEC Documents filed with the
Commission as of the date hereof, no Hazardous Materials are contained on or
about any real property currently owned, leased or used by the Company and no
Hazardous Materials were released on or about any real property previously
owned, leased or used by the Company or either Subsidiary during the period the
property was so owned, leased or used, other than those which, in the
aggregate, would not reasonably be expected to have a material adverse effect
on the Company.
4.20 Parent Stock Ownership. Except as set forth in Section 4.20 to
the Company Disclosure Schedule, neither the Company nor any of its
"affiliates" or "associates" "owns" (as each of such terms is defined in
Section 203 of the DGCL) any shares of Parent Common Stock or other securities
convertible into Parent Common Stock.
4.21 DGCL Section 203 and State Takeover Laws. Assuming the accuracy
of the representations and warranties set forth in Section 3.18, prior to the
date hereof, the Board of Directors of the Company has taken all action
necessary to exempt under or make not subject to Section 203 of the DGCL: (i)
the execution of this Agreement, (ii) the Merger and (iii) the
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transactions contemplated hereby.
ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the
period from and after the execution of this Agreement.
5.1 Mutual Covenants.
(a) General. Each of the parties shall use its reasonable
efforts to take all action and to do all things necessary, proper or advisable
to consummate the Merger and the transactions contemplated by this Agreement as
promptly as possible (including, without limitation, using its reasonable
efforts to cause the conditions set forth in Article VI for which they are
responsible to be satisfied as soon as reasonably practicable and to prepare,
execute and deliver such further instruments and take or cause to be taken such
other and further action as any other party hereto shall reasonably request).
(b) Governmental Matters. Each of the parties shall use its
reasonable efforts to take any action that may be necessary, proper or
advisable in connection with any other notices to, filings with, and
authorizations, consents and approvals of any Governmental Authority that it
may be required to give, make or obtain.
(c) Tax-Free Treatment. Each of the parties shall use its
reasonable efforts to cause the Merger to constitute a tax-free
"reorganization" under Section 368(a) of the Code and to permit Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P. to issue its opinion provided for in Section
6.1(h).
(d) Public Announcements. At all times prior to the earlier
of the Effective Time or termination of this Agreement pursuant to Section 7.1,
none of Parent, the Company or any of their affiliates shall issue any press
release or make any other public statement or disclosure concerning this
Agreement or the Merger without first obtaining the written consent of Parent
if the disclosure is to be made by the Company or any of its affiliates, or of
the Company if the disclosure is to be made by Parent or any of its affiliates,
as to the contents, the manner of presentation and the publication thereof;
provided, however, that notwithstanding the foregoing, Parent, the Company, or
any of their affiliates may make any disclosure required by applicable law (as
determined after consultation with the disclosing party's outside counsel),
provided that such disclosing party shall use its reasonable best efforts to
first notify the other parties in writing of the proposed disclosure and
provide the other parties with reasonable opportunity to comment on such
disclosure.
(e) Access. Subject to Applicable Law, from and after the
date of this Agreement until the Effective Time (or the termination of this
Agreement), Parent and the Company shall permit representatives of the other to
have reasonable access to the other's officers, employees, premises,
properties, books, records, contracts, tax records and documents. Information
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obtained by Parent and the Company pursuant to this Section 5.1(e) shall be
subject to the provisions of the confidentiality agreements between them dated
September 25, 1997 and November 5, 1997 (the "Confidentiality Agreements"),
which agreements remain in full force and effect.
(f) Stockholders Meetings. Each of Parent and the Company
shall duly call, give notice of, convene and hold a meeting of its stockholders
(each a "Stockholders Meeting"), to be held as promptly as practicable
following the date hereof for the purpose of obtaining the requisite
stockholder approvals and adoptions in connection with this Agreement, the
Share Issuance and the Merger, and each shall use reasonable efforts to cause
such meetings to occur on the same date. Subject to its fiduciary duties under
Applicable Law as advised by counsel, the Board of Directors of each of Parent
and the Company will (i) recommend that its stockholders approve such matters
and (ii) use reasonable efforts to obtain any necessary approvals by its
stockholders.
(g) Preparation of Proxy Statement and Registration
Statement. Each of Parent and the Company shall cooperate to, and shall, as
soon as is reasonably practicable, prepare and file the Proxy Statement with
the Commission on a confidential basis. Each of Parent and the Company shall
cooperate to prepare and file, and Parent shall prepare and file, the
Registration Statement with the Commission as soon as is reasonably practicable
following clearance of the Proxy Statement by the Commission and each of Parent
and the Company shall cooperate to, and shall, use all reasonable efforts to
have the Registration Statement declared effective by the Commission as
promptly as practicable and to maintain the effectiveness of the Registration
Statement through the Effective Time. Parent shall advise the Company promptly
after it receives notice of (i) the Registration Statement being declared
effective or any supplement or amendment thereto being filed with the
Commission, (ii) the issuance of any stop order in respect of the Registration
Statement, and (iii) the receipt of any correspondence, comments or requests
from the Commission in respect of the Registration Statement. If at any time
prior to the Effective Time, any information pertaining to the Company
contained in or omitted from the Registration Statement makes statements
contained in the Registration Statement false or misleading, the Company shall
promptly so inform Parent and provide Parent with the information necessary to
make such statements contained therein not false and misleading. Each of Parent
and Company shall also cooperate to, and shall, take such other reasonable
actions (other than qualifying to do business in any jurisdiction in which it
is not so qualified) required to be taken under any applicable state securities
laws in connection with the Share Issuance.
(h) Notification of Certain Matters. Each of Parent and the
Company shall give prompt notice to the other party of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would cause
any representation or warranty contained in this Agreement made by such party
to be untrue or inaccurate at or prior to the Effective Time and (ii) any
material failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
5.1(i) shall not limit or otherwise affect the remedies available hereunder to
any party.
(i) Pooling of Interests. Notwithstanding anything herein to
the contrary, Parent and the Company agree to continue to evaluate whether the
Merger can or should be
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accounted for under the pooling-of-interests method of accounting, and if so,
to amend the relevant provisions of this Agreement so as to comply with
pooling-of-interest requirements.
5.2 Covenants of Parent.
(a) Conduct of Parent's Operations. During the period from
the date of this Agreement to the Effective Time, Parent shall, and shall cause
its subsidiaries to, conduct its operations in the ordinary course except as
expressly contemplated by this Agreement and the transactions contemplated
hereby and shall use its reasonable efforts to maintain and preserve its
business organization and its material rights and franchises and to retain the
services of its officers and key employees and maintain relationships with
customers, suppliers and other third parties to the end that their goodwill and
ongoing business shall not be impaired in any material respect. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time or the earlier termination of this
Agreement pursuant to Section 7.1, Parent shall not, and with respect to clause
(ii) below, Sub shall not, and with respect to clauses (ii) and (iii) below,
Parent shall cause each of its subsidiaries to not, except as otherwise
expressly contemplated by this Agreement and the transactions contemplated
hereby, without the prior written consent of the Company:
(i) make or propose any change in its Certificate of
Incorporation, as amended, or By-laws, as amended, or other
organizational documents, except with respect to those changes
described on Schedule 5.2A hereto;
(ii) except with respect to the transaction described on
Schedule 5.2B hereto, and subject to the limitations of clause (iii)
below, merge or consolidate with any other person or acquire a
material amount of assets or capital stock of any other person, that
would involve, in any case, individually or in the aggregate, the
issuance of more than 20% of the outstanding Parent Common Stock on
the date hereof, other than in connection with this Agreement and the
transactions contemplated hereby;
(iii) except with respect to that transaction described on
Schedule 5.2B hereto, conduct its business in a manner or take, or,
subject to its fiduciary duties under Applicable Law, cause to be
taken, any other action that would or might reasonably be expected to
prevent or materially delay Parent or Sub from consummating the
transactions contemplated by this Agreement (regardless of whether
such action would otherwise be permitted or not prohibited hereunder),
including, without limitation, any action that may materially limit or
delay the ability of Parent or Sub to consummate the transactions
contemplated by this Agreement as a result of antitrust or securities
laws or other regulatory concerns; or
(iv) agree to take any action prohibited by the foregoing.
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(b) Indemnification; Insurance.
(i) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, indemnify and hold harmless
to the fullest extent permitted under Applicable Law each person who
is now, or has been at any time prior to the date hereof, an officer,
director, employee, trustee or agent of the Company (or any subsidiary
or division thereof), including, without limitation, each person
controlling any of the foregoing persons (individually, an
"Indemnified Party" and collectively, the "Indemnified Parties"),
against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement in connection with any claim, action, suit,
proceeding or investigation (and shall pay expenses for legal fees in
advance of the final disposition of any such action or proceeding to
each Indemnified Party to the fullest extent permitted under Delaware
law, provided that the Indemnified Party agrees that, in the event
that it is ultimately determined that such Indemnified Party is not
entitled to the payment of such expenses, for any reason, such
Indemnified Party shall reimburse Parent and the Surviving Corporation
for such expenses paid in advance) arising out of or pertaining to
acts or omissions, or alleged acts or omissions, by them in their
capacities as such, whether commenced, asserted or claimed before the
Effective Time and including, without limitation, liabilities arising
under the Securities Act, the Exchange Act and state corporation laws
in connection with the Merger; provided that the Parent and the
Surviving Corporation shall pay for only one law firm (in addition to
local counsel) for all Indemnified Parties, unless the use of one law
firm for all Indemnified Parties would present such law firm with a
conflict of interest. Parent shall cause the Surviving Corporation to
keep in effect the Company's current provisions in its Certificate of
Incorporation and By-laws providing for exculpation of director and
officer liability and indemnification of the Indemnified Parties to
the fullest extent permitted under the DGCL. In the event of any
actual or threatened claim, action, suit, proceeding or investigation
in respect of such acts or omissions, Parent shall, and shall cause
the Surviving Corporation to cooperate in the defense of any such
matter; provided, however, that the Parent and the Surviving
Corporation shall not be liable for any settlement effected without
their written consent (which consent shall not be unreasonably
withheld).
(ii) From and after the Effective Time, Parent shall, or
shall cause the Surviving Corporation to, maintain in effect for not
less than 6 years, the current policies of directors' and officers'
liability insurance maintained by the Company; provided that Parent
may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions that are no less advantageous
in any material respect to the Indemnified Parties; provided, however,
that in no event shall the Parent or the Surviving Corporation be
required to expend pursuant to this Section 5.2(b)(ii) more than the
current annual premiums paid by the Company for such insurance and, in
the event the cost of such coverage shall exceed that amount, the
Parent or the Surviving Corporation shall purchase as much coverage as
possible for such amount.
(c) Listing Application. Parent shall, as soon as
practicable following the date hereof, prepare and submit to NASDAQ a
subsequent listing application covering the shares of
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Parent Common Stock issuable in the Merger, and shall use its reasonable
efforts to obtain, prior to the Effective Time, approval for the listing of
such shares of Parent Common Stock, subject to official notice of issuance.
(d) Directors of Parent. Immediately after the Effective
Time, Parent will take such action as may be necessary to create one additional
seat on the Board of Directors of Parent and to cause Xxxxxxx X. Xxxxxxxx (such
individual being referred to herein as the "New Member") to be elected to the
Board of Directors of Parent, to serve until his successor is duly elected and
qualified. Parent shall take, or cause to be taken, all action necessary to
nominate the New Member for election to the Board of Directors of Parent at the
1998 Annual Meeting of Parent Stockholders and, in accordance with its normal
solicitation efforts, solicit proxies for his election to such Board of
Directors.
5.3 Covenants of the Company.
(a) Conduct of the Company's and the Subsidiaries'
Operations. During the period from the date of this Agreement to the Effective
Time, the Company shall conduct its and its Subsidiaries operations in the
ordinary course except as expressly contemplated by this Agreement and the
transactions contemplated hereby and shall use its reasonable efforts to
maintain and preserve its business organization and its material rights and
franchises and to retain the services of its officers and key employees and
maintain relationships with customers, suppliers and other third parties to the
end that its goodwill and ongoing business shall not be impaired in any
material respect. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time or the earlier
termination of this Agreement pursuant to Section 7.1, neither the Company nor
the Subsidiaries shall, except as otherwise expressly contemplated by this
Agreement and the transactions contemplated hereby, without the prior written
consent of Parent:
(i) take or effect any of the following actions with
respect to its securities: (A) adjust, split, combine or reclassify
its capital stock, (B) make, declare or pay any dividend or
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire any of its securities (except in connection with the
use of shares of capital stock of the Company to pay the exercise
price or tax withholding in connection with stock-based employee
benefit plans of the Company), (C) grant any person any right or
option to acquire any of its securities, (D) issue, deliver or sell or
agree to issue, deliver or sell any additional securities (except
pursuant to the exercise of outstanding warrants or options to
purchase Company Common Stock) or amend the terms of any of its
securities (provided, however, that the Company may amend any option
agreement(s) to which the Company is a party to provide that the
optionee(s) under such agreement(s) will have the right to exercise
any or all of such options, subject to the terms otherwise applicable
under such agreement(s), for a period of one year following the
termination of the employment of such optionee by the Company or any
successor thereto, if, on the date of this Agreement, the optionee is
an employee of the Company, or the termination of the optionee's
membership on the Board of Directors of the Company, if, on the date
of this Agreement, the optionee is a member of the Board of Directors
of the Company), or (E) enter into any agreement, understanding or
arrangement with respect to the sale or voting of its capital stock;
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(ii) sell, transfer, lease, pledge, mortgage, encumber or
otherwise dispose of any of its property or assets which are material,
in the aggregate, other than with respect to sales of oil and gas in
the ordinary course of business consistent with past practice;
(iii) make or propose any changes in its Certificate of
Incorporation, as amended, or its By-laws, as amended, or other
organizational documents;
(iv) merge or consolidate with any other person or acquire
a material amount of assets or capital stock of any other person or
enter into any confidentiality agreement with any person, other than
in connection with this Agreement and the transactions contemplated
hereby;
(v) incur, create, assume or otherwise become liable for
indebtedness for borrowed money, other than in the ordinary course of
business consistent with past practice, but in no event in excess of
$100,000, or assume, guarantee, endorse or otherwise as an
accommodation become responsible or liable for obligations of any
other individual, corporation or other entity, other than in the
ordinary course of business consistent with past practice;
(vi) enter into or modify any employment, severance,
termination or similar agreements or arrangements with, or grant any
bonuses, salary increases, severance or termination pay to, any
officer, director, consultant or employee other than salary increases
and bonuses granted to employees who are not officers or directors in
the ordinary course of business consistent with past practice, or
otherwise increase the compensation or benefits provided to any
officer, director, consultant or employee except as may be required by
Applicable Law, this Agreement, any applicable collective bargaining
agreement or a binding written contract in effect on the date of this
Agreement, or adopt any new employee benefit plan;
(vii) change its method of doing business or change any
method or principle of accounting in a manner that is inconsistent
with past practice;
(viii) settle any Actions, whether now pending or hereafter
made or brought involving, in any Action or related series of Actions,
which individually or in the aggregate are in an amount in excess of
$100,000;
(ix) modify, amend or terminate, or waive, release or
assign any material rights or claims with respect to, any material
Contract to which it is a party or any confidentiality agreement to
which it is a party;
(x) incur or commit to any capital expenditures,
obligations or liabilities in respect thereof, other than in the
ordinary course of business consistent with past practice, but in no
event in excess of $50,000 individually or $250,000 in the aggregate;
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(xi) conduct its business in a manner or take, or cause to
be taken, any other action that would or might reasonably be expected
to prevent or materially delay the Company from consummating the
transactions contemplated by this Agreement (regardless of whether
such action would otherwise be permitted or not prohibited hereunder),
including, without limitation, any action that may materially limit or
delay the ability of the Company to consummate the transactions
contemplated by this Agreement as a result of antitrust or securities
laws or other regulatory concerns;
(xii) take any action to exempt under or make not subject
to Section 203 of the DGCL, any person or entity (other than Parent or
its subsidiaries) or any action taken thereby, which person, entity or
action would have otherwise been subject to the restrictive provisions
thereof and not exempt therefrom; or
(xiii) agree to take any action prohibited by the foregoing.
(b) No Solicitation. The Company agrees that, during the
term of this Agreement, it will not negotiate with any person other than Parent
with respect to the acquisition of the Company or its Subsidiaries and it will
not, and will not permit any of its officers, directors, employees, affiliates,
agents or representatives (including, without limitation, investment bankers,
attorneys and accountants) to (a) initiate contact with, (b) make, solicit or
encourage any inquiries or proposals from, (c) enter into, or participate in,
any discussions or negotiations with, (d) disclose, directly or indirectly, any
information not customarily disclosed concerning the business and properties of
the Company or its Subsidiaries to or (e) afford any access to the Company's or
its Subsidiaries properties, books and records to any person (other than
Parent, Sub or their respective directors, officers, employees, agents and
representatives) in connection with any possible proposal relating to (i) the
disposition of its respective businesses or all or substantially all of its
assets (except for disposition of assets in the ordinary course of business
consistent with past practice), (ii) the acquisition of equity or debt
securities of the Company or its Subsidiaries (except in connection with the
exercise of options, as permitted in Section 5.3(a)) or (iii) the merger, share
exchange or business combination, or similar acquisition transaction of or
involving the Company or its Subsidiaries with any person other than Parent
(each or any combination of the foregoing a "Company Competing Transaction");
provided that the Company may (x) furnish information (subject to a
confidentiality agreement in reasonably customary form) to, and negotiate or
otherwise engage in discussions with, any party who delivers a written proposal
for a Company Competing Transaction if and so long as the Board of Directors of
the Company determines in good faith, based upon the written opinion of its
outside legal counsel, that failing to take such action would reasonably be
expected to constitute a breach of the fiduciary duties of the Board and (y)
take a position with respect to the Merger or a Company Competing Transaction,
or amend or withdraw such position, in compliance with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to a Company Competing
Transaction. From and after the execution of this Agreement, the Company and
each of its Subsidiaries will immediately notify Parent orally, and
subsequently confirm in writing, all the relevant details relating to all
inquiries and proposals which it may receive relating to any such matters.
Subject to the foregoing, the Company will not, and will not permit any of its
representatives or Subsidiaries to enter, at any time, into or participate in
any discussions or negotiations regarding, or accept, any proposal for a
Company Competing Transaction received by them from a third party or that a
third party expresses a desire to
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communicate with them.
(c) Directors, Officers and Employees. The Company shall
take any and all action to cause all directors, officers and employees of the
Company and the Subsidiaries to resign and/or be terminated from all positions
with the Company and the Subsidiaries, including termination of any employment
agreements, and to terminate any and all Company Plans, effective prior to the
Effective Time, without cost or penalty to the Company, except with respect to
the severance benefits set forth in Section 4.15(h) and Section 4.15(i) to the
Company Disclosure Schedule.
(d) Agreements of Affiliates. The Company shall deliver to
Parent, prior to the date the Registration Statement becomes effective under
the Securities Act, a letter (the "Affiliate Letter") identifying all persons
who are, at the time of the Company Stockholders' Meeting, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company shall
use its best efforts to cause each person who is identified as an "affiliate"
in the Affiliate Letter to deliver to Parent, prior to the Effective Time, a
written agreement (an "Affiliate Agreement") providing that each such person
will agree not to sell, pledge, transfer or otherwise dispose of, the shares of
Parent Common Stock to be received by such person in the Merger except in
compliance with the applicable provisions of the Securities Act and the
applicable rules and regulations thereunder.
ARTICLE VI
CONDITIONS
6.1 Mutual Conditions. The obligations of the parties hereto to
consummate the Merger shall be subject to fulfillment of the following
conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree which prevents the consummation of
the Merger shall have been issued and remain in effect, and no
statute, rule or regulation shall have been enacted by any
Governmental Authority which prevents the consummation of the Merger.
(b) All material consents, approvals, permits or
authorizations required to be obtained prior to the Effective Time
from any Governmental Authority in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been obtained.
(c) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the affirmative vote of a
majority of the outstanding shares of Company Common Stock entitled to
vote thereon, in accordance with Applicable Law, at the Company's
stockholders' meeting, and the Share Issuance shall have been approved
by the Parent Stockholders in accordance with the rules of Nasdaq.
(d) The Registration Statement shall have become effective
under the Securities
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Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or, to the knowledge of Parent
or the Company, threatened by the Commission or any other
Governmental Entity.
(e) No Action shall be instituted by any Governmental
Authority which seeks to prevent consummation of the Merger or which
seeks material damages in connection with the transactions
contemplated hereby which continues to be outstanding.
(f) The shares of Parent Common Stock to be issued in the
Merger shall have been authorized for quotation on Nasdaq, subject to
official notice of issuance.
(g) All consents, waivers and approvals of third parties
required in connection with the transactions contemplated hereby shall
have been obtained, except where the failure to obtain such consents,
waivers or approvals, in the aggregate, would not reasonably be
expected to result in a material adverse effect on Parent or the
Company, as the case may be, provided that a party which has not used
all reasonable efforts to obtain a consent, approval or waiver may not
assert this condition with respect to such consent, approval or
waiver.
(h) Parent shall have received an opinion dated as of the
Closing Date of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., to the
effect that (1) the Merger should constitute a reorganization within
the meaning of Section 368(a) of the Code and (2) no gain or loss
should be recognized by Company Stockholders with respect to shares of
Parent Common Stock received in the Merger in exchange for shares of
Company Common Stock, except with respect to cash received in lieu of
fractional shares of Parent Common Stock. In rendering such opinion,
such counsel may require and rely on representations contained in
certificates of Parent, the Company, Sub and others, as they deem
reasonably appropriate.
6.2 Conditions to Obligations of the Company. The obligations of the
Company to consummate the Merger and the transactions contemplated hereby shall
be subject to the fulfillment of the following conditions unless waived by the
Company:
(a) The representations and warranties of each of Parent and
Sub shall be true and correct on the date hereof and on and as of the
Closing Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need
be true and correct only as of the specified date), other than such
breaches of representations and warranties which would not have or
which would not be reasonably expected to have, in the aggregate, a
material adverse effect on Parent.
(b) Each of Parent and Sub shall have performed in all
material respects each obligation and agreement and shall have
complied in all material respects with each covenant to be performed
and complied with by it hereunder at or prior to the Effective Time.
(c) XxXxxxxx shall have delivered an opinion to the Board of
Directors of the
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Company, in form reasonably satisfactory to the Company, confirming,
as of the date of the Proxy Statement, its opinion referred to in
Section 4.13 hereof.
6.3 Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to consummate the Merger and the other transactions contemplated
hereby shall be subject to the fulfillment of the following conditions unless
waived by each of Parent and Sub:
(a) The representations and warranties of the Company shall
be true and correct on the date hereof and on and as of the Closing
Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need
be true and correct only as of the specified date), other than such
breaches of representations and warranties which would not have or
which would not be reasonably expected to have, in the aggregate, a
material adverse effect on the Company.
(b) The Company shall have performed in all material respects
each obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by it
hereunder at or prior to the Effective Time.
(c) Parent shall have received from each person who is
identified in the Affiliate Letter as an "affiliate" of the Company,
an Affiliate Agreement in form and substance satisfactory to Parent.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval and adoption of
this Agreement by Company Stockholders:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if any permanent
injunction or other order or decree of a court or other competent
Governmental Authority preventing the consummation of the Merger shall
have become final and non-appealable;
(c) by either Parent or the Company if the Merger shall not
have been consummated before the later of (i) April 30, 1998 and (ii)
if as of April 30, 1998 the Registration Statement was filed, the date
that is 60 days after the Registration Statement is declared effective,
unless extended by the Boards of Directors of both Parent and the
Company (provided that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party whose failure to
perform any material covenant or obligation under this Agreement has
been the cause of or resulted in the failure of the Merger to occur on
or before such date);
(d) by Parent or the Company if at the meeting of Company
Stockholders held
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for such purpose (including any adjournment or postponement thereof)
the requisite vote of the Company Stockholders to approve the Merger
and the transactions contemplated hereby shall not have been obtained;
(e) by Parent or the Company if at the meeting of Parent
Stockholders held for such purpose (including any adjournment or
postponement thereof) the requisite vote of the Parent Stockholders to
approve the Share Issuance shall not have been obtained;
(f) by Parent or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part
of the other party, which breach is not cured within 30 days following
written notice given by the terminating party to the party committing
such breach, or which breach, by its nature, cannot be cured prior to
the Closing, but only if such breach would constitute a failure of a
condition contained in Section 6.2 or Section 6.3, as applicable;
(g) by the Company if the Board of Directors of the Company
shall determine to engage in a Company Competing Transaction and the
Company shall have delivered to Parent a written notice of the
determination by the Company Board of Directors to terminate this
Agreement pursuant to this Section 7.1(g); provided, however, that the
Company may not terminate this Agreement pursuant to this clause (g)
unless (w) five business days shall have elapsed after delivery to
Parent of the notice referred to above, (x) at the end of such five
business day period the Company Board of Directors shall continue to
believe that the failure to engage in such Company Competing
Transaction would reasonably be expected to be a breach of the
fiduciary duties of the Board of Directors of the Company (after
giving effect to any adjustment to the terms and conditions of such
transactions proposed by Parent in response to such Company Competing
Transaction) and (y) at the time of such termination, the Company
shall have paid to Parent the Termination Fee (as hereinafter
defined);
(h) by Parent if the Board of Directors of the Company shall
not have recommended the Merger to the Company Stockholders, or shall
have resolved not to make such recommendation, or shall have
materially modified or rescinded its recommendation of the Merger to
the Company Stockholders, or shall have modified or rescinded its
approval of this Agreement, or shall have entered into an acquisition,
merger or similar agreement to effect, or shall have effected, a
Company Competing Transaction, or shall have resolved to do any of the
foregoing; or
(i) by Parent or the Company if at the meeting of Parent
Stockholders held for such purpose (including any adjournment or
postponement thereof) the requisite vote of the Parent Stockholders to
approve the Share Issuance shall not have been obtained.
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7.2 Effect of Termination.
(a) In the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement, except for the provisions of the last
sentence of Section 5.1(e) and the provisions of Sections 7.2 and 8.10, shall
become void and have no effect, without any liability on the part of any party
or its directors, officers, employees or stockholders. Notwithstanding the
foregoing, nothing in this Section 7.2 shall relieve any party to this
Agreement of liability for a breach of any provision of this Agreement prior to
such termination.
(b) If this Agreement is terminated
(i) by Parent or the Company pursuant to Section 7.1(d),
if (A) a Prior Event (as defined below) shall have occurred prior to
such termination and (B) either (x) the Company shall enter into a
definitive agreement with respect to a Company Competing Transaction
within twelve months following such termination and such Company
Competing Transaction is thereafter consummated or (y) a Company
Competing Transaction is consummated within twelve months following
such termination; or
(ii) by the Company pursuant to Section 7.1(g) or by
Parent pursuant to Section 7.1(h);
then in any such case the Company will pay to Parent in cash by wire transfer
in immediately available funds to an account designated by Parent a termination
fee in an amount equal to $1,000,000; provided, however, that if this Agreement
has been terminated by Parent pursuant to Section 7.1(h) and the Board of
Directors of the Company has taken any of the actions referenced in Section
7.1(h) because XxXxxxxx shall not have delivered its opinion referred to in
Section 6.2(c), then the amount to be paid by the Company shall be the amount
of Parent's out-of-pocket expenses incurred in connection with this
transaction, up to a maximum of $500,000. Such payment shall be made (a) in the
case of clause (i) above, within one business day following the consummation of
such Company Competing Transaction and (b) in the case of clause (ii), no later
than immediately prior to such termination.
(c) If this Agreement is terminated by Parent or the Company
pursuant to Section 7.1(i) and (A) a Parent Prior Event (as defined below)
shall have occurred prior to such termination, and (B) either (x) Parent shall
enter into a definitive agreement with respect to a Parent Competing
Transaction (as defined below) within twelve months following such termination
and such Parent Competing Transaction (as it may be amended) is thereafter
consummated, or (y) a Parent Competing Transaction is consummated within twelve
months following such termination, then Parent will pay to the Company in cash
by wire transfer in immediately available funds to an account designated by the
Company a termination fee in an amount equal to $1,000,000. Such payment shall
be made within one business day following the consummation of the Parent
Competing Transaction.
(d) As used herein, a "Prior Event" shall mean any of the
following events:
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(i) any person (other than Parent or any of its
subsidiaries) shall have commenced (as such term is defined in Rule
14d-2 under the Exchange Act), or shall have filed a registration
statement under the Securities Act, with respect to, a tender offer or
exchange offer to purchase any shares of Company Common Stock such
that, upon consummation of such offer, such person would Beneficially
Own (as defined below) or control 50% or more of the then outstanding
Company Common Stock;
(ii) the Company or any of its subsidiaries shall have
entered into, authorized, recommended, proposed or publicly announced
an intention to enter into, authorize, recommend, or propose, an
agreement, arrangement or understanding with any person (other than
Parent or any of its subsidiaries) to, or any person (other than
Parent or any of its subsidiaries) shall have announced a bona fide
intention to, or the Company shall have announced that any person
(other than Parent or any of it subsidiaries) has proposed or
communicated its intention to, or the Company shall have received a
bona fide proposal or communication regarding an intention to, (A)
effect any Competing Transaction, (B) purchase, lease or otherwise
acquire 40% or more of the assets of the Company or (C) purchase or
otherwise acquire (including by way of merger, consolidation, tender
or exchange offer or similar transaction) Beneficial Ownership of
securities representing 30% or more of the voting power of the
Company; or
(iii) any person (other than Parent or any subsidiary of
Parent) shall have acquired Beneficial Ownership of a number of shares
of Company Common Stock in addition to the number of shares of Company
Common Stock Beneficially Owned by such person on the date hereof
equal to 30% or more of the voting power of the Company.
(e) As used herein, the term "Parent Prior Event" shall have
the same meaning with respect to Parent as the term "Prior Event" has with
respect to the Company, with such changes in the definition thereof as are
appropriate to contemplate Parent in lieu of the Company.
(f) As used herein, the term "Parent Competing Transaction"
shall mean a transaction involving the acquisition of the businesses or all or
substantially all of the assets of Parent, or the merger, share exchange or
business combination, or similar acquisition transaction of or involving Parent
in which (A) persons who immediately prior to the consummation of such
transaction were serving as directors of Parent do not comprise a majority of
the directors of the acquiring or surviving entity immediately following the
consummation of such transaction and (B) the stockholders of Parent as of the
date hereof do not hold collectively a majority of the shares or equity
interests of the acquiring or surviving entity immediately following the
consummation of such transaction.
(g) As used herein, the terms "Beneficial Ownership" and
"Beneficially Own" shall have the meanings ascribed to them in Rule 13d-3 under
the Exchange Act. As used herein, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
7.3 Amendment. This Agreement may be amended by the parties hereto, at
any time before or after adoption of this Agreement by Company Stockholders or
authorization of the Share Issuance by Parent Stockholders, but after such
approval or authorization, no amendment shall be
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made which by law requires further approval or authorization by the Company
Stockholders or Parent Stockholders, as the case may be, without such further
approval or authorization. Notwithstanding the foregoing, this Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, Parent
(with respect to the Company) and the Company (with respect to Parent and Sub)
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of such party, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations and Warranties. The representations
and warranties made herein by the parties hereto shall not survive the
Effective Time. Notwithstanding the foregoing, this Section 8.1 shall not limit
any covenant or agreement of the parties hereto, which by its terms
contemplates performance after the Effective Time or the termination of this
Agreement.
8.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given upon receipt if delivered personally,
telecopied (which is confirmed) or dispatched by a nationally recognized
overnight courier service to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub:
Southern Mineral Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
with a copy to
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000 - Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
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(b) if to the Company:
Amerac Energy Corporation
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Peak
Telecopy No.: (000) 000-0000
with a copy to
Xxxxx X. Xxxx III, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
8.3 Interpretation. When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The headings and the table of contents
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. For the
purposes of this Agreement, a "material adverse effect" shall mean, as to any
party, a material adverse effect on the assets, liabilities, results of
operations, business or financial condition of such party and its subsidiaries,
taken as a whole, or on such party's ability to consummate the transactions
contemplated hereby.
8.4 Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same agreement. The parties may
execute more than one copy of this Agreement, each of which shall constitute an
original.
8.5 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement constitute
the entire agreement among the parties and supersede all prior agreements and
understandings by or among the parties, written and oral, with respect to the
subject matter hereof.
8.6 Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended or shall be construed to create any third party
beneficiaries, except for the provisions of Section 5.2(b) which may be
enforced by the beneficiaries thereof.
8.7 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas without regard to principles of
conflict of laws.
8.8 Specific Performance. The transactions contemplated by this
Agreement are unique and monetary damages would not be an adequate remedy for a
breach hereof. Accordingly, each of the parties acknowledges and agrees that,
in addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided that
such party is not in material default hereunder.
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8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and permitted assigns.
8.10 Expenses. Parent and the Company shall pay their own costs and
expenses associated with the transactions contemplated by this Agreement,
except that the Company and Parent shall share equally (i) the filing fees in
connection with the filing of the Proxy Statement and Registration Statement
with the Commission and (ii) the expenses incurred in connection with printing
and mailing the Proxy Statement to the Company Stockholders and the Parent
Stockholders.
8.11 Incorporation of Disclosure Schedules. The Company Disclosure
Schedule and the Parent Disclosure Schedule are hereby incorporated herein and
made a part hereof for all purposes as if fully set forth herein.
8.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
8.13 Subsidiaries and Affiliates. As used in this Agreement, the word
"subsidiary" when used with respect to any party means any corporation or other
organization, whether incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization, or any organization of which
such party is a general partner, and unless otherwise specified, the word
"affiliate" has the meaning ascribed thereto in the Investment Company Act of
1940, as amended.
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IN WITNESS WHEREOF, Parent, Sub and the Company have signed this
Agreement as of the date first written above.
SOUTHERN MINERAL CORPORATION
By: /s/ XXXXXX X. XXXXX
--------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
SMC ACQUISITION CORP.
By: /s/ XXXXXX X. XXXXX
--------------------------------------
Xxxxxx X. Xxxxx
President
AMERAC ENERGY CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
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