EXHIBIT 99.2
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEVON ENERGY CORPORATION,
DEVON NEWCO CORPORATION
AND
OCEAN ENERGY, INC.
DATED AS OF FEBRUARY 23, 2003
AGREEMENT AND PLAN OF MERGER
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TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER.................................................................................1
Section 1.1 THE MERGER........................................................................1
Section 1.2 THE CLOSING.......................................................................1
Section 1.3 EFFECTIVE TIME....................................................................2
Section 1.4 CERTIFICATE OF INCORPORATION......................................................2
Section 1.5 BYLAWS............................................................................2
Section 1.6 BOARD OF DIRECTORS OF SURVIVING CORPORATION.......................................2
Section 1.7 BOARD OF DIRECTORS OF PARENT......................................................2
Section 1.8 EXECUTIVE OFFICERS OF PARENT......................................................3
ARTICLE 2 CONVERSION OF COMPANY SHARES...............................................................3
Section 2.1 EFFECT ON CAPITAL STOCK...........................................................3
Section 2.2 EXCHANGE OF CERTIFICATES FOR SHARES...............................................4
Section 2.3 APPRAISAL RIGHTS..................................................................7
Section 2.4 ADJUSTMENTS.......................................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................8
Section 3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY.....................................8
Section 3.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS..................................8
Section 3.3 CAPITALIZATION....................................................................8
Section 3.4 SIGNIFICANT SUBSIDIARIES..........................................................9
Section 3.5 NO VIOLATION......................................................................9
Section 3.6 NO CONFLICT......................................................................10
Section 3.7 SEC DOCUMENTS....................................................................11
Section 3.8 LITIGATION AND LIABILITIES.......................................................11
Section 3.9 ABSENCE OF CERTAIN CHANGES.......................................................12
Section 3.10 TAXES............................................................................12
Section 3.11 EMPLOYEE BENEFIT PLANS...........................................................13
Section 3.12 LABOR MATTERS....................................................................15
Section 3.13 ENVIRONMENTAL MATTERS............................................................16
Section 3.14 INTELLECTUAL PROPERTY............................................................17
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Section 3.15 TITLE TO PROPERTIES..............................................................18
Section 3.16 INSURANCE........................................................................18
Section 3.17 NO BROKERS.......................................................................18
Section 3.18 OPINION OF FINANCIAL ADVISOR.....................................................18
Section 3.19 CONTRACTS; DEBT INSTRUMENTS......................................................19
Section 3.20 VOTE REQUIRED....................................................................20
Section 3.21 CERTAIN APPROVALS................................................................20
Section 3.22 CERTAIN CONTRACTS................................................................20
Section 3.23 RIGHTS AGREEMENT.................................................................20
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...................................21
Section 4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY....................................21
Section 4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS.................................21
Section 4.3 CAPITALIZATION...................................................................21
Section 4.4 SIGNIFICANT SUBSIDIARIES.........................................................22
Section 4.5 NO VIOLATION.....................................................................23
Section 4.6 NO CONFLICT......................................................................23
Section 4.7 SEC DOCUMENTS....................................................................24
Section 4.8 LITIGATION AND LIABILITIES.......................................................25
Section 4.9 ABSENCE OF CERTAIN CHANGES.......................................................25
Section 4.10 TAXES............................................................................26
Section 4.11 EMPLOYEE BENEFIT PLANS...........................................................26
Section 4.12 LABOR MATTERS....................................................................28
Section 4.13 ENVIRONMENTAL MATTERS............................................................29
Section 4.14 INTELLECTUAL PROPERTY............................................................30
Section 4.15 TITLE TO PROPERTIES..............................................................30
Section 4.16 INSURANCE........................................................................31
Section 4.17 NO BROKERS.......................................................................31
Section 4.18 OPINION OF FINANCIAL ADVISOR.....................................................31
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TABLE OF CONTENTS
(continued)
PAGE
Section 4.19 CONTRACTS; DEBT INSTRUMENTS......................................................31
Section 4.20 VOTE REQUIRED....................................................................32
Section 4.21 CERTAIN CONTRACTS................................................................32
Section 4.22 RIGHTS AGREEMENT.................................................................32
ARTICLE 5 COVENANTS.................................................................................33
Section 5.1 CONDUCT OF BUSINESS..............................................................33
Section 5.2 NO SOLICITATION BY THE COMPANY...................................................39
Section 5.3 NO SOLICITATION BY PARENT........................................................41
Section 5.4 MEETINGS OF STOCKHOLDERS.........................................................42
Section 5.5 FILINGS; REASONABLE BEST EFFORTS.................................................44
Section 5.6 INSPECTION.......................................................................45
Section 5.7 PUBLICITY........................................................................46
Section 5.8 REGISTRATION STATEMENT...........................................................46
Section 5.9 LISTING APPLICATION..............................................................47
Section 5.10 INTENTIONALLY OMITTED............................................................47
Section 5.11 AGREEMENTS OF AFFILIATES.........................................................47
Section 5.12 EXPENSES.........................................................................47
Section 5.13 INDEMNIFICATION AND INSURANCE....................................................47
Section 5.14 EMPLOYEE BENEFITS................................................................49
Section 5.15 REORGANIZATION...................................................................52
Section 5.16 DIVIDENDS........................................................................52
ARTICLE 6 CONDITIONS................................................................................52
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.......................52
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER.....................53
Section 6.3 CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER..........................54
ARTICLE 7 TERMINATION...............................................................................55
Section 7.1 TERMINATION BY MUTUAL CONSENT....................................................55
Section 7.2 TERMINATION BY PARENT OR THE COMPANY.............................................55
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Section 7.3 TERMINATION BY THE COMPANY.......................................................55
Section 7.4 TERMINATION BY PARENT............................................................56
Section 7.5 EFFECT OF TERMINATION............................................................57
Section 7.6 EFFECT OF VOTE...................................................................59
ARTICLE 8 GENERAL PROVISIONS........................................................................59
Section 8.1 SURVIVAL.........................................................................59
Section 8.2 NOTICES..........................................................................60
Section 8.3 ASSIGNMENT; BINDING EFFECT; BENEFIT..............................................61
Section 8.4 ENTIRE AGREEMENT.................................................................61
Section 8.5 AMENDMENTS.......................................................................62
Section 8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL................................62
Section 8.7 COUNTERPARTS.....................................................................62
Section 8.8 HEADINGS.........................................................................62
Section 8.9 INTERPRETATION...................................................................63
Section 8.10 WAIVERS..........................................................................63
Section 8.11 SEVERABILITY.....................................................................63
Section 8.12 ENFORCEMENT OF AGREEMENT; LIMITATION ON DAMAGES..................................64
Section 8.13 OBLIGATION OF MERGER SUB.........................................................64
Section 8.14 EXTENSION; WAIVER................................................................64
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 23, 2003, is among Devon Energy Corporation, a
Delaware corporation
("Parent"), Devon NewCo Corporation, a
Delaware corporation and a direct and
wholly owned subsidiary of Parent ("Merger Sub"), and Ocean Energy, Inc., a
Delaware corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent, Merger
Sub and the Company have determined that the merger of Merger Sub with and into
the Company (the "Merger"), in the manner contemplated herein, is advisable and
in the best interests of their respective corporations and stockholders, and, by
resolutions duly adopted, have approved this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization within the meaning of section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"); and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub shall
be merged with and into the Company in accordance with this Agreement, and the
separate corporate existence of Merger Sub shall thereupon cease. The Company
(sometimes hereinafter referred to as the "Surviving Corporation") shall be the
surviving corporation in the Merger and shall be a wholly owned subsidiary of
Parent. The Merger shall have the effects specified in the
Delaware General
Corporation Law ("DGCL"). At the election of Parent, any direct wholly owned
subsidiary of Parent may be substituted for Merger Sub as a constituent
corporation in the Merger at any time prior to the meetings of each of the
Company's and the Parent's stockholders contemplated by Section 5.4 so long as
such substitution does not delay either such meeting.
Section 1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of Mayer, Brown, ▇▇▇▇ & Maw, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
at 9:00 a.m., local time, on the first business day immediately following the
day on which the last to be fulfilled or waived of the conditions set forth in
Article 6 (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to fulfillment or waiver of those conditions) shall
be fulfilled or waived in accordance herewith or (b) at such other time, date or
place as Parent and the Company may agree in writing. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
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Section 1.3 EFFECTIVE TIME. If all the conditions to the Merger set
forth in Article 6 shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated as provided in Article 7, on
the Closing Date, a certificate of merger (the "Certificate of Merger") meeting
the requirements of Section 251 of the DGCL shall be properly executed and filed
with the Secretary of State of the State of
Delaware. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of
Delaware in accordance with the DGCL, or at such later
time that the parties hereto shall have agreed upon and designated in such
filing as the effective time of the Merger (the "Effective Time").
Section 1.4 CERTIFICATE OF INCORPORATION. At the Effective Time, the
certificate of incorporation of the Company shall be amended to read as set
forth in Exhibit A attached hereto, and as so amended shall be the certificate
of incorporation of the Surviving Corporation, until duly amended in accordance
with applicable law.
Section 1.5 BYLAWS. The bylaws of Merger Sub in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation,
until duly amended in accordance with applicable law.
Section 1.6 BOARD OF DIRECTORS OF SURVIVING CORPORATION. The Board of
Directors of the Surviving Corporation shall consist of the Board of Directors
of Merger Sub, as it existed immediately prior to the Effective Time, until
changed in accordance with applicable law. Each of the members of the Board of
Directors of the Company shall tender his or her resignation as a director of
the Company, to be effective at the Effective Time.
Section 1.7 BOARD OF DIRECTORS OF PARENT. At the Effective Time, the
Board of Directors of Parent shall consist of such number of persons as may be
determined by Parent. If the Board of Directors of Parent is to consist of 13
directors at the Effective Time, Parent shall, except as provided otherwise in
this Section 1.7, cause the four persons from the Company's Board of Directors
designated in writing by the Company no later than March 10, 2003 to be
appointed to the Board of Directors of Parent at the Effective Time; provided,
however, that if the Board of Directors of Parent will consist of more or less
than 13 directors immediately after the Effective Time, then Parent shall cause
a number of persons designated in writing by the Company (and from the Company's
Board of Directors as existing on the date hereof) equal to four-thirteenths of
the total number of directors (rounded upward to the nearest whole number) to be
included on the Board of Directors of Parent at the Effective Time. The persons
designated by the Company for inclusion on the Board of Directors of Parent
pursuant to this Section 1.7 are referred to herein as the "Company Designees".
Parent shall notify the Company if the number of directors constituting the
Board of Directors at the Effective Time will be more or less than 13 directors.
If the number of directors to be designated by the Company pursuant to this
Section 1.7 is less than four, then Parent shall cause the Company Designees to
be appointed in the order designated by the Company. If the number of directors
to be designated by the Company pursuant to this Section 1.7 is greater than
four directors, the Company shall provide Parent with written notice of the
additional individuals designated to serve as Company Designees. The Company
shall provide Parent the information concerning each Company Designee that would
be required to be included in a proxy statement under Regulation 14A of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If
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Parent determines in its sole discretion that any Company Designee is
unacceptable to Parent, Parent and the Company will agree upon a substitute
Company Designee from the Company's Board of Directors as soon as practicable
and in any event prior to the mailing of the Proxy Statement/Prospectus (as
defined in Section 5.8). The Company Designees shall be allocated as evenly as
possible among the different classes of Parent directors, but otherwise at
Parent's discretion; provided, however, that, in the event there are four or
more Company Designees and except as provided in the following sentence, the
term of one Company Designee may expire at Parent's annual meeting held in 2004
and the terms of the remaining Company Designees shall expire at Parent's annual
meeting held in 2005 and 2006. If the Effective Time occurs prior to Parent's
annual meeting held in 2003, the Company Designee(s) who would have been
appointed to a term expiring at Parent's annual meeting held in 2006 under the
immediately preceding sentence shall instead be appointed to a term expiring at
Parent's annual meeting held in 2003 and shall be nominated for election at that
meeting to a term expiring at Parent's annual meeting held in 2006.
Section 1.8 EXECUTIVE OFFICERS OF PARENT. At the Effective Time, the
Executive Officers of Parent shall include ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who shall serve as
Chairman of the Board and Chief Executive Officer, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who
shall serve as President and Chief Operating Officer (in each case assuming he
is willing and able to serve).
ARTICLE 2
CONVERSION OF COMPANY SHARES
Section 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, the Merger
shall have the following effects on the capital stock of the Company and Merger
Sub, without any action on the part of the holder of any capital stock of the
Company or Merger Sub:
(a) Conversion of the Company Common Shares. Subject to the provisions
of this Section 2.1, each share of Common Stock, $0.10 par value per share, of
the Company (each a "Company Common Share" and collectively the "Company Common
Shares") issued and outstanding immediately prior to the Effective Time (but not
including any Company Common Shares that are owned (i) by Parent, Merger Sub or
any other direct or indirect Subsidiary of Parent or (ii) by the Company or any
direct or indirect Subsidiary of the Company (the "Excluded Company Shares"))
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into 0.414 of a share (the "Exchange Ratio") of Parent
Common Stock (the "Merger Consideration"). "Parent Common Stock" shall mean the
common stock, par value $0.10 per share, of Parent.
(b) Company Preferred Shares. Each share of Series B Convertible
Preferred Stock, $1.00 par value per share, of the Company (each, a "Company
Preferred Share," and collectively the "Company Preferred Shares;" and,
together, the Company Common Shares and the Company Preferred Shares are
collectively referred to herein as the "Company Shares"), other than Appraisal
Shares (as defined in Section 2.3), issued and outstanding immediately prior to
the Effective Time shall remain outstanding as one share of Series B Convertible
Preferred Stock, par value $1.00 per share, of the Surviving Corporation. From
and after the Effective Time, all shares of the Series B Convertible Preferred
Stock of the Surviving Corporation then outstanding shall be convertible into
Parent Common Stock instead of Company Common Shares in
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accordance with the terms of the certificate of designations governing such
series, giving effect to the Exchange Ratio.
(c) Cancellation of Excluded Company Shares. Each Excluded Company
Share issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
no longer be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(d) Merger Sub. At the Effective Time, each share of common stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation, and the Surviving Corporation shall thereby become a
wholly owned subsidiary of Parent.
(e) Stock Options; Employee Benefit Plans. At the Effective Time, all
Stock Options (as defined in Section 5.14) outstanding at the Effective Time
under each Company Plan (as defined in Section 3.11) shall be assumed by Parent
in accordance with Section 5.14.
Section 2.2 EXCHANGE OF CERTIFICATES FOR SHARES.
(a) Exchange Procedures. At or prior to the Effective Time, Parent
shall deposit with such party as may be reasonably satisfactory to Parent and
the Company (the "Exchange Agent"), in trust for the benefit of the holders of
Company Common Shares, certificates representing shares of Parent Common Stock
required to effect the conversion of the Company Common Shares into the Merger
Consideration pursuant to Section 2.1(a) (including shares of Parent Common
Stock that are needed with respect to fractional shares as contemplated by
Section 2.2(d)). Parent shall make sufficient funds available to the Exchange
Agent from time to time as needed to pay cash in respect of dividends or other
distributions in accordance with Section 2.2(b). Promptly after the Effective
Time, but in no event later than three business days following the Closing Date,
the Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record as of the Effective Time of a certificate representing Company Common
Shares (each a "Certificate") (other than holders of a Certificate in respect of
Excluded Company Shares) (i) a letter of transmittal specifying that delivery of
the Certificates shall be effected, and that risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, such letter of transmittal to be in such form and to have such other
provisions as Parent and the Company may reasonably agree, and (ii) instructions
for exchanging the Certificates and receiving the Merger Consideration to which
such holder shall be entitled pursuant to Section 2.1(a). Subject to Section
2.2(g), upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor (i) a certificate
representing that number of whole shares of Parent Common Stock that such holder
is entitled to receive pursuant to Section 2.1(a) and (ii) a check in the
aggregate amount (after giving effect to any required tax withholdings) of (A)
any cash in lieu of fractional shares determined in accordance with Section
2.2(d) plus (B) any cash dividends and any other dividends or other
distributions that such holder has the right to receive pursuant to the
provisions of this Section 2.2. The Certificate so surrendered shall forthwith
be canceled. No interest will be paid or accrued on any amount payable (for
fractional shares, dividends or otherwise) upon surrender of any Certificate. In
the event of a transfer of ownership of Company Common Shares that
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occurred prior to the Effective Time, but is not registered in the transfer
records of the Company, the Merger Consideration may be issued and/or paid to
such a transferee if the Certificate formerly representing such Company Common
Shares 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. If any certificate for shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the Person requesting such exchange shall pay any transfer or
other taxes required by reason of the issuance of certificates for shares of
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the reasonable satisfaction of
Parent or the Exchange Agent that such tax has been paid or is not applicable.
(b) Distributions with Respect to Unexchanged Shares. Whenever a
dividend or other distribution is declared by Parent in respect of Parent Common
Stock, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
shares of Parent Common Stock issuable pursuant to this Agreement. No dividends
or other distributions so declared in respect of such Parent Common Stock shall
be paid to any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Section 2.2. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be issued or paid, less the amount of any withholding taxes that may be
required thereon, to the holder of the certificates representing whole shares of
Parent Common Stock issued in exchange for such Certificate, without interest,
(i) at the time of such surrender, the dividends or other distributions with a
record date that is at or after the Effective Time and a payment date on or
prior to the date of surrender of such whole shares of Parent Common Stock and
not previously paid and (ii) at the appropriate payment date, the dividends or
other distributions payable with respect to such whole shares of Parent Common
Stock with a record date at or after the Effective Time but with a payment date
subsequent to surrender. No interest shall be payable with respect to any
amounts to be paid under this Section 2.2. For purposes of dividends or other
distributions in respect of shares of Parent Common Stock, all shares of Parent
Common Stock to be issued pursuant to the Merger shall be deemed issued and
outstanding as of the Effective Time.
(c) Transfers. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Company Common Shares that were
outstanding immediately prior to the Effective Time.
(d) Fractional Shares.
(i) No certificates or scrip representing fractional shares of
Parent Common Stock or book-entry credit of the same shall be issued
upon the surrender for exchange of Certificates or upon conversion of
shares, and such fractional share interest shall not entitle the owner
thereof to vote or to any rights of a shareholder of Parent.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (A) the aggregate
number of shares of Parent Common Stock that would be distributed to
holders of the Certificates pursuant to Section 2.1(a) if no effect
were given to Section 2.2(d)(i) over (B) the aggregate number
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of whole shares of Parent Common Stock to be distributed to holders of
the Certificates pursuant Section 2.1(a) taking into account the effect
of Section 2.2(d)(i) (such excess, the "Excess Shares"). As soon as
practicable after the Effective Time, the Exchange Agent, as agent for
the holders of the Certificates, shall sell the Excess Shares at
then-prevailing prices on the American Stock Exchange ("AMEX"), all in
the manner provided in Section 2.2(d)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the AMEX and shall be executed in round lots to
the extent practicable. The Surviving Corporation shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of the Excess Shares. Until the proceeds
of such sale or sales have been distributed to the holders of the
Certificates (or paid to Parent pursuant to Section 2.2(e)), the
Exchange Agent shall hold such proceeds in trust for the holders of the
Certificates (the "Common Stock Trust"). The Exchange Agent shall
determine the portion of the Common Stock Trust to which each holder of
a Certificate shall be entitled, if any, by multiplying the amount of
the aggregate net proceeds comprising the Common Stock Trust by a
fraction, the numerator of which is the amount of the fractional share
interest in the Parent Common Stock to which such holder of a
Certificate is entitled and the denominator of which is the aggregate
amount of fractional share interests in the Parent Common Stock to
which all holders of the Certificates are entitled. Parent shall comply
with the provisions of Rule 236(c) under the Securities Act of 1933, as
amended (the "Securities Act").
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates in lieu
of any fractional share interests, the Exchange Agent shall make
available such amounts, without interest, to such holders of
Certificates that have surrendered their Certificates in accordance
with this Section 2.2.
(e) Termination of Exchange Period; Unclaimed Merger Consideration. Any
shares of Parent Common Stock, any portion of the Common Stock Trust and any
portion of the cash, dividends or other distributions with respect to the Parent
Common Stock deposited by Parent with the Exchange Agent (including the proceeds
of any investments thereof) that remain unclaimed by the former stockholders of
the Company one year after the Effective Time shall be transferred to Parent.
Any former stockholders of the Company who have not theretofore complied with
this Section 2.2 shall thereafter be entitled to look only to Parent for payment
of their Merger Consideration and any cash, dividends and other distributions in
respect thereof issuable and/or payable pursuant to Section 2.1, Section 2.2(b)
and Section 2.2(d) upon due surrender of their Certificates, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation, the Exchange Agent or any other Person shall be liable to
any former holder of Company Common Shares for any amount properly delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws. If any Certificate shall not have been surrendered immediately prior to
the date on which any Merger Consideration would escheat to or become the
property of any governmental entity, any such Merger Consideration shall, to the
extent permitted by applicable law, become the property of Parent, free and
clear of all claims or interest of any person previously entitled thereto.
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(f) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed, and if Parent believes that the Person providing the
indemnity is sufficiently creditworthy, the making of a reasonable undertaking
to indemnify Parent or the Company, or, if Parent does not so believe, the
posting by such Person of a bond in the form customarily required by Parent to
indemnify against any claim that may be made against it with respect to such
Certificate, Parent will issue the shares of Parent Common Stock and the
Exchange Agent will distribute such Merger Consideration, dividends and other
distributions in respect thereof issuable or payable in exchange for such lost,
stolen or destroyed Certificate pursuant to Section 2.1, Section 2.2(b) and
Section 2.2(d), in each case, without interest. Any delivery or surrender for
exchange of a Certificate pursuant to this Section 2.2 may be effected (in lieu
of such delivery or exchange for surrender of a Certificate) by delivery of an
affidavit together with an indemnity undertaking or indemnity bond in accordance
with this Section 2.2(f).
(g) Affiliates. Notwithstanding anything in this Agreement to the
contrary, Certificates surrendered for exchange by any Rule 145 Affiliate (as
determined pursuant to Section 5.11) of the Company shall not be exchanged until
Parent has received a written agreement from such Person as provided in Section
5.11.
Section 2.3 APPRAISAL RIGHTS. The parties hereto agree that, in
accordance with Section 262 of the DGCL, no appraisal rights will be available
to holders of Company Common Shares in connection with the Merger.
Notwithstanding anything in this Agreement to the contrary, Company Preferred
Shares issued and outstanding immediately prior to the Effective Time that are
held by any holder who is entitled to demand and properly demands appraisal of
such shares (the "Appraisal Shares") pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL ("Section 262") shall
be entitled to payment of the fair value of such shares in accordance with the
provisions of Section 262. At the Effective Time, all Appraisal Shares shall
automatically be canceled and shall cease to exist or be outstanding, and each
holder of Appraisal Shares shall cease to have any rights with respect thereto,
except the right to receive the fair value of such shares in accordance with the
provisions of Section 262. Notwithstanding the foregoing, if any such holder
shall fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262 or a court of competent jurisdiction shall determine
that such holder is not entitled to the relief provided by Section 262, then the
right of such holder to be paid the fair value of such holder's Appraisal Shares
under Section 262 shall cease to exist and such Appraisal Shares shall remain
outstanding as provided in Section 2.1(b). The Company shall serve prompt notice
to Parent of any demands for appraisal of any Company Preferred Shares, and
Parent shall have the right to participate in and, subject to applicable law,
direct all negotiations and proceedings with respect to such demands. The
Company shall not, without the prior written consent of Parent, make any payment
with respect to, settle or offer to settle, any such demands, or agree to do any
of the foregoing.
Section 2.4 ADJUSTMENTS. In the event that prior to the Effective Time,
there shall have been declared or effected a stock split, reverse stock split,
stock dividend or stock distribution (including any dividend, or distribution,
of securities convertible into Company Common Shares or Parent Common Stock),
reorganization, recapitalization, reclassification or
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similar event made with respect to the Company Common Shares or the Parent
Common Stock, the Exchange Ratio shall be adjusted to reflect fully the
appropriate effect of such event.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered to Parent
concurrently with the execution hereof (the "Company Disclosure Letter") or as
disclosed with reasonable specificity in the Company Reports (as defined in
Section 3.7), the Company represents and warrants to Parent that:
Section 3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of
Delaware. The Company is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified would not have or
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect (as defined in Section 8.9). The Company has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as now conducted. The copies of the Company's
certificate of incorporation and bylaws previously made available to Parent are
true and correct and contain all amendments as of the date hereof.
Section 3.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and all other agreements and documents contemplated hereby to
which it is a party. The consummation by the Company of the transactions
contemplated hereby has been duly authorized by all requisite corporate action,
other than, with respect to the Merger, the adoption of this Agreement by the
Company's stockholders. This Agreement constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
Section 3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 520,000,000 Company Common Shares, and 10,000,000 Company Preferred
Shares. As of February 20, 2003, there were (a) 177,405,787 Company Common
Shares issued and outstanding, (b) 50,000 Company Preferred Shares issued and
outstanding and (c) 19,661,271 Company Common Shares subject to outstanding
employee and director stock options issued pursuant to the stock option plans of
the Company described in the Company Disclosure Letter (the "Company Option
Plans"), of which the weighted average exercise price was approximately $16.26
per share and (d) 1,500,000 unissued shares of preferred stock designated as
Series A Junior Participating Preferred Stock ("Company Series A Preferred
Stock"). All issued and outstanding Company Shares (i) are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, (ii)
were not issued in violation of the terms of any agreement or other
understanding binding upon the Company and (iii) were issued in compliance with
all applicable charter documents of the Company and all applicable federal and
state securities laws, rules and regulations. As of the date hereof, one right
to purchase Series A Junior Participating
8
Preferred Stock of the Company (each, a "Company Right") issued pursuant to the
Amended and Restated Rights Agreement, dated December 12, 1997 (as amended, the
"Company Rights Agreement"), between the Company and Fleet National Bank (f/k/a
BankBoston, N.A.) is associated with and attached to each outstanding Company
Common Share. Except (i) as set forth in this Section 3.3, (ii) for any Company
Common Shares issuable upon conversion of Company Preferred Shares, (iii) for
any Company Common Shares issued pursuant to the exercise of the options
referred to in subsection (c) above, (iv) for options issued under the Company
Option Plans after the date of this Agreement in compliance with Section 5.1(a)
and Company Common Shares issued pursuant to the exercise of such options and
(v) for shares of Company Series A Preferred Stock and Company Common Shares
issuable pursuant to the Company Rights, there are no outstanding shares of
capital stock and there are no options, warrants, calls, subscriptions,
shareholder rights plan or similar instruments, convertible securities, or other
rights, agreements or commitments which obligate the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of the Company or any of its Subsidiaries. The Company has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter.
Section 3.4 SIGNIFICANT SUBSIDIARIES. For purposes of this Agreement,
"Significant Subsidiary" shall mean a significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Exchange Act. Each of the Company's Significant
Subsidiaries is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing (where applicable) under the
laws of its jurisdiction of incorporation or organization, has the corporate,
limited liability company or partnership power and authority to own, operate and
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified to do business and is in good standing (where applicable)
in each jurisdiction in which the ownership, operation or lease of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not have or reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. All of the outstanding shares of
capital stock of, or other ownership interests in, each of the Company's
Significant Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by the Company free and
clear of all liens, pledges, security interests, claims, preferential purchase
rights or other rights, interests or encumbrances ("Liens"). Schedule 3.4 of the
Company Disclosure Letter sets forth for each Significant Subsidiary of the
Company, its name and jurisdiction of incorporation or organization.
Section 3.5 NO VIOLATION. Neither the Company nor any of its
Subsidiaries is, or has received notice that it would be with the passage of
time, in violation of any term, condition or provision of (a) its charter
documents or bylaws, (b) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license or other instrument or (c) any
order of any court, governmental authority or arbitration board or tribunal, or
any law, ordinance, governmental rule or regulation to which the Company or any
of its Subsidiaries or any of their respective properties or assets is subject,
or is delinquent with respect to any report required to be filed with any
governmental entity, except, in the case of matters described in clause (b) or
(c), as would not have or reasonably be expected to have, individually or in the
aggregate, a Company
9
Material Adverse Effect. Except as would not have or reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, (i)
the Company and its Subsidiaries hold all permits, licenses, variances,
exemptions, orders, franchises and approvals of all governmental authorities
necessary for the lawful conduct of their respective businesses (the "Company
Permits") and (ii) the Company and its Subsidiaries are in compliance with the
terms of the Company Permits. No investigation by any governmental authority
with respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, other than those that would not have or
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.6 NO CONFLICT.
(a) Neither the execution and delivery by the Company of this Agreement
nor the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof will: (i) conflict with or result in a breach
of any provisions of the charter documents or bylaws of the Company; (ii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of the Company or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, or
otherwise result in a detriment to the Company or any of its Subsidiaries under
any of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, Company Permit, lease, contract, agreement, joint
venture or other instrument or obligation to which the Company or any of its
Subsidiaries is a party, or by which the Company or any of its Subsidiaries or
any of their properties is bound or affected; or (iii) contravene or conflict
with or constitute a violation of any provision of any law, rule, regulation,
judgment, order or decree binding upon or applicable to the Company or any of
its Subsidiaries, except, in the case of matters described in clause (ii) or
(iii), as would not have or reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this Agreement
nor the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof will require any consent, approval or
authorization of, or filing or registration with, any governmental or regulatory
authority, other than (i) the filings provided for in Article 1 and (ii) filings
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Exchange Act, the Securities Act or applicable
state securities and "Blue Sky" laws and applicable foreign competition or
antitrust laws ((i) and (ii) collectively, the "Regulatory Filings"), except for
any consent, approval or authorization the failure of which to obtain and for
any filing or registration the failure of which to make would not have or
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Other than as contemplated by Section 3.6(b), no consents,
assignments, waivers, authorizations or other certificates are necessary in
connection with the transactions contemplated hereby to provide for the
continuation in full force and effect of all of the Company's material contracts
or leases or for the Company to consummate the transactions
10
contemplated hereby, except where the failure to receive such consents or other
certificates would not have or reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in any
payment from the Company or its Subsidiaries (including severance, unemployment
compensation, parachute payment, bonus or otherwise) becoming due to any
director, employee or independent contractor of the Company or any of its
Subsidiaries under any Company Plan (as defined in Section 3.11) or otherwise;
(ii) increase any benefits otherwise payable under any Company Plan or
otherwise; or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
Section 3.7 SEC DOCUMENTS. The Company has made available to Parent
each registration statement, report, proxy statement or information statement
(other than preliminary materials) filed by the Company with the Securities and
Exchange Commission ("SEC") since January 1, 2001, each in the form (including
exhibits and any amendments thereto) filed with the SEC prior to the date hereof
(collectively, the "Company Reports"), and the Company has filed all forms,
reports and documents required to be filed by it with the SEC pursuant to
relevant securities statutes, regulations, policies and rules since such time.
As of their respective dates, the Company Reports (i) were prepared in
accordance with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder and complied with the then
applicable accounting requirements and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of the Company and its Subsidiaries as of its date and each
of the consolidated statements of operations, cash flows and stockholders'
equity included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents in all material
respects the results of operations, cash flows or changes in stockholders'
equity, as the case may be, of the Company and its Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to such
exceptions as may be permitted by Form 10-Q of the SEC), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein.
Section 3.8 LITIGATION AND LIABILITIES. There are no actions, suits or
proceedings pending against the Company or any of its Subsidiaries or, to the
Company's knowledge, threatened against the Company or any of its Subsidiaries,
at law or in equity, or before or by any federal, state or foreign commission,
court, board, bureau, agency or instrumentality, other than those that would not
have or reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. There are no outstanding judgments, decrees,
injunctions, awards or orders against the Company or any of its Subsidiaries,
other than those that would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. There are
no obligations or liabilities of any nature, whether accrued, absolute,
contingent or otherwise, of the Company or any of its
11
Subsidiaries, other than those liabilities and obligations (a) that are
disclosed in the Company Reports, (b) that have been incurred in the ordinary
course of business since September 30, 2002, (c) related to expenses associated
with the transactions contemplated by this Agreement or (d) that would not have
or reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.9 ABSENCE OF CERTAIN CHANGES. Since December 31, 2001, the
Company has conducted its business only in the ordinary and usual course of
business, and during such period there has not been (i) any event, condition,
action or occurrence that has had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (ii) any
material change by the Company or any of its Subsidiaries (viewed on a
consolidated basis) in any of its accounting methods, principles or practices or
any of its tax methods, practices or elections, except for changes required by
generally accepted accounting principles; (iii) any material damage,
destruction, or loss to the business or properties of the Company and its
Subsidiaries, taken as a whole, not covered by insurance; (iv) any declaration,
setting aside or payment of any dividend (other than ordinary quarterly
dividends of $0.04 per share on the Company Common Shares and ordinary
semi-annual dividends of $32.50 per share on the Company Preferred Shares) or
other distribution in respect of the capital stock of the Company, or any direct
or indirect redemption, purchase or any other acquisition by the Company of any
such stock; (v) any change in the capital stock or in the number of shares or
classes of the Company's authorized or outstanding capital stock (other than as
a result of issuances under the Company Option Plans or exercises of options to
purchase the Company Common Shares outstanding or issued as permitted hereunder
pursuant to Section 5.1(a)(vi)); (vi) any increase in or establishment of any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option, stock purchase or other employee benefit plan, except in
the ordinary course of business or (vii) any event, condition, action or
occurrence that is prohibited on or after the date of this Agreement under
Section 5.1(a)(viii), (ix), (x), (xii), (xiii), (xv), (xvi), or (xx) of this
Agreement.
Section 3.10 TAXES.
(a) Each of the Company, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or, since January 1, 1991, was a member has (i) duly filed (or there has been
filed on its behalf) on a timely basis (taking into account any extensions of
time to file before the date hereof) with appropriate governmental authorities
all tax returns, statements, reports, declarations, estimates and forms
("Returns") required to be filed by or with respect to it, except to the extent
that any failure to file would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and (ii)
duly paid or deposited in full on a timely basis or made adequate provisions in
accordance with generally accepted accounting principles (or there has been paid
or deposited or adequate provision has been made on its behalf) for the payment
of all taxes required to be paid by it other than those being contested in good
faith by the Company or a Subsidiary of the Company and except to the extent
that any failure to pay or deposit or make adequate provision for the payment of
such taxes would not have or reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
12
(b) Except for matters that would not have or reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, (i)
the federal income tax returns of the Company and each of its Subsidiaries have
been examined by the Internal Revenue Service (the "IRS") (or the applicable
statutes of limitation for the assessment of federal income taxes for such
periods have expired) for all periods; (ii) all deficiencies asserted as a
result of any examinations of the Company and its Subsidiaries by any taxing
authority have been paid fully, settled or adequately provided for in the
financial statements contained in the Company Reports; (iii) as of the date
hereof, neither the Company nor any of its Subsidiaries has granted any
requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any taxes of the Company or any of
its Subsidiaries that will be outstanding as of the Effective Time; (iv) neither
the Company nor any of its Subsidiaries is a party to, is bound by or has any
obligation under any tax sharing, allocation or indemnity agreement or any
similar agreement or arrangement; (v) there are no tax liens on any assets of
the Company or its Subsidiaries except for (A) taxes not yet currently due and
(B) matters being contested by the Company in good faith for which adequate
reserves are reflected in the financial statements; and (vi) neither the Company
nor any of its Subsidiaries is a party to an agreement that provides for the
payment of any amount that would constitute a "parachute payment" within the
meaning of section 280G of the Code.
For purposes of this Agreement, "tax" or "taxes" means all federal,
state, county, local, foreign or other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, accumulated earnings, personal holding, excess
profits, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, disability, capital stock, or
windfall profits taxes, customs duties or other taxes, fees, assessments or
governmental charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign).
Section 3.11 EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Section 3.11, the Subsidiaries of the Company
shall include any enterprise which, with the Company, forms or formed a
controlled group of corporations, a group of trades or business under common
control or an affiliated service group, within the meaning of section 414(b),
(c) or (m) of the Code.
(b) All employee benefit plans, programs, arrangements and agreements
covering active, former or retired employees of the Company and any of its
Subsidiaries which provide material benefits to such employees, or as to which
the Company or any Subsidiary has any material liability or material contingent
liability, are listed on Schedule 3.11(b) of the Company Disclosure Letter (the
"Company Plans").
(c) The Company has made available to Parent a true, correct and
complete copy of each of the Company Plans, and all contracts relating thereto,
or to the funding thereof, including, without limitation, all trust agreements,
insurance contracts, administration contracts, investment management agreements,
subscription and participation agreements, and record-keeping agreements, each
as in effect on the date hereof. In the case of any Company Plan that is not in
written form, Parent has been supplied with an accurate description of such
Company Plan as in effect on the date hereof. A true, correct and complete copy
of the most recent annual
13
report, actuarial report, accountant's opinion of the plan's financial
statements, summary plan description and IRS determination letter with respect
to each Company Plan, to the extent applicable, and a current schedule of assets
(and the fair market value thereof assuming liquidation of any asset which is
not readily tradable) held with respect to any funded Company Plan have been
made available to Parent. There have been no material changes in the financial
condition in the respective plans from that stated in the annual reports and
actuarial reports supplied that would have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(d) All Company Plans comply in form and have been administered in
operation in all material respects with all applicable requirements of law,
excluding any deficiencies that would not have or reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, no
event has occurred which will or could cause any such Company Plan to fail to
comply with such requirements, excluding any deficiencies that would not have or
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, and no notice has been issued by any governmental
authority questioning or challenging such compliance.
(e) All required employer contributions under any such plans have been
made and the applicable funds have been funded in accordance with the terms
thereof, excluding any deficiencies that would not have or reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(f) To the extent applicable, the Company Plans comply, in all material
respects, with the requirements of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), the Code and any other applicable tax act and
other laws, and any Company Plan intended to be qualified under section 401(a)
of the Code has been determined by the IRS to be so qualified and nothing has
occurred to cause the loss of such qualified status.
(g) No Company Plan is covered by Title IV of ERISA or section 412 of
the Code.
(h) There are no pending or anticipated claims against or otherwise
involving any of the Company Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of the Company
Plan activities) has been brought against or with respect to any Company Plan.
(i) Neither the Company nor any of its Subsidiaries has incurred or
reasonably expects to incur any liability under subtitle C or D of Title IV of
ERISA with respect to any "single-employer plan," within the meaning of section
4001(a)(15) of ERISA, currently or formerly maintained by the Company, any
Company Subsidiary or any entity which is considered one employer with the
Company under section 4001 of ERISA.
(j) Neither the Company nor any of its Subsidiaries has incurred or
reasonably expects to incur any withdrawal liability under subtitle E of Title
IV of ERISA with respect to any "multi-employer plan," within the meaning of
section 4001(a)(3) of ERISA.
(k) None of the assets of any Company Plan is invested in employer
securities or employer real property.
14
(l) There have been no "prohibited transactions" (as described in
section 406 of ERISA or section 4975 of the Code) with respect to any Company
Plan that would have or reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(m) There have been no acts or omissions by the Company or any of its
Subsidiaries which have given rise to or may give rise to fines, penalties,
taxes or related charges under section 502 of ERISA or Chapters 43, 47, 68 or
100 of the Code for which the Company or any of its Subsidiaries may be liable
that would reasonably be expected to result in a Company Material Adverse
Effect.
(n) Each Company Plan which constitutes a "group health plan" (as
defined in section 607(1) of ERISA or section 4980B(g)(2) of the Code),
including any plans of current and former affiliates which must be taken into
account under sections 4980B and 414(t) of the Code or section 601 of ERISA, has
been operated in material compliance with applicable law, including coverage
requirements of sections 4980B of the Code, Chapter 100 of the Code and section
601 of ERISA to the extent such requirements are applicable.
(o) Neither the Company nor any of its Subsidiaries has any liability
or contingent liability for providing, under any Company Plan or otherwise, any
post-retirement medical or life insurance benefits, other than statutory
liability for providing group health plan continuation coverage under Part 6 of
Title I of ERISA and section 4980B of the Code.
(p) Obligations under the Company Plans are properly reflected in the
financial statements of the Company.
(q) There has been no act or omission that would impair the ability of
the Parent or any of its Subsidiaries (or any successor thereto) to unilaterally
amend or terminate any Company Plan.
Section 3.12 LABOR MATTERS.
(a) Neither the Company 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.
(b) Neither the Company nor any of its Subsidiaries is subject to a
dispute, strike or work stoppage with respect to any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization to which it is a party or by which it is bound that would
have or reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(c) To the Company's knowledge, 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 of its
Subsidiaries.
15
Section 3.13 ENVIRONMENTAL MATTERS.
(a) As used in this Agreement:
(i) "Environmental Laws" means any and all applicable laws,
statutes, regulations, rules, orders, ordinances, legally enforceable
directives, and rules of common law of any governmental entity
pertaining to protection of human health (to the extent arising from
exposure to Hazardous Materials) or the environment (including, without
limitation, any natural resource damages or any generation, use,
storage, treatment, disposal, release, threatened release, discharge,
or emission of Hazardous Materials into the indoor or outdoor
environment) in effect at the time of Closing;
(ii) "Hazardous Materials" means any (1) chemical, product,
substance, waste, pollutant, or contaminant that is defined or listed
as hazardous or toxic or that is otherwise regulated under any
Environmental Law; (2) asbestos containing materials, whether in a
friable or non-friable condition, polychlorinated biphenyls, naturally
occurring radioactive materials or radon; and (3) any petroleum
hydrocarbons, petroleum products, petroleum substances, crude oil,
natural gas, and any components, fractions, or derivatives thereof;
(iii) "Environmental Permits" means any and all permits,
registrations, licenses, consents, exemptions, variances,
authorizations, and similar approvals required under Environmental
Laws;
(iv) "Release" means any depositing, spilling, leaking,
pumping, pouring, placing, emitting, discarding, abandoning, emptying,
discharging, migrating, injecting, escaping, leaching, dumping, or
disposing;
(v) "Company Real Properties" means those real properties
owned, leased, or otherwise operated by the Company or its Subsidiaries
in connection with the performance of their respective businesses; and
(vi) "Offsite Non-Company Real Properties" means any real
properties other than the Company Real Properties
(b) Except as would not have or reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect:
(i) The Company and its Subsidiaries and their respective
operations, assets, businesses and Company Real Properties are and have
been in compliance with all Environmental Laws and Environmental
Permits;
(ii) All Environmental Permits required under Environmental
Laws for operating the Company's and its Subsidiaries' assets,
businesses, and Company Real Properties as they are currently being
operated have been obtained and are currently in full force and effect
and, to the Company's knowledge, there are no conditions or
circumstances that would limit or preclude it or its Subsidiaries from
renewing such Environmental Permits;
16
(iii) The Company and its Subsidiaries are not subject to any
pending or, to the Company's knowledge, threatened claims, actions,
suits, investigations, inquiries or proceedings under Environmental
Laws and neither the Company nor its Subsidiaries have received written
notice of alleged violations under applicable Environmental Laws with
respect to their respective operations, assets, businesses, or Company
Real Properties;
(iv) There have been no Releases of Hazardous Materials on,
under or from the Company Real Properties and there are no
investigations, remediations, removals, or monitorings of Hazardous
Materials required under Environmental Laws at such properties;
(v) Neither the Company nor its Subsidiaries have received any
written notice asserting an alleged liability or obligation under any
Environmental Laws with respect to the investigation, remediation,
removal, or monitoring of any Hazardous Materials at, under, or
Released or threatened to be Released from any Offsite Non-Company Real
Properties and, to the knowledge of the Company, there are no
conditions or circumstances that would reasonably be expected to result
in the receipt of such written notice;
(vi) There has been no exposure of any person or property to
Hazardous Materials in connection with the Company's or its
Subsidiaries' operations, assets, businesses, or Company Real
Properties that would reasonably be expected to form the basis for a
claim for damages or compensation; and
(vii) The Company and its Subsidiaries have made available to
Parent complete and correct copies of all material environmental site
assessment reports, studies, and correspondence on environmental
matters (in each instance relevant to the Company or its Subsidiaries)
that are in the Company's or its Subsidiaries' possession and relating
to their respective operations, assets, businesses, or Company Real
Properties.
Neither the Company nor its Subsidiaries make any representation or
warranty regarding compliance or failure to comply with, or any actual or
contingent liability under, any Environmental Law, except as expressly set forth
in this Section 3.13.
Section 3.14 INTELLECTUAL PROPERTY. The Company and its Subsidiaries
own or possess all necessary licenses or other valid rights to use all patents,
patent rights, trademarks, trademark rights and proprietary information used or
held for use in connection with their respective businesses as currently being
conducted, free and clear of material Liens, except where the failure to own or
possess such licenses and other rights would not have or reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect,
and there are no assertions or claims challenging the validity of any of the
foregoing which would have or reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. Except in the ordinary course
of business, neither the Company nor any of its Subsidiaries has granted to any
other person any license to use any of the foregoing. The conduct of the
Company's and its Subsidiaries' respective businesses as currently conducted
does not conflict with any patents, patent rights, licenses, trademarks,
trademark rights, trade
17
names, trade name rights or copyrights of others in a way which would have or
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. There is no infringement of any proprietary right owned
by or licensed by or to the Company or any of its Subsidiaries in a way which
would have or reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
Section 3.15 TITLE TO PROPERTIES. Except for goods and other property
sold, used or otherwise disposed of since September 30, 2002 in the ordinary
course of business for fair value, as of the date hereof, the Company has
defensible title for oil and gas purposes to all its properties, interests in
properties and assets, real and personal, reflected in the Company's September
30, 2002 financial statements included in the Company Reports, free and clear of
any Lien, except: (a) Liens reflected in the balance sheet of the Company as of
September 30, 2002 included in the Company Reports; (b) Liens for current taxes
not yet due and payable; and (c) such imperfections of title, easements and
Liens that would not have or reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. All leases and other
agreements pursuant to which the Company or any of its Subsidiaries leases or
otherwise acquires or obtains operating rights affecting any real or personal
property are in good standing, valid, and effective, except where the failure to
be in good standing, valid or effective would not have or reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect;
and there is not, under any such leases, any existing or prospective default or
event of default or event which with notice or lapse of time, or both, would
constitute a default by the Company or any of its Subsidiaries that would have
or reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. All significant operating equipment of the Company and
its Subsidiaries is in good operating condition, ordinary wear and tear
excepted. The Company has not received any material advance, take-or-pay or
other similar payments that entitle purchasers of production to receive
deliveries of hydrocarbons without paying therefor, and, on a net, company-wide
basis, the Company is neither underproduced nor overproduced, in either case, to
any material extent, under gas balancing or similar arrangements.
Section 3.16 INSURANCE. The Company and its Subsidiaries maintain
insurance coverage adequate and customary in the industry for the operation of
their respective businesses (taking into account the cost and availability of
such insurance).
Section 3.17 NO BROKERS. The Company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Parent, Merger Sub or the Company to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that the Company has retained Deutsche Banc
Securities Inc. to act as its financial advisor in connection with the Merger
and render the opinion referred to in Section 3.18, the terms of which
(including the fees owed by the Company in connection therewith) have been
disclosed in writing to Parent prior to the date hereof.
Section 3.18 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company has received the opinion of Deutsche Bank Securities Inc. to the
effect that the Exchange Ratio is fair, from a financial point of view, to the
holders of the Company Common
18
Shares (other than Parent and its Subsidiaries); it being understood and
acknowledged by Parent that such opinion has been rendered for the benefit of
the Board of Directors of the Company, and is not intended to, and may not, be
relied upon by Parent, its affiliates or their respective Subsidiaries.
Section 3.19 CONTRACTS; DEBT INSTRUMENTS.
(a) Except for documents filed or listed as exhibits to the Company
Reports filed since December 31, 2001, there are no contracts that are material
to the business, properties, assets, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole ("Company
Material Contracts"). Neither the Company nor any of its Subsidiaries is in
violation of or in default under (nor does there exist any condition which with
the passage of time or the giving of notice or both would cause such a violation
of or default under) any Company Material Contract to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that would not have or reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. Each Company Material
Contract is in full force and effect, and is a legal, valid and binding
obligation of the Company or one of its Subsidiaries and, to the knowledge of
the Company, each of the other parties thereto, enforceable in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity and except where the failure of any Company
Material Contract to be a legal, valid and binding obligation and enforceable in
accordance with its terms would not have or reasonably be expected to have,
individually or in the aggregate, a Company Adverse Effect. No condition exists
or event has occurred which (whether with or without notice or lapse of time or
both) would constitute a default by the Company or one of its Subsidiaries or,
to the knowledge of the Company, any other party thereto under any Company
Material Contract or result in a right of termination of any Company Material
Contract, except for any condition or event that would not have or reasonably be
expected to have, individually or in the aggregate, a Company Adverse Effect.
(b) Set forth in Schedule 3.19(b) of the Company Disclosure Letter is,
as of the date hereof, (i) a list of all loan or credit agreements, notes,
bonds, mortgages, indentures and other agreements and instruments pursuant to
which any indebtedness of the Company or its Subsidiaries in an aggregate
principal amount in excess of $50,000,000 is outstanding or may be incurred, and
(ii) the respective principal amounts outstanding thereunder as of February 21,
2003.
(c) Neither the Company nor any of its Subsidiaries has entered into
any contract and there is no commitment, judgment, injunction, order or decree
to which the Company or any of its Subsidiaries is a party or subject to that
has or would reasonably be expected to have the effect of prohibiting or
impairing the conduct of business by the Company or any of its Subsidiaries or
any contract that may be terminable as a result of Parent's status as a
competitor of any party to such contract, except, in each case, for any
prohibition, impairment or termination right that would not have or reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
19
(d) The Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ have executed (i) a third
amendment to the employment agreement by and between the Company and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, initially effective as of September 16, 1998 (the "Employment
Agreement"), in the form of Exhibit B attached hereto (the "Employment Agreement
Amendment") and (ii) a second amendment to the severance agreement by and
between the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, initially effective as of August 25,
1998 (the "Severance Agreement"), in the form of Exhibit C attached hereto (the
"Severance Agreement Amendment"), and each of the Employment Agreement, as
amended by the Employment Agreement Amendment, and the Severance Agreement, as
amended by the Severance Agreement Amendment, shall be effective at the
Effective Time (it being understood that, prior to the Effective Time and only
with the consent of each of Parent, the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the
Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ may enter into an employment agreement (the "New
Employment Agreement") incorporating the terms of each of the Employment
Agreement (as amended by the Employment Agreement Amendment) and the Severance
Agreement (as amended by the Severance Agreement Amendment), which New
Employment Agreement, if entered into as contemplated by this parenthetical,
shall be effective as of the Effective Time).
Section 3.20 VOTE REQUIRED. The affirmative vote of holders of a
majority in interest of the voting power of the outstanding Company Shares (with
the Company Preferred Shares voting on an as-converted basis), voting as a
single class, is the only vote necessary to adopt this Agreement and the
transactions contemplated hereby (as applied to this Agreement and the
transactions contemplated hereby, the "Company Requisite Vote").
Section 3.21 CERTAIN APPROVALS. The Company's Board of Directors has
taken any and all necessary and appropriate action to render inapplicable to the
Merger and the transactions contemplated by this Agreement the restrictions
contained in Section 203 of the DGCL and any other "fair price," "moratorium,"
control share acquisition, interested shareholder or other similar antitakeover
provision or regulation and any restrictive provision of any antitakeover
provision in the certificate of incorporation or bylaws of the Company.
Section 3.22 CERTAIN CONTRACTS. Neither the Company nor any of its
Subsidiaries is a party to or bound by (i) any non-competition agreement or any
other agreement or obligation which purports to limit the manner in which, or
the localities in which, the current business of the Company and its
Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a
whole, is conducted or (ii) any executory agreement or obligation which pertains
to the acquisition or disposition of any asset, or which provides any third
party any lien, claim or preferential right with regard thereto, except, in the
case of this clause (ii), for such agreements or obligations that would not have
or reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.23 RIGHTS AGREEMENT. The Company has adopted an amendment to
the Company Rights Agreement with the effect that (i) neither Parent nor Merger
Sub shall be deemed to be an Acquiring Person (as defined in the Company Rights
Agreement), the Distribution Date (as defined in the Company Rights Agreement)
shall not be deemed to occur, and the Rights (as defined in the Company Rights
Agreement) will not separate from the Company Common Shares, as a result of
entering into this Agreement or consummating the Merger and/or the other
transactions contemplated by this Agreement and (ii) the Rights will
20
expire immediately prior to the Effective Time. The Company has made available
to Parent a true and complete copy of the Company Rights Agreement, as amended
to date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Except as set forth in the disclosure letter delivered to the Company
concurrently with the execution hereof (the "Parent Disclosure Letter") or as
disclosed with reasonable specificity in the Parent Reports (as defined in
Section 4.7), Parent and Merger Sub, jointly and severally, represent and
warrant to the Company that:
Section 4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of
Parent and Merger Sub is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of
Delaware. Each of Parent and
Merger Sub is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have or reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect (as defined in Section 8.9).
Each of Parent and Merger Sub has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted. The copies of each of Parent's and Merger Sub's certificate of
incorporation and bylaws previously made available to the Company are true and
correct and contain all amendments as of the date hereof.
Section 4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of
Parent and Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement and all other agreements and documents contemplated
hereby to which it is a party. The consummation by each of Parent and Merger Sub
of the transactions contemplated hereby, including the issuance and delivery by
Parent of shares of Parent Common Stock pursuant to the Merger, has been duly
authorized by all requisite corporate action, other than, with respect to the
Merger, the approval of the issuance of Parent Common Stock pursuant to the
Merger by Parent's stockholders. This Agreement constitutes the valid and
legally binding obligation of each of Parent and Merger Sub, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
Section 4.3 CAPITALIZATION. The authorized capital stock of Parent
consists of 400,000,000 shares of Parent Common Stock, one share of Parent
Special Voting Stock, par value $0.10 per share, and 4,500,000 shares of
Parent's preferred stock, par value $1.00 per share ("Parent Preferred Stock").
As of February 20, 2003, there were (a) 156,798,464 shares of Parent Common
Stock issued and outstanding, (b) one share of Parent Special Voting Stock
issued and outstanding, (c) 1,270,668 shares of Parent Common Stock reserved for
issuance pursuant to options issued under the stock options plans of Parent (the
"Parent Option Plans") described in Schedule 4.3 of the Parent Disclosure
Letter, (d) 49,209 shares of Parent Common Stock reserved for issuance under the
Parent Restricted Stock Award Plan, (e) 1,680,637 shares reserved for issuance
upon exchange of outstanding exchangeable shares ("Northstar
21
Exchangeable Shares") issued by Northstar Energy Corporation, an Alberta
corporation ("Northstar"), (f) 1,500,000 shares of Parent Preferred Stock
designated as 6.49% Cumulative Preferred Stock, Series A, issued and
outstanding, (g) 2,000,000 unissued shares of Parent Preferred Stock designated
as Series A Junior Participating Preferred Stock ("Parent Series A Preferred
Stock") and (h) 4,377,068 shares of Parent Common Stock reserved for issuance
upon conversion of the $760,000,000 of Zero Coupon Convertible Senior Debentures
due 2020 (the "Zero Coupon Debentures"). All issued and outstanding shares of
Parent Common Stock, Parent Special Voting Stock, and Parent Preferred Stock (i)
are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights, (ii) were not issued in violation of the terms of any
agreement or other understanding binding upon Parent and (iii) were issued in
compliance with all applicable charter documents of Parent and all applicable
federal and state securities laws, rules and regulations. One right to purchase
Series A Junior Participating Preferred Stock of Parent (each, a "Parent Right")
issued pursuant to a Rights Agreement, dated as of August 17, 1999 (as amended,
the "Parent Rights Agreement"), between Parent and Wachovia Bank, N.A., is
associated with and attached to each outstanding share of Parent Common Stock.
The shares of Parent Common Stock to be issued in connection with the Merger,
when issued in accordance with this Agreement, will be validly issued, fully
paid and nonassessable and free of preemptive rights. Except (i) as set forth in
this Section 4.3, (ii) for any Parent Common Stock issuable upon conversion or
exchange of the Northstar Exchangeable Shares, Parent Preferred Stock or Zero
Coupon Debentures, (iii) for any shares of Parent Common Stock issued pursuant
to the exercise of options or other awards referred to in subsections (c)-(d)
above, (iv) for options issued under the Parent Option Plans after the date of
this Agreement and Parent Common Stock issued pursuant to the exercise of such
options and (v) for Parent Series A Preferred Stock or Parent Common Stock
issuable pursuant to Parent Rights, there are no outstanding shares of capital
stock and there are no options, warrants, calls, subscriptions, shareholder
rights plan or similar instruments, convertible securities, or other rights,
agreements or commitments which obligate Parent or any of its Subsidiaries to
issue, transfer or sell any shares of capital stock or other voting securities
of Parent or any of its Subsidiaries. Except as set forth in this Section 4.3,
Parent has no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
Parent on any matter.
Section 4.4 SIGNIFICANT SUBSIDIARIES.
(a) Each of Parent's Significant Subsidiaries is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing (where applicable) under the laws of its jurisdiction of incorporation
or organization, has the corporate, limited liability company or partnership
power and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing (where applicable) in each jurisdiction in which the
ownership, operation or lease of its property or the conduct of its business
requires such qualification, except for jurisdictions in which such failure to
be so qualified or to be in good standing would not have or reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. All of the outstanding shares of capital stock of, or other ownership
interests in, each of Parent's Significant Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Parent free and clear of all Liens. Schedule 4.4 of the
22
Parent Disclosure Letter sets forth for each Significant Subsidiary of Parent
its name and jurisdiction of incorporation or organization.
(b) Devon Energy Production Company, L.P. ("Devon Production"), a
Significant Subsidiary, is a limited partnership (except for tax purposes) duly
organized and validly existing under Oklahoma law, the general partner of which
is Devon Energy Management Company, L.L.C., an Oklahoma limited liability
company which is wholly owned by Devon Energy Corporation (Oklahoma), an
Oklahoma corporation, and has elected to be treated as a sole proprietorship for
federal income tax purposes. Devon Production has one limited partner. All of
the outstanding partnership interests of Devon Production are owned directly or
indirectly by Parent.
(c) All of the outstanding shares of capital stock of Merger Sub are
owned directly by Parent. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
activities other than in connection with the transactions contemplated by this
Agreement.
Section 4.5 NO VIOLATION. Neither Parent nor any of its Subsidiaries
is, or has received notice that it would be with the passage of time, in
violation of any term, condition or provision of (a) its charter documents or
bylaws, (b) any loan or credit agreement, note, bond, mortgage, indenture,
contract, agreement, lease, license or other instrument or (c) any order of any
court, governmental authority or arbitration board or tribunal, or any law,
ordinance, governmental rule or regulation to which Parent or any of its
Subsidiaries or any of their respective properties or assets is subject, or is
delinquent with respect to any report required to be filed with any governmental
entity, except, in the case of matters described in clause (b) or (c), as would
not have or reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect. Except as would not have or reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, (i) Parent and its Subsidiaries hold all permits, licenses, variances,
exemptions, orders, franchises and approvals of all governmental authorities
necessary for the lawful conduct of their respective businesses (the "Parent
Permits") and (ii) Parent and its Subsidiaries are in compliance with the terms
of the Parent Permits. No investigation by any governmental authority with
respect to Parent or any of its Subsidiaries is pending or, to the knowledge of
Parent, threatened, other than those that would not have or reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section 4.6 NO CONFLICT.
(a) Neither the execution and delivery by Parent and Merger Sub of this
Agreement nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict with
or result in a breach of any provisions of the charter documents or bylaws of
Parent or Merger Sub; (ii) violate, or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or give rise to a
right of purchase under, or accelerate the performance required by, or result in
the creation of any Lien upon any of the properties of Parent or its
Subsidiaries under, or result in being declared void, voidable, or without
further
23
binding effect, or otherwise result in a detriment to Parent or any of its
Subsidiaries under any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, Parent Permit, lease, contract,
agreement, joint venture or other instrument or obligation to which Parent or
any of its Subsidiaries is a party, or by which Parent or any of its
Subsidiaries or any of their properties is bound or affected; or (iii)
contravene or conflict with or constitute a violation of any provision of any
law, rule, regulation, judgment, order or decree binding upon or applicable to
Parent or any of its Subsidiaries, except, in the case of matters described in
clause (ii) or (iii), as would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) Neither the execution and delivery by Parent or Merger Sub of this
Agreement nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, other than Regulatory Filings, and listing
of the Parent Common Stock to be issued in the Merger on the AMEX, except for
any consent, approval or authorization the failure of which to obtain and for
any filing or registration the failure of which to make would not have or
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(c) Other than as contemplated by Section 4.6(b), no consents,
assignments, waivers, authorizations or other certificates are necessary in
connection with the transactions contemplated hereby to provide for the
continuation in full force and effect of all of Parent's material contracts or
leases or for Parent to consummate the transactions contemplated hereby, except
where the failure to receive such consents or other certificates would not have
or reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in any
payment from Parent or its Subsidiaries (including severance, unemployment
compensation, parachute payment, bonus or otherwise) becoming due to any
director, employee or independent contractor of Parent or any of its
Subsidiaries under any Parent Plan (as defined in Section 4.11) or otherwise;
(ii) increase any benefits otherwise payable under any Parent Plan or otherwise;
or (iii) result in the acceleration of the time of payment or vesting of any
such benefits.
Section 4.7 SEC DOCUMENTS. Parent has made available to the Company
each registration statement, report, proxy statement or information statement
(other than preliminary materials) filed by Parent with the SEC since January 1,
2001, each in the form (including exhibits and any amendments thereto) filed
with the SEC prior to the date hereof (collectively, the "Parent Reports"), and
Parent has filed all forms, reports and documents required to be filed by it
with the SEC pursuant to relevant securities statutes, regulations, policies and
rules since such time. As of their respective dates, the Parent Reports (i) were
prepared in accordance with the applicable requirements of the Securities Act,
the Exchange Act, and the rules and regulations thereunder and complied with the
then applicable accounting requirements and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading except for such
statements, if any, as
24
have been modified by subsequent filings with the SEC prior to the date hereof.
Each of the consolidated balance sheets included in or incorporated by reference
into the Parent Reports (including the related notes and schedules) fairly
presents in all material respects the consolidated financial position of Parent
and its Subsidiaries as of its date and each of the consolidated statements of
operations, cash flows and stockholders' equity included in or incorporated by
reference into the Parent Reports (including any related notes and schedules)
fairly presents in all material respects the results of operations, cash flows
or changes in stockholders' equity, as the case may be, of Parent and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to such exceptions as may be permitted by Form 10-Q of the
SEC), in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein.
Section 4.8 LITIGATION AND LIABILITIES. There are no actions, suits or
proceedings pending against Parent or any of its Subsidiaries or, to Parent's
knowledge, threatened against Parent or any of its Subsidiaries, at law or in
equity, or before or by any federal, state or foreign commission, court, board,
bureau, agency or instrumentality, other than those that would not have or
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. There are no outstanding judgments, decrees,
injunctions, awards or orders against Parent or any of its Subsidiaries, other
than those that would not have or reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. There are no obligations
or liabilities of any nature, whether accrued, absolute, contingent or
otherwise, of Parent or any of its Subsidiaries, other than those liabilities
and obligations (a) that are disclosed in the Parent Reports, (b) that have been
incurred in the ordinary course of business since September 30, 2002, (c)
related to expenses associated with the transactions contemplated by this
Agreement or (d) that would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.9 ABSENCE OF CERTAIN CHANGES. Since December 31, 2001, Parent
has conducted its business only in the ordinary and usual course of business and
during such period there has not been any (i) event, condition, action or
occurrence that has had or would reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect; (ii) any material change by
Parent or any of its Subsidiaries (viewed on a consolidated basis) in any of its
accounting methods, principles or practices or any of its tax methods, practices
or elections, except for changes required by generally accepted accounting
principles; (iii) any material damage, destruction, or loss to the business or
properties of Parent and its Subsidiaries, taken as a whole, not covered by
insurance; (iv) any declaration, setting aside or payment of any dividend (other
than ordinary dividends on the Parent Common Stock and Northstar Exchangeable
Shares at a rate not greater than $0.05 per share in any quarter and dividends
upon its 6.49% Cumulative Preferred Stock, Series A, in accordance with the
terms thereof) or other distribution in respect of the capital stock of Parent,
or any direct or indirect redemption, purchase or any other acquisition by
Parent of any such stock; (v) any change in the capital stock or in the number
of shares or classes of Parent's authorized or outstanding capital stock (other
than as a result of issuances under the Parent Option Plans, exercises of
options to purchase the Parent Common Stock outstanding or issued, or such other
issuances of capital stock, in each case, as permitted hereunder pursuant to
Section 5.1(b)(vi)); or (vi) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option, stock purchase or other employee benefit plan, except in
the
25
ordinary course of business or (vii) any event, condition, action or occurrence
that is prohibited on or after the date of this Agreement under Section
5.1(b)(viii), (ix), (x), (xii), (xiii), (xv), (xvi), or (xx) of this Agreement.
Section 4.10 TAXES.
(a) Each of Parent and its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or, since January 1, 1991, was a member has (i) duly filed (or there has been
filed on its behalf) on a timely basis (taking into account any extensions of
time to file before the date hereof) with appropriate governmental authorities
all Returns required to be filed by or with respect to it, except to the extent
that any failure to file would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, and (ii)
duly paid or deposited in full on a timely basis or made adequate provisions in
accordance with generally accepted accounting principles (or there has been paid
or deposited or adequate provision has been made on its behalf) for the payment
of all taxes required to be paid by it other than those being contested in good
faith by Parent or a Subsidiary of Parent and except to the extent that any
failure to pay or deposit or make adequate provision for the payment of such
taxes would not have or reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) Except for matters that would not have or reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect, (i)
the federal income tax returns of the Parent and each of its Subsidiaries have
been examined by the IRS (or the applicable statutes of limitation for the
assessment of federal income taxes for such periods have expired) for all
periods; (ii) all deficiencies asserted as a result of any examinations of
Parent and its Subsidiaries by any taxing authority have been paid fully,
settled or adequately provided for in the financial statements contained in the
Parent Reports; (iii) as of the date hereof, neither Parent nor any of its
Subsidiaries has granted any requests, agreements, consents or waivers to extend
the statutory period of limitations applicable to the assessment of any taxes of
Parent or any of its Significant Subsidiaries that will be outstanding as of the
Effective Time; (iv) neither Parent nor any of its Subsidiaries is a party to,
is bound by or has any obligation under any tax sharing, allocation or indemnity
agreement or any similar agreement or arrangement; and (v) there are no tax
liens on any assets of the Parent or its Subsidiaries except for (A) taxes not
yet currently due and (B) matters being contested by Parent in good faith for
which adequate reserves are reflected in the financial statements.
Section 4.11 EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Section 4.11, the Subsidiaries of Parent shall
include any enterprise which, with Parent, forms or formed a controlled group of
corporations, a group of trades or business under common control or an
affiliated service group, within the meaning of section 414(b), (c) or (m) of
the Code.
(b) All employee benefit plans, programs, arrangements and agreements
covering active, former or retired employees of Parent and any of its
Subsidiaries which provide material benefits to such employees, or as to which
Parent or any Subsidiary has any material liability or
26
material contingent liability, are listed on Schedule 4.11(b) of the Parent
Disclosure Letter (the "Parent Plans").
(c) Parent has made available to the Company a true, correct and
complete copy of each of the Parent Plans, and all contracts relating thereto,
or to the funding thereof, including, without limitation, all trust agreements,
insurance contracts, administration contracts, investment management agreements,
subscription and participation agreements, and record-keeping agreements, each
as in effect on the date hereof. In the case of any Parent Plan that is not in
written form, the Company has been supplied with an accurate description of such
Parent Plan as in effect on the date hereof. A true, correct and complete copy
of the most recent annual report, actuarial report, accountant's opinion of the
plan's financial statements, summary plan description and IRS determination
letter with respect to each Parent Plan, to the extent applicable, and a current
schedule of assets (and the fair market value thereof assuming liquidation of
any asset which is not readily tradable) held with respect to any funded Parent
Plan have been made available to the Company. There have been no material
changes in the financial condition in the respective plans from that stated in
the annual reports and actuarial reports supplied that would have or reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(d) All Parent Plans comply in form and have been administered in
operation in all material respects with all applicable requirements of law,
excluding any deficiencies that would not have or reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect, no
event has occurred which will or could cause any such Parent Plan to fail to
comply with such requirements, excluding any deficiencies that would not have or
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, and no notice has been issued by any governmental
authority questioning or challenging such compliance.
(e) All required employer contributions under any such plans have been
made and the applicable funds have been funded in accordance with the terms
thereof, excluding any deficiencies that would not have or reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(f) To the extent applicable, Parent Plans comply, in all material
respects, with the requirements of ERISA, the Code and any other applicable tax
act and other laws, and any Parent Plan intended to be qualified under section
401(a) of the Code has been determined by the IRS to be so qualified and nothing
has occurred to cause the loss of such qualified status.
(g) No Parent Plan is covered by Title IV of ERISA or section 412 of
the Code.
(h) There are no pending or anticipated claims against or otherwise
involving any of the Parent Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of the Parent
Plan activities) has been brought against or with respect to any Parent Plan.
(i) Neither Parent nor any of its Subsidiaries has incurred or
reasonably expects to incur any liability under subtitle C or D of Title IV of
ERISA with respect to any "single-
27
employer plan," within the meaning of section 4001(a)(15) of ERISA, currently or
formerly maintained by Parent, any Parent Subsidiary or any entity which is
considered one employer with Parent under section 4001 of ERISA.
(j) Neither Parent nor any of its Subsidiaries has incurred or
reasonably expects to incur any withdrawal liability under subtitle E of Title
IV of ERISA with respect to any "multi-employer plan," within the meaning of
section 4001(a)(3) of ERISA.
(k) None of the assets of any Parent Plan is invested in employer
securities or employer real property.
(l) There have been no "prohibited transactions" (as described in
section 406 of ERISA or section 4975 of the Code) with respect to any Parent
Plan that would have or reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(m) There have been no acts or omissions by Parent or any of its
Subsidiaries which have given rise to or may give rise to fines, penalties,
taxes or related charges under section 502 of ERISA or Chapters 43, 47, 68 or
100 of the Code for which Parent or any of its Subsidiaries may be liable that
would reasonably be expected to result in a Parent Material Adverse Effect.
(n) Each Parent Plan which constitutes a "group health plan" (as
defined in section 607(1) of ERISA or section 4980B(g)(2) of the Code),
including any plans of current and former affiliates which must be taken into
account under sections 4980B and 414(t) of the Code or section 601 of ERISA, has
been operated in material compliance with applicable law, including coverage
requirements of sections 4980B of the Code, Chapter 100 of the Code and section
601 of ERISA to the extent such requirements are applicable.
(o) Neither Parent nor any of its Subsidiaries has any liability or
contingent liability for providing, under any Parent Plan or otherwise, any
post-retirement medical or life insurance benefits, other than statutory
liability for providing group health plan continuation coverage under Part 6 of
Title I of ERISA and section 4980B of the Code.
(p) Obligations under the Parent Plans are properly reflected in the
financial statements of Parent.
Section 4.12 LABOR MATTERS.
(a) 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.
(b) Neither Parent nor any of its Subsidiaries is subject to a dispute,
strike or work stoppage with respect to any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization to which it is a party or by which it is bound that would have or
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
28
(c) To Parent's knowledge, 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.
Section 4.13 ENVIRONMENTAL MATTERS.
(a) As used in this Agreement:
(i) "Parent Real Properties" means those real properties
owned, leased, or otherwise operated by Parent, the Merger Sub or their
Subsidiaries in connection with the performance of any of their
respective businesses; and
(ii) "Offsite Non-Parent Real Properties" means any real
properties other than the Parent Real Properties
(b) Except as would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect:
(i) Parent, Merger Sub, and their Subsidiaries and any of
their respective operations, assets, businesses and Parent Real
Properties are and have been in compliance with all Environmental Laws
and Environmental Permits;
(ii) All Environmental Permits required under Environmental
Laws for operating Parent's, Merger Sub's, and their Subsidiaries'
assets, businesses, and Parent Real Properties as they are currently
being operated have been obtained and are currently in full force and
effect and, to Parent's knowledge, there are no conditions or
circumstances that would limit or preclude it, Merger Sub or their
Subsidiaries from renewing such Environmental Permits;
(iii) Parent, Merger Sub, and their Subsidiaries are not
subject to any pending or, to Parent's knowledge, threatened claims,
actions, suits, investigations, inquiries or proceedings under
Environmental Laws and none of Parent, Merger Sub, or their
Subsidiaries have received written notice of alleged violations under
applicable Environmental Laws with respect to their respective
operations, assets, businesses, and Parent Real Properties;
(iv) There have been no Releases of Hazardous Materials on,
under or from the Parent Real Properties and there are no
investigations, remediations, removals, or monitorings of Hazardous
Materials required under Environmental Laws at such properties;
(v) None of Parent, Merger Sub, or their Subsidiaries have
received any written notice asserting an alleged liability or
obligation under any Environmental Laws with respect to the
investigation, remediation, removal, or monitoring of any Hazardous
Materials at, under, or Released or threatened to be Released from any
Offsite Non-Parent Real Properties and, to the knowledge of Parent,
there are no conditions or circumstances that would reasonably be
expected to result in the receipt of such written notice;
29
(vi) There has been no exposure of any person or property to
Hazardous Materials in connection with Parent's, Merger Sub's, or their
Subsidiaries' operations, assets, businesses, and Parent Real
Properties that would reasonably be expected to form the basis for a
claim for damages or compensation; and
(vii) Parent, Merger Sub, and their Subsidiaries have made
available to the Company complete and correct copies of all material
environmental site assessment reports, studies, and correspondence on
environmental matters (in each instance relevant to the Parent, Merger
Sub or their Subsidiaries) that are in Parent's, Merger Sub's, or their
Subsidiaries' possession and relating to their respective operations,
assets, businesses and Parent Real Properties.
None of Parent, Merger Sub, or their Subsidiaries make any
representation or warranty regarding compliance or failure to comply with, or
any actual or contingent liability under, any Environmental Law, except as
expressly set forth in this Section 4.13.
Section 4.14 INTELLECTUAL PROPERTY. Parent and its Subsidiaries own or
possess all necessary licenses or other valid rights to use all patents, patent
rights, trademarks, trademark rights and proprietary information used or held
for use in connection with their respective businesses as currently being
conducted, free and clear of material Liens, except where the failure to own or
possess such licenses and other rights would not have or reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect, and
there are no assertions or claims challenging the validity of any of the
foregoing which would have or reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. Except in the ordinary course
of business, neither Parent nor any of its Subsidiaries has granted to any other
person any license to use any of the foregoing. The conduct of Parent's and its
Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in a way which would have or
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. There is no infringement of any proprietary right owned
by or licensed by or to Parent or any of its Subsidiaries in a way which would
have or reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
Section 4.15 TITLE TO PROPERTIES. Except for goods and other property
sold, used or otherwise disposed of since September 30, 2002 in the ordinary
course of business for fair value, as of the date hereof, Parent has defensible
title for oil and gas purposes to all its properties, interests in properties
and assets, real and personal, reflected in Parent's September 30, 2002
financial statements included in the Parent Reports, free and clear of any Lien,
except: (a) Liens reflected in the balance sheet of Parent as of September 30,
2002 included in the Parent Reports; (b) Liens for current taxes not yet due and
payable; and (c) such imperfections of title, easements and Liens that would not
have or reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect. All leases and other agreements pursuant to
which Parent or any of its Subsidiaries leases or otherwise acquires or obtains
operating rights affecting any real or personal property are in good standing,
valid, and effective, except where the failure to be in good standing, valid or
effective would not have or reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect; and there is not, under any
such leases, any existing or prospective default or event of default or event
which with notice or lapse of time, or both, would constitute a default by
Parent or any of its Subsidiaries that would have or reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse
30
Effect. All significant operating equipment of Parent and its Subsidiaries is in
good operating condition, ordinary wear and tear excepted. Parent has not
received any material advance, take-or-pay or other similar payments that
entitle purchasers of production to receive deliveries of hydrocarbons without
paying therefor, and, on a net, company-wide basis, Parent is neither
underproduced nor overproduced, in either case, to any material extent, under
gas balancing or similar arrangements.
Section 4.16 INSURANCE. Parent and its Subsidiaries maintain insurance
coverage adequate and customary in the industry for the operation of their
respective businesses (taking into account the cost and availability of such
insurance).
Section 4.17 NO BROKERS. Parent has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company, Parent or Merger Sub to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Parent has retained ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to act as
its financial advisor in connection with the Merger and render the opinion
referred to in Section 4.18, the terms of which (including the fees owed by
Parent in connection therewith) have been disclosed in writing to the Company
prior to the date hereof.
Section 4.18 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
Parent has received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to the effect that the
Exchange Ratio is fair, from a financial point of view, to Parent; it being
understood and acknowledged by Parent that such opinion has been rendered for
the benefit of the Board of Directors of Parent, and is not intended to, and may
not, be relied upon by the Company, its affiliates or their respective
Subsidiaries.
Section 4.19 CONTRACTS; DEBT INSTRUMENTS
(a) Except for documents filed or listed as exhibits to the Parent
Reports filed since December 31, 2001, as of the date hereof, there are no
contracts that are material to the business, properties, assets, financial
condition or results of operations of Parent and its Subsidiaries taken as a
whole ("Parent Material Contracts"). Neither Parent nor any of its Subsidiaries
is in violation of or in default under (nor does there exist any condition which
with the passage of time or the giving of notice or both would cause such a
violation of or default under) any Parent Material Contract to which it is a
party or by which it or any of its properties or assets is bound, except for
violations or defaults that would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Each Parent
Material Contract is in full force and effect, and is a legal, valid and binding
obligation of Parent or one of its Subsidiaries and, to the knowledge of Parent,
each of the other parties thereto, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity and except where the failure of any Parent Material
Contract to be a legal, valid and binding obligation and enforceable in
accordance with its terms would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Adverse Effect. No condition exists
31
or event has occurred which (whether with or without notice or lapse of time or
both) would constitute a default by Parent or one of its Subsidiaries or, to the
knowledge of Parent, any other party thereto under any Parent Material Contract
or result in a right of termination of any Parent Material Contract, except for
any condition or event that would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Adverse Effect.
(b) Set forth in Schedule 4.19(b) of the Parent Disclosure Letter is,
as of the date hereof, (i) a list of all loan or credit agreements, notes,
bonds, mortgages, indentures and other agreements and instruments pursuant to
which any indebtedness of Parent or its Subsidiaries in an aggregate principal
amount in excess of $50,000,000 is outstanding or may be incurred, and (ii) the
respective principal amounts outstanding thereunder as of February 21, 2003.
(c) Neither Parent nor any of its Subsidiaries has entered into any
contract and there is no commitment, judgment, injunction, order or decree to
which Parent or any of its Subsidiaries is a party or subject to that has or
would reasonably be expected to have the effect of prohibiting or impairing the
conduct of business by Parent or any of its Subsidiaries or any contract that
may be terminable as a result of the Company's status as a competitor of any
party to such contract, except, in each case, for any prohibition, impairment or
termination right that would not have or reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.20 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the votes cast in person or by proxy by holders of Parent Common
Stock and the outstanding Northstar Exchangeable Shares, voting as a single
class with the Parent Special Voting Stock (representing the Northstar
Exchangeable Shares as provided in Parent's certificate of incorporation),
represented in person or by proxy at a meeting at which a quorum is present,
approving the issuance of shares of Parent Common Stock required to be issued
pursuant to Article 2, is the only vote of the holders of any class or series of
Parent capital stock necessary to approve this Agreement and the transactions
contemplated hereby (as applied to the issuance of shares of Parent Common Stock
pursuant to this Agreement and the transactions contemplated hereby, the "Parent
Requisite Vote").
Section 4.21 CERTAIN CONTRACTS. Neither the Parent nor any of its
Subsidiaries is a party to or bound by (i) any non-competition agreement or any
other agreement or obligation which purports to limit the manner in which, or
the localities in which, the current business of Parent and its Subsidiaries,
taken as a whole, or the Company and its Subsidiaries, taken as a whole, is
conducted or (ii) any executory agreement or obligation which pertains to the
acquisition or disposition of any asset, or which provides any third party any
lien, claim or preferential right with regard thereto, except, in the case of
this clause (ii), for such agreements or obligations that would not have or
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.22 RIGHTS AGREEMENT. No person shall be deemed to be an
Acquiring Person (as defined in the Parent Rights Agreement), the Distribution
Date (as defined in the Parent Rights Agreement) shall not be deemed to occur
and the Rights (as defined in the Parent Rights Agreement) will not separate
from the Parent Common Stock, as a result of entering into this Agreement or
consummating the Merger and/or the other transactions contemplated by this
32
Agreement. Parent has made available to the Company a true and complete copy of
the Parent Rights Agreement, as amended to date.
ARTICLE 5
COVENANTS
Section 5.1 CONDUCT OF BUSINESS.
(a) Prior to the Effective Time, except as set forth in the Company
Disclosure Letter or as expressly contemplated by this Agreement, including
Section 5.14, or as consented to in writing by Parent, the Company:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and shall cause
each of its Subsidiaries to use its reasonable best efforts, to
preserve intact their business organizations and goodwill, keep
available the services of their respective officers and employees and
maintain satisfactory relationships with those persons having business
relationships with them;
(iii) shall not amend its certificate of incorporation or
bylaws;
(iv) shall promptly notify Parent of any material adverse
change in its financial condition or business or any termination,
cancellation, repudiation or material breach of any Company Material
Contract (or communications expressly indicating the same may be
contemplated), or the institution of any material litigation or
material governmental complaints, investigations or hearings (or
communications in writing indicating the same may be contemplated), or
the breach in any material respect of any representation or warranty
contained herein;
(v) shall promptly make available (in paper form or via the
Internet) to Parent true and correct copies of any report, statement or
schedule filed with the SEC subsequent to the date of this Agreement;
(vi) shall not (A) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on
the date hereof and disclosed in the Company Disclosure Letter or
referred to in clause (B) below, issue any shares of its capital stock,
effect any stock split or otherwise change its capitalization as it
existed on the date hereof; (B) grant, confer or award any option,
warrant, conversion right or other right not existing on the date
hereof to acquire any shares of its capital stock except (1) the grant
of options or restricted shares to new employees consistent with past
practice in an aggregate amount not to exceed 100,000 Company Common
Shares or (2) pursuant to contractual commitments existing on the date
of this Agreement and disclosed in the Company Disclosure Letter; (C)
increase any compensation or benefits of any officer, director,
employee or agent of the Company or any of its Subsidiaries, except in
the ordinary course of business consistent with the past practice of
the Company or any
33
of its Subsidiaries (as applicable), or enter into or amend any
employment agreement or severance agreement with any of its present or
future officers, directors or employees except with new employees
consistent with past practice, or (D) adopt any new employee benefit
plan (including any stock option, stock benefit or stock purchase plan)
or amend (except as required by law) any existing employee benefit plan
in any material respect;
(vii) shall not, and, in the case of clause (B) below, shall
not permit any of its Subsidiaries to (A) declare, set aside or pay any
dividend or make any other distribution or payment with respect to any
shares of its capital stock (other than the Company's ordinary
quarterly dividends payable with respect to the Company Common Shares
of $0.04 per share and ordinary semi-annual dividends payable with
respect to the Company Preferred Shares of $32.50 per share) or (B)
redeem, purchase or otherwise acquire any shares of its capital stock
or capital stock of any of its Subsidiaries or any option, warrant,
conversion right or other right to acquire such shares, or make any
commitment for any such action;
(viii) shall not, and shall not permit any of its Subsidiaries
to, sell, lease or otherwise dispose of any of its assets (including
capital stock of Subsidiaries) for an amount in excess of $150,000,000,
individually or in the aggregate, except in the ordinary course of
business and for fair value; (ix) shall not, and shall not permit any
of its Subsidiaries to, except pursuant to contractual commitments in
effect on the date hereof and disclosed in the Company Disclosure
Letter and except for amounts that in the aggregate do not exceed
$40,000,000 authorize, propose, agree to, enter into or consummate any
merger, consolidation or business combination transaction (other than
the Merger) or acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof;
(x) shall not, except as may be required as a result of a
change in law or in generally accepted accounting principles, change
any of the accounting principles or practices used by it;
(xi) shall, and shall cause each of its Subsidiaries to, use
reasonable best efforts to maintain with financially responsible
insurance companies insurance in such amounts and against such risks
and losses as are customary for such party;
(xii) shall not, and shall not permit any of its Subsidiaries
to, except where it would not have and would not be reasonably expected
to have, individually or in the aggregate, a Company Material Adverse
Effect, (A) make or rescind any express or deemed election relating to
taxes, including elections for any and all joint ventures,
partnerships, limited liability companies, working interests or other
investments where it has the capacity to make such binding election,
(B) settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to taxes, or (C) change in any respect any of its methods of reporting
any item for federal income tax purposes from those employed in the
preparation of its federal income tax
34
return for the most recent taxable year for which a return has been
filed, except as may be required by applicable law;
(xiii) shall not, nor shall it permit any of its Subsidiaries
to, (A) incur any indebtedness for borrowed money (except under credit
lines in existence as of the date of this Agreement) or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of such party or any of its
Subsidiaries or guarantee any debt securities of others, (B) except in
the ordinary course of business, enter into any material lease (whether
such lease is an operating or capital lease) or create any material
mortgages, liens, security interests or other encumbrances on the
property of the Company or Parent or any of their Subsidiaries in
connection with any indebtedness thereof, (C) make or commit to make
aggregate capital expenditures in excess of $1,000,000,000 or (D) make
or commit to make individual operating expenditures in excess of
$50,000,000;
(xiv) subject to Section 5.5, shall not take any action that
is likely to delay materially or adversely affect the ability of any of
the parties hereto to obtain any consent, authorization, order or
approval of any governmental commission, board or other regulatory body
or the expiration of any applicable waiting period required to
consummate the Merger;
(xv) unless in the good faith opinion of its Board of
Directors after consultation with its outside legal counsel complying
with the following provisions would be inconsistent with the fiduciary
duties of such Board of Directors and only then if taking such actions
would not violate any of the other terms of this Agreement, shall not,
and shall not permit any of its Subsidiaries to, terminate, amend,
modify or waive any provision of any confidentiality or standstill
agreement to which it or any of its Subsidiaries is a party; and during
such period shall enforce, to the fullest extent permitted under
applicable law, the provisions of such agreement, including by
obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court of
the United States of America or any state having jurisdiction;
(xvi) shall not enter into or amend any agreement with any
holder of Company capital stock with respect to holding, voting or
disposing of Company Shares;
(xvii) shall not by resolution of its Board of Directors cause
the acceleration of rights, benefits or payments under any Company
Plans;
(xviii) shall not, and shall not permit any of its
Subsidiaries to, enter into any additional commodity hedge transactions
for (A) any period in 2003, (B) any period in 2004 in which the volume
hedged is more than 35% of its and its Subsidiaries' (taken as a whole)
estimated production of proved reserves of these commodities during
that period, or (C) any period after December 31, 2004;
35
(xix) shall not take any action to amend the Company Rights
Agreement, redeem the Company Rights subject thereto, or exempt any
third party from the other provisions of the Company Rights Agreement,
as applicable;
(xx) shall not split, combine, subdivide or reclassify its
outstanding shares of capital stock;
(xxi) shall not purchase any Parent Common Stock;
(xxii) shall not, and shall not permit any of its Subsidiaries
to, (A) do business in any country in which the Company or any of its
Subsidiaries is not doing business as of the date hereof or (B) enter
into any joint venture, partnership or other joint business venture
with any person in which the fair market value of the Company's or its
Subsidiaries' aggregate investments and commitments exceed $50,000,000;
and
(xxiii) shall not, nor shall it permit any of its Subsidiaries
to, agree in writing or otherwise to take any of the foregoing actions.
(b) Prior to the Effective Time, except as set forth in the Parent
Disclosure Letter or as expressly contemplated by this Agreement, including
Section 5.14, or as consented to in writing by the Company, Parent:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and shall cause
each of its Subsidiaries to use its reasonable best efforts, to
preserve intact their business organizations and goodwill, keep
available the services of their respective officers and employees and
maintain satisfactory relationships with those persons having business
relationships with them;
(iii) shall not amend its certificate of incorporation or
bylaws except as necessary to consummate the transactions contemplated
by this Agreement;
(iv) shall promptly notify the Company of any material adverse
change in its financial condition or business or any termination,
cancellation, repudiation or material breach of any Parent Material
Contract (or communications expressly indicating the same may be
contemplated), or the institution of any material litigation or
material governmental complaints, investigations or hearings (or
communications in writing indicating the same may be contemplated), or
the breach in any material respect of any representation or warranty
contained herein;
(v) shall promptly make available (in paper form or via the
Internet) to the Company true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement;
36
(vi) shall not (A) except (1) pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed in the Parent Disclosure
Letter or referred to in clause (B) below or (2) for awards of options
or restricted shares made in the ordinary course and consistent with
past practice, issue any shares of its capital stock, effect any stock
split or otherwise change its capitalization as it existed on the date
hereof; (B) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any
shares of its capital stock except (1) the grant of options or
restricted shares to new employees consistent with past practice in an
aggregate amount not to exceed 100,000 shares of Parent Common Stock,
(2) pursuant to contractual commitments existing on the date of this
Agreement and disclosed in the Parent Disclosure Letter or (3) the
grant of options or restricted shares made in the ordinary course of
business and consistent with past practice; (C) increase any
compensation or benefits of any officer, director, employee or agent of
the Parent or any of its Subsidiaries, except in the ordinary course of
business consistent with the past practice of the Parent or any of its
Subsidiaries (as applicable), or enter into or amend any employment
agreement or severance agreement with any of its present or future
officers, directors or employees except with new employees consistent
with past practice, or (D) adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase plan) or
amend (except as required by law) any existing employee benefit plan in
any material respect;
(vii) shall not, and, in the case of clause (B) below, shall
not permit any of its Subsidiaries to (A) declare, set aside or pay any
dividend or make any other distribution or payment with respect to any
shares of its capital stock (other than ordinary dividends on the
Parent Common Stock and Northstar Exchangeable Shares at a rate not
greater than $0.05 per share in any quarter and dividends upon its
6.49% Cumulative Preferred Stock, Series A, in accordance with the
terms thereof) or (B) redeem, purchase or otherwise acquire any shares
of its capital stock or capital stock of any of its Subsidiaries or any
option, warrant, conversion right or other right to acquire such
shares, or make any commitment for any such action;
(viii) shall not, and shall not permit any of its Subsidiaries
to, sell, lease or otherwise dispose of any of its assets (including
capital stock of Subsidiaries) for an amount in excess of $700,000,000,
individually or in the aggregate, except in the ordinary course of
business and for fair value;
(ix) shall not, and shall not permit any of its Subsidiaries
to, except pursuant to contractual commitments in effect on the date
hereof and disclosed in the Parent Disclosure Letter and except for
amounts that in the aggregate do not exceed $100,000,000 authorize,
propose, agree to, enter into or consummate any merger, consolidation
or business combination transaction (other than the Merger) or acquire
or agree to acquire by merging or consolidating with, or by purchasing
a substantial equity interest in or a substantial portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof;
37
(x) shall not, except as may be required as a result of a
change in law or in generally accepted accounting principles, change
any of the accounting principles or practices used by it;
(xi) shall, and shall cause each of its Subsidiaries to, use
reasonable best efforts to maintain with financially responsible
insurance companies insurance in such amounts and against such risks
and losses as are customary for such party;
(xii) shall not, and shall not permit any of its Subsidiaries
to, except where it would not have and would not be reasonably expected
to have, individually or in the aggregate, a Parent Material Adverse
Effect, (A) make or rescind any express or deemed election relating to
taxes, including elections for any and all joint ventures,
partnerships, limited liability companies, working interests or other
investments where it has the capacity to make such binding election,
(B) settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to taxes, or (C) change in any respect any of its methods of reporting
any item for federal income tax purposes from those employed in the
preparation of its federal income tax return for the most recent
taxable year for which a return has been filed, except as may be
required by applicable law;
(xiii) shall not, nor shall it permit any of its Subsidiaries
to, (A) incur any indebtedness for borrowed money (except under credit
lines in existence as of the date of this Agreement) or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of such party or any of its
Subsidiaries or guarantee any debt securities of others except for
amounts that in the aggregate do not exceed $100,000,000, (B) except in
the ordinary course of business, enter into any material lease (whether
such lease is an operating or capital lease) or create any material
mortgages, liens, security interests or other encumbrances on the
property of the Company or Parent or any of their Subsidiaries in
connection with any indebtedness thereof, (C) make or commit to make
aggregate capital expenditures in excess of $1,000,000,000 or (D) make
or commit to make individual operating expenditures in excess of
$50,000,000;
(xiv) subject to Section 5.5, shall not take any action that
is likely to delay materially or adversely affect the ability of any of
the parties hereto to obtain any consent, authorization, order or
approval of any governmental commission, board or other regulatory body
or the expiration of any applicable waiting period required to
consummate the Merger;
(xv) unless in the good faith opinion of its Board of
Directors after consultation with its outside legal counsel complying
with the following provisions would be inconsistent with the fiduciary
duties of such Board of Directors and only then if taking such actions
would not violate any of the other terms of this Agreement, shall not,
and shall not permit any of its Subsidiaries to, terminate, amend,
modify or waive any provision of any confidentiality or standstill
agreement to which it or any of its Subsidiaries is a party; and during
such period shall enforce, to the fullest extent permitted under
applicable law, the provisions of such agreement, including by
obtaining
38
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the
United States of America or any state having jurisdiction;
(xvi) shall not enter into or amend any agreement with any
holder of Parent capital stock with respect to holding, voting or
disposing of shares of Parent Common Stock or Parent Preferred Stock;
(xvii) shall not by resolution of its Board of Directors cause
the acceleration of rights, benefits or payments under any Parent
Plans;
(xviii) shall not, and shall not permit any of its
Subsidiaries to, enter into any additional commodity hedge transactions
for (A) any period in 2003 in which the volume hedged is more than 65%
of its and its Subsidiaries' (taken as a whole) estimated production of
proved reserves of these commodities during that period, (B) any period
in 2004 in which the volume hedged is more than 35% of its and its
Subsidiaries' (taken as a whole) estimated production of proved
reserves of these commodities during that period, or (C) any period
after December 31, 2004;
(xix) shall not take any action to amend the Parent Rights
Agreement, redeem the Parent Rights subject thereto, or exempt any
third party from the other provisions of the Parent Rights Agreement,
as applicable;
(xx) shall not split, combine, subdivide or reclassify its
outstanding shares of capital stock;
(xxi) shall not purchase any Company Common Stock;
(xxii) shall not, and shall not permit any of its Subsidiaries
to, (A) do business in any country in which Parent or any of its
Subsidiaries is not doing business as of the date hereof or (B) enter
into any joint venture, partnership or other joint business venture
with any person in which the fair market value of Parent's or its
Subsidiaries' aggregate investments and commitments exceed $50,000,000;
and
(xxiii) shall not, nor shall it permit any of its Subsidiaries
to, agree in writing or otherwise to take any of the foregoing actions.
Section 5.2 NO SOLICITATION BY THE COMPANY.
(a) The Company agrees that it and its Subsidiaries (i) will not (and
the Company will not permit its or its Subsidiaries' officers, directors,
employees, agents or representatives, including any investment banker, attorney
or accountant retained by the Company or any of its Subsidiaries, to) solicit,
initiate or encourage (including by way of furnishing non-public information)
any inquiry, proposal or offer (including any proposal or offer to its
stockholders) with respect to a third party tender offer, merger, consolidation,
business combination or similar transaction involving any assets or class of
capital stock of the Company, or any acquisition of 10% or more of the capital
stock of the Company (other than upon exercise of the Stock Options (as
hereinafter defined) that are outstanding as of the date hereof) or a business
or assets that
39
constitute 10% or more of the net revenues, net operating income or assets of
the Company and its Subsidiaries, taken as a whole, in a single transaction or a
series of related transactions, or any combination of the foregoing (any such
proposal, offer or transaction being hereinafter referred to as a "Company
Acquisition Proposal") or participate or engage in any discussions or
negotiations concerning a Company Acquisition Proposal; and (ii) will
immediately cease and cause to be terminated any existing discussions or
negotiations with any third parties conducted heretofore with respect to any
Company Acquisition Proposal; provided that, subject to Section 5.4(b), nothing
contained in this Agreement shall prevent the Company or its Board of Directors
from (A) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a Company Acquisition Proposal, (B) making any disclosure to the
holders of Company Shares if in the good faith judgment of the Company's Board
of Directors failure to make such disclosure would be inconsistent with its
fiduciary duties under applicable law or the rules of the New York Stock
Exchange or (C) providing information (pursuant to a confidentiality agreement
in reasonably customary form and which does not contain terms that prevent the
Company from complying with its obligations under this Section 5.2) to or
engaging in any negotiations or discussions with any person or group who has
made an unsolicited bona fide Company Acquisition Proposal with respect to all
the outstanding shares of capital stock of the Company or all or substantially
all of the assets of the Company if, with respect to the actions set forth in
clause (C), (x) in the good faith judgment of the Company's Board of Directors,
taking into account the likelihood of consummation and after consultation with
its financial advisors, such Company Acquisition Proposal is reasonably likely
to result in a transaction more favorable to the holders of the Company Common
Shares from a financial point of view than the Merger (a "Company Superior
Proposal") and (y) the Board of Directors of the Company, after consultation
with its outside legal counsel, determines in good faith that the failure to do
so would be inconsistent with its fiduciary obligations under applicable law.
(b) The Company agrees that it will notify Parent promptly (and in any
event within 24 hours) if any proposal or offer relating to or constituting a
Company Acquisition Proposal is received by, any information is requested from,
or any discussions or negotiations are sought to be initiated or continued with,
the Company or any of its officers, directors, employees, agents or
representatives. In connection with such notice, the Company shall indicate the
identity of the person or group making such request or inquiry or engaging in
such negotiations or discussions and the material terms and conditions of any
Company Acquisition Proposal. Thereafter, the Company shall keep Parent fully
informed on a prompt basis (and in any event within 24 hours) of any material
changes, additions or adjustments to the terms of any such proposal or offer.
Prior to taking any action referred to in clause (C) of the proviso of Section
5.2(a), if the Company intends to participate in any such discussions or
negotiations or provide any such information to any such third party, the
Company shall give notice to Parent.
(c) Nothing in this Section 5.2 shall permit the Company to enter into
any agreement with respect to a Company Acquisition Proposal during the term of
this Agreement, it being agreed that, during the term of this Agreement, the
Company shall not enter into any agreement with any person that provides for, or
in any way facilitates, a Company Acquisition Proposal, other than a
confidentiality agreement and/or standstill agreement permitted under Section
5.2(a) in reasonably customary form and which does not contain terms that
prevent the Company from complying with its obligations under this Section 5.2.
40
Section 5.3 NO SOLICITATION BY PARENT.
(a) Parent agrees that it and its Subsidiaries (i) will not (and Parent
will not permit its or its Subsidiaries' officers, directors, employees, agents
or representatives, including any investment banker, attorney or accountant
retained by Parent or any of its Subsidiaries, to) solicit, initiate or
encourage (including by way of furnishing non-public information) any inquiry,
proposal or offer (including any proposal or offer to its stockholders) with
respect to a third party tender offer, merger, consolidation, business
combination or similar transaction involving any assets or class of capital
stock of Parent, or any acquisition of 10% or more of the capital stock of
Parent (other than upon exercise of options to acquire Parent Common Stock under
the Parent Option Plans that are outstanding as of the date hereof) or a
business or assets that constitute 10% or more of the net revenues, net
operating income or assets of Parent and its Subsidiaries, taken as a whole, in
a single transaction or a series of related transactions, or any combination of
the foregoing (any such proposal, offer or transaction being hereinafter
referred to as a "Parent Acquisition Proposal") or participate or engage in any
discussions or negotiations concerning a Parent Acquisition Proposal; and (ii)
will immediately cease and cause to be terminated any existing discussions or
negotiations with any third parties conducted heretofore with respect to any
Parent Acquisition Proposal; provided that, subject to Section 5.4(b), nothing
contained in this Agreement shall prevent Parent or its Board of Directors from
(A) complying with Rule 14e-2 promulgated under the Exchange Act with regard to
a Parent Acquisition Proposal, (B) making any disclosure to the holders of
Parent Common Stock if in the good faith judgment of Parent's Board of Directors
failure to make such disclosure would be inconsistent with its fiduciary duties
under applicable law or the rules of the AMEX or (C) providing information
(pursuant to a confidentiality agreement in reasonably customary form and which
does not contain terms that prevent Parent from complying with its obligations
under this Section 5.3) to or engaging in any negotiations or discussions with
any person or group who has made an unsolicited bona fide Parent Acquisition
Proposal with respect to all the outstanding shares of capital stock of Parent
or all or substantially all of the assets of Parent if, with respect to the
actions set forth in clause (C), (x) in the good faith judgment of Parent's
Board of Directors, taking into account the likelihood of consummation and after
consultation with its financial advisors, such Parent Acquisition Proposal is
reasonably likely to result in a transaction more favorable to the holders of
the Parent Common Stock from a financial point of view than the Merger (a
"Parent Superior Proposal") and (y) the Board of Directors of Parent, after
consultation with its outside legal counsel, determines in good faith that the
failure to do so would be inconsistent with its fiduciary obligations under
applicable law.
(b) Parent agrees that it will notify the Company promptly (and in any
event within 24 hours) if any proposal or offer relating to or constituting a
Parent Acquisition Proposal is received by, any information is requested from,
or any discussions or negotiations are sought to be initiated or continued with,
Parent or any of its officers, directors, employees, agents or representatives.
In connection with such notice, Parent shall indicate the identity of the person
or group making such request or inquiry or engaging in such negotiations or
discussions and the material terms and conditions of any Parent Acquisition
Proposal. Thereafter, Parent shall keep the Company fully informed on a prompt
basis (and in any event within 24 hours) of any material changes, additions or
adjustments to the terms of any such proposal or offer. Prior to taking action
any referred to in clause (C) of the proviso of Section 5.3(a), if Parent
intends to
41
participate in any such discussions or negotiations or provide any such
information to any such third party, Parent shall give notice to the Company.
(c) Nothing in this Section 5.3 shall permit Parent to enter into any
agreement with respect to a Parent Acquisition Proposal during the term of this
Agreement, it being agreed that, during the term of this Agreement, Parent shall
not enter into any agreement with any person that provides for, or in any way
facilitates, a Parent Acquisition Proposal, other than a confidentiality
agreement and/or standstill agreement permitted under Section 5.3(a) in
reasonably customary form and which does not contain terms that prevent Parent
from complying with its obligation under this Section 5.3.
Section 5.4 MEETINGS OF STOCKHOLDERS.
(a) The Company will take all action necessary in accordance with
applicable law and its certificate of incorporation and bylaws to convene as
promptly as practicable a meeting of its stockholders for purposes of obtaining
the Company Requisite Vote in favor of approval and adoption of this Agreement
and the transactions contemplated hereby. Parent will take all action necessary
in accordance with applicable law and its certificate of incorporation and
bylaws to convene as promptly as practicable a meeting of its stockholders for
purposes of obtaining the Parent Requisite Vote in favor of the issuance of the
Parent Common Stock necessary to consummate the transactions contemplated
hereby. Parent and the Company shall each use their reasonable best efforts to
hold their respective stockholders meetings on the same day.
(b) Except as otherwise permitted by this Section 5.4, the Company and
Parent, through their respective Boards of Directors, shall (i) recommend
approval of the matters described in Section 5.4(a) to be submitted to their
respective stockholders, (ii) not withdraw, withhold, modify, or change such
recommendation in a manner adverse to the other party, (iii) not recommend or
declare advisable any Company Superior Proposal or Parent Superior Proposal, as
the case may be, and (iv) unless such recommendation has been withdrawn,
withheld, modified or changed as permitted by this Section 5.4(b), use their
reasonable best efforts to solicit the Company Requisite Vote (in the case of
the Company) and the Parent Requisite Vote (in the case of Parent). The Board of
Directors of the Company or Parent, as applicable (the "Withdrawing Party;" the
other party being the "Non-Withdrawing Party"), may at any time prior to
obtaining the Company Requisite Vote or Parent Requisite Vote, as applicable,
(1) withdraw, withhold, modify, or change, in a manner adverse to the
Non-Withdrawing Party, any approval or recommendation regarding this Agreement
or the transactions contemplated hereby or (2) recommend and declare advisable
any Company Superior Proposal or Parent Superior Proposal, as the case may be
(the actions set forth in clauses (1) and (2) being referred to herein as
"Adverse Actions"), if its Board of Directors determines in good faith after
consultation with its outside legal counsel that the failure to take the Adverse
Action in question would be inconsistent with its fiduciary obligations under
applicable law. After the Board of Directors has made a determination to take an
Adverse Action pursuant to the previous sentence but at least two business days
prior to taking such Adverse Action, the Board of Directors of the Withdrawing
Party shall give the Non-Withdrawing Party written notice of the Withdrawing
Party's intention to take such Adverse Action (including a reasonable
description of the circumstances related thereto) so as to allow the
Non-Withdrawing Party to propose a modification to the terms of the Merger or
this Agreement
42
that would eliminate the need to take the Adverse Action. Notwithstanding any
Adverse Action taken by the Withdrawing Party, the Non-Withdrawing Party shall
have the option (the "Option"), exercisable in its sole discretion within two
business days of written notice of such Adverse Action by the Withdrawing Party
(which written notice shall be provided by the Withdrawing Party to the
Non-Withdrawing Party promptly, but in any event, within 24 hours, of the
Withdrawing Party taking such Adverse Action and shall include a reasonable
description of the circumstances related thereto), to cause the Withdrawing
Party to submit the matters to be voted on by such stockholders (as contemplated
hereby) to the stockholders of the Withdrawing Party at the relevant
stockholders meeting and, in connection with such submission, communicate the
circumstances under which the matters to be voted on by such stockholders (as
contemplated hereby) are being submitted to its stockholders. If the
Non-Withdrawing Party exercises the Option within the time permitted, the
Non-Withdrawing Party shall no longer be entitled to terminate this Agreement
under Section 7.3(b) or Section 7.4(b) below, as applicable. If the
Non-Withdrawing Party exercises the Option within the time permitted, the
Withdrawing Party shall use its reasonable best efforts, if so requested by the
Non-Withdrawing Party, to promptly furnish or cause to be furnished (in such
formats, including electronic formats, as the Non-Withdrawing Party or its
agents, advisors or attorneys may reasonably request) to the Non-Withdrawing
Party and its agents, advisors and attorneys, at the Non-Withdrawing Party's
expense, the most current, accurate and complete shareholders lists of the
Withdrawing Party, including non-objecting beneficial owner lists, as may be
requested by the Non-Withdrawing Party or its agents, advisors or attorneys from
time to time so that the Non-Withdrawing Party can solicit proxies from the
Withdrawing Party's stockholders. If the Non-Withdrawing Party fails to exercise
the Option within the time permitted, the Withdrawing Party may terminate this
Agreement at any time after the expiration of the relevant two business day
period but prior to obtaining the Company Requisite Vote (if the Withdrawing
Party is the Company) or the Parent Requisite Vote (if the Withdrawing Party is
Parent) pursuant to Section 7.3(c) or Section 7.4(c) below, as applicable;
provided, however, that in the event that the Non-Withdrawing Party proposes to
the Withdrawing Party any modifications to the terms of the Merger or this
Agreement during such two business day period (the "Modified Terms"), the
Withdrawing Party shall not be permitted to terminate this Agreement pursuant to
Section 7.3(c) or Section 7.4(c) below, as applicable, unless and until the
Board of Directors of the Withdrawing Party (i) in good faith considers the
Modified Terms and (ii) makes a good faith determination, after consultation
with its outside legal counsel, that proceeding with a transaction with the
Non-Withdrawing Party reflecting the Modified Terms would be inconsistent with
its fiduciary obligations under applicable law. If the Non-Withdrawing Party
proposes Modified Terms to the Withdrawing Party pursuant to the previous
sentence which causes the Withdrawing Party's Board of Directors to reinstate
its recommendation regarding this Agreement and the transactions contemplated
hereby and to proceed with a transaction with the Non-Withdrawing Party, then in
the event that subsequent to the acceptance by the Withdrawing Party of the
Modified Terms the Board of Directors of the Withdrawing Party again either (i)
withdraws, withholds, modifies, or changes, in a manner adverse to the
Non-Withdrawing Party, any approval or recommendation regarding this Agreement
or the transactions contemplated hereby or (ii) recommends and declares
advisable any Company Superior Proposal or Parent Superior Proposal, as the case
may be, then the Non-Withdrawing Party shall again have the right to exercise
the Option pursuant to the terms of this Section 5.4(b).
43
Section 5.5 FILINGS; REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions herein provided, the Company
and Parent shall:
(i) promptly (but in not more than 10 business days from the
date hereof) make their respective filings under the HSR Act with
respect to the Merger and thereafter shall promptly make any other
required submissions under the HSR Act;
(ii) use their reasonable best efforts to satisfy the
conditions to closing in Article 6 (including, in the case of the
Company, obtaining the opinion described in Section 6.2(b) and, in the
case of Parent, obtaining the opinion described in Section 6.3(b)) as
promptly as practicable and to cooperate with one another in (1)
determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time
from, governmental or regulatory authorities of the United States, the
several states, and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of the
Merger and the transactions contemplated hereby; and (2) timely making
all such filings and timely seeking all such consents, approvals,
permits or authorizations;
(iii) promptly notify each other of any communication
concerning this Agreement or the Merger to that party from any
governmental authority and permit the other party to review in advance
any proposed communication concerning this Agreement or the Merger to
any governmental entity;
(iv) not agree to participate in any meeting or discussion
with any governmental authority in respect of any filings,
investigation or other inquiry concerning this Agreement or the Merger
unless it consults with the other party in advance and, to the extent
permitted by such governmental authority, gives the other party the
opportunity to attend and participate thereat;
(v) furnish the other party with copies of all correspondence,
filings and communications (and memoranda setting forth the substance
thereof) between them and their affiliates and their respective
representatives on the one hand, and any government or regulatory
authority or members or their respective staffs on the other hand, with
respect to this Agreement and the Merger; and
(vi) furnish the other party with such necessary information
and reasonable assistance as such other parties and their respective
affiliates may reasonably request in connection with their preparation
of necessary filings, registrations or submissions of information to
any governmental or regulatory authorities, including any filings
necessary or appropriate under the provisions of the HSR Act.
(b) Without limiting Section 5.5(a), Parent and the Company shall:
(i) each use its reasonable best efforts to avoid the entry
of, or to have vacated or terminated, any decree, order or judgment
that would restrain, prevent or delay
44
the Closing, including defending through litigation on the merits any
claim asserted in any court by any party; and
(ii) each use reasonable best efforts to avoid or eliminate
each and every impediment under any antitrust, competition or trade
regulation law that may be asserted by any governmental entity with
respect to the Merger so as to enable the Closing to occur as soon as
reasonably possible (and in any event no later than 60 days following
the termination of all applicable waiting periods under the HSR Act,
unless the parties are in litigation with the government, in which case
at the conclusion of such litigation).
(c) Neither Parent nor the Company shall, without the other party's
prior written consent, commit to any divestitures, licenses, hold separate
arrangements or similar matters, including covenants affecting business
operating practices (or allow its Subsidiaries to commit to any divestitures,
licenses, hold separate arrangements or similar matters) in connection with the
transactions contemplated under this Agreement, but the parties shall commit or
consent to, and shall use reasonable efforts to effect (and shall cause their
Subsidiaries to commit or consent to and use reasonable efforts to effect), any
such divestitures, licenses, hold separate arrangements or similar matters as
any governmental entity shall request if such divestitures, licenses, hold
separate arrangements or similar matters are required by any such governmental
entity as a condition to resolving such governmental entity's objections to the
Merger or obtaining its approval of the Merger and are contingent upon
consummation of the Merger; provided that, notwithstanding anything to the
contrary in this Section 5.5(c) or the remainder of this Agreement, neither
Parent, the Company nor any of their respective Subsidiaries shall be required
to agree (with respect to (x) Parent or its Subsidiaries or (y) the Company or
its Subsidiaries) to any divestitures, licenses, hold separate arrangements or
similar matters, including covenants affecting business operating practices, if
such divestitures, licenses, arrangements or similar matters, individually or in
the aggregate, would have or reasonably be expected to have a Parent Material
Adverse Effect or a Company Material Adverse Effect.
Section 5.6 INSPECTION. From the date hereof to the Effective Time, the
Company and Parent shall allow all designated officers, attorneys, accountants
and other representatives of the other party access at all reasonable times upon
reasonable notice to the records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs of the Company and its Subsidiaries or Parent and its Subsidiaries,
including inspection of such properties; provided that no investigation pursuant
to this Section 5.6 shall affect any representation or warranty given by any
party hereunder, and provided further that notwithstanding the provision of
information or investigation by any party, no party shall be deemed to make any
representation or warranty except as expressly set forth in this Agreement.
Notwithstanding the foregoing, no party shall be required to provide any
information which it reasonably believes it may not provide to any other party
by reason of applicable law, rules or regulations, which that party reasonably
believes constitutes information protected by attorney/client privilege, or
which it is required to keep confidential by reason of contract or agreement
with third parties. The parties hereto will make reasonable and appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply. The Company and Parent agree that they will
not, and will cause their representatives not to, use any information obtained
pursuant to this Section 5.6 for any purpose unrelated to the
45
consummation of the transactions contemplated by this Agreement. All nonpublic
information obtained pursuant to this Section 5.6 shall be governed by the
Confidentiality Agreement dated October 25, 2002 between Parent and the Company
(the "Confidentiality Agreement").
Section 5.7 PUBLICITY. The Company and Parent will consult with each
other and will mutually agree upon any press releases or public announcements
pertaining to this Agreement or the transactions contemplated hereby and shall
not issue any such press releases or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make
such public announcement shall use its reasonable best efforts to consult in
good faith with the other party before issuing any such press releases or making
any such public announcements.
Section 5.8 REGISTRATION STATEMENT.
(a) Each of Parent and the Company shall cooperate and as promptly as
practicable prepare, and Parent shall file with the SEC as soon as practicable,
a Registration Statement on Form S-4 under the Securities Act (the "Registration
Statement"), with respect to the Parent Common Stock issuable in the Merger. A
portion of the Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of the stockholders of Parent and of the
Company in connection with the Merger (the "Proxy Statement/Prospectus"). The
respective parties will cause the Proxy Statement/Prospectus and the
Registration Statement to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Parent shall use its reasonable best efforts, and the
Company will cooperate with Parent, to have the Registration Statement declared
effective by the SEC as promptly as practicable. Parent shall use its reasonable
best efforts to obtain, prior to the effective date of the Registration
Statement, all necessary state securities law or "Blue Sky" permits or approvals
required to carry out the transactions contemplated by this Agreement and will
pay all expenses incident thereto. Parent will advise the Company, promptly
after it receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, the issuance
of any stop order, the suspension of the qualification of the Parent Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy Statement/
Prospectus or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
(b) Each of Parent and the Company will use its reasonable best efforts
to cause the Proxy Statement/Prospectus to be mailed to its stockholders as
promptly as practicable after the date hereof.
(c) Each of Parent and the Company agrees that the information provided
by it for inclusion in the Proxy Statement/Prospectus and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
respective meetings of stockholders of Parent and of the Company, or, in the
case of information provided by it for inclusion in the Registration Statement
or any amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to
46
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 5.9 LISTING APPLICATION. Parent shall use its reasonable best
efforts to cause the Parent Common Stock to be issued in the Merger to be
approved for listing on the AMEX prior to the Effective Time, subject to
official notice of issuance. Parent shall promptly prepare and submit to the
AMEX a supplemental listing application covering the shares of Parent Common
Stock issuable in the Merger and shares issuable pursuant to Assumed Options (as
defined below).
Section 5.10 INTENTIONALLY OMITTED.
Section 5.11 AGREEMENTS OF AFFILIATES. Prior to the Effective Time, the
Company shall cause to be prepared and delivered to Parent a list identifying
all persons who, at the time of the meeting of the Company's stockholders
pursuant to Section 5.4, the Company believes may be deemed to be "affiliates"
of the Company, as that term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act (the "Rule 145 Affiliates"). Parent shall be entitled to
place restrictive legends on any shares of Parent Common Stock received by such
Rule 145 Affiliates. The Company shall use its reasonable best efforts to cause
each person who is identified as a Rule 145 Affiliate in such list to deliver to
Parent, at or prior to the Effective Time, a written agreement, in the form
attached hereto as Exhibit D.
Section 5.12 EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except as expressly provided in Section 7.5.
Section 5.13 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to indemnify, defend and hold harmless to the fullest extent
permitted under applicable law each person who is immediately prior to the
Effective Time, or has been at any time prior to the Effective Time, an officer
or director of the Company (or any Subsidiary or division thereof) and each
person who immediately prior to the effective time is serving or prior to the
Effective Time has served at the request of the Company as a director, officer,
trustee or fiduciary of another corporation, partnership, joint venture, trust,
pension or other employee benefit plan or enterprise (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 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 or after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), (i) Parent shall cause the Surviving Corporation to
pay, as incurred, the fees and expenses of counsel selected by the Indemnified
Party, which counsel shall be reasonably acceptable to Parent, in advance of the
final disposition of any such Action to the fullest extent permitted by
applicable law, and, if required, upon receipt of any undertaking required by
applicable law, and (ii) Parent will, and will cause the Surviving Corporation
to, cooperate in the defense of any such matter; provided, however, neither
Parent nor the Surviving
47
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld or delayed), and
provided further that neither Parent nor the Surviving Corporation shall be
obligated pursuant to this Section 5.13(a) to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single Action, unless,
in the good faith judgment of any of the Indemnified Parties, there is or may be
a conflict of interests between two or more of such Indemnified Parties, in
which case there may be separate counsel for each similarly situated group.
(b) The parties agree that the rights to indemnification hereunder,
including provisions relating to advances of expenses incurred in defense of any
action or suit, in the certificate of incorporation, bylaws and any
indemnification agreement of the Company and its Subsidiaries with respect to
matters occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of six years from the Effective
Time; provided, however, that all rights to indemnification and advancement of
expenses in respect of any Action pending or asserted or claim made within such
period shall continue until the disposition of such Action or resolution of such
claim.
(c) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain officers' and directors' liability insurance covering
the Indemnified Parties who are or at any time prior to the Effective Time were
covered by the Company's existing officers' and directors' liability insurance
("D&O Insurance") policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance with respect to acts or
omissions, or alleged acts or omissions, prior to the Effective Time (whether
claims, actions or other proceedings relating thereto are commenced, asserted or
claimed before or after the Effective Time); provided that, after the Effective
Time, the Surviving Corporation shall not be required to pay annual premiums in
excess of 250% of the 2003 annual premium paid by the Company prior to the date
hereof (the amount of which premiums are set forth in the Company Disclosure
Letter) (the "Maximum Premium"), but in such case shall purchase as much
coverage as reasonably practicable for such amount. Parent shall have the right
to cause coverage to be extended under the Company's D&O Insurance by obtaining
a six-year "tail" policy on terms and conditions no less advantageous than the
Company's existing D&O Insurance, and such "tail" policy shall satisfy the
provisions of this Section 5.13(c).
(d) The rights of each Indemnified Party hereunder shall be in addition
to any other rights such Indemnified Party may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, under the
DGCL, or otherwise. The provisions of this Section 5.13 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
(e) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, Parent shall cause proper provision to be
made so that the successors and assigns of Parent, as the case may be, shall
assume the obligations set forth in this Section 5.13.
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Section 5.14 EMPLOYEE BENEFITS.
(a) Parent hereby agrees to honor, and agrees to cause its Subsidiaries
to honor, all employee benefit plans, contracts, agreements and commitments of
the Company or any of its Subsidiaries maintained or entered into by the Company
or any of its Subsidiaries prior to the date hereof that apply to any current or
former employee or current or former director of the Company or any of its
Subsidiaries, including the executive change-in-control severance agreements
between the Company and certain of its key employees (copies of which executive
change-in-control severance agreements have been furnished to Parent); provided,
however, that, except as otherwise expressly provided in this Section 5.14,
Parent reserves the right to modify any such plan, contract, agreement or
commitment in accordance with its terms.
(b) Notwithstanding the provisions of Section 5.14(a):
(i) Parent and the Company agree that the consummation of the
transaction contemplated by this Agreement shall constitute a "Change
of Control" as that term is defined in the Ocean Energy, Inc. 2001
Change of Control Severance Plan (the "Company Severance Plan"), and
that, to the extent required by Section 4.5 of the Company Severance
Plan, such plan shall not be modified with respect to severance
benefits payable and Welfare Benefit Coverages provided as a result of
Involuntary Terminations occurring before the one-year anniversary of
the Effective Time. The Company agrees that, prior to the Effective
Time, it shall amend the Company Severance Plan to provide that a
transfer between Parent and one of its Subsidiaries or between two of
its Subsidiaries at or after the Effective Time shall not constitute a
termination of employment resulting in eligibility for severance;
provided that if the transfer results in a Change in Duties, any such
transfer may be treated as a basis for Involuntary Termination to the
extent provided by the terms of the Company Severance Plan, including
the definitions of "Involuntary Termination" and "Change in Duties"(as
in effect on December 1, 2002).
(ii) Parent agrees that for the period beginning at the
Effective Time and ending December 31, 2003 (or such later date
determined by Parent), the Company and its Subsidiaries (and any
successor entities to the Company or any of its Subsidiaries) shall
maintain the medical, health, life, and disability insurance plans, and
the deferred compensation and retirement plans, as in effect
immediately prior to the Effective Time, and prior to January 1, 2004
shall not amend any such plan to reduce any benefit provided under any
such plan. With respect to the Company's Retirement Savings Plan,
Parent shall cause the Company to make an employer discretionary
contribution for 2003 for the eligible participants at the same
fraction of their eligible compensation as the Company's discretionary
contributions made for 2001 and 2002.
(iii) If, during calendar year 2004, the benefits applicable
to officers and employees of the Company or its Subsidiaries (and any
successor entities to the Company or any of its Subsidiaries) are
materially modified then, for the remainder of calendar year 2004,
Parent hereby agrees to, and agrees to cause its Subsidiaries to,
provide to officers and employees of the Company and its Subsidiaries
(and any successor entities to the Company or any of its Subsidiaries)
who become or remain regular (full-time)
49
employees of Parent or any of its Subsidiaries (including, without
limitation, the Company and any successor entity to the Company for so
long as it is a Subsidiary of Parent) employee benefits, no less
favorable than those provided by Parent and its Subsidiaries to their
similarly situated officers and employees.
(iv) Each employee of the Company or its Subsidiaries (and any
successor entities to the Company or any of its Subsidiaries) who
becomes a participant in any employee benefit plan, program, policy, or
arrangement of Parent or any of its Subsidiaries on or after the
Effective Time shall be given credit under such plan, program, policy,
or arrangement for all service with the Company, any of its
Subsidiaries, any of their predecessors to the extent such predecessor
employment was recognized by the Company or any of its Subsidiaries,
and, if applicable, with Parent or any of its Subsidiaries, prior to
becoming such a participant for purposes of eligibility, vesting and
benefit determination; provided that this Section 5.14(b)(iv) shall not
apply to the determination of accrual service under any defined benefit
pension plan as defined in section 3(35) of ERISA (regardless of
whether such plan is qualified under Code section 401(a)), and shall
not apply to the determination of the right to receive, or the amount
of, any retiree or other post-retirement medical service (except for
COBRA medical continuation coverage as described in section 4980B of
the Code).
(v) At such time, if any, as Parent causes an employee of the
Company or its Subsidiaries (and any successor entities to the Company
or any of its Subsidiaries) to be covered under a group health plan
maintained by Parent or one of its Subsidiaries (other than the group
health plan maintained by the Company at the Effective Time), Parent
shall cause (A) such employee and his or her eligible dependents
(including, without limitation, all such dependents of the employee
covered immediately prior to such time under the Company's group health
plan) to be credited under such Parent or Subsidiary group health plan,
for the year during which such coverage under such group health plan
begins, with any deductibles and copayments already incurred during
such year under the group health plan of the Company (or successor
entity to the Company), and (B) such Parent or Subsidiary group health
plan to waive any preexisting condition restrictions to the extent
necessary to provide immediate coverage (to the extent such preexisting
condition restrictions have been waived, or would have been waived,
under the Company's group health plan).
(vi) Nothing in this Section 5.14(b) shall be construed to
restrict the ability of Parent and its Subsidiaries (including, without
limitation, the Company and any successor entity to the Company for so
long as it is a Subsidiary of Parent) to modify or terminate any plan
(at or after the Effective Time) with respect to persons employed at
operations outside the United States.
(vii) Nothing in this Section 5.14(b) shall be construed as a
contract of employment, and this Section 5.14(b) shall not give any
employee the right to be retained in the employ of Parent or any of its
Subsidiaries. Nothing in this Section 5.14(b) shall be construed to
require the provision of coverage or benefits to an employee following
termination of employment except to the extent such coverage or
benefits is otherwise required pursuant to the terms of the applicable
plan or arrangement.
50
(viii) Notwithstanding anything in this Section 5.14 to the
contrary, (1) the Average Monthly Compensation used to determine the
benefit of each member under the Company's Executive Supplemental
Retirement Plan ("ESRP") shall not be less than such members' Average
Monthly Compensation as of January 1, 2003, (2) each member shall
receive credit, for purposes of vesting in his Accrued Benefit, for his
service with Parent and its Subsidiaries (including the Company and its
Subsidiaries) following the Effective Time, (3) no amendment may be
made to the ESRP that would adversely affect the member's right to
continued vesting under the ESRP based on his continued service with
the Company and its Subsidiaries, and (4) if the ESRP is terminated,
each member who is then an employee of the Parent and its Subsidiaries
(including the Company and its Subsidiaries) automatically shall be
100% vested on such termination.
(ix) The parties intend and agree that the employees of the
Company and its Subsidiaries on the Closing Date are third party
beneficiaries with respect to the provisions of this Section 5.14 that
are applicable to such employee and shall be entitled to enforce such
provisions against the parties.
(c) Parent and the Company shall take such actions, including (with
respect to the Company) the amendment of the options ("Stock Options") to
purchase Company Common Shares, and the plans pursuant to which such options
have been issued, to permit Parent to assume, and Parent shall assume, effective
at the Effective Time, each Option Plan and each Stock Option that remains
unexercised in whole or in part as of the Effective Time and substitute shares
of Parent Common Stock for the Company Common Shares purchasable under each such
assumed option ("Assumed Option"), which assumption and substitution shall be
effected as follows:
(i) the number of shares of Parent Common Stock purchasable
under the Assumed Option shall be equal to 0.414 (to be adjusted
appropriately if the Exchange Ratio is adjusted pursuant to Section
2.4) times the number of Company Common Shares underlying the Assumed
Option (or that would be purchasable if the option was then vested and
exercisable and with any fractional amount rounded to the next lowest
share);
(ii) the per share exercise price of such Assumed Option shall
be an amount (with fractional amounts rounded to the next highest cent)
equal to the per share exercise price of the Stock Option being assumed
divided by 0.414 (to be adjusted appropriately if the Exchange Ratio is
adjusted pursuant to Section 2.4);
(iii) Parent will provide each holder of each Stock Option
being assumed with a statement showing the converted number of shares,
the exercise price, and the expiration date for each Assumed Option;
(iv) for any individual whose service is terminated after the
Effective Time and, in connection with such termination, such
individual is eligible to receive severance benefits, such individual's
non-qualified stock options that are exercisable on the date of such
individual's termination shall continue to be exercisable during the
one-year period following such termination; and
51
(v) any other provisions of each Assumed Option shall remain
in effect; provided, however, that in the case of any option to which
Section 421 of the Code applies by reason of the qualifications under
Section 422 or 423 of the Code, the exercise price, the number of
shares purchasable pursuant to such option and the terms and conditions
of exercise of such option shall comply with Section 424(a) of the
Code.
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the Assumed Options, and, as soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or other
appropriate form) with respect to the shares of Parent Common Stock subject to
the Assumed Options, and shall use its reasonable best efforts to maintain the
effectiveness of such registration statement for so long as any of the Assumed
Options remain outstanding.
(e) Parent agrees that its Board of Directors (or the Compensation
Committee thereof) shall, at or prior to the Effective Time, adopt resolutions
specifically approving, for purposes of Rule 16b-3 under the Exchange Act, the
receipt, pursuant to this Section 5.14, of Assumed Options.
Section 5.15 REORGANIZATION. From and after the date hereof and until
the Effective Time, none of Parent, the Company or any of their respective
Subsidiaries shall knowingly (i) take any action, or fail to take any reasonable
action, as a result of which the Merger would fail to qualify as a
reorganization within the meaning of section 368(a) of the Code or (ii) enter
into any contract, agreement, commitment or arrangement to take or fail to take
any such action. Following the Effective Time, Parent shall not knowingly take
any action or knowingly cause any action to be taken which would cause the
Merger to fail to qualify as a reorganization within the meaning of section
368(a) of the Code (and any comparable provisions of applicable state or local
law).
Section 5.16 DIVIDENDS. The Company shall coordinate with Parent
respecting the declaration, setting of record dates and payment dates of
dividends on the Company Common Shares so that holders of Company Common Shares
do not receive dividends on both Company Common Shares and Parent Common Stock
received in the Merger in respect of any calendar quarter or fail to receive a
dividend on Company Common Shares or Parent Common Stock received in the Merger
in respect of any calendar quarter.
ARTICLE 6
CONDITIONS
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver by mutual agreement of the parties at or prior to
the Closing Date of the following conditions:
(a) (i) The Company Requisite Vote shall have been obtained and (ii)
the Parent Requisite Vote shall have been obtained.
(b) (i) The waiting period (and any extension thereof) applicable to
the consummation of the Merger shall have expired or been terminated under the
HSR Act and
52
(ii) any mandatory waiting period or required consent under any applicable
foreign competition or antitrust law or regulation shall have expired or been
obtained except where the failure to observe such waiting period or obtain a
consent referred to in this clause (ii) would not reasonably be expected to
delay or prevent the consummation of the Merger or have a material adverse
effect on the expected benefits of the transactions contemplated by this
Agreement to Parent.
(c) None of the parties hereto shall be subject to any decree, order or
injunction of a court of competent jurisdiction, U.S. or foreign, which
prohibits the consummation of the Merger, and no statute, rule or regulation
shall have been enacted by any governmental authority which prohibits or makes
unlawful the consummation of the Merger.
(d) The Registration Statement shall have become effective and no stop
order with respect thereto shall be in effect and no proceedings for that
purpose shall have been commenced or threatened by the SEC.
(e) The shares of Parent Common Stock to be issued pursuant to the
Merger and shares reserved for issuance pursuant to Assumed Options shall have
been authorized for listing on the AMEX, subject to official notice of issuance.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment or waiver by the Company at or prior to the Closing Date of the
following conditions:
(a) Parent and Merger Sub shall have performed in all material respects
their respective covenants and agreements contained in this Agreement required
to be performed on or prior to the Closing Date and the representations and
warranties of Parent and Merger Sub contained in this Agreement and in any
document delivered in connection herewith (i) to the extent qualified by Parent
Material Adverse Effect or any other materiality qualification shall be true and
correct and (ii) to the extent not qualified by Parent Material Adverse Effect
or any other materiality qualification shall be true and correct in all material
respects, in each case as of the date of this Agreement 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), and the Company
shall have received a certificate of Parent, executed on its behalf by its
President or a Senior Vice President of Parent, dated the Closing Date,
certifying to such effect.
(b) The Company shall have received the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P. or other nationally recognized tax counsel, acting as counsel to the
Company, in form and substance reasonably satisfactory to the Company, on the
basis of certain facts, representations and assumptions set forth in such
opinion, dated the Closing Date, a copy of which shall be furnished to Parent,
to the effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
and (ii) no gain or loss will be recognized by the Company or the stockholders
of the Company to the extent they receive Parent Common Stock in exchange for
Company Common Shares pursuant to the Merger. In rendering such opinion, such
counsel shall be entitled to receive and rely upon representations of officers
of the Company, Merger Sub and Parent as to such matters as such counsel may
reasonably request.
53
(c) The Company Designees shall have been duly elected or appointed as
directors of Parent from and after the Effective Time in accordance with Section
1.7 above.
(d) Either (i) each of the Employment Agreement, as amended by the
Employment Agreement Amendment, and the Severance Agreement, as amended by the
Severance Agreement Amendment, or (ii) the New Employment Agreement, as
applicable, shall not have been repudiated by Parent.
Section 6.3 CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER.
The obligations of Parent and Merger Sub to effect the Merger shall be subject
to the fulfillment or waiver by Parent at or prior to the Closing Date of the
following conditions:
(a) The Company shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date and the representations and warranties of the
Company contained in this Agreement and in any document delivered in connection
herewith (i) to the extent qualified by Company Material Adverse Effect or any
other materiality qualification shall be true and correct and (ii) to the extent
not qualified by Company Material Adverse Effect or any other materiality
qualification shall be true and correct in all material respects, in each case
as of the date of this Agreement 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), and Parent shall have received a
certificate of the Company, executed on its behalf by its President or an
Executive Vice President of the Company, dated the Closing Date, certifying to
such effect.
(b) Parent shall have received the opinion of Mayer, Brown, ▇▇▇▇ & Maw
or other nationally recognized tax counsel, acting as counsel to Parent, in form
and substance reasonably satisfactory to Parent, on the basis of certain facts,
representations and assumptions set forth in such opinion, dated the Closing
Date, a copy of which will be furnished to the Company, to the effect that (i)
the Merger will be treated for federal income tax purposes as a reorganization
within the meaning of section 368(a) of the Code and (ii) no gain or loss will
be recognized by any corporation which is a party to the reorganization. In
rendering such opinion, such counsel shall be entitled to receive and rely upon
representations of officers of the Company, Merger Sub and Parent as to such
matters as such counsel may reasonably request.
(c) Each of the members of the Board of Directors of the Company shall
have tendered his or her resignation, to be effective as of the Effective Time,
in accordance with Section 1.6 above.
(d) Either (i) each of the Employment Agreement, as amended by the
Employment Agreement Amendment, and the Severance Agreement, as amended by the
Severance Agreement Amendment, or (ii) the New Employment Agreement, as
applicable, shall not have been (1) modified in any way or (2) repudiated by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
54
ARTICLE 7
TERMINATION
Section 7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Effective Time by the mutual written
agreement of the Company and Parent approved by action of their respective
Boards of Directors.
Section 7.2 TERMINATION BY PARENT OR THE COMPANY. At any time prior to
the Effective Time, this Agreement may be terminated by the Company or Parent,
in either case by action of its Board of Directors, if:
(a) the Merger shall not have been consummated by September 30, 2003;
provided, however, that the right to terminate this Agreement pursuant to this
clause (a) shall not be available to any party whose failure or whose
affiliates' failure to perform or observe in any material respect any of its
obligations under this Agreement in any manner shall have been the principal
cause of, or resulted in, the failure of the Merger to occur on or before such
date; or
(b) the Company Requisite Vote shall not have been obtained at a
meeting (including adjournments and postponements) of the Company's stockholders
duly convened for the purpose of obtaining the Company Requisite Vote; or
(c) the Parent Requisite Vote shall not have been obtained at a meeting
(including adjournments and postponements) of Parent's stockholders duly
convened for the purpose of obtaining the Parent Requisite Vote; or
(d) a United States federal or state court or foreign court of
competent jurisdiction or United States federal or state or foreign
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (including the
enactment of any statute, rule, regulation, decree or executive order)
permanently restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action (including the enactment of any statute,
rule, regulation, decree or executive order) shall have become final and
non-appealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause (d) shall have complied with Section 5.5 and
with respect to other matters not covered by Section 5.5 shall have used its
reasonable best efforts to remove such injunction, order or decree.
Section 7.3 TERMINATION BY THE COMPANY. At any time prior to the
Effective Time, this Agreement may be terminated by the Company, by action of
its Board of Directors, if:
(a) (i) there has been a breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement set forth in this Agreement or
if any representation or warranty of Parent or Merger Sub shall have become
untrue, in either case such that the conditions set forth in Section 6.2(a)
would not be satisfied and (ii) such breach is not curable, or, if curable, is
not cured within 30 days after written notice of such breach is given to Parent
by the Company; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.3(a) shall not be available to the Company if it, at
such time, is in material breach of any representation,
55
warranty, covenant or agreement set forth in this Agreement such that the
conditions set forth in Section 6.3(a) shall not be satisfied;
(b) prior to obtaining the Parent Requisite Vote, the Board of
Directors of Parent shall have withdrawn, modified, withheld or changed, in a
manner adverse to the Company, such Board's approval or recommendation of this
Agreement or the Merger, or recommended a Parent Superior Proposal, or resolved
to do any of the foregoing; provided that the Company may not exercise this
right of termination if it exercises the Option or the circumstances giving rise
to the right to terminate under this Section 7.3(b) are no longer in effect
because the parties are proceeding on Modified Terms; or
(c) prior to obtaining the Company Requisite Vote, (i) the Company is
the Withdrawing Party pursuant to Section 5.4(b), (ii) Parent had the right to
exercise the Option and (iii) Parent did not exercise the Option within the time
in which it had the right to do so (it being understood that the Company shall
not have the right to terminate this Agreement pursuant to this Section 7.3(c)
unless and until the Company shall have paid Parent any amounts due under
Section 7.5(a)).
Section 7.4 TERMINATION BY PARENT. At any time prior to the Effective
Time, this Agreement may be terminated by Parent, by action of its Board of
Directors, if:
(a) (i) there has been a breach by the Company of any representation,
warranty covenant or agreement set forth in this Agreement or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) would not be satisfied
and (ii) such breach is not curable, or, if curable, is not cured within 30 days
after written notice of such breach is given by Parent to the Company; provided,
however, that the right to terminate this Agreement pursuant to this Section
7.4(a) shall not be available to Parent if it, at such time, is in material
breach of any representation, warranty, covenant or agreement set forth in this
Agreement such that the conditions set forth in Section 6.2(a) shall not be
satisfied;
(b) prior to obtaining the Company Requisite Vote, the Board of
Directors of the Company shall have withdrawn, modified, withheld or changed, in
a manner adverse to Parent, the Board's approval or recommendation of this
Agreement or the Merger, or recommended a Company Superior Proposal, or resolved
to do any of the foregoing; provided that Parent may not exercise this right of
termination if it exercises the Option or the circumstances giving rise to the
right to terminate under this Section 7.4(b) are no longer in effect because the
parties are proceeding on Modified Terms; or
(c) prior to obtaining the Parent Requisite Vote, (i) Parent is the
Withdrawing Party pursuant to Section 5.4(b), (ii) the Company had the right to
exercise the Option and (iii) the Company did not exercise the Option within the
time in which it had a right to do so (it being understood that Parent shall not
have the right to terminate this Agreement pursuant to this Section 7.4(c)
unless and until Parent shall have paid the Company any amounts due under
Section 7.5(b)).
56
Section 7.5 EFFECT OF TERMINATION.
(a) If this Agreement is terminated
(i) by the Company or Parent, after the public announcement of
a Company Acquisition Proposal or after Parent has exercised the
Option, pursuant to Section 7.2(b);
(ii) by Parent pursuant to Section 7.4(b); or
(iii) by the Company pursuant to Section 7.3(c);
then the Company shall pay Parent the Company Termination Amount (as defined
below) and, in addition, reimburse Parent for all expenses incurred by Parent in
connection with this Agreement up to the Reimbursement Maximum Amount (as
defined below) prior to or upon termination of this Agreement. All payments
under this Section 7.5(a) shall be made in cash by wire transfer to an account
designated by Parent at the time of such termination (or, in the case of a
termination pursuant to Section 7.3(c), prior to such termination). The term
"Company Termination Amount" shall mean $139,000,000; provided, however, that
if, upon the termination of this Agreement by the Company or Parent pursuant to
Section 7.2(b) after the public announcement of a Company Acquisition Proposal,
the Board of Directors of the Company shall not have (x) withdrawn, withheld,
modified or changed, in a manner adverse to Parent, the Board's approval or
recommendation of this Agreement or the Merger, (y) recommended a Company
Superior Proposal or (z) resolved to do any of the foregoing, then the "Company
Termination Amount" shall mean $69,500,000 plus, if (x) the Company executes and
delivers an agreement with respect to any Company Acquisition (as defined below)
or (y) a Company Acquisition is consummated, in any such case within 12 months
from the date of termination, an additional $69,500,000 (which additional amount
shall be paid promptly by wire transfer to an account designated by Parent). If
the Board of Directors of the Company recommends the acceptance by the
stockholders of the Company of a third-party tender or exchange offer for
Company Common Shares, such recommendation shall have the same consequences for
purposes of this paragraph as though an agreement with respect to a Company
Acquisition had been executed and delivered. For purposes hereof, "Company
Acquisition" means (i) a consolidation, exchange of shares or merger of the
Company with any person, other than Parent or one of its Subsidiaries or any of
the Company's Subsidiaries, and, in the case of a merger, in which the Company
shall not be the continuing or surviving corporation, (ii) a merger of the
Company with a person, other than Parent or one of its Subsidiaries or any of
the Company's Subsidiaries, in which the Company shall be the continuing or
surviving corporation but the then outstanding Company Common Shares shall be
changed into or exchanged for stock or other securities of the Company or any
other person or cash or any other property or the Company Common Shares
outstanding immediately before such merger shall after such merger represent
less than 50% of the voting stock of the Company outstanding immediately after
the merger, (iii) the acquisition of beneficial ownership of 50% or more of the
voting stock of the Company by any person (as such term is used under Section
13(d) of the Exchange Act), or (iv) a sale, lease or other transfer of 50% or
more of the assets, net revenues or net operating income of the Company and its
Subsidiaries, taken as a whole, to any person, other than Parent or one of its
Subsidiaries or any of the Company's Subsidiaries. The term "Reimbursement
Maximum Amount" shall mean $10,000,000. In addition, the Company shall reimburse
Parent for all expenses incurred by
57
Parent in connection with this Agreement up to the Reimbursement Maximum Amount
if this Agreement has been terminated pursuant to Section 7.2(b) even if Parent
is not entitled to any Company Termination Amount under this Section 7.5(a). The
Company acknowledges that the agreements contained in this Section 7.5(a) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay any amount due pursuant to
this Section 7.5(a), and, in order to obtain such payment, Parent commences a
suit which results in a judgment against the Company for the payment set forth
in this Section 7.5(a), the Company shall pay to Parent its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the Company Termination Amount and other amounts to be reimbursed to Parent
under this Section 7.5(a) from the date payment was required to be made until
the date of such payment at the prime rate of JPMorgan Chase Bank in effect on
the date such payment was required to be made plus one percent (1%). If this
Agreement is terminated pursuant to a provision that calls for a payment to be
made under this Section 7.5(a), it shall not be a defense to the Company's
obligation to pay hereunder that this Agreement could have been terminated under
a different provision or could have been terminated at an earlier or later time.
(b) If this Agreement is terminated
(i) by the Company or Parent, after the public announcement of
a Parent Acquisition Proposal or after the Company has exercised the
Option, pursuant to Section 7.2(c);
(ii) by the Company pursuant to Section 7.3(b); or
(iii) by Parent pursuant to Section 7.4(c);
then Parent shall pay the Company the Parent Termination Amount (as defined
below) and, in addition, reimburse the Company for all expenses incurred by the
Company in connection with this Agreement up to the Reimbursement Maximum Amount
prior to or upon the termination of this Agreement. All payments under this
Section 7.5(b) shall be made in cash by wire transfer to an account designated
by the Company at the time of such termination (or, in the case of a termination
pursuant to Section 7.4(c), prior to such termination). The term "Parent
Termination Amount" shall mean $139,000,000; provided, however, that if, upon
termination of this Agreement by the Company or Parent pursuant to Section
7.2(c) after the public announcement of a Parent Acquisition Proposal, the Board
of Directors of Parent shall not have (x) withdrawn, withheld, modified or
changed, in a manner adverse to the Company, the Board's approval or
recommendation of this Agreement or the Merger, (y) recommended a Parent
Superior Proposal or (z) resolved to do any of the foregoing, then the "Parent
Termination Amount" shall mean $69,500,000 plus, if (x) Parent executes and
delivers an agreement with respect to any Parent Acquisition (as defined below)
or (y) a Parent Acquisition is consummated, in any such case, within 12 months
from the date of termination, an additional $69,500,000 (which additional amount
shall be paid promptly by wire transfer to an account designated by the
Company). If the Board of Directors of Parent recommends the acceptance by the
stockholders of Parent of a third-party tender or exchange offer for shares of
Parent Common Stock, such recommendation shall have the same consequences for
purposes of this paragraph as though an agreement with respect to a Parent
Acquisition had been executed and delivered. For purposes hereof, "Parent
58
Acquisition" means (i) a consolidation, exchange of shares or merger of Parent
with any person, other than the Company or one of its Subsidiaries or any of
Parent's Subsidiaries, and, in the case of a merger, in which Parent shall not
be the continuing or surviving corporation, (ii) a merger of Parent with a
person, other than the Company or one of its Subsidiaries or any of Parent's
Subsidiaries, in which Parent shall be the continuing or surviving corporation
but the then outstanding shares of Parent Common Stock shall be changed into or
exchanged for stock or other securities of Parent or any other person or cash or
any other property or the shares of Parent Common Stock outstanding immediately
before such merger shall after such merger represent less than 50% of the voting
stock of Parent outstanding immediately after the merger, (iii) the acquisition
of beneficial ownership of 50% or more of the voting stock of Parent by any
person (as such term is used under Section 13(d) of the Exchange Act), or (iv) a
sale, lease or other transfer of 50% or more of the assets, net revenues or net
operating income of Parent and its Subsidiaries, taken as a whole, to any
person, other than the Company or one of its Subsidiaries or any of Parent's
Subsidiaries. In addition, Parent shall reimburse the Company for all expenses
incurred by the Company in connection with this Agreement up to the
Reimbursement Maximum Amount if this Agreement has been terminated pursuant to
Section 7.2(c) even if the Company is not entitled to any Parent Termination
Amount under this Section 7.5(b). Parent acknowledges that the agreements
contained in this Section 7.5(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the Company
would not enter into this Agreement; accordingly, if Parent fails promptly to
pay any amount due pursuant to this Section 7.5(b), and, in order to obtain such
payment, the Company commences a suit which results in a judgment against Parent
for the payment set forth in this Section 7.5(b), Parent shall pay to the
Company its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the Parent Termination Amount and other
amounts to be reimbursed to the Company under this Section 7.5(b) from the date
payment was required to be made until the date of such payment at the prime rate
of JPMorgan Chase Bank in effect on the date such payment was required to be
made plus one percent (1%). If this Agreement is terminated pursuant to a
provision that calls for a payment to be made under this Section 7.5(b), it
shall not be a defense to Parent's obligation to pay hereunder that this
Agreement could have been terminated under a different provision or could have
been terminated at an earlier or later time.
Section 7.6 EFFECT OF VOTE. Any right to terminate this Agreement
provided under Sections 7.1, 7.2(a), 7.2(d), 7.3(a) or 7.4(a) hereunder shall be
effective notwithstanding whether the Company Requisite Vote or the Parent
Requisite Vote has been obtained. Any right to terminate this Agreement provided
under Sections 7.2(b) or 7.4(b) hereunder shall be effective notwithstanding
whether the Parent Requisite Vote has been obtained. Any right to terminate this
Agreement provided under Sections 7.2(c) or 7.3(b) hereunder shall be effective
notwithstanding whether the Company Requisite Vote has been obtained.
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 SURVIVAL. (a) In the event of termination of this Agreement
and the abandonment of the Merger pursuant to Article 7, all rights and
obligations of the parties hereto shall terminate, except the obligations of the
parties pursuant to Section 7.5 and Section 5.12 and except for the provisions
of Sections 8.3, 8.4, 8.6, 8.8, 8.9, 8.11, 8.12 and 8.13 and the
59
Confidentiality Agreement; provided that nothing herein shall relieve any party
from any liability for any willful and material breach by such party of any of
its covenants or agreements set forth in this Agreement and, subject to Section
8.12, all rights and remedies of such nonbreaching party under this Agreement in
the case of such a breach, at law or in equity, shall be preserved. The parties
hereto agree that, if this Agreement has been terminated, any remedy or amount
payable pursuant to Section 7.5 or Section 5.12 shall be the sole and exclusive
remedy of the party receiving payment thereunder unless the other party is in
material and willful breach of any of its covenants and agreements set forth in
this Agreement.
(a) None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the consummation of the Merger; provided, however, that Article 2, this
Article 8 and the agreements contained in Sections 5.11-5.14 shall survive the
consummation of the Merger, unless otherwise provided herein.
Section 8.2 NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
(a) if to Parent or Merger Sub:
Devon Energy Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Duke ▇. ▇▇▇▇▇
Senior Vice President and General Counsel
with a copy to:
Mayer, Brown, ▇▇▇▇ & Maw
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
60
(b) if to the Company:
Ocean Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and General Counsel
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
2300 First City Tower
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: T. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 8.3 ASSIGNMENT; BINDING EFFECT; BENEFIT. Except as provided in
Section 1.1 hereof, 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
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except for the provisions of Article 2 and as provided
in Section 5.13 and Section 5.14, notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 8.4 ENTIRE AGREEMENT. This Agreement, the Confidentiality
Agreement (other than Sections 9 and 10 thereof, which are hereby suspended and
shall be of no further force or effect during the term of this Agreement, but
shall come back into effect if this Agreement is terminated without the
consummation of the Merger), the exhibits to this Agreement, the Company
Disclosure Letter, the Parent Disclosure Letter and any documents delivered by
the parties in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT, MERGER SUB NOR THE COMPANY MAKES
ANY OTHER
61
REPRESENTATIONS OR WARRANTIES AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO ANY OTHER
PARTY OR ANY OTHER PARTY'S REPRESENTATIVES OF ANY DOCUMENT OR OTHER INFORMATION
WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
Section 8.5 AMENDMENTS. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of the Company or Parent, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF
DELAWARE. EACH OF THE COMPANY, MERGER SUB AND PARENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COMPETENT COURTS OF THE STATE OF
DELAWARE AND OF THE UNITED STATES OF AMERICA,
IN EITHER CASE LOCATED IN WILMINGTON, DELAWARE (THE "DELAWARE COURTS") FOR ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO
EXCEPT IN SUCH COURTS), WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION IN THE DELAWARE COURTS AND AGREES NOT TO PLEAD OR CLAIM IN ANY
DELAWARE COURT THAT SUCH LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
Section 8.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together shall be deemed to be one and the same instrument.
Section 8.8 HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
62
Section 8.9 INTERPRETATION. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and words denoting any
gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa.
(b) The words "include", "includes" and "including" are not limiting.
(c) The phrase "to the knowledge of" and similar phrases relating to
knowledge of the Company or Parent, as the case may be, shall mean the actual
knowledge of its executive officers.
(d) "Material Adverse Effect" with respect to the Company or Parent
shall mean a material adverse effect respecting (a) the business, assets and
liabilities (taken together) or financial condition of a party and its
Subsidiaries on a consolidated basis or (b) the ability of the party to
consummate the transactions contemplated by this Agreement or fulfill the
conditions to closing set forth in Article 6, except to the extent (in the case
of either clause (a) or clause (b) above) that such adverse effect results from
(i) general economic, regulatory or political conditions or changes therein in
the United States or the other countries in which such party operates; (ii)
financial or securities market fluctuations or conditions; (iii) changes in, or
events or conditions affecting, the oil and gas industry generally; (iv) the
announcement or pendency of the Merger or compliance with the terms and
conditions of Section 5.1 hereof; or (v) stockholder class action litigation
arising from allegations of a breach of fiduciary duty relating to this
Agreement. "Company Material Adverse Effect" and "Parent Material Adverse
Effect" mean a Material Adverse Effect with respect to the Company and Parent,
respectively.
(e) "Person" or "person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or other entity or
organization.
(f) "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.
Section 8.10 WAIVERS. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder. The failure of any party to this Agreement to assert any of
its rights under this Agreement shall not constitute a waiver of such rights.
Section 8.11 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
63
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.
Section 8.12 ENFORCEMENT OF AGREEMENT; LIMITATION ON DAMAGES. The
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any Delaware Court, this being in addition to any other remedy to which they are
entitled at law or in equity. IN NO EVENT SHALL ANY PARTY BE LIABLE IN RESPECT
OF THIS AGREEMENT FOR PUNITIVE OR EXEMPLARY DAMAGES.
Section 8.13 OBLIGATION OF MERGER SUB. Whenever this Agreement requires
Merger Sub (or its successors) to take any action prior to the Effective Time,
such requirement shall be deemed to include an undertaking on the part of Parent
to cause Merger Sub to take such action and a guarantee of the performance
thereof.
Section 8.14 EXTENSION; WAIVER. At any time prior to the Effective
Time, each party may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party 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 an instrument in
writing signed on behalf of such party.
[SIGNATURE PAGE FOLLOWS]
64
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
DEVON ENERGY CORPORATION
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board, President and
Chief Executive Officer
DEVON NEWCO CORPORATION
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
OCEAN ENERGY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board, President and
Chief Executive Officer
EXHIBIT A
CERTIFICATE OF INCORPORATION
OCEAN ENERGY, INC.
ARTICLE I
NAME
The name of the corporation is Ocean Energy, Inc. (the "Corporation").
ARTICLE II
REGISTERED AGENT
The address of the registered office of the Corporation in the State of
Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, in the City of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇. The name of the registered agent of the Corporation at such address is
The Corporation Trust Company.
ARTICLE III
PURPOSE
The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful business, act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is 51,000 shares, consisting of 50,000 shares of
Preferred Stock of the par value of $1.00 per share and 1,000 shares of Common
Stock of the par value of $.01 per share.
The following is a statement fixing certain of the designations and
powers, voting powers, preferences, and relative, participating, optional or
other rights of the Preferred Stock and the Common Stock of the Corporation, and
the qualifications, limitations or restrictions thereof, and the authority with
respect thereto expressly granted to the Board of Directors of the Corporation
to fix any such provisions not fixed by this Certificate of Incorporation:
A. Preferred Stock
The Board of Directors is hereby expressly vested with the authority to
adopt a resolution or resolutions providing for the issuance of authorized but
unissued shares of Preferred Stock, which shares may be issued from time to time
in one or more series and in such amounts as may be determined by the Board of
Directors in such resolution or resolutions. The powers, voting powers,
designations, preferences, and relative, participating, optional or other
rights, if any, of each series of Preferred Stock and the qualifications,
limitations or restrictions, if any, of such powers, preferences and/or rights
(collectively the "Series Terms"), shall be such as are stated and expressed in
a resolution or resolutions providing for the creation or revision of such
Series Terms (a "Preferred Stock Series Resolution") adopted by the Board of
Directors (or a committee of the Board of Directors to which such responsibility
is specifically and lawfully
delegated). The powers of the Board with respect to the Series Terms of a
particular series shall include, but not be limited to, determination of the
following:
(i) The number of shares constituting that series and the
distinctive designation of that series, or any increase or
decrease (but not below the number of shares thereof then
outstanding) in such number;
(ii) The dividend rate or method of determining dividends on the
shares of that series, any conditions upon which such
dividends shall be payable, and the date or dates or the
method for determining the date or dates upon which such
dividends shall be payable, whether such dividends, if any,
shall be cumulative, and, if so, the date or dates from which
dividends payable on such shares shall accumulate, and the
relative rights of priority, if any, of payment of dividends
on shares of that series;
(iii) The voting rights and powers, if any, of the holders of any
series of Preferred Stock generally or with respect to any
particular matter, which may be less than, equal to or greater
than one vote per share, and which may, without limiting the
generality of any other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation generally or under such specific
circumstances and on such conditions, as shall be provided in
the resolution or resolutions of the Board of Directors (or
such committee of the Board of Directors, as the case may be)
adopted pursuant hereto, including, without limitation, in the
event there shall have been a default in the payment of
dividends on or redemption of any one or more series of
Preferred Stock;
(iv) Whether that series shall have conversion or exchange
privileges with respect to shares of any other class or
classes of stock or of any other series of any class of stock,
and, if so, the terms and conditions of such conversion or
exchange, including provision for adjustment of the conversion
or exchange rate upon occurrence of such events as the Board
of Directors shall determine;
(v) Whether the shares of that series shall be redeemable, and, if
so, the price or prices and the terms and conditions of such
redemption, including their relative rights of priority, if
any, of redemption, the date or dates upon or after which they
shall be redeemable, provisions regarding redemption notices,
and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different
redemption dates;
(vi) Whether that series shall have a sinking fund for the
redemption or repurchase of shares of that series, and, if so,
the terms, conditions and amount of such sinking fund;
(vii) The rights, if any, of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution, or
winding up of the Corporation or in the event of any merger or
consolidation of or sale of assets by the Corporation, and the
relative rights of priority, if any, of payment of shares of
that series;
2
(viii) The conditions or restrictions upon the creation of
indebtedness of the Corporation or upon the issuance of
additional Preferred Stock or other capital stock ranking on a
parity therewith, or prior thereto, with respect to dividends
or distribution of assets upon liquidation;
(ix) The conditions or restrictions with respect to the issuance
of, payment of dividends upon, or the making of other
distributions to, or the acquisition or redemption of, shares
ranking junior to the Preferred Stock or to any series thereof
with respect to dividends or distribution of assets upon
liquidation; and
(x) Any other designations, powers, preferences, and relative,
participating, optional or other rights, including, without
limitation, any qualifications, limitations, or restrictions
thereof.
Subject to the provisions of this Article IV, shares of one or more
series of Preferred Stock may be authorized or issued from time to time as shall
be determined by and for such consideration as shall be fixed by the Board of
Directors (or a designated committee thereof), in an aggregate amount not
exceeding the total number of shares of Preferred Stock authorized by this
Certificate of Incorporation. The number of authorized shares of Preferred Stock
may be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holder is
required pursuant to any Preferred Stock Series Resolution. Except as required
by law, holders of Preferred Stock shall not be entitled to receive notice of
any meeting of stockholders at which they are not entitled to vote. Except in
respect of series particulars fixed by the Board of Directors as permitted
hereby, all shares of Preferred Stock shall be of equal rank and shall be
identical. All shares of any one series of Preferred Stock so designated by the
Board of Directors shall be alike in every particular, except that shares of any
one series issued at different times may differ as to the dates from which
dividends thereon shall be cumulative.
B. Common Stock
(i) Subject to the provisions of any Preferred Stock Series
Resolution, the Board of Directors may, in its discretion, out
of funds legally available for the payment of dividends and at
such times and in such manner as determined by the Board of
Directors, declare and pay dividends on the Common Stock of
the Corporation.
(ii) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, after
payment or provision for payment of the debts and other
liabilities of the Corporation and payment or setting aside
for payment of any preferential amount due to the holders of
any other class or series of stock, the holders of the Common
Stock shall be entitled to receive ratably any or all assets
remaining to be paid or distributed.
(iii) Subject to any special voting rights set forth in any
Preferred Stock Series Resolution, the holders of the Common
Stock of the Corporation shall be entitled at all meetings of
stockholders to one vote for each share of such stock held by
3
them. Except as may be provided in a Preferred Stock Series
Resolution, the Common Stock shall have the exclusive right to
vote for the election of directors and for all other purposes.
C. No Preemptive Rights
No holder of shares of stock of the Corporation shall have any
preemptive or other rights, except as such rights are expressly provided by
contract, to purchase or subscribe for or receive any shares of any class, or
series thereof, of stock of the Corporation, whether now or hereafter
authorized, or any warrants, options, bonds, debentures or other securities
convertible into, exchangeable for or carrying any right to purchase any shares
of any class, or series thereof, of stock; but such additional shares of stock
and such warrants, options, bonds, debentures or other securities convertible
into, exchangeable for or carrying any right to purchase any shares of any
class, or series thereof, of stock may be issued or disposed of by the Board of
Directors to such persons, and on such terms and for such lawful consideration,
as in its discretion it shall deem advisable or as to which the Corporation
shall have by binding contract agreed.
D. Registered Owner
The Corporation shall be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes and shall
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person, whether or not the Corporation shall have
notice thereof, except as expressly provided by applicable law.
ARTICLE V
BOARD OF DIRECTORS
The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
The number and terms of the Board of Directors of the Corporation and
the procedures to elect directors, to remove directors, and to fill vacancies in
the Board of Directors shall be as follows:
(i) Subject to the rights of holders of any series of Preferred Stock
to elect additional directors under specified circumstances, the number
of directors that shall constitute the whole Board of Directors shall
from time to time be fixed exclusively by the Board of Directors by a
resolution adopted by a majority of the whole Board of Directors
serving at the time of that vote. No decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Directors of the Corporation need not be elected by written
ballot unless the Bylaws of the Corporation otherwise provide.
(ii) Vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office, or
other cause and newly-created directorships resulting from any increase
in the authorized number of directors may only be filled by no less
than a majority vote of the remaining directors then in office, though
less than a quorum, or by the sole remaining director (but not by the
stockholders except as required
4
by law), and each director shall hold office until the first meeting of
stockholders held after his election for the purpose of electing
directors and until his successor is elected and qualified or until his
earlier death, resignation, or removal from office.
Notwithstanding the foregoing, whenever the holders of any one or more
series of Preferred Stock issued by the Corporation shall have the right, voting
separately by series, to elect one or more directors at an annual or special
meeting of stockholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of such
series of Preferred Stock.
ARTICLE VI
INDEMNIFICATION
The Corporation shall indemnify, in accordance with and to the full
extent now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of his acting as a director or officer of the
Corporation (and the Corporation, in the discretion of the Board of Directors,
may so indemnify a person by reason of the fact that he is or was an employee or
agent of the Corporation or is or was serving at the request of the corporation
in any other capacity for or on behalf of the Corporation) against any liability
or expense actually and reasonably incurred by such person in respect thereof;
provided, however, the Corporation shall be required to indemnify an officer or
director in connection with an action, suit or proceeding initiated by such
person only if such action, suit or proceeding was authorized by the Board of
Directors of the Corporation. Such indemnification is not exclusive of any other
right to indemnification provided by law or otherwise. The right to
indemnification conferred by this Article VI shall be deemed to be a contract
between the Corporation and each person referred to herein.
ARTICLE VII
LIMITED LIABILITY OF DIRECTORS
No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty by such director
as a director, except for liability (a) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the General Corporation Law of the State of
Delaware, or (d) for any transaction from which the director derived an improper
personal benefit. Any amendment or repeal of this Article VII shall be
prospective only, and neither the amendment, modification nor repeal of this
Article VII shall eliminate or reduce the effect of this Article VII in respect
of any matter occurring, or any cause of action, suit or claim that, but for
this Article VII would accrue or arise, prior to such amendment, modification or
repeal. If the General Corporation Law of the State of Delaware hereafter is
amended to authorize corporate action further eliminating or limiting the
liability of directors, then the liability of a director of the Corporation, in
addition to the limitation on personal liability provided herein, shall be
eliminated or limited to the fullest extent permitted by the General Corporation
Law of the State of Delaware, as so amended from time to time.
5
ARTICLE VIII
POWER TO AMEND BYLAWS
In furtherance and not in limitation of the powers conferred by
statute, the Bylaws of the Corporation may be altered, amended or repealed and
new Bylaws may be adopted by (i) the Board of Directors in accordance with the
Bylaws or (ii) the stockholders of the Corporation by an affirmative vote of the
holders of at least a majority of the votes of the outstanding shares of the
class or classes or series of stock then entitled to be voted thereon, voting
together as a single class.
ARTICLE IX
AMENDMENT OF CERTIFICATE OF INCORPORATION
Subject to the provisions of this Certificate of Incorporation and
applicable law, the Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and any other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and, all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the right
reserved in this Article IX.
6
EXHIBIT B
THIRD AMENDMENT TO
EMPLOYMENT AGREEMENT
WHEREAS, Ocean Energy, Inc. ("OEI") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Executive")
have heretofore entered into an Employment Agreement (the "Agreement"),
initially effective as of September 16, 1998; and
WHEREAS, the Agreement has been subsequently amended on two occasions
and OEI, Devon Energy Corporation ("Devon") and Executive desire to further
amend the Agreement in certain respects, contingent on, and effective upon, the
consummation of the transactions (the "Merger") contemplated by the Agreement
and Plan of Merger by and among Devon, Devon Newco Corporation, and OEI dated as
of February 23, 2003, as the same may be amended from time to time (the "
Merger
Agreement");
NOW, THEREFORE, the Agreement is amended as follows, effective as of
the "Effective Time" (which, for purposes of this Amendment, shall have the
meaning ascribed to it in the
Merger Agreement):
1. References to the "Company" in the Agreement shall mean Devon
Energy Corporation.
2. Paragraph 1.2 of the Agreement shall be amended to read as
follows:
"1.2 POSITIONS. Effective as of the Effective Time, the
Company shall cause Executive to be appointed the President and Chief
Operating Officer of the Company. The Company shall maintain Executive
in such positions, or such other positions as the parties mutually may
agree, for the full term of Executive's employment hereunder. The term
"Effective Time" shall have the meaning ascribed to it in the Agreement
and Plan of Merger by and among Devon Energy Corporation, Devon Newco
Corporation, and Ocean Energy, Inc. dated as of February 23, 2003, as
the same may be amended from time to time (the "
Merger Agreement")."
3. Article I is amended by adding thereto a new Paragraph 1.6,
Office Location, to read as follows:
"1.6 OFFICE LOCATION. The Company's principal executive
offices shall be maintained in the greater Oklahoma City,
Oklahoma area. It is anticipated that Executive will regard
Oklahoma City as the primary location of his office. Prior to
the relocation of his residence to Oklahoma City, the Company
shall provide Executive with appropriate airplane
transportation between Oklahoma City and Houston, Texas, or
promptly reimburse
Executive for the cost thereof. In addition, prior to
Executive's relocation to the greater Oklahoma City area (as
provided below), the Company shall provide Executive with, or
promptly reimburse Executive for the cost of, a temporary
rented, furnished apartment or condominium in the greater
Oklahoma City area and the use of an automobile while there
(the "Temporary Benefits"). All utility expenses, gasoline,
parking and other expenses incurred by Executive and
reasonably related to the Temporary Benefits shall be paid by
the Company. The Temporary Benefits provided Executive shall
be of a nature and have a status appropriate for Executive's
position with the Company. To the extent that the Company's
provision or payment of any of these items is taxable
compensation to Executive, the Company shall pay Executive, at
such applicable times, an additional amount in cash such that
the benefits are provided to Executive without any "tax cost,"
whether federal, state or otherwise, to him.
By May 1, 2004, Executive shall notify the Company
whether he is relocating to the greater Oklahoma City area or
exercising his right to terminate pursuant to paragraph
2.3(i). If Executive notifies the Company that he is
relocating, he shall use his reasonable best efforts to so
relocate by May 31, 2004, and if Executive has not relocated
to the greater Oklahoma City area by June 30, 2004, the
Company may terminate Executive's employment and such
termination shall be deemed to have been for cause pursuant to
paragraph 2.2(iii)."
4. Paragraph 2.1 is amended by adding a new sentence thereto to
read as follows:
"Notwithstanding the foregoing, the term of this Agreement
shall not expire prior to the fifth anniversary of the
Effective Time, unless sooner terminated pursuant to the other
provisions hereof."
5. Item (D) of Paragraph 2.3(i) is amended to read as follows:
"(D) the Company's principal executive offices cease to be in
the greater Oklahoma City area or Executive is required to
work at an office other than the principal executive offices
of the Company, excluding business travel reasonably
consistent with Executive's past practice;"
6. Paragraph 2.3 is further amended by adding thereto a new
sentence to read as follows:
"The Company and Executive agree that Executive may not
terminate his employment pursuant to paragraph 2.3(i) due to a
change in his duties, responsibilities, positions or principal
place of employment based on the same as they existed
immediately prior to the Effective Time; provided, however,
the foregoing shall not prevent Executive from terminating
pursuant to paragraph 2.3(i)
-2-
based on any change from those duties, responsibilities,
positions or principle place of employment as in effect
immediately following the Effective Time; and provided,
further, that upon not less than four weeks notice, Executive
may in all events terminate his employment on May 1, 2004 and
such termination shall be deemed to be for a reason
encompassed by paragraph 2.3(i) for which there is no
correction by the Company and upon such termination the
Company shall provide Executive with the Termination
Benefits."
7. Paragraph 3.9(v) is amended by adding thereto the following:
"Notwithstanding the foregoing or anything in the
ESRP or Executive's Membership Agreement thereunder to the
contrary, Executive may elect, at any time prior to the
commencement of his benefit under the ESRP in an annuity form,
to receive an amount equal to 95% of the Actuarial Equivalent
(as such term is defined in the ESRP) of his then vested
Accrued Benefit under the ESRP in a single lump sum. Upon such
election, the non-vested portion, if any, of Executive's
Accrued Benefit shall be forfeited. The Company shall cause
the ESRP and Executive's Membership Agreement thereunder to be
amended as necessary to reflect this Paragraph 3.9(v)."
8. Notwithstanding anything herein to the contrary, the Company
continues to have the right to terminate Executive's employment at any
time pursuant to paragraph 2.2 and any such termination by the Company,
other than pursuant to paragraph 2.2(iii) or (iv), shall entitle
Executive to the Termination Benefits.
9. As amended hereby, the Agreement is specifically ratified and
reaffirmed. If the
Merger Agreement is terminated without the
consummation of the transactions contemplated thereby, this Amendment
shall be null and void and of no effect.
[SIGNATURE PAGE FOLLOWS]
-3-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
this February __, 2003, to be effective as of the Effective Time.
Ocean Energy, Inc.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Devon Energy Corporation
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBIT C
SECOND AMENDMENT TO
SEVERANCE AGREEMENT
WHEREAS, Ocean Energy, Inc. ("OEI") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Executive")
have heretofore entered into a Severance Agreement (the "Agreement"), initially
effective as of August 25, 1998; and
WHEREAS, the Agreement has been subsequently amended, and OEI, Devon
Energy Corporation ("Devon") and Executive desire to further amend the Agreement
in certain respects, contingent on, and effective upon, the consummation of the
transactions (the "Merger") contemplated by the Agreement and Plan of Merger by
and among Devon, Devon Newco Corporation, and OEI dated as of February 23, 2003,
as the same may be amended from time to time (the "
Merger Agreement");
NOW, THEREFORE, the Agreement is amended as follows, effective as of
the "Effective Time" (which, for purposes of this Amendment, shall have the
meaning ascribed to it in the
Merger Agreement):
1. References to the "Company" in the Agreement shall mean Devon
Energy Corporation.
2. Clauses (i), (ii) and (iv) of Section 1(a) of the Agreement
shall be amended to read as follows:
"(i) Executive is assigned any duties as the President and
Chief Operating Officer of the Company that are significantly
less than or below the duties generally associated with such
positions in a comparable company;"
(ii) the sum of Executive's annual base salary and bonus for
2003 or 2004 is less than the average of the total base salary
and bonus paid to Executive in 2001 and 2002;
. . . .
(iv) Executive's principal place of employment is changed to a
location other than the principal executive offices of the
Company or such Company offices are changed to a location
other than the greater Oklahoma City area."
3. The Company agrees that the Merger constitutes a Change of
Control for purposes of this Agreement, as hereby amended, and the
two-year termination "protected" period provided in Section 3 with
respect to such Change of Control shall begin on the Effective Time.
4. As amended hereby, the Agreement is specifically ratified and
reaffirmed. If the
Merger Agreement is terminated without the
consummation of the transactions contemplated thereby, this Amendment
shall be null and void and of no effect.
[SIGNATURE PAGE FOLLOWS]
-2-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
this February __, 2003, to be effective as of the Effective Time.
Ocean Energy, Inc.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Devon Energy Corporation
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit D
FORM OF COMPANY AFFILIATE'S LETTER
This SHAREHOLDER AGREEMENT, dated as of _________, 2003 (this
"Agreement") is among Devon Energy Corporation, a Delaware corporation
("Parent"), and the undersigned shareholder ("Shareholder") of Ocean Energy,
Inc., a Delaware corporation (the "Company"). Capitalized terms not otherwise
defined in this Agreement have the meanings ascribed to them in the
Merger
Agreement.
RECITALS
A. Parent, Devon NewCo Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and the Company have entered into an
Agreement and Plan of Merger, dated as of February 23, 2003 (the "
Merger
Agreement"), pursuant to which Merger Sub will merge (the "Merger") with and
into the Company, with the Company surviving the Merger.
B. Pursuant to the
Merger Agreement, at the Effective Time, outstanding
Company Common Shares will be converted into shares of Parent Common Stock;
C. The execution and delivery of this Agreement by Shareholder is a
material inducement to Parent to enter into the Merger Agreement; and
D. Shareholder has been advised that Shareholder may be deemed to be an
"affiliate" of the Company, as such term is used (i) for purposes of paragraphs
(c) and (d) of Rule 145 of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act").
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. Acknowledgments by Shareholder. Shareholder acknowledges and
understands that the representations, warranties and covenants made by
Shareholder set forth in this Agreement will be relied upon by Parent, the
Company, and their respective affiliates and counsel, and that substantial
losses and damages may be incurred by such persons if Shareholder's
representations, warranties or covenants are breached. Shareholder has carefully
read this Agreement and the Merger Agreement and has consulted with such legal
counsel and financial advisers as Shareholder has deemed appropriate in
connection with the execution of this Agreement.
2. Compliance with Rule 145 and the Act.
(a) Shareholder has been advised that (i) the issuance of shares
of Parent Common Stock in connection with the Merger is expected to be effected
pursuant to a Registration Statement filed by Parent on Form S-4, and the resale
of such shares will be subject to the restrictions set forth in Rule 145 under
the Act unless such shares are otherwise transferred
Exhibit D-1
pursuant to an effective registration statement under the Act or an appropriate
exemption from registration, and (ii) Shareholder may be deemed to be an
affiliate of the Company. Shareholder accordingly agrees not to sell, pledge,
transfer or otherwise dispose of any shares of Parent Common Stock issued to
Shareholder in the Merger, unless (i) such sale, pledge, transfer or other
disposition is made in conformity with the requirements of Rule 145 under the
Act, (ii) such sale, pledge, transfer or other disposition is made pursuant to
an effective registration statement under the Act, or (iii) Shareholder delivers
to Parent a written opinion of counsel, in form and substance reasonably
acceptable to Parent to the effect that such sale, pledge, transfer or other
disposition is otherwise exempt from registration under the Act.
(b) Parent will give stop transfer instructions to its transfer
agent with respect to any Parent Common Stock received by Shareholder pursuant
to the Merger and there will be placed on the certificates representing such
Parent Common Stock, or any substitutions therefor, legends stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES, AND MAY ONLY BE TRANSFERRED IN CONFORMITY WITH RULE 145,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR IN ACCORDANCE WITH
A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, IN
FORM AND SUBSTANCE TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend), and Parent shall so instruct its transfer
agent, if a registration statement respecting the sale of the shares has been
declared effective under the Act or if Shareholder delivers to Parent (i)
satisfactory written evidence that the shares have been sold in compliance with
Rule 145 (in which case, the substitute certificate will be issued in the name
of the transferee), or (ii) an opinion of counsel, in form and substance
reasonably acceptable to Parent to the effect that sale of the shares by the
holder thereof is no longer subject to Rule 145.
3. Miscellaneous.
(a) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document. Delivery of an executed counterpart of
this Agreement by facsimile shall be effective to the fullest extent permitted
by applicable law.
(b) This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties and their respective successors and
assigns. As used in this Agreement, the term "successors and assigns" means,
where the context to permits, heirs, executors, administrators, trustees and
successor trustees, and personal and other representatives.
(c) This Agreement shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and in accordance with
the laws of the State of Delaware.
Exhibit D-2
The parties irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America, in either case located in Wilmington, Delaware (the "Delaware Courts")
for any litigation arising out of or relating to this Agreement and the
transactions contemplated by this Agreement (and agree not to commence any
litigation relating thereto except in such Delaware Courts), waive any objection
to the laying of venue of any such litigation in the Delaware Courts and agree
not to plead or claim in any Delaware Court that such litigation brought therein
has been brought in an inconvenient forum.
(d) If any term, provision, covenant, or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void, or unenforceable, the remainder of
the terms, provisions, covenants, and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected,
impaired, or invalidated.
(e) Counsel to the parties to the Merger Agreement shall be
entitled to rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or any right
waived or any obligations excused, except by a written agreement signed by both
parties.
(g) Notwithstanding any other provision contained in this
Agreement, this Agreement and all obligations under this Agreement shall
terminate upon the termination of the Merger Agreement in accordance with its
terms.
(h) From and after the Effective Time of the Merger and as long
as is necessary in order to permit Shareholder to sell Parent Common Stock held
by Shareholder pursuant to Rule 145 and, to the extent applicable, Rule 144
under the Act, Parent will file on a timely basis all reports required to be
filed by it pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, as the same shall be in effect at the time,
and shall otherwise make available adequate public information regarding Parent
in such manner as may be required to satisfy the requirements of paragraph (c)
of Rule 144 under the Act.
[SIGNATURE PAGE FOLLOWS]
Exhibit D-3
IN WITNESS WHEREOF, this Agreement is executed as of the date first
stated above.
DEVON ENERGY CORPORATION, a Delaware
corporation
By:
---------------------------------
Name:
Title:
SHAREHOLDER
------------------------------------
Name:
Number of Shares Owned:
-------------
Number of Shares Issuable upon
Exercise of Stock Options:
----------
Exhibit D-4