<PAGE> 1
EXHIBIT (d)
[CONFORMED]
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of December 22, 2000
among
MARATHON OIL COMPANY,
MARATHON OIL ACQUISITION 1, LTD.
and
PENNACO ENERGY, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE OFFER AND THE MERGER
Section 1.01. The Offer........................................................1
Section 1.02. Company Actions..................................................3
Section 1.03. The Merger.......................................................4
Section 1.04. Closing..........................................................4
Section 1.05. Effective Time...................................................4
Section 1.06. Effects..........................................................4
Section 1.07. Certificate of Incorporation and Bylaws..........................5
Section 1.08. Directors........................................................5
Section 1.09. Officers.........................................................5
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Capital Stock..........................................5
Section 2.02. Exchange of Certificates.........................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01. Organization, Standing and Power.................................8
Section 3.02. Subsidiaries; Equity Interests...................................9
Section 3.03. Capital Structure................................................9
Section 3.04. Authority; Execution and Delivery; Enforceability...............10
Section 3.05. No Conflicts; Consents..........................................11
Section 3.06. SEC Documents; Undisclosed Liabilities..........................12
Section 3.07. Information Supplied............................................13
Section 3.08. Absence of Certain Changes or Events............................13
Section 3.09. Taxes...........................................................15
Section 3.10. Absence of Changes in Benefit Plans.............................16
Section 3.11. ERISA Compliance; Excess Parachute Payments.....................17
Section 3.12. Litigation......................................................19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 3.13. Compliance with Applicable Laws.................................19
Section 3.14. Environmental Matters...........................................19
Section 3.15. Contracts.......................................................21
Section 3.16. Labor Matters...................................................21
Section 3.17. Brokers; Fees and Expenses......................................21
Section 3.18. Opinion of Financial Advisor....................................22
Section 3.19. Potential Conflicts of Interest.................................22
Section 3.20. Reserve Information.............................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.01. Organization, Standing and Power................................22
Section 4.02. Sub.............................................................22
Section 4.03. Authority; Execution and Delivery; Enforceability...............23
Section 4.04. No Conflicts; Consents..........................................23
Section 4.05. Information Supplied............................................24
Section 4.06. Brokers.........................................................24
Section 4.07. Financing.......................................................24
Section 4.08. Litigation......................................................24
Section 4.09. Ownership of Company Common Stock...............................25
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.01. Conduct of Business.............................................25
Section 5.02. No Solicitation.................................................27
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01. Preparation of Proxy Statement; Stockholders Meeting............29
Section 6.02. Access to Information; Confidentiality..........................30
Section 6.03. Reasonable Best Efforts; Notification...........................30
Section 6.04. Stock Options...................................................31
Section 6.05. Indemnification.................................................32
Section 6.06. Fees and Expenses...............................................33
Section 6.07. Public Announcements............................................34
Section 6.08. Transfer Taxes..................................................34
Section 6.09. Directors.......................................................34
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 6.10. CMS Operating Agreement.........................................35
Section 6.11. Further Assurances..............................................35
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to Each Party's Obligation to Effect the Merger......35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01. Termination.....................................................36
Section 8.02. Effect of Termination...........................................38
Section 8.03. Amendment.......................................................39
Section 8.04. Extension; Waiver...............................................39
Section 8.05. Procedure for Termination, Amendment, Extension or Waiver.......39
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Nonsurvival of Representations and Warranties...................39
Section 9.02. Notices.........................................................39
Section 9.03. Definitions.....................................................40
Section 9.04. Interpretation..................................................41
Section 9.05. Severability....................................................41
Section 9.06. Counterparts....................................................42
Section 9.07. Entire Agreement; No Third-Party Beneficiaries..................42
Section 9.08. Governing Law...................................................42
Section 9.09. Assignment......................................................42
Section 9.10. Limitations on Warranties.......................................42
</TABLE>
iii
<PAGE> 5
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
affiliate...................................................................9.03
Agreement...............................................................Preamble
Appraisal Statute........................................................2.01(d)
business day................................................................9.03
Certificate of Merger.......................................................1.05
Certificates.............................................................2.02(b)
Closing.....................................................................1.04
Closing Date................................................................1.04
CMS.........................................................................6.10
Code.....................................................................2.02(g)
Company.................................................................Preamble
Company Benefit Agreements..................................................3.10
Company Benefit Plans.......................................................3.10
Company Board............................................................1.02(a)
Company Bylaws..............................................................3.01
Company Charter.............................................................3.01
Company Common Stock....................................................Recitals
Company Disclosure Letter................................................3.05(a)
Company Material Adverse Effect.............................................9.03
Company Multiemployer Pension Plan.......................................3.11(c)
Company Pension Plans....................................................3.11(a)
Company Right............................................................3.03(a)
Company Rights Agreement.................................................3.03(a)
Company SEC Documents....................................................3.06(a)
Company Stock Option.....................................................6.04(d)
Company Stock Plan.......................................................6.04(d)
Company Stockholder Approval.............................................3.04(a)
Company Stockholders Meeting.............................................6.01(b)
Company Takeover Proposal................................................5.02(c)
Confidentiality Agreement................................................6.02(b)
Consent..................................................................3.05(b)
Contract.................................................................3.03(a)
DGCL........................................................................1.03
Dissent Shares...........................................................2.01(d)
Effective Time..............................................................1.05
Environmental Claim......................................................3.14(a)
Environmental Laws.......................................................3.14(a)
ERISA....................................................................3.11(a)
ERISA Affiliate..........................................................3.11(c)
Exchange Act.............................................................3.05(b)
Exchange Fund............................................................2.02(a)
Expiration Date..........................................................1.01(a)
Filed Company SEC Documents.................................................3.08
Fully Diluted Shares.....................................................Annex I
GAAP.....................................................................3.06(a)
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Governmental Entity......................................................3.05(b)
Hazardous Substance......................................................3.14(a)
in the ordinary course of business..........................................9.03
Indemnified Liabilities..................................................6.05(a)
Indemnified Parties......................................................6.05(a)
Indemnified Party........................................................6.05(a)
Independent Directors.......................................................6.09
Information Statement....................................................1.02(b)
Judgment.................................................................3.05(a)
Law......................................................................3.05(a)
Liens....................................................................3.05(a)
Material Contracts..........................................................3.15
Merger..................................................................Recitals
Merger Consideration.................................................2.01(c)(ii)
Minimum Tender Condition.................................................Annex I
Offer...................................................................Recitals
Offer Documents..........................................................1.01(b)
Offer Price.............................................................Recitals
Parent..................................................................Preamble
Parent Material Adverse Effect...........................................4.04(a)
Paying Agent.............................................................2.02(a)
Permits..................................................................3.13(b)
person......................................................................9.03
Primary Company Executives...............................................3.11(f)
Proxy Statement..........................................................3.05(b)
Representatives..........................................................5.02(a)
Rights Agent.............................................................3.03(a)
Royalty..................................................................3.09(g)
Royalty Return...........................................................3.09(g)
Ryder Scott.................................................................3.20
Schedule 14D-9...........................................................1.02(b)
SEC......................................................................1.01(a)
Securities Act...........................................................3.06(a)
Sub.....................................................................Preamble
subsidiary..................................................................9.03
Superior Company Proposal................................................5.02(c)
Surviving Corporation.......................................................1.03
Tax Return...............................................................3.09(g)
Taxes....................................................................3.09(g)
Termination Fee..........................................................6.06(b)
Transactions.............................................................1.02(a)
Transfer Taxes..............................................................6.08
USX......................................................................3.04(b)
Warrants.................................................................3.03(a)
</TABLE>
v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER dated as of December 22, 2000 (this
"Agreement") among MARATHON OIL COMPANY, an Ohio corporation ("Parent"),
MARATHON OIL ACQUISITION 1, LTD., a Delaware corporation and a direct wholly
owned subsidiary of Parent ("Sub"), and PENNACO ENERGY, INC., a Delaware
corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the outstanding shares of
common stock, par value $0.001 per share, of the Company, including the
associated Company Rights (the "Company Common Stock"), at a price per share of
$19.00, net to the seller in cash (such amount, or any greater amount per share
paid pursuant to the Offer, the "Offer Price"), without interest thereon, on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS the respective Boards of Directors of Parent and Sub have
approved the merger (the "Merger") of Sub into the Company on the terms and
subject to the conditions set forth in this Agreement, whereby each issued share
of Company Common Stock not owned directly or indirectly by Parent or the
Company shall be converted into the right to receive an amount in cash equal to
the Offer Price; and
WHEREAS, the Board of Directors of the Company has approved the Offer
and the Merger and resolved to recommend that holders of shares of Company
Common Stock tender their shares pursuant to the Offer and approve and adopt
this Agreement and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and other terms contained in this
Agreement, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
THE OFFER AND THE MERGER
Section 1.01. The Offer.
(a) Subject to the conditions of this Agreement, no earlier
than January 8, 2001 and no later than January 12, 2001, Sub shall, and Parent
shall cause Sub to, commence the Offer within the meaning of the applicable
rules and regulations of the Securities and Exchange Commission (the "SEC");
provided, however, that the obligation of Sub to, and of Parent to cause Sub to,
commence the Offer and accept for payment, and pay for, any shares of Company
Common Stock tendered pursuant to the Offer is subject to the Minimum Tender
Condition and the
1
<PAGE> 8
satisfaction or waiver of the other conditions set forth in Annex I. The initial
expiration date of the Offer (the "Expiration Date") shall be the 20th business
day following the commencement of the Offer (determined pursuant to Rule 14d-2
promulgated by the SEC). Sub expressly reserves the right to modify the terms
and conditions of the Offer and to waive any condition set forth in Annex I
(other than the Minimum Tender Condition), except that, without the prior
written consent of the Company, Sub shall not (i) reduce the number of shares of
Company Common Stock subject to the Offer, (ii) reduce the price per share of
Company Common Stock to be paid pursuant to the Offer, (iii) reduce or modify
the Minimum Tender Condition, (iv) modify or add to the conditions set forth in
Annex I in any manner adverse to the holders of Company Common Stock (other than
Parent and its subsidiaries), (v) except as provided in the next sentence,
extend the Offer or (vi) change the form of consideration payable in the Offer.
Notwithstanding the foregoing, Sub may, without the consent of the Company, (i)
extend the Offer in increments of not more than five business days each, if at
the scheduled Expiration Date of the Offer any of the conditions to Sub's
obligation to purchase shares of Company Common Stock are not satisfied, until
such time as such conditions are satisfied or waived, (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer and (iii) make available a
subsequent offering period (within the meaning of Rule 14d-11 promulgated by the
SEC). Without limiting the right of Sub to extend the Offer, in the event that
the Minimum Tender Condition is not satisfied at the scheduled Expiration Date
of the Offer, at the request of the Company, Sub shall, and Parent shall cause
Sub to, extend the Expiration Date of the Offer in increments of five business
days each until the earliest to occur of (v) the date that is 60 days after the
initial Expiration Date, (w) the satisfaction of the Minimum Tender Condition,
(x) the reasonable determination by Parent that the Minimum Tender Condition is
not capable of being satisfied on or prior to the date that is 60 days after the
initial Expiration Date, (y) the termination of this Agreement in accordance
with its terms and (z) April 30, 2001. On the terms and subject to the
conditions of the Offer and this Agreement, Sub shall, and Parent shall cause
Sub to, accept for payment and pay for all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the expiration of the Offer and in any event not later than three business
days after such expiration.
(b) As soon as practicable on the date of commencement of the
Offer, Sub shall, and Parent shall cause Sub to, file with the SEC a Tender
Offer Statement on Schedule TO with respect to the Offer, which shall contain or
incorporate by reference an offer to purchase and a related letter of
transmittal and any related documents (such Schedule TO and the documents
included or incorporated by reference therein pursuant to which the Offer will
be made, together with any supplements or amendments thereto, the "Offer
Documents"). The Company shall cooperate in the preparation of the Offer
Documents, and the Company and its counsel will be given a reasonable
opportunity to review and comment on the Offer Documents before they are filed
with the SEC. Each of Parent, Sub and the Company shall promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect, and each of Parent and Sub shall take all steps necessary to amend or
supplement the Offer Documents and to cause the Offer Documents as so amended or
supplemented to be filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. Parent and Sub shall provide the Company and its counsel with
any comments Parent, Sub or their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such
2
<PAGE> 9
comments and shall consult with the Company and its counsel prior to responding
to any such comments.
Section 1.02. Company Actions.
(a) The Company hereby approves of and consents to the Offer,
the Merger and the other transactions contemplated by this Agreement
(collectively, the "Transactions"). The Company hereby consents to the inclusion
in the Offer Documents of the recommendation of the Board of Directors of the
Company (the "Company Board") described in Section 3.04(b)(iii); provided,
however, that prior to the consummation of the Offer, the Company Board reserves
the right to modify or withdraw such recommendation in a manner adverse to
Parent and Sub if (and only if) a majority of the entire Company Board shall
have determined in good faith, based on (among other things) the advice of its
independent financial advisors and outside counsel, that this Agreement or the
Merger is no longer in the best interests of the Company's stockholders and that
such modification or withdrawal is, therefore, required in order to satisfy the
Company Board's fiduciary duties to the Company's stockholders under applicable
Law. The Company has been advised by each of its directors and executive
officers that he intends either to tender all shares of Company Common Stock
beneficially owned by him to Sub pursuant to the Offer or to vote such shares in
favor of the approval and adoption by the stockholders of the Company of this
Agreement and the Transactions; provided, however, that such directors and
executive officers shall have no obligation under this Agreement to so tender or
vote their shares if this Agreement is terminated in accordance with its terms.
(b) As soon as practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9, including an Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder (the "Information Statement"), with respect to the Offer
(such Schedule 14D-9 and Information Statement, as amended or supplemented from
time to time, the "Schedule 14D-9") containing the recommendation of the Company
Board described in Section 3.04(b)(iii) and shall disseminate the Schedule 14D-9
to the holders of Company Common Stock as and to the extent required by
applicable federal securities laws. Each of Parent, Sub and their counsel shall
be given a reasonable opportunity to review and comment on the Schedule 14D-9
before it is filed with the SEC. Each of the Company, Parent and Sub shall
promptly correct any information provided by it for use in the Schedule 14D-9 if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company shall take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. The Company shall provide Parent and its counsel with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments and
shall consult with Parent, Sub and their counsel prior to responding to any such
comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders
3
<PAGE> 10
subsequent to such date, together with 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 Company
Common Stock, and shall furnish to Sub such information and assistance
(including updated lists of stockholders, security position listings and
computer files) as Parent or Sub may reasonably request in communicating the
Offer to the Company's stockholders. Subject to the requirements of applicable
Law, until the Effective Time, Parent and Sub shall use such information only in
connection with the Offer and the Merger and, if this Agreement shall be
terminated in accordance with Section 8.01, shall, upon written request,
deliver, and shall use their reasonable efforts to cause their affiliates,
agents and advisors to deliver, to the Company all copies of such information
then in their possession.
Section 1.03. The Merger.
On the terms and subject to the conditions set forth in this Agreement,
and in accordance with the Delaware General Corporation Law (the "DGCL"), Sub
shall be merged with and into the Company at the Effective Time. At the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (as such, the "Surviving
Corporation") and a wholly owned subsidiary of Parent.
Section 1.04. Closing.
Unless this Agreement shall have been terminated and the transactions
contemplated hereby shall have been abandoned pursuant to Article VIII, and
subject to the satisfaction or waiver of all of the conditions set forth in
Article VII, the closing (the "Closing") of the Merger shall take place at the
offices of Baker Botts L.L.P., One Shell Plaza, 910 Louisiana Street, Houston,
Texas 77002 at 10:00 a.m. on the second business day following the satisfaction
(or, to the extent permitted by Law, waiver) of the conditions set forth in
Section 7.01 (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or, to the extent
permitted by Law, waiver of those conditions), or at such other place, time and
date as shall be agreed in writing between Parent and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date."
Section 1.05. Effective Time.
Prior to the Closing, the Company shall prepare, and on the Closing
Date the Company shall file with the Secretary of State of the State of
Delaware, a certificate of merger (or a certificate of ownership and merger)
(the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with such Secretary of State or at such
other time as Parent and the Company shall agree and specify in the Certificate
of Merger (the time the Merger becomes effective being the "Effective Time").
Section 1.06. Effects.
The Merger shall have the effects set forth in Section 259 of the DGCL.
4
<PAGE> 11
Section 1.07. Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of Sub, as in effect
immediately prior to the Effective Time, shall be amended at the Effective Time
to change the corporate name set forth therein to "Pennaco Energy, Inc." and, as
so amended, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended in accordance with the
provisions thereof and applicable Law.
(b) The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until thereafter
changed or amended in accordance with the provisions thereof and the provisions
of the Certificate of Incorporation of the Surviving Corporation and applicable
Law.
Section 1.08. Directors.
The directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.09. Officers.
The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Capital Stock.
At the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any shares of Company Common Stock or any shares of
capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.001 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time that is owned by the Company, Parent or Sub shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
5
<PAGE> 12
(c) Conversion of Company Common Stock.
(i) Subject to Sections 2.01(b) and 2.01(d), each
issued and outstanding share of Company Common Stock shall be converted
into the right to receive an amount in cash equal to the Offer Price,
without interest, less any required withholding taxes, upon surrender
and exchange of the Certificate representing such share.
(ii) The cash payable upon the conversion of a share
of Company Common Stock pursuant to this Section 2.01(c) is referred to
as the "Merger Consideration." As of the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a Certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration, without interest,
less any required withholding taxes, upon surrender of such Certificate
in accordance with Section 2.02.
(d) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, shares ("Dissent Shares") of Company Common Stock
that are outstanding immediately prior to the Effective Time and that are held
by any person who is entitled to dissent from and properly dissents from this
Agreement pursuant to, and who complies in all respects with, Section 262 of the
DGCL, in each case to the extent applicable (the "Appraisal Statute"), shall not
be converted into a right to receive the Merger Consideration as provided in
Section 2.01(c), but rather the holders of Dissent Shares shall be entitled to
the right to receive payment of the appraised value of such Dissent Shares in
accordance with the Appraisal Statute; provided, however, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to receive payment of the appraised value under the Appraisal Statute,
then the right of such holder to be paid the appraised value of such holder's
Dissent Shares shall cease and such Dissent Shares shall be deemed to have been
converted as of the Effective Time into, and to have become exchangeable solely
for, the right to receive the Merger Consideration, without interest, as
provided in Section 2.01(c). The Company shall give prompt notice to Parent of
any objections or demands received by the Company for appraisal of Company
Common Stock pursuant to the Appraisal Statute, and Parent shall have the right
to direct all negotiations and proceedings with respect to such objections or
demands. Neither the Company nor the Surviving Corporation shall, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such objections or demands, or agree to do any of the
foregoing.
Section 2.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
select a bank or trust company reasonably acceptable to the Company to act as
paying agent (the "Paying Agent") for the payment of the Merger Consideration
upon surrender of Certificates. The Surviving Corporation shall, and Parent
shall cause the Surviving Corporation to, provide to the Paying Agent on a
timely basis, as and when needed after the Effective Time, cash necessary to pay
for the shares of Company Common Stock converted into the right to receive the
Merger Consideration pursuant to Section 2.01(c) (such cash being hereinafter
referred to as the "Exchange Fund"). The expenses of the
6
<PAGE> 13
Paying Agent shall not be paid from the Exchange Fund, but shall be paid
directly by the Surviving Corporation.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a certificate or certificates (the "Certificates") that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.01(c), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon surrender of
a Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor cash in an amount equal to the product of (A) the
number of shares of Company Common Stock theretofore represented by such
Certificate and (B) the Merger Consideration, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that such tax has been paid or is not
applicable. No interest shall be paid or shall accrue on the cash payable upon
surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock;
Transfer Books. The Merger Consideration paid in accordance with the terms of
this Article II upon conversion of any shares of Company Common Stock shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
shares of Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time that may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement and which remain unpaid at the Effective Time, and after the
Effective Time there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of shares of Company Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund (including any interest or other income received by the Paying Agent in
respect thereof that has not previously been distributed pursuant to Section
2.02(f)) that remains undistributed to the holders of Company Common Stock for
180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holder of Company Common Stock who has not
theretofore complied with this Article II shall thereafter look only to the
Surviving Corporation for payment of such holder's claim for the Merger
Consideration.
7
<PAGE> 14
(e) No Liability. None of Parent, Sub, the Company, the
Surviving Corporation or the Paying Agent shall be liable to any person in
respect of any payments or distributions payable from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate has not been surrendered prior to
five years after the Effective Time (or immediately prior to such earlier date
on which the Merger Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity), any amounts
payable in respect of such Certificate shall, to the extent permitted by
applicable Law, become the property of the Surviving Corporation, free and clear
of all claims or interests of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest
any cash included in the Exchange Fund, as directed by the Surviving
Corporation, on a daily basis. Any interest and other income resulting from such
investments shall be payable to the Surviving Corporation on demand.
(g) Withholding Rights. Parent, Sub or the Surviving
Corporation shall be entitled to deduct and withhold, or cause the Paying Agent
to deduct and withhold, from the consideration otherwise payable to any holder
of Company Common Stock pursuant to this Agreement, whether the Offer Price or
the Merger Consideration, such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or under any provision of state, local or
foreign tax Law. To the extent that amounts are so deducted and withheld by
Parent, Sub or the Surviving Corporation, such deducted and withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent, Sub or the Surviving Corporation.
(h) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against Parent or the Surviving Corporation
with respect to such Certificate, the Paying Agent will pay, in exchange for
such lost, stolen or destroyed Certificate, the Merger Consideration to be paid
in respect of the shares of Company Common Stock represented by such
Certificate, as contemplated by this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.01. Organization, Standing and Power.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full corporate
power and authority necessary to enable it to own, lease or otherwise hold its
properties and assets and to conduct its business as currently
8
<PAGE> 15
conducted. The Company is duly qualified to do business in each jurisdiction
where (a) the nature of its business or its ownership or leasing of its
properties make such qualification necessary or (b) the failure to so qualify,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect. The Company has delivered to Parent
true, correct and complete copies of the certificate of incorporation of the
Company, as amended to the date of this Agreement (as so amended, the "Company
Charter"), and the Bylaws of the Company, as amended to the date of this
Agreement (as so amended, the "Company Bylaws"). The Company Charter and the
Company Bylaws are in full force and effect, and no other organizational
documents are applicable to or binding upon the Company. The Company is not in
violation of any provision of the Company Charter or the Company Bylaws.
Section 3.02. Subsidiaries; Equity Interests.
The Company has no subsidiaries and does not own, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or other equity or ownership interest in any person.
Section 3.03. Capital Structure.
(a) The authorized capital stock of the Company consists of
50,000,000 shares of Company Common Stock and 10,000,000 shares of preferred
stock, par value $0.001 per share. At the close of business on December 21,
2000, (i) 19,641,286 shares of Company Common Stock were issued and outstanding,
(ii) no shares of Company Common Stock were held by the Company in its treasury,
(iii) 3,931,536 shares of Company Common Stock were subject to issuance upon
exercise of outstanding Company Stock Options under the Company Stock Plan at a
weighted average exercise price of $5.89 per share, (iv) 90,000 shares of
Company Common Stock were subject to issuance upon exercise of outstanding
warrants at a weighted average exercise price of $4.72 per share (the
"Warrants"), (v) 447,772 additional shares of Company Common Stock were reserved
for issuance pursuant to the Company Stock Plan and (vi) one common share
purchase right (a "Company Right") for each share of Common Stock outstanding
was issued and outstanding in accordance with that certain Rights Agreement (the
"Company Rights Agreement"), dated as of February 24, 1999, between the Company
and Harris Trust and Savings Bank, as Rights Agent (the "Rights Agent"), and
one-half of a share of Company Common Stock was reserved for issuance pursuant
to the exercise of each Company Right. Except as set forth above, at the close
of business on the date of this Agreement, no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. All outstanding shares of Company capital stock are, and all such
shares that may be issued prior to the Effective Time will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the DGCL, the Company Charter, the Company Bylaws or any contract, lease,
license, indenture, note, bond, agreement, permit, concession, franchise or
other instrument (a "Contract") to which the Company is a party or otherwise
bound. Except as set forth above, as of the date of this Agreement, there are
not any options, warrants, calls, rights, convertible or exchangeable
securities, units, commitments, Contracts, arrangements or undertakings to which
the Company is a party or by which it is bound (x) obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity interests in,
9
<PAGE> 16
or any security convertible or exercisable for or exchangeable into any capital
stock of or other equity interest in, the Company or (y) obligating the Company
to issue, grant, extend or enter into any such option, warrant, call, right,
security, unit, commitment, Contract, arrangement or undertaking. As of the date
of this Agreement, there are not any outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of capital stock
of the Company. Except as contemplated in connection with the execution of this
Agreement, there are no shareholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or to which it is
bound relating to the holding, voting or disposition of any shares of capital
stock of the Company.
(b) The Company Board or a committee administering the Company
Stock Plan has the power and authority to adjust the terms of all outstanding
Company Stock Options granted under the Company Stock Plan, by resolution or
other action, to provide that each such Company Stock Option outstanding
immediately prior to the acceptance for payment of shares of Company Common
Stock pursuant to the Offer shall be canceled in accordance with Section 6.04,
with the holder thereof becoming entitled to receive the amount of cash referred
to in Section 6.04. Such cancellation of a Company Stock Option in exchange for
the cash payment described in Section 6.04 will constitute a release of any and
all rights the holder of such Company Stock Option had or may have had in
respect thereof. No consents of the holders of the Company Stock Options are
necessary to effectuate the foregoing. The Company Board or a committee
administering the Company Stock Plan has the power and authority to cause (i)
the Company Stock Plan to terminate as of the Effective Time and (ii) the
provisions in any other Company Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company to be deleted as of the Effective Time.
Following the Effective Time, no holder of a Company Stock Option or any
participant in the Company Stock Plan or other Company Benefit Plan will have
any right thereunder to acquire any capital stock of the Company or the
Surviving Corporation.
Section 3.04. Authority; Execution and Delivery; Enforceability.
(a) The Company has all requisite corporate power and
authority to execute, deliver and perform this Agreement and to consummate the
Transactions. The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate and stockholder action on the part of the
Company, subject, in the case of the Merger, to receipt of the Company
Stockholder Approval required by applicable Law. The Company has duly executed
and delivered this Agreement, and this Agreement constitutes its legal, valid
and binding obligation, enforceable against the Company in accordance with its
terms, except as that enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the
enforcement of creditor's rights generally and the application of general
principles of equity (regardless of whether that enforceability is considered in
a proceeding at law or in equity). Subject to the applicability of Section 253
of the DGCL, the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock voting as a single class (the
"Company Stockholder Approval") is the only vote of any class or series of the
Company's capital stock required to approve the Merger and adopt this Agreement.
10
<PAGE> 17
(b) The Company Board has duly adopted resolutions, in each
case by a unanimous vote of all members of the Company Board, (i) approving and
declaring the advisability of this Agreement, the Offer, the Merger and the
other Transactions in accordance with the applicable provisions of the DGCL,
(ii) determining that the terms of the Offer, the Merger and the other
Transactions are fair to and in the best interests of the Company and its
stockholders and (iii) recommending that the holders of Company Common Stock
accept the Offer, tender their shares of Company Common Stock pursuant to the
Offer and, if approval is required by applicable Law, approve and adopt this
Agreement and the Merger. Such resolutions are sufficient to render inapplicable
to Parent, Sub and USX Corporation, a Delaware corporation of which Parent is a
wholly owned subsidiary ("USX"), and this Agreement, the Offer, the Merger and
the other Transactions the provisions of Section 203 of the DGCL. No other state
takeover statute or similar statute or regulation applies or purports to apply
to the Company with respect to this Agreement, the Offer, the Merger or any
other Transaction.
Section 3.05. No Conflicts; Consents.
(a) Except as set forth in Section 3.05(a) of the letter dated
as of the date of this Agreement from the Company to Parent and Sub (the
"Company Disclosure Letter"), the execution, delivery and performance by the
Company of this Agreement do not, and the consummation of the Offer, the Merger
and the other Transactions and compliance with the terms of this Agreement will
not, (i) conflict with or result in any violation of any provision of the
Company Charter or the Company Bylaws, (ii) subject to the filings and other
matters referred to in Section 3.05(b), conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any pledge, lien, charge, mortgage,
encumbrance or security interest of any kind or nature whatsoever (collectively,
"Liens") upon any of the properties or assets of the Company under, or require
the consent of any person under, any provision of any Contract to which the
Company is a party or by which any of its properties or assets is bound or
affected or (iii) subject to the filings and other matters referred to in
Section 3.05(b), conflict with or result in any violation of any domestic or
foreign judgment, verdict, jury award, injunction, order or decree ("Judgment")
or domestic or foreign statute, law (including common law), ordinance, rule or
regulation ("Law") applicable to the Company or its properties or assets, except
in the case of clauses (ii) and (iii) above, for such matters as, individually
or in the aggregate, could not reasonably be expected to have a Company Material
Adverse Effect.
(b) No consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, or
notice to, or Permit from, any federal, state, local or foreign government or
any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity") is required to be obtained or made by or with respect to
the Company in connection with the execution, delivery and performance of this
Agreement or the consummation of the Transactions, other than (i) the filing
with the SEC of (A) the Schedule 14D-9, (B) a proxy or information statement
relating to the Company Stockholder Approval (the "Proxy Statement"), if such
approval is required by applicable Law, and (C) such reports under Section 13 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement, the Offer,
11
<PAGE> 18
the Merger and the other Transactions, (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of the other jurisdictions in which the
Company is qualified to do business, (iii) such filings as may be required in
connection with the Taxes described in Section 6.08, (iv) filings under state
securities Laws, and (v) such other items as, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect.
(c) The Company Board, by a unanimous vote of all its members,
has taken all action necessary, subject only to obtaining the countersignature
of the Rights Agent to an amendment to the Company Rights Agreement (which
countersignature the Company will have obtained prior to the commencement of the
Offer), to (i) render the Company Rights inapplicable to this Agreement, the
Offer, the Merger and the other Transactions, (ii) ensure that (A) neither
Parent nor Sub nor any of its "Affiliates" or "Associates" is or will become an
"Acquiring Person" (each as defined in the Company Rights Agreement) by reason
of this Agreement, the Offer, the Merger or any other Transaction, and (B) a
"Distribution Date" (as defined in the Company Rights Agreement) will not occur
by reason of this Agreement, the Offer, the Merger or any of the other
Transactions and (iii) cause the Company Rights to expire concurrently with the
consummation of the Offer.
Section 3.06. SEC Documents; Undisclosed Liabilities.
(a) The Company has timely filed all required reports,
schedules, forms, statements and other documents with the SEC relating to
periods commencing on or after September 1, 1998 (such reports, schedules,
forms, statements and other documents being hereinafter referred to as the
"Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act of 1933, as amended (the "Securities Act"),
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and none of the Company SEC
Documents as of such dates contained any untrue statement of a material fact or
omitted 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 were made, not misleading. The consolidated financial statements of the
Company included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles in the United States ("GAAP")
(except, in the case of unaudited quarterly statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may otherwise be indicated in the notes thereto) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments).
(b) Except as set forth in the most recent financial
statements included in the Filed Company SEC Documents, the Company has no
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected in the Company's financial
statements, and there is no existing condition, situation or set of
circumstances that could reasonably be expected to result in such a liability or
obligation (including any claims,
12
<PAGE> 19
whether or not asserted, for royalty payments), that, individually or in the
aggregate, could reasonably be expected to have a Company Material Adverse
Effect.
Section 3.07. Information Supplied.
Subject to Parent's and Sub's fulfillment of their obligations with
respect thereto, the Schedule 14D-9 and the Proxy Statement will contain (or
will be amended in a timely manner so as to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable Law and will conform
in all material respects with the requirements of the Exchange Act and any other
applicable Law; and neither the Schedule 14D-9 nor the Proxy Statement (or any
amendment or supplement thereto) will, at the respective times they are filed
with the SEC or published, sent or given to the Company's stockholders, 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
or, in the case of the Proxy Statement, will, at the time of the Company
Stockholders Meeting, omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which shall have become false or
misleading in any material respect. Notwithstanding the foregoing, no
representation or warranty is hereby made by the Company with respect to any
information supplied by USX, Parent or Sub in writing for inclusion in, or with
respect to USX, Parent or Sub information derived from USX's public SEC filings
which is included or incorporated by reference in, the Schedule 14D-9 or the
Proxy Statement. None of the information supplied or to be supplied by the
Company in writing for inclusion or incorporation by reference in, or which may
be deemed to be incorporated by reference in, any of the Offer Documents will,
at the respective times the Offer Documents are filed with the SEC or published,
sent or given to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading. If at any time prior to the Effective Time
any event with respect to the Company, or with respect to any information
supplied by the Company in writing for inclusion in any of the Offer Documents,
shall occur which is required to be described in an amendment of, or a
supplement to, any of the Offer Documents, the Company shall so describe the
event to Parent.
Section 3.08. Absence of Certain Changes or Events.
Except as disclosed in the Company SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or in Section 3.08 of the Company Disclosure Letter, since December
31, 1999, the Company has conducted its business only in the ordinary course of
business, and there has not been:
(a) any event, change, occurrence, effect or development that,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock, property or otherwise) with
respect to any Company capital stock or any
13
<PAGE> 20
repurchase, redemption or other acquisition by the Company of any capital stock
or other equity securities of, or other ownership interests in, the Company;
(c) any split, combination or reclassification of any Company
capital stock or any issuance of or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for, shares of
Company capital stock;
(d) (i) any grant by the Company to any director or officer of
the Company of any increase in compensation, bonus or other benefits, (ii) any
grant by the Company to any such director or officer of any increase in
severance, change of control or termination pay benefits, or (iii) any entry by
the Company into, or any amendment of, any employment, consulting, deferred
compensation, indemnification, severance, change of control or termination
agreement or arrangement with any such director or officer;
(e) any change in accounting methods, principles or practices
by the Company, except for such changes as may have been required by a change in
GAAP;
(f) any (i) material elections with respect to Taxes by the
Company, (ii) settlement or compromise by the Company of any material Tax
liability or refund or (iii) assessment of a material Tax or Royalty against the
Company by any Governmental Entity;
(g) any amendment of any term of any outstanding security of
the Company that would materially increase the obligations of the Company under
such security;
(h) any incurrence, assumption or guarantee by the Company of
any indebtedness for borrowed money;
(i) any creation or assumption by the Company of any Lien on
any asset of the Company;
(j) any making of any loan, advance or capital contribution to
or investment in any person by the Company other than (i) in connection with any
acquisition or capital expenditure permitted by Section 5.01, or (ii) loans or
advances to employees of the Company made in the ordinary course of business;
(k) (i) any acquisition by the Company by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other business
organization or division thereof or any acquisition by the Company of any assets
(other than inventory) that are material to the Company, (ii) any sale, lease,
license, encumbrance or other disposition of material assets of the Company,
other than sales of products to customers in the ordinary course of business,
(iii) any incurrence of capital expenditures by the Company other than in the
ordinary course of business, or (iv) any modification, amendment, assignment,
termination or relinquishment by the Company of any Contract, license or other
right that, individually or in the aggregate with all such modifications,
amendments, assignments, terminations and relinquishments, has had or could
reasonably be expected to have a Company Material Adverse Effect;
14
<PAGE> 21
(l) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company that, individually or in
the aggregate, has had or could reasonably be expected to have a Company
Material Adverse Effect;
(m) any entry by the Company into any commitment or
transaction material to the Company (other than commitments or transactions
entered into in the ordinary course of business);
(n) as of the date hereof, any revaluation by the Company of
any of its material assets, including but not limited to writing down the value
of inventory or writing off notes or accounts receivable other than in the
ordinary course of business; or
(o) any agreement, commitment or undertaking to take any
action referred to in Sections 3.08(a) through 3.08(n).
Section 3.09. Taxes.
(a) The Company has timely filed, or has caused to be timely
filed on its behalf, all Tax Returns (including those returns requiring
estimates of Tax payments) required to be filed by it, and all such Tax Returns
are true, complete and accurate in all material respects. The Tax Returns have
been prepared in accordance with all applicable Laws. All Taxes shown to be due
on such Tax Returns, or otherwise owed, have been timely paid. Section 3.09(a)
of the Company Disclosure Letter contains a list of all jurisdictions (whether
foreign or domestic) in which the Company currently files Tax Returns.
(b) Except as set forth in Section 3.09(b) of the Company
Disclosure Letter, (i) the Company has not requested any extension of time in
which to file any Tax Return, which Tax Return has not since been filed, and
(ii) no audits, investigations or other proceedings by a Governmental Entity are
presently pending against the Company that could materially affect the liability
of the Company for Taxes, and no notification has been received by the Company
that any such audit, investigation or proceeding is threatened. Section 3.09(b)
of the Company Disclosure Letter includes a list of all issues in dispute in any
audit, investigation or proceeding against the Company and an estimate of the
amount of Tax in dispute as to each issue.
(c) The most recent financial statements contained in the
Filed Company SEC Documents reflect an adequate reserve for all Taxes payable by
the Company for all Taxable periods and portions thereof through the date of
such financial statements. No material deficiency with respect to any Taxes has
been threatened, proposed, asserted or assessed against the Company, and no
waivers or extensions of the statute of limitations with respect to any Taxes
are pending.
(d) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Company. The Company
is not bound by any agreement with respect to Taxes.
(e) The Company has never been a member of an affiliated,
consolidated, combined or unitary group and has no liability for the payment of
Taxes of any other entity as a result of being a member of such a group or as a
result of any express or implied obligation to indemnify any other person with
respect to the payment of any Taxes.
15
<PAGE> 22
(f) The Company has timely filed, or has caused to be timely
filed on its behalf, all Royalty Returns required to be filed by it, and all
such Royalty Returns are true, complete and accurate in all material respects as
provided for under contract or by statute. All Royalties shown to be due on such
Royalty Returns, or otherwise owed, have been timely paid. Section 3.09(f) of
the Company Disclosure Letter contains a list of all jurisdictions in which the
Company currently files Royalty Returns, a list of all scheduled royalty audits
or planned audits by the relevant authorities, and a list of disputed matters as
described above along with an estimated dollar amount attributable to the
disputed matter. No material deficiency with respect to any Royalty has been
threatened, proposed, asserted or assessed against the Company.
(g) For purposes of this Agreement:
"Royalty" includes any payments required under any contractual
arrangement or by any applicable statute attributable to the production of
natural resources whether owed to a local, state or federal Governmental Entity
and shall include all interest, penalties and additions imposed with respect to
such amounts.
"Royalty Return" means any federal, state, or local Royalty return,
declaration, statement, report, schedule, form or information return or any
amended Royalty return relating to Royalties.
"Taxes" includes all forms of taxation, whenever created or imposed,
and whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, state, foreign, federal or other Governmental Entity,
or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.
"Tax Return" means any federal, state, local, provincial or foreign Tax
return, declaration, statement, report, schedule, form or information return or
any amended Tax return relating to Taxes.
Section 3.10. Absence of Changes in Benefit Plans.
Except as disclosed in the Filed Company SEC Documents or in Section
3.10 of the Company Disclosure Letter, since December 31, 1999, there has not
been any adoption or amendment in any material respect by the Company of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, thrift, savings, stock bonus, restricted
stock, cafeteria, severance, disability, medical or other plan, providing
benefits to any current or former employee, officer or director of the Company
(collectively, "Company Benefit Plans"). Except as disclosed in the Filed
Company SEC Documents or in Section 3.10 of the Company Disclosure Letter, there
are not any employment, consulting, deferred compensation, indemnification,
severance or termination agreements or arrangements, non-compete agreements,
confidentiality agreements, nonsolicitation and business diversion agreements or
tax gross-up agreements between the Company and any current or former employee,
officer or director of the Company (collectively, "Company Benefit Agreements").
16
<PAGE> 23
Section 3.11. ERISA Compliance; Excess Parachute Payments.
(a) Section 3.11(a) of the Company Disclosure Letter contains
a list and brief description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Company Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
other Company Benefit Plans and Company Benefit Agreements maintained, or
contributed to, by the Company or to which the Company is a party, for the
benefit of any current or former employees, officers or directors of the
Company. The Company has made available to Parent true, complete and correct
copies of (i) each Company Benefit Plan and Company Benefit Agreement (or, in
the case of any unwritten Company Benefit Plan or Company Benefit Agreement, a
description thereof), (ii) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Company Benefit Plan (if any
such report was required), (iii) the most recent summary plan description for
each Company Benefit Plan for which such summary plan description is required,
(iv) each trust agreement and group annuity contract relating to any Company
Benefit Plan and (v) each employment agreement to which the Company is a party
or is bound.
(b) All Company Pension Plans have received favorable
determination letters from the Internal Revenue Service with respect to "TRA"
(as defined in Section 1 of Rev. Proc. 93-39), to the effect that such Company
Pension Plans are qualified and exempt from federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, and no such determination letter
has been revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any such Company Pension Plan been amended since the date of
its most recent determination letter or application therefor in any respect that
would materially adversely affect its qualification or materially increase its
costs. There is no material pending or, to the knowledge of the Company,
threatened litigation relating to the Company Benefit Plans.
(c) No Company Pension Plan, other than any Company Pension
Plan that is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA (a "Company Multiemployer Pension Plan"), had, as of the respective last
annual valuation date for each such Company Pension Plan, any "unfunded benefit
liabilities" (as such term is defined in Section 4001(a)(18) of ERISA), based on
actuarial assumptions that have been furnished to Parent, and there has been no
material adverse change in the financial condition of any Company Pension Plan
since its last such annual valuation date. No liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company with
respect to any ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by it,
or the single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). None of the Company, any officer of the Company or any of the
Company Benefit Plans which are subject to ERISA, including the Company Pension
Plans, any trusts created thereunder or any trustee or administrator thereof,
has engaged in a "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company or any officer of the Company to
the tax or penalty on prohibited transactions imposed by such Section 4975 or to
any liability under Section 502(i) or 502(l) of ERISA. None of such Company
Benefit Plans and trusts has been terminated, nor has there been any "reportable
event" (as that term is defined in Section 4043 of
17
<PAGE> 24
ERISA) for which the 30-day reporting requirement has not been waived with
respect to any Company Benefit Plan during the last five years, and no notice of
a reportable event will be required to be filed in connection with the
Transactions. The Company has not incurred a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Sections 4203 and 4205, respectively,
of ERISA) since the effective date of such Sections 4203 and 4205 with respect
to any Company Multiemployer Pension Plan. All contributions and premiums
required to be made under the terms of any Company Benefit Plan as of the date
hereof have been timely made or have been reflected on the most recent balance
sheet filed or incorporated by reference in the Filed Company SEC Documents.
Neither any Company Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (as such term is defined in
Section 302 of ERISA or Section 412 of the Code), whether or not waived.
(d) With respect to any Company Benefit Plan that is an
employee welfare benefit plan, (i) no such Company Benefit Plan is unfunded or
funded through a "welfare benefit fund" (as such term is defined in Section
419(e) of the Code), (ii) each such Company Benefit Plan that is a "group health
plan" (as such term is defined in Section 5000(b)(1) of the Code) complies with
the applicable requirements of Section 4980B(f) of the Code and (iii) each such
Company Benefit Plan (including any such Company Benefit Plan covering retirees
or other former employees) may be amended or terminated without material
liability to the Company on or at any time after the Effective Time. The Company
has no obligations for retiree health and life benefits under any Company
Benefit Plan or Company Benefit Agreement.
(e) Except as disclosed in Section 3.11(e) of the Company
Disclosure Letter, the consummation of the Offer, the Merger or any other
Transaction will not (x) entitle any employee, officer or director of the
Company to severance pay or an election to terminate and receive severance pay,
(y) accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Company Benefit Plans or Company Benefit Agreements or (z) result
in any breach or violation of, or a default under, any of the Company Benefit
Plans or Company Benefit Agreements.
(f) Other than payments that may be made to the persons listed
in Section 3.11(f) of the Company Disclosure Letter (the "Primary Company
Executives"), (i) any amount or economic benefit that could be received (whether
in cash or property or the vesting of property) under any Company Benefit Plan
or Company Benefit Agreement or otherwise as a result of the Offer, the Merger,
any Transaction or any other event (including upon, as a result of or in
connection with a termination of employment on or following the Effective Time)
by any employee, officer or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) would not be characterized as an "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code), and (ii) no
disqualified individual is entitled to receive any additional payment from the
Company or any other person in the event that the excise tax under Section 4999
of the Code is imposed on such disqualified individual.
18
<PAGE> 25
Section 3.12. Litigation.
There is no suit, action, proceeding or investigation pending against,
or to the knowledge of the Company threatened against or affecting, the Company
or any of its properties before any arbitrator, court or other Governmental
Entity (and the Company is not aware of any basis for any such suit, action,
proceeding or investigation) that, individually or in the aggregate, could
reasonably be expected to have a Company Material Adverse Effect. As of the date
hereof, there are no suits, claims, actions, proceedings or investigations
pending or, to the knowledge of the Company, threatened, seeking to prevent,
hinder, modify or challenge the transactions contemplated by this Agreement. The
Company is not subject to any outstanding Judgment against the Company or naming
the Company as a party that, individually or in the aggregate, could reasonably
be expected to have a Company Material Adverse Effect.
Section 3.13. Compliance with Applicable Laws.
(a) Except as disclosed in the Filed Company SEC Documents,
the Company is, and its operations are being conducted, in compliance with all
applicable Laws, except for such failures to comply as, individually or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect. Except as set forth in the Filed Company SEC Documents, the Company has
not received any written notice: (i) of any administrative, civil or criminal
investigation or audit (other than Tax audits) by any Governmental Entity
relating to the Company or (ii) during the past two years, from any Governmental
Entity alleging that the Company is not in compliance in any material respect
with any applicable Law.
(b) The Company has in effect all approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights of or
with all Governmental Entities ("Permits") necessary for it to own, lease or
otherwise hold and to operate its properties and assets and to carry on its
business and operations as now conducted, except for the failure to have such
Permits that, individually or in the aggregate, has not had and could not
reasonably be expected to have a Company Material Adverse Effect. There have
occurred no defaults under, or violations of, any such Permit, except for such
defaults and violations that, individually and in the aggregate, have not had
and could not reasonably be expected to have a Company Material Adverse Effect.
Neither the Offer nor the Merger, in and of itself, would cause the revocation
or cancellation of any such Permit that, individually or in the aggregate, could
reasonably be expected to have a Company Material Adverse Effect.
(c) This Section 3.13 does not relate to matters with respect
to Taxes, which are the subject of Section 3.09, or to environmental matters,
which are the subject of Section 3.14.
Section 3.14. Environmental Matters.
(a) Except as disclosed in the Filed Company SEC Documents or
in Section 3.14(a) of the Company Disclosure Letter and except for such matters
as, individually or in the aggregate, have not had and could not reasonably be
expected to have a Company Material Adverse Effect, (i) the Company is, and
within the period of all applicable statutes of limitation has been, in
compliance with all applicable Environmental Laws, (ii) the Company holds and
is, and
19
<PAGE> 26
within the period of all applicable statutes of limitation has been, in
compliance with all Permits required to conduct its business and operations
under all applicable Environmental Laws, (iii) the Company has not received any
Environmental Claim against it, and the Company has no knowledge of any such
Environmental Claim being threatened, (iv) to the knowledge of the Company, no
Hazardous Substance or other conditions are present on any property owned,
leased or operated by the Company, or at any other location, that are reasonably
likely to form the basis of any Environmental Claim against the Company or
against any person (including any predecessor of the Company) whose liability
the Company retained or assumed either contractually or by operation of law, (v)
the Company has not entered into or agreed to any Governmental Entity decree,
order or agreement and is not subject to any judgment relating to compliance
with, or to investigation or cleanup, or to liability, under any Environmental
Law, and (vi) the Company has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any Hazardous
Substance, or owned or operated any property or facility in a manner that has
given or would reasonably be expected to give rise to any liability, including
any liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees, pursuant to any
Environmental Laws. "Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, Lien, demand letter or notice
(written or oral) of noncompliance, violation or liability by any person
asserting liability or potential liability (including liability or potential
liability for enforcement, investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damage, personal injury,
fines or penalties) arising out of, based on or resulting from (i) the presence,
discharge, emission, release or threatened release of any Hazardous Substance at
any location, (ii) circumstances forming the basis of any violation or alleged
violation of any Environmental Law or any Permit issued under any Environmental
Law, or (iii) otherwise relating to obligations or liabilities under any
Environmental Law. "Environmental Laws" means any and all applicable federal,
state or local statutes, regulations, ordinances, guidelines, codes, decrees, or
other legally enforceable requirement (including common law) of any foreign
government, the United States, or any state, local, municipal or other
Governmental Entity, regulating, relating to or imposing liability or standards
of conduct concerning protection of the environment (including indoor air,
ambient air, surface water, groundwater, land surface, subsurface strata, or
plant or animal species) or human health as affected by the environment or
Hazardous Substances (including employee health and safety). "Hazardous
Substance" means all explosive or radioactive substances, materials or wastes,
hazardous or toxic substances, materials or wastes, asbestos,
asbestos-containing materials, pollutants and contaminants (including petroleum
or any fraction thereof) and all other substances, materials or wastes, whether
or not defined as such, that are regulated pursuant to or that could result in
liability under any applicable Environmental Law.
(b) No Environmental Law imposes any obligation upon the
Company arising out of or as a condition to the Offer, the Merger or any other
Transaction, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree, except for such obligations as,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect. No material Lien has been placed upon any of
the Company's properties under any Environmental Law.
20
<PAGE> 27
Section 3.15. Contracts.
Except as disclosed as an exhibit to the Filed Company SEC Documents or
as set forth in Section 3.15 of the Company Disclosure Letter, the Company is
not a party to or bound by or otherwise subject to any Contracts of the
following nature (collectively, the "Material Contracts"): (i) any Contract
which restricts the Company or any of its affiliates from competing in any line
of business or with any person in any geographical area; (ii) any Contract
involving (A) the acquisition, merger or purchase of all or substantially all
the assets or business of a third party involving aggregate consideration of
$10.0 million, (B) the purchase or sale of assets, or a series of purchases and
sales of assets, involving aggregate consideration of $10.0 million or more or
(C) the grant to any person of any preferential right to purchase any material
asset or assets of the Company; (iii) any Contract which contains a "change in
control" or similar provision pursuant to which the execution and delivery of
this Agreement, the commencement of the Offer or the consummation of the Offer,
the Merger or any of the other Transactions would give rise to any right
(including any right of termination, cancellation, acceleration or vesting) or
benefit that could reasonably be expected to have a Company Material Adverse
Effect; (iv) any Contract, including any mortgage or other grant of security
interests, guarantee or note, relating to the borrowing of money in an amount in
excess of $10.0 million in the aggregate; (v) any Contract to indemnify for any
Environmental Claim or any other liability or cost with respect to any
Environmental Law; (vi) any Contract which would prohibit or materially delay
the consummation of the Merger or any of the other Transactions; or (vii) any
other Contract that is material to the business, assets, condition (financial or
otherwise), prospects or results of operations of the Company. Except as,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect, the Company is not in breach or default under
any Material Contract nor, to the knowledge of the Company, is any other party
to any Material Contract in breach or default thereunder.
Section 3.16. Labor Matters.
There are no collective bargaining or other labor union agreements to
which the Company is a party or by which it is bound. To the knowledge of the
Company, there have been no labor union organizing activities involving the
Company, and the Company has not had any actual or threatened employee strike,
work stoppage, slowdown or lockout.
Section 3.17. Brokers; Fees and Expenses.
No broker, investment banker, financial advisor or other person, other
than Lehman Brothers Inc., the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Offer, the Merger and the other
Transactions based upon arrangements made by or on behalf of the Company. The
Company has furnished to Parent a true and complete copy of all agreements
between the Company and Lehman Brothers Inc. relating to the Offer, the Merger
and the other Transactions.
21
<PAGE> 28
Section 3.18. Opinion of Financial Advisor.
The Company has received the opinion of Lehman Brothers Inc., dated the
date of this Agreement, to the effect that, as of such date, the consideration
to be received in the Offer and the Merger by the holders of Company Common
Stock is fair to the holders of Company Common Stock from a financial point of
view.
Section 3.19. Potential Conflicts of Interest.
Except as disclosed in the Filed Company SEC Documents or set forth in
Section 3.19 of the Company Disclosure Letter, there have been no transactions,
agreements, arrangements or understandings between the Company, on the one hand,
and its affiliates, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act.
Section 3.20. Reserve Information.
The underlying factual information provided to Ryder Scott Company,
L.P. ("Ryder Scott"), to the extent that it was relied upon by Ryder Scott in
the preparation of its report on the Company's proved reserves as of January 1,
2000, 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. The Company
has no present knowledge of any material errors in such underlying factual
information supplied to Ryder Scott for purposes of preparing such report and
the conclusions in such report are not in any material way unreasonable when
compared with the Company's own evaluation of the properties included in such
report as of January 1, 2000 taken as a whole.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub, jointly and severally, represent and warrant to the
Company as follows:
Section 4.01. Organization, Standing and Power.
Each of Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has full corporate power and authority necessary to enable it to
own, lease or otherwise hold its properties and assets and to conduct its
businesses as presently conducted.
Section 4.02. Sub.
Since the date of its incorporation, Sub has not carried on any
business or conducted any operations other than the execution of this Agreement,
the performance of its obligations hereunder and matters ancillary thereto. Sub
is a wholly owned subsidiary of Parent.
22
<PAGE> 29
Section 4.03. Authority; Execution and Delivery; Enforceability.
Each of Parent and Sub has all requisite corporate power and authority
to execute, deliver and perform this Agreement and to consummate the
Transactions. The execution, delivery and performance by each of Parent and Sub
of this Agreement and the consummation by it of the Transactions have been duly
authorized by all necessary corporate and stockholder action on the part of
Parent and Sub. USX has recommended that Parent enter into this Agreement.
Parent, as sole stockholder of Sub, has adopted this Agreement. Each of Parent
and Sub has duly executed and delivered this Agreement, and this Agreement
constitutes its legal, valid and binding obligations, enforceable against it in
accordance with its terms, except as that enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditor's rights generally and the application of
general principles of equity (regardless of whether that enforceability is
considered in a proceeding at law or in equity). Subject to the applicability of
Section 253 of the DGCL, the affirmative vote of the holders of a majority of
the outstanding shares of common stock of Sub voting as a single class is the
only vote of any class or series of Sub's capital stock required to approve the
Merger and adopt this Agreement.
Section 4.04. No Conflicts; Consents.
(a) The execution, delivery and performance by each of Parent
and Sub of this Agreement do not, and the consummation of the Offer, the Merger
and the other Transactions and compliance with the terms of this Agreement will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, any provision of (i) the charter or
organizational documents of Parent or any of its subsidiaries, (ii) any Contract
to which Parent or any of its subsidiaries is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 4.04(b), any Judgment or Law applicable to
Parent or any of its subsidiaries or their respective properties or assets,
subject in the case of clauses (ii) and (iii) above, for such matters as,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on (a) the ability of Parent or Sub to perform its
obligations under this Agreement or (b) the ability of Parent or Sub to
consummate the Offer, the Merger and the other Transactions (any of the
foregoing, a "Parent Material Adverse Effect").
(b) No Consent of, or registration, declaration or filing
with, or notice to, or Permit from any Governmental Entity is required to be
obtained or made by or with respect to Parent or any of its subsidiaries in
connection with the execution, delivery and performance of this Agreement or the
consummation of the Transactions, other than (i) the filing with the SEC of (A)
the Offer Documents and (B) such reports under the Exchange Act as may be
required in connection with this Agreement, the Offer, the Merger and the other
Transactions, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (iii) such filings as may be required in
connection with the Taxes described in Section 6.08, (iv) filings under state
securities Laws, and (v) such other items as, individually or in the aggregate,
could not reasonably be expected to have a Parent Material Adverse Effect.
23
<PAGE> 30
Section 4.05. Information Supplied.
Subject to the Company's fulfillment of its obligations hereunder with
respect thereto, the Offer Documents will contain (or will be amended in a
timely manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable Law and will conform in all material
respects with the requirements of the Exchange Act and any other applicable Law;
and the Offer Documents will not, at the respective times they are filed with
the SEC or published, sent or given to the Company's stockholders, 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.
Notwithstanding the foregoing, no representation or warranty is hereby made by
Parent or Sub with respect to any information supplied by the Company in writing
for inclusion in, or with respect to the Company information derived from the
Company's public SEC filings which is included or incorporated by reference in,
the Offer Documents. None of the information supplied or to be supplied by USX,
Parent or Sub for inclusion or incorporation by reference in, or which may be
deemed to be incorporated by reference in, the Schedule 14D-9 or the Proxy
Statement will, at the respective times the Schedule 14D-9 and the Proxy
Statement are filed with the SEC or published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. If any time prior to the Effective Time any event with respect to
Parent or Sub, or with respect to any information supplied by USX, Parent or Sub
for inclusion in the Schedule 14D-9 or the Proxy Statement, shall occur which is
required to be described in an amendment of, or a supplement to, such document,
Parent or Sub shall so describe the event to the Company.
Section 4.06. Brokers.
No broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Offer, the Merger and the other Transactions
based upon arrangements made by or on behalf of Parent.
Section 4.07. Financing.
Parent and Sub now have and will have available (through cash on hand
and existing credit arrangements or otherwise) all of the funds necessary for
the acquisition of all shares of Common Stock pursuant to the Offer and the
Merger, as and when needed, and to perform their respective obligations under
this Agreement.
Section 4.08. Litigation.
There is no suit, action, proceeding or investigation pending against,
or to the knowledge of Parent threatened against or affecting, Parent or any of
its subsidiaries before any Governmental Entity that questions the validity of
this Agreement or any action to be taken by Parent or Sub in connection with the
consummation of the Transactions or would otherwise prevent or delay the
consummation of the Transactions.
24
<PAGE> 31
Section 4.09. Ownership of Company Common Stock.
As of the date hereof, neither Parent nor any of its subsidiaries
beneficially owns any shares of Company Common Stock.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.01. Conduct of Business.
(a) Conduct of Business by the Company. Except for matters set
forth in Section 5.01(a) of the Company Disclosure Letter or otherwise expressly
permitted by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall conduct its business in the usual, regular and ordinary
course of business and in substantially the same manner as previously conducted
and use its reasonable best efforts to preserve intact its current business
organization, keep available the services of its current officers and employees
and keep its relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time. The
Company shall maintain its assets and all parts thereof in as good working order
and condition as at present, ordinary wear and tear excepted, consistent with
past practice, and shall maintain in full force and effect current insurance
policies or other comparable insurance coverage with respect to the assets and
potential liabilities thereof. In addition, and without limiting the generality
of the foregoing, except for matters set forth in Section 5.01(a) of the Company
Disclosure Letter or conduct otherwise expressly permitted by this Agreement,
from the date of this Agreement to the Effective Time, the Company shall not do
any of the following without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, stock, property or
otherwise) in respect of, any of its capital stock, (B) split, combine
or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any
other securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(ii) issue, deliver, sell, grant, pledge, transfer or
otherwise encumber or dispose of or subject to any Lien (A) any shares
of its capital stock, (B) any securities convertible into or
exchangeable for, or any options, warrants, commitments or rights of
any kind to acquire, any such shares, voting securities or convertible
or exchangeable securities or (C) any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units,
other than the issuance of Company Common Stock upon the exercise of
Company Stock Options and Warrants outstanding on the date of this
Agreement and in accordance with their terms as in effect on the date
of this Agreement;
(iii) amend the Company Charter or the Company
Bylaws;
25
<PAGE> 32
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest in
or all or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, company, limited
liability company, joint venture, association or other business
organization or division thereof or (B) any assets that, individually
or in the aggregate, are in excess of $10 million, except purchases of
inventory in the ordinary course of business;
(v) (A) grant to any employee, officer or director of
the Company any increase in compensation or pay any bonus, except to
the extent required under employment agreements in effect as of the
date of the most recent audited financial statements included in the
Filed Company SEC Documents, (B) grant to any employee, officer or
director of the Company any increase in severance, change of control or
termination pay, except to the extent required under any agreement in
effect as of the date of the most recent audited financial statements
included in the Filed Company SEC Documents, (C) establish, adopt,
enter into or amend any Company Benefit Agreement, any collective
bargaining agreement, other labor union agreement or Company Benefit
Plan, or (D) take any action to accelerate any rights or benefits, take
any action to fund or in any other way secure the payment of
compensation or benefits under any Company Benefit Agreement or Company
Benefit Plan, or make any material determinations not in the ordinary
course of business, under any collective bargaining agreement, labor
union agreement or Company Benefit Plan or Company Benefit Agreement;
(vi) make any change in accounting methods,
principles or practices affecting the reported assets, liabilities or
results of operations of the Company, except as required by a change in
GAAP;
(vii) sell, lease (as lessor), license, encumber or
otherwise dispose of or subject to any Lien any properties or assets
that, individually or in the aggregate, are in excess of $1 million,
except sales of commodity production, inventory and excess or obsolete
assets in the ordinary course of business;
(viii) (A) incur, assume or prepay any indebtedness
for borrowed money or guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for any
indebtedness or obligation of another person or issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of the Company, except for short-term borrowings incurred in the
ordinary course of business and additional borrowings under its credit
facility not to exceed $10 million at any time outstanding, or (B) make
or forgive any loans, advances or capital contributions to, or
investments in, any other person;
(ix) make or agree to make any new capital
expenditure or expenditures that, individually or in the aggregate, are
in excess of $2.0 million in any calendar quarter;
(x) make or change any material Tax election or
settle or compromise any material Tax liability or refund;
26
<PAGE> 33
(xi) (A) pay, discharge, settle or satisfy any
claims, liabilities, obligations or litigation, other than the payment,
discharge, settlement or satisfaction, in the ordinary course of
business or in accordance with their terms, of liabilities reflected or
reserved against in the most recent financial statements (or the notes
thereto) of the Company included in the Filed Company SEC Documents or
incurred since the date of such financial statements in the ordinary
course of business or (B) cancel any indebtedness that is material,
individually or in the aggregate, to the Company, or waive any claims
or rights of substantial value;
(xii) adopt a plan or agreement of, or resolutions
providing for or authorizing, complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization;
(xiii) make, enter into or renew, extend, amend,
modify, or waive any provisions of any Material Contract or relinquish
or waive any rights under, or agree to the termination of, any Material
Contract, except in the ordinary course of business;
(xiv) permit any material insurance policy naming it
as a beneficiary or a loss payable payee to lapse, be cancelled or
expire unless a new policy with substantially identical coverage is in
effect as of the date of lapse, cancellation or expiration; or
(xv) authorize, or commit or agree to take, any of
the foregoing actions or take any action that would (y) make any
representation or warranty in Article III hereof untrue or incorrect in
any material respect, or (z) result in any of the conditions to the
Offer set forth in Annex I hereto or any of the conditions to the
Merger set forth in Article VII hereof not being satisfied.
(b) Advice of Changes. The Company shall promptly advise
Parent of any change or event that has had or could reasonably be expected to
have a Company Material Adverse Effect.
Section 5.02. No Solicitation.
(a) From the date hereof, the Company shall not (whether
directly or indirectly through advisors, agents, representatives or other
intermediaries), and the Company shall use its reasonable best efforts to cause
its officers, directors, advisors, representatives and other agents
(collectively, its "Representatives") not to, directly or indirectly, (i)
continue any discussions or negotiations, if any, with any parties, other than
Parent and Sub, conducted heretofore with respect to any Company Takeover
Proposal (as hereinafter defined) or which could reasonably be expected to lead
to a Company Takeover Proposal, (ii) solicit, initiate or knowingly encourage
any inquiries relating to, or the submission of, any Company Takeover Proposal,
(iii) participate in any discussions or negotiations regarding any Company
Takeover Proposal, or, in connection with any Company Takeover Proposal, furnish
to any person any information or data with respect to or access to the
properties of the Company, or take any other action to facilitate the making of
any proposal that constitutes or may reasonably be expected to lead to any
Company Takeover Proposal or (iv) enter into any agreement with respect to any
Company Takeover Proposal. Notwithstanding the foregoing,
27
<PAGE> 34
the Company or the Company Board shall be permitted to furnish information with
respect to the Company and participate in discussions or negotiations regarding
an unsolicited bona fide Company Takeover Proposal if, and only to the extent
that, a majority of the entire Company Board determines in good faith that such
Company Takeover Proposal could reasonably be expected to result in a Superior
Company Proposal, in which case the Company will not disclose any information to
such person without entering into a customary confidentiality agreement
containing confidentiality provisions substantially identical to those contained
in the Confidentiality Agreement (as hereinafter defined); provided, however,
that such confidentiality agreement shall not prohibit the presentation of a
Company Takeover Proposal to Parent. The Company shall promptly (but in no case
later than 48 hours after actual receipt by an officer of the Company) provide
Parent with a copy of any written Company Takeover Proposal received and a
written statement with respect to any non-written Company Takeover Proposal
received, which statement shall include the material terms thereof (but may omit
the identity of the person making the Company Takeover Proposal). The Company
shall keep Parent informed on a reasonably current basis of any material
developments with respect to any discussions regarding any Company Takeover
Proposal.
(b) Nothing contained in Section 5.02(a) shall prohibit the
Company or the Company Board from (i) taking and disclosing to the Company's
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act (or any similar communications) in connection with the making or
amendment of a tender offer or exchange offer or (ii) making any disclosure to
the Company's stockholders required by applicable Law, provided that the Company
Board shall not recommend that the stockholders of the Company tender their
shares of Company Common Stock in connection with any such tender or exchange
offer unless the Company Board, by majority vote of the entire Company Board,
shall have determined in good faith, based upon (among other things) the advice
of its independent financial advisors and outside counsel, that the relevant
Company Takeover Proposal constitutes a Superior Company Proposal.
(c) For purposes of this Agreement:
"Company Takeover Proposal" means any inquiry, proposal or
offer (other than by Parent, Sub or any of their affiliates) for (i) a
merger, consolidation, share exchange, dissolution, recapitalization,
liquidation or other business combination involving the Company, (ii)
the acquisition by any person in any manner, directly or indirectly, of
a number of shares of any class of equity securities of the Company
equal to or greater than 15% of the number of such shares outstanding
before such acquisition or (iii) the acquisition by any person in any
manner, directly or indirectly, of assets that generate or constitute a
substantial part of the net revenues, net income or assets of the
Company, in each case other than the Transactions.
"Superior Company Proposal" means any bona fide written
Company Takeover Proposal made by a third party (other than by Parent,
Sub or any of their affiliates) to acquire directly or indirectly (i)
all the equity securities or (ii) the assets of the Company
substantially as an entirety, which the Company Board determines in
good faith (based on, among other things, the advice of its independent
financial advisors and outside counsel), taking into account all legal,
financial, regulatory and other aspects of the proposal and the person
making such proposal, (x) would, if consummated, be more favorable,
from a financial point
28
<PAGE> 35
of view, to the holders of Company Common Stock than the Transactions
and (y) is reasonably likely to be consummated without undue delay.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01. Preparation of Proxy Statement; Stockholders Meeting.
(a) If the Company Stockholder Approval is required by
applicable Law, the Company shall, as soon as practicable following the
acceptance of shares of Company Common Stock pursuant to the Offer, prepare and
file with the SEC the Proxy Statement in preliminary form, and each of the
Company and Parent shall use its reasonable best efforts to respond as promptly
as practicable to any comments of the SEC with respect thereto. The Company
shall 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 the Proxy Statement or for additional information and shall supply Parent
with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement. If at any time prior to receipt of the
Company Stockholder Approval there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall
promptly prepare and mail to its stockholders such an amendment or supplement.
No filing of, or amendment to, the Proxy Statement will be made by the Company
without providing Parent the opportunity to review and comment thereon. The
Company shall not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects. The Company shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing with the SEC.
(b) If the Company Stockholder Approval is required by
applicable Law, the Company shall, as soon as practicable following the
acceptance of shares of Company Common Stock pursuant to the Offer, duly call,
give notice of, convene and hold a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of seeking the Company Stockholder
Approval. The Company shall, through the Company Board, recommend to its
stockholders that they give the Company Stockholder Approval.
(c) If the Company Stockholders Meeting is held, Parent shall
cause all shares of Company Common Stock purchased pursuant to the Offer and all
other shares of Company Common Stock owned by Sub or any other subsidiary of
Parent to be voted at the Company Stockholders Meeting in favor of the adoption
of this Agreement and shall, after acceptance of shares of Company Common Stock
pursuant to the Offer, otherwise use its reasonable best efforts to cause the
Merger to be completed as soon as practicable.
(d) Notwithstanding the foregoing clauses (a), (b) and (c), if
Sub or any other subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock, the parties shall, as soon as
possible following the acceptance of shares of Company Common Stock pursuant to
the Offer, take all necessary and appropriate action to cause the Merger to
become
29
<PAGE> 36
effective as soon as practicable after the expiration of the Offer without a
stockholders meeting in accordance with Section 253 of the DGCL.
Section 6.02. Access to Information; Confidentiality.
(a) The Company shall afford to Parent, and to Parent's
officers, employees, accountants, counsel, financial advisors and other
representatives, access during reasonable business hours during the period prior
to the Effective Time to (i) all of the Company's properties, books, contracts,
commitments, personnel and records and other information and business documents,
(ii) by appointment, the Company's independent reserve engineers and accountants
and (iii) the premises of the Company for the purpose of inspecting the books
and records of the Company, provided that access to the premises shall be
permitted only with the prior consent of the Company (which consent shall not be
unreasonably withheld or delayed). During the period prior to the Effective
Time, Parent will have the full cooperation of the Company in confirming the
nature of the relationships between the Company and its customers, working
interest owners, contractors and suppliers, including whether or not such
relationships are satisfactory and whether or not such relationships are
expected to continue after the Merger. The Company shall have the right to have
a representative present at all times of any such inspections, interviews and
communications conducted by Parent or its representatives.
(b) Neither any investigation conducted by Parent or its
representatives pursuant to this Section 6.02 nor the results thereof shall
affect any representation or warranty of the Company contained in this Agreement
or the ability of Parent to rely thereon. All information exchanged pursuant to
this Section 6.02 shall be subject to the confidentiality agreement dated
November 15, 2000, between the Company and Parent (the "Confidentiality
Agreement").
Section 6.03. Reasonable Best Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties shall use all reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger and the other Transactions, including
(i) determining whether any action by or in respect of or filing with any
Governmental Entities is required or any actions, consents, approvals or waivers
are required to be obtained from third parties in connection with the
Transactions, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement. Nothing in this Agreement shall be deemed to require
Parent to waive any rights or agree to any limitation on
30
<PAGE> 37
its operations or to dispose of any asset or collection of assets of the
Company, Parent or any of their respective subsidiaries or affiliates.
(b) The Company shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect, (ii) the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, (iii) any notice or other communication it
receives from any person alleging that the consent of such person is or may be
required in connection with the Transactions, (iv) any notice or other
communication it receives from any Governmental Entity in connection with the
Transactions or (v) any action, suit, claim, investigation or proceeding
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting it that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 3.12 or 4.08, as
applicable, or that relate to the consummation of the Transactions; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
Section 6.04. Stock Options.
(a) As soon as practicable following the date of this
Agreement, the Company Board (or, if appropriate, any committee administering
the Company Stock Plan) shall adopt such resolutions or take such other actions
as are required to provide that each Company Stock Option outstanding
immediately prior to the acceptance for payment of shares of Company Common
Stock pursuant to the Offer shall be canceled, with the holder thereof becoming
entitled to receive (i) in the case of each holder listed in Section 6.04(a) of
the Company Disclosure Letter, an amount of cash in respect of such Company
Stock Option equal to the product of (A) the excess, if any, of (x) the Merger
Consideration over (y) the exercise price per share of Company Common Stock
subject to such Company Stock Option and (B) the number of shares of Company
Common Stock subject to such Company Stock Option immediately prior to its
cancellation or (ii) in the case of each other holder, the amount of cash in
respect of such Company Stock Option as provided in the Company Stock Plan upon
a change of control.
(b) All amounts payable pursuant to this Section 6.04 shall be
subject to any required withholding of Taxes and shall be paid at or as soon as
practicable following the Effective Time, but in any event within seven days
following the Effective Time, without interest. The Company shall use its
reasonable best efforts to obtain all consents of the holders of the Company
Stock Options as shall be necessary to effectuate the foregoing. The
cancellation of a Company Stock Option in exchange for the cash payment
described in this Section 6.04 shall be deemed a release of any and all rights
the holder of such Company Stock Option had or may have had in respect thereof,
and any required consents from all such holders shall so provide.
Notwithstanding anything to the contrary contained in this Agreement, payment
shall, at Parent's request, be withheld in respect of any Company Stock Option
until all consents, approvals and tax certifications which Parent reasonably
determines to be necessary are obtained.
31
<PAGE> 38
(c) As soon as practicable following the date of this
Agreement, the Company Board (or, if appropriate, any committee administering
the Company Stock Plan) shall take or cause to be taken such actions as are
required to cause (i) the Company Stock Plan to terminate as of the Effective
Time and (ii) the provisions in any other Company Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company to be deleted as of the Effective
Time. The Company shall ensure that following the Effective Time no holder of a
Company Stock Option or any participant in the Company Stock Plan or other
Company Benefit Plan shall have any right thereunder to acquire any capital
stock of the Company or the Surviving Corporation.
(d) In this Agreement:
"Company Stock Option" means any option to purchase Company
Common Stock granted under any Company Stock Plan.
"Company Stock Plan" means the Company's 1998 Stock Option and
Incentive Plan as amended from time to time.
Section 6.05. Indemnification.
(a) After the Effective Time, Parent will cause the Surviving
Corporation to indemnify each person who is now, or has been at any time prior
to the date hereof, a director or officer of the Company (individually, an
"Indemnified Party" and, collectively, the "Indemnified Parties"), to the
fullest extent permitted by law, with respect to any liability, loss, damage,
judgment, fine, penalty, amount paid in settlement or compromise with the
approval of the Company (which approval shall not be unreasonably withheld or
delayed), cost or expense (including reasonable fees and expenses of legal
counsel) incurred in connection with any threatened or actual action, suit or
proceeding based on, or arising out of, the fact that such person is or was a
director or officer of the Company ("Indemnified Liabilities"), in each case, to
the full extent that Parent or the Company is permitted under applicable Law to
so indemnify. Any Indemnified Party desiring to claim indemnification under this
Section 6.05(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent and the Surviving Corporation (but
the failure so to notify shall not relieve the indemnifying party from any
liability which it may have under this Section 6.05(a) except to the extent such
failure materially prejudices such indemnifying party), and shall deliver to
Parent and the Surviving Corporation all undertakings required under applicable
Law. After Parent's receipt of such notice with respect to any such claim,
action, suit, proceeding or investigation, Parent shall have the right to assume
and direct, or cause the Surviving Corporation to assume and direct, all aspects
of the defense thereof, including settlement, and the Indemnified Party shall
cooperate in the vigorous defense of any such matter. In no event shall Parent
or the Surviving Corporation be liable for any settlement effected without its
prior written consent. The rights to indemnification under this Section 6.05(a)
shall continue in full force and effect for a period of six years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
32
<PAGE> 39
(b) For a period of six years after the Effective Time, Parent
shall cause to be maintained in effect policies of directors' and officers'
insurance, for the benefit of those persons who are covered by the Company's
directors' and officers' liability insurance at the Effective Time, providing
coverage with respect to matters occurring prior to the Effective Time that is
at least equal to the coverage provided under the Company's current directors'
and officers' liability insurance policies, to the extent that such liability
insurance can be maintained at an annual cost to Parent not greater than 150
percent of the premium for the current Company directors' and officers'
liability insurance (which the Company represents and warrants to be not more
than $150,000); provided, however, that if such insurance cannot be so
maintained at or below such cost, Parent shall maintain as much of such
insurance as can be so maintained at a cost equal to 150 percent of the current
annual premiums of the Company for such insurance. The foregoing provisions
shall not in any way restrict or preclude any sale, liquidation or dissolution
of any subsidiary of Parent at any time after the Effective Time. Parent agrees
to pay all expenses (including fees and expenses of counsel) that may be
incurred by any Indemnified Party in successfully enforcing the indemnity or
other obligations under this Section 6.05.
(c) In the event Parent or the Surviving Corporation or any of
their successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation shall assume the obligations set forth in this Section
6.05.
(d) The provisions of this Section 6.05 are (i) intended to be
for the benefit of, and to be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
Section 6.06. Fees and Expenses.
(a) Except as provided below, all fees and expenses incurred
in connection with the Merger and the other Transactions shall be paid by the
party incurring such fees or expenses, whether or not the Merger is consummated.
(b) In the event that this Agreement is terminated by (i) the
Company pursuant to Section 8.01(d) or (ii) by Parent or Sub pursuant to Section
8.01(c)(i), (iii) or (iv), then the Company shall promptly, but in no event
later than the date of such event, pay to Parent a fee equal to $15 million (the
"Termination Fee"), payable by wire transfer of same day funds, which shall be
deemed to be sole and exclusive liquidated damages for such termination. In
addition, if: (A)(x) this Agreement is terminated by the Company pursuant to
Section 8.01(b)(ii) or by Parent or Sub pursuant to Section 8.01(c)(v) (where
the breach by the Company is willful), (y) prior to such termination a Company
Takeover Proposal has been publicly announced, disclosed or communicated and (z)
on the date of such termination, neither Parent nor Sub is in material breach of
this Agreement and the Minimum Tender Condition has not been satisfied and (B)
within nine months after such termination pursuant to clause (A), the Company
shall consummate or enter into an agreement with respect to any Company Takeover
Proposal, then the Company shall pay the
33
<PAGE> 40
Termination Fee concurrently with the earlier of entering into any such
agreement or consummating such transaction.
Section 6.07. Public Announcements.
Parent and Sub, on the one hand, and the Company, on the other hand,
shall consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the Offer, the Merger and the other Transactions and
shall not issue any such press release or make any such public statement prior
to such consultation, except after reasonable attempts to provide notice have
been undertaken and such release or statement is required by applicable Law.
Section 6.08. Transfer Taxes.
All stock transfer, real estate transfer, documentary, stamp, recording
and other similar Taxes (including interest, penalties and additions to any such
Taxes) ("Transfer Taxes") incurred in connection with the Transactions shall be
paid by the party upon whom the primary burden is placed by the applicable Law.
Each party shall cooperate with the other in preparing, executing and filing any
Tax Returns with respect to such Transfer Taxes, including supplying in a timely
manner a complete list of all real property interests held by the Company and
any information with respect to such property that is reasonably necessary to
complete such Tax Returns.
Section 6.09. Directors.
Promptly upon the acceptance for payment of, and payment by Sub for,
any shares of Company Common Stock pursuant to the Offer, Sub shall be entitled
to designate such number of directors on the Company Board as will give Sub,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Company Board equal to at least that number of directors, rounded up to the
next whole number, that equals the product of (a) the total number of directors
on the Company Board (giving effect to the directors elected pursuant to this
sentence) multiplied by (b) the percentage that (i) such number of shares of
Company Common Stock so accepted for payment and paid for by Sub plus the number
of shares of Company Common Stock otherwise owned by Sub or any other subsidiary
of Parent bears to (ii) the number of such shares then outstanding, and the
Company shall, at such time, cause Sub's designees to be so elected or appointed
to the Company Board; provided, that in the event that Sub's designees are
appointed or elected to the Company Board, until the Effective Time the Company
Board shall have at least two directors who are directors on the date of this
Agreement and who are not officers of the Company (the "Independent Directors");
and provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall be entitled to designate a person to fill such vacancy who shall
be deemed to be an Independent Director for purposes of this Agreement or, if no
Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who are not officers, stockholders or affiliates
of the Company, Parent or Sub, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. After acceptance by Sub of
shares of Company Common Stock pursuant to the Offer and prior to the Effective
Time, any (i) amendment or termination of this Agreement by the Company, (ii)
extension of time for the performance, or waiver, of the obligations
34
<PAGE> 41
or other acts of Parent or Sub or (iii) waiver of the Company's rights
hereunder, shall require the approval of all of the Independent Directors (and,
in any event, at least two Independent Directors) in addition to any required
approval thereof by the full Company Board. Subject to applicable Law, the
Company shall take all action requested by Parent necessary to effect any such
election or appointment, including mailing to its stockholders the Information
Statement, and the Company shall make such mailing with the mailing of the
Schedule 14D-9 (provided that Sub shall have provided to the Company on a timely
basis all information required to be included in the Information Statement with
respect to Sub's designees). In connection with the foregoing, the Company shall
promptly, at the option of Sub, either increase the size of the Company Board or
obtain the resignation of such number of its current directors as is necessary
to enable Sub's designees to be elected or appointed to the Company Board as
provided above. The Company will also use its reasonable efforts to cause Sub's
designees to be proportionately represented on each committee of the Company
Board (other than any committee of the Company Board established to take action
under this Agreement). The provisions of this Section 6.09 are in addition to
and, except as specifically contemplated by this Section 6.09, shall not limit
any rights which Sub, Parent or any of their affiliates may have as a holder or
beneficial owner of shares of Company Common Stock as a matter of applicable Law
with respect to the election of directors or otherwise.
Section 6.10. CMS Operating Agreement.
The Company has had discussions with CMS Oil & Gas Company ("CMS")
regarding the elimination of Section D of Article XVI of the Operating Agreement
dated November 20, 1998 between CMS and the Company, and the Company will use
its reasonable best efforts to effect an amendment to that agreement prior to
the Effective Time so that such Section D will be eliminated or modified to
remove any effective impediment to drilling proposals consistent with aggressive
development.
Section 6.11. Further Assurances.
At and after the Effective Time, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of the Company or Sub, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the Company or Sub,
any other actions and things to vest, perfect or confirm of record or otherwise
in the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to Each Party's Obligation to Effect the
Merger.
The respective obligation of each party to effect the Merger is subject
to the satisfaction or, if permitted by applicable Law, waiver on or prior to
the Closing Date of the following conditions:
35
<PAGE> 42
(a) Stockholder Approval. If required by applicable Law, the
Company shall have obtained the Company Stockholder Approval.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
asserting this condition, subject to Section 6.03, the party asserting such
condition shall have used its reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible any
such injunction or other order that may be entered.
(c) Statutory Restraints. No statute, code or regulation shall
have been enacted or promulgated by any Governmental Entity that prohibits
consummation of the Merger.
(d) Purchase of Common Stock. Sub shall have previously
accepted for payment and paid for shares of Company Common Stock pursuant to the
Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01. Termination.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of Sub or, subject
to the terms hereof, the Company:
(a) by mutual written consent of Parent and the Company;
provided, however, that if Parent shall have nominated a majority of the
directors pursuant to Section 6.09, such consent of the Company may only be
given if approved by the Independent Directors in accordance with Section 6.09;
(b) by either Parent or the Company:
(i) if a statute, rule or executive order shall have
been enacted, entered or promulgated prohibiting the transactions
contemplated hereby on the terms contemplated by this Agreement or if
any Governmental Entity shall have issued an order, decree or ruling or
takes any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, shares of
Company Common Stock pursuant to the Offer or the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable; or
(ii) if (A) as the result of the failure of any of
the conditions set forth in Annex I to this Agreement, (1) Sub shall
have failed to commence the Offer within 30 days following the date of
this Agreement or (2) the Offer shall have terminated or expired in
accordance with its terms without Sub having purchased any shares of
Company Common Stock pursuant to the Offer or (B) Sub shall not have
accepted for payment any shares of
36
<PAGE> 43
Company Common Stock pursuant to the Offer prior to April 30, 2001;
provided, however, that the right to terminate this Agreement pursuant
to this clause (ii) shall not be available to any party whose willful
failure to fulfill any of its obligations under this Agreement results
in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute a willful
breach of any representation or warranty of such party contained in
this Agreement;
(c) by Parent or Sub:
(i) if, prior to the acceptance for payment of shares
of Company Common Stock pursuant to the Offer, the Company Board shall
have withdrawn, or modified or changed in a manner adverse to Parent or
Sub, its approval or recommendation of the Offer (including by
amendment to the Schedule 14D-9), this Agreement or the Merger or shall
have recommended or approved a Company Takeover Proposal; or
(ii) if any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Sub or their
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (as determined pursuant to Rule 13d-3
under the Exchange Act) of 15% or more of the outstanding shares of
Company Common Stock;
(iii) if there shall have been a material breach by
the Company of any provision of Section 5.02;
(iv) if the Company shall have (i) exempted for
purposes of Section 203 of the DGCL any acquisition of shares of
Company Common Stock by any person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than USX, Parent, Sub or their
affiliates, or (ii) amended (or agreed to amend) the Company Rights
Agreement or redeemed (or agreed to redeem) the outstanding Company
Rights thereunder for the purpose of exempting an acquisition of shares
of Company Common Stock (other than pursuant to this Agreement) from
the Company Rights Agreement and the Company Rights; or
(v) if, prior to the acceptance for payment of shares
of Company Common Stock pursuant to the Offer, (i) there shall be a
breach of any representation or warranty of the Company in this
Agreement that is qualified as to materiality or Company Material
Adverse Effect, (ii) there shall be a breach of any representation or
warranty of the Company in this Agreement that is not so qualified
other than any such breaches which, in the aggregate, have not had or
could not reasonably be expected to have a Company Material Adverse
Effect, or (iii) there shall be a material breach by the Company of any
of its covenants or agreements contained in this Agreement, which
breach, in the case of clause (i), (ii) or (iii), either is not capable
of being cured or, if it is capable of being cured, has not been cured
by the earlier of (x) 10 business days following written notice to the
Company from Parent or Sub of such breach and (y) the expiration of the
Offer; provided, however, that neither Parent nor Sub may terminate
this Agreement pursuant to this Section 8.01(c)(v) if Parent or Sub is
then in material breach of any representation, warranty or covenant
contained in this Agreement;
37
<PAGE> 44
(d) by the Company if, prior to the acceptance for payment of
shares of Company Common Stock pursuant to the Offer, (A) the Company Board, by
majority vote of the entire Company Board, determines in good faith, based upon
(among other things) the advice of outside financial advisors and outside
counsel to the Company, that a Company Takeover Proposal constitutes a Superior
Company Proposal, (B) the Company, at the direction of the Company Board,
notifies Parent in writing that it intends to enter into an agreement with
respect to such Superior Company Proposal, which notification identifies the
person making the Superior Company Proposal and attaches the most current
version of such agreement (or a complete and accurate description of all
material terms and conditions thereof), (C) Parent does not make, within three
business days of receipt of the Company's written notification of its intention
to enter into a binding agreement for a Superior Company Proposal, an offer that
the Company Board determines, in good faith after consultation with its
financial advisors, is at least as favorable to the stockholders of the Company
as such Superior Company Proposal, it being understood that the Company shall
not enter into any such binding agreement during such three-business day period
and (D) the Company concurrently with such termination pursuant to this clause
(e)(i) pays to Parent in immediately available funds the Termination Fee (as
provided in Section 6.06). The Company agrees to notify Parent promptly if its
intention to enter into a written agreement referred to in its notification
shall change at any time after giving effect to such notification; or
(e) by the Company prior to the consummation of the Offer, if
(A) there shall be a breach of any representation or warranty of Parent or Sub
in this Agreement that is qualified as to materiality or Parent Material Adverse
Effect, (B) there shall be a breach of any representation or warranty of Parent
or Sub in this Agreement that is not so qualified, other than any such breaches
which, in the aggregate, have not had or could not reasonably be expected to
have a Parent Material Adverse Effect or (C) there shall be a material breach by
Parent or Sub of any of its covenants or agreements contained in this Agreement,
which breach, in the case of clause (A), (B) or (C), either is not capable or
being cured or, if it is capable of being cured, has not been cured by the
earlier of (x) 10 business days following written notice to Parent from the
Company of such breach and (y) the expiration of the Offer; provided that the
Company may not terminate this Agreement pursuant to this Section 8.01(f) if the
Company is then in material breach of any representation, warranty or covenant
contained in this Agreement.
Section 8.02. Effect of Termination.
In the event of termination of this Agreement by either the Company or
Parent or Sub as provided in Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part of
Parent, Sub or the Company, other than Section 6.06, this Section 8.02 and
Article IX, which provisions shall survive such termination, and except that
nothing in this Section 8.02 shall relieve a party from liability for fraud or
liability for the willful breach by a party of any representation, warranty or
covenant set forth in this Agreement and such party shall be fully liable for
any and all liabilities and damages incurred or suffered by the other party as a
result of any such breach.
38
<PAGE> 45
Section 8.03. Amendment.
Subject to Section 6.09, this Agreement may be amended, supplemented or
modified by the parties at any time before or after receipt of the Company
Stockholder Approval only by an instrument in writing signed on behalf of each
of the parties; provided, however, that after receipt of the Company Stockholder
Approval, there shall be made no amendment, supplement or modification that by
Law requires further approval by the stockholders of the Company without the
further approval of such stockholders.
Section 8.04. Extension; Waiver.
Subject to Section 6.09, at any time prior to the Effective Time, (a)
the parties may extend the time for the performance of any of the obligations or
other acts of the other parties, (b) each party may waive any inaccuracies in
the representations and warranties of another party contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.03, each party may waive compliance with any of the
agreements or conditions of another party contained in this Agreement. Subject
to Section 6.09, any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
Section 8.05. Procedure for Termination, Amendment, Extension or
Waiver.
Subject to Section 6.09, a termination of this Agreement pursuant to
Section 8.01, an amendment, modification or supplement of this Agreement
pursuant to Section 8.03 or an extension or waiver pursuant to Section 8.04
shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
Section 9.02. Notices.
All notices, requests, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given upon receipt (or
upon the next succeeding business day if received after 5 p.m. local time on a
business day or if received on a Saturday, Sunday or United States holiday) by
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
39
<PAGE> 46
(a) if to Parent or Sub, to:
Marathon Oil Company
5555 San Felipe Road
Houston, Texas 77056-2723
Attention: President
General Counsel
with a copy to:
Baker Botts L.L.P.
3000 One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Jr.
(b) if to the Company, to:
Pennaco Energy, Inc.
1050 17th Street, Suite 700
Denver, Colorado 80265-2076
Attention: Glen C. Warren, Jr.
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Attention: David P. Oelman
Section 9.03. Definitions.
For purposes of this Agreement:
An "affiliate," when used with reference to any person, shall
have the meaning ascribed to such term in Rule 12b-2 of the Exchange
Act, as in effect on the date of this Agreement.
A "business day" means any day other than Saturday, Sunday or
any other day on which banks in the City of New York are required or
permitted by applicable Law to close.
A "Company Material Adverse Effect" means a material adverse
effect on (i) the business, operations, assets, condition (financial or
otherwise), or results of operations of the Company, (ii) the ability
of the Company to perform its obligations under this Agreement or (iii)
the ability of the Company to consummate the Offer, the Merger and the
other
40
<PAGE> 47
Transactions; provided, however, that effects relating to (a) the
economy in general, (b) changes in oil, gas or other hydrocarbon
commodity prices or other changes affecting the oil and gas industry
generally or (c) the announcement of the transactions contemplated
hereby, shall not be deemed to constitute a Company Material Adverse
Effect or be considered in determining whether a Company Material
Adverse Effect has occurred.
"in the ordinary course of business," with respect to any
action, means such action is:
(a) consistent with the past custom and practices of
such person (including with respect to quantity and frequency)
and is taken in the ordinary course of the normal day-to-day
operations of such person;
(b) not required to be authorized by the Board of
Directors of such person; and
(c) similar in nature and magnitude to actions
customarily taken, without any authorization by the Board of
Directors, in the ordinary course of the normal day-to-day
operations of other persons that are in the same line of
business as such person.
A "person" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity of any kind.
A "subsidiary" of any person means any other person of which
(i) such person or any subsidiary thereof is a general partner, (ii)
such person and/or one or more of its subsidiaries holds voting power
to elect a majority of the board of directors or others performing
similar functions or (iii) such person, directly or indirectly, owns or
controls more than 50% of the equity interests of such other person.
Words and terms used in this Agreement which are defined in
other Sections of this Agreement are used throughout this Agreement as
therein defined.
Section 9.04. Interpretation.
When a reference is made in this Agreement to a Section or an Article,
such reference shall be to a Section or Article of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 9.05. Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or Law, or public policy, all other
terms and provisions of this Agreement shall
41
<PAGE> 48
nevertheless remain in full force and effect so long as the economic and legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the Transactions are fulfilled to the extent possible.
Section 9.06. Counterparts.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.
Section 9.07. Entire Agreement; No Third-Party Beneficiaries.
This Agreement, taken together with the Company Disclosure Letter, (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
Transactions and (b) except for the provisions of Article II, Section 6.05 and
Section 6.09, is not intended to confer upon any person other than the parties
hereto any rights, remedies, obligations or liabilities.
Section 9.08. Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
Section 9.09. Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of law
or otherwise by any of the parties without the prior written consent of the
other parties. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 9.10. Limitations on Warranties.
(a) Except for the representations and warranties contained in
Article III of this Agreement and in the Company Disclosure Letter, the Company
makes no other express or implied representation or warranty to Parent or Sub.
Parent and Sub each acknowledge that, in entering into this Agreement, it has
not relied on any representations or warranties of the Company other than the
representations and warranties of the Company set forth in Article III of this
Agreement or the Company Disclosure Letter.
(b) Except for the representations and warranties contained in
Article IV of this Agreement, Parent and Sub make no other express or implied
representation or warranty to the Company. The Company acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of Parent and Sub other than the representations and warranties of
Parent and Sub set forth in Article IV of this Agreement.
42
<PAGE> 49
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.
MARATHON OIL COMPANY
By: /s/ Clarence P. Cazalot, Jr.
----------------------------
Clarence P. Cazalot, Jr.
President
MARATHON OIL ACQUISITION 1, LTD.
By: /s/ Richard J. Murphy
----------------------------
Richard J. Murphy
President
PENNACO ENERGY, INC.
By: /s/ Paul M. Rady
----------------------------
Paul M. Rady
President
<PAGE> 50
ANNEX I
CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I have the meanings set forth
in the attached Agreement and Plan of Merger (the "Agreement"). Notwithstanding
any other term of the Offer or this Agreement, Sub shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered shares of Company Common Stock promptly
after the termination or withdrawal of the Offer), to pay for, and may postpone
the acceptance for payment of and payment for, shares of Company Common Stock
tendered, and, except as set forth in the Agreement, terminate the Offer as to
any shares of Company Common Stock 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 of Company Common Stock which would represent at least a
majority of the Fully Diluted Shares on the date of purchase (the "Minimum
Tender Condition"). The term "Fully Diluted Shares" means all outstanding
securities entitled generally to vote in the election of directors of the
Company on a fully diluted basis, after giving effect to the exercise or
conversion of all options, rights and securities exercisable or convertible into
such voting securities. Furthermore, notwithstanding any other term of the Offer
or this Agreement, Sub shall not be required to commence the Offer, accept for
payment or, subject as aforesaid, to pay for any shares of Company Common Stock
not theretofore accepted for payment or paid for, and may terminate or amend the
Offer, with the consent of the Company or if, at any time on or after the date
of this Agreement and before the acceptance of such 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 Entity, or pending any suit, action or proceeding that has a
reasonable likelihood of success by any other person, (i) seeking to restrain,
prohibit or make illegal or materially more costly the making or consummation of
the Offer or the Merger or any other Transaction, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries or affiliates, or to
compel the Company, Parent or any of their respective subsidiaries or affiliates
to dispose of or hold separate any material portion of the business or assets of
the Company, Parent or any of their respective subsidiaries or affiliates, as a
result of the Offer, the Merger or any other Transaction, (iii) seeking to
impose limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock,
including the right to vote the Company Common Stock purchased by it on all
matters properly presented to the stockholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company or (v) that otherwise
could reasonably 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, (i) Parent, the Company
I-1
<PAGE> 51
or any of their respective subsidiaries or affiliates or (ii) the Offer, the
Merger or any other Transaction, in either case by any Governmental Entity that
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in paragraph (a) above;
(c) (i) it shall have been publicly disclosed or Parent shall
have otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of
more than 15% of the outstanding shares of the Company Common Stock has been
acquired by another person or (ii) the Company Board or any committee thereof
shall have (1) 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, (2) approved or recommended to the stockholders
of the Company a Company Takeover Proposal or announced its intention to enter
into an agreement with respect to a Company Takeover Proposal, (3) approved or
recommended that the stockholders of the Company tender their shares of Company
Common Stock into any tender offer or exchange offer that is a Company Takeover
Proposal or is related thereto or (4) resolved to do any of the foregoing;
(d) the representations or warranties of the Company set forth
in the Agreement that are qualified by materiality or Company Material Adverse
Effect shall not be true and correct, or the representations and warranties of
the Company set forth in the Agreement that are not so qualified shall not be
true and correct in all material respects, in each case, as if such
representations or warranties were made as of such time (except to the extent
such representations and warranties speak as of a specific date or as of the
date hereof, in which case such representations and warranties shall not be so
true and correct or true and correct in all material respects, as the case may
be, as of such specific date or as of the date hereof, respectively);
(e) there shall have occurred any changes, conditions, events
or developments that, individually or in the aggregate, could reasonably be
expected to have a Company Material Adverse Effect;
(f) the Company shall have breached in any material respect
any material agreement or covenant of the Company under this Agreement; or
(g) this 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 sole and absolute discretion of Parent, to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent and
may be asserted by Sub or Parent regardless of the circumstances giving rise to
such condition or may be waived by Sub and Parent in whole or in part at any
time and from time to time in their sole discretion; provided, however, that the
Minimum Tender Condition may not be waived. The failure by Parent, Sub or any
other affiliate of Parent at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall 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 shall be
final and binding on the parties.
I-2
