APPENDIX A
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AGREEMENT AND PLAN OF MERGER
AMONG
VISTA RESOURCES PARTNERS, L.P.,
MIDLAND RESOURCES, INC.,
VISTA ENERGY RESOURCES, INC.,
AND
MIDLAND MERGER CO.
DATED AS OF MAY 22, 1998
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TABLE OF CONTENTS
PAGE NO.
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ARTICLE 1
DEFINITIONS
1.1 Defined Terms..................................................... A-7
1.2 References and Titles............................................. A-13
ARTICLE 2
THE MERGER AND EXCHANGES
2.1 The Midland Merger................................................ A-14
2.2 Effect of the Midland Merger...................................... A-14
2.3 Certificates of Incorporation of Newco, Midland and Newco Sub..... A-14
2.4 Bylaws............................................................ A-14
2.5 Directors......................................................... A-14
2.6 Officers.......................................................... A-15
2.7 Effect on Securities.............................................. A-15
2.8 Vista Exchange Agreements......................................... A-16
2.9 Adjustments....................................................... A-17
2.10 Exchange of Certificates.......................................... A-17
2.11 Closing........................................................... A-20
2.12 Effective Time of the Merger...................................... A-20
2.13 Shareholder Approvals Obtained.................................... A-20
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Midland......................... A-20
(a) Organization, Standing and Power............................ A-20
(b) Capital Structure........................................... A-21
(c) Authority; No Violations; Consents and Approvals............ A-22
(d) SEC Documents............................................... A-23
(e) Information Supplied........................................ A-23
(f) Absence of Certain Changes or Events........................ A-24
(g) No Undisclosed Material Liabilities......................... A-24
(h) No Default.................................................. A-24
(i) Compliance with Applicable Laws............................. A-24
(j) Litigation.................................................. A-25
(k) Taxes....................................................... A-25
(l) Employee Benefit Matters.................................... A-27
(m) Labor Matters............................................... A-28
(n) Intangible Property......................................... A-29
(o) Environmental Matters....................................... A-29
(p) Insurance................................................... A-31
(q) Absence of Certain Changes or Events........................ A-31
(r) Governmental Regulation..................................... A-32
(s) No Restrictions............................................. A-32
(t) Audits and Settlements...................................... A-33
(u) Employment Contracts and Benefits........................... A-33
(v) Accounts Receivable......................................... A-33
(w) Title to Assets............................................. A-33
(x) Midland Engineering Report.................................. A-33
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(y) Oil and Gas Operations...................................... A-34
(z) Hydrocarbon Sales and Purchase Agreements................... A-34
(aa) Financial and Commodity Hedging............................. A-35
(bb) Committed Capital Expenditures.............................. A-35
(cc) Business Relations.......................................... A-35
(dd) Books and Records........................................... A-35
(ee) Brokers..................................................... A-35
(ff) Vote Required............................................... A-36
(gg) Disclosure and Investigation................................ A-36
(hh) Fairness Opinion............................................ A-36
3.2 Representations and Warranties of Vista........................... A-36
(a) Organization, Standing and Power............................ A-36
(b) Capital Structure........................................... A-36
(c) Authority; No Violations; Consents and Approvals............ A-37
(d) Financial Statements and Material Agreements................ A-38
(e) Information Supplied........................................ A-38
(f) Absence of Certain Changes or Events........................ A-38
(g) No Undisclosed Material Liabilities......................... A-38
(h) No Default.................................................. A-39
(i) Compliance with Applicable Laws............................. A-39
(j) Litigation.................................................. A-39
(k) Taxes....................................................... A-39
(l) Employee Benefit Matters.................................... A-41
(m) Labor Matters............................................... A-42
(n) Intangible Property......................................... A-43
(o) Environmental Matters....................................... A-43
(p) Insurance................................................... A-44
(q) Absence of Certain Changes or Events........................ A-44
(r) Governmental Regulation..................................... A-45
(s) No Restrictions............................................. A-45
(t) Audits and Settlements...................................... A-46
(u) Employment Contracts and Benefits........................... A-46
(v) Accounts Receivable......................................... A-46
(w) Title to Assets............................................. A-46
(x) Vista Engineering Report.................................... A-46
(y) Oil and Gas Operations...................................... A-47
(z) Hydrocarbon Sales and Purchase Agreements................... A-47
(aa) Financial and Commodity Hedging............................. A-48
(bb) Committed Capital Expenditures.............................. A-48
(cc) Business Relations.......................................... A-48
(dd) Books and Records........................................... A-48
(ee) Brokers..................................................... A-49
(ff) Disclosure and Investigation................................ A-49
3.3 Representations and Warranties of Newco and Merger Sub............ A-49
(a) Organization, Standing and Corporate Power.................. A-49
(b) Capital Structure........................................... A-49
(c) Authority; No Violations; Consents and Approvals............ A-50
(d) No Prior Activities......................................... A-50
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ARTICLE 4
COVENANTS
4.1 Conduct of Business by Vista and Midland Pending Closing.......... A-50
4.2 Access to Assets, Personnel, and Information...................... A-53
4.3 No Solicitation by Midland........................................ A-55
4.4 No Solicitation by Vista.......................................... A-56
4.5 Midland Shareholders Meeting...................................... A-56
4.6 S-4 and Proxy Statement........................................... A-57
4.7 Stock Exchange Listing............................................ A-58
4.8 Additional Arrangements........................................... A-58
4.9 Agreements of Rule 145 Affiliates................................. A-58
4.10 Public Announcements.............................................. A-58
4.11 Notification of Certain Matters................................... A-59
4.12 Payment of Expenses............................................... A-59
4.13 Indemnification................................................... A-59
4.14 Indemnification Agreements........................................ A-60
4.15 Registration of Shares to be Issued Pursuant to Stock Options..... A-60
4.16 Registration Rights Agreement..................................... A-60
4.17 Resignations of Officers and Directors of Midland................. A-61
4.18 Newco Long-Term Incentive Plan.................................... A-61
4.19 Midland Option Exercise Agreements................................ A-61
4.20 Transactions with Affiliates...................................... A-61
ARTICLE 5
CONDITIONS
5.1 Conditions to Each Party's Obligation to Effect the Merger........ A-61
(a) Shareholder Approval........................................ A-61
(b) Fairness Opinion............................................ A-61
(c) Tax Opinion................................................. A-61
(d) Exchange Listing............................................ A-61
(e) Other Approvals............................................. A-61
(f) Securities Law Matters...................................... A-62
(g) No Injunctions or Restraints................................ A-62
5.2 Conditions of Obligations of Vista, Newco, and Merger Sub......... A-62
(a) Representations and Warranties.............................. A-62
(b) Performance of Covenants and Agreements..................... A-62
(c) Comfort Letter.............................................. A-62
(d) Dissenters' Rights.......................................... A-62
(e) Legal Opinion............................................... A-62
(f) No Adverse Change........................................... A-62
(g) Midland Option Exercise Agreements.......................... A-63
5.3 Conditions of Obligations of Midland.............................. A-63
(a) Representations and Warranties.............................. A-63
(b) Performance of Covenants and Agreements..................... A-63
(c) Legal Opinion............................................... A-63
(d) Comfort Letter.............................................. A-63
(e) No Adverse Change........................................... A-63
(f) Exchange Agreements......................................... A-63
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ARTICLE 6
TERMINATION
6.1 Termination Rights................................................ A-64
6.2 Effect of Termination............................................. A-65
ARTICLE 7
MISCELLANEOUS
7.1 Amendment......................................................... A-65
7.2 Extension; Waiver................................................. A-65
7.3 Nonsurvival of Representations, Warranties, Covenants, and
Agreements........................................................ A-65
7.4 Notices........................................................... A-65
7.5 Counterparts...................................................... A-66
7.6 Severability...................................................... A-66
7.7 Entire Agreement; No Third Party Beneficiaries.................... A-66
7.8 Applicable Law.................................................... A-66
7.9 No Remedy in Certain Circumstances................................ A-66
7.10 Enforcement of Agreement.......................................... A-66
7.11 Assignment........................................................ A-67
7.12 Waivers........................................................... A-67
7.13 Certain Provisions Inapplicable................................... A-67
7.14 Termination of Letter of Intent and Confidentiality Agreement..... A-67
EXHIBITS:
Exhibit A -- Form of Midland Exchange Agreement
Exhibit B -- Form of Midland Voting Agreement
Exhibit C -- Form of Newco Warrant
Exhibit D -- Form of Midland Option Exercise Agreement
Exhibit E -- Form of Vista Exchange Agreement
Exhibit 3.3(a) -- Newco Certificate of Incorporation and Bylaws
Exhibit 4.9(a) -- Form of Vista Affiliate's Agreement
Exhibit 4.9(b) -- Form of Midland Affiliate's Agreement
-- Form of Indemnification Agreement for Vista Officers and
Exhibit 4.14(a) Directors
-- Form of Indemnification Agreement for Midland Officers
Exhibit 4.14(b) and Directors
Exhibit 4.16(a) -- Form of Vista Registration Rights Agreement
Exhibit 4.16(b) -- Form of Midland Registration Rights Agreement
Exhibit 4.17(a) -- Form of Termination Agreement for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Exhibit 4.17(b) -- Form of Termination Agreement for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Exhibit 4.18 -- Form of Newco Long-Term Incentive Plan
Exhibit 5.2(e)(i) -- Midland Legal Opinion
Exhibit -- Midland 10b-5 Letter
5.2(e)(ii)
Exhibit 5.3(c)(i) -- Vista Legal Opinion
Exhibit -- Vista 10b-5 Letter
5.3(c)(ii)
DISCLOSURE SCHEDULES:
Midland Disclosure Schedule
Vista Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into,
effective as of May 22, 1998, by and among Vista Resources Partners, L.P., a
Texas limited partnership ("Vista"), Midland Resources, Inc., a Texas
corporation ("Midland"), Vista Energy Resources, Inc., a Delaware corporation
and a direct wholly-owned subsidiary of Vista ("Newco"), and Midland Merger Co.,
a Texas corporation and a direct wholly-owned subsidiary of Newco ("Merger
Sub").
RECITALS
A. Vista and Midland have determined to engage in a strategic business
combination.
B. In furtherance thereof, Vista Resources I, Inc., the sole general
partner of Vista (the "General Partner"), has approved this Agreement and the
exchange (the "Vista GP Exchange") of shares of Newco common stock, $.01 par
value per share ("Newco Common Stock"), and warrants that are exercisable for
shares of Newco Common Stock ("Newco Warrants") for all of the outstanding
shares of common stock, $.01 par value per share, of the General Partner (the
"GP Common Stock") and the exchange (the "Vista LP Exchange" and, together with
the Vista GP Exchange, the "Vista Exchange") of shares of Newco Common Stock and
Newco Warrants for all of the outstanding Partnership Interests (as hereinafter
defined).
C. Contemporaneously with the execution and delivery of this Agreement,
Newco and each holder of a Midland Exchange Stock Option has entered into a
Midland Exchange Agreement pursuant to which such holder has agreed to exchange
(the "Midland Exchange") his Midland Exchange Stock Options for Newco Warrants.
D. In furtherance thereof, the respective Boards of Directors of Merger Sub
and Midland have approved this Agreement and the merger of Merger Sub with and
into Midland, with Midland being the surviving corporation (the "Midland
Merger").
E. In furtherance thereof, the Board of Directors of Newco has approved the
contribution of the Partnership Interests received by it pursuant to the Vista
LP Exchange to Vista LLC, a Delaware limited liability company and a direct
wholly-owned subsidiary of Newco ("Newco LLC"), effective immediately after the
Midland Merger and the Vista Exchange (the "Newco Contribution").
F. The respective Boards of Directors of Newco, Merger Sub and Midland have
determined that it is in the best interests of their respective shareholders or
stockholders (hereinafter referred to as "shareholders"), and the General
Partner has determined that it is in the best interests of the limited partners
of Vista, for the Midland Merger and the Vista Exchange to be effected upon the
terms and subject to the conditions of this Agreement.
G. For federal income tax purposes, it is intended that (a) the Vista
Exchange shall qualify as a transfer within the meaning of Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code"), (b) the Midland Merger
and the Midland Exchange shall qualify as a reorganization within the meaning of
Section 368(a) of the Code, and (c) this Agreement be, and is adopted as, a plan
of reorganization within the meaning of Treasury Regulation Section 1.368-1(c).
H. Contemporaneously with the execution and delivery of this Agreement,
Newco and each of ▇▇▇▇ ▇. ▇▇▇▇▇▇ III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ have entered
into separate Midland Voting Agreements (as hereinafter defined).
I. Vista, Newco, Merger Sub and Midland desire to make certain
representations, warranties, covenants and agreements in connection with the
Midland Merger and the Vista Exchange and also to prescribe various conditions
to the Midland Merger and the Vista Exchange.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, each of the following terms
has the meaning given in this Section or in the Sections referred to below:
"Affiliate" means, with respect to any Person, each other Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by, or is under common control with such Person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a Person.
"Affiliate Agreement" has the meaning specified in Section 4.9.
"Agreement" means this Agreement and Plan of Merger, as amended,
supplemented, or modified from time to time.
"Agreement of Limited Partnership" means the Agreement of Limited
Partnership for Vista dated as of September 26, 1995, by and among the General
Partner and the persons who have executed such agreement as limited partners.
"AMEX" means the American Stock Exchange or any successor thereto.
"Audited Financial Statements" has the meaning specified in Section 3.2(d).
"Closing" means the closing of the Midland Merger, the Midland Exchange and
the Vista Exchange and the consummation of the other transactions contemplated
by this Agreement.
"Closing Date" means the date on which the Closing occurs, which date shall
be the first business day following the day on which all of the conditions
provided for in Article 5 have been satisfied or waived as provided therein (or
such later date as is mutually agreed upon by the parties).
"Code" means the Internal Revenue Code of 1986, as amended.
"Defensible Title" means good and defensible right, title, and interest
that is (a) evidenced by an instrument or instruments filed of record in
accordance with the conveyance and recording laws of the applicable jurisdiction
to the extent necessary to prevail against competing claims of bona fide
purchasers for value without notice and (b) subject to Permitted Encumbrances,
free and clear of all Liens, claims, infringements, burdens, or other defects.
"DGCL" means the Delaware General Corporation Law, as amended.
"Effective Time" has the meaning specified in Section 2.12.
"Environmental Laws" has the meaning specified in Section 3.1(o)(i).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Shares" has the meaning specified in Section 2.10(e)(ii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" shall mean such agent as is reasonably satisfactory to
Newco and Midland.
"Exchange Fund" has the meaning specified in Section 2.10(a).
"Financial Statements" has the meaning specified in Section 3.2(d).
"First Union" has the meaning specified in Section 3.1(ee).
"Fully Diluted Basis" means as of the date of the calculation thereof the
sum of (a) the number of shares of Newco Common Stock then issued and
outstanding immediately after the Effective Time, plus (b) the number of shares
of Newco Common Stock, if any, issued after the Effective Time as a result of
the exercise of any Midland Stock Options (other than Midland Exchange Stock
Options), plus (c) the number of shares
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of Newco Common Stock issuable, whether at such time or upon the passage of time
or the occurrence of future events, upon exercise, conversion or exchange of all
Midland Exercisable Warrants outstanding as of the close of business on the
trading day immediately preceding the second business day immediately prior to
the Closing Date.
"GAAP" has the meaning specified in Section 3.1(d).
"General Partner" means has the meaning specified in the Recitals hereto.
"Governmental Action" means any authorization, application, approval,
consent, exemption. filing, license, notice, registration, permit, or other
requirement of, to, or with any Governmental Entity.
"Governmental Entity" has the meaning specified in Section 3.1(c)(iii).
"GP Certificate" means a certificate representing shares of GP Common
Stock.
"GP Common Stock" has the meaning specified in the Recitals hereto.
"Hazardous Materials" has the meaning specified in Section 3.1(o)(ii).
"Hydrocarbon Agreement" means any of the Hydrocarbon Sales Agreements, the
Hydrocarbon Purchase Agreements, and the Hydrocarbon Support Agreements.
"Hydrocarbon Purchase Agreement" means any material sales agreement,
purchase contract, or marketing agreement that is currently in effect and under
which Midland or any of its Subsidiaries (or Vista or Vista Sub, as applicable)
is a buyer of Hydrocarbons for resale (other than purchase agreements entered
into in the ordinary course of business with a term of three months or less,
terminable without penalty on 30 days' notice or less, which provide for a price
not greater than the market value price that would be paid pursuant to an
arm's-length contract for the same term with an unaffiliated third-party seller,
and which do not obligate the purchaser to take any specified quantity of
Hydrocarbons or to pay for any deficiencies in quantities of Hydrocarbons not
taken).
"Hydrocarbon Sales Agreement" means any material sales agreement, purchase
contract, or marketing agreement that is currently in effect and under which
Midland or any of its Subsidiaries (or Vista or Vista Sub, as applicable) is a
seller of Hydrocarbons (other than "spot" sales agreements entered into in the
ordinary course of business with a term of three months or less, terminable
without penalty on 30 days' notice or less, and which provide for a price not
less than the market value price that would be received pursuant to an
arm's-length contract for the same term with an unaffiliated third party
purchaser).
"Hydrocarbon Support Agreement" means any gathering, transportation,
treatment, compression, processing, or similar agreement that is currently in
effect and to which Midland or any of its Subsidiaries (or Vista or Vista Sub,
as applicable) is a party (other than gathering, transportation, treatment,
compression, processing, and similar agreements that have been entered into in
the ordinary course of business and which contain market value prices and terms
of the type found in gathering, transportation, treatment, compression,
processing, and similar agreements entered into between unaffiliated parties in
arm's length transactions).
"Hydrocarbons" means oil, condensate, gas, casinghead gas, and other liquid
or gaseous hydrocarbons.
"Indemnification Agreement" has the meaning specified in Section 4.14.
"IRS" means the Internal Revenue Service.
"Lien" means any lien, trust, mortgage, security interest, pledge, deposit,
production payment, restriction, burden, claim, charge, detriment, option,
encumbrance, voting agreement, preemptive right, shareholder agreement, rights
of a vendor under any title retention or conditional sale agreement, or lease or
other arrangement substantially equivalent to any of the foregoing.
"Material Adverse Change" has the meaning specified in Section 3.1(a).
"Material Adverse Effect" has the meaning specified in Section 3.1(a).
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"Merger Sub" means Midland Merger Co., a Texas corporation and a direct
wholly-owned subsidiary of Newco.
"Midland" means Midland Resources, Inc., a Texas corporation.
"Midland Acquisition Proposal" has the meaning specified in Section 4.3(b).
"Midland Articles of Merger" has the meaning specified in Section 2.12.
"Midland Benefit Program or Agreement" has the meaning specified in
Section 3.1(l).
"Midland Certificate" means a certificate representing shares of Midland
Common Stock.
"Midland Common Stock" means the common stock, par value $.001 per share,
of Midland.
"Midland Common Stock Warrant" means all Midland Stock Equivalents other
than the Midland Stock Options and Midland Warrants.
"Midland Conversion Number" means one.
"Midland Engineering Report" means the oil and gas reserve engineering
report concerning the Oil and Gas Interests of Midland as of January 1, 1998
prepared by ▇▇▇▇▇▇▇▇▇▇ Petroleum Consultants, Inc., and provided to Vista by or
on behalf of Midland.
"Midland Exchange" has the meaning specified in the Recitals hereto.
"Midland Exchange Agreement" means an Exchange Agreement in the form and
substance of Exhibit A hereto.
"Midland Exchange Stock Options" has the meaning set forth in Section
2.7(b)(v).
"Midland Exercisable Warrants" means all Midland Common Stock Warrants that
have an exercise price per share of Midland Common Stock that is equal to or
less than the closing price for a share of Midland Common Stock, as reported on
AMEX, on any of the five trading days immediately preceding the second business
day immediately prior to the Closing Date.
"Midland Financial Statements" has the meaning specified in Section 3.1(d).
"Midland Group" has the meaning specified in Section 3.1(l).
"Midland Indemnified Parties" has the meaning specified in Section 4.13(a).
"Midland Intangible Property" has the meaning set forth in Section 3.1(n).
"Midland Litigation" has the meaning set forth in Section 3.1(j).
"Midland Material Agreement" means (a) any written or oral agreement,
contract, commitment, or understanding to which Midland or any of its
Subsidiaries is a party, by which Midland is directly or indirectly bound, or to
which any asset of Midland or any of its Subsidiaries may be subject, the
termination or breach of which, individually or in the aggregate, would have or
could reasonably be expected to have a Material Adverse Effect on Midland or (b)
any instrument defining the rights of security holders, including an indenture,
or material contract that is required by Item 601 of Regulation S-K to be filed
with the SEC as an exhibit to Midland's Annual Report on Form 10-K for the year
ended December 31, 1997.
"Midland Meeting" means the meeting of the shareholders of Midland called
for the purpose of voting on the proposal to approve this Agreement and the
Midland Merger.
"Midland Merger" has the meaning specified in the Recitals hereto.
"Midland Option Exercise Agreement" means an Option Exercise Agreement in
the form and substance of Exhibit D hereto.
"Midland Order" has the meaning specified in Section 3.1(j).
"Midland Permits" has the meaning specified in Section 3.1(i).
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"Midland Plan" has the meaning specified in Section 3.1(l).
"Midland Preferred Stock" has the meaning set forth in Section 3.1(b).
"Midland Registration Rights Agreement" has the meaning specified in
Section 4.16(b).
"Midland SEC Documents" has the meaning specified in Section 3.1(d).
"Midland Stock Equivalents" means all rights, warrants (including the
Midland Warrants and Midland Common Stock Warrant), options (including the
Midland Stock Options) convertible securities or indebtedness, exchangeable
securities or other instruments, or other rights that (a) are outstanding
immediately after the Effective Time, (b) immediately prior to the Effective
Time, were exercisable for or convertible or exchangeable into, directly or
indirectly, shares of Midland Common Stock at the time of issuance or upon the
passage of time or occurrence of some future event and (c) immediately after the
Effective Time, are exercisable for or convertible or exchangeable into,
directly or indirectly, shares of Newco Common Stock upon the passage of time or
occurrence of some future event.
"Midland Stock Option" means an issued and outstanding option to acquire
shares of Midland Common Stock granted pursuant to any of the Midland Stock
Plans.
"Midland Stock Plans" has the meaning specified in Section 3.1(b).
"Midland Voting Agreement" means a Voting Agreement and Irrevocable Proxy
in the form and substance of Exhibit B hereto.
"Midland Warrant" means the warrants issued and outstanding under that
certain Warrant Agreement dated as of November 1, 1990 by and between Midland
and Stock Transfer Company of America, Inc.
"MM Surviving Corporation" has the meaning specified in Section 2.2.
"Nasdaq" means the Nasdaq National Market.
"Newco" means Vista Energy Resources, Inc., a Delaware corporation.
"Newco Common Stock" has the meaning specified in the Recitals hereto.
"Newco Contribution" has the meaning specified in the Recitals hereto.
"Newco Director Nominee" has the meaning specified in Section 2.5.
"Newco LLC" has the meaning specified in the Recitals hereto.
"Newco Long-Term Incentive Plan" has the meaning specified in Section 4.18.
"Newco Stock Certificate" means a certificate representing shares of Newco
Common Stock.
"Newco Warrant" means a warrant that is exercisable for shares of Newco
Common Stock and which is evidenced by an agreement in the form and substance of
Exhibit C hereto.
"Oil and Gas Interests" means direct and indirect interests in and rights
with respect to oil, gas, mineral, and related properties and assets of any kind
and nature, direct or indirect, including working, royalty, and overriding
royalty interests, production payments, operating rights, net profits interests,
other nonworking interests, and nonoperating interests; all interests in and
rights with respect to Hydrocarbons and other minerals or revenues therefrom and
all contracts in connection therewith and claims and rights thereto (including
all oil and gas leases, operating agreements, unitization and pooling agreements
and orders, division orders, transfer orders, mineral deeds, royalty deeds, oil
and gas sales, exchange, and processing contracts and agreements, and in each
case, interests thereunder), surface interests, fee interests, reversionary
interests, reservations, and concessions; all easements, rights of way,
licenses, permits, leases, and other interests associated with, appurtenant to,
or necessary for the operation of any of the foregoing; and all interests in
equipment and machinery (including well equipment and machinery), oil and gas
production, gathering, transmission, treating, processing, and storage
facilities (including tanks, tank batteries, pipelines, and gathering systems),
pumps, water injection facilities, electric plants, gasoline and gas processing
plants,
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refineries, and other tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the foregoing.
References in this Agreement to "Oil and Gas Interests" of a specified Person
means the collective Oil and Gas Interests of such Person and its Subsidiaries.
"Party" has the meaning specified in Section 4.1.
"Partnership Interest" (and correlatives thereof) means, with respect to a
limited partner of Vista, each 1% interest in Vista based on sharing ratios
held, or to be held, of record by a limited partner as of the date of
determination.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" means (a) Liens for Taxes, assessments, or other
governmental charges or levies if the same shall not at the particular time in
question be due and delinquent or (if foreclosure, distraint, sale, or other
similar proceedings shall not have been commenced or, if commenced, shall have
been stayed) are being contested in good faith by appropriate proceedings and if
a specified Person or any of its Subsidiaries shall have set aside on its books
such reserves segregated to the extent required by sound accounting practices)
as may be required by GAAP or otherwise determined by its board of directors or
general partner to be adequate with respect thereto, (b) Liens of carriers,
warehousemen, mechanics, laborers, materialmen, landlords, vendors, workmen, and
operators arising by operation of law in the ordinary course of business or by a
written agreement existing as of the date hereof and necessary or incident to
the exploration, development, operation, and maintenance of Hydrocarbon
properties and related facilities and assets for sums not yet due or being
contested in good faith by appropriate proceedings, if such Person or any of its
Subsidiaries shall have set aside on its books such reserves (segregated to the
extent required by sound accounting practices) as may be required by GAAP or
otherwise determined by its board of directors or general partner to be adequate
with respect thereto, (c) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance, and other social
security legislation (other than ERISA), (d) Liens incurred in the ordinary
course of business to secure the performance of bids, tenders, trade contracts,
leases (statutory only), statutory obligations, surety and appeal bonds,
performance and return-of-money bonds, and other obligations of a like nature,
(e) Liens, easements, rights-of-way, restrictions, servitudes, permits,
conditions, covenants, exceptions, reservations, and other similar encumbrances
incurred in the ordinary course of business or existing on property and not in
the aggregate materially impairing the value of the assets of such Person or any
of its Subsidiaries or interfering with the ordinary conduct of such Person or
any of its Subsidiaries' business or rights to its assets, (f) Liens arising
pursuant to Section 9.319 of the Texas Business and Commerce Code and all other
similar Liens created or arising by operation of law to secure a party's
obligations as a purchaser of oil and gas, (g) all rights to consent by,
required notices to, filings with, or other actions by Governmental Entities to
the extent customarily obtained subsequent to the Closing for transactions
similar to the Midland Merger and the Vista Exchange, (h) farmout, carried
working interest, joint operating, unitization, hedging agreements, royalty,
overriding royalty, sales, and similar agreements relating to the exploration or
development of, or production from, Hydrocarbon properties entered into in the
ordinary course of business and not in violation of Section 4.1, (i) any
defects, irregularities, or deficiencies in title to easements, rights-of-way,
or other surface use agreements that do not have a Material Adverse Effect on
the value of any asset of such Person or any of its Subsidiaries, (j)
preferential rights to purchase and Third-Party Consents that would not be
activated or triggered by either the Midland Merger or the Vista Exchange and
the other transactions contemplated by this Agreement, (k) Liens approved in
writing by or on behalf of Vista, (l) in the case of Vista, Liens and security
interests securing Vista's senior credit facility and (m) in the case of
Midland, Liens and security interests securing Midland's senior credit facility.
"Person" means any natural person, corporation, limited or general
partnership, limited liability company, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business trust, or
other entity or organization, whether or not a Governmental Entity.
"Providing Party" has the meaning specified in Section 4.2.
"Proxy Statement" has the meaning specified in Section 3.1(c)(iii).
"Release" has the meaning specified in Section 3.1(o)(iii).
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"Remedial Action" has the meaning set forth in Section 3.1(o)(iv).
"Representative" means, with respect to any Person, any director, officer,
general partner, employee, agent, advisor (including legal, accounting, and
financial advisors), Affiliate, or other representative of such Person or any of
its Subsidiaries.
"Requesting Party" has the meaning specified in Section 4.2.
"Responsible Officer" means, with respect to any corporation, the
President, the Chief Executive Officer, the Chief Operating Officer, the Chief
Financial Officer, or any Vice President or other member of executive management
of such corporation.
"Rule 145 Affiliates" has the meaning specified in Section 4.9.
"S-4" means the Registration Statement on Form S-4 to be filed by Newco in
connection with the issuance of Newco Common Stock pursuant to the Midland
Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Subsidiary" (and correlatives thereof) means, with respect to any Person,
any corporation or other organization, whether incorporated or unincorporated,
of which (a) such Person or any other Subsidiary of such Person is a general
partner or (b) 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 is, directly or indirectly, owned or
controlled by such Person or by any one or more of its Subsidiaries, or by such
Person and any one or more of its Subsidiaries.
"Tax" (and, with correlative meaning, "Taxes") has the meaning specified in
Section 3.1(k).
"Tax Returns" has the meaning specified in Section 3.1(k).
"TBCA" means the Texas Business Corporation Act, as amended.
"Termination Agreement" has the meaning specified in Section 4.17.
"Texas Secretary of State" means the Secretary of State of the State of
Texas.
"Third-Party Consent" means the consent or approval of any Person other
than Vista, Midland, Newco, Merger Sub, or any of their respective Subsidiaries,
or any Governmental Entity.
"Vista" means Vista Resources Partners, L.P., a Texas limited partnership.
"Vista Acquisition Proposal" has the meaning specified in Section 4.4(b).
"Vista Benefit Program or Agreement" has the meaning specified in Section
3.2(l).
"Vista Disclosure Schedule" means the Vista Disclosure Schedule attached
hereto and any documents listed on such Vista Disclosure Schedule and expressly
incorporated therein by reference, true and correct copies of which have been
delivered to Midland.
"Vista Engineering Report" means the oil and gas reserve engineering report
concerning the Oil and Gas Interests of Vista as of January 1, 1998 prepared by
▇▇▇▇▇▇▇▇▇▇ Petroleum Consultants, Inc., and provided to Midland by or on behalf
of Vista.
"Vista Exchange" has the meaning specified in the Recitals hereto.
"Vista Exchange Agreement" means an Exchange Agreement in the form and
substance of Exhibit E hereto.
"Vista GP Conversion Stock Number" means 1.60089817, as such number may be
changed pursuant to Section 2.8.
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"Vista GP Conversion Warrant Number" means 1.16511028, as such number may
be changed pursuant to Section 2.8.
"Vista GP Exchange" has the meaning specified in the Recitals hereto.
"Vista Group" has the meaning specified in Section 3.2(l).
"Vista Indemnified Parties" has the meaning specified in Section 4.13(b).
"Vista Intangible Property" has the meaning specified in Section 3.2(n).
"Vista Litigation" has the meaning specified in Section 3.2(j).
"Vista LP Conversion Stock Number" means 117,674.06, as such number may be
changed pursuant to Section 2.8.
"Vista LP Conversion Warrant Number" means 85,641.46, as such number may be
changed pursuant to Section 2.8.
"Vista LP Exchange" has the meaning set forth in the Recitals hereto.
"Vista Material Agreement" means any instrument defining the rights of
security holders, including an indenture, or material contract that would be
required by Item 601 of Regulation S-K to be filed by Vista with the SEC if
Vista were subject to the periodic reporting requirements of Section 12(b),
12(g), or 15(d) of the Exchange Act.
"Vista Order" has the meaning specified in Section 3.2(j).
"Vista Permits" has the meaning specified in Section 3.2(i).
"Vista Plan" has the meaning specified in Section 3.2(l).
"Vista Registration Rights Agreement" has the meaning specified in Section
4.16(a).
"Vista Sub" means Vista Resources, Inc., a Texas corporation and a direct
wholly-owned subsidiary of Vista.
"Voting Debt" has the meaning specified in Section 3.1(b).
1.2 REFERENCES AND TITLES. All references in this Agreement to Exhibits,
Schedules, Articles, Sections, subsections, and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections, and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any Articles, Sections, subsections, or other
subdivisions of this Agreement are for convenience only, do not constitute any
part of such Articles, Sections, subsections, or other subdivisions, and shall
be disregarded in construing the language contained in such subdivisions. The
words "this Agreement," "herein," "hereby," "hereunder," and "hereof," and words
of similar import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "this Section" and "this
subsection," and words of similar import, refer only to the Sections or
subsections hereof in which such words occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation." Pronouns in masculine, feminine, or neuter genders shall be
construed to state and include any other gender, and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires.
As used in the representations and warranties contained in this Agreement,
the phrase "to the knowledge of" shall mean, with respect to a specified
representing party, that the Responsible Officers of such representing party,
individually or collectively, have conducted such investigations and inquiries
that they reasonably believe to be most likely to confirm the truth and accuracy
of the matter being represented and warranted (or have caused such
investigations and inquiries to be made under their supervision) and, after
evaluating the findings of such investigations and inquiries, either (a) know
that the matter being represented and warranted is true and accurate or (b) have
no reason to believe that the matter being represented and warranted is not true
and accurate.
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ARTICLE 2
THE MERGER AND EXCHANGES
2.1 THE MIDLAND MERGER. Subject to the terms and conditions set forth in
this Agreement, at the Effective Time (as hereinafter defined) Merger Sub shall
be merged with and into Midland in accordance with the provisions of this
Agreement and in accordance with the TBCA.
2.2 EFFECT OF THE MIDLAND MERGER. Upon the effectiveness of the Midland
Merger, the separate existence of Merger Sub shall cease and Midland, as the
surviving corporation in the Midland Merger (the "MM Surviving Corporation"),
shall continue its corporate existence under the laws of the State of Texas. The
Midland Merger shall have the effects specified in the TBCA.
2.3 CERTIFICATES OF INCORPORATION OF NEWCO, MIDLAND AND NEWCO SUB. The
Articles of Incorporation of Midland, as in effect immediately prior to the
Effective Time (as hereinafter defined) shall be the Articles of Incorporation
of the MM Surviving Corporation until thereafter amended in accordance with its
terms and as provided by applicable law.
2.4 BYLAWS. The Bylaws of Merger Sub in effect immediately prior to the
Midland Merger shall be the bylaws of the MM Surviving Corporation, until
thereafter amended in accordance with its terms and as provided by applicable
law. Newco and Merger Sub have delivered true and correct copies of their Bylaws
to each of Vista and Midland.
2.5 DIRECTORS. Immediately prior to the Closing, Vista shall take such
action as may be necessary as the then sole shareholder of Newco so as to cause
the directors of Newco at the Effective Time to be as set forth below:
C. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
Midland representative to be named by Midland's Board of Directors
prior to Closing Date
Vista as set forth in this Section 2.5 shall have the right to initially
nominate eight of the nine directors and Midland shall have the right to
initially nominate one of the nine directors who shall serve as directors of
Newco commencing as of the Effective Time. Each nominee for director of Newco
identified as such above (a "Newco Director Nominee") will hold office until the
1999 annual meeting of Newco, and in all cases, until his or her respective
successor is duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation or Bylaws of Newco, or as otherwise provided by
applicable law. If prior to the Effective Time a Newco Director Nominee selected
by Vista or Midland shall decline or be unable to serve as a director of Newco
or whose nomination shall be withdrawn by Vista or Midland, as applicable, then
Vista or Midland, as appropriate, shall be entitled to nominate a replacement
for such Newco Director Nominee, who shall thereafter become a Newco Director
Nominee, provided that such person shall be reasonably acceptable to each of the
other parties to this Agreement and this Agreement shall be amended by the
parties to the extent necessary to reflect such action.
The directors of the MM Surviving Corporation shall be the same as the
directors of Newco set forth in this Section 2.5.
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2.6 OFFICERS. The initial senior executive officers of Newco immediately
following the Effective Time shall be as set forth below:
C. ▇▇▇▇▇▇▇ ▇▇▇▇............................. Chairman, Chief Executive Officer,
Chief Financial Officer, Treasurer
and Assistant Secretary
▇▇▇▇▇▇ ▇. ▇▇▇▇.............................. President, Assistant Treasurer and
Assistant Secretary
R. ▇▇▇▇ ▇▇▇▇▇▇▇▇............................ Executive Vice President --
Exploration and Secretary
Each such officer of Newco will hold office from the Effective Time until
his respective successor is duly elected or appointed and qualified in the
manner provided in the Certificate of Incorporation or Bylaws of Newco, or as
otherwise provided by applicable law. The names, titles, and responsibilities of
the other individuals who initially will hold officerships with Newco shall be
determined by Vista prior to the Effective Time, and the election of those
persons shall be considered by the Board of Directors of Newco immediately
following the Effective Time.
The officers of Merger Sub immediately prior to the Effective Time shall be
the initial officers of the MM Surviving Corporation until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation or Bylaws of the MM Surviving Corporation, or
as otherwise provided by applicable law.
2.7 EFFECT ON SECURITIES.
(a) MERGER SUB STOCK. At the Effective Time, by virtue of the Midland
Merger and without any action on the part of any holder thereof, each share
of Merger Sub Common Stock outstanding immediately prior to the Effective
Time shall be converted into and shall become one validly issued, fully
paid, and nonassessable share of common stock, par value $.01 per share, of
the MM Surviving Corporation.
(b) MIDLAND SECURITIES.
(i) CONVERSION. At the Effective Time, by virtue of the Midland
Merger and without any action on the part of any holder thereof (but
subject to the provisions of Section 2.10(e)), all shares of Midland
Common Stock that are issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive shares of
Newco Common Stock, with each such share of Midland Common Stock being
converted into a number of shares of Newco Common Stock equal to the
Midland Conversion Number. Each such share of Midland Common Stock, when
so converted, shall automatically be cancelled and retired, shall cease
to exist, and shall no longer be outstanding; and the holder of any
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Newco
Common Stock to be issued in exchange therefor (along with any cash in
lieu of fractional shares of Newco Common Stock as provided in Section
2.10(e) and any unpaid dividends and distributions with respect to such
shares of Newco Common Stock as provided in Section 2.10(c)), without
interest, upon the surrender of such certificate in accordance with
Section 2.10.
(ii) MIDLAND TREASURY STOCK. At the Effective Time, by virtue of
the Midland Merger and without any action on the part of any holder
thereof, all shares of Midland Common Stock that are issued and held as
treasury stock shall be cancelled and retired and shall cease to exist
and no shares of Newco Common Stock, cash, or other consideration shall
be paid or payable in exchange therefor.
(iii) MIDLAND STOCK OPTIONS. All Midland Stock Options (other than
the Midland Exchange Stock Options) shall remain outstanding following
the Effective Time. At the Effective Time, by virtue of the Midland
Merger and without any action on the part of Midland or any holder
thereof, each such Midland Stock Option (other than the Midland Exchange
Stock Options) shall be
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assumed by Newco in such manner that Newco is a corporation assuming a
stock option in a transaction to which Section 424(a) applied within the
meaning of Section 424 of the Code or, to the extent that Section 424 of
the Code does not apply to any such Midland Stock Option (other than the
Midland Exchange Stock Options), would be such a corporation were
Section 424 applicable to such option. Subject to the terms of the
Midland Option Exercise Agreement, each Midland Stock Option (other than
the Midland Exchange Stock Options) assumed by Newco shall be
exercisable on the same terms and conditions as apply immediately prior
to the Effective Time, except that each such Midland Stock Option (other
than the Midland Exchange Stock Options) shall be exercisable for that
whole number of shares of Newco Common Stock (to the nearest whole
share) into which the number of shares of Midland Common Stock subject
to such Midland Stock Option (other than the Midland Exchange Stock
Options) immediately prior to the Effective Time would be converted
under paragraph (i) of this subsection and the option price per share of
Newco Common Stock shall be an amount equal to the option price per
share of Midland Common Stock subject to such Midland Stock Option
(other than the Midland Exchange Stock Options) in effect immediately
prior to the Effective Time divided by the Midland Conversion Number
(the option price per share, as so determined, being rounded upward to
the nearest full cent). No payment shall be made for fractional
interests.
(iv) MIDLAND WARRANTS AND MIDLAND COMMON STOCK WARRANTS. All
Midland Warrants and Midland Common Stock Warrants shall remain
outstanding following the Effective Time. At the Effective Time, by
virtue of the Midland Merger and without any action on the part of
Midland or any holder thereof, each such Midland Warrant and Midland
Common Stock Warrant shall be assumed by Newco and shall be exercisable
on the same terms and conditions as apply immediately prior to the
Effective Time, except that each Midland Warrant and Midland Common
Stock Warrant shall be exercisable for that number of shares of Newco
Common Stock into which the number of shares of Midland Common Stock
subject to such Midland Warrant or Midland Common Stock Warrant, as
applicable, immediately prior to the Effective Time would be converted
under paragraph (i) of this subsection. No payment shall be made for
fractional interests.
(v) MIDLAND EXCHANGE STOCK OPTIONS. Pursuant to the terms of the
Midland Exchange Agreement contemporaneously entered into between Newco
and each holder of the Midland Stock Options described on Schedule 2.7
of the Midland Disclosure Schedule (the "Midland Exchange Stock
Options"), at the Effective Time, without any action on the part of any
holder thereof, each Midland Exchange Stock Option will be exchanged for
a Newco Warrant that is exercisable for that whole number of shares of
Newco Common Stock (to the nearest whole share) equal to the product of
(x) .725 times (y) the number of shares of Newco Common Stock into which
the shares of Midland Common Stock subject to such Midland Exchange
Stock Option would be converted under paragraph (i) of this subsection.
Pursuant to the Midland Exchange Agreement, no payment shall be made for
fractional interests. Pursuant to the terms of the Midland Exchange
Agreement, each Midland Exchange Stock Option subject thereto shall be
terminated immediately following their exchange for a Newco Warrant.
2.8 VISTA EXCHANGE AGREEMENTS. Within 30 days from the date hereof, Newco
and Vista agree to cause Newco to enter into Vista Exchange Agreements in
connection with the Vista GP Exchange and the Vista LP Exchange, respectively,
with all of the holders of the GP Common Stock and all of the Partnership
Interests. Pursuant to such Vista Exchange Agreements at the Effective Time,
without any action on the part of any holder thereof, (a) each share of GP
Common Stock that is issued and outstanding prior to the Effective Time shall be
exchanged for (i) a number of shares of Newco Common Stock equal to the Vista GP
Conversion Stock Number and (ii) a Newco Warrant that is exercisable for a
number of shares of Newco Common Stock equal to the Vista GP Conversion Warrant
Number and (b) each Partnership Interest that is issued and outstanding prior to
the Effective Time shall be exchanged for (i) a number of shares of Newco Common
Stock equal to the Vista LP Conversion Stock Number and (ii) a Newco Warrant
that is exercisable for a number of shares of Newco Common Stock equal to the
Vista LP Conversion Warrant
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Number. As provided in the Exchange Agreement, any fractional Partnership
Interest shall be likewise exchanged on a pro rata basis.
2.9 ADJUSTMENTS. (a) The parties hereto mutually agree that,
notwithstanding anything in this Agreement to the contrary, each of the Vista GP
Conversion Stock Number, the Vista LP Conversion Stock Number, the Vista GP
Conversion Warrant Number and the Vista LP Conversion Warrant Number shall be
increased or decreased, as necessary, immediately prior to the Effective Time
such that (i) the aggregate percentage of shares of Newco Common Stock that the
holders of GP Common Stock and the holders of Partnership Interests shall be
entitled to receive at the Effective Time shall equal 72.5% of the shares of
Newco Common Stock that will be outstanding calculated on a Fully Diluted Basis
immediately after the Effective Time and (ii) the aggregate percentage of shares
of Newco Common Stock issuable upon exercise of the Newco Warrants that the
holders of GP Common Stock and the holders of Partnership Interests shall be
entitled to receive shall equal 72.5% of the shares of Newco Common Stock that
is issuable upon the exercise of (x) all Midland Warrants outstanding
immediately after the Effective Time, (y) all Newco Warrants issued pursuant to
the Midland Exchange and (z) all Newco Warrants issuable pursuant to the Vista
Exchange. Subject to Section 2.9(b), 2.9(c), any such adjustments to the Vista
GP Conversion Stock Number, the Vista LP Conversion Stock Number, the Vista GP
Conversion Warrant Number or the Vista LP Conversion Warrant Number shall be
made not later than two business days prior to the Closing and shall be
determined by Newco's independent auditors ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
(b) Pursuant to the Vista Exchange Agreements, effective as of the last day
of the fourth calendar month immediately following the calendar month in which
the Closing Date occurred, Newco shall cause its independent auditors ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP to redetermine the Vista GP Conversion Stock Number and the Vista
LP Conversion Stock Number by redetermining, as of such date, Fully Diluted
Basis only to the extent necessary so as to reflect the number of shares of
Newco Common Stock, if any, issued after the Effective Time as a result of the
exercise of any Midland Stock Options. In the event any such adjustment to the
Vista GP Conversion Stock Number and the Vista LP Conversion Stock Number is
determined appropriate, then pursuant to the Vista Exchange Agreements, Newco
shall promptly issue to the prior holders of the GP Common Stock and Partnership
Interests their pro rata share of a number of shares of Newco Common Stock equal
to an amount equal to (i) the quotient realized by dividing (x) the number of
shares of Newco Common Stock issued after the Effective Time as a result of the
exercise of any Midland Stock Options by (y) .275 minus (ii) the number of
shares of Newco Common Stock described in clause (x) above.
(c) The parties hereto mutually agree that, notwithstanding anything in
this Agreement to the contrary, (i) at the Effective Time, by virtue of the
Midland Merger, the holders of shares of Midland Common Stock shall receive
shares of Newco Common Stock issued in exchange therefor equal to 27.5% of the
shares of Newco Common Stock that will be outstanding immediately after the
Effective Time (calculated giving effect to the shares of Newco Common Stock
issued as a result of the Vista Exchange), and (ii) immediately after the
Effective Time, the aggregate percentage of shares of Newco Common Stock
issuable upon exercise of (a) all Midland Warrants outstanding immediately after
the Effective Time, and (b) all Newco Warrants issued pursuant to the Midland
Exchange, shall equal 27.5% of the shares of Newco Common Stock that is issuable
upon exercise of (x) all Midland Warrants outstanding immediately after the
Effective Time, (y) all Newco Warrants issued pursuant to the Midland Exchange,
and (z) all Newco Warrants issuable pursuant to the Vista Exchange.
2.10 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE FUND. Immediately after the Effective Time, Newco shall
deposit with the Exchange Agent, for the benefit of the holders of shares
of Midland Common Stock and for exchange in accordance with this Agreement,
certificates representing the shares of Newco Common Stock to be issued in
exchange for shares of Midland Common Stock pursuant to Section 2.7. Such
shares of Newco Common Stock, together with any dividends or distributions
with respect thereto (as provided in subSection (c) of this Section 2.10),
are referred to herein as the "Exchange Fund." The Exchange Agent, pursuant
to irrevocable instructions consistent with the terms of this Agreement,
shall deliver the Newco Common Stock to be issued pursuant to Section 2.7
out of the Exchange Fund, and the Exchange
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Fund shall not be used for any other purpose. The Exchange Agent shall not
be entitled to vote or exercise any rights of ownership with respect to the
Newco Common Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or
distributed with respect thereto for the account of Persons entitled
thereto.
(b) EXCHANGE PROCEDURES.
(i) As soon as reasonably practicable after the Effective Time,
Newco shall cause the Exchange Agent to mail to each holder of record of
a Midland Certificate that, immediately prior to the Effective Time,
represented shares of Midland Common Stock converted into Newco Common
Stock pursuant to Section 2.7 a letter of transmittal to be used to
effect the exchange of such Midland Certificate for a Newco Stock
Certificate and cash in lieu of fractional shares, along with
instructions for using such letter of transmittal to effect such
exchange. The letter of transmittal (or the instructions thereto) shall
specify that delivery of any Midland Certificate shall be effected, and
risk of loss and title thereto shall pass, only upon delivery of such
Midland Certificate to the Exchange Agent and shall be in such form and
have such other provisions as Newco may reasonably specify.
(ii) Upon delivery to the Exchange Agent of, together with the
surrender of a Midland Certificate, if applicable, a duly completed and
executed letter of transmittal and any other required documents
(including, in the case of any Rule 145 Affiliate, an Affiliate
Agreement from such Person as described in Section 4.9, if not
theretofore delivered to Newco), (A) the holder of such Midland
Certificate shall be entitled to receive in exchange therefor a Newco
Stock Certificate representing the number of whole shares of Newco
Common Stock that such holder has the right to receive pursuant to
Section 2.7, any cash in lieu of fractional shares of Newco Common Stock
as provided in subSection (e) of this Section, and any unpaid dividends
and distributions that such holder has the right to receive pursuant to
subSection (c) of this Section (after giving effect to any required
withholding of taxes) and (B) the Midland Certificate, if any, so
surrendered shall forthwith be cancelled. No interest shall be paid or
accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Midland Certificates.
(iii) In the event of a transfer of ownership of Midland Common
Stock that is not registered in the transfer records of Midland, a Newco
Stock Certificate representing the appropriate number of shares of Newco
Common Stock (along with any cash in lieu of fractional shares and any
unpaid dividends and distributions that such holder has the right to
receive) may be issued to a transferee if the Midland Certificate
representing such shares of Midland Common Stock 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.
(iv) Until surrendered as contemplated by this subsection, each
Midland Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender a Newco Stock
Certificate representing shares of Newco Common Stock (along with any
cash in lieu of fractional shares and any unpaid dividends and
distributions).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to Newco Common Stock declared or made
after the Effective Time with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Midland Certificate. Subject to
the effect of applicable laws, (i) at the time of the surrender of a
Midland Certificate for exchange in accordance with the provisions of this
Section, there shall be paid to the surrendering holder, without interest,
the amount of dividends or other distributions (having a record date after
the Effective Time but on or prior to surrender and a payment date on or
prior to surrender) theretofore paid with respect to the number of whole
shares of Newco Common Stock that such holder is entitled to receive (less
the amount of any withholding taxes that may be required with respect
thereto) and (ii) at the appropriate payment date, there shall be paid to
the surrendering holder, without interest, the amount of dividends or other
distributions (having a record date after the Effective Time but on or
prior to surrender and a payment
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date subsequent to surrender) payable with respect to the number of whole
shares of Newco Common Stock that such holder receives (less the amount of
any withholding taxes that may be required with respect thereto).
(d) NO FURTHER OWNERSHIP RIGHTS IN MIDLAND COMMON STOCK. All shares of
Newco Common Stock issued upon the surrender for exchange of shares of
Midland Common Stock in accordance with the terms hereof (including any
cash paid pursuant to subSection (c) or (e) of this Section) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of Midland Common Stock. After the Effective Time, there shall
be no further registration of transfers on the MM Surviving Corporation's
stock transfer books of the shares of Midland Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, a Midland Certificate is presented to the MM Surviving
Corporation for any reason, it shall be cancelled and exchanged as provided
in this Section.
(e) TREATMENT OF FRACTIONAL SHARES.
(i) No Newco Stock Certificates or scrip representing fractional
shares of Newco Common Stock shall be issued in the Midland Merger, and
except as provided in this subsection, no dividend or other
distribution, stock split, or interest shall relate to any such
fractional share and such fractional share shall not entitle the owner
thereof to vote or to any other rights of a shareholder of Newco.
(ii) As soon as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of whole
shares of Newco Common Stock delivered to the Exchange Agent by Newco
pursuant to subSection (a) of this Section over (B) the aggregate number
of whole shares of Newco Common Stock issuable to holders of Midland
Common Stock pursuant to Section 2.7 (such excess being referred to
herein as the "Excess Shares") and the Exchange Agent, as the agent for
the former holders of Midland Common Stock, shall sell the Excess Shares
at the prevailing prices on the securities exchange on which the shares
of Newco Common Stock are traded. The sale of the Excess Shares by the
Exchange Agent shall be executed on such securities exchange through one
or more member firms of such securities exchange and shall be executed
in round lots to the extent practicable. Newco shall pay all
commissions, transfer taxes, and other out-of-pocket transaction costs
incurred in connection with such sale of the Excess Shares.
(iii) In lieu of any fractional share of Newco Common Stock to
which a holder of Midland Common Stock would otherwise be entitled, such
holder, upon surrender of a Midland Certificate as described in this
Section, shall be paid an amount in cash (without interest) equal to
such holder's proportionate interest in the sum of (A) the net proceeds
from the sale of the Excess Shares in accordance with the provisions of
paragraph (2) of this subsection and (B) the aggregate dividends or
other distributions that are payable with respect to the Excess Shares
pursuant to subsection (c) of this Section, such proportionate interest
to be determined by dividing the amount of the fractional share
interests to which such holder would otherwise be entitled by the
aggregate amount of fractional share interests to which all holders of
Midland Common Stock would otherwise be entitled. Until the net proceeds
of the sale of Excess Shares (along with any dividends or distributions
with respect thereto have been distributed to the former shareholders of
Midland), the Exchange Agent will hold such amounts in trust for the
former holders of Midland Common Stock.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund and
cash held by the Exchange Agent in accordance with the terms of this
Section that remains unclaimed by the former shareholders of Midland for a
period of one year following the Effective Time shall be delivered to
Newco, upon demand. Thereafter, any former shareholders of Midland who have
not theretofore complied with the provisions of this Section shall look
only to Newco for payment of their claim for Newco Common Stock, any cash
in lieu of fractional shares of Newco Common Stock, and any dividends or
distributions with respect to Newco Common Stock (all without interest).
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(g) NO LIABILITY. None of Newco, the MM Surviving Corporation, the
Exchange Agent, or any other Person shall be liable to any former holder of
shares of Midland Common Stock for any amount properly delivered to any
public official pursuant to any applicable abandoned property, escheat, or
similar law. Any amounts remaining unclaimed by former holders of shares of
Midland Common Stock for a period of two years following the Effective Time
(or such earlier date immediately prior to the time at which such amounts
would otherwise escheat to or become property of any governmental entity)
shall, to the extent permitted by applicable law, become the property of
Newco free and clear of any claims or interest of any such holders or their
successors, assigns, or personal representative previously entitled
thereto.
(h) LOST, STOLEN, OR DESTROYED MIDLAND CERTIFICATES. If any Midland
Certificate shall have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the Person claiming such Midland Certificate
to be lost, stolen, or destroyed and, if required by Newco, the posting by
such Person of a bond in such reasonable amount as Newco may direct as an
indemnity against any claim that may be made against it with respect to
such Midland Certificate, the Exchange Agent shall issue in exchange for
such lost, stolen, or destroyed Midland Certificate the shares of Newco
Common Stock (along with any cash in lieu of fractional shares pursuant to
subsection (e) of this Section and any unpaid dividends and distributions
pursuant to subsection (c) of this Section) deliverable with respect
thereto pursuant to this Agreement.
2.11 CLOSING. The Closing shall take place on the Closing Date. The Closing
shall take place at such time as is agreed upon by Vista and Midland and shall
take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to by Vista and
Midland.
2.12 EFFECTIVE TIME OF THE MERGER. In connection with the Midland Merger,
the parties hereto will file with the Texas Secretary of State on the Closing
Date articles of merger (the "Midland Articles of Merger"). Notwithstanding
anything in this Section to the contrary, the articles of merger referred to in
this Section may be filed prior to the Closing Date or prior to the Closing so
long as it provides for an effective time that occurs on or after the Closing.
The Midland Merger shall become effective immediately upon the filing of the
Midland Articles of Merger with the Texas Secretary of State, or at such later
time specified in the Midland Articles of Merger (the "Effective Time").
2.13 SHAREHOLDER APPROVALS OBTAINED.
(a) Vista, in its capacity as the sole shareholder of Newco, by its
execution hereof, approves and adopts this Agreement and the transactions
contemplated hereby.
(b) Newco, in its capacity as the sole shareholder of Merger Sub, by
its execution hereof, approves and adopts this Agreement and the
transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF MIDLAND. Midland hereby represents
and warrants to Vista, Newco and Merger Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Midland and its
Subsidiaries is a corporation or partnership duly organized, validly
existing and in good standing under the laws of its state of incorporation
or organization, has all requisite power and authority to own, lease, and
operate its properties and to carry on its business as now being conducted,
and is duly qualified and in good standing to do business in each
jurisdiction in which the business it is conducting, or the operation,
ownership, or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
would not have a Material Adverse Effect (as defined below) on Midland.
Midland has heretofore delivered to Vista and Newco complete and correct
copies of its and each of its Subsidiaries' Articles of Incorporation and
Bylaws, each as amended to date. The respective jurisdictions of
incorporation or organization of Midland's Subsidiaries are identified on
Schedule 3.1(a) of the
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Midland Disclosure Schedule. Other than Midland's Subsidiaries disclosed on
Schedule 3.1(a) of the Midland Disclosure Schedule, Midland has no other
Subsidiary. As used in this Agreement, a "Material Adverse Effect" or
"Material Adverse Change" shall mean, in respect of Midland or Vista, as
the case may be, any effect or change that is or, as far as can be
reasonably determined, may be materially adverse to the business,
operations, assets, condition (financial or otherwise) or results of
operations of such party and its Subsidiaries taken as a whole.
(b) CAPITAL STRUCTURE. As of the date hereof, the authorized capital
stock of Midland consists of 80,000,000 shares of Midland Common Stock and
20,000,000 shares of preferred stock, par value $.01 per share ("Midland
Preferred Stock"). At the close of business on April 30, 1998: (i)
4,463,499 shares of Midland Common Stock were issued and outstanding; (ii)
no shares of Midland Preferred Stock were issued and outstanding; (iii)
1,235,000, 236,500, and 398,000 Midland Common Stock were authorized and
available for grant pursuant to the Midland Resources, Inc. 1997 Board of
Directors' Stock Incentive Plan, the 1994 Midland Resources, Inc. Long-Term
Incentive Plan, and the 1996 Midland Resources, Inc. Long-Term Incentive
Plan (collectively, the "Midland Stock Plans"), respectively; (iv) 123,500,
236,500, and 398,000 shares of Midland Common Stock were reserved for
issuance pursuant to each of the Midland Stock Plans, respectively; (v)
1,603,000 shares of Midland Common Stock were subject to issuance under
Midland Options outstanding as of the date hereof; (vi) 2,253,094 shares of
Midland Common Stock were subject to issuance upon exercise of the Midland
Warrants; (vii) 2,253,094 shares of Midland Common Stock were reserved for
issuance upon exercise of the Midland Warrants; (viii) no shares of Midland
Common Stock were held by Midland in its treasury; (ix) 270,000 shares of
Midland Common Stock were subject to issuance upon exercise of the Midland
Common Stock Warrants, (x) 270,000 shares of Midland Common Stock were
reserved for issuance upon exercise of the Midland Common Stock Warrants
and (xi) no bonds, debentures, notes or other indebtedness having the right
to vote (or convertible into securities having the right to vote) ("Voting
Debt") on any matters on which shareholders of Midland may vote were issued
and outstanding. The Midland Resources, Inc. 1995 Board of Directors' Stock
Incentive Plan has been terminated, however, options for 50,000 shares of
Midland Common Stock issued thereunder prior to such termination remain
outstanding. All outstanding shares of Midland Common Stock are validly
issued, fully paid, and nonassessable and are not subject to preemptive
rights. Except as set forth on Schedule 3.1(b) of the Midland Disclosure
Schedule, all outstanding shares of capital stock of the Subsidiaries of
Midland are owned by Midland, or a direct or indirect wholly-owned
Subsidiary of Midland, free and clear of all Liens. Except as set forth in
this Section 3.1(b) or on Schedule 3.1(b) of the Midland Disclosure
Schedule, and except for changes since April 30, 1998 resulting from the
subsequent exercise of Midland Options, Midland Warrants, or Midland Common
Stock Warrants, there are outstanding: (A) no shares of capital stock,
Voting Debt or other voting securities of Midland; (B) no securities of
Midland or any Subsidiary of Midland convertible into or exchangeable for
shares of capital stock, Voting Debt or other voting securities of Midland
or any Subsidiary of Midland; and (C) no options, warrants, calls, rights
(including preemptive rights), commitments, or agreements to which Midland
or any Subsidiary of Midland is a party or by which it is bound in any case
obligating Midland or any Subsidiary of Midland to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or any
Voting Debt or other voting securities of Midland or of any Subsidiary of
Midland, or obligating Midland or any Subsidiary of Midland to grant,
extend, or enter into any such option, warrant, call, right, commitment, or
agreement. Except for the Midland Voting Agreements, there are not as of
the date hereof and there will not be at the Effective Time any shareholder
agreements, voting trusts or other agreements or understandings to which
Midland is a party or by which it is bound relating to the voting of any
shares of the capital stock of Midland that will limit in any way the
solicitation of proxies by or on behalf of Midland from, or the casting of
votes by, the shareholders of Midland with respect to the Midland Merger.
There are no restrictions on Midland to vote the stock of any of its
Subsidiaries. The exercise price or conversion price of each of the
outstanding Midland Warrants, Midland Common Stock Warrants, Midland
Options and other Midland Stock Equivalents is set forth on Schedule
3.1(b).
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(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) The Board of Directors of Midland has approved the Midland
Merger and this Agreement, and declared the Midland Merger and this
Agreement to be in the best interests of the shareholders of Midland.
The directors of Midland have advised Midland and Vista that they intend
(acting in their capacity as a shareholder of Midland and in accordance
with the applicable Midland Voting Agreement) to vote or cause to be
voted all of the shares of Midland Common Stock beneficially owned by
them and their affiliates in favor of approval of the Midland Merger and
this Agreement. Midland has all requisite corporate power and authority
to enter into this Agreement and, subject, with respect to consummation
of the Midland Merger, to approval of this Agreement and the Midland
Merger by the shareholders of Midland in accordance with the TBCA and
the Articles of Incorporation and Bylaws of Midland, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Midland, subject, with respect to consummation of the Midland Merger,
to approval of this Agreement and the Midland Merger by the shareholders
of Midland in accordance with the TBCA and the Articles of Incorporation
and Bylaws of Midland. This Agreement has been duly executed and
delivered by Midland and, subject, with respect to consummation of the
Midland Merger, to approval of this Agreement and the Midland Merger by
the shareholders of Midland in accordance with the TBCA and the Restated
Certificate of Incorporation and Restated Bylaws of Midland, and
assuming this Agreement constitutes the valid and binding obligation of
Vista, Newco and Merger Sub, constitutes a valid and binding obligation
of Midland enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium
and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(ii) Except as set forth on Schedule 3.1(c) of the Midland
Disclosure Schedule, the execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation, or acceleration of any material obligation or to the loss
of a material benefit under, or give rise to a right of purchase under,
result in the creation of any Lien upon any of the properties or assets
of Midland or any of its Subsidiaries under, or otherwise result in a
material detriment to Midland or any of its Subsidiaries under, any
provision of (A) the Articles of Incorporation or Bylaws of Midland or
any provision of the comparable charter or organizational documents of
any of its Subsidiaries, (B) any loan or credit agreement, note, bond,
mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise, or license applicable to Midland or any of its
Subsidiaries, (C) any joint venture or other ownership arrangement, or
(D) assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in Section 3.1(c)(iii) are duly and
timely obtained or made and the approval of the Midland Merger and this
Agreement by the shareholders of Midland has been obtained, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Midland or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clause (B)
or (C) in this subsection, any such conflicts, violations, defaults,
rights, Liens that, individually or in the aggregate, would not have a
Material Adverse Effect on Midland, materially impair the ability of
Midland to perform its obligations hereunder, or prevent the
consummation of any of the transactions contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any court,
governmental, regulatory or administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Midland or any
of its Subsidiaries in connection with the execution and delivery of
this Agreement by Midland or the consummation by Midland of the
transactions contemplated hereby, as to which the failure to obtain or
make would have a Material Adverse
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Effect on Midland, except for: (A) the filing with the SEC of (1) a
proxy statement in preliminary and definitive form relating to the
meeting of the shareholders of Midland to be held in connection with the
Midland Merger (the "Proxy Statement") and (2) such reports under
Section 13(a) of the Exchange Act and such other compliance with the
Exchange Act and the rules and regulations thereunder, as may be
required in connection with this Agreement and the transactions
contemplated hereby; (B) the filing of the Midland Articles of Merger
with the Texas Secretary of State; (C) filings with, and approval of,
the Nasdaq or the AMEX; (D) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover
laws, or environmental laws; (E) such filings and approvals as may be
required by any foreign premerger notification, securities, corporate or
other law, rule or regulation; and (F) any such consent, approval,
order, authorization, registration, declaration, filing, or permit that
the failure to obtain or make would not, individually or in the
aggregate, have a Material Adverse Effect on Midland, materially impair
the ability of Midland to perform its obligations hereunder, or prevent
the consummation of any of the transactions contemplated hereby.
(d) SEC DOCUMENTS. Midland has made available to Vista a true and
complete copy of each report, schedule, registration statement, and
definitive proxy statement filed by Midland with the SEC since December 31,
1995 and prior to or on the date of this Agreement (the "Midland SEC
Documents"), which are all the documents (other than preliminary material)
that Midland was required to file with the SEC between December 31, 1995
and the date of this Agreement. As of their respective dates, the Midland
SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Midland SEC
Documents, and none of the Midland SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
financial statements of Midland included in the Midland SEC Documents
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles in the United States ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements,
as permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly present
in accordance with applicable requirements of GAAP (subject, in the case of
the unaudited statements, to normal, recurring adjustments, none of which
are material) the consolidated financial position of Midland and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of Midland and its
consolidated Subsidiaries for the periods presented therein. In addition,
Midland has made available to Vista the audited consolidated balance sheets
of Midland and its Subsidiaries as of December 31, 1997, together with the
audited consolidated statements of operations, shareholder's equity and
cash flows of Midland and its Subsidiaries for the year then ended (such
audited consolidated financial statements of Midland being referred to as
the "Midland Financial Statements"). The Midland Financial Statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved and fairly present in accordance with applicable
requirements of GAAP the consolidated financial position of Midland and its
consolidated Subsidiaries as of its date and the consolidated results of
operations and the consolidated cash flows of Midland and its Subsidiaries
for the period presented therein. Except as disclosed in the Midland SEC
Documents, there are no agreements, arrangements, or understandings between
Midland and any party who is at the date of this Agreement or was at any
time prior to the date hereof but after December 31, 1995 an Affiliate of
Midland that are required to be disclosed in the Midland SEC Documents.
(e) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Midland for inclusion or incorporation by reference in the
Registration Statement on Form S-4 to be filed with the SEC by Newco in
connection with the issuance of shares of Newco Common Stock in the Midland
Merger (the "S-4") will, at the time the S-4 becomes effective under the
Securities Act or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required
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to be stated therein or necessary to make the statements therein not
misleading, and none of the information supplied or to be supplied by
Midland and included or incorporated by reference in the Proxy Statement
will, at the date mailed to shareholders of Midland or at the time of the
meeting of such shareholders to be held in connection with the Midland
Merger or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Midland or any of its
Subsidiaries, or with respect to other information supplied by Midland for
inclusion in the Proxy Statement or S-4, shall occur which is required to
be described in an amendment of, or a supplement to, the S-4 or the Proxy
Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of Midland. The Proxy Statement, insofar
as it relates to Midland or its Subsidiaries or other information supplied
by Midland for inclusion therein, will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in, or
reflected in the financial statements included in the Midland SEC Documents
or in the Midland Financial Statements, or except as contemplated by this
Agreement, since December 31, 1997, there has not been: (i) any
declaration, setting aside, or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
Midland's capital stock; (ii) any amendment of any material term of any
outstanding equity security of Midland or any Subsidiary of Midland; (iii)
any repurchase, redemption, or other acquisition by Midland or any
Subsidiary of Midland of any outstanding shares of capital stock or other
equity securities of, or other ownership interests in, Midland or any
Subsidiary of Midland; (iv) any material change in any method of accounting
or accounting practice or any tax method, practice, or election by Midland
or any Subsidiary of Midland; or (v) any other transaction, commitment,
dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) that is
reasonably likely to have a Material Adverse Effect on Midland, except for
general economic changes and changes that may affect the industries of
Midland or any of its Subsidiaries generally.
(g) NO UNDISCLOSED MATERIAL LIABILITIES. Except as disclosed on
Schedule 3.1(g)or as disclosed in the Midland SEC Documents or in the
Midland Financial Statements, as of the date hereof, there are no
liabilities of Midland or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise, that are reasonably likely to have a Material Adverse Effect on
Midland, other than: (i) liabilities adequately provided for on the balance
sheet of Midland dated as of December 31, 1997 (including the notes
thereto) contained in Midland's Annual Report on Form 10-KSB for the year
ended December 31, 1997; (ii) liabilities incurred in the ordinary course
of business subsequent to December 31, 1997; and (iii) liabilities under
this Agreement.
(h) NO DEFAULT. Except as disclosed on Schedule 3.1(h), neither
Midland nor any of its Subsidiaries is in default or violation (and no
event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any term, condition or provision of
(i) the Articles of Incorporation or Bylaws of Midland or the comparable
charter or organizational documents of any of its Subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease, or other
agreement, instrument, permit, concession, franchise, or license to which
Midland or any of its Subsidiaries is now a party or by which Midland or
any of its Subsidiaries or any of their respective properties or assets is
bound or (iii) any order, writ, injunction, decree, statute, rule, or
regulation applicable to Midland or any of its Subsidiaries, except in the
case of clauses (ii) and (iii) in this subsection for defaults or
violations which in the aggregate would not have a Material Adverse Effect
on Midland.
(i) COMPLIANCE WITH APPLICABLE LAWS. Midland and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders, franchises and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Midland Permits"), except where the
failure so to hold would not have a Material Adverse Effect on Midland.
Midland and its Subsidiaries are in
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compliance with the terms of the Midland Permits, except where the failure
so to comply would not have a Material Adverse Effect on Midland. Except as
disclosed in the Midland SEC Documents, the businesses of Midland and its
Subsidiaries are not being conducted in violation of any law, ordinance, or
regulation of any Governmental Entity, except for possible violations which
would not have a Material Adverse Effect on Midland. As of the date of this
Agreement, no investigation or review by any Governmental Entity with
respect to Midland or any of its Subsidiaries is pending and of which
Midland has knowledge or, to the knowledge (as hereinafter defined) of
Midland as of the date hereof, threatened, other than those the outcome of
which would not have a Material Adverse Effect on Midland.
(j) LITIGATION. Except as disclosed in the Midland SEC Documents or
Schedule 3.1(j) of the Midland Disclosure Schedule, as of the date of this
Agreement there is no suit, action or proceeding pending, or, to the
knowledge of Midland, threatened against or affecting Midland or any
Subsidiary of Midland ("Midland Litigation"), and Midland and its
Subsidiaries have no knowledge of any facts that are likely to give rise to
any Midland Litigation, that (in any case) is reasonably likely to have a
Material Adverse Effect on Midland, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Midland or any Subsidiary of Midland ("Midland Order")
that is reasonably likely to have a Material Adverse Effect on Midland or
its ability to consummate the transactions contemplated by this Agreement.
Schedule 3.1(j) of the Midland Disclosure Schedule contains an accurate and
complete list of all suits, actions and proceedings pending or, to the
knowledge of Midland, threatened against or affecting Midland or any of its
Subsidiaries as of the date hereof.
(k) TAXES. Except as set forth on Schedule 3.1(k) of the Midland
Disclosure Schedule:
(i) Each of Midland, each of its Subsidiaries and any affiliated,
consolidated, combined, unitary or similar group of which Midland or any
of its Subsidiaries is or was a member has (A) duly filed on a timely
basis (taking into account any extensions) all U.S. federal income Tax
Returns (as hereinafter defined), and all other material Tax Returns,
required to be filed or sent by or with respect to it, (B) duly paid or
deposited on a timely basis all Taxes (as hereinafter defined) that are
shown to be due and payable on or with respect to such Tax Returns, and
all material Taxes that are otherwise due and payable (except for audit
adjustments not material in the aggregate or to the extent that
liability therefor is reserved for in Midland's most recent audited
financial statements) for which Midland or any of its Subsidiaries may
be liable, (C) established reserves that are adequate for the payment of
all material Taxes not yet due and payable with respect to the results
of operations of Midland and its Subsidiaries through the date hereof,
and (D) complied in all material respects with all applicable laws,
rules and regulations relating to the reporting, payment and withholding
of Taxes that are required to be withheld from payments to employees,
independent contractors, creditors, shareholders or any other third
party and has in all material respects timely withheld from employee
wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over.
(ii) Schedule 3.1(k) of the Midland Disclosure Schedule sets forth
(A) the last taxable period through which the federal income Tax Returns
of Midland and any of its Subsidiaries have been audited by the IRS or
for which the statute of limitations for assessment has otherwise closed
and (B) any affiliated, consolidated, combined, unitary or similar group
or Tax Return in which Midland or any of its Subsidiaries is or has been
a member or joins or has joined in the filing. Except to the extent
being contested in good faith, all material deficiencies asserted as a
result of such examinations and any examination by any applicable taxing
authority have been paid, fully settled or adequately provided for in
Midland's most recent audited financial statements. Except as disclosed
in or adequately provided for in the Midland SEC Documents or disclosed
in Schedule 3.1(k) of the Midland Disclosure Schedule, no audits or
other administrative proceedings or court proceedings are presently
pending, or to the knowledge of Midland, threatened, with regard to any
Taxes for which Midland or any of its Subsidiaries would be liable, and
no material deficiency for any Taxes has been proposed, asserted or
assessed (whether by examination report or prior to completion of
examination by means of notices of proposed adjustment or other similar
requests or notices) pursuant to such
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examination against Midland or any of its Subsidiaries by any taxing
authority with respect to any period.
(iii) Neither Midland nor any of its Subsidiaries has executed or
entered into with the IRS or any taxing authority (A) any agreement or
other document extending or having the effect of extending the period
for assessment or collection of any income or franchise Taxes for which
Midland or any of its Subsidiaries would be liable or (B) a closing
agreement pursuant to Section 7121 of the Code or any similar provision
of state, local, foreign or other income tax law, which will require any
increase in taxable income or alternative minimum taxable income, or any
reduction in tax credits, for Midland or any of its Subsidiaries for any
taxable period ending after the Closing Date.
(iv) Except as set forth in the Midland SEC Documents or disclosed
in Schedule 3.1(k), neither Midland 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 or that would constitute compensation whose
deductibility is limited under Section 162(m) of the Code.
(v) Except as set forth in the Midland SEC Documents, neither
Midland nor any of its Subsidiaries is a party to, is bound by or has
any obligation under any tax sharing or allocation agreement or similar
agreement or arrangement.
(vi) There are no requests for rulings or outstanding subpoenas
from any taxing authority for information with respect to Taxes of
Midland or any of its Subsidiaries and, to the knowledge of Midland, no
material reassessments (for property or ad valorem Tax purposes) of any
assets or any property owned or leased by Midland or any of its
Subsidiaries have been proposed in written form.
(vii) Neither Midland nor any of its Subsidiaries has agreed to
make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method
of Midland or any of its Subsidiaries, and neither Midland nor any of
its Subsidiaries has any application pending with any taxing authority
requesting permission for any changes in any accounting method of
Midland or any of its Subsidiaries. To the knowledge of Midland, neither
the IRS nor any other taxing authority has proposed in writing, and
neither Midland nor any of its Subsidiaries is otherwise required to
make, any such adjustment or change in accounting method.
(viii) There are no material excess loss accounts or deferred
intercompany transactions between Midland and/or any of its Subsidiaries
within the meaning of Treas. Reg. Section 1.1502-13 or 1.1502-19,
respectively.
For purposes of this Agreement, "Tax" (and, with correlative meaning,
"Taxes") means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding on amounts paid by Midland or any
of its Subsidiaries (or Vista or any of its Subsidiaries, as applicable),
payroll, employment, excise, production, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and/or any penalty, addition to tax
or additional amount imposed by any taxing authority, (ii) any liability of
Midland or any of its Subsidiaries (or Vista or any of its Subsidiaries, as
applicable) for the payment of any amounts of the type described in (i) as
a result of being a member of an affiliated or consolidated group, or
arrangement whereby liability of Midland or any of its Subsidiaries (or
Vista or any of its Subsidiaries, as applicable) for payment of such
amounts was determined or taken into account with reference to the
liability of any other person for any period and (iii) liability of Midland
or any of its Subsidiaries (or Vista or any of its Subsidiaries, as
applicable) with respect to the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied obligation
to indemnify any other Person.
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"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed by or with respect
to Midland or any of its Subsidiaries (or Vista or any of its Subsidiaries,
as applicable) in respect of any Taxes, including, without limitation, (i)
any consolidated Federal Income Tax return in which Midland or any of its
Subsidiaries (or Vista or any of its Subsidiaries, as applicable) is
included and (ii) any state, local or foreign Income Tax returns filed on a
consolidated, combined or unitary basis (for purposes of determining tax
liability) in which Midland or any of its Subsidiaries (or Vista or any of
its Subsidiaries, as applicable) is included.
(l) EMPLOYEE BENEFIT MATTERS. (i) Schedule 3.1(l)(i) provides a
description of each of the following which is sponsored, maintained or
contributed to by Midland or one of its Subsidiaries (the "Midland Group")
for the benefit of the employees of the Midland Group, former employees of
the Midland Group, directors of the Midland Group, former directors of the
Midland Group, or any agents, consultants, or similar representatives
providing services to or for the Midland Group, or has been so sponsored,
maintained or contributed to within six years prior to the Closing Date for
the benefit of such individuals:
(A) each "employee benefit plan," as such term is defined in
Section 3(3) of ERISA (including, but not limited to, employee benefit
plans, such as foreign plans, which are not subject to the provisions of
ERISA) ("Midland Plan");
(B) except for the Midland Stock Option Plans, each personnel
policy, stock option plan, stock purchase plan, stock appreciation
rights, phantom stock plan, collective bargaining agreement, bonus plan
or arrangement, incentive award plan or arrangement, vacation policy,
severance pay plan, policy or agreement, deferred compensation agreement
or arrangement, executive compensation or supplemental income
arrangement, consulting agreement, employment agreement and each other
employee benefit plan, agreement, arrangement, program, practice or
understanding which is not described in Section 3.1(l)(i)(A) (together
with the Midland Stock Plans, the "Midland Benefit Program or
Agreement").
(ii) True, correct and complete copies of each of the Midland Plans,
related trusts, insurance or group annuity contracts and each other funding
or financing arrangement relating to any Midland Plan, including all
amendments thereto, have been furnished to Vista. There has also been
furnished to Vista, with respect to each Midland Plan required to file such
report and description, the most recent report on Form 5500 and the summary
plan description. True, correct and complete copies or descriptions of all
Midland Benefit Programs or Agreements have also been furnished to Vista. A
schedule of employer expenses with respect to each Midland Plan and Midland
Benefit Program or Agreement for the current plan year and past plan year
has been furnished to Vista along with any administration agreement
associated with any Midland Plan. Additionally, the most recent
determination letter from the IRS for each of the Midland Plans intended to
be qualified under Section 401 of the Code, and any outstanding
determination letter application for such plans has been furnished.
(iii) Except as otherwise set forth on Schedule 3.1(l)(iii),
(A) Each Midland Plan and Midland Benefit Program or Agreement has
been administered in compliance with its terms, the applicable
provisions of ERISA, the Code and all other applicable laws and the
terms of all applicable collective bargaining agreements;
(B) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of a member of the
Midland Group, threatened against, or with respect to, any of the
Midland Plans or Midland Benefit Programs or Agreements or their assets;
(C) As to any Midland Plan intended to be qualified under Section
401 of the Code, there has been no termination or partial termination of
the Midland Plan within the meaning of Section 411(d)(3) of the Code;
(D) No act, omission or transaction has occurred which would result
in imposition on a member of the Midland Group of (1) breach of
fiduciary duty liability damages under Section 409
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of ERISA, (2) a civil penalty assessed pursuant to subsections (c), (i)
or (l) of Section 502 of ERISA or (3) a tax imposed pursuant to Chapter
43 of Subtitle D of the Code;
(E) To the knowledge of a member of the Midland Group, there is no
matter pending (other than routine qualification determination filings)
with respect to any of the Midland Plans before the IRS, the Department
of Labor or the PBGC;
(F) No trust funding a Midland Plan is intended to be exempt from
federal income taxation pursuant to Section 501(c)(9) of the Code;
(iv) In connection with the consummation of the transaction
contemplated by this Agreement, no payments have or will be made under the
Midland Plans or Midland Benefit Programs or Agreements which, in the
aggregate, would result in imposition of the sanctions imposed under
Sections 280G and 4999 of the Code.
(v) Except as otherwise set forth in Schedule 3.1(l)(v), no Midland
Plan or Midland Benefit Program or Agreement provides retiree medical or
retiree life insurance benefits to any person and a member of the Midland
Group is not contractually or otherwise obligated (whether or not in
writing) to provide any person with life insurance or medical benefits upon
retirement or termination of employment, other than as required by the
provisions of Section 601 through 608 of ERISA and Section 4980B of the
Code. Additionally, each Midland Plan which is an "employee welfare benefit
plan," as such term is defined in Section 3(1) of ERISA, may be
unilaterally amended or terminated in its entirety without liability except
as to benefits accrued thereunder prior to such amendment or termination.
(vi) No Midland Plan is a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(vii) Except for the Midland Stock Plans or as otherwise set forth in
Schedule 3.1(l)(vii), no Midland Plan or Midland Benefit Program or
Agreement provides that payments pursuant to such Midland Plan or Midland
Benefit Program or Agreement may be made in securities of a member of the
Midland Group or a Commonly Controlled Entity, nor does any trust
maintained pursuant to any Midland Plan or Midland Benefit Program or
Agreement hold any securities of a member of the Midland Group.
(m) LABOR MATTERS. Except as set forth on Schedule 3.1(m) of the
Midland Disclosure Schedule or in the Midland SEC Documents:
(i) neither Midland nor any of its Subsidiaries is a party to any
collective bargaining agreement or other current labor agreement with
any labor union or organization, and there is no current union
representation question involving employees of Midland or any of its
Subsidiaries, nor does Midland or any of its Subsidiaries know of any
activity or proceeding of any labor organization (or representative
thereof) or employee group (or representative thereof) to organize any
such employees;
(ii) as of the date hereof, there is no unfair labor practice
charge or grievance arising out of a collective bargaining agreement or
other grievance procedure against Midland or any of its Subsidiaries
pending, or, to the knowledge or Midland or any of its Subsidiaries,
threatened, that has, or is reasonably likely to have, a Material
Adverse Effect on Midland;
(iii) as of the date hereof, there is no complaint, lawsuit or
proceeding in any forum by or on behalf of any present or former
employee, any applicant for employment or any classes of the foregoing
alleging breach of any express or implied contract of employment, any
law or regulation governing employment or the termination thereof or
other discriminatory, wrongful or tortious conduct in connection with
the employment relationship against Midland or any of its Subsidiaries
pending, or, to the knowledge of Midland or any of its Subsidiaries,
threatened, that has, or is reasonably likely to have, a Material
Adverse Effect on Midland;
(iv) Midland and each of its Subsidiaries are in compliance with
all applicable laws respecting employment and employment practices,
terms and conditions of employment, wages, hours of work
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and occupational safety and health, except for non-compliance that does
not have, and is not reasonably likely to have, a Material Adverse
Effect on Midland; and
(v) as of the date hereof, there is no proceeding, claim, suit,
action or governmental investigation pending or, to the knowledge of
Midland or any of its Subsidiaries, threatened, in respect to which any
current or former director, officer, employee or agent of Midland or any
of its Subsidiaries is or may be entitled to claim indemnification from
Midland or any of its Subsidiaries pursuant to the Articles of
Incorporation or Bylaws of Midland or any provision of the comparable
charter or organizational documents of any of its Subsidiaries, as
provided in any indemnification agreement to which Midland or any
Subsidiary of Midland is a party or pursuant to applicable law that has,
or is reasonably likely to have, a Material Adverse Effect on Midland.
(n) INTANGIBLE PROPERTY. Midland and its Subsidiaries possess or have
adequate rights to use all material trademarks, trade names, patents,
service marks, brand marks, brand names, computer programs, databases,
industrial designs and copyrights necessary for the operation of the
businesses of each of Midland and its Subsidiaries (collectively, the
"Midland Intangible Property"), except where the failure to possess or have
adequate rights to use such properties would not reasonably be expected to
have a Material Adverse Effect on Midland. All of the Midland Intangible
Property is owned or licensed by Midland or its Subsidiaries free and clear
of any and all Liens, except those that are not reasonably likely to have a
Material Adverse Effect on Midland, and neither Midland nor any such
Subsidiary has forfeited or otherwise relinquished any Midland Intangible
Property which forfeiture would result in a Material Adverse Effect on
Midland. To the knowledge of Midland, the use of the Midland Intangible
Property by Midland or its Subsidiaries does not, in any material respect,
conflict with, infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including, without
limitation, any intellectual property right, trademark, trade name, patent,
service ▇▇▇▇, brand ▇▇▇▇, brand name, computer program, database,
industrial design, copyright or any pending application therefor of any
other person and there have been no claims made and neither Midland nor any
of its Subsidiaries has received any notice of any claim or otherwise knows
that any of the Midland Intangible Property is invalid or conflicts with
the asserted rights of any other person or has not been used or enforced or
has failed to have been used or enforced in a manner that would result in
the abandonment, cancellation or unenforceability of any of the Midland
Intangible Property, except for any such conflict, infringement, violation,
interference, claim, invalidity, abandonment, cancellation or
unenforceability that would not reasonably be expected to have a Material
Adverse Effect on Midland.
(o) ENVIRONMENTAL MATTERS.
For purposes of this Agreement:
(i) "Environmental Laws" means all federal, state and local laws
(including common laws), rules, regulations, ordinances, orders,
decrees of any Governmental Entity, whether now in existence or
hereafter enacted and in effect at the time of Closing, relating to
pollution or the protection of human health, safety or the
environment of any jurisdiction in which the applicable party hereto
owns or operates assets or conducts business or owned or operated
assets or conducted business (whether or not through a predecessor
entity) (including, without limitation, ambient air, surface water,
groundwater, land surface, subsurface strata, natural resources or
wildlife), including, without limitation, laws and regulations
relating to Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of solid waste or
Hazardous Materials, and any similar laws, rules, regulations,
ordinances, orders and decrees of any foreign jurisdiction in which
the applicable party hereto owns or operates assets or conducts
business;
(ii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials (including naturally occurring
radioactive materials), asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, polychlorinated biphenyls
or trans-
A-29
formers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls, (B) any chemicals, materials or substances
which are now defined as or included in the definition of "solid
wastes," "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances" or "toxic pollutants," or words of
similar import, under any Environmental Law and (C) any other
chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated under any Environmental Law in a
jurisdiction in which Midland or any of its Subsidiaries operates
(for purposes of Section 3.1(o)) or in which Vista or any of its
Subsidiaries operates (for purposes of Section 3.2(o)).
(iii) "Release" means any spill, effluent, emission, leaking,
pumping, pouring, emptying, escaping, dumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, or into or out of any property owned,
operated or leased by the applicable party or its Subsidiaries; and
(iv) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a Governmental
Entity or required under any Environmental Law, or voluntarily
undertaken to (A) clean up, remove, treat, or in any other way
ameliorate or address any Hazardous Materials or other substance in
the indoor or outdoor environment; (B) prevent the Release or threat
of Release, or minimize the further Release of any Hazardous Material
so it does not endanger or threaten to endanger the public or
employee health or welfare of the indoor or outdoor environment; (C)
perform pre-remedial studies and investigations or post-remedial
monitoring and care pertaining or relating to a Release; or (D) bring
the applicable party into compliance with any Environmental Law.
Except as disclosed on Schedule 3.1(o) of the Midland Disclosure
Schedule:
(v) The operations of Midland and its Subsidiaries have been
conducted, are and, as of the Closing Date, will be, in
compliance with all Environmental Laws, except where the failure
to so comply would not reasonably be expected to have a Material
Adverse Effect on Midland;
(vi) Midland and its Subsidiaries have obtained and will
maintain all permits, licenses and registrations, or applications
relating thereto, and have made and will make all filings,
reports and notices required under applicable Environmental Laws
for the continued operations of their respective businesses,
except such matters the lack or failure of which would not
reasonably be expected to lead to a Material Adverse Effect on
Midland;
(vii) Midland and its Subsidiaries are not subject to any
outstanding written orders issued by, or contracts with, any
Governmental Entity or other person respecting (A) Environmental
Laws, (B) Remedial Action, (C) any Release or threatened Release
of a Hazardous Material or (D) an assumption of responsibility
for environmental liabilities of another person, except such
orders or contracts the compliance with which would not
reasonably be expected to have a Material Adverse Effect on
Midland;
(viii) Midland and its Subsidiaries have not received any
written communication alleging, with respect to any such party,
the violation of or liability under any Environmental Law, which
violation or liability would reasonably be expected to have a
Material Adverse Effect on Midland;
(ix) Neither Midland nor any of its Subsidiaries has any
contingent liability in connection with the Release of any
Hazardous Material into the indoor or outdoor environment
(whether on-site or off-site) or employee or third party exposure
to Hazardous Materials that would reasonably be expected to lead
to a Material Adverse Effect on Midland;
(x) The operations of Midland or its Subsidiaries involving
the generation, transportation, treatment, storage or disposal of
hazardous or solid waste, as defined and regulated
A-30
under 40 C.F.R. Parts 260-270 (in effect as of the date of this
Agreement) or any applicable state equivalent, are in compliance
with applicable Environmental Laws, except where the failure to
so comply would not reasonably be expected to have a Material
Adverse Effect on Midland; and
(xi) To the knowledge of Midland, there is not now on or in
any property of Midland or its Subsidiaries or any property for
which Midland or its Subsidiaries is potentially liable any of
the following: (A) any underground storage tanks or surface
impoundments or (B) any on-site disposal of Hazardous Material,
any of which ((A) or (B) preceding) could reasonably be expected
to have a Material Adverse Effect on Midland.
(p) INSURANCE. Schedule 3.1(p) of the Midland Disclosure Schedule sets
forth an insurance schedule of Midland's and each of its Subsidiaries'
directors' and officers' liability insurance, primary and excess casualty
insurance policies, providing coverage for bodily injury and property
damage to third parties, including products liability and completed
operations coverage, and worker's compensation, in effect as of the date
hereof. Midland maintains, and through the Closing Date will maintain,
insurance in such amounts and covering such risks as are in accordance with
normal industry practice for companies engaged in businesses similar to
those of Midland and each of its Subsidiaries (taking into account the cost
and availability of such insurance). Each of Midland and its Subsidiaries
may terminate each of its insurance policies or binders at or after the
Closing Date and will incur no penalties or other material costs in doing
so. None of such policies or binders was obtained through the use of false
or misleading information or the failure to provide the insurer with all
information requested in order to evaluate the liabilities and risks
insured. There is no material default with respect to any provision
contained in any such policy or binder nor has Midland or any of its
Subsidiaries failed to give any notice or present any claim under any such
policy or binder in due and timely fashion. There are no billed but unpaid
premiums past due under any such policy or binder. Except as otherwise
disclosed on Schedule 3.1(p) of the Midland Disclosure Schedule, there are
no outstanding claims under any such policies or binders and, to the
knowledge of Midland, there has not occurred any event that might
reasonably form the basis of any claim against or relating to Midland or
any of its Subsidiaries is not covered by any of such policies or binders.
No notice of cancellation or non-renewal of any such policies or binders
has been received. Except as otherwise disclosed on Schedule 3.1(p) of the
Midland Disclosure Schedule, there are no performance bonds outstanding
with respect to Midland or any of its Subsidiaries.
(q) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed on
Schedule 3.1(q) of the Midland Disclosure Schedule or as contemplated by
this Agreement, since December 31, 1997 none of Midland or any of its
Subsidiaries has done any of the following:
(i) Discharged or satisfied any Lien or paid any obligation or
liability, absolute or contingent, other than current liabilities
incurred and paid in the ordinary course of business and consistent with
past practices;
(ii) Paid or declared any dividends or distributions, purchased,
redeemed, acquired, or retired any indebtedness, stock, or other
securities from its shareholders or other securityholders, made any
loans or advances or guaranteed any loans or advances to any Person
(other than loans, advances, or guaranties made in the ordinary course
of business and consistent with past practices), or otherwise incurred
or suffered to exist any liabilities (other than current liabilities
incurred in the ordinary course of business and consistent with past
practices);
(iii) Except for Permitted Encumbrances suffered or permitted any
Lien to arise or be granted or created against or upon any of its
assets;
(iv) Cancelled, waived, or released any rights or claims against,
or indebtedness owed by, third parties;
(v) Amended its certificate or articles of incorporation or bylaws
or comparable organizational documents;
A-31
(vi) Made or permitted any amendment, supplement, modification, or
termination of any Midland Material Agreement;
(vii) Paid or made any agreement to pay any severance or
termination payment to any employee or consultant;
(viii) Sold, transferred, assigned, or otherwise disposed of (A)
any Oil and Gas Interests of Midland that, individually or in the
aggregate, had a value at the time of such transfer, assignment, or
disposition of $50,000 or more or (B) any other assets (including any
undeveloped leasehold acreage) that, individually or in the aggregate,
had a value at the time of such transfer, assignment, or disposition of
$50,000 or more; provided, however, that this paragraph shall not apply
to Hydrocarbons sold in the ordinary course of business and consistent
with past practices;
(ix) Made any investment in or contribution, payment, or advance to
any Person (other than investments, contributions, payments, or
advances, or commitments with respect thereto, made in the ordinary
course of business and consistent with past practices).
(x) Granted present or future increases in the rates of
compensation or other benefits payable to any of its directors,
officers, or other executive personnel or any consultant or paid any
bonuses to such Persons;
(xi) Paid, loaned, or advanced (other than the payment, advance or
reimbursement of expenses in the ordinary course of business) any
amounts to, or sold, transferred, or leased any of its assets to, or
entered into any other transactions with, any of its Affiliates;
(xii) Waived any rights of material value;
(xiii) Suffered any material damage, destruction, or loss, whether
or not covered by insurance, affecting its assets or prospects;
(xiv) Made any change in any of the accounting principles followed
by it or the method of applying such principles;
(xv) Suffered any material labor trouble or any material
controversies with any of its employees or collective bargaining
association representing any of its employees;
(xvi) Entered into any other transactions (other than this
Agreement) except in the ordinary course of business and consistent with
past practices;
(xvii) Taken any of the actions referred to in Section 4.1 except
as would have been permitted or required thereby had such Section been
applicable at the time of such action;
(xviii) Agreed, whether in writing or otherwise, to do any of the
foregoing; or
(xix) Suffered any material adverse change or trend in its
financial position, results of operations, or business (other than
changes or trends, including changes or trends in commodity prices,
generally prevalent in or affecting the oil and gas industry).
(r) GOVERNMENTAL REGULATION. None of Midland or any of its
Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
the Investment Company Act of 1940, or any state public utilities code.
(s) NO RESTRICTIONS. Except as otherwise disclosed on Schedule 3.1(s)
of the Midland Disclosure Schedule, none of Midland or any of its
Subsidiaries is a party to (i) any agreement, indenture, or other
instrument that contains restrictions with respect to the payment of
dividends or other distributions with respect to its capital, (ii) any
financial arrangement with respect to or creating any indebtedness to any
Person (other than indebtedness reflected in the Midland SEC Documents or
indebtedness incurred in the ordinary course of business), (iii) any
agreement, contract, or commitment relating to the making of any advance
to, or investment in, any Person (other than advances in the ordinary
course of business), (iv) any guaranty or other contingent liability with
respect to any indebtedness or obligation of any
A-32
Person (other than guaranties undertaken in the ordinary course of business
and other than the endorsement of negotiable instruments for collection in
the ordinary course of business), (v) any management, service, consulting,
or other contract of a similar nature that cannot be terminated by Midland
or any of its Subsidiaries, as the case may be, upon written notice of 30
days or less and without penalty or other obligation, or (vi) any
agreement, contract, or commitment limiting in any respect its ability to
compete with any Person or otherwise conduct business of any line or
nature.
(t) AUDITS AND SETTLEMENTS. Except as otherwise disclosed on Schedule
3.1(t) of the Midland Disclosure Schedule, none of Midland or any of its
Subsidiaries is a party or subject to any unresolved or incomplete audit,
accounting, or other settlement.
(u) EMPLOYMENT CONTRACTS AND BENEFITS. Except as otherwise disclosed
on Schedule 3.1(u) of the Midland Disclosure Schedule or otherwise provided
for in any Midland Plan or Midland Benefit Program or Agreement, (i) none
of Midland or any of its Subsidiaries is subject to or obligated under any
consulting, employment, severance, termination, or similar arrangement, any
employee benefit, incentive, deferred compensation plan with respect to any
Person, or any bonus, profit sharing, pension, stock option, stock
purchase, or similar plan or other arrangement or other fringe benefit plan
entered into or maintained for the benefit of employees or any other Person
and (ii) no employee of Midland or any of its Subsidiaries, or any other
Person owns, or has any right granted by Midland or any of its Subsidiaries
to acquire, any interest in any of the assets or business of Midland or any
of its Subsidiaries.
(v) ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Schedule
3.1(v) of the Midland Disclosure Schedule, all of the accounts, notes, and
loans receivable that have been recorded on the books of Midland or any of
its Subsidiaries are bona fide and represent accounts, notes, and loans
receivable validly due for goods sold or services rendered and are
reasonably expected to be collected in full within 90 days after the
applicable invoice or note maturity date (other than such accounts, notes,
and loans receivable that, individually or in the aggregate, do not have a
book value as of the date hereof in excess of $25,000). Except for
Permitted Encumbrances, all of such accounts, notes, and loans receivable
are free and clear of any and all Liens and other adverse claims and
charges, and none of such accounts, notes, or loans receivable is subject
to any offsets or claims of offset. None of the obligors on such accounts,
notes, or loans receivable has given notice to Midland or any of its
Subsidiaries that it will or may refuse to pay the full amount or any
portion thereof.
(w) TITLE TO ASSETS. Midland and its Subsidiaries (individually or
collectively) have Defensible Title to all Oil and Gas Interests of Midland
included or reflected in the Midland Engineering Report or the Midland
Financial Statements. Each Oil and Gas Interest included or reflected in
the Midland Engineering Report entitles Midland and its Subsidiaries
(individually or collectively) to receive not less than the undivided
interest set forth in (or derived from) the Midland Engineering Report of
all Hydrocarbons produced, saved, and sold from or attributable to such Oil
and Gas Interest, and the portion of the costs and expenses of operation
and development of such Oil and Gas Interest that is borne or to be borne
by Midland and its Subsidiaries (individually or collectively) is not
greater than the undivided interest set forth in (or derived from) the
Midland Engineering Report. Except for Permitted Encumbrances, each of
Midland and its Subsidiaries has good, marketable, and defensible title to
its assets (other than the Oil and Gas Interests of Midland). All leases
pursuant to which Midland or any of its Subsidiaries leases any assets are
in full force and effect, and neither Midland or any of its Subsidiaries
has received any notice of default under any such lease.
(x) MIDLAND ENGINEERING REPORT. All information supplied to ▇▇▇▇▇▇▇▇▇▇
Petroleum Consultants, Inc. by or on behalf of Midland that was material to
such firm's evaluation of Midland's Oil and Gas Interests in connection
with the preparation of the Midland Engineering Report was (at the time
supplied or as modified or amended prior to the issuance of the Midland
Engineering Report) true and correct in all material respects. Except for
changes in classification or values of oil and gas reserve or property
interests that occurred in the ordinary course of business since December
31, 1997 and except for changes (including changes in commodity prices)
generally affecting the oil and gas industry, there has been no Material
Adverse Change with respect to the matters addressed in the Midland
Engineering Report.
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(y) OIL AND GAS OPERATIONS. Except as otherwise disclosed on Schedule
3.1(y):
(i) None of the ▇▇▇▇▇ included in the Oil and Gas Interests of
Midland has been overproduced such that it is subject or liable to being
shut-in or to any overproduction penalty, except where any such
overproduction could not reasonably be expected to have a Material
Adverse Effect on Midland;
(ii) There have been no changes proposed in the production
allowables for any ▇▇▇▇▇ included in the Oil and Gas Interests of
Midland that could reasonably be expected to have a Material Adverse
Effect on Midland;
(iii) All ▇▇▇▇▇ included in the Oil and Gas Interests of Midland
have been drilled and (if completed) completed, operated, and produced
in accordance with good oil and gas field practices and in compliance in
all material respects with applicable oil and gas leases and applicable
laws, rules, and regulations, except where any failure or violation
could not reasonably be expected to have a Material Adverse Effect on
Midland;
(iv) None of Midland or any of its Subsidiaries has agreed to or is
now obligated to abandon any well operated by any of them and included
in the Oil and Gas Interests of Midland that is or will not be abandoned
and reclaimed in accordance with applicable laws, rules, and regulations
and good oil and gas industry practices;
(v) Proceeds from the sale of Hydrocarbons produced from and
attributable to Midland's Oil and Gas Interests are being received by
Midland or its Subsidiaries in a timely manner and are not being held in
suspense for any reason (except for amounts, individually or in the
aggregate, not in excess of $25,000 and held in suspense in the ordinary
course of business); and
(vi) No Person has any call on, option to purchase, or similar
rights with respect to Midland's Oil and Gas Interests or to the
production attributable thereto, and upon consummation of the
transactions contemplated by this Agreement, Midland and its
Subsidiaries will have the right to market production from Midland's Oil
and Gas Interests on terms no less favorable than the terms upon which
such company is currently marketing such production.
(z) HYDROCARBON SALES AND PURCHASE AGREEMENTS. Except as otherwise
disclosed on Schedule 3.1(z) of the Midland Disclosure Schedule:
(i) None of the Hydrocarbon Sales Agreements of Midland or
Hydrocarbon Purchase Agreements of Midland has required since December
31, 1997, or will require as of or after the Closing Date, Midland or
any of its Subsidiaries (A) to have sold or delivered, or to sell or
deliver, Hydrocarbons for a price materially less than the market value
price that would have been, or would be, received pursuant to any
arm's-length contract for a term of one month with an unaffiliated
third-party purchaser or (B) to have purchased or received, or to
purchase or receive, Hydrocarbons for a price materially greater than
the market value price that would have been, or would be, paid pursuant
to an arm's-length contract for a term of one month with an unaffiliated
third-party seller;
(ii) Each of the Hydrocarbon Agreements of Midland is valid,
binding, and in full force and effect, and no party is in material
breach or default of any Hydrocarbon Agreement of Midland, and to the
knowledge of Midland, no event has occurred that with notice or lapse of
time (or both) would constitute a material breach or default or permit
termination, modification, or acceleration under any Hydrocarbon
Agreement of Midland;
(iii) There have been no claims from any third party for any price
reduction or increase or volume reduction or increase under any of the
Hydrocarbon Agreements of Midland, and none of Midland or any of its
Subsidiaries has made any claims for any price reduction or increase or
volume reduction or increase under any of the Hydrocarbon Agreements of
Midland;
(iv) Payments for Hydrocarbons sold pursuant to each Hydrocarbon
Sales Agreement of Midland have been made (subject to adjustment in
accordance with such Hydrocarbon Sales
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Agreements) materially in accordance with prices or price setting
mechanisms set forth in such Hydrocarbon Sales Agreements;
(v) No purchaser under any Hydrocarbon Sales Agreement of Midland
has notified Midland or any of its Subsidiaries (or, to the knowledge of
Midland, the operator of any property) of its intent to cancel,
terminate, or renegotiate any Hydrocarbon Sales Agreement of Midland or
otherwise to fail and refuse to take and pay for Hydrocarbons in the
quantities and at the price set out in any Hydrocarbon Sales Agreement,
whether such failure or refusal was pursuant to any force majeure,
market out, or similar provisions contained in such Hydrocarbon Sales
Agreement or otherwise;
(vi) None of Midland or any of its Subsidiaries is obligated in any
Hydrocarbon Sales Agreement by virtue of any prepayment arrangement, a
"take-or-pay" or similar provision, a production payment, or any other
arrangements to deliver Hydrocarbons produced from an Oil and Gas
Interest of Midland at some future time without then or thereafter
receiving payment therefor;
(vii) Midland and its Subsidiaries, collectively, are not
obligated, due to production and pipeline gas imbalances, to deliver gas
having a market value in excess of $50,000 without receiving payment
therefor; and
(viii) The Hydrocarbon Agreements of Midland are of the type
generally found in the oil and gas industry, do not (individually or in
the aggregate) contain unusual or unduly burdensome provisions that may
have a Material Adverse Effect on Midland, and are in form and substance
considered normal within the oil and gas industry.
(aa) FINANCIAL AND COMMODITY HEDGING. Schedule 3.1(aa) of the Midland
Disclosure Schedule accurately summarizes the outstanding Hydrocarbon and
financial hedging positions of Midland and its Subsidiaries (including
fixed price controls, collars, swaps, caps, ▇▇▇▇▇▇, and puts).
(bb) COMMITTED CAPITAL EXPENDITURES. Schedule 3.1(bb) of the Midland
Disclosure Schedule is a true, accurate, and complete list of all
commitments (including AFEs) pursuant to which Midland or any of its
Subsidiaries has paid or incurred since December 31, 1997, or is obligated
to pay or incur after the date hereof, drilling or capital expenditures in
excess of $25,000 with respect to any well, and except as otherwise
disclosed on Schedule 3.1(bb) of the Midland Disclosure Schedule, the
aggregate amount of drilling and capital expenditures with respect to oil
and gas ▇▇▇▇▇ that Midland and its Subsidiaries have paid or incurred since
December 31, 1997 or are obligated to pay or incur after the date hereof
does not exceed $500,000.
(cc) BUSINESS RELATIONS. To the knowledge of Midland, since December
31, 1997, there has been no termination, cancellation, or limitation of, or
any material modification or change in, the material business relationships
of Midland or any of its Subsidiaries with any material supplier or
customer or any partner or joint venture partner nor has there been any
material development relating to any such supplier, customer, partner, or
joint venture partner that could reasonably be expected to have a Material
Adverse Effect on Midland.
(dd) BOOKS AND RECORDS. All books, records, and files of Midland and
its Subsidiaries (including those pertaining to Midland's Oil and Gas
Interests, ▇▇▇▇▇, and other assets, those pertaining to the production,
gathering, transportation, and sale of Hydrocarbons, and corporate,
accounting, financial, and employee records) (i) have been prepared,
assembled, and maintained in accordance with usual and customary policies
and procedures and (ii) fairly and accurately reflect the ownership, use,
enjoyment, and operation by Midland and its Subsidiaries of their
respective assets.
(ee) BROKERS. Except as disclosed in Schedule 3.1(ee), no broker,
finder, investment banker, or other Person is or will be, in connection
with the transactions contemplated by this Agreement, entitled to any
brokerage, finder's, or other fee or compensation based on any arrangement
or agreement made by or on behalf of Midland and for which Newco, Midland
or any Subsidiary of Midland.
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(ff) VOTE REQUIRED. The affirmative vote of the holders of at least
two-thirds of the outstanding shares of Midland Common Stock is the only
vote of the holders of any class or series of Midland capital stock or
other voting securities necessary to approve this Agreement, the Midland
Merger, and the transactions contemplated hereby.
(gg) DISCLOSURE AND INVESTIGATION. No representation or warranty of
Midland contained in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements contained herein not misleading. The Responsible Officers,
individually or collectively, of Midland and its Subsidiaries have
conducted, or have caused the respective officers, employees,
representatives, or agents of Midland and its Subsidiaries to conduct, such
investigations and inquiries that they reasonably believe most likely to
confirm the truth and accuracy of each of the representations and
warranties contained in this Section.
(hh) FAIRNESS OPINION. Midland has received an oral opinion from ▇▇▇▇
▇▇▇▇▇▇▇▇ Incorporated to the effect that the consideration to be received
in the Midland Merger by the holders of shares of Midland Common Stock is
fair to such holders from a financial point of view and such opinion has
not been withdrawn, revoked, or modified.
3.2 REPRESENTATIONS AND WARRANTIES OF VISTA. Vista hereby represents and
warrants to Midland as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Vista, the General
Partner and Vista Sub is a partnership or corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, has all requisite power and authority to own, lease, and
operate its properties and to carry on its business as now being conducted,
and is duly qualified and in good standing to do business in each
jurisdiction in which the business it is conducting, or the operation,
ownership, or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
would not have a Material Adverse Effect on Vista. Vista has heretofore
delivered to Midland complete and correct copies of its Agreement of
Limited Partnership, as amended to date. The jurisdiction of incorporation
of the General Partner and Vista Sub is Texas. Vista has no Subsidiary
other than Vista Sub.
(b) CAPITAL STRUCTURE.
(i) All outstanding Partnership Interests are validly issued and
all capital contributions required to be made with respect to such
Partnership Interests have been made in full. The outstanding
Partnership Interests are subject to preemptive rights as set forth in
the Agreement of Limited Partnership. The outstanding Partnership
Interests have not been issued in violation of such preemptive rights.
Except as set forth in this Section 3.2(b), the Agreement of Limited
Partnership, or on Schedule 3.2(b) of the Vista Disclosure Schedule,
there are outstanding: (1) no Partnership Interests, Voting Debt or
other voting securities of Vista; (2) no securities of Vista or Vista
Sub convertible into or exchangeable for Partnership Interests, Voting
Debt or other voting securities of Vista or Vista Sub; and (3) no
options, warrants, calls, rights (including preemptive rights),
commitments, or agreements to which Vista or Vista Sub is a party or by
which it is bound in any case obligating Vista or Vista Sub to issue,
deliver, sell, purchase, redeem or acquire, or cause to be issued,
delivered, sold, purchased, redeemed or acquired, additional Partnership
Interests or any Voting Debt or other voting securities of Vista or of
Vista Sub, or obligating Vista or Vista Sub to grant, extend, or enter
into any such option, warrant, call, right, commitment, or agreement.
Except for the Agreement of Limited Partnership, there are not as of the
date hereof and there will not be at the Effective Time any voting
trusts or other agreements or understandings to which Vista is a party
or by which it is bound relating to the voting of any Partnership
Interests that will limit in any way the solicitation of consents by or
on behalf of Vista from, or the casting of votes by, the partners of
Vista with respect to the Vista Exchange. All outstanding shares of
capital stock of Vista Sub are owned by Vista, free and clear of all
Liens. There are no restrictions on Vista to vote the capital stock of
Vista Sub
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(ii) As of the date hereof, the authorized capital stock of the
General Partner consists of 100,000 shares of GP Common Stock. At the
close of business on April 30, 1998, 79,254 shares of GP Common Stock
were issued and outstanding and no shares of GP Common Stock are held by
the General Partner in its treasury. No shares of GP Common Stock are
reserved for issuance for any other purpose. No Voting Debt on any
matters on which shareholders of the General Partner may vote are issued
and outstanding. All outstanding shares of GP Common Stock are validly
issued, fully paid, and nonassessable and are not subject to preemptive
rights. Except as described above, there are outstanding (A) no shares
of GP Common Stock, Voting Debt or other voting securities of the
General Partner; (B) no securities of the General Partner convertible
into or exchangeable for shares of GP Common Stock, Voting Debt or other
voting securities of the General Partner; and (C) no options, warrants,
calls, rights (including preemptive rights), commitments, or agreements
to which the General Partner is a party or by which it is bound in any
case obligating the General Partner to issue, deliver, sell, purchase,
redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, additional shares of GP Common Stock or any Voting
Debt or other voting securities of the General Partner, or obligating
the General Partner to grant, extend, or enter into any such option,
warrant, call, right, commitment, or agreement.
(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) The General Partner has approved the Vista Exchange and this
Agreement, and declared the Vista Exchange and this Agreement to be in
the best interests of the shareholders of the General Partner and the
limited partners of Vista. Vista has all requisite partnership power and
authority to enter into this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of the General Partner and all necessary partnership action on
the part of Vista. This Agreement has been duly executed and delivered
by Vista and, assuming this Agreement constitutes the valid and binding
obligation of Midland, Newco, and Merger Sub, constitutes a valid and
binding obligation of Vista enforceable in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) Except as set forth on Schedule 3.2(c) of the Vista Disclosure
Schedule, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with
the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation, or
acceleration of any material obligation or to the loss of a material
benefit under, or give rise to a right of purchase under, result in the
creation of any Lien upon any of the properties or assets of Vista, the
General Partner or Vista Sub under, or otherwise result in a material
detriment to Vista, the General Partner or Vista Sub under, any
provision of (A) the Agreement of Limited Partnership or any provision
of the Articles of Incorporation or Bylaws the General Partner or Vista
Sub, (B) any loan or credit agreement, note, bond, mortgage, indenture,
lease, or other agreement, instrument, permit, concession, franchise, or
license applicable to Vista, the General Partner or Vista Sub, (C) any
joint venture or other ownership arrangement, or (D) any judgment,
order, decree, statute, law, ordinance, rule, or regulation applicable
to Vista, the General Partner or Vista Sub or any of their respective
properties or assets, other than, in the case of clause (B) or (C) in
this subsection, any such conflicts, violations, defaults, rights, Liens
that, individually or in the aggregate, would not have a Material
Adverse Effect on Vista, materially impair the ability of Vista to
perform its obligations hereunder, or prevent the consummation of any of
the transactions contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any
Governmental Entity, is required by or with respect to Vista, the
General Partner or Vista Sub in connection with the execution and
delivery of this Agreement by Vista or the consummation by Vista of the
transactions contemplated hereby, as to which the failure to obtain or
A-37
make would have a Material Adverse Effect on Vista, except for (A) such
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws, or environmental laws; (B) such
filings and approvals as may be required by any foreign premerger
notification, securities, corporate or other law, rule or regulation;
and (C) any such consent, approval, order, authorization, registration,
declaration, filing, or permit that the failure to obtain or make would
not, individually or in the aggregate, have a Material Adverse Effect on
Vista, materially impair the ability of Vista to perform its obligations
hereunder, or prevent the consummation of any of the transactions
contemplated hereby.
(d) FINANCIAL STATEMENTS AND MATERIAL AGREEMENTS. Vista has made
available to Midland a true and complete copy of (i) each of the Vista
Material Agreements and (ii) the audited consolidated balance sheets of
Vista and its sole Subsidiary as of December 31, 1997, together with the
audited consolidated statements of operations, partners' capital, and cash
flows of Vista and its sole Subsidiary for the year then ended, and the
notes thereto, accompanied by the reports thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
(such audited consolidated financial statements of Vista collectively being
referred to as the "Financial Statements"). The Financial Statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly present in accordance with applicable requirements of GAAP the
consolidated financial position of Vista and its consolidated sole
Subsidiary as of their respective dates and the consolidated results of
operations and the consolidated cash flows of Vista and its sole Subsidiary
for year then ended.
(e) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Vista for inclusion or incorporation by reference in the S-4 to
be filed with the SEC by Newco in connection with the issuance of shares of
Newco Common Stock in the Midland Merger will, at the time the S-4 becomes
effective under the Securities Act or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and none of the information supplied or to be supplied by
Vista and included or incorporated by reference in the Proxy Statement
will, at the date mailed to shareholders of Midland or at the time of the
meeting of such shareholders to be held in connection with the Midland
Merger or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Vista, the General
Partner or Vista Sub, or with respect to other information supplied by
Vista for inclusion in the Proxy Statement or S-4, shall occur which is
required to be described in an amendment of, or a supplement to, the S-4 or
the Proxy Statement, such event shall be so described, and such amendment
or supplement shall be promptly filed with the SEC.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in, or
reflected in the Financial Statements, or except as contemplated by this
Agreement, since December 31, 1997, there has not been: (i) any
declaration, setting aside, or payment of any distribution (whether in
cash, stock or property) with respect to any of Vista's equity securities;
(ii) any amendment of any material term of any outstanding equity security
of Vista, the General Partner or Vista Sub; (iii) any repurchase,
redemption, or other acquisition by Vista, the General Partner or Vista Sub
of any outstanding shares of capital stock, Partnership Interests, or other
equity securities of, or other ownership interests in, Vista, the General
Partner or Vista Sub; (iv) any material change in any method of accounting
or accounting practice or any tax method, practice, or election by Vista,
the General Partner or Vista Sub; or (v) any other transaction, commitment,
dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) that is
reasonably likely to have a Material Adverse Effect on Vista, except for
general economic changes and changes that may affect the industries of
Vista, the General Partner or Vista Sub generally.
(g) NO UNDISCLOSED MATERIAL LIABILITIES. Except as disclosed in the
Financial Statements, as of the date hereof, there are no liabilities of
Vista, the General Partner or Vista Sub of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that
are reasonably likely
A-38
to have a Material Adverse Effect on Vista, other than: (i) liabilities
adequately provided for on the consolidated balance sheet of Vista and its
sole Subsidiary dated as of December 31, 1997 (including the notes
thereto), a copy of which has previously been provided to Midland; (ii)
liabilities incurred in the ordinary course of business subsequent to
December 31, 1997; and (iii) liabilities under this Agreement. The General
Partner has not engaged in any business, operations or activities other
than business, operations and activities undertaken in its capacity as
general partner of Vista.
(h) NO DEFAULT. Neither Vista, the General Partner nor Vista Sub is in
default or violation (and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation) of any
term, condition or provision of (i) the Agreement of Limited Partnership or
the Articles of Incorporation and Bylaws of the General Partner or Vista
Sub, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease, or other agreement, instrument, permit, concession, franchise, or
license to which Vista, the General Partner or Vista Sub is now a party or
by which Vista, the General Partner or Vista Sub or any of their respective
properties or assets is bound, or (iii) any order, writ, injunction,
decree, statute, rule or regulation applicable to Vista, the General
Partner or Vista Sub, except in the case of clauses (ii) and (iii) in this
subsection for defaults or violations which in the aggregate would not have
a Material Adverse Effect on Vista.
(i) COMPLIANCE WITH APPLICABLE LAWS. Vista, the General Partner and
Vista Sub hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Vista Permits"), except
where the failure so to hold would not have a Material Adverse Effect on
Vista. Vista, the General Partner and Vista Sub are in compliance with the
terms of the Vista Permits, except where the failure so to comply would not
have a Material Adverse Effect on Vista. The businesses of Vista, the
General Partner and Vista Sub are not being conducted in violation of any
law, ordinance, or regulation of any Governmental Entity, except for
possible violations which would not have a Material Adverse Effect on
Vista. As of the date of this Agreement, no investigation or review by any
Governmental Entity with respect to Vista, the General Partner and Vista
Sub is pending and of which Vista has knowledge or, to the knowledge of
Vista as of the date hereof, threatened, other than those the outcome of
which would not have a Material Adverse Effect on Vista.
(j) LITIGATION. Except as disclosed on Schedule 3.2(j) of the Vista
Disclosure Schedule, as of the date of this Agreement there is no suit,
action or proceeding pending, or, to the knowledge of Vista, threatened
against or affecting Vista, the General Partner or Vista Sub ("Vista
Litigation"), and Vista, the General Partner and Vista Sub have no
knowledge of any facts that are likely to give rise to any Vista
Litigation, that (in any case) is reasonably likely to have a Material
Adverse Effect on Vista, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against
Vista, the General Partner or Vista Sub ("Vista Order") that is reasonably
likely to have a Material Adverse Effect on Vista or its ability to
consummate the transactions contemplated by this Agreement. Schedule 3.2(j)
of the Vista Disclosure Schedule contains an accurate and complete list of
all suits, actions and proceedings pending or, to the knowledge of Vista,
threatened against or affecting Vista, the General Partner or Vista Sub as
of the date hereof.
(k) TAXES. Except as set forth on Schedule 3.2(k) of the Vista
Disclosure Schedule:
(i) Each of Vista, the General Partner and Vista Sub and any
affiliated, consolidated, combined, unitary or similar group of which
Vista, the General Partner and Vista Sub is or was a member has (A) duly
filed on a timely basis (taking into account any extensions) all U.S.
federal income Tax Returns, and all other material Tax Returns, required
to be filed or sent by or with respect to it, (B) duly paid or deposited
on a timely basis all Taxes that are shown to be due and payable on or
with respect to such Tax Returns, and all material Taxes that are
otherwise due and payable (except for audit adjustments not material in
the aggregate or to the extent that liability therefor is reserved for
in Vista's most recent audited financial statements) for which Vista,
the General Partner or Vista Sub may be liable, (C) established reserves
that are adequate for the payment of all material Taxes not yet due and
payable with respect to the results of operations of
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Vista, the General Partner and Vista Sub through the date hereof, and
(D) complied in all material respects with all applicable laws, rules
and regulations relating to the reporting, payment and withholding of
Taxes that are required to be withheld from payments to employees,
independent contractors, creditors, shareholders or any other third
party and has in all material respects timely withheld from employee
wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over.
(ii) Schedule 3.2(k) of the Vista Disclosure Schedule sets forth
(A) the last taxable period through which the federal income Tax Returns
of Vista, the General Partner and Vista Sub have been audited by the IRS
or for which the statute of limitations for assessment has otherwise
closed and (B) any affiliated, consolidated, combined, unitary or
similar group or Tax Return in which Vista, the General Partner or Vista
Sub is or has been a member or joins or has joined in the filing. Except
to the extent being contested in good faith, all material deficiencies
asserted as a result of such examinations and any examination by any
applicable taxing authority have been paid, fully settled or adequately
provided for in Vista's most recent audited financial statements. Except
as disclosed in Schedule 3.2(k) of the Vista Disclosure Schedule, no
audits or other administrative proceedings or court proceedings are
presently pending, or to the knowledge of Vista, threatened, with regard
to any Taxes for which Vista, the General Partner or Vista Sub would be
liable, and no material deficiency for any Taxes has been proposed,
asserted or assessed (whether by examination report or prior to
completion of examination by means of notices of proposed adjustment or
other similar requests or notices) pursuant to such examination against
Vista, the General Partner or Vista Sub by any taxing authority with
respect to any period.
(iii) Neither Vista, the General Partner nor Vista Sub has executed
or entered into (or prior to the close of business on the Closing Date
will execute or enter into) with the IRS or any taxing authority (A) any
agreement or other document extending or having the effect of extending
the period for assessment or collection of any income or franchise Taxes
for which Vista, the General Partner or Vista Sub would be liable or (B)
a closing agreement pursuant to Section 7121 of the Code or any similar
provision of state, local, foreign or other income tax law, which will
require any increase in taxable income or alternative minimum taxable
income, or any reduction in tax credits, for Vista, the General Partner
or Vista Sub for any taxable period ending after the Closing Date.
(iv) Except as disclosed in Schedule 3.2(k) of the Vista Disclosure
Schedule, neither Vista, the General Partner nor Vista Sub 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 or that would constitute compensation whose deductibility is
limited under Section 162(m) of the Code.
(v) Except as disclosed in Schedule 3.2(k) of the Vista Disclosure
Schedule, neither Vista, the General Partner nor Vista Sub is a party
to, is bound by or has any obligation under any tax sharing or
allocation agreement or similar agreement or arrangement.
(vi) There are no requests for rulings or outstanding subpoenas
from any taxing authority for information with respect to Taxes of
Vista, the General Partner or Vista Sub and, to the knowledge of Vista,
no material reassessments (for property or ad valorem Tax purposes) of
any assets or any property owned or leased by Vista, the General Partner
or Vista Sub have been proposed in written form.
(vii) Neither Vista, the General Partner nor Vista Sub has agreed
to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method
of Vista or any of its Subsidiaries, and neither Vista, the General
Partner nor Vista Sub has any application pending with any taxing
authority requesting permission for any changes in any accounting method
of Vista, the General Partner or Vista Sub To the knowledge of Vista,
neither the IRS nor any other taxing authority has proposed in writing,
and neither Vista, the General Partner nor Vista Sub is otherwise
required to make, any such adjustment or change in accounting method.
A-40
(viii) Vista has properly qualified to be treated as a partnership
for federal (and, where permissible, state) income Tax purposes and has
not, at any time, been required to be taxed as an association taxable as
a corporation for federal income Tax purposes under any provision of the
Code or elected to be taxable as a corporation for federal income Tax
purposes.
(l) EMPLOYEE BENEFIT MATTERS. (i) Schedule 3.2(l)(i) provides a
description of each of the following which is sponsored, maintained or
contributed to by Vista, the General Partner, or Vista Sub (the "Vista
Group") for the benefit of the employees of the Vista Group, former
employees of the Vista Group, directors of the Vista Group, former
directors of the Vista Group, or any agents, consultants, or similar
representatives providing services to or for the Vista Group, or has been
so sponsored, maintained or contributed to within six years prior to the
Closing Date for the benefit of such individuals:
(A) each "employee benefit plan," as such term is defined in
Section 3(3) of ERISA (including, but not limited to, employee benefit
plans, such as foreign plans, which are not subject to the provisions of
ERISA) ("Vista Plan");
(B) each personnel policy, stock option plan, stock purchase plan,
stock appreciation rights, phantom stock plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or
arrangement, vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive compensation
or supplemental income arrangement, consulting agreement, employment
agreement and each other employee benefit plan, agreement, arrangement,
program, practice or understanding which is not described in Section
3.2(l)(i)(A) ("Vista Benefit Program or Agreement").
(ii) True, correct and complete copies of each of the Vista Plans,
related trusts, insurance or group annuity contracts and each other funding
or financing arrangement relating to any Vista Plan, including all
amendments thereto, have been furnished to Midland. There has also been
furnished to Midland, with respect to each Vista Plan required to file such
report and description, the most recent report on Form 5500 and the summary
plan description. True, correct and complete copies or descriptions of all
Vista Benefit Programs or Agreements have also been furnished to Midland. A
schedule of employer expenses with respect to each Vista Plan or Vista
Benefit Program or Agreement for the current plan year and past plan year
has been furnished to Midland along with any administration agreement
associated with any Vista Plan. Additionally, the most recent determination
letter from the IRS for each of the Vista Plans intended to be qualified
under Section 401 of the Code, and any outstanding determination letter
application for such plans has been furnished.
(iii) Except as otherwise set forth on Schedule 3.2(l)(iii),
(A) Each Vista Plan or Vista Benefit Program or Agreement has been
administered in compliance with its terms, the applicable provisions of
ERISA, the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements;
(B) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of a member of the
Vista Group, threatened against, or with respect to, any of the Vista
Plans or Vista Benefit Programs or Agreements or their assets;
(C) As to any Vista Plan intended to be qualified under Section 401
of the Code, there has been no termination or partial termination of the
Vista Plan within the meaning of Section 411(d)(3) of the Code;
(D) No act, omission or transaction has occurred which would result
in imposition on a member of the Vista Group of (1) breach of fiduciary
duty liability damages under Section 409 of ERISA, (2) a civil penalty
assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA
or (3) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code;
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(E) To the knowledge of a member of the Vista Group, there is no
matter pending (other than routine qualification determination filings)
with respect to any of the Vista Plans before the IRS, the Department of
Labor or the PBGC;
(F) No trust funding a Vista Plan is intended to be exempt from
federal income taxation pursuant to Section 501(c)(9) of the Code;
(iv) In connection with the consummation of the transaction
contemplated by this Agreement, no payments have or will be made under the
Vista Plans or Vista Benefit Programs or Agreements which, in the
aggregate, would result in imposition of the sanctions imposed under
Sections 280G and 4999 of the Code.
(v) Except as otherwise set forth in Schedule 3.2(l)(v), no Vista Plan
or Vista Benefit Program or Agreement provides retiree medical or retiree
life insurance benefits to any person and a member of the Vista Group is
not contractually or otherwise obligated (whether or not in writing) to
provide any person with life insurance or medical benefits upon retirement
or termination of employment, other than as required by the provisions of
Section 601 through 608 of ERISA and Section 4980B of the Code.
Additionally, each Vista Plan which is an "employee welfare benefit plan,"
as such term is defined in Section 3(1) of ERISA, may be unilaterally
amended or terminated in its entirety without liability except as to
benefits accrued thereunder prior to such amendment or termination.
(vi) No Vista Plan is a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(vii) Except as otherwise set forth in Schedule 3.2(l)(vii), no Vista
Plan or Vista Benefit Program or Agreement provides that payments pursuant
to such Vista Plan or Vista Benefit Program or Agreement may be made in
securities of a member of the Vista Group or a Commonly Controlled Entity,
nor does any trust maintained pursuant to any Vista Plan or Vista Benefit
Program or Agreement hold any securities of a member of the Vista Group.
(m) LABOR MATTERS. Except as set forth on Schedule 3.2(m) of the Vista
Disclosure Schedule:
(i) neither Vista, the General Partner nor Vista Sub is a party to
any collective bargaining agreement or other current labor agreement
with any labor union or organization, and there is no current union
representation question involving employees of Vista, the General
Partner or Vista Sub, nor does Vista, the General Partner or Vista Sub
know of any activity or proceeding of any labor organization (or
representative thereof) or employee group (or representative thereof) to
organize any such employees;
(ii) as of the date hereof, there is no unfair labor practice
charge or grievance arising out of a collective bargaining agreement or
other grievance procedure against Vista, the General Partner or Vista
Sub pending, or, to the knowledge of Vista, the General Partner or Vista
Sub, threatened, that has, or is reasonably likely to have, a Material
Adverse Effect on Vista;
(iii) as of the date hereof, there is no complaint, lawsuit or
proceeding in any forum by or on behalf of any present or former
employee, any applicant for employment or any classes of the foregoing
alleging breach of any express or implied contract of employment, any
law or regulation governing employment or the termination thereof or
other discriminatory, wrongful or tortious conduct in connection with
the employment relationship against Vista, the General Partner or Vista
Sub pending, or, to the knowledge of Vista, the General Partner or Vista
Sub, threatened, that has, or is reasonably likely to have, a Material
Adverse Effect on Vista;
(iv) Vista, the General Partner and Vista Sub are in compliance
with all applicable laws respecting employment and employment practices,
terms and conditions of employment, wages, hours of work and
occupational safety and health, except for non-compliance that does not
have, and is not reasonably likely to have, a Material Adverse Effect on
Vista; and
(v) As of the date hereof, there is no proceeding, claim, suit,
action or governmental investigation pending or, to the knowledge of
Vista, the General Partner or Vista Sub, threatened, in
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respect to which any current or former director, officer, employee or
agent of Vista, the General Partner or Vista Sub is or may be entitled
to claim indemnification from Vista, the General Partner or Vista Sub
pursuant to the Agreement of Limited Partnership or any provision of the
Articles of Incorporation or Bylaws of the General Partner or Vista Sub,
as provided in any indemnification agreement to which Vista, the General
Partner or Vista Sub is a party or pursuant to applicable law that has,
or is reasonably likely to have, a Material Adverse Effect on Vista.
(n) INTANGIBLE PROPERTY. Vista, the General Partner and Vista Sub
possess or have adequate rights to use all material trademarks, trade
names, patents, service marks, brand marks, brand names, computer programs,
databases, industrial designs and copyrights necessary for the operation of
the businesses of each of Vista, the General Partner and Vista Sub
(collectively, the "Vista Intangible Property"), except where the failure
to possess or have adequate rights to use such properties would not
reasonably be expected to have a Material Adverse Effect on Vista. All of
the Vista Intangible Property is owned or licensed by Vista, the General
Partner or Vista Sub free and clear of any and all Liens, except those that
are not reasonably likely to have a Material Adverse Effect on Vista, and
neither Vista, the General Partner nor Vista Sub has forfeited or otherwise
relinquished any Vista Intangible Property which forfeiture would result in
a Material Adverse Effect on Vista. To the knowledge of Vista, the use of
the Vista Intangible Property by Vista, the General Partner or Vista Sub
does not, in any material respect, conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right, title, interest
or goodwill, including, without limitation, any intellectual property
right, trademark, trade name, patent, service ▇▇▇▇, brand ▇▇▇▇, brand name,
computer program, database, industrial design, copyright or any pending
application therefor of any other person and there have been no claims made
and neither Vista, the General Partner nor Vista Sub has received any
notice of any claim or otherwise knows that any of the Vista Intangible
Property is invalid or conflicts with the asserted rights of any other
person or has not been used or enforced or has failed to have been used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of the Vista Intangible Property, except for any
such conflict, infringement, violation, interference, claim, invalidity,
abandonment, cancellation or unenforceability that would not reasonably be
expected to have a Material Adverse Effect on Vista.
(o) ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 3.2(o) of
the Vista Disclosure Schedule:
(i) The operations of Vista, the General Partner and Vista Sub have
been conducted, are and, as of the Closing Date, will be, in compliance
with all Environmental Laws, except where the failure to so comply would
not reasonably be expected to have a Material Adverse Effect on Vista;
(ii) Vista, the General Partner and Vista Sub have obtained and
will maintain all permits, licenses and registrations, or applications
relating thereto, and have made and will make all filings, reports and
notices required under applicable Environmental Laws for the continued
operations of their respective businesses, except such matters the lack
or failure of which would not reasonably be expected to lead to a
Material Adverse Effect on Vista;
(iii) Vista, the General Partner and Vista Sub are not subject to
any outstanding written orders issued by, or contracts with, any
Governmental Entity or other person respecting (A) Environmental Laws,
(B) Remedial Action, (C) any Release or threatened Release of a
Hazardous Material or (D) an assumption of responsibility for
environmental liabilities of another person, except such orders or
contracts the compliance with which would not reasonably be expected to
have a Material Adverse Effect on Vista;
(iv) Vista, the General Partner and Vista Sub have not received any
written communication alleging, with respect to any such party, the
violation of or liability under any Environmental Law, which violation
or liability would reasonably be expected to have a Material Adverse
Effect on Vista;
(v) Neither Vista, the General Partner nor Vista Sub has any
contingent liability in connection with the Release of any Hazardous
Material into the indoor or outdoor environment (whether on-
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site or off-site) or employee or third party exposure to Hazardous
Materials that would reasonably be expected to lead to a Material
Adverse Effect on Vista;
(vi) The operations of Vista, the General Partner or Vista Sub
involving the generation, transportation, treatment, storage or disposal
of hazardous or solid waste, as defined and regulated under 40 C.F.R.
Parts 260-270 (in effect as of the date of this Agreement) or any
applicable state equivalent, are in compliance with applicable
Environmental Laws, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect on Vista; and
(vii) To the knowledge of Vista, there is not now on or in any
property of Vista, the General Partner or Vista Sub or any property for
which Vista, the General Partner or Vista Sub is potentially liable any
of the following: (A) any underground storage tanks or surface
impoundments or (B) any on-site disposal of Hazardous Material, any of
which ((A) or (B) preceding) could reasonably be expected to have a
Material Adverse Effect on Vista.
(p) INSURANCE. Schedule 3.2(p) of the Vista Disclosure Schedule sets
forth an insurance schedule of Vista's, the General Partner's and Vista
Sub's directors' and officers' liability insurance, primary and excess
casualty insurance policies, providing coverage for bodily injury and
property damage to third parties, including products liability and
completed operations coverage, and worker's compensation, in effect as of
the date hereof. Vista maintains, and through the Closing Date will
maintain, insurance in such amounts and covering such risks as are in
accordance with normal industry practice for companies engaged in
businesses similar to those of Vista, the General Partner and Vista Sub
(taking into account the cost and availability of such insurance). Each of
Vista, the General Partner and Vista Sub may terminate each of its
insurance policies or binders at or after the Closing Date and will incur
no penalties or other material costs in doing so. None of such policies or
binders was obtained through the use of false or misleading information or
the failure to provide the insurer with all information requested in order
to evaluate the liabilities and risks insured. There is no material default
with respect to any provision contained in any such policy or binder nor
has Vista, the General Partner or Vista Sub failed to give any notice or
present any claim under any such policy or binder in due and timely
fashion. There are no billed but unpaid premiums past due under any such
policy or binder. Except as otherwise disclosed on Schedule 3.2(p) of the
Vista Disclosure Schedule, there are no outstanding claims under any such
policies or binders and, to the knowledge of Vista, there has not occurred
any event that might reasonably form the basis of any claim against or
relating to Vista, the General Partner or Vista Sub that is not covered by
any of such policies or binders. No notice of cancellation or non-renewal
of any such policies or binders has been received. Except as otherwise
disclosed on Schedule 3.2(p) of the Vista Disclosure Schedule, there are no
performance bonds outstanding with respect to Vista, the General Partner or
Vista Sub.
(q) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise
disclosed on Schedule 3.2(q) of the Vista Disclosure Schedule or as
contemplated by this Agreement, since December 31, 1997, neither Vista, the
General Partner nor Vista Sub has done any of the following:
(i) Discharged or satisfied any Lien or paid any obligation or
liability, absolute or contingent, other than current liabilities
incurred and paid in the ordinary course of business and consistent with
past practices;
(ii) Paid or declared any dividends or distributions, purchased,
redeemed, acquired, or retired any indebtedness, stock, or other
securities from its partners, shareholders, or other securityholders,
made any loans or advances or guaranteed any loans or advances to any
Person (other than loans, advances, or guaranties made in the ordinary
course of business and consistent with past practices), or otherwise
incurred or suffered to exist any liabilities (other than current
liabilities incurred in the ordinary course of business and consistent
with past practices);
(iii) Except for Permitted Encumbrances, suffered or permitted any
Lien to arise or be granted or created against or upon any of its
assets;
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(iv) Cancelled, waived, or released any rights or claims against,
or indebtedness owed by, third parties;
(v) Amended the Agreement of Limited Partnership, in the case of
Vista, or its articles of incorporation or bylaws, in the case of the
General Partner and Vista Sub;
(vi) Made or permitted any amendment, supplement, modification, or
termination of any Vista Material Agreement;
(vii) Paid or made any agreement to pay any severance or
termination payment to any employee or consultant;
(viii) Sold, transferred, assigned, or otherwise disposed of (A)
any Oil and Gas Interests of Vista that, individually or in the
aggregate, had a value at the time of such transfer, assignment, or
disposition of $50,000 or more or (B) any other assets (including any
undeveloped leasehold acreage) that, individually or in the aggregate,
had a value at the time of such transfer, assignment, or disposition of
$50,000 or more provided, however, that this paragraph shall not apply
to Hydrocarbons sold in the ordinary course of business and consistent
with past practices;
(ix) Made any investment in or contribution, payment, or advance to
any Person (other than investments, contributions, payments, or
advances, or commitments with respect thereto, made in the ordinary
course of business and consistent with past practices).
(x) Granted present or future increases in the rates of
compensation or other benefits payable to any of its directors,
officers, or other executive personnel or any consultant or paid any
bonuses to such Persons;
(xi) Paid, loaned, or advanced (other than the payment, advance or
reimbursement of expenses in the ordinary course of business) any
amounts to, or sold, transferred, or leased any of its assets to, or
entered into any other transactions with, any of its Affiliates;
(xii) Waived any rights of material value;
(xiii) Suffered any material damage, destruction, or loss, whether
or not covered by insurance, affecting its assets or prospects;
(xiv) Made any change in any of the accounting principles followed
by it or the method of applying such principles;
(xv) Suffered any material labor trouble or any material
controversies with any of its employees or collective bargaining
association representing any of its employees;
(xvi) Entered into any other transactions (other than this
Agreement) except in the ordinary course of business and consistent with
past practices;
(xvii) Taken any of the actions referred to in Section 4.1 except
as would have been permitted or required thereby had such Section been
applicable at the time of such action;
(xviii) Agreed, whether in writing or otherwise, to do any of the
foregoing; or
(xix) Suffered any material adverse change or trend in its
financial position, results of operations, or business (other than
changes or trends, including changes or trends in commodity prices,
generally prevalent in or affecting the oil and gas industry).
(r) GOVERNMENTAL REGULATION. Neither Vista, the General Partner nor
Vista Sub is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the
Investment Company Act of 1940, or any state public utilities code.
(s) NO RESTRICTIONS. Except for the Agreement of Limited Partnership
or as otherwise disclosed on Schedule 3.2(s) of the Vista Disclosure
Schedule, neither Vista, the General Partner nor Vista Sub is a party to
(i) any agreement, indenture, or other instrument that contains
restrictions with respect to the
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payment of dividends or other distributions with respect to its capital,
(ii) any financial arrangement with respect to or creating any indebtedness
to any Person (other than indebtedness reflected in the Financial
Statements or indebtedness incurred in the ordinary course of business),
(iii) any agreement, contract, or commitment relating to the making of any
advance to, or investment in, any Person (other than advances in the
ordinary course of business), (iv) any guaranty or other contingent
liability with respect to any indebtedness or obligation of any Person
(other than guaranties undertaken in the ordinary course of business and
other than the endorsement of negotiable instruments for collection in the
ordinary course of business), (v) any management, service, consulting, or
other contract of a similar nature that cannot be terminated by Vista, the
General Partner or Vista Sub, as the case may be, upon written notice of 30
days or less and without penalty or other obligation, or (vi) any
agreement, contract, or commitment limiting in any respect its ability to
compete with any Person or otherwise conduct business of any line or
nature.
(t) AUDITS AND SETTLEMENTS. Except as otherwise disclosed on Schedule
3.2(t) of the Vista Disclosure Schedule, neither Vista, the General Partner
nor Vista Sub is a party or subject to any unresolved or incomplete audit,
accounting, or other settlement.
(u) EMPLOYMENT CONTRACTS AND BENEFITS. Except as otherwise disclosed
on Schedule 3.2(u) of the Vista Disclosure Schedule or otherwise provided
for in any Vista Plan or Vista Benefit Program or Agreement, (i) neither
Vista, the General Partner nor Vista Sub is subject to or obligated under
any consulting, employment, severance, termination, or similar arrangement,
any employee benefit, incentive, or deferred compensation plan with respect
to any Person, or any bonus, profit sharing, pension, stock option, stock
purchase, or similar plan or other arrangement or other fringe benefit plan
entered into or maintained for the benefit of employees or any other Person
and (ii) no employee of Vista, the General Partner, Vista Sub, or any other
Person owns, or has any right granted by Vista, the General Partner or
Vista Sub to acquire, any interest in any of the assets or business of
Vista, the General Partner or Vista Sub.
(v) ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Schedule
3.2(v) of the Vista Disclosure Schedule, all of the accounts, notes, and
loans receivable that have been recorded on the books of Vista, the General
Partner or Vista Sub are bona fide and represent accounts, notes, and loans
receivable validly due for goods sold or services rendered and are
reasonably expected to be collected in full within 90 days after the
applicable invoice or note maturity date (other than such accounts, notes,
and loans receivable that, individually or in the aggregate, do not have a
book value as of the date hereof in excess of $25,000). Except for
Permitted Encumbrances, all of such accounts, notes, and loans receivable
are free and clear of any and all Liens and other adverse claims and
charges, and none of such accounts, notes, or loans receivable is subject
to any offsets or claims of offset. None of the obligors on such accounts,
notes, or loans receivable has given notice to Vista, the General Partner
or Vista Sub that it will or may refuse to pay the full amount or any
portion thereof.
(w) TITLE TO ASSETS. Vista and Vista Sub (individually or
collectively) have Defensible Title to all Oil and Gas Interests of Vista
included or reflected in the Vista Engineering Report or the Financial
Statements. Each Oil and Gas Interest included or reflected in the Vista
Engineering Report entitles Vista and Vista Sub (individually or
collectively) to receive not less than the undivided interest set forth in
(or derived from) the Vista Engineering Report of all Hydrocarbons
produced, saved, and sold from or attributable to such Oil and Gas
Interest, and the portion of the costs and expenses of operation and
development of such Oil and Gas Interest that is borne or to be borne by
Vista and Vista Sub (individually or collectively) is not greater than the
undivided interest set forth in (or derived from) the Vista Engineering
Report. Except for Permitted Encumbrances, each of Vista and Vista Sub has
good, marketable, and defensible title to its assets (other than the Oil
and Gas Interests of Vista). All leases pursuant to which Vista or Vista
Sub lease any assets are in full force and effect, and neither Vista nor
Vista Sub has received any notice of default under any such lease.
(x) VISTA ENGINEERING REPORT. All information supplied to ▇▇▇▇▇▇▇▇▇▇
Petroleum Consultants, Inc. by or on behalf of Vista that was material to
such firm's evaluation of Vista's Oil and Gas Interests in connection with
the preparation of the Vista Engineering Report was (at the time supplied
or as modified
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or amended prior to the issuance of the Vista Engineering Report) true and
correct in all material respects. Except for changes in classification or
values of oil and gas reserve or property interests that occurred in the
ordinary course of business since December 31, 1997 and except for changes
(including changes in commodity prices) generally affecting the oil and gas
industry, there has been no Material Adverse Change with respect to the
matters addressed in the Vista Engineering Report.
(y) OIL AND GAS OPERATIONS. Except as otherwise disclosed on Schedule
3.2(y):
(i) None of the ▇▇▇▇▇ included in the Oil and Gas Interests of
Vista has been overproduced such that it is subject or liable to being
shut-in or to any owe overproduction penalty, except where any such
overproduction could not reasonably be expected to have a Material
Adverse Effect on Vista;
(ii) There have been no changes proposed in the production
allowables for, any ▇▇▇▇▇ included in the Oil and Gas Interests of Vista
that could reasonably be expected to have a Material Adverse Effect on
Vista;
(iii) All ▇▇▇▇▇ included in the Oil and Gas Interests of Vista have
been drilled and (if completed) completed, operated, and produced in
accordance with good oil and gas field practices and in compliance in
all material respects with applicable oil and gas leases and applicable
laws, rules, and regulations, except where any failure or violation
could not reasonably be expected to have a Material Adverse Effect on
Vista;
(iv) Neither Vista nor Vista Sub has agreed to or is now obligated
to abandon any well operated by any of them and included in the Oil and
Gas Interests of Vista that is or will not be abandoned and reclaimed in
accordance with applicable laws, rules, and regulations and good oil and
gas industry practices;
(v) Proceeds from the sale of Hydrocarbons produced from and
attributable to Vista's Oil and Gas Interests are being received by
Vista or Vista Sub in a timely manner and are not being held in suspense
for any reason (except for amounts, individually or in the aggregate,
not in excess of $25,000 and held in suspense in the ordinary course of
business); and
(vi) No Person has any call on, option to purchase, or similar
rights with respect to Vista's Oil and Gas Interests or to the
production attributable thereto, and upon consummation of the
transactions contemplated by this Agreement, Vista or Vista Sub will
have the right to market production from Vista's Oil and Gas Interests
on terms no less favorable than the terms upon which such company is
currently marketing such production.
(z) HYDROCARBON SALES AND PURCHASE AGREEMENTS. Except as otherwise
disclosed on Schedule 3.2(z) of the Vista Disclosure Schedule:
(i) None of the Hydrocarbon Sales Agreements of Vista or
Hydrocarbon Purchase Agreements of Vista has required since December 31,
1997, or will require as of or after the Closing Date, Vista or Vista
Sub (A) to have sold or delivered, or to sell or deliver, Hydrocarbons
for a price materially less than the market value price that would have
been, or would be, received pursuant to any arm's-length contract for a
term of one month with an unaffiliated third-party purchaser or (B) to
have purchased or received, or to purchase or receive, Hydrocarbons for
a price materially greater than the market value price that would have
been, or would be, paid pursuant to an arm's-length contract for a term
of one month with an unaffiliated third-party seller;
(ii) Each of the Hydrocarbon Agreements of Vista is valid, binding,
and in full force and effect, and no party is in material breach or
default of any Hydrocarbon Agreement of Vista, and to the knowledge of
Vista, no event has occurred that with notice or lapse of time (or both)
would constitute a material breach or default or permit termination,
modification, or acceleration under any Hydrocarbon Agreement of Vista;
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(iii) There have been no claims from any third party for any price
reduction or increase or volume reduction or increase under any of the
Hydrocarbon Agreements of Vista, and neither Vista nor Vista Sub has
made any claims for any price reduction or increase or volume reduction
or increase under any of the Hydrocarbon Agreements of Vista;
(iv) Payments for Hydrocarbons sold pursuant to each Hydrocarbon
Sales Agreement of Vista have been made (subject to adjustment in
accordance with such Hydrocarbon Sales Agreements) materially in
accordance with prices or price setting mechanisms set forth in such
Hydrocarbon Sales Agreements;
(v) No purchaser under any Hydrocarbon Sales Agreement of Vista has
notified Vista or Vista Sub (or, to the knowledge of Vista, the operator
of any property) of its intent to cancel, terminate, or renegotiate any
Hydrocarbon Sales Agreement of Vista or otherwise to fail and refuse to
take and pay for Hydrocarbons in the quantities and at the price set out
in any Hydrocarbon Sales Agreement, whether such failure or refusal was
pursuant to any force majeure, market out, or similar provisions
contained in the Hydrocarbon Sales Agreement or otherwise;
(vi) Neither Vista nor Vista Sub is obligated in any Hydrocarbon
Sales Agreement of Vista by virtue of any prepayment arrangement, a
"take-or-pay" or similar provision, a production payment, or any other
arrangements to deliver Hydrocarbons produced from an Oil and Gas
Interest of Midland at some future time without then or thereafter
receiving payment therefor;
(vii) Vista and Vista Sub, collectively, are not obligated, due to
production and pipeline gas imbalances, to deliver gas having a market
value in excess of $50,000 without receiving payment therefor; and
(viii) The Hydrocarbon Agreements of Vista are of the type
generally found in the oil and gas industry, do not (individually or in
the aggregate) contain unusual or unduly burdensome provisions that may
have a Material Adverse Effect on Vista, and are in form and substance
considered normal within the oil and gas industry.
(aa) FINANCIAL AND COMMODITY HEDGING. Schedule 3.2(aa) of the Vista
Disclosure Schedule accurately summarizes the outstanding Hydrocarbon and
financial hedging positions of Vista and Vista Sub (including fixed price
controls, collars, swaps, caps, ▇▇▇▇▇▇, and puts).
(bb) COMMITTED CAPITAL EXPENDITURES. Schedule 3.2(bb) of the Vista
Disclosure Schedule is a true, accurate, and complete list of all
commitments (including AFEs) pursuant to which Vista or Vista Sub has paid
or incurred since December 31, 1997, or is obligated to pay or incur after
the date hereof, drilling or capital expenditures in excess of $25,000 with
respect to any well, and except as otherwise set forth disclosed on
Schedule 3.2(bb) of the Vista Disclosure Schedule, the aggregate amount of
drilling and capital expenditures with respect to oil and gas ▇▇▇▇▇ that
Vista and Vista Sub have paid or incurred since December 31, 1997 or are
obligated to pay or incur after the date hereof does not exceed $500,000.
(cc) BUSINESS RELATIONS. To the knowledge of Vista, since December 31,
1997, there has been no termination, cancellation, or limitation of, or any
material modification or change in, the material business relationships of
Vista, the General Partner or Vista Sub with any material supplier or
customer or any partner or joint venture partner nor has there been any
material development relating to any such supplier, customer, partner, or
joint venture partner that could reasonably be expected to have a Material
Adverse Effect on Vista.
(dd) BOOKS AND RECORDS. All books, records, and files of Vista, the
General Partner and Vista Sub (including those pertaining to Vista's Oil
and Gas Interests, ▇▇▇▇▇, and other assets, those pertaining to the
production, gathering, transportation, and sale of Hydrocarbons, and
corporate, accounting, financial, and employee records) (i) have been
prepared, assembled, and maintained in accordance with usual and customary
policies and procedures and (ii) fairly and accurately reflect the
ownership, use, enjoyment, and operation by Vista, the General Partner and
Vista Sub of their respective assets.
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(ee) BROKERS. No broker, finder, investment banker, or other Person is
or will be, in connection with the transactions contemplated by this
Agreement, entitled to any brokerage, finder's, or other fee or
compensation based on any arrangement or agreement made by or on behalf of
Vista.
(ff) DISCLOSURE AND INVESTIGATION. No representation or warranty of
Vista contained in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements contained herein not misleading. The Responsible Officers,
individually or collectively, of Vista have conducted, or have caused the
respective officers, employees, representatives, or agents of Vista, the
General Partner and Vista Sub to conduct, such investigations and inquiries
that they reasonably believe most likely to confirm the truth and accuracy
of each of the representations and warranties contained in this Section.
3.3 REPRESENTATIONS AND WARRANTIES OF NEWCO AND MERGER SUB. Newco, Merger
Sub and Vista, jointly and severally, represent and warrant to Midland as
follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Newco and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the its state of incorporation has all requisite
corporate power and authority to own, lease, and operate its properties and
to carry on its business as now being conducted and is duly qualified and
in good standing to do business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in such jurisdictions where
the failure so to qualify would not have a Material Adverse Effect on Newco
or Merger Sub, as applicable. Merger Sub has heretofore delivered to
Midland complete and correct copies of its Articles of Incorporation and
Bylaws. Complete and correct copies of Newco's Certificate of Incorporation
and Bylaws are attached as Exhibit 3.3(a) hereto.
(b) CAPITAL STRUCTURE.
(i) As of the date hereof, the authorized capital stock of Newco
consists of (x) 50,000,000 shares of common stock, $0.01 par value,
1,000 shares of which are issued and outstanding, all of which are owned
of record and beneficially by Vista and (y) 10,000,000 shares of
preferred stock, none of which is issued and outstanding. The
outstanding share of capital stock of Newco is duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive
rights. Upon consummation of the Merger and the Vista Exchange, the
shares of Newco Common Stock to be issued pursuant to the Merger and the
Vista Exchange will be duly authorized, and upon their issuance in
accordance with the terms of this Agreement, validly issued, fully paid
and nonassessable, and will not have been issued in violation of any
preemptive rights. Newco does not, and at the Effective Time, except as
expressly contemplated by this Agreement, Newco will not, have
outstanding any options, warrants, calls, rights (including preemptive
rights), commitments or agreements to which Newco or any Subsidiary of
Newco will be a party or by which it will be bound in any case
obligating Newco or any Subsidiary of Newco to issue, deliver, sell,
purchase, redeem, or acquire, or cause to be issued, delivered, sold,
purchased, redeemed, or acquired, additional shares of capital stock or
any Voting Debt or other voting securities of Newco or any Subsidiary of
Newco, or obligating Newco or any Subsidiary of Newco to grant, extend,
or enter into any such option, warrant, call, right, commitment, or
agreement.
(ii) The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, $0.01 par value, all of which are issued and
outstanding and owned of record and beneficially by Newco. The
outstanding share of capital stock of Merger Sub is duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights. Merger Sub does not, and at the Effective Time,
except as contemplated by this Agreement, will not, have outstanding any
options, warrants, calls, rights (including preemptive rights),
commitments or agreements to which Merger Sub will be a party or by
which it will be bound in any case obligating Merger Sub to issue,
deliver, sell, purchase, redeem or acquire, or cause to be issued,
delivered, sold, purchased, redeemed or acquired, additional shares of
capital stock or any Voting Debt or other voting securities of Merger
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Sub, or obligating Merger Sub to grant, extend, or enter into any such
option, warrant, call, right, commitment, or agreement.
(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS. Each of Newco
and Merger Sub has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Newco and Merger
Sub, and the consummation by each of them of the transactions contemplated
by this Agreement, have been duly authorized by all necessary corporate
action on the part of each of them, including all necessary shareholder
approval. This Agreement has been duly executed and delivered by each of
Newco and Merger Sub, and, assuming this Agreement constitutes the valid
and binding obligation of Vista and Midland, constitutes a valid and
binding obligation of each of Newco and Merger Sub enforceable against each
of them in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution and delivery
of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any material obligation or to
the loss of a material benefit under, or give rise to a right of purchase
under, result in the creation of any Lien upon any of the properties or
assets of Newco or Merger Sub under, or otherwise result in a material
detriment to Newco or Merger Sub under, any provision of the Certificate of
Incorporation or Bylaws of Newco or Merger Sub. No consent, approval, order
or authorization of, or registration, declaration or filing with, or permit
from any Governmental Entity is required by or with respect to Newco or
Merger Sub in connection with the execution and delivery of this Agreement
by, or the consummation of the transactions contemplated in this Agreement
by, Newco or Merger Sub, except for: (i) the filing by Newco of the S-4
with the SEC with respect to the offer and sale of Newco Common Stock
pursuant to the Midland Merger; (ii) the filing by Newco of a Form D Notice
of Sale of Securities Pursuant to Regulation D with the SEC, with respect
to the offer and sale of Newco Common Stock pursuant to the Vista Exchange,
and such other compliance with the Securities Act and the rules and
regulations thereunder, as may be required in connection with this
Agreement and the transactions contemplated hereby; (iii) the filing by
Merger Sub of the Midland Articles of Merger with the Texas Secretary of
State; (iv) the filing by Newco of the Vista Certificate of Merger with the
Delaware Secretary of State and the Vista Articles of Merger with the Texas
Secretary of State; (v) filings with, and approval of, the AMEX or Nasdaq;
and (vi) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover laws, or environmental laws.
(d) NO PRIOR ACTIVITIES. Except for this Agreement and the agreements
and transactions contemplated herein, neither Newco nor Merger (i) Sub has
entered into any agreements or arrangements with any person or (ii) is
subject to or bound by any obligation or undertaking. Except as
contemplated by this Agreement and the agreements and transactions
contemplated herein, neither Newco nor Merger Sub has engaged, directly or
indirectly, in any business activities of any type or kind.
ARTICLE 4
COVENANTS
4.1 CONDUCT OF BUSINESS BY VISTA AND MIDLAND PENDING CLOSING. Prior to the
Effective Time, (a) Midland agrees as to itself and its Subsidiaries that
(except as expressly contemplated or permitted by this Agreement, or to the
extent that Vista shall otherwise consent in writing) and (b)Vista agrees as to
itself and Vista Sub that (except as expressly contemplated or permitted by this
Agreement, or to the extent that Midland shall otherwise consent in writing)
(for purposes of this Section 4.1 Midland and Vista each being a "Party"):
(i) A Party and its Subsidiaries shall carry on its businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and shall use all commercially
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reasonable efforts to preserve intact its present business organizations,
keep available the services of its current officers and employees and
endeavor to preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect at the Effective
Time;
(ii) A Party shall not, and it shall not permit its Subsidiaries to,
engage in any line of business in which it is not engaged as of the date
hereof;
(iii) A Party shall not, and it shall not permit its Subsidiaries to,
(A) amend its certificate or articles of incorporation or by-laws or other
organizational documents, (B)'split, combine, or reclassify any of its
outstanding capital stock, partnership interests, or other securities,
(C)'declare, set aside, or pay any dividends or other distributions
(whether payable in cash, property, or securities) with respect to its
capital stock, (D) issue, sell, or agree to issue or sell any securities,
including its capital stock or other equity securities, any rights,
options, or warrants to acquire its equity securities, or securities
convertible into or exchangeable or exercisable for its equity securities
(other than shares of Midland Common Stock issued pursuant to the exercise
of any Midland Stock Option or any Midland Stock Warrant outstanding as of
the date hereof), (E) purchase, cancel, retire, redeem, or otherwise
acquire any of its outstanding equity securities or other securities, (F)
merge or consolidate with, or transfer all or substantially all of its
assets to, another corporation or other business entity, (G) liquidate,
wind-up, or dissolve (or suffer any liquidation or dissolution), or (H)
enter into any contract, agreement, commitment, or arrangement with respect
to any of the foregoing;
(iv) A Party shall not, and it shall not permit its Subsidiaries to,
(A) acquire any corporation, partnership, or other business entity or any
interest therein (other than interests in joint ventures, joint operation
or ownership arrangements, or tax partnerships acquired in the ordinary
course of business), (B) sell, lease or sublease, transfer, or otherwise
dispose of or mortgage, pledge, or otherwise encumber any Oil and Gas
Interests that, individually or in the aggregate, had a value at the time
of such sale, lease, sublease, transfer, or disposition of $50,000 or more
or any other assets that, individually or in the aggregate, have a value at
the time of such sale, lease, sublease, transfer, or disposition of $50,000
or more (except that this clause shall not apply to the sale of
Hydrocarbons in the ordinary course of business) (C) farm-out any Oil and
Gas Interest of Midland or Vista, as applicable, or interest therein, (D)
sell, transfer, or otherwise dispose of or mortgage, pledge, or otherwise
encumber any securities of any other Person, (E) make any material loans,
advances, or capital contributions to, or investments in, any Person (other
than loans or advances in the ordinary course of business and consistent
with past practices, (F) enter into any material agreement not terminable
by such Party upon notice of 30 days or less and without penalty or other
obligation (other than Hydrocarbon Agreements entered into in the ordinary
course of business and consistent with past practices), (G) enter into any
material transaction not in the ordinary course of business and not
contemplated by this Agreement, (H) agree with any Person to limit or
otherwise restrict in any manner the ability of such Party or any of its
Subsidiaries to compete or otherwise conduct its business, or (I) enter
into any contract, agreement, commitment, or arrangement with respect to
any of the foregoing;
(v) A Party shall not, and it shall not permit its Subsidiaries to,
(A) incur any indebtedness for borrowed money or any other obligation or
liability (other than current liabilities incurred in the ordinary course
of business and consistent with past practices) in excess of its then
current borrowing capacity under its existing senior bank facilities, (B)
assume, endorse (other than endorsements of negotiable instruments in the
ordinary course of business), guarantee, or otherwise become liable or
responsible (whether directly, contingently, or otherwise) for the
liabilities or obligations of any Person, or (C) enter into any contract,
agreement, commitment, or arrangement with respect to any of the foregoing;
(vi) A Party shall, and shall cause its Subsidiaries to, operate,
maintain, and otherwise deal with the Oil and Gas Interests of such Party
in accordance with good and prudent oil and gas field practices (including
the making of all appropriate repairs, renewals, and replacements thereof)
and in accordance with all applicable oil and gas leases and other
contracts or agreements and all applicable laws, rules, and regulations;
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(vii) A Party shall not, and it shall not permit its Subsidiaries to,
pay, agree to pay, or incur drilling or other capital expenditures with
respect to oil and gas ▇▇▇▇▇ in excess of ten percent (10%) of its current
drilling and capital expenditure budget as respectively set forth on
Schedules 3.1(bb) and 3.2(bb) in the aggregate (in either case, other than
expenditures necessary for the preservation or protection of the public
safety or health under emergency circumstances);
(viii) A Party shall not, and it shall not permit its Subsidiaries to,
resign, or transfer or otherwise voluntarily relinquish any right it has as
of the date of this Agreement, as operator of any Oil and Gas Interest;
(ix) A Party shall not, and it shall not permit its Subsidiaries
to,(A) enter into, or otherwise become liable or obligated under or
pursuant to, (x) any employee benefit, pension, or other plan (whether or
nor subject to ERISA), (y) any other stock option, stock purchase,
incentive, or deferred compensation plans or arrangements or other fringe
benefit plan, or (z) any consulting, employment, severance, termination, or
similar agreement with any Person, or amend or extend any such plan,
arrangement, or agreement, (B) hire any key employee, except for payments
made pursuant to any plan, agreement, or arrangement disclosed on Schedule
3.1(l) of the Midland Disclosure Schedule or Schedule 3.2(l) of the Vista
Disclosure Schedule, as applicable, grant, or otherwise become liable for
or obligated to pay, any severance or termination payments, bonuses, or
increases in compensation or benefits (other than payments, bonuses, or
increases that are mandated by the terms of written agreements existing as
of the date hereof or that are paid in the ordinary course of business,
consistent with past practices, and not individually or in the aggregate
material in amount) to, or forgive any indebtedness of, any employee or
consultant, or (C) enter into any contract, agreement, commitment, or
arrangement to do any of the foregoing;
(x) A Party shall, and shall cause its Subsidiaries to, keep and
maintain accurate books, records, and accounts in accordance with GAAP;
(xi) A Party shall not, and it shall not permit its Subsidiaries to,
create, incur, assume, or permit to exist any Lien on any of its assets,
except for Permitted Encumbrances;
(xii) A Party shall, and it shall permit its Subsidiaries to, (A) pay
all Taxes, assessments, and other governmental charges imposed upon any of
its assets or with respect to its franchises, business, income, or assets
before any penalty or interest accrues thereon, (B) pay all claims
(including claims for labor, services, materials, and supplies) that have
become due and payable and which by law have or may become a Lien upon any
of its assets prior to the time when any penalty or fine shall be incurred
with respect thereto or any such Lien shall be imposed thereon, and (C)
comply in all material respects with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Entity, obtain or
take all Governmental Actions necessary in the operation of its business,
and comply with and enforce the provisions of all Midland Material
Agreements or Vista Material Agreements, as applicable, including paying
when due all rentals, royalties, expenses, and other liabilities relating
to its business or assets (provided, however, that such Party or any of its
Subsidiaries may contest the imposition of any such Taxes, assessments, and
other governmental charges, any such claim, or the requirements of any
applicable law, rule, regulation, or order or any Midland Material
Agreement or Vista Material Agreement, as applicable, if done so in good
faith by appropriate proceedings, if adequate reserves are established in
accordance with GAAP or as may be determined as sufficient by Midland's
board of directors or the General Partner of Vista, as applicable, and if
such contest does not involve a risk of a Material Adverse Effect on
Midland or Vista, as applicable);
(xiii) A Party shall, and it shall permit its Subsidiaries to,
maintain in full force and effect the policies or binders of insurance
described in Section 3.1(p) or Section'3.2(p), as applicable, and
applicable to it;
(xiv) A Party shall not, and it shall not permit its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including the purchase, sale, lease, or exchange of any assets, unless
otherwise permitted hereby, or the rendering of any service) with any
Affiliate of such Party (other than
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any of its Subsidiaries) on terms that are less favorable to such Party or
any of its Subsidiaries, as the case may be, than those that could be
obtained at the time from unaffiliated third parties;
(xv) A Party shall not, and it shall not permit its Subsidiaries to,
enter into, or otherwise be a party to, any, shareholder agreement, voting
trust, or other agreement or understanding relating to the voting of any
shares of the capital stock or other securities of such Party or any of its
Subsidiaries (other than the Midland Voting Agreement); and
(xvi) A Party shall, and it shall permit its Subsidiaries to, at all
times preserve and keep in full force and effect its corporate existence
and rights and franchises material to its performance under this Agreement.
4.2 ACCESS TO ASSETS, PERSONNEL, AND INFORMATION. From the date hereof
until the Effective Time, Midland agrees as to itself and its Subsidiaries that,
and Vista agrees as to itself and its Subsidiaries that (for purposes of this
Section 4.2, Midland and Vista each being a "Requesting Party" or the "Providing
Party," as applicable):
(a) A Providing Party shall afford to the Requesting Party and the
Requesting Party's Representatives, at the Requesting Party's sole risk and
expense, reasonable access to any of the assets, books and records
(including files, Tax Returns, and accountants' workpapers), contracts,
employees, representatives, and agents (including attorneys, accountants,
and independent engineers) and facilities (including office facilities) of
such Providing Party and its Subsidiaries, and shall upon request furnish
promptly to the Requesting Party (at the Requesting Party's expense) a copy
of any file, book or record, contract, or other written information
concerning such Providing Party and its Subsidiaries (or any of their
respective assets) that is within the possession or control of the
Providing Party; provided, however, that a Providing Party shall not be
obligated to provide access to or to furnish to a Requesting Party any
information that the Providing Party is contractually obligated not to so
disclose under a written confidentiality agreement; provided, further, that
the Providing Party notifies the Requesting Party of such confidentiality
agreement. If requested by the Requesting Party, however, the Providing
Party shall use reasonable efforts to obtain the required consent to
provide such information. During such period, the Providing Party will make
available to a reasonable number of the Requesting Party's Representatives
adequate office space and facilities at the principal office facility of
such Providing Party and will permit a reasonable number of the Requesting
Party's Representatives to observe, but not participate in, staff meetings
at those facilities and other facilities of the Providing Party and its
Subsidiaries.
(b) As soon as practicable following a Requesting Party's request
therefor, the Providing Party shall provide the Requesting Party with
descriptions of all material assets (including such Providing Party's Oil
and Gas Interests) sufficient to permit such Requesting Party to properly
identify and evaluate such assets. Such descriptions shall include, with
respect to the Providing Party's Oil and Gas Interests, an electronic (A)
listing of all properties by name, well, and internal accounting and land
number designation and (B) division of interest for all ▇▇▇▇▇ and
properties by field or location and by well by field or location,
identifiable by reference to the listing described in clause (i) above.
(c) A Requesting Party and the Requesting Party's Representatives
shall have the right to make an environmental and physical assessment of
the assets of the Providing Party and its Subsidiaries and, in connection
therewith, shall have the right to enter and inspect such assets and all
buildings and improvements thereon, conduct soil and water tests and
borings, and generally conduct such tests, examinations, investigations,
and studies as such Requesting Party deems necessary, desirable, or
appropriate for the preparation of engineering or other reports relating to
such assets, their condition, and the presence of Hazardous Materials. The
Providing Party shall be provided 24 hours' prior notice of the activities,
and the Providing Party's Representatives shall have the right to witness
all such tests and investigations. The Requesting Party shall (and shall
cause the Requesting Party's Representatives to) keep any data or
information acquired by any such examinations and the results of any
analyses of such data and information strictly confidential and will not
(and will cause the Requesting Party's Representative not to) disclose any
of such data, information, or results to any Person unless otherwise
required by
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law or regulation and then only after written notice to the Providing Party
of the determination of the need for disclosure. The Requesting Party
hereby indemnifies and holds the Providing Party and its Subsidiaries, and
the Providing Party's Representatives harmless from and against any and all
claims arising out of or as a result of the activities of the Requesting
Party and the Requesting Party's Representatives on the assets of the
Providing Party and its Subsidiaries in connection with conducting such
environmental and physical assessment, except to the extent of and limited
by the gross negligence or willful misconduct of the Providing Party and
its Subsidiaries, or any of the Providing Party's Representatives or any
failure of any of them to warn the Requesting Party and the Requesting
Party's Representatives of known hazardous or dangerous conditions.
(d) A Providing Party will fully and accurately disclose, and will
cause each of its Subsidiaries to fully and accurately disclose, to the
Requesting Party and the Requesting Party's Representatives all information
that is (A) requested by the Requesting Party or any of the Requesting
Party's Representatives, (B) known (now or hereafter) to the Providing
Party or any of its Subsidiaries, and (C) relevant in any manner or degree
to the value, ownership, use, operation, development, or transferability of
the assets of the Providing Party or any of its Subsidiaries.
(e) A Providing Party shall furnish to the Requesting Party, promptly
upon receipt or filing (as the case may be), a copy of each communication
between the Providing Party and the SEC after the date hereof and each
report, schedule, registration statement, or other document filed by such
party with the SEC after the date hereof.
(f) A Providing Party will (and will cause its Subsidiaries and
Representatives to) fully cooperate in all respects with the Requesting
Party and the Requesting Party's Representatives in connection with the
Requesting Party's examinations, evaluations, and investigations described
in this Section, and the Providing Party will (and will cause the Providing
Party's Representatives to) fully cooperate in all respects with the
Requesting Party and the Requesting Party's Representatives in connection
with the Requesting Party's examinations, evaluations, and investigations
described in this Section.
(g) A Requesting Party agrees that it will not (and will cause the
Requesting Party's Representatives not to) use any information obtained
pursuant to this Section for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement.
(h)(i) A Requesting Party shall not, and shall not permit its
Affiliates, officers, employees, directors, shareholders or representatives
to, disclose to any third party (other than such parties' respective legal
counsel, accountants and other advisors, all of whom shall be required to
observe the provisions of this Section 4.2(h)) any information received
from the Providing Party in the course of investigating, negotiating, and
performing the transactions contemplated by this Agreement; provided,
however, that this provision shall not be applicable to information which:
(1) becomes generally available to the public other than as a result of a
disclosure by the Requesting Party or such Requesting Party's Affiliates,
officers, directors, employees, shareholders or representatives, (2) was
available to the Requesting Party on a non-confidential basis prior to its
disclosure to the Requesting Party by the Providing Party or its
Affiliates, officers, directors, employees, shareholders or
representatives, (3) becomes available to the Requesting Party on a
non-confidential basis from a source other than the Providing Party or its
Affiliates, officers, directors, employees, shareholders or representatives
when such source is entitled, to the best of the Requesting Party's
knowledge, to make the disclosure, or (4) was independently developed by
the Requesting Party without reference to the information received from the
Providing Party. If either party or any of their respective Affiliates,
officers, directors, employees, shareholders or representatives is
requested or required to disclose any information received by it or to
disclose any such information which is required to be kept confidential by
this Section 4.2(h), such party agrees to provide the Providing Party with
prompt notice of each such request, to the extent practicable, so that the
Providing Party may seek an appropriate protective order or waive
compliance by the Requesting Party with the provisions of this Section
4.2(h) or both. If, absent the entry of a protective order or the receipt
of a waiver under this Agreement, the Requesting Party, its Affiliates,
officers, directors, employees, shareholders or representatives are, in the
opinion of its counsel, legally compelled
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to disclose such information, the Requesting Party may disclose such
information to the persons and to the extent required without liability
under this Agreement, and such party agrees to exercise its reasonable
commercial efforts to obtain reasonable assurances that confidential
treatment will be accorded any such information so furnished.
(ii) Midland and its Subsidiaries have taken, and after the date
hereof Midland will, and Midland will cause its Subsidiaries to, take all
steps reasonably necessary to safeguard and maintain the secrecy and
confidentiality of any of Midland's assets that constitute confidential or
proprietary information of Midland or its Subsidiaries. From and after the
date hereof, Midland shall not, and Midland shall cause its Subsidiaries to
not, disclose to any Person (other than Vista and such authorized
representatives of Vista as Vista shall identify to Midland in writing) any
confidential or proprietary information with respect to the business of
Midland except (i) as otherwise required by law, or (ii) prior to the
Closing Date, in the ordinary course and consistent with the past business
practices of Midland and its Subsidiaries;
provided, however, that the provisions of this Section 4.2(h) shall not
prohibit Midland or Vista from including such confidential or proprietary
information in the S-4 or any private placement memorandum distributed in
connection with the Exchange Agreements.
(i) Notwithstanding anything in this Section to the contrary, (A)
Midland shall not be obligated under the terms of this Section to disclose
to Vista or Vista's Representatives, or grant Vista or the Vista's
Representatives access to, information that is within Midland's possession
or control but subject to a valid and binding confidentiality agreement
with a third party without first obtaining the consent of such third party,
and Midland, to the extent reasonably requested by Vista, will use its
reasonable best efforts to obtain any such consent; and (B) Vista shall not
be obligated under the terms of this Section to disclose to Midland or
Midland's Representatives, or grant Midland or Midland's Representatives
access to, information that is within Vista's possession or control but
subject to a valid and binding confidentiality agreement with a third party
without first obtaining the consent of such third party, and Vista, to the
extent reasonably requested by Midland, will use its reasonable best
efforts to obtain any such consent.
4.3 NO SOLICITATION BY MIDLAND.
(a) From and after the date hereof, Midland will not, and will not
authorize or permit any of its Representatives to, directly or indirectly,
solicit or encourage (including by way of providing information) any
prospective acquiror or the invitation or submission of any inquiries,
proposals or offers or any other efforts or attempts that constitute, or
may reasonably be expected to lead to, any Midland Acquisition Proposal (as
hereinafter defined) from any person or engage in any discussions or
negotiations with respect thereto or otherwise cooperate with or assist or
participate in, or facilitate any such proposal; provided, however, that,
notwithstanding any other provision of this Agreement, Midland's Board of
Directors may take and disclose to the shareholders of Midland a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act. Midland
shall immediately cease and cause to be terminated any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by Midland or any of its
Representatives with respect to any Midland Acquisition Proposal existing
on the date hereof. Midland will promptly notify in writing Vista of any
receipt by Midland or any of its Subsidiaries of a request from a third
party for information concerning Midland (or any of its Subsidiaries) and
its business, properties and assets or the receipt of any Midland
Acquisition Proposal, including the identity of the person or group
requesting such information or making such Midland Acquisition Proposal,
and the material terms and conditions of any Midland Acquisition Proposal.
(b) As used in this Agreement, "Midland Acquisition Proposal" means
any proposal or offer, other than a proposal or offer by Vista or any of
its Affiliates, for, or that could be reasonably expected to lead to, a
tender or exchange offer, a merger, consolidation or other business
combination involving Midland or any of its Subsidiaries or any proposal to
acquire in any manner a substantial equity interest in, or any substantial
portion of the assets of, Midland or any of its Subsidiaries.
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4.4 NO SOLICITATION BY VISTA.
(a) From and after the date hereof, Vista will not, and will not
authorize or permit any of its Representatives to, directly or indirectly,
solicit or encourage (including by way of providing information) any
prospective acquiror or the invitation or submission of any inquiries,
proposals or offers or any other efforts or attempts that constitute, or
may reasonably be expected to lead to, any Vista Acquisition Proposal (as
hereinafter defined) from any person or engage in any discussions or
negotiations with respect thereto or otherwise cooperate with or assist or
participate in, or facilitate any such proposal; provided, however, that,
notwithstanding any other provision of this Agreement, the General Partner
may take and disclose to the limited partners of Vista a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act. Vista
shall immediately cease and cause to be terminated any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by Vista or any of its
Representatives with respect to any Vista Acquisition Proposal existing on
the date hereof. Vista will promptly notify in writing Midland of any
receipt by Vista or Vista Sub of a request from a third party for
information concerning Vista or Vista Sub and its business, properties and
assets or the receipt of any Vista Acquisition Proposal, including the
identity of the person or group requesting such information or making such
Vista Acquisition Proposal, and the material terms and conditions of any
Vista Acquisition Proposal.
(b) As used in this Agreement, "Vista Acquisition Proposal" means any
proposal or offer, other than a proposal or offer by Midland or any of its
Affiliates, for, or that could be reasonably expected to lead to, a tender
or exchange offer, a merger, consolidation or other business combination
involving Vista or Vista Sub or any proposal to acquire in any manner a
substantial equity interest in, or any substantial portion of the assets
of, Vista or Vista Sub
4.5 MIDLAND SHAREHOLDERS MEETING.
(a) Midland shall call a meeting of its shareholders to be held as
promptly as practicable after the date hereof for the purpose of voting
upon this Agreement and the Midland Merger. Subject to the fiduciary duties
of the Board of Directors of Midland, Midland will (through its Board of
Directors) recommend to its shareholders approval of such matters and not
rescind such recommendation and shall use its reasonable best efforts to
obtain approval and adoption of this Agreement and the Midland Merger by
its shareholders. Midland shall use all commercially reasonable efforts to
hold such meeting as soon as practicable after the date upon which the S-4
becomes effective.
(b) Notwithstanding clause (a) above, however, the following shall be
conditions (which shall be for the benefit of both Midland and Vista) to
the recommendation of the Board of Directors of Midland to the Midland
shareholders, the holding of the Midland Meeting and the mailing of the
Proxy Statement:
(i) The fairness opinion described in Section 3.1(hh) shall have
been confirmed in writing and shall not have been withdrawn, revoked, or
modified;
(ii) Midland shall have received an opinion (reasonably acceptable
to Midland and Vista) from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (or such other firm as is
reasonably acceptable to Midland and Vista) to the effect that (A) the
Midland Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (B)
each of Newco, Midland, and Merger Sub will be a party to such
reorganization within the meaning of Section 368(b) of the Code, (C) no
gain or loss will be recognized by Newco, Midland, or Merger Sub as a
result of the Midland Merger, and (D) no gain or loss will be recognized
by a shareholder of Midland as a result of the Midland Merger with
respect to the shares of Midland Common Stock converted solely into
shares of Newco Common Stock, and such opinion shall not have been
withdrawn, revoked, or modified;
(iii) Vista shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Midland's
independent auditors, a letter, dated a date within two business days
before the date on which the Proxy Statement is first
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mailed to the shareholders of Midland, with respect to the financial
statements of Midland and other financial information about Midland
included (or incorporated by reference) in the Proxy Statement, such
letter to be in substantially the form described in Section 5.2(c); and
(iv) Midland shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Vista's
independent certified public accountants, a letter dated a date within
two business days before the date on which the Proxy Statement is first
mailed to the shareholders of Midland, with respect to the Financial
Statements of Vista and other financial information about Vista included
in the Proxy Statement, such letter to be in substantially the form
described in Section 5.3(d).
4.6 S-4 AND PROXY STATEMENT.
(a) Vista, Newco, and Midland shall cooperate and promptly prepare the
S-4, and Vista shall cause Newco to file the S-4 with the SEC as soon as
practicable after the date hereof. Vista and Newco shall use their
reasonable best efforts, and Midland shall cooperate fully with Vista and
Newco (including furnishing all information concerning Midland and the
holders of Midland Common Stock as may be reasonably requested by Vista and
Newco), to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Newco shall use its reasonable
best efforts, and Midland shall cooperate fully with Newco, to obtain all
necessary state securities laws or "blue sky" permits, approvals, and
registrations in connection with the issuance of Newco Common Stock
pursuant to the Midland Merger.
(b) Vista, Newco, and Midland will cause the S-4 (including the Proxy
Statement), at the time it becomes effective under the Securities Act, 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 of
the SEC thereunder.
(c) Midland hereby covenants and agrees with Vista and Newco that (i)
the S-4 (at the time it becomes effective under the Securities Act and at
the Effective Time) will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (provided, however, that this
clause shall apply only to information contained in the S-4 that was
supplied by Midland specifically for inclusion therein) and (ii) the Proxy
Statement (at the time it is first mailed to shareholders of Midland, at
the time of the Midland Meeting, and at the Effective Time) will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading provided, however, that this clause shall not apply to
any information contained in the Proxy Statement that was supplied by Vista
or Newco specifically for inclusion therein). If, at any time prior to the
Effective Time, any event with respect to Midland, or with respect to other
information supplied by Midland specifically for inclusion in the S-4,
occurs and such event is required to be described in an amendment to the
▇-▇, ▇▇▇▇▇▇▇ shall promptly notify Vista and Newco of such occurrence and
shall cooperate with Newco in the preparation and filing of such amendment.
If, at any time prior to the Effective Time, any event with respect to
Midland, or with respect to other information included in the Proxy
Statement, occurs and such event is required to be described in a
supplement to the Proxy Statement, such event shall be so described and
such supplement shall be promptly prepared, filed, and disseminated.
(d) Vista and Newco hereby covenant and agree with Midland that (i)
the S-4 (at the time it becomes effective under the Securities Act and at
the Effective Time) will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (provided, however, that this
clause shall not apply to any information contained in the S-4 that was
supplied by Midland specifically for inclusion therein) and (ii) the Proxy
Statement (at the time it is first mailed to shareholders of Midland, at
the time of the Midland Meeting, and at the Effective Time) will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading (provided, however, that this clause shall apply only
to information contained in the Proxy Statement that was supplied by Vista
or
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Newco specifically for inclusion therein). If, at any time prior to the
Effective Time, any event with respect to Vista or Newco, or with respect
to other information included in the S-4, occurs and such event is required
to be described in an amendment to the S-4, such event shall be so
described and such amendment shall be promptly prepared and filed. If at
any time prior to the Effective Time, any event with respect to Vista or
Newco, or with respect to other information supplied by Vista or Newco
specifically for inclusion in the Proxy Statement, occurs and such event is
required to be described in a supplement to the Proxy Statement, Vista or
Newco shall promptly notify Midland of such occurrence and shall cooperate
with Midland in the preparation, filing, and dissemination of such
supplement.
(e) No amendment or supplement to the S-4 or the Proxy Statement will
be filed or disseminated to the shareholders of Midland without the
approval of Vista, Newco, and Midland. Newco shall advise Vista and
Midland, promptly after it receives notice thereof, of the time when the
S-4 has become effective under the Securities Act, the issuance of any stop
order with respect to the S-4, the suspension of the qualification of the
Newco Common Stock issuable in connection with the Merger and the Vista
Exchange, for offering or sale in any jurisdiction, or any comments or
requests for additional information by the SEC.
4.7 STOCK EXCHANGE LISTING. Newco shall use its reasonable best efforts to
cause the shares of Newco Common Stock to be issued in the Midland Merger and
the Vista Exchange and upon exercise of the Midland Stock Options, Midland
Warrants or Midland Common Stock Warrants to be approved for listing on the AMEX
or Nasdaq, subject to official notice of issuance prior to the Closing Date.
4.8 ADDITIONAL ARRANGEMENTS. Subject to the terms and conditions herein
provided, each of Midland, Vista and Newco will take, or cause to be taken, all
action and will do, or cause to be done, all things necessary, appropriate, or
desirable under applicable laws and regulations or under applicable governing
agreements to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable best efforts to obtain all
necessary waivers, consents, and approvals and effecting all necessary
registrations and filings. Each of Midland, Vista, and Newco will take, or cause
to be taken, all action or will do, or cause to be done, all things necessary,
appropriate, or desirable to cause the covenants and conditions applicable to
the transactions contemplated hereby to be performed or satisfied as soon as
practicable. In addition, if any Governmental Entity shall have issued any
order, decree, ruling, or injunction or taken any other action that would have
the effect of restraining, enjoining, or otherwise prohibiting or preventing the
consummation of the transactions contemplated hereby, each of Midland, Vista,
and Newco will use its reasonable best efforts to have such order, decree,
ruling, or injunction or other action declared ineffective as soon as
practicable.
4.9 AGREEMENTS OF RULE 145 AFFILIATES. At least 30 days prior to the
Effective Time, Vista shall cause to be prepared and delivered to Midland, and
Midland shall cause to be prepared and delivered to Vista, a list identifying
all persons who, at the time of the Midland Meeting or the Vista Exchange, as
applicable, may be deemed to be "affiliates" of Midland or Vista, as that term
is used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the
"Rule 145 Affiliates"). Vista shall use its reasonable best efforts to cause
each person who is identified as a Rule 145 Affiliate in such Vista list to
deliver to Vista and Newco, at or prior to the Effective Time, a written
agreement, in the form attached as Exhibit 4.9 hereto (the "Affiliate
Agreement"). Vista and the Rule 145 Affiliates shall be relieved of this
obligation under the foregoing provisions of this Section 4.9 and such written
agreements if, and to the extent, such Rule 145 is amended not to require such
written agreements or any of the covenants contained therein. Midland shall use
its reasonable best efforts to cause each person who is identified as a Rule 145
Affiliate in such Midland list to deliver to Midland and Newco, at or prior to
the Effective Time, an Affiliate Agreement. Midland and the Rule 145 Affiliates
shall be relieved of this obligation under the foregoing provisions of this
Section 4.9 and such written agreements if, and to the extent, such Rule 145 is
amended not to require such written agreements or any of the covenants contained
therein.
4.10 PUBLIC ANNOUNCEMENTS. Prior to the Closing, the parties hereto will
consult with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any press release or make any such public
statement prior
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to obtaining the approval of the other parties hereto; provided, however, that
such consent shall not be required where such release or announcement is
required by applicable law or stock exchange rule; and provided further,
however, that any of the parties hereto may respond to inquiries by the press or
others regarding the transactions contemplated by this Agreement, so long as
such responses are consistent with such party's previously issued press
releases.
4.11 NOTIFICATION OF CERTAIN MATTERS. Midland shall give prompt notice to
Vista of (a) any representation or warranty contained in Section 3.1 being
untrue or inaccurate when made, (b) the occurrence of any event or development
that would cause (or could reasonably be expected to cause) any representation
or warranty contained in Section 3.1 to be untrue or inaccurate on the Closing
Date, or (c) any failure of Midland to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder. Vista
shall give prompt notice to Midland of (i) any representation or warranty
contained in Section 3.2 or 3.3 being untrue or inaccurate when made, (ii) the
occurrence of any event or development that would cause (or could reasonably be
expected to cause) any representation or warranty contained in Section 3.2 or to
be untrue or inaccurate on the Closing Date, or (iii) any failure of Vista,
Newco, or Merger Sub to comply with or satisfy any covenant, condition, or
agreement to be complied with or satisfied by it hereunder.
4.12 PAYMENT OF EXPENSES. Each party hereto shall pay its own fees and
expenses (including fees and expenses of such parties' attorneys and
accountants) incident to preparing for, entering into, and carrying out this
Agreement and the consummation of the transactions contemplated hereby, whether
or not the Merger and the Vista Exchange shall be consummated, except that (a)
the fees and expenses (including fees and expenses of such parties' attorneys
and accountants) incurred by a party terminating this Agreement as provided
below in connection with this Agreement and the transactions contemplated herein
(including fees and expenses incurred in connection with the preparation and
filing of the S-4 with the SEC and the fees and expenses incurred in connection
with the printing, mailing and distribution of the Proxy Statement) shall be
reimbursed, borne and paid (i) if this Agreement is terminated by Midland
pursuant to Section 6.1(d), by Vista up to $300,000, and (ii) if this Agreement
is terminated by Vista pursuant to Section 6.1(c), by Midland up to $300,000 and
(b) if the Merger and the Vista Exchange are consummated all fees and expenses
(including fees and expenses of such parties' attorneys and accountants)
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby shall be borne and paid by
Newco. The provisions for reimbursement of fees and expenses in this Section
shall be in addition to and not a limitation upon the liabilities or obligations
of a party as a result of a termination pursuant to Section 6.1(c) or 6.1(d).
4.13 INDEMNIFICATION.
(a) From and after the Effective Time, the MM Surviving Corporation
shall indemnify and hold harmless each person and shall advance expenses
incurred by each person who is, has been at any time prior to the date
hereof, or becomes prior to the Effective Time an officer or director of
Midland or any of its Subsidiaries (collectively, the "Midland Indemnified
Parties") against all losses, claims, damages, liabilities, costs or
expenses (including attorney's fees), judgments, 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 him in his capacity as an officer or director of
Midland or any of its Subsidiaries, which acts or omissions occurred prior
to the Effective Time, to the full extent permitted by applicable law and
by the Bylaws of Midland in effect prior to the Effective Time, which
Bylaws make mandatory the indemnification of and advancement of expenses to
all Midland Indemnified Parties to the full extent permitted by Article
2.02-1 of the TBCA. The procedures associated with such indemnification
shall be the same as those associated with the Midland Indemnified Parties'
indemnification from Midland or any of its respective Subsidiaries, as the
case may be, immediately prior to the Effective Time (provided, however,
that the determination that such indemnification is permissible under
Section B of Article 2.02-1 of the TBCA shall be made by special legal
counsel selected by the Board of Directors as set forth in Section F(3) of
Article 2.02-1, such selection to be subject to the consent of a majority
of the Midland Indemnified Parties in such instance, which consent may not
be unreasonably withheld; and, further provided, however, that the MM
Surviving Corporation shall be under no
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obligation to deposit trust funds pursuant to any "change-in-control" or
similar provisions). Midland hereby agrees that, from and after the date
hereof until the Effective Time, it will not (and it will cause each of its
Subsidiaries not to) amend, modify, or otherwise alter any contractual
provision under which any Midland Indemnified Party is entitled to
indemnification from Midland or any of its Subsidiaries, as the case may
be, at the time of the execution of this Agreement. The provisions of this
Section are intended to be for the benefit of, and shall be enforceable by,
the parties hereto and each Midland Indemnified Party and their respective
heirs and representatives.
(b) From and after the Effective Time, Vista shall indemnify and hold
harmless each person or entity, and shall advance expenses incurred by each
person or entity who is, has been at any time prior to the date hereof, or
becomes prior to the Effective Time an officer, director or partner of the
General Partner, Vista or any of its Subsidiaries (collectively, the "Vista
Indemnified Parties") against all losses, claims, damages, liabilities,
costs or expenses (including attorney's fees), judgments, 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 such Vista Indemnified Party in his or its capacity
as an officer, director, or partner of the General Partner, Vista or any of
its Subsidiaries, which acts or omissions occurred prior to the Effective
Time to the full extent permitted by applicable law. The procedures
associated with such indemnification shall be the same as those associated
with the Vista Indemnified Parties' indemnification from Vista or any of
its Subsidiaries, as the case may be, immediately prior to the Effective
Time (provided, however, that Vista shall be under no obligation to deposit
trust funds pursuant to any "change-in-control" or similar provisions).
Vista hereby agrees that, from and after the date hereof until the
Effective Time, it will not (and it will cause each of its Subsidiaries not
to) amend, modify, or otherwise alter any contractual provision under which
any Vista Indemnified Party is entitled to indemnification from Vista or
any of its Subsidiaries at the time of the execution of this Agreement. The
provisions of this Section are intended to be for the benefit of, and shall
be enforceable by, the parties hereto and each Vista Indemnified Party and
their respective heirs and representatives.
4.14 INDEMNIFICATION AGREEMENTS. Contemporaneously with the Closing, Newco
shall enter into indemnification agreements, substantially in the form attached
hereto as Exhibit 4.14(a)(each an "Indemnification Agreement"), with each of its
officers and directors and with each of the officers and directors listed on
Schedule 4.14 of the Midland Disclosure Schedule, substantially in the form
attached hereto as Exhibit 4.14(b). The provisions of this Section are intended
to be for the benefit of, and shall be enforceable by, the parties hereto and
each of the Persons named in this Section and their respective heirs and
representatives.
4.15 REGISTRATION OF SHARES TO BE ISSUED PURSUANT TO STOCK
OPTIONS. Promptly after the Effective Time, Newco shall file with the SEC a
registration statement on Form S-8, effective as of the Effective Time, with
respect to the shares of Newco Common Stock to be issued upon exercise of the
Midland Stock Options. Newco shall use all reasonable efforts to maintain the
effectiveness of such registration statement (and maintain the current status of
the related prospectus) for so long as any Midland Stock Options remain
outstanding. The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, the parties hereto and each holder of a Midland
Stock Option and their respective heirs and representatives.
4.16 REGISTRATION RIGHTS AGREEMENT. (a) Contemporaneously with the Closing,
Newco shall enter into a Registration Rights Agreement, substantially in the
form attached hereto as Exhibit 4.16(a) (the "Vista Registration Rights
Agreement"), with each of the shareholders of the General Partner and each of
the limited partners of Vista immediately prior to the Vista Exchange.
(b) Contemporaneously with the Closing, Newco shall enter into a
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit 4.16(b) (the "Midland Registration Rights Agreement") with each holder
of a Midland Exchange Stock Option.
(c) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, the parties hereto and each of the Persons named or
described in this Section and their respective heirs and representatives.
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4.17 RESIGNATIONS OF OFFICERS AND DIRECTORS OF MIDLAND. Contemporaneously
with the execution and delivery of this Agreement, Midland shall obtain written
resignations from each of its officers and directors under which such persons
have resigned as an officer and/or director of Midland effective as of the
Effective Time. Contemporaneously with the execution and delivery of this
Agreement, Midland shall enter into a Termination Agreements, substantially in
the forms attached hereto as Exhibits 4.17(a) and 4.17(b) (each a "Termination
Agreement"), with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, respectively.
4.18 NEWCO LONG-TERM INCENTIVE PLAN. Prior to the Effective Time, but to
become effective immediately after the Effective Time, Newco shall approve and
adopt the Vista Energy Resources, Inc. 1998 Key Employee Stock Option Plan,
substantially in the form attached hereto as Exhibit 4.18 (the "Newco Long-Term
Incentive Plan").
4.19 MIDLAND OPTION EXERCISE AGREEMENTS. Within 30 days from the date
hereof, Midland shall use its reasonable best efforts to cause each of the
holders of issued and outstanding Midland Stock Options (other than Midland
Exchange Stock Options) to execute an Option Exercise Agreement.
4.20 TRANSACTIONS WITH AFFILIATES. For a period of one year following the
Effective Time, except for the grant of options pursuant to the terms of the
Newco Long-Term Incentive Plan and the issuance of shares of Newco Common Stock
underlying such options or the Newco Warrants, Newco shall not issue shares of
Newco Common Stock or securities exchangeable or exercisable for or convertible
into shares of Newco Common Stock to any person or entity that is an affiliate
of Newco for consideration that is less than fair market value of the securities
issued. For a transaction or series of related transactions involving value of
less than $1,000,000, the fair market value of the Newco Common Stock or other
security to be issued will be determined by the Board of Directors of Newco
after taking into consideration the historical trading price of Newco Common
Stock. For a transaction or series of related transactions involving value of
more than $1,000,000, the fair market value of the Newco Common Stock or other
security to be issued will be determined by the Board of Directors of Newco
after (i) taking into consideration the historical trading price of Newco Common
Stock and (ii) receipt of an opinion from a nationally recognized investment
banking firm that such transaction is fair, from a financial point of view, to
Newco.
ARTICLE 5
CONDITIONS
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER AND THE
VISTA EXCHANGE. The respective obligations of each party to effect the Merger
and the Vista Exchange shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions:
(a) SHAREHOLDER APPROVAL. The Midland Merger and this Agreement shall
have been duly and validly approved and adopted by the shareholders of
Midland;
(b) FAIRNESS OPINION. The fairness opinion described in Section
3.1(hh) shall have been confirmed in writing and shall not have been
withdrawn, revoked, or modified;
(c) TAX OPINION. The tax opinion described in Section 4.5(b)(ii) shall
not have been withdrawn, revoked, or modified;
(d) EXCHANGE LISTING. The shares of Newco Common Stock issuable
pursuant to the Midland Merger and the Vista Exchange and the shares of
Newco Common Stock to be issued upon exercise of the Midland Stock Options
and the Midland Warrants shall have been authorized for listing on the AMEX
or Nasdaq, subject to official notice of issuance;
(e) OTHER APPROVALS. All consents, approvals, permits, and
authorizations required to be obtained prior to the Effective Time from,
any Governmental Entity in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
by Midland, Vista, Newco, and Merger Sub shall have been made or obtained
(as the case may be), except where the failure to obtain such consents,
approvals, permits, and authorizations would not be reasonably likely to
result in
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a Material Adverse Effect on Newco (assuming the Midland Merger and the
Vista Exchange have taken place) or to materially adversely affect the
consummation of the Midland Merger and the Vista Exchange;
(f) SECURITIES LAW MATTERS. The S-4 shall have become effective under
the Securities Act and shall be effective at the Effective Time, and no
stop order suspending such effectiveness shall have been issued, no action,
suit, proceeding, or investigation by the SEC to suspend such effectiveness
shall have been initiated and be continuing, and all necessary approvals
under state securities laws relating to the issuance or trading of the
Newco Common Stock to be issued in the Midland Merger and the Vista
Exchange shall have been received; and
(g) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Midland Merger and the Vista Exchange shall be in
effect; provided, however, that prior to invoking this condition, each
party shall have complied fully with its obligations under Section 4.8 and,
in addition, shall use all reasonable efforts to have any such decree,
ruling, injunction, or order vacated, except as otherwise contemplated by
this Agreement.
5.2 CONDITIONS OF OBLIGATIONS OF VISTA, NEWCO, AND MERGER SUB. The
obligations of Vista and Newco to effect the Vista Exchange are subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by Vista.
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Midland set forth in Section 3.1 shall be true and correct in
all material respects (provided that any representation or warranty of
Midland contained herein that is qualified by a materiality standard or a
Material Adverse Effect qualification shall not be further qualified
hereby) as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, and Vista shall
have received a certificate signed on behalf of Midland by the chief
executive officer and the chief financial officer of Midland to such
effect;
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS. Midland shall have
performed in all material respects all covenants and agreements required to
be performed by it under this Agreement at or prior to the Closing Date,
and Vista shall have received a certificate signed on behalf of Midland by
the chief executive officer and the chief financial officer of Midland to
such effect;
(c) COMFORT LETTER. Vista shall have received a letter from ▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, Midland's independent auditors, of the kind contemplated by
the Statement of Auditing Standards with respect to Letters to Underwriters
promulgated by the American Institute of Certified Public Accountants,
dated as of a date within two business days prior to the Closing Date, in
form and substance reasonably satisfactory to Vista, in connection with the
procedures undertaken by them with respect to the financial statements of
Midland and its consolidated Subsidiaries included (or incorporated by
reference) in the S-4 and the other matters contemplated by such Statement
of Auditing Standards and customarily included in similar letters relating
to transactions similar to the Midland Merger;
(d) DISSENTERS' RIGHTS. The aggregate number of shares of capital
stock of Midland, which are entitled to vote at the Midland Meeting and are
held of record by a Person or Persons who exercise their right, if any,
under the TBCA to dissent from the proposed Midland Merger, shall not
exceed five percent (5%) of the total number of issued and outstanding
shares of capital stock of Midland held of record as of the record date for
the Midland Meeting and entitled to vote on the proposed Midland Merger at
such meeting.
(e) LEGAL OPINION. At the Closing, Vista shall have received from Law
Snakard & ▇▇▇▇▇▇▇, Midland's legal counsel, an opinion dated the Closing
Date in substantially the form set forth as Exhibit 5.2(e) hereto.
(f) NO ADVERSE CHANGE. From the date of this Agreement through the
Closing, there shall not have occurred any change in the condition
(financial or otherwise), operations, or business of Midland
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and its Subsidiaries, taken as a whole, that would have or would be
reasonably likely to have a Material Adverse Effect on Midland (other than
changes, including changes in commodity prices, generally prevalent
affecting the oil and gas industry).
(g) MIDLAND OPTION EXERCISE AGREEMENTS. Midland shall have received an
Option Exercise Agreement executed by each of the holders of issued and
outstanding Midland Stock Options who is an executive officer or director
of Midland.
5.3 CONDITIONS OF OBLIGATIONS OF MIDLAND. The obligation of Midland to
effect the Midland Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Midland:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Vista, Newco, and Merger Sub set forth in Sections 3.2 and
3.3 shall be true and correct in all material respects (provided that any
representation or warranty of Vista, Newco, or Merger Sub contained herein
that is qualified by a materiality standard or a Material Adverse Effect
qualification shall not be further qualified hereby) as of the date of this
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date, and Midland shall have received a certificate
signed on behalf of Vista by the General Partner to such effect;
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS. Vista, Newco, and Merger
Sub shall have performed in all material respects all covenants and
agreements required to be performed by them under this Agreement at or
prior to the Closing Date, and Midland shall have received a certificate
signed on behalf of Vista by the General Partner to such effect;
(c) LEGAL OPINION. At the Closing, Midland shall have received from
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., Vista's legal counsel, an opinion dated the Closing
Date in substantially the form set forth as Exhibit 5.3(c) hereto.
(d) COMFORT LETTER. Midland shall have received a letter from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, Vista's independent certified public accountants, of the kind
contemplated by the Statement of Auditing Standards with respect to Letters
to Underwriters promulgated by the American Institute of Certified Public
Accountants, dated as of a date within two business days prior to the
Closing Date, in form and substance reasonably satisfactory to Midland, in
connection with the procedures undertaken by them with respect to the
financial statements of Vista and its consolidated Subsidiaries included in
the S-4 and the other matters contemplated by such Statement of Auditing
Standards and customarily included in similar letters relating to
transactions similar to the Midland Merger; and
(e) NO ADVERSE CHANGE. From the date of this Agreement through the
Closing, there shall not have occurred any change in the condition
(financial or otherwise), operations, or business of Vista and its
Subsidiaries, taken as a whole, that would have or would be reasonably
likely to have a Material Adverse Effect on Vista (other than changes,
including changes in commodity prices, generally prevalent affecting the
oil and gas industry).
(f) EXCHANGE AGREEMENTS. Newco shall have received an Exchange
Agreement from each holder of GP Common Stock and each holder of a
Partnership Interest.
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ARTICLE 6
TERMINATION
6.1 TERMINATION RIGHTS. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the Merger and this Agreement by the shareholders of Midland and the
partners of Vista:
(a) By mutual written consent of Vista and Midland;
(b) By either Midland or Vista if (i) the Merger have not been
consummated by October 30, 1998 (provided, however, that the right to
terminate this Agreement pursuant to this clause (i) shall not be available
to any party whose breach of any representation or warranty or failure to
perform any covenant or agreement under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or before such
date), (ii) any Governmental Entity shall have issued an order, decree, or
ruling or taken any other action permanently restraining, enjoining, or
otherwise prohibiting the Merger and such order, decree, ruling, or other
action shall have become final and nonappealable (provided, however, that
the right to terminate this Agreement pursuant to this clause (ii) shall
not be available to any party until such party has used all reasonable
efforts to remove such injunction, order, or decree), or (iii) any required
approval of the shareholders or partners of a party, as applicable, shall
not have been obtained by reason of the failure to obtain the required vote
upon a vote held at a duly held meeting of shareholders of Midland, or at
any adjournment thereof (provided, however, that Midland shall not have the
right to terminate this Agreement pursuant to this clause (iii) if Vista
then has the right to terminate this Agreement pursuant to subsection (e)
of this Section);
(c) By Vista if (i) there has been a breach of the representations and
warranties made by Midland in Section 3.1 of this Agreement or (ii) Midland
has failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement and such failure has not been, or
cannot be, cured within a reasonable time after notice and demand for cure
thereof which period in no event shall extend beyond October 30, 1998.
(d) By Midland if (i) there has been a breach of the representations
and warranties made by Vista, Newco, or Merger Sub in Sections 3.2 and 3.3
of this Agreement, (ii) Vista, Newco, or Merger Sub has failed to comply in
any material respect with any of its covenants or agreements contained in
this Agreement, and, in either such case, such breach or failure has not
been, or cannot be, cured within a reasonable time after notice and a
demand for cure thereof which period in no event shall extend beyond
October 30, 1998;
(e) By Vista if (i) the Board of Directors of Midland shall have
failed to recommend adoption of the Midland Merger and this Agreement at
the time the Proxy Statement is first mailed to shareholders of Midland or
shall have amended or withdrawn any such recommendation and such
recommendation is not reinstated in its prior form within five business
days after such amendment or withdrawal or (ii) (x) the shareholders of
Midland fail to duly and validly adopt the Midland Merger and this
Agreement at the Midland Meeting or any adjournment thereof or (y) the
Midland Meeting does not occur for any reason (other than as a result of a
breach of this Agreement by Vista) prior to October 29, 1998 (and if this
Agreement is terminated pursuant to this subsection, Vista shall have the
right to receive from Midland, and Midland agrees to pay to Vista, an
amount of cash equal to $400,000, which amount shall be inclusive of
expenses as set forth in Section 4.12);
(f) By Vista after June 22, 1998, if on such date Midland shall not
have received an Option Exercise Agreement executed by each of the holders
of issued and outstanding Midland Stock Options who is an executive officer
of director of Midland;
(g) By Midland after June 22, 1998, if on such date Vista shall not
have received an Exchange Agreement from each holder of GP Common Stock and
each holder of a Partnership Interest.
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6.2 EFFECT OF TERMINATION. If this Agreement is terminated by either
Midland or Vista pursuant to the provisions of Section 6.1, this Agreement shall
forthwith become void except for, and there shall be no further obligation on
the part of any party hereto or its respective Affiliates, directors, officers,
partners, or shareholders except pursuant to, the provisions of Sections 4.12
and 6.1(e), and Article 7; provided, however, that a termination of this
Agreement shall not relieve any party hereto from any liability for damages
(excluding punitive damages which each party hereby waives the right to recover
hereunder) incurred as a result of a breach by such party of its
representations, warranties, covenants, agreements, or other obligations
hereunder occurring prior to such termination.
ARTICLE 7
MISCELLANEOUS
7.1 AMENDMENT. This Agreement may be amended by the parties hereto at any
time before or after approval of the Midland Merger and this Agreement by the
shareholders of Midland and the Vista Exchange by the partners of Vista;
provided, however, that after any such approval, no amendment shall be made that
by law requires further approval by such shareholders or partners without such
further approval. This Agreement may not be amended except by a written
instrument signed on behalf of each of the parties hereto.
7.2 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties
hereto 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 contained
herein or in any document delivered pursuant hereto, and (c) waive performance
of any of the covenants or agreements, or satisfaction of any of the conditions,
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party.
7.3 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS, AND
AGREEMENTS. All representations, warranties, covenants, and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall be deemed to the extent expressly provided herein to be conditions to the
Midland Merger, and none of such representations, warranties, covenants, and
agreements shall survive the consummation of the Merger (except for the
agreements contained in Article 2, in Sections 4.12, 4.13, 4.14, 4.15, 4.16,
4.17, 4.18 and 4.20, and in this Article.
7.4 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and either delivered personally, by facsimile
transmission, or by registered or certified mail (postage prepaid and return
receipt requested) and shall be deemed given when received (or, if mailed, five
business days after the date of mailing) at the following addresses or facsimile
transmission numbers (or at such other address or facsimile transmission number
for a party as shall be specified by like notice):
(a) If to Vista, Newco, or Merger Sub:
Vista Energy Resources, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to Midland:
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Law, Snakard & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
7.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
7.6 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
7.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the documents and instruments delivered by the parties in
connection with this Agreement) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and (b) except as
provided in Section 4.13, is solely for the benefit of the parties hereto and
their respective successors, legal representatives, and assigns and does not
confer on any other person any rights or remedies hereunder.
7.8 APPLICABLE LAW. This Agreement shall be governed in all respects,
including validity, interpretation, and effect, by the laws of the State of
Texas regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
7.9 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or part
hereof to be null, void, or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality, and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby, unless the foregoing inconsistent action or the failure to
take an action constitutes a material breach of this Agreement or makes this
Agreement impossible to perform, in which case this Agreement shall terminate
pursuant to Article 6. Except as otherwise contemplated by this Agreement, to
the extent that a party hereto took an action inconsistent herewith or failed to
take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent Governmental Entity, such party shall not
incur any liability or obligation unless such party breached its obligations
hereunder or did not in good faith seek to resist or object to the imposition or
entering of such order or judgment.
7.10 ENFORCEMENT OF AGREEMENT. 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 the terms hereof or was otherwise
breached. Accordingly, the parties hereto hereby agree that each party hereto
shall be entitled to an injunction to prevent a breach of this Agreement and
shall be entitled to specific performance of the terms and provisions hereof in
addition to any other remedy at law or in equity.
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7.11 ASSIGNMENT. Nether 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, except that Merger Sub may assign, in its sole discretion, any or all
of its rights, interests, and obligations hereunder to any newly-formed direct
or indirect wholly-owned corporate subsidiary of Newco. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective successors and assigns.
7.12 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including 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 hereof shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provisions hereof.
7.13 CERTAIN PROVISIONS INAPPLICABLE. The parties hereby acknowledge and
represent that the Board of Directors of each corporate party hereto has
approved the terms of this Agreement and the consummation of the transactions
contemplated herein and that such approval is sufficient to render the
provisions of Section 203 of the DGCL and Section 13.03 of the TBCA inapplicable
to the transactions contemplated herein.
7.14 TERMINATION OF LETTER OF INTENT AND CONFIDENTIALITY AGREEMENT. The
parties hereby acknowledge and agree that the Letter of Intent dated January 12,
1998 between Vista and Midland and the Confidentiality Agreement dated November
18, 1997 between Vista and Midland are hereby terminated and are of no further
force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF. The parties have caused this Agreement to be executed
by their duly authorized representatives, effective as of the date first written
above.
VISTA RESOURCES PARTNERS, L.P.
By: Vista Resources I, Inc., its
General Partner
By:
--------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
MIDLAND RESOURCES, INC.
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
VISTA ENERGY RESOURCES, INC.
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
MIDLAND ACQUISITION CO.
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
[SIGNATURE PAGE TO MERGER AGREEMENT]
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