AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEVON ENERGY CORPORATION,
DEVON MERGER CO.
AND SANTA ▇▇ ▇▇▇▇▇▇ CORPORATION
DATED AS OF MAY 25, 2000
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER..........................................................................................2
Section 1.1 THE MERGER....................................................................................2
Section 1.2 THE CLOSING...................................................................................2
Section 1.3 EFFECTIVE TIME................................................................................2
Section 1.4 CORPORATE HEADQUARTERS........................................................................2
Section 1.5 CERTIFICATE OF INCORPORATION..................................................................2
Section 1.6 BYLAWS........................................................................................2
Section 1.7 RESIGNATION OF SANTA ▇▇ ▇▇▇▇▇▇ DIRECTORS......................................................2
ARTICLE 2 DIRECTORS OF DEVON..................................................................................3
Section 2.1 DIRECTORS OF DEVON............................................................................3
ARTICLE 3 CONVERSION OF SANTA ▇▇ ▇▇▇▇▇▇ STOCK.................................................................3
Section 3.1 CERTAIN DEFINITIONS...........................................................................3
Section 3.2 CONVERSION OF SANTA ▇▇ ▇▇▇▇▇▇ STOCK...........................................................4
Section 3.3 EXCHANGE OF CERTIFICATES REPRESENTING SANTA ▇▇ ▇▇▇▇▇▇ STOCK...................................5
Section 3.4 ADJUSTMENT OF EXCHANGE RATIO..................................................................7
Section 3.5 RULE 16B-3 APPROVAL...........................................................................7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SANTA ▇▇ ▇▇▇▇▇▇...................................................7
Section 4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY.................................................8
Section 4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS..............................................8
Section 4.3 CAPITALIZATION................................................................................8
Section 4.4 SIGNIFICANT SUBSIDIARIES......................................................................9
Section 4.5 NO VIOLATION..................................................................................9
Section 4.6 NOCONFLICT....................................................................................9
Section 4.7 SECDOCUMENTS.................................................................................10
Section 4.8 LITIGATION...................................................................................11
Section 4.9 ABSENCE OF CERTAIN CHANGES...................................................................11
Section 4.10 TAXES........................................................................................12
Section 4.11 EMPLOYEE BENEFIT PLANS.......................................................................13
Section 4.12 LABOR MATTERS................................................................................14
Section 4.13 ENVIRONMENTAL MATTERS........................................................................14
Section 4.14 INTELLECTUAL PROPERTY........................................................................15
Section 4.15 TITLE TO PROPERTIES..........................................................................15
Section 4.16 INSURANCE....................................................................................16
Section 4.17 NO BROKERS...................................................................................16
Section 4.18 OPINION OF FINANCIAL ADVISOR.................................................................16
Section 4.19 DEVON STOCK OWNERSHIP........................................................................16
Section 4.20 ACCOUNTING AND REORGANIZATION MATTERS........................................................16
Section 4.21 VOTE REQUIRED................................................................................16
Section 4.22 CERTAIN APPROVALS............................................................................16
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Section 4.23 CERTAIN CONTRACTS............................................................................17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF DEVON AND MERGER CO..............................................17
Section 5.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY................................................17
Section 5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS.............................................17
Section 5.3 CAPITALIZATION...............................................................................18
Section 5.4 SIGNIFICANTSUBSIDIARIES......................................................................18
Section 5.5 NO VIOLATION.................................................................................19
Section 5.6 NO CONFLICT..................................................................................19
Section 5.7 SECDOCUMENTS.................................................................................20
Section 5.8 LITIGATION...................................................................................21
Section 5.9 ABSENCE OF CERTAIN CHANGES...................................................................21
Section 5.10 TAXES........................................................................................22
Section 5.11 EMPLOYEE BENEFIT PLANS.......................................................................22
Section 5.12 LABOR MATTERS................................................................................23
Section 5.13 ENVIRONMENTAL MATTERS........................................................................24
Section 5.14 INTELLECTUAL PROPERTY........................................................................24
Section 5.15 TITLE TO PROPERTIES..........................................................................25
Section 5.16 INSURANCE....................................................................................25
Section 5.17 NO BROKERS...................................................................................25
Section 5.18 OPINION OF FINANCIAL ADVISOR.................................................................26
Section 5.19 SANTA FE SNYDERSTOCK OWNERSHIP...............................................................26
Section 5.20 ACCOUNTING AND REORGANIZATION MATTERS........................................................26
Section 5.21 VOTE REQUIRED................................................................................26
Section 5.22 DEVON RIGHTS AGREEMENT.......................................................................26
Section 5.23 CERTAIN APPROVALS............................................................................26
Section 5.24 CERTAIN CONTRACTS............................................................................27
ARTICLE 6 COVENANTS..........................................................................................27
Section 6.1 CONDUCT OF BUSINESSES........................................................................27
Section 6.2 NO SOLICITATION BY SANTA ▇▇ ▇▇▇▇▇▇...........................................................30
Section 6.3 NO SOLICITATION BY DEVON.....................................................................31
Section 6.4 MEETINGS OF STOCKHOLDERS.....................................................................32
Section 6.5 FILINGS; REASONABLE BEST EFFORTS.............................................................32
Section 6.6 INSPECTION...................................................................................33
Section 6.7 PUBLICITY....................................................................................34
Section 6.8 REGISTRATION STATEMENT.......................................................................34
Section 6.9 LISTING APPLICATION..........................................................................35
Section 6.10 LETTERS OF ACCOUNTANTS.......................................................................35
Section 6.11 AGREEMENTS OF AFFILIATES.....................................................................36
Section 6.12 EXPENSES.....................................................................................36
Section 6.13 INDEMNIFICATION AND INSURANCE................................................................36
Section 6.14 CERTAIN BENEFITS.............................................................................38
Section 6.15 REORGANIZATION...............................................................................38
Section 6.16 RIGHTS AGREEMENT.............................................................................38
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ARTICLE 7 CONDITIONS.........................................................................................38
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...................................38
Section 7.2 CONDITIONS TO OBLIGATION OF SANTA ▇▇ ▇▇▇▇▇▇ TO EFFECT THE MERGER.............................39
Section 7.3 CONDITIONS TO OBLIGATION OF DEVON TO EFFECT THE MERGER.......................................40
ARTICLE 8 TERMINATION........................................................................................41
Section 8.1 TERMINATION BY MUTUAL CONSENT................................................................41
Section 8.2 TERMINATION BY DEVON OR SANTA ▇▇ ▇▇▇▇▇▇......................................................41
Section 8.3 TERMINATION BY SANTA ▇▇ ▇▇▇▇▇▇...............................................................41
Section 8.4 TERMINATION BY DEVON.........................................................................42
Section 8.5 EFFECT OF TERMINATION........................................................................42
Section 8.6 EXTENSION; WAIVER............................................................................45
ARTICLE 9 GENERAL PROVISIONS.................................................................................45
Section 9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS....................................45
Section 9.2 NOTICES......................................................................................45
Section 9.3 ASSIGNMENT; BINDING EFFECT; BENEFIT..........................................................46
Section 9.4 ENTIRE AGREEMENT.............................................................................47
Section 9.5 AMENDMENTS...................................................................................47
Section 9.6 GOVERNING LAW................................................................................47
Section 9.7 COUNTERPARTS.................................................................................47
Section 9.8 HEADINGS.....................................................................................47
Section 9.9 INTERPRETATION...............................................................................47
Section 9.10 WAIVERS......................................................................................48
Section 9.11 INCORPORATION OF EXHIBITS....................................................................48
Section 9.12 SEVERABILITY.................................................................................48
Section 9.13 ENFORCEMENT OF AGREEMENT.....................................................................48
Section 9.14 OBLIGATION OF MERGER CO......................................................................48
Section 9.15 SUBSIDIARIES.................................................................................48
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of May
25, 2000, is among Devon Energy Corporation, a Delaware corporation
("Devon"), Devon Merger Co., a Delaware corporation and a direct and
wholly-owned subsidiary of Devon ("Merger Co."), and Santa ▇▇ ▇▇▇▇▇▇
Corporation, a Delaware corporation ("Santa ▇▇ ▇▇▇▇▇▇").
RECITALS
WHEREAS, Devon and Santa ▇▇ ▇▇▇▇▇▇ have each determined to engage in
a strategic business combination with the other;
WHEREAS, in furtherance thereof, the parties hereto desire that
Merger Co. merge with and into Santa ▇▇ ▇▇▇▇▇▇ (the "Merger"), pursuant to
which each outstanding share of Santa ▇▇ ▇▇▇▇▇▇ Common Stock (as defined in
Section 3.1) will be converted into shares of Devon Common Stock (as defined
in Section 3.1);
WHEREAS, the respective Boards of Directors of each of Devon, Merger
Co. and Santa ▇▇ ▇▇▇▇▇▇ have determined the Merger, in the manner
contemplated herein, to be desirable and in the best interests of their
respective corporations and stockholders and to be consistent with, and in
furtherance of, their respective business strategies and goals, and, by
resolutions duly adopted, have approved and adopted this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, it is intended that the Merger be accounted for as a
pooling of interests in accordance with APB Opinion 16 as amended by
Statements of Financial Accounting Standards and related interpretations of
the American Institute of Certified Public Accountants, the Financial
Accounting Standards Board, and the rules and regulations of the Securities
and Exchange Commission ("Pooling of Interests");
WHEREAS, as an inducement to the willingness of Santa ▇▇ ▇▇▇▇▇▇ to
enter into this Agreement, Devon has granted Santa ▇▇ ▇▇▇▇▇▇ an option to
purchase shares of Devon Common Stock pursuant to a Stock Option Agreement
(as defined in Section 3.1); and
WHEREAS, as an inducement to the willingness of Devon to enter into
this Agreement, Santa ▇▇ ▇▇▇▇▇▇ has granted Devon an option to purchase
shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock pursuant to a Stock Option Agreement
(as defined in Section 3.1).
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), Merger Co.
shall be merged with and into Santa ▇▇ ▇▇▇▇▇▇ in accordance with this
Agreement, and the separate corporate existence of Merger Co. shall thereupon
cease. Santa ▇▇ ▇▇▇▇▇▇ shall be the surviving corporation in the Merger and
shall be a wholly-owned subsidiary of Devon (sometimes hereinafter referred
to as the "Surviving Corporation"). The Merger shall have the effects
specified in the Delaware General Corporation Law ("DGCL").
Section 1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at
the offices of McAfee & ▇▇▇▇ A Professional Corporation, 10th Floor, Two
Leadership Square, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, at
9:00 a.m., local time, on the first business day immediately following the
day on which the last to be fulfilled or waived of the conditions set forth
in Article 7 shall be fulfilled or waived in accordance herewith or (b) at
such other time, date or place as Devon and Santa ▇▇ ▇▇▇▇▇▇ may agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
Section 1.3 EFFECTIVE TIME. If all the conditions to the Merger set
forth in Article 7 shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated as provided in Article 8,
on the Closing Date, a certificate of merger (the "Certificate of Merger")
meeting the requirements of Section 251 of the DGCL shall be properly
executed and filed with the Secretary of State of the State of Delaware (the
"Secretary of State"). The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State in accordance
with the DGCL, or at such later time that the parties hereto shall have
agreed upon and designated in such filing as the effective time of the Merger
(the "Effective Time").
Section 1.4 CORPORATE HEADQUARTERS. After the Closing Date, the
corporate headquarters of Devon and the Surviving Corporation shall be
located in Oklahoma City, Oklahoma.
Section 1.5 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Santa ▇▇ ▇▇▇▇▇▇ in effect immediately prior to the Effective
Time shall be amended and restated to duplicate the certificate of
incorporation of Merger Co., until duly amended in accordance with applicable
law, except that Article 1 of such certificate of incorporation shall state
as follows: "FIRST: The name of the corporation is Santa ▇▇ ▇▇▇▇▇▇
Corporation."
Section 1.6 BYLAWS. The bylaws of Merger Co. in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation,
until duly amended in accordance with applicable law.
Section 1.7 RESIGNATION OF SANTA ▇▇ ▇▇▇▇▇▇ DIRECTORS. The Board of
Directors of the Surviving Corporation shall consist of the Board of
Directors of Merger Co., as it existed
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immediately prior to the Effective Time, and each of the members of the Board
of Directors of Santa ▇▇ ▇▇▇▇▇▇ shall tender his resignation, to be effective
immediately upon the Effective Time.
ARTICLE 2
DIRECTORS OF DEVON
Section 2.1 DIRECTORS OF DEVON. At the Effective Time, the Board of Directors
of Devon shall consist of a number of persons as determined by Devon.
One-third (1/3) of the total number of directors, rounded to the nearest
whole number, shall be persons designated by Santa ▇▇ ▇▇▇▇▇▇ who are
acceptable to Devon (the "Santa ▇▇ ▇▇▇▇▇▇ Designees"). The Santa ▇▇ ▇▇▇▇▇▇
Designees shall be appointed to fill any vacancies on the Board of Directors
existing immediately prior to the Effective Time and then shall be allocated
as evenly as possible among the different classes of Devon directors. Devon
shall give written notice to Santa ▇▇ ▇▇▇▇▇▇ by June 15, 2000 of the number
of directors which shall constitute the entire Board at the Effective Time.
Santa ▇▇ ▇▇▇▇▇▇ shall have until June 30, 2000 to give Devon written notice
of Santa ▇▇ ▇▇▇▇▇▇'▇ designees to serve as directors at the Effective Time.
The notice of designees shall include the information concerning each
designee as would be required to be included in a proxy statement under
Regulation 14A of the Exchange Act. If Devon reasonably determines that any
Santa ▇▇ ▇▇▇▇▇▇ designee is unacceptable, Santa ▇▇ ▇▇▇▇▇▇ and Devon will
agree upon a substitute designee not later than July 15, 2000. If, prior to
the Effective Time, any Santa ▇▇ ▇▇▇▇▇▇ designee becomes unavailable or
unwilling to serve, Santa ▇▇ ▇▇▇▇▇▇ shall designate a substitute designee
acceptable to Devon. If necessary to comply with this Section 2.1, Devon
shall cause to be presented to the meeting of its stockholders contemplated
by Section 6.4 of this Agreement a proposal to amend Devon's Certificate of
Incorporation to increase the number of directors that constitutes the entire
Board of Directors.
ARTICLE 3
CONVERSION OF SANTA ▇▇ ▇▇▇▇▇▇ STOCK
Section 3.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) "Devon Common Stock" shall mean the common stock, par value $.10
per share, of Devon, and the rights under the Devon Rights Agreement.
(b) "Santa ▇▇ ▇▇▇▇▇▇ Common Stock" shall mean the common stock, par
value $0.01 per share, of Santa ▇▇ ▇▇▇▇▇▇.
(c) "Santa ▇▇ ▇▇▇▇▇▇ Exchange Ratio" shall equal 0.22.
(d) "Stock Option Agreements" shall mean (i) the Stock Option
Agreement dated the date hereof between Devon and Santa ▇▇ ▇▇▇▇▇▇ pursuant to
which Devon has granted to Santa ▇▇ ▇▇▇▇▇▇ an option to purchase a certain
number of shares of Devon Common Stock and (ii) the Stock Option Agreement
dated the date hereof between Santa ▇▇ ▇▇▇▇▇▇ and Devon
3
pursuant to which Santa ▇▇ ▇▇▇▇▇▇ has granted to Devon an option to purchase a
certain number of shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock.
Section 3.2 CONVERSION OF SANTA ▇▇ ▇▇▇▇▇▇ STOCK AND MERGER CO. STOCK.
(a) At the Effective Time, each share of Santa ▇▇ ▇▇▇▇▇▇ Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock (x) held in Santa ▇▇ ▇▇▇▇▇▇'▇ treasury or
(y) owned by Devon or any wholly-owned Subsidiary (as defined in Section 9.15)
of Devon or Santa ▇▇ ▇▇▇▇▇▇) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the number of shares
of Devon Common Stock equal to the Santa ▇▇ ▇▇▇▇▇▇ Exchange Ratio, subject to
adjustment as provided in Section 3.4. At the Effective Time, each share of
Merger Co. common stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into one share of Santa ▇▇ ▇▇▇▇▇▇ Common
Stock.
(b) As a result of the Merger and without any action on the part of the
holders thereof, each share of Santa ▇▇ ▇▇▇▇▇▇ Common Stock shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate representing any shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock
(a "Certificate") shall thereafter cease to have any rights with respect to such
shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock, except that such Certificates shall
thereafter evidence (x) the number of whole shares of Devon Common Stock into
which such shares are converted pursuant to Section 3.2(a) and the right to
receive any dividends or distributions with respect thereto and (y) the right to
receive cash for fractional shares of Devon Common Stock in accordance with
Sections 3.3(b) and 3.3(e) upon the surrender of such Certificate.
(c) (i) At the Effective Time, all options (individually, a "Santa ▇▇
▇▇▇▇▇▇ Option" and collectively, the "Santa ▇▇ ▇▇▇▇▇▇ Options") then outstanding
under the stock option plans of Santa ▇▇ ▇▇▇▇▇▇ described in the Santa ▇▇ ▇▇▇▇▇▇
Disclosure Letter (collectively, the "Santa ▇▇ ▇▇▇▇▇▇ Stock Option Plans") shall
remain outstanding following the Effective Time and cease to represent a right
to acquire shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock and shall be converted
automatically into options to purchase shares of Devon Common Stock as provided
in this Section 3.2(c). At the Effective Time, the Santa ▇▇ ▇▇▇▇▇▇ Options
shall, by virtue of the Merger and without any further action on the part of
Devon or the holder of any Santa ▇▇ ▇▇▇▇▇▇ Option, be assumed by Devon in such
manner that Devon (A) 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 (B) to the extent that Section 424 of the Code does not apply to any Santa ▇▇
▇▇▇▇▇▇ Option, would be such a corporation were Section 424 of the Code
applicable to such option. Each Santa ▇▇ ▇▇▇▇▇▇ Option assumed by Devon shall be
exercisable upon the same terms and conditions as under the applicable Santa ▇▇
▇▇▇▇▇▇ Stock Option Plan and the applicable option agreement issued thereunder,
except that (X) each Santa ▇▇ ▇▇▇▇▇▇ Option shall be exercisable for that whole
number of shares of Devon Common Stock (rounded upward to the nearest whole
share) into which the number of shares of the Santa ▇▇ ▇▇▇▇▇▇ Common Stock
subject to such Santa ▇▇ ▇▇▇▇▇▇ Option immediately prior to the Effective Time
would be converted under Section 3.2(a) if such number of shares of Santa ▇▇
▇▇▇▇▇▇ Common Stock was then outstanding and (Y), the option price per share of
Devon Common Stock shall be an amount
4
equal to the option price per share of Santa ▇▇ ▇▇▇▇▇▇ Common Stock subject to
such Santa ▇▇ ▇▇▇▇▇▇ Option in effect immediately prior to the Effective Time,
divided by the Santa ▇▇ ▇▇▇▇▇▇ Exchange Ratio, subject to adjustment as provided
in Section 3.4 (the price per share, as so determined, being rounded upward to
the nearest full cent).
(ii) Devon shall take all corporate action necessary to reserve for
issuance a number of shares of Devon Common Stock equal to the number of shares
of Devon Common Stock issuable upon the exercise of the Santa ▇▇ ▇▇▇▇▇▇ Options
assumed by Devon pursuant to this Section 3.2(c). From and after the date of
this Agreement, except as provided in Section 6.1(f), no additional options
shall be granted by Santa ▇▇ ▇▇▇▇▇▇ or its Subsidiaries under the Santa ▇▇
▇▇▇▇▇▇ Stock Option Plans or otherwise. At the Effective Time or as soon as
practicable, but in no event more than three business days thereafter, Devon
shall file with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-8 covering all shares of Devon Common Stock to
be issued upon exercise of the Santa ▇▇ ▇▇▇▇▇▇ Options and shall cause such
registration statement to remain effective for as long as there are outstanding
any Santa ▇▇ ▇▇▇▇▇▇ Options.
Section 3.3 EXCHANGE OF CERTIFICATES REPRESENTING SANTA ▇▇ ▇▇▇▇▇▇
STOCK.
(a) As of the Effective Time, Devon shall deposit, or shall cause to be
deposited, with BankBoston, N.A. or such other party reasonably satisfactory to
Devon and Santa ▇▇ ▇▇▇▇▇▇ (the "Exchange Agent"), for the benefit of the holders
of shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock, for exchange in accordance with this
Article 3, certificates representing (i) the shares of Devon Common Stock to be
issued pursuant to Section 3.2 in exchange for outstanding shares of Santa ▇▇
▇▇▇▇▇▇ Common Stock and (ii) cash sufficient to pay cash in lieu of fractional
shares and any dividends and other distributions pursuant to Section 3.3(b) and
3.3(e) (the "Exchange Fund").
(b) Promptly after the Effective Time, Devon shall cause the Exchange
Agent to mail to each holder of record of one or more Certificates: (i) a letter
of transmittal (the "Letter of Transmittal") which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Devon and Santa ▇▇ ▇▇▇▇▇▇ may
reasonably specify and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Devon
Common Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Certificate shall be entitled to receive in exchange
therefor (A) a certificate representing that number of whole shares of Devon
Common Stock and (B) a check representing the amount of cash in lieu of
fractional shares, if any, in respect of the Certificate surrendered pursuant to
the provisions of this Article 3, after giving effect to any required
withholding tax, and the Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued on the cash in lieu of fractional shares and
unpaid dividends and distributions, if any, payable to holders of Certificates.
In the event of a transfer of ownership of Santa ▇▇ ▇▇▇▇▇▇ Common Stock which is
not registered in the transfer records of Santa ▇▇ ▇▇▇▇▇▇, a certificate
representing the proper number of shares of Devon Common Stock, together with a
check for the cash to be paid in lieu of fractional shares, shall be issued to
such a transferee if the Certificate representing
5
such Santa ▇▇ ▇▇▇▇▇▇ 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.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time with
respect to Devon Common Stock with a record date after the Effective Time shall
be paid with respect to the shares represented by any Certificate until such
Certificate is surrendered for exchange as provided herein. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of
Devon Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with respect to the
number of whole shares of Devon Common Stock into which the shares represented
by the Certificates are exchanged and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Devon Common Stock, less
the amount of any withholding taxes which may be required thereon.
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of Santa ▇▇ ▇▇▇▇▇▇ of the shares of Santa ▇▇ ▇▇▇▇▇▇ Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to Devon, the presented
Certificates shall be canceled and exchanged for certificates for shares of
Devon Common Stock and cash in lieu of fractional shares, if any, deliverable in
respect thereof pursuant to this Agreement in accordance with the procedures set
forth in this Article 3.
(e) No fraction of a share of Devon Common Stock will be issued, but in
lieu thereof each holder of Santa ▇▇ ▇▇▇▇▇▇ Common Stock otherwise entitled to
receive a fraction of a share of Devon Common Stock will be entitled to receive
in accordance with the provisions of this Section 3.3(e) from the Exchange Agent
a cash payment in lieu of the fraction of a share of Devon Common Stock equal to
the fraction multiplied by the average of the closing sales price (or, if the
securities should not trade on any trading day, the average of the bid and ask
prices therefor on that day) of Devon Common Stock as reported on the American
Stock Exchange (the "AMEX") during the five consecutive trading days immediately
preceding the Effective Date. As promptly as practicable after the determination
of the amount of cash, if any, to be paid to holders of fractional interests,
the Exchange Agent will notify Devon, and Devon will deposit the necessary cash
with the Exchange Agent and will cause the Exchange Agent to forward payment to
the holders of fractional interests in accordance with the terms of this
Agreement. The Exchange Agent shall, subject to any applicable abandoned
property or similar law, until one year after the Effective Date, pay to such
holders the cash value of such fraction so determined, without interest. Any
balance of such cash, as to which certificates representing Santa ▇▇ ▇▇▇▇▇▇
Common Stock outstanding immediately prior to the Effective Time shall not have
been surrendered by the expiration of such one-year period, shall thereafter be
returned to and held by Devon subject to any applicable statute of limitations
or any abandoned property, escheat or similar law.
6
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any shares of Devon Common Stock) that remains unclaimed
by the former stockholders of Santa ▇▇ ▇▇▇▇▇▇ one year after the Effective Time
shall be delivered to Devon. Any former stockholders of Santa ▇▇ ▇▇▇▇▇▇ who have
not theretofore complied with this Article 3 shall thereafter look only to Devon
for payment of their shares of Devon Common Stock, cash in lieu of fractional
shares and unpaid dividends and distributions on the Devon Common Stock
deliverable in respect of each Certificate such former stockholder holds as
determined pursuant to this Agreement.
(g) None of Devon, the Exchange Agent or any other person shall be
liable to any former holder of shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(h) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by Devon, the posting by such
person of a bond in such reasonable amount as Devon may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Devon Common Stock and cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Devon Common Stock
deliverable in respect thereof pursuant to this Agreement.
Section 3.4 ADJUSTMENT OF EXCHANGE RATIO. If, subsequent to the date of
this Agreement but prior to the Effective Time, Santa ▇▇ ▇▇▇▇▇▇ changes the
number of shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock, or Devon changes the number of
shares of Devon Common Stock, issued and outstanding as a result of a stock
split, reverse stock split, stock dividend, recapitalization or other similar
transaction, the Santa ▇▇ ▇▇▇▇▇▇ Exchange Ratio and other items dependent
thereon shall be appropriately adjusted.
Section 3.5 RULE 16b-3 APPROVAL. Devon agrees that the Devon Board of
Directors or the Compensation Committee of the Devon Board of Directors shall,
at or prior to the Effective Time, adopt resolutions specifically approving, for
purposes of Rule 16b-3 ("Rule 16b-3") under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the receipt, pursuant to Section 3.2, of Devon
Common Stock and Devon stock options by officers and directors of Santa ▇▇
▇▇▇▇▇▇ who will become officers or directors of the Devon subject to Section 16
of the Exchange Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SANTA ▇▇ ▇▇▇▇▇▇
Except as set forth in the disclosure letter delivered to
Devon concurrently with the execution hereof (the "Santa ▇▇ ▇▇▇▇▇▇ Disclosure
Letter") or as disclosed with reasonable specificity in the Santa ▇▇ ▇▇▇▇▇▇
Reports (as defined in Section 4.7), Santa ▇▇ ▇▇▇▇▇▇ represents and warrants to
Devon that:
7
Section 4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Santa ▇▇
▇▇▇▇▇▇ is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. Santa ▇▇ ▇▇▇▇▇▇ is duly qualified to do
business as a foreign corporation and is in good standing under the laws of any
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified would not have,
individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect (as
defined in Section 9.9). Santa ▇▇ ▇▇▇▇▇▇ has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted. The copies of Santa ▇▇ ▇▇▇▇▇▇'▇ certificate of incorporation
and bylaws previously made available to Devon are true and correct and contain
all amendments as of the date hereof.
Section 4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Santa ▇▇
▇▇▇▇▇▇ has the requisite corporate power and authority to execute and deliver
this Agreement, the Stock Option Agreements and all other agreements and
documents contemplated hereby, to which it is a party. The consummation by Santa
▇▇ ▇▇▇▇▇▇ of the transactions contemplated hereby and by the Stock Option
Agreements has been duly authorized by all requisite corporate action, other
than, with respect to the Merger, the approval and adoption of this Agreement by
Santa ▇▇ ▇▇▇▇▇▇'▇ stockholders. This Agreement and the Stock Option Agreements
constitute the valid and legally binding obligations of Santa ▇▇ ▇▇▇▇▇▇ to the
extent it is a party, enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
Section 4.3 CAPITALIZATION. The authorized capital stock of Santa ▇▇
▇▇▇▇▇▇ consists of 300,000,000 shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock, and
50,000,000 shares of Santa ▇▇ ▇▇▇▇▇▇ preferred stock, par value $0.01 per share
("Santa ▇▇ ▇▇▇▇▇▇ Preferred Stock"). As of May 24, 2000, there were (a)
183,035,836 shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock issued and outstanding
(including 40,000 shares of restricted stock to be granted to non-employee
directors, 20,000 shares of bonus stock to be granted to the non-employee
directors and 345,324 shares of restricted stock to be granted to ▇▇▇▇▇ ▇.
▇▇▇▇▇, all such shares to be issued as of May 16, 2000) and (b) no shares of
Santa ▇▇ ▇▇▇▇▇▇ Preferred Stock issued and outstanding. All issued and
outstanding shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock (i) are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, (ii)
were not issued in violation of the terms of any agreement or other
understanding binding upon Santa ▇▇ ▇▇▇▇▇▇ and (iii) were issued in compliance
with all applicable charter documents of Santa ▇▇ ▇▇▇▇▇▇ and all applicable
federal and state securities laws, rules and regulations. As of the date of this
Agreement, except as set forth in this Section 4.3 or in the Stock Option
Agreements and except for any shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock issued
pursuant to the plans described in the Santa ▇▇ ▇▇▇▇▇▇ Disclosure Letter, there
are no outstanding shares of capital stock and there are no options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other voting securities of Santa
▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries. Santa ▇▇ ▇▇▇▇▇▇ has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of Santa ▇▇ ▇▇▇▇▇▇ on any matter.
8
Section 4.4 SIGNIFICANT SUBSIDIARIES. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Exchange Act. Each of Santa ▇▇ ▇▇▇▇▇▇'▇
Significant Subsidiaries is a corporation or partnership duly organized, validly
existing and in good standing (where applicable) under the laws of its
jurisdiction of incorporation or organization, has the corporate or partnership
power and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing (where applicable) in each jurisdiction in which the
ownership, operation or lease of its property or the conduct of its business
requires such qualification, except for jurisdictions in which such failure to
be so qualified or to be in good standing would not have, individually or in the
aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect. All of the outstanding
shares of capital stock of, or other ownership interests in, each of Santa ▇▇
▇▇▇▇▇▇'▇ Significant Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and is owned, directly or indirectly, by Santa ▇▇ ▇▇▇▇▇▇ free
and clear of all liens, pledges, security interests, claims, preferential
purchase rights or other rights, interests or encumbrances ("Liens"). Schedule
4.4 to the Santa ▇▇ ▇▇▇▇▇▇ Disclosure Letter sets forth for each Significant
Subsidiary of Santa ▇▇ ▇▇▇▇▇▇, its name and jurisdiction of incorporation or
organization.
Section 4.5 NO VIOLATION. Neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its
Subsidiaries is, or has received notice that it would be with the passage of
time, in violation of any term, condition or provision of (a) its charter
documents or bylaws, (b) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license or other instrument or (c) any
order of any court, governmental authority or arbitration board or tribunal, or
any law, ordinance, governmental rule or regulation to which Santa ▇▇ ▇▇▇▇▇▇ or
any of its Subsidiaries or any of their respective properties or assets is
subject, or is delinquent with respect to any report required to be filed with
any governmental entity, except, in the case of matters described in clause (b)
or (c), as would not have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇
Material Adverse Effect. Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
governmental authorities necessary for the lawful conduct of their respective
businesses (the "Santa ▇▇ ▇▇▇▇▇▇ Permits"), except where the failure so to hold
would not have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material
Adverse Effect. Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries are in compliance with the
terms of the Santa ▇▇ ▇▇▇▇▇▇ Permits, except where the failure so to comply
would not have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material
Adverse Effect. No investigation by any governmental authority with respect to
Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries is pending or, to the knowledge of
Santa ▇▇ ▇▇▇▇▇▇, threatened, other than those the outcome of which would not
have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse
Effect.
Section 4.6 NO CONFLICT.
(a) Neither the execution and delivery by Santa ▇▇ ▇▇▇▇▇▇ of this
Agreement or the Stock Option Agreements nor the consummation by Santa ▇▇ ▇▇▇▇▇▇
of the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof will: (i) conflict with or result in a breach of any
provisions of the charter documents or bylaws of Santa ▇▇ ▇▇▇▇▇▇; (ii) violate,
or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a
9
right of purchase under, or accelerate the performance required by, or result in
the creation of any Lien upon any of the properties of Santa ▇▇ ▇▇▇▇▇▇ or its
Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in a detriment to Santa ▇▇ ▇▇▇▇▇▇ or
any of its Subsidiaries under any of the terms, conditions or provisions of, any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, agreement, joint venture or other instrument or obligation to
which Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries is a party, or by which Santa
▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries or any of their properties is bound or
affected; or (iii) contravene or conflict with or constitute a violation of any
provision of any law, rule, regulation, judgment, order or decree binding upon
or applicable to Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries, except, in the case
of matters described in clause (ii) or (iii), as would not have, individually or
in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
(b) Neither the execution and delivery by Santa ▇▇ ▇▇▇▇▇▇ of this
Agreement or the Stock Option Agreements nor the consummation by Santa ▇▇ ▇▇▇▇▇▇
of the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof will require any consent, approval or authorization of, or
filing or registration with, any governmental or regulatory authority, other
than (i) the filings provided for in Article l and (ii) filings required under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act, the Securities Act or applicable state securities and
"Blue Sky" laws and applicable foreign competition or antitrust laws ((i) and
(ii) collectively, the "Regulatory Filings"), and listing on the New York Stock
Exchange ("NYSE") of Santa ▇▇ ▇▇▇▇▇▇ Common Stock to be issued upon exercise of
the option granted to Devon pursuant to the applicable Stock Option Agreement
under the rules of NYSE, except for any consent, approval or authorization the
failure of which to obtain and for any filing or registration the failure of
which to make would not prevent or materially delay the consummation of the
Merger or otherwise prevent Santa ▇▇ ▇▇▇▇▇▇ from performing its obligations
under this Agreement and would not have, individually or in the aggregate, a
Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
(c) Other than as contemplated by Section 4.6(b), no consents,
assignments, waivers, authorizations or other certificates are necessary in
connection with the transactions contemplated hereby to provide for the
continuation in full force and effect of all of Santa ▇▇ ▇▇▇▇▇▇'▇ material
contracts or leases or for Santa ▇▇ ▇▇▇▇▇▇ to consummate the transactions
contemplated hereby, except when the failure to receive such consents or other
certificates would not have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇
Material Adverse Effect.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in any
payment from Santa ▇▇ ▇▇▇▇▇▇ or its Subsidiaries (including severance,
unemployment compensation, parachute payment, bonus or otherwise) becoming due
to any director, employee or independent contractor of Santa ▇▇ ▇▇▇▇▇▇ or any of
its Subsidiaries under any Santa ▇▇ ▇▇▇▇▇▇ Plan (as defined in Section 4.11) or
otherwise; (ii) materially increase any benefits otherwise payable under any
Santa ▇▇ ▇▇▇▇▇▇ Plan or otherwise; or (iii) result in the acceleration of the
time of payment or vesting of any such benefits.
Section 4.7 SEC DOCUMENTS. Santa ▇▇ ▇▇▇▇▇▇ has made available to Devon
each registration statement, report, proxy statement or information statement
(other than preliminary
10
materials) filed by Santa ▇▇ ▇▇▇▇▇▇ with the SEC since January 1, 1999, each in
the form (including exhibits and any amendments thereto) filed with the SEC
prior to the date hereof (collectively, the "Santa ▇▇ ▇▇▇▇▇▇ Reports"), and
Santa ▇▇ ▇▇▇▇▇▇ has filed all forms, reports and documents required to be filed
by it with the SEC pursuant to relevant securities statutes, regulations,
policies and rules since such time. As of their respective dates, the Santa ▇▇
▇▇▇▇▇▇ Reports (i) were prepared in all material respects in accordance with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder and complied in all material respects with the then
applicable accounting requirements and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Santa ▇▇ ▇▇▇▇▇▇ Reports (including the
related notes and schedules) fairly presents in all material respects the
consolidated financial position of Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries as of
its date and each of the consolidated statements of operations, comprehensive
income, cash flows and stockholders' equity included in or incorporated by
reference into the Santa ▇▇ ▇▇▇▇▇▇ Reports (including any related notes and
schedules) fairly presents in all material respects the results of operations,
cash flows or changes in stockholders' equity, as the case may be, of Santa ▇▇
▇▇▇▇▇▇ and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to such exceptions as may be permitted by Form
10-Q of the SEC), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein. Since December 31, 1999, neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its
Subsidiaries had any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise), other than liabilities or obligations
disclosed in the Santa ▇▇ ▇▇▇▇▇▇ Reports or which would not have, individually
or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.8 LITIGATION. There are no actions, suits or proceedings
pending against Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries or, to Santa ▇▇
▇▇▇▇▇▇'▇ knowledge, threatened against Santa ▇▇ ▇▇▇▇▇▇ or any of its
Subsidiaries, at law or in equity, or before or by any federal, state or foreign
commission, board, bureau, agency or instrumentality, that are likely to have,
individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
There are no outstanding judgments, decrees, injunctions, awards or orders
against Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries that are likely to have,
individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.9 ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, there
has not been (i) an event that would have a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse
Effect; (ii) any material change by Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries,
when taken as a whole, in any of its accounting methods, principles or practices
or any of its tax methods, practices or elections; (iii) any material damage,
destruction, or loss to the business or properties of Santa ▇▇ ▇▇▇▇▇▇ and its
Subsidiaries, taken as a whole, not covered by insurance; (iv) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
capital stock of Santa ▇▇ ▇▇▇▇▇▇, or any direct or indirect redemption, purchase
or any other acquisition by Santa ▇▇ ▇▇▇▇▇▇ of any such stock; (v) except for
the repurchase by Santa ▇▇ ▇▇▇▇▇▇ of a total of 1,213,000 shares pursuant to
Santa ▇▇ ▇▇▇▇▇▇'▇ open market purchase program, any change in the capital stock
or in the number of shares or classes of Santa ▇▇ ▇▇▇▇▇▇'▇ authorized or
outstanding capital stock
11
(other than as a result of issuances of restricted stock under the Santa ▇▇
▇▇▇▇▇▇ Plans or exercises of options to purchase Santa ▇▇ ▇▇▇▇▇▇ Common Stock
outstanding or issued as permitted hereunder); (vi) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (other than the 2000 Incentive
Stock Option Plan), stock purchase or other employee benefit plan, except in the
ordinary course of business; or (vii) any other event or condition known to
Santa ▇▇ ▇▇▇▇▇▇ particularly pertaining to and adversely affecting the
operations, assets or business of Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries
(other than events or conditions which are of a general or industry-wide nature
and of general public knowledge) which would constitute, individually or in the
aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.10 TAXES.
(a) Each of Santa ▇▇ ▇▇▇▇▇▇, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or, since January 1, 1991, was a member has (i) duly filed (or there has been
filed on its behalf) on a timely basis (taking into account any extensions of
time to file before the date hereof) with appropriate governmental authorities
all tax returns, statements, reports, declarations, estimates and forms
("Returns") required to be filed by or with respect to it, except to the extent
that any failure to file would not have, individually or in the aggregate, a
Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect, and (ii) duly paid or deposited in full
on a timely basis or made adequate provisions in accordance with generally
accepted accounting principles (or there has been paid or deposited or adequate
provision has been made on its behalf) for the payment of all taxes required to
be paid by it other than those being contested in good faith by Santa ▇▇ ▇▇▇▇▇▇
or a Subsidiary of Santa ▇▇ ▇▇▇▇▇▇ and except to the extent that any failure to
pay or deposit or make adequate provision for the payment of such taxes would
not have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse
Effect.
(b) (i) The federal income tax returns of Santa ▇▇ ▇▇▇▇▇▇ and each of
its Subsidiaries have been examined by the Internal Revenue Service (the "IRS")
(or the applicable statutes of limitation for the assessment of federal income
taxes for such periods have expired) for all periods; (ii) except to the extent
being contested in good faith, all material deficiencies asserted as a result of
such examinations and any other examinations of Santa ▇▇ ▇▇▇▇▇▇ and its
Subsidiaries by any taxing authority have been paid fully, settled or adequately
provided for in the financial statements contained in the Santa ▇▇ ▇▇▇▇▇▇
Reports; (iii) as of the date hereof, neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its
Subsidiaries has granted any requests, agreements, consents or waivers to extend
the statutory period of limitations applicable to the assessment of any taxes
with respect to any Returns of Santa ▇▇ ▇▇▇▇▇▇ or any of its Significant
Subsidiaries that will be outstanding as of the Effective Time; (iv) neither
Santa ▇▇ ▇▇▇▇▇▇ nor any of its Subsidiaries is a party to, is bound by or has
any obligation under any tax sharing, allocation or indemnity agreement or any
similar agreement or arrangement that would have, individually or in the
aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect; (v) there are no tax liens
on any assets of Santa ▇▇ ▇▇▇▇▇▇ or its Subsidiaries except for taxes not yet
currently due, with respect to matters being contested by Santa ▇▇ ▇▇▇▇▇▇ in
good faith for which adequate reserves are reflected in the financial statements
and those which could not reasonably be expected, individually or in the
aggregate, to result in a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect; and (vi)
neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its Subsidiaries is a party to an agreement
that provides for
12
the payment of any amount that would constitute a "parachute payment" within the
meaning of Section 280G of the Code.
For purposes of this Agreement, "tax" or "taxes" means all
federal, state, county, local, foreign or other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, accumulated earnings, personal
holding, excess profits, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, disability,
capital stock, or windfall profits taxes, customs duties or other taxes, fees,
assessments or governmental charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign).
Section 4.11 EMPLOYEE BENEFIT PLANS. For purposes of this Section 4.11,
Santa ▇▇ ▇▇▇▇▇▇ Subsidiaries shall include any enterprise which, with Santa ▇▇
▇▇▇▇▇▇, forms or formed a controlled group of corporations, a group of trades or
business under common control or an affiliated service group, within the meaning
of Section 414(b), (c) or (m) of the Code. All employee benefit plans, programs,
arrangements and agreements covering active, former or retired employees of
Santa ▇▇ ▇▇▇▇▇▇ and Santa ▇▇ ▇▇▇▇▇▇ Subsidiaries which provide material benefits
to such employees are listed in the Santa ▇▇ ▇▇▇▇▇▇ Disclosure Letter (the
"Santa ▇▇ ▇▇▇▇▇▇ Plans"). Santa ▇▇ ▇▇▇▇▇▇ has made available to Devon true,
complete and correct copies of each Santa ▇▇ ▇▇▇▇▇▇ Plan, any related trust
agreement, annuity or insurance contract or other funding vehicle, and: (a) each
Santa ▇▇ ▇▇▇▇▇▇ Plan has been maintained and administered in material compliance
with its terms and is, to the extent required by applicable law or contract,
fully funded without having any deficit or unfunded actuarial liability or
adequate provision has been made therefor; (b) all required employer
contributions under any such plans have been made and the applicable funds have
been funded in accordance with the terms thereof, (c) each Santa ▇▇ ▇▇▇▇▇▇ Plan
that is required or intended to be qualified under applicable law or registered
or approved by a governmental agency or authority has been so qualified,
registered or approved by the appropriate governmental agency or authority, and
nothing has occurred since the date of the last qualification, registration or
approval to adversely affect, or cause, the appropriate governmental agency or
authority to revoke such qualification, registration or approval; (d) to the
extent applicable, the Santa ▇▇ ▇▇▇▇▇▇ Plans comply, in all material respects,
with the requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code and any other applicable tax act and other laws, and
any Santa ▇▇ ▇▇▇▇▇▇ Plan intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified and
nothing has occurred to cause the loss of such qualified status; (e) no Santa ▇▇
▇▇▇▇▇▇ Plan is covered by Title IV of ERISA or Section 412 of the Code; (f)
there are no pending or anticipated material claims against or otherwise
involving any of the Santa ▇▇ ▇▇▇▇▇▇ Plans and no suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of the
Santa ▇▇ ▇▇▇▇▇▇ Plan activities) has been brought against or with respect to any
Santa ▇▇ ▇▇▇▇▇▇ Plan; (g) all material contributions, reserves or premium
payments required to be made as of the date hereof to the Santa ▇▇ ▇▇▇▇▇▇ Plans
have been made or provided for; (h) neither Santa ▇▇ ▇▇▇▇▇▇ nor any Santa ▇▇
▇▇▇▇▇▇ Subsidiary has incurred or reasonably expects to incur any liability
under subtitle C or D of Title IV of ERISA with respect to any "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by Santa ▇▇ ▇▇▇▇▇▇, any Santa ▇▇ ▇▇▇▇▇▇ Subsidiary or any entity
which is considered one employer with Santa ▇▇ ▇▇▇▇▇▇ under Section 4001 of
ERISA; (i) neither Santa ▇▇ ▇▇▇▇▇▇ nor any Santa ▇▇ ▇▇▇▇▇▇ Subsidiary has
incurred or
13
reasonably expects to incur any withdrawal liability under Subtitle E of Title
IV of ERISA with respect to any "multi-employer plan," within the meaning of
Section 4001(a)(3) of ERISA; and (j) neither Santa ▇▇ ▇▇▇▇▇▇ nor any Santa ▇▇
▇▇▇▇▇▇ Subsidiary has any material obligations for retiree health and life
benefits under any Santa ▇▇ ▇▇▇▇▇▇ Plan.
Section 4.12 LABOR MATTERS.
(a) Neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its Subsidiaries is a party to,
or bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization.
(b) Neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its Subsidiaries is subject to a
dispute, strike or work stoppage with respect to any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization to which it is a party or by which it is bound which would
have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse
Effect.
(c) To Santa ▇▇ ▇▇▇▇▇▇'▇ knowledge, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened involving employees of Santa ▇▇ ▇▇▇▇▇▇ or any of its
Subsidiaries except for those the formation of which would not have,
individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.13 ENVIRONMENTAL MATTERS. Except as would not have,
individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect:
(a) there are not any present or, to the knowledge of Santa ▇▇ ▇▇▇▇▇▇,
past conditions or circumstances that interfere with the conduct of the business
of Santa ▇▇ ▇▇▇▇▇▇ and each of its Subsidiaries in the manner now conducted or
which interfere with compliance with any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation related to human health or the environment ("Environmental
Law");
(b) there are not any present or, to the knowledge of Santa ▇▇ ▇▇▇▇▇▇,
past conditions or circumstances at, or arising out of, any current or, to the
knowledge of Santa ▇▇ ▇▇▇▇▇▇, former businesses, assets or properties of Santa
▇▇ ▇▇▇▇▇▇ or any Subsidiary of Santa ▇▇ ▇▇▇▇▇▇, including but not limited to,
on-site or off-site disposal or release of any chemical substance, product or
waste, which constitute a violation under any Environmental Law or could
reasonably be expected to give rise to: (i) liabilities or obligations for any
cleanup, remediation, disposal or corrective action under any Environmental Law
or (ii) claims arising for personal injury, property damage, or damage to
natural resources;
(c) neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its Subsidiaries has (i)
received any written notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law, (ii) received any written
notice regarding any existing, pending or threatened investigation or inquiry
related to alleged violations under any Environmental Laws or regarding any
claims for remedial obligations or contribution under any Environmental Laws or
(iii) entered into any consent decree or order or is subject to any order of any
court or
14
governmental authority or tribunal under any Environmental Law or relating to
the cleanup of any hazardous materials contamination;
(d) Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries have in full force and effect
all material environmental permits, licenses, approvals and other authorizations
required to conduct their operations and are operating in material compliance
thereunder; and
(e) Santa ▇▇ ▇▇▇▇▇▇ does not know of any reason that would preclude it
from renewing or obtaining a reissuance of the material permits, licenses or
other authorizations required pursuant to any applicable Environmental Laws to
operate and use any of Santa ▇▇ ▇▇▇▇▇▇'▇ or its Subsidiaries' assets for their
current purposes and uses.
Section 4.14 INTELLECTUAL PROPERTY. Santa ▇▇ ▇▇▇▇▇▇ and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, patent rights, trademarks, trademark rights and proprietary information
used or held for use in connection with their respective businesses as currently
being conducted, free and clear of material Liens, except where the failure to
own or possess such licenses and other rights would not have, individually or in
the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect, and there are no
assertions or claims challenging the validity of any of the foregoing which are
likely to have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material
Adverse Effect. Except in the ordinary course of business, neither Santa ▇▇
▇▇▇▇▇▇ nor any of its Subsidiaries has granted to any other person any license
to use any of the foregoing. The conduct of Santa ▇▇ ▇▇▇▇▇▇'▇ and its
Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in any way likely to have,
individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
There is no material infringement of any proprietary right owned by or licensed
by or to Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries which is likely to have,
individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.15 TITLE TO PROPERTIES. Except for goods and other property
sold, used or otherwise disposed of since December 31, 1999 in the ordinary
course of business for fair value, Santa ▇▇ ▇▇▇▇▇▇ has defensible title for oil
and gas purposes to all its properties, interests in properties and assets, real
and personal, reflected in its December 31, 1999 financial statements, free and
clear of any Lien, except: (a) Liens reflected in the balance sheet of Santa ▇▇
▇▇▇▇▇▇ as of December 31, 1999; (b) Liens for current taxes not yet due and
payable and (c) such imperfections of title, easements and Liens as would not
have, individually or in the aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse
Effect. All leases and other agreements pursuant to which Santa ▇▇ ▇▇▇▇▇▇ or any
of its Subsidiaries leases or otherwise acquires or obtains operating rights
affecting any real or personal property are in good standing, valid, and
effective; and there is not, under any such leases, any existing or prospective
default or event of default or event which with notice or lapse of time, or
both, would constitute a default by Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries
which, individually or in the aggregate, would have a Santa ▇▇ ▇▇▇▇▇▇ Material
Adverse Effect and in respect to which Santa ▇▇ ▇▇▇▇▇▇ or any of its
Subsidiaries has not taken adequate steps to prevent a default from occurring.
All major items of operating equipment of Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries
are in good operating condition and in a state of reasonable maintenance and
repair, ordinary wear and tear excepted. Without limiting the generality of the
foregoing, Santa ▇▇ ▇▇▇▇▇▇'▇ interest in production of hydrocarbons from each
well, unit or
15
property described in the report of ▇▇▇▇▇ ▇▇▇▇▇ Company dated February 7, 2000
and delivered to Devon (after deducting all applicable royalties, overriding
royalties and other payments out of production) is not materially less than the
interest shown under the heading "Net Revenue Interest" for such well, unit or
property, and Santa ▇▇ ▇▇▇▇▇▇'▇ share of exploration, development and operation
costs for each such well, unit or property is not materially greater than the
percentage shown under the heading "Working Interest" for such well, unit or
property. Santa ▇▇ ▇▇▇▇▇▇ has not received any material advance, take-or-pay or
other similar payments that entitle purchasers of production to receive
deliveries of hydrocarbons without paying therefor, and, on a net, company-wide
basis, Santa ▇▇ ▇▇▇▇▇▇ is neither underproduced nor overproduced under gas
balancing or similar arrangements.
Section 4.16 INSURANCE. Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries maintain
insurance coverage reasonably adequate for the operation of their respective
businesses (taking into account the cost and availability of such insurance).
Section 4.17 NO BROKERS. Santa ▇▇ ▇▇▇▇▇▇ has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Devon, Merger Co. or Santa ▇▇ ▇▇▇▇▇▇ pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Santa ▇▇ ▇▇▇▇▇▇ has retained Chase Securities
Inc. to render the opinion referred to in Section 4.18, the arrangements with
which have been disclosed in writing to Devon prior to the date hereof.
Section 4.18 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
Santa ▇▇ ▇▇▇▇▇▇ has received the opinion of Chase Securities Inc. to the effect
that, as of the date of this Agreement, the Santa ▇▇ ▇▇▇▇▇▇ Exchange Ratio is
fair, from a financial point of view, to the holders of Santa ▇▇ ▇▇▇▇▇▇ Common
Stock; it being understood and acknowledged by Devon that such opinion has been
rendered for the benefit of the Board of Directors of Santa ▇▇ ▇▇▇▇▇▇, and is
not intended to, and may not, be relied upon by Devon, its affiliates or their
respective Subsidiaries.
Section 4.19 DEVON STOCK OWNERSHIP. Neither Santa ▇▇ ▇▇▇▇▇▇ nor any of
its Subsidiaries owns any shares of capital stock of Devon or any other
securities convertible into or otherwise exercisable to acquire capital stock of
Devon.
Section 4.20 ACCOUNTING AND REORGANIZATION MATTERS. Santa ▇▇ ▇▇▇▇▇▇
intends that the Merger be accounted for as a Pooling of Interests. To the best
of its knowledge, neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its affiliates has taken or
agreed to take any action that would prevent the Merger from qualifying (i) for
Pooling of Interests accounting treatment or (ii) as a reorganization within the
meaning of Section 368(a) of the Code (a "368(a) Reorganization").
Section 4.21 VOTE REQUIRED. The affirmative vote of holders of a
majority of the outstanding shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock required by
the DGCL is the only vote necessary to approve this Agreement and the
transactions contemplated hereby.
Section 4.22 CERTAIN APPROVALS. Santa ▇▇ ▇▇▇▇▇▇'▇ Board of Directors
has taken any and all necessary and appropriate action to render inapplicable to
the Merger and the transactions
16
contemplated by this Agreement and the Stock Option Agreements the provisions of
Section 203 of the DGCL.
Section 4.23 CERTAIN CONTRACTS. Neither Santa ▇▇ ▇▇▇▇▇▇ nor any of its
Subsidiaries is a party to or bound by (i) any non-competition agreement or any
other agreement or obligation which purports to limit the manner in which, or
the localities in which, the current business of Santa ▇▇ ▇▇▇▇▇▇ and its
Subsidiaries, taken as a whole, or Devon and its Subsidiaries, taken as a whole,
is conducted or (ii) any executory agreement or obligation which pertains to the
acquisition or disposition of any asset, or which provides any third party any
lien, claim or preferential right with regard thereto, except in each case for
any such agreements or obligations which would not have, individually or in the
aggregate, a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
DEVON AND MERGER CO.
Except as set forth in the disclosure letter delivered to
Santa ▇▇ ▇▇▇▇▇▇ concurrently with the execution hereof (the "Devon Disclosure
Letter") or as disclosed with reasonable specificity in the Devon Reports (as
defined in Section 5.7), Devon and Merger Co., jointly and severally, represent
and warrant to Santa ▇▇ ▇▇▇▇▇▇ that:
Section 5.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of
Devon and Merger Co. is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware. Each of Devon and Merger
Co. is duly qualified to do business as a foreign corporation and is in good
standing under the laws of any jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have, individually or in the aggregate, a Devon Material
Adverse Effect (as defined in Section 9.9). Each of Devon and Merger Co. has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as now conducted. The copies of each of Devon's and
Merger Co.'s certificate of incorporation and bylaws previously made available
to Santa ▇▇ ▇▇▇▇▇▇ are true and correct and contain all amendments as of the
date hereof.
Section 5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of
Devon and Merger Co. has the requisite corporate power and authority to execute
and deliver this Agreement, the Stock Option Agreements and all other agreements
and documents contemplated hereby, to which it is a party. The consummation by
each of Devon and Merger Co. of the transactions contemplated hereby, including
the issuance and delivery by Devon of shares of Devon Common Stock pursuant to
the Merger, and the consummation by Devon of the transactions contemplated by
the Stock Option Agreements, has been duly authorized by all requisite corporate
action, other than, with respect to the Merger, the approval and adoption of
this Agreement by Devon's stockholders. This Agreement and the Stock Option
Agreements constitutes the valid and legally binding obligations of each of
Devon and Merger Co. to the extent it is a party, enforceable in accordance with
their respective terms, subject to applicable
17
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
Section 5.3 CAPITALIZATION. The authorized capital stock of Devon
consists of 400,000,000 shares of Devon Common Stock, one share of Devon Special
Voting Stock, par value $0.10 per share, and 4,500,000 shares of Devon's
preferred stock, par value $1.00 per share ("Devon Preferred Stock"). As of May
24, 2000, there were (a) 82,919,871 shares of Devon Common Stock issued and
outstanding, (b) one share of Devon Special Voting Stock issued and outstanding,
(c) 8,462,318 shares of Devon Common Stock reserved for issuance under the stock
options plans of Devon described in the Devon Disclosure Letter, (d) 33,300
shares of Devon Common Stock reserved for issuance under the Devon Restricted
Stock Award Plan, (e) 53,147 shares of Devon Common Stock reserved for issuance
under certain conditional stock awards granted to former employees of
PennzEnergy Company, (f) 3,877,317 shares reserved for issuance upon exchange of
outstanding exchangeable shares ("Northstar Exchangeable Shares") issued by
Northstar Energy Corporation, an Alberta corporation ("Northstar"), (g)
1,500,000 shares of Devon Preferred Stock designated as 6.49% Cumulative
Preferred Stock, Series A, issued and outstanding and (h) 1,000,000 unissued
shares of Devon Preferred Stock designated as Series A Junior Participating
Preferred Stock. All issued and outstanding shares of Devon Common Stock (i) are
duly authorized, validly issued, fully paid, nonassessable and, except as set
forth in the Devon Disclosure Letter, free of preemptive rights, (ii) were not
issued in violation of the terms of any agreement or other understanding binding
upon Devon and (iii) were issued in compliance with all applicable charter
documents of Devon and all applicable federal and state securities laws, rules
and regulations. One right to purchase Series A Junior Participating Preferred
Stock of Devon (each, a "Devon Right") issued pursuant to a Rights Agreement,
dated as of August 17, 1999 (the "Devon Rights Agreement"), between Devon and
BankBoston, N.A., is associated with and attached to each outstanding share of
Devon Common Stock. The shares of Devon Common Stock to be issued in connection
with the Merger, when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable. As of the date of this Agreement, except
as set forth in this Section 5.3 or in the Stock Option Agreements and except
for any shares of Devon Common Stock issued pursuant to the plans described in
the Devon Disclosure Letter, there are no outstanding shares of capital stock
and there are no options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate Devon or
any of its Subsidiaries to issue, transfer or sell any shares of capital stock
or other voting securities of Devon or any of its Subsidiaries. Devon has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of Devon on any
matter.
Section 5.4 SIGNIFICANT SUBSIDIARIES.
(a) Each of Devon's Significant Subsidiaries is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing (where applicable) under the laws of its jurisdiction of incorporation
or organization, has the corporate, limited liability company or partnership
power and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing (where applicable) in each jurisdiction in which the
ownership, operation or lease of its property or the conduct of its business
requires such qualification, except for
18
jurisdictions in which such failure to be so qualified or to be in good standing
would not have, individually or in the aggregate, a Devon Material Adverse
Effect. All of the outstanding shares of capital stock of, or other ownership
interests in, each of Devon's Significant Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Devon free and clear of all Liens. Schedule 5.4 to the Devon
Disclosure Letter sets forth for each Significant Subsidiary of Devon its name
and jurisdiction of incorporation or organization.
(b) Devon Energy Production Company, L.P. ("Devon Production"), a
Significant Subsidiary, is a limited partnership (except for tax purposes) duly
organized and validly existing under Oklahoma law, the general partner of which
is Devon Energy Management Company, L.L.C., an Oklahoma limited liability
company which is wholly owned by Devon Energy Corporation (Oklahoma), an
Oklahoma corporation, and has elected to be treated as a sole proprietorship for
federal income tax purposes. Devon Production has one limited partner. All of
the outstanding partnership interests of Devon Production are owned directly or
indirectly by Devon.
(c) All of the outstanding shares of capital stock of Merger Co. are
owned directly by Devon. Merger Co. was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
activities other than in connection with the transactions contemplated by this
Agreement.
Section 5.5 NO VIOLATION. Neither Devon nor any of its Subsidiaries is,
or has received notice that it would be with the passage of time, in violation
of any term, condition or provision of (a) its charter documents or bylaws, (b)
any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license or other instrument or (c) any order of any court,
governmental authority or arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which Devon or any of its Subsidiaries or any
of their respective properties or assets is subject, or is delinquent with
respect to any report required to be filed with any governmental entity, except,
in the case of matters described in clause (b) or (c), as would not have,
individually or in the aggregate, a Devon Material Adverse Effect. Devon and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all governmental authorities necessary for the
lawful conduct of their respective businesses (the "Devon Permits"), except
where the failure so to hold would not have, individually or in the aggregate, a
Devon Material Adverse Effect. Devon and its Subsidiaries are in compliance with
the terms of the Devon Permits, except where the failure so to comply would not
have, individually or in the aggregate, a Devon Material Adverse Effect. No
investigation by any governmental authority with respect to Devon or any of its
Subsidiaries is pending or, to the knowledge of Devon, threatened, other than
those the outcome of which would not have, individually or in the aggregate, a
Devon Material Adverse Effect.
Section 5.6 NO CONFLICT.
(a) Neither the execution and delivery by Devon and Merger Co. of this
Agreement, the execution and delivery by Devon of the Stock Option Agreements
nor the consummation by Devon and Merger Co. of the transactions contemplated
hereby or thereby in accordance with the terms hereof or thereof will: (i)
conflict with or result in a breach of any provisions of the charter documents
or bylaws of Devon or Merger Co.; (ii) violate, or conflict
19
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or cancellation
of, or give rise to a right of purchase under, or accelerate the performance
required by, or result in the creation of any Lien upon any of the properties of
Devon or its Subsidiaries under, or result in being declared void, voidable, or
without further binding effect, or otherwise result in a detriment to Devon or
any of its Subsidiaries under any of the terms, conditions or provisions of, any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, agreement, joint venture or other instrument or obligation to
which Devon or any of its Subsidiaries is a party, or by which Devon or any of
its Subsidiaries or any of their properties is bound or affected; or (iii)
contravene or conflict with or constitute a violation of any provision of any
law, rule, regulation, judgment, order or decree binding upon or applicable to
Devon or any of its Subsidiaries, except, in the case of matters described in
clause (ii) or (iii), as would not have, individually or in the aggregate, a
Devon Material Adverse Effect.
(b) Neither the execution and delivery by Devon or Merger Co. of this
Agreement, the execution and delivery by Devon of the Stock Option Agreements
nor the consummation by Devon or Merger Co. of the transactions contemplated
hereby or thereby in accordance with the terms hereof or thereof will require
any consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, other than Regulatory Filings, and listing
of the Devon Common Stock to be issued in the Merger on the AMEX and the listing
of the Devon Common Stock upon exercise of the option granted to Santa ▇▇ ▇▇▇▇▇▇
pursuant to the applicable Stock Option Agreement under the rules of the AMEX,
except for any consent, approval or authorization the failure of which to obtain
and for any filing or registration the failure of which to make would not
prevent or materially delay the consummation of the Merger or otherwise prevent
Devon from performing its obligations under this Agreement and would not have,
individually or in the aggregate, a Devon Material Adverse Effect.
(c) Other than as contemplated by Section 5.6(b), no consents,
assignments, waivers, authorizations or other certificates are necessary in
connection with the transactions contemplated hereby to provide for the
continuation in full force and effect of all of Devon's material contracts or
leases or for Devon to consummate the transactions contemplated hereby, except
when the failure to receive such consents or other certificates would not have,
individually or in the aggregate, a Devon Material Adverse Effect.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in any
payment from Devon or its Subsidiaries (including severance, unemployment
compensation, parachute payment, bonus or otherwise) becoming due to any
director, employee or independent contractor of Devon or any of its Subsidiaries
under any Devon Plan (as defined in Section 5.11) or otherwise; (ii) materially
increase any benefits otherwise payable under any Devon Plan or otherwise; or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits.
Section 5.7 SEC DOCUMENTS. Devon has made available to Santa ▇▇ ▇▇▇▇▇▇
each registration statement, report, proxy statement or information statement
(other than preliminary materials) filed by Devon with the SEC since January 1,
1999, each in the form (including exhibits and any amendments thereto) filed
with the SEC prior to the date hereof (collectively, the "Devon Reports"), and
Devon has filed all forms, reports and documents required to be filed
20
by it with the SEC pursuant to relevant securities statutes, regulations,
policies and rules since such time. As of their respective dates, the Devon
Reports (i) were prepared in all material respects in accordance with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder and complied in all material respects with the then
applicable accounting requirements and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Devon Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of Devon and its Subsidiaries as of its date and each of the
consolidated statements of operations, cash flows and stockholders' equity
included in or incorporated by reference into the Devon Reports (including any
related notes and schedules) fairly presents in all material respects the
results of operations, cash flows or changes in stockholders' equity, as the
case may be, of Devon and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to such exceptions as may be
permitted by Form 10-Q of the SEC), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Since December 31, 1999, neither Devon nor any
of its Subsidiaries had any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise), other than liabilities or
obligations disclosed in the Devon Reports or which would not have, individually
or in the aggregate, a Devon Material Adverse Effect.
Section 5.8 LITIGATION. There are no actions, suits or proceedings
pending against Devon or any of its Subsidiaries or, to Devon's knowledge,
threatened against Devon or any of its Subsidiaries, at law or in equity, or
before or by any federal, state or foreign commission, board, bureau, agency or
instrumentality, that are likely to have, individually or in the aggregate, a
Devon Material Adverse Effect. There are no outstanding judgments, decrees,
injunctions, awards or orders against Devon or any of its Subsidiaries that are
likely to have, individually or in the aggregate, a Devon Material Adverse
Effect.
Section 5.9 ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, there
has not been (i) an event that would have a Devon Material Adverse Effect; (ii)
any material change by Devon or any of its Subsidiaries, when taken as a whole,
in any of its accounting methods, principles or practices or any of its tax
methods, practices or elections; (iii) any material damage, destruction, or loss
to the business or properties of Devon and its Subsidiaries, taken as a whole,
not covered by insurance; (iv) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of Devon, or any
direct or indirect redemption, purchase or any other acquisition by Devon of any
such stock (except for, and provided that, Devon may continue to pay or cause to
be paid, dividends upon the shares of Devon Common Stock and the Northstar
Exchangeable Shares at a rate not greater than $.05 per share in any quarter);
(v) any change in the capital stock or in the number of shares or classes of
Devon's authorized or outstanding capital stock (other than as a result of
exercises of options to purchase Devon Common Stock outstanding or issued as
permitted hereunder); (vi) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option, stock purchase or other employee benefit plan, except in
the ordinary course of business; or (vii) any other event or condition known to
Devon particularly
21
pertaining to and adversely affecting the operations, assets or business of
Devon or any of its Subsidiaries (other than events or conditions which are of a
general or industry-wide nature and of general public knowledge) which would
constitute, individually or in the aggregate, a Devon Material Adverse Effect.
Section 5.10 TAXES.
(a) Each of Devon, its Subsidiaries and each affiliated, consolidated,
combined, unitary or similar group of which any such corporation is or was a
member has (i) duly filed (or there has been filed on its behalf) on a timely
basis (taking into account any extensions of time to file before the date
hereof) with appropriate governmental authorities all Returns required to be
filed by or with respect to it, except to the extent that any failure to file
would not have, individually or in the aggregate, a Devon Material Adverse
Effect, and (ii) duly paid or deposited in full on a timely basis or made
adequate provisions in accordance with generally accepted accounting principles
(or there has been paid or deposited or adequate provision has been made on its
behalf) for the payment of all taxes required to be paid by it other than those
being contested in good faith by Devon or a Subsidiary of Devon and except to
the extent that any failure to pay or deposit or make adequate provision for the
payment of such taxes would not have, individually or in the aggregate, a Devon
Material Adverse Effect.
(b) (i) The federal income tax returns of Devon and each of its
Subsidiaries have been examined by the IRS (or the applicable statutes of
limitation for the assessment of federal income taxes for such periods have
expired) for all periods; (ii) except to the extent being contested in good
faith, all material deficiencies asserted as a result of such examinations and
any other examinations of Devon and its Subsidiaries by any taxing authority
have been paid fully, settled or adequately provided for in the financial
statements contained in the Devon Reports; (iii) as of the date hereof, neither
Devon nor any of its Subsidiaries has granted any requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any taxes with respect to any Returns of Devon or any of its
Significant Subsidiaries that will be outstanding as of the Effective Time; (iv)
neither Devon nor any of its Subsidiaries is a party to, is bound by or has any
obligation under any tax sharing, allocation or indemnity agreement or any
similar agreement or arrangement that would have, individually or in the
aggregate, a Devon Material Adverse Effect; (v) there are no tax liens on any
assets of Devon or its Subsidiaries except for taxes not yet currently due, with
respect to matters being contested by Devon in good faith for which adequate
reserves are reflected in the financial statements and those which could not
reasonably be expected, individually or in the aggregate, to result in a Devon
Material Adverse Effect; and (vi) neither Devon 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.
Section 5.11 EMPLOYEE BENEFIT PLANS. For purposes of this Section 5.11,
Devon Subsidiaries shall include any enterprise which, with Devon, forms or
formed a controlled group of corporations, a group of trades or business under
common control or an affiliated service group, within the meaning of Section
414(b), (c) or (m) of the Code. All employee benefit plans, programs,
arrangements and agreements covering active, former or retired employees of
Devon and Devon Subsidiaries which provide material benefits to such employees
are listed in the Devon Disclosure Letter (the "Devon Plans"). Devon has made
available to Santa ▇▇ ▇▇▇▇▇▇
22
true, complete and correct copies of each Devon Plan, any related trust
agreement, annuity or insurance contract or other funding vehicle, and: (a) each
Devon Plan has been maintained and administered in material compliance with its
terms and is, to the extent required by applicable law or contract, fully funded
without having any deficit or unfunded actuarial liability or adequate provision
has been made therefor; (b) all required employer contributions under any such
plans have been made and the applicable funds have been funded in accordance
with the terms thereof, (c) each Devon Plan that is required or intended to be
qualified under applicable law or registered or approved by a governmental
agency or authority has been so qualified, registered or approved by the
appropriate governmental agency or authority, and nothing has occurred since the
date of the last qualification, registration or approval to adversely affect or
cause the appropriate governmental agency or authority to revoke such
qualification, registration or approval; (d) to the extent applicable, the Devon
Plans comply, in all material respects, with the requirements of ERISA, the Code
and any other applicable tax act and other laws, and any Devon Plan intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and nothing has occurred to cause
the loss of such qualified status; (e) no Devon Plan is covered by Title IV of
ERISA or Section 412 of the Code; (f) there are no pending or anticipated
material claims against or otherwise involving any of the Devon Plans and no
suit, action or other litigation (excluding claims for benefits incurred in the
ordinary course of Devon Plan activities) has been brought against or with
respect to any Devon Plan; (g) all material contributions, reserves or premium
payments required to be made as of the date hereof to the Devon Plans have been
made or provided for; (h) neither Devon nor any Devon Subsidiary has incurred or
reasonably expects to incur any liability under subtitle C or D of Title IV of
ERISA with respect to any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by Devon, any Devon
Subsidiary or any entity which is considered one employer with Devon under
Section 4001 of ERISA; (i) neither Devon nor any Devon Subsidiary has incurred
or reasonably expects to incur any withdrawal liability under Subtitle E of
Title IV of ERISA with respect to any "multi-employer plan," within the meaning
of Section 4001(a)(3) of ERISA; and (j) neither Devon nor any Devon Subsidiary
has any material obligations for retiree health and life benefits under any
Devon Plan.
Section 5.12 LABOR MATTERS.
(a) Neither Devon nor any of its Subsidiaries is a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization.
(b) Neither Devon nor any of its Subsidiaries is subject to a dispute,
strike or work stoppage with respect to any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization to which it is a party or by which it is bound which would have,
individually or in the aggregate, a Devon Material Adverse Effect.
(c) To Devon's knowledge, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened involving employees of Devon or any of its Subsidiaries, except for
those the formation of which would not have, individually or in the aggregate, a
Devon Material Adverse Effect.
23
Section 5.13 ENVIRONMENTAL MATTERS. Except as would not have,
individually or in the aggregate, a Devon Material Adverse Effect:
(a) there are not any present or, to the knowledge of Devon, past
conditions or circumstances that interfere with the conduct of the business of
Devon and each of its Subsidiaries in the manner now conducted or which
interfere with compliance with any order of any court, governmental authority or
arbitration board or tribunal, or any Environmental Law;
(b) there are not any present or, to the knowledge of Devon, past
conditions or circumstances at, or arising out of, any current or, to the
knowledge of Devon, former businesses, assets or properties of Devon or any
Subsidiary of Devon, including but not limited to, on-site or off-site disposal
or release of any chemical substance, product or waste, which constitute a
violation under any Environmental Law or could reasonably be expected to give
rise to: (i) liabilities or obligations for any cleanup, remediation, disposal
or corrective action under any Environmental Law or (ii) claims arising for
personal injury, property damage, or damage to natural resources;
(c) neither Devon nor any of its Subsidiaries has (i) received any
written notice of noncompliance with, violation of, or liability or potential
liability under any Environmental Law, (ii) received any written notice
regarding any existing, pending or threatened investigation or inquiry related
to alleged violations under any Environmental Laws or regarding any claims for
remedial obligations or contribution under any Environmental Laws or (iii)
entered into any consent decree or order or is subject to any order of any court
or governmental authority or tribunal under any Environmental Law or relating to
the cleanup of any hazardous materials contamination;
(d) Devon and its Subsidiaries have in full force and effect all
material environmental permits, licenses, approvals and other authorizations
required to conduct their operations and are operating in material compliance
thereunder; and
(e) Devon does not know of any reason that would preclude it from
renewing or obtaining a reissuance of the material permits, licenses or other
authorizations required pursuant to any applicable Environmental Laws to operate
and use any of Devon's or its Subsidiaries' assets for their current purposes
and uses.
Section 5.14 INTELLECTUAL PROPERTY. Devon and its Subsidiaries own or
possess adequate licenses or other valid rights to use all patents, patent
rights, trademarks, trademark rights and proprietary information used or held
for use in connection with their respective businesses as currently being
conducted, free and clear of material Liens, except where the failure to own or
possess such licenses and other rights would not have, individually or in the
aggregate, a Devon Material Adverse Effect, and there are no assertions or
claims challenging the validity of any of the foregoing which are likely to
have, individually or in the aggregate, a Devon Material Adverse Effect. Except
in the ordinary course of business, neither Devon nor any of its Subsidiaries
has granted to any other person any license to use any of the foregoing. The
conduct of Devon's and its Subsidiaries' respective businesses as currently
conducted does not conflict with any patents, patent rights, licenses,
trademarks, trademark rights, trade names, trade name rights or copyrights of
others in any way likely to have, individually or in the aggregate, a
24
Devon Material Adverse Effect. There is no material infringement of any
proprietary right owned by or licensed by or to Devon or any of its Subsidiaries
which is likely to have, individually or in the aggregate, a Devon Material
Adverse Effect.
Section 5.15 TITLE TO PROPERTIES. Except for goods and other property
sold, used or otherwise disposed of since December 31, 1999 in the ordinary
course of business for fair value, Devon has defensible title for oil and gas
purposes to all its properties, interests in properties and assets, real and
personal, reflected in its December 31, 1999 financial statements, free and
clear of any Lien, except: (a) Liens reflected in the balance sheet of Devon as
of December 31, 1999; (b) Liens for current taxes not yet due and payable and
(c) such imperfections of title, easements and Liens as would not have,
individually or in the aggregate, a Devon Material Adverse Effect. All leases
and other agreements pursuant to which Devon or any of its Subsidiaries leases
or otherwise acquires or obtains operating rights affecting any real or personal
property are in good standing, valid, and effective; and there is not, under any
such leases, any existing or prospective default or event of default or event
which, with notice or lapse of time, or both, would constitute a default by
Devon or any of its Subsidiaries which, individually or in the aggregate, would
have a Devon Material Adverse Effect and in respect to which Devon or any of its
Subsidiaries has not taken adequate steps to prevent a default from occurring.
All major items of operating equipment of Devon and its Subsidiaries are in good
operating condition and in a state of reasonable maintenance and repair,
ordinary wear and tear excepted. Without limiting the generality of the
foregoing, Devon's interest in production of hydrocarbons from each well, unit
or property described in the reports of (i) ▇▇▇▇▇▇▇ Petroleum Consultants, Ltd.
dated January 25, 2000, (ii) Paddock ▇▇▇▇▇▇▇▇▇ & Associates, Ltd. dated January
19, 2000, (iii) ▇▇▇▇▇ ▇▇▇▇▇ Company dated February 18, 2000 and (iv) Devon dated
January 4, 2000 and delivered to Santa ▇▇ ▇▇▇▇▇▇ (after deducting all applicable
royalties, overriding royalties and other payments out of production) is not
materially less than the interest shown under the heading "Net Revenue Interest"
for such well, unit or property, and Devon's share of exploration, development
and operation costs for each such well, unit or property is not materially
greater than the percentage shown under the heading "Working Interest" for such
well, unit or property. Devon has not received any material advance, take-or-pay
or other similar payments that entitle purchasers of production to receive
deliveries of hydrocarbons without paying therefor, and, on a net, company-wide
basis, Devon is neither underproduced nor overproduced under gas balancing or
similar arrangements.
Section 5.16 INSURANCE. Devon and its Subsidiaries maintain insurance
coverage reasonably adequate for the operation of their respective businesses
(taking into account the cost and availability of such insurance).
Section 5.17 NO BROKERS. Devon has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Devon, Merger Co. or Santa ▇▇ ▇▇▇▇▇▇ to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Devon has retained ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
to prepare the opinion as set forth in Section 5.18, the arrangements with which
have been disclosed in writing to Santa ▇▇ ▇▇▇▇▇▇ prior to the date hereof.
25
Section 5.18 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
Devon has received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated to the
effect that, as of the date of this Agreement, the Santa ▇▇ ▇▇▇▇▇▇ Exchange
Ratio is fair, from a financial point of view, to Devon; it being understood and
acknowledged by Santa ▇▇ ▇▇▇▇▇▇ that such opinion has been rendered for the
benefit of the Board of Directors of Devon, and is not intended to, and may not,
be relied upon by Santa ▇▇ ▇▇▇▇▇▇, its affiliates or their respective
Subsidiaries.
Section 5.19 SANTA ▇▇ ▇▇▇▇▇▇ STOCK OWNERSHIP. Neither Devon nor any of
its Subsidiaries owns any shares of capital stock of Santa ▇▇ ▇▇▇▇▇▇ or any
other securities convertible into or otherwise exercisable to acquire capital
stock of Santa ▇▇ ▇▇▇▇▇▇.
Section 5.20 ACCOUNTING AND REORGANIZATION MATTERS. Each of Devon and
Merger Co. intends that the Merger be accounted for as a Pooling of Interests.
To the best of its knowledge, neither Devon nor any of its affiliates has taken
or agreed to take any action that would prevent the Merger from qualifying (i)
for Pooling of Interests accounting treatment or (ii) as a 368(a)
Reorganization.
Section 5.21 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Devon Common Stock and the outstanding
Northstar Exchangeable Shares, voting as a single class with the Devon Special
Voting Share voting for the Northstar Exchangeable Shares as provided in Devon's
charter, represented in person or by proxy at a meeting at which quorum is
present is the only vote of the holders of any class or series of Devon capital
stock necessary to approve this Agreement and the transactions contemplated
hereby; PROVIDED, HOWEVER, if a proposal to amend Devon's Certificate of
Incorporation is presented at the meeting for approval pursuant to Section 2.1
hereof, the affirmative vote of the holders of a majority of the outstanding
shares of Devon Common Stock and the outstanding Northstar Exchangeable Shares,
voting as a single class with the Devon Special Voting Share voting for the
Northstar Exchangeable Shares as provided in Devon's charter, will be required
for approval.
Section 5.22 DEVON RIGHTS AGREEMENT. Devon has taken all required
action under the Devon Rights Agreement so that none of the execution and
delivery of this Agreement or the Stock Option Agreements, the issuance of
shares of Devon Common Stock upon exercise of the option granted to Santa ▇▇
▇▇▇▇▇▇ pursuant to the applicable Stock Option Agreement, and the consummation
of the Merger or any other transaction contemplated hereby or by the Stock
Option Agreement, will cause (i) the Devon Rights to become exercisable under
the Devon Rights Agreement, (ii) Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries to
be deemed an "Acquiring Person" (as defined in the Devon Rights Agreement),
(iii) any such event to be an event described in Section 7(e) or 13 of the Devon
Rights Agreement or (iv) the "Stock Acquisition Date" or the "Distribution Date"
(each as defined in the Devon Rights Agreement) to occur upon any such event.
Devon has delivered to Santa ▇▇ ▇▇▇▇▇▇ a true and complete copy of the Devon
Rights Agreement, as amended to date.
Section 5.23 CERTAIN APPROVALS. Devon's Board of Directors has taken
any and all necessary and appropriate action to render inapplicable to the
Merger and the transactions contemplated by this Agreement and the Stock Option
Agreements the provisions of Section 203 of the DGCL.
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Section 5.24 CERTAIN CONTRACTS. Neither Devon nor any of its
Subsidiaries is a party to or bound by (i) any non-competition agreement or any
other agreement or obligation which purports to limit the manner in which, or
the localities in which, the current business of Devon and its Subsidiaries,
taken as a whole, or Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries, taken as a whole, is
conducted or (ii) any executory agreement or obligation which pertains to the
acquisition or disposition of any asset, or which provides any third party any
lien, claim or preferential right with regard thereto, except in each case for
any such agreements or obligations which would not have, individually or in the
aggregate, a Devon Material Adverse Effect.
ARTICLE 6
COVENANTS
Section 6.1 CONDUCT OF BUSINESSES. Prior to the Effective Time, except
as set forth in the Devon Disclosure Letter or Santa ▇▇ ▇▇▇▇▇▇ Disclosure Letter
or as expressly contemplated by any other provision of this Agreement including
Schedule 6.14, or the Stock Option Agreements, unless Devon or Santa ▇▇ ▇▇▇▇▇▇,
respectively, has consented in writing thereto, each of Santa ▇▇ ▇▇▇▇▇▇ and
Devon:
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted; provided, however, such
Subsidiaries may be reorganized or combined in any manner so long as the
reorganization or combination would not have a Material Adverse Effect;
(b) shall use its commercially reasonable best efforts, and shall cause
each of its Subsidiaries to use its commercially reasonable best efforts, to
preserve intact their business organizations and goodwill, keep available the
services of their respective officers and employees and maintain satisfactory
relationships with those persons having business relationships with them;
(c) shall not amend its certificate of incorporation or bylaws;
(d) shall promptly notify the other of any material change in its
financial condition or business or any material litigation or material
governmental complaints, investigations or hearings (or communications in
writing indicating that such litigation, complaints, investigations or hearings
may be contemplated), or the breach in any material respect of any
representation or warranty contained herein;
(e) shall promptly deliver or otherwise make available to the other
true and correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement;
(f) shall not (i) except pursuant to the exercise of options, warrants,
conversion rights and other contractual rights existing on the date hereof, or
referred to in clause (ii) below and disclosed pursuant to this Agreement or in
connection with transactions permitted by Section 6.1(i), issue any shares of
its capital stock, effect any stock split or otherwise change its capitalization
as it existed on the date hereof; (ii) grant, confer or award any option,
warrant,
27
conversion right or other right not existing on the date hereof to acquire any
shares of its capital stock except (x) the grant of options to new employees
consistent with past practice in an amount not to exceed 100,000 shares of Santa
▇▇ ▇▇▇▇▇▇ Common Stock, in the case of Santa ▇▇ ▇▇▇▇▇▇, and 100,000 shares of
Devon Common Stock, in the case of Devon, or pursuant to contractual commitments
existing on the date of this Agreement; (iii) increase any compensation or
benefits, except in the ordinary course of business consistent with past
practice, or enter into or amend any employment agreement with any of its
present or future officers or directors, except with new employees consistent
with past practice, or (iv) adopt any new employee benefit plan (including any
stock option, stock benefit or stock purchase plan) or amend (except as required
by law) any existing employee benefit plan in any material respect, except for
changes which are less favorable to participants in such plans;
(g) shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock or
(ii) redeem, purchase or otherwise acquire any shares of its capital stock or
capital stock of any of its Subsidiaries, or make any commitment for any such
action, except that Devon may continue to pay or cause to be paid, dividends
upon (A) the shares of Devon Common Stock and the Northstar Exchangeable Shares
at a rate not greater than $.05 per share in any quarter and (B) the shares of
Devon Preferred Stock at a rate not greater than $1.6225 per share in any
quarter;
(h) shall not, and shall not permit any of its Subsidiaries to, sell,
lease or otherwise dispose of any of its assets (including capital stock of
Subsidiaries) which are material to Santa ▇▇ ▇▇▇▇▇▇ or Devon, as the case may
be, individually or in the aggregate, except in the ordinary course of business;
(i) shall not, and shall not permit any of its Subsidiaries to, except
pursuant to contractual commitments in effect on the date hereof and disclosed
in the Devon Disclosure Letter or Santa ▇▇ ▇▇▇▇▇▇ Disclosure Letter, as the case
may be, acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets or securities in each case (i) for an
aggregate consideration for all such acquisitions in excess of $3 million
(excluding acquisitions approved in writing by Devon and Santa ▇▇ ▇▇▇▇▇▇) and
(ii) where a filing under the HSR Act is required, except where Devon and Santa
▇▇ ▇▇▇▇▇▇ have agreed in writing that such action is not likely to (x) have a
material adverse effect on the ability of the parties to consummate the
transactions contemplated by this Agreement or (y) delay materially the
Effective Time;
(j) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(k) shall, and shall cause any of its Subsidiaries to, use reasonable
efforts to maintain with financially responsible insurance companies insurance
in such amounts and against such risks and losses as are customary for such
party;
(l) shall not, and shall not permit any of its Subsidiaries to, (i)
make or rescind any material express or deemed election relating to taxes unless
it is reasonably expected that
28
such action will not, individually or in the aggregate, materially and adversely
affect Devon or Santa ▇▇ ▇▇▇▇▇▇, including elections for any and all joint
ventures, partnerships, limited liability companies, working interests or other
investments where it has the capacity to make such binding election, (ii) settle
or compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, except where
such settlement or compromise will not, individually or in the aggregate,
materially and adversely affect Devon or Santa ▇▇ ▇▇▇▇▇▇ or (iii) change in any
material respect any of its methods of reporting any item for federal income tax
purposes from those employed in the preparation of its federal income tax return
for the most recent taxable year for which a return has been filed, except as
may be required by applicable law or except for such changes that are reasonably
expected not to, individually or in the aggregate, materially and adversely
affect Devon or Santa ▇▇ ▇▇▇▇▇▇;
(m) shall not, nor shall it permit any of its Subsidiaries to, (i)
incur any indebtedness for borrowed money (except (x) under existing credit
lines, (y) refinancings of existing debt and (z) other immaterial borrowings
that, in the case of (x), (y) or (z), permit prepayment of such debt without
penalty (other than LIBOR breakage costs)) or guarantee any such indebtedness or
issue or sell any debt securities or warrants or rights to acquire any debt
securities of such party or any of its Subsidiaries or guarantee any debt
securities of others, (ii) except in the ordinary course of business, enter into
any material lease (whether such lease is an operating or capital lease) or
create any material mortgages, liens, security interests or other encumbrances
on the property of Devon or Santa ▇▇ ▇▇▇▇▇▇ or any of their Subsidiaries in
connection with any indebtedness thereof, or (iii) make or commit to make
aggregate capital expenditures in excess of $3 million over the fiscal 2000
capital expenditures budget disclosed in reasonable detail on the Devon
Disclosure Letter or Santa ▇▇ ▇▇▇▇▇▇ Disclosure Letter, as the case may be;
(n) shall not purchase any shares of Devon Common Stock or Santa ▇▇
▇▇▇▇▇▇ Common Stock;
(o) shall not, nor shall it permit any of its Subsidiaries to, agree in
writing or otherwise to take any of the foregoing actions;
(p) subject to Section 6.5, shall not take any action that is likely to
delay materially or adversely affect the ability of any of the parties hereto to
obtain any consent, authorization, order or approval of any governmental
commission, board or other regulatory body or the expiration of any applicable
waiting period required to consummate the Merger;
(q) shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its respective
Subsidiaries is a party; and during such period shall enforce, to the fullest
extent permitted under applicable law, the provisions of such agreement,
including by obtaining injunctions to prevent any breaches of such agreements
and to enforce specifically the terms and provisions thereof in any court of the
United States of America or any state having jurisdiction;
(r) shall not enter into or amend any agreement with any holder of
shares of Devon Common Stock or Santa ▇▇ ▇▇▇▇▇▇ Common Stock with respect to
holding, voting or disposing of shares;
29
(s) shall not by resolution of its Board of Directors cause the
acceleration of rights, benefits or payments under any Santa ▇▇ ▇▇▇▇▇▇ Plans or
Devon Plans;
(t) undertakes and agrees to use its best commercial efforts to cause
the Merger to qualify as a 368(a) Reorganization, and to be accounted for as a
Pooling of Interests, and that it will not intentionally take any action that
would cause the Merger to fail to so qualify or fail to be accounted for as a
Pooling of Interests; and
(u) shall not enter into forward sales contracts, fixed price
contracts, fixed price swaps, collars, options or other hedging arrangements
with respect to its oil production and more than 10% of its budgeted gas
production for the year 2000, and, in any event, for a term longer than 12
months.
Section 6.2 NO SOLICITATION BY SANTA ▇▇ ▇▇▇▇▇▇.
(a) Santa ▇▇ ▇▇▇▇▇▇ agrees that it and its Subsidiaries will not
knowingly (and it will not permit their officers, directors, employees, agents
or representatives, including, without limitation, any investment banker,
attorney or accountant retained by it or any of its Subsidiaries) to, solicit,
initiate or knowingly encourage (including by way of furnishing material
non-public information) any inquiry, proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a third
party tender offer, merger, consolidation, business combination or similar
transaction involving any assets or class of capital stock of Santa ▇▇ ▇▇▇▇▇▇,
or any acquisition of 15% or more of the capital stock (other than upon exercise
of Santa ▇▇ ▇▇▇▇▇▇ Options that are outstanding as of the date hereof) or 30% or
more of the assets of Santa ▇▇ ▇▇▇▇▇▇ and its subsidiaries, taken as a whole, in
a single transaction or a series of related transactions, or any combination of
the foregoing (any such proposal, offer or transaction being hereinafter
referred to as a "Santa ▇▇ ▇▇▇▇▇▇ Acquisition Proposal") or participate or
engage in any discussions or negotiations concerning a Santa ▇▇ ▇▇▇▇▇▇
Acquisition Proposal; and (ii) it will immediately cease and cause to be
terminated any existing negotiations with any third parties conducted heretofore
with respect to any of the foregoing; PROVIDED THAT, subject to Section 6.4(b),
nothing contained in this Agreement shall prevent Santa ▇▇ ▇▇▇▇▇▇ or its Board
of Directors from (A) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a Santa ▇▇ ▇▇▇▇▇▇ Acquisition Proposal or (B) prior to the
Cutoff Date, providing information (pursuant to a confidentiality agreement
containing terms identical in all material respects to the terms of the
confidentiality agreement entered into between Santa ▇▇ ▇▇▇▇▇▇ and Devon) to or
engaging in any negotiations or discussions with any person or entity who has
made an unsolicited bona fide Santa ▇▇ ▇▇▇▇▇▇ Acquisition Proposal with respect
to the outstanding Santa ▇▇ ▇▇▇▇▇▇ Common Stock or the assets of Santa ▇▇ ▇▇▇▇▇▇
that, in the good faith judgment of Santa ▇▇ ▇▇▇▇▇▇'▇ Board of Directors, taking
into account the likelihood of consummation, after consultation with its
financial advisors, is superior to the Merger (a "Santa ▇▇ ▇▇▇▇▇▇ Superior
Proposal"), if the Board of Directors of Santa ▇▇ ▇▇▇▇▇▇, after consultation
with its outside legal counsel, determines that the failure to do so would be
inconsistent with its fiduciary obligations.
(b) Santa ▇▇ ▇▇▇▇▇▇ will promptly notify Devon of any requests referred
to in Section 6.2(a) for information or the receipt of any Santa ▇▇ ▇▇▇▇▇▇
Acquisition Proposal, including the identity of the person or group engaging in
such discussions or negotiations,
30
requesting such information or making such Santa ▇▇ ▇▇▇▇▇▇ Acquisition Proposal,
and the material terms and conditions of any Santa ▇▇ ▇▇▇▇▇▇ Acquisition
Proposal, and shall keep Devon informed on a timely basis of any material
changes with respect thereto. Prior to taking any action referred to in the
PROVISO of Section 6.2(a), if Santa ▇▇ ▇▇▇▇▇▇ intends to participate in any such
discussions or negotiations or provide any such information to any such third
party, Santa ▇▇ ▇▇▇▇▇▇ shall give prompt prior notice to Devon of each such
action.
(c) Nothing in this Section 6.2 shall permit Santa ▇▇ ▇▇▇▇▇▇ to enter
into any agreement with respect to a Santa ▇▇ ▇▇▇▇▇▇ Acquisition Proposal during
the term of this Agreement, it being agreed that during the term of this
Agreement, Santa ▇▇ ▇▇▇▇▇▇ shall not enter into any agreement with any person
that provides for, or in any way facilitates, a Santa ▇▇ ▇▇▇▇▇▇ Acquisition
Proposal, other than a confidentiality agreement in reasonably customary form.
(d) For purposes hereof, the "Cutoff Date" means the date the
conditions set forth in Section 7.1(a) are satisfied.
Section 6.3 NO SOLICITATION BY DEVON.
(a) Devon agrees that it and its Subsidiaries will not knowingly (and
it will not permit their officers, directors, employees, agents or
representatives, including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) to, solicit, initiate
or knowingly encourage (including by way of furnishing material non-public
information) any inquiry, proposal or offer (including, without limitation, any
proposal or offer to its stockholders) with respect to a third party tender
offer, merger, consolidation, business combination or similar transaction
involving any assets or class of capital stock of Devon, or any acquisition of
15% or more of the capital stock (other than upon exercise of Devon Options that
are outstanding as of the date hereof) or 30% or more of the assets of Devon and
its subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, or any combination of the foregoing (any such proposal,
offer or transaction being hereinafter referred to as a "Devon Acquisition
Proposal") or participate or engage in any discussions or negotiations
concerning a Devon Acquisition Proposal; and (ii) it will immediately cease and
cause to be terminated any existing negotiations with any third parties
conducted heretofore with respect to any of the foregoing; PROVIDED that,
subject to Section 6.4(b), nothing contained in this Agreement shall prevent
Devon or its Board of Directors from (A) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a Devon Acquisition Proposal or (B) prior
to the Cutoff Date, providing information (pursuant to a confidentiality
agreement containing terms identical in all material respects to the terms of
the confidentiality agreement entered into between Santa ▇▇ ▇▇▇▇▇▇ and Devon) to
or engaging in any negotiations or discussions with any person or entity who has
made an unsolicited bona fide Devon Acquisition Proposal with respect to the
outstanding Devon Common Stock or the assets of Devon that, in the good faith
judgment of Devon's Board of Directors, taking into account the likelihood of
consummation, after consultation with its financial advisors, is superior to the
Merger (a "Devon Superior Proposal"), if the Board of Directors of Devon, after
consultation with its outside legal counsel, determines that the failure to do
so would be inconsistent with its fiduciary obligations.
31
(b) Devon will promptly notify Santa ▇▇ ▇▇▇▇▇▇ of any requests referred
to in Section 6.3(a) for information or the receipt of any Devon Acquisition
Proposal, including the identity of the person or group engaging in such
discussions or negotiations, requesting such information or making such Devon
Acquisition Proposal, and the material terms and conditions of any Devon
Acquisition Proposal, and shall keep Santa ▇▇ ▇▇▇▇▇▇ informed on a timely basis
of any material changes with respect thereto. Prior to taking any action
referred to in the PROVISO of Section 6.3(a), if Devon intends to participate in
any such discussions or negotiations or provide any such information to any such
third party, Devon shall give prompt prior notice to Santa ▇▇ ▇▇▇▇▇▇ of each
such action.
(c) Nothing in this Section 6.3 shall permit Devon to enter into any
agreement with respect to a Devon Acquisition Proposal during the term of this
Agreement, it being agreed that during the term of this Agreement, Devon shall
not enter into any agreement with any person that provides for, or in any way
facilitates, a Devon Acquisition Proposal, other than a confidentiality
agreement in reasonably customary form.
Section 6.4 MEETINGS OF STOCKHOLDERS.
(a) Each of Devon and Santa ▇▇ ▇▇▇▇▇▇ will take all action necessary in
accordance with applicable law and its certificate of incorporation and bylaws
to convene a meeting of its stockholders as promptly as practicable to consider
and vote upon the approval of this Agreement and the Merger, and in the case of
Devon, if necessary pursuant to Section 2.1 hereof, an amendment to Devon's
Certificate of Incorporation. Santa ▇▇ ▇▇▇▇▇▇ and Devon shall coordinate and
cooperate with respect to the timing of such meetings and shall use their
reasonable commercial efforts to hold such meetings on the same day.
(b) Santa ▇▇ ▇▇▇▇▇▇ and Devon, through their respective Boards of
Directors, shall recommend approval of such matters; provided that the Board of
Directors of Santa ▇▇ ▇▇▇▇▇▇ or the Board of Directors of Devon may at any time
prior to the Effective Time withdraw, modify, or change any recommendation and
declaration regarding this Agreement or the Merger, or recommend and declare
advisable any other offer or proposal, if and only if, after receipt of a Santa
▇▇ ▇▇▇▇▇▇ Superior Proposal or a Devon Superior Proposal, as the case may be, in
the opinion of such Board of Directors after consultation with its counsel the
failure to so withdraw, modify, or change its recommendation and declaration
would be inconsistent with its fiduciary obligations.
Section 6.5 FILINGS; REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions herein provided, Santa ▇▇
▇▇▇▇▇▇ and Devon shall:
(i) promptly (but in not more than 20 business days from the
date hereof) make their respective filings under the HSR Act with respect to the
Merger and thereafter shall promptly make any other required submissions under
the HSR Act;
(ii) use their reasonable commercial efforts to cooperate with
one another in (a) determining which filings are required to be made prior to
the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the
32
Effective Time from governmental or regulatory authorities of the United States,
the several states, and foreign jurisdictions in connection with the execution
and delivery of this Agreement and the consummation of the Merger and the
transactions contemplated hereby; and (b) timely making all such filings and
timely seeking all such consents, approvals, permits or authorizations;
(iii) promptly notify each other of any communication
concerning this Agreement or the Merger to that party from any governmental
authority and permit the other party to review in advance any proposed
communication concerning this Agreement or the Merger to any governmental
entity;
(iv) not agree to participate in any meeting or discussion
with any governmental authority in respect of any filings, investigation or
other inquiry concerning this Agreement or the Merger unless it consults with
the other party in advance and, to the extent permitted by such governmental
authority, gives the other party the opportunity to attend and participate
thereat;
(v) furnish the other party with copies of all correspondence,
filings and communications (and memoranda setting forth the substance thereof)
between them and their affiliates and their respective representatives on the
one hand, and any government or regulatory authority or members or their
respective staffs on the other hand, with respect to this Agreement and the
Merger; and
(vi) furnish the other party with such necessary information
and reasonable assistance as such other parties and their respective affiliates
may reasonably request in connection with their preparation of necessary
filings, registrations or submissions of information to any governmental or
regulatory authorities, including without limitation, any filings necessary or
appropriate under the provisions of the HSR Act.
(b) Without limiting Section 6.5(a), Devon and Santa ▇▇ ▇▇▇▇▇▇
shall:
(i) each use its reasonable commercial efforts to avoid the
entry of, or to have vacated or terminated, any decree, order or judgment that
would restrain, prevent or delay the Closing, including without limitation
defending through litigation on the merits any claim asserted in any court by
any party; and
(ii) each use reasonable commercial efforts to avoid or
eliminate each and every impediment under any antitrust, competition or trade
regulation law that may be asserted by any governmental entity with respect to
the Merger so as to enable the Closing to occur as soon as reasonably possible
(and in any event no later than 60 days following the termination of all
applicable waiting periods under the HSR Act, unless the parties are in
litigation with the government, in which case at the conclusion of such
litigation).
Section 6.6 INSPECTION. From the date hereof to the Effective Time,
each of Santa ▇▇ ▇▇▇▇▇▇ and Devon shall allow all designated officers,
attorneys, accountants and other representatives of Devon or Santa ▇▇ ▇▇▇▇▇▇, as
the case may be, access at all reasonable times upon reasonable notice to the
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles and financial position,
or otherwise
33
pertaining to the business and affairs of Devon and Santa ▇▇ ▇▇▇▇▇▇ and their
respective Subsidiaries, including inspection of such properties; provided that
no investigation pursuant to this Section 6.6 shall affect any representation or
warranty given by any party hereunder, and provided further that notwithstanding
the provision of information or investigation by any party, no party shall be
deemed to make any representation or warranty except as expressly set forth in
this Agreement. Notwithstanding the foregoing, no party shall be required to
provide any information which it reasonably believes it may not provide to the
other party by reason of applicable law, rules or regulations, which such party
reasonably believes constitutes information protected by attorney/client
privilege, or which it is required to keep confidential by reason of contract or
agreement with third parties. The parties hereto will make reasonable and
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. Each of Devon and Santa ▇▇ ▇▇▇▇▇▇
agrees that it will not, and will cause its respective representatives not to,
use any information obtained pursuant to this Section 6.6 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement.
Section 6.7 PUBLICITY. The parties will consult with each other and
will mutually agree upon any press releases or public announcements pertaining
to this Agreement or the transactions contemplated hereby and shall not issue
any such press releases or make any such public announcements prior to such
consultation and agreement, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make
such public announcement shall use its reasonable commercial best efforts to
consult in good faith with the other party before issuing any such press
releases or making any such public announcements.
Section 6.8 REGISTRATION STATEMENT.
(a) Each of Devon and Santa ▇▇ ▇▇▇▇▇▇ shall cooperate and promptly
prepare and Devon shall file with the SEC as soon as practicable a Registration
Statement on Form S-4 under the Securities Act (the "Registration Statement"),
with respect to the Devon Common Stock issuable in the Merger. A portion of the
Registration Statement shall also serve as the joint proxy statement with
respect to the meetings of the stockholders of Devon and of Santa ▇▇ ▇▇▇▇▇▇ in
connection with the Merger (the "Proxy Statement/Prospectus"). The respective
parties will cause the Proxy Statement/Prospectus and the Registration Statement
to comply as to form in all material respects with the applicable provisions of
the Securities Act, the Exchange Act and the rules and regulations thereunder.
Devon shall use its reasonable commercial efforts, and Santa ▇▇ ▇▇▇▇▇▇ will
cooperate with Devon, to have the Registration Statement declared effective by
the SEC as promptly as practicable. Devon shall use its reasonable commercial
efforts to obtain, prior to the effective date of the Registration Statement,
all necessary state securities law or "Blue Sky" permits or approvals required
to carry out the transactions contemplated by this Agreement and will pay all
expenses incident thereto. Devon will advise Santa ▇▇ ▇▇▇▇▇▇, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Devon Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Proxy Statement/Prospectus or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
34
(b) Each of Devon and Santa ▇▇ ▇▇▇▇▇▇ will use its reasonable
commercial efforts to cause the Proxy Statement/Prospectus to be mailed to its
stockholders as promptly as practicable after the date hereof.
(c) Each of Devon and Santa ▇▇ ▇▇▇▇▇▇ agrees that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the respective meetings of stockholders of Devon and of Santa ▇▇ ▇▇▇▇▇▇, or,
in the case of information provided by it for inclusion in the Registration
Statement or any amendment or supplement thereto, at the time it is filed or
becomes effective, will not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 6.9 LISTING APPLICATION. Devon shall use its reasonable
commercial efforts to cause the Devon Common Stock to be issued in the Merger to
be approved for listing on the AMEX prior to the Effective Time, subject to
official notice of issuance. Devon shall promptly prepare and submit to the AMEX
a supplemental listing application covering the shares of Devon Common Stock
issuable in the Merger.
Section 6.10 LETTERS OF ACCOUNTANTS.
(a) If requested to do so by Devon, Santa ▇▇ ▇▇▇▇▇▇ shall use its
reasonable commercial efforts to cause to be delivered to Devon "comfort"
letters of PricewaterhouseCoopers LLP, Santa ▇▇ ▇▇▇▇▇▇'▇ independent public
accountants, dated the effective date of the Registration Statement and the
Closing Date, respectively, and addressed to Devon with regard to certain
financial information regarding Santa ▇▇ ▇▇▇▇▇▇ included in the Registration
Statement, in form reasonably satisfactory to Devon and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(b) If requested to do so by Santa ▇▇ ▇▇▇▇▇▇, Devon shall use its
reasonable commercial efforts to cause to be delivered to Santa ▇▇ ▇▇▇▇▇▇
"comfort" letters of KPMG LLP, Devon's independent public accountants, dated the
effective date of the Registration Statement and the Closing Date, respectively,
and addressed to Santa ▇▇ ▇▇▇▇▇▇, with regard to certain financial information
regarding Devon included in the Registration Statement, in form reasonably
satisfactory to Santa ▇▇ ▇▇▇▇▇▇ and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
(c) Santa ▇▇ ▇▇▇▇▇▇ shall use its reasonable commercial efforts to
cause to be delivered to it, immediately prior to the Effective Time, from
PricewaterhouseCoopers LLP, Santa ▇▇ ▇▇▇▇▇▇'▇ independent public accountants, an
opinion in form and substance acceptable to Santa ▇▇ ▇▇▇▇▇▇ that the Merger
should be accounted for as a Pooling of Interests (the "PricewaterhouseCoopers
Opinion").
(d) Devon shall use its reasonable commercial efforts to cause to be
delivered to it, immediately prior to the Effective Time, from KPMG LLP, Devon's
independent public
35
accountants, an opinion in form and substance acceptable to Devon that the
Merger should be accounted for as a Pooling of Interests (the "KPMG Opinion").
Section 6.11 AGREEMENTS OF AFFILIATES.
(a) Prior to the Effective Time, Santa ▇▇ ▇▇▇▇▇▇ shall cause to be
prepared and delivered to Devon a list identifying all persons who, at the time
of the meeting or the meeting of Santa ▇▇ ▇▇▇▇▇▇'▇ stockholders pursuant to
Section 6.4, Santa ▇▇ ▇▇▇▇▇▇ believes may be deemed to be "affiliates" of Santa
▇▇ ▇▇▇▇▇▇, as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Rule 145 Affiliates"). Devon shall be entitled to place
restrictive legends on any shares of Devon Common Stock received by such Rule
145 Affiliates. Santa ▇▇ ▇▇▇▇▇▇ shall use its reasonable commercial efforts to
cause each person who is identified as a Rule 145 Affiliate in such list to
deliver to Devon, at or prior to the Effective Time, a written agreement, in the
form to be approved by the parties hereto, that such Rule 145 Affiliate will not
sell, pledge, transfer or otherwise dispose of any shares of Devon Common Stock
issued to such Rule 145 Affiliate pursuant to the Merger, except pursuant to an
effective registration statement or in compliance with Rule 145 or an exemption
from the registration requirements of the Securities Act.
(b) At or prior to a date 45 days prior to the Effective Time, Santa ▇▇
▇▇▇▇▇▇ and Devon shall each cause to be prepared and delivered to the other a
list identifying all persons Santa ▇▇ ▇▇▇▇▇▇ and Devon believe may be deemed to
be their "affiliates" as that term is used in Section E of Topic 2 of the staff
accounting bulletin series (the "Pooling Affiliates"). Santa ▇▇ ▇▇▇▇▇▇ and Devon
shall use their reasonable commercial efforts to cause each person who is
identified as their Pooling Affiliates to deliver to the other party, at or
prior to the Effective Time, a written agreement, in the form to be approved by
the parties hereto, that such Pooling Affiliates will not intentionally take any
action that would cause the Merger to fail to be accounted for as a Pooling of
Interests.
Section 6.12 EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except as expressly provided in Section 8.5.
Section 6.13 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, Devon shall indemnify, defend
and hold harmless to the fullest extent permitted under applicable law each
person who is, or has been at any time prior to the Effective Time, an officer
or director of Santa ▇▇ ▇▇▇▇▇▇ (or any Subsidiary or division thereof) and each
person who served at the request of Santa ▇▇ ▇▇▇▇▇▇ as a director, officer,
trustee or fiduciary of another corporation, partnership, joint venture, trust,
pension or other employee benefit plan or enterprise (individually, an
"Indemnified Party" and, collectively, the "Indemnified Parties") against all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, whether commenced, asserted or claimed before or after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), (i) Devon shall pay, as incurred,
36
the fees and expenses of counsel selected by the Indemnified Party, which
counsel shall be reasonably acceptable to Devon, in advance of the final
disposition of any such Action to the fullest extent permitted by applicable
law, and, if required, upon receipt of any undertaking required by applicable
law, and (ii) Devon will cooperate in the defense of any such matter; PROVIDED,
HOWEVER, Devon shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or delayed),
and provided FURTHER, that Devon shall not be obligated pursuant to this Section
6.13(a) to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single Action, unless, in the good faith judgment of
any of the Indemnified Parties, there is or may be a conflict of interests
between two or more of such Indemnified Parties, in which case there may be
separate counsel for each similarly situated group.
(b) The parties agree that the rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, in the certificate of incorporation, bylaws and any indemnification
agreement of Santa ▇▇ ▇▇▇▇▇▇ and its Subsidiaries with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of six years from the Effective
Time; PROVIDED, HOWEVER, that all rights to indemnification in respect of any
Action pending or asserted or claim made within such period shall continue until
the disposition of such Action or resolution of such claim.
(c) For a period of six years after the Effective Time, Devon shall
cause to be maintained officers' and directors' liability insurance covering the
Indemnified Parties who are or at any time prior to the Effective Time were
covered by Santa ▇▇ ▇▇▇▇▇▇'▇ existing officers' and directors' liability
insurance policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance with respect to acts or
omissions, or alleged acts or omissions, prior to the Effective Time (whether
claims, actions or other proceedings relating thereto are commenced, asserted or
claimed before or after the Effective Time); PROVIDED, that after the Effective
Time, Devon shall not be required to pay annual premiums in excess of 250% of
the last annual premium paid by Devon prior to the date hereof (the amount of
which premiums are set forth in the Devon Disclosure Letter), but in such case
shall purchase as much coverage as reasonably practicable for such amount.
(d) The rights of each Indemnified Party hereunder shall be in addition
to any other rights such Indemnified Party may have under the certificate of
incorporation or bylaws of Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries, under the
DGCL, or otherwise. The provisions of this Section 6.13 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
(e) In the event Devon or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Devon, as the case may be, shall assume the
obligations set forth in this Section 6.13.
37
Section 6.14 CERTAIN BENEFITS. Schedule 6.14 sets forth certain
agreements of Devon and Santa ▇▇ ▇▇▇▇▇▇ with respect to employee benefit
matters.
Section 6.15 REORGANIZATION. From and after the date hereof and until
the Effective Time, none of Devon, Santa ▇▇ ▇▇▇▇▇▇ or any of their respective
Subsidiaries shall knowingly (i) take any action, or fail to take any reasonable
action, as a result of which the Merger would fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code or (ii) enter
into any contract, agreement, commitment or arrangement to take or fail to take
any such action. Each of the parties shall use its reasonable best efforts to
obtain the opinions of counsel referred to in Sections 7.2(b) and 7.3(b).
Following the Effective Time, Devon shall not knowingly take
any action or knowingly cause any action to be taken which would cause the
Merger to fail to qualify as a reorganization within the meaning of section
368(a) of the Code (and any comparable provisions of applicable state or local
law).
Section 6.16 RIGHTS AGREEMENT. Prior to the Effective Time, the
Board of Directors of Devon shall take any action (including, if necessary,
amending or terminating (but with respect to termination, only as of
immediately prior to the Effective Time) the Devon Rights Agreement)
necessary so that none of the execution and delivery of this Agreement, the
Stock Option Agreements, the issuance of Devon Common Stock upon exercise of
the option granted to Santa ▇▇ ▇▇▇▇▇▇ pursuant to the applicable Stock Option
Agreement, the consummation of the Merger, or any other transaction
contemplated hereby or by the Stock Option Agreements will cause (i) the
Devon Rights to become exercisable under the Devon Rights Agreement, (ii)
Santa ▇▇ ▇▇▇▇▇▇ or any of its Subsidiaries to be deemed an "Acquiring Person"
(as defined in the Devon Rights Agreement), (iii) any such event to be an
event described in Section 13 of the Devon Rights Agreement or (iv) the
"Stock Acquisition Date" or the "Distribution Date" (each as defined in the
Devon Rights Agreement) to occur upon any such event. Neither the Board of
Directors of Devon nor Devon shall take any other action to terminate the
Devon Rights Agreement, redeem the Devon Rights, cause any person not to be
or become an "Acquiring Person" or otherwise amend the Devon Rights Agreement
in a manner adverse to Santa ▇▇ ▇▇▇▇▇▇, unless otherwise ordered by a court
of competent jurisdiction.
ARTICLE 7
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Merger shall have been adopted and approved
by the affirmative vote of holders of (i) a majority of the outstanding shares
of Santa ▇▇ ▇▇▇▇▇▇ Common Stock; and (ii) a majority of the outstanding shares
of Devon Common Stock and the Northstar Exchangeable Shares voting as a single
class with the Devon Special Voting Stock voting for the Northstar Exchangeable
Shares as provided in Devon's charter.
38
(b) The waiting period applicable to the consummation of the Merger
shall have expired or been terminated under (i) the HSR Act and (ii) any
mandatory waiting period under any applicable foreign competition or antitrust
law or regulation where the failure to observe such waiting period referred to
in this clause (ii) would have, individually or in the aggregate, a Devon
Material Adverse Effect or a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect.
(c) None of the parties hereto shall be subject to any decree, order or
injunction of a court of competent jurisdiction, U.S. or foreign, which
prohibits the consummation of the Merger; PROVIDED, HOWEVER, that prior to
invoking this condition, each party agrees to comply with Section 6.5, and with
respect to other matters not covered by Section 6.5, to use its reasonable
commercial efforts to have any such decree, order or injunction lifted or
vacated; and no statute, rule or regulation shall have been enacted by any
governmental authority which prohibits or makes unlawful the consummation of the
Merger.
(d) The Registration Statement shall have become effective and no stop
order with respect thereto shall be in effect.
(e) The shares of Devon Common Stock to be issued pursuant to the
Merger shall have been authorized for listing on the AMEX, subject to official
notice of issuance.
Section 7.2 CONDITIONS TO OBLIGATION OF SANTA ▇▇ ▇▇▇▇▇▇ TO EFFECT THE
MERGER. The obligation of Santa ▇▇ ▇▇▇▇▇▇ to effect the Merger shall be subject
to the fulfillment or prior to the Closing Date of the following conditions:
(a) Devon shall have performed in all material respects its covenants
and agreements contained in this Agreement required to be performed on or prior
to the Closing Date and the representations and warranties of Devon and Merger
Co. contained in this Agreement and in any document delivered in connection
herewith (i) to the extent qualified by Devon Material Adverse Effect or any
other materiality qualification shall be true and correct and (ii) to the extent
not qualified by Devon Material Adverse Effect or any other materiality
qualification shall be true and correct so long as any failures of such
representations and warranties to be true and correct, individually or in the
aggregate, do not have a Devon Material Adverse Effect, as of the date of this
Agreement and as of the Closing Date (except for representations and warranties
made as of a specified date, which need be true and correct only as of the
specified date), and Santa ▇▇ ▇▇▇▇▇▇ shall have received a certificate of Devon,
executed on its behalf by its President or a Senior Vice President of Devon,
dated the Closing Date, certifying to such effect.
(b) Santa ▇▇ ▇▇▇▇▇▇ shall have received the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
L.L.P., counsel to Santa ▇▇ ▇▇▇▇▇▇, in form and substance reasonably
satisfactory to Santa ▇▇ ▇▇▇▇▇▇, on the basis of certain facts, representations
and assumptions set forth in such opinion, dated the Closing Date, a copy of
which shall be furnished to Devon, to the effect that (i) the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and (ii) no gain or loss will be recognized by
Santa ▇▇ ▇▇▇▇▇▇ or the stockholders of Santa ▇▇ ▇▇▇▇▇▇ who exchange all of their
Santa ▇▇ ▇▇▇▇▇▇ Common Stock solely for Devon Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest in Devon Common Stock). In rendering such opinion, such counsel shall
be entitled to receive and rely upon representations of officers of Santa ▇▇
▇▇▇▇▇▇,
39
Merger Co. and Devon as to such matters as such counsel may reasonably request.
The opinion referred to in this Section 7.2(b) shall not be waivable after
receipt of the affirmative vote of stockholders referred to in Section 7.1(a),
unless further stockholder approval is obtained with appropriate disclosure.
(c) At any time after the date of this Agreement, there shall not have
been any event or occurrence, individually or in the aggregate with all such
events or occurrences, that have had or is likely to have a Devon Material
Adverse Effect.
Section 7.3 CONDITIONS TO OBLIGATION OF DEVON TO EFFECT THE MERGER. The
obligations of Devon and Devon Production to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) Santa ▇▇ ▇▇▇▇▇▇ shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date and the representations and warranties of Santa ▇▇
▇▇▇▇▇▇ contained in this Agreement and in any document delivered in connection
herewith (i) to the extent qualified by Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect
or any other materiality qualification shall be true and correct and (ii) to the
extent not qualified by Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect or any other
materiality qualification shall be true and correct so long as any failures of
such representations and warranties to be true and correct, individually or in
the aggregate, do not have a Santa ▇▇ ▇▇▇▇▇▇ Material Adverse Effect, as of the
date of this Agreement and as of the Closing Date (except for representations
and warranties made as of a specified date, which need be true and correct only
as of the specified date), and Devon shall have received a certificate of Santa
▇▇ ▇▇▇▇▇▇, executed on its behalf by its President or a Vice President of Santa
▇▇ ▇▇▇▇▇▇, dated the Closing Date, certifying to such effect.
(b) Devon shall have received the opinion of McAfee & ▇▇▇▇ A
Professional Corporation, counsel to Devon, in form and substance reasonably
satisfactory to Devon, on the basis of certain facts, representations and
assumptions set forth in such opinion, dated the Closing Date, a copy of which
will be furnished to Santa ▇▇ ▇▇▇▇▇▇, to the effect that (i) the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and (ii) no gain or loss will be recognized by
Devon. In rendering such opinion, such counsel shall be entitled to receive and
rely upon representations of officers of Santa ▇▇ ▇▇▇▇▇▇, Merger Co. and Devon
as to such matters as such counsel may reasonably request. The opinion referred
to in this Section 7.3(b) shall not be waivable after receipt of the affirmative
vote of stockholders referred to in Section 7.1(a), unless further stockholder
approval is obtained with appropriate disclosure.
(c) At any time after the date of this Agreement, there shall not have
been any event or occurrence, individually or the in aggregate, with all such
events or occurrences that have had or is likely to have a Santa ▇▇ ▇▇▇▇▇▇
Material Adverse Effect.
40
ARTICLE 8
TERMINATION
Section 8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Effective Time by the mutual written consent
of Santa ▇▇ ▇▇▇▇▇▇ and Devon.
Section 8.2 TERMINATION BY DEVON OR SANTA ▇▇ ▇▇▇▇▇▇. This Agreement may
be terminated by action of the Board of Directors of Devon or of Santa ▇▇ ▇▇▇▇▇▇
if:
(a) the Merger shall not have been consummated by December 31, 2000;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
clause (a) shall not be available to any party whose failure to perform or
observe in any material respect any of its obligations under this Agreement in
any manner shall have been the cause of, or resulted in, the failure of the
Merger to occur on or before such date; or
(b) a meeting (including adjournments and postponements) of Santa ▇▇
▇▇▇▇▇▇'▇ stockholders for the purpose of obtaining the approval required by
Section 7.1(a)(i) shall have been held and such stockholder approval shall not
have been obtained; or
(c) a meeting (including adjournments and postponements) of Devon's
stockholders for the purpose of obtaining the approval required by Section
7.1(a)(ii) shall have been held and such stockholder approval shall not have
been obtained; or
(d) a United States federal or state court of competent jurisdiction or
United States federal or state governmental, regulatory or administrative agency
or commission 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
non-appealable; PROVIDED, HOWEVER, that the party seeking to terminate this
Agreement pursuant to this clause (d) shall have complied with Section 6.5 and
with respect to other matters not covered by Section 6.5 shall have used its
reasonable commercial efforts to remove such injunction, order or decree.
Section 8.3 TERMINATION BY SANTA ▇▇ ▇▇▇▇▇▇. This Agreement may be
terminated prior to the Effective Time, by action of the Board of Directors of
Santa ▇▇ ▇▇▇▇▇▇ after consultation with its legal advisors, if:
(a) the Board of Directors of Santa ▇▇ ▇▇▇▇▇▇ determines that
proceeding with the Merger would be inconsistent with its fiduciary obligations
by reason of a Santa ▇▇ ▇▇▇▇▇▇ Superior Proposal and elects to terminate this
Agreement effective prior to the Cutoff Date; PROVIDED that Santa ▇▇ ▇▇▇▇▇▇ may
not effect such termination pursuant to this Section 8.3(a) unless and until (i)
Devon receives at least three business days' prior written notice from Santa ▇▇
▇▇▇▇▇▇ of its intention to effect such termination pursuant to this Section
8.3(a); (ii) during such week, Santa ▇▇ ▇▇▇▇▇▇ shall, and shall cause its
respective financial and legal advisors to, consider any adjustment in the terms
and conditions of this Agreement that Devon may propose; and PROVIDED, FURTHER,
that any termination of this Agreement pursuant to this Section 8.3(a) shall
41
not be effective until Santa ▇▇ ▇▇▇▇▇▇ has made the $103,000,000 payment
required by Section 8.5(a)(i); or
(b) (i) there has been a breach by Devon or Merger Co. of any
representation, warranty, covenant or agreement set forth in this Agreement or
if any representation or warranty of Devon or Merger Co. shall have become
untrue, in either case such that the conditions set forth in Section 7.2(a)
would not be satisfied and (ii) such breach is not curable, or, if curable, is
not cured within 30 days after written notice of such breach is given to Devon
by Santa ▇▇ ▇▇▇▇▇▇; PROVIDED, HOWEVER, that the right to terminate this
Agreement pursuant to this Section 8.3(b) shall not be available to Santa ▇▇
▇▇▇▇▇▇ if it, at such time, is in material breach of any representation,
warranty, covenant or agreement set forth in this Agreement such that the
conditions set forth in Section 7.3(a) shall not be satisfied; or
(c) the Board of Directors of Devon shall have withdrawn or materially
modified, in a manner adverse to Santa ▇▇ ▇▇▇▇▇▇, its approval or recommendation
of the Merger or recommended a Devon Acquisition Proposal, or resolved to do so.
Section 8.4 TERMINATION BY DEVON. This Agreement may be terminated at
any time prior to the Effective Time, by action of the Board of Directors of
Devon after consultation with its legal advisors, if:
(a) the Board of Directors of Devon determines that proceeding with the
Merger would be inconsistent with its fiduciary obligations by reason of a Devon
Superior Proposal and elects to terminate this Agreement effective prior to the
Cutoff Date; PROVIDED that Devon may not effect such termination pursuant to
this Section 8.4(a) unless and until (i) Santa ▇▇ ▇▇▇▇▇▇ receives at least three
business days' prior written notice from Devon of its intention to effect such
termination pursuant to this Section 8.4(a); (ii) during such week, Devon shall,
and shall cause its respective financial and legal advisors to, consider any
adjustment in the terms and conditions of this Agreement that Santa ▇▇ ▇▇▇▇▇▇
may propose; and PROVIDED, FURTHER, that any termination of this Agreement
pursuant to this Section 8.4(a) shall not be effective until Devon has made the
$103,000,000 payment required by Section 8.5(b)(i); or
(b) (i) there has been a breach by Santa ▇▇ ▇▇▇▇▇▇ of any
representation, warranty covenant or agreement set forth in this Agreement or if
any representation or warranty of Santa ▇▇ ▇▇▇▇▇▇ shall have become untrue, in
either case such that the conditions set forth in Section 7.3(a) would not be
satisfied and (ii) such breach is not curable, or, if curable, is not cured
within 30 days after written notice of such breach is given by Devon to Santa ▇▇
▇▇▇▇▇▇; PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this Section 8.4(b) shall not be available to Devon if it, at such time, is
in material breach of any representation, warranty, covenant or agreement set
forth in this Agreement such that the conditions set forth in Section 7.2(a)
shall not be satisfied; or
(c) the Board of Directors of Santa ▇▇ ▇▇▇▇▇▇ shall have withdrawn or
materially modified, in a manner adverse to Devon, its approval or
recommendation of the Merger or recommended approval of a Santa ▇▇ ▇▇▇▇▇▇
Acquisition Proposal, or resolved to do so.
Section 8.5 EFFECT OF TERMINATION.
42
(a) If this Agreement is terminated
(i) by Santa ▇▇ ▇▇▇▇▇▇ pursuant to Section 8.3(a); or
(ii) after the public announcement of a Santa ▇▇ ▇▇▇▇▇▇
Acquisition Proposal, by Santa ▇▇ ▇▇▇▇▇▇ or Devon pursuant to Section
8.2(b); or
(iii) after the public announcement, or receipt by Santa ▇▇
▇▇▇▇▇▇'▇ Board of Directors of a Santa ▇▇ ▇▇▇▇▇▇ Acquisition Proposal,
by Devon pursuant to Section 8.4(c);
then Santa ▇▇ ▇▇▇▇▇▇ shall pay Devon the Santa ▇▇ ▇▇▇▇▇▇ Termination Amount
(subject to reduction pursuant to Section 6 of the applicable Stock Option
Agreement) at the time of such termination in cash by wire transfer to an
account designated by Devon. The term "Santa ▇▇ ▇▇▇▇▇▇ Termination Amount" shall
mean, in the case of termination pursuant to clause (i) or clause (iii) of the
preceding sentence, $103,000,000 or, in the case of termination pursuant to
clause (ii) of the preceding sentence, "Santa ▇▇ ▇▇▇▇▇▇ Termination Amount"
shall mean $46,350,000 plus, if (x) Santa ▇▇ ▇▇▇▇▇▇ executes and delivers an
agreement with respect to any Santa ▇▇ ▇▇▇▇▇▇ Acquisition or (y) a Santa ▇▇
▇▇▇▇▇▇ Acquisition is consummated, in any such case, within 12 months from the
date of termination pursuant to clause (ii), an additional $56,650,000 (which
additional amount shall be paid promptly by wire transfer to an account
designated by Devon). If the Board of Directors of Santa ▇▇ ▇▇▇▇▇▇ recommends
the acceptance by the stockholders of Santa ▇▇ ▇▇▇▇▇▇ of a third-party tender or
exchange offer for Santa ▇▇ ▇▇▇▇▇▇ Common Stock, such recommendation shall be
treated for purposes of this paragraph as though an agreement with respect to a
Santa ▇▇ ▇▇▇▇▇▇ Acquisition had been executed and delivered. For purposes
hereof, "Santa ▇▇ ▇▇▇▇▇▇ Acquisition" means (i) a consolidation, exchange of
shares or merger of Santa ▇▇ ▇▇▇▇▇▇ with any person, other than Devon or one of
its Subsidiaries or any of Santa ▇▇ ▇▇▇▇▇▇'▇ Subsidiaries, and, in the case of a
merger, in which Santa ▇▇ ▇▇▇▇▇▇ shall not be the continuing or surviving
corporation, (ii) a merger of Santa ▇▇ ▇▇▇▇▇▇ with a person, other than Devon or
one of its Subsidiaries or any of Santa ▇▇ ▇▇▇▇▇▇'▇ Subsidiaries, in which Santa
▇▇ ▇▇▇▇▇▇ shall be the continuing or surviving corporation but the then
outstanding shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock shall be changed into or
exchanged for stock or other securities of Santa ▇▇ ▇▇▇▇▇▇ or any other person
or cash or any other property or the shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock
outstanding immediately before such merger shall after such merger represent
less than 50% of the voting stock of Santa ▇▇ ▇▇▇▇▇▇ outstanding immediately
after the merger, (iii) the acquisition of beneficial ownership of 50% or more
of the voting stock of Santa ▇▇ ▇▇▇▇▇▇ by any person (as such term is used under
Section 13(d) of the Exchange Act), or (iv) a sale, lease or other transfer of
50% or more of the assets of Santa ▇▇ ▇▇▇▇▇▇ to any person, other than Devon or
one of its Subsidiaries or any of Santa ▇▇ ▇▇▇▇▇▇'▇ Subsidiaries. Santa ▇▇
▇▇▇▇▇▇ acknowledges that the agreements contained in this Section 8.5(a) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Devon would not enter into this Agreement;
accordingly, if Santa ▇▇ ▇▇▇▇▇▇ fails promptly to pay any amount due pursuant to
this Section 8.5(a), and, in order to obtain such payment, Devon commences a
suit which results in a judgment against Santa ▇▇ ▇▇▇▇▇▇ for the payment set
forth in this Section
43
8.5(a), Santa ▇▇ ▇▇▇▇▇▇ shall pay to Devon its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on the
Santa ▇▇ ▇▇▇▇▇▇ Termination Amount from each date for payment until the date of
such payment at the prime rate of The Chase Manhattan Bank in effect on the date
such payment was required to be made plus two percent (2%).
(b) If this Agreement is terminated
(i) by Devon pursuant to Section 8.4(a); or
(ii) after the public announcement of a Devon Acquisition
Proposal, by Santa ▇▇ ▇▇▇▇▇▇ or Devon pursuant to Section 8.2(c); or
(iii) after the public announcement or receipt by Devon's
Board of Directors of a Devon Acquisition Proposal, by Santa ▇▇ ▇▇▇▇▇▇
pursuant to Section 8.3(c);
then Devon shall pay Santa ▇▇ ▇▇▇▇▇▇ the Devon Termination Amount (subject to
reduction pursuant to Section 6 of the applicable Stock Option Agreement) at the
time of such termination in cash by wire transfer to an account designated by
Santa ▇▇ ▇▇▇▇▇▇. The term "Devon Termination Amount" shall mean, in the case of
termination pursuant to clause (i) or clause (iii) of the preceding sentence,
$103,000,000 or, in the case of termination pursuant to clause (ii) of the
preceding sentence, "Devon Termination Amount" shall mean $46,350,000 plus, if
(x) Devon executes and delivers an agreement with respect to any Devon
Acquisition or (y) a Devon Acquisition is consummated, in any such case, within
12 months from the date of termination pursuant to clause (ii), an additional
$56,650,000 (which additional amount shall be paid promptly by wire transfer to
an account designated by Santa ▇▇ ▇▇▇▇▇▇). If the Board of Directors of Devon
recommends the acceptance by the stockholders of Devon of a third party tender
or exchange offer for the Devon Common Stock, such recommendation shall be
treated for purposes of this paragraph as though an agreement with respect to a
Devon Acquisition had been executed and delivered. For purposes hereof, "Devon
Acquisition" means (i) a consolidation, exchange of shares or merger of Devon
with any person, other than Santa ▇▇ ▇▇▇▇▇▇ or one of its Subsidiaries or any of
Devon's Subsidiaries, and, in the case of a merger, in which Devon shall not be
the continuing or surviving corporation, (ii) a merger of Devon with a person,
other than Santa ▇▇ ▇▇▇▇▇▇ or one of its Subsidiaries or any of Devon's
Subsidiaries, in which Devon shall be the continuing or surviving corporation
but the then outstanding shares of Devon Common Stock shall be changed into or
exchanged for stock or other securities of Devon or any other person or cash or
any other property or the shares of Devon Common Stock outstanding immediately
before such merger shall after such merger represent less than 50% of the voting
stock of Devon outstanding immediately after the merger, (iii) the acquisition
of beneficial ownership of 50% or more of the voting stock of Devon by any
person (as such term is used. under Section 13(d) of the Exchange Act), or (iv)
a sale, lease or other transfer of 50% or more of the assets of Devon to any
person, other than Santa ▇▇ ▇▇▇▇▇▇ or one of its Subsidiaries or any of Devon's
Subsidiaries. Devon acknowledges that the agreements contained in this Section
8.5(b) are an integral part of the transactions contemplated by this Agreement,
and that,
44
without these agreements, Santa ▇▇ ▇▇▇▇▇▇ would not enter into this Agreement;
accordingly, if Devon fails promptly to pay any amount due pursuant to this
Section 8.5(b), and, in order to obtain such payment, Santa ▇▇ ▇▇▇▇▇▇ commences
a suit which results in a judgment against Devon for the payment set forth in
this Section 8.5(b), Devon shall pay to Santa ▇▇ ▇▇▇▇▇▇ its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the Devon Termination Amount from each date for payment until the date of
such payment at the prime rate of The Chase Manhattan Bank in effect on the date
such payment was required to be made plus two percent (2%).
(c) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article 8, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
8.5 and Section 6.12 and except for the provisions of Sections 9.3, 9.4, 9.6,
9.8, 9.9, 9.12, 9.13 and 9.14, PROVIDED that nothing herein shall relieve any
party from any liability for any willful and material breach by such party of
any of its covenants or agreements set forth in this Agreement and all rights
and remedies of such nonbreaching party under this Agreement in the case of such
a willful and material breach, at law or in equity, shall be preserved.
Section 8.6 EXTENSION; WAIVER. At any time prior to the Effective Time,
each party may by action taken by its Board of Directors, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 9
GENERAL PROVISIONS
Section 9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Merger; PROVIDED, HOWEVER, that the agreements contained in
Article 2, Article 3 and in Sections 6.11, 6.12, 6.13, 6.14, 6.15 and this
Article 9 and the agreements delivered pursuant to this Agreement shall
survive the Merger.
Section 9.2 NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
45
(a) if to Devon or Merger Co.:
Devon Energy Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (405)
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
McAfee & ▇▇▇▇ A Professional Corporation
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
(b) if to Santa ▇▇ ▇▇▇▇▇▇:
Santa ▇▇ ▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: G. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 9.3 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article 3 and Section 6.13, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors,
46
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
Section 9.4 ENTIRE AGREEMENT. This Agreement, the Stock Option
Agreements, the exhibits to this Agreement, the Santa ▇▇ ▇▇▇▇▇▇ Disclosure
Letter, the Devon Disclosure Letter and any documents delivered by the parties
in connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
Section 9.5 AMENDMENTS. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of Santa ▇▇ ▇▇▇▇▇▇ or Devon, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its rules of conflict of laws. Each of Santa ▇▇ ▇▇▇▇▇▇ and Devon hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the United States of America
located in the State of Delaware (the "Delaware Courts") for any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any litigation relating thereto except in
such courts), waives any objection to the laying of venue of any such litigation
in the Delaware Courts and agrees not to plead or claim in any Delaware Court
that such litigation brought therein has been brought in an inconvenient forum.
Section 9.7 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
Section 9.8 HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
Section 9.9 INTERPRETATION. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and words denoting any
gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa.
47
(b) The phrase "to the knowledge of" and similar phrases relating to
knowledge of Santa ▇▇ ▇▇▇▇▇▇ or Devon, as the case may be, shall mean the actual
knowledge of its executive officers.
(c) "Material Adverse Effect" with respect to Santa ▇▇ ▇▇▇▇▇▇ or Devon
shall mean a material adverse effect on or change in (a) the business or
financial condition of a party and its Subsidiaries on a consolidated basis,
except for such changes or effects in general economic, capital market,
regulatory or political conditions or changes that affect generally the oil and
gas industry or (b) the ability of the party to consummate the transactions
contemplated by this Agreement or fulfill the conditions to closing. "Santa ▇▇
▇▇▇▇▇▇ Material Adverse Effect" and "Devon Material Adverse Effect" mean a
Material Adverse Effect with respect to Santa ▇▇ ▇▇▇▇▇▇ and Devon, respectively.
Section 9.10 WAIVERS. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
Section 9.11 INCORPORATION of EXHIBITS. The Santa ▇▇ ▇▇▇▇▇▇ Disclosure
Letter, the Devon Disclosure Letter and all exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
Section 9.12 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 9.13 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 its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Delaware Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 9.14 OBLIGATION OF MERGER CO. Whenever this Agreement requires
Merger Co. (or its successors) to take any action prior to the Effective Time,
such requirement shall be deemed to include an undertaking on the part of Devon
to cause Merger Co. to take such action and a guarantee of the performance
thereof.
Section 9.15 SUBSIDIARIES. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation or other
organization, whether incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least a majority
48
of the securities or other interests having by their terms ordinary voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which such party is a general partner.
[SIGNATURE PAGE TO FOLLOW]
49
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
DEVON ENERGY CORPORATION
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
DEVON MERGER CO.
By: /s/ Duke ▇. ▇▇▇▇▇
-----------------------------------------
Name: Duke ▇. ▇▇▇▇▇
Title: Vice President
SANTA ▇▇ ▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
SCHEDULE 6.14
EMPLOYEE BENEFIT MATTERS
[TO COME]
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of May 25, 2000 is by and between
Santa ▇▇ ▇▇▇▇▇▇ Corporation, a Delaware corporation (the "Company"), and
Devon Energy Corporation, a Delaware corporation (the "Grantee").
RECITALS
The Grantee, the Company and Merger Co., a Delaware corporation wholly
owned by the Grantee ("Merger Co."), propose to enter into the Merger
Agreement providing, among other things, for the Merger pursuant to the
Merger Agreement of Merger Co. with and into the Company, which shall be the
surviving corporation.
As a condition and inducement to the Grantee's willingness to enter into
the Merger Agreement, the Grantee has requested that the Company agree, and
the Company has agreed, to grant the Grantee the Option.
The Board of Directors of the Grantee has approved and adopted the
Merger Agreement, the Merger and this Agreement and has recommended approval
of the Merger Agreement by the holders of Devon Common Stock (as defined in
the Merger Agreement).
The Board of Directors of the Company has approved and adopted the
Merger Agreement, the Merger and this Agreement and has recommended approval
of the Merger Agreement by the holders of Santa ▇▇ ▇▇▇▇▇▇ Common Stock (as
defined in the Merger Agreement).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the Company and the Grantee agree as follows:
1. CAPITALIZED TERMS. Those capitalized terms used but not defined herein
that are defined in the Merger Agreement are used herein with the same
meanings as ascribed to them therein; PROVIDED, HOWEVER, that, as used in
this Agreement, "Person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act. Those capitalized terms used in this
Agreement that are not defined in the Merger Agreement are defined in Annex A
hereto and are used herein with the meanings ascribed to them therein.
2. THE OPTION.
(a) GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Company hereby grants to the Grantee an irrevocable option to
purchase, out of the authorized but unissued Santa ▇▇ ▇▇▇▇▇▇ Common Stock,
36,424,413 shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock (as adjusted as set forth
herein) (the "Option Shares"), at the Exercise Price.
(b) EXERCISE PRICE. The exercise price (the "Exercise Price") per
Option Share shall be the Current Market Price per share of Santa ▇▇ ▇▇▇▇▇▇
Common Stock on the date of this Agreement.
(c) TERM. The Option shall either (i) be exercisable at any time and
from time to time following the occurrence of an Exercise Event described in
subsection (i) of the definition of an Exercise Event and remain in full
force and effect for one year thereafter, or (ii) be exercisable at any time
and from time to time following the occurrence of an Exercise Event described
in subsection (ii) of the definition of an Exercise Event and remain in full
force and effect for one year thereafter (the "Option Term"). This Option
shall terminate on the earliest to occur of (i) the failure of Grantee to
exercise the Option prior to the termination of the Option Term, (ii) the
Effective Time, (iii) Grantee's written notice of termination of this
Agreement to the Company, and (iv) termination of the Merger Agreement in
accordance with its terms under circumstances in which the Option does not
and could not, through the passage of time or in conjunction with subsequent
events, become exercisable in accordance with the preceding sentence.
(d) EXERCISE OF OPTION.
(i) The Grantee may exercise the Option, in whole or in part, at
any time and from time to time during the Option Term. Notwithstanding the
expiration of the Option Term, the Grantee shall be entitled to purchase
those Option Shares with respect to which it has exercised the Option in
accordance with the terms hereof prior to the expiration of the Option Term.
(ii) If the Grantee wishes to exercise the Option, it shall send a
written notice (an "Exercise Notice") (the date of which being herein
referred to as the "Notice Date") to the Company specifying (i) the total
number of Option Shares it intends to purchase pursuant to such exercise and
(ii) a place and a date (the "Closing Date") not earlier than three Business
Days nor later than 15 Business Days from the Notice Date for the closing of
the purchase and sale pursuant to the Option (the "Closing").
(iii) If the Closing cannot be effected by reason of the
application of any Law, Regulation or Order, the Closing Date shall be
extended to the tenth Business Day following the expiration or termination of
the restriction imposed by such Law, Regulation or Order; PROVIDED HOWEVER,
that during this extended period, notwithstanding any prior Exercise Notice,
Grantee shall be entitled to rescind such Exercise Notice and shall not be
obligated to purchase any Option Shares in connection with such exercise upon
written notice to such effect to the Company. Without limiting the
foregoing, if prior notification to, or Authorization of, any Governmental
Authority is required in connection with the purchase of such Option Shares
by virtue of the application of such Law, Regulation or Order, the Grantee
and, if applicable, the Company shall promptly file the required notice or
application for Authorization and the Grantee, with the cooperation of the
Company, shall expeditiously process the same.
(e) PAYMENT AND DELIVERY OF CERTIFICATES.
(i) At each Closing, the Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated by
the Company an amount equal to the Exercise Price multiplied by the number of
Option Shares to be purchased on such Closing Date. Alternatively, the
Grantee may elect to purchase Option Shares issuable, and pay some or all of
the aggregate Exercise Price payable, upon an exercise of the Option by
surrendering a portion of the Option with respect to such number of Option
Shares as is determined by dividing
2
(i) the aggregate Exercise Price payable in respect of the number of Option
Shares being purchased in such manner by (ii) the excess of the Current
Market Price per share of Santa ▇▇ ▇▇▇▇▇▇ Common Stock as of the last trading
day preceding the date Grantee delivers its Exercise Notice over the per
share Exercise Price.
(ii) At each Closing, simultaneously with the delivery of
immediately available funds as provided above, the Company shall deliver to
the Grantee a certificate or certificates representing the Option Shares to
be purchased at such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all Liens,
and the Grantee shall deliver to the Company its written agreement that the
Grantee will not offer to sell or otherwise dispose of such Option Shares in
violation of applicable Law or the provisions of this Agreement.
(f) CERTIFICATES. Certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
A new certificate or certificates evidencing the same number of shares
of the Santa ▇▇ ▇▇▇▇▇▇ Common Stock will be issued to the Grantee in lieu of
the certificate bearing the above legend, and such new certificate shall not
bear such legend if the Grantee shall have delivered to the Company a copy of
a letter from the staff of the Commission, or an opinion of counsel in form
and substance reasonably satisfactory to the Company and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
(g) If at the time of issuance of any Santa ▇▇ ▇▇▇▇▇▇ Common Stock
pursuant to any exercise of the Option, the Company shall have issued any
share purchase rights or similar securities to holders of Santa ▇▇ ▇▇▇▇▇▇
Common Stock, then each Option Share purchased pursuant to the Option shall
also include rights with terms substantially the same as and at least as
favorable to the Grantee as those issued to other holders of Santa ▇▇ ▇▇▇▇▇▇
Common Stock.
3. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in the outstanding shares of Santa ▇▇
▇▇▇▇▇▇ Common Stock by reason of a stock dividend, stock split, split-up,
merger, consolidation, recapitalization, combination, conversion, exchange of
shares, extraordinary or liquidating dividend or similar transaction which
would have the effect of diluting the Grantee's rights hereunder, the type
and number of shares or securities purchasable upon the exercise of the
Option and the Exercise Price shall be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that
the Grantee will receive upon exercise of the Option the number and class of
shares or other securities or property that Grantee would have received in
respect of the Option Shares had the Option been exercised immediately prior
to such event or the record date therefor, as applicable. In no event shall
the number of shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock subject to the Option
exceed 19.9% of the number of shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock issued
and outstanding at the time of exercise.
3
(b) Without limiting the foregoing, whenever the number of Option
Shares purchasable upon exercise of the Option is adjusted as provided in
this Section 3, the Exercise Price shall be adjusted by multiplying the
Exercise Price by a fraction, the numerator of which is equal to the number
of Option Shares purchasable prior to the adjustment and the denominator of
which is equal to the number of Option Shares purchasable after the
adjustment.
(c) Without limiting the parties' relative rights and obligations under
the Merger Agreement, if the Company enters into an agreement to consummate a
Business Combination Transaction, then, and in each such case, the agreement
governing such transaction will make proper provision so that the Option
will, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class
of shares or other securities or property that Grantee would have received in
respect of Option Shares had the Option been exercised immediately prior to
such consolidation, merger, sale or transfer or the record date therefor, as
applicable, and will make any other necessary adjustments and the Company
shall take such steps in connection with such consolidation, merger,
liquidation or other such transaction as may be reasonably necessary to
assure that the provisions hereof shall thereafter apply as nearly as
possible to any securities or property thereafter deliverable upon exercise
of the Option.
4. REPURCHASE AT THE OPTION OF GRANTEE.
(a) At the request of the Grantee made at any time and from time to
time after the occurrence of an Exercise Event and prior to 120 days after
the expiration of the Option Term (the "Put Period"), the Company (or any
successor thereto) shall, at the election of the Grantee (the "Put Right"),
repurchase from the Grantee (i) that portion of the Option relating to all or
any part of the Unexercised Option Shares (or as to which the Option has been
exercised but the Closing has not occurred) and (ii) all or any portion of
the Option Shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock purchased by the Grantee
upon exercise of the Option (or any portion thereof) and with respect to
which the Grantee then has ownership. The date on which the Grantee exercises
its rights under this Section 4 is referred to as the "Put Date." Such
repurchase shall be at an aggregate price (the "Put Consideration") equal to
the sum of:
(i) the aggregate Exercise Price paid by the Grantee for any
Option Shares which the Grantee owns and as to which the Grantee is
exercising the Put Right;
(ii) the excess, if any, of (x) the Applicable Price per share of
Santa ▇▇ ▇▇▇▇▇▇ Common Stock over (y) the Exercise Price paid by the Grantee
for each Option Share as to which the Grantee is exercising the Put Right,
multiplied by the number of such Option Shares; and
(iii) the excess, if any, of (x) the Applicable Price per share of
Santa ▇▇ ▇▇▇▇▇▇ Common Stock over (y) the Exercise Price, multiplied by the
number of Unexercised Option Shares as to which the Grantee is exercising the
Put Right.
(b) If the Grantee exercises its rights under this Section 4, the
Company shall, within five Business Days after the Put Date, pay the Put
Consideration to the Grantee in immediately
4
available funds, and the Grantee shall surrender to the Company the Option or
portion of the Option and the certificates evidencing the Option Shares of
Santa ▇▇ ▇▇▇▇▇▇ Common Stock purchased thereunder. The Grantee shall warrant
to the Company that, immediately prior to the repurchase thereof pursuant to
this Section 4, the Grantee had sole record and Beneficial Ownership of the
Option or such Option Shares, or both, as the case may be, and that the
Option or such shares, or both, as the case may be, were then held free and
clear of all Liens.
(c) If the Option has been exercised, in whole or in part, as to any
Option Shares subject to the Put Right but the Closing thereunder has not
occurred, the payment of the Put Consideration shall, to that extent, render
such exercise null and void.
(d) Notwithstanding any provision to the contrary in this Agreement,
the Grantee may not exercise its rights pursuant to this Section 4 in a
manner that would result in Total Profit of more than the Profit Cap;
PROVIDED, HOWEVER, that nothing in this sentence shall limit the Grantee's
ability to exercise the Option in accordance with its terms.
(e) To the extent that the Company is prohibited under applicable Law
from repurchasing the portion of the Option or the Option Shares pursuant to
this Section 4, the Company shall immediately so notify Grantee and
thereafter deliver, from time to time, to Grantee the portion of the Put
Consideration that it is no longer prohibited from delivering, within five
Business Days after the date on which the Company is no longer so prohibited;
PROVIDED, HOWEVER, that if the Company at any time after the Put Date is
prohibited under applicable Law from delivering to Grantee the full amount of
the Put Consideration, Grantee may rescind the exercise of the Put Right,
whether in whole, in part or to the extent of the prohibition, and, to the
extent rescinded, no part of the amounts, terms or the rights with respect to
the Option or Put Right shall be changed or affected as if such Put Right was
not exercised. The Company shall use its reasonable best efforts to obtain
all required regulatory and legal approvals and to file any required notices
to permit Grantee to exercise its Put Right and shall use its reasonable best
efforts to avoid or cause to be rescinded or rendered inapplicable any
prohibition on the Company's repurchase of the Option or the Option Shares.
5. REGISTRATION RIGHTS.
(a) The Company shall, if requested by the Grantee at any time and from
time to time during the Registration Period, as expeditiously as practicable,
prepare, file and cause to be made effective up to two registration
statements under the Securities Act if such registration is required in order
to permit the offering, sale and delivery of any or all shares of Santa ▇▇
▇▇▇▇▇▇ Common Stock or other securities that have been acquired by or are
issuable to the Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by the Grantee,
including, at the sole discretion of the Company, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and the Company shall use all reasonable efforts to qualify such shares or
other securities under any applicable state securities laws. The Company
shall use all reasonable efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties that are
required therefor and to keep such registration statement effective for such
period not in excess of 180 days from the day such registration statement
first becomes effective as may be reasonably necessary to effect such sale or
other disposition. The obligations of the Company hereunder to file a
registration
5
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 60 days in the aggregate if the Board of
Directors of the Company shall have determined in good faith that the filing
of such registration or the maintenance of its effectiveness would require
disclosure of nonpublic information that would materially and adversely
affect the Company. For purposes of determining whether two requests have
been made under this Section 5, only requests relating to a registration
statement that has become effective under the Securities Act and pursuant to
which the Grantee has disposed of all shares covered thereby in the manner
contemplated therein shallbe counted.
(b) The Registration Expenses shall be for the account of the Company;
PROVIDED, HOWEVER, that the Company shall not be required to pay any
Registration Expenses with respect to such registration if the registration
request is subsequently withdrawn at the request of the Grantee unless the
Grantee agrees to forfeit its right to request one registration.
(c) The Grantee shall provide all information reasonably requested by
the Company for inclusion in any registration statement to be filed
hereunder. If during the Registration Period the Company shall propose to
register under the Securities Act the offering, sale and delivery of Santa ▇▇
▇▇▇▇▇▇ Common Stock for cash for its own account or for any other stockholder
of the Company pursuant to a firm underwriting, it shall, in addition to the
Company's other obligations under this Section 5, allow the Grantee the right
to participate in such registration provided that the Grantee participates in
the underwriting; PROVIDED, HOWEVER, that, if the managing underwriter of
such offering advises the Company in writing that in its opinion the number
of shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock requested to be included in such
registration exceeds the number that can be sold in such offering, the
Company shall, after fully including therein all securities to be sold by the
Company or, if such registration relates to Santa ▇▇ ▇▇▇▇▇▇ Common Stock of
any other stockholder of the Company being registered pursuant to a demand
registration, all securities to be sold by such other stockholder, include
the shares requested to be included therein by Grantee pro rata (based on the
number of shares intended to be included therein) with the shares intended to
be included therein by Persons other than the Company or, in the case of a
demand registration of a Company stockholder, with the shares intended to be
included therein by the Company or other Company stockholders.
(d) In connection with any offering, sale and delivery of Santa ▇▇
▇▇▇▇▇▇ Common Stock pursuant to a registration statement effected pursuant to
this Section 5, the Company and the Grantee shall provide each other and each
underwriter of the offering with customary representations, warranties and
covenants, including covenants of indemnification and contribution.
6. PROFIT LIMITATION.
(a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Profit exceed the Profit Cap and, if it otherwise
would exceed such amount, the Grantee, at its sole election, shall either (i)
deliver to the Company for cancellation Option Shares previously purchased by
Grantee, (ii) pay cash or other consideration to the Company, (iii) reduce
the amount of the fee payable to Grantee under Section 8.5 of the Merger
Agreement or (iv) undertake any combination thereof, so that the Grantee's
Total Profit shall not exceed the Profit Cap after taking into account the
foregoing actions.
6
(b) Notwithstanding any other provision of this Agreement, this Stock
Option may not be exercised for a number of Option Shares that would, as of
the Notice Date, result in a Notional Total Profit of more than the Profit
Cap, and, if the Notional Total Profit associated with exercise of the Option
otherwise would exceed the Profit Cap, the Grantee, at its sole option, may
increase the Exercise Price for that number of Option Shares set forth in the
Exercise Notice so that the Notional Total Profit shall not exceed the Profit
Cap; PROVIDED, HOWEVER, that nothing in this sentence shall restrict any
exercise of the Option otherwise permitted by this Section 6(b) on any
subsequent date at the Exercise Price set forth in Section 2(b) if such
exercise would not then be restricted under this Section 6(b).
7. LISTING. If the Santa ▇▇ ▇▇▇▇▇▇ Common Stock or any other securities
then subject to the Option are then listed on the New York Stock Exchange
("NYSE") or any other national securities exchange, or on the Nasdaq National
Market, the Company, upon the occurrence of an Exercise Event, will promptly
file an application to list on the NYSE or such other securities exchange the
shares of the Santa ▇▇ ▇▇▇▇▇▇ Common Stock or other securities then subject
to the Option and will use all reasonable efforts to cause such listing
application to be approved as promptly as practicable.
8. REPLACEMENT OF AGREEMENT. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation
of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement shall constitute an
additional contractual obligation of the Company, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
9. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in the Merger Agreement or
as otherwise expressly provided herein, each of the parties hereto shall bear
and pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses of
its own financial consultants, investment bankers, accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARY; SEVERABILITY. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein
and therein) (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and (ii) is not intended to confer
upon any Person other than the parties hereto any rights or remedies
hereunder.
7
(d) SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
(e) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of Delaware, regardless of the Laws
that might otherwise govern under applicable principles of conflicts of law.
(f) DESCRIPTIVE HEADINGS. The descriptive headings contained herein are
for convenience or reference only and shall not affect in any way the meaning
or interpretation of this Agreement.
(g) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses or sent by electronic
transmission to the telecopier number specified below:
If to the Company to:
Santa ▇▇ ▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: G. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
8
If to Grantee to:
Devon Energy Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
McAfee & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
(h) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in counterparts, each of which shall be deemed an original and all
of which taken together shall constitute but a single document.
(i) ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be sold, assigned or
otherwise disposed of or transferred by either of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other party, except that the Grantee may assign this Agreement to a wholly
owned Subsidiary of the Grantee; PROVIDED, HOWEVER, that no such assignment
shall have the effect of releasing the Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(j) FURTHER ASSURANCES. If the Grantee exercises the Option or any
portion thereof, the Company and the Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for by
such exercise.
(k) SPECIFIC PERFORMANCE. The parties hereto hereby acknowledge and
agree that the failure of any party to this Agreement to perform its
agreements and covenants hereunder will cause irreparable injury to the other
party to this Agreement for which damages, even if available, will not be an
adequate remedy. Accordingly, each of the parties hereto hereby consents to
the granting of equitable relief (including specific performance and
injunctive relief) by any court of competent jurisdiction to enforce any
party's obligations hereunder. The parties further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
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IN WITNESS WHEREOF, the Company and the Grantee have caused this
Stock Option Agreement to be signed by their respective officers thereunto
duly authorized, all as of the day and year first written above.
SANTA ▇▇ ▇▇▇▇▇▇ CORPORATION
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
DEVON ENERGY CORPORATION
By:
-----------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall
have the meanings set forth below unless the context shall otherwise require:
"Agreement" shall mean this Stock Option Agreement.
"Applicable Price" means the highest of (i) the highest purchase
price per share paid pursuant to a third party's tender or exchange offer
made for shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock after the date hereof and on
or prior to the Put Date, (ii) the price per share to be paid by any third
Person for shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock pursuant to an agreement
for a Business Combination Transaction entered into on or prior to the Put
Date, and (iii) the Current Market Price. If the consideration to be offered,
paid or received pursuant to either of the foregoing clauses (i) or (ii)
shall be other than in cash, the value of such consideration shall be
determined in good faith by an independent nationally recognized investment
banking firm jointly selected by the Grantee and the Company, which
determination shall be conclusive for all purposes of this Agreement.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals granted
by any Governmental Authority.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
"Business Combination Transaction" shall mean (i) a consolidation,
exchange of shares or merger of the Company with any Person, other than the
Grantee or one of its Subsidiaries, and, in the case of a merger, in which
the Company shall not be the continuing or surviving corporation, (ii) a
merger of the Company with a Person, other than the Grantee or one of its
Subsidiaries, in which the Company shall be the continuing or surviving
corporation but the then outstanding shares of Santa ▇▇ ▇▇▇▇▇▇ Common Stock
shall be changed into or exchanged for stock or other securities of the
Company or any other Person or cash or any other property or the shares of
Santa ▇▇ ▇▇▇▇▇▇ Common Stock outstanding immediately before such merger shall
after such merger represent less than 50% of the common shares and common
share equivalents of the Company outstanding immediately after the merger or
(iii) a sale, lease or other transfer of all or substantially all the assets
of the Company to any Person, other than the Grantee or one of its
Subsidiaries.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday.
"Closing" shall have the meaning ascribed to such term in Section 2
herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
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"Court" shall mean any court or arbitration tribunal of the United
States, any foreign country or any domestic or foreign state, and any
political subdivision thereof, and shall include the European Court of
Justice.
"Current Market Price" shall mean, as of any date, the average of
the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the
Santa Fe Snyder Common Stock as reported on the New York Stock Exchange
Composite Tape during the ten consecutive trading days ending on (and
including) the trading day immediately prior to such date or, if the shares
of Santa Fe Snyder Common Stock are not quoted thereon, on The Nasdaq
National Market or, if the shares of Santa Fe Snyder Common Stock are not
quoted thereon, on the principal trading market (as defined in Regulation M
under the Exchange Act) on which such shares are traded as reported by a
recognized source during such ten Business Day period.
"Exercise Event" shall mean (i) any of the events giving rise to
the obligation of the Company to pay the $103,000,000 fee under Section
8.5(a) of the Merger Agreement or (ii) the event giving rise to the
obligation to pay the $56,650,000 fee under Section 8.5(a) of the Merger
Agreement after an event giving rise to the obligation to pay the $46,350,000
fee under Section 8.5(a) of the Merger Agreement has already occurred.
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Governmental Authority" shall mean any governmental agency or
authority (other than a Court) of the United States, any foreign country, or
any domestic or foreign state, and any political subdivision thereof, and
shall include any multinational authority having governmental or
quasi-governmental powers.
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of
Courts having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest, adverse
claim, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing), any conditional sale or other title retention
agreement, any lease in the nature thereof or the filing of or agreement to
give any financing statement under the Laws of any jurisdiction.
"Merger Agreement" shall mean that certain Agreement and Plan of
Merger dated as of the date hereof by and among the Company, Merger Co. and
Grantee.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which the Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that
the Option were exercised on such date for such number of Option Shares and
assuming such Option Shares, together with all other Option
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Shares held by the Grantee and its Affiliates as of such date, were sold for
cash at the closing market price for the Santa Fe Snyder Common Stock as of
the close of business on the preceding trading day (less customary brokerage
commissions) and including all amounts theretofore received or concurrently
being paid to the Grantee pursuant to clauses (i), (ii) and (iii) of the
definition of Total Profit.
"Option" shall mean the option granted by the Company to Grantee
pursuant to Section 2 herein.
"Option Shares" shall have the meaning ascribed to such term in
Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local, of competent
jurisdiction.
"Profit Cap" shall mean $103,000,000.
"Put Consideration" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Date" shall have the meaning ascribed to such term in Section
4 herein.
"Put Period" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Right" shall have the meaning ascribed to such term in Section
4 herein.
"Registration Expenses" shall mean the expenses associated with the
preparation and filing of any registration statement pursuant to Section 5
herein and any sale covered thereby (including any fees related to blue sky
qualifications and filing fees in respect of the National Association of
Securities Dealers, Inc.), but excluding underwriting discounts or
commissions or brokers' fees in respect to shares to be sold by the Grantee
and the fees and disbursements of the Grantee's counsel.
"Registration Period" shall mean the period of two years following
the first exercise of the Option by the Grantee.
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law or of any rule or regulation of any
self-regulatory organization, such as the NYSE.
"Total Profit" shall mean the aggregate (before income taxes) of
the following: (i) all amounts received by the Grantee or concurrently being
paid to the Grantee pursuant to Section 4 for the repurchase of all or part
of the unexercised portion of the Option, (ii) (A) the amounts received by
the Grantee or concurrently being paid to the Grantee pursuant to the sale of
Option Shares (or any other securities into which such Option Shares are
converted or exchanged), including sales made to the Company or pursuant to a
registration statement under the Securities Act or any exemption therefrom,
less (B) the Grantee's purchase price for such
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Option Shares (or, in the case of a cashless exercise, the aggregate Exercise
Price of the Option Shares purchased by cashless exercise) and (iii) all
amounts received by the Grantee from the Company or concurrently being paid
to the Grantee pursuant to Section 8.5 of the Merger Agreement less (iv) any
payments made pursuant to Section 6(a)(ii) herein.
"Unexercised Option Shares" shall mean, from and after the Exercise
Date until the expiration of the Option Term, those Option Shares as to which
the Option remains unexercised from time to time.
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