SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event report) JUNE 6, 1996
Alexander Energy Corporation
(Exact name of registrant as specified in its charter)
Oklahoma 0-10525 73-1088777
(State or other (Commission File (I.R.S. Employee
jurisdiction of Number) Identification No.)
incorporation)
701 Cedar Lake Boulevard, Oklahoma City, Oklahoma 73114
(Address of principal (Zip Code)
executive offices)
Registrant telephone number, including area code (405) 478-8686
N/A
(Former name or former address if changed since last report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
On June 6, 1996, National Energy Group ("NEG"), NEG-OK,
Inc., a wholly-owned subsidiary of NEG ("NEG-OK") and Alexander
Energy Corporation ("Alexander") signed an Agreement and Plan of
Merger (the "Agreement"). Pursuant to the Agreement, Alexander
will be merged with and into NEG-OK and the stockholders of
Alexander will receive 1.7 shares of NEG's Common Stock for each
share of Alexander Common Stock and associated rights. The
Agreement was approved by NEG's and Alexander's Boards of
Directors. NEG also received a bank commitment for $65,000,000 to
finance part of the proposed transaction.
The Merger is subject to the approval of the stockholders
of NEG and Alexander and requisite regulatory approvals. The
Merger is expected to be submitted to the stockholders of NEG and
Alexander in August, 1996. The Merger is also subject to several
other material conditions.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
The following are filed as exhibits hereto:
Exhibit
Number Description
- ------- -----------
2 Agreement and Plan of Merger by and among National Energy
Group, Inc., NEG-OK, Inc. and Alexander Energy Corporation
dated June 6, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
ALEXANDER ENERGY CORPORATION
BOB G. ALEXANDER
Bob G. Alexander, President
Date: July 23, 1996
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Number Description Method of Filing
- -------------- ----------- ----------------
<S> <C> <C>
2 Agreement and Plan of Merger by Filed herewith
and among National Energy Group, electronically
Inc., NEG-OK, Inc. and Alexander
Energy Corporation dated June 6,
1996
</TABLE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NATIONAL ENERGY GROUP, INC.,
NEG-OK, INC.
AND
ALEXANDER ENERGY CORPORATION
June 6, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . .2
1.01 The Exchange Ratio . . . . . . . . . . . . . . . . . . . .2
1.02 The Merger . . . . . . . . . . . . . . . . . . . . . . . .2
1.03 Effect of the Merger . . . . . . . . . . . . . . . . . . .2
1.04 Exchange of Certificates . . . . . . . . . . . . . . . . .3
1.05 Taking Necessary Action; Further Action. . . . . . . . . .4
1.06 Closing. . . . . . . . . . . . . . . . . . . . . . . . . .4
1.07 No Fractional Shares . . . . . . . . . . . . . . . . . . .5
1.08 Dissenting Shares. . . . . . . . . . . . . . . . . . . . .5
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF NEG . . . . . . . . . .6
2.01 Organization, NEG's Subsidiaries, etc. . . . . . . . . . .6
2.02 Capital Stock of NEG and Acquisition . . . . . . . . . . .7
2.03 Ownership Interests in and Securities
of Others. . . . . . . . . . . . . . . . . . . . . . . . .8
2.04 Financial Matters. . . . . . . . . . . . . . . . . . . . .8
2.05 Tax Matters . . . . . . . . . . . . . . . . . . . . . . .10
2.06 Title and Liens. . . . . . . . . . . . . . . . . . . . . .11
2.07 Agreements, Contracts and Commitments. . . . . . . . . . .11
2.08 No Breach of Statute or Contract;
Governmental Authorizations. . . . . . . . . . . . . . . .12
2.09 Litigation or Adverse Events . . . . . . . . . . . . . . .13
2.10 Patents, Trademarks, etc.. . . . . . . . . . . . . . . . .14
2.11 Authorization of Agreement . . . . . . . . . . . . . . . .14
2.12 Disclosure in Proxy Statement-Prospectus . . . . . . . . .15
2.13 Broker's or Finder's Fees. . . . . . . . . . . . . . . . .15
2.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . .15
2.15 Permits. . . . . . . . . . . . . . . . . . . . . . . . . .16
2.16 Completeness of Documents Furnished by NEG. .. . . . . . .16
2.17 Disposition of Assets. . . . . . . . . . . . . . . . . . .16
2.18 Employees and Labor. . . . . . . . . . . . . . . . . . . .16
2.19 Obligations to Employees . . . . . . . . . . . . . . . . .18
2.20 Vested Vacation Entitlement. . . . . . . . . . . . . . . .20
2.21 Environmental Matters. . . . . . . . . . . . . . . . . . .20
2.22 Books of Account . . . . . . . . . . . . . . . . . . . . .21
2.23 Prior Obligations. . . . . . . . . . . . . . . . . . . . .21
2.24 Oil and Gas Reserve Report . . . . . . . . . . . . . . . .21
2.25 Title to Interests . . . . . . . . . . . . . . . . . . . .22
2.26 Compliance with Leases and Laws. . . . . . . . . . . . . .23
2.27 Sale of Production . . . . . . . . . . . . . . . . . . . .24
2.28 Contracts. . . . . . . . . . . . . . . . . . . . . . . . .25
2.29 Status of NEG Wells. . . . . . . . . . . . . . . . . . . .25
2.30 Tax Partnerships . . . . . . . . . . . . . . . . . . . . .25
2.31 Equipment and Off-Lease Facilities . . . . . . . . . . . .25
2.32 SEC Documents. . . . . . . . . . . . . . . . . . . . . . .25
2.33 Related Party Transactions . . . . . . . . . . . . . . . .26
2.34 Certain Payments . . . . . . . . . . . . . . . . . . . . .26
2.35 Royalty Accounts . . . . . . . . . . . . . . . . . . . . .27
2.36 Accounts Payable . . . . . . . . . . . . . . . . . . . . .27
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF ALEXANDER. . . . . . .27
3.01 Organization, Alexander's Subsidiaries, etc. . . . . . . .27
3.02 Capital Stock of Alexander . . . . . . . . . . . . . . . .29
3.03 Ownership Interests in and Securities of Others. . . . . .29
3.04 Financial Matters. . . . . . . . . . . . . . . . . . . . .30
3.05 Tax Matters . . . . . . . . . . . . . . . . . . . . . . .32
3.06 Title and Liens. . . . . . . . . . . . . . . . . . . . . .32
3.07 Agreements, Contracts and Commitments. . . . . . . . . . .33
3.08 No Breach of Statute or Contract;
Governmental Authorizations. . . . . . . . . . . . . . . .33
3.09 Litigation or Adverse Events . . . . . . . . . . . . . . .35
3.10 Patents, Trademarks, etc.. . . . . . . . . . . . . . . . .35
3.11 Authorization of Agreement . . . . . . . . . . . . . . . .36
3.12 Disclosure in Proxy Statement-Prospectus . . . . . . . . .36
3.13 Broker's or Finder's Fees. . . . . . . . . . . . . . . . .36
3.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . .37
3.15 Permits. . . . . . . . . . . . . . . . . . . . . . . . . .37
3.16 Completeness of Documents Furnished by
Alexander. . . . . . . . . . . . . . . . . . . . . . . . .37
3.17 Disposition of Assets. . . . . . . . . . . . . . . . . . .38
3.18 Employees and Labor. . . . . . . . . . . . . . . . . . . .38
3.19 Obligations to Employees . . . . . . . . . . . . . . . . .39
3.20 Vested Vacation Entitlement. . . . . . . . . . . . . . . .41
3.21 Environmental Matters. . . . . . . . . . . . . . . . . . .41
3.22 Books of Account . . . . . . . . . . . . . . . . . . . . .42
3.23 Prior Obligations. . . . . . . . . . . . . . . . . . . . .42
3.24 Oil and Gas Reserve Report . . . . . . . . . . . . . . . .42
3.25 Title to Interests . . . . . . . . . . . . . . . . . . . .42
3.26 Compliance with Leases and Laws. . . . . . . . . . . . . .44
3.27 Sale of Production . . . . . . . . . . . . . . . . . . . .45
3.28 Contracts. . . . . . . . . . . . . . . . . . . . . . . . .46
3.29 Status of Alexander Wells. . . . . . . . . . . . . . . . .46
3.30 Tax Partnerships . . . . . . . . . . . . . . . . . . . . .46
3.31 Equipment and Off-Lease Facilities . . . . . . . . . . . .46
3.32 SEC Documents. . . . . . . . . . . . . . . . . . . . . . .47
3.33 Related Party Transactions . . . . . . . . . . . . . . . .47
3.34 Certain Payments . . . . . . . . . . . . . . . . . . . . .47
3.35 Royalty Accounts . . . . . . . . . . . . . . . . . . . . .48
3.36 Accounts Payable . . . . . . . . . . . . . . . . . . . . .48
ARTICLE IV. CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE DATE OF THE MERGER . . . . . . . . . . . . . .48
4.01 Investigations; Operation of Business
of Alexander . . . . . . . . . . . . . . . . . . . . . . .48
4.02 Investigations; Operation of Business
of NEG . . . . . . . . . . . . . . . . . . . . . . . . . .51
4.03 Shareholder Approvals. . . . . . . . . . . . . . . . . . .55
4.04 NEG Registration Statement, etc. . . . . . . . . . . . . .55
4.05 Information for Proxy Statement-Prospectus . . . . . . . .55
4.06 Restricted Common Stock. . . . . . . . . . . . . . . . . .55
4.07 Letters from Affiliates. . . . . . . . . . . . . . . . . .56
4.08 Consents . . . . . . . . . . . . . . . . . . . . . . . . .56
4.09 NEG Board of Directors . . . . . . . . . . . . . . . . . .56
4.10 Outstanding Alexander Options, Warrants
and Stock Awards . . . . . . . . . . . . . . . . . . . . .56
4.11 Filings. . . . . . . . . . . . . . . . . . . . . . . . . .57
4.12 Notices of Certain Events. . . . . . . . . . . . . . . . .57
4.13 Tax Free Reorganization. . . . . . . . . . . . . . . . . .57
4.14 Recognition of Employment and Severance Agreements . . . .58
ARTICLE V. CONDITIONS OF MERGER; ABANDONMENT OF MERGER. . . . . . . .58
5.01 Conditions of Obligations of Alexander . . . . . . . . . .58
(a) Resolutions of Shareholders and
Board of Directors . . . . . . . . . . . . . . . . . .58
(b) Representations and Warranties of
NEG and Acquisition to be True . . . . . . . . . . . .58
(c) Third Party Consents . . . . . . . . . . . . . . . . .59
(d) Registration of NEG Stock. . . . . . . . . . . . . . .59
(e) No Material Adverse Change . . . . . . . . . . . . . .59
(f) Statutory Requirements . . . . . . . . . . . . . . . .59
(g) Opinion of Counsel of NEG. . . . . . . . . . . . . . .60
(h) Fairness Opinion . . . . . . . . . . . . . . . . . . .61
(i) NEG Stock Price. . . . . . . . . . . . . . . . . . . .61
(j) NEG Financing. . . . . . . . . . . . . . . . . . . . .61
(k) Filing of Form S-4 . . . . . . . . . . . . . . . . . .61
5.02 Conditions of Obligation of NEG. . . . . . . . . . . . . .62
(a) Resolutions of Shareholders and
Boards of Directors. . . . . . . . . . . . . . . . . .62
(b) Representations and Warranties of
Alexander to be True . . . . . . . . . . . . . . . . .62
(c) Third Party Consents . . . . . . . . . . . . . . . . .62
(d) Registration of NEG Stock. . . . . . . . . . . . . . .62
(e) No Material Adverse Change . . . . . . . . . . . . . .62
(f) Statutory Requirements . . . . . . . . . . . . . . . .63
(g) Opinion of Counsel of Alexander. . . . . . . . . . . .63
(h) Receipt of Letters from Alexander
Affiliates . . . . . . . . . . . . . . . . . . . . . .65
(i) Fairness Opinion . . . . . . . . . . . . . . . . . . .65
(j) Outstanding Alexander Common Stock . . . . . . . . . .65
(k) NEG Stock Price. . . . . . . . . . . . . . . . . . . .65
(l) NEG Financing. . . . . . . . . . . . . . . . . . . . .65
5.03 Conditions of Obligations of NEG
and Alexander. . . . . . . . . . . . . . . . . . . . . . .65
(a) Tax Opinion. . . . . . . . . . . . . . . . . . . . . .65
(b) Payment of Prudential and
McAfee & Taft. . . . . . . . . . . . . . . . . . . . .66
5.04 Termination of Agreement and Abandonment
of Merger. . . . . . . . . . . . . . . . . . . . . . . . .67
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . .67
(b) By Alexander . . . . . . . . . . . . . . . . . . . . .67
(c) By NEG . . . . . . . . . . . . . . . . . . . . . . . .67
5.05 Effect of Termination and Abandonment. . . . . . . . . . .67
ARTICLE VI. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . .67
6.01 Amendments . . . . . . . . . . . . . . . . . . . . . . . .67
6.02 "Subsidiaries"; "Material Adverse Effect"; "Knowledge" . .67
6.03 Schedules. . . . . . . . . . . . . . . . . . . . . . . . 68
6.04 Survival of Covenants, Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . 68
6.05 Governing Law. . . . . . . . . . . . . . . . . . . . . . 68
6.06 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 68
6.07 No Assignment. . . . . . . . . . . . . . . . . . . . . . 68
6.08 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 69
6.09 Headings . . . . . . . . . . . . . . . . . . . . . . . . 70
6.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 70
6.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . 70
6.12 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 70
6.13 No Third Party Beneficiaries . . . . . . . . . . . . . . 70
EXHIBITS AND SCHEDULES
Exhibits
EXHIBIT A Amendment to Certificate of
Incorporation of NEG
EXHIBIT B Certificate of Merger
EXHIBIT C Form of Affiliates Letter
Schedules
Schedule 2.01 Subsidiaries and Partnerships of NEG
Schedule 2.02 Capital Stock of NEG
Schedule 2.03 Ownership Interests in Securities of Others
Schedule 2.04 Financial Matters
Schedule 2.05 Tax and Other Returns and Reports
Schedule 2.06 Title and Liens
Schedule 2.07 Agreements, Contracts and Commitments
Schedule 2.08 No Breach of Statute or Contract; Governmental
Authorizations
Schedule 2.09 Litigation or Adverse Events
Schedule 2.13 Brokers
Schedule 2.14 Insurance
Schedule 2.17 Disposition of Assets
Schedule 2.18 Employees and Labor
Schedule 2.19 Obligations to Employees
Schedule 2.20 Vested Vacation Entitlement
Schedule 2.21 Environmental
Schedule 2.25A Title to NEG Interests - Producing Leases
Schedule 2.25B Title to NEG Interests - Non-Producing Leases
Schedule 2.25C Title to NEG Interests - Non-Producing Mineral Fee
Interests
Schedule 2.26 Compliance with Leases and Laws
Schedule 2.27 Sale of Production
Schedule 2.28 Contracts
Schedule 2.29 Status of NEG Wells
Schedule 2.30 Tax Partnerships
Schedule 2.32 SEC Documents of NEG
Schedule 2.33 Related Party Transactions of NEG
Schedule 2.34 Certain Payments of NEG
Schedule 2.35 Royalty Accounts
Schedule 2.36 Accounts Payable
Schedule 3.01 Subsidiaries and Partnerships of Alexander
Schedule 3.02 Capital Stock of Alexander
Schedule 3.03 Ownership Interests in Securities of Others
Schedule 3.04 Financial Matters
Schedule 3.05 Tax and Other Returns and Reports
Schedule 3.06 Title and Liens
Schedule 3.07 Agreements, Contracts and Commitments
Schedule 3.08 No Breach of Statute or Contract; Governmental
Authorizations
Schedule 3.09 No Litigation or Adverse Events
Schedule 3.13 Brokers
Schedule 3.14 Insurance
Schedule 3.17 Disposition of Assets
Schedule 3.18 Employees and Labor
Schedule 3.19 Obligations to Employees
Schedule 3.20 Vested Vacation Entitlement
Schedule 3.21 Environmental Matters
Schedule 3.25A Title to Alexander Interests - Producing Leases
Schedule 3.25B Title to Alexander Interests - Non-Producing Leases
Schedule 3.25C Title to Alexander Interests - Non-Producing
Mineral Fee Interests
Schedule 3.26 Compliance with Leases and Laws
Schedule 3.27 Sale of Production
Schedule 3.28 Contracts
Schedule 3.29 Status of Alexander Wells
Schedule 3.30 Tax Partnerships
Schedule 3.32 SEC Documents of Alexander
Schedule 3.33 Related Party Transactions of Alexander
Schedule 3.34 Certain Payments of Alexander
Schedule 3.35 Royalty Accounts
Schedule 3.36 Accounts Payable
Schedule 4.01 Alexander's Proposed Capital Expenditures
Schedule 4.02 NEG's Proposed Capital Expenditures and Conduct of
Business Pending Closing
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NATIONAL ENERGY GROUP, INC.,
NEG-OK, INC. AND
ALEXANDER ENERGY CORPORATION
______________
AGREEMENT AND PLAN OF MERGER (hereinafter called the
"Agreement"), dated as of the 7th of June, 1996, by and among
NATIONAL ENERGY GROUP, INC., a Delaware corporation ("NEG"), NEG-OK,
Inc., a Delaware corporation ("Acquisition"), and ALEXANDER
ENERGY CORPORATION, an Oklahoma corporation ("Alexander").
W I T N E S S E T H:
WHEREAS, all of the outstanding capital stock of
Acquisition is owned by NEG; and
WHEREAS, the Boards of Directors of NEG, Acquisition and
Alexander, respectively, deem it advisable and in the best
interests of the respective companies and their respective
shareholders that Alexander merge with and into Acquisition
pursuant to this Agreement and applicable provisions of the
Oklahoma General Corporation Act (the "Oklahoma Act") and the
General Corporation Law of the State of Delaware (the "DGCL") (the
"Merger"); and
WHEREAS, this Agreement, among other things, provides for
(i) the merger of Alexander with and into Acquisition, and (ii) the
automatic conversion of each share of Alexander's common stock, par
value $0.03 per share ("Alexander Common Stock"), outstanding at
the Effective Time (as defined in Section 1.02), together with any
and all rights associated with such Alexander Common Stock pursuant
to the Rights Agreement ("Rights Agreement") dated December 15,
1994, between Alexander and Liberty Bank and Trust Company of
Oklahoma City, N.A. and all related documents ("Associated
Rights"), into one and seven tenths (1.7) shares of Common Stock of
NEG, par value $0.01 per share (the "NEG Common Stock") which is
currently entitled Class A Common Stock, but which will be renamed
Common Stock after shareholder approval of NEG's Amendment to
Certificate of Incorporation, a copy of which is attached hereto as
Exhibit A; and
WHEREAS, the Boards of Directors of the respective
companies have approved and adopted this Agreement as a plan of
reorganization within the provisions of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code");
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements, provisions and covenants herein contained,
the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.01 The Exchange Ratio. NEG shall acquire Alexander
through the merger of Alexander with and into NEG's wholly-owned
subsidiary, Acquisition, under the terms of which each share of
Alexander Common Stock issued and outstanding at the Effective Time
(as defined in Section 1.02 hereof), together with all Associated
Rights, will be converted as a result of the Merger into one and
seven tenths (1.7) shares of fully paid and nonassessable shares of
NEG's Common Stock (the "Exchange Ratio").
Each share of Acquisition issued and outstanding at the
Effective Time shall remain outstanding.
1.02 The Merger. Subject to Article V of this
Agreement, a Certificate of Merger substantially in the form
attached hereto as Exhibit B (the "Certificate of Merger") shall be
executed with reasonable promptness by the parties after
satisfaction or waiver of the conditions to the Merger set forth
herein and delivered to the Secretary of State of the State of
Oklahoma (the "Oklahoma Secretary of State") and the Secretary of
State of the State of Delaware (the "Delaware Secretary of State")
for filing and to be effective on such date (the "Effective Date"
or the "Effective Date of the Merger") and time (the "Effective
Time" or the "Time of Filing") as may be mutually agreed by NEG and
Alexander and set forth in the Certificate of Merger. As of the
Effective Time of the Merger, the separate existence of Alexander
shall cease and Alexander shall be merged with and into
Acquisition, and the name of Acquisition shall be changed to NEG-OK, Inc.
1.03 Effect of the Merger. In accordance with the
provisions of this Agreement, the Oklahoma Act and the DGCL, at the
Effective Time, Alexander shall be merged with and into
Acquisition, which shall be the surviving corporation (Acquisition
being herein sometimes referred to as the "Surviving Corporation").
The Certificate of Incorporation and By-Laws of Acquisition as in
effect at the Effective Time shall continue to be the Certificate
of Incorporation and By-Laws of the Surviving Corporation until
amended or supplemented in accordance with the DGCL. The officers
and directors of Acquisition at the Effective Time shall be the
officers and directors of Acquisition immediately after the
Effective Time, each to serve until his respective successor is
duly elected and qualified, or until his earlier resignation or
removal. Acquisition, as the Surviving Corporation, shall, at and
after the Effective Time, possess all the rights, privileges,
powers and franchises, of a public as well as of a private nature,
of Alexander and Acquisition (the "Constituent Corporations"),
subject to all the restrictions, disabilities and duties of each of
the Constituent Corporations; and all rights, privileges, powers
and franchises of each of the Constituent Corporations, and all
property, real, personal and mixed, and all debts due on whatever
account, as well as stock subscriptions and all other things in
action or belonging to each of the Constituent Corporations shall
be vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interest
shall be thereafter the property of the Surviving Corporation as
they were of the Constituent Corporations and the title to any real
estate, or any interest thereto, vested in any of the Constituent
Corporations shall not revert or be in any way impaired by reason
of the provisions of the Merger, the Oklahoma Act or the DGCL; but
all rights of creditors and all liens upon any property of any of
the Constituent Corporations shall be preserved unimpaired, and all
debts, liabilities and duties of the respective Constituent
Corporations shall thenceforth attach to the Surviving Corporation,
and may be enforced against the Surviving Corporation to the same
extent as if said debts, liabilities and duties had been incurred
or contracted by it. Without limiting the generality of the
foregoing, from and after the Effective Time, the Surviving
Corporation shall assume and be liable for all of the obligations
of Alexander under Alexander's Certificate of Incorporation and
By-Laws as in effect immediately prior to the Effective Time relating
to the indemnification of persons who are directors or officers of
Alexander immediately prior to the Effective Time; it is the intent
of this provision that the officers and directors be as fully
indemnified after the Effective Time of the Merger for acts or
omissions prior thereto as they were prior to the Merger. The
provisions of this Section 1.03 shall survive the termination of
the Agreement and shall be enforceable after the Effective Time by
each of the persons who are officers and directors of Alexander
immediately prior to the Effective Time.
1.04 Exchange of Certificates. Immediately after the
Effective Time, each holder of an outstanding certificate or
certificates which immediately prior to the Effective Time
represented shares of Alexander Common Stock and Associated Rights
(the "Certificates") shall surrender the same to a bank or other
financial institution selected by NEG and satisfactory to
Alexander, which shall act as exchange agent for all such holders
(the "Exchange Agent"), and such holders shall be entitled upon
such surrender to receive in exchange therefor certificates
representing the number of whole shares of NEG Common Stock into
which the shares theretofore represented by the Certificates so
surrendered shall have been converted pursuant to Section 1.01
above. Approval of this Agreement by the shareholders of Alexander
shall constitute ratification of the appointment of the Exchange
Agent. At the Effective Time, all rights of holders of Alexander
Common Stock and the Associated Rights, except with respect to
Alexander Dissenting Shares (as defined below), if any, shall
cease, except for the right to receive shares of NEG Common Stock
as provided herein, and neither shares of Alexander Common Stock
nor the Associated Rights shall be deemed to be outstanding for any
purpose whatsoever. Until so surrendered, each outstanding
Certificate shall be deemed for all corporate purposes (except the
payment of dividends) from and after the Effective Time to evidence
the ownership of the number of whole shares of NEG Common Stock
into which the shares and rights represented thereby prior to such
Effective Time shall have been converted. After the Effective Time
and until the Certificates are so surrendered, no dividend payable
to holders of record of NEG shall be paid to the holders of such
Certificates in respect thereof. Upon surrender of such
Certificates, however, there shall be paid to the holders of the
Certificates for NEG Common Stock issued in exchange therefor the
amount of dividends, if any, which theretofore became payable after
the Effective Time with respect to such whole shares of NEG Common
Stock, but which have not theretofore been paid on such stock. No
interest shall be payable with respect to the payment of any such
dividends. Promptly after the Effective Time, the Exchange Agent
shall mail or deliver to each recordholder of Certificates a form
letter of transmittal and instructions for use in surrendering
Certificates and receiving payment therefor, which letter of
transmittal shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass only upon proper
delivery of the Certificates to the Exchange Agent. If payment is
to be made to a person other than the person in whose name the
Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that 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 or established to the satisfaction of NEG that
such tax has been paid or is not applicable.
1.05 Taking Necessary Action; Further Action. The
parties shall use all reasonable efforts to take all such action as
may be necessary or appropriate in order to effectuate the Merger
as promptly as possible, including recording the Certificate of
Merger for the State of Delaware in the Office of the Recorder of
the County of Newcastle in Delaware, if appropriate. If, at any
time after the Effective Time of the Merger, any further action is
necessary or desirable to carry out the purposes of this Agreement,
or to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and
franchises of the Constituent Corporations, the officers and
directors of the Surviving Corporation are fully authorized in the
name of the Constituent Corporations or otherwise to take, and
shall take, all such action.
1.06 Closing. Subject to the terms and provisions
hereof, after satisfaction or waiver of the conditions to the
Merger set forth herein, the effectiveness of the Merger will be
confirmed at 11:00 a.m. at the offices of Strasburger & Price, LLP,
901 Main Street, Suite 4300, Dallas, Texas on August 30, 1996, or
at such earlier or later date or place as shall be mutually agreed
by NEG and Alexander, such date and time herein sometimes referred
to as the "Closing" or "Closing Date."
1.07 No Fractional Shares. No certificates or scrip for
fractional shares of NEG Common Stock will be issued and no such
fractional share interest shall entitle the owner thereof to vote
or to have any rights of a shareholder of NEG. In lieu of such
fractional shares, any holder of Alexander Common Stock and
Associated Rights who otherwise would have been entitled to receive
fractional shares of NEG Common Stock shall, after surrender of his
Certificate, be paid the cash value of each such fraction, which
shall be equal to the fraction multiplied by the closing sales
price of NEG Common Stock on the Nasdaq National Market for the
trading day preceding the Closing Date. The Exchange Agent shall,
subject to any applicable abandoned property, escheat or similar
law, until one year after the Effective Date, pay to such holders,
upon surrender of their Certificates, the cash value of such
fraction so determined, without interest. Any balance of such
cash, as to which Certificates shall not have been surrendered by
the expiration of such one-year period, shall thereafter be
returned to and held by NEG subject to any applicable statute of
limitations or any abandoned property, escheat or similar law.
1.08 Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, all shares of Alexander Common
Stock which are outstanding immediately prior to the Effective Time
and which are held by holders who shall have delivered a written
demand for appraisal of such Alexander Common Stock ("Alexander
Dissenting Shares") in the manner provided in Section 1091 of the
Oklahoma Act shall not be converted into or be exchangeable for the
right to receive the consideration provided for in Section 1.01;
but the holders thereof shall be entitled to payment of the
appraised value of such shares in accordance with the provisions of
Section 1091 of the Oklahoma Act; provided, however, that (i) if
any holder of Alexander Dissenting Shares shall subsequently
deliver a written withdrawal of such holder's demand for appraisal
of such Alexander Common Stock (with the written approval of NEG,
if such withdrawal is not tendered within 60 days after the
Effective Time), or (ii) if neither any holder of Alexander
Dissenting Shares nor NEG has filed a petition demanding a
determination of the value of all Alexander Dissenting Shares
within the time provided in Section 1091 of the Oklahoma Act, such
holders shall forfeit the right to appraisal of such shares and
such shares shall thereupon be deemed to have become exchangeable
for, as of the Effective Time, the right to receive the merger
consideration provided in Section 1.01, without any interest
thereon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF NEG
NEG (unless the context otherwise indicates, for purposes
of this Agreement NEG shall include the NEG Subsidiaries and the
NEG Partnerships as defined herein) represents and warrants to
Alexander as follows:
2.01 Organization, NEG's Subsidiaries, etc. NEG is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. NEG has the corporate
power and authority to own its property and to carry on its
business as now being conducted. NEG has the corporate power and
authority to execute, deliver and perform this Agreement and the
Certificate of Merger and to consummate the transactions
contemplated hereby and thereby; and NEG is duly qualified and/or
licensed, as may be required, and in good standing in each of the
jurisdictions in which the nature of the business conducted by it
or the character of the property owned, leased or used by it makes
such qualification and/or licensing necessary, except where the
failure to be so qualified, licensed and/or in good standing would
not individually or in the aggregate have or result in a Material
Adverse Effect (as defined in Section 6.02(b) hereof) on or to NEG.
NEG has delivered to Alexander certified copies of its
Certificate of Incorporation and Bylaws which reflect all
amendments made at any time prior to the date of this Agreement and
are complete and accurate in all respects as of the date hereof.
The minute books containing the records of meetings of the
shareholders and Board of Directors of NEG are complete and correct
in all respects. Such minute books have been made available to
Alexander for examination. NEG is not in default under or in
violation of any provision of its Certificate of Incorporation or
Bylaws except for such defaults or violations which individually or
in the aggregate would not have a Material Adverse Effect on or to
NEG.
Schedule 2.01 hereto sets forth a complete and correct
description of (i) the name and jurisdiction of incorporation of
each of the direct and indirect Subsidiaries of NEG (such
subsidiaries are sometimes hereafter collectively referred to as
the "NEG Subsidiaries" or individually as an "NEG Subsidiary" and,
except for those accounted for on the equity method of accounting,
sometimes collectively referred to as the "NEG Consolidated
Subsidiaries") and (ii) the name and jurisdiction of organization
of, and interest of NEG in, each partnership or joint venture in
which NEG owns an equity interest (collectively the "NEG
Partnerships" or individually an "NEG Partnership"). Except as
set forth on Schedule 2.01, (i) all of the issued and outstanding
shares of capital stock of each NEG Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable and
are owned directly or beneficially by NEG or an NEG Subsidiary free
and clear of any liens, claims or other encumbrances or rights of
third parties, and (ii) the interest of NEG or an NEG Subsidiary in
each NEG Partnership is owned by NEG or an NEG Subsidiary free and
clear of any liens, claims or encumbrances or rights of third
parties. Except as set forth on Schedule 2.01, there are no
outstanding options, warrants or rights to purchase or acquire any
capital stock of any of the NEG Subsidiaries, and there are no
contracts, commitments, understandings, arrangements or
restrictions by which any NEG Subsidiary or NEG is bound to sell or
issue any shares of capital stock of such NEG Subsidiary or any
interest in any NEG Partnership.
Each NEG Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
respective property and to carry on its respective business as now
being conducted, and is duly qualified and/or licensed as may be
required and in good standing as a foreign corporation, as the case
may be, in each jurisdiction in which the nature of the business
conducted by it or the character of the property owned, leased or
used by any of them makes such qualification and/or licensing
necessary, except in such jurisdictions where the failure to be so
qualified would not individually or in the aggregate have a
Material Adverse Effect on NEG.
2.02 Capital Stock of NEG and Acquisition.
(a) As of the date of this Agreement, the
authorized capital stock of NEG consists of (i) 50,000,000 shares
of Class A Common Stock, $0.01 par value, of which 12,114,532
shares are issued and outstanding; (ii) 200,000 shares of Class B
Common Stock, $0.01 par value, none of which are issued and
outstanding; and (iii) 1,000,000 shares of preferred stock, $1.00
par value, of which 52,500 shares of 10% Cumulative Convertible
Preferred Stock, Series B ("Series B Preferred") and 40,000 shares
of 10 1/2% Cumulative Convertible Preferred Stock, Series C ("Series
C Preferred") (collectively, the "NEG Preferred Stock") are issued
and outstanding. As of the date of this Agreement, there are no
shares of capital stock held in the treasury of NEG. Such issued
and outstanding shares of NEG Common Stock and NEG Preferred Stock
are validly authorized and issued and fully paid and nonassessable.
Except as set forth in Schedule 2.02 attached hereto, NEG has not,
subsequent to December 31, 1995, declared or paid any dividend, or
declared or made any distribution on, or authorized the creation or
issuance of, or issued, or authorized or effected any split-up or
any other recapitalization of, any of its capital stock, or
directly or indirectly redeemed, purchased or otherwise acquired
any of its outstanding capital stock. Except as set forth in
Schedules 2.02 and 2.18, there are no contracts, commitments,
understandings, arrangements or restrictions by which NEG is bound
to sell or issue any shares of capital stock of NEG. Except as
described at Schedule 2.02, all dividends which have been declared
by NEG with respect to its capital stock have been fully paid or
distributed, as applicable. Except as set forth on Schedule 2.02,
NEG has not heretofore agreed to take any such action, will not
take any such action during the period between the date of this
Agreement and the Effective Date of the Merger and there are no
outstanding contractual obligations of NEG to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of NEG.
(b) Set forth on Schedule 2.02 attached hereto is
a list of all outstanding options, warrants or other rights to
subscribe for or to purchase from NEG any capital stock of NEG or
securities convertible into or exchangeable for capital stock of
NEG setting forth, in each case, the name of the optionee, the
number of shares subject to options which are currently
exercisable, the number of shares subject to options which will
become exercisable in the future and the date on which such options
become exercisable, the option exercise price, whether or not stock
appreciation rights ("SAR's") are attached to the options and the
date or dates on which such SAR's become exercisable.
(c) The authorized capital stock of Acquisition
consists of 50,000 shares of common stock, par value $1.00 per
share, of which 100 shares of Acquisition Common Stock are issued
and outstanding and owned of record by NEG. No shares of common
stock of Acquisition are held in the treasury. As of the date of
this Agreement, there are no outstanding options, warrants or other
rights to subscribe for or purchase from Acquisition any capital
stock of Acquisition, or securities convertible into capital stock
of Acquisition.
2.03 Ownership Interests in and Securities of Others.
Set forth in Schedule 2.03 attached hereto are (i) a description of
the types and amounts of investment securities, bonds and
debentures owned by NEG and (ii) a list of all equity or ownership
interests of NEG in other business enterprises or entities other
than the NEG Consolidated Subsidiaries, and Schedule 2.03 indicates
any such interests which are held subject to any legal, contractual
or other limitations or restrictions on the right to resell the
same. Except as set forth in Schedule 2.03, there are no
outstanding options, warrants or other rights to subscribe for or
purchase from NEG any of the debt, equity, or ownership interests
set forth in such Schedule 2.03.
2.04 Financial Matters.
(a) NEG has previously furnished Alexander a true
and complete copy of (i) NEG's Annual Report on Form 10-KSB, as
amended on Form 10-KSB/A Amendment No. 1, and Form 10-KSB/A
Amendment No. 2, filed with the Securities and Exchange Commission
("SEC"), for the year ended December 31, 1995, which amended report
(the "NEG 10-K") includes Balance Sheets of NEG as at December 31,
1995 and December 31, 1994, and the related Statements of
Operations, Statements of Changes in Stockholders' Equity and
Statements of Cash Flows for each of the years ended December 31,
1995 and December 31, 1994 reported upon by Ernst & Young LLP
("Ernst & Young"), independent certified public accountants, and
(ii) NEG's Quarterly Report on Form 10-QSB filed with the SEC for
the period ended March 31, 1996 (the "NEG 10-Q"), which report
includes the unaudited Balance Sheet of NEG at that date (the "NEG
March 31 Balance Sheet"), and the end of the preceding year, and
the related Statements of Operations and Statements of Cash Flow
for the required periods. All year end financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a basis consistent with prior periods, except
as set forth in such financial statements and the notes thereto.
Except as set forth in Schedule 2.04, the Balance Sheets of NEG as
at December 31, 1995 and December 31, 1994 contained in the NEG
10-K present fairly the financial condition of NEG as of the dates
thereof, and the related Statements of Operations of NEG contained
in the NEG 10-K present fairly the results of the operations
thereof for the periods indicated. Except as disclosed in Schedule
2.04, the NEG March 31 Balance Sheet fairly presents the financial
condition of NEG as of the date thereof, and the related Statement
of Operations of NEG contained in the NEG 10-Q fairly presents the
results of operations thereof for the period indicated, including
all necessary adjustments (which consist of only normal recurring
accruals). For the purposes of this Agreement, all financial
statements of NEG shall include any notes to such financial
statements.
(b) NEG does not have any liabilities or
obligations, either accrued, absolute, contingent or otherwise,
which in the aggregate are material to NEG, which have not been:
(i) reflected in the Balance Sheet and notes
thereto of NEG dated December 31, 1995 (the "NEG Balance
Sheet"), or the NEG March 31 Balance Sheet; or
(ii) disclosed to Alexander in writing in
connection with this Agreement; or
(iii) incurred, consistent with past practices,
in or as a result of the ordinary course of business
since December 31, 1995.
(c) Except as is determinable from the NEG Balance
Sheet, the NEG 10-Q, as set forth on Schedule 2.04 or except as
contemplated by this Agreement, between December 31, 1995 and the
date of this Agreement, NEG has not engaged in any material
transaction not in the ordinary course of its business and, except
as set forth in Schedule 2.04, there has not been, occurred or
arisen since December 31, 1995:
(i) any material adverse change in the
financial condition or in the operations of the business
of NEG from that shown on the NEG Balance Sheet; or
(ii) any damage or destruction in the nature
of a casualty loss, or interference with its business
from such loss or from any labor dispute or court or
governmental action, order or decree, whether covered by
insurance or not, either individually or in the
aggregate, which had a Material Adverse Effect on or to
NEG; or
(iii) any event, condition or state of facts
(other than the general state of the national economy,
prices of oil and gas generally in the United States and
proposed state or federal legislation or regulation) of
any character which would have a Material Adverse Effect
on or to NEG; or
(iv) any extraordinary loss or collective
losses (as defined in Opinions No. 9 and No. 30 of the
Accounting Principles Board of the American Institute of
Certified Public Accountants) suffered by NEG which has
a Material Adverse Effect on NEG, or any waiver by NEG of
any rights which are material to NEG.
2.05 Tax Matters.
(a) Except as set forth on Schedule 2.05, all
federal, state, local and foreign tax returns, reports and
declarations required to be filed by NEG have been timely filed (or
appropriate extensions or waivers have been obtained) with the
appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed.
(b) All federal, state, local and foreign income,
profits, franchise, sales, use, occupation, property, production,
severance, excise and other taxes (including interest and
penalties) (collectively "Taxes") due from NEG (i) have been fully
paid or adequately reserved against on the books of NEG, the NEG
Balance Sheet or the NEG March 31 Balance Sheet, or (ii) are being
contested in good faith by appropriate proceedings and are
disclosed in Schedule 2.05 attached hereto. Any deficiencies or
assessments claimed or made as a result of examination of the
federal or state income tax returns of NEG by the Internal Revenue
Service (the "IRS") or the appropriate state taxing authority have
either been paid or settled or fully reserved against on its books
or on the financial statements of NEG.
(c) No waivers of statutes of limitation in
respect of any tax returns or tax reports have been given or
requested, except as shown on Schedule 2.05.
(d) There are no potential tax deficiencies which
are reasonably likely to arise from issues which have been raised
by the IRS or any other taxing authority that have not been
disclosed in Schedule 2.05 and are reasonably likely to have a
Material Adverse Effect on or to NEG.
(e) Notwithstanding the foregoing representations
regarding Taxes and tax returns described in this Section 2.05, NEG
represents and warrants that with respect to all taxable years
ended on and prior to December 31, 1995, NEG shall owe no
additional Taxes except those that have been paid or as to which
proper and adequate reserves and allowances have been provided on
the books of NEG or the NEG Balance Sheet.
2.06 Title and Liens. NEG has defensible title to all of the
properties and assets included in the NEG Balance Sheet, including,
without limitation, the NEG Leases (as defined in, and after giving
effect to the provisions of Section 2.25), which are material to
NEG and its Consolidated Subsidiaries considered as one enterprise
except for properties and assets disposed of in the ordinary course
of its business subsequent to the date thereof. There are no
mortgages, liens, security interests, assignments of production,
deeds of trust, charges, deficiencies or encumbrances of any nature
whatsoever covering or affecting any of such properties or assets
except (i) as set forth on Schedule 2.06, (ii) liens for taxes and
assessments not yet subject to penalties for nonpayment, or (iii)
such liens, security interests, assignments of production,
encumbrances, charges or deficiencies, which individually or in the
aggregate are immaterial to such property or asset.
2.07 Agreements, Contracts and Commitments. NEG has listed on
Schedule 2.07 (or, with respect to employee benefit obligations,
Schedule 2.18) all contracts, agreements and instruments to which
it is a party or by which it is bound as of the date hereof and
which are in any single case of material importance to the conduct
of the business of NEG and its Consolidated Subsidiaries considered
as one enterprise. Each such document, or a true and correct copy
thereof, has been made available for inspection and copying by
Alexander at its sole expense, and Alexander has been provided a
written description of each oral arrangement so listed. Except as
set forth in Schedule 2.07 or Schedule 2.18 attached hereto, NEG
does not have as of the date hereof (i) any collective bargaining
agreements or any agreements that contain any severance pay
liabilities or obligations, (ii) any bonus, deferred compensation,
pension, profit-sharing or retirement plans, programs or other
similar employee benefit arrangements, (iii) any employment
agreement, contract or commitment with an employee, or agreements
to pay severance, (iv) any agreement of guarantee or
indemnification running from NEG to any person or entity, (v) any
agreement, indenture or other instrument for borrowed money and any
agreement or other instrument which contains restrictions with
respect to payment of dividends or any other distribution in
respect of NEG Common Stock or any other outstanding securities of
NEG, (vi) any agreement, contract or commitment containing any
covenant limiting the freedom of NEG to engage in any line of
business or compete with any person, (vii) any agreement, contract
or commitment relating to capital expenditures in excess of $10,000
and involving future payments, (viii) any agreement, contract or
commitment relating to the acquisition of capital stock or an
amount of assets exceeding $10,000 in value of any business
enterprise, or (ix) any agreement, contract or commitment not made
in the ordinary course of business. Except as set forth on
Schedule 2.07, NEG has not breached, nor to NEG's knowledge is
there any claim or any legal basis for a claim that NEG has
breached, any of the terms or conditions of any agreement, contract
or commitment set forth in any of the Schedules attached to this
Agreement or of any other agreement, contract or commitment, if any
such breach, whether considered individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on
or to NEG.
2.08 No Breach of Statute or Contract; Governmental
Authorizations.
(a) Assuming compliance with NEG's obligations under
this Agreement, neither the execution and delivery of this
Agreement by NEG nor compliance by NEG with the terms and
provisions of this Agreement will violate any applicable law,
statute, rule or regulation of any municipal, parish, local, city,
county, state or federal court, agency, board, legislature,
commission, or other legislative, judicial, administrative or
regulatory body ("Governmental Body"), or will as of the Effective
Date of the Merger conflict with or result in a breach of any of
the terms, conditions or provisions of any judgment, order,
injunction, decree or ruling of any Governmental Body to which NEG
is subject or of any agreement or instrument to which NEG is a
party or by which it is bound, or constitute a default thereunder,
or result in the creation of any lien, charge or encumbrance upon
any property or asset of NEG or cause any acceleration of maturity
on any obligation or loan, or give to others any interest or
rights, including rights of termination or cancellation, in or with
respect to any of the material properties, assets, agreements,
contracts or business of NEG and its Consolidated Subsidiaries
considered as one enterprise, except as set forth in Schedule 2.08
attached hereto which describes all third party consents necessary
to the consummation of this Agreement.
(b) Except for applicable requirements, if any, of the
Securities and Exchange Act of 1934 ("34 Act"), the Securities Act
of 1933 (the "33 Act"), the premerger notification requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Nasdaq National Market, the filing and
recordation of appropriate merger documents as required by the
Oklahoma Act and the DGCL, filings required pursuant to any state
securities or "blue sky" laws and such other notices, reports or
other filings the failure of which to be made would not,
individually or in the aggregate, have a Material Adverse Effect on
NEG or prevent or materially impair the consummation of the
transactions contemplated hereby, NEG is not required to submit any
notice, report or other filing to any Governmental Body, domestic
or foreign, in connection with the execution, delivery or
performance of this Agreement or the consummation of the
transactions contemplated hereby.
(c) NEG has delivered to Alexander true and complete
copies, described in Schedule 2.08, of all reports made by it
during the past two fiscal years to the Equal Employment
Opportunity Commission ("EEOC"), Occupational Safety and Health
Administration ("OSHA") and the Department of Labor (the "DOL"),
and tax returns to, and tax rulings and tax audit reports from, the
IRS and state and local jurisdictions. Schedule 2.08 also contains
a brief description of all other types of material periodic reports
to all other state or federal Governmental Bodies other than the
SEC.
(d) NEG is not in violation of any applicable law,
statute, rule, governmental regulation or order, or court decree or
judgment which violation, considered individually or in the
aggregate, could reasonably be expected to have or result in a
Material Adverse Effect on or to NEG. NEG and, where applicable,
its employees and agents hold all licenses, franchises,
authorizations and permits required for the conduct of NEG business
which the failure to hold would result in a Material Adverse Effect
on or to NEG.
2.09 Litigation or Adverse Events. Schedule 2.09 attached
hereto contains a description of each suit, action and legal,
administrative, arbitration or other proceeding or governmental
investigation pending or, to the knowledge of NEG, threatened (the
"NEG Cases"), to which NEG is a party or of which any of its assets
or properties are the subject, which description reflects the names
of the parties, the style of the action and a brief description of
the subject matter of the action. NEG has made available to
Alexander true and correct copies of all pleadings and other
filings made in connection with the NEG Cases. None of the NEG
Cases, whether considered individually or in the aggregate, could
reasonably be expected to have or result in a Material Adverse
Effect on or to NEG, except as set forth in Schedule 2.09.
Except as set forth in Schedule 2.09, there are no claims
against or liabilities or obligations of, or to the knowledge of
NEG, any legal basis for any claims against or liabilities or
obligations of, NEG or its Consolidated Subsidiaries which are
reasonably likely to result in a material reduction in the
consolidated net worth of NEG and its Consolidated Subsidiaries,
considered as one enterprise, from that shown on the NEG Balance
Sheet or the NEG March 31 Balance Sheet or any material charge
against consolidated net earnings of NEG and its Consolidated
Subsidiaries, considered as one enterprise, except as expressly
disclosed in this Agreement or any Schedule hereto, financial data
and other material submitted in connection therewith or except as
disclosed in writing to Alexander.
2.10 Patents, Trademarks, etc. NEG and the NEG Subsidiaries
own, or have adequate licenses or other rights to use all patents,
trade names, common law trademarks, private labels, trademark
registrations and applications, copyrights and copyright
registrations and applications used in or necessary for their
respective businesses as now conducted. To the knowledge of NEG,
there are no claims or demands of any other person, firm or
corporation pertaining to any of such patents, trade names,
trademark registrations and applications, common law trademarks,
copyrights or copyright registrations and applications and no
proceedings have been instituted, are pending or, to the knowledge
of NEG, threatened which challenge the rights of NEG in respect
thereof. To the knowledge of NEG, none of such patents, trade
names, trademark registrations and applications, common law
trademarks, copyrights or copyright registrations and applications,
as the case may be, infringes on, or, to NEG's knowledge, is being
infringed by, other patents, trade names, private labels,
trademarks or copyrights and none is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the
ownership or use of such patents, trade names, trademarks or
copyrights. NEG has not given nor is it bound by an agreement of
indemnification for patent, trade name, trademark or copyright
infringement as to any property produced, used or sold by it.
2.11 Authorization of Agreement. The execution, delivery and
performance of this Agreement by NEG and Acquisition have been duly
and validly authorized and approved by the Board of Directors of
NEG and Acquisition, and NEG and Acquisition have taken, or, prior
to the Effective Date of the Merger, will use all reasonable
efforts to take, all other action required by law, their
Certificates of Incorporation and bylaws, and any other action
required, to authorize such execution, delivery and performance.
The execution, delivery and performance by NEG and
Acquisition of all other agreements and transactions contemplated
hereby have been, or prior to Closing will be, duly authorized and
approved by all requisite corporate action on the part of NEG and
Acquisition. This Agreement has been, and the other agreements and
instruments contemplated hereby, when executed, will be, duly
executed and delivered by NEG and Acquisition and, assuming the due
authorization, execution and delivery hereof and thereof by the
other parties hereto or thereto, this Agreement constitutes and,
when executed, each of the other agreements contemplated hereby
will constitute, a valid and binding obligation of NEG and
Acquisition, enforceable against NEG and Acquisition in accordance
with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws
affecting creditors' rights generally from time to time and to
general principles of equity.
2.12 Disclosure in Proxy Statement - Prospectus. None of the
information which has been or will be supplied by NEG to Alexander
which has been or will be included (or incorporated by reference to
SEC filings of NEG) in the Registration Statement on Form S-4, as
amended (the "Registration Statement"), containing a Prospectus
covering shares of NEG Common Stock to be issued pursuant to the
Merger and Proxy Statements for Alexander and NEG (the Prospectus
and the Proxy Statements and any supplements thereto are herein
referred to as the "Proxy Statement-Prospectus") in connection with
the meeting of the shareholders of Alexander held to approve the
Merger will, (i) in the case of the Proxy Statement-Prospectus
contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with
respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any prior
communication with respect to the solicitation of a proxy for the
same meeting or subject matter which has become false or
misleading, or (ii) in the case of the Registration Statement at
the time it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
2.13 Broker's or Finder's Fees. Except as disclosed in
Schedule 2.13, no agent, broker, person or firm acting on behalf of
NEG or under its authority is, or will be entitled to, any
advisory, commission or broker's or finder's fee from any of the
parties hereto in connection with any of the transactions
contemplated herein.
2.14 Insurance. Schedule 2.14 lists each policy of insurance
under which NEG may currently make a claim or has made any claim
which remains unresolved. NEG has provided Alexander with a true
and correct copy of each such policy or the binder therefor.
Except as disclosed in Schedule 2.14, with respect to each such
insurance policy or binder, (i) to NEG's knowledge, the policy is
legal, valid, binding and enforceable and in full force and effect;
(ii) to NEG's knowledge, if the term of the policy extends beyond
the Effective Time, the policy will continue to be legal, valid,
binding and enforceable and in full force and effect on identical
terms following the Effective Time; and (iii) neither NEG nor, to
NEG's knowledge, any other party to the policy is in material
breach or default (including with respect to the payment of
premiums or the giving of notices), and, to NEG's knowledge, no
event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination,
modification or acceleration, under the policy. Schedule 2.14
describes any self-insurance arrangement affecting NEG. In all
material respects, NEG has at all times been insured in respect of
its properties, assets and businesses in such amounts, of such
types, and covering such casualties, risks and contingencies as is
ordinarily carried by prudent companies engaged in similar
businesses and owning similar properties and assets in the same
general areas in which NEG operates.
2.15 Permits. NEG has all material governmental licenses,
authorizations, code approvals and permits (the "Permits") required
by any governmental authority for the lawful operation of its
business and each of its properties. There is no outstanding
violation of any of the Permits that would have a Material Adverse
Effect on or to NEG, and none is anticipated. The Permits are in
full force and effect and have been duly and validly issued.
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby gives or will
give any governmental body or licensor or licensee of NEG any right
to change the terms or provisions of, or terminate or cancel, any
Permit to which NEG is a party.
2.16 Completeness of Documents Furnished by NEG. The
Certificate of Incorporation and bylaws of NEG, as amended, and all
leases, instruments, agreements and other documents (including all
Schedules and documents made available, furnished or delivered
pursuant to this Agreement), and all copies thereof, which have
been or will be made available, furnished or delivered to Alexander
for its inspection and review pursuant to the terms of this
Agreement or in connection with the transactions contemplated
hereby, are, or if not heretofore made available, furnished or
delivered, will, when made available, furnished or delivered, be
complete and correct originals or copies of the originals.
2.17 Disposition of Assets. Since December 31, 1995, NEG has
not made any sale or other disposition of any of its material
properties or assets or surrendered any of its rights with respect
thereto or the usage thereof, or made any material additions to its
properties or assets, or entered into or amended any material
agreements, or entered into any material transaction, except as set
forth on Schedule 2.17.
2.18 Employees and Labor.
(a) NEG has listed in Schedule 2.18 and has made
available for inspection and copying by Alexander at Alexander's
sole expense true and complete copies of all employee benefit plans
within the meaning of Section 3(3) of ERISA (as defined below), or
any plan, program, arrangement, agreement, or obligation to provide
benefits in the form of bonus, incentive, deferred compensation,
dental, medical, disability, hospitalization, insurance, death
benefits, vacation, severance, pension, profit sharing, retirement
benefits, stock purchase, stock option, restricted stock, fringe
benefits, or any other employee benefits of any kind whatsoever
(collectively, the "NEG Single Employer Plans"), as well as any
other written agreements or other arrangements, which are currently
in effect, between NEG and any of its officers, directors,
employees, independent contractors and consultants and anyone who
has formerly served in any such capacity (or any of their
respective dependents, heirs, legatees, beneficiaries or legal
representatives). NEG has not entered into any similar oral
agreements or other arrangements, which in either instance is
currently in effect. Except as disclosed in Schedule 2.18, there
are no loans or other obligations payable or owing by NEG to any
officer, director or employee of NEG (except salaries and wages
incurred and accrued in the ordinary course of business), nor are
there any loans or debts payable or owing by any of such persons to
NEG or any guarantees by NEG of any loan or obligation of any
nature to which any such person is a party.
(b) NEG has complied with all applicable laws relating
to the employment of labor, including, without limitation,
provisions relating to wages, hours, insurance and other benefits,
equal opportunity, age discrimination, collective bargaining,
workers' compensation and the payment of social security and other
taxes (collectively the "Employment Laws"), except for such
noncompliance as would not individually or in the aggregate result
in a Material Adverse Effect on or to NEG. Except as described in
Schedule 2.18, there is not and will not be any material liability
of NEG arising out of claims made or suits brought for injury,
sickness, disease, death, termination of employment or conditions
of employment of any person (including any employee or former
employee or any contractor or subcontractor of NEG or any agent or
distributor of NEG) arising out of or in connection with any event
occurring or a state of facts existing prior to the Effective Date
arising under any Employment Laws. NEG is not a party to or
otherwise bound by any compliance or affirmative action plan,
award, settlement agreement, decree or other obligation arising out
of or in connection with any violation or alleged violation of any
Employment Laws.
(c) There are no collective bargaining agreements or
other labor union agreements or understandings to which NEG or its
Subsidiaries is a party or by which any of them is bound. Since
December 31, 1995, neither NEG nor its Subsidiaries has encountered
any labor union organizing activity, or had any actual or
threatened employee strikes, work stoppages, slowdowns or lockouts.
(d) Except as set forth on Schedule 2.18, NEG does not
have any liabilities, taxes or sanctions that have arisen under the
Consolidated Omnibus Budget Reconciliation Act of 1984 ("COBRA") or
the Code, nor is there any action, suit, proceeding, claim, appeal,
or demand against NEG and/or any of its employees arising by reason
of or relating to any failure by NEG to comply with the continuing
health care coverage of COBRA and Sections 601 through 608 of the
Employee Retirement Income Security Act of 1974 ("ERISA"), which
failure occurred with respect to any current or prior employee of
NEG or any qualified beneficiary of such employee (as defined in
COBRA).
(e) Except as set forth in Schedule 2.18, no person has
asserted any claim under which NEG has any liability under any
health insurance, sickness, life insurance, disability, medical,
surgical, hospital, death benefit or any other employee benefit
plan maintained by NEG or to which NEG is a party or may be bound
or under any workers compensation or similar law which exceeds
$10,000 and is not fully covered by insurance maintained with
responsible insurers or which has not been reserved for in the
books of accounts of NEG as of the date of this Agreement. Except
as set forth on Schedule 2.18, NEG does not provide any benefits to
retirees or former employees, under NEG's medical plans, the
aggregate expense for which is required to be accrued under
Statement of Financial Accounting Standards No. 106 ("FASB 106").
Except as set forth on Schedule 2.18, to the extent such benefits
are provided to retirees or former employees of NEG, such benefits
may be terminated at any time with no liability to NEG.
2.19 Obligations to Employees.
(a) All obligations of NEG, whether arising by operation
of law, contract, agreement, or otherwise, for bonuses or other
forms of compensation or benefits, or for payments to trusts or
other funds or to any Governmental Body or to any employees, former
employees, directors, officers, agents, or any other individual (or
any of their respective heirs, legatees, beneficiaries, or legal
representatives), with respect to any NEG Single Employer Plan of
any kind whatsoever with respect to periods ending on or before the
date of this Agreement have been paid or accrued at December 31,
1995, if due, all in accordance with generally accepted accounting
principles.
(b) NEG does not have any accumulated funding
deficiencies, as such term is defined in ERISA and in the Code,
with respect to any NEG Single Employer Plans. NEG has not
incurred any liability to the Pension Benefit Guaranty Corporation
("PBGC"), other than for the payment of insurance premiums, all of
which have been paid when due, the IRS or the DOL with respect to
any NEG Single Employer Plan. As to each multiemployer pension
plan ("Multiemployer Plan") which is subject to the Multiemployer
Pension Plan Amendments Act of 1980 ("MEPPA"), NEG has not incurred
and does not expect to incur any withdrawal liability. The
consummation of this Agreement will not result in either a complete
or partial withdrawal from any of the Multiemployer Plans. All of
the NEG Single Employer Plans have been amended as, when and to the
extent necessary to comply with and qualify under the applicable
provisions of the Code.
(c) Except as described in Schedule 2.19, the NEG Single
Employer Plans which are pension benefit plans have received, or
have applied for and expect to receive, determination letters from
the IRS to the effect that such plans are qualified and exempt from
federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no amendments have been made to such
NEG Single Employer Plans other than those covered by such
determination letters or applications for such determination
letters with respect to such amendments which have been timely
filed with the IRS. No determination letter received with respect
to any NEG Single Employer Plan has been revoked nor, to the
knowledge of NEG, has revocation been threatened. Each of the NEG
Single Employer Plans has been administered at all times in all
respects in accordance with its respective terms. There are no
pending investigations by any governmental agency involving the NEG
Single Employer Plans, no deficiency or termination proceedings
involving the NEG Single Employer Plans, and no pending or, to the
knowledge of NEG, threatened claims (except for claims for benefits
payable in the normal operation of the NEG Single Employer Plans),
suits or proceedings against any NEG Single Employer Plan or
asserting any rights or claims to benefits under any NEG Single
Employer Plan nor, to the knowledge of NEG, are there any facts
which could give rise to any liability in the event of any such
investigation, claim, suit or proceeding.
(d) Neither the NEG Single Employer Plans nor any trusts
created thereunder, nor any trustee, administrator or other
fiduciary thereof, has engaged in a "prohibited transaction" with
respect to any NEG Single Employer Plan (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA). Except as set
forth in Schedule 2.19, NEG has not experienced any reportable
event within the meaning of ERISA or other event or condition which
constitutes a reportable event, or any other event or condition
which presents a material risk of termination of any NEG Single
Employer Plan by the PBGC, or has had any tax imposed upon it by
the IRS for any alleged violation under Section 4975 of the Code,
or has engaged in any transaction which might subject NEG or any
such NEG Single Employer Plan to any liability for such tax. The
terms of any such NEG Single Employer Plans comply with ERISA and
the Code, if applicable, in all respects, and any and all reporting
and disclosure requirements of ERISA or the IRS and the DOL with
respect to any such NEG Single Employer Plan have been timely met.
The information supplied to the actuary by NEG for use in preparing
those annual reports for the NEG Single Employer Plans was complete
and accurate and NEG has no reason to believe that the conclusions
expressed in such reports are incorrect.
(e) If termination (whether complete or partial) of any
NEG Single Employer Plan has occurred, then all liabilities with
respect thereto have been satisfied in full and no present
liability exists with respect to any such prior termination.
2.20 Vested Vacation Entitlement. Except as set forth on
Schedule 2.20, NEG books of account and financial statements
referred to in Section 2.04 hereof provide for vested vacation
entitlement in accordance with Statement of Financial Accounting
Standards No. 43 ("FASB 43") and for all other material accruals
for other employee benefits required by generally accepted
accounting principles.
2.21 Environmental Matters. Except as disclosed at Schedule
2.21, in connection with the use, ownership or operation of NEG's
assets or oil well, gas well or other well located on lands covered
by a lease in which NEG has any interest or on lands spaced, pooled
or unitized therewith, NEG and, to NEG's knowledge, each person or
entity owning or having owned any interest (leasehold, fee,
equitable or otherwise) in, or using or operating or having
operated or used, any such asset or well, have complied in all
material respects with all applicable laws, ordinances, permits,
licenses, orders, statutes, rules, permitting and licensing
requirements, and regulations promulgated or issued by any
Governmental Body, relating to the protection of the environment
(including, without limitation, ambient air, and subsurface and
surface waters, soils and lands), natural resources, wildlife or
human health, including, without limitation, all laws, statutes,
orders, ordinances, rules, permits, licenses, permitting and
licensing requirements, and regulations concerning (i) emissions,
discharges, migrations, spills, leaks, releases or threatened
releases ("Releases") of petroleum (including, without limitation,
oil, used oil, waste oil, gasoline, diesel, and petroleum based
fuels), petroleum products and by-products, petroleum wastes,
petroleum contaminated soils, salt water, brine, asbestos, wastes
associated with oil and gas drilling, exploration and production
activities, wastes associated with naturally occurring radioactive
materials, pollutants, contaminants, deleterious substances,
chemicals, radioactive substances and materials, "hazardous
substances," as that term is defined in the Comprehensive
Environmental Response, Compensation and Liability Act, as same may
be amended, or "hazardous wastes," as that term is defined in the
Resource Conservation and Recovery Act, as same may be amended
(hereinafter individually and collectively called "Pollutants"),
into the environment or the workplace, and/or (ii) the production,
manufacture, processing, distribution, generation, use, treatment,
storage, disposal, transportation, or handling of Pollutants
(collectively, "Environmental Laws"), for which the failure to have
complied or be in compliance therewith or the remedial obligations
resulting therefrom would result in a Material Adverse Effect on or
to NEG.
Except as disclosed at Schedule 2.21, NEG does not have
knowledge of, and has not received notice from any Governmental
Body, person or entity, of any Release, or any event, condition,
circumstance, activity, practice or incident concerning or
affecting NEG assets that (i) would result in NEG failing to comply
with any Environmental Law or the terms of any Permit issued
pursuant thereto, or (ii) would result in any common law or other
liability of NEG to any person, entity or Governmental Body for
damage or injury to natural resources, wildlife, human health or
the environment, which failure or liability would result in a
Material Adverse Effect on or to NEG.
Except as disclosed at Schedule 2.21, there is no civil,
criminal, or administrative action, lawsuit, demand, litigation,
claim, hearing, notice of violation, investigation, or proceeding
pending or, to NEG's knowledge, threatened against NEG, or any
present or former owner of any interest in, or operator of, any oil
well, gas well or other well in which NEG has any interest or any
other of NEG's assets as a result of the maintenance of a nuisance,
or the violation or breach of any Environmental Law or any remedial
obligation arising thereunder, the terms of any Permit issued under
any Environmental Law affecting NEG's assets, properties or
business or any duty arising at common law to any person, entity or
Governmental Body relating to the protection of the environment,
which would result in a Material Adverse Effect on or to NEG.
2.22 Books of Account. NEG has maintained its books of
account in the usual, regular and ordinary manner.
2.23 Prior Obligations. NEG has no contractual obligation
relating to the disposition, by merger or otherwise, of any of the
equity securities of NEG or of all or any significant portion of
NEG's assets except as described in this Agreement or the Schedules
hereto.
2.24 Oil and Gas Reserve Report. To NEG's knowledge, the
proved oil and gas quantities included in the reserve report
prepared for NEG by Netherland, Sewell and Associates ("N&S") as of
December 31, 1995 (the "NEG Reserve Report")fairly presents the
estimated quantities of projected oil and gas production
attributable to the assets of NEG as stated therein as of the date
thereof. It is understood that such estimated quantities are based
in whole or in part on studies performed by independent engineers,
and NEG does not represent or warrant the accuracy of such studies.
NEG made available to N&S all information within its possession or
its control relevant to such studies and, to NEG's knowledge, such
information was true and correct. To NEG's knowledge, there has
been no material adverse change in the information provided to N&S,
and no event or circumstance has occurred which could reasonably be
expected to result in a decrease of more than 10% in the projected
proved oil and gas quantities in the aggregate set forth in the NEG
Reserve Report since the date of such report, except for the
production of oil, gas and other hydrocarbons in the ordinary
course of business, the acquisition and disposition of interests in
oil and gas properties described on Schedules 2.25A, B and C and
decreases in oil and gas prices generally in the United States.
2.25 Title to Interests. Schedule 2.25A identifies (i) each
oil well and gas well in which NEG owns an interest, vested or
contingent, and which is producing or capable of producing
hydrocarbons in commercial quantities (individually an "NEG Well"
and collectively the "NEG Wells") and (ii) NEG's net revenue
interest and leasehold cost bearing interest (i.e., working
interest) in each NEG Well. Adjacent to the name of each NEG Well
is a description of all lands constituting the drilling and spacing
unit or other allowable production unit in which such NEG Well is
situated. Each oil, gas, and mineral lease in which NEG owns any
interest and which interest is entitled to share in the production
of hydrocarbons or the proceeds of sale of the production of
hydrocarbons from the NEG Wells is hereinafter individually and are
collectively called the "NEG Producing Leases." Schedule 2.25B
describes all oil, gas, and mineral leases, other than the NEG
Producing Leases, in which NEG owns any interest and the type of
interest which NEG owns therein (hereinafter individually and
collectively called the "NEG Non-Producing Leases;" the NEG
Non-Producing Leases and the NEG Producing Leases are hereinafter
individually and collectively called the "NEG Leases"). Schedule
2.25C describes (i) all lands in which NEG owns a fee simple or
term mineral or royalty interest, which is not entitled to share in
the production of hydrocarbons from the NEG Wells or the proceeds
of sale of the production of hydrocarbons from the NEG Wells (the
"NEG Non-Producing Mineral Fee Interests"), and (ii) NEG's interest
in and to the NEG Non-Producing Mineral Fee Interests by virtue of
such ownership. The lands described at Schedules 2.25A-C are
individually and collectively called the "NEG Land." The NEG
Wells, the NEG Leases, and the NEG Land, together with (i) all
contracts, agreements, leases, licenses, permits, authorizations,
easements, and orders (individually and collectively called the
"NEG Agreements") in any way relating to the NEG Wells, NEG Leases
and/or the NEG Land, the operations conducted or to be conducted
pursuant thereto or thereon, or the production, treatment, sale or
disposal of hydrocarbons or water produced therefrom or
attributable thereto, (ii) all wells, personal property, fixtures
(including, without limitation, pipe, plants and pipelines),
equipment (including, without limitation, compressors, parts, rods,
tubular goods and supplies) and improvements located at, under or
on the NEG Wells, the NEG Leases and/or the NEG Land, or used or
obtained in connection therewith or with the operation or
maintenance of the NEG Wells or other facilities thereon or with
the production, treatment, sale or disposal of hydrocarbons or
water produced therefrom or attributable thereto, and (iii) all
other rights and interests in, to or under or derived from the NEG
Wells, the NEG Leases, the NEG Agreements, and/or the NEG Land
(including, without limitation, all mineral and royalty interests,
and all overriding royalty interests and all other interests in or
payable out of or measured by production, and all surface
interests, for a term or in fee), or in any way relating thereto,
are referred to herein as the "NEG Interests."
As respects each NEG Well, NEG's interests in the NEG
Producing Leases and the NEG Lands are such that, after giving
effect to existing spacing orders, operating agreements, unit
agreements, communitization agreements and orders, unitization
orders and pooling designations and orders, subject to the
limitations described in Schedule 2.25A, and after taking into
account all royalty interests, overriding royalty interests, net
profit interests, production payments and other burdens on
production attributable to third parties, (i) NEG is entitled,
during the entire extended terms of the NEG Producing Leases
covering such NEG Well, to a share (expressed as a decimal) of all
oil, gas and other minerals produced from such NEG Well which is
not less than the "net revenue interest" set out in connection with
the description of such NEG Well, free and clear of all liens,
claims, mortgages, deeds of trust, assignments of production, and
security interests, other than those described in Schedule 2.06,
(ii) NEG owns an undivided interest (expressed as a decimal) equal
to the "working interest" set out in connection with the
description of such NEG Well in and to all property and rights
incident thereto, including all rights in, to and under all
agreements, leases, permits, easements, licenses and orders in any
way relating thereto, and in and to all wells, personal property,
fixtures and improvements thereon, appurtenant thereto or used or
obtained in connection therewith or with the production or
treatment or sale or disposal of hydrocarbons or water produced
therefrom or attributable thereto, and (iii) NEG is obligated,
during the entire extended terms of the NEG Producing Leases to
which production from such NEG Well is attributable, for a share of
the costs relating to the exploration, development, and operation
of such NEG Well which is no greater than the "working interest"
set out in connection with the description of such NEG Well.
2.26 Compliance With Leases and Laws. NEG has complied in all
material respects with the terms and provisions of the NEG Leases.
To NEG's knowledge and except as disclosed on Schedule 2.26, no
default exists under any of the terms and provisions, express or
implied, of any of the NEG Leases or under any of the terms and
provisions of any agreement to which any of the NEG Leases are
subject, and NEG has not received notice of any claim of such
default. All bonuses, rentals, shut-in royalties and royalties due
under the NEG Leases and applicable laws, rules and regulations of
the federal and state Governmental Bodies having jurisdiction with
respect to same have been timely and properly paid and are not in
suspense for any reason, except as disclosed in Schedule 2.26.
NEG's aggregate delay rental and bonus obligations due under the
terms of the NEG Non-Producing Leases for each of calendar years
1996, 1997 and 1998 are set forth at Schedule 2.26. There is no
express provision under any NEG Lease or any agreement which
requires the drilling of additional wells or other operations to
earn or continue to hold any of the NEG Leases and all lands
covered thereby, except as disclosed in Schedule 2.26. All NEG
Wells have been drilled, completed, and operated in compliance with
all applicable federal, state and local laws and regulations
applicable thereto (including, without limitation, the
Environmental Laws), except to the extent such failure to comply
would not result in a Material Adverse Effect to NEG. Based on
information available to NEG, all production from the NEG Wells has
been properly accounted for and all proceeds attributable thereto
have been properly paid to the persons entitled thereto in
accordance with payment practices customary in the oil and gas
industry and applicable law, except as disclosed in Schedule 2.26,
and all necessary filings with Governmental Bodies have been
properly made in connection with the drilling, completion, and
operations of each NEG Well and all other oil and gas operations on
the NEG Land and, except as disclosed in Schedule 2.26, no
production or sale of oil, gas and other hydrocarbons heretofore
produced or sold from or attributable to the NEG Leases has been in
excess of any allowable quantity (plus permitted tolerances) or
price or in violation of any other rule or regulation affecting the
sale of hydrocarbons as established by the applicable regulatory
authorities. Schedule 2.26 identifies by amount all proceeds
attributable to the production of hydrocarbons through December 31,
1995, which are owing to third parties and which are in the
possession or under the control of NEG. Except as disclosed in
Schedule 2.26, no gas produced from the NEG Interests is subject to
the price control jurisdiction of the Federal Energy Regulatory
Commission ("FERC") under the Natural Gas Policy Act ("NGPA").
2.27 Sale of Production. Except as set forth in Schedule
2.27, to NEG's knowledge, NEG has no production from any NEG Well
which is subject to balancing rights of third parties or is subject
to balancing duties under governmental requirements, and no third
party has production from any NEG Well which is subject to the
balancing rights of NEG. Except as set forth on Schedule 2.27, no
production from any NEG Well has exceeded the allowable production
established therefor by the appropriate Governmental Body. Except
as set forth on Schedule 2.27, NEG is not obligated by virtue of
any prepayment made under any production sales contract or any
other contract containing a take-or-pay clause or relating to the
settlement of a take-or-pay dispute, or under any similar
arrangement, to deliver oil, gas, natural gas liquids or other
hydrocarbons or minerals produced from or allocated to any of the
NEG Leases at any time after the Effective Time without receiving
full payment therefor at the time of delivery. Except as disclosed
on Schedule 2.27, NEG has not collected any proceeds from the sale
of hydrocarbons produced from the NEG Interests which are subject
to refund. Except as set forth in Schedule 2.27, proceeds from the
sale of oil, gas and natural gas liquids from the NEG Wells are
being received by NEG in a timely manner and based upon the net
revenue interest described at Schedule 2.25 for each such NEG Well
and in accordance with the terms of the applicable purchase
agreement governing such sale, and are not being held in suspense
for any reason. NEG has described in Schedule 2.27 and made
available to Alexander for examination all contracts and agreements
(other than routine division orders terminable by NEG upon less
than sixty (60) days' notice) pursuant to which hydrocarbons
produced from the NEG Interests are sold, transported, processed or
otherwise disposed of or marketed. Except as disclosed in Schedule
2.27, no person has any call upon, right of first refusal,
preferential right or option to purchase or similar rights with
respect to the NEG Interests or to the production therefrom.
Except as disclosed in Schedule 2.27, price renegotiation
procedures have not been commenced under FERC Order No. 451 which
involve or which hereafter may affect any gas produced from the NEG
Interests. Except as disclosed in Schedule 2.27, no offer of
credits under FERC Order No. 500 has been made which would entitle
any purchaser of gas produced from the NEG Interests to credit
transported volumes against such purchaser's take-or-pay
obligations under any contract for the sale of gas produced from
the NEG Interests.
2.28 Contracts. NEG has described in Schedule 2.28 all
partnership, joint venture, farmout, dry hole, bottom hole, acreage
contribution, area of mutual interest, purchase and/or acquisition
agreements of which any terms remain executory which may affect the
NEG Interests, and all other executory contracts to which NEG is a
party which would have a Material Adverse Effect on any item of the
NEG Interests.
2.29 Status of NEG Wells. Except as disclosed on Schedule
2.29, all NEG Wells are producing or capable of producing
hydrocarbons in commercial quantities (based upon prevailing
economic conditions) without the necessity of reworking or
recompletion operations. To NEG's knowledge and except as
disclosed in Schedule 2.29, there are no obligations existing for
the plugging or abandonment (including obligations for restoration
of the surface) of any oil and/or gas well, salt water disposal
well or other well located at the NEG Interests.
2.30 Tax Partnerships. Except as disclosed on Schedule 2.30,
no item of the NEG Interests is treated for income tax purposes as
being owned by a partnership.
2.31 Equipment and Off-Lease Facilities. That portion of the
NEG Interests consisting of personal property, facilities, and
fixtures, including without limitation, all property and assets
used in connection with the operation of the NEG Interests, is in
good condition and repair, ordinary wear and tear excepted, and is
adequate for the proper operation of the NEG Interests, except for
such repairs and additions necessary for the proper operation of
the NEG Interests and which individually or in the aggregate would
not result in a Material Adverse Effect on NEG.
2.32 SEC Documents. NEG has delivered or made available to
Alexander the Registration Statement of NEG filed with the SEC on
Form S-4 (No. 33-38331) in 1991, and all exhibits, amendments and
supplements thereto (the "NEG Registration Statement"), and each
registration statement, report, definitive proxy statement or
definitive information statement and all exhibits thereto filed
since the effective date of the NEG Registration Statement, which
are listed on Schedule 2.32, each in the form (including exhibits
and any amendments thereto) filed with the SEC (collectively, the
"NEG Reports"). The NEG Reports, which were filed with the SEC in
a timely manner except as set forth in Schedule 2.32, constitute
all forms, reports and documents required to be filed by NEG under
the 33 Act, the 34 Act and the rules and regulations promulgated
thereunder. As of their respective dates, the NEG Reports (i)
complied as to form in all material respects with the applicable
requirements of the 33 Act and/or the 34 Act and (ii) did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each of the balance
sheets of NEG included in or incorporated by reference into the NEG
Reports (including the related notes and schedules) fairly presents
the financial position of NEG as of its date and each of the
statements of income, retained earnings and cash flows of NEG
included in or incorporated by reference into the NEG Reports
(including any related notes and schedules) fairly presents the
results of operations, retained earnings or cash flows, as the case
may be, of NEG for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments
which would not be material in amount or effect), in each case in
accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be
noted therein and except, in the case of any unaudited statements,
as permitted by Form 10-Q promulgated under the 34 Act.
2.33 Related Party Transactions. Set forth in Schedule 2.33
is a complete list of all arrangements, agreements and contracts
between NEG and any person who is an officer, director or affiliate
of NEG, any relative of any of the foregoing or any entity of which
any of the foregoing is an affiliate.
2.34 Certain Payments. Except as set forth in Schedule 2.34,
the execution of, and performance of the transactions contemplated
by, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) (i) constitute an event under
any NEG benefit plan, policy, practice, agreement or other
arrangement or any trust or loan (the "NEG Employee Arrangements")
that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits
with respect to any employee, director or consultant of NEG, or
(ii) result in the triggering or imposition of any restrictions or
limitations on the right of NEG or Alexander to amend or terminate
any NEG Employee Arrangements and receive the full amount of any
excess assets remaining or resulting from such amendment or
termination, subject to applicable taxes. Except as set forth in
Schedule 2.34, no payment or benefit which will be required to be
made pursuant to the terms of any agreement, commitment or NEG
benefit plan, as a result of the transactions contemplated by this
Agreement, to any officer, director or employee of NEG will be
characterized as an "excess parachute payment" within the meaning
of Section 280G(b)(1) of the Code.
2.35 Royalty Accounts. Schedule 2.35 sets forth as of April
30, 1996, the amount of funds held by NEG in suspense and which are
owed to third party owners of royalty, overriding royalty, working
or other interests for past production of oil and gas attributable
to the NEG Interests.
2.36 Accounts Payable. The accounts payable reflected on the
NEG Balance Sheet, the NEG March 31 Balance Sheet and those
reflected on the books of NEG at the time of the Closing reflect
all amounts owed by NEG, in respect of trade accounts due and other
payables as required by generally accepted accounting principles to
be identified on such NEG Balance Sheet, NEG March 31 Balance Sheet
or in the books of NEG. Schedule 2.36 sets forth all accounts
payable past due as of April 30, 1996 and will be updated by NEG to
set forth all accounts payable past due as of the date of Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ALEXANDER
Alexander (unless the context otherwise indicates, for
purposes of this Agreement Alexander shall include the Alexander
Subsidiaries and the Alexander Partnerships as defined herein)
represents and warrants to NEG and Acquisition as follows:
3.01 Organization, Alexander's Subsidiaries, etc. Alexander
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oklahoma. Alexander has
the corporate power and authority to own its property and to carry
on its business as now being conducted. Alexander has the
corporate power and authority to execute, deliver, and perform this
Agreement and the Certificate of Merger and to consummate the
transactions contemplated hereby and thereby; and Alexander is duly
qualified and/or licensed, as may be required, and in good standing
in each of the jurisdictions in which the nature of the business
conducted by it or the character of the property owned, leased or
used by it makes such qualification and/or licensing necessary,
except where the failure to be so qualified, licensed and/or in
good standing would not individually or in the aggregate have or
result in a Material Adverse Effect on or to Alexander.
Alexander has delivered to NEG certified copies of its
Certificate of Incorporation and Bylaws which reflect all
amendments made at any time prior to the date of this Agreement and
are complete and accurate in all respects as of the date hereof.
The minute books containing the records of meetings of the
shareholders and Board of Directors of Alexander are complete and
correct in all respects. Such minute books have been made
available to NEG for examination. Alexander is not in default
under or in violation of any provision of its Certificate of
Incorporation or Bylaws except for such defaults or violations
which individually or in the aggregate would not have a Material
Adverse Effect on or to Alexander.
Schedule 3.01 hereto sets forth a complete and correct
description of (i) the name and jurisdiction of incorporation of
each of the direct and indirect Subsidiaries of Alexander (such
subsidiaries are sometimes hereafter collectively referred to as
the "Alexander Subsidiaries" or individually as an "Alexander
Subsidiary" and, except for those accounted for on the equity
method of accounting, sometimes collectively referred to as the
"Alexander Consolidated Subsidiaries") and (ii) the name and
jurisdiction of organization of, and interest of Alexander in, each
partnership or joint venture in which Alexander owns an equity
interest (collectively the "Alexander Partnerships" or individually
an "Alexander Partnership"). Except as set forth on Schedule
3.01, (i) all of the issued and outstanding shares of capital stock
of each Alexander Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable and are owned beneficially
or directly by Alexander or an Alexander Subsidiary free and clear
of any liens, claims or other encumbrances or rights of third
parties, and (ii) the interest of Alexander or an Alexander
Subsidiary in each Alexander Partnership is owned by Alexander or
an Alexander Subsidiary free and clear of any liens, claims or
encumbrances or rights of third parties. Except as set forth on
Schedule 3.01, there are no outstanding options, warrants or rights
to purchase or acquire any capital stock of any of the Alexander
Subsidiaries, and there are no contracts, commitments,
understandings, arrangements or restrictions by which any Alexander
Subsidiary or Alexander is bound to sell or issue any shares of
capital stock of such Alexander Subsidiary or any interest in any
Alexander Partnership.
Each Alexander Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
respective property and to carry on its respective business as now
being conducted, and is duly qualified and/or licensed as may be
required and in good standing as a foreign corporation, as the case
may be, in each jurisdiction in which the nature of the business
conducted by it or the character of the property owned, leased or
used by any of them makes such qualification and/or licensing
necessary, except in such jurisdictions where the failure to be so
qualified would not individually or in the aggregate have a
Material Adverse Effect on Alexander.
3.02 Capital Stock of Alexander.
(a) As of the date of this Agreement, the authorized
capital stock of Alexander consists of 20,000,000 shares of common
stock, par value $.03 per share, and 2,000,000 shares of preferred
stock, par value $.01 per share, of which 12,463,931 shares of
Alexander Common Stock and no shares of preferred stock, are issued
and outstanding. As of the date of this Agreement, there are no
shares of Alexander Common Stock held in the treasury of Alexander.
Such shares of issued and outstanding Alexander Common Stock are
validly authorized and issued and fully paid and nonassessable.
Except as set forth in Schedule 3.02 attached hereto, Alexander has
not, subsequent to December 31, 1995, declared or paid any
dividend, or declared or made any distribution on, or authorized
the creation or issuance of, or issued, or authorized or effected
any split-up or any other recapitalization of, any of its capital
stock, or directly or indirectly redeemed, purchased or otherwise
acquired any of its outstanding capital stock. Except as described
at Schedule 3.02, all dividends which have been declared by
Alexander have been fully paid or distributed as applicable.
Except as set forth in Schedules 3.02 and 3.18, there are no
contracts, commitments, understandings, arrangements or
restrictions by which Alexander is bound to sell or issue any
shares of capital stock of Alexander. Except as set forth on
Schedule 3.02, Alexander has not heretofore agreed to take any such
action, will not take any such action during the period between the
date of this Agreement and the Effective Date of the Merger and
there are no outstanding contractual obligations of Alexander to
repurchase, redeem or otherwise acquire any outstanding shares of
capital stock of Alexander.
(b) Set forth on Schedule 3.02 attached hereto is a list
of all outstanding options, warrants or other rights to subscribe
for or to purchase from Alexander any capital stock of Alexander or
securities convertible into or exchangeable for capital stock of
Alexander setting forth, in each case, the name of the optionee,
the number of shares subject to options which are currently
exercisable, the number of shares subject to options which will
become exercisable in the future and the date on which such options
become exercisable, the option exercise price, whether or not stock
appreciation rights ("SAR's") are attached to the options and the
date or dates on which such SAR's become exercisable. Schedule
3.02 also lists all awards of stock to employees of Alexander which
are subject to forfeiture upon termination of employment setting
forth, in each case, the name of the recipient of the award of
stock, the number of shares of such award, the vesting of any such
award and the terms of the forfeiture of such award.
3.03 Ownership Interests in and Securities of Others. Set
forth in Schedule 3.03 attached hereto are (i) a description of the
types and amounts of investment securities, bonds and debentures
owned by Alexander and (ii) a list of all equity or ownership
interests of Alexander in other business enterprises or entities
other than the Alexander Consolidated Subsidiaries, and Schedule
3.03 indicates any such interests which are held subject to any
legal, contractual or other limitations or restrictions on the
right to resell the same. Except as set forth in Schedule 3.03,
there are no outstanding options, warrants or other rights to
subscribe for or purchase from Alexander any of the debt, equity,
or ownership interests set forth in such Schedule 3.03.
3.04 Financial Matters.
(a) Alexander has previously furnished NEG a true and
complete copy of (i) Alexander's Annual Report on Form 10-K, filed
with the SEC, for the year ended December 31, 1995, which report
(the "Alexander 10-K") includes Consolidated Balance Sheets of
Alexander and the Alexander Consolidated Subsidiaries as at
December 31, 1995 and December 31, 1994, and the related
Consolidated Statements of Operations, Consolidated Statements of
Changes in Stockholders' Equity and Consolidated Statements of Cash
Flows for each of the years ended December 31, 1995, December 31,
1994 and December 31, 1993, reported upon by Ernst & Young,
independent certified public accountants, and (ii) Alexander's
Quarterly Report on Form 10-Q filed with the SEC for the period
ended March 31, 1996 ("Alexander 10-Q"), which report includes the
unaudited Consolidated Balance Sheet of Alexander and its
Consolidated Subsidiaries at that date (the "Alexander March 31
Balance Sheet") and the end of the preceding year, and related
Consolidated Statements of Operations and Consolidated Statements
of Cash Flow for the required periods. All year end financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent with prior
periods, except as set forth in such financial statements and the
notes thereto. Except as set forth in Schedule 3.04, the
Consolidated Balance Sheets of Alexander and its Consolidated
Subsidiaries as at December 31, 1995 and December 31, 1994
contained in the Alexander 10-K present fairly the financial
condition of Alexander and its Consolidated Subsidiaries as of the
dates thereof, and the related Consolidated Statements of
Operations of Alexander and its Consolidated Subsidiaries contained
in the Alexander 10-K present fairly the results of the operations
thereof for the periods indicated. Except as disclosed in Schedule
3.04, the Alexander March 31 Balance Sheet fairly presents the
financial condition of Alexander as of the date thereof, and the
related Consolidated Statement of Operations of Alexander and its
Consolidated Subsidiaries contained in the Alexander 10-Q fairly
present the results of operations thereof for the period indicated,
including all necessary adjustments (which consist only of normal
recurring accruals). For the purposes of this Agreement, all
financial statements of Alexander and its Consolidated Subsidiaries
shall include any notes to such financial statements.
(b) Neither Alexander nor any of the Alexander
Consolidated Subsidiaries has any liabilities or obligations,
either accrued, absolute, contingent or otherwise, which in the
aggregate are material to Alexander and its Consolidated
Subsidiaries, considered as one enterprise, which have not been:
(i) reflected in the Consolidated Balance Sheet and
notes thereto of Alexander and its Consolidated Subsidiaries
dated December 31, 1995 (the "Alexander Balance Sheet"), or
the Alexander March 31 Balance Sheet; or
(ii) disclosed to NEG in writing in connection with
this Agreement; or
(iii) incurred, consistent with past practices, in or
as a result of the ordinary course of business since December
31, 1995.
(c) Except as is determinable from the Alexander Balance
Sheet, the Alexander 10-Q or except as contemplated by this
Agreement, between December 31, 1995 and the date of this Agreement
neither Alexander nor any of its Consolidated Subsidiaries has
engaged in any material transaction not in the ordinary course of
its business and, except as set forth in Schedule 3.04, there has
not been, occurred or arisen since December 31, 1995:
(i) any material adverse change in the financial
condition or in the operations of the business of Alexander
and its Consolidated Subsidiaries, considered as one
enterprise, from that shown on the Alexander Balance Sheet; or
(ii) any damage or destruction in the nature of a
casualty loss, or interference with its business from such
loss or from any labor dispute or court or governmental
action, order or decree, whether covered by insurance or not,
either individually or in the aggregate, which had a Material
Adverse Effect on or to Alexander; or
(iii) any event, condition or state of facts (other
than the general state of the national economy, prices of oil
and gas generally in the United States and proposed state or
federal legislation or regulation) of any character which
would have a Material Adverse Effect on or to Alexander; or
(iv) any extraordinary loss or collective losses (as
defined in Opinions No. 9 and No. 30 of the Accounting
Principles Board of the American Institute of Certified Public
Accountants) suffered by Alexander or any of its Consolidated
Subsidiaries which had a Material Adverse Effect on Alexander,
or any waiver by Alexander or any of its Consolidated
Subsidiaries of any rights which are material to Alexander and
its Consolidated Subsidiaries considered as one enterprise.
3.05 Tax Matters.
(a) All federal, state, local and foreign tax returns,
reports and declarations required to be filed by Alexander have
been timely filed (or appropriate extensions or waivers have been
obtained) with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be
filed.
(b) All Taxes due from Alexander (i) have been fully
paid or adequately reserved against on the books of Alexander, the
Alexander Balance Sheet or the Alexander March 31 Balance Sheet, or
(ii) are being contested in good faith by appropriate proceedings
and are disclosed in Schedule 3.05 attached hereto. Any
deficiencies or assessments claimed or made as a result of
examination of the federal or state income tax returns of Alexander
by the IRS or the appropriate state taxing authority have either
been paid or settled or fully reserved against on its books or on
the financial statements of Alexander.
(c) No waivers of statutes of limitation in respect of
any tax returns or tax reports have been given or requested, except
as shown on Schedule 3.05.
(d) There are no potential tax deficiencies which are
reasonably likely to arise from issues which have been raised by
the IRS or any other taxing authority that have not been disclosed
in Schedule 3.05 and are reasonably likely to have a Material
Adverse Effect on or to Alexander.
(e) Notwithstanding the foregoing representations
regarding Taxes and tax returns described in this Section 3.05,
Alexander represents and warrants that with respect to all taxable
years ended on and prior to December 31, 1995, Alexander shall owe
no additional Taxes except those that have been paid or as to which
proper and adequate reserves and allowances have been provided on
the books of Alexander or the Alexander Balance Sheet.
3.06 Title and Liens. Alexander has defensible title to all
of the properties and assets included in the Alexander Balance
Sheet, including, without limitation, the Alexander Leases (as
defined in, and after giving effect to the provisions of Section
3.25), which are material to Alexander and its Consolidated
Subsidiaries considered as one enterprise, except for properties
and assets disposed of in the ordinary course of its business
subsequent to the date thereof. There are no mortgages, liens,
security interests, assignments of production, deeds of trust,
charges, deficiencies or encumbrances of any nature whatsoever
covering or affecting any of such properties or assets except (i)
as set forth on Schedule 3.06, (ii) liens for taxes and assessments
not yet subject to penalties for nonpayment, or (iii) such liens,
security interests, assignments of production, encumbrances,
charges or deficiencies, which individually or in the aggregate are
immaterial to such property or asset.
3.07 Agreements, Contracts and Commitments. Alexander has
listed on Schedule 3.07 (or, with respect to employee benefit
obligations, Schedule 3.18) all contracts, agreements and
instruments to which it is a party or by which it is bound as of
the date hereof and which are in any single case of material
importance to the conduct of the business of Alexander and its
Consolidated Subsidiaries considered as one enterprise. Each such
document, or a true and correct copy thereof, has been made
available for inspection and copying by NEG at its sole expense,
and NEG has been provided a written description of each oral
arrangement so listed. Except as set forth in Schedule 3.07 or
Schedule 3.18 attached hereto, Alexander does not have as of the
date hereof (i) any collective bargaining agreements or any
agreements that contain any severance pay liabilities or
obligations, (ii) any bonus, deferred compensation, pension,
profit-sharing or retirement plans, programs or other similar
employee benefit arrangements, (iii) any employment agreement,
contract or commitment with an employee, or agreements to pay
severance, (iv) any agreement of guarantee or indemnification
running from Alexander to any person or entity, (v) any agreement,
indenture or other instrument for borrowed money and any agreement
or other instrument which contains restrictions with respect to
payment of dividends or any other distribution in respect of
Alexander Common Stock or any other outstanding securities of
Alexander, (vi) any agreement, contract or commitment containing
any covenant limiting the freedom of Alexander to engage in any
line of business or compete with any person, (vii) any agreement,
contract or commitment relating to capital expenditures in excess
of $10,000 and involving future payments, (viii) any agreement,
contract or commitment relating to the acquisition of capital stock
or an amount of assets exceeding $10,000 in value of any business
enterprise, or (ix) any agreement, contract or commitment not made
in the ordinary course of business. Except as set forth on
Schedule 3.07, Alexander has not breached, nor to Alexander's
knowledge is there any claim or any legal basis for a claim that
Alexander has breached, any of the terms or conditions of any
agreement, contract or commitment set forth in any of the Schedules
attached to this Agreement or of any other agreement, contract or
commitment, if any such breach, whether considered individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect on or to Alexander.
3.08 No Breach of Statute or Contract; Governmental
Authorizations.
(a) Assuming compliance with Alexander's obligations
under this Agreement, neither the execution and delivery of this
Agreement by Alexander nor compliance by Alexander with the terms
and provisions of this Agreement will violate any applicable law,
statute, rule or regulation of any Governmental Body, or will as of
the Effective Date of the Merger conflict with or result in a
breach of any of the terms, conditions or provisions of any
judgment, order, injunction, decree or ruling of any Governmental
Body to which Alexander is subject or of any agreement or
instrument to which Alexander is a party or by which it is bound,
or constitute a default thereunder, or result in the creation of
any lien, charge or encumbrance upon any property or asset of
Alexander or cause any acceleration of maturity on any obligation
or loan, or give to others any interest or rights, including rights
of termination or cancellation, in or with respect to any of the
material properties, assets, agreements, contracts or business of
Alexander and its Consolidated Subsidiaries considered as one
enterprise, except as set forth in Schedule 3.08 attached hereto
which describes all third party consents necessary to the
consummation of this Agreement.
(b) Except for applicable requirements, if any, of the
33 Act, 34 Act, the premerger notification requirements of the HSR
Act, the Nasdaq National Market, the filing and recordation of
appropriate merger documents as required by the DGCL and the
Oklahoma Act, filings required pursuant to any state securities or
"blue sky" laws, and such other notices, reports or other filings
the failure of which to be made would not, individually or in the
aggregate, have a Material Adverse Effect on Alexander or prevent
or materially impair the consummation of the transactions
contemplated hereby, Alexander is not required to submit any
notice, report or other filing to any Governmental Body, domestic
or foreign, in connection with the execution, delivery or
performance of this Agreement or the consummation of the
transactions contemplated hereby.
(c) Alexander has delivered to NEG true and complete
copies, described in Schedule 3.08, of all reports made by it
during the past two fiscal years to the EEOC, OSHA and the DOL, and
tax returns to, and tax rulings and tax audit reports from, the IRS
and state and local jurisdictions. Schedule 3.08 also contains a
brief description of all other types of material periodic reports
to all other state or federal Governmental Bodies other than the
SEC.
(d) Alexander is not in violation of any applicable law,
statute, rule, governmental regulation or order, or court decree or
judgment which violation, considered individually or in the
aggregate, could reasonably be expected to have or result in a
Material Adverse Effect on or to Alexander. Alexander and, where
applicable, its employees and agents hold all licenses, franchises,
authorizations and permits required for the conduct of Alexander's
business which the failure to hold would result in a Material
Adverse Effect on or to Alexander.
3.09 Litigation or Adverse Events. Schedule 3.09 attached
hereto contains a description of each suit, action and legal,
administrative, arbitration or other proceeding or governmental
investigation pending or, to the knowledge of Alexander, threatened
(the "Alexander Cases"), to which Alexander is a party or of which
any of its assets or properties are the subject, which description
reflects the names of the parties, the style of the action and a
brief description of the subject matter of the action. Alexander
has made available to NEG true and correct copies of all pleadings
and other filings made in connection with the Alexander Cases.
None of the Alexander Cases, whether considered individually or in
the aggregate, could reasonably be expected to have or result in a
Material Adverse Effect on or to Alexander, except as set forth in
Schedule 3.09.
Except as set forth in Schedule 3.09, there are no claims
against or liabilities or obligations of, or to the knowledge of
Alexander, any legal basis for any claims against or liabilities or
obligations of, Alexander or its Consolidated Subsidiaries which
are reasonably likely to result in a material reduction in the
consolidated net worth of Alexander and its Consolidated
Subsidiaries, considered as one enterprise, from that shown on the
Alexander Balance Sheet or the Alexander March 31 Balance Sheet or
any material charge against consolidated net earnings of Alexander
and its Consolidated Subsidiaries, considered as one enterprise,
except as expressly disclosed in this Agreement or any Schedule
hereto, financial data and other material submitted in connection
therewith or except as disclosed in writing to NEG.
3.10 Patents, Trademarks, etc. Alexander and the Alexander
Subsidiaries own, or have adequate licenses or other rights to use
all patents, trade names, common law trademarks, private labels,
trademark registrations and applications, copyrights and copyright
registrations and applications used in or necessary for their
respective businesses as now conducted. To the knowledge of
Alexander, there are no claims or demands of any other person, firm
or corporation pertaining to any of such patents, trade names,
trademark registrations and applications, common law trademarks,
copyrights or copyright registrations and applications and no
proceedings have been instituted, are pending or, to the knowledge
of Alexander, threatened which challenge the rights of Alexander in
respect thereof. To the knowledge of Alexander, none of such
patents, trade names, trademark registrations and applications,
common law trademarks, copyrights or copyright registrations and
applications, as the case may be, infringes on, or, to Alexander's
knowledge, is being infringed by, other patents, trade names,
private labels, trademarks or copyrights and none is subject to any
outstanding order, judgment, decree, stipulation or agreement
restricting the ownership or use of such patents, trade names,
trademarks or copyrights. Alexander has not given nor is it bound
by an agreement of indemnification for patent, trade name,
trademark or copyright infringement as to any property produced,
used or sold by it.
3.11 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Alexander have been duly and
validly authorized and approved by the Board of Directors of
Alexander, and Alexander has taken, or, prior to the Effective Date
of the Merger, will use all reasonable efforts to take, all other
action required by law, its Certificate of Incorporation and
bylaws, and any other action required, to authorize such execution,
delivery and performance.
The execution, delivery and performance by Alexander of all
other agreements and transactions contemplated hereby have been, or
prior to Closing will be, duly authorized and approved by all
requisite corporate action on the part of Alexander. This
Agreement has been, and the other agreements and instruments
contemplated hereby, when executed, will be, duly executed and
delivered by Alexander and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties
hereto or thereto, this Agreement constitutes and, when executed,
each of the other agreements contemplated hereby will constitute,
a valid and binding obligation of Alexander, enforceable against
Alexander in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and similar laws affecting creditors' rights generally
from time to time and to general principles of equity.
3.12 Disclosure in Proxy Statement - Prospectus. None of the
information which has been or will be supplied by Alexander to NEG
which has been or will be included (or incorporated by reference to
SEC filings of Alexander) in the Registration Statement in
connection with the meeting of the shareholders of NEG held to
approve the Merger will, (i) in the case of the Proxy Statement-
Prospectus contain any statement which, at the time and in light of
the circumstances under which it is made, is false or misleading
with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any prior
communication with respect to the solicitation of a proxy for the
same meeting or subject matter which has become false or
misleading, or (ii) in the case of the Registration Statement at
the time it becomes effective, contain an untrue statement of a
material fact, or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
3.13 Broker's or Finder's Fees. Except as disclosed in
Schedule 3.13, no agent, broker, person or firm acting on behalf of
Alexander or under its authority is, or will be entitled to, any
advisory, commission or broker's or finder's fee from any of the
parties hereto in connection with any of the transactions
contemplated herein.
3.14 Insurance. Schedule 3.14 lists each policy of insurance
under which Alexander may currently make a claim or has made any
claim which remains unresolved. Alexander has provided NEG with a
true and correct copy of each such policy or the binder therefor.
Except as disclosed in Schedule 3.14, with respect to each such
insurance policy or binder, (i) to Alexander's knowledge, the
policy is legal, valid, binding and enforceable and in full force
and effect; (ii) to Alexander's knowledge, if the term of the
policy extends beyond the Effective Time, the policy will continue
to be legal, valid, binding and enforceable and in full force and
effect on identical terms following the Effective Time; and (iii)
neither Alexander nor, to Alexander's knowledge, any other party to
the policy is in material breach or default (including with respect
to the payment of premiums or the giving of notices), and, to
Alexander's knowledge, no event has occurred which, with notice or
the lapse of time, would constitute such a breach or default or
permit termination, modification or acceleration, under the policy.
Schedule 3.14 describes any self-insurance arrangement affecting
Alexander. In all material respects, Alexander has at all times
been insured in respect of its properties, assets and businesses in
such amounts, of such types, and covering such casualties, risks
and contingencies as is ordinarily carried by prudent companies
engaged in similar businesses and owning similar properties and
assets in the same general areas in which Alexander operates.
3.15 Permits. Alexander has all of the Permits required by
any governmental authority for the lawful operation of its business
and each of its properties. There is no outstanding violation of
any of the Permits that would have a Material Adverse Effect on or
to Alexander, and none is anticipated. The Permits are in full
force and effect and have been duly and validly issued. Neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby gives or will give any
Governmental Body or licensor or licensee of Alexander any right to
change the terms or provisions of, or terminate or cancel, any
Permit to which Alexander is a party.
3.16 Completeness of Documents Furnished by Alexander. The
Certificate of Incorporation and bylaws of Alexander, as amended,
and all leases, instruments, agreements and other documents
(including all Schedules and documents made available, furnished or
delivered pursuant to this Agreement), and all copies thereof,
which have been or will be made available, furnished or delivered
to NEG for its inspection and review pursuant to the terms of this
Agreement or in connection with the transactions contemplated
hereby, are, or if not heretofore made available, furnished or
delivered, will, when made available, furnished or delivered, be
complete and correct originals or copies of the originals.
3.17 Disposition of Assets. Since December 31, 1995,
Alexander has not made any sale or other disposition of any of its
material properties or assets or surrendered any of its rights with
respect thereto or the usage thereof, or made any material
additions to its properties or assets, or entered into or amended
any material agreements, or entered into any material transaction,
except as set forth on Schedule 3.17.
3.18 Employees and Labor.
(a) Alexander has listed in Schedule 3.18 and has made
available for inspection and copying by NEG at NEG's expense true
and complete copies of all employee benefit plans within the
meaning of Section 3(3) of ERISA, or any plan, program,
arrangement, agreement or obligation to provide benefits in the
form of bonus, incentives, deferred compensation, dental, medical,
disability, hospitalization, insurance, death benefits, vacation,
severance, pension, profit sharing, retirement benefits, stock
purchase, stock option, restricted stock, fringe benefits, or any
other employee benefits of any kind whatsoever (collectively, the
"Alexander Single Employer Plans"), as well as any other written
agreements or other arrangements, which in either instance are
currently in effect, between Alexander and any of its officers,
directors, employees, independent contractors and consultants and
anyone who has formerly served in any such capacity (or any of
their respective defendants, heirs, legatees, beneficiaries or
legal representatives). Alexander has not entered into any similar
oral agreements or other arrangements, which in either instance is
currently in effect. Except as disclosed in Schedule 3.18, there
are no loans or other obligations payable or owing by Alexander to
any officer, director or employee of Alexander (except salaries and
wages incurred and accrued in the ordinary course of business), nor
are there any loans or debts payable or owing by any of such
persons to Alexander or any guarantees by Alexander of any loan or
obligation of any nature to which any such person is a party.
(b) Alexander has complied with all applicable
Employment Laws, except for such noncompliance as would not
individually or in the aggregate result in a Material Adverse
Effect on or to Alexander. Except as described in Schedule 3.18,
there is not and will not be any material liability of Alexander
arising out of claims made or suits brought for injury, sickness,
disease, death, termination of employment or conditions of
employment of any person (including any employee or former employee
or any contractor or subcontractor of Alexander or any agent or
distributor of Alexander) arising out of or in connection with any
event occurring or a state of facts existing prior to the Effective
Date arising under any Employment Laws. Alexander is not a party
to or otherwise bound by any compliance or affirmative action plan,
award, settlement agreement, decree or other obligation arising out
of or in connection with any violation or alleged violation of any
Employment Laws.
(c) There are no collective bargaining agreements or
other labor union agreements or understandings to which Alexander
or its Subsidiaries is a party or by which any of them is bound.
Since December 31, 1995, neither Alexander nor its Subsidiaries has
encountered any labor union organizing activity, or had any actual
or threatened employee strikes, work stoppages, slowdowns or
lockouts.
(d) Except as set forth on Schedule 3.18, Alexander does
not have any liabilities, taxes or sanctions that have arisen under
COBRA or the Code, nor is there any action, suit, proceeding,
claim, appeal, or demand against Alexander and/or any of its
employees arising by reason of or relating to any failure by
Alexander to comply with the continuing health care coverage of
COBRA and Sections 601 through 608 of ERISA, which failure occurred
with respect to any current or prior employee of Alexander or any
qualified beneficiary of such employee (as defined in COBRA).
(e) Except as set forth in Schedule 3.18, no person has
asserted any claim under which Alexander has any liability under
any health insurance, sickness, life insurance, disability,
medical, surgical, hospital, death benefit or any other employee
benefit plan maintained by Alexander or to which Alexander is a
party or may be bound or under any workers compensation or similar
law which exceeds $10,000 and is not fully covered by insurance
maintained with responsible insurers or which has not been reserved
for in the books of accounts of Alexander as of the date of this
Agreement. Alexander does not provide any benefits to retirees or
former employees under Alexander's medical plans, the aggregate
expense for which is required to be accrued under FASB 106. To the
extent such benefits are provided to retirees or former employees
of Alexander, such benefits may be terminated at any time with no
liability to Alexander.
3.19 Obligations to Employees.
(a) All obligations of Alexander, whether arising by
operation of law, contract, agreement, or otherwise, for bonuses or
other forms of compensation or benefits, or for payments to trusts
or other funds or to any Governmental Body or to any employees,
former employees, directors, officers, agents, or any other
individual (or any of their respective heirs, legatees,
beneficiaries, or legal representatives) with respect to any
Alexander Single Employer Plans of any kind whatsoever with respect
to periods ending on or before the date of this Agreement have been
paid or accrued at December 31, 1995, if due, all in accordance
with generally accepted accounting principles.
(b) Alexander does not have any accumulated funding
deficiencies, as such term is defined in ERISA and in the Code,
with respect to any Alexander Single Employer Plans. Alexander has
not incurred any liability to the PBGC, other than for the payment
of insurance premiums, all of which have been paid when due, the
IRS or the DOL with respect to any such Alexander Single Employer
Plan. As to each Multiemployer Plan which is subject to MEPPA,
Alexander has not incurred and does not expect to incur any
withdrawal liability. The consummation of this Agreement will not
result in either a complete or partial withdrawal from any of the
Multiemployer Plans. All of the Alexander Single Employer Plans
have been amended as, when and to the extent necessary to comply
with and qualify under the applicable provisions of the Code.
(c) Except as described in Schedule 3.19, the Alexander
Single Employer Plans which are pension benefit plans have
received, or have applied for and expect to receive, determination
letters from the IRS to the effect that such plans are qualified
and exempt from federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no amendments have been made
to such Alexander Single Employer Plans other than those covered by
such determination letters or applications for such determination
letters with respect to such amendments which have been timely
filed with the IRS. No determination letter received with respect
to any Alexander Single Employer Plan has been revoked nor, to the
knowledge of Alexander, has revocation been threatened. Each of
the Alexander Single Employer Plans has been administered at all
times in all respects in accordance with its respective terms.
There are no pending investigations by any governmental agency
involving the Alexander Single Employer Plans, no deficiency or
termination proceedings involving the Alexander Single Employer
Plans, and no pending or, to the knowledge of Alexander, threatened
claims (except for claims for benefits payable in the normal
operation of the Alexander Single Employer Plans), suits or
proceedings against any Alexander Single Employer Plan or asserting
any rights or claims to benefits under any Alexander Single
Employer Plan nor, to the knowledge of Alexander, are there any
facts which could give rise to any liability in the event of any
such investigation, claim, suit or proceeding.
(d) Neither the Alexander Single Employer Plans nor any
trusts created thereunder, nor any trustee, administrator or other
fiduciary thereof, has engaged in a "prohibited transaction" with
respect to any Alexander Single Employer Plan (as such term is
defined in Section 4975 of the Code or Section 406 of ERISA).
Except as set forth in Schedule 3.19, Alexander has not experienced
any reportable event within the meaning of ERISA or other event or
condition which constitutes a reportable event, or any other event
or condition which presents a material risk of termination of any
Alexander Single Employer Plan by the PBGC, or has had any tax
imposed upon it by the IRS for any alleged violation under Section
4975 of the Code, or has engaged in any transaction which might
subject Alexander or any such Alexander Single Employer Plan to any
liability for such tax. The terms of any such Alexander Single
Employer Plans comply with ERISA and the Code, if applicable, in
all respects, and any and all reporting and disclosure requirements
of ERISA or the IRS and the DOL with respect to any such Alexander
Single Employer Plan have been timely met. The information
supplied to the actuary by Alexander for use in preparing those
annual reports for the Alexander Single Employer Plans was complete
and accurate and Alexander has no reason to believe that the
conclusions expressed in such reports are incorrect.
(e) If termination (whether complete or partial) of any
Alexander Single Employer Plan has occurred, then all liabilities
with respect thereto have been satisfied in full and no present
liability exists with respect to any such prior termination.
(f) All stock options and restricted stock referred to
in Section 4.10 satisfy the requirements of Code Section 162(m) and
applicable regulations for performance based compensation, or
otherwise are exempt from the provisions of Code Section 162(m).
Any cancellation, substitution or modification of stock options or
restricted stock required by Section 4.10 is permitted under the
terms of the applicable benefit plan or agreement, and does not
require the consent or agreement of any holder of stock options or
restricted stock.
3.20 Vested Vacation Entitlement. Except as set forth on
Schedule 3.20, Alexander's books of account and financial
statements referred to in Section 3.04 hereof provide for vested
vacation entitlement in accordance with FASB 43 and for all other
material accruals for other employee benefits required by generally
accepted accounting principles.
3.21 Environmental Matters. Except as disclosed at Schedule
3.21, in connection with the use, ownership or operation of
Alexander's assets or any oil well, gas well or other well located
on lands covered by a lease in which Alexander has any interest or
on lands spaced, pooled or unitized therewith, Alexander and, to
Alexander's knowledge, each person or entity owning or having owned
any interest (leasehold, fee, equitable or otherwise) in, or using
or operating or having operated or used, any such asset or well,
have complied in all material respects with all Environmental Laws,
for which the failure to have complied or be in compliance
therewith or the remedial obligations resulting therefrom would
result in a Material Adverse Effect on or to Alexander.
Except as disclosed at Schedule 3.21, Alexander does not have
knowledge of, and has not received notice from, any Governmental
Body, person or entity, of any Release, or any event, condition,
circumstance, activity, practice or incident concerning or
affecting Alexander's assets that (i) would result in Alexander
failing to comply with any Environmental Law or the terms of any
Permit issued pursuant thereto, or (ii) would result in any common
law or other liability of Alexander to any person, entity or
Governmental Body for damage or injury to natural resources,
wildlife, human health or the environment, which failure or
liability would result in a Material Adverse Effect on or to
Alexander.
Except as disclosed at Schedule 3.21, there is no civil,
criminal, or administrative action, lawsuit, demand, litigation,
claim, hearing, notice of violation, investigation, or proceeding
pending or, to Alexander's knowledge, threatened against Alexander,
or any present or former owner of any interest in, or operator of,
any oil well, gas well or other well in which Alexander has any
interest or any other of Alexander's assets as a result of the
maintenance of a nuisance, or the violation or breach of any
Environmental Law or any remedial obligation arising thereunder,
the terms of any Permit issued under any Environmental Law
affecting Alexander's assets, properties or business, or any duty
arising at common law to any person, entity or Governmental Body
relating to the protection of the environment, which would result
in a Material Adverse Effect on or to Alexander.
3.22 Books of Account. Alexander has maintained its books of
account in the usual, regular and ordinary manner.
3.23 Prior Obligations. Alexander has no contractual
obligation relating to the disposition, by merger or otherwise, of
any of the equity securities of Alexander or of all or any
significant portion of Alexander's assets except as described in
this Agreement or the Schedules hereto.
3.24 Oil and Gas Reserve Report. To Alexander's knowledge,
the proved oil and gas quantities in the reserve report prepared
with respect to Alexander by N&S as of December 31, 1995 (the
"Alexander Reserve Report") fairly present the estimated quantities
of projected oil and gas production attributable to the assets of
Alexander as stated therein as of the date thereof. It is
understood that such estimated quantities are based in whole or in
part on studies performed by independent engineers, and Alexander
does not represent or warrant the accuracy of such studies.
Alexander made available to N&S all information within its
possession or its control relevant to such studies and, to
Alexander's knowledge, such information was true and correct. To
Alexander's knowledge, there has been no material adverse change in
the information provided to N&S, and no event or circumstance has
occurred which could reasonably be expected to result in a decrease
of more than 10% in the projected proved oil and gas quantities in
the aggregate set forth in the Alexander Reserve Report since the
date of such report, except for the production of oil, gas and
other hydrocarbons in the ordinary course of business, the
acquisition and disposition of interests in oil and gas properties
described on Schedules 3.25A, B and C, and decreases in oil and gas
prices generally in the United States.
3.25 Title to Interests. Schedule 3.25A identifies (i) each
oil well and gas well in which Alexander owns an interest, vested
or contingent, and which is producing or capable of producing
hydrocarbons in commercial quantities (individually an "Alexander
Well" and collectively called the "Alexander Wells") and (ii)
Alexander's net revenue interest and leasehold cost bearing
interest (i.e., working interest) in each Alexander Well. Adjacent
to the name of each Alexander Well is a description of all lands
constituting the drilling and spacing unit or other allowable
production unit in which such Alexander Well is situated. Each
oil, gas, and mineral lease in which Alexander owns any interest
and which interest is entitled to share in the production of
hydrocarbons or the proceeds of sale of the production of
hydrocarbons from the Alexander Wells is hereinafter individually
and are collectively called the "Alexander Producing Leases."
Schedule 3.25B describes all oil, gas, and mineral leases, other
than the Alexander Producing Leases, in which Alexander owns any
interest and the type of interest which Alexander owns therein
(hereinafter individually and collectively called the "Alexander
Non-Producing Leases;" the Alexander Non-Producing Leases and the
Alexander Producing Leases are hereinafter individually and
collectively called the "Alexander Leases"). Schedule 3.25C
describes (i) all lands in which Alexander owns a fee simple or
term mineral or royalty interest, which are not entitled to share
in the production of hydrocarbons from the Alexander Wells or the
proceeds of sale of the production of hydrocarbons from the
Alexander Wells (the "Alexander Non-Producing Mineral Fee
Interests"), and (ii) Alexander's interest in and to the Alexander
Non-Producing Mineral Fee Interests by virtue of such ownership.
The lands described at Schedules 3.25A-C are individually and
collectively called the "Alexander Land." The Alexander Wells, the
Alexander Leases, and the Alexander Land, together with (i) all
contracts, agreements, leases, licenses, permits, authorizations,
easements, and orders (individually and collectively called the
"Alexander Agreements") in any way relating to the Alexander Wells,
Alexander Leases and/or the Alexander Land, the operations
conducted or to be conducted pursuant thereto or thereon, or the
production, treatment, sale or disposal of hydrocarbons or water
produced therefrom or attributable thereto, (ii) all wells,
personal property, fixtures (including, without limitation, pipe,
plants and pipelines), equipment (including, without limitation,
compressors, parts, rods, tubular goods and supplies) and
improvements located at, under or on the Alexander Wells, the
Alexander Leases and/or the Alexander Land, or used or obtained in
connection therewith or with the operation or maintenance of the
Alexander Wells or other facilities thereon or with the production,
treatment, sale or disposal of hydrocarbons or water produced
therefrom or attributable thereto, and (iii) all other rights and
interests in, to or under or derived from the Alexander Wells, the
Alexander Leases, the Alexander Agreements, and/or the Alexander
Land (including, without limitation, all mineral and royalty
interests, and all overriding royalty interests and all other
interests in or payable out of or measured by production, and all
surface interests, for a term or in fee), or in any way relating
thereto, are referred to herein as the "Alexander Interests."
As respects each Alexander Well, Alexander's interests in the
Alexander Producing Leases and the Alexander Land are such that,
after giving effect to existing spacing orders, operating
agreements, unit agreements, communitization agreements and orders,
unitization orders and pooling designations and orders, subject to
the limitations described in Schedule 3.25A, and after taking into
account all royalty interests, overriding royalty interests, net
profit interests, production payments and other burdens on
production attributable to third parties, (i) Alexander is
entitled, during the entire extended terms of the Alexander
Producing Leases covering such Alexander Well, to a share
(expressed as a decimal) of all oil, gas and other minerals
produced from such Alexander Well which is not less than the "net
revenue interest" set out in connection with the description of
such Alexander Well, free and clear of all liens, claims,
mortgages, deeds of trust, assignments of production, and security
interests, other than those described in Schedule 3.06, (ii)
Alexander owns an undivided interest (expressed as a decimal) equal
to the "working interest" set out in connection with the
description of such Alexander Well in and to all property and
rights incident thereto, including all rights in, to and under all
agreements, leases, permits, easements, licenses and orders in any
way relating thereto, and in and to all wells, personal property,
fixtures and improvements thereon, appurtenant thereto or used or
obtained in connection therewith or with the production or
treatment or sale or disposal of hydrocarbons or water produced
therefrom or attributable thereto, and (iii) Alexander is
obligated, during the entire extended terms of the Alexander
Producing Leases to which production from such Alexander Well is
attributable, for a share of the costs relating to the exploration,
development, and operation of such Alexander Well which is no
greater than the "working interest" set out in connection with the
description of such Alexander Well.
3.26 Compliance With Leases and Laws. Alexander has complied
in all material respects with the terms and provisions of the
Alexander Leases. To Alexander's knowledge and except as disclosed
on Schedule 3.26, no default exists under any of the terms and
provisions, express or implied, of any of the Alexander Leases or
under any of the terms and provisions of any agreement to which any
of the Alexander Leases are subject, and Alexander has not received
notice of any claim of such default. All bonuses, rentals, shut-in
royalties and royalties due under the Alexander Leases and
applicable law, rules and regulations of the federal and state
Governmental Bodies having jurisdiction with respect to same have
been timely and properly paid and are not in suspense for any
reason, except as disclosed in Schedule 3.26. Alexander's
aggregate delay rental and bonus obligations due under the terms of
the Alexander Non-Producing Leases for each of calendar years 1996,
1997, and 1998 are set forth at Schedule 3.26. There is no express
provision under any Alexander Lease or any agreement which requires
the drilling of additional wells or other operations to earn or
continue to hold any of the Alexander Leases and all lands covered
thereby, except as disclosed in Schedule 3.26. All Alexander Wells
have been drilled, completed, and operated in compliance with all
applicable federal, state and local laws and regulations applicable
thereto (including, without limitation, the Environmental Laws),
except to the extent such failure to comply would not result in a
Material Adverse Effect to Alexander. Based on information
available to Alexander, all production from the Alexander Wells has
been properly accounted for and all proceeds attributable thereto
have been properly paid to the persons entitled thereto in
accordance with payment practices customary in the oil and gas
industry and applicable law, except as disclosed in Schedule 3.26,
and all necessary filings with Governmental Bodies have been
properly made in connection with the drilling, completion, and
operations of each Alexander Well and all other oil and gas
operations on the Alexander Land and, except as disclosed in
Schedule 3.26, no production or sale of oil, gas and other
hydrocarbons heretofore produced or sold from or attributable to
the Alexander Leases has been in excess of any allowable quantity
(plus permitted tolerances) or price or in violation of any other
rule or regulation affecting the sale of hydrocarbons as
established by the applicable regulatory authorities. Schedule
3.26 identifies by amount all proceeds attributable to the
production of hydrocarbons through December 31, 1995, which are
owing to third parties and which are in the possession or under the
control of Alexander. Except as disclosed in Schedule 3.26, no gas
produced from the Alexander Interests is subject to the price
control jurisdiction of the FERC under the NGPA.
3.27 Sale of Production. Except as set forth in Schedule
3.27, to Alexander's knowledge, Alexander has no production from
any Alexander Well which is subject to balancing rights of third
parties or is subject to balancing duties under governmental
requirements, and no third party has production from any Alexander
Well which is subject to the balancing rights of Alexander. Except
as set forth on Schedule 3.27, no production from any Alexander
Well has exceeded the allowable production established therefor by
the appropriate Governmental Body. Except as set forth on Schedule
3.27, Alexander is not obligated by virtue of any prepayment made
under any production sales contract or any other contract
containing a take-or-pay clause or relating to the settlement of a
take-or-pay dispute, or under any similar arrangement, to deliver
oil, gas, natural gas liquids or other hydrocarbons or minerals
produced from or allocated to any of the Alexander Leases at any
time after the Effective Time without receiving full payment
therefor at the time of delivery. Except as disclosed on Schedule
3.27, Alexander has not collected any proceeds from the sale of
hydrocarbons produced from the Alexander Interests which are
subject to refund. Except as set forth in Schedule 3.27, proceeds
from the sale of oil, gas and natural gas liquids from the
Alexander Wells are being received by Alexander in a timely manner
and based upon the net revenue interest described at Schedule 3.25
for each such Alexander Well and in accordance with the terms of
the applicable purchase agreement governing such sale, and are not
being held in suspense for any reason. Alexander has described in
Schedule 3.27 and made available to NEG for examination all
contracts and agreements (other than routine division orders
terminable by Alexander upon less than sixty (60) days' notice)
pursuant to which hydrocarbons produced from the Alexander
Interests are sold, transported, processed or otherwise disposed of
or marketed. Except as disclosed in Schedule 3.27, no person has
any call upon, right of first refusal, preferential right or option
to purchase or similar rights with respect to the Alexander
Interests or to the production therefrom. Except as disclosed in
Schedule 3.27, price renegotiation procedures have not been
commenced under FERC Order No. 451 which involve or which hereafter
may affect any gas produced from the Alexander Interests. Except
as disclosed in Schedule 3.27, no offer of credits under FERC Order
No. 500 has been made which would entitle any purchaser of gas
produced from the Alexander Interests to credit transported volumes
against such purchaser's take-or-pay obligations under any contract
for the sale of gas produced from the Alexander Interests.
3.28 Contracts. Alexander has described in Schedule 3.28 all
partnership, joint venture, farmout, dry hole, bottom hole, acreage
contribution, area of mutual interest, purchase and/or acquisition
agreements of which any terms remain executory which may affect the
Alexander Interests, and all other executory contracts to which
Alexander is a party which would have a Material Adverse Effect on
any item of the Alexander Interests.
3.29 Status of Alexander Wells. Except as disclosed on
Schedule 3.29, all Alexander Wells are producing or capable of
producing hydrocarbons in commercial quantities (based upon
prevailing economic conditions) without the necessity of reworking
or recompletion operations. To Alexander's knowledge and except as
disclosed in Schedule 3.29, there are no obligations existing for
the plugging or abandonment (including obligations for restoration
of the surface) of any oil and/or gas well, salt water disposal
well or other well located at the Alexander Interests.
3.30 Tax Partnerships. Except as disclosed on Schedule 3.30,
no item of the Alexander Interests is treated for income tax
purposes as being owned by a partnership.
3.31 Equipment and Off-Lease Facilities. That portion of the
Alexander Interests consisting of personal property, facilities,
and fixtures, including without limitation, all property and assets
used in connection with the operation of the Alexander Interests,
is in good condition and repair, ordinary wear and tear excepted,
and is adequate for the proper operation of the Alexander
Interests, except for such repairs and additions necessary for the
proper operation of the Alexander Interests and which individually
or in the aggregate would not result in a Material Adverse Effect
on Alexander.
3.32 SEC Documents. Alexander has delivered or made available
to NEG each registration statement, report, definitive proxy
statement or definitive information statement and all exhibits
thereto filed since December 31, 1991, which are listed on Schedule
3.32, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "Alexander
Reports"). The Alexander Reports, which were filed with the SEC in
a timely manner except as set forth in Schedule 3.32, constitute
all forms, reports and documents required to be filed by Alexander
under the 33 Act, the 34 Act and the rules and regulations
promulgated thereunder. As of their respective dates, the
Alexander Reports (i) complied as to form in all material respects
with the applicable requirements of the 33 Act and/or the 34 Act
and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each of
the balance sheets of Alexander included in or incorporated by
reference into the Alexander Reports (including the related notes
and schedules) fairly presents the financial position of Alexander
as of its date and each of the statements of income, retained
earnings and cash flows of Alexander included in or incorporated by
reference into the Alexander Reports (including any related notes
and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of Alexander for the
periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein and
except, in the case of any unaudited statements, as permitted by
Form 10-Q promulgated under the 34 Act.
3.33 Related Party Transactions. Set forth in Schedule 3.33
is a complete list of all arrangements, agreements and contracts
between Alexander and any person who is an officer, director or
affiliate of Alexander, any relative of any of the foregoing or any
entity of which any of the foregoing is an affiliate.
3.34 Certain Payments. Except as set forth in Schedule 3.34,
the execution of, and performance of the transactions contemplated
by, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) (i) constitute an event under
any Alexander benefit plan, policy, practice, agreement or other
arrangement or any trust or loan (the "Alexander Employee
Arrangements") that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or
obligations to fund benefits with respect to any employee, director
or consultant of Alexander or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of NEG
or Alexander to amend or terminate any Alexander Employee
Arrangements and receive the full amount of any excess assets
remaining or resulting from such amendment or termination, subject
to applicable taxes. Except as set forth in Schedule 3.34, no
payment or benefit which will be required to be made pursuant to
the terms of any agreement, commitment or Alexander benefit plan,
as a result of the transactions contemplated by this Agreement, to
any officer, director or employee of Alexander will be
characterized as an "excess parachute payment" within the meaning
of Section 280G(b)(1) of the Code.
3.35 Royalty Accounts. Schedule 3.35 sets forth as of April
30, 1996, the amount of funds held by Alexander in suspense and
which are owed to third party owners of royalty, overriding
royalty, working or other interests for past production of oil and
gas attributable to the Alexander Interests.
3.36 Accounts Payable. The accounts payable reflected on the
Alexander Balance Sheet, the Alexander March 31 Balance Sheet and
those reflected on the books of Alexander at the time of the
Closing reflect all amounts owed by Alexander, in respect of trade
accounts due and other payables as required by generally accepted
accounting principles to be identified on such Alexander Balance
Sheet, Alexander March 31 Balance Sheet or in the books of
Alexander. Schedule 3.36 sets forth all accounts payable past due
as of April 30, 1996 and will be updated by Alexander to set forth
all accounts payable past due as of the date of Closing.
ARTICLE IV
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE DATE OF THE MERGER
4.01 Investigations; Operation of Business of Alexander.
Between the date of this Agreement and the Effective Date of the
Merger:
(a) (i) Alexander shall give NEG, its agents and
representatives, full access to all of the premises of Alexander,
the Alexander Partnerships, and the Alexander Subsidiaries,
including well sites, and books and records and to cause their
respective officers to furnish NEG, its agents and representatives
with such financial and operating data and other information with
respect to the respective businesses and properties of Alexander,
the Alexander Partnerships, and the Alexander Subsidiaries as NEG,
its agents and representatives shall from time to time reasonably
request; provided, however, that any such investigation shall not
affect any of the representations and warranties of Alexander
hereunder, and provided further, that any such investigation shall
be conducted in such manner as not to interfere unreasonably with
the operation of the respective businesses of Alexander, the
Alexander Partnerships, and the Alexander Subsidiaries. In the
event of termination of this Agreement, except as prevented by law,
NEG will, and shall cause its agents and representatives to, return
to Alexander all documents, work papers and other materials
obtained from Alexander, the Alexander Partnerships, and the
Alexander Subsidiaries in connection with the transactions
contemplated hereby, and all copies, extracts or other
reproductions thereof in whole or in part (the "Alexander
Confidential Material"). The term Alexander Confidential
Information does not include information which (i) is public
information, (ii) was already known to NEG, (iii) is developed by
NEG independently from the information supplied to NEG pursuant to
this Agreement, or (iv) is furnished to NEG by a third party who is
not an employee, agent, representative, or advisor of Alexander or
any entity in which Alexander has an interest independently from
NEG's investigation pursuant to the transactions contemplated by
this Agreement. NEG agrees, and shall cause its affiliates and
their respective officers, directors, employees, financial advisors
and agents (collectively, "NEG Representatives") to keep
confidential any information obtained pursuant to this Agreement
unless such information is readily ascertainable from public or
published information or trade sources. If this Agreement is
terminated, NEG shall not use, and shall cause each NEG
Representative not to use, any of the Alexander Confidential
Information to NEG's or any other person's or entity's financial
advantage or to the detriment of Alexander. The confidentiality
provisions of this Section 4.01(a) shall survive the termination of
this Agreement.
(ii) Subject to Subsection 4.01(a)(iii) below or
except as required by law, the Alexander Confidential Material will
be kept confidential and will not, without the prior written
consent of Alexander, be disclosed by NEG or the NEG
Representatives, in whole or in part, and will not be used by NEG
or the NEG Representatives, directly or indirectly, for any purpose
other than in connection with this Agreement, the Merger, the other
transactions contemplated by this Agreement or evaluating,
negotiating or advising NEG with respect to the transactions
contemplated herein. Moreover, NEG agrees to transmit the
Alexander Confidential Material to the NEG Representatives only if
and to the extent that the NEG Representatives need to know the
Alexander Confidential Material for purposes of such transaction
and are informed by NEG of the confidential nature of the Alexander
Confidential Material and of the terms of this Section. In any
event, NEG will be responsible for any actions by the NEG
Representatives which are not in accordance with the provisions
hereof.
(iii) In the event that NEG, the NEG Representatives
or anyone to whom NEG or the NEG Representatives supply the
Alexander Confidential Material are requested or required (by oral
questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand, any informal or formal
investigation by any Governmental Body or otherwise in connection
with legal processes) to disclose any of the Alexander Confidential
Material, NEG agrees (i) to immediately notify Alexander of the
existence, terms and circumstances of such a request, (ii) to
consult with Alexander on the advisability of taking legally
available steps to resist or narrow such request and (iii) if
disclosure of such information is required, to furnish only that
portion of the Alexander Confidential Material which, in the
opinion of NEG's counsel, NEG is legally compelled to disclose and
to cooperate with any action by Alexander to obtain an appropriate
protective order or other reliable assurance that confidential
treatment will be accorded the Alexander Confidential Material (it
being agreed that Alexander shall reimburse NEG for all reasonable
out-of-pocket expenses incurred by NEG in connection with such
cooperation).
(b) Alexander will, to the extent required for continued
operation of its business without impairment, use its reasonable
efforts to preserve substantially intact the books and records and
the business organization of Alexander, to keep available the
services of its present officers and employees, and to preserve the
present relationships of Alexander with persons having significant
business relations therewith such as suppliers, customers, brokers,
agents or otherwise and to promptly notify NEG of an emergency or
other change which would have a Material Adverse Effect on
Alexander, any governmental complaints, investigations, hearings
(or communications indicating that the same may be contemplated) or
the breach in any material respect of any representation, warranty,
covenant or agreement contained herein.
(c) Alexander will conduct its business only in the
ordinary course and, by way of amplification and not limitation,
Alexander will not, without the prior written consent of NEG,
except with respect to the issuance of shares previously reserved
for issuance as described in Schedule 3.02, (i) issue, sell or
otherwise dispose of any shares of its capital stock, or (ii) grant
any other options or warrants or other rights to purchase or
otherwise acquire any shares of Alexander's capital stock or issue
any securities convertible into shares of Alexander's capital
stock, or (iii) adopt any new employee benefit plans or modify or
alter any existing employee benefit plan, or (iv) declare, set
aside, or pay any dividend or distribution with respect to the
capital stock of Alexander, or (v) directly or indirectly redeem,
purchase or otherwise acquire any capital stock of Alexander, or
(vi) effect a split or reclassification of any capital stock of
Alexander or a recapitalization of Alexander, or (vii) change the
charter or bylaws of Alexander, or (viii) grant any increase in the
compensation payable or to become payable by Alexander to officers
or salaried employees of Alexander or any increase in any Alexander
Single Employer Plan or Alexander Employee Arrangement for any
officers or employees, or (ix) borrow, except for working capital
purposes not to exceed $10,000, or agree to borrow any funds, or
guarantee or agree to guarantee the obligations of others, or (x)
waive any rights of substantial value, or (xi) except in the
ordinary course of business enter into an agreement, contract or
commitment which, if entered into prior to the date of this
Agreement, would be required to be listed in a Schedule attached to
this Agreement, or materially amend or change the terms of any such
agreement, contract or commitment, or (xii) take any action or
omit to take any action which would result in any of its
representations or warranties set forth in this Agreement becoming
untrue or any of the conditions or obligations of Alexander set
forth in Section 5.02 hereof not being satisfied. Listed on
Schedule 4.01 hereto are all of Alexander's presently proposed
capital expenditures exceeding $10,000. Without the prior written
consent of NEG, Alexander will not make any other capital
expenditures in excess of $100,000 in any one case or $150,000 in
the aggregate.
(d) Alexander shall furnish NEG a copy of all amendments
to the Alexander 10-K and of any other form filed with the SEC
under the 34 Act from the date of filing of the Alexander 10-K to
the Effective Date of the Merger.
(e) Following its execution of this Agreement, neither
Alexander nor any of its affiliates or agents, will directly or
indirectly solicit, initiate or participate in negotiations with
any person other than NEG with respect to the disposition of any of
the equity securities of Alexander or any options with respect
thereto or merger of Alexander with another corporation, or any
disposition of all or any significant portion of the assets of
Alexander not in the ordinary course of business, or similar
transaction (each an "Alexander Acquisition Proposal"), nor shall
Alexander or any of its affiliates or agents provide any
information concerning Alexander with respect to an Alexander
Acquisition Proposal, unless Alexander has been advised by counsel
that participation in such negotiations or the provision of such
information in response to any unsolicited offer is required by the
fiduciary duties of Alexander's Board of Directors under applicable
law. In the event anyone should solicit, initiate negotiations
with or make inquiries of Alexander relative to an Alexander
Acquisition Proposal, Alexander will promptly notify NEG.
(f) Alexander will continue to maintain its books of
account in the usual, regular and ordinary manner.
4.02 Investigations; Operation of Business of NEG. Between
the date of this Agreement and the Effective Date of the Merger:
(a) (i) NEG shall give Alexander, its agents and
representatives, full access to all of the premises of NEG, the NEG
Partnerships, and the NEG Subsidiaries including well sites, and
books and records, and to cause their respective officers to
furnish Alexander, its agents and representatives with such
financial and operating data and other information with respect to
the respective businesses and properties of NEG, the NEG
Partnerships, and the NEG Subsidiaries as Alexander, its agents and
representatives shall from time to time reasonably request;
provided, however, that any such investigation shall not affect any
of the representations and warranties of NEG hereunder, and
provided further, that any such investigation shall be conducted in
such manner as not to interfere unreasonably with the operation of
the respective businesses of NEG, the NEG Partnerships, and the NEG
Subsidiaries. In the event of termination of this Agreement,
except as prevented by law, Alexander will, and shall cause its
agents and representatives to, return to NEG all documents, work
papers and other materials obtained from NEG, the NEG Partnerships,
and the NEG Subsidiaries in connection with the transactions
contemplated hereby, and all copies, extracts or other
reproductions thereof in whole or in part (the "NEG Confidential
Material"). The term NEG Confidential Information does not include
information which (i) is public information, (ii) was already known
to Alexander, (iii) is developed by Alexander independently from
the information supplied to Alexander pursuant to this Agreement,
or (iv) is furnished to Alexander by a third party who is not an
employee, agent, representative, or advisor of NEG or any entity in
which NEG has an interest independently from Alexander's
investigation pursuant to the transactions contemplated by this
Agreement. Alexander agrees, and shall cause its affiliates and
their respective officers, directors, employees, financial advisors
and agents (collectively, "Alexander Representatives") to keep
confidential any information obtained pursuant to this Agreement
unless such information is readily ascertainable from public or
published information or trade sources. If this Agreement is
terminated, Alexander shall not use, and shall cause each Alexander
Representative not to use, any of the NEG Confidential Information
to Alexander's or any other person's or entity's financial
advantage or to the detriment of NEG. The confidentiality
provisions of this Section 4.02(a) shall survive the termination of
this Agreement.
(ii) Subject to Subsection 4.02(a)(iii) below or
except as required by law, the NEG Confidential Material will be
kept confidential and will not, without the prior written consent
of NEG, be disclosed by Alexander or the Alexander Representatives,
in whole or in part, and will not be used by Alexander or the
Alexander Representatives, directly or indirectly, for any purpose
other than in connection with this Agreement, the Merger, the other
transactions contemplated by this Agreement or evaluating,
negotiating or advising Alexander with respect to the transactions
contemplated herein. Moreover, Alexander agrees to transmit the
NEG Confidential Material to the Alexander Representatives only if
and to the extent that the Alexander Representatives need to know
the NEG Confidential Material for purposes of such transaction and
are informed by Alexander of the confidential nature of the NEG
Confidential Material and of the terms of this Section. In any
event, Alexander will be responsible for any actions by the
Alexander Representatives which are not in accordance with the
provisions hereof.
(iii) In the event that Alexander, the Alexander
Representatives or anyone to whom Alexander or the Alexander
Representatives supply the NEG Confidential Material are requested
or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, any
informal or formal investigation by any Governmental Body or
otherwise in connection with legal processes) to disclose any of
the NEG Confidential Material, Alexander agrees (i) to immediately
notify NEG of the existence, terms and circumstances of such a
request, (ii) to consult with NEG on the advisability of taking
legally available steps to resist or narrow such request and (iii)
if disclosure of such information is required, to furnish only that
portion of the NEG Confidential Material which, in the opinion of
Alexander's counsel, Alexander is legally compelled to disclose and
to cooperate with any action by NEG to obtain an appropriate
protective order or other reliable assurance that confidential
treatment will be accorded the NEG Confidential Material (it being
agreed that NEG shall reimburse Alexander for all reasonable out-
of-pocket expenses incurred by Alexander in connection with such
cooperation).
(b) NEG will, to the extent required for continued
operation of its business without impairment, use its reasonable
efforts to preserve substantially intact the books and records and
the business organization of NEG, to keep available the services of
its present officers and employees, and to preserve the present
relationships of NEG with persons having significant business
relations therewith such as suppliers, customers, brokers, agents
or otherwise and to promptly notify Alexander of an emergency or
other change which would have a Material Adverse Effect on NEG, any
governmental complaints, investigations, hearings (or
communications indicating that the same may be contemplated) or the
breach in any material respect of any representation, warranty,
covenant or agreement contained herein.
(c) NEG will conduct its business only in the ordinary
course and, by way of amplification and not limitation, NEG will
not, without the prior written consent of Alexander, except with
respect to the issuance of shares as described in Schedule 2.02,
(i) issue, sell or otherwise dispose of shares of its capital
stock, or (ii) grant any other options or warrants or other rights
to purchase or otherwise acquire any shares of NEG's capital stock
or issue any securities convertible into shares of NEG's capital
stock, or (iii) adopt any new employee benefit plans or modify or
alter any existing employee benefit plan except as otherwise
disclosed on Schedule 4.02, or (iv) declare, set aside, or pay any
dividend or distribution with respect to the capital stock of NEG
other than ordinary semi-annual cash dividends by NEG consistent
with past practice in an amount not in excess of $5.00 per share of
Series B Preferred and $5.25 per share of Series C Preferred, or
(v) directly or indirectly redeem, purchase or otherwise acquire
any capital stock of NEG, or (vi) effect a split or
reclassification of any capital stock of NEG or a recapitalization
of NEG, or (vii) change the charter or bylaws of NEG except as
otherwise disclosed on Schedule 4.02, or (viii) grant any increase
in the compensation payable or to become payable by NEG to officers
or salaried employees of NEG or any increase in any NEG Single
Employer Plan or NEG Employee Arrangement for any officers or
employees except as otherwise disclosed on Schedule 4.02, or (ix)
borrow, except for working capital purposes not to exceed $10,000
and except as set forth on Schedule 4.02, or agree to borrow any
funds, or guarantee or agree to guarantee the obligations of
others, or (x) waive any rights of substantial value, or (xi)
except in the ordinary course of business and except as set forth
on Schedule 4.02, enter into an agreement, contract or commitment
which, if entered into prior to the date of this Agreement, would
be required to be listed in a Schedule attached to this Agreement,
or materially amend or change the terms of any such agreement,
contract or commitment, or (xii) take any action or omit to take
any action which would result in any of its representations or
warranties set forth in this Agreement becoming untrue or any of
the conditions or obligations of NEG set forth in Section 5.01
hereof not being satisfied. Listed on Schedule 4.02 hereto are all
of NEG's presently proposed capital expenditures exceeding $10,000.
Without the prior written consent of Alexander, NEG will not make
any other capital expenditures in excess of $100,000 in any one
case or $150,000 in the aggregate.
(d) NEG shall furnish Alexander a copy of any amendment
to the NEG 10-K and of any other report filed with the SEC under
the 34 Act from the date of filing of the NEG 10-K to the Effective
Date of the Merger.
(e) Following its execution of this Agreement, neither
NEG nor any of its affiliates or agents, will directly or
indirectly solicit, initiate or participate in negotiations with
any person other than Alexander with respect to the disposition of
any of the equity securities of NEG or any options with respect
thereto or merger of NEG with any corporation, or any disposition
of all or any significant portion of the assets of NEG not in the
ordinary course of business, or similar transaction (each an "NEG
Acquisition Proposal"), nor shall NEG or any of its affiliates or
agents provide any information concerning NEG with respect to an
NEG Acquisition Proposal, unless NEG has been advised by counsel
that participation in such negotiations or the provision of such
information in response to any unsolicited offer is required by the
fiduciary duties of NEG's Board of Directors under applicable law.
In the event anyone should solicit, initiate negotiations with or
make inquiries of NEG relative to an NEG Acquisition Proposal, NEG
will promptly notify Alexander.
(f) NEG will maintain its books of account in the usual,
regular and ordinary manner.
4.03 Shareholder Approvals. NEG and Alexander each shall
submit this Agreement to its respective shareholders for approval,
all as provided by law and their respective Certificates of
Incorporation. Each of Alexander and NEG will, through its
respective Board of Directors, recommend to the holders of their
respective Common Stock the approval of the Merger and will not
rescind its declaration that the Merger is advisable unless such
party has been advised by counsel that such recommendation cannot
be made by the Board of Directors or must be rescinded because such
recommendation violates the fiduciary duties of such Board of
Directors under applicable law. Such actions shall be effected
with reasonable promptness and as the parties shall mutually
determine desirable.
4.04 NEG Registration Statement, etc. Prior to the Effective
Date of the Merger, NEG shall have prepared and filed with the SEC
the Registration Statement under the 33 Act, for the purpose of
registering the shares of NEG Common Stock to be exchanged for the
shares of Alexander Common Stock pursuant to Article I of this
Agreement. NEG and Alexander will use all reasonable efforts to
cause such Registration Statement, together with applicable state
securities law qualifications, to become effective by August 9,
1996, or as soon thereafter as may be practicable.
4.05 Information for Proxy Statement-Prospectus. NEG and
Alexander will each furnish to the other such data and information
relating to it as the other may reasonably request for the purpose
of including such data and information in the Proxy Statement-
Prospectus or the Registration Statement.
4.06 Restricted Common Stock. Alexander will deliver to NEG
not later than ten (10) days before the Effective Date of the
Merger, a schedule listing Alexander's Affiliates (as herein
defined) and the amounts of shares of Alexander Common Stock owned
by Such Affiliates and the numbers of the certificates representing
the same. Alexander shall furnish NEG with such information and
documents as NEG shall reasonably request for purposes of reviewing
and updating such list. For the purposes of Sections 4.06 and 4.07
and Exhibit C to this Agreement, "Affiliates" means each director
or executive officer and each person who, should he sell, transfer
or distribute NEG Common Stock acquired by him in connection with
the Merger, would be subject to the requirements of paragraphs (c)
and (d) of Rule 145, as amended, under the 33 Act, or who would
otherwise be considered to be an Affiliate under the applicable
rules and regulations of the SEC and the 33 Act.
4.07 Letters from Affiliates. Prior to Closing, Alexander
will use its reasonable efforts to obtain from each of its
Affiliates a letter substantially in the form attached as Exhibit
C hereto.
4.08 Consents. Prior to Closing, NEG and Alexander shall each
use its respective reasonable efforts to obtain the consent or
approval of each person whose consent or approval shall be required
in order to permit it to consummate the Merger.
4.09 NEG Board of Directors. In connection with the Merger,
the following persons shall be nominated for election as directors
of NEG at the annual shareholders meeting of NEG at which the
Merger is considered to serve for the ensuing year or until their
successors are duly elected and qualified: George B. McCullough,
Norman C. Miller, Miles D. Bender, Robert H. Kite, George N.
McDonald, Robert V. Sinnott and Elwood W. Schafer and immediately
after the Effective Time, the board of directors of NEG shall
increase the size of the NEG board of directors to ten and elect
Bob G. Alexander, Jim L. David and Robert A. West as directors to
serve for the ensuing year or until their successors are duly
elected and qualified; provided, however, if any such person
becomes unwilling or unable to serve prior to the Effective Time,
any person who is to replace George B. McCullough, Norman C.
Miller, Miles D. Bender, Robert H. Kite, George N. McDonald, Robert
V. Sinnott or Elwood W. Schafer (an NEG designated director) shall
be named by NEG, and any person who is to replace Bob G. Alexander,
Jim L. David or Robert A. West (an Alexander designated director)
shall be named by Alexander.
4.10 Outstanding Alexander Options, Warrants and Stock Awards.
NEG shall deliver at Closing to each record holder of options or
warrants identified in Schedule 3.02 hereof that remain unexercised
in whole or in part at the Effective Time, in substitution therefor
and in cancellation thereof, options or warrants, as the case may
be, to purchase a number of shares of NEG Common Stock determined
by multiplying the number of shares of Alexander Common Stock
subject to the option or warrant by the Exchange Ratio (rounded to
the nearest whole number of shares). The per share exercise price
of each substitute option or warrant shall be determined by
dividing the per share exercise price for the Alexander option or
warrant by the Exchange Ratio, and rounding the exercise price to
the nearest whole cent. Other terms of such substitute options or
warrants shall be the same terms as are contained in the options
and warrants identified on Schedule 3.02. As promptly as
practicable after the Effective Time, NEG shall use its best
efforts to cause a registration statement on Form S-8, or any
successor form to be declared effective by the SEC under the 33 Act
for the issuance and sale of all shares of NEG Common Stock which
are subject to such options or warrants. NEG shall deliver at
Closing to each holder of restricted stock awards set forth on
Schedule 3.02 that remain subject to forfeiture at the Effective
Time, in substitution therefor and in cancellation thereof, a
number of shares of NEG Common Stock determined by multiplying the
number of such shares subject to forfeiture by the Exchange Ratio.
The provisions of this Section 4.10 shall survive the Effective
Time and the Closing.
4.11 Filings. Subject to the terms and conditions herein
provided, NEG and Alexander shall use all reasonable efforts to
cooperate with one another in (i) determining which filings are
required to be made prior to the Effective Time with, and which
consents, approvals, permits or authorizations are required to be
obtained prior to the Effective Time from, Governmental Bodies in
connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and (ii)
timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations.
4.12 Notices of Certain Events. Each of Alexander or NEG, as
appropriate, shall promptly notify the other of receipt of:
(a) any notice or other communication from any person
other than a Governmental Body alleging that the consent of such
person is or may be required in connection with, or that any rights
or properties of Alexander or NEG may be lost or subjected to any
preferential purchase or other similar rights by reason of, the
transactions contemplated by this Agreement;
(b) any notice or other communication from any
Governmental Body in connection with the transactions contemplated
by this Agreement; and
(c) notice of any actions, suits, claims, investigations
or proceedings commenced or, to its knowledge, threatened, against,
relating to or involving or otherwise affecting Alexander, NEG or
Acquisition or any of their respective Subsidiaries which, if
pending on the date of this Agreement, would have been required to
have been disclosed in a Schedule which relate to the consummation
of the transactions contemplated by this Agreement.
4.13 Tax Free Reorganization. During the period from the date
of this Agreement through the Effective Time, unless the other
parties shall otherwise agree in writing, none of NEG, Acquisition,
any other Subsidiary of NEG, Alexander or any Subsidiary of
Alexander shall knowingly take or fail to take any action which
action or failure to act would jeopardize the treatment of NEG's
combination with Alexander as a tax free reorganization under the
Code.
4.14 Recognition of Employment and Severance Agreements.
Alexander has previously adopted certain employment and severance
agreements for certain of its executive officers entitled The
Alexander Energy Corporation Employment Agreement, The Alexander
Energy Corporation Special Severance Agreement, and The Alexander
Energy Corporation Separation Policy (collectively such agreements
are herein called the "Severance Agreements") which are listed on
Schedule 3.18. NEG recognizes that the Severance Agreements are a
significant benefit to the affected employees of Alexander and
acknowledges that NEG has reviewed these Severance Agreements and
agrees that, after the Effective Time, such agreements remaining in
existence after the Effective Time will be enforceable against NEG
to the same extent as enforceable against Alexander prior to the
Merger. NEG agrees that it shall take no acts to terminate, amend
or modify the Severance Agreements in any manner which would be
detrimental to the employees of Alexander who are covered under the
Severance Agreements without the prior consent of the employee who
would be adversely effected by any such termination, amendment or
modification.
ARTICLE V
CONDITIONS OF MERGER; ABANDONMENT OF MERGER
5.01 Conditions of Obligations of Alexander. The obligations
of Alexander to effect the Merger shall be subject to the following
conditions:
(a) Resolutions of Shareholders and Board of Directors.
NEG and Acquisition shall have furnished Alexander with (i)
certified copies of resolutions duly adopted by the holders of at
least a majority of the outstanding stock of NEG and Acquisition
entitled to vote thereon approving and authorizing the transactions
contemplated by this Agreement and (ii) certified copies of
resolutions duly adopted by the Board of Directors of NEG and
Acquisition authorizing all necessary and proper corporate action
to enable NEG and Acquisition to comply with the terms of this
Agreement and approving the execution and delivery to Alexander of
this Agreement.
(b) Representations and Warranties of NEG and
Acquisition to be True. Except to the extent waived in writing by
Alexander hereunder, (i) the representations and warranties of NEG
and Acquisition herein contained shall be true in all material
respects at the Time of Filing with the same effect as though made
at such time; and (ii) NEG and Acquisition shall have performed all
material obligations and complied with all material covenants
required by this Agreement to be performed or complied with by them
prior to the Time of Filing. Each of NEG and Acquisition shall
have also delivered to Alexander a certificate, dated the Closing
Date and signed by two of their respective officers, to both of the
aforementioned effects. In the event any of the Schedules need to
be updated as a result of any events that have occurred since the
execution of this Agreement, such certificate shall have attached
to it updates of all such Schedules to this Agreement; provided,
however, no change in or amendment to a Schedule by a party hereto
made after the date hereof shall constitute a waiver hereunder of
any right of the other party or any condition to the such other
party's obligations hereunder without the specific written consent
of such other party.
(c) Third Party Consents. NEG shall have obtained and
delivered to Alexander consents to the transactions contemplated by
this Agreement from the parties to all material contracts referred
to in the Schedules attached hereto in accordance with this
Agreement, which require such consent.
(d) Registration of NEG Stock. The Registration
Statement shall have been declared effective under the 33 Act and
applicable state securities laws, no stop order suspending the
effectiveness of the Registration Statement shall have been issued
and no proceeding for that purpose shall have been instituted or be
pending.
(e) No Material Adverse Change. There shall not have
occurred since December 31, 1995, (i) any material adverse change
in the business, properties, results of operations or financial
condition of NEG and its Consolidated Subsidiaries, considered as
one enterprise, or (ii) any loss or damage to any of the properties
or assets (whether or not covered by insurance) of NEG or any of
its Consolidated Subsidiaries which, in either case, will have a
Material Adverse Effect on NEG.
(f) Statutory Requirements. All statutory requirements
for the valid consummation by NEG of the transactions contemplated
by this Agreement shall have been fulfilled and all authorizations,
consents and approvals of all Governmental Bodies required to be
obtained in order to permit consummation by NEG of the transactions
contemplated by this Agreement and to permit the business presently
carried on by NEG to continue unimpaired to any material degree
immediately following the Effective Date of the Merger shall have
been obtained. Neither the Federal Trade Commission, the United
States Department of Justice, nor any other governmental agency,
whether federal, state or local, shall have instituted (or
threatened to institute in a writing directed to NEG or Alexander
or any of the NEG or Alexander Subsidiaries) an investigation which
is pending at the Time of Filing relating to the Merger, and
between the date of this Agreement and the Time of Filing no action
or proceeding shall have been instituted or, to the knowledge of
NEG, shall have been threatened by any party (public or private)
before a court or other governmental body to restrain or prohibit
the transactions contemplated by this Agreement or to obtain
damages in respect thereof.
(g) Opinion of Counsel of NEG. Alexander shall have
received from Strasburger & Price, LLP, counsel to NEG, an opinion
dated the Closing Date, in form and substance satisfactory to
Alexander's counsel, McAfee & Taft A Professional Corporation, to
the effect that (i) each of NEG and the NEG Subsidiaries is a
corporation duly incorporated and validly existing and in good
standing under the laws of its respective jurisdiction of
incorporation; (ii) each of NEG and the NEG Subsidiaries has the
corporate power to carry on its business as now being conducted;
(iii) the authorized capital stock of NEG and the number of shares
of capital stock outstanding are as set forth in Section 2.02 of
this Agreement, and that such issued shares have been duly
authorized, are validly issued and outstanding, and are fully paid
and nonassessable; (iv) the shares of NEG Common Stock into which
the shares of Alexander Common Stock are to be converted pursuant
to Article I of this Agreement have been duly authorized and,
immediately after the Effective Date of the Merger, will be duly
and validly issued and will be fully paid and nonassessable; (v)
NEG and Acquisition each has the requisite corporate power and
authority and has taken all requisite corporate action necessary to
enable NEG and Acquisition to execute and deliver this Agreement
and to consummate the transactions contemplated thereby; (vi) this
Agreement has been duly and validly executed and delivered by NEG
and Acquisition and is the valid, binding and enforceable
obligation of NEG and Acquisition (subject to bankruptcy,
insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights of creditors generally, and to
principles of equity); (vii) neither the execution and delivery by
NEG and Acquisition of this Agreement nor compliance with the terms
and provisions thereof will violate any law, statute, rule or
regulation, injunction, order or decree of any governmental agency
or authority or court, of which such counsel is aware, or conflict
with or result in the breach of any term, condition or provision of
any material agreement or commitment listed as an exhibit to or
described in the NEG Reports and any SEC filings under Section
4.02(d) hereof, or cause any acceleration of maturity of any
material obligation or loan known to such counsel, or give to
others any material interests or rights known to counsel (including
rights of termination or cancellation) in or with respect to any
material properties or assets; (viii) to such counsel's knowledge,
neither NEG nor any NEG Subsidiary is engaged in any legal or
administrative proceeding which is reasonably likely to have a
Material Adverse Effect on NEG; (ix) except as described in such
opinion, to such counsel's knowledge, all authorizations, consents
and approvals of all Governmental Bodies required to be obtained by
NEG and Acquisition in order to permit consummation of the Merger
(excluding state securities or "Blue Sky" requirements) have been
obtained; and (x) upon filing of the Certificate of Merger, the
Merger shall become effective in accordance with this Agreement.
Such counsel shall also provide a statement in their opinion
letter to the effect that nothing has come to their attention that
would lead them to believe the Registration Statement with respect
to the information supplied by NEG (except for the financial
statements or other financial or statistical data, as to which they
need make no comment), at the time it became effective, contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Proxy Statement-
Prospectus with respect to the information supplied by NEG (except
for the financial statements or other financial or statistical
data, as to which they need make no comment), at the time the Proxy
Statement-Prospectus was mailed or at the Effective Date of the
Merger, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
Such opinion shall also cover such other matters incidental to
the matters herein contemplated as Alexander and its counsel may
reasonably request. In rendering such opinion, counsel may rely,
to the extent counsel determines such reliance necessary or
appropriate, upon opinions of local counsel as to matters of law
other than that of the United States and Texas and, as to matters
of fact, upon certificates of state officials or of any officer or
officers of NEG provided the extent of such reliance is stated in
the opinion.
(h) Fairness Opinion. Alexander shall have received an
opinion, dated as of the date of this Agreement and confirmed as of
the date of the Proxy Statement-Prospectus, from Prudential
Securities Incorporated to the effect that the Exchange Ratio is
fair, from a financial point of view, to the holders of Alexander
Common Stock, which opinion shall not have been withdrawn.
(i) NEG Stock Price. The average closing sales price
for the NEG Common Stock on the Nasdaq National Market for the ten
(10) trading days immediately prior to the Closing Date (the "NEG
Average Price") shall not be less than $2.40.
(j) NEG Financing. Alexander shall have received on or
before the date of this Agreement satisfactory evidence of a
commitment from a bank or banks to provide NEG with financing after
the Closing for not less than $65,000,000 (the "Commitment"), which
Commitment may not be amended or terminated on or before the
Effective Time.
(k) Filing of Form S-4. NEG shall have filed with the
SEC the Registration Statement on Form S-4 used to register the
shares of NEG Common Stock to be exchanged for the shares of
Alexander Common Stock pursuant to this Agreement on or before June
14, 1996.
5.02 Conditions of Obligation of NEG. The obligation of NEG
to effect the Merger shall be subject to the following conditions:
(a) Resolutions of Shareholders and Boards of Directors.
Alexander shall have furnished NEG with (i) certified copies of
resolutions duly adopted by the holders of at least a majority of
the outstanding stock of Alexander entitled to vote thereon
approving and authorizing the transactions contemplated by this
Agreement and (ii) certified copies of resolutions duly adopted by
the Board of Directors of Alexander authorizing all necessary and
proper corporate action to enable Alexander to comply with the
terms of this Agreement and approving the execution and delivery to
NEG of this Agreement.
(b) Representations and Warranties of Alexander to be
True. Except to the extent waived in writing by NEG hereunder,
(i) the representations and warranties of Alexander herein
contained shall be true in all material respects at the Time of
Filing with the same effect as though made at such time; and
(ii) Alexander shall have performed all material obligations and
complied with all material covenants required by this Agreement to
be performed or complied with by it prior to the Time of Filing.
Alexander shall have also delivered to NEG a certificate of
Alexander, dated the Closing Date and signed by two of its
officers, to both of the aforementioned effects. In the event any
of the Schedules need to be updated as a result of any events that
have occurred since the execution of this Agreement, such
certificate shall have attached to it updates of all Schedules to
this Agreement; provided, however, no change in or amendment to a
Schedule by a party hereto made after the date hereof shall
constitute a waiver hereunder of any right of the other party or
any condition to the such other party's obligations hereunder
without the specific written consent of such other party.
(c) Third Party Consents. Alexander shall have obtained
and delivered to NEG consents to the transactions contemplated by
this Agreement from the parties to all material contracts referred
to in the Schedules attached hereto in accordance with this
Agreement, which require such consent.
(d) Registration of NEG Stock. The Registration
Statement shall have been declared effective under the 33 Act and
applicable state securities laws, no stop order suspending the
effectiveness of the Registration Statement shall have been issued
and no proceeding for that purpose shall have been instituted or be
pending.
(e) No Material Adverse Change. There shall not have
occurred since December 31, 1995 (i) any material adverse change in
the business, properties, results of operations or financial
condition of Alexander and its Consolidated Subsidiaries,
considered as one enterprise, or (ii) any loss or damage to any of
the properties or assets (whether or not covered by insurance) of
Alexander or any of its Consolidated Subsidiaries which, in either
case, will have a Material Adverse Effect on Alexander.
(f) Statutory Requirements. All statutory requirements
for the valid consummation by Alexander of the transactions
contemplated by this Agreement shall have been fulfilled and all
authorizations, consents and approvals of all Governmental Bodies
required to be obtained in order to permit consummation by
Alexander of the transactions contemplated by this Agreement and to
permit the business presently carried on by Alexander to be
continued by Acquisition unimpaired to any material degree
immediately following the Effective Date of the Merger shall have
been obtained. Neither the Federal Trade Commission, the United
States Department of Justice, nor any other governmental agency,
whether federal, state or local, shall have instituted (or
threatened to institute in a writing directed to NEG or Alexander
or any of the NEG or Alexander Subsidiaries) an investigation which
is pending at the Time of Filing relating to the Merger, and
between the date of this Agreement and the Time of Filing no action
or proceeding shall have been instituted or, to the knowledge of
Alexander, shall have been threatened by any party (public or
private) before a court or other governmental body to restrain or
prohibit the transactions contemplated by this Agreement or to
obtain damages in respect thereof.
(g) Opinion of Counsel of Alexander. NEG shall have
received from McAfee & Taft A Professional Corporation, counsel to
Alexander, an opinion, dated the Closing Date, in form and
substance satisfactory to NEG counsel, Strasburger & Price, LLP, to
the effect that (i) each of Alexander and the Alexander
Subsidiaries is a corporation duly incorporated and validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation; (ii) each of Alexander and the
Alexander Subsidiaries has the corporate power to carry on its
business as now being conducted; (iii) the authorized capital stock
of Alexander and the number of shares of capital stock outstanding
are as set forth in Section 3.02 of this Agreement, and that such
issued shares have been duly authorized, are validly issued and
outstanding, and are fully paid and nonassessable; (iv) Alexander
has the requisite corporate power and authority and has taken all
requisite corporate action necessary to enable it to execute and
deliver this Agreement and to consummate the transactions
contemplated thereby; (v) this Agreement has been duly and validly
executed and delivered by Alexander and is the valid, binding and
enforceable obligation of Alexander (subject to bankruptcy,
insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights of creditors generally, and to
principles of equity); (vi) neither the execution and delivery by
Alexander of this Agreement nor compliance with the terms and
provisions of thereof will violate any law, statute, rule or
regulation, injunction, order or decree of any governmental agency
or authority or court, of which such counsel is aware, or conflict
with or result in a breach of any term, condition or provision of
any material agreement or commitment listed as an exhibit to or
described in the Alexander reports and any SEC filings under
Section 4.01(d) hereof, or cause any acceleration or maturity of
any material obligation or loan known to such counsel, or give to
others any material interests or rights known to counsel (including
rights of termination or cancellation) in or with respect to any
material properties or assets; (vii) to such counsel's knowledge,
neither Alexander nor any Alexander Subsidiary is engaged in any
legal or administrative proceeding which is reasonably likely to
have a Material Adverse Effect on Alexander; (viii) except as
described in such opinion, to such counsel's knowledge, all
authorizations, consents and approvals of all Governmental Bodies
required to be obtained by Alexander in order to permit
consummation of the Merger (excluding state securities or "Blue
Sky" requirements) have been obtained; (ix) upon filing of the
Certificate of Merger, the Merger shall become effective in
accordance with this Agreement; (x) no anti-takeover statutes or
regulations under Oklahoma law are applicable to the transactions
contemplated by the Agreement, including but not limited to Section
1090.3 of the Oklahoma Act; and (xi) no Associated Rights will
become exercisable as a result of consummating the transactions
contemplated by the Agreement.
Such counsel shall also provide a statement in their opinion
letter to the effect that nothing has come to their attention that
would lead them to believe the Registration Statement with respect
to the information supplied by Alexander (except for the financial
statements or other financial or statistical data, as to which they
need make no comment), at the time it became effective, contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Proxy Statement-
Prospectus with respect to the information supplied by Alexander
(except for the financial statements or other financial or
statistical data, as to which they need make no comment), at the
time the Proxy Statement-Prospectus was mailed or at the Effective
Date of the Merger, contained an untrue statement of material fact
or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
Such opinion shall also cover such other matters incidental to
the matters herein contemplated as NEG and its counsel may
reasonably request. In rendering such opinion, counsel may rely,
to the extent counsel determines such reliance necessary or
appropriate, upon opinions of local counsel as to matters of law
other than that of the United States and Oklahoma and, as to
matters of fact, upon certificates of state officials and of any
officer or officers of Alexander provided the extent of such
reliance is specified in the opinion.
(h) Receipt of Letters from Alexander Affiliates. NEG
shall have received from each Alexander Affiliate a duly executed
letter substantially in the form of Exhibit C attached hereto.
(i) Fairness Opinion. NEG shall have received an
opinion, dated as of the date of this Agreement and confirmed as of
the date of the Proxy Statement-Prospectus, from Oppenheimer & Co.,
Inc. to the effect that the Exchange Ratio is fair, from a
financial point of view, to the holders of NEG Common Stock, which
opinion shall not have been withdrawn.
(j) Outstanding Alexander Common Stock. Alexander shall
have no more than 12,850,000 shares of Alexander Common Stock
outstanding, on a fully diluted basis, immediately prior to the
Effective Time.
(k) NEG Stock Price. The NEG Average Price shall not be
greater than $3.60.
(l) NEG Financing. NEG shall have received on or before
the date of this Agreement the Commitment, and such bank or banks
shall fund the loan described in the Commitment on the terms set
forth therein simultaneous with the Closing. NEG shall use its
best efforts to cause the loan described in the Commitment to close
simultaneous with the Closing; provided, however, that NEG shall
not be obligated to close if the sum of the refinancing of the
existing debt of NEG and Alexander and the costs of closing the
transactions contemplated by this Agreement (including all
estimated costs under Section 1.08) exceeds $80,000,000.
5.03 Conditions of Obligations of NEG and Alexander. The
obligations of each of NEG and Alexander to effect the Merger shall
be subject to the following conditions:
(a) Tax Opinion. NEG, Alexander and Acquisition
shall have received an opinion of Strasburger & Price, LLP, in form
and substance satisfactory to NEG, Alexander and Acquisition, dated
the date of this Agreement and confirmed as of the date of the
Proxy Statement-Prospectus and confirmed as of the Effective Date,
substantially to the effect that, for United States federal income
tax purposes, on the basis of facts, representations and
assumptions set forth in such opinion (and such facts so stated,
represented or assumed and information relied upon will not, to the
actual knowledge of the attorneys with such law firm devoting
substantive attention to this matter, be false or incorrect as of
the date of such opinion):
(i) The Merger will constitute a
reorganization for federal income tax purposes
within the meaning of Section 368(a) of the Code
and Alexander, NEG and Acquisition will each be a
party to that reorganization within the meaning of
Section 368(b) of the Code;
(ii) No gain or loss will be recognized
by NEG, Acquisition or Alexander for federal
income tax purposes as a result of the Merger;
(iii) No gain or loss will be recognized
for federal income tax purposes by holders of
Alexander Common Stock who are United States
persons (within the meaning of the Code) upon the
exchange of their shares of Alexander Common Stock
for shares of NEG Common Stock pursuant to the
conversion of shares that will occur in the
Merger, except that gain or loss will be
recognized on the receipt of cash, if any,
received (i) in lieu of fractional shares of NEG
Common Stock, or (ii) for shares of Alexander
Common Stock pursuant to exercise of dissenters'
rights of appraisal;
(iv) For federal income tax purposes,
the basis of the shares of any NEG Common Stock
received in exchange for shares of Alexander
Common Stock pursuant to the Merger will be the
same as the basis of the Alexander Common Stock
surrendered in exchange therefor, decreased by the
amount of any tax basis allocable to (i) a
fractional share interest for which cash is
received, or (ii) shares for which cash is
received pursuant to exercise of dissenter's
rights of appraisal; and
(v) For federal income tax purposes,
the holding period of the shares of NEG Common
Stock received in exchange for shares of Alexander
Common Stock will include the holding period of
such shares of Alexander Common Stock, provided
that such shares of Alexander Common Stock were
held as capital assets by the holder thereof as of
the Effective Date.
(vi) In rendering such opinion,
Strasburger & Price, LLP, may receive and rely
upon representations contained in certificates of
Alexander, NEG and Acquisition.
(b) Payment of Prudential and McAfee & Taft.
Alexander, and if Alexander is financially unable, NEG, as
immediate successor to Alexander, shall pay any and all fees or
expenses due Prudential Securities Incorporated ("Prudential") and
McAfee & Taft for services rendered to Alexander in conjunction
with the Merger, in cash or other readily available funds
acceptable to Prudential and McAfee & Taft, as the case may be, at
or immediately prior to Closing.
5.04 Termination of Agreement and Abandonment of Merger.
Anything herein to the contrary notwithstanding, this Agreement and
the Merger contemplated hereby may be terminated at any time before
the Time of Filing, whether before or after approval of this
Agreement by the respective shareholders of Alexander and NEG, as
follows, and in no other manner:
(a) Mutual Consent. By mutual consent of the
Boards of Directors of Alexander and NEG.
(b) By Alexander. By the Board of Directors of
Alexander if, by October 1, 1996, the conditions set forth in
Section 5.01 or 5.03 of this Article V shall not have been met (or
waived as provided in this Agreement).
(c) By NEG. By the Board of Directors of NEG if,
by October 1, 1996, the conditions set forth in Section 5.02 or
5.03 of this Article V shall not have been met (or waived as
provided in this Agreement).
5.05 Effect of Termination and Abandonment. In the
event of termination of this Agreement and the abandonment of the
Merger pursuant to this Article V, no party hereto (or any of its
directors or officers) shall have any liability or further
obligation to any other party to this Agreement, except as provided
in Sections 4.01 or 4.02 and except that nothing herein will
relieve any party from liability for any breach of this Agreement.
ARTICLE VI
GENERAL
6.01 Amendments. Subject to applicable law, this
Agreement and the form of any exhibit attached hereto may be
amended upon authorization by the Boards of Directors of the
parties hereto before and after the meetings of shareholders
referred to in Section 4.03 of Article IV hereof at any time prior
to the Time of Filing except that no such amendment after any
shareholders' meeting approving the Merger shall affect the rates
of conversion and exchange provided for in Article I of this
Agreement.
6.02 "Subsidiaries"; "Material Adverse Effect";
"Knowledge".
(a) A "S(s)ubsidiary" with respect to any
corporation referred to in this Agreement shall mean a corporation
(or equivalent legal entity under foreign law) of which NEG,
Alexander or any other corporation referred to in this Agreement,
as the case may be, owns more than 50% of the stock, the holders of
which are ordinarily and generally, in the absence of
contingencies, entitled to vote for the election of a majority of
the directors except that, with respect to consolidated financial
statements referred to in this Agreement, a "S(s)ubsidiary" shall
include only those corporations the accounts of which are
consolidated with NEG or Alexander or any other corporation
referred to in this Agreement, as the case may be.
(b) Whenever in this Agreement the term "Material
Adverse Effect" is used with respect to any entity, it shall mean
any material adverse change in or effect upon the business,
operations, assets, properties or financial condition of such
entity and its Subsidiaries considered as a single enterprise.
(c) Whenever in this Agreement the term
"knowledge" is used with respect to any entity, it shall mean the
actual knowledge of the officers and directors of the entity, after
reasonable investigation and all knowledge which such officers or
directors, as the case may be, after the exercise of reasonable
judgment, should have known.
6.03 Schedules. The Schedules delivered pursuant to the
terms of this Agreement shall be bound together, initialed by each
of Alexander and NEG and deemed attached hereto and made a part
hereof. To the extent any information disclosed in a schedule to
any Section of this Agreement or the initialed documentation
referred to in the next succeeding sentence is also responsive
disclosure to any other Section of this Agreement, such disclosure
shall have been deemed referred to therein. To the extent
Alexander or NEG makes a representation in a Section of this
Agreement that does not call for a disclosure schedule, and such
disclosure is made in a schedule to this Agreement it shall be
nonetheless deemed disclosed under this Agreement, as shall
documentation concurrently furnished to the other party with such
Schedules.
6.04 Survival of Covenants, Representations and
Warranties. The respective covenants, representations and
warranties of Alexander, NEG and Acquisition contained herein shall
expire and be terminated at the Effective Time, unless otherwise
specifically herein provided.
6.05 Governing Law. This Agreement and the legal
relations between the parties shall be governed by and construed in
accordance with the laws of the State of Delaware.
6.06 Notices. All notices, requests, demands or other
communications required or permitted by this Agreement shall be in
writing and effective when received, and delivery shall be made
personally or by registered or certified mail, return receipt
requested, postage prepaid, or overnight courier or confirmed
facsimile transmission, addressed as follows:
(a) If to Alexander:
Alexander Energy Corporation
701 Cedar Lake Blvd.
Oklahoma City, Oklahoma 73114-7800
Attention: Mr. Bob G. Alexander
President
Facsimile No.: (405) 552-4550
with a copy to:
McAfee & Taft
A Professional Corporation
10th Floor, Two Leadership Square
Oklahoma City, Oklahoma 73102
Attention: Jerry A. Warren, Esq.
Facsimile No.: (405) 235-0439
(b) If to NEG or Acquisition:
National Energy Group, Inc.
1400 One Energy Square
4925 Greenville Avenue
Dallas, Texas 75206
Attention: Mr. Miles D. Bender, President
Facsimile No.: (214) 692-9310
with a copy to:
Strasburger & Price, LLP
901 Main Street, Suite 4300
Dallas, Texas 75202
Attention: Mike Joplin, Esq.
Facsimile No.: (214) 651-4330
6.07 No Assignment. This Agreement may not be assigned
by operation of law or otherwise.
6.08 Fees and Expenses. All fees and expenses,
including attorneys' fees, shall be borne by the respective party
who has incurred such fee or expense.
6.09 Headings. The descriptive headings of the several
Articles, Sections and paragraphs of this Agreement are inserted
for convenience only and do not constitute a part of this
Agreement.
6.10 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 hereto and
delivered to each of the other parties hereto.
6.11 Entire Agreement. This Agreement constitutes the
entire agreement among NEG, Alexander and Acquisition with respect
to the subject matter hereof and supersedes all other prior
agreements and understandings among the parties with respect to the
subject matter.
6.12 Publicity. The initial press release relating to
this Agreement shall be a joint press release and thereafter NEG
and Alexander shall, subject to their respective legal obligations
(including requirements of the Nasdaq National Market and other
similar regulatory bodies), consult with each other, and use
reasonable efforts to agree upon the text of any press release
before issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby and
in making any filings with any federal or state governmental or
regulatory agency or with the Nasdaq National Market with respect
thereto.
6.13 No Third Party Beneficiaries. Nothing in this
Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any
person other than the parties to it, nor is anything in this
Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement, nor
shall any provision give any third persons any rights of
subrogation or action over or against any party to this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the day and year first above
written.
ALEXANDER ENERGY CORPORATION
ATTEST:
SUE BARNARD By BOB G. ALEXANDER
Sue Barnard, Secretary Bob G. Alexander, President
NEG-OK, INC.
ATTEST:
GRACE BRICKER By MILES D. BENDER
Grace Bricker, Secretary Miles D. Bender, President
NATIONAL ENERGY GROUP, INC.
ATTEST:
RANDALL A. CARTER By MILES D. BENDER
Randall A. Carter, Secretary Miles D. Bender, President
