EXHIBIT 10.51
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 13, 2000
AMONG
HANOVER COMPRESSOR COMPANY
Caddo Acquisition Corporation
and
OEC COMPRESSION CORPORATION
TABLE OF CONTENTS
Page
------
ARTICLE I. THE MERGER............................................ 1
Section 1.1. Effective Time of the Merger.................. 1
Section 1.2. Closing....................................... 2
Section 1.3. Effect of the Merger.......................... 2
Section 1.4. Certificate of Incorporation; Bylaws.......... 2
Section 1.5. Directors and Officers........................ 2
Section 1.6. Conversion of Capital Stock................... 2
Section 1.7. Adjustment of Conversion Number............... 3
Section 1.8. No Further Ownership Rights in Company Common
Stock......................................... 3
Section 1.9. No Fractional Shares.......................... 4
Section 1.10. Shares of Dissenting Shareholders............. 4
Section 1.11. Company Options............................... 4
Section 1.12. Tax Consequences.............................. 5
ARTICLE II. EXCHANGE OF CERTIFICATES............................. 5
Section 2.1. Exchange Agent................................ 5
Section 2.2. Exchange and Payment Procedures............... 5
Section 2.3. Distributions with Respect to Unexchanged
Shares........................................ 6
Section 2.4. Termination of Exchange Fund.................. 6
Section 2.5. No Liability.................................. 6
Section 2.6. Lost Certificates............................. 6
Section 2.7. Withholding Rights............................ 7
Section 2.8. Further Assurances............................ 7
Section 2.9. Stock Transfer Books.......................... 7
Section 2.10. Affiliates.................................... 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF the Company....... 7
Section 3.1. Organization of the Company and its
Subsidiaries.................................. 8
Section 3.2. Capitalization................................ 8
Section 3.3. Authority; No Conflict; Required Filings and
Consents; Recommendation of the Board......... 9
Section 3.4. SEC Filings; Financial Statements............. 11
Section 3.5. No Undisclosed Liabilities.................... 12
Section 3.6. Absence of Certain Changes or Events.......... 12
Section 3.7. Taxes......................................... 12
Section 3.8. Title to Assets............................... 13
Section 3.9. Real Property................................. 14
Section 3.10. Intellectual Property......................... 16
Section 3.11. Agreements, Contracts and Commitments......... 17
Section 3.12. Litigation.................................... 17
Section 3.13. Environmental Matters......................... 18
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Section 3.14. Employee Benefit Plans........................ 19
Section 3.15. Compliance with Law; Authorizations........... 22
Section 3.16. Registration Statement and Proxy Statement.... 23
Section 3.17. Labor Matters................................. 23
Section 3.18. Insurance..................................... 23
Section 3.19. Year 2000 Problem............................. 24
Section 3.20. Opinion of Financial Advisor.................. 24
Section 3.21. Brokers....................................... 24
Section 3.22. Transactions With Affiliates.................. 24
Section 3.23. No Excess Parachute or Nondeductible Payments. 24
Section 3.24. State Anti-Takeover Statutes.................. 24
Section 3.25. Accuracy of Information....................... 25
Section 3.26. Inventory..................................... 25
Section 3.27. Customers and Suppliers....................... 25
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB.......................................... 25
Section 4.1. Organization.................................. 25
Section 4.2. Authority; No Conflict; Required Filings and
Consents...................................... 26
Section 4.3. Parent Common Stock........................... 26
Section 4.4. SEC Filings: Financial Statements............ 27
Section 4.5. Proxy Statement/Registration Statement........ 27
Section 4.6. Absence of Certain Changes or Events.......... 28
Section 4.7. No Vote Required.............................. 28
Section 4.8. Merger Sub.................................... 28
Section 4.9. Brokers....................................... 28
Section 4.10. Accuracy of Information....................... 28
ARTICLE V. COVENANTS............................................. 28
Section 5.1. Conduct of Business of the Company............ 28
Section 5.2. Cooperation; Notice; Cure..................... 31
Section 5.3. No Solicitation............................... 31
Section 5.4. Preparation of Proxy Statement/Registration;
Company Shareholder Meeting................... 33
Section 5.5. Access to Information......................... 34
Section 5.6. Legal Conditions to Merger.................... 34
Section 5.7. Publicity..................................... 35
Section 5.8. Tax-Free Reorganization....................... 36
Section 5.9. Affiliate Agreements.......................... 36
Section 5.10. NYSE Listing.................................. 36
Section 5.11. Prudential Agreement.......................... 36
Section 5.12. Indemnification............................... 36
Section 5.13. Letter of the Company's Accountants........... 37
Section 5.14. Stockholder Litigation........................ 37
Section 5.15. Stock Exchange Listing........................ 37
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Section 5.16. Employee Benefits............................. 37
Section 5.17. Fees and Expenses............................. 38
ARTICLE VI. CONDITIONS TO MERGER................................. 38
Section 6.1. Conditions to Each Party's Obligation to
Effect the Merger............................. 38
Section 6.2. Additional Conditions to Obligations of the
Company....................................... 38
Section 6.3. Additional Conditions to Obligations of Parent
and Merger Sub................................ 39
ARTICLE VII. TERMINATION AND AMENDMENT........................... 41
Section 7.1. Termination................................... 41
Section 7.2. Effect of Termination......................... 42
Section 7.3. Fees and Expenses............................. 42
Section 7.4. Amendment..................................... 43
Section 7.5. Extension; Waiver............................. 43
ARTICLE VIII. MISCELLANEOUS...................................... 43
Section 8.1. Nonsurvival of Representations, Warranties
and Agreements................................ 43
Section 8.2. Notices....................................... 44
Section 8.3. Interpretation; Certain Definitions........... 44
Section 8.4. Counterparts.................................. 45
Section 8.5. Entire Agreement; No Third Party Beneficiaries 45
Section 8.6. Governing Law................................. 45
Section 8.7. Assignment.................................... 46
Annex I Key Stockholders
iii
TABLE OF EXHIBITS
Exhibit A Form of Voting and Disposition Agreement
Exhibits B-1 and B-2 ▇▇▇▇▇ and ▇▇▇▇▇ Agreements
Exhibit C Form of Non-Competition Agreement
iv
TABLE OF DEFINED TERMS
TERM SECTION
---- -------
Acquisition Proposal 5.3(a)
Affiliate 8.3 and 5.9
Affiliate Agreement 5.9
Agreement Preamble
AMEX 3.3(c)
Assets 3.8(a)
Average Parent Stock Price 1.6(b)
Benefit Arrangement 3.14(a)(i)
Business Day 1.2
Certificates 1.8
Certificate of Merger 1.1
Closing 1.2
Closing Date 1.2
Code Recitals
Company Preamble
Company 401 (k) Plan 5.16
Company Balance Sheet 3.4(b)(i)
Company Common Stock 1.6
Company Disclosure Schedule ARTICLE III
Company Intellectual Property 3.10
Company Options 1.11
Company Material Adverse Effect 3.1
Company Material Contracts 3.11(a)
Company Preferred Stock 3.2(a)
Company SEC Reports 3.4(a)
Company Stock Option Plans 3.2(b) and 1.11
Company Stockholders' Meeting 5.4(e)
Confidentiality Agreement 5.3(a)
Contracts 3.11(a)
Conversion Ratio 1.6(b)
Dissenting Shares 1.10
Effective Time 1.1
Employee Plans 3.14(a)(iii)
Encumbrance 3.9
Environmental Condition 3.13
Environmental Laws 3.13
Environmental Liabilities and Costs 3.13
ERISA 3.14(a)(iv)
ERISA Affiliate 3.14(a)(v)
Exchange Act 3.3(c)
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TERM SECTION
---- -------
Exchange Agent 2.1
Exchange Fund 2.1
Expenses 5.17
GAAP 4.4(b)(i)
Governmental Entity 3.3(c)
Hazardous Substances 3.13
HSR Act 3.3(c)
Indebtedness 3.11(a)
Indemnified Parties 5.12(a)
Intellectual Property 3.10
Key Stockholders Recitals
Knowledge 8.3
Leases 3.9
Liens 3.8
Merger Recitals
Merger Consideration 1.6(b)
Merger Sub Preamble
Multiemployer Plan 3.14(a)(vi)
NYSE 4.2(c)
OGCA 1.1
Order 5.6(b)
Other Benefit Obligations 3.14(a)(vii)
Outside Date 7.1(b)
Parent Preamble
Parent 401(k) Plan 5.16
Parent Balance Sheet 4.4(b)(i)
Parent Common Stock 1.6(b)
Parent Disclosure Schedule ARTICLE IV
Parent Material Adverse Effect 4.1
Parent SEC Reports 4.4
Pension Plan 3.14(a)(viii)
Permits 3.15(b)
Permitted Encumbrance 3.9
Permitted Liens 3.8
Proxy Statement 5.4(a)
Prudential 5.11
Prudential Agreement 5.11
Registration Statement 5.4(a)
Regulations 3.15(a)
Required Company Vote 3.3(a)
Required Consents 5.6(c)
Rule 145 5.9
Securities Act 3.3(c)
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TERM SECTION
---- -------
Subsidiary 3.1
Superior Proposal 5.3(a)
Surviving Corporation 1.3
Tax Returns 3.7(b)
Taxes 3.7(b)
Third Party 5.3(a)
to the knowledge of 8.3
Voting, Option and Disposition Agreement Recitals
Voting Debt 3.2(b)
Warrants 1.12
Welfare Plan 3.14(a)(ix)
Year 2000 Problem 3.19
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 13, 2000,
by and among Hanover Compressor Company, a Delaware corporation ("Parent"),
Caddo Acquisition Corporation, an Oklahoma corporation and a direct wholly owned
subsidiary of Parent ("Merger Sub"), and OEC Compression Corporation, an
Oklahoma corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent and Merger Sub have
determined that the merger of Merger Sub with and into the Company, upon the
terms and subject to the conditions set forth in this Agreement (the "Merger"),
is advisable and in the best interests of each corporation and its respective
stockholders;
WHEREAS, the Board of Directors of the Company has determined that the
Merger is fair to, and in the best interests of, the Company and its
stockholders;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have each approved and adopted this Agreement and approved the Merger
and the other transactions contemplated hereby;
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, contemporaneous with the execution of this Agreement, certain of
the stockholders of the Company listed on Annex I hereto (the "Key
Stockholders") have entered into an agreement in substantially the form of
Exhibit A hereto (the "Voting and Disposition Agreement") to vote all of their
shares of Company Common Stock in favor of the Merger, grant Parent certain
rights to acquire such shares and limit their disposition of Parent Common
Stock;
WHEREAS, the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇ have each entered
into a non-competition and non-solicitation agreement attached as Exhibits B-1
and B-2 hereto;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. Effective Time of the Merger. Subject to the provisions of
this Agreement, a certificate of merger (the "Certificate of Merger") in such
form as is required by the relevant provisions of the Oklahoma General
Corporation Act (the "OGCA") shall be duly prepared, executed and acknowledged
by the Surviving Corporation and thereafter delivered to
the Secretary of State of the state of Oklahoma for filing, as provided in the
OGCA, as early as practicable on the Closing Date. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the state of Oklahoma or such later time as specified in the
Certificate of Merger (the "Effective Time").
Section 1.2. Closing. The closing of the Merger (the "Closing") will take
place on the second business day, which is any day other than a Saturday, a
Sunday or a day on which U.S. banking institutions are authorized by law,
regulation or executive order to remain closed (a "Business Day"), after
satisfaction or waiver (as permitted by this Agreement and applicable law) of
the conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article VI (the "Closing Date"), unless
another time or date is agreed to in writing by the parties hereto. The Closing
shall be held at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing by the parties
hereto. The Certificate of Merger shall be filed on or as promptly as
practicable following the Closing Date.
Section 1.3. Effect of the Merger. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as
the surviving corporation (the "Surviving Corporation"). Upon becoming
effective, the Merger shall have the effects set forth in the OGCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all properties, rights, privileges, powers and franchises of the Company
and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.4. Certificate of Incorporation; Bylaws. At the Effective Time,
(i) the Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation, and (ii) the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, in each case until duly amended in accordance with applicable law.
Section 1.5. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
Section 1.6. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of the Company's common stock, par value $.01 per share ("Company Common
Stock"), or capital stock of Merger Sub:
(a) Cancellation of Stock. Each share of Company Common Stock
that is owned by the Company or any wholly owned subsidiary of the
Company (as treasury stock or
2
otherwise) shall automatically be canceled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(b) Consideration for Company Common Stock. Subject to Section
1.10, each issued and outstanding share of Company Common Stock (other
than Dissenting Shares and shares to be canceled in accordance with
Section 1.6(a)) shall be converted into the right to receive a number of
fully paid and nonassessable shares of common stock, par value $.001 per
share, of Parent ("Parent Common Stock") equal to the Conversion Ratio
(as defined below) (the "Merger Consideration"). The "Conversion Ratio"
shall be equal to $1.00 divided by the Average Parent Stock Price (as
defined below). The "Average Parent Stock Price" shall mean the closing
sales price per share of Parent Common Stock as reported by The New York
Stock Exchange Composite Tape for the twenty consecutive trading days
(on which shares of Parent Common Stock are actually traded) immediately
preceding the second Business Day prior to the Effective Time; provided,
however, that if the foregoing amount is calculated to be less than $30,
then the Average Parent Stock Price shall be $30; and provided further,
that if the foregoing amount is calculated to be greater than $32.50,
then the Average Parent Stock Price shall be $32.50. As of the Effective
Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate which, prior to the
Effective Time, represented any such shares of Company Common Stock
shall cease to have any rights with respect thereto, except the right to
receive, upon surrender of such certificate in accordance with
Section 2.2, the Merger Consideration in accordance with this
Section 1.6.
(c) Merger Sub Capital Stock. Each share of capital stock of
Merger Sub issued and outstanding immediately prior to the Effective
Time shall remain outstanding and shall be unchanged as a share of
capital stock of the Surviving Corporation.
Section 1.7. Adjustment of Conversion Number. In the event that pursuant to
a transaction announced after the date hereof and becoming effective prior to
the Effective Time (i) any distribution is made in respect of Parent Common
Stock other than a regular quarterly cash dividend or (ii) any stock dividend,
stock split, reclassification, recapitalization, combination or mandatory
exchange of shares occurs with respect to, or rights (other than non-mandatory
offers to exchange) are issued in respect of, Parent Common Stock, then, the
Conversion Ratio shall be adjusted accordingly.
Section 1.8. No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
certificates which immediately prior to the Effective Time represented
outstanding share of Company Common Stock ("Certificates") in accordance with
the terms hereof (including any cash paid pursuant to Sections 1.9 or 2.3) shall
be deemed to have been issued in full satisfaction of all rights pertaining to
such shares of Company Common Stock, and from and after the Effective Time there
shall be no further registration of transfers of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in Article II.
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Section 1.9. No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a stockholder of Parent.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock (after
taking into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Parent Common Stock multiplied by the Average Parent Stock Price.
Section 1.10. Shares of Dissenting Shareholders. Notwithstanding anything
in this Agreement to the contrary, any shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and have not been voted in
favor of the Merger and with respect to which appraisal rights shall have been
demanded and perfected in accordance with Section 1091 of the OGCA to the extent
applicable (collectively, the "Dissenting Shares") and not withdrawn shall not
be converted into or represent the right to receive the Merger Consideration,
but such shares shall become the right to receive such consideration as may be
determined to be due to holders of Dissenting Shares pursuant to the laws of the
State of Oklahoma unless and until the holder of such Dissenting Shares
withdraws his or her demand for such appraisal in accordance with the OGCA or
becomes ineligible for appraisal. If, after the Effective Time, any such holder
withdraws his or her demand for appraisal or becomes ineligible for appraisal
(through failure to perfect or otherwise), such Dissenting Shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive, without any interest
thereon, the consideration provided for in Section 1.6. The Company shall give
Parent prompt notice of any demands for appraisal for shares of Company Common
Stock received by the Company, and Parent shall have the right to direct all
proceedings, negotiations and actions taken by the Company in respect thereof.
Section 1.11. Company Options. At the Effective Time, each unexpired and
unexercised outstanding option, whether or not then vested or exercisable in
accordance with its terms, to purchase shares of Company Common Stock (the
"Company Options") previously granted by the Company or its Subsidiaries shall
be canceled and converted into the right to receive from the Parent, within 10
days following the Effective Time, cash in an amount equal to the product of (a)
$1.00 minus the exercise price per share of such Company Option, times (b) the
number of shares of Common Stock which may be purchased upon exercise of such
Company Option (whether or not then exercisable). Prior to (but effective at)
the Effective Time, the Company shall (i) obtain any consents from all holders
of Company Options and (ii) make any amendments to the terms of such stock
option or compensation plans or arrangements that, in the case of either clause
(i) or (ii), are necessary to give effect to the transactions contemplated by
this Section 1.11. Immediately prior to the Effective Time, the Company shall
terminate all plans and other arrangements pursuant to which such Company
Options were granted (the "Company Stock Option Plans") effective as of the
Effective Time with no further liability to the Company.
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Section 1.12. Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a "reorganization" within the meaning of Section
368(a) of the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
ARTICLE II.
EXCHANGE OF CERTIFICATES
Section 2.1. Exchange Agent. As of the Effective Time, Parent shall deposit
with ChaseMellon Shareholder Services or such other bank or trust company as may
be designated by Parent and be reasonably acceptable to the Company (the
"Exchange Agent") for the benefit of the holders of shares of Company Common
Stock, for exchange or payment in accordance with this Section 2.1, through the
Exchange Agent, (i) certificates evidencing such number of shares of Parent
Common Stock equal to (x) the Merger Consideration multiplied by (y) the
aggregate number of shares of Company Common Stock which may be converted into
the right to receive Parent Common Stock in the Merger; and (ii) any cash
necessary to pay amounts due pursuant to Section 1.9 (such certificates for
shares of Parent Common Stock and such cash being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable instructions
in accordance with Articles I and II, deliver the Parent Common Stock and cash
contemplated to be issued pursuant to Sections 1.6(b) and 1.9 out of the
Exchange Fund. The Exchange Fund shall not be used for any other purpose. The
Exchange Agent shall invest any cash included in the Exchange Fund, as directed
by Parent, on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent.
Section 2.2. Exchange and Payment Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a Certificate or Certificates that were converted into the
right to receive shares of Parent Common Stock and cash pursuant to Sections
1.6(b) and 1.9, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent, and which
shall be in such form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for shares of Parent Common Stock and cash. 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, and such other documents as may reasonably be required by
the Exchange Agent, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing that number of whole shares of
Parent Common Stock and cash which such holder has the right to receive pursuant
to the provisions of Article I and this Article II and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Common Stock that is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock may be issued, and cash, if any, pursuant to Sections 1.6(b) and 1.9 may
be paid, to a person other than the person in whose name the Certificate so
surrendered is registered if the Certificate representing such Company Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect
5
such transfer and evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Article II, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon surrender the certificate representing shares of Parent Common
Stock and cash as contemplated by Article I.
Section 2.3. Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock to which such holder is entitled hereunder and no cash payment paid
to any such holder pursuant to Sections 1.6(b) and 1.9 until the holder of
record of such Certificate shall surrender such Certificate. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be given to the record holder of the certificates representing whole
shares of Parent Common Stock to which such holder is entitled hereunder,
without interest, (i) at the time of such surrender, a certificate representing
the number of whole shares of Parent Common Stock and the amount of cash, if
any, pursuant to Section 1.9 to which such holder is entitled pursuant to
Section 1.9 and the amount of dividends or other distributions with respect to
such whole shares of Parent Common Stock with a record date after the Effective
Time and a payment date prior to the date of issuance to such holder, 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 Parent
Common Stock.
Section 2.4. Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for nine months after
the Effective Time shall be delivered to Parent, upon demand, and any
shareholders of the Company who have not previously complied with the provisions
of this Article II shall thereafter look only to Parent for payment of their
claim for Parent Common Stock and cash and any dividends or distributions with
respect to Parent Common Stock. Any portion of the Exchange Fund remaining
unclaimed by holders of Company Common Stock five years after the Effective Time
(or such earlier date immediately prior to such time as such portion would
otherwise escheat to or become property of any Governmental Entity) shall, to
the extent permitted by applicable law, become the property of Parent free and
clear of any claims or interest of any person previously entitled therein.
Section 2.5. No Liability. To the fullest extent permitted by law, none of
Parent, Merger Sub, the Company or the Surviving Corporation shall be liable to
any holder of Company Common Stock or Parent Common Stock, as the case may be,
for any shares (or dividends or distributions with respect thereto) and/or cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 2.6. Lost Certificates. 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
Parent, the posting by such person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will deliver in exchange for
such
6
lost, stolen or destroyed Certificate the shares of Parent Common Stock and cash
in accordance with this Agreement.
Section 2.7. Withholding Rights. Parent and the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as Parent or the Exchange Agent, as applicable, is required to deduct
and withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign Tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by such party.
Section 2.8. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
Section 2.9. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such shares of
Company Common Stock formerly represented thereby, except as otherwise provided
herein or by law. On or after the Effective Time, any Certificates presented to
the Exchange Agent or Parent for any reason shall be converted into the Merger
Consideration with respect to the shares of Company Common Stock formerly
represented thereby.
Section 2.10. Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as defined in Section
5.9) of the Company shall not be exchanged until Parent has received an
Affiliate Agreement (as defined in Section 5.9) from such Affiliate.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that the
statements contained in this Article III are true and correct except as set
forth herein and in the disclosure schedule delivered by the Company to Parent
and Merger Sub on or before the date of this Agreement (the "Company Disclosure
Schedule"). The Company Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this
Article III.
7
Section 3.1. Organization of the Company and its Subsidiaries. Each of the
Company and its Subsidiaries (as defined below) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, partnership or limited liability
company power and authority to carry on its business as now being conducted and
as proposed to be conducted. Each of the Company and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified, licensed or in good standing,
individually or in the aggregate, could not be expected to have a material
adverse effect on the business, properties, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole (a "Company
Material Adverse Effect"). The Company has delivered to Parent a true and
correct copy of the Certificate of Incorporation and Bylaws of the Company and
each of its Subsidiaries, in each case as amended to date and each of such
documents is in full force and effect. Neither the Company nor any of its
Subsidiaries is in violation of any provision of any of such documents. The
respective organizational documents of the Company's Subsidiaries do not contain
any provision that would limit or otherwise restrict the ability of Parent or
the Surviving Corporation, following the Effective Time, from owning or
operating such Subsidiaries on the same basis as the Company. A true and
complete list of all of the Company's Subsidiaries, together with the
jurisdiction of incorporation of each such Subsidiary and the percentage of
ownership interest of the Company therein, is set forth in Section 3.1 of the
Company Disclosure Schedule. Neither the Company nor any of its Subsidiaries
directly or indirectly owns (other than ownership interests in the Company or in
one or more of its Subsidiaries) any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity. As used in
this Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
or member or (ii) at least twenty-five percent (25%) of the securities or other
interests having by their terms ordinary voting power to elect or select a
majority of the Board of Directors or other persons or entities performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries.
Section 3.2. Capitalization.
(a) The authorized capital stock of the Company consists of
60,000,000 shares of Company Common Stock and 1,000,000 shares of the
Company's Preferred Stock, $1.00 par value per share ("Company Preferred
Stock"). As of the date hereof, (i) 36,885,333 shares of Company Common
Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) 320,445 shares of Company Common Stock are
held in the treasury of the Company or by Subsidiaries of the Company,
and (iii) no shares of Company Preferred Stock are issued and
outstanding. There are no obligations, contingent or otherwise, of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of Company Common Stock or the capital stock of any
Subsidiary or to provide funds to or make any material investment (in
the form of a loan, capital contribution or otherwise) in any such
Subsidiary or
8
any other entity (other than to or in a wholly owned Subsidiary of the
Company). All of the outstanding shares of capital stock (including
shares which may be issued upon exercise of outstanding options) or
other ownership interests of each of the Company's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all such
shares are owned by the Company or another Subsidiary of the Company
free and clear of all security interests, liens, claims, pledges,
agreements, limitations on the Company's voting rights, charges or other
encumbrances of any nature.
(b) There are no bonds, debentures, notes or other indebtedness
having voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. Section 3.2(b) of the Company Disclosure Schedule sets
forth (i) the total number of shares of Company Common Stock reserved
for issuance upon exercise of Company Stock Options granted and
outstanding as of the date hereof and (ii) the Company Stock Option
Plan, the name of each holder under the Company Stock Option Plans, the
number of Company Stock Options held by such holder, and the exercise
price of each such Company Stock Option. Except as reserved for future
grants of options or restricted stock under the Company Stock Option
Plans, (x) there are no shares of capital stock of any class of the
Company, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding; (y)
there are no options, warrants (other than warrants to purchase
1,000,000 shares of Company Common Stock issued to The Prudential Life
Insurance Company), equity securities, calls, rights, commitments or
agreements of any character to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or
other ownership interests (including Voting Debt) of the Company or any
of its Subsidiaries or obligating the Company or any of its Subsidiaries
to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement;
and (z) there are no voting trusts, proxies or other voting agreements
or understandings with respect to the shares of capital stock of the
Company, including, without limitation, any registration rights
agreements (other than those registration rights agreements listed in
Section 3.2(b) of the Company Disclosure Schedule) or shareholder
agreements. All shares of Company Common Stock subject to issuance as
specified in this Section 3.2(b) or the related Company Disclosure
Schedule section are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable.
Section 3.3. Authority; No Conflict; Required Filings and Consents;
Recommendation of the Board.
(a) The Company has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by the Company
have been duly authorized by all necessary corporate action on the part
of the Company, subject only to the approval and adoption of this
Agreement and the Merger by the holders of a majority of the Company's
outstanding common stock (the "Required Company Vote"). This Agreement
has been duly executed and delivered by the Company and constitutes
9
the valid and binding obligation of the Company, enforceable against it
in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditor rights and to
general equity principles.
(b) The execution and delivery of this Agreement by the Company
does not, and the consummation of the transactions contemplated hereby
will not, (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or Bylaws of the
Company or the comparable charter, organizational or governing documents
of any of its Subsidiaries, (ii) result in any violation or breach of,
or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under,
or require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or
other agreement, instrument or obligation to which the Company or any of
its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound other than as disclosed in Section
3.3(b) of the Company Disclosure Schedule, or (iii) subject to the
governmental filings and other matters referred to in Section 3.3(c),
conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of its or
their properties or assets. No consent of any holder of outstanding
Company Stock Options is required in connection with the conversion of
such Company Stock Options in accordance with the provisions of
Section 1.11.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or instrumentality,
whether federal, state or local (or any subdivision thereof)
("Governmental Entity") is required by or with respect to the Company or
any of its Subsidiaries in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby, except for (i) those required under or in relation to the ▇▇▇▇-
▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) state securities or "blue sky" laws, (iii) the Securities
Act of 1933, as amended (the "Securities Act"), (iv) the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (v) the OGCA with
respect to the filing and recordation of appropriate documents to effect
the Merger and (vi) rules and regulations of the American Stock Exchange
("AMEX").
(d) The Board of Directors of the Company has, by a unanimous
vote at a meeting of such Board (with one director absent) duly held on
July 12, 2000, approved, adopted and declared advisable this Agreement,
the Merger and the other transactions contemplated hereby, and
determined that this Agreement, the Merger and the other transactions
contemplated hereby, taken together, are in the best interests of the
Company and of the stockholders of the Company, and prior to the date
hereof such Board has resolved to recommend that the shareholders of the
Company approve this Agreement, the Merger and the other transactions
contemplated hereby.
10
Section 3.4. SEC Filings; Financial Statements.
(a) The Company has filed and made available to Parent all
forms, reports and documents filed by the Company with the SEC since
December 31, 1996 (collectively, the "Company SEC Reports"). The Company
SEC Reports (including any financial statements filed as a part thereof
or incorporated by reference therein) (i) at the time filed, complied in
all material respects with the applicable requirements of the Securities
Act and the Exchange Act, as the case may be, and (ii) did not, at the
time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in such Company SEC Reports or necessary in order
to make the statements in such Company SEC Reports, in the light of the
circumstances under which they were made, not misleading as of such
date. None of the Company's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) (i) Each of the consolidated financial statements
(including, in each case, any related notes) of the Company contained in
the Company SEC Reports complied as to form in all material respects
with the applicable rules, regulations and practices of the SEC with
respect thereto, was prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q under the Exchange Act) and fairly presented the
consolidated financial position of the Company and its Subsidiaries as
of the dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-
end adjustments which were not or are not expected to be material in
amount. The audited balance sheet of the Company as of December 31, 1999
is referred to herein as the "Company Balance Sheet."
(ii) The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that (A) its transactions
and those of its Subsidiaries are executed in accordance with
management's general or specific authorization, (B) its transactions and
those of its Subsidiaries are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets, (C) access to its assets and those
of its Subsidiaries is permitted only in accordance with management's
general or specific authorization, and (D) the recorded accountability
for its assets and those of its Subsidiaries is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
Section 3.5. No Undisclosed Liabilities. Except for, and to the extent of,
those liabilities that are reflected or reserved against, to the extent
reflected or reserved against, on the consolidated balance sheet of the Company
and its Subsidiaries included in the Company's Quarterly Report on Form 10-Q for
the fiscal period ended March 31, 2000, or the Company's Annual Report on Form
10-K for the year ended December 31, 1999, and except for obligations under
contracts and commitments incurred in the ordinary course of business which are
not required under GAAP to be reflected in the financial statements of the
Company, which, in both
11
cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Company, and except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since March 31, 2000, and except and as to the extent disclosed in the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has
any liabilities or obligations of any nature whatsoever (whether fixed,
absolute, accrued, contingent or otherwise and whether due or to become due).
Section 3.6. Absence of Certain Changes or Events. Except as disclosed in
the Company's SEC Reports filed prior to the date hereof, since the date of the
Company Balance Sheet, the Company and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any event, change or
development which, individually or in the aggregate, has had or could reasonably
be expected to have a Company Material Adverse Effect; (ii) any change by the
Company in its accounting methods, principles or practices; (iii) any
revaluation by the Company of any asset; (iv) any modification of any Material
Contract, except in the ordinary course of business or as contemplated by this
Agreement; (v) any disposition of any assets of the Company or any of its
Subsidiaries outside the ordinary course of business; or (vi) any other action
or event that would have required the consent of Parent pursuant to Section 5.1
of this Agreement had such action or event occurred after the date of this
Agreement.
Section 3.7. Taxes.
(a) Except as set forth in Section 3.7 of the Company Disclosure
Schedule: (i) the Company and each of its Subsidiaries have duly and
timely filed (taking into account any extension of time within which to
file) all Tax Returns required to be filed by any of them and all such
filed Tax Returns are complete and accurate in all respects; (ii) the
Company and each of its Subsidiaries have timely paid to the proper
taxing authorities all Tax liabilities (whether or not shown as due on
such filed Tax Returns), including Taxes that the Company or any of its
Subsidiaries have been obligated to withhold from amounts paid or owed
to any employee, independent contractor, creditor or third party, except
with respect to matters contested in good faith and which are set forth
in Section 3.7 of the Company Disclosure Schedule, or for which a
reserve (other than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) is provided on
the Company Balance Sheet; (iii) as of the date hereof: (A) there are no
pending or, to the knowledge of the Company, threatened audits,
examinations, investigations or other proceedings in respect of Taxes or
Tax matters relating to the Company or any of its Subsidiaries, (B)
there are no deficiencies or claims for any Taxes that have been
proposed, asserted or assessed against the Company or any of its
Subsidiaries, (C) there are no Liens for Taxes upon the assets of the
Company or any of its Subsidiaries, other than Liens for current Taxes
not yet due and payable and Liens for Taxes that are being contested in
good faith by appropriate proceedings and properly reserved for and (D)
neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Returns in respect of any
taxable year which have not since been filed, and no request for waivers
of the time to assess any Taxes are pending or outstanding; (iv) none of
the Company or any of its Subsidiaries has made a consent under Section
341(f) of the Code; (v) as of the date hereof, the consolidated federal
income Tax Returns for the Company and its Subsidiaries have
12
never been examined by the Internal Revenue Service; (vi) neither the
Company nor any of its Subsidiaries has any liability for Taxes of any
person (other than the Company and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any comparable provision of state, local
or foreign law), as a transferee or successor, by contract, or
otherwise; (vii) neither the Company nor any Subsidiary is a party to
any agreement relating to the allocation or sharing of Taxes; and (viii)
as of the date hereof, neither the Company nor any of its Subsidiaries
knows of any facts with respect to the Company or its Subsidiaries that
would reasonably be expected to prevent or materially or burdensomely
impede the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code. Neither the Company nor any of
its Subsidiaries will, as a result of the consummation of the
transactions contemplated by this Agreement, recognize any gain under
any applicable provisions of the federal consolidated return regulations
(Treasury Regulation Section 1.1502 et seq.) with respect to any excess
loss account or any intercompany transaction or distribution in which
the taxation of gain or loss was previously deferred. None of the
Company or its Subsidiaries has been a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code. No written power of attorney that has been granted by the
Company or its Subsidiaries currently is in force with respect to any
matter relating to Taxes. The Company has not distributed the stock of a
"controlled corporation" (within the meaning of Section 355(a) of the
Code) in a transaction subject to Section 355 of the Code within the
past two years. None of the Company or its Subsidiaries has made an
election, nor is required, to treat any Assets as owned by another
person or entity or as tax-exempt bond financed property or tax-exempt
use property for tax purposes.
(b) (i) "Taxes" shall mean all taxes, assessments, charges,
duties, fees, levies, imposts or other governmental charges, including,
without limitation, all federal, state, local, foreign and other income,
environmental, add-on, minimum, franchise, profits, capital gains,
capital stock, capital structure, transfer, sales, gross receipts, use,
ad valorem, service, occupation, property, excise, severance, windfall
profits, premium, stamp, license, payroll, social security, employment,
unemployment, disability, value-added, withholding and other taxes,
assessments, charges, duties, fees, levies, imposts or other
governmental charges of any kind whatsoever (whether payable directly or
by withholding and whether or not requiring the filing of a Tax Return),
and all estimated taxes, deficiency assessments, additions to tax,
additional amounts imposed by any governmental authority (domestic or
foreign), penalties and interest, and shall include any liability for
such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation
to indemnify any person, corporation or other organization regardless of
whether disputed, and (ii) "Tax Returns" shall mean all returns and
reports (including elections, claims, declarations, disclosures,
schedules, estimates, computations and information returns) required to
be supplied to a governmental authority in any jurisdiction (domestic or
foreign) relating to Taxes, including any schedule or amendment thereto
or amendment thereof.
Section 3.8. Title to Assets. The Company and each of its Subsidiaries owns
and has good and valid title to, or a valid leasehold interest in, or otherwise
has sufficient and legally enforceable rights to use, all of the properties and
assets (real, personal or mixed, tangible or intangible), used, or held for use
by, the Company and such Subsidiaries in connection with the
13
conduct of their business (the "Assets"), including Assets reflected on the
Company Balance Sheet or acquired since the date thereof, except for Assets
disposed of in the ordinary course of business consistent with past practice and
in accordance with this Agreement, in each case free and clear of any lien,
charge, encumbrance or security interest of any kind ("Liens") except for
Permitted Liens. "Permitted Liens" shall mean those Liens (i) securing debt that
is reflected on the Company Balance Sheet or the notes thereto, (ii) for Taxes
not yet due or payable or being contested in good faith and for which adequate
reserves have been established in accordance with GAAP, (iii) that constitute
mechanics', carriers', workmens' or similar liens, liens arising under original
purchase price conditional sale contracts and equipment leases with third
parties entered into in the ordinary course of business consistent with past
practice, and for which adequate provision for payment has been made, and (iv)
incurred or deposits made in the ordinary course of business consistent with
past practice in connection with workers' compensation, unemployment insurance
and social security, retirement and other legislation. This Section 3.8 does not
relate to intellectual property (for which Section 3.10 is applicable). Section
3.8 of the Company Disclosure Schedule includes a list of all compressors and
related equipment owned or leased by the Company (specifying for each compressor
the horsepower and whether such compressor is owned or leased).
Section 3.9. Real Property.
(a) Section 3.9 (a) of the Company Disclosure Schedule sets
forth a true and correct list of all facilities owned by the Company and
its Subsidiaries or to be acquired by the Company or its Subsidiaries
prior to the Effective Time. With respect to each parcel of owned real
property, except as set forth in Section 3.9 (a) of the Company
Disclosure Schedule, (i) the Company or any Subsidiary of the Company,
as the case may be, has good and indefeasible fee simple title to such
parcel of real property, free and clear of any and all Encumbrances
other than Permitted Encumbrances, (ii) there are no leases, subleases,
licenses, options, rights, concessions or other agreements, written or
oral, granting to any party or parties the right of use or occupancy of
any portion of such parcel of real property, (iii) there are no
outstanding options or rights of first refusal in favor of any other
party to purchase any such parcel of real property or any portion
thereof or interest thereof or interest therein, (iv) there are no
parties (other than the Company or its Subsidiary, as the case may be)
who are in possession of or who are using any such parcel of real
property, except in connection with a Permitted Encumbrance, and (v)
there is no (A) pending or, to the knowledge of the Company, threatened
condemnation or expropriation proceeding relating to such parcel of real
property, (B) pending or, to the knowledge of the Company, threatened
Action relating to such parcel of real property, (C) to the knowledge of
the Company, other matter adversely affecting the current use or
occupancy of such parcel of real property in any material respect, (D)
pending, or to the knowledge of the Company, threatened special
assessment relating to such real property or (E) pending, or to the
Company's knowledge, proposed or threatened zoning change to any zoning
affecting the property.
(b) Section 3.9 (b) of the Company Disclosure Schedule sets
forth all leases of real property (the "Leases"), to which the Company
is a party and has delivered true and correct copies of all such Leases.
The Leases are in full force and effect and are valid and binding
obligations of the parties thereto enforceable against each such party
in accordance with their
14
terms. The Company is not in default or, to the Company's knowledge,
alleged to be in default thereunder. To the knowledge of the Company,
none of the other parties to the Leases are in default, or alleged to be
in default, thereunder or have any defenses to their obligation
thereunder. Except as set forth in Section 3.9(b) of the Company
Disclosure Schedule, the Company has full legal power and authority to
assign its rights under the Leases, and the continuation, validity and
effectiveness thereof will not be affected by the occurrence of the
Effective Time. The Company has not assigned, subleased, mortgaged,
deeded in trust or otherwise transferred or encumbered any Lease or
interest therein.
With respect to each Lease and the real property demised thereby: (i)
the Company or any Subsidiary of the Company, as the case may be, has good and
valid leasehold interest in such property, free and clear of any and all
Encumbrances other than Permitted Encumbrances, (ii) there are no subleases,
licenses, options, rights, concessions or other agreements, written or oral,
granting to any party or parties the right of use or occupancy of any portion
of such parcel of real property, (iii) there are no outstanding options or
rights of first refusal in favor of any other party to purchase, lease or
sublease any such parcel of real property or any portion thereof or interest
thereof or interest therein, (iv) there are no parties (other than the Company
or its Subsidiary, as the case may be) who are in possession of or who are using
any such parcel of real property, except in connection with a Permitted
Encumbrance, and (v) there is no (A) pending or, to the knowledge of the
Company, threatened condemnation or expropriation proceeding relating to such
parcel of real property, (B) pending or, to the knowledge of the Company,
threatened Action relating to such parcel of real property, (C) to the knowledge
of the Company, other matter adversely affecting the current use or occupancy of
such parcel of real property in any material respect, (D) pending, or to the
knowledge of the Company, threatened special assessment relating to such real
property or (E) pending, or to the Company's knowledge, proposed or threatened
zoning change to any zoning affecting the property.
For purposes of this Section 3.9, the following definitions shall apply:
"Encumbrance" means any claim, lien, pledge, option, lease, license,
occupancy agreement, charge, easement, tax assessment, security interest, deed
of trust, mortgage, right-of-way, encroachment, building or use restriction,
title defect, work order, conditional sales agreement, encumbrance or other
right of third parties or other restriction on use, whether voluntarily incurred
or arising by operation of law, and includes any agreement to give any of the
foregoing in the future, and any contingent sale or other title retention
agreement or lease in the nature thereof.
"Permitted Encumbrances" means (a) statutory liens of landlords, liens
of carriers, warehousepersons, mechanics and materialpersons incurred in the
ordinary course of business for sums (i) not yet due and payable, or (ii) being
contested in good faith, if, in either such case, an adequate reserve, shall
have been made therefor in such Person's financial statements, (b) liens
incurred or deposits made in connection with workers' compensation, unemployment
insurance and other similar types of social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance
15
and return of money bonds and similar obligations, in each case in the ordinary
course of business, consistent with past practice, (c) easements, rights-of-way,
restrictions and other similar non-monetary charges or encumbrances which, in
each case, and in the aggregate, do not interfere with the ordinary conduct of
business of the Company and its Subsidiaries and do not materially detract from
the value, use or occupancy of the property upon which such encumbrance exists,
and (d) liens securing taxes, assessments and governmental charges not yet
delinquent or the amount or validity of which are being contested in good faith
by appropriate proceedings by the Company or its Subsidiaries, as applicable.
Section 3.10. Intellectual Property. The Company and its Subsidiaries own
or possess adequate and enforceable rights to use the Intellectual Property used
in their respective businesses as currently conducted (the "Company Intellectual
Property"). There are no restrictions or conditions on the use of the Company
Intellectual Property. The Company Intellectual Property is owned or licensed by
the Company free from any Liens except for Permitted Liens. The conduct of the
respective businesses of the Company and its Subsidiaries does not infringe or
conflict with the rights of any third party in respect of any Intellectual
Property. To the Company's knowledge, none of the Company Intellectual Property
is being infringed by any third party. "Intellectual Property" means all
trademarks, trademark applications, trade names, marketing or advertising
slogans, service marks, trade secrets (including customer lists and databases),
copyrights, patents, licenses, know-how and other proprietary intellectual
property rights. The Company has taken and will take all actions and necessary
precautions to preserve the confidentiality of its trade secrets (including
customer lists and customer databases). Section 3.10 of the Company Disclosure
Schedule lists (i) all trademark and service ▇▇▇▇ registrations and applications
owned by the Company or any of its Subsidiaries, (ii) license Contracts
concerning Intellectual Property to which the Company or any of its Subsidiaries
is a party and (iii) patents, patent applications and copyrights owned by the
Company or any of its Subsidiaries.
16
Section 3.11. Agreements, Contracts and Commitments.
(a) Set forth in Section 3.11 of the Company Disclosure Schedule
are all of the following to which the Company or any of its Subsidiaries
is a party: (i) agreements, contracts, indentures or other instruments
or arrangements ("Contracts") relating to Indebtedness (as defined
below) in an amount exceeding $100,000, (ii) partnership, joint venture
or limited liability agreements with any person, (iii) Contracts
pursuant to which the Company or any of its Subsidiaries will or may be
obligated to issue after the date of this Agreement any equity
securities (including Company Common Stock) or any security convertible
equity securities (including Company Common Stock), (iv) Contracts which
provide for the payment or receipt of consideration by the Company in
excess of $100,000 in any 12-month period, (v) Contracts to be performed
after the date hereof which would be material contracts (as defined in
Item 601(b)(10) of Regulation S-K of the SEC), (vi) Contracts which
restrict the conduct of any line of business by the Company or any of
its Subsidiaries, (vii) Contracts which are not terminable by the
Company within the next twelve months without the payment of any
termination fee or penalty, (viii) all leases pursuant to which the
Company leases compressors and related equipment that provide for lease
payments of more than $100,000 on an annual basis and (ix) Contracts
which include provisions relating to non-competition or non-solicitation
or non-hiring of employees (collectively, the "Company Material
Contracts"). "Indebtedness" means any liability in respect of (A)
borrowed money, (B) capitalized lease obligations, (C) the deferred
purchase price of property or services (other than trade payables in the
ordinary course of business) and (D) guarantees of any of the foregoing
incurred by any other person other than the Company or any of its wholly
owned Subsidiaries.
(b) (i) Each of the Company Material Contracts is valid and
binding in accordance with its terms and is in full force and effect,
(ii) there is no material breach or violation of or default by the
Company or any of its Subsidiaries under any of the Company Material
Contracts, whether or not such breach, violation or default has been
waived, and (iii) no event has occurred which, with notice or lapse of
time or both, would constitute a material breach, violation or default,
or give rise to a right of termination, modification, cancellation,
foreclosure, imposition of a lien, prepayment or acceleration under any
of the Company Material Contracts. To the knowledge of the Company, no
counterparty to any Company Material Contract has violated any provision
of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both, could reasonably be expected to
constitute a default or other breach under the provisions of, such the
Company Material Contract.
Section 3.12. Litigation. Except as set forth in Section 3.12 of the
Company Disclosure Letter, (a) there is no action, suit or proceeding, claim,
arbitration or investigation against the Company or any of its Subsidiaries
pending, or as to which the Company or any of its Subsidiaries has received any
written notice of assertion or, to the best knowledge of the Company, threatened
against or affecting, the Company or any of its Subsidiaries or any property or
asset of the Company or any of its Subsidiaries, before any Governmental Entity,
domestic or foreign and (b) there is no judgment, order, injunction or decree of
any Governmental Entity outstanding against the Company or any of its
Subsidiaries.
17
Section 3.13. Environmental Matters. (a) The Company is currently and has
in the past been in compliance with all applicable Environmental Laws, (b) there
are no existing or potential Environmental Liabilities and Costs of the Company
or its Subsidiaries, (c) there are no Environmental Conditions on or related to
any of the property owned or leased by the Company or its Subsidiaries, or the
other assets of the Company or its Subsidiaries, (d) none of the Company or its
Subsidiaries has received any notices from any governmental agency or other
third party regarding the existence of any Hazardous Substance on any of the
property owned or leased by the Company or its Subsidiaries alleging any
violation of or noncompliance with any Environmental Law, or requiring the
investigation, removal, clean-up, or remediation of any Environmental Condition
whether or not on property owned or leased by the Company or its Subsidiaries,
(e) the Company is not subject to any enforcement or investigatory action by any
governmental agency regarding an Environmental Condition with respect to any of
the property owned or leased by the Company or its Subsidiaries, or any other
property related in any way to the Company or its Subsidiaries, (f) there are no
underground tanks or other underground storage receptacles for Hazardous
Substances located on any of the property owned or leased by the Company or its
Subsidiaries, (g) the Company has no knowledge of any leaks, releases, threats
of releases, spills or discharge of fluids at any property owned or leased by
the Company or its Subsidiaries, (h) there are no PCBs or asbestos located at or
on any property owned or leased by the Company or its Subsidiaries and (i) true
and correct copies of any environmental reports, audits, analysis, summary or
assessments which have been conducted, either by or on behalf of the Company or
its Subsidiaries, at any of the property currently or previously owned or leased
by the Company or its Subsidiaries have been made available to Parent and Merger
Sub. The Company and its Subsidiaries have no obligation to indemnify any other
person, corporation or other entity with respect to any Environmental
Liabilities and Costs.
For purposes of this Section 3.13, the following definitions shall apply:
"Environmental Laws" means all applicable foreign, federal, state and local
statutes or laws, common law, judgments, orders, notice requirements,
regulations, agency guidelines, policies, licenses, permits, rules and
ordinances relating to pollution or protection of health, safety or the
environment, including, but not limited to the Federal Water Pollution Control
Act (33 U.S.C. (S)1251 et seq.), Resource Conservation and Recovery Act (42
U.S.C. (S)6901 et seq.), Safe Drinking Water Act (42 U.S.C. (S)3000(f) et seq.),
Toxic Substances Control Act (15 U.S.C. (S)2601 et seq.), Clean Air Act (42
U.S.C. (S)7401 et seq.), Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. (S)9601 et seq.), each as amended, and other similar
state and local statutes.
"Environmental Condition" means the introduction into the environment of
any pollution, including without limitation any contaminant, pollutant,
hazardous or toxic waste, substance or material (whether or not upon the any of
the property owned or leased by the Company or its Subsidiaries and whether or
not such pollution constituted at the time thereof a violation of any
Environmental Law as a result of any release of any kind of any toxic or
hazardous waste, substance or material) as a result of which the Company (1) has
or may become liable to any person, (2) is or was in violation of any
Environmental Law, or (3) by reason of which any of the
18
property owned or leased by the Company or its Subsidiaries or other assets of
the Company, may suffer or be subject to any lien.
"Environmental Liabilities and Costs" means all liabilities, obligations,
responsibilities, obligations to conduct cleanup, losses, damages, deficiencies,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigations and
feasibility studies and responding to government requests for information or
documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any person or entity, whether
based in contract, tort, implied or express warranty, strict liability, joint
and several liability, criminal or civil statute, under any Environmental Law,
or arising from environmental, health or safety conditions, as a result of past
or present ownership, leasing or operation of any properties, owned, leased or
operated by the Company or any of its Subsidiaries.
"Hazardous Substances" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or
otherwise hazardous substance, material or waste (whether solid, liquid or gas)
subject to regulation, control or remediation under Environmental Laws.
Section 3.14. Employee Benefit Plans.
(a) The following terms, when used in this Section 3.14, shall
have the following meanings. Any of these terms may, unless the context
otherwise requires, be used in the singular or the plural depending on
the reference.
(i) Benefit Arrangement. "Benefit Arrangement" shall
mean any employment, consulting, severance or other similar
contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing
for insurance coverage (including without limitation any self-
insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health, disability or accident
benefits (including without limitation any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the
Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or
benefits which is not a Welfare Plan, Pension Plan or
Multiemployer Plan and is entered into, maintained, contributed
to or required to be contributed to, as the case may be, by the
Company or an ERISA Affiliate or under which the Company or any
ERISA Affiliate may incur any liability.
(ii) Code. "Code" shall have the meaning set forth in
the Preamble.
(iii) Employee Plans. "Employee Plans" shall mean all
Benefit Arrangements, Multiemployer Plans, Pension Plans and
Welfare Plans.
19
(iv) ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
(v) ERISA Affiliate. "ERISA Affiliate" shall mean any
entity which is (or at any relevant time was) a member of a
"controlled group of corporations" with, under "common control"
with, or a member of an "affiliated service group" with, the
Company as defined in Section 414(b), (c), (m) or (o) of the
Code.
(vi) Multiemployer Plan. "Multiemployer Plan" shall mean
any "multiemployer plan," as defined in Section 3(37) of ERISA.
(vii) Other Benefit Obligations. "Other Benefit
Obligations" shall mean all obligations, arrangements or
customary practices, whether or not legally enforceable, to
provide benefits, other than salary or commissions, as
compensation for services rendered, to present or former
directors, employees or agents, other than obligations,
arrangements and practices that are Employee Plans. Other
Benefit Obligations include employment agreements, consulting
agreements under which the compensation paid does not depend
upon the amount of service rendered, sabbatical policies,
severance payment policies and fringe benefits within the
meaning of Code Section 132.
(viii) Pension Plan. "Pension Plan" shall mean any
"employee pension benefit plan" as defined in Section 3(2) of
ERISA (other than a Multiemployer Plan) which the Company or any
ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, within the five years prior to
the Closing Date, maintained, administered, contributed to or
was required to contribute to, or under which the Company or any
ERISA Affiliate may incur any liability.
(ix) Welfare Plan. "Welfare Plan" shall mean any
"employee welfare benefit plan" as defined in Section 3(1) of
ERISA, which the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or
under which the Company or any ERISA Affiliate may incur any
liability.
(b) Section 3.14 of the Company Disclosure Schedule contains a
complete list of the Employee Plans and Other Benefit Obligations. True
and complete copies of each of the following documents have been
delivered by the Company to Parent: (i) each Employee Plan (and, if
applicable, related trust agreements) and all amendments thereto, all
written interpretations thereof and written descriptions thereof which
have been distributed to employees and all annuity contracts or other
funding instruments, (ii) the most recent determination or opinion
letter issued by the Internal Revenue Service with respect to each
Pension Plan and, if applicable, each Welfare Plan, (iii) for the three
most recent plan years, Annual Reports on Form 5500 Series required to
be filed with any governmental agency for each Pension Plan and Welfare
Plan, (iv) all actuarial reports prepared for the last three plan years
for each Employee Plan, (v) all documents that set forth the terms of
each Other Benefit Obligation of the Company and its ERISA Affiliates
for which a plan description or summary plan description is not required
20
and (vi) all personnel, payroll and employment manuals and policies of
the Company and its ERISA Affiliates.
(c) (i) Pension Plans. No Pension Plan is subject to Title IV of
ERISA or the minimum funding requirements of Section 412 of the Code.
Each Pension Plan has been maintained in compliance with its terms and,
both as to form and in operation, is qualified and tax-exempt under the
provisions of Code Section 401(a) and 501(a) and no fact or condition
exists which would adversely affect such qualified status.
(ii) Multiemployer Plans. Neither the Company nor any ERISA
Affiliate has, at any time, contributed to, or been obligated to
contribute to, or have any liability to any Multiemployer Plan.
(iii) Welfare Plans.
(A) None of the Company, any ERISA Affiliate or any
Welfare Plan has any present or future obligation to make any
payment to, or with respect to any present or former employee of
the Company or any ERISA Affiliate pursuant to, any retiree
medical benefit plan, or other retiree Welfare Plan, except to
the extent required by the Code or ERISA, and no condition
exists which would prevent the Company from amending or
terminating any such benefit plan or Welfare Plan.
(B) Each Welfare Plan which is a "group health plan," as
defined in Section 607(1) of ERISA, has been operated in
material compliance with provisions of Parts 6 and 7 of Title I,
Subtitle B of ERISA and Sections 4980B of the Code.
(iv) Benefit Arrangements. Each Benefit Arrangement has been
maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which
are applicable to such Benefit Arrangement, including without limitation
the Code.
(v) Deductibility of Payments. There is no contract, agreement,
plan or arrangement covering any employee or former employee of the
Company (with respect to its relationship with such entities) that,
individually or collectively, provides for the payment by the Company of
any amount that is not deductible under Section 162(a)(1) or 404 of the
Code,
(vi) Foreign Employees. No Employee Plan covers foreign
employees, other than resident aliens.
(vii) Fiduciary Duties and Prohibited Transactions. None of the
Company, any ERISA Affiliate or any plan fiduciary of any Employee Plan
has engaged in any transaction in violation of Sections 404 or 406 of
ERISA or any
21
"prohibited transaction," as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 408 of ERISA or Section
4975(c)(2) or (d) of the Code, or has otherwise violated the provisions
of Part 4 of Title I, Subtitle B of ERISA, which could result in any
material liability to the Company. The Company has not been assessed any
civil penalty under Section 502(l) of ERISA.
(viii) Litigation. There is no action, order, writ, injunction,
judgment or decree outstanding or claim, suit, litigation, proceeding,
arbitral action, letters requesting information, governmental audit,
investigation or voluntary compliance resolution or closing agreement
program proceeding relating to or seeking benefits under any Employee
Plan that is pending, threatened or anticipated against the Company, any
ERISA Affiliate or any Employee Plan.
(ix) No Acceleration or Creation of Rights. Except as provided
in Section 3.14 of the Company Disclosure Schedule, neither the
execution and delivery of this Agreement or other related agreements by
the Company nor the consummation of the transactions contemplated hereby
or the related transactions will result in the acceleration or creation
of any rights of any person to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of
any restricted stock, the acceleration of the accrual or vesting of any
benefits under any Pension Plan or the acceleration or creation of any
rights under any severance, parachute or change in control agreement).
(x) Other. The Company and its ERISA Affiliates have performed
all of their obligations under all the Employee Plans and Other Benefit
Obligations of the Company and its ERISA Affiliates. No statement,
either written or oral, has been made by the Company or any ERISA
Affiliate to any person with regard to any Employee Plan or Other
Benefit Obligation that was not in accordance with the Employee Plan or
Other Benefit Obligation and that could have, individually or in the
aggregate, a material adverse effect on the Company or such ERISA
Affiliate. All tax, annual reporting and other governmental filings
required by ERISA and the Code as to each Plan of the Company or its
ERISA Affiliates have been timely filed with the appropriate
governmental agency, and all notices and disclosures to participants of
such Plans required by either ERISA or the Code have been timely
provided to such participants. No amount, nor any asset of any Employee
Plan of the Company and its ERISA Affiliates is subject to tax as
unrelated business taxable income.
Section 3.15. Compliance with Law; Authorizations.
(a) The Company, each of its Subsidiaries and the conduct of
their respective businesses is and has been in compliance with all
applicable Regulations and judgments, decisions or orders entered by any
Governmental Entity relating to the business, operations, assets or
properties of the Company and each of its Subsidiaries. "Regulations"
shall mean any
22
laws, statutes, ordinances, regulations, rules, notice requirements,
agency guidelines and orders of any Governmental Entity. Neither the
Company nor any of its Subsidiaries has received any written or, to its
knowledge, other notice to the effect that, or otherwise been advised
that, it is not in or may not be in compliance with any Regulations, and
neither the Company nor any of its Subsidiaries have any reason to
anticipate that any currently existing circumstances are or have been
likely to result in violations of any Regulations.
(b) The Company and each of its Subsidiaries have all licenses,
permits, authorizations and approvals issued by Governmental Entities
(collectively, "Permits"), all of which are currently valid and in full
force and effect, necessary to carry on their respective businesses as
presently conducted and as proposed to be conducted.
Section 3.16. Registration Statement and Proxy Statement. The information
to be supplied by the Company for inclusion in the Registration Statement shall
not at the time the Registration Statement is filed with or declared effective
by the SEC or at the date of the Company Stockholders' Meeting contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The Proxy Statement shall not, on the date
the Proxy Statement is first mailed to shareholders of the Company, at the time
of the Company Shareholders' Meeting, or at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements made in the
Proxy Statement not false or misleading (excluding any statement based upon
information supplied by Parent for inclusion in the Proxy Statement).
Section 3.17. Labor Matters. (i) There are no controversies pending or, to
the best knowledge of the Company, threatened between the Company or any of its
Subsidiaries and any of their respective employees; (ii) to the knowledge of the
Company, there are no activities or proceedings of any labor union to organize
any non-unionized employees; and (iii) there are no unfair labor practice
complaints pending against the Company or any of its Subsidiaries before the
National Labor Relations Board, or any similar foreign labor relations
governmental bodies, or any current union representation questions involving
employees of the Company or any of its Subsidiaries. The Company and its
Subsidiaries are not parties to any collective bargaining agreements.
Section 3.18. Insurance. The Company and its Subsidiaries maintain policies
or binders of fire, liability, title, worker's compensation and other forms of
insurance in a character and in amounts at least equivalent to that carried by
persons engaged in similar businesses and which are sufficient for compliance
with all requirements of law and of all Material Contracts to which the Company
or any of its Subsidiaries is a party. The Company is not in default under any
of such policies or binders, the Company has not failed to give any notice or to
present any claim under any such policy or binder in a due and timely fashion,
and such policies and binders are in full force and effect on the date hereof
and shall be kept in full force and effect by the Company through the Closing
Date.
23
Section 3.19. Year 2000 Problem. The "Year 2000 Problem" (that is, the
risk that computer applications used by any person may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999) did not and will not have a Company
Material Adverse Effect.
Section 3.20. Opinion of Financial Advisor. The financial advisors of the
Company, Prudential Securities, delivered to the Company an opinion dated the
date of this Agreement to the effect that the Merger Consideration is fair to
the holders of the Company Common Stock from a financial point of view.
Section 3.21. Brokers. None of the Company, any of its Subsidiaries, or
any of their respective officers, directors or employees have employed any
broker, financial advisor or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement, except that the Company has retained Prudential
Securities as its financial advisor, the arrangements with which have been
disclosed in writing to Parent and Merger Sub prior to, and will not be modified
subsequent to, the date of this Agreement.
Section 3.22. Transactions With Affiliates. Other than the transactions
contemplated by this Agreement and except to the extent disclosed in the Company
SEC Reports filed prior to the date hereof or as disclosed in Section 3.23 of
the Company Disclosure Schedule, there have been no transactions, agreements,
arrangements or understandings between the Company or any of its Subsidiaries,
on the one hand, and the Company's affiliates or other persons, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act.
Section 3.23. No Excess Parachute or Nondeductible Payments. Any amount
that could be received (whether in cash or property or the vesting of property)
as a result of any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Arrangement currently in
effect does not constitute an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code and the proposed regulations
thereunder). Neither the Company nor any of its Subsidiaries is a party to any
agreement, contract or arrangement that could result, on account of the
transactions contemplated hereunder, individually or in the aggregate, in any
payment that would be nondeductible under Section 162(m) of the Code.
Section 3.24. State Anti-Takeover Statutes. The Board of Directors of the
Company has approved the terms of this Agreement and the Voting, Option and
Disposition Agreement and the consummation of the transactions contemplated
hereby and thereby, and such approvals are sufficient to render inapplicable to
the Merger and the other transactions contemplated by this Agreement and the
Voting, Option and Disposition Agreement the restrictions of Section 1090.3 of
the OGCA. No other "fair price," "moratorium," "control share acquisition" or
other similar anti-takeover statute or regulation applies or purports to apply
to the Merger, this Agreement, the
24
Voting, Option and Disposition Agreement or any of the transactions contemplated
by this Agreement or the Voting, Option and Disposition Agreement.
Section 3.25. Accuracy of Information. No representation or warranty by
the Company contained in this Agreement or in any certificate to be furnished by
or on behalf of the Company or its Subsidiaries pursuant hereto contains or will
contain any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading with respect to the
Company and its Subsidiaries as a whole or the transactions contemplated by this
Agreement.
Section 3.26. Inventory. Except as set forth in Section 3.26 of the
Company Disclosure Schedule, (i) all items of the Company's inventory and
related supplies reflected on the Company Balance Sheet or thereafter acquired
(and not subsequently disposed of in the ordinary course of business) are
merchantable, for sale in the ordinary course of business at normal ▇▇▇▇-ups,
(ii) none of such items of the Company's inventory is obsolete (except to the
extent accrued from the Company Balance Sheet) and (iii) each item of such
inventory reflected on the Company Balance Sheet and the books and records of
the Company is so reflected on the basis of a complete physical count and is
valued at the lower of cost or market in accordance with GAAP.
Section 3.27. Customers and Suppliers. Except for matters that reasonably
could not be expected to have a Company Material Adverse Effect, no supplier or
customer of the Company has advised the Company formally or informally that such
customer or supplier intends to terminate, discontinue or substantially reduce
its business with the Company and the Company does not expect the occurrence of
the Effective Time to adversely affect such relationship.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that the
statements contained in this Article IV are true and correct except as set forth
herein and in the disclosure schedule delivered by Parent and Merger Sub to the
Company on or before the date of this Agreement (the "Parent Disclosure
Schedule"). The Parent Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IV.
Section 4.1. Organization. Each of Parent and Merger Sub is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate, partnership or
limited liability company power and authority to carry on its business as now
being conducted and as proposed to be conducted. Each of Parent and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified, licensed or in
good standing could not be expected, individually or in the aggregate, to
25
have a material adverse effect on the business, properties, financial condition
or results of operations of Parent and its Subsidiaries, taken as a whole (a
"Parent Material Adverse Effect"). Parent has delivered to the Company true and
correct copies of the Certificate of Incorporation and Bylaws of each of Parent
and Merger Sub, in each case as amended to the date and each of such documents
is in full force and effect.
Section 4.2. Authority; No Conflict; Required Filings and Consents.
(a) Parent and Merger Sub have all requisite corporate power and
authorityenter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by Parent and
Merger Sub have been duly authorized by all necessary corporate action
on the part of Parent and Merger Sub. This Agreement has been duly
executed and delivered by Parent and Merger Sub (as applicable) and
constitutes the valid and binding obligation of Parent and Merger Sub
(as applicable), enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditor rights and to general equity
principles.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub (as applicable) does not, and the consummation of the
transactions contemplated hereby will not, (i) conflict with, or result
in any violation or breach of, any provision of the Certificate of
Incorporation or Bylaws of Parent or Merger Sub (ii) result in any
violation or breach of, or constitute (with or without notice or lapse
of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material
benefit) under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Parent or
Merger Sub is a party or by which any of them or any of their properties
or assets may be bound other than as disclosed in Section 4.2(b) of the
Parent Disclosure Schedule, or (iii) subject to the governmental filings
and other matters referred to in Section 4.2(c), conflict with or
violate any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent
or Merger Sub or any of its or their properties or assets.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Merger Sub in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) those required under or
in relation to the HSR Act, (ii) state securities or "blue sky" laws,
(iii) the Securities Act, (iv) the Exchange Act, (v) the OGCA with
respect to the filing and recordation of appropriate documents to effect
the Merger and (vi) rules and regulations of the New York Stock Exchange
("NYSE").
Section 4.3. Parent Common Stock. The shares of Parent Common Stock to
be issued pursuant to Article Iissued, be duly authorized, validly issued, fully
paid and nonassessable, and no stockholder of Parent is entitled to preemptive
rights as a result of the
26
issuance of the Parent Company Stock hereunder. The Parent Common Stock to be
issued in the Merger pursuant to Article I will, when issued, be registered
under the Securities Act and the Exchange Act and registered or exempt from
registration under any applicable state securities laws, in each case for
delivery hereunder to holders of Company Common Stock. Parent has available for
issuance a sufficient number of shares of authorized Parent Common Stock
necessary to satisfy the obligations of Parent under this Agreement.
Section 4.4. SEC Filings: Financial Statements. Parent has made available
to the Company all forms, statements and documents filed by Parent with the SEC
since April 1, 1997 (collectively, the "Parent SEC Reports"). The Parent SEC
Reports (including any financial statements filed as a part thereof or
incorporated by reference therein) (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and (ii) did not, at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing), contain any untrue statement of a material
fact or omit to state a material fact required to be stated in such Parent SEC
Reports or necessary in order to make the statements in such Parent SEC Reports,
in the light of the circumstances under which they were made, not misleading.
(a) (i) Each of the consolidated financial statements
(including, in each case, any related notes) of Parent contained in the
Parent SEC Reports complied as to form in all material respects with the
applicable rules, regulations and practices of the SEC with respect
thereto, was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form
10-Q under the Exchange Act) and fairly presented the consolidated
financial position of Parent and its Subsidiaries as of the dates and
the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
The audited balance sheet of Parent as of December 31, 1999 is referred
to herein as the "Parent Balance Sheet."
(ii) Parent maintains a system of accounting controls sufficient
to provide reasonable assurances that (A) its transactions and those of
its Subsidiaries are executed in accordance with management's general or
specific authorization, (B) its transactions and those of its
Subsidiaries are recorded as necessary to permit preparation of
financial statements in accordance with GAAP and to maintain
accountability for assets, (C) access to its assets and those of its
Subsidiaries is permitted only in accordance with management's general
or specific authorization, and (D) the recorded accountability for its
assets and those of its Subsidiaries is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
Section 4.5. Proxy Statement/Registration Statement. The Registration
Statement shall not at the time the Registration Statement is declared effective
by the SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration
27
Statement, in light of the circumstances under which they were made, not
misleading (excluding any statement based upon information supplied by the
Company for inclusion in the Proxy Statement). The information to be supplied by
Parent for inclusion in the Registration Statement shall not on the date the
Proxy Statement is first mailed to shareholders of the Company, at the time of
the Company Stockholders' Meeting, and at the Effective Time, contain any
statement that, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements made in the
Proxy Statement not false or misleading.
Section 4.6. Absence of Certain Changes or Events. Except as disclosed in
the Parent SEC Reports filed prior to the date of this Agreement, since March
31, 2000, there has not been any event, change or development which,
individually or in the aggregate, could reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.7. No Vote Required. No vote or approval of the holders of any
class of Parent shares is necessary to approve this Agreement and the
transactions contemplated hereby.
Section 4.8. Merger Sub. Merger Sub was formed solely for the purpose of
effecting the Merger and has not engaged in any business activities or conducted
any operations other than in connection with the Merger. Except for obligations
or liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement, and except for this Agreement
and any other agreements or arrangements contemplated by this Agreement, Merger
Sub has not incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or entered into any agreement or
arrangements with any person.
Section 4.9. Brokers. None of Parent, any of its Subsidiaries, or any of
their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
Section 4.10. Accuracy of Information. No representation or warranty by
Parent or Merger Sub contained in this Agreement or in any certificate to be
furnished by or on behalf of Parent or its Subsidiaries pursuant hereto contains
or will contain any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading with
respect to Parent and its Subsidiaries as a whole or the transactions
contemplated by this Agreement.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business of the Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, the Company agrees as to itself and each
of its Subsidiaries (except to the extent that Parent shall otherwise consent in
writing) to carry on its business in the usual, regular and
28
ordinary course in substantially the same manner as previously conducted, to pay
its debts and taxes when due subject to good faith disputes over such debts or
taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, and others
having business dealings with it. Without limiting the generality of the
foregoing and except as expressly contemplated by this Agreement, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, without the written consent
of Parent, the Company shall not and shall not permit any of its Subsidiaries
to:
(i) adopt any amendment to its Certificate of Incorporation or
Bylaws or comparable charter or organizational documents;
(ii) (A) other than pursuant to the Prudential Agreement issue,
pledge or sell, or authorize the issuance, pledge or sale of additional
shares of capital stock of any class, or securities convertible into
capital stock of any class, or any rights, warrants or options to
acquire any convertible securities or capital stock, or any other
securities in respect of, in lieu of, or in substitution for, shares of
Company Common Stock outstanding on the date hereof or (B) amend, waive
or otherwise modify any of the terms of any option, warrant or stock
option plan of the Company or any of its Subsidiaries, including without
limitation, the Company Stock Options or the Company Option Plans;
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other
than between any wholly owned Subsidiary of the Company and the Company
or any other wholly owned Subsidiary of the Company;
(iv) split, combine, subdivide, reclassify or other than
pursuant to the Prudential Agreement, redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(v) (A) increase the compensation or fringe benefits payable or
to become payable to its directors, officers or employees (whether from
the Company or any of its Subsidiaries), or pay any benefit not required
by any existing plan or arrangement (including, without limitation, the
granting of stock options, stock appreciation rights, shares of
restricted stock or performance units) or grant any severance or
termination pay to, or (B) enter into any employment or severance
agreement with, any director, officer or employee of the Company or any
of its Subsidiaries or establish, adopt, enter into, or amend any
collective bargaining, Employee plan or Other Benefit Obligation, to the
extent required by applicable Regulations;
29
(vi) (A) sell, pledge, lease, dispose of, grant, encumber, or
otherwise authorize the sale, pledge, disposition, grant or encumbrance
of any material properties or assets of the Company or any of its
Subsidiaries or (B) acquire (including, without limitation, by merger,
consolidation, lease or acquisition of stock or assets) any corporation,
partnership, other business organization or any business thereof (or a
substantial portion of the assets thereof) or any other assets;
(vii) (A) incur, assume or pre-pay any Indebtedness, except that
the Company and its Subsidiaries may incur or pre-pay debt in the
ordinary course of business consistent with past practice under existing
lines of credit, (B) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except in the ordinary course of
business consistent with past practice, or (C) make any loans, advances
or capital contributions to, or investments in, any other person except
in the ordinary course of business consistent with past practice and
except for loans, advances, capital contributions or investments between
any wholly-owned Subsidiary of the Company and the Company or another
wholly-owned Subsidiary of the Company; provided, however, that in no
event shall the Company or any of its Subsidiaries incur Indebtedness
which is subject to any penalty, premium, "make-whole" or similar
obligation in connection with pre-payment thereof;
(viii) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of the
Company or any of its Subsidiaries;
(ix) make or rescind any express or deemed election relating to
Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes, amend any Tax Return except in the ordinary course of business
consistent with past practice, or, except as may be required by
applicable law, make any change to any of its methods of reporting
income or deductions for federal income tax purposes from those employed
in the preparation of the Company's consolidated federal income tax
return for the taxable year ending December 31, 1998;
(x) settle or consent to any judgment concerning any pending or
threatened litigation involving the Company or any of its Subsidiaries
(whether brought by a private party or a Governmental Entity);
(xi) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures, unless required by GAAP or
the SEC;
(xii) modify, amend or terminate any of the Company Material
Contracts or waive, release or assign any material rights or claims,
except in the ordinary course of business consistent with past practice;
30
(xiii) take, or agree to commit to take, any action that would
make any representation or warranty of the Company contained herein
inaccurate in any respect at, or as of any time prior to, the Effective
Time such that the condition to Closing set forth in Section 6.3(a)
would not be likely satisfied;
(xiv) engage in any transaction with, or enter into any
agreement, arrangement, or understanding with, directly or indirectly,
any of the Company's Affiliates which involves the transfer of
consideration or has a financial impact on the Company, other than
pursuant to such agreements, arrangements, or understandings existing on
the date of this Agreement which are set forth in the Company Disclosure
Schedule or in the Company SEC Reports filed prior to the date hereof;
(xv) make any capital expenditures in excess of $100,000,
individually or $300,000 in the aggregate;
(xvi) amend, modify or terminate any standstill or
confidentiality agreement or waive, release or assign any rights of the
Company under any such agreement; or
(xvii) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize, recommend,
propose or announce an intention to do any of the foregoing.
Section 5.2. Cooperation; Notice; Cure. Subject to compliance with
applicable law, from the date hereof until the Effective Time, the Company shall
confer on a regular basis with one or more representatives of Parent to report
on the general status of ongoing operations at the Company. Each of Parent and
the Company shall promptly notify the other in writing of, and will use all
commercially reasonable efforts to cure before the Closing Date, any event,
transaction or circumstance, as soon as practical after it becomes known to such
party, that causes or will cause any covenant or agreement of such party under
this Agreement to be breached or that renders or will render untrue any
representation or warranty of such party contained in this Agreement. No notice
given pursuant to this paragraph shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
Section 5.3. No Solicitation
(a) The Company shall not, directly or indirectly, through any
officer, director, employee, financial advisor, representative or agent
of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination,
recapitalization, sale of substantial assets, sale or acquisition of
shares of capital stock (including, without limitation, by way of a
tender offer) or similar transaction involving the Company or any of its
subsidiaries, other than the transactions contemplated by this Agreement
(any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) initiate or
31
engage in negotiations or discussions with any person (or group of
persons) other than the Parent or its respective affiliates (a "Third
Party") concerning, or provide any non-public information to any person
or entity relating to or in contemplation of, any Acquisition Proposal,
or (iii) agree to or recommend any Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent the
Company or its Board of Directors from (A) furnishing non-public
information to, or entering into discussions or negotiations with, any
person or entity in connection with an unsolicited bona fide written
Acquisition Proposal by such person or entity or modifying or
withdrawing its recommendation with respect to the transactions
contemplated hereby or recommending an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, if and only to
the extent that (1) a Third Party has made a written proposal to the
Board of Directors of the Company to consummate an Acquisition Proposal,
which proposal identifies a price to be paid for the outstanding
securities or substantially all of the assets of the Company, (2) the
Board of Directors of the Company believes in good faith, after
consultation with its financial advisors, that such Acquisition Proposal
is reasonably capable of being completed on the terms proposed and
would, if consummated, result in a transaction more favorable to the
stockholders of such party than the transaction contemplated by this
Agreement, (3) the Board of Directors of the Company determines in good
faith based on the written advice of outside legal counsel, that such
action is required for such Board of Directors to comply with its
fiduciary duties to stockholders under applicable law, (4) the Company
is not in breach of its obligations under this Section 5.3, and (5)
prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such Third Party, the Board of
Directors of the Company receives from such Third Party an executed
confidentiality and standstill agreement with terms no less favorable to
such party than those contained in the Confidentiality Agreement dated
July 8, 1999 between the Parent and the Company (the "Confidentiality
Agreement") (an Acquisition Proposal meeting the requirements of each of
clauses (1) through (5) above is referred to as a "Superior Proposal");
or (B) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal. The Company agrees not to release any
Third Party from, or waive any provision of, any standstill agreement to
which it is a party or any confidentiality agreement between it and
another person who has made, or who may reasonably be considered likely
to make, an Acquisition Proposal, unless the Board of Directors of the
Company determines in good faith based on the written advice of outside
legal counsel, that such action is required for the Board of Directors
of the Company to comply with its fiduciary duties to stockholders under
applicable law.
(b) The Company shall notify the Parent immediately after
receipt by the Company or any of its subsidiaries (or any of their
advisors) of any Acquisition Proposal or any request for non-public
information in connection with an Acquisition Proposal or for access to
the properties, books or records of such party by any Third Party that
informs the Company or any of its subsidiaries (or any of their
advisors) that it is interested in making, considering making, or has
made, an Acquisition Proposal. Such notice shall be made orally and in
writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or
contact. The Company shall continue to keep the Parent informed, on a
current basis, of the status of any such discussions or negotiations and
the terms being discussed or negotiated. Notwithstanding the foregoing,
the Company shall not accept or enter into any agreement concerning a
Superior Proposal for a period of at least five business days after the
32
Parent's receipt of the notification of the terms thereof pursuant the
second preceding sentence, during which period the Parent shall be
afforded the opportunity to beat or improve upon the terms and
conditions contained in such Superior Proposal.
(c) The Company has terminated any direct or indirect (through
any officer, director, employee, financial advisor, representative or
agent of such party) discussions or negotiations with, and the provision
of information or data to, any person (other than the Parent) respecting
an Acquisition Proposal.
Section 5.4. Preparation of Proxy Statement/Registration; Company
Shareholder Meeting.
(a) As promptly as practicable after the execution of this
Agreement, Parent shall prepare and the Company shall cooperate
therewith, and the Company shall file with the SEC, a proxy
statement/prospectus (the "Proxy Statement") to be sent to the
shareholders of the Company in connection with the Company Stockholders'
Meeting to consider the Merger and the issuance of Parent Common Stock
in connection therewith, and Parent shall prepare and file with the SEC
a registration statement on Form S-4 pursuant to which the shares of
Parent Common Stock to be issued in the Merger will be registered under
the Securities Act (the "Registration Statement") and the Company shall
cooperate therewith, in which the Proxy Statement will be included as a
prospectus. Parent may delay the filing of the Registration Statement
until after the Proxy Statement has been declared effective. Parent and
the Company shall use reasonable best efforts to cause the Registration
Statement to become effective as soon after filing as practicable. The
Proxy Statement shall include the unanimous recommendation of the Board
of Directors of the Company (with one director absent) in favor of this
Agreement and the Merger unless the Board changes such recommendation
pursuant to clause (e) below. Parent and the Company shall make all
other necessary filings with respect to the Merger under the Securities
Act and the Exchange Act and the rules and regulations thereunder. If at
any time before the Effective Time any event relating to the Company or
Parent, or any of its affiliates, officers, or directors, is discovered
by the Company or Parent, respectively, that should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy
Statement, such party shall promptly so inform the other.
(b) The Company shall take all action necessary to cause the
representation set forth in Section 3.16 to be true and correct at all
applicable times with respect to each of the Proxy Statement and the
Registration Statement.
(c) Parent shall take all action necessary to cause the
representation set forth in Section 4.5 to be true and correct at all
applicable times with respect to each of the Proxy Statement and the
Registration Statement.
(d) As soon as reasonably practicable, the Company and Parent
shall take all such actions as may be necessary to comply with state
"blue sky" or securities laws in connection with the transactions
contemplated by this Agreement.
33
(e) The Company shall, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting
of its shareholders (the "Company Stockholders' Meeting") for the
purpose of obtaining the Required Company Votes with respect to this
Agreement. The Board of Directors of the Company shall unanimously
declare advisable and recommend adoption of this Agreement by the
stockholders of the Company and, upon Parent's request, reconfirm such
recommendation (provided that the Board of Directors of the Company need
not make or reconfirm such recommendation (1) (x) if at the time that it
would otherwise be required to make or reconfirm such recommendation the
Company is not then in breach of its obligations under Section 5.3 and
(y) in such event, if and only to the extent that the Board of Directors
of the Company concludes in good faith (after having consulted with and
considered the advice of outside legal counsel) in connection with the
receipt of a Superior Proposal that such action is necessary in order
for its directors to comply with their respective fiduciary duties under
applicable law, or (2) if no other Acquisition Proposal is pending or in
Parent's reasonable judgment likely to become pending). Notwithstanding
the foregoing, the Company shall use its best efforts to solicit such
adoption, and the Company shall nevertheless submit this Agreement to
its stockholders for consideration.
Section 5.5. Access to Information. Upon reasonable notice, the Company
shall (and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of Parent, access, during normal
business hours during the period prior to the Effective Time, to all its
personnel, properties, books, contracts, commitments and records and, during
such period, the Company shall, and shall cause its Subsidiaries to, furnish
promptly to the other (a) copies of monthly financial reports and acquisition
related reports, (b) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal securities laws and (c) all other information concerning
its business, properties and personnel as Parent may reasonably request. Parent
will hold any such information furnished to it by the Company which is nonpublic
in confidence in accordance with the Confidentiality Agreement. No information
or knowledge obtained in any investigation pursuant to this Section 5.5 shall
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger.
Section 5.6. Legal Conditions to Merger.
(a) The Company and Parent shall each use their best efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary and proper under applicable law to
consummate and make effective the transactions contemplated hereby as
promptly as practicable, (ii) obtain from any Governmental Entity or any
other third party any consents, licenses, permits, waivers, approvals,
authorizations, or orders required to be obtained or made by the Company
or Parent or any of their Subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby including, without
limitation, the Merger, and (iii) as promptly as practicable, make all
necessary filings, and thereafter make any other required submissions,
with respect to this Agreement and the Merger required under (A) the
Securities Act and the Exchange Act, and any other applicable federal or
state securities laws, (B) the HSR Act and any
34
related governmental request thereunder, and (C) any other applicable
law; without limiting the foregoing, the parties shall undertake all
reasonable efforts to cause to be filed all requisite filings under the
HSR Act within 10 business days of the date of this Agreement. The
Company and Parent shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes
suggested in connection therewith. The Company and Parent shall use
their best efforts to furnish to each other all information required for
any application or other filing to be made pursuant to the rules and
regulations of any applicable law (including all information required to
be included in the Proxy Statement and the Registration Statement) in
connection with the transactions contemplated by this Agreement.
(b) Parent and the Company agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective best
efforts to obtain any government clearances required for Closing
(including through compliance with the HSR Act), to respond to any
government requests for information, and to contest and resist any
action, including any legislative, administrative or judicial action,
and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by
this Agreement, including, without limitation, by vigorously pursuing
all available avenues of administrative and judicial appeal and all
available legislative action. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one
another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted
by or on behalf of any party hereto in connection with proceedings under
or relating to the HSR Act or any other federal or state antitrust or
fair trade law. Parent shall be entitled to direct any proceedings or
negotiations with any Governmental Entity relating to any of the
foregoing, provided that it shall afford the Company a reasonable
opportunity to participate therein. Notwithstanding anything to the
contrary in this Section 5.6, neither Parent nor the Company nor any of
their respective Subsidiaries shall be required to take any action that
would reasonably be expected to substantially impair the overall
benefits expected, as of the date hereof, to be realized from the
consummation of the Merger or the divestiture or holding separate of any
assets or businesses.
(c) Each of the Company and Parent shall give (or shall cause
their respective Subsidiaries to give) any notices to third parties, and
use, and cause their respective Subsidiaries to use, their best efforts
to obtain any third party consents related to or required in connection
with the Merger that are set forth on Schedule 5.6(c) (collectively, the
"Required Consents").
Section 5.7. Publicity. Parent and the Company shall agree on the form and
content of the initial press release regarding the transactions contemplated
hereby and thereafter shall consult with each other before issuing, and use all
reasonable efforts to agree upon, any press release or other public statement
with respect to any of the transactions contemplated hereby and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law.
35
Section 5.8. Tax-Free Reorganization Parent and the Company shall each use
their respective best efforts to cause the Merger to be treated as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 5.9. Affiliate Agreements. Upon the execution of this Agreement,
the Company will provide Parent with a list of those persons who are, in the
Company's reasonable judgment, "affiliates" of the Company within the meaning of
Rule 145 (each such person who is an "affiliate" of the Company within the
meaning of Rule 145 is referred to as an "Affiliate") promulgated under the
Securities Act ("Rule 145"). The Company shall provide Parent such information
and documents as Parent shall reasonably request for purposes of reviewing such
list and shall notify Parent in writing regarding any change in the identity of
its Affiliates prior to the Closing Date. The Company shall use its best efforts
to deliver or cause to be delivered to Parent by August 15, 2000 (and in any
case prior to the Effective Time) from each of its Affiliates, an executed
Affiliate Agreement, in form and substance satisfactory to Parent (an "Affiliate
Agreement"). Parent shall be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by such
Affiliates of the Company pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Parent
Common Stock, consistent with the terms of the Affiliate Agreements (provided
that such legends or stop transfer instructions shall be removed, one year after
the Effective Date, upon the request of any stockholder that is not then an
Affiliate of Parent).
Section 5.10. NYSE Listing. Parent shall promptly prepare and submit to the
NYSE a listing application covering the shares of Parent Common Stock to be
issued in the Merger, and shall use all reasonable efforts to cause such shares
to be approved for listing on the NYSE, subject to official notice of issuance,
prior to the Effective Time.
Section 5.11. Prudential Agreement. Parent, the Company and the Prudential
Insurance Company of America ("Prudential")shall enter into an agreement with
respect to the repayment of certain subordinated notes, on terms and conditions
satisfactory to each of the Parent, the Company and Prudential (the "Prudential
Agreement").
Section 5.12. Indemnification.
(a) From and after the Effective Time, Parent agrees that it
will, and will cause the Surviving Corporation to, indemnify and hold
harmless each present and former director and officer of the Company
(the "Indemnified Parties"), against any costs or expenses (including
attorneys' fees), judgments, fines, losses, claims, damages, liabilities
or amounts paid in settlement incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the
fullest extent that the Company would have been permitted under Oklahoma
law and its Certificate of Incorporation or Bylaws in effect on the date
hereof to indemnify such Indemnified Party.
(b) For a period of three years after the Effective Time, Parent
shall maintain or shall cause the Surviving Corporation to maintain (to
the extent available in the market) in
36
effect a directors' and officers' liability insurance policy covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (copies of which have been
heretofore delivered by the Company to Parent) with coverage in amount
and scope at least as favorable as the Company's existing coverage;
provided that in no event shall Parent or the Surviving Corporation be
required to expend in the aggregate in excess of 150% of the annual
premium currently paid by the Company for such coverage; and if such
premium would at any time exceed 150% of the such amount, then Parent or
the Surviving Corporation shall maintain insurance policies which
provide the maximum and best coverage available at an annual premium
equal to 150% of such amount.
(c) The provisions of this Section 5.12 are intended to be an
addition to the rights otherwise available to the current officers and
directors of the Company by law, charter, statute, bylaw or agreement,
and shall operate for the benefit of, and shall be enforceable by, each
of the Indemnified Parties, their heirs and their representatives.
Section 5.13. Letter of the Company's Accountants. The Company shall use
reasonable efforts to cause to be delivered to Parent and the Company a letter
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the Company's independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to Parent, in form reasonably satisfactory to
Parent and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement.
Section 5.14. Stockholder Litigation. The Company shall give Parent the
reasonable opportunity to participate in the defense of any stockholder
litigation against the Company and its directors relating to the transactions
contemplated hereby.
Section 5.15. Stock Exchange Listing. Parent and the Company agree to
continue the listing and quotation of Parent Common Stock and Company Common
Stock on the NYSE and the AMEX, respectively, during the term of this Agreement
though the Effective Time.
Section 5.16. Employee Benefits. Parent and the Company agree that the
Company and the Surviving Corporation shall pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the terms of any
Employee Plan or Other Benefit Obligation as disclosed to Parent as of the
Effective Time. The Company shall take all action necessary to terminate its
401(k) Plan (the "Company 401(k) Plan") in compliance with applicable law, no
later than immediately prior to the Effective Time. On or as soon as
administratively practicable following the Effective Time employees who were
participants in the Company 401(k) Plan shall be eligible to participate in the
401(k) Plan sponsored by Parent or one of its Subsidiaries ("Parent 401(k)
Plan"). At the election of participants, Parent 401(k) Plan shall accept
rollovers from the Company 401(k) Plan. Nothing herein shall require the
continued employment of any person. Years of service with the Company and its
Subsidiaries prior to the Effective Time shall be treated as service with the
Surviving Corporation or Parent for eligibility and vesting purposes and for
purposes of vacation and severance pay accruals, except to the extent such
treatment will result in the duplication of benefits.
37
Section 5.17. Fees and Expenses. Whether or not the Merger is consummated,
all Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses.
"Expenses" means all reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby, including the preparation, printing, filing
and mailing of the Proxy Statement and the solicitation of shareholder approvals
and all other matters related to the transactions contemplated hereby.
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or waiver by each party prior to the
Effective Time of the following conditions:
(a) HSR Act. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
(b) No Injunctions. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any order, executive order,
stay, decree, judgment or injunction or statute, rule, regulation which
is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(c) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order.
(d) NYSE Listing. The shares of Parent Common Stock to be issued
in the Merger shall have been approved for listing on the NYSE.
(e) Stockholder Approval. The Required Company Vote shall have
been obtained.
Section 6.2. Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction of
each of the following conditions prior to the Effective Time, any of which may
be waived in writing exclusively by the Company:
(a) Representations and Warranties. (i) Each of the
representations and warranties of Parent and Merger Sub set forth in
this Agreement that is qualified as to materiality or Parent Material
Adverse Effect shall have been true and correct when made and shall be
true and correct on and as of the Closing Date as if made on and as of
such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of
such certain date), and (ii) each of the representations and warranties
of each of Parent and Merger Sub that is not so qualified shall have
been true and correct when made and shall be true and correct on and as
of the Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true
38
and correct as of such certain date), except for such inaccuracies as
could not be expected, individually or in the aggregate, to have a
Parent Material Adverse Effect, and the Company shall have received a
certificate of the chief executive officer and the chief financial
officer of Parent to such effect with respect to both (i) and (ii)
above.
(b) Performance of Obligations of Parent. Parent shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date
that are qualified as to materiality or Parent Material Adverse Effect
and shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified as
to materiality, and the Company shall have received a certificate of an
executive officer of Parent to such effect.
Section 6.3. Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of each of the following conditions prior to the Effective Time,
any of which may be waived in writing exclusively by Parent:
(a) Representations and Warranties. (i) Each of the
representations and warranties of the Company set forth in this
Agreement that is qualified as to materiality or Company Material
Adverse Effect shall have been true and correct when made and shall be
true and correct on and as of the Closing Date as if made on and as of
such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of
such certain date), and (ii) each of the representations and warranties
of the Company that is not so qualified shall have been true and correct
in all material respects when made and shall be true and correct on and
as of the Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true and correct as of such certain date),
except for such inaccuracies as could not be expected, individually or
in the aggregate, to have a Company Material Adverse Effect, and Parent
and Merger Sub shall have received a certificate of the chief executive
officer and the chief financial officer of the Company to such effect
with respect to both (i) and (ii) above.
(b) Performance of Obligations. The Company shall have performed
or complied with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality or Company Material Adverse Effect and shall
have performed or complied in all material respects with all agreements
and covenants required to be performed by it under this Agreement at or
prior to the Closing Date that are not so qualified as to materiality or
Company Material Adverse Effect, and Parent and Merger Sub shall have
received a certificate of the chief executive officer and the chief
financial officer of the Company to such effect.
39
(c) Regulatory Approvals. All consents, approvals, orders,
authorizations of, or registrations, licenses, declarations or filings
with, any Governmental Entity required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof
shall have expired and no such approval shall contain any conditions,
limitations or restrictions which Parent reasonably determines in good
faith will have or would reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect.
(d) Absence of Certain Changes or Events. Since the date of this
Agreement, there shall not have been any event, development or change of
circumstance that constitutes, has had, or to have, individually or in
the aggregate, or could be expected to have a Company Material Adverse
Effect.
(e) Required Consents. All Required Consents shall have been
obtained, and the Company shall have provided evidence thereof to the
Parent, which evidence shall be reasonably satisfactory to Parent.
(f) Non-Competition Agreements. Two-year non-competition
agreements, substantially in the form attached as Exhibit C hereto,
shall have been executed and delivered to Parent by all officers of the
Company and affiliates of the Company as requested by Parent, including,
but not limited to, ▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(g) Prudential Agreement. Parent, the Company and Prudential
shall have into the Prudential Agreement, and the Prudential Agreement
shall be in full force and effect as of the Effective Time or shall have
been consummated prior to the Effective Time.
(h) Affiliate Agreements. Parent shall have received an
Affiliate Agreement from each Person identified as an Affiliate pursuant
to Section 5.9.
(i) Suits; Actions. No suit, action, investigation or other
proceeding by any Governmental Entity shall have been instituted and be
pending which imposes, seeks to impose or reasonably would be expected
to impose any remedy, condition or restriction that would have a Company
Material Adverse Effect or that would materially restrict Parent's
ownership or operation of the Company (except as provided in Section
5.6(b)).
(j) Dissenting Shares. The number of shares of Company Common
Stock with respect to which dissenters' rights have been asserted under
the OGCA shall not exceed 7.5% of the number of outstanding shares of
Company Common Stock.
(k) Fairness Opinion. The Company's financial advisor,
Prudential Securities, shall have rendered a fairness opinion with
respect to this Agreement and the transactions contemplated hereby, and
such opinion shall not have been withdrawn or adversely modified.
(l) ▇▇▇▇▇ Promissory Notes. All principal and accrued interest
thereon under the promissory notes made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇ in favor of the Company having principal amounts of $217,250 and
$114,507 respectively, shall have been paid in full.
40
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(h), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of the Company:
(a) by mutual written consent of the Company and Parent; or
(b) by either Parent or the Company if the Merger shall not have
been consummated by six months from signing (the "Outside Date"),
provided that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Entity shall have issued a
nonappealable final order, decree or ruling or taken any other
nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
or
(d) by Parent or the Company, if, at the Company Stockholders'
Meeting (including any adjournment or postponement), the requisite vote
of the stockholders of the Company in favor of the approval and adoption
of this Agreement and the Merger shall not have been obtained; or
(e) By Parent if (i) the Board of Directors of the Company shall
have withdrawn, or adversely modified, or failed (upon Parent's request)
to reconfirm its recommendation of the Merger or this Agreement (or
determined to do so); (ii) the Board of Directors of the Company shall
have determined to recommend to the shareholders of the Company that
they approve an Acquisition Proposal other than that contemplated by
this Agreement or shall have determined to accept a Superior Proposal;
(iii) a tender offer or exchange officer that, if successful, would
result in any person or "group" becoming a "beneficial owner" (such
terms having the meaning in this Agreement as is ascribed under
Regulation 13D under the Exchange Act) of 20% or more of the outstanding
shares of Company Common Stock is commenced (other than by Parent or an
Affiliate of Parent) and the Board of Directors of the Company fails to
recommend that the shareholders of the Company not tender their shares
in such tender or exchange offer; (iv) any person (other than Parent or
an Affiliate of Parent) or "group" becomes the "beneficial owner" of 20%
or more of the outstanding shares of Company Common Stock; or (v) for
any reason the Company fails to call or hold the Company Shareholders
Meeting by the Outside Date; or
(f) by the Company, prior to the Required Company Vote if, as a
result of a Superior Proposal received by such party from a Third Party,
the Board of Directors of the Company determines in good faith, based on
written advice of outside legal counsel, that
41
accepting such Superior Proposal is required for the Board of Directors
of the Company to comply with its fiduciary duties to stockholders under
applicable law; provided, however, that (i) no termination shall be
effective pursuant to this Section 7.1(f) under circumstances in which a
termination fee is payable by the Company pursuant to Section
7.3(b)(iv), unless concurrently with such termination, such termination
fee is paid in full by the Company in accordance with Section 7.3(b)(iv)
and (ii) the Company's right to terminate under this paragraph (f) shall
not be available if the Company has breached Section 5.3; or
(g) by Parent or the Company, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other
party set forth in this Agreement, which breach will cause the
conditions set forth in Section 6.2(a) or (b) (in the case of
termination by the Company) or Section 6.3(a) or (b) (in the case of
termination by Parent) not to be satisfied.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Parent, Merger
Sub or the Company, or their respective officers, directors, stockholders or
Affiliates, except as set forth in Section 7.3 and Article VIII and except that
such termination shall not limit liability for a willful breach of this
Agreement; provided that, the provisions of Section 7.3 of this Agreement and
the Confidentiality Agreement shall remain in full force and effect and survive
any termination of this Agreement.
Section 7.3. Fees and Expenses.
(a)
(i) In addition to any payment required by Section
7.3(b), if this Agreement is terminated pursuant to Section
7.1(d), (e), (f) or by Parent pursuant to Section 7.1(b) (but
only if such termination is due to the failure of the condition
specified in Section 6.3(g) to be satisfied) or 7.1(g), then the
Company shall pay Parent an amount equal to the sum of Parent's
Expenses up to an amount equal to $750,000.
(ii) If this Agreement is terminated pursuant to Section
7.1(g) by the Company, then Parent shall pay the Company an
amount equal to the sum of the Company's expenses up to an
amount equal to $750,000.
(b) The Company shall pay Parent a termination fee of $1,665,000
upon the earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant
to Section 7.1(b), if such termination is due to the failure of
the condition specified in Section 6.3(g) to be satisfied;
(ii) the termination of this Agreement pursuant to
Section 7.1(d);
(iii) the termination of this Agreement pursuant to
Section 7.1(e);
42
(iv) the termination of this Agreement pursuant to
Section 7.1(f); or
(v) the termination of this Agreement by Parent pursuant
to Section 7.1 (g).
(c) The Company's or Parent's satisfaction of its obligations
under this Section 7.3 shall be the sole and exclusive remedy of Parent
against the Company and the Company against Parent and Merger Sub, as
the case may be, and their respective directors, officers, employees,
agents, advisors or other representatives with respect to the
occurrences giving rise to such payment and the termination of this
Agreement; provided that this limitation shall not apply in the event of
a willful breach of this Agreement by the Company or Parent.
(d) Fees payable pursuant to Section 7.3(b)(iv) shall be paid
concurrently with the event described in Section 7.3(b)(iv). Fees
pursuant to Section 7.3(b)(i), (ii), (iii) or (v) shall be paid within
two business days of the first to occur of the events described in
Section 7.3(b)(i), (ii), (iii) or (v). Expenses payable pursuant to
Section 7.3(a) shall be paid with two business days of delivery to the
Company or Parent, as the case may be, of a demand for payment and a
documented itemization setting forth in reasonable detail all Expenses
of Parent or the Company (which itemization may be supplemented and
updated from time to time by Parent or the Company until the 60th day
after Parent or the Company delivers such notice of demand for payment).
All payments under this Section 7.3 shall be made by wire transfer of
immediately available funds to an account designated by Parent or the
Company, as the case may be.
Section 7.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without 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 7.5. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained here. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. 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 Effective
Time, except for the agreements contained
43
in Sections 1.3, 5.12, 5.16 and 5.17 and Articles II and VIII, and the
agreements of the Affiliates delivered pursuant to Section 5.9. The
Confidentiality Agreement shall survive the execution and delivery of this
Agreement.
Section 8.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to the Company, to
OEC Compression Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Schlanger, Mills, ▇▇▇▇▇ & Silver, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Parent, to
Hanover Compressor Company
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.3. Interpretation; Certain Definitions. When a reference is made
in this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall
44
be deemed to be followed by the words "without limitation." "Knowledge" or "to
the knowledge of" of the Company or any of its Subsidiaries means the actual
knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇. "Person" or "person" has the meaning given to it in Section
3(a) of the Exchange Act. The term "affiliate" has the meaning given to it in
Rule 12b-2 under the Exchange Act.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third Party Beneficiaries. This Agreement
and all documents and instruments referred to herein (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Section 5.12, are not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder; provided that
the Confidentiality Agreements shall remain in full force and effect until the
Effective Time. Each party hereto agrees that, except for the representations
and warranties contained in this Agreement, none of Parent, Merger Sub or the
Company makes any other representations or warranties, and each hereby disclaims
any other representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement or
the transactions contemplated hereby, notwithstanding the delivery or disclosure
to any of them or their respective representatives of any documentation or other
information with respect to any one or more of the foregoing.
Section 8.6. Governing Law. The laws of the State of Oklahoma shall govern
the interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law. Any suit, action or proceeding by a party hereto with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, may
be brought in any state or federal court of competent jurisdiction in Houston,
Texas, and each party hereto hereby submits to the exclusive jurisdiction of
such courts for the purpose of any such suit, action, proceeding or judgment.
Nothing herein shall in any way be deemed to limit the ability of a party hereto
to serve any such writs, process or summonses in any other manner permitted by
applicable law. Each party hereto hereby irrevocably waives any objections which
it may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any state or
federal court of competent jurisdiction in Houston, Texas, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum. No suit, action or
proceeding against a party hereto with respect to this Agreement may be brought
in any court, domestic or foreign, or before any similar domestic or foreign
authority other than in a court of competent jurisdiction in Houston, Texas, and
each party hereto hereby irrevocably waives any right which it may otherwise
have had to bring such an action in any other court, domestic or foreign, or
before any similar domestic or foreign authority.
45
Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct or indirect Subsidiary of Parent
which is controlled (as such term is defined in Regulation S-X under the
Exchange Act) by Parent without the consent of the Company. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
46
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first written above.
HANOVER COMPRESSOR COMPANY
By:
-----------------------------------
Its:
-----------------------------------
Title:
-----------------------------------
CADDO ACQUISITION CORPORATION
By:
-----------------------------------
Its:
-----------------------------------
Title:
-----------------------------------
OEC COMPRESSION CORPORATION
By:
-----------------------------------
Its:
-----------------------------------
Title:
-----------------------------------
ANNEX I
Key Stockholders
HACL, Ltd.
Energy Investors Joint Venture