EXHIBIT (d)(1)
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AGREEMENT
Among
▇▇▇▇▇▇ AMERICAS AND EUROPE CORPORATION,
ECM ACQUISITION COMPANY
and
ESENJAY EXPLORATION, INC.
Dated as of March 17, 2002
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TABLE OF CONTENTS
Page
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ARTICLE ONE THE OFFER ..........................................................1
Section 1.01. The Offer......................................................1
Section 1.02. Company Actions................................................3
ARTICLE TWO THE MERGER .........................................................5
Section 2.01. Certificate of Merger..........................................5
Section 2.02. The Effective Time.............................................5
Section 2.03. Effects of the Merger..........................................5
Section 2.04. Closing........................................................6
ARTICLE THREE EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES...................................................6
Section 3.01. Effect on Capital Stock........................................6
Section 3.02. Derivative Securities and Derivative Securities Plans..........7
Section 3.03. Exchange of Certificates.......................................7
ARTICLE FOUR REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................8
Section 4.01. Organization; Power............................................8
Section 4.02. Capitalization.................................................8
Section 4.03. Authority; Enforceability......................................9
Section 4.04. Consents and Approvals; No Violations.........................10
Section 4.05. SEC Reports and Financial Statements..........................10
Section 4.06. Absence of Certain Changes or Events..........................11
Section 4.07. No Undisclosed Liabilities....................................12
Section 4.08. Information Supplied..........................................12
Section 4.09. Benefit Plans.................................................13
Section 4.10. Other Compensation Arrangements and Employee Matters..........15
Section 4.11. Litigation....................................................17
Section 4.12. Compliance With Governmental Requirements.....................17
Section 4.13. Reserve Information...........................................17
Section 4.14. Tax Matters...................................................17
Section 4.15. State Takeover Statutes.......................................19
Section 4.16. Brokers; Fees and Expenses....................................19
Section 4.17. Opinion of the Company Financial Advisor......................19
Section 4.18. Intellectual Property.........................................19
Section 4.19. Environmental Matters.........................................20
Section 4.20. Stockholders Agreement........................................21
Section 4.21. Option Agreement..............................................21
ARTICLE FIVE REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB..................21
Section 5.01. Organization; Power...........................................21
Section 5.02. Authority; Enforceability.....................................21
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Section 5.03. Consents and Approvals; No Violations.........................22
Section 5.04. Information Supplied..........................................22
Section 5.05. Interim Operations of Sub.....................................23
Section 5.06. Brokers; Fees and Expenses....................................23
Section 5.07. Financing.....................................................23
ARTICLE SIX COVENANTS .........................................................23
Section 6.01. Covenants of the Company......................................23
Section 6.02. No Solicitation...............................................26
Section 6.03. Other Actions.................................................28
ARTICLE SEVEN ADDITIONAL AGREEMENTS............................................28
Section 7.01. Effecting the Merger; Stockholder Approval....................28
Section 7.02. Access to Information.........................................29
Section 7.03. Reasonable Efforts............................................29
Section 7.04. Benefits......................................................30
Section 7.05. Directors.....................................................30
Section 7.06. Fees and Expenses.............................................30
Section 7.07. Indemnification; Insurance....................................31
Section 7.08. Antitakeover Measures.........................................32
Section 7.09. Certain Litigation............................................32
Section 7.10. Credit Agreement..............................................32
ARTICLE EIGHT CONDITIONS ......................................................32
Section 8.01. Conditions to Each Party's Obligation To Effect the Merger....32
ARTICLE NINE TERMINATION AND AMENDMENT.........................................33
Section 9.01. Termination...................................................33
Section 9.02. Effect of Termination.........................................35
Section 9.03. Amendment.....................................................35
Section 9.04. Extension; Waiver.............................................36
Section 9.05. Independent Director Approval.................................36
ARTICLE TEN MISCELLANEOUS......................................................36
Section 10.01.Nonsurvival of Representations and Warranties.................36
Section 10.02.Notices.......................................................37
Section 10.03.Definitions and Interpretation................................38
Section 10.04.Counterparts..................................................39
Section 10.05.Entire Agreement; Third Party Beneficiaries...................39
Section 10.06.Publicity.....................................................39
Section 10.07.Assignment....................................................39
SECTION 10.08.GOVERNING LAW.................................................40
Section 10.09.Exercise of Rights and Remedies...............................40
Section 10.10.Reformation and Severability..................................40
Section 10.11.Remedies Cumulative...........................................40
Section 10.12.Enforcement...................................................40
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Schedule 2.03 - Effects of the Merger - Officers
Schedule 3.02 - Derivative Securities and Derivative Securities Plans
Schedule 4.01 - List of Subsidiaries
Schedule 7.04 - Benefits
Schedule 7.06 - Fees and Expenses
Exhibit A - Stockholders Agreement
Exhibit B - Option Agreement
Exhibit C - Definitions
Exhibit D - Offer Conditions
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▇▇▇▇▇▇ Americas and Europe Corporation ("Parent"), ECM
Acquisition Company ("Sub"), a wholly owned subsidiary of Parent, and Esenjay
Exploration, Inc. (the "Company"), each of which is a
Delaware corporation,
hereby enter into this Agreement dated as of March 17, 2002.
PRELIMINARY STATEMENT
On the terms and subject to the conditions this Agreement
contains, Parent proposes to acquire the Company in a two-step transaction. The
first step would be a tender offer by Sub for all the outstanding shares of the
Company's common stock, and the second step would be a follow-on merger between
Sub and the Company in which the Company would become the surviving corporation.
The board of directors of the Company has:
o determined that Parent's proposed tender offer and merger are
fair to and in the best interests of the Company's
stockholders;
o declared the agreement of merger this Agreement contains
advisable and resolved to recommend that the holders of the
Company's common stock accept that offer and adopt that
agreement of merger; and
o authorized the Company to enter into this agreement.
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
ARTICLE ONE
THE OFFER
Section 1.01. The Offer. (a) As soon as practicable after the
date of this Agreement, and in any event during the period of seven business
days beginning on the day of the first public announcement that Parent and the
Company have entered into this Agreement, Sub will commence the Offer. The
consideration Sub will pay under the Offer for Shares validly tendered and not
subsequently properly withdrawn will be:
(1) $2.84 per Share, net to the seller in cash and without
interest; or
(2) such greater consideration per Share, if any, as Sub may,
in its sole discretion, offer in the Offer Documents to pay for each of
those Shares.
If any party terminates this Agreement under Article Nine at any time prior to
the acceptance for payment by Sub of Shares under the Offer, Sub may, in its
sole discretion, without the consent of the Company and notwithstanding Section
1.01(b) to the contrary, make any change in the terms and conditions of the
Offer and revise the Offer Documents accordingly.
(b) The obligation of Sub to accept for payment and pay for
Shares validly tendered in the Offer and not subsequently properly withdrawn
will be subject to the Offer Conditions. Sub expressly reserves the right, in
its sole discretion, to waive any of the Offer Conditions or make any change in
the terms and conditions of the Offer, except that, without the prior written
consent of the Company, Sub will not:
(1) waive or make any change in the Minimum Tender Condition;
(2) reduce the maximum number of Shares it will purchase under
the Offer;
(3) decrease the Offer consideration or, other than by adding
consideration, change the form of the Offer consideration; or
(4) make any change in or addition to the Offer Conditions or
otherwise amend the Offer in a manner adverse to the holders of Common
Stock.
For purposes of clause (4) above, none of the following will
constitute a change in the Offer in a manner adverse to the holders of Common
Stock:
(1) any increase in or addition to the Offer consideration; or
(2) any extension of the Offer beyond the then scheduled
Expiration Date:
(A) for any period any applicable Governmental
Requirement or any interpretation thereof or position
thereunder by the SEC may require;
(B) in increments of not more than five business days
each, if Parent has reasonably determined that any Offering
Condition is not capable of being satisfied on or prior to
that scheduled Expiration Date;
(C) for one or more periods, up to a total of 10
business days for all those periods, if, notwithstanding that
all Offer Conditions are satisfied or waived by Sub, to the
extent waivable by Sub, as of that scheduled Expiration Date,
less than 90% of all outstanding Shares have been validly
tendered and not subsequently properly withdrawn; or
(D) for any period or periods, if, prior to the
acceptance for payment by Sub of Shares under the Offer, the
Company has terminated this Agreement under Section
9.01(a)(4).
(c) As soon as practicable on the Offer Commencement Date,
Parent and Sub will file the Schedule TO with the SEC. Thereafter, in each case
as and to the extent any applicable federal securities law so requires, Parent
will:
(1) promptly correct any information in the Offer Documents or
the Schedule 14D-9 which is or has become false or misleading in any
material respect concerning it or its Affiliates or the Company,
provided that, in the case of information concerning the
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Company, the Company shall have furnished the corrected information to
Parent under Section 1.02(b);
(2) cause the Schedule TO, as so corrected or otherwise
changed, to be promptly filed with the SEC; and
(3) take all lawful action necessary to cause the Offer
Documents, as originally filed with the SEC and as thereafter so
corrected or otherwise changed, to be disseminated to the holders of
Shares.
(d) For purposes of Section 7.05, Parent will supply to the
Company in writing and be solely responsible for any information concerning
Parent and Sub and their nominees, directors, officers and Affiliates which
Section 14(f) of the Exchange Act and Exchange Act Rule 14f-1 require be
disclosed to the Company's stockholders.
(e) Parent will provide to Sub the funds necessary to enable
Sub, as soon as practicable after the Offer expires and the satisfaction or
waiver of the Offer Conditions, to accept for payment and pay for all Shares
validly tendered in the Offer and not subsequently properly withdrawn.
(f) In this Section 1.01, the terms "commence" and "public
announcement" have the meanings Exchange Act Rule 14d-2 specifies.
Section 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and the agreement of merger this Agreement contains
and represents and warrants to Parent and Sub that the Company Board, at a
meeting duly called and held, has duly by the vote of directors which the
Charter Documents of the Company require adopted resolutions:
(1) confirming the Company Board's determination that the
Offer and the Merger are fair to and in the best interests of the
Company's stockholders;
(2) approving and consenting to this Agreement and the
transactions it contemplates, including the Offer and the Merger, which
approval and consent are sufficient to render the Section 203
Restrictions inapplicable to the consummation of the Offer or the
Merger;
(3) declaring the advisability of this Agreement, including
the agreement of merger it contains; and
(4) resolving to recommend to the holders of Shares that they
accept the Offer and adopt this Agreement, including the agreement of
merger it contains; provided, however, that prior to the consummation
of the Offer, the Company Board will have the right, under the
circumstances Section 6.02(b) describes, to withdraw that
recommendation and recommend that the holders of Shares reject the
Offer and the agreement of merger this Agreement contains.
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The Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Company Board to which clause (4) above refers. Each
director and executive officer of the Company has advised the Company Board that
he intends to tender all his Shares in the Offer for so long as no party has
terminated this Agreement under Article Nine.
(b) As soon as practicable on or after the Offer Commencement
Date, the Company will:
(1) file the Schedule 14D-9 with the SEC; and
(2) promptly commence mailing the Schedule 14D-9 to its
stockholders.
The Company will, if Parent so requests, include in the Schedule 14D-9 the
information Section 14(f) of the Exchange Act and Exchange Act Rule 14f-1
require be disclosed to the Company's stockholders in connection with the
performance by the Company of its obligations under Section 7.05.
Thereafter, in each case as and to the extent any applicable
federal securities law so requires, the Company will:
(1) promptly correct any information in the Offer Documents or
the Schedule 14D-9 which is or has become false or misleading in any
material respect concerning it or its Affiliates or Parent and its
Affiliates, provided that, in the case of information concerning Parent
and its Affiliates, Parent shall have furnished the corrected
information to the Company under Section 1.01(c);
(2) cause the Schedule 14D-9, as so corrected or otherwise
changed, to be promptly filed with the SEC; and
(3) take all lawful action necessary to cause the Schedule
14D-9, as originally filed with the SEC and as thereafter so corrected
or otherwise changed, to be disseminated to the holders of Shares.
(c) In connection with the Offer, the Company will:
(1) cause its transfer agent to furnish Sub promptly with (A)
mailing labels containing the names and addresses of the record holders
of Shares as of a recent date and of those persons becoming record
holders subsequent to that date and (B) copies of all lists of
stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Common Stock; and
(2) furnish to Sub such information and assistance, including
updated lists of stockholders, security position listings and computer
files, as Parent may reasonably request in communicating the Offer to
the Company's stockholders.
Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to
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consummate the Merger, Parent and Sub and their agents will hold in confidence
the information any such labels, listings and files contain, will use that
information only in connection with the Offer and the Merger and, if this
Agreement is terminated, will, on request, deliver, and will use their best
efforts to cause their agents to deliver, to the Company all copies of and any
extracts or summaries from that information then in their possession or control.
ARTICLE TWO
THE MERGER
Section 2.01. Certificate of Merger. Subject to the terms and
conditions hereof, the Company will cause the Certificate of Merger to be duly
executed on or promptly following the Closing Date and filed with the Applicable
Filing Office.
Section 2.02. The Effective Time. The Effective Time will be
the time and date the Certificate of Merger specifies or, if the Certificate of
Merger does not so specify, the time the Certificate of Merger is duly filed
with the Applicable Filing Office.
Section 2.03. Effects of the Merger. At and as of the
Effective Time:
(1) Sub will merge with and into the Company in accordance
with the DGCL;
(2) Sub will cease to exist as a separate legal entity;
(3) the Company will be the Surviving Corporation and, as
such, will, all with the effect the DGCL provides, (A) possess all the
properties and rights, and be subject to all the restrictions and
duties, of the Company and Sub and (B) be governed by the laws of the
State of
Delaware;
(4) the Company's certificate of incorporation in effect
immediately prior to the Effective Time will be amended in article V
thereof to provide that the authorized Capital Stock of the Company
will consist of 1,000 shares of New Common Stock and in article VII
thereof by deleting in their entirety the second and third paragraphs
thereof and, as so amended, that certificate will become and thereafter
remain, until changed in accordance with applicable law, the
certificate of incorporation of the Surviving Corporation;
(5) the Company's bylaws in effect immediately prior to the
Effective Time will become and thereafter remain, until changed in
accordance with their terms or applicable law, the bylaws of the
Surviving Corporation;
(6) the Company's directors immediately prior to the Effective
Time who were Sub's nominees under Section 7.05 will be the directors
of the Surviving Corporation until the earlier of their resignation or
removal or the election of their successors; and
(7) the officers of the Surviving Corporation will be as
Schedule 2.03 sets forth, and each of those persons will serve in each
office Schedule 2.03 specifies for that
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person until the earlier of that person's resignation or removal or the
appointment or election of that person's successor.
Section 2.04. Closing. The closing of the Merger will take
place at 10:00 a.m., local time, on a date Parent will specify, which will be no
later than the second business day after satisfaction or waiver of the
conditions Article Eight sets forth (the "Closing Date"), at the Applicable
▇▇▇▇▇ ▇▇▇▇▇ Office, unless the parties agree in writing to another date or
place.
ARTICLE THREE
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.01. Effect on Capital Stock. (a) As of the Effective
Time and without any action on the part of any holder of Common Stock or Capital
Stock of Sub:
(1) Capital Stock of Sub. The theretofore issued and
outstanding shares of Capital Stock of Sub will convert into and become
1,000 validly issued, fully paid and nonassessable shares of New Common
Stock;
(2) Treasury Common Stock and Parent-Owned Common Stock. Each
Share issued and outstanding immediately prior to the Effective Time
which any Company Entity or Parent Entity then owns automatically will
be cancelled and retired and cease to exist, and no consideration will
be delivered in exchange therefor;
(3) Conversion of Common Stock. Except as clause (2) above
otherwise provides and subject to the provisions of clause (4) below,
each Share issued and outstanding immediately prior to the Effective
Time automatically will (A) convert into the right, and solely the
right, to receive the Merger Consideration, less any required
withholding taxes, on surrender of the Certificate representing that
Share and (B) be cancelled and retired and cease to exist; and
(4) Dissenting Shares. No Dissenting Share will convert into
the right to receive the Merger Consideration, except that, if under
the Appraisal Statute the right to an appraisal of that Dissenting
Share thereafter ceases prior to that appraisal, that Dissenting Share
will be treated as a Share that had converted as of the Effective Time
into the right to receive the Merger Consideration under clause (3)
above.
(b) Rights of Certificate Holders. Each holder of a
Certificate will, as of the Effective Time and thereafter, cease to have any
rights respecting the shares that Certificate represented immediately prior to
the Effective Time other than:
(1) if those shares are not Dissenting Shares, the right to
receive the Merger Consideration in respect of those shares under
Section 3.01(a)(3); or
(2) if those shares are Dissenting Shares, the rights the
Appraisal Statute and Section 3.01(a)(4) provide.
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(c) Control of Appraisal Process. If the Company receives any
demand for an appraisal of Common Stock under the Appraisal Statute, it will
promptly notify Parent of that demand and will not, without the prior written
consent of Parent, offer, or accept an offer, to settle, or make or otherwise
commit to make any payment in respect of, any such demand. Parent will have the
right to participate in and direct all negotiations and proceedings with respect
to all such demands.
Section 3.02. Derivative Securities and Derivative Securities
Plans. Each party will comply with the provisions of Schedule 3.02, which the
parties incorporate herein by this reference.
Section 3.03. Exchange of Certificates. (a) Prior to the
Effective Time, Parent will designate the Paying Agent and from time to time
will make or cause to be made available to the Paying Agent funds in the amounts
and at the times necessary for the payment of the Merger Consideration on
surrender of Certificates. Any and all interest earned on funds made available
to the Paying Agent hereunder will belong to and be turned over to Parent.
(b) As soon as reasonably practicable after the Effective
Time, the Paying Agent will mail to each holder of record of a Certificate:
(1) a letter of transmittal, which will specify that delivery
will be effected, and risk of loss and title to Certificates will pass,
only on delivery of Certificates to the Paying Agent and will be in a
form and have such other provisions as Parent may specify; and
(2) instructions for use in effecting the surrender of
Certificates in exchange for the Merger Consideration.
On surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as Parent may appoint, together with that letter of
transmittal, duly executed, and such other documents as the Paying Agent
reasonably may require, the holder of that Certificate will be entitled to
receive for each Share that Certificate formerly represented the amount of cash
equal to the Merger Consideration, and that Certificate forthwith will be
cancelled. In the event of a transfer of ownership of Converted Shares which is
not registered in the transfer records of the Company, payment may be made to a
Person other than the Person in whose name the Certificate so surrendered is
registered, if that Certificate is properly endorsed or otherwise in proper form
for transfer and the Person requesting that payment:
(1) pays any transfer or other Taxes the payment to a Person
other than the registered holder of that Certificate necessitates; or
(2) establishes to the satisfaction of the Surviving
Corporation that the Tax has been paid or is not applicable.
No interest will accrue or become payable on the cash payable on the surrender
of any Certificate.
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(c) All cash paid on the surrender of Certificates in
accordance with the terms of this Article Three will be deemed to have been paid
in full satisfaction of all rights pertaining to the Converted Shares those
Certificates theretofore represented. At the Effective Time, the stock transfer
books of the Company will close, and there will be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
Converted Shares that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they will be cancelled and
exchanged as this Article Three provides.
(d) None of Parent, the Surviving Corporation or the Paying
Agent will be liable to any Person in respect of any cash delivered to a public
official under any applicable abandoned property, escheat or similar law.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as the Company Disclosure Letter sets forth, the
Company represents and warrants to Parent and Sub as follows:
Section 4.01. Organization; Power. Each Company Entity is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority under those laws and its Charter Documents to own or lease and
operate its properties and to carry on its business as now being conducted. Each
Company Entity is duly qualified or licensed to do business and in good standing
in each jurisdiction in which property it owns, leases or operates is located or
the nature of the business it conducts makes that qualification or licensing
necessary, except where the failures of all Company Entities to be so duly
qualified or licensed and in good standing, individually or in the aggregate,
would not have a Company Material Adverse Effect or prevent or materially delay
the consummation of the Offer or the Merger.
The Company has made available to Parent complete and correct
copies of the Charter Documents of the Company and each of the other Company
Entities, in each case as amended to the date of this Agreement. The respective
Charter Documents of the Company Entities, other than the Company, do not
contain any provision limiting or otherwise restricting the ability of the
Company to control those Entities.
Schedule 4.01 contains an accurate list of all the
Subsidiaries of the Company. The Company owns all the outstanding shares of
Capital Stock of each other Company Entity, directly or indirectly through one
or more of the other Company Entities, free and clear of all liens, and all
those shares are duly authorized, validly issued, fully paid and nonassessable.
Section 4.02. Capitalization. As of the date of this
Agreement, the authorized Capital Stock of the Company is comprised solely of:
(1) 40,000,000 shares of Common Stock of which, as of March 1,
2002, 19,121,568 shares were issued and outstanding and no shares were
treasury shares; and
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(2) 5,000,000 shares of Preferred Stock, of which, as of March
1, 2002, no shares were issued and outstanding.
As of March 1, 2002:
(1) 2,653,836 shares of Common Stock were reserved for
issuance on the exercise of Options then issued and outstanding under
the Option Plan; and
(2) 566,250 shares of Common Stock were reserved for issuance
on the exercise of Warrants then issued and outstanding.
Since March 1, 2002, no Options or Warrants have been granted
and no shares of Common Stock have been issued except for shares of Common Stock
issued:
(1) on the exercise of Options and Warrants outstanding on
that date;
(2) as employer's contributions under the Savings Plan as the
Company Disclosure Letter sets forth;
(3) on the exercise of the Options to be granted as the
Company Disclosure Letter sets forth; and
(4) as payment under the Current Bonus Plan as the Company
Disclosure Letter sets forth.
All outstanding shares of Common Stock are, and all shares of
Common Stock the Company may issue under the Option Plan or on the exercise of
Warrants will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and free of any
preemptive rights in respect thereto.
As of the date of this Agreement:
(1) no Derivative Securities of any Company Entity are
outstanding other than the Options and Warrants this Section 4.02
describes above;
(2) no Company Entity has outstanding any binding obligation
to repurchase, redeem or otherwise acquire for value any Capital Stock
of any Company Entity; and
(3) the Company has delivered to Parent an accurate, complete
schedule that sets forth, for each outstanding Option and Warrant, the
exercise price thereof, the number of shares of Common Stock issuable
on that exercise, the extent to which that Option or Warrant presently
is exercisable and the expiration date and the holder thereof.
Section 4.03. Authority; Enforceability. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions this Agreement contemplates. The execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions this Agreement contemplates have been duly authorized by all
necessary corporate action on the part of the
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Company, other than, with respect to the Merger, the approval of the agreement
of merger this Agreement contains by the holders of the outstanding Common
Stock.
The Company has duly executed and delivered this Agreement,
and this Agreement, assuming it constitutes valid and binding obligations of
Parent and Sub, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as that
enforceability may be:
(1) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally; and
(2) subject to general principles of equity, regardless of
whether that enforceability is considered in a proceeding in equity or
at law.
Section 4.04. Consents and Approvals; No Violations. Neither
the execution, delivery or performance of this Agreement by the Company nor the
consummation of the transactions this Agreement contemplates will:
(1) conflict with or result in any breach of any provision of
the Charter Documents of any Company Entity;
(2) require any Governmental Approval, except (A) as the
Exchange Act, the DGCL and state securities or blue sky laws may
require and (B) where failures to obtain or effect Governmental
Approvals would not have a Company Material Adverse Effect;
(3) result in a violation or breach of, or constitute, with or
without due notice or lapse of time or both, a default, or give rise to
any right of termination, amendment, cancellation or acceleration,
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract, agreement, option,
warrant or other instrument or obligation to which any Company Entity
is a party or by which any of its properties or assets may be bound; or
(4) violate any Governmental Requirement applicable to any
Company Entity or any of its properties or assets;
except, in the case of clauses (3) and (4), for violations, breaches or defaults
that would not have, individually or in the aggregate, a Company Material
Adverse Effect or prevent or materially delay the consummation of the Offer or
the Merger.
Section 4.05. SEC Reports and Financial Statements. Each
Company Entity has timely filed with the SEC, and has made available to Parent
true and complete copies of, all SEC Documents the federal securities laws have
required it to so file. Each of those SEC Documents, as of its date:
(1) complied in all material respects with the requirements of
the Exchange Act or the Securities Act, as applicable; and
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(2) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, in
light, in the case only of SEC Documents filed under the Exchange Act,
of the circumstances under which they were made.
The consolidated financial statements of the Company included in any SEC
Document, in fact or by incorporation by reference:
(1) complied as to form in all material respects with the
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto;
(2) were prepared in accordance with GAAP, except, in the case
of unaudited quarterly statements on Exchange Act Form 10-Q, as that
form otherwise permitted, applied on a consistent basis during the
periods presented, except as the notes thereto indicate otherwise; and
(3) presented fairly in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as
of the dates of the balance sheets those financial statements include
and the consolidated results of their operations and their consolidated
cash flows for the periods ended on those dates, subject, in the case
of unaudited quarterly statements, to normal year-end audit
adjustments.
The audited consolidated financial statements of the Company
for the year ended December 31, 2001 will not differ in any adverse respects,
individually or in the aggregate, Material to the Company Entities from the
unaudited consolidated financial statements of the Company for the year ended
December 31, 2001, a true and correct copy of which is attached to the Company
Disclosure Letter.
The Company is, and the Company Entities considered as a whole
are not "insolvent," as the federal bankruptcy code uses the quoted term.
Section 4.06. Absence of Certain Changes or Events. Except as
the Filed SEC Documents disclose, since the Current Audited Balance Sheet Date,
each Company Entity has conducted its business only in the ordinary course, and
there has not occurred:
(1) any Company Material Adverse Effect;
(2) any declaration, setting aside or payment of any dividend
or other distribution with respect to the Capital Stock of any Company
Entity or any redemption, purchase or other acquisition of any of that
Capital Stock;
(3) any split, combination or reclassification of any Capital
Stock of any Company Entity or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of that Capital Stock;
(4) any granting, or any commitment or promise to grant, by
any Company Entity to any officer of any Company Entity of (A) any
increase in compensation, except in the ordinary course of business,
including in connection with promotions, consistent
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with prior practice or as employment agreements in effect as of the
Current Audited Balance Sheet Date required or (B) any increase in
severance or termination pay, except as part of a standard employment
package to any person promoted or hired, but not including the five
most highly compensated executive officers of the Company, or as
employment, severance or termination agreements in effect as of the
Current Audited Balance Sheet Date required;
(5) except for termination arrangements in the ordinary course
of business consistent with past practice with employees other than any
executive officer of the Company, any entry by any Company Entity into
any employment, severance or termination agreement with any officer of
any Company Entity;
(6) any increase in, or any commitment or promise to increase,
benefits payable or available under any pre-existing Benefit Plan,
except in accordance with the pre-existing terms of that Benefit Plan,
any establishment of, or any commitment or promise to establish, any
new Benefit Plan, any amendment of any existing stock options, stock
appreciation rights, performance awards or restricted stock awards or,
except in accordance with and under pre-existing compensation policies,
any grant, or any commitment or promise to grant, any stock options,
stock appreciation rights, performance awards, or restricted stock
awards;
(7) any damage to or any destruction or loss of physical
properties any Company Entity owns or uses, whether or not covered by
insurance, that in the aggregate have had or reasonably could be
expected to have a Company Material Adverse Effect;
(8) any reevaluations by the Company Entities of any of their
assets which, in accordance with GAAP, the Company will reflect in its
consolidated financial statements, including any impairment of assets,
and which in the aggregate are Material to them; or
(9) any material change in accounting methods, principles or
practices by the Company.
Section 4.07. No Undisclosed Liabilities. Except as and to the
extent the Current Audited Financial Statements, or the financial statements any
subsequently Filed SEC Document contains, include an accrual or reserve therefor
or otherwise disclose, no Company Entity has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that GAAP would
require to be reflected on a consolidated balance sheet of the Company and its
consolidated Subsidiaries, including the notes thereto, except for liabilities
or obligations they incurred in the ordinary course of business since the date
of the most recently Filed SEC Document that have not had and will not have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 4.08. Information Supplied. No information the Company
has supplied or will supply specifically for inclusion or incorporation by
reference in the Offer Documents or the Schedule 14D-9, at the respective times
those documents are filed with the SEC or first published, sent or given to the
Company's stockholders, contained or will contain any untrue statement of a
material fact or omitted or will omit to state any material fact required to be
stated
-12-
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were or are made, not misleading, except that the
Company makes no representation or warranty with respect to statements made or
incorporated by reference in the Schedule 14D-9 which constitute information
Parent or Sub has supplied or may hereafter supply in writing specifically for
inclusion or incorporation by reference in the Schedule 14D-9. The Schedule
14D-9 will comply as to form in all material respects with the applicable
requirements of the Exchange Act.
Section 4.09. Benefit Plans. (a) The Company has delivered to
Parent prior to the date of this Agreement true and correct copies of all
Benefit Plans now existing or which existed at any time within the six-year
period ending on the date of this Agreement. Each such plan has been
administered in accordance with its terms. Each Company Entity and all the
Benefit Plans are in compliance with the applicable provisions of ERISA, the
Code and all other applicable Governmental Requirements.
(b) No Company Entity has, or had within the six-year period
ending on the date of this Agreement, any ERISA Affiliates other than the other
Company Entities.
(c) All Benefit Plans intended to qualify under Section 401(a)
of the Code (the "Qualified Plans") are so qualified, and the IRS has determined
them to be so qualified or application for determination letters have been
timely submitted to the IRS. The Company will promptly provide Parent after the
date of this Agreement with true and complete copies of the current plan
determination letters, most recent actuarial valuation reports, if any, most
recent Form 5500, or, as applicable, Form 5500-C/R, filed with respect to each
Qualified Plan and the most recent trustee or custodian report. To the extent
that any Qualified Plans have not been amended to comply with applicable
Governmental Requirements, the remedial amendment period permitting retroactive
amendment of those Qualified Plans has not expired and will not expire within
120 days after the consummation of the Offer. All reports and other documents
required to be filed with any Governmental Authority or distributed to plan
participants or beneficiaries, including annual reports, summary annual reports,
actuarial reports, PBGC-1 Forms, audits or returns, have been timely filed or
distributed.
(d) No Benefit Plan or Company Entity has engaged in any
Prohibited Transaction. No Benefit Plan has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(a) of
ERISA, and no circumstances exist as a result of which any Company Entity could
have any direct or indirect liability whatsoever, including being subject to any
statutory lien to secure payment of any such liability, to the PBGC under Title
IV of ERISA or to the IRS for any excise tax or penalty with respect to any
Benefit Plan now or hereafter maintained or contributed to by any Company
Entity. Further:
(1) no termination, partial termination or discontinuance of
contributions to any Qualified Plan has occurred without a
determination by the IRS that such action does not adversely affect the
tax-qualified status of that plan;
(2) no Termination Event has occurred;
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(3) no Reportable Event has occurred with respect to any
Benefit Plan which was not properly reported;
(4) the valuation of assets of any Qualified Plan, as of the
Effective Time, will equal or exceed the actuarial present value of all
"benefit liabilities" (within the meaning of Section 4001(a)(16) of
ERISA) under that plan in accordance with the assumptions the
regulations of the PBGC governing the funding of terminated defined
benefit plans contain;
(5) with respect to Benefit Plans qualifying as "group health
plans" under Section 4980B of the Code or Section 607)(1) or 609 of
ERISA, relating to the benefit continuation rights "COBRA" or qualified
medical child support orders impose, each Company Entity has complied
in all material respects with all reporting, disclosure, notice,
election and other benefit continuation and coverage requirements so
imposed as and when applicable to those plans, and no Company Entity
has incurred, or will incur, any direct or indirect liability or is, or
will be, subject to any loss, assessment, excise tax penalty, loss of
federal income tax deduction or other sanction, arising on account of
or in respect of any direct or indirect failure by any Company Entity,
at any time prior to the consummation of the Offer to comply with any
such benefit continuation of coverage Governmental Requirement, which
is capable of being assessed or asserted before or after that
consummation directly or indirectly against any Company Entity, Parent
or any Affiliate of Parent; and
(6) no Company Entity has incurred liability under Section
4062 of ERISA.
(e) No Company Entity is, or at any time within the six-year
period ended on the date of this Agreement was, obligated to contribute to a
Multiemployer Plan.
(f) No act, omission or transaction has occurred which would
result in the imposition on any Company Entity with respect to any Benefit Plan
of:
(1) any breach of fiduciary duty liability damages under
Section 409 of ERISA;
(2) a civil penalty under Section 502(c), (i) or (l) of
ERISA; or
(3) any excise tax under the Code.
(g) Any Benefit Plan funded trust intended to be exempt under
Section 501(c)(9) of the Code:
(1) satisfies the requirements of that Section;
(2) has received a favorable determination letter from the IRS
regarding that exempt status; and
(3) has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way that would
adversely affect that exempt status.
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(h) Each Benefit Plan that is a Welfare Plan may be amended or
terminated at any time after the consummation of the Offer without liability to
any Company Entity.
Section 4.10. Other Compensation Arrangements and Employee
Matters. (a) Except as the Filed SEC Documents disclose, and except for the
Severance Plan, the TSIP and the Current Bonus Plan, as of the date of this
Agreement, no Company Entity is a party to any written or oral:
(1) consulting agreement not terminable on not more than 60
calendar days' prior notice or union or collective bargaining
agreement;
(2) agreement with any executive officer or other key employee
of any Company Entity (A) the benefits of which are contingent, or the
terms of which are materially affected or altered, on the occurrence of
a transaction involving the Company of the nature this Agreement
contemplates or (B) providing any term of employment or compensation
guarantee; or
(3) agreement or plan, including any stock option plan (other
than the Option Plan), stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be
increased or affected, or the vesting of the benefits of which will be
accelerated or affected, by the occurrence of any of the transactions
this Agreement contemplates or the value of any of the benefits of
which will be calculated on the basis of any of the transactions this
Agreement contemplates.
(b) Each Company Entity has been and is in compliance with the
IRCA and all applicable Governmental Requirements respecting employment and
employment practices, terms and conditions of employment, wages and hours and
workplace health and safety at well sites and in other work areas.
(c) No Company Entity has any obligation or made any
commitment or promise to provide medical, dental or life insurance benefits to
or on behalf of any of its employees who may retire or any of its former
employees who have retired, except as the continuation of coverage provisions of
Section 4980B of the Code and the applicable parallel provisions of ERISA may
require.
(d) No Company Entity is a party to or bound by any collective
bargaining or other labor union agreement. To the knowledge of the Company, no
labor union organizing activities involving any Company Entity are ongoing.
(e) The Company has delivered to Parent prior to the date of
this Agreement an accurate, complete schedule that sets forth as of March 1,
2002, on the basis of the assumptions that schedule contains:
(1) the name of each "Participant" in the Severance Plan; and
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(2) for each named "Participant:"
(A) the amount of the "Incentive Benefit" to which that
individual may be come entitled; and
(B) the amount of the "Severance Benefit" to which that
individual may become entitled.
The consummation of neither the Offer nor the Merger will constitute a
"succession" for purposes of Section 8.1 of the Severance Plan, and the failure
of the Company to obtain from Parent or any of its Affiliates an agreement to
assume and agree to perform the obligations of the Company under the Severance
Plan will not constitute a breach of that plan for any purpose of that plan. The
Severance Plan will permit its amendment in accordance with Schedule 7.04
without the consent of any Participant.
Quoted terms this Section 4.10(e) uses have the meanings the Severance Plan
specifies.
(f) The Company has delivered to Parent prior to the date of
this Agreement an accurate, complete schedule that sets forth as of March 1,
2002:
(1) the names of all participants in the TSIP and, for each
such participant, the estimated liability of the Company thereto under
the TSIP;
(2) the names of all participants in the Current Bonus Plan
and, for each such participant, the estimated liability of the Company
thereto for all amounts payable thereunder with respect to calendar
years 2000 and 2001; and
(3) the names of all "Grantees" of all then granted and
outstanding "Incentive Awards" under the LIP and, for each such award,
the "cash value" thereof for purposes of Section 5.7(b) of the LIP on
the assumption that the highest price that will be paid under the Offer
will be the dollar amount per Share Section 1.01(a) sets forth.
Quoted terms this Section 4.10(f) uses have the meanings the LIP specifies.
(g) Effecting the disposition of outstanding Options and
Warrants in accordance with Schedule 3.02 will not require the consent of any
holder of any Option or Warrant which has not been duly obtained prior to the
date of this Agreement and furnished to Parent.
(h) As of March 1, 2002, each then current employee of the
Company had executed and delivered to the Company a confidentiality agreement in
one of the forms the Company delivered to Parent prior to the date of this
Agreement. Each of those agreements is a legal, valid and binding obligation of
the employee party thereto.
(i) The Company has delivered to Parent prior to the date of
this Agreement an accurate, correct list of the names, years of service and
current rates of salary and wages for all current employees and consultants who
are employed or otherwise compensated by a
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Company Entity. No person any Company Entity has classified as an independent
contractor properly should be classified as a common-law employee of that
Company Entity.
(j) The Company Entities have no contract, commitment,
obligation or intention, whether legally binding or not, to establish or adopt
any new or additional plans or other arrangements that would constitute Benefit
Plans if adopted, or to increase the benefits under any existing Benefit Plan.
Section 4.11. Litigation. Except as the Filed SEC Documents
disclose, and except for suits filed in connection with the Offer, no actions,
claims, investigations, proceedings or suits are pending or, to the knowledge of
the Company, threatened against Company Entities by or before any Governmental
Authority the outcomes of which, individually or in the aggregate, reasonably
could be expected to have a Company Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger. Except as the
Filed SEC Documents disclose, no Company Entity is subject to any outstanding
orders, writs, injunctions, decrees or binding awards that reasonably could be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.12. Compliance With Governmental Requirements.
Except as the Filed SEC Documents disclose, the Company Entities:
(1) hold all Governmental Approvals necessary for the lawful
conduct of their businesses; and
(2) are in compliance with the terms of their Governmental
Approvals and all applicable Governmental Requirements;
except for such failures to hold Governmental Approvals and to comply with
Governmental Approvals and Governmental Requirements as would not, individually
or in the aggregate, have a Company Material Adverse Effect.
Section 4.13. Reserve Information. The Company has delivered
to Parent prior to the date of this Agreement the definitive report of ▇▇▇▇▇
▇▇▇▇▇ Company, independent petroleum engineers, on the Company's proved reserves
as of December 31, 2001 together with the written acknowledgment by ▇▇▇▇▇ ▇▇▇▇▇
Company that the report so delivered is as represented and warranted hereby. The
underlying factual information provided to ▇▇▇▇▇ ▇▇▇▇▇ Company, to the extent
that ▇▇▇▇▇ ▇▇▇▇▇ Company relied on it in the preparation of that report on the
Company's proved reserves as of December 31, 2001, was, at the time of delivery,
true and correct in all material respects, except for such errors as,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect.
Section 4.14. Tax Matters. (a) Each Company Entity has filed
all federal income tax returns and all other material Tax returns and reports
any Governmental Requirement has required it to file. All those returns are
complete and correct. Each Company Entity has paid, or the Company has paid on
its behalf, all Taxes those returns showed as due and all Taxes for which no
return was required to be filed.
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(b) No Tax return of any Company Entity is under audit or
examination by any taxing authority, and no Company Entity has received any
written or oral notice of any such audit or examination. With respect to Taxes
paid or payable by any Company Entity, a Company Entity has paid each deficiency
resulting from any audit or examination relating thereto, except for
deficiencies a Company Entity is contesting in good faith, and no relevant
taxing authority has raised in writing:
(1) any issues relating thereto in the course of any presently
pending audit or examination; or
(2) any material issues relating thereto in any completed
audit or examination which reasonably could be expected to recur in a
later taxable period.
The consolidated federal income tax returns of the Company have never been
examined by the IRS and all years are closed through 1997.
(c) No liens for Taxes exist with respect to any assets or
properties of any Company Entity, except for statutory liens for Taxes not yet
due.
(d) No Company Entity is a party to or is bound by any Tax
sharing agreement, Tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes, including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any taxing authority.
(e) Any disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amount paid or payable
by any Company Entity under any contract, Option Plan, Benefit Plan, program,
arrangement or understanding currently in effect.
(f) Any amount or other entitlement that could be received,
whether in cash or property or the vesting of property, as a result of any of
the transactions this Agreement contemplates by any employee, officer or
director of the Company or any of its Affiliates who is a "disqualified
individual," as proposed Treasury Regulation Section 1.280G-1 defines that term,
under any employment, severance or termination agreement, other compensation
arrangement or Benefit Plan currently in effect would not be characterized as an
"excess parachute payment," as Section 280G(b)(1) of the Code defines that term.
(g) Each Company Entity has timely filed, or caused to be
timely filed on its behalf, all Royalty Returns any contract or Governmental
Requirement has required it to file, and all those Royalty Returns are true,
complete and accurate in all material respects as provided for under any
contract or by any applicable Governmental Requirement. All Royalties those
Royalty Returns showed to be due, or otherwise owing, as well as all Royalties
for which no Royalty Return was required to be filed, have been timely paid. The
Company Disclosure Letter contains lists of:
(1) all jurisdictions in which any Company Entity currently
files Royalty Returns;
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(2) all planned audits by the relevant authorities; and
(3) all disputed Royalty matters and an estimated dollar
amount attributable to each of those matters;
and each of those lists is true and complete in all material respects. No
Governmental Authority or other Person has asserted, assessed, proposed or
threatened any deficiencies with respect to any Royalty against the Company
Entities which, individually or in the aggregate, are Material to them.
(h) For purposes of Article Nine, no representations Section
4.09 and this Section 4.14 contain (each, a "Relevant Representation") will be
deemed to be untrue unless all untruths the Relevant Representations contain
cumulatively reasonably could be expected to have a Company Material Adverse
Effect.
Section 4.15. State Takeover Statutes. The Company Board has
approved the Offer, the Merger and this Agreement, and that approval is
irrevocable and sufficient to render the Section 203 Restrictions inapplicable
to the Offer, the Merger and this Agreement and the transactions this Agreement
contemplates. To the Company's knowledge, no other state takeover statute or
similar Governmental Requirement applies or purports to apply to the Offer, the
Merger, this Agreement or any of the transactions this Agreement contemplates.
Section 4.16. Brokers; Fees and Expenses. No Company Entity
has, directly or indirectly, agreed to pay or incurred any obligation to pay any
broker, investment banker, financial advisor or other Person, other than the
Company Financial Advisor and ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., the fees and expenses of
which the Company will pay, any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions this Agreement
contemplates. The Company Disclosure Letter correctly sets forth the estimated
fees and expenses the Company has incurred and expects to incur in connection
with this Agreement and the transactions it contemplates, including the fees of
the Company's legal counsel, counsel for the Company Financial Advisor and
▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. The Company has provided Parent true and complete copies
of all executory agreements, all of which are in writing, between the Company
Financial Advisor or ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. and the Company.
Section 4.17. Opinion of the Company Financial Advisor. The
Company has received the written opinion of the Company Financial Advisor to the
effect that, as of the date of that opinion, the consideration the holders of
Shares will receive under the Offer and in the Merger is fair to those holders
from a financial point of view.
Section 4.18. Intellectual Property. Except to the extent that
the inaccuracies in any of the following, or the circumstances giving rise to
those inaccuracies, individually or in the aggregate, would not have a Company
Material Adverse Effect:
(1) each Company Entity owns, or is licensed or otherwise has
the right to use, in each case, clear of any liens or encumbrances of
any kind, all Proprietary Rights used in or necessary for the conduct
of its business as currently conducted;
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(2) no claims are pending or, to the knowledge of the Company,
threatened that any Company Entity is infringing on or otherwise
violating the rights of any Person with regard to any Proprietary
Rights any Company Entity owns or uses under a license;
(3) to the knowledge of the Company, no Person is infringing
on or otherwise violating any right of any Company Entity with respect
to any Proprietary Rights any Company Entity owns or uses under a
license;
(4) none of the former or current members of management or key
personnel of any Company Entity, including all former and current
employees, agents, consultants and contractors who have contributed to
or participated in the conception and development of the Proprietary
Rights of any Company Entity, has asserted or threatened in writing any
claim against any Company Entity in connection with the involvement of
those Persons in the conception and development of the Proprietary
Rights of any Company Entity;
(5) the execution and delivery of this Agreement, compliance
with its terms and consummation of the transactions it contemplates do
not and will not conflict with or result in any violation or default,
with or without notice or lapse of time or both, or give rise to any
right or license or any creation or extension of any lien or
encumbrance relating to the Proprietary Rights of any Company Entity or
any right of termination, cancellation or acceleration or any loss of
any Proprietary Rights of any Company Entity or benefits related
thereto which, in the aggregate, are Material to the Company Entities,
and no consent of any Person will be required for the use of any of
these Proprietary Rights by Parent or any Affiliate or Parent following
the consummation of the Offer; and
(6) each Company Entity has taken reasonable and necessary
steps to protect its Proprietary Rights, and, to the knowledge of the
Company, none of the Proprietary Rights of the Company Entities has
been lost or are in jeopardy of being lost because of any omission to
act by any Company Entity.
Section 4.19. Environmental Matters. Except as the Filed SEC
Documents disclose or as would not, individually or in the aggregate, have a
Company Material Adverse Effect:
(1) each Company Entity has all Governmental Approvals all
applicable Environmental Laws require it to have and is in compliance
with the requirements of those Environmental Laws and Governmental
Approvals;
(2) to the knowledge of the Company, there are no pending or
threatened claims against or governmental investigations involving any
Company Entity under any Environmental Laws; and
(3) to the knowledge of the Company, there are no
circumstances with respect to any current or former property or
operations of any Company Entity or any other Person for which any
Company Entity has assumed liability that would form the basis of any
claims of material violations of Environmental Laws against one or more
of the Company Entities, and applicable Governmental Requirements have
not required the
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Company to disclose facts relating to environmental proceedings or
matters in the Filed SEC Documents which the Company has not so
disclosed.
The representations and warranties in Section 7.17 of the Credit Agreement are
true and correct. The Company has delivered to Parent prior to the date of this
Agreement an accurate, complete copy of the "Disclosure Schedule," as the Credit
Agreement defines the quoted term.
Section 4.20. Stockholders Agreement. Each Stockholder has
duly executed and delivered to Parent the Stockholders Agreement, and the
Stockholders Agreement constitutes a valid and binding obligation of that
Stockholder, enforceable against that Stockholder in accordance with its terms,
except as that enforceability may be:
(1) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally; and
(2) subject to general principles of equity, regardless of
whether that enforceability is considered in a proceeding in equity or
at law.
Section 4.21. Option Agreement. Each Option Grantor has duly
executed and delivered to Parent the Option Agreement, and the Option Agreement
constitutes a valid and binding obligation of that Option Grantor, enforceable
against that Option Grantor in accordance with its terms, except as that
enforceability may be:
(1) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally; and
(2) subject to general principles of equity, regardless of
whether that enforceability is considered in a proceeding in equity or
at law.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 5.01. Organization; Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of
Delaware and has all requisite corporate power and authority
under those laws and its Charter Documents to:
(1) own or lease its properties and carry on its business as
now conducted; and
(2) execute, deliver and perform its obligations under this
Agreement and consummate the transactions this Agreement contemplates
it will consummate.
Section 5.02. Authority; Enforceability. The execution,
delivery and performance of this Agreement by each of Parent and Sub and the
consummation of the transactions this Agreement contemplates have been duly
authorized by all necessary corporate
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action on its part which its Charter Documents and the applicable Governmental
Requirements of the State of
Delaware require. No vote of Parent's stockholders
is required to approve this Agreement or the other transactions this Agreement
contemplates.
Each of Parent and Sub has duly executed and delivered this
Agreement, and this Agreement, assuming it constitutes a valid and binding
obligation of the Company, constitutes its valid and binding obligation
enforceable against it in accordance with its terms, except as that
enforceability may be:
(1) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally; and
(2) subject to general principles of equity, regardless of
whether that enforceability is considered in a proceeding in equity or
at law.
Section 5.03. Consents and Approvals; No Violations. (a) The
execution, delivery and performance of this Agreement by each Parent Entity, the
consummation of the Offer and the Merger and the effectuation by either Parent
Entity of any other transaction this Agreement contemplates it will effect do
not and will not:
(1) violate or breach any Charter Document of Parent or Sub;
(2) violate any Governmental Requirement applicable to Parent
or Sub; or
(3) except as would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay the consummation
of the Offer or the Merger, violate, breach or constitute, with or
without due notice or lapse of time or both, a default under, or result
in, or afford another Person the right to cause, any cancellation or
termination of, any amendment or other change in the terms of or any
acceleration of the obligations of either Parent or Sub or its
obligations under any agreement Material to Parent.
(b) Except as the Exchange Act, the DGCL and state securities
or blue sky laws do or may require, no Governmental Requirement requires either
of Parent or Sub to obtain any Governmental Approval, or make any filings,
including any report or notice, with any Governmental Authority, in connection
with its execution, delivery or performance of this Agreement, the enforcement
against it of its obligations hereunder, the consummation of the Offer or the
Merger or the effectuation of any other transaction this Agreement contemplates
it will effect.
Section 5.04. Information Supplied. The information Parent or
Sub has supplied or may hereafter supply specifically for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-9 or the
information statement, if any, respecting the Merger will, at the respective
times they are filed with the SEC or first published, sent or given to the
Company's stockholders, not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, except that Parent and Sub make no representation
respecting the information the Company has supplied or may hereafter
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supply in writing specifically for inclusion or incorporation by reference
therein. The Offer Documents comply as to form in all material respects with the
applicable requirements of Exchange Act.
Section 5.05. Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions this Agreement contemplates, has
engaged in no other business activities and has conducted its operations only as
this Agreement contemplates.
Section 5.06. Brokers; Fees and Expenses. Neither Parent nor
Sub has, directly or indirectly, agreed to pay or incurred any obligation to pay
any broker, investment banker, financial advisor or other Person, other ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., the fees and expenses of which Parent or Sub will pay, any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions this Agreement contemplates.
Section 5.07. Financing. Parent has the funds available to
purchase all the outstanding Shares on a fully diluted basis in the Offer and
pay the Merger Consideration in the Merger and all fees and expenses this
Agreement contemplates it or Sub will pay.
ARTICLE SIX
COVENANTS
Section 6.01. Covenants of the Company. (a) Until such time as
Parent's nominees constitute a majority of the whole Company Board, the Company
will, and will cause each other Company Entity to, except as this Agreement
otherwise expressly contemplates or permits or as Parent otherwise has
previously consented in writing:
(1) carry on its businesses in substantially the same manner
as it has heretofore and not introduce any new methods of management,
operation or accounting that in the aggregate are Material to the
business of the Company Entities;
(2) maintain its properties and facilities, including those it
holds under leases, in as good working order and condition as at
present, ordinary wear and tear excepted;
(3) perform in all material respects all its obligations under
agreements relating to or affecting its properties, rights and other
assets, including the Credit Agreement;
(4) keep in full force and effect without interruption all its
present insurance policies or other comparable insurance coverage;
(5) use reasonable commercial efforts to (A) maintain and
preserve its business organization intact, (B) retain its present
employees and (C) maintain its relationships with suppliers, customers
and others having business relations with it;
(6) comply with all applicable Governmental Requirements; and
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(7) maintain the instruments and agreements governing its
outstanding indebtedness and leases on their present terms and not
enter into (i) new or amended indebtedness or (ii) new or amended lease
instruments or agreements involving amounts over $25,000 in any single
case or $100,000 in the aggregate.
(b) Until such time as Parent's nominees constitute a majority
of the whole Company Board, the Company will not, and will not permit any other
Company Entity to, except as this Agreement otherwise expressly contemplates or
permits or as Parent otherwise has previously consented in writing:
(1) (A) declare or pay any dividends on or make other
distributions in respect of any of its Capital Stock, other than
dividends or distributions a wholly owned Subsidiary of the Company may
declare, pay or make to the Company or one of its other wholly owned
Subsidiaries, (B) split, combine or reclassify any of its Capital Stock
or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its Capital
Stock or (C) repurchase, redeem or otherwise acquire any shares of
Capital Stock of any Company Entity;
(2) issue, deliver or sell, or authorize, or propose the
issuance, delivery or sale of, any shares of its Capital Stock of any
class, or any Derivative Securities or phantom securities, except that:
(A) the Company may issue:
(i) shares of Common Stock on the exercise
of Options and Warrants awarded and outstanding on
the date of this Agreement in accordance with the
present terms of those Options or Warrants and the
applicable Option Plan or Warrant agreement,
(ii) shares of Common Stock under the
Current Bonus Plan, as the Company Disclosure Letter
sets forth,
(iii) shares of Common Stock as employer's
contributions under the Savings Plan, as the Company
Disclosure Letter sets forth and
(iv) Options awarded but not issued under
the LIP, as the Company Disclosure Letter sets forth,
provided those Options are in form and substance
reasonably satisfactory to Parent; and
(B) any wholly owned Subsidiary of the Company may
issue shares of its Capital Stock to the Company or one of its
other wholly owned Subsidiaries;
(3) amend or propose to amend its Charter Documents;
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(4) make, or enter into a contract or other commitment to
make, directly or indirectly:
(A) any investments, other than Permitted
Investments, in the Capital Stock or indebtedness of any
Person; or
(B) except in connection with transactions GAAP
characterizes as hedging transactions, as distinct from
trading transactions, that the Credit Agreement requires,
issue or acquire any commodity derivatives;
(5) negotiate for the acquisition of any business or the
start-up of any new business or, merge, consolidate or otherwise effect
a business combination with, or agree to merge, consolidate or
otherwise effect a business combination with, any other Entity;
(6) other than sales of production and products in the
ordinary course of business and consistent with prior practice and the
requirements of the Credit Agreement, directly or indirectly sell,
lease, license, encumber or otherwise dispose of, or enter into a
contract to sell, lease, license, encumber or otherwise dispose of, any
of its assets;
(7) incur any new or additional indebtedness for borrowed
money (which, for purposes of this Section 6.01, will include any
production payment, whether volumetric or denominated in a currency, or
similar royalty, overriding royalty net profits or other interest in
any oil or gas property) or guarantee any such indebtedness, issue or
sell any debt securities or warrants or rights to acquire any debt
securities of the Company or any other Company Entity or guarantee any
debt securities of others;
(8) make any Tax elections that, individually or in the
aggregate, would have a Company Material Adverse Effect or settle or
compromise any income tax liabilities of the Company or any other
Company Entity that, individually or in the aggregate, would have a
Company Material Adverse Effect;
(9) pay, discharge, settle or satisfy any claims, liabilities
or obligations, absolute, accrued, asserted or unasserted, contingent
or otherwise, other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities the unaudited consolidated
financial statements of the Company for the year ended December 31,
2001 recognize or disclose or incurred since December 31, 2001, in the
ordinary course of business consistent with past practice, or waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any other
Company Entity is a party;
(10) fail to comply with any covenant Article VIII of the
Credit Agreement contains;
(11) except in the ordinary course of business, modify, amend
or terminate any contract or agreement Material to the Company Entities
to which any Company Entity is a party or of which it is a beneficiary
or by which it is bound or waive, release or assign any rights or
claims Material to the Company Entities;
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(12) permit the call of the 2002 annual meeting, or any
special meeting, of its stockholders; or
(13) amend or otherwise change any agreement it or any other
Company Entity has with the Company Financial Advisor.
In the case of any requested deviation by the Company from the provisions of
clause (7) above, Parent will not unreasonably withhold its consent.
Section 6.02. No Solicitation. (a) The Company:
(1) will, and will cause all its Representatives to, cease
immediately any discussions or negotiations with any parties which may
be ongoing with respect, or which reasonably may be expected to lead,
to any Acquisition Proposal; and
(2) will not authorize or permit any of its Representatives to
(A) solicit, initiate or encourage, including by way of furnishing
information, or take any other action to facilitate, any inquiries or
the making of any proposal which constitutes, or reasonably may be
expected to lead to, any Acquisition Proposal or (B) participate in any
discussions or negotiations regarding, or which reasonably may be
expected to lead to, any Acquisition Proposal;
provided, however, that, if at any time before Sub accepts Shares for payment
under the Offer, the Company receives an unsolicited bona fide written
Acquisition Proposal and a majority of the Company Board determines in good
faith that the proposal reasonably may be expected to constitute a Superior
Takeover Proposal, the Company may, and may permit its Representatives to, in
response to that proposal, and provided that the Company complies with Section
6.02(c):
(1) furnish information about the Company to any Person under
a confidentiality agreement in a form Parent has previously approved in
writing, which approval Parent will not unreasonably withhold; and
(2) participate in negotiations regarding that proposal.
Without limiting the foregoing, the parties hereto acknowledge their respective
understandings that any violation of the restrictions the preceding sentence
sets forth will constitute a breach of this Section 6.02(a) by the Company.
(b) Except as this Section 6.02(b) otherwise sets forth,
neither the Company Board nor any committee thereof will:
(1) withdraw or modify, or propose to withdraw or modify in a
manner adverse to Parent, the approval or recommendation by the Company
Board of the Offer or the agreement of merger this Agreement contains;
(2) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal; or
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(3) cause the Company to enter into any agreement respecting
any Acquisition Proposal;
provided, however, that if at any time before Sub accepts Shares for payment
under the Offer, the Company receives an unsolicited bona fide written
Acquisition Proposal that a majority of the Company Board determines in good
faith constitutes a Superior Takeover Proposal, the Company Board may, at any
time that is after the fourth business day following the Company's delivery to
Parent of the written notice Section 6.02(c) requires the Company to deliver in
connection with that proposal:
(1) withdraw or modify its recommendation, but not its
approval, which will be irrevocable, of the Offer and the agreement of
merger this Agreement contains; and
(2) approve or recommend that proposal or cause the Company to
enter into an agreement implementing that proposal.
(c) If the Company or, to its knowledge, any of its
Representatives receives any Acquisition Proposal or any request for information
or inquiry with respect, or which reasonably may be expected to lead, to an
Acquisition Proposal, the Company will:
(1) immediately advise Parent orally of, and thereafter
promptly, but in no event later than 24 hours after receipt, confirm to
Parent in writing, the material terms and conditions of that
Acquisition Proposal, request or inquiry and the identity of the Person
making that Acquisition Proposal, request or inquiry; and
(2) thereafter will keep Parent fully informed of the status
and details, including amendments or proposed amendments, of that
Acquisition Proposal, request or inquiry.
(d) Nothing this Section 6.02 contains will prohibit the
Company from taking and disclosing to its stockholders a position Exchange Act
Rule 14e-2(a) contemplates or from making any disclosure to the Company's
stockholders if, in the opinion of the Company Board, after consultation with
counsel, failure so to disclose would be inconsistent with the fiduciary duties
of its members to the Company's stockholders under
Delaware law; provided,
however, that neither the Company nor the Company Board or any committee thereof
will, except as Section 6.02(b) otherwise permits, withdraw or modify, or
propose to withdraw or modify, the Company Board's position with respect to the
Offer and the agreement of merger this Agreement contains or approve or
recommend, or propose to approve or recommend, a Superior Takeover Proposal.
(e) During any period of four business days which Section
6.02(b) describes, the Company will not, and will not permit any other Company
Entity to, enter into any binding agreement respecting any Superior Takeover
Proposal. If, during or after any such period, the Company changes its intention
to enter into any such binding agreement, the Company promptly will notify
Parent of that change and its particulars.
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Section 6.03. Other Actions. The Company will not, and will
not permit any other Company Entity to, take any action that would result in:
(1) any of the representations and warranties of the Company
in this Agreement which are qualified as to materiality or a Company
Material Adverse Effect becoming untrue;
(2) any of those representations and warranties which are not
so qualified becoming untrue in any material respect; or
(3) any of the Offer Conditions not being satisfied, subject
to the Company's right to take the actions Section 6.02 expressly
permits it to take.
ARTICLE SEVEN
ADDITIONAL AGREEMENTS
Section 7.01. Effecting the Merger; Stockholder Approval. (a)
If Parent Entities own at least 90% of the outstanding Shares after Sub
consummates the Offer, the parties hereto will take all actions necessary to
effect the Merger under Section 253 of the DGCL as soon as practicable after
that consummation.
(b) If Parent and Sub cannot or choose not to effect the
Merger under Section 253 of the DGCL, the parties will effect the Merger under
Section 251 of the DGCL as soon as practicable after complying with the
applicable informational requirements of the Exchange Act, and the Company will
submit the agreement of merger this Agreement contains to its stockholders for
the purpose of their acting on that agreement notwithstanding that the Company
Board, having heretofore declared that agreement advisable, may have determined
after the date of this Agreement that that agreement is no longer advisable and
recommended that its stockholders reject it.
(c) If Parent will effect the Merger under Section 251 of the
DGCL and, in connection therewith, the Company must furnish to its stockholders
an information statement under Section 14(c) of the Exchange Act, the Company
will, at Parent's request, as soon as practicable following the consummation of
the Offer, prepare and file a preliminary information statement with the SEC and
will use its reasonable best efforts to respond to any comments of the SEC or
its staff and to cause that information statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all those comments
to the satisfaction of that staff. The Company will notify Parent promptly of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to that information statement or
for additional information and will supply Parent with copies of all
correspondence between the Company or any of its Representatives and the SEC or
its staff with respect to the information statement or the Merger. If at any
time any event occurs that an amendment or supplement to the information
statement should set forth, the Company will promptly prepare and mail to its
stockholders that amendment or supplement. The Company will not mail any
information statement, or any amendment or supplement thereto, to which Parent
reasonably objects.
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(d) In connection with the Merger, the Company will comply
with the applicable notice requirements of the Appraisal Statute.
(e) Parent will cause all Shares that all Parent Entities own
to vote in favor of the agreement of merger this Agreement contains if it is to
be effected under Section 251 of the DGCL.
Section 7.02. Access to Information. On reasonable notice and
subject to any restrictions that confidentiality agreements to which the Company
is subject contain, from which restrictions the Company will use reasonable
efforts to be released, the Company will:
(1) afford to Parent and its Representatives access, during
normal business hours at any time prior to the Effective Time, to all
the properties, books, contracts, commitments and records of the
Company Entities; and
(2) furnish promptly to Parent (A) a copy of each report,
schedule, registration statement and other document filed or received
by it during such period under the federal securities or Tax laws and
(B) all other information concerning its business, properties and
personnel as Parent reasonably may request.
The Company will deliver to Parent copies of its audited
consolidated financial statements for the year ended December 31, 2001, together
with the report of Deloitte & Touche LLP thereon, promptly after they become
available to the Company.
Except as the Company otherwise may agree, unless and until
Parent Entities own at least a majority of the outstanding Shares, and
notwithstanding termination of this Agreement, Parent will keep, and will cause
its Representatives and Affiliates to keep, all Confidential Information of the
Company Entities confidential and not to disclose any of that Confidential
Information to any Person other than those Representatives and Affiliates and
then only on a confidential basis; provided, however, that Parent or Sub may
disclose that Confidential Information:
(1) as any applicable Governmental Requirement may require; or
(2) as any Governmental Authority may request.
Neither Parent nor any of its Affiliates will use any Confidential Information
of the Company Entities in any manner detrimental to the Company or its
stockholders and, in the event any party terminates this Agreement for any
reason under Article Nine, Parent will, and will cause Sub to, promptly return
all that Confidential Information to the Company.
Section 7.03. Reasonable Efforts. Each party agrees to use its
reasonable efforts to:
(1) take all actions necessary to comply promptly with all
Governmental Requirements applicable to it with respect to the Offer or
the Merger, which actions will include furnishing all information
hereafter required to be filed in connection with approvals of or
filings with any other Governmental Authority, and promptly cooperate
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with and furnish information to each other in connection with any such
requirements imposed upon any of them or their Affiliates in connection
with the Offer or the Merger; and
(2) take all reasonable actions necessary to obtain, and will
cooperate with each other in obtaining, any Governmental Approval of,
or any exemption by, any Governmental Authority or other public or
private third party required to be obtained or made by Parent, Sub or
the Company or any of their respective Affiliates in connection with
the Offer or the Merger or the taking of any action those transactions
or this Agreement contemplate.
Parent will cause Sub to comply with its obligations under this Agreement.
Section 7.04. Benefits. Each party will comply with the
provisions Schedule 7.04 sets forth, which the parties incorporate herein by
this reference.
Section 7.05. Directors. Promptly on the acceptance for
payment of, and payment for, any Shares by Sub in the Offer, Sub will be
entitled to designate such number of members of the Company Board as will give
Sub, subject to compliance with Section 14(f) of the Exchange Act, at least a
majority of the members of the whole Company Board, and the Company will, at
that time, cause Sub's nominees to be so elected by the then constituted Company
Board; provided, however, that if Sub's nominees are so elected, then, until the
Effective Time, the Company Board will have at least two directors who are
Independent Directors. Subject to applicable Governmental Requirements, the
Company will take all action Parent reasonably may request to effect the
Company's compliance with this Section 7.05.
Section 7.06. Fees and Expenses. (a) Except as Section 7.06(b)
and (c) otherwise provide, each party will pay the fees and expenses it incurs
in connection with the Offer, the Merger, this Agreement and the transactions
this Agreement contemplates, whether or not the Offer or the Merger is
consummated.
(b) The Company will pay the Termination Fee to Parent if any
of the following events occurs:
(1) Parent becomes entitled to, and does, terminate this
Agreement under Section 9.01(a)(3)(A) or (B);
(2) the Company becomes entitled to, and does, terminate this
Agreement under Section 9.01(a)(4); or
(3) an Acquisition Proposal having been publicly announced,
communicated or otherwise disclosed prior to the purchase of Shares
under the Offer and the termination of this Agreement under Article
Nine:
(A) (1) Parent becomes entitled to, and does,
terminate this Agreement under Section 9.01(a)(3)(C) unless
that termination results from a breach of Section 4.06(1) that
was not caused by any action or omission to act on the part of
the Company or (2) the Company becomes entitled to, and does,
at a time when
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the Minimum Tender Condition has not been satisfied and
neither Parent nor Sub is in a material breach of this
Agreement, terminate this Agreement under Section
9.01(a)(2)(A); and
(B) within 12 months after that termination, the
Company consummates or enters into an agreement providing for
the consummation of any transaction that has been the subject
of any Acquisition Proposal.
The Company must pay the Termination Fee to Parent by wire
transfer of immediately available funds to Parent's account Schedule 7.06
specifies:
(1) if an event clause (1) of the preceding sentence describes
occurs, as promptly as is reasonable practicable, but in no event later
than two business days, after that occurrence; and
(2) if an event clause (2) or (3) of the preceding sentence
describes occurs, concurrently with that occurrence.
(c) If the Company becomes obligated to pay the Termination
Fee to Parent under Section 7.06(b), it also will reimburse Parent for all
out-of-pocket fees and expenses reasonably incurred by Parent and Sub from and
after January 1, 2002 in connection with the Offer, the Merger, this Agreement
and the transactions this Agreement contemplates and the enforcement of their
rights hereunder. If the Company becomes entitled to, and does, terminate this
Agreement under Section 9.01(a)(5), Parent will reimburse the Company for all
out-of-pocket fees and expenses reasonably incurred by the Company from and
after January 1, 2002 in connection with the Offer, the Merger, this Agreement
and the transactions this Agreement contemplates and the enforcement of its
rights hereunder.
Section 7.07. Indemnification; Insurance. (a) All rights to
indemnification for acts or omissions occurring before the Effective Time now
existing in favor of the current or former directors or officers of the Company
as its Charter Documents or contractual arrangements provide on the date of this
Agreement, or as applicable law otherwise provides, will survive the Merger and
continue in full force and effect in accordance with their terms.
(b) For six years from the Effective Time, Parent will, unless
Parent elects, at its option, in writing to guarantee performance of the
indemnification obligations to which Section 7.07(a) refers, maintain in effect
the Company's current D&O Insurance covering those persons who are currently
covered by the Company's D&O Insurance policy, a copy of which the Company has
made available to Parent; provided, however, that Parent will extend the
Company's current D&O policy in effect to cover claims made prior to the first
anniversary of the Effective Time if the premium for that additional coverage
does not exceed $80,000.
(c) This Section 7.07 will survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent, the
Surviving Corporation and the indemnified parties and will be binding on all
successors and assigns of Parent and the Surviving Corporation.
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Section 7.08. Antitakeover Measures. So long as the Offer
remains outstanding and complies with Section 1.01(b), the Company will not at
any time, notwithstanding that the Company may have terminated this Agreement
under Article Nine, adopt, or permit any other Company Entity to adopt, by means
of any amendment to any of its Charter Documents or any agreement on its part,
any Anti-Parent Takeover Measures, including any "poison pill" rights plan or
any measure to the same or similar effect as the Section 203 Restrictions.
Section 7.09. Certain Litigation. (a) The Company will not
settle any litigation currently pending, or commenced after the date hereof,
against the Company or any of its directors (other than human
resources/employment matters), without the prior written consent of Parent,
which consent Parent will not unreasonably withhold.
(b) The Company will not voluntarily cooperate with any third
party that has sought or may hereafter seek to restrain or prohibit or otherwise
oppose the Offer or the Merger and will cooperate with Parent and Sub to resist
any such effort to restrain or prohibit or otherwise oppose the Offer or the
Merger, unless the Company Board determines, in the good faith of its members
after consultation with the Company's outside counsel, that failing so to
cooperate with that third party or cooperating with Parent or Sub, as the case
may be, would constitute a breach of its members' fiduciary duties under
Delaware law.
Section 7.10. Credit Agreement. The Company will use
reasonable efforts to cause the lenders under the Credit Agreement to forbear
from accelerating its indebtedness under the Credit Agreement solely as a result
of the consummation of the Offer or the performance by the Company of its
obligations under Section 7.05.
ARTICLE EIGHT
CONDITIONS
Section 8.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger will be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(1) Company Stockholder Approval. If the DGCL so requires for
the effectuation of the Merger, the Company shall have obtained the
approval by the Company's stockholders of the agreement of merger this
Agreement contains;
(2) No Injunctions or Restraints. No Governmental Requirement
or other legal restraint or prohibition preventing or materially
restraining the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable
efforts to prevent the entry of any injunction or other order and to
appeal as promptly as possible any injunction or other order that may
be entered; and
(3) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares under the Offer.
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ARTICLE NINE
TERMINATION AND AMENDMENT
Section 9.01. Termination. (a) This Agreement may be
terminated, and the Merger may be abandoned, at any time prior to the Effective
Time, whether before or after approval by the Company's stockholders of the
agreement of merger this Agreement contains:
(1) by mutual written consent of Parent and the Company;
(2) by either Parent or the Company:
(A) if (1) as a result of the failure of any of the
Offer Conditions the Offer shall have terminated or expired in
accordance with its terms without Sub having accepted for
payment any Shares under the Offer or (2) Sub shall not have
accepted for payment any Shares under the Offer within 180
days following the date of this Agreement; provided, however,
that the right to terminate this Agreement under this Section
9.01(a)(2)(A) will not be available to any party whose failure
to perform any of its obligations hereunder or whose breach of
any of its representations and warranties herein shall have
caused that right to become exercisable; or
(B) if any Governmental Authority shall have issued
any order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting
the acceptance for payment of, or payment for, Shares under
the Offer or the consummation of the Merger and that order,
decree or ruling or other action shall have become final and
nonappealable;
(3) by Parent if, prior to the purchase of Shares under the
Offer:
(A) the Company Board shall have:
(1) withdrawn, or modified or otherwise
changed, in a manner or to an effect adverse to
Parent or Sub, its approval or recommendation of the
Offer or the agreement of merger this Agreement
contains;
(2) approved or recommended any Acquisition
Proposal or determined any Acquisition Proposal to be
a Superior Takeover Proposal; or
(3) taken any action for the purpose of
rendering the Section 203 Restrictions inapplicable
to any acquisition of Shares, other than under the
Offer or the Merger, or any Takeover Transaction,
other than the Merger;
(B) the Company shall have breached any provision of
Section 6.02 or 7.08 in any material respect;
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(C) the Company shall have breached:
(1) any of its representations and
warranties herein which (a) are qualified as to
materiality or a Company Material Adverse Effect or
(b) are not so qualified if, as a result of all
breaches thereof in the aggregate, a Company Material
Adverse Effect has occurred or reasonably could be
expected to occur; or
(2) any of its covenants and other
agreements herein, other than in Sections 6.02 and
7.08, in any material respect,
all which breaches, in the case of clauses (C)(1) and (C)(2),
either are not capable of being cured or, in the case of any
such breach that is so capable, that breach has not been cured
before the first to occur of (1) the elapse of 10 consecutive
business days after Parent or Sub has delivered to the Company
a written notice of that breach or (2) the expiration of the
Offer; or
(D) any Stockholder shall have breached any of its
covenants and other agreements in Sections 2, 3, 4 and 5 of
the Stockholders Agreement;
(4) by the Company, if, prior to the purchase of Shares under
the Offer:
(A) the Company Board, by a majority vote of the
whole board, has determined in the good faith of its members
and on the basis of, among other facts, the advice of the
Company Financial Advisor and the Company's outside counsel,
that the Company has received a Superior Takeover Proposal;
(B) the Company Board has directed the Company to
notify Parent in writing that the Company intends to enter
into a definitive agreement respecting that proposal, and the
Company has delivered that notice to Parent together with
either the then most current version of that agreement or an
accurate, complete description of all the material terms and
conditions thereof; and
(C) Parent, within four business days after its
receipt of that notice, either (1) has not delivered to the
Company a written counteroffer to that proposal or (2) has
delivered to the Company a written counteroffer to that
proposal which the Company Board has determined, in the good
faith of its members and after consultation with the Company
Financial Advisor and the Company's outside counsel, is not at
least as favorable to the Company's stockholders, other than
Parent Entities, as that proposal;
(5) by the Company, if Sub or Parent shall have breached:
(A) any of its representations and warranties herein
which (1) are qualified as to materiality or a material
adverse effect or (2) are not so qualified if, as a result of
all breaches thereof in the aggregate, a material adverse
effect on the ability of Parent and Sub to consummate the
Offer or the Merger has occurred or reasonably could be
expected to occur; or
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(B) any of its covenants and other agreements herein
in any material respect, if, as a result of all breaches
thereof in the aggregate, a material adverse effect on the
ability of Parent and Sub to consummate the Offer or the
Merger has occurred or reasonably could be expected to occur,
all which breaches, in the case of clauses (A) and (B), are not capable
of being cured or, in the case of any such breach that is so capable,
that breach has not been cured before the elapse of 10 consecutive
business days after the Company has delivered to Parent a written
notice of that breach; or
(6) by the Company if, prior to the acceptance for payment or
purchase of Shares under the Offer, Sub shall have terminated the Offer
on the stated ground that condition (h) of the Offer Conditions has not
been satisfied.
(b) The Company may not terminate this Agreement under Section
9.01(a)(5) if it is, and Parent may not terminate this Agreement under Section
9.01(a)(3) if either Sub or it is, then in a material breach of any of its
representations and warranties or covenants or other agreements herein.
(c) Any termination of this Agreement by any party under this
Article Nine will require the prior authorization of either the board of
directors of that party or the duly authorized designee of that board.
Section 9.02. Effect of Termination. If any party terminates
this Agreement in accordance with Section 9.01, this Agreement will forthwith
become void and no party will have any liability or obligation hereunder, except
that Sections 4.16, 5.06, and 6.02, the last two sentences of Section 7.02,
Sections 7.06 and 7.08, this Section 9.02 and Article Ten will survive any such
termination and remain in full force and effect; provided, however, that nothing
herein will relieve any party for liability for any breach by it hereof.
Section 9.03. Amendment. (a) If:
(1) the Company has given a notice to Parent of the type to
which Section 9.01(a)(4)(B) refers,
(2) Parent, within four business days after its receipt of
that notice has delivered to the Company a written counteroffer to the
Superior Takeover Proposal that is the subject of that notice and
(3) the Company Board has determined that counteroffer to be
at least as favorable to the Company's stockholders, other than Parent
Entities, as that proposal,
the parties promptly will execute and deliver an amendment or supplement to this
Agreement, and Parent promptly after that execution and delivery by the parties
will amend the Offer Documents, to give effect to the changes in the terms of
the Offer and the Merger which that counteroffer contemplates will be made. That
amendment or supplement to this Agreement will not require any further
authorization by the Company Board, whose approval of this Agreement prior to
the date hereof will constitute the approval of that amendment or supplement.
-35-
(b) Except as Section 9.02(a) otherwise provides, the parties may amend this
Agreement if and to the extent that their respective boards of directors
authorize them to do so, at any time before or after the Company's stockholders
have approved the agreement of merger this Agreement contains, if the DGCL
requires that approval, but, after any such approval, the parties hereto may not
effect any further amendment which by law requires further approval by those
stockholders without that further approval. To be effective, any amendment
hereto must be in a written document each party has executed and delivered to
the other parties.
Section 9.04. Extension; Waiver. At any time prior to the
Effective Time, the parties, by action their respective boards of directors have
taken or authorized, may, to the extent applicable Governmental Requirements
permit:
(1) extend the time for the performance of any of the
obligations or other acts of any party;
(2) waive any inaccuracies in the representations and
warranties this Agreement contains; or
(3) waive compliance with any of the covenants or other
agreements or conditions this Agreement contains.
To be effective, any agreement on the part of a party to any such extension or
waiver must be in a written document that party has executed and delivered to
the other parties.
Section 9.05. Independent Director Approval. After Sub's
nominees have become members of the Company Board under Section 7.05 and prior
to the Effective Time, the Company may not:
(1) amend or terminate this Agreement or
(2) take any action under Section 9.04,
unless a majority of the Independent Directors then in office, as well as a
majority of the whole Company Board, shall have duly authorized that action.
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Nonsurvival of Representations and Warranties.
The representations and warranties herein will:
(1) if made by Parent or Sub, terminate and expire as of the
Effective Time; and
(2) if made by the Company, terminate and expire as of the
time Sub accepts Shares for payment in the Offer; provided, however,
that if, prior to that payment and after all Offer Conditions have been
satisfied or waived by Sub, to the extent waivable by
-36-
Sub, as of the then scheduled Expiration Date, Sub has extended the
Offer because less than 90% of all outstanding Shares have been validly
tendered and not subsequently properly withdrawn, the representations
and warranties of the Company herein will terminate and expire as of
that then scheduled Expiration Date.
After a representation and warranty has terminated and expired, no claim for
damages or other relief may be made or prosecuted through litigation or
otherwise by any Person who would have been entitled to that relief on the basis
of that representation and warranty prior to its termination and expiration.
This Section 10.01 will not limit or otherwise affect any covenant or agreement
of any party which by its terms contemplates performance by that party after the
Effective Time.
Section 10.02. Notices. All notices and other communications
hereunder must be in writing and will be deemed given if delivered personally,
telecopied or otherwise sent by means of electronic communications equipment
(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 it has specified by like notice):
(a) if to Parent or Sub, to it at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
With a copy, which will not constitute notice for purposes
hereof, to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
and
-37-
(b) if to the Company, to it at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
With a copy, which will not constitute notice for purposes
hereof, to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
or
T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Section 10.03. Definitions and Interpretation. (a) Capitalized
terms this Agreement uses have the meanings Exhibit C specifies. The parties
hereto, by this reference to Exhibit C, hereby incorporate it herein.
(b) Except as this Agreement otherwise specifies, all
references herein to any Governmental Requirement, including the Code, ERISA,
the Exchange Act and the Securities Act, are references to that Governmental
Requirement or any successor Governmental Requirement, as the same may have been
amended or supplemented from time to time, and any rules or regulations
promulgated thereunder.
(c) This Agreement uses the words "herein," "hereof" and
"hereunder" and words of similar import to refer to this Agreement as a whole
and not to any provision of this Agreement, and the words "Article," "Section,"
"Schedule" and "Exhibit" refer to Articles and Sections of and Schedules and
Exhibits to this Agreement, unless it otherwise specifies. This Agreement uses
the word "party" to refer to any original signatory hereto and its permitted
successors and assigns under Section 10.07.
(d) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(e) The word "including," and, with correlative meaning, the
word "include," means including, without limiting the generality of any
description preceding that word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
-38-
(f) The term "business day" means any day other than a day on
which commercial banks are authorized or required to close in New York City.
(g) The phrase "to the knowledge of the Company" or phrases
with similar wording, when used in this Agreement to qualify any representation
and warranty of the Company, means the collective knowledge, after reasonable
investigation, of the executive officers of the Company and each other
individual who holds a management position with the Company on or after the date
of this Agreement; provided, however, that if any Governmental Requirement to
which any such representation or warranty refers specifies a different meaning
for that phrase, the meaning that Governmental Requirement specifies will apply
for purposes of that representation and warranty.
(h) The language this Agreement uses will be deemed to be the
language the parties have chosen to express their mutual intent, and no rule of
strict construction will be applied against any party.
(i) This Agreement includes captions to Articles, Sections and
subsections of, and Schedules and Exhibits to, this Agreement for convenience of
reference only, and these captions do not constitute a part of this Agreement
for any other purpose or in any way affect the meaning or construction of any
provision of this Agreement.
Section 10.04. Counterparts. This Agreement may be executed in
two or more counterparts, all of which will be considered one and the same
agreement and will 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 10.05. Entire Agreement; Third Party Beneficiaries.
This Agreement, together with the Schedules, the Company Disclosure Letter and
Exhibit C:
(1) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof; and
(2) except for Article Three and Section 7.07, are not
intended to confer on any Person other than the parties any rights or
remedies hereunder.
Section 10.06. Publicity. Except as any applicable
Governmental Requirement or the rules of the National Association of Securities
Dealers, Inc. otherwise require, for so long as this Agreement is in effect, the
Company will not, and will not permit any of its Affiliates to, issue or cause
the publication of any press release or other public announcement with respect
to the transactions this Agreement contemplates without the consent of Parent,
which consent Parent will not unreasonably withhold.
Section 10.07. Assignment. This Agreement and the rights,
interests or obligations of the parties hereunder may not be assigned by any of
the parties (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, all or any of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the
-39-
preceding sentence, this Agreement will be binding on, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
SECTION 10.08. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
DELAWARE
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF THAT WOULD CAUSE THE
LAWS OF ANY OTHER JURISDICTION TO APPLY.
Section 10.09. Exercise of Rights and Remedies. Except as this
Agreement otherwise provides, no delay or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default
hereunder by any other party will impair any such right, power or remedy, nor
will it be construed, deemed or interpreted as a waiver of or acquiescence in
any such breach or default, or of any similar breach or default occurring later;
nor will any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
Section 10.10. Reformation and Severability. If any provision
of this Agreement is invalid, illegal or unenforceable, that provision will, to
the extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties as
expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
Section 10.11. Remedies Cumulative. No right, remedy or
election any provision of this Agreement gives will be deemed exclusive, but
each will be cumulative with all other rights, remedies and elections available
at law or in equity.
Section 10.12. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the provisions of this Agreement in the Appropriate
Delaware Court, this being
in addition to any other remedy to which law or in equity entitles them. Each
party will:
(1) submit itself to the personal jurisdiction of the
Appropriate
Delaware Court with respect to any dispute that arises out
of this Agreement or any transaction this Agreement contemplates;
(2) not attempt to deny or defeat that personal jurisdiction
by motion or other request for leave from any such court; and
(3) not bring any action relating to this Agreement or any
transaction this Agreement contemplates in any court other than the
Appropriate
Delaware Court.
-40-
The parties have caused this Agreement to be signed by their
respective officers thereunto duly authorized as of the date first written
above.
▇▇▇▇▇▇ AMERICAS AND EUROPE
CORPORATION
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
ECM ACQUISITION COMPANY
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
ESENJAY EXPLORATION, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
SCHEDULE 2.03
to the
Agreement
to which
▇▇▇▇▇▇ Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
EFFECTS OF THE MERGER - OFFICERS
1. Definitions. Capitalized terms this Schedule uses, but does
not define, have the meanings the captioned Agreement specifies.
2. Officers. Effective as of the Effective Time, the officers
of the Surviving Corporation will be as follows:
NAME OFFICE
---- ------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Vice President, Secretary and
Treasurer
End of Schedule
-1-
SCHEDULE 3.02
to the
Agreement
to which
▇▇▇▇▇▇ Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
DERIVATIVE SECURITIES AND DERIVATIVE SECURITIES PLANS
1. Definitions. Capitalized terms this Schedule uses, but does
not define, have the meanings the captioned Agreement specifies.
2. Options. Effective as of the Effective Time, each then
outstanding Option will automatically convert into solely the right to receive
with respect to each Share subject thereto, without interest, cash in the amount
equal to the amount by which the Merger Consideration exceeds the exercise price
payable to purchase that Share under that Option.
3. Warrants. Effective as of the Effective Time, each then
outstanding Warrant will automatically convert into solely the right to receive
with respect to each Share (or stock unit or other phantom equivalent to a
Share) subject thereto, without interest, cash in the amount, if any, equal to
the amount by which the Merger Consideration exceeds the exercise price payable
to purchase that Share (or stock unit or other phantom equivalent to a Share)
under that Warrant.
4. Option Plan. The Company will take the action respecting
the Option Plan which Schedule 7.04 specifies.
End of Schedule
-2-
SCHEDULE 4.01
to the
Agreement
to which
▇▇▇▇▇▇ Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
LIST OF SUBSIDIARIES
1. Definitions. Capitalized terms this Schedule uses, but does
not define, have the meanings the captioned Agreement specifies.
2. Subsidiaries. The Company has no Subsidiaries.
End of Schedule
-3-
SCHEDULE 7.04
to the
Agreement
to which
▇▇▇▇▇▇ Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
BENEFITS
1. Definitions. Capitalized terms this Schedule uses, but does
not define, have the meanings the captioned Agreement specifies.
2. Severance Plan. Prior to the consummation of the Offer, the
Company will amend the Severance Plan, in form and substance satisfactory to
Parent, to provide:
(A) only individuals who are "Employees" on the date of this
Agreement will be "Participants" under the Severance Plan;
(B) the transfer of a "Participant's" employment with the
Company to an Affiliate of Parent will not, in and of itself,
constitute a termination of employment by the "Employer" for any
purpose of the Severance Plan or a "Good Reason" for that "Participant"
to terminate that employment.
Parent acknowledges that the consummation of the Offer will constitute a "Change
in Control" under Section 2.4(b) of the Severance Plan and will cause the
Company thereafter to perform its obligations under the Severance Plan, and to
make any payments to its employees the Severance Plan will require it to pay
consistent with the methodology underlying the schedule to which Section 4.10(e)
refers. The quoted terms this Section 2 uses have the meanings the Severance
Plan specifies.
3. Option Plan. Prior to the consummation of the Offer, the
Company will amend the Option Plan to provide that no additional Options will
granted thereunder after the date of this Agreement except as disclosed in the
Company Disclosure Letter. In addition, the Company will amend the LIP to:
(A) provide that no "Incentive Awards" granted after the date
of this Agreement can include, or become payable in whole or in part
with, any Common Stock or other equity security; and
(B) to delete the parenthetical phrase "(other than cash)"
wherever it appears in Section 5.5(a) of the LIP.
The quoted term this Section 3 uses has the meaning the LIP specifies.
-4-
4. Savings Plan. Prior to the consummation of the Offer, the
Company will amend the Savings Plan, in form and substance satisfactory to
Parent, to provide only individuals who are "Employees" on the date of this
Agreement will be "Participants" under the Savings Plan. Immediately on
execution of this Agreement, the Company will adopt an amendment to the Savings
Plan, in a form acceptable to the Parent, to provide that the participants in
the Savings Plan shall have the right to direct a tender of Shares held by the
trustee of the Savings Plan and to clarify that the Company and its officers
shall have no fiduciary liability for the actions of the participants. The
quoted terms this Section 4 uses has the meanings the Savings Plan specifies.
5. Service Credit. Parent will deem the period of continuous
employment with the Company Entities to be service with the Parent for purposes
of determining eligibility to join, and vesting under, the Parent's 401(k) Plan.
Parent will recognize all industry service for purposes of determining vacation
eligibility. Eligibility for a bonus under any bonus plan of Parent in which
employees of the Company on the date of this Agreement become entitled to
participate will be pro-rated on the basis of the number of complete months of
service with Parent following the consummation of the Merger.
6. Current Bonus Plan. Parent will cause the Company to make
the payments which become due after the consummation of the Offer under the
Current Bonus Plan as the Company Disclosure Letter sets forth.
End of Schedule
-5-
SCHEDULE 7.06
to the
Agreement
to which
▇▇▇▇▇▇ Americas and Europe Corporation,
ECM Acquisition Company
and
Esenjay Exploration, Inc.
are parties
FEES AND EXPENSES
1. Definitions. Capitalized terms this Schedule uses, but does
not define, have the meanings the captioned Agreement specifies.
2. The Company will pay the Termination Fee, if it has become
payable under Section 7.06, in accordance with the following wire-transfer
instructions:
Bank of America
ABA ▇▇▇▇▇▇▇▇▇
A/C No. 3750493171
End of Schedule
-6-
EXHIBIT A
STOCKHOLDERS AGREEMENT
▇▇▇▇▇▇ Americas and Europe Corporation ("Parent"), a Delaware
corporation, and the holders of outstanding common stock of Esenjay Exploration,
Inc. (the "Company"), a Delaware corporation, to which this Agreement refers to
as "Stockholders" on the signature pages hereof (the "Stockholders") hereby
enter into this Agreement dated as of March 17, 2002.
PRELIMINARY STATEMENT
Parent and its subsidiary, ECM Acquisition Company ("Sub"), a
Delaware corporation, propose to enter into an agreement dated as of March 17,
2002 with the Company (the "Acquisition Agreement"). On the terms and subject to
the conditions the Acquisition Agreement contains, Parent proposes to acquire
the Company in a two-step transaction. The first step would be a tender offer by
Sub for all the outstanding shares of the Company's common stock, and the second
step would be a follow-on merger between Sub and the Company in which the
Company would become the surviving corporation.
The board of directors of the Company has:
o determined that Parent's proposed tender offer and merger are
fair to and in the best interests of the Company's
stockholders;
o declared the agreement of merger the Acquisition Agreement
contains advisable and resolved to recommend that the holders
of the Company's common stock accept that offer and adopt that
agreement of merger; and
o authorized the Company to enter into the Acquisition
Agreement.
The Stockholders collectively own approximately 53% of the
shares of the Company's common stock issued and outstanding as of March 1, 2002.
In order to induce Parent and Sub to enter into and thereafter perform their
respective obligations under the Acquisition Agreement, the Stockholders are
entering into this Agreement.
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
Section 1. Definitions. (a) In this Agreement:
(1) the "Original Shares" of a Stockholder means the number of
shares of Common Stock which appears opposite that Stockholder's name
on the signature pages hereof; and
A-1
(2) the "Subject Shares" of a Stockholder means that
Stockholder's Original Shares together with:
(A) all shares of Common Stock or other Capital
Stock, all Derivative Securities, including any preferred
stock purchase rights, and all other properties or rights,
including any phantom securities, to which that Stockholder
hereafter becomes entitled by reason of any dividend or other
distribution the Company pays or makes in respect of the
Common Stock or any other class or series of its Capital
Stock;
(B) all properties, securities and rights to which
that Stockholder becomes entitled by reason of any split,
combination or reclassification of the Common Stock or any
other Capital Stock of the Company or any issuance by the
Company in respect or lieu of or in substitution for shares of
its Capital Stock; and
(C) all properties, securities and rights of any type
to which clause (2)(A) or (B) of this definition refers which
that Stockholder purchases or otherwise acquires after the
date hereof from the Company or any other Person.
(b) Capitalized terms this Agreement uses, but does not
define, have the meanings the Acquisition Agreement specifies. References herein
to "this Agreement" are to this Agreement as it may be amended, modified or
supplemented from time to time hereafter in writing by each party against which
another party seeks to enforce that amendment, modification or supplement.
Section 2. Tender of Subject Shares. (a) Each Stockholder will
(1) effect a valid tender under and in accordance with the terms of the Offer,
as soon as practicable after the Offer Commencement Date and in no event later
than prior to the initially scheduled Expiration Date, of all that Stockholder's
Subject Shares and (2) not withdraw or attempt to withdraw those tendered
Subject Shares from the Offer until after the first to occur of (A) the
termination of the Acquisition Agreement by the Company under Section 9.01(a)(4)
thereof or (B) a termination of the Offer in accordance with its terms prior to
the purchase by Sub of any Shares thereunder. Any tender of Subject Shares by a
Stockholder in accordance with this Section 2 must include the physical delivery
of certificates representing those Subject Shares and the execution and delivery
of a properly completed letter of transmittal with respect thereto.
(b) If the Subject Securities of a Stockholder include
property, securities or rights that Sub has not amended the Offer to include,
this Section 2 will not require that Stockholder to tender, and Sub will not be
required to amend the Offer to include, any property, securities or rights not
so included.
Section 3. Voting of Subject Shares. (a) If the agreement of
merger the Acquisition Agreement contains is duly submitted to the stockholders
of the Company for their approval or disapproval, each Stockholder will duly and
properly vote all that Stockholder's Subject Shares entitled to vote on that
matter in favor of the adoption of that agreement.
A-2
(b) If any action or agreement is duly submitted to the
stockholders of the Company which, if taken or effected, reasonably could be
expected to
(1) result in a breach of any representation, warranty,
covenant or other agreement of the Company in or under the Acquisition
Agreement, or
(2) prevent, impede, interfere with, delay or postpone the
consummation of the Offer or the Merger, including any Acquisition
Proposal,
each Stockholder will duly and properly vote all that Stockholder's Subject
Shares entitled to vote on that matter against the taking of that action or the
effecting of that agreement.
(c) If any action by the stockholders or the Company to which
Section 3(a) or (b) refers is sought to be taken by written consent in lieu of a
meeting of those stockholders, each Stockholder will give or withhold that
Stockholder's consent thereto to the same effect as if that action were
presented for approval or disapproval at such a meeting.
(d) Each Stockholder:
(1) hereby irrevocably grants to, and appoints, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or either of them, in their respective capacities
as officers of Parent or Sub, and any individual who hereafter succeeds
to any such office, and each of them individually, that Stockholder's
proxy and attorney-in-fact, with full power of substitution, for and in
the name, place and stead of that Stockholder, to vote that
Stockholder's Subject Shares in accordance with this Section 3;
(2) represents that any proxies that Stockholder has
heretofore given in respect of any of that Stockholder's Subject Shares
are not irrevocable and hereby revokes all such proxies and agrees to
give all notices required to evidence that revocation;
(3) acknowledges that Stockholder's understanding that Parent
is entering into the Acquisition Agreement in reliance on that
Stockholder's execution and delivery of this Agreement and affirms that
that Stockholder is granting the irrevocable proxy this Section 3
contains in connection with Parent's execution and delivery of the
Acquisition Agreement and to secure the performance by that Stockholder
of that Stockholder's obligations hereunder;
(4) affirms that that irrevocable proxy is coupled with an
interest and may not be revoked under any circumstances; and
(5) ratifies all that the proxies and attorneys-in-fact
designated by that proxy lawfully may do or cause to be done in their
several capacities as such and confirms that that proxy is intended to
be irrevocable under the applicable Delaware law.
A-3
Section 4. No Inconsistent Arrangements. Each Stockholder
agrees that, except as the Acquisition Agreement and this Agreement otherwise
provide or contemplate, that Stockholder will not:
(1) sell, transfer, pledge, assign or otherwise dispose of
(collectively, "Transfer"), for value, by gift or otherwise, or consent
to or permit any Transfer of, any of that Stockholder's Subject Shares
or any interest therein;
(2) enter into any contract, option or other agreement or
understanding respecting any such Transfer;
(3) grant any proxy, power-of-attorney or other authorization
respecting those Subject Shares;
(4) deposit into a voting trust, or enter into a voting
agreement respecting, any of those Subject Shares; or
(5) take any other action that reasonably could be expected in
any way to restrict, limit or interfere with the performance by that
Stockholder of that Stockholder's obligations hereunder or with the
consummation of the Offer or the Merger.
Section 5. Waiver of Appraisal Rights. Each Stockholder hereby
waives all rights of appraisal or dissent that Stockholder has under the DGCL
with respect to the Merger.
Section 6. Treatment of Confidential Information. (a) Each of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ (the "Receiving
Stockholders"), severally and not jointly with any other Person, acknowledges
that he has or may have had in the past, currently has and in the future may
have access to Confidential Information of the Company Entities and Parent and
its Affiliates. Each Receiving Stockholder, severally and not jointly with any
other Person, agrees that he will keep confidential and not use, directly or
indirectly, for his own benefit or the benefit of any business of any Person
other than the Company Entities and Parent and its Affiliates, all that
Confidential Information that Receiving Stockholder has or hereafter obtains
and, except with the specific prior written consent of Parent, will not disclose
that Confidential Information to any Person except (1) Representatives of Parent
and (2) his own Representatives, provided that these Representatives, other than
counsel, agree to the confidentiality provisions of this Section 6; provided,
however, that, for purpose of this Section 6(a), Confidential Information a
Receiving Stockholder has does not include such information as:
(1) becomes known to the public generally through no fault of
that Receiving Stockholder;
(2) is required to be disclosed by law or the order of any
Governmental Authority under color of law, provided, that prior to the
disclosure by that Receiving Stockholder of any information under this
clause (2), that Receiving Stockholder will give prior written notice
thereof to Parent and provide Parent with the opportunity to contest
that disclosure; or
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(3) that Receiving Stockholder reasonably believes is required
to be disclosed in connection with the defense of a lawsuit against
that Receiving Stockholder.
In the event of a breach or threatened breach by any Receiving Stockholder of
the provisions of this Section 6 with respect to any Confidential Information,
Parent or the Company will be entitled to an injunction restraining that
Receiving Stockholder from disclosing, in whole or in part, that Confidential
Information. Nothing herein shall be construed as prohibiting Parent or the
Company from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
(b) Because of (1) the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Section 6(a) and (2) the
immediate and irreparable damage that would be caused to Parent or the Company
for which it would have no other adequate remedy, each of the Receiving
Stockholders agrees that Parent or the Company may enforce the provisions of
Section 6(a) by injunctions and restraining orders against each of them who
breaches any of those provisions.
Section 7. Representations and Warranties. Each Stockholder
represents and warrants to Parent that, as applied solely to that Stockholder,
all the following representations and warranties in this Section 7 are as of the
date of this Agreement, and will be immediately prior to Sub's payment for that
Stockholder's Subject Shares, true and correct:
(1) the Stockholder:
(A) is the record and beneficial owner of, and has
good and marketable title to, the Stockholder's Original
Shares and, as of the date Sub consummates the Offer, all
other Subject Shares the Stockholder hereafter acquires, in
each case free and clear of any "adverse claim," as the
applicable Uniform Commercial Code defines that term, or other
lien or encumbrance; and
(B) has and will have, with respect to the Original
Shares, and will have, with respect to all other Subject
Shares the Stockholder hereafter acquires, the sole right to
Transfer and direct the voting of those securities;
(2) except as this Agreement or the Option Agreement otherwise
provides, none of the Original Shares is, and none of the other Subject
Shares the Stockholder hereafter acquires will be, subject to any
voting trust, voting agreement or other agreement, arrangement or
restriction respecting the Transfer or voting of any of those
securities;
(3) the Stockholder has the full power, legal capacity and
authority to execute, deliver and perform the Stockholder's obligations
under this Agreement. This Agreement constitutes the legal, valid and
binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except as that enforceability
may be:
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(A) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally; and
(B) subject to general principles of equity,
regardless of whether that enforceability is considered in a
proceeding in equity or at law;
(4) if the Stockholder is an Entity, the Stockholder has
obtained, in accordance with all applicable Governmental Requirements
and its Charter Documents, all approvals and the taking of all actions
necessary for the authorization, execution, delivery and performance by
the Stockholder of this Agreement;
(5) if the Stockholder is acting otherwise than in his
individual capacity, whether as an executor or a guardian or in any
other fiduciary or representative capacity, all actions on the part of
the Stockholder and all other Persons, including any court, necessary
for the authorization, execution, delivery and performance by the
Stockholder of this Agreement have been duly taken;
(6) the Stockholder's execution, delivery and performance in
accordance with its terms of this Agreement and the effectuation of the
transactions this Agreement contemplates do not and will not:
(A) violate or conflict with any Governmental
Requirement;
(B) breach or constitute a default under any
agreement or instrument to which the Stockholder is a party or
by which the Stockholder or any Subject Shares the Stockholder
owns is bound;
(C) result in the creation or imposition of, or
afford any Person the right to obtain, any lien upon any
Subject Shares the Stockholder owns, or upon any revenues,
income or profits of the Stockholder therefrom; or
(D) if the Stockholder is an Entity, violate the
Stockholder's Charter Documents; and
(7) no litigation is pending or, to the knowledge of the
Stockholder, threatened to which the Stockholder is or may become a
party which:
(A) questions or involves the validity or
enforceability of any of the Stockholder's obligations under
this Agreement; or
(B) seeks, or reasonably could be expected to seek,
(1) to prevent or delay the consummation by the Stockholder of
the transactions this Agreement contemplates the Stockholder
will consummate or (2) damages in connection with any such
consummation.
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Section 8. Several Nature of Obligations. The obligations of
each Stockholder under this Agreement are several and not joint, or joint and
several, with the obligations of any other Stockholder under this Agreement.
Section 9. Termination of Various Obligations. The obligations
of each Stockholder under Sections 2, 3, 4 and 5, and the irrevocable proxy each
Stockholder has granted in Section 3, will terminate on the first to occur of
the termination of the Acquisition Agreement by the Company under Section
9.01(a)(4) thereof or the termination by Sub of the Offer without purchasing any
Shares thereunder. The obligations of each Receiving Stockholder under Section 6
will terminate on the termination by Sub of the Offer without purchasing any
Shares thereunder, but, except for termination on that occurrence, will continue
in accordance with its terms notwithstanding any termination of the Acquisition
Agreement.
Section 10. Notices. All notices and other communications
hereunder must be in writing and will be deemed given if delivered personally,
telecopied or otherwise sent by means of electronic communications equipment
(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 it has specified by like notice):
(1) if to Parent, to it at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
With a copy, which will not constitute notice for
purposes hereof, to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
and
(2) if to a Stockholder, to the address set forth opposite
that Stockholder's name on the signature pages hereto.
Section 11. Construction and Interpretation. (a) This
Agreement uses the words "herein," "hereof" and "hereunder" and words of similar
import to refer to this Agreement
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as a whole and not to any provision of this Agreement, and the word "Section"
refers to a Section of this Agreement, unless it otherwise specifies. This
Agreement uses the word "party" to refer to any original signatory hereto and
its permitted successors and assigns under Section 15.
(b) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(c) The word "including," and, with correlative meaning, the
word "include," means including, without limiting the generality of any
description preceding that word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
(d) The language this Agreement uses will be deemed to be the
language the parties have chosen to express their mutual intent, and no rule of
strict construction will be applied against any party.
(e) This Agreement includes captions for convenience of
reference only, and these captions do not constitute a part of this Agreement
for any other purpose or in any way affect the meaning or construction of any
provision of this Agreement.
Section 12. Counterparts. This Agreement may be executed in
two or more counterparts, all of which will be considered one and the same
agreement and will become effective as to any Stockholder when two or more
counterparts have been signed by that Stockholder and Parent and delivered to
each other, it being understood that to be binding on any Stockholder, no other
Stockholder need sign this Agreement and Parent need not sign the same
counterpart.
Section 13. Entire Agreement; No Third Party Beneficiaries.
This Agreement:
(1) constitutes 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
(2) except as Section 6 otherwise provides, is not intended to
confer on any Person other than the parties any rights or remedies
hereunder.
Section 14. Publicity. (a) Each Stockholder hereby agrees that
Parent and any of its Affiliates may publish and disclose in the Offer Documents
and the information statement Section 7.01(c) of the Acquisition Agreement
contemplates, and any other documents Parent or Sub files with the SEC in
connection with the Offer or the Merger, the identity and ownership of Subject
Shares by that Stockholder and the nature of that Stockholder's commitments,
agreements and understandings under this Agreement.
(b) Except as any applicable Governmental Requirement or the
rules of the National Association of Securities Dealers, Inc. otherwise require,
for so long as this Agreement is in effect, no Stockholder will, or will permit
any of its Affiliates to, issue or cause the publication of any press release or
other public announcement with respect to the transactions
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this Agreement contemplates without the consent of Parent, which consent Parent
will not unreasonably withhold.
Section 15. Assignment. This Agreement and the rights,
interests or obligations of the parties hereunder may not be assigned by any
Stockholder, whether by operation of law or otherwise, without the prior written
consent of Parent. Subject to the preceding sentence, this Agreement will be
binding on, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 16. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF THAT WOULD CAUSE THE LAWS OF ANY OTHER
JURISDICTION TO APPLY.
Section 17. Exercise of Rights and Remedies. Except as this
Agreement otherwise provides, no delay or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default
hereunder by any other party will impair any such right, power or remedy, nor
will it be construed, deemed or interpreted as a waiver of or acquiescence in
any such breach or default, or of any similar breach or default occurring later;
nor will any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
Section 18. Reformation and Severability. If any provision of
this Agreement is invalid, illegal or unenforceable, that provision will, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties as
expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
Section 19. Remedies Cumulative. No right, remedy or election
any provision of this Agreement gives will be deemed exclusive, but each will be
cumulative with all other rights, remedies and elections available at law or in
equity.
Section 20. Enforcement. Each Stockholder agrees that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, Parent will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the provisions of this Agreement in the Appropriate Delaware Court, this being
in addition to any other remedy to which Section 6, law or equity entitles
Parent or any of its Affiliates. Each Stockholder will:
(1) submit itself to the personal jurisdiction of the
Appropriate Delaware Court with respect to any dispute that arises out
of this Agreement or any transaction this Agreement contemplates;
(2) not attempt to deny or defeat that personal jurisdiction
by motion or other request for leave from any such court; and
A-9
(3) not bring any action relating to this Agreement or any
transaction this Agreement contemplates in any court other than the
Appropriate Delaware Court.
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The parties have signed this Agreement as of the date first written above.
▇▇▇▇▇▇ AMERICAS AND
EUROPE CORPORATION
By:
-------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
STOCKHOLDERS
No. of Original Shares: 48,000
Aspect Resources, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ By:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
ASPECT ENERGY, LLC
BY: ASPECT MANAGEMENT CORPORATION,
MANAGER
No. of Original Shares: 4,729,456
c/o ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ BY:
Aspect Resources, LLC -------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ PRESIDENT
No. of Original Shares: 132,754
Esenjay Exploration, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ By:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ESENJAY PETROLEUM CORPORATION
No. of Original Shares: 4,896,415
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Esenjay Exploration, Inc. By:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ -------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
STOCKHOLDERS (continued)
No. of Original Shares: 202,297
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
No. of Original Shares: 0
Aspect Resources, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ By:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
No. of Original Shares: 14,000
Pollicoff, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ By:
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
No. of Original Shares: 12,000
▇▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ By: ---------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
No. of Original Shares: 12,000
▇▇▇▇▇ International Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ By:
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ---------------------------------
Hobart ▇. ▇▇▇▇▇
No. of Original Shares: 12,470
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
No. of Original Shares: 12,000
▇▇▇ ▇▇▇▇▇ ▇▇▇ By:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EXHIBIT B
OPTION AGREEMENT
▇▇▇▇▇▇ America and Europe Corporation ("Parent"), a Delaware
corporation, and the holders of outstanding common stock of Esenjay Exploration,
Inc. (the "Company"), a Delaware corporation, to which this Agreement refers to
as "Stockholders" on the signature pages hereof (the "Stockholders") hereby
enter into this Agreement dated as of March 17, 2002.
PRELIMINARY STATEMENT
Parent and its subsidiary, ECM Acquisition Company ("Sub"), a
Delaware corporation, propose to enter into an agreement dated as of March 17,
2002 with the Company (the "Acquisition Agreement"). On the terms and subject to
the conditions the Acquisition Agreement contains, Parent proposes to acquire
the Company in a two-step transaction. The first step would be a tender offer by
Sub for all the outstanding shares of the Company's common stock, and the second
step would be a follow-on merger between Sub and the Company in which the
Company would become the surviving corporation.
The board of directors of the Company has:
o determined that Parent's proposed tender offer and merger are
fair to and in the best interests of the Company's
stockholders;
o declared the agreement of merger the Acquisition Agreement
contains advisable and resolved to recommend that the holders
of the Company's common stock accept that offer and adopt that
agreement of merger; and
o authorized the Company to enter into the Acquisition
Agreement.
The Stockholders collectively own approximately 52% of the
shares of the Company's common stock issued and outstanding as of March 1, 2002.
In order to induce Parent and Sub to enter into and thereafter perform their
respective obligations under the Acquisition Agreement, the Stockholders are
entering into this Agreement.
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
Section 1. Definitions. (a) In this Agreement:
(1) the "Original Shares" of a Stockholder means the number of
shares of Common Stock which appears opposite that Stockholder's name
on the signature pages hereof; and
(2) the "Subject Shares" of a Stockholder means that
Stockholder's Original Shares together with:
B-1
(A) all shares of Common Stock or other Capital
Stock, all Derivative Securities, including any preferred
stock purchase rights, and all other properties or rights,
including any phantom securities, to which that Stockholder
hereafter becomes entitled by reason of any dividend or other
distribution the Company pays or makes in respect of the
Common Stock or any other class or series of its Capital
Stock;
(B) all properties, securities and rights to which
that Stockholder becomes entitled by reason of any split,
combination or reclassification of the Common Stock or any
other Capital Stock of the Company or any issuance by the
Company in respect or lieu of or in substitution for shares of
its Capital Stock; and
(C) all properties, securities and rights of any type
to which clause (2)(A) or (B) of this definition refers which
that Stockholder purchases or otherwise acquires after the
date hereof from the Company or any other Person.
(b) Capitalized terms this Agreement uses, but does not
define, have the meanings the Acquisition Agreement specifies. References herein
to "this Agreement" are to this Agreement as it may be amended, modified or
supplemented from time to time hereafter in writing by each party against which
another party seeks to enforce that amendment, modification or supplement.
Section 2. Option To Purchase Subject Shares. (a) Each
Stockholder hereby grants to Parent an irrevocable option (each such option, a
"Purchase Option") to purchase from that Stockholder at any time during the
Option Exercise Period all that Stockholder's Subject Shares at a total cash
option exercise price equal to the product of (1) the total number of that
Stockholder's Original Shares multiplied by (2) $2.84 (each such price, a
"Purchase Price").
(b) In this Section 2, "Option Exercise Period" means, if
Parent becomes entitled to, and does, terminate the Acquisition Agreement under
Section 9.01(a)(3) thereof or the Company becomes or purports to become entitled
to, and does or purportedly does, terminate this Agreement under Section
9.01(a)(4) thereof, the period of 30 days beginning the date of that termination
or purported termination; provided, however, that if the Offer Commencement Date
shall have previously occurred, that 30-day period will begin on the next day
following the date Sub terminates the Offer without having purchased any Shares
thereunder.
(c) Parent must exercise each Purchase Option in whole only
and must exercise all Purchase Options at the same time. To exercise the
Purchase Options, Parent must deliver to each Stockholder a written notice of
Parent's intention to effect that exercise, and the closing of the purchase of
the Subject Shares subject to the Purchase Options will take place:
(1) in accordance with the escrow arrangement Section 2(d)
describes below or, if for any reason that escrow arrangement and the
deposit thereunder of the Subject Shares has not occurred when Parent
exercises the Purchase Options,
(2) in the office of ▇▇▇▇▇ ▇▇▇▇▇ LLP in Houston, Texas.
B-2
In the latter case, Parent will designate in that notice the date and time of
the closing, which date may be the next day after Parent has delivered that
notice. At that closing, Parent will pay in respect of each Purchase Option the
Purchase Price payable under that Purchase Option against delivery of the
certificates representing the Subject Shares subject to that Purchase Price,
duly endorsed for transfer to Parent.
(d) Each Stockholder agrees to deposit as promptly as possible
(1) certificates representing all of that Stockholder's Subject Shares, duly
endorsed in blank with signatures guaranteed, and (2) an irrevocable power of
attorney with Bank of America, Bank of New York or such other party as may be
mutually agreed upon by the Parent and the Stockholders, as escrow agent (the
"Escrow Agent") under an escrow agreement substantially in the form of Annex A
with such changes therein, if any, as the Escrow Agent may require or as Parent
and the Stockholders may agree (the "Escrow Agreement"). The irrevocable power
of attorney shall authorize the Escrow Agent to effect a valid tender of such
Subject Shares under and in accordance with the terms of the Offer, pursuant to
the terms of the Stockholders Agreement. This shall include, without limitation,
physical delivery of such certificates and the execution and delivery of a
properly completed letter of transmittal and any other required documentation or
instruments with respect thereto. If any Stockholder withdraws its tendered
Subject Shares from the Offer in accordance with the terms of the Stockholders
Agreement, the Escrow Agent shall hold such Subject Shares in escrow until
Parent exercises its Purchase Option with respect thereto or the Option Exercise
Period has otherwise ended. When that escrow is established (the "Escrow"), the
Purchase Options may be exercised in accordance with this Section 2, by delivery
to the Escrow Agent of a notice in the form of Exhibit 1 to the Escrow Agreement
and the Purchase Prices thereunder.
Section 3. Limitation on Competition. (a) Each Stockholder
agrees, severally and not jointly with any other Person, that that Stockholder
will not, during the period beginning on the date hereof and ending on the first
anniversary of the date hereof (the "Non-Compete Period"), directly or
indirectly, for any reason, for that Stockholder's own account or on behalf of
or together with any other Person:
(1) acquire or enter into an agreement to acquire, directly or
through direct or indirect ownership or contract rights with respect to
a Person, including without limitation whether as principal, agent,
stockholder, partner, joint venturer, employer, employee or in any
other capacity, any interest (an "Interest") of any kind or character
in the lands or in the minerals on or under said lands whatsoever
located within the Non-Compete Area (as Annex B defines that term),
whether by means of lease, purchase, assignment, trade, sublease,
easement, farmout, or any other form of acquisition, including any
merger with or acquisition of stock or ownership interests in any other
Person; or
(2) call on or otherwise solicit, directly or indirectly
through any Person, any natural person who is at that time employed by
the Company in any managerial capacity with the purpose or intent of
attracting that person from the employ of the Company.
Notwithstanding the foregoing, any Stockholder may own and hold as a passive
investment up to 10% of the outstanding Capital Stock of a competing Entity. In
the event that a Stockholder
B-3
acquires an Interest in the Non-Compete Area during the Non-Compete Period, that
Stockholder (the "Acquiring Stockholder") must promptly notify Parent in writing
of that acquisition, including a full description of the acquired Interest and
the rights, obligations and duties with respect thereto, accompanied by a copy
of any acquisition agreement and any other relevant documents. Within 30 days
following that acquisition, the Acquiring Stockholder will convey, transfer and
assign all its rights, titles, and interests in the Interest so acquired to the
Company without consideration.
(b) Because of (1) the difficulty of measuring economic losses
to Parent or the Company as a result of any breach by a Stockholder of that
Stockholder's covenants in Section 3(a) and (2) the immediate and irreparable
damage that could be caused to Parent or the Company for which it would have no
other adequate remedy, each Stockholder agrees that Parent or the Company may
enforce the provisions of Section 3(a) by injunctions and restraining orders
against that Stockholder if that Stockholder breaches any of those provisions.
The breaching Stockholder will be responsible for, and Parent and the Company
will be entitled to receive reimbursement of, all costs of enforcing their
rights under this Section 3, including reasonable attorney's fees.
(c) The parties each agree that Sections 3(a) and (b) impose a
reasonable restraint on the Stockholders in light of the activities and business
of Parent and the Company on the date hereof and the current business plans of
the Company and Parent and its Affiliates.
(d) The covenants in this Section 3 are severable and
separate, and the unenforceability of any specific covenant in this Section 3 is
not intended by any party to, and will not, affect the provisions of any other
covenant in this Section 3. If any court of competent jurisdiction determines
that the scope, time or territorial restrictions Section 3(a) sets forth are
unreasonable as applied to any Stockholder, the parties, including that
Stockholder, acknowledge their mutual intention and agreement that those
restrictions be enforced to the fullest extent the court deems reasonable, and
thereby will be reformed to that extent as applied to that Stockholder and any
other Stockholders similarly situated.
(e) All the covenants in this Section 3 are intended by each
party to be, and will be construed as, an agreement independent of any other
provision in this Agreement. It is specifically agreed that the time periods
Section 3(a) specifies will be computed in the case of each Stockholder by
excluding from that computation any time during which that Stockholder is in
violation of any provision of Section 3(a). The covenants this Section 3
contains will not be affected by any breach of any other provision hereof by any
party.
(f) Each Stockholder, severally and not jointly with any other
Person, hereby agrees that this Section 3 is a material and substantial part of
the transactions the Acquisition Agreement contemplates.
B-4
Section 4. Representations and Warranties. Each Stockholder
represents and warrants to Parent that, as applied solely to that Stockholder,
all the following representations and warranties in this Section 4 are as of the
date of this Agreement, and will be immediately prior to Sub's payment for that
Stockholder's Subject Shares, true and correct:
(1) the Stockholder:
(A) is the record and beneficial owner of, and has
good and marketable title to, the Stockholder's Original
Shares and, as of the date Sub consummates the Offer, all
other Subject Shares the Stockholder hereafter acquires, in
each case free and clear of any "adverse claim," as the
applicable Uniform Commercial Code defines that term, or other
lien or encumbrance; and
(B) has and will have, with respect to the Original
Shares, and will have, with respect to all other Subject
Shares the Stockholder hereafter acquires, the sole right to
Transfer and direct the voting of those securities;
(2) except as the Stockholders Agreement otherwise provides,
none of the Original Shares is, and none of the other Subject Shares
the Stockholder hereafter acquires will be, subject to any voting
trust, voting agreement or other agreement, arrangement or restriction
respecting the Transfer or voting of any of those securities;
(3) the Stockholder has the full power, legal capacity and
authority to execute, deliver and perform the Stockholder's obligations
under this Agreement. This Agreement constitutes the legal, valid and
binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except as that enforceability
may be:
(A) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally; and
(B) subject to general principles of equity,
regardless of whether that enforceability is considered in a
proceeding in equity or at law;
(4) if the Stockholder is an Entity, the Stockholder has
obtained, in accordance with all applicable Governmental Requirements
and its Charter Documents, all approvals and the taking of all actions
necessary for the authorization, execution, delivery and performance by
the Stockholder of this Agreement;
(5) if the Stockholder is acting otherwise than in his
individual capacity, whether as an executor or a guardian or in any
other fiduciary or representative capacity, all actions on the part of
the Stockholder and all other Persons, including any court, necessary
for the authorization, execution, delivery and performance by the
Stockholder of this Agreement have been duly taken;
B-5
(6) the Stockholder's execution, delivery and performance in
accordance with its terms of this Agreement and the effectuation of the
transactions this Agreement contemplates do not and will not:
(A) violate or conflict with any Governmental
Requirement;
(B) breach or constitute a default under any
agreement or instrument to which the Stockholder is a party or
by which the Stockholder or any Subject Shares the Stockholder
owns is bound;
(C) result in the creation or imposition of, or
afford any Person the right to obtain, any lien upon any
Subject Shares the Stockholder owns, or upon any revenues,
income or profits of the Stockholder therefrom; or
(D) if the Stockholder is an Entity, violate the
Stockholder's Charter Documents; and
(7) no litigation is pending or, to the knowledge of the
Stockholder, threatened to which the Stockholder is or may become a
party which:
(A) questions or involves the validity or
enforceability of any of the Stockholder's obligations under
this Agreement; or
(B) seeks, or reasonably could be expected to seek,
(1) to prevent or delay the consummation by the Stockholder of
the transactions this Agreement contemplates the Stockholder
will consummate or (2) damages in connection with any such
consummation.
Section 5. Several Nature of Obligations. The obligations of
each Stockholder under this Agreement are several and not joint, or joint and
several, with the obligations of any other Stockholder under this Agreement.
Section 6. Termination of Certain Obligations. The obligations
of each Stockholder under Sections 2 and 3 will terminate on the expiration of
an Option Exercise Period during which Parent has not exercised its Purchase
Options, but, except for termination on that occurrence, will continue in
accordance with its terms notwithstanding any termination of the Acquisition
Agreement. The obligations of each Stockholder under Section 3 will, if they
have not terminated earlier in accordance with the preceding sentence, terminate
at 5:00 p.m., Denver, Colorado time, on March 17, 2003.
Section 7. Notices. All notices and other communications
hereunder must be in writing and will be deemed given if delivered personally,
telecopied or otherwise sent by means of electronic communications equipment
(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 it has specified by like notice):
B-6
(1) if to Parent, to it at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
With a copy, which will not constitute notice for purposes
hereof, to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
and
(2) if to a Stockholder, to the address set forth opposite
that Stockholder's name on the signature pages hereto.
Section 8. Construction and Interpretation. (a) This Agreement
uses the words "herein," "hereof" and "hereunder" and words of similar import to
refer to this Agreement as a whole and not to any provision of this Agreement,
and the words "Section" and "Annex" refer to a Section of or Annex to this
Agreement, unless it otherwise specifies. This Agreement uses the word "party"
to refer to any original signatory hereto and its permitted successors and
assigns under Section 12.
(b) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(c) The word "including," and, with correlative meaning, the
word "include," means including, without limiting the generality of any
description preceding that word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
(d) The language this Agreement uses will be deemed to be the
language the parties have chosen to express their mutual intent, and no rule of
strict construction will be applied against any party.
(e) This Agreement includes captions for convenience of
reference only, and these captions do not constitute a part of this Agreement
for any other purpose or in any way affect the meaning or construction of any
provision of this Agreement.
B-7
Section 9. Counterparts. This Agreement may be executed in two
or more counterparts, all of which will be considered one and the same agreement
and will become effective as to any Stockholder when two or more counterparts
have been signed by that Stockholder and Parent and delivered to each other, it
being understood that to be binding on any Stockholder, no other Stockholder
need sign this Agreement and Parent need not sign the same counterpart.
Section 10. Entire Agreement; Third Party Beneficiaries. This
Agreement:
(1) constitutes 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
(2) except as Sections 3 and 4 otherwise provide, is not
intended to confer on any Person other than the parties any rights or
remedies hereunder.
Section 11. Publicity. (a) Each Stockholder hereby agrees that
Parent and any of its Affiliates may publish and disclose in the Offer Documents
and the information statement Section 7.01(c) of the Acquisition Agreement
contemplates, and any other documents Parent or Sub files with the SEC in
connection with the Offer or the Merger, the identity and ownership of Subject
Shares by that Stockholder and the nature of that Stockholder's commitments,
agreements and understandings under this Agreement.
(b) Except as any applicable Governmental Requirement or the
rules of the National Association of Securities Dealers, Inc. otherwise require,
for so long as this Agreement is in effect, no Stockholder will, or will permit
any of its Affiliates to, issue or cause the publication of any press release or
other public announcement with respect to the transactions this Agreement
contemplates without the consent of Parent, which consent Parent will not
unreasonably withhold.
Section 12. Assignment; Assumption. (a) This Agreement and the
rights, interests or obligations of the parties hereunder may not be assigned by
any Stockholder, whether by operation of law or otherwise, without the prior
written consent of Parent. Parent may assign its rights and interest hereunder
against any Stockholder to any of its Affiliates, and any such assignee
Affiliate may reassign those rights and interests to any other Affiliate of
Parent, without the consent of that Stockholder, but any other such assignment
to any other Person will require the prior written consent of that Stockholder,
which consent that Stockholder will not unreasonably withhold. Subject to the
preceding sentence, this Agreement will be binding on, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
(b) Each Stockholder that is an Entity will require the
successor to that Entity's business and assets substantially as an entirety,
whether by merger, consolidation, sale of assets or other transaction, to assume
in writing that Stockholder's obligations hereunder.
Section 13. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS
B-8
THEREOF THAT WOULD CAUSE THE LAWS OF ANY OTHER JURISDICTION TO APPLY; PROVIDED,
HOWEVER, THAT SECTION 3 AND THE RIGHTS AND OBLIGATIONS THEREUNDER OF THE PARTIES
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
Section 14. Exercise of Rights and Remedies. Except as this
Agreement otherwise provides, no delay or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default
hereunder by any other party will impair any such right, power or remedy, nor
will it be construed, deemed or interpreted as a waiver of or acquiescence in
any such breach or default, or of any similar breach or default occurring later;
nor will any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
Section 15. Reformation and Severability. If any provision of
this Agreement is invalid, illegal or unenforceable, that provision will, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties as
expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
Section 16. Remedies Cumulative. No right, remedy or election
any provision of this Agreement gives will be deemed exclusive, but each will be
cumulative with all other rights, remedies and elections available at law or in
equity.
Section 17. Enforcement. Each Stockholder agrees that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, Parent will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the provisions of this Agreement in the Appropriate Court, this being in
addition to any other remedy to which Section 3, law or equity entitles Parent
or any of its Affiliates. Each Stockholder will:
(1) submit itself to the personal jurisdiction of the
Appropriate Court with respect to any dispute that arises out of this
Agreement or any transaction this Agreement contemplates;
(2) not attempt to deny or defeat that personal jurisdiction
by motion or other request for leave from any such court; and
(3) not bring any action relating to this Agreement or any
transaction this Agreement contemplates in any court other than the
Appropriate Court.
In this Section 17, "Appropriate Court" means:
(1) in the case of any dispute that arises under this
Agreement or any transaction this Agreement contemplates, other than
under Section 3 and the conduct that Section contemplates, the
Appropriate Delaware Court; and
B-9
(2) in the case of any dispute that arises under Section 3 or
any conduct to which that Section relates, the civil district courts
located in ▇▇▇▇▇▇ County, Texas.
Section 18. Further Assurances. At the request of Parent, each
Stockholder will duly execute and deliver to Parent a signature page hereto
together with the notarization of that Stockholder's signature by an appropriate
notary public and such other documents as, in the good-faith judgment of Parent,
are reasonably necessary or advisable to carry out more effectively other
provisions and purposes of Section 3.
B-10
The parties have signed this Agreement as of the date first
written above.
▇▇▇▇▇▇ AMERICAS AND
EUROPE CORPORATION
By:
----------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
STOCKHOLDERS
No. of Original Shares: 48,000
Aspect Resources, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ By:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
ASPECT ENERGY, LLC
BY: ASPECT MANAGEMENT CORPORATION,
MANAGER
No. of Original Shares: 4,729,456
c/o ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Aspect Resources, LLC BY:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ----------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
PRESIDENT
No. of Original Shares: 132,754
Esenjay Exploration, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
STOCKHOLDERS (continued)
ESENJAY PETROLEUM CORPORATION
No. of Original Shares: 4,896,415
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Esenjay Exploration, Inc. By:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
No. of Original Shares: 202,297
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
STATE OF __________ )
)
COUNTY/PARISH OF _______________ )
(Alabama) I, _________________, a _________________, in and for the
above mentioned county and state, hereby certify that ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, whose name as president, of Esenjay Petroleum
Corporation, a corporation, is signed to the foregoing
agreement and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he, as such officer and with full authority,
executed the same voluntarily for and as the act of such
corporation.
(Louisiana) On this the ___ day of March, 2002, before me, ______________,
the undersigned officer, personally appeared ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ who acknowledged himself to be the president of
Esenjay Petroleum Corporation, a corporation, and that he, as
such president, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as president.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, who acknowledged that he is president of Esenjay
Petroleum Corporation, a Delaware corporation, and that for
and on behalf of the corporation, and as its act and deed he
executed the above and foregoing instrument, after first
having been duly authorized by the corporation so to do.
(Oklahoma) This instrument was acknowledged before me on March __, 2002,
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as president of Esenjay Petroleum
Corporation.
(Texas) This instrument was acknowledged before me on March __, 2002,
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, president of Esenjay Petroleum
Corporation, a Delaware corporation, on behalf of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
_______ day of March, A. D. 2002.
----------------------------------
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ )
)
COUNTY/PARISH OF _______________ )
(Alabama) I, _______________ , a _______________ , hereby certify that
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, whose name is signed to the foregoing
agreement, and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he executed the same voluntarily on the day the
same bears date.
(Louisiana) On this the ___ day of March, 2002, before me, ______________,
the undersigned officer, personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
known to me or satisfactorily proven to be the person whose
name is subscribed to the within instrument and acknowledged
he executed the same for the purposes therein contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, who acknowledged that he executed the above and
foregoing instrument.
(Oklahoma and
Texas) This instrument was acknowledged before me on March __, 2002,
by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
_______ day of March, A. D. 2002.
----------------------------------------
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ )
)
COUNTY/PARISH OF _______________ )
(Alabama) I, _______________ , a _______________ , hereby certify that
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, whose name is signed to the foregoing
agreement, and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he executed the same voluntarily on the day the
same bears date.
(Louisiana) On this the ___ day of March, 2002, before me, ______________,
the undersigned officer, personally appeared ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, known to me or satisfactorily proven to be the person
whose name is subscribed to the within instrument and
acknowledged he executed the same for the purposes therein
contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, who acknowledged that he executed the above and
foregoing instrument.
(Oklahoma and
Texas) This instrument was acknowledged before me on March __, 2002,
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
_______ day of March, A. D. 2002.
------------------------------------
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ )
)
COUNTY/PARISH OF _______________ )
(Alabama) I, _______________ , a _______________ , hereby certify that
▇▇▇▇▇ ▇. ▇▇▇▇▇, whose name is signed to the foregoing
agreement, and who is known to me, acknowledged before me on
this day that, being informed of the contents of the
agreement, he executed the same voluntarily on the day the
same bears date.
(Louisiana) On this the ___ day of March, 2002, before me, ______________,
the undersigned officer, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇,
known to me or satisfactorily proven to be the person whose
name is subscribed to the within instrument and acknowledged
he executed the same for the purposes therein contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named ▇▇▇▇▇ ▇. ▇▇▇▇▇,
who acknowledged that he executed the above and foregoing
instrument.
(Oklahoma and
Texas) This instrument was acknowledged before me on March __, 2002,
by ▇▇▇▇▇ ▇. ▇▇▇▇▇.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
_______ day of March, A. D. 2002.
--------------------------------------
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
STATE OF __________ )
)
COUNTY/PARISH OF _______________ )
(Alabama) I, ___________________, hereby certify that ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
whose name is signed to the foregoing conveyance, and who is
known to me, acknowledged before me on this day that, being
informed of the contents of the conveyance, he executed the
same voluntarily on the day the same bears date.
(Louisiana) On this ___ day of March, 2002, before me,
___________________, the undersigned officer, personally
appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, known to me or satisfactorily
proven to be the person whose name is subscribed as president
for Aspect Management Corporation which is manager for Aspect
Energy, LLC, and acknowledged that he executed the same act of
his limited liability company for the purposes therein
contained.
(Mississippi) Personally appeared before me, the undersigned authority in
and for the said county and state, on this ___ day of March,
2002, within my jurisdiction, the within named ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, who acknowledged that he is president of Aspect
Management Corporation which is manager for Aspect Energy, LLC
and that in said representative capacity he executed the above
and foregoing instrument, after first having been duly
authorized so to do.
(Oklahoma) This instrument was acknowledged before me on March __, 2002,
by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as president of Aspect Management
Corporation which is manager for Aspect Energy, LLC.
(Texas) This instrument was acknowledged before me on March __, 2002,
by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, president of Aspect Management
Corporation, as manager on behalf of Aspect Energy, LLC, a
limited liability company.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
_______ day of March, A. D. 2002.
----------------------------------------
Signature
Printed Name:
Title of officer:
My commission or term of office expires on _______________.
[SEAL]
ANNEX A
ESCROW AGREEMENT
▇▇▇▇▇▇ Americas and Europe Corporation ("Parent"), a Delaware
corporation, the holders of outstanding common stock of Esenjay Exploration,
Inc. (the "Company"), a Delaware corporation, to which this Escrow Agreement
refers as "Stockholders" on the signature pages hereof (the "Stockholders") and
___________________________, as Escrow Agent ("Escrow Agent") hereby enter into
this Escrow Agreement dated as of March ___, 2002
PRELIMINARY STATEMENT
Parent and its subsidiary, ECM Acquisition Company ("Sub"), a
Delaware corporation, have entered into an agreement dated as of March 17, 2002
with the Company (the "Acquisition Agreement"). On the terms and subject to the
conditions the Acquisition Agreement contains, Parent will acquire the Company
in a two-step transaction. The first step will be a tender offer by Sub for all
the outstanding shares of the Company's common stock.
The Stockholders collectively own approximately 52% of the
shares of the Company's common stock issued and outstanding as of March 1, 2002.
In order to induce Parent and Sub to enter into and thereafter perform their
respective obligations under the Acquisition Agreement, the Stockholders have
entered into a Stockholders Agreement dated as of March 17, 2002 (the
"Stockholders Agreement") and an Option Agreement dated as of March 17, 2002
(the "Option Agreement").
AGREEMENT
In consideration of the premises and the covenants and other
undertakings this Agreement contains, the parties, intending to be legally bound
hereby, agree as follows:
1. Capitalized terms this Escrow Agreement uses, but does not
define, have the meanings the Option Agreement or the Stockholders Agreement
specifies.
2. Each Stockholder will deliver to Escrow Agent, against
receipt therefor of the Escrow Agent, certificates registered in the name of
that Stockholder, but endorsed in blank with signatures guaranteed, representing
all that Stockholder's Subject Shares. Escrow Agent will hold and dispose of the
certificates each Stockholder deposits with it hereunder in accordance with the
terms hereof.
3. Each Stockholder hereby irrevocably appoints and designates
Escrow Agent as the agent, representative and attorney-in-fact for and on behalf
of that Stockholder to take any and all actions on behalf of that Stockholder to
effect, in accordance with the Stockholders Agreement, a valid tender of that
Stockholder's Subject Shares under and in accordance with the terms of the
Offer. This power of attorney includes, without limitation, physical delivery of
those certificates and the execution and delivery of a properly completed letter
of transmittal and any other required documentation or instruments with respect
thereto. If, prior to the acceptance for payment by Sub of Shares under the
Offer,
A-1
(1) (A) Parent terminates the Acquisition Agreement
under Section 9.01(a)(3) thereof or (B) the Company terminates
the Acquisition Agreement under Section 9.01(a)(4) thereof,
and
(2) Sub terminates the Offer,
Parent will give written notice of that termination and the date of termination
of the Offer to Escrow Agent and cause the certificates representing the Subject
Shares of each Stockholder that have been tendered under the Offer to be
redelivered to Escrow Agent for redeposit into escrow hereunder. Following that
redeposit, Escrow Agent will hold those certificates in its custody hereunder
until it disposes of those certificates in accordance with Section 4 below.
4. (a) If at any time during the Option Exercise Period Parent
shall deliver to Escrow Agent written notice in the form of Exhibit 1 hereto of
its exercise of the Purchase Options, together with immediately available funds
in the aggregate amount of the Purchase Prices payable thereunder, Escrow Agent
promptly will deliver the certificates representing all Subject Shares Parent
has purchased on its exercise of the Purchase Options to Parent. Escrow Agent
will, promptly following its receipt of those funds, deliver to each
Stockholder, in accordance with that Stockholder's written wire transfer
instructions, immediately available funds in the amount of the Purchase Price to
which that Stockholder is entitled.
(b) If during the Option Exercise Period Parent does not
exercise the Purchase Options and purchase the Subject Shares subject thereto
under Section 4(a), Escrow Agent promptly will deliver to each Stockholder
following the expiration of the Option Exercise Period the certificates
representing that Stockholder's Subject Shares.
5. Prior to the termination of this Escrow Agreement, Escrow
Agent will vote all Subject Shares that it holds or has tendered under the Offer
in accordance with the written instructions of Parent.
6. Escrow Agent may resign by mailing its written notice of
that resignation to the Stockholders and Parent; provided, however, that this
resignation will not be effective until Parent shall have appointed a successor
Escrow Agent and that successor shall have executed an Escrow Agreement
substantially in the form hereof. Any successor escrow agent must be a national
or state bank authorized to exercise corporate trust powers, and having a
combined capital and surplus of at least $100,000,000. Escrow Agent will receive
reasonable compensation for its services hereunder which Parent will pay or
cause to be paid.
7. Each of the Stockholders and Parent severally represents
and warrants to the Escrow Agent that it has full right, power and authority to
execute and deliver this Escrow Agreement.
8. All notices, requests, claims, demands and other
communications hereunder must be in writing and will be given (and will be
deemed to have been duly received if so given) by personal delivery or
facsimile, by mail (registered or certified mail, postage prepaid, return
receipt requested), or by means of electronic communications equipment (which is
confirmed) to the respective parties as follows:
A-2
If to Parent, to it at:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
With a copy, which will not constitute notice for purposes
hereof, to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
and
If to a Stockholder, to that Stockholder's address set forth
opposite that Stockholder's name on the signature pages hereto.
If to Escrow Agent, to it at:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Attention: Corporate Trust Department
9. This Agreement may be executed in two or more counterparts,
all of which will be considered one and the same agreement, it being understood
that to be binding on any Stockholder, no other Stockholder need sign this
Agreement and Parent need not sign the same counterpart.
10. Each Stockholder that is an Entity will require the
successor to that Entity's business and assets substantially as an entirety,
whether by merger, consolidation, sale of assets or other transaction, to assume
in writing that Stockholder's obligations hereunder.
11. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF THAT WOULD CAUSE THE LAWS OF ANY OTHER JURISDICTION TO APPLY.
A-3
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be duly executed on the date below written.
Dated: March __, 2002
▇▇▇▇▇▇ AMERICAS AND
EUROPE CORPORATION
By:
----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
ESCROW AGENT
--------------------------------------------
By:
----------------------------------------
Name:
Title:
STOCKHOLDERS
Aspect Resources, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ By:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
ASPECT ENERGY, LLC
BY: ASPECT MANAGEMENT CORPORATION,
MANAGER
c/o ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ BY:
Aspect Resources, LLC ----------------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ PRESIDENT
Esenjay Exploration, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
A-4
STOCKHOLDERS (continued)
ESENJAY PETROLEUM CORPORATION
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Esenjay Exploration, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ By:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Esenjay Exploration, Inc.
500 Dallas, Suite 2920 By:
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
A-5
EXHIBIT 1
[Letterhead of ▇▇▇▇▇▇ Americas and Europe Corporation]
_______________, 200__
[ESCROW AGENT] (or any successor)
Ladies and Gentlemen:
We refer to the Escrow Agreement, dated March __, 2002 among
the undersigned, the Stockholders signatory thereto and you, as Escrow Agent. We
hereby exercise the option to purchase such Subject Shares referred to in that
Escrow Agreement and deliver herewith the Purchase Prices therefor.
Very truly yours,
▇▇▇▇▇▇ AMERICAS AND
EUROPE CORPORATION
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
The undersigned, [Escrow Agent] (or successor), as Escrow
Agent, acknowledges receipt of this and the Purchase Prices therefor.
-------------------------------------
Escrow Agent
EXHIBIT C
DEFINITIONS
This Exhibit is Exhibit C to the Agreement dated as of March
17, 2002 among ▇▇▇▇▇▇ Americas and Europe Corporation, ECM Acquisition Company
and Esenjay Exploration, Inc., each of which is a Delaware corporation (this
"Agreement"). The following terms this Agreement uses have the meanings this
Exhibit assigns to them.
"Acquisition Proposal" means any inquiry, proposal or offer
from any Person relating to:
(1) any direct or indirect acquisition or purchase,
other than the Offer and the Merger or any other Takeover
Transaction by Parent or any Affiliate of Parent, by means of
a Takeover Transaction or otherwise, of (A) a substantial
amount of assets of any Company Entity or (B) 15% or more of
any class of equity securities of any Company Entity; or
(2) any other transaction the consummation of which
reasonably (A) could be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger or (B)
would be expected to dilute materially the benefits to Parent
of the transactions this Agreement contemplates.
"Affiliate" means, as to any specified Person, any other
Person that, directly or indirectly through one or more intermediaries
or otherwise, controls, is controlled by or is under common control
with the specified Person. This definition uses "control" to mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through
ownership of Capital Stock or other securities of that Person, by
contract or otherwise.
"Agreement" means this Agreement, including Exhibit C, the
Schedules and the Company Disclosure Letter, as each of the same may be
amended, modified or supplemented from time to time in accordance with
the provisions hereof.
"Anti-Parent Takeover Measure" means:
(1) any measure having or purporting to have, in the
event the Company terminates this Agreement under Section
9.01(a)(4), a deterrent effect on the ability of Parent or any
Affiliate of Parent to consummate the Offer or otherwise
effect a Takeover Transaction thereafter, including any
"poison pill" rights plan, any provision in any Charter
Document which imposes supermajority, class or series voting
requirements or restricts or may otherwise adversely affect
the ability of a holder of a majority of the shares of
outstanding Common Stock to propose or effect action by the
stockholders of the Company or any transaction with any
Company Entity, including any provision in the terms of any
class or series of Preferred Stock; and
C-1
(2) any provision that at any time is any more
restrictive than Section 6.02(a) on the ability of the Company
and its Representatives to solicit, initiate or encourage,
including by way of furnishing information, or to take any
other action to facilitate, a Takeover Transaction by Parent
or any Affiliate of Parent.
"Applicable ▇▇▇▇▇ ▇▇▇▇▇ Office" means the office of ▇▇▇▇▇
▇▇▇▇▇ L.L.P. located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Applicable Filing Office" means the Secretary of State of the
State of Delaware.
"Appraisal Statute" means Section 262 of the DGCL.
"Appropriate Delaware Court" means:
(1) the Court of Chancery in and for New Castle
County in the State of Delaware; or
(2) if that court lacks subject-matter jurisdiction,
any appropriate state or federal court in New Castle County,
Delaware.
"Benefit Plan" means each of the following which any Company
Entity has maintained, is maintaining or is required to maintain or to
which any Company Entity has contributed, is contributing or is
required to contribute, in each case for the benefit of any present or
former employee, officer or director of any Company Entity:
(1) each "employee pension benefit plan" (as Section
3(2) of ERISA defines that term) (hereinafter, a "Pension
Plan");
(2) each "employee welfare benefit plan" (as Section
3(1) of ERISA defines that term) (hereinafter, a "Welfare
Plan"); and
(3) each other arrangement, plan, policy, program or
practice, written or oral relating to stock options, stock
purchases, compensation, deferred compensation, bonuses,
severance, fringe benefits or other employee benefits.
"Capital Stock" means, with respect to:
(1) any corporation, (A) any share, or any depositary
receipt or other certificate representing any share, of any
equity ownership interest in that corporation and (B) any
other security possessing voting rights with respect to
matters on which holders of the corporation's Capital Stock
are entitled to vote; and
(2) any other Entity, any share, membership or other
percentage interest, unit of participation or other
equivalent, however designated, of an equity interest in that
Entity.
C-2
"Certificate" means any stock certificate formerly
representing Converted Shares as of the Effective Time.
"Certificate of Merger" means the certificate of merger
respecting the Merger which contains the information the DGCL requires
to effect the Merger.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.
"Charter Documents" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time:
(1) the articles or certificate of formation,
incorporation or organization or the equivalent organizational
documents, of that Entity;
(2) the bylaws or limited liability company agreement
or regulations, or the equivalent governing documents, of that
Entity; and
(3) each document setting forth the designation,
amount and relative rights, limitations and preferences of any
class or series of that Entity's Capital Stock.
"Closing Date" has the meaning Section 2.04 specifies.
"Code" means the Internal Revenue Code of 1986.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Company" has the meaning first paragraph hereof specifies.
"Company Board" means the board of directors of the Company,
and references herein to the "whole" Company Board at any time are to
the total authorized members of the Company Board at that time,
including any vacancies.
"Company Disclosure Letter" means the disclosure letter the
Company delivered to Parent prior to the execution of this Agreement
and in which the Company provided the information Article Four
describes it as so providing and took exception to various of its
representations and warranties in Article Four.
"Company Entity" means at any time the Company or any Entity
that is a Subsidiary of the Company at that time.
"Company Financial Advisor" means Hibernia Southcoast Capital
LLC.
"Company Material Adverse Effect" means, with respect to the
consequences of any fact or circumstance, including the occurrence or
non-occurrence of any event, that the fact or circumstance has caused,
is causing or reasonably could be expected to cause,
C-3
directly, indirectly or consequentially, individually or in the
aggregate with all other facts and circumstances qualified as to
materiality, damage or loss to, including under Environmental Laws, any
Company Entity or combination of Company Entities that is Material to
the Company Entities.
"Confidential Information" means, with respect to any Person,
all trade secrets and other confidential, nonpublic or proprietary
information of that Person, including information derived from reports,
investigations, research, reserve studies, seismic or other geophysical
or geological work, work in progress, codes, marketing and sales
programs, customer lists, records relating to past production service
provided to customers, capital expenditure projects, cost summaries,
pricing formulae, contract analyses, financial information,
projections, present and future business plans, confidential filings
with any Governmental Authority and all other confidential, nonpublic
concepts, methods of doing business, ideas, materials or information
prepared or performed for, by or on behalf of that Person respecting
any aspect of its business.
"Converted Shares" means:
(1) Shares that have converted into the right to
receive the Merger Consideration under Section 3.01(a)(3); and
(2) Dissenting Shares that will be deemed under
Section 3.01(a)(4) to have so converted.
"Credit Agreement" means the second amended and restated
credit agreement dated as of August 13, 2001 between the Company and
Deutsche Bank AG New York Branch, as in effect on the date hereof.
"Current Audited Balance Sheet Date" means December 31, 2000.
"Current Bonus Plan" means, collectively, the 2000 Bonus Pay
Plan and the 2001 Bonus Pay Plan of the Company.
"Current Audited Financial Statements" means the audited
consolidated financial statements of the Company and its Subsidiaries
as of the Current Audited Balance Sheet Date and for the period of two
years then ended, including the notes thereto and the related audit
report of Deloitte & Touche LLP.
"DGCL" means the General Corporation Law of the State of
Delaware.
"Derivative Securities" of a specified Entity means any
Capital Stock, debt security or other Indebtedness of the specified
Entity or any other Person which is convertible into or exchangeable
for, or any option, warrant or other right to acquire:
(1) any unissued Capital Stock of the specified
Entity; or
(2) any Capital Stock of the specified Entity which
that Entity issued and holds directly or indirectly as
treasury Capital Stock.
C-4
"D&O Insurance" means directors' and officers' liability
insurance.
"Dissenting Share" means any share of Common Stock issued and
outstanding immediately prior to the Effective Time as to which its
then holder of record then is entitled to an appraisal of its fair
value under the Appraisal Statute.
"Effective Time" means the time as of which the Merger becomes
effective under the DGCL.
"Eligible Securities" means equity or debt securities:
(1) of which no Company Entity is an issuer; and
(2) which are not convertible into, exchangeable for
or exercisable to purchase or otherwise acquire any securities
of which any Company Entity is an issuer.
"Entity" means any sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited
liability company, business trust, unincorporated organization or
association, mutual company, joint stock company or joint venture.
"Environmental Laws" means any and all Governmental
Requirements relating to the environment or public or worker health or
safety, including ambient air, surface water (including water
management and runoff), land surface or subsurface strata, or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes (including Solid Wastes, Hazardous Wastes or Hazardous
Substances) or noxious noise or odor into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, recycling, removal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes (including petroleum, petroleum distillates,
asbestos or asbestos-containing material, volatile organic compounds
and polychlorinated biphenyls).
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" means, with respect to any specified Person
at any time, any other Person, including an Affiliate of the specified
Person, that is, or at any time within six years of that time was, a
member of any ERISA Group of which the specified Person is or was a
member at the same time.
"ERISA Group" means any "group of organizations" within the
meaning of Section 414(b), (c), (m) or (o) of the Code or any
"controlled group" (as Section 4001(a)(14) of ERISA defines that term).
"Exchange Act" means the Securities Exchange Act of 1934.
"Expiration Date" means 12:00 midnight, New York City time, on
the date on which the Offer will expire, which date will be:
C-5
(1) the 20th business day from the Offer Commencement
Date; or
(2) such later date as Sub may designate in
accordance with the Exchange Act:
(A) with the prior written consent of the
Company; or
(B) without the prior written consent of the
Company if Section 1.01(b) so permits.
"Filed SEC Documents" means all SEC Documents filed with and
publicly available for inspection by the SEC on its website prior to
the date of this Agreement.
"GAAP" means, as applied to any financial statements,
generally accepted accounting principles and practices in the United
States as in effect from time to time which:
(1) have been concurred in by independent public
accountants; and
(2) have been or are applied on a basis consistent,
except for changes concurred in by independent public
accountants, with the most recent audited financial statements
the Filed SEC Documents include.
"Governmental Approval" means at any time any authorization,
consent, approval, permit, franchise, certificate, license,
implementing order or exemption of, or registration or filing with, any
Governmental Authority, including any certification or licensing of a
natural person to engage in a profession or trade or a specific
regulated activity, at that time.
"Governmental Authority" means:
(1) any national, state, county, municipal or other
government, domestic or foreign, or any agency, board, bureau,
commission, court, department or other instrumentality of any
such government;
(2) any Person having the authority under any
applicable Governmental Requirement to assess and collect
Taxes for its own account; and
(3) for purposes of Section 4.11, any arbitrator or
mediator having the power to bind the parties to an
arbitration or alternative dispute resolution proceeding.
"Governmental Requirement" means at any time any obligation or
requirement:
(1) under any law including common law, statute,
code, ordinance, order, rule, regulation, judgment, decree,
injunction, writ, edict, award, authorization or other
requirement of any Governmental Authority in effect at that
time;
C-6
(2) included in any issued Governmental Approval at
that time; or
(3) resulting from binding arbitration or mediation
at that time.
"Independent Director" means:
(1) any individual who: (A) is a director of the
Company on the date of this Agreement; (B) is not an officer
or employee of any Company Entity; and (C) has been designated
by the Company Board by written notice to Parent as a director
who will continue to serve as a member of the Company Board
for purposes of this Agreement; or
(2) If any individual clause (1) above describes as
an Independent Director ceases to be a member of the Company
Board for any reason, any individual who: (A) is not an
officer, director, employee or Affiliate of any Company Entity
or Parent or any of its Affiliates; and (B) is elected by the
Company Board to fill the resulting vacancy.
"IRCA" means the Immigration Reform and Control Act of 1986.
"IRS" means the Internal Revenue Service.
"LIP" means the "Esenjay Exploration, Inc. Long-Term Incentive
Plan" as in effect on November 1, 1999 and on the date of this
Agreement.
"Material" means, as applied to any Person or the Company
Entities, material to the business, operations, property or other
assets, liabilities, financial condition, results of operations or
prospects of that Person and its Subsidiaries considered as a whole or
the Company Entities considered as a whole, as the case may be.
"Merger" means the merger of Sub or its assignee permitted
hereby with and into the Company:
(1) on the terms and subject to the conditions this
Agreement sets forth; or
(2) if this Agreement has been earlier terminated and
Sub thereafter consummates the Offer, on the terms and subject
to the conditions that would have been applicable if this
Agreement had remained in effect.
"Merger Consideration" means the Offer consideration per Share
Sub pays for Shares it purchases in the Offer, without interest.
"Minimum Tender Condition" means the condition to the Offer
that there shall be validly tendered and not properly withdrawn prior
to the expiration of the Offer the number of Shares which, together
with the Shares Sub, Parent and Parent's other direct and indirect
Subsidiaries own, would represent at least a majority of all
outstanding Shares on a fully diluted basis on the date of purchase.
C-7
"Multiemployer Plan" means a "multiemployer plan," as Section
4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of ERISA
defines that term.
"New Common Stock" means the common stock, per value $.001 per
share, of the Surviving Corporation.
"Offer" means the offer of Sub to purchase all outstanding
Shares that Parent does not already own, directly or indirectly through
its Subsidiaries, for:
(1) the price of $2.84 per Share, net to the seller
in cash and without interest thereon; or
(2) such greater consideration per Share, if any, as
Sub may, in its sole discretion, offer in the Offer Documents
to pay for each of those Shares.
"Offer Commencement Date" means the date on which Sub
commences the Offer under Section 1.01(a).
"Offer Conditions" means the conditions of the Offer which
Exhibit D contains, as those conditions may be amended or supplemented
from time to time:
(1) in accordance with Section 1.01(b) until such
time, if ever, as any party terminates this Agreement under
Article Nine; and
(2) if any party terminates this Agreement under
Article Nine, in accordance with Section 1.01(a) after that
termination.
"Offer Documents" means the offer to purchase to be dated on
or about the Offer Commencement Date of Sub and the related letter of
transmittal and other documents ancillary to the Offering the Schedule
TO includes as of the Offer Commencement Date, as those documents
thereafter may be amended or supplemented from time to time.
"Option" means any option to purchase Common Stock which has
been granted under any of the Option Plans and remains outstanding on
the date of this Agreement.
"Option Agreement" means the option agreement dated the date
of this Agreement in the form Exhibit B includes.
"Option Grantors" means the Persons named as "Stockholders" by
the Option Agreement.
"Option Plan" means collectively the "Frontier Natural Gas
Corporation Employee Option Plan -- 1997" and the LIP.
"Parent" has the meaning the first paragraph hereof specifies.
"Parent Entity" means Parent, Sub or any Entity that is a
Subsidiary of Parent.
C-8
"Paying Agent" means at any time the bank or trust company
acting as Parent's paying agent at that time in connection with the
exchange of Certificates for the Merger Consideration.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has the meaning the definition of "Benefit
Plan" herein specifies.
"Permitted Investments" means:
(1) at the time of purchase or other acquisition by
any Company Entity,
(A) obligations issued or guaranteed by the
United States of America with a remaining maturity
not exceeding one year,
(B) commercial paper with maturities of not
more than 270 days and a published rating of not less
than A-1 by S&P or P-1 by ▇▇▇▇▇'▇ and
(C) certificates of deposit and bankers'
acceptances having maturities of not more than one
year of any commercial bank or trust company if (1)
that bank or trust company has a combined capital and
surplus of at least $500,000,000 and (2) its
unsecured long-term debt obligations, or those of a
holding company of which it is a subsidiary, are
rated not less than A- by S&P or A3 by ▇▇▇▇▇'▇; and
(2) other extensions of credit made by any Company
Entity to its customers in the ordinary course of its business
and consistent with its past practices.
"Person" means any natural person, Entity, estate, trust,
union or employee organization or Governmental Authority or, for the
purpose of the definition of "ERISA Affiliate," any trade or business.
"Preferred Stock" means the preferred stock, par value $.01
per share, of the Company.
"Prohibited Transaction" means any transaction either Section
4975 of the Code or Section 406 of ERISA prohibits and neither Section
4975 of the Code nor Section 408 of ERISA exempts.
"Proprietary Rights" means:
(1) patents, applications for patents and patent
rights;
(2) in each case, whether registered, unregistered or
under pending registration, trademark rights, trade names,
trade name rights, corporate names,
C-9
business names, trade styles or dress, service marks and logos
and other trade designations and copyrights; and
(3) in the case of any Company Entity, all agreements
relating to the technology, know-how or processes used or held
for use in any business of any Company Entity.
"Qualified Plans" has the meaning Section 4.09 specifies.
"Relevant Representation" has the meaning Section 4.14
specifies.
"RCRA" means the Resource Conservation and Recovery Act of
1976.
"Reportable Event" means, with respect to any Pension Plan:
(1) the occurrence of any of the events set forth in
Section 4043(b) or (c) (other than a Reportable Event as to
which the provision of 30 days' notice to the PBGC is waived
under applicable regulations), 4062(e) or 4063(a) of ERISA
with respect to that plan;
(2) any event requiring any Company Entity to provide
security to that plan under Section 401(a)(29) of the Code; or
(3) any failure to make a payment Section 412(m) of
the Code requires with respect to that plan.
"Representatives" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants, including
independent certified public accountants, advisors, attorneys,
consultants or other agents of that Person, or any other
representatives of that Person or of any of those directors, officers,
employees, Affiliates, accountants, advisors, attorneys, consultants or
other agents.
"Royalty" includes any payment attributable to any royalty,
overriding royalty or other interest in oil and gas properties and
payments any contractual arrangement or applicable Governmental
Approval or Governmental Requirement may require which are attributable
to the production of natural resources and owed to a federal, state or
local Governmental Authority or otherwise, including all interest,
penalties and additions imposed with respect to the amount of those
payments.
"Royalty Return" means, as originally filed or as thereafter
amended, any federal, state or local declaration, form, information
return, report, return or statement relating to Royalties.
"Savings Plan" means Esenjay Employee Savings Plan as in
effect on the date of this Agreement and since October 1, 1998.
"Schedule 14D-9" means a Solicitation/Recommendation Statement
on Exchange Act Schedule 14D-9 of the Company, as filing person, which
contains, among other
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information respecting the Company and the Offer, the recommendations
of the Company Board to which Section 1.02(b) refers, as originally
filed with the SEC under the Exchange Act and, after that filing, as
amended from time to time.
"Schedule TO" means a Tender Offer Statement on Exchange Act
Schedule TO of Parent and Sub, as filing persons, which contains, among
other information and documents respecting Parent, Sub and the Offer,
the Offer Documents, as originally filed with the SEC under the
Exchange Act and, after that filing, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means at any time all forms, registration and
other statements reports, schedules, exhibits and other documents
relating to periods beginning or transactions or other events occurring
on or after January 1, 1999 which the Exchange Act or the Securities
Act has required the Company or any other Company Entity to file with
the SEC at or prior to that time.
"Section 203 Restrictions" means the provisions of Section 203
of the DGCL which impose conditions to or restrictions on "business
combinations" by Delaware corporations with their "interested
stockholders" (the quoted terms having the meanings Section 203
specifies).
"Securities Act" means the Securities Act of 1933.
"Severance Plan" means the Company's severance compensation
plan known as the "Esenjay Exploration, Inc. Employee Incentive and
Severance Protection Plan," as adopted effective as of February 21,
2001 and as thereafter amended, modified or supplemented prior to the
date of this Agreement.
"Shares" means at any time the outstanding shares of Common
Stock.
"Solid Wastes, Hazardous Wastes or Hazardous Substances" have
the meanings ascribed to those terms in CERCLA, RCRA or any other
Environmental Law applicable to the business or operations of any
Company Entity which imparts a broader meaning to any of those terms
than does CERCLA or RCRA.
"Stockholders" means the Persons named as "Stockholders" by
the Stockholders Agreement.
"Stockholders Agreement" means the stockholders agreement
dated the date of this Agreement in the form Exhibit A includes.
"Sub" has the meaning the first paragraph hereof specifies.
"Subsidiary" of any specified Person at any time means any
Entity a majority of the Capital Stock of which the specified Person
owns or controls at that time, directly or indirectly, through another
Subsidiary of the specified Person.
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"Superior Takeover Proposal" means any bona fide written
Acquisition Proposal from any Person relating to any direct or indirect
purchase or other acquisition by any Person, other than Parent or an
Affiliate of Parent, of the entire equity interest in the Company which
that Person does not already own or the business and assets of the
Company substantially as an entirety in a Takeover Transaction which:
(1) is for a Takeover Consideration to the holders of
the Common Stock and is otherwise on terms which the Company
Board determines in the good faith of its members and on the
basis of written advice of the Company Financial Advisor, and
taking into account all legal, financial, regulatory and other
aspects of that proposal and the Person making that proposal,
would, if consummated, be more favorable, from a financial
point of view, to those holders than the Offer and the Merger
and is reasonably likely to be consummated without undue
delay; and
(2) does not include or otherwise provide for or
contemplate, directly or indirectly, the adoption by any
Company Entity of, or any commitment by any Company Entity to
perform, any Anti-Parent Takeover Measure.
"Surviving Corporation" means the corporation surviving the
Merger.
"Takeover Consideration" means:
(1) cash;
(2) Eligible Securities; or
(3) any combination of cash and Eligible Securities.
"Takeover Transaction" means any one of the following or any
combination of one or more of the following in a series of related
transactions: any merger, consolidation, business combination, sale of
assets, tender or exchange offer, share exchange, conversion,
recapitalization, redemption, liquidation, dissolution or similar
transaction involving any Company Entity.
"Tax" or "Taxes" means all net or gross income, gross
receipts, net proceeds, sales, use, ad valorem, value added, franchise,
bank shares, withholding, payroll, employment, excise, property, deed,
stamp, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges or
assessments of any nature whatever imposed by any Governmental
Requirement, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"Termination Event" means, with respect to any Pension Plan:
(1) any Reportable Event with respect to that plan
which is likely to result in the termination of that plan;
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(2) the termination of, or the filing of a notice of
intent to terminate, that plan or the treatment of any
amendment to that plan as a termination under Section 4041(c)
of ERISA; or
(3) the institution of proceedings to terminate, or
the appointment of a trustee to administer, that plan under
Section 4042 of ERISA.
"Termination Fee" means cash in the amount of $3,000,000.
"TSIP" means the "Esenjay Exploration, Inc. Targeted Sales
Incentive Plan" as in effect on February 21, 2001 and on the date of
this Agreement.
"Warrant" means any warrant to purchase or otherwise acquire
Common Stock from the Company or any other Company Entity which has
been created and is outstanding on the date of this Agreement.
"Welfare Plan" has the meaning the definition of "Benefit
Plan" herein specifies.
End of Exhibit C
C-13
EXHIBIT D
OFFER CONDITIONS
This Exhibit is Exhibit D to the Agreement dated as of March
17, 2002 among ▇▇▇▇▇▇ Americas and Europe Corporation, ECM Acquisition Company
and Esenjay Exploration, Inc., each of which is a Delaware corporation (the
"Agreement"). Capitalized terms this Exhibit uses, but does not define, have the
meanings the Agreement specifies.
Notwithstanding any other term of the Offer or the Agreement,
Sub will not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Exchange Act Rule 14e-l(c), which
relates to Sub's obligation to pay for or return tendered Shares promptly after
the termination or withdrawal of the Offer, to pay for, and may postpone the
acceptance for payment of and payment for, Shares tendered, and, except as the
Agreement otherwise provides, terminate the Offer as to any Shares not then paid
for if there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of Shares which would satisfy the Minimum
Tender Condition.
Moreover, notwithstanding any other term of the Offer or the
Agreement, Sub will not be required to commence the Offer, accept for payment
or, subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate or amend the Offer, with or without the
consent of the Company as the Agreement provides, or if, at any time on or after
the date of the Agreement and before the acceptance of Shares for payment or the
payment therefor, any of the following conditions exists:
(a) there shall be pending any suit, action or proceeding by
any Governmental Authority, or pending any suit, action or proceeding
that has a reasonable likelihood of success by any other Person:
(1) seeking to restrain, prohibit or make illegal or
materially more costly the making or consummation of the Offer
or the Merger or any other transactions contemplated by the
Agreement (collectively, the "Transactions");
(2) seeking to prohibit or limit the ownership or
operation by the Company, Parent or any of their respective
Affiliates of any material portion of the business or assets
of the Company, Parent or any of their respective Affiliates,
or to compel the Company, Parent or any of their respective
Affiliates to dispose of or hold separate any material portion
of the business or assets of the Company, Parent or any of
their respective Affiliates, as a result of the Offer, the
Merger or any other Transaction;
(3) seeking to impose limitations that in the
aggregate are material on the ability of Parent or Sub or any
Affiliate of Parent to acquire or hold, or exercise full
rights of ownership of, any Shares, including the right to
vote the Shares purchased or otherwise acquired by it on all
matters properly presented to the stockholders of the Company;
D-1
(4) seeking to prohibit Parent or any of its
Affiliates from effectively controlling in any material
respect the business or operations of the Company; or
(5) that otherwise reasonably could be expected to
have a Company Material Adverse Effect;
(b) any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction shall be enacted,
entered, enforced, promulgated, amended or issued with respect to, or
deemed applicable to, or any consent or approval withheld with respect
to, (1) Parent, the Company or any of their respective Affiliates or
(2) the Offer, the Merger or any other Transaction, in either case by
any Governmental Authority that is reasonably likely to result,
directly or indirectly, in any of the consequences to which paragraph
(a) above refers;
(c) (1) it shall have been publicly disclosed, or Parent shall
have otherwise learned, that beneficial ownership, determined for the
purposes of this paragraph under Exchange Act Rule l3d-3, of more than
15% of the Shares has been acquired by another Person that is not a
Stockholder or (2) the Company Board or any committee thereof shall
have:
(A) withdrawn or modified the approval or
recommendation of the Company Board of the Offer, including by
amendment of the Schedule 14D-9, in a manner adverse to Parent
or Sub;
(B) approved or recommended to the stockholders of
the Company an Acquisition Proposal, determined that an
Acquisition Proposal is a Superior Takeover Proposal or
announced its intention to enter into an agreement with
respect to an Acquisition Proposal;
(C) approved or recommended that the stockholders of
the Company tender their Shares into any tender offer or
exchange offer that is an Acquisition Proposal or is related
thereto; or
(D) resolved to do any of the foregoing;
(d) the Company shall have breached any of its representations
and warranties in the Agreement prior to their termination which (1)
are qualified as to materiality or a Company Material Adverse Effect or
(2) are not so qualified if, as a result of all breaches thereof, a
Company Material Adverse Effect has occurred or reasonably could be
expected to occur;
(e) there shall have occurred any changes, conditions, events
or developments that have had, or reasonably could be expected to have,
individually or in the aggregate, a Company Material Adverse Effect;
(f) there shall have occurred or been threatened:
D-2
(1) any material change in Australian currency
exchange rates relative to United States currency exchange
rates or a suspension of, or limitation on, the markets
therefor;
(2) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United
States;
(3) any limitations, whether or not mandatory, by any
government or governmental authority, domestic, foreign or
supranational, on, or other event that might affect the
extension of credit by banks or other lending institutions;
(g) the Company shall have breached in any material respect
any material agreement or covenant of the Company under the Agreement;
(h) the Parent shall not have received environmental site
assessment reports from each of (1) Cornerstone Environmental Services,
Inc., covering 12 of the Company's operating ▇▇▇▇▇ and (2) ▇▇▇▇▇▇▇▇
Environmental Services, Inc., covering the Company's remaining
operating ▇▇▇▇▇, in each case in form and substance satisfactory to
Parent in its sole discretion;
(i) the auditor's report to the audited consolidated financial
statements of the Company for the year ended December 31, 2001, shall
have contained any reservation, qualification or non-standard
disclosure; or
(j) the Agreement shall have been terminated in accordance
with its terms;
in each case which, and regardless of the circumstances giving rise to any such
condition, including any action or inaction by Parent or any of its Affiliates,
makes it inadvisable, in the good-faith judgment of Parent, to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and
Parent. Sub or Parent may assert any of those conditions regardless of the
circumstances giving rise thereto or may waive any of those conditions in whole
or in part at any time and from time to time in its sole discretion; provided,
however, that the Minimum Tender Condition may not be waived without the prior
written consent of the Company. The failure by Parent, Sub or any other
Affiliate of Parent at any time to exercise any of the foregoing rights will not
be deemed a waiver of any such right, the waiver of any such right with respect
to particular facts and circumstances will not be deemed a waiver with respect
to any other facts and circumstances and each such right will be deemed an
ongoing right that may be asserted at any time and from time to time. Any
determination by Parent with respect to the foregoing conditions will be final
and binding on all parties.
End of Exhibit D
D-3
