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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 reported): May 24, 1996
Clinton Gas Systems, Inc.
(Exact name of registrant as specified in its charter)
Ohio 0-10833 31-0813959
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(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification No.)
4770 Indianola Avenue
Columbus, Ohio 43214
(Address of principal executive offices and zip code)
Registrant's Telephone No. (including area code): (614) 888-9588
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Item 5. Other Events
ANNOUNCEMENT OF EXECUTION OF DEFINITIVE MERGER AGREEMENT
On May 24, 1996, Clinton Gas Systems, Inc. ("CGAS") announced that it
had entered into a definitive merger agreement dated as of May 24, 1996 (the
"Merger Agreement") by and among CGAS, Jenco Acquisition, Inc., an Ohio
corporation ("Sub"), and Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership ("JEDI") and an affiliate of Enron
Capital & Trade Resources Corp. ("ECT"). Sub is a wholly-owned subsidiary of
JEDI. Pursuant to the terms of the Merger Agreement, JEDI will acquire common
shares, without par value, of CGAS (the "Shares") at a price of $6.75 per Share
in cash. As of May 24, 1996, CGAS had a total of 5,661,561 Shares outstanding.
The Merger Agreement has been approved by the Board of Directors of CGAS and
its Special Committee of outside directors. Concurrently with the execution of
the Merger Agreement, JEDI and Sub have entered into certain agreements with
Jerry D. Jordan and certain other employees of a subsidiary of CGAS providing
for a continuing role of management in CGAS after the acquisition. Consummation
of the acquisition is subject to the satisfaction of various conditions,
including (i) the approval of the transaction by the shareholders of CGAS and
(ii) receipt of all necessary consents and governmental approvals. CGAS
currently expects to hold a special meeting of its shareholders as soon as
practicable after filing and receipt of clearance of the proxy materials from
the Securities and Exchange Commission for the purpose of voting on the
transaction. CGAS is an independent exploration and development company and
natural gas marketer. The Shares are traded over-the-counter on The Nasdaq
Stock Market under the symbol "CGAS."
CERTAIN TERMS OF THE MERGER
The Merger. Upon the terms and subject to the conditions set forth in
the Merger Agreement, and in accordance with the General Corporation Law of the
State of Ohio ("OGCL"), Sub shall be merged (the "Merger") with and into CGAS
and the separate corporate existence of Sub shall thereupon cease and CGAS, as
the surviving corporation in the Merger (the "Surviving Corporation"), shall by
virtue of the Merger continue its corporate existence in accordance with the
OGCL.
The Merger shall become effective at the date and time (the "Effective
Time") when a properly executed certificate of merger, in such form as is
required by the OGCL and the Secretary of State of Ohio, is duly filed with the
Secretary of State of Ohio or at such later time as the parties shall have
provided in such certificate.
At the Effective Time, by virtue of the Merger and without any action
on the part of Sub, CGAS or its respective shareholders (other than the filing
of the certificate of merger referred to above) (a) each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Sub, Shares held in the treasury of CGAS or owned by any subsidiary of CGAS and
Dissenting Shares (as defined in the Merger Agreement) in respect of which
dissenters' rights are properly exercised and perfected) shall be canceled and
extinguished and be converted automatically into the right to receive $6.75 per
Share in cash, without interest thereon (the
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"Merger Consideration"), less any required withholding of taxes, which Merger
Consideration shall be payable upon surrender of the certificate formerly
representing such Share in the manner provided in the Merger Agreement, (b) each
Share then held in the treasury of CGAS and each Share owned by any subsidiary
of CGAS shall be canceled and retired without conversion thereof and without
payment of any consideration and shall cease to exist and (c) each Share owned
beneficially or of record by Sub immediately prior to the Effective Time shall
be canceled and retired without conversion thereof and without payment of any
consideration and shall cease to exist. At the Effective Time, each share of
common stock, $.01 par value, of Sub issued and outstanding immediately prior to
Effective Time shall be converted, by virtue of the Merger and without any
action on the part of the holder thereof, into one fully paid and nonassessable
share of the common stock of the Surviving Corporation.
Shareholders' Meeting. CGAS, acting through its board of directors,
shall take all action necessary, in accordance with applicable law and its
Articles of Incorporation and Regulations, to convene a special meeting of the
holders of Shares as promptly as practicable for the purpose of considering and
taking action to authorize and adopt the Merger Agreement.
RELATED DOCUMENTS
Subscription Agreement. Sub and Jerry D. Jordan, the Chairman of the
Board, Chief Executive Officer and Director of CGAS (the "Management Investor"),
entered into a Subscription Agreement dated as of May 24, 1996 (the
"Subscription Agreement"), which provides that Management Investor agrees to
contribute to Sub 148,150 Shares owned by Management Investor. Subject to the
satisfaction of the conditions to the obligations of the parties to the Merger
Agreement to effect the Merger or the waiver thereof by the applicable parties
to the Merger Agreement in accordance therewith, such Shares shall be
contributed to Sub effective immediately prior to the Effective Time. At the
closing of the transactions contemplated by the Merger Agreement, and effective
immediately prior to the Effective Time, Sub shall issue 1,000 shares of Sub
common stock to Management Investor in consideration for such Shares. Subject to
the consummation of the Merger, JEDI will make a capital contribution to Sub at
or prior to the Effective Time in the amount of $31,354,000 in consideration for
31,354 shares of Sub common stock that immediately after the Effective Time will
represent approximately 97% of the outstanding common stock of the Surviving
Corporation on a fully diluted basis. Management Investor will own, immediately
after the Effective Time, 1,000 shares of common stock of the Surviving
Corporation which will represent approximately 3% of the outstanding common
stock of the Surviving Corporation on a fully diluted basis.
Shareholders Agreement. Sub, JEDI and Management Investor entered into
a Shareholders Agreement dated as of May 24, 1996 (the "Shareholders
Agreement"). The Shareholders Agreement provides generally that Management
Investor shall not make any transfer of the Surviving Corporation common stock
(the "Common Stock"), directly or indirectly, except as expressly permitted
therein. Management Investor may transfer, from time to time, any Common Stock
to permitted family transferees. Management Investor may transfer Common Stock
to any other transferee if, but only if, the Surviving Corporation has not
exercised its right to match any bona fide written
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third party offer to purchase the Common Stock. The Surviving Corporation's
right to match such third party offer may be assigned, in whole or in part, to
JEDI. The Shareholders Agreement further provides that if JEDI or any of its
affiliates propose to sell Common Stock for value (excluding certain sales
set forth in the Shareholders Agreement), then such transferor shall offer to
include in the proposed sale a number of shares of Common Stock designated by
Management Investor (the "Tagalong Right"), not to exceed the number of shares
equal to the product of (A) the aggregate number of shares to be sold by the
transferor to the proposed transferee and (B) a fraction with a numerator equal
to the number of shares of fully-diluted Common Stock held by Management
Investor and a denominator equal to the number of shares of fully-diluted
Common Stock held by the transferor and Management Investor. The Shareholders
Agreement further provides that if the Surviving Corporation at any time
proposes to sell Common Stock pursuant to a registration statement filed under
the Securities Act of 1933, as amended, (other than registrations on Forms S-4
or S-8 or any successor forms thereto), the Surviving Corporation will each
such time promptly give written notice to Management Investor of its intention
to do so and, upon the written request of Management Investor, the Surviving
Corporation will use its best efforts to cause the number of shares owned by
Management Investor and so designated to be registered under such registration
statement to the extent requisite to permit the sale or other disposition by
Management Investor of such shares (the "Registration Right"). The Shareholders
Agreement further provides that the Surviving Corporation shall be obligated to
purchase Management Investor's shares of Common Stock in certain cases (the
"Stock Sale Rights"). The Management Investor shall have the right to cause the
Surviving Corporation to purchase all, but not less than all, shares of Common
Stock then owned by Management Investor at any time following the date
Management Investor ceases to be an employee of Surviving Corporation (the
"Employment Termination Date") at a price per share equal to an appraised value
as defined in the Shareholders Agreement. In addition, if the Employment
Termination Date occurs as the result of the death or incapacity of Management
Investor, the Surviving Corporation shall purchase such shares and pay
Management Investor (or his representative) the purchase price thereof on the
date which is no later than 30 days following the date of the Surviving
Corporation's receipt of such notice, and the appraised value shall be
determined as of the end of the second month immediately preceding such date of
receipt. If the Employment Termination Date occurs as a result of any other
reason, such purchase and payment shall occur on the date which is the later of
three years following the Effective Time, or 30 days following the date of the
Surviving Corporation's receipt of the notice referred to above, and the
appraised value shall be determined as of the end of the second month
immediately preceding such date of purchase and payment. The Surviving
Corporation shall have the right to purchase all, but not less than all, shares
of Common Stock owned by Management Investor at any time following the
Employment Termination Date. Such right may be assigned by the Surviving
Corporation, in whole or in part, to JEDI. The Shareholders Agreement shall
terminate upon the earliest of (i) the termination of the Merger Agreement in
accordance with its terms, (ii) the date which is 10 years following the
Effective Time, (iii) the date a qualified initial public offering (as defined
in the Shareholders Agreement) is consummated (except that in such event,
Management Investor's Tagalong Right, Registration Right and Stock Sale Rights
will continue until Management Investor has sold all of his shares of Common
Stock), (iv) the date of the dissolution, liquidation or winding-up of the
Surviving Corporation or (v) the date of delivery to the Surviving Corporation
of a written termination notice executed by the parties to the Shareholders
Agreement.
Business Opportunity Agreement. ECT, Sub, JEDI and Management Investor
also entered into a Business Opportunity Agreement dated May 24, 1996 (the
"Business Opportunity
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Agreement") that is intended to make it clear that Enron Corp., a Delaware
corporation ("Enron") and the parent of ECT, and its affiliates, have no duty to
make business opportunities available to the Surviving Corporation in most
circumstances. The Business Opportunity Agreement also provides that ECT and its
affiliates may pursue certain business opportunities to the exclusion of the
Surviving Corporation. In addition, there may be circumstances in which the
Surviving Corporation will offer business opportunities to certain affiliates of
Enron. If an Enron affiliate is offered such an opportunity and decides to
pursue it, the Surviving Corporation may be unable to pursue it.
Employment Agreements. Management Investor and Sub entered into an
employment agreement to be effective as of the Effective Time (the "Employment
Agreement"). The Employment Agreement is for a period of three years after the
Effective Time. The Employment Agreement provides that Management Investor will
serve as the Chairman of the Board and Chief Executive Officer of the Surviving
Corporation and will be paid an annual base salary of $250,000. The Employment
Agreement provides that Management Investor shall be allowed to participate, on
the same basis generally as other employees of the Surviving Corporation, in all
general employee benefit plans and programs, including improvements or
modifications to the same, which are in effect as of the Effective Time or
thereafter are made available by the Surviving Corporation to all or
substantially all of its employees. Upon a voluntary termination (as defined in
the Employment Agreement) of the employment relationship prior to the expiration
of the term of the Employment Agreement , all future compensation to which
Management Investor is entitled and all future benefits for which Management
Investor is eligible shall cease and terminate as of the date of termination.
Management Investor shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Surviving Corporation, but Management Investor shall not be
entitled to any individual bonuses or individual incentive compensation not yet
paid at the date of such termination. If Management Investor's employment shall
be terminated for cause (as defined in Employment Agreement) prior to the
expiration of the term of the Employment Agreement, all future compensation to
which Management Investor is entitled and all future benefits for which
Management Investor is eligible shall cease and terminate as of the date of
termination. Upon an involuntary termination (as defined in the Employment
Agreement) prior to the expiration of the term of the Employment Agreement,
Management Investor shall be entitled, in consideration of Management Investor's
continuing obligations under the Employment Agreement after such termination, to
receive his base salary as if his employment has continued for the full term of
the Employment Agreement. The Employment Agreement provides that Management
Investor shall not compete with the Surviving Corporation until the later of (a)
three years after the Effective Time or (b) one year after the termination of
the employment relationship.
Sub also entered into employment agreements, to be effective as of the
Effective Time, with Marilyn A. Ennis, John L. Forman, William A. Grubaugh, Mark
D. Jordan, Donald E. Kreager and Connie J. Slocum, all of whom are currently
employees of a subsidiary of CGAS.
Noncompetition Agreement. An affiliate of Sub has entered into a
noncompetition agreement with F. Daniel Ryan, the President of CGAS.
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The descriptions of the terms and conditions of the Merger Agreement,
the Subscription Agreement, the Employment Agreements, the Business Opportunity
Agreement, the Shareholders Agreement and the other agreements referred to
herein are qualified in their entirety by reference to the text of those
agreements which are included as exhibits to this filing.
Item 7. Financial Statements and Exhibits
The following documents are attached hereto as exhibits:
2.1 Agreement and Plan of Merger by and among Jenco Acquisition,
Inc., Joint Energy Development Investments Limited
Partnership, and Clinton Gas Systems, Inc. dated as of May 24,
1996.
99.1 Clinton Gas Systems, Inc. Press Release dated May 24, 1996.
99.2 Subscription Agreement between Jenco Acquisition, Inc. and
Jerry D. Jordan dated May 24, 1996.
99.3 Business Opportunity Agreement dated May 24, 1996 among Enron
Capital & Trade Resources Corp., Jenco Acquisition, Inc.,
Joint Energy Development Investments Limited Partnership and
Jerry D. Jordan.
99.4 Shareholders Agreement dated May 24, 1996 among Jenco
Acquisition, Inc., Joint Energy Development Investments
Limited Parnership and Jerry D. Jordan.
99.5 Executive Employment Agreement between Jenco Acquisition, Inc.
and Jerry D. Jordan
99.6 Executive Employment Agreement between Jenco Acquisition, Inc.
and Marilyn A. Ennis.
99.7 Executive Employment Agreement between Jenco Acquisition, Inc.
and John L. Forman.
99.8 Executive Employment Agreement between Jenco Acquisition, Inc.
and William A. Grubaugh.
99.9 Executive Employment Agreement between Jenco Acquisition, Inc.
and Mark D. Jordan.
99.10 Executive Employment Agreement between Jenco Acquisition, Inc.
and Donald E. Kreager.
99.11 Executive Employment Agreement between Jenco Acquisition, Inc.
and Connie J. Slocum.
99.12 Agreement between Enron Capital & Trade Resources and F.
Daniel Ryan.
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SIGNATURES
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.
CLINTON GAS SYSTEMS, INC.
Date: June 3, 1996 By: /s/ Jerry D. Jordan
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Jerry D. Jordan, Chairman of the Board
and Chief Executive Officer
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION OF EXHIBIT SEQUENTIAL PAGE NO.
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2.1 Agreement and Plan of Merger by and among
Jenco Acquisition, Inc., Joint Energy
Development Investments Limited Partnership
and Clinton Gas Systems, Inc. dated as of May
24, 1996.
99.1 Clinton Gas Systems, Inc. Press Release dated
May 24, 1996
99.2 Subscription Agreement between Jenco
Acquisition, Inc. and Jerry D. Jordan dated May
24, 1996.
99.3 Business Opportunity Agreement dated May 24,
1996 among Enron Capital & Trade Resources
Corp., Jenco Acquisition, Inc., Joint Energy
Development Investments Limited Partnership
and Jerry D. Jordan.
99.4 Shareholders Agreement dated May 24, 1996 among
Jenco Acquisition, Inc., Joint Energy
Development Investments Limited Partnership and
Jerry D. Jordan.
99.5 Executive Employment Agreement between
Jenco Acquisition, Inc. and Jerry D. Jordan.
99.6 Executive Employment Agreement between
Jenco Acquisition, Inc. and Marilyn A. Ennis.
99.7 Executive Employment Agreement between
Jenco Acquisition, Inc. and John L. Forman.
99.8 Executive Employment Agreement between
Jenco Acquisition, Inc. and William A.
Grubaugh.
99.9 Executive Employment Agreement between
Jenco Acquisition, Inc. and Mark D. Jordan.
99.10 Executive Employment Agreement between
Jenco Acquisition, Inc. and Donald E. Kreager.
99.11 Executive Employment Agreement between
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Jenco Acquisition, Inc. and Connie J. Slocum.
99.12 Agreement between Enron Capital & Trade
Resources Corp. and F. Daniel Ryan.
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EXHIBIT 2.1
AGREEMENT
AND
PLAN OF MERGER
BY AND AMONG
JENCO ACQUISITION, INC.,
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
AND
CLINTON GAS SYSTEMS, INC.
DATED AS OF MAY 24, 1996
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger .................................................................. 1
Section 1.2 Effective Time of the Merger ................................................ 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation ................................................... 2
Section 2.2 Regulations ................................................................. 2
Section 2.3 Board of Directors and Officers of the Surviving Corporation ................ 2
Section 2.4 Effects of Merger ........................................................... 3
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Merger Consideration ........................................................ 3
Section 3.2 Paying Agent and Surrender of Certificates .................................. 3
Section 3.3 Dissenting Shares ........................................................... 4
Section 3.4 Conversion of Sub Securities ................................................ 5
Section 3.5 Shareholders to Have No Further Rights ...................................... 5
Section 3.6 Shareholders' Meeting ....................................................... 5
Section 3.7 Closing of the Company's Transfer Books ..................................... 5
Section 3.8 Closing ..................................................................... 6
ARTICLE IV
DEFINITIONS
Section 4.1 Definitions ................................................................. 6
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUB
Section 5.1 Organization and Qualification .............................................. 11
Section 5.2 Authority Relative to this Agreement ........................................ 11
Section 5.3 Information in Proxy Statement .............................................. 12
Section 5.4 Capitalization of Sub ....................................................... 12
Section 5.5 Financing ................................................................... 12
Section 5.6. Finder's Fees ............................................................... 12
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF JEDI
Section 6.1 Organization ................................................................ 12
Section 6.2 Authority and Capacity; No Violation or Consent ............................. 12
Section 6.3 Financial Information ....................................................... 13
Section 6.4 Information ................................................................. 14
Section 6.5. Finder's Fees ............................................................... 14
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 7.1 Organization and Qualification ............................................. 14
Section 7.2 Capitalization ............................................................. 14
Section 7.3 Subsidiaries ............................................................... 15
Section 7.4 Authority Relative to this Agreement ....................................... 15
Section 7.5 Reports and Financial Statements ........................................... 16
Section 7.6 Absence of Certain Changes or Events ....................................... 17
Section 7.7 Litigation ................................................................. 17
Section 7.8 Information in Disclosure Documents ........................................ 18
Section 7.9 Employee Benefits Plans; Labor Matters ..................................... 18
Section 7.10 Environmental Matters ...................................................... 20
Section 7.11 Public Utility Holding Company Act/Investment Company Act .................. 21
Section 7.12 Futures Trading and Fixed Price Exposure ................................... 21
Section 7.13 Interested Shareholder Provisions Inapplicable ............................. 21
Section 7.14 Fairness Opinion ........................................................... 21
Section 7.15 Finder's Fees .............................................................. 21
Section 7.16 Compliance with Applicable Laws ............................................ 21
Section 7.17 Taxes ...................................................................... 22
Section 7.18. Certain Agreements ......................................................... 23
Section 7.19. Engineering Reports ........................................................ 23
Section 7.20 Oil and Gas Reserve Information ............................................ 24
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Section 7.21 Title to Property .......................................................... 26
Section 7.22 Insurance .................................................................. 26
Section 7.23 Affiliate Transactions ..................................................... 26
Section 7.24 Hart-Scott-Rodino Exemption ................................................ 26
ARTICLE VIII
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
Section 8.1 Conduct of Business by the Company .......................................... 26
Section 8.2 Obligations of JEDI and Sub; Conduct of Business of Sub ..................... 29
Section 8.3 Notice ...................................................................... 29
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 Access and Information ...................................................... 29
Section 9.2 Proxy Statement ............................................................. 30
Section 9.3 Indemnification ............................................................. 30
Section 9.4 Reasonable Best Efforts ..................................................... 31
Section 9.5 No Solicitation ............................................................. 32
Section 9.6 JEDI ........................................................................ 33
Section 9.7 401(k) Plan ................................................................. 33
Section 9.8 Certain Employee Benefit Matters ............................................ 33
ARTICLE X
CONDITIONS PRECEDENT
Section 10.1 Conditions to Each Party's Obligation to Effect the Merger ................. 34
Section 10.2 Conditions to Obligation of the Company to Effect the Merger ............... 34
Section 10.3 Conditions to Obligations of Sub to Effect the Merger ...................... 34
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination ................................................................ 36
Section 11.2 Effect of Termination ...................................................... 37
Section 11.3 Amendment .................................................................. 37
Section 11.4 Waiver ..................................................................... 37
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ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Non-Survival of Representations and Warranties .................... 38
Section 12.2 Notices ........................................................... 38
Section 12.3 Expenses; Termination Fees ........................................ 39
Section 12.4 Publicity ......................................................... 40
Section 12.5 Interpretation .................................................... 40
Section 12.6 Severability ...................................................... 41
Section 12.7 Miscellaneous ..................................................... 41
Exhibit A - Opinion of Vinson & Elkins L.L.P.
Exhibit B - Opinion Vorys, Sater, Seymour and Pease
Exhibit 10.3 - Specified Parties to Employment Agreements
JEDI DISCLOSURE SCHEDULE
Schedule 6.1 Names of Partners and Ownership Interests
Schedule 6.5 Brokers
COMPANY DISCLOSURE SCHEDULE
Schedule 7.1 Subsidiaries
Schedule 7.2 Obligations to Issue Stock
Schedule 7.3 Subsidiaries and Ownership Interests
Schedule 7.4 Violations and Conflicts
Schedule 7.7 Litigation
Schedule 7.9(a) Employee Benefit Plans
Schedule 7.9(b) ERISA Matters
Schedule 7.9(d) Employee Policies
Schedule 7.9(f) Termination of Employee Plans
Schedule 7.10 Environmental Matters
Schedule 7.12 Futures Trading
Schedule 7.17 Tax Matters
Schedule 7.18 Certain Agreements
Schedule 7.19(c) Significant Wells
Schedule 7.20(d) Abandonments
Schedule 7.20(f) Options to Purchase
Schedule 7.20(i) Oil and Gas Lease Matters
Schedule 7.21 Title Matters
Schedule 7.22 Insurance
Schedule 7.23 Affiliate Transactions
Schedule 8.1(c) Proposed Acquisitions
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May
24, 1996, by and among Jenco Acquisition, Inc., an Ohio corporation ("Sub"),
Clinton Gas Systems, Inc., an Ohio corporation (the "Company") and Joint Energy
Development Investments Limited Partnership, a Delaware limited partnership
("JEDI"), which holds all of the outstanding capital stock of Sub:
W I T N E S S E T H:
WHEREAS, JEDI and the Company desire to effect a merger of Sub with and
into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company has appointed a special
committee of independent directors (the "Special Committee") to consider the
Merger;
WHEREAS, the Special Committee has unanimously recommended that the
Board of Directors of the Company approve this Agreement and the transactions
contemplated hereby;
WHEREAS, the Board of Directors of the Company, with the advice and
assistance of McDonald & Co. and independent legal counsel, has unanimously
determined it to be advisable and in the best interests of the Company's
shareholders to approve this Agreement and the transactions contemplated hereby
and to consummate the Merger, upon the terms and subject to the conditions set
forth herein;
WHEREAS, the Board of Directors of Sub has unanimously determined it to
be advisable and in the best interests of Sub's shareholders to approve this
Agreement and the transactions contemplated hereby and to consummate the Merger,
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Ohio (the "OGCL"), at the Effective Time (as hereinafter
defined), Sub shall be merged with and into the Company and the separate
corporate existence of Sub shall thereupon cease, and the Company, as the
surviving corporation in the Merger (the "Surviving Corporation"), shall by
virtue of the Merger continue its corporate existence in accordance with the
OGCL.
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Section 1.2 Effective Time of the Merger. The Merger shall become
effective at the date and time (the "Effective Time") when a properly executed
certificate of merger, in such form as is required by the OGCL and the Secretary
of State of Ohio, is duly filed with the Secretary of State of the State of Ohio
or at such later time as the parties hereto shall have provided in such
certificate. The parties hereto shall cause such filing to occur as soon as
practicable on or after the Closing Date (as hereinafter defined).
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law; provided, however,
that, at the Effective Time, Article 1. of the Articles of Incorporation of the
Surviving Corporation shall be amended to read as follows: "1. The name of the
corporation is Clinton Gas Systems, Inc."; and a new Article 15 will be added to
the Articles of Incorporation of the Surviving Corporation which will read as
follows:
15. NO RIGHT TO VOTE CUMULATIVELY
Notwithstanding any provision of the General Corporation Law of Ohio
now or hereafter in effect, no shareholder shall have the right to vote
cumulatively in the election of directors. Without limiting the
generality of the immediately preceding sentence, no shareholder shall
have the right at any time in the election of directors either to give
one candidate as many votes as the number of directors to be elected
multiplied by the number of his votes equals or to distribute his votes
on the same principle among two or more candidates.
NOTICE IS HEREBY GIVEN THAT AN EFFECT OF THE AMENDMENT ADOPTING ARTICLE 15 TO
THE ARTICLES WILL BE TO DO BOTH OF THE FOLLOWING: (1) TO PERMIT A MAJORITY OF A
QUORUM OF THE VOTING POWER IN THE ELECTION OR REMOVAL OF DIRECTORS TO ELECT OR
REMOVE EVERY DIRECTOR; (2) TO PRECLUDE A MINORITY OF A QUORUM OF THE VOTING
POWER IN THE ELECTION OR REMOVAL OF DIRECTORS FROM ELECTING OR PREVENTING THE
REMOVAL OF ANY DIRECTOR.
Section 2.2 Regulations. The Regulations of Sub as in effect at the
Effective Time shall be the Regulations of the Surviving Corporation until
thereafter amended as provided by law.
Section 2.3 Board of Directors and Officers of the Surviving
Corporation. The directors of Sub and the officers of the Company immediately
prior to the Effective Time, subject to the applicable provisions of the
Articles of Incorporation and Regulations of the Surviving Corporation, shall be
the directors and officers of the Surviving Corporation until their respective
successors shall be duly elected or appointed and qualified.
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Section 2.4 Effects of Merger. The Merger shall have the effects set
forth in Section 1701.82 of the OGCL. The corporate existence of the Company
shall continue unaffected and unimpaired by the Merger and, as the Surviving
Corporation, it shall be governed by the laws of the State of Ohio and succeed
to all rights, assets, liabilities and obligations of Sub in accordance with the
applicable provisions of the OGCL.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Merger Consideration. At the Effective Time, by virtue of
the Merger and without any action on the part of Sub, the Company or their
respective shareholders (other than the filing of the certificate of merger
referred to in Section 1.2 hereof) (a) each share (a "Share") of common stock,
without par value, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other than (i) Shares held
by Sub, (ii) Shares held in the treasury of the Company or owned by any
subsidiary of the Company and (iii) Dissenting Shares (as hereinafter defined)
in respect of which dissenters' rights are properly exercised and perfected)
shall be canceled and extinguished and be converted automatically into the right
to receive, pursuant to Section 3.2 hereof, $6.75 per Share in cash, without
interest thereon (the "Merger Consideration"), less any required withholding of
taxes, which Merger Consideration shall be payable upon surrender of the
certificate formerly representing such Share (a "Certificate") in the manner
provided in Section 3.2(b), (b) each Share then held in the treasury of the
Company and each Share owned by any subsidiary of the Company shall be canceled
and retired without conversion thereof and without payment of any consideration
and shall cease to exist, and (c) each Share owned beneficially or of record by
the Sub immediately prior to the Effective Time shall be canceled and retired
without conversion thereof and without payment of any consideration and shall
cease to exist.
Section 3.2 Paying Agent and Surrender of Certificates. (a) Prior to
the Effective Time, Sub and the Company shall appoint American Stock Transfer &
Trust Company, the Company's Transfer Agent, as paying agent (the "Paying
Agent"), for purposes of this Agreement. At Closing, JEDI shall cause to be
deposited in trust with the Paying Agent, on behalf of Sub, funds that will be
sufficient to enable the Paying Agent to make payments with respect to all
outstanding Certificates representing Shares for which the Merger Consideration
is payable in accordance with Section 3.1. Such funds shall be invested by the
Paying Agent as directed by JEDI, provided that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors
Services, Inc. or Standard & Poor's Corporation, respectively, or in deposit
accounts, certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of $100 million (based on the most recent financial statements of such
bank which are then publicly available at the Commission (as hereinafter
defined) or otherwise); provided, however, that no loss on any investment made
pursuant to this Section 3.2(a) shall relieve JEDI or the Surviving Corporation
of its obligation to pay the Merger Consideration for each Share outstanding
immediately prior to the Effective Time.
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(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Paying Agent to mail to each person who was a record holder of Shares
immediately prior to the Effective Time (other than holders of Dissenting
Shares, Sub, the Company and the Company's subsidiaries), a form of letter of
transmittal and instructions for use in effecting the surrender for payment of
Certificates that immediately prior to the Effective Time represented Shares.
Upon surrender of a Certificate to the Paying Agent, together with a duly
executed and completed letter of transmittal and any other required documents,
the holder of the Certificate shall be entitled to receive in exchange therefor,
and the Paying Agent will pay (via U.S. mail postage prepaid) as soon as
practicable to such holder, cash in an amount equal to the product of the number
of Shares represented by the Certificate or Certificates surrendered and the
Merger Consideration, without any interest thereon and less any required
withholding of taxes, and such Certificate(s) shall forthwith be canceled. If
the payment is to be made to a person other than the person in whose name a
surrendered Certificate is registered, it shall be a condition of payment that
(x) the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that (y) the person requesting such payment shall
either pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation or the Paying Agent
that such tax has been paid or is not applicable. The Surviving Corporation
shall pay all charges and expenses, including those of the Paying Agent,
incurred in connection with the distribution of the Merger Consideration. After
the Effective Time, until surrendered in accordance with the provisions of this
Section 3.2(b), a Certificate shall represent only the right to receive the
Merger Consideration in cash multiplied by the number of Shares evidenced by
such Certificate, without any interest thereon. On or after the one-hundred
eightieth day following the Effective Time, the Surviving Corporation may by
written request require the Paying Agent to pay to the Surviving Corporation
that portion of the funds deposited with the Paying Agent pursuant to this
Section 3.2(b) (and any income earned thereon) that have not been disbursed
pursuant to this Section 3.2(b), and holders of Certificates shall thereafter
look only to the Surviving Corporation for any payment to be made pursuant to
this Section 3.2(b). Notwithstanding anything to the contrary, none of the
Paying Agent, the Surviving Corporation or any party hereto shall be liable to a
holder of a Certificate for any amount delivered to a public official pursuant
to applicable abandoned property, escheat or similar law.
Section 3.3 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by shareholders who have properly
exercised dissenters' rights with respect thereto under Section 1701.85 of the
OGCL (the "Dissenting Shares") shall not be converted into or represent the
right to receive the Merger Consideration as provided in Sections 3.1 and 3.2,
but the holders of Dissenting Shares shall be entitled to receive such payment
of the fair cash value of such Shares held by them from the Surviving
Corporation (or the Paying Agent, if applicable) as shall be determined pursuant
to Section 1701.85 of the OGCL; provided, however, that if any such holder shall
have failed to perfect or shall withdraw or lose such holder's rights under
Section 1701.85 of the OGCL, each such holder's Shares shall thereupon be deemed
to have been converted as of the Effective Time into the right to receive the
Merger Consideration, without any interest thereon and less any required
withholding of taxes, as provided in Section 3.1, and upon the surrender of the
Certificates representing such Shares, in the manner provided in Section 3.2,
such Shares shall no longer be Dissenting Shares.
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Section 3.4 Conversion of Sub Securities. At the Effective Time, each
share of common stock, par value $0.01 per share, of Sub issued and outstanding
immediately prior to the Effective Time shall be converted, by virtue of the
Merger and without any action on the part of the holder thereof, into one fully
paid and nonassessable share of the common stock of the Surviving Corporation.
Section 3.5 Shareholders to Have No Further Rights. At and after the
Effective Time, the holder of a Certificate shall cease to have any rights as a
shareholder of the Company, except for (i) the right to surrender such
Certificate in exchange for the amount of Merger Consideration to which such
holder is entitled under this Agreement and (ii) the rights available under the
OGCL for Dissenting Shares.
Section 3.6 Shareholders' Meeting. The Company, acting through its
Board of Directors, shall take all action necessary, in accordance with
applicable law and its Articles of Incorporation and Regulations, to convene a
special meeting of the holders of Company Common Stock (the "Company Meeting")
as promptly as practicable for the purpose of considering and taking action to
authorize and adopt this Agreement pursuant to the OGCL. The Company shall file
with the Commission the Company's preliminary proxy material for the Company
Meeting by a date (the "Filing Date") as soon as practicable but in no event
later than June 24, 1996. The Company shall convene the Company Meeting by no
later than September 6, 1996, unless the Company encounters a delay by the staff
of the Commission which causes the period from the Filing Date to the date of
the staff's clearance of the Proxy Statement to exceed seven weeks. Subject to
its fiduciary duties under applicable law as advised in writing by outside
counsel (notice of which advice shall also have been communicated to JEDI) in
connection with the receipt by the Company of an Other Acquisition Transaction
(as hereinafter defined) that the Board of Directors of the Company reasonably
determines will result in a Superior Proposal (as hereinafter defined), the
Board of Directors of the Company will recommend that holders of Company Common
Stock vote in favor of and approve the Merger and the adoption of this Agreement
at the Company Meeting. At the Company Meeting, all of the shares of Company
Common Stock then owned by Sub, or with respect to which Sub holds the power to
direct the voting, will be voted in favor of approval of the Merger and adoption
of this Agreement. The vote required under the Company's Articles of
Incorporation as permitted by Section 1701.78(F) of the OGCL for approval of the
Merger and adoption of this Agreement is the affirmative vote of the holders of
a majority of the outstanding shares of Company Common Stock.
Section 3.7 Closing of the Company's Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
Shares shall be made thereafter. In the event that, after the Effective Time,
Certificates are presented for transfer to the Surviving Corporation, they shall
be canceled and exchanged for the Merger Consideration as provided in Section
3.1 and 3.2.
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Section 3.8 Closing. Unless this Agreement is terminated and the
transactions contemplated herein abandoned pursuant to Section 11.1 and subject
to the satisfaction or, if permissible, waiver of the conditions set forth in
Article X, the consummation of the Merger and the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place (i) at the
offices of Vinson & Elkins L.L.P., Houston, Texas, at 9:00 A.M. local time on a
date to be specified by the JEDI and the Company, but as soon as practicable
(and in any event within two business days) after the day on which the last of
the conditions set forth in Article X is fulfilled (other than deliveries of
instruments to be made at Closing) or, if permissible, waived by the relevant
party or (ii) at such other time and place as JEDI and the Company shall agree
in writing. The date on which the Closing occurs is referred to herein as the
"Closing Date."
ARTICLE IV
DEFINITIONS
Section 4.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Agreement" shall have the meaning set forth in the opening paragraph.
"CERCLA" shall mean the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended.
"Certificate" shall have the meaning set forth in Section 3.1.
"Closing" shall have the meaning set forth in Section 3.8.
"Closing Date" shall have the meaning set forth in Section 3.8.
"Code" shall have the meaning set forth in Section 7.9(b).
"Commission" shall have the meaning set forth in Section 7.5. .
"Commonly Controlled Entity" shall have the meaning set forth in
Section 7.9(b).
"Company" shall have the meaning set forth in the opening paragraph of
the Agreement.
"Company Common Stock" shall have the meaning set forth in Section 3.1.
"Company Disclosure Schedule" shall have the meaning set forth in
Section 7.1.
"Company Estimated Proved Reserves" shall have the meaning set forth in
Section 7.19(a).
"Company Material Adverse Effect" shall have the meaning set forth in
Section 7.1.
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"Company Meeting" shall have the meaning set forth in Section 3.6.
"Company Reserve Report" shall have the meaning set forth in Section
7.19(a).
"Company SEC Reports" shall have the meaning set forth in Section 7.5.
"Company Voting Debt" shall have the meaning set forth in Section 7.2.
"Confidentiality Agreement" shall have the meaning set forth in Section
9.1.
"Debentures" shall have the meaning set forth in Section 7.2.
"Defensible Title" shall mean, subject to and except for the Permitted
Encumbrances, (i) the title of the Company and its Subsidiaries to such assets
is free and clear of all liens, encumbrances and defects of any kind whatsoever,
and (ii) as to those wells for which a "Working Interest" and a "Net Revenue
Interest" are set forth in the Company Reserve Report, the Company or its
Subsidiaries are entitled to receive the percentage of all Hydrocarbons
produced, saved and marketed from such wells in an amount not less than the Net
Revenue Interest set forth in the such engineering report, without reduction,
suspension or termination throughout the duration of the productive life of such
wells (except as set forth in such report), and such party is obligated to bear
the percentage of costs and expenses related to the maintenance, development and
operation of such wells in an amount not greater than the Working Interest set
forth in such engineering report, without increase throughout the productive
life of such wells, except increases that also result in a proportionate
increase in Net Revenue Interest and as set forth in such report.
"Dissenting Shares" shall have the meaning set forth in Section 3.3.
"ECT" shall have the meaning set forth in Section 9.1.
"Effective Time" shall have the meaning set forth in Section 1.2.
"Environmental Laws" shall mean any and all laws, statutes, ordinances,
rules, regulations, or orders of any Governmental Entity pertaining to health or
the environment currently in effect in any or all jurisdictions in which the
Company and its Subsidiaries own property or conduct business, including without
limitation, the Clean Air Act, as amended, CERCLA, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, RCRA, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, the Hazardous & Solid Waste Amendments Act of 1984, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as amended,
the Hazardous Materials Transportation Act, as amended, the Oil Pollution Act of
1990 ("OPA"), any state laws implementing the foregoing federal laws, any state
laws pertaining to the handling of oil and gas exploration and production wastes
or the use, maintenance, and closure of pits and impoundments, and all other
environmental conservation or protection laws.
"ERISA" shall have the meaning set forth in Section 7.9(a).
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"Exchange Act" shall have the meaning set forth in Section 5.2.
"Fixed Price Contracts" means any contracts, commitments or agreements
for the purchase or sale of Hydrocarbons (i) having, as of the date hereof, a
remaining term of two months or more, wherein the purchase or sales price
thereunder throughout all or part of the life of such contract, commitment or
agreement is a fixed amount or an amount that is otherwise reasonably
determinable as of the date hereof pursuant to the terms of such contract,
commitment or agreement, or (ii) which the Company or any Subsidiary thereof has
hedged with futures contracts or otherwise; provided, that the term Fixed Price
Contracts will not include any contract, commitment or agreement wherein the
purchase or sales price thereunder throughout all of the life of the contract,
commitment or agreement is based on a market responsive reference price for a
Hydrocarbon.
"GAAP" shall have the meaning set forth in Section 6.3.
"Governmental Entity" shall have the meaning set forth in Section 7.16.
"Hydrocarbons" means oil, gas, condensate, casinghead gas, helium,
carbon dioxide, mineral and other liquid or gaseous hydrocarbons.
"Indebtedness" means any liability in respect of (A) borrowed money,
(B) capitalized lease obligations, (C) the deferred purchase price of property
or services (other than trade payables in the ordinary course of business) and
(D) guarantees of any of the foregoing.
"JEDI" shall have the meaning set forth in the opening paragraph of the
Agreement.
"JEDI Disclosure Schedule" shall have the meaning set forth in Section
6.1.
"JEDI Material Adverse Effect" shall have the meaning set forth in
Section 6.2(b).
"Leases" shall have the meaning set forth in Section 7.20(e).
"Material Company Assets" shall have the meaning set forth in Section
7.21.
"Merger" shall have the meaning set forth in the recitals.
"Merger Consideration" shall have the meaning set forth in Section 3.1.
"OGCL" shall have the meaning set forth in Section 1.1.
"Oil and Gas Interests" means, when used with respect to the Company or
its Subsidiaries, direct and indirect interests in and rights with respect to
Hydrocarbons and related properties and assets of any kind and nature, direct or
indirect, including working, royalty, and overriding royalty interests,
production payments, operating rights, net profits interests, other nonworking
interests, and nonoperating interests; and all revenues therefrom and all
contracts in connection therewith and claims and rights thereto (including all
oil and gas leases, operating agreements, unitization and
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<PAGE> 14
pooling agreements and orders, divisions orders, transfer orders, mineral deeds,
royalty deeds, oil and gas sales, exchange and processing contracts and
agreements, and in each case, interests thereunder), surface interests, fee
interests, reversionary interests, reservations, and concessions; all easements,
rights of way, licenses, permits, leases, and other interests associated with,
appurtenant to, or necessary for the operation of any of the foregoing; and all
interests in equipment and machinery (including tanks, batteries, pipelines, and
gathering systems), pumps, water plants, electric plants, gasoline and gas
processing plants, refineries, and other tangible personal property and fixtures
associated with, appurtenant to, or necessary for the operation of any of the
foregoing.
"Other Acquisition Transaction" shall have the meaning set forth in
Section 9.5.
"Paying Agent" shall have the meaning set forth in Section 3.2.
"PBGC" shall have the meaning set forth in Section 7.9(b).
"Permitted Encumbrances" shall mean any of the following: (i) any liens
for taxes and assessments not yet delinquent or, if delinquent, that are being
contested in good faith in the ordinary course of business; (ii) any obligations
or duties to any municipality or public authority with respect to any franchise,
grant, certificate, license or permit, and all applicable laws; (iii) any
easements, rights-of-way, servitudes, permits and other rights in respect of
surface operations, pipelines or the like, and easements for pipelines, power
lines and other similar rights-of-way, and encroachments, on, over or in respect
of any property or lands of the Company and its Subsidiaries or over which such
party owns rights-of-way, easements, permits or licenses, that do not
unreasonably or materially interfere with the operation of any property or lands
for exploration and production of hydrocarbon or related operations; (iv) all
royalties, overriding royalties, net profits interests, production payments,
carried interests, reversionary interests, calls on production and other burdens
on or deductions from the proceeds of production that do not operate to (A)
reduce the Net Revenue Interest below that set forth in the Company Reserve
Report, or (B) increase the Working Interest of the Company and its Subsidiaries
above that set forth in the engineering report without a proportionate increase
in the Net Revenue Interest of such party; (v) the terms and conditions of all
leases, servitudes, production sales contracts, division orders, contracts for
sale, purchase, exchange, refining or processing of hydrocarbons, unitization
and pooling designations, declarations, orders and agreements, operating
agreements, agreements of development, area of mutual interest agreements,
farmout agreements, gas balancing or deferred production agreements, processing
agreements, plant agreements, pipeline, gathering and transportation agreements,
injection, repressuring and recycling agreements, carbon dioxide purchase or
sale agreements, salt water or other disposal agreements, seismic or geophysical
permits or agreements, and other agreements, to the extent that such contracts
and agreements do not (A) reduce the Net Revenue Interest below that set forth
in the Company Reserve Report, or (B) increase the Working Interest above that
set forth in the Company Reserve Report, as applicable, without a proportionate
increase in the Net Revenue Interest of the applicable party; (vi) conventional
rights of reassignment prior to abandonment; (vii) materialmen's, mechanics',
repairmen's, employees', contractors', operators', tax and other similar liens
or charges arising in the ordinary course of business incidental to
construction, maintenance or operation of any of the Company's assets (A) if
they have not been filed pursuant to law, (B) if filed, they have not yet become
due and payable or payment is being withheld as
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provided by law or (C) if their validity is being contested in good faith in
the ordinary course of business by appropriate action; and (viii) any other
encumbrances that (A) do not secure an obligation in respect of borrowed money
or (B) do not interfere materially with the operation, value or use of assets of
the Company or its Subsidiaries.
"Potential Acquiror" shall have the meaning set forth in Section 9.5.
"Proxy Statement" shall have the meaning set forth in Section 5.3.
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976,
as amended.
"Securities Act" shall have the meaning set forth in Section 7.5.
"Share" shall have the meaning set forth in Section 3.1.
"Significant Wells" shall have the meaning set forth in Section 7.19.
"Sub" shall have the meaning set forth in the opening paragraph of the
Agreement.
"Sub Material Adverse Effect" shall have the meaning set forth in
Section 5.1.
"Subsidiaries" shall have the meaning set forth in Section 7.3.
"Superior Proposal" shall have the meaning set forth in Section 9.5.
"Surviving Corporation" shall have the meaning set forth in Section
1.1.
"Tax" shall mean all federal, state, local and foreign income, profits,
franchise, gross receipts, payroll, sales, employment, use, property,
withholding, excise and other taxes, imposts, duties and assessments of any
nature whatsoever together with all interest, penalties and additions imposed
with respect to such amounts.
"Tax Return" shall mean any return, declaration, report, estimate,
claim for refund, information return, statement, request for extension, or other
similar document relating to any Tax, including any schedule or attachment
thereto, and including any amendment thereof.
"Terminating Other Acquisition Transaction" shall have the meaning set
forth in Section 11.1(e).
"401(k) Plan" shall have the meaning set forth in Section 9.7.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUB
Sub hereby represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio and has the corporate power to carry on its business as it is now being
conducted. Sub is duly qualified as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities make such qualification
necessary, except where the failure to be so qualified or in good standing would
not, individually or in the aggregate, have a material adverse effect on the
business, assets, condition (financial or otherwise), liabilities, prospects or
operations of Sub or Sub's ability to consummate the Merger (a "Sub Material
Adverse Effect"). Complete and correct copies as of the date hereof of the
Articles of Incorporation and Regulations of Sub have been delivered to the
Company.
Section 5.2 Authority Relative to this Agreement.
(a) Sub has the requisite corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement by Sub and the consummation of the transactions
contemplated hereby by Sub have been duly authorized by all necessary corporate
action on the part of Sub. This Agreement has been duly executed and delivered
by Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company and JEDI, this Agreement constitutes a legal, valid and
binding obligation of Sub enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(b) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby will (i) conflict
with or violate the Articles of Incorporation or Regulations of Sub or (ii)
result in any breach or constitute a default (with or without notice or lapse of
time, or both) under or give rise in others to any rights of termination,
cancellation or acceleration under, any indenture, contract, loan agreement,
license, franchise, permit, order, decree, concession, lease, instrument,
judgment, statute, law, ordinance, rule or regulation applicable to Sub or its
assets, other than, in the case of clause (ii) only, such breaches, defaults,
violations and losses of rights that would not, individually or in the
aggregate, have a Sub Material Adverse Effect. Except as referred to herein, or
in connection or in compliance with the provisions of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the filing of the certificate
of merger pursuant to the OGCL, no filing or registration with, or
authorization, consent or approval of, any governmental or regulatory body or
authority or third party is necessary for the consummation by Sub of the Merger
or the other transactions contemplated by this Agreement, except where the
failure to make any such filing or registration or to obtain such
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authorization, consent or approval would not, individually or in the aggregate,
(x) prevent Sub from consummating the Merger or (y) have a Sub Material Adverse
Effect.
Section 5.3 Information in Proxy Statement. None of the written
information supplied by Sub for inclusion in the definitive proxy statement of
the Company and any amendments or supplements thereto (collectively the "Proxy
Statement") to be mailed to the shareholders of the Company in connection with
the Merger will, at the time of the mailing thereof or at the time of the
Company Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
Section 5.4 Capitalization of Sub. The authorized capital stock of Sub
consists of 50,000 shares of common stock, par value $0.01 per share, 1 of which
shares is validly issued and outstanding, fully paid and nonassessable and is
owned by JEDI free and clear of all liens, claims and encumbrances.
Section 5.5 Financing. Sub has or will have available to it at the time
the Surviving Corporation is required to pay for the Shares pursuant to Article
III hereof sufficient funds (i) to permit it to pay for all of the outstanding
shares of Company Common Stock and (ii) to permit the Surviving Corporation to
pay amounts due to shareholders of the Company who have perfected dissenters'
rights in accordance with the OGCL.
Section 5.6. Finder's Fees. Sub has not made any arrangements with any
broker, finder or investment banker that would require the Company to pay any
fee or commission if the Merger or the other transactions contemplated by this
Agreement are not consummated.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF JEDI
JEDI hereby represents and warrants to the Company as follows:
Section 6.1 Organization. JEDI is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the partnership power to carry on its business as it is now being
conducted. The names of the general partner and of the limited partner of JEDI
and their respective percentages of ownership are set forth on Schedule 6.1 of a
disclosure schedule delivered by JEDI to the Company on the date of this
Agreement (the "JEDI Disclosure Schedule").
Section 6.2 Authority and Capacity; No Violation or Consent.
(a) JEDI has the requisite partnership power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement by JEDI and the consummation of the transactions
contemplated hereby by JEDI have been duly authorized by all necessary
partnership action on the part of JEDI. This Agreement has been duly executed
and
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delivered by JEDI and, assuming the due authorization, execution and delivery of
this Agreement by the Company and Sub, this Agreement constitutes a legal, valid
and binding obligation of JEDI enforceable in accordance with its terms except
as enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(b) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby will (i) conflict
with or violate the partnership agreement of JEDI or (ii) result in any breach
or constitute a default (with or without notice or lapse of time or both) under,
or give rise in others to any rights of termination, cancellation or
acceleration under, any indenture, contract, instrument, or loan agreement
pursuant to which JEDI is a borrower, or any license, franchise, permit, order,
decree, concession, lease, judgment, statute, law, ordinance, rule or regulation
applicable to JEDI or its assets, other than, in the case of clause (ii) only,
such breaches, defaults, violations and losses of rights that would not,
individually or in the aggregate, have a Sub Material Adverse Effect or a
material adverse effect on the business, assets, condition (financial or
otherwise), liabilities, prospects or operations of JEDI or JEDI's ability to
consummate the Merger (a "JEDI Material Adverse Effect"). Except as referred to
herein, or in connection with compliance with the Exchange Act and the filing of
a certificate of merger in accordance with the OGCL, no filing or registration
with, or authorization, consent or approval of any governmental or regulatory
body or authority or third party is necessary for the performance of its
obligations pursuant to this Agreement or the transactions contemplated hereby,
except where such failure to make such filing or registration or obtain such
authorization, consent or approval would not, individually or in the aggregate,
(i) prevent JEDI from consummating the Merger, (ii) have a Sub Material Adverse
Effect or (iii) have a JEDI Material Adverse Effect.
Section 6.3 Financial Information.
(a) JEDI has furnished the Company with true and complete copies of
JEDI's audited consolidated financial statements as of December 31, 1995 and
unaudited interim financial statements as of March 31, 1996. As of their
respective dates, the audited financial statements and unaudited interim
financial statements of JEDI were (i) prepared in accordance with generally
accepted accounting principles applied on a consistent basis ("GAAP") during the
periods presented (except as may be indicated therein or in the notes thereto,
or in the case of the unaudited statements, subject to normal year-end audit
adjustments), (ii) present fairly, in all material respects, the financial
position of JEDI as of the dates thereof and the results of their operations and
cash flow for the periods then ended subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and any other
adjustments described therein and (iii) are, in all material respects, in
accordance with the books of account and records of JEDI.
(b) JEDI has or will have sufficient funds available to perform its
obligations under Section 9.6 of this Agreement.
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Section 6.4 Information in Proxy Statement. None of the information
supplied in writing by JEDI for inclusion in the Proxy Statement will, at the
time of mailing thereof or at the time of the Company Meeting, 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 therein, in light of the
circumstances under which they are made, not misleading.
Section 6.5. Finder's Fees. JEDI has not made any arrangements with any
broker, finder or investment banker that would require the Company to pay any
fee or commission if the Merger or the other transactions contemplated by this
Agreement are not consummated. The only arrangement which JEDI has made with any
broker, finder or investment banker pertaining to the transactions contemplated
by this Agreement is described on Schedule 6.5 of the JEDI Disclosure Schedule.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to JEDI and Sub as follows:
Section 7.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has the corporate power to carry on its business as it
is now being conducted. The Company is duly qualified as a foreign corporation
and is in good standing in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a direct or indirect
material adverse effect on the business, assets, condition (financial or
otherwise), liabilities, prospects or operations of the Company and its
Subsidiaries (as hereinafter defined) taken as a whole or its ability to
consummate the Merger (a "Company Material Adverse Effect"). Complete and
correct copies of the Articles of Incorporation or other charter documents and
Regulations, by-laws or comparable organizational documents of the Company and
each of its Subsidiaries as of the date hereof have been previously delivered to
JEDI, and a list of each jurisdiction of incorporation and each jurisdiction in
which the Company and each of its Subsidiaries is duly qualified as a foreign
corporation has been delivered to Sub as Schedule 7.1 of a disclosure schedule
delivered by the Company to Sub on the date of this Agreement (the "Company
Disclosure Schedule").
Section 7.2 Capitalization. The authorized capital stock of the Company
consists of 10,000,000 shares of Company Common Stock and 2,000,000 shares of
preferred stock, without par value. As of the date of this Agreement, 5,661,561
shares of Company Common Stock were outstanding, 533,368 shares of Company
Common Stock were held by the Company and its Subsidiaries, 294,000 shares of
Company Common Stock were reserved for issuance upon conversion of the Company's
9% Convertible Subordinated Debentures due 2006 (the "Debentures"), 20,000
shares of Company Common Stock were reserved for issuance upon exercise of an
option granted to Peter E. Susey, which expires on June 3, 1996 (the "Susey
Option"), and no shares of preferred stock were outstanding. The Company has
delivered to JEDI true and complete copies of all agreements and any amendments
thereto related to the Susey Option. All the
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<PAGE> 20
outstanding shares of Company Common Stock are validly issued, fully paid and
non-assessable and were issued free of preemptive rights. As of the date hereof,
there are not issued or outstanding any bonds, debentures, notes or other
evidences of indebtedness having the right to vote on any matters on which the
Company's shareholders may vote ("Company Voting Debt"). Except as set forth in
Schedule 7.2 of the Company Disclosure Schedule, there are no options, warrants,
calls or other rights, agreements or commitments outstanding obligating the
Company to issue, deliver or sell shares of its capital stock or debt
securities, or obligating the Company to grant, extend or enter into any such
option, warrant, call or other such right, agreement or commitment.
Section 7.3 Subsidiaries. Schedule 7.3 of the Company Disclosure
Schedule lists all subsidiaries of the Company (the "Subsidiaries") and their
jurisdictions of incorporation. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to carry on
its business as it is now being conducted. Each Subsidiary is duly qualified as
a foreign corporation, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate, have
a Company Material Adverse Effect. Except as set forth on Schedule 7.3, all the
outstanding shares of capital stock of each Subsidiary are validly issued, fully
paid and nonassessable and are owned by the Company free and clear of any liens,
claims or encumbrances. There are no existing options, warrants, calls or other
rights, agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of any of the Subsidiaries. Other
than the Subsidiaries and except as set forth in Schedule 7.3, the Company does
not directly or indirectly own any interest in any other corporation,
partnership, joint venture or other business association or entity, excluding
joint working interest operations of oil and gas wells and drilling ventures
arising in the ordinary course of business.
Section 7.4 Authority Relative to this Agreement.
(a) The Company has the requisite corporate power to enter into this
Agreement and, subject to approval of this Agreement by the holders of the
Company Common Stock as described in Section 3.6, the corporate power and
authority to carry out its obligations hereunder. The execution and delivery of
this Agreement by the Company and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company (except for the approval of the holders of Company
Common Stock as described in Section 3.6). This Agreement has been duly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Sub and JEDI, this Agreement constitutes a legal,
valid and binding obligation of the Company enforceable in accordance with its
terms except as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and except
that the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought.
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(b) Except as set forth in Schedule 7.4 of the Company Disclosure
Schedule, neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated hereby will (i) conflict with
or violate the Articles of Incorporation or other charter documents or
Regulations or bylaws of the Company or any of its Subsidiaries, or (ii) result
in any breach or constitute a default (with or without notice or lapse of time,
or both) under, or give rise in others to any rights of termination,
cancellation or acceleration under, any indenture, contract, loan agreement,
license, franchise, permit, order, decree, concession, lease, instrument,
judgment, statute, law, ordinance, rule or regulation applicable to the Company
or any of its Subsidiaries or its or their respective assets, other than, in the
case of clause (ii) only, such breaches, defaults, violations and losses of
rights that would not, individually or in the aggregate, have a Company Material
Adverse Effect. Except as disclosed in Schedule 7.4 of the Company Disclosure
Schedule or, in connection or in compliance with the provisions of the Exchange
Act and the filing of the certificate of merger pursuant to the OGCL, no filing
or registration with, or authorization, consent or approval of, any governmental
or regulatory body or authority or third party is necessary for the consummation
by the Company of the Merger or the other transactions contemplated hereby,
except where failure to make such filing or registration or obtain such
authorization, consent or approval would not, individually or in the aggregate
(y) prevent the Company from consummating the Merger or (z) have a Company
Material Adverse Effect.
Section 7.5 Reports and Financial Statements. The Company has furnished
JEDI with true and complete copies of the Company's (i) Annual Reports on Form
10-K for the fiscal years ended December 31, 1994 and December 31, 1995, as
filed with the Securities and Exchange Commission (the "Commission"), (ii)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994, June 30,
1994, September 30, 1994, March 31, 1995, June 30, 1995 and September 30, 1995
as filed with the Commission, (iii) proxy statements related to all meetings of
its shareholders (whether annual or special) held since January 1, 1994 and (iv)
all other reports on Form 8-K, Form 10-KA and registration statements declared
effective by the Commission since December 31, 1993, except registration
statements on Form S-8 relating to employee benefit plans and Reports on Form
10-C relating to securities quoted on the NASDAQ Interdealer Quotation System,
which are all the documents (other than preliminary material) that the Company
was required to file with the Commission since January 1, 1994 relating to
matters occurring since January 1, 1994 (all items in clauses (i) through (iv)
being referred to herein collectively as the "Company SEC Reports"). As of their
respective dates, the Company SEC Reports complied in all material respects with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and regulations of
the Commission thereunder applicable to such Company SEC Reports. As of their
respective dates, the Company SEC Reports 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 therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the audited consolidated financial statements and unaudited interim
financial statements of the Company included in the Company SEC Reports complied
in all material respects with applicable accounting requirements of the
Securities Act and the Exchange Act, and with the published rules and
regulations of the Commission with respect thereto. The financial statements
included in the Company SEC Reports (i) have been prepared in accordance with
GAAP during the periods presented (except as may be indicated therein or in the
notes thereto or in the case of the unaudited statements, subject to normal
year-end audit adjustments
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and except for the fact that such unaudited financial statements do not contain
all notes required by GAAP), (ii) present fairly, in all material respects, the
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flow for
the periods then ended (except as may be indicated therein or in the notes
thereto or, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments and any other adjustments described therein and
except for the fact that certain information and notes have been condensed or
omitted in accordance with the Securities Act and the Exchange Act and the rules
promulgated thereunder) and (iii) are, in all material respects, in accordance
with the books of account and records of the Company. Neither the Company nor
any of its Subsidiaries has any liability or is subject to any loss contingency
material to the Company and its Subsidiaries, taken as a whole, other than as
reflected or disclosed in the financial statements or notes thereto included in
the Company SEC Reports filed prior to the date hereof. Any reports or other
material filed by the Company with the Commission after the date hereof and
prior to the Effective Time (other than preliminary material) shall be deemed to
be included in the defined term "Company SEC Reports" for purposes of this
Agreement, and, other than written information supplied by JEDI or Sub to the
Company for inclusion by the Company in any subsequent report filed by the
Company with the Commission, the Company shall be deemed to have made the
representations set forth in this Section 7.5 in respect of such reports or
other material and any financial statements set forth therein.
Section 7.6 Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as disclosed in any of the Company SEC Reports
filed prior to the date hereof, there have not been since December 31, 1995 (i)
any transactions, commitments, disputes, events, damage, destruction or losses,
whether or not covered by insurance, development or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
individually or in the aggregate having, or which could reasonably be expected
to have, a Company Material Adverse Effect or (ii) (A) any entry into any
commitment or transaction material to the Company and its Subsidiaries taken as
a whole (including, without limitation, any borrowing or sale of assets) except
in the ordinary course of business consistent with past practice or (B) any
action taken by the Company or its Board of Directors in connection with the
adoption or implementation of any plan or arrangement or the entry into any
agreement (x) principally intended to discourage an Other Acquisition
Transaction, or (y) pursuant to which the officers, directors or employees of
the Company or its Subsidiaries have been granted any benefits payable or
distributable upon severance or upon a change of control of the Company or
pursuant to which any rights held by such persons have been accelerated to occur
or vest at or prior to a change of control, including without limitation any
amendments to, modifications of, or elections of other rights under existing
benefit plans (including the 401(k) Plan).
Section 7.7 Litigation. Except as disclosed in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 or as disclosed in
Schedule 7.7 of the Company Disclosure Schedule, there is no claim, suit, action
or proceeding pending or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its Subsidiaries which, either individually
or in the aggregate, has or could reasonably be expected to have a Company
Material Adverse Effect, nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Company or any of its Subsidiaries.
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Section 7.8 Information in Disclosure Documents. None of the
information with respect to the Company or its Subsidiaries included or
incorporated by reference in the Proxy Statement will, at the time of the
mailing thereof and at the time of the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading; provided, however,
that this provision shall not apply to, and no representation or warranty is
made by the Company with respect to, statements or omissions in the Proxy
Statement based upon information furnished in writing by or on behalf of JEDI or
Sub expressly for use therein. The Proxy Statement will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. No representation or warranty made by the Company contained in this
Agreement and no statement contained in the Company Disclosure Schedule or in
any certificate delivered pursuant to this Agreement contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
Section 7.9 Employee Benefits Plans; Labor Matters.
(a) Schedule 7.9 (a) of the Company Disclosure Schedule lists each
"employee benefit plan," as such term is defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (including, but not
limited to, employee benefit plans, such as foreign plans, which are not subject
to the provisions of ERISA) ("Plan"), sponsored, maintained or contributed to by
the Company or any of its Subsidiaries for the benefit of the employees of the
Company or any of its Subsidiaries, or that has been so sponsored, maintained or
contributed to by Company or any of its Subsidiaries within six years prior to
the Closing.
(b) Except as otherwise set forth in Schedule 7.9(b) of the Company
Disclosure Schedule:
(i) the Company and its Subsidiaries do not contribute to or
have an obligation to contribute to, and have not at any time within six years
prior to the Closing contributed to or had an obligation to contribute to, a
multiemployer plan within the meaning of Section 3(37) of ERISA;
(ii) all reports and disclosures relating to the Plans
required to be filed with or furnished to governmental agencies, Plan
participants or Plan beneficiaries have been filed or furnished in accordance
with applicable law in a timely manner, and each Plan has been administered in
substantial compliance with its governing documents and in accordance with
ERISA, the Internal Revenue Code of 1986, as amended (the "Code"), and other
applicable laws;
(iii) there are no actions, suits, claims, investigations or
audits pending (other than routine claims for benefits) or, to the knowledge of
the Company, threatened against, or with respect to, any of the Plans or their
assets;
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(iv) no act, omission or transaction has occurred which would
result in imposition on the Company of (A) breach of fiduciary duty liability
damages under Section 409 of ERISA, (B) a civil penalty assessed pursuant to
subsections (c), (i) or (l) of Section 502 of ERISA or (C) a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code, which could have a Company
Material Adverse Effect;
(v) each of the Plans intended to be qualified under Section
401 of the Code satisfies the requirements of such Section and has received a
favorable determination letter from the Internal Revenue Service regarding such
qualified status and has not, since receipt of the most recent favorable
determination letter, been amended or, to the knowledge of Company, operated in
a way which would adversely affect such qualified status;
(vi) no Plan is subject to Title IV of ERISA;
(vii) as to any Plan intended to be qualified under Section
401 of the Code, there has been no termination or partial termination of the
Plan within the meaning of Section 411(d)(3) of the Code; and
(viii) with respect to any Plan which is sponsored, maintained
or contributed to, or has been sponsored, maintained or contributed to within
six years prior to the Closing Date, by any corporation, trade, business or
entity under common control with the Company, within the meaning of Section
4104(b), (c) or (m) of the Code or Section 4001 of ERISA ("Commonly Controlled
Entity"), (A) no withdrawal liability, within the meaning of Section 4201 of
ERISA, has been incurred, which withdrawal liability has not been satisfied, (B)
no liability to the Pension Benefit Guaranty Corporation ("PBGC") has been
incurred by any Commonly Controlled Entity, which liability has not been
satisfied, (C) no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred, and (D) all contributions (including installments) to such Plan
required by Section 302 of ERISA and Section 412 of the Code have been timely
made.
(c) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining or other labor union contracts. There is no pending or
threatened labor dispute, strike or work stoppage against the Company or any of
its Subsidiaries which may interfere with the respective business activities of
the Company or any of its Subsidiaries.
(d) Except as set forth in Schedule 7.9(d) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to or is
bound by any severance agreements, programs or policies. Schedule 7.9(d) of the
Company Disclosure Schedule sets forth, and the Company has provided to Sub,
true and correct copies (where in writing) of (i) all agreements with employees
or consultants of the Company or its Subsidiaries, obligating the Company or any
Subsidiary to make annual cash payments in an amount exceeding $10,000, (ii) all
non-competition agreements with the Company or a Subsidiary executed by officers
of the Company or a Subsidiary, and (iii) all plans, programs, agreements and
other arrangements of the Company or its Subsidiaries with or relating to the
employment and to the remuneration and compensation of its employees.
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(e) (i) No Plan provides retiree medical or retiree life insurance
benefits to any person and (ii) neither the Company nor any of its Subsidiaries
is contractually or otherwise obligated (whether or not in writing) to provide
any person with life insurance or medical benefits upon retirement or
termination of employment, other than as required by the provisions of Section
601 through 608 of ERISA and Section 4980B of the Code.
(f) Except as set forth in Schedule 7.9(f) of the Company Disclosure
Schedule, the Company has not amended, terminated or taken any other actions
with respect to any of the Plans or any of the plans, programs, agreements,
policies or other arrangements described in Section 7.9 of this Agreement since
December 31, 1995.
Section 7.10 Environmental Matters. Except for matters disclosed in
Schedule 7.10 of the Company Disclosure Schedule, the Company and its
Subsidiaries and the properties and operations of the Company and its
Subsidiaries are not subject to any existing, pending or, to the knowledge of
the Company, threatened action, suit, investigation, inquiry or proceeding by or
before any Governmental Entity under any Environmental Law. Except for matters
disclosed in Schedule 7.10 of the Company Disclosure Schedule and except for
matters that would not result, individually or in the aggregate, in a Company
Material Adverse Effect, (i) the properties, operations and activities of the
Company and its Subsidiaries are in compliance with all applicable Environmental
Laws; (ii) all notices, permits, licenses, or similar authorizations, if any,
required to be obtained or filed by the Company or any of its Subsidiaries under
any Environmental Law in connection with any aspect of the business of the
Company or its Subsidiaries, including without limitation those relating to the
treatment, storage, disposal or release of a hazardous substance, have been duly
obtained or filed and will remain valid and in effect after the Merger, and the
Company and its Subsidiaries are in compliance with the terms and conditions of
all such notices, permits, licenses and similar authorizations; (iii) there are
no physical or environmental conditions existing on any property of the Company
or its Subsidiaries or resulting from the Company's or such Subsidiaries'
operations or activities, past or present, at any location, that would give rise
to any on-site or off-site remedial obligations imposed on the Company or any of
its Subsidiaries under any Environmental Laws; (iv) to the Company's knowledge,
since the effective date of the relevant requirements of applicable
Environmental Laws and to the extent required by such applicable Environmental
Laws, all hazardous substances generated by the Company and its Subsidiaries
have been transported only by carriers authorized under Environmental Laws to
transport such substances and wastes, and disposed of only at treatment,
storage, and disposal facilities authorized under Environmental Laws to treat,
store or dispose of such substances and wastes; (v) there has neither been any
exposure of any person or property to hazardous substances or any pollutant or
contaminant released by the Company or its Subsidiaries, nor has there been any
release of hazardous substances, or any pollutant or contaminant into the
environment by the Company or its Subsidiaries or in connection with their
properties or operations that could reasonably be expected to give rise to any
claim against the Company or any of its Subsidiaries for damages or
compensation; and (vi) the Company and its Subsidiaries have made available to
Sub all internal and external environmental audits and studies and all
correspondence on substantial environmental matters in the possession of the
Company or its Subsidiaries relating to any of the current or former properties
or operations of the Company and its Subsidiaries. For purposes of this
Agreement, the terms "hazardous substance" and "release" have the meanings
specified in CERCLA, and the term "disposal" has the meaning specified in RCRA;
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provided, however, that to the extent the laws of the state in which the
property is located establish a meaning for "hazardous substance," "release," or
"disposal" that is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply.
Section 7.11 Public Utility Holding Company Act/Investment Company Act.
None of the Company or any of its Subsidiaries is subject to regulation under
(i) the Public Utility Holding Company Act of 1935, as amended, and the rules
and regulations thereunder, or (ii) the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
Section 7.12 Futures Trading and Fixed Price Exposure. None of the
Company or any of its Subsidiaries engages in any natural gas or other futures
or options trading or is a party to any price swaps, hedges, futures or similar
instruments, except for transactions and agreements entered into primarily to
hedge contracts for the purchase or sale of Hydrocarbons to which the Company or
one of its Subsidiaries is a party. Schedule 7.12 to the Company Disclosure
Schedule sets forth a true and correct statement of the position, as of the date
hereof, of the Company and its Subsidiaries with respect to obligations under
Fixed Price Contracts (including, with respect to each Fixed Price Contract,
location of delivery and variations in the obligation to take or deliver) and
related Hydrocarbon price swaps, hedges, futures or similar instruments to which
Enron Corp. or any of its affiliates is a party.
Section 7.13 Interested Shareholder Provisions Inapplicable. As of the
date hereof the Company is in compliance with Chapter 1704 of the OGCL and the
Merger and the transactions contemplated hereby would not violate such Chapter
if the Merger were consummated on the date hereof.
Section 7.14 Fairness Opinion. The Company has received the written
opinion of McDonald & Co., financial advisor to the Company, dated the date
hereof, to the effect that the Merger Consideration is fair to the shareholders
of the Company from a financial point of view.
Section 7.15 Finder's Fees. Neither the Company nor any of its
Subsidiaries has any outstanding agreement with any broker, finder or investment
banker that would require the Company or any of its Subsidiaries to pay any fee
or commission in connection with any material transaction by the Company or any
of its Subsidiaries, and no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company. A complete and correct copy of all agreements
referenced in Schedule 7.15 of the Company Disclosure Schedule has been provided
to Sub.
Section 7.16 Compliance with Applicable Laws. Except as disclosed in
the Company SEC Reports filed prior to the date of this Agreement, the Company
and the Subsidiaries are not in violation of any law, ordinance, regulation,
order or writ of any courts, administrative agencies or commissions or other
governmental authorities or instrumentalities, domestic or foreign (each a
"Governmental Entity") applicable to the Company or any of the Subsidiaries or
by which any of them or their assets may be bound, except for violations that,
individually or in the aggregate, would not have a Company Material Adverse
Effect. Neither the Company nor any of the Subsidiaries has
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received notice of violation of any law, ordinance, regulation, order or writ,
or is in default with respect to any order, writ, judgment, award, injunction or
decree of any Governmental Entity, except for such notices or defaults which
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
Section 7.17 Taxes.
(a) Except as set forth in Schedule 7.17, (i) all material Tax Returns
required to be filed on or before the Closing Date (taking into account
permitted extensions) by or with respect to the Company or any of the
Subsidiaries have been or will be duly and timely filed, (ii) all items of
income, gain, loss, deduction and credit or other items required to be included
in each such Tax Return have been or will be so included and all information
provided in each such Tax Return is true, correct and complete in all material
respects, (iii) all Taxes which have become or will become due with respect to
the period covered by each such Tax Return have been or will be timely paid in
full, (iv) all withholding Tax requirements imposed on or with respect to the
Company and any of the Subsidiaries have been or will be satisfied in full in
all material respects, and (v) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or late
payment of any such Tax.
(b) None of the Tax Returns of or with respect to the Company or any of
the Subsidiaries has been audited by the applicable governmental authority
except as set forth in Schedule 7.17 and except for Tax Returns for periods for
which the statute of limitations has expired.
(c) There is no material claim against the Company or any of the
Subsidiaries for any Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to the
Company or any of the Subsidiaries, other than those disclosed (and to which are
attached true and complete copies of all audit or similar reports) in Schedule
7.17.
(d) Except as set forth in Schedule 7.17, there is not in force any
extension of time with respect to the due date for the filing of any Tax Return
of or with respect to the Company or any of the Subsidiaries or any waiver or
agreement for any extension of time for the assessment or payment of any Tax of
or with respect to the Company or any of the Subsidiaries.
(e) The total amounts set up as liabilities for current and deferred
Taxes in the financial statements included in the Company's SEC Reports are
sufficient to cover in all material respects the payment of all Taxes, whether
or not assessed or disputed, which are, or are hereafter found to be, or to have
been, due by or with respect to the Company and any of the Subsidiaries up to
and through the periods covered thereby.
(f) Except as set forth in Schedule 7.17, there are no Tax allocation
or sharing agreements affecting the Company or any of the Subsidiaries.
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(g) Except as set forth in Schedule 7.17, neither the Company nor any
of the Subsidiaries owns any interest in any controlled foreign corporation (as
defined in section 957 of the Code) or passive foreign investment company (as
defined in section 1296 of the Code).
(h) Except as set forth in Schedule 7.17, neither the Company nor any
Subsidiary will be required to include any amount in income for any taxable
period beginning after December 31, 1994 as a result of a change in accounting
method for any taxable period ending on or before December 31, 1995 or pursuant
to any agreement with any Tax authority with respect to any such taxable period.
(i) Neither the Company nor any of the Subsidiaries has consented to
have the provisions of section 341(f) of the Code apply with respect to a sale
of its stock.
(j) Neither the Company nor any of the Subsidiaries is a party to or
obligated under any agreement, commitment, or arrangement that could require the
payment of any "excess parachute payment" within the meaning of section 280G of
the Code.
Section 7.18. Certain Agreements.
Except as listed as an exhibit to the Company SEC Reports filed prior
to the date of this Agreement or as disclosed in Schedule 7.18 of the Company
Disclosure Schedule, neither the Company nor any of the Subsidiaries is a party
to any oral or written (i) agreements, contracts, indentures or other
instruments relating to Indebtedness in an amount exceeding $10,000, (ii)
confidentiality agreement, standstill agreement or other contract or agreement
which, after giving effect to the transactions contemplated by this Agreement,
purports to restrict or bind Sub or any of its affiliates (other than the
Surviving Corporation and its subsidiaries), (iii) collective bargaining
agreement, (iv) contract, agreement or commitment not entered into in the
ordinary course of business consistent with past practice and for which the
Company could become liable for payments in excess of $10,000 (in respect of any
such single contract, agreement or commitment) or $100,000 (in respect of all
such contracts, agreements or commitments, collectively), (v) any contract or
agreement not entered into in the ordinary course of business granting a
preferential right of purchase or similar right to any person or entity with
respect to any Material Company Asset, or (vi) material contract or agreement
that is not expected to be fully performed within 30 days following the
Effective Time, other than oil and gas leases, farmout agreements, joint
operating agreements, unit operating agreements, unit agreements, gas marketing
agreements, co-ownership agreements and other similar agreements entered into in
the ordinary course of business. The Company has delivered to JEDI true and
complete copies of all Exhibits to the Company SEC Reports and all documents
listed on Schedule 7.18 of the Company Disclosure Schedule.
Section 7.19. Engineering Reports.
(a) The estimates of proved reserves of oil and natural gas (the
"Company Estimated Proved Reserves") prepared by the Company and set forth in
the report of Company Estimated Proved Reserves as of December 31, 1995 (the
"Company Reserve Report"), the documents constituting the Company Reserve Report
having been made available for inspection by JEDI:
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(i) are reasonable; (ii) with respect to proved developed reserves, were
reviewed by independent consulting engineer John Redic as indicated in, and with
the conclusion set forth in, his reports dated March 16, 1996; (iii) were
prepared in accordance with generally accepted petroleum engineering and
evaluation principles as set forth in the Standards Pertaining to the Estimating
and Auditing of Oil and Gas Reserve Information promulgated by the Society of
Petroleum Engineers; and (iv) conform in all material respects to the
requirements of the Commission respecting the inclusion of reserve information
in filings under the Securities Act.
(b) All information and production data provided to John Redic for the
preparation of the Company Reserve Report were true and correct in all material
respects as of the date provided;
(c) Set forth in Schedule 7.19(c) to the Company Disclosure Schedule is
a list of each completed well or unit (the "Significant Wells) or well location
that had a "Present Value of Estimated Future Net Revenues" from proved
developed and undeveloped oil and natural gas reserves of $100,000, or more as
of December 31, 1995, which present worth calculation was made in accordance
with Regulation S-X 4-10(k)(6)(ii) as promulgated by the Commission; and, except
as set forth in Schedule 7.19(c) of the Company Disclosure Schedule, to the
knowledge of the Company, since December 31, 1995 to the date of this Agreement
there has been no change in the mechanical capability or production facilities
of any Significant Well or the reservoir performance (other than normal
depletion by subsequent production) of any Significant Well, the effect of any
of which would reduce its Present Value of Estimated Future Net Revenues by more
than the greater of 10% or $25,000.
Section 7.20 Oil and Gas Reserve Information. Except for exceptions
that would not, and could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect:
(a) None of the wells included in the Oil and Gas Interests of the
Company and its Subsidiaries has been overproduced such that it is subject or
liable to being shut-in or to any other overproduction penalty (including cash
payments);
(b) There have been no changes proposed in the production allowables
for any wells included in the Oil and Gas Interests of the Company and its
Subsidiaries;
(c) All wells included in the Oil and Gas Interests of the Company and
its Subsidiaries have been drilled and (if completed) completed, operated, and
produced in accordance with good oil and gas field practices and in compliance
in all respects with the applicable oil and gas leases and all applicable laws,
rules, regulations and orders;
(d) Except as set forth in Schedule 7.20 (d) to the Company Disclosure
Schedule, there are no wells included in the Oil and Gas Interests of the
Company and its Subsidiaries that: (i) the Company or any of its Subsidiaries
are currently obligated by law or contract to plug and abandon; (ii) are subject
to exceptions to a requirement to plug and abandon issued by a regulatory
authority having jurisdiction over such Oil and Gas Interests; or (iii) to the
knowledge of the Company, have been plugged and abandoned but have not been
plugged or reclaimed in accordance with all
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applicable requirements of each regulatory authority having jurisdiction over
such Oil and Gas Interests;
(e) Proceeds from the sale of Hydrocarbons produced from the Oil and
Gas Interests of the Company and its Subsidiaries are being received by the
Company and its Subsidiaries in a timely manner and are not being held in
suspense for any reason (except for amounts, individually or in the aggregate,
not in excess of $10,000);
(f) Except as set forth in Schedule 7.20(f) of the Company Disclosure
Schedule, no person has any call on, option to purchase, or similar rights with
respect to the Oil and Gas Interests of the Company and its Subsidiaries
(including without limitation the production attributable thereto) and upon
consummation of the transactions contemplated by this Agreement, the Company and
its Subsidiaries will have the right to market production from the Oil and Gas
Interests of the Company and its Subsidiaries on terms no less favorable than
the terms upon which such company is currently marketing such production;
(g) All of the wells included in the Oil and Gas Interests of the
Company and its Subsidiaries have been drilled and completed within the
boundaries of the leases included in such Oil and Gas Interests or within limits
otherwise permitted by contract, pooling or unitization agreement and by
applicable law;
(h) All royalties, overriding royalties, compensatory royalties and
other payments due with respect to the Oil and Gas Interests of the Company and
its Subsidiaries (excluding those held in suspense in accordance with past
operating practices or in connection with post-closing adjustments in respect of
acquired properties) have been properly and timely paid;
(i) Except as set forth in Schedule 7.20(i) of the Company Disclosure
Schedule, with respect to those assets of the Company and its Subsidiaries that
are oil and gas leases ("Leases") (but only to the Company's knowledge with
respect to Leases not operated by the Company or its Subsidiaries): (i) the
Leases are presently in full force and effect; (ii) there has not occurred any
event, fact or circumstance which with the lapse of time or the giving of
notice, or both, would constitute such a breach or default on behalf of the
Company and its Subsidiaries or, to the knowledge of the Company and its
Subsidiaries, with respect to any other parties; and (iii) there are no
provisions of the Leases or under any contract or law applicable to the Leases
which increase the royalty share of the lessor thereunder or excise or similar
taxes claimed by persons with jurisdiction over the land covered thereby; and
(j) The Company has not (i) received any material advance,
"take-or-pay" or other similar payments under production sales contracts that
entitled the purchasers to "make up" or otherwise receive deliveries of
Hydrocarbons at any time after the date hereof without paying at such time the
contract price therefor, or (ii) taken or received any material amount of
Hydrocarbons under any gas balancing agreements or any similar arrangements that
permit any party to thereafter receive any portion of the interest of the
Company to "balance" any disproportionate allocation of Hydrocarbons.
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Section 7.21 Title to Property. Except as set forth on Schedule 7.21,
the Company or its Subsidiaries has Defensible Title to all of the material
assets reflected on the consolidated balance sheets of the Company included in
the Company SEC Reports as being owned by it or its Subsidiaries (including Oil
and Gas Interests of the Company and its Subsidiaries) and all of the material
assets acquired after the dates of such balance sheets by it or its Subsidiaries
(except to the extent that such assets have been disposed of after the dates of
such balance sheets in the ordinary course of business consistent with past
practice) (collectively, the "Material Company Assets"). All material payments
of any kind required to be made by the Company and its Subsidiaries to third
parties under any contract or agreement relating to the Material Company Assets
have been or will be properly and timely paid or provided for.
Section 7.22 Insurance. Schedule 7.22 to the Company Disclosure
Schedule contains a summary of all policies of insurance maintained by the
Company and its Subsidiaries during the past five calendar years. Copies of all
such policies have been made available to JEDI.
Section 7.23 Affiliate Transactions. Except for the transactions
described in Schedule 7.23 of the Company Disclosure Schedule, all transactions
between the Company or any of its Subsidiaries and any third party required to
be disclosed in the Company SEC Reports in accordance with Item 404 of
Regulation S-K have been so disclosed, and since December 31, 1995, neither the
Company nor any of its Subsidiaries has entered into any transactions with any
third parties that would be required to be disclosed in future public filings
under the Exchange Act pursuant to such Item which have not already been
disclosed in the Company SEC Reports filed prior to the date hereof.
Section 7.24 Hart-Scott-Rodino Exemption. The aggregate fair market
value of the assets of the Company and its Subsidiaries which are not exempt
under Section 7A(c)(2) of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 or 16 C.F.R. Sections 802.2, 802.3 or 802.5 (and which do not constitute
current assets) is not in excess of $15,000,000.
ARTICLE VIII
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
Section 8.1 Conduct of Business by the Company. From the date hereof
and prior to the Effective Time, unless JEDI shall otherwise agree in writing:
(a) subject to the limitations contained in or transactions
contemplated by this Agreement, the Company shall, and shall cause its
Subsidiaries to, carry on their respective operations in the usual and ordinary
course consistent with past practice, and shall use its reasonable best efforts,
and shall cause each of its Subsidiaries to use its reasonable best efforts, to
preserve substantially intact its present business organization, keep available
the services of its present officers and employees, maintain and keep its
material assets in as good repair and condition as of the date hereof, ordinary
wear and tear excepted, and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that its goodwill and
on-going businesses shall be materially unimpaired at the Effective Time;
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(b) the Company shall not, nor shall it propose to, except as required
by this Agreement, (i) sell or pledge or agree to sell or pledge any capital
stock owned by it in any of its Subsidiaries, (ii) amend its Articles of
Incorporation or Regulations, (iii) split, combine or reclassify its outstanding
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
capital stock, or declare, set aside or pay any dividend or other distribution
payable in cash, stock or property, or (iv) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire
any shares of its capital stock;
(c) the Company shall not, nor shall it permit any of its Subsidiaries
to, (i) except as required by this Agreement, issue, deliver or sell or agree to
issue, deliver or sell any additional shares of, or stock appreciation rights or
rights of any kind to acquire any shares of, its capital stock of any class, any
Company Voting Debt, or any option, rights or warrants to acquire, or securities
convertible into, shares of capital stock, (ii) permit any employees that have
not, prior to the date hereof, made an election to acquire stock under the
401(k) Plan to make such an election on or after the date hereof or permit any
participants that have, prior to the date hereof, made an election to acquire
stock under the 401(k) Plan to increase such prior election on or after the date
hereof, (iii) acquire or lease or agree to acquire or lease any capital assets,
or make any other capital expenditures, which exceed the Company's capital
expenditure budgets for the year ended December 31, 1996 set forth in Schedule
8.1(c) of the Company Disclosure Schedule, in the aggregate for all such assets
or other capital expenditures, in excess of $100,000 (including in such
calculation the proceeds of any sale/leaseback transactions), (iv) dispose or
agree to dispose of capital assets or any other assets other than in the
ordinary course of business with a value in excess of $100,000, (v) (A) create,
incur, assume or permit additional indebtedness (including obligations in
respect of capital leases), other than (y) the refinancing of the existing
mortgage on the Company's property located at 4770 Indianola, Columbus, Ohio and
(z) periodic drawdowns under the Company's credit facilities existing as of the
date hereof, provided that such drawdowns are in the ordinary course of business
consistent with past practice, and provided further that the amount available
under such facilities as of the date hereof is not increased, (B) assume,
guarantee, endorse or otherwise become liable or responsible for the obligations
of any other person (other than a Subsidiary of the Company, or, as to a
Subsidiary, another Subsidiary or the Company), (C) encumber or grant a security
interest in any asset other than with respect to the Company's credit facilities
and capital leases existing at the date hereof, or (D) make any loans or
advances to any other person (excluding intercompany transactions), enter into
any agreement or instrument relating to the borrowing of money or the extension
of credit or enter into any other material transaction, other than in each case
in the ordinary course of business consistent with past practice, (vi) acquire
or agree to acquire oil or gas properties or prospects or program interests not
listed on Schedule 8.1(c) of the Company Disclosure Schedule or any other assets
outside the ordinary course of business, or acquire or agree to acquire by
merging or consolidating with, or by purchasing the assets of or a substantial
equity interest in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof,
(vii) enter into or renew any material agreements, contracts or other
commitments that are not expected to be fully performed within thirty days after
the Effective Time, except oil and gas leases, farmout agreements, gas sales or
purchase contracts, joint operating agreements, unit operating agreements and
unit agreements entered into in the ordinary course of business and consistent
with past practice, or (viii) adopt, enter
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into, amend or terminate any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(d) the Company shall not, nor shall it permit any of its Subsidiaries
to, except as required to comply with applicable law and except as contemplated
by this Agreement, (i) adopt, enter into, terminate or amend any bonus, profit
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other Plan, agreement, trust,
fund or other arrangement for the benefit or welfare of any current or former
director, officer or employee, (ii) increase in any manner the compensation or
fringe benefits of any director, executive officer or employee (provided,
however, that the Company shall be permitted to award normal salary increases to
employees (other than executive officers) of the Company in the ordinary course
of business that are consistent with past practice (including in connection with
any promotion of such employee) and that, in the aggregate, do not result in a
material increase in compensation expense to the Company and its Subsidiaries
relative to the level in effect prior to such increase), (iii) pay any benefit
not provided under any existing plan or arrangement, (iv) grant any awards under
the 401(k) Plan or any other bonus, incentive, performance or other compensation
plan or arrangement or Plan (including, without limitation, the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing restrictions
in any Plans or agreements or awards made thereunder), (v) take any action to
fund or in any other way secure the payment of compensation or benefits under
any employee plan, agreement, contract or arrangement or Plan, other than in the
ordinary course of business consistent with past practice, or (vi) adopt, enter
into, amend or terminate any contract, agreement, commitment or arrangement to
do any of the foregoing;
(e) the Company shall not, nor shall it permit its Subsidiaries to,
make any change in its accounting policies or procedures, except as required
under GAAP;
(f) the Company shall use its reasonable best efforts to refrain from
taking, and shall use its reasonable best efforts to cause its Subsidiaries to
refrain from taking, any action that would, or reasonably might be expected to,
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect as of the Effective Time, or in
any of the conditions to the Merger set forth in Article X not being satisfied,
or (unless such action is required by applicable law) that would adversely
affect the ability of the Company to obtain any of the regulatory approvals
required to consummate the Merger;
(g) the Company shall not settle or compromise any claim for
dissenters' rights in respect of the Merger;
(h) the Company shall maintain in full force and effect all of its
policies of insurance in existence as of the date hereof or insurance comparable
to the coverage afforded by such policies; and
(i) the Company shall not enter into any natural gas or other future or
options trading or be a party to any price swaps, hedges, futures or similar
instruments.
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Section 8.2 Obligations of JEDI and Sub; Conduct of Business of Sub.
Each of JEDI and Sub shall use its reasonable best efforts to refrain from
taking any action that would, or reasonably might be expected to, result in any
of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect as of the Effective Time, or in any of
the conditions to the Merger set forth in Article X not being satisfied, or
(unless such action is required by applicable law) that would adversely affect
the ability of the JEDI or Sub to obtain any of the regulatory approvals
required to consummate the Merger.
Section 8.3 Notice. Each party shall promptly give written notice to
the other party upon becoming aware of the occurrence or, to its knowledge,
impending or threatened occurrence, of any event that would cause any of the
representations and warranties to be untrue at the Effective Time or cause a
breach of any covenant contained or referenced in this Agreement and will use
its reasonable best efforts to prevent or promptly remedy the same. Any such
notification shall not be deemed to amend the representations, warranties and
covenants of the parties, unless consented to by the parties.
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 Access and Information. Upon reasonable notice, the Company
and its Subsidiaries shall afford to Sub and to Sub's affiliates, accountants,
lenders, counsel and other representatives full access, during normal business
hours (and at such other times as the parties may mutually agree) and in a
manner so as not to materially interfere with the normal business operations of
the Company and its Subsidiaries throughout the period prior to the Effective
Time, to all of their properties (which shall include the right to conduct an
environmental assessment thereof), books, contracts, commitments, records and
personnel. During such period, the Company shall furnish promptly to Sub (i) a
copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws and (ii) all
other information concerning its business, properties and personnel as Sub may
reasonably request. JEDI and Sub shall hold all such information in confidence
and hereby assume all of the obligations of Enron Capital & Trade Resources
Corp. ("ECT") in accordance with the terms of the letter agreement regarding
confidential information and certain other matters, dated February 9, 1996,
between ECT and the Company (the "Confidentiality Agreement"), and, in the event
of termination of this Agreement for any reason, will promptly comply with the
terms of the Confidentiality Agreement. During the period prior to the Effective
Time, the Company shall make its accountants, counsel, lenders and other
representatives available to Sub and to Sub's affiliates, accountants, lenders,
counsel and other representatives at reasonable times. The foregoing assumption
of ECT's obligations under the Confidentiality Agreement shall not be deemed to
release ECT from such obligations.
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Section 9.2 Proxy Statement. (a) As promptly as reasonably practicable
after the execution of this Agreement, the Company shall prepare and file with
the Commission preliminary proxy materials with respect to the actions to be
taken at the Company Meeting, which shall be in form and substance reasonably
satisfactory to JEDI. As promptly as reasonably practicable after comments are
received from the Commission with respect to such preliminary proxy materials,
the Company shall use its reasonable best efforts to respond to the comments of
the Commission. Sub and JEDI shall provide the Company with such information as
may be required to be included in the proxy statement or as may be reasonably
required to respond to any comment of the Commission. After all the comments
received from the Commission have been cleared by the Commission staff and all
information required to be contained in the proxy statement has been included
therein by the Company, the Company shall file with the Commission the Proxy
Statement and the Company shall use its reasonable best efforts to have the
Proxy Statement cleared by the Commission as soon thereafter as practicable. The
Company shall cause the Proxy Statement to be mailed to its shareholders of
record as promptly as reasonably practicable after clearance by the Commission.
Unless the Company is advised in writing by outside counsel that such a
recommendation is no longer consistent with the discharge of applicable
fiduciary duties of directors of the Company, the Proxy Statement shall include
the recommendation of the Board of Directors of the Company in favor of the
Merger. If requested by JEDI, the Company shall use its reasonable best efforts
to obtain a "SAS No. 71 letter" from the Company's independent public
accountants addressed to the Company, in form and substance reasonably
satisfactory to JEDI, with respect to interim financial statements, if any,
included in the Proxy Statement.
(b) Each of Sub and the Company shall make all necessary filings
applicable to it with respect to the Merger under the Exchange Act and the rules
and regulations thereunder and shall use its reasonable best efforts to obtain
required clearances with respect thereto.
Section 9.3 Indemnification.
(a) The provisions relating to indemnification and advancement of
expenses that are set forth in the Code of Regulations of Sub as of the date of
this Agreement, a true and complete copy of which has been delivered to the
Company, shall remain effective in the Code of Regulations of the Surviving
Corporation for a period of six years from the Effective Time with respect to
individuals who at any time from and after the date of this Agreement and to and
including the Effective Time were directors, officers, employees, fiduciaries or
agents of the Company or any of its Subsidiaries in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the matters contemplated by this Agreement), and the Surviving
Corporation shall not amend or repeal such provisions to the detriment of such
individuals for a period of six years from the Effective Time.
(b) The Surviving Corporation shall, for six years from the Effective
Time, maintain in effect the current directors' and officers' liability
insurance coverage listed, and identified as such, on Schedule 7.22 of the
Company's Disclosure Schedule maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to such officers and directors so long as substitution does not
result in gaps or lapses in coverage) with respect to matters occurring
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through the Effective Time, provided that in no event shall the Surviving
Corporation be required to expend to maintain or procure insurance coverage
pursuant to this Section 9.3 any amount per annum, for any of the first three
years after the Effective Time, in excess of 75% of the aggregate premiums paid
in 1995 on an annualized basis for such purpose, or for the fourth, fifth or
sixth year after the Effective Time, in excess of 50% of the aggregate premiums
paid in 1995 on an annualized basis for such purpose (such limitations on annual
aggregate premiums being herein referred to as the "Ceiling Limits"). In the
event that the amount required to maintain or procure insurance coverage
pursuant to Section 9.3 shall exceed the appropriate Ceiling Limit in any year,
the Surviving Corporation shall notify the persons who were directors of the
Company on the date of this Agreement within 30 days prior to the termination of
such insurance coverage. Such notification shall identify (a) the amount by
which the insurance premium needed to maintain or procure the insurance coverage
pursuant to Section 9.3 exceeds the appropriate Ceiling Limit and (b) the
liability limits for such insurance coverage that the Surviving Corporation
could procure by expending only the appropriate Ceiling Limit. Within 20 days
after receipt of such notification, a majority of such persons shall be entitled
to notify the Surviving Corporation in a written instrument that such persons
desire for the Surviving Corporation (y) to expend the appropriate Ceiling Limit
to purchase insurance coverage with the lower liability limits referenced in the
Surviving Corporation's notification to the former directors or (z) to purchase
insurance coverage necessary to maintain or procure the comparable insurance
coverage referenced in Section 9.3; provided, however, that the Surviving
Corporation shall not be required to purchase the comparable insurance coverage
under clause (z) unless the notification from the former directors is also
accompanied by a check payable to the Surviving Corporation in an amount equal
to the amount by which the insurance premium needed to maintain or procure the
comparable insurance coverage for such year exceeds the appropriate Ceiling
Limit.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation, or at JEDI's
option, JEDI, shall assume the obligations set forth in this Section 9.3.
(d) The obligations of the Surviving Corporation under this Section 9.3
shall not be terminated or modified in such a manner as to adversely affect any
director, officer, employee, fiduciary and agent to whom this Section 9.3
applies without the consent of each affected director, officer, employee,
fiduciary and agent (it being expressly agreed that the directors, officers,
employees, fiduciaries and agents to whom this Section 9.3 applies shall be
third-party beneficiaries of this Section 9.3).
Section 9.4 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to cooperate
with each other and to use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, in each case consistent with
the fiduciary duties of their respective Boards of Directors, all things
necessary, proper or advisable (i) under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as reasonably practicable, including to obtain
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all necessary waivers, consents and approvals and to effect all necessary
registrations and filings and (ii) to lift any injunction or other legal bar to
the Merger as soon as reasonably practicable (and, in such case, to proceed with
the Merger as expeditiously as possible); provided, however, that nothing in
this Section 9.4 or elsewhere in this Agreement shall require any party hereto
to incur expenses in connection with the transactions contemplated hereby which
are not reasonable under the circumstances in relation to the size of the
transaction contemplated hereby or to require any party or any affiliate of any
party, in order to obtain any requisite approval of any Government Entity or
third party, to hold separate or make any divestiture of any significant asset
or otherwise agree to any material restrictions upon its operations.
(b) In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the
Surviving Corporation shall take all such necessary action.
(c) If at any time prior to the Effective Time any information, event
or circumstance shall be discovered that should be set forth in a supplement to
the Proxy Statement, the discovering party shall promptly inform the other party
of such information, event or circumstance, and the Company shall as soon as
practicable prepare a supplement to the Proxy Statement, which shall be in form
and substance reasonably satisfactory to JEDI, and mail such supplement to its
shareholders.
Section 9.5 No Solicitation. Prior to the Effective Time, the Company
shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly or
indirectly, initiate, solicit, negotiate or encourage (including by way of
furnishing information), or take any other action to facilitate or entertain,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any proposal or offer to acquire all or any substantial
part of the business of the Company and its Subsidiaries, or all or
substantially all of the capital stock of the Company, whether by merger,
purchase of assets, tender offer, exchange offer or otherwise, whether for cash,
securities or any other consideration or combination thereof (any such
transaction being referred to herein as an "Other Acquisition Transaction") or
agree to endorse or recommend any such Other Acquisition Transaction; provided,
however, that the Company and its Subsidiaries may negotiate with a corporation,
partnership, person or other entity or group (a "Potential Acquiror") if (i) the
Potential Acquiror has, in circumstances not involving any prior breach by the
Company of the foregoing provisions, made a tender or exchange offer for, or a
proposal to the Board of Directors of the Company to acquire, a majority of the
capital stock of the Company or made a proposal for a merger, purchase of all or
any substantial part of the assets of the Company, or other business combination
transaction involving a change of control of the Company, (ii) the Company's
Board of Directors believes, based in part upon advice of its financial advisor,
and after having an opportunity to discuss any such proposal with the Potential
Acquiror, which contacts shall not been deemed a violation of this Section 9.5,
that such Potential Acquiror has the financial wherewithal to consummate such
offer or transaction and such offer or transaction would yield a better value to
the Company's shareholders than would the Merger (a "Superior Proposal"), and
(iii) based upon the written opinion of counsel to the Company to such effect
addressed and delivered to the Board of Directors of the Company (notice of
which opinion shall also have been furnished by the Company to JEDI), the
Company's
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Board of Directors determines in good faith that there is a significant risk
that the failure to negotiate with the Potential Acquiror would constitute a
breach of the Board's fiduciary duty to the shareholders of the Company. The
Company shall promptly advise JEDI in writing of any request for non-public
written information or of any Other Acquisition Transaction, or any inquiry with
respect to or which appears to be intended to or could reasonably be expected to
lead to any Other Acquisition Transaction, the terms and conditions of such
request, Other Acquisition Transaction or inquiry, the identity of the person
making any such request, Other Acquisition Transaction or inquiry, and whether
the Company has elected to negotiate with a Potential Acquiror in accordance
with the preceding sentence. If the Company elects to negotiate with a Potential
Acquiror in accordance with the foregoing provisions, the Company may provide
non-public information to, and have discussions with, the Potential Acquiror and
its representatives. Such negotiations and delivery of documents shall not
violate the terms of this Agreement or the Confidentiality Agreement. The
Company shall use its reasonable best efforts to keep JEDI fully informed of the
status and details of any such request, Other Acquisition Transaction, inquiry,
or negotiation. The Company may not enter into a definitive agreement for an
Other Acquisition Transaction with a Potential Acquiror with which the Company
is permitted to negotiate pursuant to this Section 9.5 unless (i) at least 10
business days prior to the Company's execution thereof the Company shall have
furnished JEDI with a description of all of the material terms thereof and (ii)
the Company shall terminate this Agreement in accordance with Section 11.1(e)
hereof.
Section 9.6 JEDI. JEDI agrees to take all action necessary to cause Sub
to perform all of Sub's covenants and obligations under this Agreement. Sub and
JEDI shall be liable for any breach of any representation, warranty, covenant or
agreement of Sub or Surviving Corporation and for any breach of this covenant;
provided, however, that JEDI shall not have any responsibility for, or provide
any guaranties of, any actions of Sub or any obligation or liability otherwise
hereunder except as expressly provided in Section 3.2.
Section 9.7 401(k) Plan. Immediately after the execution of this
Agreement, the Company shall suspend the purchase of, or allocation of, Company
Common Stock pursuant to the Company's 1993 401(k) Savings Plan (the "401(k)
Plan"). The Company shall take such actions as may be necessary to effect and
permit the foregoing. In particular, prior to the Closing Date, the Board of
Directors of the Company shall rescind its resolutions adopted October 16, 1989
with respect to permitting up to 50% of the Company's contribution to the 401(k)
Plan to be used to purchase Company Common Stock.
Section 9.8 Certain Employee Benefit Matters. The Company acknowledges
and agrees that it is currently anticipated that the Surviving Corporation will
not become a participating employer in any employee benefit or compensation
plans sponsored or maintained by Enron Corp. for the benefit of its subsidiaries
or affiliated companies.
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ARTICLE X
CONDITIONS PRECEDENT
Section 10.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions, any one or more of which may be waived in a writing executed by JEDI
and the Company subject to and in accordance with Section 11.4 hereof:
(a) This Agreement shall have been approved and adopted by the
requisite vote of the holders of the Company Common Stock, and ten days shall
have elapsed following the date of such approval and adoption.
(b) No United States or state governmental authority or other agency or
commission or United States or state court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any law, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
the Merger illegal or otherwise preventing or prohibiting consummation of the
Merger.
(c) The Company shall have received the written opinion of McDonald &
Co., dated as of a recent date, confirming its opinion referred to in Section
7.14 hereof.
(d) As of the Effective Time, the Merger complies with Section
1704.03(A)(4) of the Ohio Revised Code.
Section 10.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company in accordance with Section
11.4 hereof:
(a) JEDI and Sub shall have performed in all material respects their
respective agreements contained in this Agreement required to be performed at or
prior to the Effective Time and the representations and warranties of JEDI and
Sub contained in this Agreement shall be true and correct in all material
respects when made and on and at the Effective Time as if made on and at such
time (except to the extent they expressly relate to the date of this Agreement
or any other particular date), and the Company shall have received a certificate
of the President or Chief Executive Officer (or comparable officer) of JEDI and
Sub, dated the Closing Date, to that effect.
(b) The Company shall have received the opinion of Vinson & Elkins
L.L.P., dated the Closing Date, substantially in the form of Exhibit A hereto.
Section 10.3 Conditions to Obligations of Sub to Effect the Merger. The
obligations of Sub to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the following additional conditions, unless
waived in writing by Sub in accordance with Section 11.4 hereof:
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<PAGE> 40
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed at or prior to
the Effective Time and the representations and warranties of the Company
contained in this Agreement which are qualified with respect to materiality
shall be true and correct in all respects, and such representations and
warranties not so qualified shall be true and correct in all material respects,
in each case when made and at the Effective Time as if made at such time (except
to the extent they expressly relate to the date of this Agreement or any other
particular date), and Sub shall have received a certificate of the President or
Chief Executive Officer of the Company, dated the Closing Date, to that effect.
Notwithstanding anything to the contrary herein, the condition set forth in this
Section 10.3(a) shall be deemed conclusively to not have been satisfied if (i)
the representations and warranties of the Company when made or on and as of the
Closing Date or agreements of the Company to be performed at or prior to the
Effective Time, in each case without regard to any "materiality qualifications,"
were breached or would have been breached and such breach resulted or would
result in a Loss with respect to any individual representation, warranty or
agreement in excess of $2.0 million or, with respect to all such
representations, warranties and agreements, resulted or would result in an
aggregate Loss in excess of $3.5 million. "Loss" shall mean the amount that
would be required to be contributed to the Surviving Corporation at the
Effective Time so that the owners of the Surviving Corporation would be in the
same economic position as they would have been if the representations and
warranties so breached had been true and correct in all respects. Without regard
to any "materiality qualifications" shall mean that references to "material" and
words of similar import shall, for such purpose, be considered to have been
deleted from the text herein and that references to exclusions or other
qualifications for items that would not have or cause a Company Material Adverse
Effect or phrases of similar import shall, for such purposes, be considered to
have been deleted from the text herein.
(b) All permits, consents, authorizations, approvals, registrations,
qualifications, designations and declarations set forth in Schedule 7.4 of the
Company Disclosure Schedule as a result of the last sentence of Section 7.4(b)
hereof shall have been obtained, on terms and conditions reasonably satisfactory
to Sub, and, to the extent required to be submitted prior to the Effective Time,
all filings and notices set forth on Schedule 7.4 of the Company Disclosure
Schedule as a result of the last sentence of Section 7.4(b) hereof shall have
been submitted by the Company.
(c) Sub shall have received the opinion of Vorys, Sater, Seymour and
Pease, dated the Closing Date, substantially in the form of Exhibit B hereto.
(d) The number of Dissenting Shares shall not exceed 10% of the number
of outstanding shares of Company Common Stock.
(e) None of the parties (other than Sub) to the Employment Agreements
referred to in Exhibit 10.3(e) shall have breached or anticipatorily breached
any such agreements. None of the parties (other than Sub) to such Employment
Agreement shall have died or become disabled; however, if prior to the Closing
Date any of such parties dies or becomes disabled and at the time of death or
disability the Company has in full force and effect a one-year term life
insurance policy covering the death of such party in the amount of $5,000,000
for Jerry Jordan or $2,000,000 for John L. Forman or $2,000,000 for William A.
Grubaugh, which policy the Company has purchased
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<PAGE> 41
for premiums not exceeding $50,000, $10,000 and $5,000, respectively, the
condition set forth in this sentence shall not apply as to the death or
disability of such party.
(f) Sub shall have received the written resignations, effective as of
the Effective Time, of each director of each of the Company and its
Subsidiaries.
(g) There shall not be pending any action, proceeding or investigation
brought by any person or entity before any Governmental Entity challenging,
affecting, or seeking material damages in connection with, the transactions
contemplated by this Agreement.
(h) All members of management shall have repaid all indebtedness to the
Company owed by them or of partnerships of which such member(s) are general
partners.
(i) The Company shall have taken all actions necessary to eliminate
permanently the Company Common Stock allocation option in the 401(k) Plan, as
contemplated by Section 9.7.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of the Company:
(a) by mutual consent of the Board of Directors of Sub and the Board of
Directors of the Company;
(b) by either Sub or the Company if the Merger shall not have been
consummated on or before September 16, 1996 (unless, such circumstance is the
result of a breach of the terms hereof by the party exercising the termination
right);
(c) by Sub if there has been a material breach on the part of the
Company, or by the Company if there has been a material breach on the part of
Sub or JEDI of any representation, warranty, covenant or agreement set forth in
this Agreement, which breach has not been cured within fifteen business days
following receipt by the breaching party of written notice of such breach;
(d) by either Sub or the Company upon written notice to the other party
if any Governmental Entity of competent jurisdiction shall have issued (i) a
final permanent order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement, and in any such case the
time for appeal or petition for reconsideration of such order shall have expired
without such appeal or petition being granted, or (ii) any order or directive
that does not directly enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement, but that would, if JEDI, Sub or the
Company were to comply with such order or directive as a condition to
consummating the transactions contemplated hereby, have a material
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<PAGE> 42
adverse effect on the business, operations or financial condition of either JEDI
or the Surviving Corporation and its Subsidiaries, taken as a whole;
(e) by the Company if (i) the Board of Directors of the Company
reasonably determines that an Other Acquisition Transaction is a Superior
Proposal, (ii) the ten business day period referred to in the last sentence of
Section 9.5 shall have expired, and (iii) simultaneously with such termination
the Company enters into a definitive agreement to effect such Other Acquisition
Transaction (a "Terminating Other Acquisition Transaction");
(f) by either Sub or the Company if the required approval of the
Company's shareholders is not received in a vote duly taken at the Company
Meeting contemplated by Section 3.6 hereof;
(g) by Sub if the Board of Directors of the Company or any committee
thereof (i) shall have amended, modified, rescinded or repealed the
recommendation of the Company's Board of Directors to the shareholders of the
Company to approve the Merger and the adoption of this Agreement, or (ii) shall
have adopted any other resolution in connection with this Agreement and the
transactions contemplated hereby inconsistent with such recommendation of the
consummation of the transactions contemplated hereby; or
(h) by Sub, if any representation or warranty of the Company which was
true on the date of this Agreement shall have become untrue such that the
condition set forth in Section 10.3(a) would be incapable of being satisfied by
September 16, 1996 or by the Company if any representation or warranty of Sub or
JEDI which was true on the date of this Agreement shall have become untrue such
that the condition set forth in Section 10.2(a) would be incapable of being
satisfied by September 16, 1996.
Section 11.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 11.1, no party hereto shall have any obligation or
liability to any other party hereto except (i) that the third to the last and
the last sentences of Section 9.1, this Section 11.2 and Article XII shall
survive any such termination and (ii) that, except as set forth herein, nothing
herein and no termination pursuant hereto will relieve any party from liability
for any breach of this Agreement.
Section 11.3 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval hereof by the shareholders of the Company,
but, after such approval, no amendment shall be made that under applicable law
requires further approval of such shareholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 11.4 Waiver. At any time prior to the Effective Time, the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, may (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of any other party contained herein or in any
documents delivered pursuant hereto by any other party and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such
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<PAGE> 43
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Non-Survival of Representations and Warranties. All
representations, warranties covenants and agreements set forth in this Agreement
shall terminate at the Effective Time or upon termination of this Agreement
pursuant to Section 11.1, as the case may be, except that (i) the agreements set
forth in Sections 9.3, 9.4(b) and 9.6 and Articles III and XII (other than
Section 12.3) shall survive the Effective Time, and (ii) the agreements set
forth in the third to the last and the last sentences of Section 9.1 and in
Article XII (including Section 12.3) shall survive termination, in each case
until the expiration of the applicable statute of limitations on actions arising
under contract .
Section 12.2 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by facsimile transmission
or by delivery service, or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214
Attention: Jerry D. Jordan
Chairman of the Board and
Chief Executive Officer
Telecopy No.: (614) 888-6287
With a copy to:
Vorys, Sater, Seymour and Pease
52 East Gay Street
Columbus, Ohio 43216-1008
Attention: Roger E. Lautzenhiser
Telecopy No.: (614) 464-6350
If to Sub or JEDI:
c/o Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Brenda McGee, Specialist
Telecopy No.: (713) 646-3602
Telephone No.: (713) 853-5259
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<PAGE> 44
With a copy to:
Enron Capital & Trade Resources Corp.
1400 Smith Street
Houston, Texas 77002
Attention: W. Craig Childers
W. Lance Schuler
Telecopy No.: (713) 646-3393
and
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2300
Houston, Texas 77002
Attention: Michael P. Finch
Telecopy No.: (713) 615-5282
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 12.2.
Section 12.3 Expenses; Termination Fees. (a) Subject to Sections
12.3(b), (d) and (e), whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated herein shall be paid by the party incurring such expenses.
(b) If this Agreement is terminated by Sub pursuant to Sections
11.1(c), (f) or (g), or by the Company pursuant to Section 11.1(e), then the
Company shall, by wire transfer of immediately available funds to an account
designated by Sub, reimburse Sub and its affiliates, not later than two business
days after Sub submits to the Company statements therefor, for all out-of-pocket
fees and expenses (including, without limitation, all fees and expenses of
counsel, accountants, financial institutions, experts and consultants) and all
internal costs (determined by multiplying $100 by the aggregate number of hours
actually spent by employees of JEDI and its affiliates), incurred in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the arranging of financing for the Merger and all
other matters related to the consummation of the transactions contemplated
hereby, the aggregate total of which recoverable fees, expenses and costs shall
not exceed $1,000,000. A payment under this Section 12.3(b) shall not limit
Sub's right to pursue all other available remedies if the Company has breached
this Agreement, although neither Sub nor JEDI shall be permitted to recover such
fees, expenses and costs more than once.
(c) In addition to any amounts payable pursuant to Section 12.3(b), if
this Agreement is terminated for any reason other than as a result of
termination by Sub pursuant to Section 11.1(b) or (d) or by the Company pursuant
to Section 11.1(b), (c) or (d), then if (i) a Terminating Other Acquisition
Transaction is consummated or (ii) an Other Acquisition Transaction that
provides a higher value to the holders of Company Common Stock than the Merger
would have provided is consummated prior to the first anniversary of the date of
this Agreement, then the Company shall
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<PAGE> 45
pay to JEDI, by wire transfer of immediately available funds to an account
designated by JEDI, $5.0 million not later than the second business day
following such consummation. A payment under this Section 12.3(c) shall not
limit Sub's right to pursue all other available remedies if the Company has
breached this Agreement.
(d) If (i) prior to the termination of this Agreement, any person
(other than Sub or any affiliate thereof) or group (as such term is defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) becomes the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of 20% or more of the outstanding Company Common Stock, (ii)
either this Agreement is terminated pursuant to Section 11.1(f) or such
beneficial owner takes any action to oppose or prevent the consummation of the
Merger and this Agreement is terminated for any reason, and (iii) an Other
Acquisition Transaction is consummated within one calendar year of the scheduled
date of the Company Meeting, then the Company shall pay to JEDI, by wire
transfer of immediately available funds to an account designated by JEDI $5.0
million plus all out-of-pocket fees and expenses (of the type referred to in and
subject to the limitations set forth in Section 12.3(b)) not later than two
business days after Sub submits to the Company a request therefore.
Notwithstanding the foregoing, no payment shall be required under Sections
12.3(b) or 12.3(c), if the payment specified by this Section 12.3(d) has been
made to Sub, and no payment shall be required under this Section 12.3(d) if the
payments specified by Sections 12.3(b) and (c) have been made to Sub. A payment
under this Section 12.3(d) shall not limit Sub's right to pursue all other
available remedies if the Company has breached this Agreement.
(e) If this Agreement is terminated by the Company pursuant to Section
11.1(c), then Sub shall, by wire transfer of immediately available funds to an
account designated by the Company, reimburse the Company and its affiliates, not
later than two business days after the Company submits to Sub statements
therefor, for all out-of-pocket fees and expenses (including, without
limitation, all fees and expenses of counsel, accountants, financial
institutions, experts and consultants) incurred in connection with or related to
the authorization, preparation, negotiation, execution and performance of this
Agreement and all other matters related to the consummation of the transactions
contemplated hereby, the aggregate total of which recoverable fees and expenses
shall not exceed $250,000. A payment under this Section 12(e) shall not limit
the Company's right to pursue all other available remedies if Sub or JEDI has
breached this Agreement.
Section 12.4 Publicity. So long as this Agreement is in effect, none of
JEDI, Sub nor the Company shall issue any press release or otherwise make any
public statement with respect to the transactions contemplated by this Agreement
without the consent of the other, which consent shall not be unreasonably
withheld, unless such press release or public statement is required by law or
the applicable rules of any securities market, in which case such press release
or public statement may be made after providing the other parties hereto a
reasonable opportunity to comment thereon.
Section 12.5 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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<PAGE> 46
Section 12.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby may be consummated to the
fullest extent possible.
Section 12.7 Miscellaneous.
(a) This Agreement (together with the exhibits and the Company
Disclosure Schedule referred to herein) and the Confidentiality Agreement (i)
constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof, (ii) is not intended to confer upon any
other person any rights or remedies hereunder and shall be binding upon and
inure to the benefit solely of each party hereto, and their respective
successors and assigns, (iii) shall not be assigned by operation of law or
otherwise, except that Sub shall have the right to assign to any direct wholly
owned subsidiary of JEDI incorporated under the laws of Ohio any and all rights
and obligations of Sub under this Agreement, and (iv) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Ohio with respect to the procedures applicable to the Merger and the
internal affairs of the parties and the laws of the State of Ohio, with respect
to all other matters (without giving effect to the provisions thereof relating
to conflicts of law). This Agreement may be executed in any number of
counterparts which together shall constitute a single agreement.
(b) In the event any action, suit, proceeding or claim is commenced or
asserted by a party against another party and/or any director or officer of such
other party relating, directly or indirectly, to this Agreement, it is expressly
agreed that no party shall be entitled to obtain any punitive, exemplary,
treble, or consequential damages of any type under any circumstances in
connection with such action, suit, proceeding or claim, regardless of whether
such damages may be available under law, the parties hereby waiving their
rights, if any, to recover any such damages in connection with any such action,
suit, proceeding or claim.
(c) Pronouns, whenever used in this Agreement, and of whatever gender,
shall include persons of every kind and character, and the singular shall
include the plural whenever and as often as may be appropriate. Any reference
herein to "including" and words of similar import refer to "including without
limitation."
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<PAGE> 47
IN WITNESS WHEREOF, JEDI, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunder duly authorized
all as of the date first written above.
JENCO ACQUISITION, INC.
By: /s/ W. Craig Childers
---------------------------------
W. Craig Childers
Vice President
CLINTON GAS SYSTEMS, INC.
By: /s/ Jerry D. Jordan
---------------------------------
Jerry D. Jordan
Chairman of the Board and Chief Executive
Officer
/s/ F. Daniel Ryan
---------------------------------
F. Daniel Ryan
President
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Management
Limited Partnership, its general partner
By: Enron Capital Corp., its general partner
By: /s/ W. Craig Childers
-------------------------------
W. Craig Childers
Agent and Attorney-in-Fact
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<PAGE> 48
Exhibit A
FORM OF OPINION TO BE DELIVERED BY
VINSON & ELKINS L.L.P.
1. JEDI is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
partnership power to carry on its business as it is now being conducted. JEDI
has the partnership power and authority to enter into the Agreement and to
perform its obligations thereunder. The execution and delivery of the Agreement
by JEDI and the consummation of the transactions contemplated thereby by JEDI
have been duly authorized by all necessary partnership action on the part of
JEDI, and the Merger Agreement has been duly executed and delivered by JEDI.
2. Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Ohio and has the corporate power
to carry on its business as it is now being conducted. Sub has the corporate
power and authority to enter into the Agreement and to perform its obligations
thereunder. The execution and delivery of the Agreement by Sub and the
consummation of the transactions contemplated thereby by Sub have been duly
authorized by all necessary corporate action on the part of Sub, and the
Agreement has been duly executed and delivered by Sub.
3. Neither the execution and delivery of the Agreement, nor the
consummation of the transactions contemplated thereby, will (i) conflict with
or violate the Articles of Incorporation or Code of Regulations of Sub or the
partnership agreement of JEDI or (ii) to our knowledge, result in any breach or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise in others to any rights of termination, cancellation or
acceleration under, any indenture, contract, instrument, or loan agreement
pursuant to which JEDI or Sub is a borrower, or any license, franchise, permit,
order, decree, concession, lease, judgment, statute, law, ordinance, rule or
regulation applicable to JEDI or Sub or their assets, other than, in the case
of clause (ii) only, such breaches, defaults, violations and losses of rights
that would not have a Sub Material Adverse Effect or a JEDI Material Adverse
Effect. Other than the filing of the certificate of merger (the "Certificate of
Merger") in accordance with the General Corporation Law of the State of Ohio
and those filings or registrations made or consents, authorizations or
approvals obtained in connection with the transactions contemplated by the
Agreement, no filing or registration with, or authorization, consent or
approval of, any governmental or regulatory body or authority is necessary for
the consummation by JEDI or Sub of the Merger or the other transactions
contemplated by the Agreement, except where the failure to make any such filing
or registration or obtain any such authorization, consent or approval would not
prevent consummation of the Merger or have either a Sub Material Adverse Effect
or a JEDI Material Adverse Effect.
4. To our knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against JEDI or Sub to
restrain or prevent the consummation of the transactions contemplated by the
Agreement.
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<PAGE> 49
5. We have participated in conferences with representatives of the
Company, JEDI, Sub and the Company's accountants, at which conferences the
contents of the Proxy Statement and related matters were discussed. We have not
independently verified the accuracy, completeness or fairness of the statements
contained in the Proxy Statement, and we are not passing upon and do not
assume responsibility for the accuracy, completeness or fairness of such
statements. However, based upon our participation in the aforesaid conferences,
we have no reason to believe that the Proxy Statement (except as to the
financial statements and other financial and statistical data contained therein,
oil and gas reserve information and information relating to the Company or its
Subsidiaries, as to which we express no opinion), as of its date and as of the
date hereof, contained any 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, in light of the circumstances under which they were made,
not misleading.
6. The Merger will become effective upon the filing of the Certificate
of Merger with the Secretary of State of the State of Ohio.
With respect to matters regarding Ohio law, such counsel may rely
solely on the opinion of Bricker & Eckler, special Ohio counsel to Sub.
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EXHIBIT B
FORM OF OPINION TO BE DELIVERED BY
VORYS, SATER, SEYMOUR AND PEASE
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Ohio and has the
corporate power to carry on its business as it is now being conducted. The
Company has the corporate power and authority to enter into the Agreement and
to perform its obligations thereunder. The execution and delivery of the
Agreement by the Company and the consummation of the transactions contemplated
thereby by the Company have been duly authorized by all necessary corporate
action on the part of the Company, and the Agreement has been duly executed and
delivered by the Company.
2. The authorized capital stock of the Company consists of
10,000,000 shares of Company Common Stock and 2,000,000 shares of preferred
stock without par value. As of the date hereof, (i) [5,681,561] shares of
Company Common Stock are outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) 533,368 shares of Company Common Stock are held by
the Company and its Subsidiaries and (iii) no shares of preferred stock are
outstanding. The stockholders of the Company have no preemptive rights
pursuant to the Company's Articles of Incorporation or Regulations or, to our
knowledge, any other instrument. In accordance with the terms of the
Debentures, the conversion rights thereunder will, as of the Effective Time,
represent the right to receive only the cash consideration specified in Section
3.1 of the Merger Agreement in place of each share of Company Common Stock into
which the Debentures were convertible immediately prior thereto, and the
Debentures will not at and after the Effective Time represent the right to
acquire any security of the Surviving Corporation.
3. To our knowledge, as of the date hereof, there are not issued
or outstanding any bonds, debentures, notes or other evidences of indebtedness
issued by the Company having the right to vote on any matters on which the
Company's stockholders may vote. To our knowledge, there will be, as of the
Effective Time, no existing options, warrants, calls or other rights,
agreements or commitments outstanding obligating the Company to issue, deliver
or sell shares of its capital stock or debt securities, or obligating the
Company to grant, extend or enter into any such option, warrant, call or other
such right, agreement or commitment.
4. Each of the Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation and has the corporate power to carry on its business as it is now
being conducted. The Clinton Oil Company is duly qualified as a foreign
corporation and in good standing in the State of Pennsylvania. Clinton Gas
Marketing, Inc. is duly qualified as a foreign corporation and in good standing
in the States of Texas, Louisiana and Oklahoma. All the outstanding shares of
capital stock of each of the Subsidiaries are validly issued, fully paid and
nonassessable and, to our knowledge, are owned by the Company free and clear of
all liens, claims or encumbrances except as expressly described in the Company
Disclosure Schedule. To our knowledge, there are no existing options, warrants,
calls or other rights, agreements or commitments relating to the issued or
unissued capital stock or other securities of any of the Subsidiaries.
5. Except as disclosed in the Company Disclosure Schedule, neither
the execution and delivery of the Agreement, nor the consummation of the
transactions contemplated thereby, will (i) conflict with or violate the
Articles of Incorporation or Regulations (or similar organizational
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<PAGE> 51
in documents) of the Company or any of its Subsidiaries or (ii) to our
knowledge, result in any breach or constitute a default (with or without notice
or lapse of time, or both) or give rise to any rights of termination,
cancellation or acceleration under any indenture, contract, loan agreement,
lease or other instrument to which the Company or any of its Subsidiaries is a
party or under a license or franchise issued to the Company or any of its
Subsidiaries; (iii) to our knowledge, constitute a violation by the Company or
any of its Subsidiaries of any statute, law, rule or regulation of the State of
Ohio or the United States of America binding on the Company or any of its
Subsidiaries or any judgment, decree or order of the State of Ohio or the
United States of America to which the Company or any of its Subsidiaries is
bound or (iv) to our knowledge, result in the creation or imposition of any
mortgage, deed of trust or lien upon the properties or assets of the Company or
any of its Subsidiaries, other than (in the case of items (ii), (iii) and
(iv)), breaches, defaults, violations, losses of rights or liens that would not
have a Company Material Adverse Effect.
6. To our knowledge, except as disclosed in the Company Disclosure
Schedule, there is no litigation, proceeding or governmental investigation
pending or overtly threatened against the Company.
7. Other than the filing of the certificate of merger ("Certificate of
Merger") in accordance with the General Corporation Law of the State of Ohio
and those filings or registrations made or consents, authorizations or
approvals obtained in connection with the transactions contemplated by the
Agreement, no filing or registration with, or authorization, consent or
approval of, any governmental or regulatory body or authority is necessary for
the consummation by the Company of the Merger or the other transactions
contemplated by the Agreement, except where the failure to make any such filing
or registration or obtain any such authorization, consent or approval would not
prevent consummation of the Merger or have a Company Material Adverse Effect.
8. The Proxy Statement complies as to form in all material respects
with the requirements of Schedule 14A of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (except that we express no
opinion as to numerical (including oil and gas reserve data), financial and
statistical data, financial statements and notes thereto and related schedules
therein).
9. The Merger will become effective upon the filing of the Certificate
of Merger with the Secretary of State of Ohio.
In the process of preparing the Proxy Statement, we have participated
in conferences with the officers and other representatives of the Company, JEDI
and Sub, and the representatives of the independent certified public
accountants for the Company, at which the contents of the Proxy Statement and
related matters were discussed and, although we are not passing upon and do not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Proxy Statement, we hereby confirm that no facts
have come to our attention which have caused us to believe that the Proxy
Statement (other than financial statements and other financial and statistical
data and oil and gas reserve information contained therein, as to which we
express no opinion) contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein, in light of the
circumstances under which they were made, not misleading.
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<PAGE> 1
[GRAPHIC] NEWS EXHIBIT 99.1
CLINTON GAS SYSTEMS, INC.
THE CLINTON OIL COMPANY
CLINTON GAS MARKETING, INC.
4770 INDIANOLA AVENUE
COLUMBUS, OHIO 43214
(614) 888-9588
FAX (614) 888-6287
DATE: MAY 24, 1996
FOR RELEASE: IMMEDIATELY
SUBJECT: CGAS ANNOUNCES MERGER AGREEMENT
CONTACT: JERRY D. JORDAN, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
614/888-9588
COLUMBUS, OHIO -- (NASDAQ/NMS:CGAS) Clinton Gas Systems, Inc. ("CGAS")
announced today that it has entered into a definitive Merger Agreement with
Joint Energy Development Investments Limited Partnership ("JEDI"), an affiliate
of Enron Capital & Trade Resources Corp., whereby JEDI will acquire, in the
merger, shares of Common Stock of CGAS at a price of $6.75 per share, in cash.
CGAS currently has a total of 5,681,561 shares of Common Stock outstanding, on a
fully diluted basis. The Merger Agreement has been approved by the Board of
Directors of CGAS and its Special Committee of outside directors. Concurrently
with the execution of the Merger Agreement, JEDI, and a newly-formed subsidiary
of JEDI, JENCO Acquisition, Inc., have entered into agreements with Jerry D.
Jordan, Chief Executive Officer of CGAS, providing that he will continue in that
position, and maintain a continuing ownership position in CGAS after the merger.
Other agreements with certain members of CGAS management also provide for a
continuing management role for those parties.
Consummation of the acquisition is subject to the satisfaction of
various conditions, including approval of the transaction by the stockholders of
CGAS, and the receipt of all necessary consents and government approvals. CGAS
currently expects to hold a special meeting of its stockholders as soon as
practicable after receipt of clearance of its proxy materials from the
Securities and Exchange Commission for the purpose of voting on the transaction.
CGAS is an independent oil and natural gas exploration and production
company, and a natural gas service company. The shares of CGAS are traded on the
National Market Tier of The Nasdaq Stock Market under the symbol of "CGAS".
--30--
<PAGE> 1
EXHIBIT 99.2
SUBSCRIPTION AGREEMENT
between
JENCO ACQUISITION, INC.
and
JERRY D. JORDAN
dated
May 24, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I 1
CERTAIN TERMS 1
1.1 Certain Terms 1
ARTICLE II 1
TENDER OF COMPANY COMMON STOCK 1
2.1 Contribution of Company Common Stock 1
ARTICLE III 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
MANAGEMENT INVESTOR 2
3.1 Company Common Stock 2
3.2 Power and Authority; Enforceability 2
3.3 Shareholders Agreement 2
3.4 Investment Representations 2
3.5 Additional Representations 3
3.6 Equity Contribution and Financing; Sale of Clinton Gas Systems,
Inc 3
3.7 Fees 4
ARTICLE IV 4
MISCELLANEOUS 4
4.1 Amendment; Waivers 4
4.2 Assignment 4
4.3 Notices 4
4.4 Counterparts 5
4.5 Headings 5
4.6 Choice of Law 5
4.7 Entire Agreement 6
4.8 Cumulative Rights 6
4.9 No Partnership 6
4.10 Number; Without Limitation 6
4.11 Severability 6
4.12 Third Person 6
4.13 Arbitration 6
4.14 Termination 7
4.15 Construction 7
</TABLE>
<PAGE> 3
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is entered into as of
May 24, 1996, between Jenco Acquisition, Inc., an Ohio corporation ("Sub"), and
Jerry D. Jordan (the "Management Investor").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Sub, Joint Energy Development Investments Limited Partnership, a
Delaware limited partnership ("JEDI"), and Clinton Gas Systems, Inc., an Ohio
corporation (the "Company"), are entering into an Agreement and Plan of Merger
(the "Merger Agreement") providing for the merger of Sub with and into the
Company (the "Merger").
WHEREAS, the Management Investor is the owner and holder of shares of
Company Common Stock (as defined in the Merger Agreement).
WHEREAS, the Management Investor desires to (a) contribute to Sub
certain of the shares of Company Common Stock owned by the Management Investor
and (b) to enter into this Agreement, pursuant to which the Management Investor
will agree to contribute to Sub shares of Company Common Stock in exchange for
shares of common stock of Sub ("Sub Common Stock"), which Sub Common Stock will
be converted, pursuant to the Merger, into common stock of the corporation
surviving in the Merger (the "Surviving Corporation").
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
CERTAIN TERMS
1.1 CERTAIN TERMS. Capitalized terms used but not defined herein shall
have the meanings given such terms in the Merger Agreement.
ARTICLE II
TENDER OF COMPANY COMMON STOCK
2.1 CONTRIBUTION OF COMPANY COMMON STOCK. The Management Investor
hereby agrees to contribute to Sub 148,150 shares of the Company Common Stock
owned by the Management Investor (the "Shares"). Subject to the satisfaction of
the conditions to the obligations of the parties to the Merger Agreement to
effect the Merger or the
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<PAGE> 4
waiver thereof by the applicable parties to the Merger Agreement in accordance
therewith, such Company Common Stock shall be deemed to be contributed to Sub
effective immediately prior to the Effective Time. At the Closing, and effective
immediately prior to the Effective Time, Sub shall issue 1,000 shares of Sub
Common Stock to the Management Investor in consideration for such Company Common
Stock.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MANAGEMENT INVESTOR
3.1 COMPANY COMMON STOCK. The Management Investor hereby represents and
warrants to Sub that (a) the Shares are held of record by the Management
Investor, are fully paid and nonassessable, and, at the time same are
contributed to Sub hereunder, will be owned by the Management Investor free and
clear of all encumbrances, and (b) the Management Investor has not appointed or
granted any proxy or power of attorney or entered into any voting agreement with
respect to the Shares. The Management Investor shall not sell, assign, transfer,
pledge, hypothecate, encumber, or otherwise dispose of, or appoint or grant any
proxy or power of attorney or enter into any voting agreement with respect to,
any of the Shares at any time prior to the Effective Time.
3.2 POWER AND AUTHORITY; ENFORCEABILITY. The Management Investor hereby
represents and warrants to Sub that (a) he has all necessary power and
authority, and the legal capacity, to execute and deliver this Agreement, to
perform his obligations hereunder, and to consummate the transactions
contemplated hereby and (b) this Agreement has been duly and validly executed
and delivered by the Management Investor and constitutes the binding obligation
thereof, enforceable against the Management Investor in accordance with its
terms.
3.3 SHAREHOLDERS AGREEMENT. Concurrently with the execution hereof, the
Management Investor and his spouse have executed the Shareholders Agreement
dated as of the date hereof between Sub and the Management Investor (the
"Shareholders Agreement"). The Management Investor agrees and acknowledges that
the Sub Common Stock being subscribed to hereunder by the Management Investor
and the common stock of the Surviving Company issued in exchange therefor
(collectively, the "Acquired Securities") are in each case subject to the terms
of the Shareholders Agreement.
3.4 INVESTMENT REPRESENTATIONS. The Management Investor represents and
warrants to Sub that (a) he is acquiring the Acquired Securities being acquired
hereunder without a view to the distribution thereof except as permitted by the
Securities Act of 1933, as amended, and the General Rules and Regulations
thereunder (the "Act"), (b) he has been advised that the Sub Common Stock has
not been and the other Acquired Securities will not be registered under the Act,
the Acquired Securities must be held indefinitely and the Management Investor
must continue to bear the economic risk of the investment in the Acquired
Securities unless they are subsequently registered under the Act or an exemption
from such registration is available, and no public market for the
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<PAGE> 5
Acquired Securities can be anticipated, (c) he is familiar with the business and
financial condition, properties, operations and prospects of Sub and the Company
and the terms and the effects of the Merger, (d) he has been given the
opportunity to obtain any information or documents and to ask questions and
receive answers about Sub and the Company and the business and prospects of Sub
and the Company that he deems necessary to evaluate the merits and risks related
to his investment in the Acquired Securities, including, without limitation,
information, documents, questions and answers related to the Merger, and no
representations concerning such matters or any other matters have been made to
the Management Investor, (e) his financial condition is such that he can afford
to bear the economic risk of holding the unregistered Acquired Securities for an
indefinite period of time and he has adequate means for providing for his
current needs and personal contingencies, and (f) his knowledge and experience
in financial and business matters are such that he is capable of evaluating the
merits and risks of his purchase of the Acquired Securities as contemplated by
this Agreement.
3.5 ADDITIONAL REPRESENTATIONS. The Management Investor hereby
represents and warrants to Sub that he has been represented by counsel in
connection with the negotiation of this Agreement and his execution and delivery
of this Agreement and that he has discussed with his counsel the legal effect of
this Agreement and the rights and obligations arising hereunder. The Management
Investor hereby acknowledges that neither Sub nor any other party to the Merger
Agreement nor any of their affiliates or advisors has made any representation or
warranty to the Management Investor concerning the tax effects of the
transactions contemplated by this Agreement.
3.6 EQUITY CONTRIBUTION AND FINANCING; SALE OF CLINTON GAS SYSTEMS,
INC. (a) The Management Investor acknowledges that, subject to the consummation
of the Merger, (i) JEDI will make a capital contribution to Sub at or prior to
the Effective Time in the amount of $31,354,000 in consideration for 31,354
shares of Sub Common Stock that immediately after the Effective Time will
represent approximately 97% of the outstanding common stock of the Surviving
Corporation on a fully diluted basis and (ii) that other than the capital
contributions referred to in (i) of this Section 3.6(a), JEDI has no obligation
at any time prior to or after the Effective Time to contribute capital to, lend
funds to, or otherwise invest any sums in Sub, the Company, or the Surviving
Corporation except to the extent otherwise provided in the Merger Agreement.
(b) The Management Investor acknowledges that (i) subject to the
consummation of the Merger, either (A) immediately prior to the Effective Time
the Company, or (B) following the Effective Time the Surviving Corporation, as
the case may be, may sell Clinton Gas Marketing, Inc. and any associated assets
constituting the natural gas management and natural gas supply businesses of the
Company ("CGM") to an affiliate of Enron Corp. for an aggregate purchase price
of up to $6,000,000, (ii) the Surviving Corporation shall have no ongoing
interest in CGM and, accordingly, the holders of the common stock of the
Surviving Company will not share in any future earnings or capital appreciation
of CGM, and (iii) the Management Investor has considered these factors,
including the amount of the purchase price to be paid for CGM, in making his
decision to execute and deliver this Agreement and to acquire the Sub Common
Stock pursuant hereto.
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<PAGE> 6
3.7 FEES. The Management Investor hereby acknowledges and agrees that,
subject to and after the consummation of the Merger and the Company's receipt of
all of the amounts specified in Section 3.6, Sub has agreed to pay to ECT
Securities Corp., an indirect wholly-owned subsidiary of Enron Corp., a
transaction fee in the amount of up to $1.1 million in connection with the
Merger (based on capital contributions of not less than $31,355,000 by JEDI).
ARTICLE IV
MISCELLANEOUS
4.1 AMENDMENT; WAIVERS. This Agreement may only be altered,
supplemented, amended or waived by the written consent of Sub and the Management
Investor; provided, however, that (A) either party hereto may (without the
consent of any other Person) waive, in writing, any obligation owed to it
hereunder by the other party hereto and (B) either party hereto may (without the
consent of any other Person) waive, in writing, any right it has hereunder. Any
waiver permitted hereunder may be made prospectively or retroactively.
4.2 ASSIGNMENT. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their permitted
successors and assigns; provided, however, that neither party hereto shall have
the right to assign this Agreement without the consent of the other party
hereto; and provided further that this Agreement will terminate if the
Management Investor dies or becomes permanently disabled prior to the Effective
Time, any Company Common Stock contributed to Sub by the Management Investor
hereunder shall be returned to the Management Investor or, if applicable, the
legal representative of the Management Investor, and neither Sub nor the
Management Investor nor, if applicable, any of the heirs, successors, or legal
representatives of the Management Investor shall have any further obligations to
one another hereunder.
4.3 NOTICES. Any and all notices, designations, consents, offers,
acceptances, or other communications provided for herein (each a "Notice") shall
be given in writing by personal delivery, overnight courier, telegram, or
telecopy which shall be addressed, or sent, to the respective addresses or
telecopy numbers as follows (or such other address or telecopy number as any
party hereto may specify for itself by Notice given in accordance with this
Section 4.3):
Sub: c/o Enron Corp.
1400 Smith
Houston, Texas 77002
Attention: Brenda McGee, Specialist
Telecopy No. 713-646-3602
Telephone No. 713-853-5259
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<PAGE> 7
with a copy to:
Enron Corp.
1400 Smith
Houston, Texas 77002
Attention: W. Craig Childers
W. Lance Schuler
Telecopy No. 713-646-3393
Management Investor: Mr. Jerry D. Jordan
Chairman of the Board and Chief Executive Officer
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbia, Ohio 43214
Telecopy No. 614/888-6287
with a copy to:
Alec Wightman
Baker & Hostetler
65 East State Street, Suite 2100
Columbus, Ohio 43215-4260
Telecopy No. 614/462-2616
All Notices shall be deemed effective, delivered and received (a) if given by
personal delivery, when such Notice is personally delivered at the address
specified above; (b) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified above and receipt thereof is confirmed; (c) if
given by overnight courier, on the business day immediately following the day on
which such Notice is delivered to a reputable overnight courier service; or (d)
if given by telegram, when such Notice is delivered at the address specified
above.
4.4 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which counterparts shall be deemed to be an original and which counterparts
together shall constitute one and the same agreement of the parties hereto.
4.5 HEADINGS. Headings contained in this Agreement are inserted only as
a matter of convenience and in no way define, limit, or extend the scope or
intent of this Agreement or any provisions hereof.
4.6 CHOICE OF LAW. This Agreement shall be governed by the internal
laws of the State of Ohio without regard to the principles of conflicts of laws
thereof.
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<PAGE> 8
4.7 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties hereto respecting the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect thereto.
4.8 CUMULATIVE RIGHTS. The rights of the parties hereto under this
Agreement are cumulative and in addition to all similar and other rights of the
parties under other agreements.
4.9 NO PARTNERSHIP. No term or provision of this Agreement shall be
construed to establish any relationship of partnership, agency or joint venture
among the parties hereto.
4.10 NUMBER; WITHOUT LIMITATION. Pronouns, wherever used in this
Agreement, shall include Persons of every kind and character, and the singular
shall include the plural whenever and as often as may be appropriate. Any
reference herein to "including" and words of similar import refer to "including
without limitation."
4.11 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties hereto shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions, the
economic effect of which approximates as nearly as possible that of the invalid,
illegal or unenforceable provisions.
4.12 THIRD PERSON. Nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any Person not a party hereto any
rights or remedies under or by reason of this Agreement.
4.13 ARBITRATION. Any and all claims, demands, causes of action,
disputes, controversies and other matters in question arising out of or relating
to this Agreement, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement ("Claims"), even though some or all of such
Claims allegedly are extra-contractual in nature, whether such Claims sound in
contract, tort or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
shall be resolved and decided exclusively by binding arbitration pursuant to the
Federal Arbitration Act in accordance with the Commercial Arbitration Rules then
in effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Houston, Texas. The arbitration shall be before a panel of
three arbitrators. Each party to such dispute shall select one arbitrator, and
the two arbitrators selected by the parties shall select the third arbitrator.
The arbitrators are authorized to issue subpoenas for depositions and other
discovery mechanisms, as well as trial subpoenas, in accordance with the Federal
Rules of Civil Procedure. Either party may initiate a proceeding in the
appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by
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<PAGE> 9
any federal or state court having jurisdiction. The enforcement of this
agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including, without limitation, any exemplary damages, treble damages or any
other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances,
regardless of whether such damages may be available under applicable law or
otherwise, the parties hereto hereby waiving their right, if any, to recover
such damages in connection with any Claims. The arbitrators shall be entitled to
award costs of the arbitration and attorney's fees as they deem appropriate.
Prior to any Person instituting a Claim under this Agreement, such Person shall
provide to the other party hereto a written notice specifying the nature and
basis of the Claim. The Persons who are the subject of any Claim shall be given
thirty (30) days to cure any breach before any Claim is filed. It is further
agreed that prior to such Claims being submitted to the arbitrators on such
Claims, the parties to the Claims shall attempt to resolve such Claims through
non-binding mediation of such Claims.
4.14 TERMINATION. If the Merger Agreement is terminated in accordance
with its terms, this Agreement shall terminate and the parties hereto shall have
no further obligations to any other party hereunder; provided, however that Sub
shall return to the Management Investor any Company Common Stock tendered to it
hereunder.
4.15 CONSTRUCTION. The Management Investor and the Sub have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Management Investor
and the Company, as the successor to the Sub, and no presumption or burden of
proof shall arise favoring or disfavoring the Management Investor or the Company
by virtue of the authorship of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
JENCO ACQUISITION, INC.
By:
W. Craig Childers
Vice President
MANAGEMENT INVESTOR:
Jerry D. Jordan, Individually
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<PAGE> 1
EXHIBIT 99.3
BUSINESS OPPORTUNITY
AGREEMENT
DATED MAY 24, 1996
AMONG
ENRON CAPITAL & TRADE RESOURCES CORP.,
JENCO ACQUISITION, INC.,
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
AND
JERRY D. JORDAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1. Certain Definitions 3
Section 2. Option Relating to Certain Business Opportunities 5
Section 3. Option Relating to Enron Projects 7
Section 5. Agreement that Enron Entities do not Have to
Offer Certain Business Opportunities to the
Company 9
Section 6. Pursuit of Business Opportunities by Enron
Entities in Certain Events 11
Section 7. Consents by Shareholders of the Company 11
Section 8. Arbitration 11
Section 9. Miscellaneous 12
(a) Contracts and Agreements 12
(b) Third Party Beneficiaries 12
(c) Confidentiality 12
(d) Amendment; Waivers 12
(e) Assignment 13
(f) Notices 13
(g) Counterparts 13
(h) Choice of Law 14
(i) Entire Agreement 14
(j) No Partnership 14
(k) Invalidity 14
(l) Contractual Obligations 14
(m) Effectiveness of this Agreement 14
</TABLE>
-i-
<PAGE> 3
BUSINESS OPPORTUNITY AGREEMENT
THIS BUSINESS OPPORTUNITY AGREEMENT (this "Agreement"), dated as of May
24, 1996, is by and among Enron Capital & Trade Resources Corp., a Delaware
corporation ("ECT"), Jenco Acquisition., an Ohio corporation ("Sub"), Joint
Energy Development Investments Limited Partnership, a Delaware limited
partnership ("JEDI"), and Jerry D. Jordan (the "Management Investor").
W I T N E S S E T H:
WHEREAS, Sub and JEDI are parties to an Agreement and Plan of Merger
dated May 24, 1996 relating to a proposed merger (the "Merger") of Sub into
Clinton Gas Systems, Inc., an Ohio corporation (the "Company") pursuant to which
the Company will be the surviving corporation, the holders of all outstanding
shares of Common Stock of the Company immediately prior to the Merger will
receive cash for such shares, and JEDI or its designee will own a controlling
interest in the Company following the Merger; and
WHEREAS, JEDI expects to derive significant benefits from its ownership
interest in the Company following the Merger; and
WHEREAS, in contemplation of and in connection with the Merger, Sub
proposes to enter into a subscription agreement and an employment agreement with
the Management Investor and a Shareholders Agreement (as defined below) with
JEDI and the Management Investor and other arrangements that the parties hereto
believe to be beneficial to the Company, the Management Investor and JEDI
following the Merger, such agreements and arrangements to be executed
simultaneously with the execution of this Agreement and effective upon
consummation of the Merger; and
WHEREAS, the Management Investor expects to derive significant benefits
from the Merger and from his employment relationship with, and ownership
interest in, the Company following the Merger; and
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<PAGE> 4
WHEREAS, ECT is a wholly-owned subsidiary of Enron Corp., a Delaware
corporation ("Enron"), and Enron owns controlling interests in a number of other
entities (Enron, ECT and any other Affiliate of Enron other than the Company
being referred to herein individually as an "Enron Entity" and collectively as
"Enron Entities"); and
WHEREAS, in order for the Merger to occur, ECT and other Enron Entities
will be required to take certain actions, including the approval of the terms of
the subscription agreement, employment agreement, Shareholders Agreement and
other arrangements between the Company and the Management Investor, following
the Merger and the furnishing of cash necessary to permit the Merger
consideration to be paid to the holders of outstanding Common Stock of the
Company; and
WHEREAS, Enron Entities own interests in a number of corporations,
partnerships and other entities engaged in energy-related businesses and intend
to acquire from time to time additional interests in such Persons (as
hereinafter defined) or in other Persons; and
WHEREAS, Enron Entities may owe fiduciary or contractual duties to
other Enron Entities and to owners of interests in other Enron Entities or to
other Persons; and
WHEREAS, upon consummation of the Merger, Enron Entities may owe
fiduciary or contractual duties to the Company, its shareholders and other
Persons, and the Company may owe fiduciary or contractual duties to its
shareholders and other Persons; and
WHEREAS, in the event an Enron Entity or the Company were to breach any
such duty, it could be held liable for damages in a legal action brought either
directly on behalf of the Person to whom such duty is owed or derivatively on
behalf of such Person by its stockholders, partners or other owners; and
WHEREAS, duties that an Enron Entity or the Company may owe to another
Person may include, under certain circumstances, the duty not to take advantage
of a Business Opportunity (as hereinafter defined) without first offering to
such other Person the opportunity to take advantage of such Business
Opportunity; and
WHEREAS, under the laws applicable to fiduciary duties, in the absence
of this Agreement there could arise circumstances in which an Enron Entity has,
or may be alleged to have, conflicting duties to offer a Business Opportunity to
more than one Person; and
WHEREAS, Enron Entities from time to time purchase properties or
entities and engage in lending or other activities that may result in the
acquisition of interests in properties or entities, including the acquisition of
production payments, royalty interests and other interests in energy properties,
and among the Enron Entities is ECT Securities Corp., which is a registered
broker-dealer that arranges transactions in securities for others and may in the
future engage in securities underwriting activities; and
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WHEREAS, ECT is unwilling to take the actions required of it in order
for the Merger to occur without assurances from the Management Investor and JEDI
that Enron Entities will be permitted to continue to conduct their business
following the Merger without undue risk of liability or damage to business
relationships with customers; and but for this Agreement ECT would be unwilling
to take such actions because of the unacceptable risk of liability to ECT and
other Enron Entities resulting from uncertainties regarding the duties owed by
them; and
WHEREAS, the parties hereto desire to provide for more certainty
regarding the circumstances in which an Enron Entity has a duty to offer a
Business Opportunity to the Company, to specify certain circumstances in which
the Company will have an obligation to offer Business Opportunities to ECT, to
provide for other agreements intended to permit Enron Entities to continue to
conduct their business activities without undue risk of liability to the Company
or its stockholders, including the Management Investor, following the Merger or
undue risk of damage to the Enron Entities' business relationships and to enter
into other agreements aimed at providing, to the extent practicable, more
certainty regarding the duties of Enron Entities and the Company; and
WHEREAS, ECT has relied on the fact that this Agreement would be
executed and in the future will rely on this Agreement and the commitments
herein made by the Company, the Management Investor and JEDI; and ECT and other
Enron Entities that are beneficiaries of this Agreement will, in taking the
steps required of them to cause or permit the Merger to occur and in continuing
to conduct their business following the Merger, rely on this Agreement and the
commitments herein made by the Company, the Management Investor and JEDI; and
WHEREAS, in order to induce ECT and other Enron Entities to enter into,
or to cause other Enron Entities to enter into, definitive agreements relating
to the Merger (including the subscription agreement, the Shareholders Agreement
and, in the case of the Management Investor, the employment agreement), to
enable ECT and other Enron Entities to take the other actions required to be
taken by them in order for the Merger to be consummated, to provide more
certainty regarding the duties of the parties to this Agreement to each other
following the Merger, to permit the Enron Entities to comply with their
fiduciary and contractual duties and to avoid undue risk of litigation, the
parties hereto desire to enter into this Agreement; and each party agrees that
this Agreement is a material inducement to the other parties hereto to enter
into the agreements relating to the Merger and to consummate the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and obligations hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. When used herein
the following terms shall have the meanings indicated:
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"AFFILIATE" of a Person means any Person controlling, controlled by, or
under common control with such Person, with "control" and its correlative terms
meaning the possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or any partnership or other ownership interest, by contract or otherwise) of a
Person. For the purposes of this Agreement, control shall include the
possession, directly or indirectly, through one or more intermediaries, of (A)
in the case of a corporation, 50% or more of the outstanding voting securities
thereof; (B) in the case of a limited liability company, partnership, limited
partnership or venture, the right to 50% or more of the distributions therefrom
(including liquidating distributions); and (C) in the case of any other Person,
50% or more of the economic or beneficial interest therein. For the purposes of
this Agreement, control shall also include serving as manager or general partner
of a Person or performing similar functions for a Person.
"BUSINESS OPPORTUNITY" means any opportunity for a Person (a) to enter
into any transaction pursuant to which such Person would acquire (whether by
purchase, lease, or other transaction), own, invest in, finance, lend funds to,
contribute capital to, manage, operate or otherwise participate in any Person,
assets or transaction or (b) to act as a broker, finder, financial adviser or
investment banker with respect to any such transaction by any other Person. In
no event, however, will the opportunity to market oil or gas produced by the
Company or other Persons from properties in which the Company has an interest
constitute a Business Opportunity, and such term shall exclude the acquisition
of equipment and supplies in the ordinary course of the Company's oil and gas
exploration, development and production business.
"BUSINESS OPPORTUNITY OPTION" shall have the meaning ascribed thereto
in Section 2(a) hereof.
"CLAIMS" shall have the meaning ascribed thereto in
Section 8(a) hereof.
"COMPANY" means the Company and all Affiliates of the Company in which
the Company owns an interest, directly or indirectly, unless the context
otherwise requires.
"E&P BUSINESS" shall have the meaning ascribed thereto in Section 5(a)
hereof.
"ENRON" shall mean Enron Corp., a Delaware corporation.
"ENRON PARTLY-OWNED AFFILIATE" shall have the meaning ascribed thereto
in Section 5(a)(iii) hereof.
"ENRON PROJECT" shall have the meaning ascribed thereto in Section 3(a)
hereof.
"ENRON PROJECT OPTION" shall have the meaning ascribed thereto in
Section 3(a) hereof.
"EOG" shall have the meaning ascribed thereto in
Section 5(a) hereof.
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"INVOLUNTARY TERMINATION" shall have the meaning ascribed thereto in
Section 7(a) hereof.
"NOTICE" shall have the meaning ascribed thereto in
Section 9(f) hereof.
"OFFEREE PARTY" shall have the meaning ascribed thereto in Section 2(a)
hereof.
"ORDINARY COURSE AGREEMENTS" shall have the meaning ascribed thereto in
Section 2(g) hereof.
"PARTLY-OWNED AFFILIATE OF ENRON" means any Affiliate of Enron of which
Enron, directly and indirectly through one or more Persons, owns less than 100%
of the equity interest.
"PERSON" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of even date
herewith among Sub, JEDI and the Management Investor.
"SIGNIFICANT STEPS" shall have the meaning ascribed thereto in Section
3(c) hereof.
SECTION 2. OPTION RELATING TO CERTAIN BUSINESS OPPORTUNITIES. (a) Sub
hereby grants to ECT an option (the "Business Opportunity Option") on those
Business Opportunities that the Company desires to pursue, except that no
Business Opportunity is subject to such option unless (a) it is a Business
Opportunity that an Enron Entity (in ECT's reasonable judgment made in good
faith) has or may have a duty to refrain from pursuing because it constitutes or
may constitute a Business Opportunity of a party other than the Company to whom
an Enron Entity owes or may owe a fiduciary or contractual duty and (b) such
other party is not wholly-owned (directly or indirectly) by Enron.
(b) ECT may exercise its Business Opportunity Option only if ECT
reasonably concludes that pursuit of the opportunity by the Company without
first offering it to the party to whom the fiduciary or contractual duty is or
may be owed will subject an Enron Entity to a material risk of liability. For
such purposes, a material risk of liability means a risk that is of a magnitude
that a reasonably prudent Person would consider it important in deciding whether
or not to proceed with a transaction. ECT's conclusion that it is entitled to
exercise its Business Opportunity Option shall conclusively be deemed to be
reasonable if it receives an opinion of outside counsel that pursuit of the
opportunity by the Company without first offering it to another party to whom a
fiduciary or contractual duty is or may be owed will subject an Enron Entity to
a material risk of liability.
(c) In order to exercise the Business Opportunity Option, ECT must
offer the Business Opportunity to the party to whom the fiduciary or contractual
duty is or may be
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owed (the "Offeree Party") in accordance with the procedures specified in
Section 2(d). If ECT exercises the option and the Offeree Party declines to
pursue the Business Opportunity, the Company may pursue it unless otherwise
provided in this Agreement or unless the Company is prohibited from doing so
under its charter, under a contract binding upon it or under applicable law. ECT
agrees that, if the Company is so entitled to pursue such Business Opportunity
and takes steps to do so, except as permitted by Section 6 neither Enron nor any
wholly-owned Affiliate of Enron will pursue it for its own account. If ECT
exercises the Business Opportunity Option and the Offeree Party elects to pursue
the Business Opportunity, then it may do so to the exclusion of the Company, in
which case the Company will refrain from pursuing such Business Opportunity. ECT
agrees to request that the Offeree Party notify the Company in the event the
Offeree Party ceases its efforts to pursue the Business Opportunity. Upon
exercise of the Business Opportunity Option, an Offeree Party that elects to
pursue a Business Opportunity is not required to do so on terms that are
identical to those on which the Company proposed to pursue it.
(d) The Company will notify ECT of each Business Opportunity that the
Management Investor desires that the Company pursue and that he reasonably
believes the Company has the financial and organizational resources to pursue,
and in connection with such notice the Company will furnish to ECT all
information regarding the Business Opportunity that is material to ECT's
decision regarding whether or not to exercise the Business Opportunity Option.
Within five business days of receipt of such notice and information (or such
later date as is reasonable if ECT has more than one such Business Opportunity
under consideration at the time or if ECT requests additional information in
order for it to make its decision), ECT will notify the Company whether ECT has
reached the conclusions required in order for the Business Opportunity to be
subject to the Business Opportunity Option and, if so, whether ECT desires to
exercise the Business Opportunity Option. If ECT notifies the Company that it
desires to exercise the Business Opportunity Option, the Company will as
promptly as practicable furnish to ECT any additional information in the
Company's possession that it believes is material to the Offeree Party's
decision whether to pursue the Business Opportunity that is subject to the
Business Opportunity Option. ECT will furnish such information to the Offeree
Party as soon as practicable. If the Offeree Party requests additional
information, the Company will furnish such information if it has it in its
possession or can obtain it without unreasonable effort or expense. ECT will use
reasonable efforts to cause the Offeree Party to make its decision whether to
pursue the Business Opportunity as soon as practicable and will notify the
Company of the Offeree Party's decision promptly upon being informed of such
decision.
(e) The Company will use reasonable efforts to furnish the notice and
information required under Section 2(d) in a timely manner in order to permit
ECT and any Offeree Party to make decisions thereunder so that the Business
Opportunity can be pursued by the Company or the Offeree Party. The parties
acknowledge that on rare occasions Business Opportunities arise that involve
limited response time, such as a solicitation of offers that must be submitted
by a specified date that occurs soon after the solicitation is made. The parties
agree that if there is insufficient time for the Company to perform its
obligations under Section 2(d) or if an Offeree Party does not respond in time,
the Company may make an investment in or otherwise enter into a binding
contractual
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commitment with respect to a Business Opportunity, and in such case all or any
portion of the steps required under Section 2(d) may be taken thereafter. In
such event, if an Offeree Party decides to pursue the Business Opportunity, the
Company will assign its interest to the Offeree Party, which shall succeed to
the Company's contractual commitment. In such case the Offeree Party will
reimburse the Company for its costs and expenses in making its investment or
entering into its contractual commitment.
(f) In the event ECT exercises the Business Opportunity Option, upon
request of the Management Investor ECT will use reasonable efforts to obtain an
agreement from the Offeree Party that in the event the Offeree Party chooses not
to pursue the Business Opportunity it will not use or disclose any confidential
information disclosed to it pursuant to Section 2(d) and that in the event the
Offeree Party chooses to pursue the Business Opportunity it will not disclose
any confidential information disclosed to it pursuant to Section 2(d) if by
doing so it would cause the Company to violate any confidentiality agreement to
which it is a party. If the Offeree Party is unwilling to enter into such an
agreement, the Company will not be required to disclose any confidential
information to the Offeree Party if the disclosure thereof by the Offeree Party
would violate any confidentiality agreement to which the Company is a party.
(g) Notwithstanding the provisions of Section 2(d), the Management
Investor is not required to notify ECT of, and the Business Opportunity Option
does not apply to, any Business Opportunity that has either of the following
characteristics:
(i) such Business Opportunity consists of the exercise by the
Company of rights under, or the performance by the Company of
obligations under, joint operating agreements, preferential purchase
right agreements, exploration or development joint venture agreements
or participation agreements, pooling and unitization agreements or
arrangements and other agreements existing on the date of this
Agreement, relating to existing properties of the Company and entered
into in the ordinary course of the Company's oil and gas exploration,
development and production business (collectively, "Ordinary Course
Agreements"); or
(ii) such Business Opportunity consists of the exercise by the
Company of rights under, or the performance by the Company of
obligations with respect to Ordinary Course Agreements entered into
after the date of this Agreement or relating to properties of the
Company acquired after the date of this Agreement; provided that the
Ordinary Course Agreement in question was not entered into in violation
of Section 9(a) and the Representatives reasonably believe that no
Enron Entity has a material risk of liability in the event such
Business Opportunity is pursued by the Company without first offering
it to another Enron Entity.
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SECTION 3. OPTION RELATING TO ENRON PROJECTS. (a) Sub hereby grants to
ECT an option (the "Enron Project Option") on those Business Opportunities that
the Company desires to pursue, but with respect to which, at the time the
Company first notifies ECT that the Company desires to pursue such Business
Opportunity, an Enron Entity has already taken and plans to continue to take
Significant Steps to pursue a Business Opportunity involving the same entity or
the same or substantially the same properties (an "Enron Project"); provided,
however, that the Enron Project Option is exercisable only if the pursuit of
such Business Opportunity by the Company would (in ECT's reasonable judgment
made in good faith) conflict with or make significantly more difficult the
efforts by an Enron Entity to pursue such Enron Project.
(b) If ECT is entitled to exercise the Enron Project Option and does
so, then an Enron Entity may pursue the Business Opportunity to the exclusion of
the Company or may otherwise pursue the Enron Project, in which case the Company
will refrain from pursuing such Business Opportunity, unless and until ECT
informs the Company that the Enron Entity has ceased its efforts to pursue such
Business Opportunity. Upon exercise of the Enron Project Option, an Enron Entity
that elects to pursue an Enron Project is not required to do so on terms that
are identical to the terms of the Business Opportunity that the Company proposed
to pursue.
(c) "Significant Steps" means the commitment of significant human or
financial resources in pursuit of a Business Opportunity including, but not
limited to, the commitment of significant engineering, financial, legal,
accounting or other resources (including in-house resources) to the process of
evaluating the property or entity that is the subject of the Business
Opportunity, the signing of a letter of intent or memorandum of understanding,
or the exchange of proposals or negotiations with management of an entity that
is the subject of the Business Opportunity or that owns the property that is the
subject of the Business Opportunity. An Enron Entity shall not be deemed to have
taken Significant Steps if its commitment has been limited to the review and
preliminary evaluation of periodic reports filed with the Securities and
Exchange Commission or other publicly available information and/or a review and
preliminary evaluation of an offering circular, private placement memorandum or
similar offering materials prepared for use by multiple parties that may
consider such Business Opportunity.
(d) The parties hereby stipulate that ECT has taken Significant Steps
with respect to Enron Projects involving entities listed in the document
entitled "Enron Projects List" dated the date hereof and delivered by ECT to the
Management Investor. The Persons to whom such list has been disclosed agree to
keep the Enron Projects List confidential.
SECTION 4. ECT CONSENT REQUIRED IN CERTAIN EVENTS. Sub agrees that the
Company will not pursue a Business Opportunity without the prior consent of ECT
if:
(a) An Enron Entity (other than Enron Oil & Gas Company) has a lending
relationship or a significant ownership or similar relationship with any
property or entity
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(including Affiliates of such entity) that is the subject of the Business
Opportunity or an investment banking relationship with any such entity; or
(b) An entity (including Affiliates of such entity) that is the subject
of the Business Opportunity or whose properties are so subject is listed in the
document entitled "ECT Business Opportunity Restricted List" dated the date
hereof and delivered by ECT to the Company and the Management Investor; or
(c) An entity (including Affiliates of such entity) that is the subject
of the Business Opportunity or whose properties are so subject is a party to a
contract with an Enron Entity that is material to Enron and its subsidiaries
considered as a whole.
Relationships of the type referred to in Section 4(a) include the ownership of a
production payment burdening such property or any property owned by such entity,
a royalty or overriding royalty interest burdening such property or any property
owned by such entity, a loan secured by such property to such entity or
guaranteed by such entity, a joint ownership interest in such property or an
equity interest in such entity (other than a less than 5% interest in a class of
publicly traded securities). No lending relationship of the type referred to in
Section 4(a) will be deemed to exist unless there is an outstanding unpaid
balance on a loan or an outstanding loan commitment. An investment banking
relationship of the type referred to in Section 4(a) will include an arrangement
pursuant to which ECT Securities Corp. is performing underwriting or brokerage
services for such entity. ECT may from time to time amend the ECT Business
Opportunity Restricted List, provided that no entity may be added to the list
unless an Enron Entity has a relationship with it of the type described in
Section 4(a).
SECTION 5. AGREEMENT THAT ENRON ENTITIES DO NOT HAVE TO OFFER CERTAIN
BUSINESS OPPORTUNITIES TO THE COMPANY. (a) Sub, the Management Investor and JEDI
agree that any Business Opportunity developed by an Enron Entity is not required
to be offered to the Company and may be pursued by such Enron Entity or another
Enron Entity (and hereby waive the right to claim that any such Business
Opportunity should be offered to the Company) if such Business Opportunity has
any one or more of the following characteristics:
(i) less than 35% of the aggregate estimated investment in the
Business Opportunity is attributable, directly or indirectly, to
mineral interests in oil and gas properties located within five miles
of any oil or gas field that includes properties that are owned by the
Company and that account for more than 5% of the book value of total
assets of the Company and its subsidiaries on a consolidated basis; and
(ii) the Business Opportunity consists of the acquisition of
publicly traded securities constituting less than 10% of a class of
outstanding securities, provided that the acquisition thereof is
effected for the purpose of investment or for trading purposes and not
for the purpose of obtaining control of the issuer or of any of its
assets; and
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(iii) the Business Opportunity is developed by Enron Oil & Gas
Company ("EOG"), Coda Energy, Inc. ("Coda"), Hardy Oil & Gas USA, Inc.
("Hardy") and other Enron Entities which are not wholly-owned by JEDI
or Enron ("Enron Partly-Owned Affiliates"); and
(iv) the Business Opportunity is developed by an Enron Entity
other than EOG, Coda, Hardy or any Enron Partly-Owned Affiliate, unless
more than 50% by value of the assets that are the subject of, or owned
by the entity that is the subject of, the Business Opportunity are
devoted to the businesses of exploring for oil and gas, developing oil
and gas reserves upon discovery thereof, operating oil and gas
properties, producing oil and gas from such properties and realizing
value from the sale of production from such properties (the "E&P
Business").
(b) for purposes of the foregoing, the E&P Business does not include
the following businesses, and assets employed in the following activities shall
not be considered to be part of the E&P Business for purposes of determining
whether the 50% test in Section 5(a)(iv) is met:
(i) acquisition or development of coal bed methane projects;
(ii) acquiring or developing mineral prospects other than
those involving the production of hydrocarbons or involving the
production of sulphur or other minerals produced in association with
hydrocarbons;
(iii) acquisition or development of geothermal projects or
prospects;
(iv) acquisition or development of integrated projects in
which a significant portion of the projects' capital expenditures must
be spent on infrastructure, such as transportation facilities, or in
which the economic success of the exploration, development and
production activities depends on the development of a large
cogeneration facility, liquefied natural gas facility, processing
facility, manufacturing plant or other facility requiring significant
capital investment by the party conducting the business (as opposed to
third parties);
(v) manufacturing or drilling and production services for
third parties, including, without limitation, manufacturing of oilfield
equipment, production of drilling fluids, contract landman services,
contract drilling services, oilfield rental tool services, fishing
services, mud services, well evaluation services, workover services,
contract operator services, supply or crew transportation services or
any other services of the type typically contracted for by oil and gas
exploration, development and production companies;
(vi) oil or gas transportation or storage business, including
the ownership or operation of gathering systems, transmission
pipelines, compressor stations, barges, storage facilities or related
facilities (but excluding the acquisition and ownership of equipment
and supplies of the type normally acquired by
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exploration, development and production companies in connection with
their activities on oil and gas leases);
(vii) gas processing, fractionation of natural gas liquids,
chemical manufacturing or similar businesses (but excluding field
separation operations);
(viii) the business of trading in energy price swaps, options,
futures contracts or other derivative products (except to hedge its own
price risk), the business of making unsecured loans or loans secured by
oil and gas or other properties, the business of acquiring production
payments or conducting other activities that may enable oil and gas
companies or other companies to obtain funds for financing their
businesses, or the business of conducting other activities designed to
assist oil and gas companies in making acquisitions; or
(ix) the business of marketing oil and gas produced by third
parties or otherwise purchasing and reselling or exchanging oil and gas
for a profit.
Nothing in this Section 5 shall be deemed to constitute an agreement by Sub that
the Company will not acquire any business that conducts non-E&P Business
activities.
(c) It is likely that there will be Business Opportunities not
described in this Section 5 that are not Company Business Opportunities. Nothing
in this Section 5 shall be interpreted to constitute an agreement that a
Business Opportunity not subject to the agreement and waiver in this Section 5
is a Company Business Opportunity.
SECTION 6. PURSUIT OF BUSINESS OPPORTUNITIES BY ENRON ENTITIES IN
CERTAIN EVENTS. Sub agrees that Enron Entities may continue to conduct their
business in the ordinary course, even if doing so may have a competitive impact
on the Company. In that connection, Sub recognizes that ECT and other Enron
Entities will continue to engage in oil and gas marketing activities, that ECT
may continue to engage in financing of other entities or in furnishing services
in connection therewith (including financing of or services in connection with
Business Opportunities pursued by others in competition with the Company) and
that ECT may acquire other Persons engaged in oil and gas exploration and
production. Sub, JEDI and the Management Investor hereby consent to such
activities, even if they have competitive impact on the Company.
SECTION 7. CONSENTS BY SHAREHOLDERS OF THE COMPANY. (a) At any time,
ECT or the Company may request that the Management Investor furnish to ECT or
the Company a consent in writing to any action or inaction by any Enron Entity
or the Company that ECT believes such Enron Entity or the Company is entitled
under this Agreement to take or refrain from taking. In the event the Management
Investor fails or refuses to furnish such consent, ECT or the Company, as the
case may be, shall have the right to submit the matter to arbitration. If the
Management Investor furnishes such consent, such consent will also contain an
agreement by the Management Investor that, in the absence of a material
misstatement or omission by ECT or the Company in connection with its request
for such consent, he will not thereafter claim that the action or inaction
covered by such consent is a breach of this Agreement or any fiduciary or other
duty owed
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by ECT or any other Enron Entity to the Company or to the Managment Investor or
by the Company or its Board of Directors to the Management Investor. Nothing
herein shall be deemed to require ECT or the Company to submit any matter to
arbitration.
SECTION 8. ARBITRATION. Any and all claims, demands, causes of action,
disputes, controversies and other matters in question arising out of or relating
to this Agreement, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement ("Claims"), even though some or all of such
Claims allegedly are extra-contractual in nature, whether such Claims sound in
contract, tort or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
shall be resolved and decided exclusively by binding arbitration pursuant to the
Federal Arbitration Act in accordance with the Commercial Arbitration Rules then
in effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Houston, Texas. The arbitration shall be before a panel of
three arbitrators. Each party to such dispute shall select one arbitrator, and
the two arbitrators selected by the parties shall select the third arbitrator.
The arbitrators are authorized to issue subpoenas for depositions and other
discovery mechanisms, as well as trial subpoenas, in accordance with the Federal
Rules of Civil Procedure. Either party may initiate a proceeding in the
appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including, without limitation, any exemplary damages, treble damages or any
other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances,
regardless of whether such damages may be available under applicable law or
otherwise, the parties hereto hereby waiving their right, if any, to recover
such damages in connection with any Claims. The arbitrators shall be entitled to
award costs of the arbitration and attorney's fees as they deem appropriate.
Prior to any Person instituting a Claim under this Agreement, such Person shall
provide to the other party hereto a written notice specifying the nature and
basis of the Claim. The Persons who are the subject of any Claim shall be given
thirty (30) days to cure any breach before any Claim is filed. It is further
agreed that prior to such Claims being submitted to the arbitrators on such
Claims, the parties to the Claims shall attempt to resolve such Claims through
non-binding mediation of such Claims.
SECTION 9. MISCELLANEOUS.
(a) Contracts and Agreements. Each of Sub and ECT agrees not to, and
Sub agrees that following the Merger the Company will not, enter into any
contracts or agreements that will prevent it from performing its duties and
obligations hereunder or prevent the other parties to this Agreement from
realizing the benefits hereof. Notwithstanding the foregoing provisions of this
Section 9(a), in the event that (x) the
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Company or ECT, as the case may be, has made reasonable efforts to persuade a
third party that proposes to make a Business Opportunity available to agree to
contract terms that will permit the Company or ECT to perform in full its
obligations hereunder, (y) such third party is unwilling to agree to contract
terms that will permit the Company or ECT to perform in full its obligations
hereunder, and (z) such third party will not make such Business Opportunity
available unless ECT, another Enron Entity or the Company, as the case may be,
enters into a contract with terms that will not or may not permit the Company or
ECT, as the case may be, to perform in full its obligations hereunder, then ECT,
such other Enron Entity or the Company, as the case may be, may enter into such
contract (and the entering into such contract shall not be a breach hereof). In
such case, the obligations of the parties to this Agreement shall be subject to
the terms of such contract.
(b) Third Party Beneficiaries This Agreement is also intended for the
benefit of each member of the Board of Directors of the Company and each Enron
Entity, each of which will be considered a third party beneficiary of this
Agreement.
(c) Confidentiality. The provisions of this Agreement and all
information regarding Business Opportunities, Enron Projects and entities listed
on the ECT Business Opportunity Restricted List, and all other information
exchanged by the parties pursuant to this Agreement, shall not be disclosed by
any party to this Agreement unless otherwise publicly disclosed and except as
otherwise required by law. The Management Investor will keep confidential any
information supplied to them by ECT under this Agreement and will not disclose
it to other Persons except that they may disclose it to any employee of the
Company if in their reasonable judgment such employee has the need to know such
information in order to discharge his or her duties as an employee. Except as
provided in the preceding sentence, the Management Investor will keep
confidential the Enron Projects List and the ECT Business Opportunity Restricted
List, and in that connection he will not, without the prior written consent of
ECT, disclose the contents of either list to any other Person.
(d) Amendment; Waivers. This Agreement may only be altered,
supplemented, amended or waived by the written consent of each party hereto.
(e) Assignment. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their permitted
successors and assigns; provided, however, that no party hereto shall have the
right to assign this Agreement without the consent of the other parties hereto.
JEDI and the Management Investor agree that they will not assign their shares of
capital stock of the Company or any portion thereof to any Person unless the
assignor obtains from such Person an agreement to be bound by this Agreement.
Sub agrees that the Company will not issue any additional shares of capital
stock of the Company to any Person unless it obtains from such Person an
agreement to be bound by this Agreement and an agreement that such Person will
not assign its shares of capital stock of the Company or any portion thereof to
any other Person unless it obtains from such Person an agreement to be bound by
this Agreement.
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(f) Notices. Any and all notices, designations, consents, offers,
acceptances, or other communications provided for herein (each a "Notice") shall
be given in writing by personal delivery, overnight courier, telegram, or
telecopy which shall be addressed, or sent, to the respective addresses or
telecopy numbers as follows (or such other address or telecopy number as any
party hereto may specify for itself by Notice given in accordance with this
Section 9(f)):
ECT: Enron Capital & Trade Resources Corp.
1400 Smith
Houston, Texas 77002
Attention: W. Craig Childers
W. Lance Schuler
Telecopy No. 713-646-3393
Telephone No. 713-853-5419
Sub: Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214
Attention: Chief Executive Officer
Telecopy No. 614-888-6287
Telephone No. 614-888-9588
JEDI: c/o Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Brenda McGee, Specialist
Telecopy No. 713-646-3602
Telephone No. 713-853-5259
Management Investor: Mr. Jerry D. Jordan
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214
All Notices shall be deemed effective, delivered and received (a) if given by
personal delivery, when such Notice is personally delivered at the address
specified above; (b) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified above and receipt thereof is confirmed; (c) if
given by overnight courier, on the business day immediately following the day on
which such Notice is delivered to a reputable overnight courier service; or (d)
if given by telegram, when such Notice is delivered at the address specified
above.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which counterparts shall be deemed to be an original and
which counterparts together shall constitute one and the same agreement of the
parties hereto.
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<PAGE> 17
(h) Choice of Law. This Agreement shall be governed by the internal
laws of the State of Texas without regard to the principles of conflicts of laws
thereof.
(i) Entire Agreement. This Agreement contains the entire understanding
of the parties hereto respecting the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect thereto.
(j) No Partnership. No term or provision of this Agreement shall be
construed to establish any relationship of partnership, agency or joint venture
among the parties hereto.
(k) Invalidity. In the event that any one or more of the provisions
contained in this Agreement is, for any reason, held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provision of this Agreement.
(l) Contractual Obligations. Nothing herein shall require any Enron
Entity or the Company to fail to perform any contractual obligation to which it
is subject, including any obligation under any standstill agreement or
confidentiality agreement with any entity that may be the subject of a Business
Opportunity.
(m) Effectiveness of this Agreement. This Agreement is effective upon
consummation of the Merger, except that the obligations in Sections 9(a) and
9(c) shall be effective immediately. This Agreement will terminate upon the
termination of the Shareholders Agreement. Sub agrees that the Company will not
effect a public offering of its common stock or engage in any other transaction
that will result in public ownership of its common stock unless subsequent to
the offering Enron Entities will own less than 50% of the outstanding common
stock of the Company or unless the parties reach agreement on the terms and
conditions of a business opportunity agreement that is appropriate for a company
with publicly traded common stock, that is satisfactory to the underwriters, if
any, and that permits ECT and other Enron Entities to continue to operate their
businesses without undue risk of liability.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ENRON CAPITAL & TRADE
RESOURCES CORP.
By:
-----------------------------------------
W. Craig Childers
Title: Vice President
JENCO ACQUISITION, INC.
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<PAGE> 18
By:
W. Craig Childers
Title: Vice President
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED
PARTNERSHIP
By: ENRON CAPITAL MANAGEMENT
LIMITED PARTNERSHIP, as General
Partner
By: ENRON CAPITAL CORP., as General
Partner
By:
W. Craig Childers
Agent and Attorney-in-Fact
MANAGEMENT INVESTOR:
Jerry D. Jordan
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<PAGE> 1
EXHIBIT 99.4
SHAREHOLDERS AGREEMENT
DATED MAY 24, 1996
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN TERMS;
REPRESENTATIONS AND WARRANTIES
1.1 Certain Terms ................................................... 1
1.2 Representations and Warranties .................................. 6
ARTICLE II
CERTAIN MATTERS
2.1 Certain Activities of the Parties; Fiduciary Duties ............. 7
ARTICLE III
RESTRICTIONS ON TRANSFERS BY MANAGEMENT INVESTOR
3.1 General Rule .................................................... 7
3.2 Transfers Not Subject to Preferential Right ..................... 7
3.3 Transfers Subject to Preferential Right 7
3.4 Procedures with Respect to Transfers Subject to Section 3.3 ..... 8
3.5 Conditions to Permitted Transfers; Continued Applicability of
Agreement ....................................................... 10
3.6 Restrictions on Other Agreements ................................ 10
3.7 Effect of Distributions and Certain Transactions ................ 10
ARTICLE IV
CERTAIN RIGHTS
4.1 Tagalong Rights. ................................................ 11
ARTICLE V
TERMINATION
5.1 Termination ..................................................... 14
ARTICLE VI
<PAGE> 3
MISCELLANEOUS
6.1 Amendment; Waivers .............................................. 14
6.2 Assignment ...................................................... 14
6.3 Shares Subject to this Agreement ................................ 14
6.4 Legends ......................................................... 15
6.5 Notices ......................................................... 15
6.6 Counterparts .................................................... 16
6.7 Headings ........................................................ 16
6.8 Choice of Law ................................................... 16
6.9 Entire Agreement ................................................ 16
6.10 Cumulative Rights ............................................... 16
6.11 Construction .................................................... 16
6.12 No Partnership .................................................. 16
6.13 Number; Gender; Without Limitation; Interpretation of Certain
Defined Terms .................................................. 16
6.14 Severability .................................................... 17
6.15 Third Person .................................................... 17
6.16 U.S. Currency ................................................... 17
6.17 Indemnification ................................................. 17
6.18 Spousal Consents ................................................ 17
6.19 Certain Records ................................................. 17
6.20 Arbitration ..................................................... 18
<PAGE> 4
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is entered into as of
May 24, 1996, among Jenco Acquisition, Inc., an Ohio corporation ("Sub"), Joint
Energy Development Investments Limited Partnership, a Delaware limited
partnership ("JEDI"), and Jerry D. Jordan (the "Management Investor"), and their
permitted successors and assigns, and each owner of Common Stock, as defined
herein, who may hereafter execute in accordance with this Agreement a separate
agreement to be bound by the terms hereof.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Sub, JEDI and Clinton Gas Systems, Inc., an Ohio corporation (the
"Company"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Sub with and into the Company (the
"Merger");
WHEREAS, the Company shall be the surviving corporation of the Merger;
and
WHEREAS, upon the consummation of the Merger, the Initial Parties (as
defined herein) shall receive shares of Common Stock (as defined herein).
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
CERTAIN TERMS;
REPRESENTATIONS AND WARRANTIES
1.1 CERTAIN TERMS. When used herein the following terms shall have the
meanings indicated:
"ACCREDITED INVESTOR" shall mean any Person deemed to be an accredited
investor pursuant to Regulation D promulgated under the Securities Act, as
amended from time to time.
"ACQUISITION PROPOSAL" means a bona fide written proposal to the
Management Investor for the acquisition of all or a portion of his Common Stock
for cash consideration.
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<PAGE> 5
"ADOPTION AGREEMENT" means an agreement in the form of Exhibit "A"
hereto or in such other form that is reasonably satisfactory to the Company.
"AFFILIATE" of a Person means any Person controlling, controlled by, or
under common control with such Person. For purposes of this Agreement only,
Enron Corp., a Delaware corporation, and each of its subsidiaries shall be
deemed to be Affiliates of JEDI.
"AGREEMENT" shall have the meaning set forth in the opening paragraph.
"APPRAISED VALUE" shall have the meaning set forth in Section 4.3(c).
"BUSINESS DAY" means any day other than (i) a Saturday or Sunday or
(ii) a day that is a banking holiday in Columbus, Ohio.
"BUSINESS OPPORTUNITY AGREEMENT" shall have the meaning set forth
in Section 2.1.
"CAPITAL STOCK" means any and all shares, interests, participations, or
other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation), and
any and all warrants, options, or other rights to purchase or acquire any of the
foregoing.
"CLAIMS" shall have the meaning set forth in Section 6.20.
"CLOSING" shall have the meaning set forth in Section 3.4(a).
"CLOSING DATE" shall have the meaning set forth in Section 3.4(a).
"COMMON STOCK" means shares of the common stock, par value $.01 per
share, of the Company or Successor Corporation issued and outstanding from time
to time after the consummation of the Merger and all securities of the Company
or any other Person issued in respect of shares of such common stock in
connection with any exchange, merger, recapitalization, consolidation,
reclassification, reorganization, stock dividend or distribution or other
transaction to which the Company is a party, but excluding any shares or
securities which cease to be outstanding.
"COMMON STOCK EQUIVALENTS" means any and all rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible into or exchangeable for, directly or
indirectly, Common Stock, whether at the time of issuance or upon the passage of
time or the occurrence of some future event, but does not include Common Stock.
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<PAGE> 6
"COMPANY" shall have the meaning set forth in the recitals.
"CONTROL", including the correlative terms "controlling", "controlled
by" and "under common control with" means possession, directly or indirectly, of
the power to direct or cause the direction of management or policies (whether
through ownership of securities or any partnership or other ownership interest,
by contract or otherwise) of a Person. For the purposes of the preceding
sentence, control shall be deemed to exist when a Person possesses, directly or
indirectly, through one or more intermediaries (i) in the case of a corporation,
more than 50% of the outstanding voting securities thereof; (ii) in the case of
a limited liability company, partnership, limited partnership or venture, the
right to more than 50% of the distributions therefrom (including liquidating
distributions); or (iii) in the case of any other Person, more than 50% of the
economic or beneficial interest therein.
"EFFECTIVE TIME" shall have the meaning ascribed to such term in the
Merger Agreement.
"EMPLOYMENT TERMINATION DATE" shall have the meaning set forth in
Section 4.3(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"FULLY-DILUTED COMMON STOCK" means, at any time, the then outstanding
Common Stock plus (without duplication) all shares of Common Stock issuable,
whether at such time or upon the passage of time or the occurrence of future
events, upon the exercise, conversion or exchange of all then-outstanding Common
Stock Equivalents.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended from time to time.
"INDEMNITEES" shall have the meaning set forth in Section 6.17.
"INDEMNITOR" shall have the meaning set forth in Section 6.17.
"INITIAL PARTIES" means JEDI and the Management Investor.
"INVALID TRANSFEr" shall have the meaning set forth in Section 3.4(h).
"ISSUANCE" shall have the meaning set forth in Section 3.1.
"JEDI" shall have the meaning set forth in the recitals.
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<PAGE> 7
"JEDI ENTITY" means JEDI or any of its Affiliates including, without
limitation, for purposes of this Agreement only any direct or indirect
subsidiary of Enron Corp., a Delaware corporation, but excluding, for all
purposes, Enron Oil & Gas Company, a Delaware corporation.
"JEDI GROUP" means, as of the time in question, all JEDI Entities that
are Parties and all JEDI Special Transferees.
"JEDI PARTY" means any Person who, at the time in question, is included
in the JEDI Group.
"JEDI PARTY TRANSFEROR" shall have the meaning set forth in Section
4.1.
"JEDI PARTY TRANSFEROR'S NOTICE" shall have the meaning set forth in
Section 4.1.
"JEDI SPECIAL TRANSFEREE" means any Person (other than a JEDI Entity)
who has acquired more than 10% of the Common Stock from any one or more JEDI
Entities and/or JEDI Special Transferees in accordance with this Agreement
(other than any such Person that notifies the Company in writing, with a copy to
all Parties, that such Person has irrevocably elected not to be deemed included
as a member of the JEDI Group), but excluding any such Person that is not a
Party as of the time in question.
"MANAGEMENT INVESTOR" shall have the meaning set forth in the recitals.
"MANAGEMENT INVESTOR SPOUSE" means the Person identified as such on the
execution pages of this Agreement and any future spouses of the Management
Investor.
"MERGER" shall have the meaning set forth in the recitals.
"MERGER AGREEMENT" shall have the meaning set forth in the recitals.
"NOTICE" shall have the meaning set forth in Section 6.5.
"OFFER" shall have the meaning specified in Section 3.3.
"OFFER DATE" shall have the meaning specified in Section 3.3.
"OFFER EXPIRATION TIME" means with respect to any Offer made pursuant
to Section 3.3, 5:30 p.m. Houston Time on the 20th business day following the
Offer Date.
"OFFEROR" shall have the meaning specified in Section 3.3.
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<PAGE> 8
"OWN" or "OWNED", with respect to Common Stock, shall have the same
meaning as beneficial ownership under Rule 13d-3 under the Exchange Act;
provided, however, that (i) such ownership shall be determined as if this
Agreement did not exist and that there is no agreement among the Parties to act
in concert in any respect, (ii) such ownership shall be determined without
regard to any Common Stock Equivalents unless otherwise expressly provided to
the contrary herein, and (iii) with respect to the determination of the Common
Stock owned by the JEDI Group, such determination shall be made by aggregating
the ownership of all members of the JEDI Group but without duplication so that a
share of Common Stock will be deemed owned by only one member of the JEDI Group.
All references herein to Common Stock owned by a Party include the community
interest or similar marital property interest, if any, of the spouse of such
Party in such Common Stock.
"PARTICIPATION OFFER" shall have the meaning set forth in Section 4.1.
"PARTY" means each Initial Party and each other Person that may become
a party to this Agreement pursuant to Section 3.5, but shall not mean (i) the
Company or (ii) any Person who executes this Agreement or an Adoption Agreement
solely in his or her capacity as a spouse of a Party; provided, however, that if
any Party ceases to own any Common Stock or any Common Stock Equivalents, then
such Party shall cease to be a Party hereunder and shall not thereafter be
subject to this Agreement even if such former Party thereafter acquires Common
Stock, unless such former Party thereafter acquires Common Stock in a
transaction in which it becomes a Party again pursuant to Section 3.5.
"PERMITTED MANAGEMENT INVESTOR FAMILY TRANSFEREE" means with respect to
the Management Investor, his spouse, children or the legal guardian for the
benefit of his minor children or a trust established for the benefit of his
spouse and/or minor children.
"PERSON" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, or other organization, whether or not a legal entity, and any government
or agency or political subdivision thereof.
"POSITIVE RECEIPT NOTICE" shall have the meaning set forth in Section
3.4(a).
"PURCHASE PRICE" shall have the meaning set forth in Section 3.4(c).
"QUALIFIED IPO" means a consummated public offering of Common Stock
which is underwritten on a firm commitment basis by a nationally-recognized
investment banking firm.
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<PAGE> 9
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SHARES SUBJECT TO THE OFFER" means with respect to an Offer under
Section 3.3, all shares of Common Stock and Common Stock Equivalents subject to
the Acquisition Proposal in question.
"SUB" shall have the meaning set forth in the recitals.
"SUBSIDIARY" means (i) any corporation or other entity a majority of
the Capital Stock of which having ordinary voting power to elect a majority of
the board of directors or other Persons performing similar functions is at the
time owned, directly or indirectly, with power to vote, by the Company or (ii) a
partnership, joint venture or limited liability company in which the Company or
any Subsidiary is a general partner, joint venturer or member.
"SUBSIDIARY STOCK" means Capital Stock of any Subsidiary.
"SUCCESSOR CORPORATION" shall have the meaning set forth in Section
6.2.
"TERMINATION DATE" means the date which is ten years following the
Effective Time.
"TRANSFER", including the correlative terms "TRANSFERRING" or
"TRANSFERRED", means any transfer, assignment, sale, gift, pledge, hypothe
cation or other encumbrance, or any other disposition (whether voluntary or
involuntary or by operation of law), of Common Stock (or any interest therein or
right thereto) or Common Stock Equivalents; provided, however, that an exchange,
merger, recapitalization, consolidation or reorganization involving the Company
in which securities of the Company or any other Person are issued in respect of
shares of the Common Stock shall not be deemed a Transfer if all shares of
Common Stock are treated identically in such transaction.
1.2 REPRESENTATIONS AND WARRANTIES. (a) The Management Investor hereby
represents and warrants to the Sub and JEDI that as of the date hereof:
(i) he has full power and authority and full legal capacity, to
execute and deliver this Agreement and the execution and delivery by
him of this Agreement have been duly authorized by all necessary
action;
(ii) this Agreement has been duly and validly executed and
delivered by him and constitutes a binding obligation, enforceable
against him in accordance with its terms; and
(iii) assuming that the Common Stock to be issued to him pursuant
to the Merger Agreement is duly and validly issued free and
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<PAGE> 10
clear of all liens and other encumbrances, immediately after the
consummation of the Merger, he shall own as of the Effective Time 1,000
shares of Common Stock, and such shares shall be owned by him free and
clear of all liens and other encumbrances arising by, through or under
him except for this Agreement.
(b) Sub hereby represents and warrants to the Management Investor and
JEDI that:
(i) it is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Ohio, it has full
corporate power and authority to execute, deliver, and perform this
Agreement and to consummate the transactions contemplated hereby, and
the execution, delivery, and performance by it of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action; and
(ii) this Agreement has been duly and validly executed and
delivered by Sub and constitutes the binding obligation thereof,
enforceable against Sub in accordance with its terms.
(c) JEDI hereby represents and warrants to the Management Investor and
Sub that:
(i) it is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
the requisite partnership power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated
hereby, and the execution, delivery and performance by it of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action; and
(ii) this Agreement has been duly and validly executed and
delivered by JEDI and constitutes the binding obligation thereof,
enforceable against JEDI in accordance with its terms.
ARTICLE II
CERTAIN MATTERS
2.1 CERTAIN ACTIVITIES OF THE PARTIES; FIDUCIARY DUTIES. The Initial
Parties acknowledge that all such parties and certain other Persons are
executing and delivering a Business Opportunity Agreement (the "Business
Opportunity Agreement") concurrently with the execution and delivery of this
Agreement.
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<PAGE> 11
ARTICLE III
RESTRICTIONS ON TRANSFERS BY MANAGEMENT INVESTOR
3.1 GENERAL RULE. The Management Investor shall not make any Transfer
of Common Stock or Common Stock Equivalents, directly or indirectly, through an
Affiliate or otherwise except as expressly permitted herein.
3.2 TRANSFERS NOT SUBJECT TO PREFERENTIAL RIGHT. The Management
Investor may Transfer, from time to time, any Common Stock owned by such Party
to a Permitted Management Investor Family Transferee.
3.3 TRANSFERS SUBJECT TO PREFERENTIAL RIGHT. Except as may otherwise be
expressly permitted herein, the Management Investor may Transfer Common Stock to
a transferee if, but only if, an Acquisition Proposal is received by such Party
from such transferee with respect to such Common Stock, and then only in
compliance with this Agreement. Upon the Management Investor's receipt of an
Acquisition Proposal which such Party is permitted hereunder to accept and
desires to accept, the Management Investor shall offer (the "Offer"), by written
notice to the Company, to sell the Shares Subject to the Offer to the Company
for the Purchase Price pursuant to the terms of this Agreement. Any Offer under
this Section 3.3(a) shall be irrevocable for so long as the Company has the
right to purchase any Shares Subject to the Offer. The Offer shall be delivered
to the Company, and shall (i) state the Shares Subject to the Offer, the
consideration to be paid therefor, the Offer Date and the Offer Expiration Time
and (ii) contain a true and complete copy of the Acquisition Proposal. The date
the Offer has been deemed received pursuant to Section 6.5 by the Company shall
be the "Offer Date."
3.4 PROCEDURES WITH RESPECT TO TRANSFERS SUBJECT TO SECTION 3.3.
(a) Election Procedure. With respect to any Offer made pursuant to
Section 3.3, the Company shall have the option and preferential right, but shall
not be obligated, to elect by the Offer Expiration Time, to purchase the Shares
Subject to the Offer. Such option and right may be assigned by the Company to
JEDI, in whole or in part, in which case written notice of such assignment shall
be given to the Management Investor. If the Company desires to purchase the
Shares Subject to the Offer it shall, prior to the Offer Expiration Time,
deliver a written notice (a "Positive Receipt Notice") to the Management
Investor stating that the Company elects to purchase, subject to the
requirements of Section 3.4(b), a specified portion of or all of the Shares
Subject to the Offer. The Positive Receipt Notice shall specify the number of
shares of Common Stock and Common Stock Equivalents that the Company is electing
to purchase and the time, date (the "Closing Date") and place of the closing of
the acquisition of Shares Subject to the Offer by the Company (the "Closing")
and shall specify the Purchase Price. The Closing Date shall be no less than
five business days
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<PAGE> 12
and no more than 20 business days following the delivery of the Positive Receipt
Notice.
(b) Requirement to Purchase Some or All. With respect to Offers made
pursuant to Section 3.3, except to the extent provided for below, the Company
shall not be required to elect to purchase all of the Shares Subject to the
Offer, but instead may elect to purchase, in accordance with this Section
3.4(b), a portion thereof, in which event the Management Investor shall be
obligated to sell that portion to the Company. If, however, the Person making
the applicable Acquisition Proposal specifies in the Acquisition Proposal that
such Person is only willing to acquire a specified minimum number of shares of
Common Stock (which minimum number may be all the Shares Subject to the Offer),
then if the Company fails to elect timely to purchase that specified minimum
number, then the Company will be deemed not to have accepted the Offer at all
and the Management Investor shall be permitted to sell all the Shares Subject to
the Offer pursuant to Section 3.4(d).
(c) Determination of Purchase Price. The "Purchase Price" for purposes
of the purchase of Shares Subject to the Offer under Section 3.3 shall be the
price per share set forth in the Acquisition Proposal. The "Purchase Price" for
any Common Stock Equivalents shall be equal to (i) the number of shares of
Common Stock then acquirable upon the exercise or conversion of the fully vested
portion of such Common Stock Equivalents multiplied by the applicable price per
share of Common Stock set forth in the Acquisition Proposal, less (ii) the
aggregate consideration required to be paid so to exercise or convert such
Common Stock Equivalents.
(d) Election Not to Purchase. If the Company does not elect to purchase
all of the Shares Subject to the Offer made under Section 3.3, the Management
Investor shall be permitted at any time within, but not after, 30 days after the
Offer Expiration Time, to make a Transfer of all (but not less than all) of the
Shares Subject to the Offer other than the shares, if any, to be purchased by
the Company pursuant to this Section 3.4; provided, however, that no such
Transfer shall be made on more favorable terms (including lower price) than the
terms specified in the Acquisition Proposal or to a Person other than the
proposed transferee specified in the Acquisition Proposal. All Common Stock
Transferred by a Party (whether voluntarily, involuntarily, by operation of law
or otherwise), even if one or more Parties had the right to purchase such Shares
pursuant to Section 3.3 and failed to do so, and Common Stock owned by a Party
that became subject to an Offer, whether or not such Common Stock was acquired
by the Company, shall nonetheless remain subject to the terms of this Agreement,
including becoming, under the applicable circumstances, subject again under
Section 3.3 to the right of the Company to purchase such shares.
(e) Closing. Unless otherwise agreed to by the Management Investor and
the Company, the Closing shall be at 9:00 a.m., on the Closing Date at the
Company's principal office, subject to any delay in the Closing pursuant to
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<PAGE> 13
Section 3.4(g). At the Closing, the Purchase Price shall be delivered to the
transferor of the Common Stock and Common Stock Equivalents or the transferor's
representative, and the transferor or the transferor's representative shall
deliver to the Company such share certificates and agreements representing the
Shares Subject to the Offer so purchased, duly endorsed for transfer or
accompanied by duly executed stock powers or assignments, free and clear of all
liens, encumbrances and adverse claims with respect thereto and such other
matters as are deemed necessary by the Company for the proper Transfer of the
Shares Subject to the Offer so purchased to the Company on the books of the
Company.
(f) Form of Payment. The Purchase Price of all Shares Subject to the
Offer pursuant to an Offer made under Section 3.3 shall be paid in cash (in the
form of a cashier's check or by wire transfer in same day funds).
(g) Delay for Approvals. If any Positive Receipt Notice is delivered by
the Company, the Management Investor and the Company shall cooperate in good
faith in obtaining all necessary governmental and other third party approvals,
waivers and consents. Any Closing pursuant to Section 3.4(e) shall be delayed,
to the extent required, until the next succeeding business day following the
expiration of any required waiting periods under the HSR Act and the obtaining
of all necessary governmental approvals; provided, however, such delay shall not
exceed 90 days, and if governmental approvals and waiting periods shall not have
been obtained or expired by such 90th day following the applicable Closing Date,
then the Company shall be deemed to have elected not to purchase any of the
Shares Subject to the Offer and, if applicable, the Offeror shall be entitled to
Transfer the Shares Subject to the Offer in accordance with Section 3.4(d)
(except that such 90th day shall be deemed to be the applicable Offer Expiration
Time).
(h) Invalid Transfers. Any Transfer or attempted Transfer in breach of
this Agreement ("Invalid Transfer") shall be void and of no effect. In
connection with any Invalid Transfer, the Company may hold and refuse to
transfer any Common Stock or any certificate therefor tendered to it for
transfer, in addition to and without prejudice to any and all other rights or
remedies which may be available to it or the Parties.
(i) Assignment of Rights. Notwithstanding anything to the contrary
herein, the Company may from time to time assign some or all of its rights under
Sections 3.3 and 3.4 herein to any JEDI Party. In such an event, the Company
shall continue to receive and provide the notices referred to in Section 3.4,
but such portion of the applicable Shares Subject to the Offer shall be acquired
by, and paid for by, any such assignee.
3.5 CONDITIONS TO PERMITTED TRANSFERS; CONTINUED APPLICABILITY OF
AGREEMENT.
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<PAGE> 14
(a) As a condition to any Transfer by the Management Investor (or any
subsequent transferee thereof) permitted hereunder or if any Transfer by the
Management Investor (or any subsequent transferee thereof) otherwise occurs, any
transferee of Common Stock from the Management Investor (or any subsequent
transferee thereof) shall be required to become a Party to this Agreement and to
the Business Opportunity Agreement, by executing (together with such Person's
spouse, if applicable) an Adoption Agreement, and shall have all the obligations
of the Management Investor hereunder and the rights that are expressly provided
for herein. If any Person acquires Common Stock from the Management Investor (or
any subsequent transferee thereof) in a Transfer notwithstanding such Person's
failure to execute an Adoption Agreement in accordance with the preceding
sentence (whether such Transfer resulted by operation of law or otherwise), such
Person and such Common Stock shall be subject to this Agreement, including the
provisions of Sections 3.3 and 3.4 even if such Person is not a Party.
(b) The Management Investor shall make no Transfer at any time if such
action would constitute a violation of any federal or state securities laws.
3.6 RESTRICTIONS ON OTHER AGREEMENTS. Except as otherwise expressly
provided herein, the Management Investor shall not grant any proxy or enter into
or agree to be bound by any voting trust with respect to Common Stock or Common
Stock Equivalents nor shall the Management Investor enter into any stockholder
agreement or arrangements of any kind with any Person with respect to Common
Stock or Common Stock Equivalents (whether or not such agreements and
arrangements are with other Parties), including, without limitation, agreements
or arrangements with respect to the acquisition, disposition or voting of shares
of Common Stock.
3.7 EFFECT OF DISTRIBUTIONS AND CERTAIN TRANSACTIONs. If, in connection
with any Offer, any record date for any dividend or distribution by the Company
(other than any regular quarterly cash dividend) or any record date for the
issuance of any securities of the Company or any other Person in respect of
Common Stock in connection with any exchange, merger, recapitalization,
consolidation, reorganization or other transaction involving the Company occurs
on or after the date on which the Purchase Price is determined and prior to the
Closing, then the Company shall be entitled to receive any such dividends,
distributions or securities, as the case may be, in respect of the Common Stock
it acquires pursuant to such Offer and appropriate documentation shall be
delivered at the Closing by the Management Investor to evidence the Company's
right to receive such dividends, distributions or securities.
ARTICLE IV
CERTAIN RIGHTS
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<PAGE> 15
4.1 TAGALONG RIGHTS. If a JEDI Party proposes to sell Common Stock for
value (such JEDI Party being referred to herein as a "JEDI Party Transferor"),
but excluding (i) a sale which is pursuant to a Qualified IPO, (ii) a sale to a
JEDI Special Transferee prior to the sixth month anniversary of the Effective
Time, (iii) a Transfer to a JEDI Entity, (iv) any sale in which the Management
Investor agrees to participate, and (v) a sale or sales which are effected by
such JEDI Party Transferor or a group of which such JEDI Party Transferor is a
member, in a single transaction or a series of related transactions, and which
do not involve more than 10% of the Fully-Diluted Common Stock, then such JEDI
Party Transferor shall offer (the "Participation Offer") to include in the
proposed sale a number of shares of Common Stock designated by the Management
Investor, not to exceed the number of shares equal to the product of (A) the
aggregate number of shares to be sold by the JEDI Party Transferor to the
proposed transferee and (B) a fraction with a numerator equal to the number of
shares of Fully-Diluted Common Stock held by the Management Investor and a
denominator equal to the number of shares of Fully-Diluted Common Stock held by
JEDI and the Management Investor. The JEDI Party Transferor shall give written
notice to the Management Investor of the Participation Offer (the "JEDI Party
Transferor's Notice") at least 20 days prior to the proposed sale. The JEDI
Party Transferor's Notice shall specify the proposed transferee, the number of
shares of Common Stock to be sold to such transferee, the amount and type of
consideration to be received therefor, and the place and date on which the sale
is to be consummated. If the Management Investor wishes to include shares of his
Common Stock in the proposed sale in accordance with the terms of this Section
4.1 he shall so notify the JEDI Party Transferor not more than 10 days after the
date of the JEDI Party Transferor's Notice. The Participation Offer shall be
conditioned upon the JEDI Party Transferor's sale of shares pursuant to the
transactions contemplated in the JEDI Party Transferor's Notice with the
transferee named therein. If the Management Investor accepts the Participation
Offer, the JEDI Party Transferor shall cause the transferee that proposes to
purchase the Common Stock of the JEDI Party Transferor to offer to purchase, on
such terms, a proportionate number of shares of Common Stock from the Management
Investor; provided, however, that, if such transferee is for any reason
unwilling or unable to purchase the aggregate number of shares from the JEDI
Party Transferor as well as the Management Investor, then the JEDI Party
Transferor shall reduce to the extent necessary the number of shares it
otherwise would have sold in the proposed sale so as to permit the Management
Investor to sell the number of shares that he is entitled to sell under this
Section 4.1, and the JEDI Party Transferor and the Management Investor shall
sell the number of shares specified in the Participation Offer to the proposed
transferee in accordance with the terms of such sale set forth in the JEDI Party
Transferor's Notice.
4.2 Piggyback Registration Rights. If the Company at any time proposes
to sell Common Stock pursuant to a registration statement filed under the
Securities Act (other than registrations on Forms S-4 or S-8 or any successor
forms thereto), it will each such time promptly give written notice to
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<PAGE> 16
the Management Investor of its intention to do so. Upon the written request of
the Management Investor delivered to the Company within ten days after receipt
of any such notice, the Company will use its best efforts to cause the number of
shares owned by the Management Investor and so designated to be registered under
such registration statement to the extent requisite to permit the sale or other
disposition by the Management Investor of such shares; provided, however, that
the Company may elect not to file a registration statement pursuant to this
Section 4.2 or may withdraw any registration statement filed pursuant to this
Section 4.2 at any time prior to the effective date thereof. In the case of an
underwritten public equity offering by the Company, the Management Investor
shall execute an underwriting agreement containing such provisions as may be
requested by the managing underwriters, including an agreement not to sell
publicly any shares of Common Stock held by the Management Investor (other than
the shares so registered) for a period of up to 120 days following the effective
date of the registration statement relating to such offering. If the managing
underwriter for the respective offering advises that the inclusion in such
registration of some or all of the shares sought to be registered by the
Management Investor and JEDI in the managing underwriter's opinion will cause
the proceeds or price per share from such registration to be reduced or that the
number of securities to be registered at the request of the Company plus the
number of shares sought to be registered by the Management Investor and JEDI is
too large a number to be reasonably sold, the number of shares sought to be
registered by the Management Investor and the number of shares sought to be
registered by JEDI shall be reduced pro rata, based on the number sought to be
registered by JEDI and the Management Investor, to equal the number of shares
recommended to be so registered by the managing underwriter. The Company will
bear all expenses involved with respect to any such registration, except for
underwriters' commissions relating to the shares sold by the Management Investor
and any separate counsel of the Management Investor. The piggyback rights
granted pursuant to this Section 4.2 shall terminate at such time as the
Management Investor shall be legally entitled to sell shares of Common Stock
pursuant to Rule 144 under the Securities Act without any volume limitation.
4.3 Rights Upon Termination of Employment.
(a) The Management Investor shall have the right to cause the Company
to purchase all, but not less than all, shares of Common Stock then owned by the
Management Investor at any time following the date the Management Investor
ceases to be an employee of the Company (the "Employment Termination Date") at a
price per share equal to the Appraised Value. Such right may be exercised by
giving the Company written notice thereof. If the Employment Termination Date
occurs as a result of the death or incapacity of the Management Investor, the
Company shall purchase such shares and pay the Management Investor (or his
representative) the purchase price therefor on the date which is no later than
30 days following the date of the Company's receipt of such notice, and the
Appraised Value shall be determined as of the end of the second month
immediately preceding such date of receipt. If
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<PAGE> 17
the Employment Termination Date occurs as a result of any other reason, such
purchase and payment shall occur on the date which is the later of three years
following the Effective Time, as defined in the Executive Employment Agreement
dated May 24, 1996, between Jenco Acquisition, Inc. and the Management Investor
(the "Employment Agreement"), or 30 days following the date of the Company's
receipt of the notice referred to above, and the Appraised Value shall be
determined as of the end of the second month immediately preceding such date of
purchase and payment. Notwithstanding the foregoing, the Company shall not be
obligated to repurchase any shares of Common Stock from the Management Investor
if there exists and is continuing an event of default which would, without
further passage of time or further notice, permit acceleration of the
indebtedness under the Company's loan or credit agreement with its principal
lender or lenders or under any other material agreement for borrowed money, or
if such purchase would result in a default or any event of default (without
regard to the further passage of time or the giving of such notice) as defined
in any such agreement, or if the capital of the Company is then impaired or such
purchase would cause an impairment of the capital of the Company or would
otherwise violate applicable law.
(b) The Company shall have the right to purchase all, but not less than
all, shares of Common Stock then owned by the Management Investor at any time
following the Employment Termination Date. Such right may be exercised by giving
the Management Investor written notice thereof, and the Company may assign such
right, in whole or in part, to JEDI, in which case written notice of such
assignment shall be given to the Management Investor. The Management Investor
shall sell such shares to the Company and the Company shall pay the purchase
price therefor on the date which is no later than 30 days following the date on
which the Company transmits such notice to the Management Investor, and the
Appraised Value shall be determined as of the end of the second month
immediately preceding such date of transmittal of notice.
(c) Upon the receipt of the notice referred to in Section 4.3(a) or the
giving of the notice referred to in Section 4.3(b), the Company shall engage
promptly Arthur Andersen LLP to determine the fair market value per share of
Common Stock (the "Appraised Value") as of the appropriate date in accordance
with accounting and valuation standards customarily used by such firm in valuing
the stock of similar closely held oil and gas exploration and production
companies. In connection with the determination of the Appraised Value, Arthur
Andersen LLP shall not discount the fair market value per share as a result of
the Management Investor's minority interest or for lack of marketability or for
any other reason pertaining to a minority interest in a private company, and the
fair market value per share of Common Stock shall be determined as if the
Company were being sold as an entire entity. The Management Investor shall
reimburse the Company for 50% of the fee and expenses of Arthur Andersen LLP in
connection with its determination of the Appraised Value, which amount may be
deducted by the Company from the purchase price. Notwithstanding the foregoing,
if the Common Stock is publicly traded at the time any such notice is
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<PAGE> 18
given, Arthur Andersen LLP shall not be so engaged, and the Appraised Value
shall be equal to the average of the quoted closing sale prices of the Common
Stock for the 20 trading days immediately prior to the date of the giving of any
such notice (by either the Management Investor or the Company), provided,
however, that if no closing sale price is quoted for any day on which the Common
Stock is traded, then the average of the quoted bid and asked prices of the
Common Stock shall be used for such day.
(d) Payment of the purchase price for the Management Investor's shares
of Common Stock pursuant to this ARTICLE IV shall be made in immediately
available funds.
ARTICLE V
TERMINATION
5.1 TERMINATION. This Agreement shall terminate and no Party shall have
any further obligations or rights hereunder upon the earliest of (i) the
termination of the Merger Agreement in accordance with its terms, (ii) the
Termination Date, (iii) the date a Qualified IPO is consummated, (iv) the date
of the dissolution, liquidation or winding-up of the Company and (v) the date of
the delivery to the Company of a written termination notice executed by each
JEDI Party and by the Management Investor.
ARTICLE VI
MISCELLANEOUS
6.1 AMENDMENT; WAIVERS. This Agreement may only be altered,
supplemented, amended or waived by the written consent of (i) the Company, (ii)
each JEDI Party that owns at least 5% of the Common Stock and (iii) the
Management Investor; provided, however, (i) any Party may (without the consent
of any other Person) waive, in writing, any obligation owed to it hereunder by
any other Party or the Company, and (ii) any Party may (without the consent of
any other Person) waive, in writing, any right it has hereunder. Any waiver
permitted hereunder may be made prospectively or retroactively.
6.2 ASSIGNMENT. Except as otherwise expressly provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the Parties, the Company and their permitted assigns; provided,
however, assigns shall only have those rights that are expressly provided for
herein in accordance with Section 3.5. No such assignment shall relieve the
assignor from any liability accruing hereunder prior to an assignment permitted
hereunder. The Company agrees that it shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets
substantially as an entirety, unless the Person formed by such consolidation or
into which the Company merges or the Person which acquires by conveyance or
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<PAGE> 19
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation organized and existing under
the laws of the United States of America or a State thereof (the "Successor
Corporation") and shall expressly assume, by written agreement signed by the
Company and the Successor Corporation and delivered to each Party, the
performance and observance of every obligation on the part of the Company to be
performed or observed hereunder.
6.3 SHARES SUBJECT TO THIS AGREEMENT. Except as otherwise provided for
herein, all shares of Common Stock or Common Stock Equivalents now or hereafter
owned by any of the Parties shall be subject to the terms of this Agreement.
6.4 LEGENDS. Each certificate for Common Stock and each agreement
representing Common Stock Equivalents that are subject to this Agreement shall
include a legend in substantially the following form:
THIS SECURITY IS SUBJECT TO CERTAIN VOTING
AGREEMENTS, RESTRICTIONS ON TRANSFER, AND OTHER
TERMS AND CONDITIONS SET FORTH IN THE SHAREHOLDERS
AGREEMENT, DATED AS OF MAY 24, 1996, A COPY OF
WHICH SHALL BE MAILED TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE, WITHIN FIVE DAYS AFTER
RECEIPT OF WRITTEN REQUEST THEREFOR.
6.5 NOTICES. Any and all notices, designations, consents, offers,
acceptances, or other communications provided for herein (each a "Notice") shall
be given in writing by personal delivery, overnight courier, telegram, or
telecopy which shall be addressed, or sent, to the respective addresses or
telecopy numbers as follows (or such other address or telecopy number as the
Company or any Party may specify for itself to the Company and all other Parties
by Notice):
The Company and JEDI: c/o Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Brenda McGee, Specialist
Telecopy No. 713-646-3602
Telephone No. 713-853-5259
with a copy to: Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: W. Craig Childers
W. Lance Schuler
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<PAGE> 20
Telecopy No. 713-646-3393
Management Investor: Mr. Jerry D. Jordan
Chairman of the Board and Chief Executive Officer
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214
Telecopy No. 614-888-6287
with a copy to: Alec Wightman
Baker & Hostetler
65 East State Street, Suite 2100
Columbus, Ohio 43215-4260
Telecopy No. 64-462-2616
All Notices shall be deemed effective, delivered and received (a) if given by
personal delivery, when such Notice is personally delivered at the address
specified above; (b) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified above and receipt thereof is confirmed; (c) if
given by overnight courier, on the business day immediately following the day on
which such Notice is delivered to a reputable overnight courier service; or (d)
if given by telegram, when such Notice is delivered at the address specified
above.
6.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of the parties
hereto.
6.7 HEADINGS. Headings contained in this Agreement are inserted only as
a matter of convenience and in no way define, limit, or extend the scope or
intent of this Agreement or any provisions hereof.
6.8 CHOICE OF LAW. This Agreement shall be governed by the internal
laws of the State of Ohio without regard to the principles of conflicts of laws
thereof.
6.9 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties hereto respecting the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect thereto.
6.10 CUMULATIVE RIGHTS. The rights of the Parties and the Company under
this Agreement are cumulative and in addition to all similar and other rights of
the Parties under other agreements.
6.11 CONSTRUCTION. The Parties and the Sub have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
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<PAGE> 21
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and the Company, as the successor to the
Sub, and no presumption or burden of proof shall arise favoring or disfavoring
any Party or the Company by virtue of the authorship of any of the provisions of
this Agreement.
6.12 NO PARTNERSHIP. No term or provision of this Agreement shall be
construed to establish any relationship of partnership, agency or joint venture
between the parties hereto.
6.13 NUMBER; GENDER; WITHOUT LIMITATION; INTERPRETATION OF CERTAIN
DEFINED TERMS. Pronouns, wherever used in this Agreement, and of whatever
gender, shall include Persons of every kind and character, and the singular
shall include the plural whenever and as often as may be appropriate. Any
reference herein to "including" and words of similar import refer to "including
without limitation." When reference is made herein to one or more Groups or
other specified Parties or Persons, the determination as to which Persons are
thereby referenced shall be made as of the time in question.
6.14 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties hereto shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions, the
economic effect of which approximates as nearly as possible that of the invalid,
illegal or unenforceable provisions.
6.15 THIRD PERSON. Nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any Person not a party hereto any
rights or remedies under or by reason of this Agreement.
6.16 U.S. CURRENCY. All payments required or permitted hereunder shall
be paid in U.S. dollars or other lawful currency constituting legal tender of
the United States of America.
6.17 INDEMNIFICATION. Each Party (the "Indemnitor") hereby agrees to
protect, defend, indemnify and hold harmless all other Parties and their
respective successors, heirs and assigns (the "Indemnitees") against any and all
claims, lawsuits, damages and other liabilities and expenses (including
reasonable attorneys' fees) suffered or incurred by any of the Indemnitees and
which arise out of any breach by the Indemnitor of its representations,
warranties, covenants or other obligations hereunder.
6.18 SPOUSAL CONSENTS. The Management Investor represents and warrants
that his spouse is the Management Investor Spouse set forth next to the
Management Investor's name on the execution pages hereof. The
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<PAGE> 22
Management Investor Spouse represents and warrants, and the Management Investor
represents and warrants with respect to his spouse, that such Management
Investor Spouse has duly and validly executed and delivered this Agreement. The
Management Investor Spouse agrees that such execution and delivery constitutes
an acknowledgment that such spouse is fully aware of, understands and fully
consents and agrees to the provisions of this Agreement and its binding effect
upon any community property interests or similar marital property interests in
the Common Stock or Common Stock Equivalents she may now or hereafter own,
agrees that the termination of her marital relationship with the Management
Investor for any reason shall not have the effect of removing any Common Stock
or Common Stock Equivalents otherwise subject to this Agreement from the
coverage hereof and agrees that such spouse shall have no rights of any nature
hereunder (including any preferential purchase rights or preemptive rights)
unless and until such spouse becomes a Party in accordance with this Agreement.
Furthermore, the Management Investor agrees to cause any subsequent spouse to
execute and deliver to the Company a counterpart of this Agreement, or an
Adoption Agreement.
6.19 CERTAIN RECORDS. In order to effectuate the purposes of this
Agreement, the Company (i) shall maintain a record of the names and addresses of
the Parties and the number of shares of Common Stock and Common Stock
Equivalents owned by the Parties and the JEDI Group, (ii) at the request of any
Party, it will provide such Party with a copy of the record, (iii) shall
promptly notify the Parties in the event the Company receives notice that any
shares of Common Stock or Common Stock Equivalents have been (or have purported
to be) Transferred by or to any Party (including the name of the transferor and
transferee or purported transferor or transferee and the number of shares
transferred or purported to be transferred), (iv) shall not register, in the
name of any Person, any shares subject to this Agreement unless the transferor
and transferee have complied with the terms of this Agreement including Section
3.5 and (v) shall not issue to any Person any stock certificate representing
shares subject to this Agreement or any agreement representing Common Stock
Equivalents unless in each case the legend referred to in Section 6.4 hereof is
set forth thereon.
6.20 ARBITRATION. Except as otherwise expressly set forth herein, any
and all claims, demands, causes of action, disputes, controversies and other
matters in question arising out of or relating to this Agreement, the alleged
breach thereof, or in any way relating to the subject matter of this Agreement
("Claims"), even though some or all of such Claims allegedly are extra
contractual in nature, whether such Claims sound in contract, tort or otherwise,
at law or in equity, under State or federal law, whether provided by statute or
the common law, for damages or any other relief, shall be resolved and decided
exclusively by binding arbitration pursuant to the Federal Arbitration Act in
accordance with the Commercial Arbitration Rules then in effect with the
American Arbitration Association. The arbitration proceeding shall be conducted
in Houston, Texas. The arbitration shall be before a panel of three arbitrators.
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<PAGE> 23
Each party to such dispute shall select one arbitrator, and the two arbitrators
selected by the parties shall select the third arbitrator. The arbitrators are
authorized to issue subpoenas for depositions and other discovery mechanisms, as
well as trial subpoenas, in accordance with the Federal Rules of Civil
Procedure. Either party may initiate a proceeding in the appropriate United
States District Court to enforce this provision. This agreement to arbitrate
shall be enforceable in either federal or State court. Judgment upon any award
rendered in any such arbitration proceeding may be entered by any federal or
State court having jurisdiction. The enforcement of this agreement to arbitrate
and all procedural aspects of this agreement to arbitrate, including the
construction and interpretation of this agreement to arbitrate, the scope of the
arbitrable issues, allegations of waiver, delay or defenses to arbitrability,
and the rules governing the conduct of the arbitration, shall be governed by and
construed pursuant to the Federal Arbitration Act. In deciding the substance of
any such Claim, the arbitrators shall apply the substantive laws of the State of
Ohio; provided, however, that the arbitrators shall have no authority to award
punitive damages under any circumstances (whether it be exemplary damages,
treble damages, or any other penalty or punitive type of damages) regardless of
whether such damages may be available under Ohio law or otherwise, the Parties
and the Company hereby waiving their right, if any, to recover punitive damages
in connection with any Claims. The arbitrators shall be entitled to award costs
of the arbitration and attorney's fees as they deem appropriate. Prior to any
Person instituting a Claim under this Agreement, such Person shall provide to
the Company and all other Parties to this Agreement a written notice specifying
the nature and basis of the Claim. The Persons who are the subject of any Claim
shall be given thirty (30) days to cure any breach before any Claim is filed. It
is further agreed that prior to such Claims being submitted to the arbitrators
on such Claims, the parties to the Claims shall attempt to resolve such Claims
through non-binding mediation of such Claims.
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<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written, but effective for all purposes as of the
Effective Time.
JENCO ACQUISITION, INC.
By:
-----------------------------
W. Craig Childers
Vice President
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
By: Enron Capital Management
Limited Partnership, its general partner
By: Enron Capital Corp., its general partner
By:
--------------------------------
W. Craig Childers
Agent and Attorney-in-Fact
MANAGEMENT INVESTOR SPOUSE: MANAGEMENT INVESTOR:
- ------------------------------------ ------------------------------------
Jerry J. Jordan
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<PAGE> 25
EXHIBIT "A"
ADOPTION AGREEMENT (form)
This Adoption Agreement ("Adoption") is executed pursuant to the terms
of the Shareholders Agreement dated as of May ___, 1996, a copy of which is
attached hereto and is incorporated herein by reference (the "Shareholders
Agreement"), by the transferee ("Transferee") executing this Adoption. Reference
is also made to the Business Opportunity Agreement dated as of May ___, 1996, a
copy of which is attached hereto and is incorporated herein by reference (the
"Business Opportunity Agreement"). By the execution of this Adoption, the
Transferee agrees as follows:
1. Acknowledgment; Representations and Warranties. ____________________
("Transferee") acknowledges that Transferee is acquiring _______ [number of
shares to be acquired to be inserted] shares of the Common Stock from a Party,
subject to the terms and conditions of the Shareholders Agreement. Capitalized
terms used herein without definition are defined in the Shareholders Agreement
and are used herein with the same meanings set forth therein. Transferee
represents and warrants to the Company and the Parties that (i) Transferee has
full power and authority to execute and deliver this Adoption and the execution
and delivery by such Transferee of this Adoption have been duly authorized by
all necessary action; (ii) this Adoption has been duly and validly executed and
delivered by the Transferee and constitutes the binding obligation of the
Transferee, enforceable against the Transferee in accordance with its terms; and
(iii) the Transferee owns _______ shares of Common Stock in addition to those
being acquired as hereinabove referenced.
2. Agreement. Transferee (i) agrees that shares of the Common Stock
acquired by Transferee, and shares of Common Stock and certain other securities
that are currently owned or that may be acquired by Transferee in the future,
shall be bound by and subject to the terms of the Shareholders Agreement
pursuant to the terms thereof, and (ii) hereby adopts the Shareholders Agreement
with the same force and effect as if he were originally a party thereto.
Transferee (i) agrees that he, she or it shall be bound by and subject to the
terms of the Business Opportunity Agreement and (ii) hereby adopts the Business
Opportunity Agreement with the same force and effect as if he, she or it were
originally a party thereto.
3. Notice. Any notice required as permitted by the Shareholders
Agreement or the Business Opportunity Agreement shall be given to Transferee at
the address listed beside Transferee's signature below.
4. Joinder. The spouse of the undersigned Transferee, if applicable,
executes this Adoption to acknowledge its fairness and that this Adoption is in
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<PAGE> 26
such spouse's best interests, and to agree that such spouse's community
interest, if any, in the shares of Common Stock and other securities referred to
above and in the Shareholders Agreement and the Business Opportunity Agreement
shall be subject to the terms of the Shareholders Agreement and the Business
Opportunity Agreement.
<PAGE> 27
EXECUTED AND DATED this the ____ day of _____________, 19___.
TRANSFEREE:
By:
-------------------------------
Name:
Address:
SPOUSE:
By:
-------------------------------
Name:
Agreed to on behalf of the Company and all Parties pursuant to Section 3.5 of
the Shareholders Agreement.
Clinton Gas Systems, Inc.
(for itself and the Parties)
By:
-------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 99.5
EXECUTIVE EMPLOYMENT AGREEMENT
(FOR JERRY JORDAN)
This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between Jenco Acquisition, Inc., having offices at 4770
Indianola Avenue, Columbus, Ohio 43214-0981 ("Employer"), and Jerry D. Jordan,
an individual currently residing at 795 Old Woods Road, Worthington, Ohio 43235
("Employee"), to be effective as of the Effective Date (as hereinafter defined).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Employer, Clinton Gas Systems, Inc., an Ohio corporation ("Clinton"),
and Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership, are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Employer with and into Clinton (the
"Merger").
WHEREAS, Employer is desirous of having Clinton, as the surviving
corporation of the Merger, continue to employ Employee, effective as of the date
on which the "Effective Time", as defined in the Merger Agreement, occurs (the
"Effective Date"), pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is desirous of entering
into such employment relationship pursuant to such terms and conditions and for
such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1.
EMPLOYMENT AND DUTIES
1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to subsidiaries of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time. Notwithstanding any other provision of this
<PAGE> 2
Agreement to the contrary, any relocation of Employee by Employer to a location
outside the State of Ohio without the prior written consent of Employee shall
give Employee the right to terminate this Agreement, which right shall be
exercisable for ten days after Employee receives notice of such relocation and
which termination shall constitute an Involuntary Termination under Article 3 of
this Agreement.
1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer, or requires any significant portion of Employee's
business time.
1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.
1.5 Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would injure Employer's
business, its interests, or its reputation. Employee shall not, during the Term
of this Agreement or any extension or renewal thereof, engage, directly or
indirectly, in any activity which constitutes a Conflict of Interest (as defined
below); provided that Employer acknowledges and agrees that Employee may have as
of the Effective Date passive investments or other interests, directly or
indirectly, in oil and gas wells, leases and pipelines, including some that may
be owned or operated by Employer, and that Employee shall be entitled to
maintain such passive investments or other interests after the Effective Date.
For purposes of this Agreement: (a) "Conflict of Interest" means, without
limitation, any act or activity, or any interest in connection with, or benefit
from any act or activity, which is adverse to the interests of or would in any
way injure Employer or any of its affiliates, provided that a passive investment
of not more than 5% of the outstanding equity securities of an entity whose
securities are then being regularly traded in open-market brokerage transactions
(either on a stock exchange or over-the-counter) shall not constitute a Conflict
of Interest; and (b) "directly or indirectly" means, without limitation,
participation for Employee's own account or as an owner, shareholder, partner,
director, officer, member, manager, employee, associate, creditor or agent of
any other person or organization or through Employee's spouse or other family
relation. In keeping with Employee's duties to Employer, Employee agrees that
Employee shall not knowingly become involved in a Conflict of Interest with
Employer or its affiliates, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee agrees that Employee shall disclose to Employer's
General Counsel any facts that might involve such a Conflict of Interest that
has not been approved by Employer's Board of Directors.
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<PAGE> 3
1.6 Employer and Employee recognize that it is impossible to provide an
exhaustive list of actions or interests that constitute a "Conflict of
Interest." Moreover, Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by the Employee to
Employer's General Counsel may be all that is necessary to enable Employer or
its affiliates to protect its interests. In others, if no improper motivation
appears to exist and the interests of Employer or its affiliates have not
suffered, prompt elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the employment
relationship, subject to Section 3.1(i), below. Employer reserves the right to
take such reasonable action as, in its judgment, will end the conflict.
ARTICLE 2.
COMPENSATION AND BENEFITS
2.1 Employee's base salary during the Term shall be not less than the
amount set forth under the heading "Monthly Base Salary" on Exhibit A, which
shall be paid in equal or nearly equal installments in accordance with
Employer's standard payroll practice and not less frequently than semi-monthly.
Employee's base salary shall be reviewed not less often than annually and shall
be subject to such upward adjustments as Employer may deem appropriate in its
discretion.
2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the Effective Date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, vacation, 401(k) and pension plans. Nothing in this Agreement is to
be construed or interpreted to provide greater rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated employees pursuant to the terms and conditions of such benefit plans
and programs.
2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a written plan document adopted by the Board
of Directors of Employer, none of the benefits or arrangements described in this
Article 2 shall be secured or funded in any way, and each shall instead
constitute an unfunded and unsecured promise to pay money in the future
exclusively from the general assets of Employer.
2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
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<PAGE> 4
ARTICLE 3.
TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
3.1 Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(i) For "cause" upon the good faith determination by the
Employer's management committee (or, if there is no management
committee, the highest applicable level of management) of Employer that
"cause" exists for the termination of the employment relationship. As
used in this Section 3.1(i), the term "cause" shall mean [a] Employee's
gross negligence or willful misconduct in the performance of the duties
and services required of Employee pursuant to this Agreement; [b]
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude; [c] a reasonable determination by Employer that
Employee has violated the Conflict of Interest provisions of Section
1.5 of this Agreement and failure by Employee to eliminate such
Conflict of Interest within ten days after notice from Employer to do
so, or, if it is impossible to eliminate such Conflict of Interest
within such ten days, failure to commence within such ten days any
action necessary to eliminate such Conflict of Interest and thereafter
to continue diligently to pursue such action until elimination of such
Conflict of Interest, within no more than 30 days after such notice; or
[d] Employee's material breach of any material provision of this
Agreement (other than Section 1.5) that remains uncorrected for sixty
(60) days following written notice to Employee by Employer of such
breach. It is expressly acknowledged and agreed that the decision as to
whether "cause" exists for termination of the employment relationship
by Employer is delegated to the management committee (or, if there is
no management committee, the highest applicable level of management) of
Employer for determination;
(ii) for any other reason whatsoever, with or without cause,
in the sole discretion of the management committee (or, if there is no
management committee, the highest applicable level of management) of
Employer;
(iii) upon Employee's death; or
(iv) upon Employee's long-term disability. For purposes of
this Agreement, "long-term disability" shall have the same meaning as
the term "long-term disability" or "permanent disability" or similar
term in Employee's long-term or permanent disability policy provided by
Employer and covering Employee; provided that if there is no such
policy in effect covering Employee, "long-term disability" shall mean
that Employee has become incapacitated by accident, sickness, or other
circumstance which renders him mentally or physically incapable of
performing the duties and services required of Employee.
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<PAGE> 5
The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute a "Termination for Cause" if made
pursuant to Section 3.1(i); the effect of such termination is specified in
Section 3.4. The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.1(ii); the effect of such termination is specified in
Section 3.5. The effect of the employment relationship being terminated pursuant
to Section 3.1(iii) as a result of Employee's death is specified in Section 3.6.
The effect of the employment relationship being terminated pursuant to Section
3.1(iv) as a result of the Employee's long-term disability is specified in
Section 3.7.
3.2 Notwithstanding any other provisions of this Agreement except
Section 7.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(i) a material breach by Employer of any material provision of
this Agreement that remains uncorrected for 30 days following written
notice of such breach by Employee to Employer; or
(ii) for any other reason whatsoever, in the sole discretion
of Employee.
The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(ii); the effect of such termination is specified in
Section 3.3.
3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.3 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and other
similar items), but Employee shall not be entitled to any individual bonuses or
individual incentive compensation not yet paid at the date of such termination.
3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.4 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive
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<PAGE> 6
benefits after termination of employment. Employee shall be entitled to pro rata
salary through the date of such termination plus any other payments generally
available to other departing employees of Employer (such as unused personal
vacation, personal days and other similar items), but Employee shall not be
entitled to any individual bonuses or individual incentive compensation not yet
paid at the date of such termination.
3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to expiration of the Term, Employee shall be
entitled, in consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's non-competition
obligations), to receive the compensation specified in Section 2.1 as if
Employee's employment (which shall cease as of the date of such Involuntary
Termination) had continue for the full Term of this Agreement. Employee shall
not be under any duty or obligation to seek or accept other employment following
Involuntary Termination and the amounts due Employee hereunder shall not be
reduced or suspended if Employee accepts subsequent employment. Employee's
rights under this Section 3.5 are Employee's sole and exclusive rights against
Employer or its affiliates, and Employer's sole and exclusive liability to
Employee under this Agreement for any Involuntary Termination of the employment
relationship. Employee covenants not to sue or lodge any claim, demand or cause
of action against Employer for any sums for Involuntary Termination other than
those sums specified in this Section 3.5. If Employee breaches this covenant,
Employer shall be entitled to recover from Employee all sums expended by
Employer (including costs and attorneys fees) in connection with such suit,
claim, demand or cause of action.
3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination plus
any other payments generally available to other departing employees of Employer
(such as unused personal vacation, personal days and other similar items), but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.7 Upon termination of the employment relationship as a result of
Employee's long-term disability, Employee shall be entitled to his or her pro
rata salary through the date of such termination plus any other payments
generally available to other departing employees of Employer (e.g., unused
vacation, personal days, etc.), but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans and policies of Employer or its affiliates; provided
that compensation for any accrued but unused vacation shall not constitute a
severance plan or policy of Employer under this Agreement.
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<PAGE> 7
3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement that are continuing obligations,
including, without limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4.
CONTINUATION OF EMPLOYMENT BEYOND TERM;
TERMINATION AND EFFECTS OF TERMINATION
4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.
ARTICLE 5.
OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) and that relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
5.2 Employee acknowledges that the business of Employer and its
affiliates is highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or its affiliates use in their business to
obtain a competitive
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<PAGE> 8
advantage over their competitors. Employee further acknowledges that protection
of such confidential business information and trade secrets against unauthorized
disclosure and use is of critical importance to Employer or its affiliates in
maintaining their competitive position. Employee hereby agrees that Employee
will not, at any time during or after his or her employment by Employer, make
any unauthorized disclosure of any confidential business information or trade
secrets of Employer or its affiliates, or make any use thereof, except in the
carrying out of his or her employment responsibilities hereunder. As a result of
Employee's employment by Employer, Employee may also from time to time have
access to, or knowledge of, confidential business information or trade secrets
of third parties, such as customers, suppliers, partners, joint venturers, and
the like, of Employer and its affiliates. Employee also agrees to preserve and
protect the confidentiality of such third party confidential information and
trade secrets to the same extent, and on the same basis, as Employer's
confidential business information and trade secrets. Employee acknowledges that
money damages would not be sufficient remedy for any breach of this Article 5 by
Employee, and Employer shall be entitled to enforce the provisions of this
Article 5 by terminating any payments then owing to Employee under this
Agreement and/or to specific performance and injunctive relief as remedies for
such breach or any threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach of this Article 5, but shall be in addition to
all remedies available at law or in equity to Employer, including the recovery
of damages from Employee and his or her agents involved in such breach.
5.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer or its affiliates shall be and remain
the property of Employer or its affiliates, as the case may be. Upon termination
of Employee's employment by Employer, for any reason, Employee promptly shall
deliver the same, and all copies thereof, to Employer.
5.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Employer shall be the author of
the work. If such work is neither prepared by the Employee within the scope of
his or her employment nor a work specially ordered and then not deemed to be a
work made for hire, then Employee hereby agrees to assign, and by these presents
does assign, to Employer all of Employee's worldwide right, title, and interest
in and to such work and all rights of copyright therein.
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<PAGE> 9
5.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.
ARTICLE 6.
POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area or market where
Employer or any of its affiliated companies are conducting any business as of
the date of termination of the employment relationship or have during the
previous twelve months conducted any business:
(i) engage in any business competitive with the business
conducted by Employer;
(ii) render advice or services to, or otherwise assist, any
other person, association, or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by
Employer; or
(iii) induce any employee of Employer or any of its affiliates
to terminate his or her employment with Employer or its affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not affiliated with Employer.
These non-competition obligations shall extend until the latter of [a]
the expiration of the Term or [b] one year after termination of the employment
relationship.
6.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under
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<PAGE> 10
this Agreement and/or to specific performance and injunctive relief as remedies
for such breach or any threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach of this Article 6, but shall be in addition to
all remedies available at law or in equity to Employer, including, without
limitation, the recovery of damages from Employee and his or her agents involved
in such breach.
6.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7.
MISCELLANEOUS
7.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, is controlled by, or is under common control with Employer.
7.2 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214-0981
Attention: Board of Directors
If to Employee, to the address shown on the first page hereof.
Either Employer or Employee may furnish a change of address to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.3 This Agreement shall be governed in all respects by the laws of the
State of Ohio, excluding any conflict-of-law rule or principle that might refer
the construction of this Agreement to the laws of another State or country.
7.4 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this
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<PAGE> 11
Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
7.5 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Sections 5.2, Article 5, or
Section 6.1, and if the dispute cannot be settled through direct discussions,
then Employer and Employee agree first to endeavor to settle the dispute in an
amicable manner by mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings legal action to
enforce the terms of this Agreement, the party who prevails in such legal
action, whether plaintiff or defendant, in addition to the remedy or relief
obtained in such legal action shall be entitled to recover its, his, or her
expenses incurred in connection with such legal action, including, without
limitation, costs of Court and attorneys fees.
7.6 It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
7.7 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.
7.8 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein: the
nature of Employee's employment relationship with Employer and the term and
termination of such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject matters, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect such subject matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby, provided that any such modification must be
authorized or approved by the Board of Directors of Employer.
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7.9 If the Merger Agreement is terminated in accordance with its terms,
this Agreement shall terminate and the parties hereto shall have no further
obligations to any other party hereunder.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.
JENCO ACQUISITION, INC.
By:
-------------------------------
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
---------------------------------
Jerry D. Jordan
This 24th day of May, 1996
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<PAGE> 13
EXHIBIT "A"
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN RAZORBACK ACQUISITION, INC. AND JERRY D. JORDAN
Employee Name: Jerry D. Jordan
Term: Three (3) years after the Effective Time.
Position: Chairman of the Board and Chief Executive Officer
Location: Columbus, Ohio
Reporting Relationship: Board of Directors
Monthly Base Salary: $20,833.33
JENCO ACQUISITION, INC.
By:
-------------------------------
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
---------------------------------
Jerry D. Jordan
This 24th day of May, 1996
<PAGE> 1
EXHIBIT 99.6
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between Jenco Acquisition, Inc., having offices at 4770
Indianola Avenue, Columbus, Ohio 43214-0981 ("Employer"), and Marilyn A. Ennis,
an individual currently residing in the State of Ohio ("Employee"), to be
effective as of the Effective Date (as hereinafter defined).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Employer, Clinton Gas Systems, Inc., an Ohio corporation ("Clinton"),
and Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership, are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Employer with and into Clinton (the
"Merger").
WHEREAS, Employer is desirous of having Clinton, as the surviving
corporation of the Merger, continue to employ Employee, effective as of the date
on which the "Effective Time", as defined in the Merger Agreement, occurs (the
"Effective Date"), pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is desirous of entering
into such employment relationship pursuant to such terms and conditions and for
such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1.
EMPLOYMENT AND DUTIES
1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to subsidiaries of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time. Notwithstanding any other provision of this
Agreement to the contrary, any relocation of Employee by Employer to a principal
place
<PAGE> 2
of employment that is more than fifty miles from Employee's principal place of
employment as of the Effective Date without the prior written consent of
Employee (a "Prohibited Relocation") or any material modification of Employee's
duties without the prior written consent of Employee (a "Prohibited
Modification") shall give Employee the right to terminate this Agreement, which
right shall be exercisable for ten days after Employee receives notice of such
Prohibited Relocation or Prohibited Modification, unless the Prohibited
Relocation or Prohibited Modification is withdrawn by Employer within ten days
after Employer's receipt of such notice, and which termination shall constitute
an Involuntary Termination under Article 3 of this Agreement.
1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer, or requires any significant portion of Employee's
business time.
1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.
1.5 Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would injure Employer's
business, its interests, or its reputation. Employee shall not, during the Term
of this Agreement or any extension or renewal thereof, engage, directly or
indirectly, in any activity which constitutes a Conflict of Interest (as defined
below); provided that Employer acknowledges and agrees that Employee may have as
of the Effective Date passive investments or other interests, directly or
indirectly, in oil and gas wells, leases and pipelines, including some that may
be owned or operated by Employer, and that Employee shall be entitled to
maintain such passive investments or other interests after the Effective Date.
For purposes of this Agreement: (a) "Conflict of Interest" means, without
limitation, any act or activity, or any interest in connection with, or benefit
from any act or activity, which is adverse to the interests of or would in any
way injure Employer or any of its affiliates, provided that a passive investment
of not more than 5% of the outstanding equity securities of an entity whose
securities are then being regularly traded in open-market brokerage transactions
(either on a stock exchange or over-the-counter) shall not constitute a Conflict
of Interest; and (b) "directly or indirectly" means, without limitation,
participation for Employee's own account or as an owner, shareholder, partner,
director, officer, member, manager, employee, associate, creditor or agent of
any other person or organization or through Employee's spouse or other family
relation. In keeping with Employee's duties to Employer, Employee agrees that
Employee shall not knowingly become involved in a Conflict of Interest with
Employer or its affiliates, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee agrees that Employee shall disclose to Employer's
General Counsel any facts that might involve such a Conflict of Interest that
has not been approved by Employer's Board of Directors.
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1.6 Employer and Employee recognize that it is impossible to provide an
exhaustive list of actions or interests that constitute a "Conflict of
Interest." Moreover, Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by the Employee to
Employer's General Counsel may be all that is necessary to enable Employer or
its affiliates to protect its interests. In others, if no improper motivation
appears to exist and the interests of Employer or its affiliates have not
suffered, prompt elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the employment
relationship, subject to Section 3.1(i), below. Employer reserves the right to
take such reasonable action as, in its judgment, will end the conflict.
ARTICLE 2.
COMPENSATION AND BENEFITS
2.1 Employee's base salary during the Term shall be not less than the
amount set forth under the heading "Monthly Base Salary" on Exhibit A, which
shall be paid in equal or nearly equal installments in accordance with
Employer's standard payroll practice and not less frequently than semi-monthly.
Employee's base salary shall be reviewed not less often than annually and shall
be subject to such upward adjustments as Employer may deem appropriate in its
discretion.
2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the Effective Date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, vacation, 401(k) and pension plans. Nothing in this Agreement is to
be construed or interpreted to provide greater rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated employees pursuant to the terms and conditions of such benefit plans
and programs. In addition, Employee shall have the right to participate in an
incentive compensation plan to be adopted by Employer (the "Plan"). The Plan
shall provide for at least annual awards of cash, performance shares or units,
or other performance- or incentive-based compensation, or any combination
thereof, upon meeting the Employer's targeted performance objectives for the
award year. If Employer does not adopt the Plan, effective as of the Effective
Date, within 120 days after the Effective Date, Employee shall then have the
right to terminate this Agreement, which right shall be exercisable for 30 days
and which termination shall constitute an Involuntary Termination under Article
3 of this Agreement.
2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a
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written plan document adopted by the Board of Directors of Employer, none of the
benefits or arrangements described in this Article 2 shall be secured or funded
in any way, and each shall instead constitute an unfunded and unsecured promise
to pay money in the future exclusively from the general assets of Employer.
2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
ARTICLE 3.
TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
3.1 Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(i) For "cause" upon the good faith determination by the
Employer's management committee (or, if there is no management
committee, the highest applicable level of management) of Employer that
"cause" exists for the termination of the employment relationship. As
used in this Section 3.1(i), the term "cause" shall mean [a] Employee's
gross negligence or willful misconduct in the performance of the duties
and services required of Employee pursuant to this Agreement; [b]
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude; [c] a reasonable determination by Employer that
Employee has violated the Conflict of Interest provisions of Section
1.5 of this Agreement and failure by Employee to eliminate such
Conflict of Interest within ten days after notice from Employer to do
so, or, if it is impossible to eliminate such Conflict of Interest
within such ten days, failure to commence within such ten days any
action necessary to eliminate such Conflict of Interest and thereafter
to continue diligently to pursue such action until elimination of such
Conflict of Interest, within no more than 30 days after such notice; or
[d] Employee's material breach of any material provision of this
Agreement (other than Section 1.5) that remains uncorrected for sixty
(60) days following written notice to Employee by Employer of such
breach. It is expressly acknowledged and agreed that the decision as to
whether "cause" exists for termination of the employment relationship
by Employer is delegated to the management committee (or, if there is
no management committee, the highest applicable level of management) of
Employer for determination;
(ii) for any other reason whatsoever, with or without cause,
in the sole discretion of the management committee (or, if there is no
management committee, the highest applicable level of management) of
Employer;
(iii) upon Employee's death; or
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(iv) upon Employee's long-term disability. For purposes of
this Agreement, "long-term disability" shall have the same meaning as
the term "long-term disability" or "permanent disability" or similar
term in Employee's long-term or permanent disability policy provided by
Employer and covering Employee; provided that if there is no such
policy in effect covering Employee, "long-term disability" shall mean
that Employee has become incapacitated by accident, sickness, or other
circumstance which renders him mentally or physically incapable of
performing the duties and services required of Employee.
The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute a "Termination for Cause" if made
pursuant to Section 3.1(i); the effect of such termination is specified in
Section 3.4. The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.1(ii); the effect of such termination is specified in
Section 3.5. The effect of the employment relationship being terminated pursuant
to Section 3.1(iii) as a result of Employee's death is specified in Section 3.6.
The effect of the employment relationship being terminated pursuant to Section
3.1(iv) as a result of the Employee's long-term disability is specified in
Section 3.7.
3.2 Notwithstanding any other provisions of this Agreement except
Section 7.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(i) a material breach by Employer of any material provision of
this Agreement that remains uncorrected for 30 days following written
notice of such breach by Employee to Employer; or
(ii) for any other reason whatsoever, in the sole discretion
of Employee.
The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(ii); the effect of such termination is specified in
Section 3.3.
3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.3 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and
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other similar items), but Employee shall not be entitled to any individual
bonuses or individual incentive compensation not yet paid at the date of such
termination.
3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.4 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and other
similar items), but Employee shall not be entitled to any individual bonuses or
individual incentive compensation not yet paid at the date of such termination.
3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to expiration of the Term, Employee shall be
entitled, in consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's non-competition
obligations), to receive the compensation specified in Section 2.1 as if
Employee's employment (which shall cease as of the date of such Involuntary
Termination) had continue for the full Term of this Agreement. Employee shall
not be under any duty or obligation to seek or accept other employment following
Involuntary Termination and the amounts due Employee hereunder shall not be
reduced or suspended if Employee accepts subsequent employment. Employee's
rights under this Section 3.5 are Employee's sole and exclusive rights against
Employer or its affiliates, and Employer's sole and exclusive liability to
Employee under this Agreement for any Involuntary Termination of the employment
relationship. Employee covenants not to sue or lodge any claim, demand or cause
of action against Employer for any sums for Involuntary Termination other than
those sums specified in this Section 3.5. If Employee breaches this covenant,
Employer shall be entitled to recover from Employee all sums expended by
Employer (including costs and attorneys fees) in connection with such suit,
claim, demand or cause of action.
3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination plus
any other payments generally available to other departing employees of Employer
(such as unused personal vacation, personal days and other similar items), but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.7 Upon termination of the employment relationship as a result of
Employee's long-term disability, Employee shall be entitled to his or her pro
rata salary through the date of such termination plus any other payments
generally available to other departing employees of Employer (e.g., unused
vacation, personal days, etc.), but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
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3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans and policies of Employer or its affiliates; provided
that compensation for any accrued but unused vacation shall not constitute a
severance plan or policy of Employer under this Agreement.
3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement that are continuing obligations,
including, without limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4.
CONTINUATION OF EMPLOYMENT BEYOND TERM;
TERMINATION AND EFFECTS OF TERMINATION
4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.
ARTICLE 5.
OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) and that relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
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5.2 Employee acknowledges that the business of Employer and its
affiliates is highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or its affiliates use in their business to
obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such confidential business information and trade
secrets against unauthorized disclosure and use is of critical importance to
Employer or its affiliates in maintaining their competitive position. Employee
hereby agrees that Employee will not, at any time during or after his or her
employment by Employer, make any unauthorized disclosure of any confidential
business information or trade secrets of Employer or its affiliates, or make any
use thereof, except in the carrying out of his or her employment
responsibilities hereunder. As a result of Employee's employment by Employer,
Employee may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Employer and
its affiliates. Employee also agrees to preserve and protect the confidentiality
of such third party confidential information and trade secrets to the same
extent, and on the same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article 5 by Employee, and Employer
shall be entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies available at law or in
equity to Employer, including the recovery of damages from Employee and his or
her agents involved in such breach.
5.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer or its affiliates shall be and remain
the property of Employer or its affiliates, as the case may be. Upon termination
of Employee's employment by Employer, for any reason, Employee promptly shall
deliver the same, and all copies thereof, to Employer.
5.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other
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<PAGE> 9
audiovisual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Employer shall be the author of the work. If such work is neither
prepared by the Employee within the scope of his or her employment nor a work
specially ordered and then not deemed to be a work made for hire, then Employee
hereby agrees to assign, and by these presents does assign, to Employer all of
Employee's worldwide right, title, and interest in and to such work and all
rights of copyright therein.
5.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.
ARTICLE 6.
POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area where Employer or
any of its subsidiaries are conducting any business as of the date of
termination of the employment relationship or have during the previous twelve
months conducted any business:
(i) engage in any business competitive with the business
conducted by Employer;
(ii) render advice or services to, or otherwise assist, any
other person, association, or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by
Employer; or
(iii) induce any employee of Employer or any of its affiliates
to terminate his or her employment with Employer or its affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not affiliated with Employer.
For all purposes of this Agreement, except with regard to a "Voluntary
Termination" described in Section 3.2(ii), "geographic area" shall be defined to
mean any township, and one half mile radius around each such township, in which
Employer or any of its subsidiaries own any oil and gas assets, or, any area
containing lands or properties which
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are included, as of the date of termination, or were planned to be included, in
any geologic or oil and/or gas development project planned or operated by
Employer or any of its subsidiaries. For purposes of a "Voluntary Termination"
described in Section 3.2(ii) "geographic area" shall be defined as the State of
Ohio, with regard to all geologic formations below the base of the Clinton
formation.
These non-competition obligations shall extend until the latter of [a]
the expiration of the Term or [b] six months after termination of the employment
relationship; provided that in the event of Involuntary Termination, these
non-competition obligations shall extend until the expiration of the Term; and
further provided that if Employee's employment ceases at the end of the Term or
at any time thereafter because Employer elects not to continue to employ
Employee at a compensation level at least equivalent to that at the end of the
Term, these non-competition obligations shall terminate upon termination of the
employment relationship. Notwithstanding the foregoing, if Employee's
non-competition obligations terminate hereunder, but four or more ex-employees
of Employer (including Employee) are employed by the same entity (or any
affiliate thereof) at any time within a period of three months after the
termination of Employee's employment relationship hereunder, these
non-competition obligations shall be reinstated and shall extend for a period of
six months after termination of Employee's employment relationship with
Employer.
6.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer, including,
without limitation, the recovery of damages from Employee and his or her agents
involved in such breach.
6.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7.
MISCELLANEOUS
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7.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, is controlled by, or is under common control with Employer.
7.2 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214-0981
Attention: Chairman of the Board of Directors
If to Employee, to the address shown on the first page hereof.
Either Employer or Employee may furnish a change of address to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.3 This Agreement shall be governed in all respects by the laws of the
State of Ohio, excluding any conflict-of-law rule or principle that might refer
the construction of this Agreement to the laws of another State or country.
7.4 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
7.5 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Sections 5.2, Article 5, or
Section 6.1, and if the dispute cannot be settled through direct discussions,
then Employer and Employee agree first to endeavor to settle the dispute in an
amicable manner by mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings legal action to
enforce the terms of this Agreement, the party who prevails in such legal
action, whether plaintiff or defendant, in addition to the remedy or relief
obtained in such legal action shall be entitled to recover its, his, or her
expenses incurred in connection with such legal action, including, without
limitation, costs of Court and attorneys fees.
7.6 It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
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enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
7.7 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.
7.8 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein: the
nature of Employee's employment relationship with Employer and the term and
termination of such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject matters, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect such subject matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby, provided that any such modification must be
authorized or approved by the Board of Directors of Employer.
7.9 If the Merger Agreement is terminated in accordance with its terms,
this Agreement shall terminate and the parties hereto shall have no further
obligations to any other party hereunder.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.
JENCO ACQUISITION, INC.
By:
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
Marilyn A. Ennis
This 24th day of May, 1996
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EXHIBIT 99.7
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between Jenco Acquisition, Inc., having offices at 4770
Indianola Avenue, Columbus, Ohio 43214-0981 ("Employer"), and John L. Forman, an
individual currently residing in the State of Ohio ("Employee"), to be effective
as of the Effective Date (as hereinafter defined).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Employer, Clinton Gas Systems, Inc., an Ohio corporation ("Clinton"),
and Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership, are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Employer with and into Clinton (the
"Merger").
WHEREAS, Employer is desirous of having Clinton, as the surviving
corporation of the Merger, continue to employ Employee, effective as of the date
on which the "Effective Time", as defined in the Merger Agreement, occurs (the
"Effective Date"), pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is desirous of entering
into such employment relationship pursuant to such terms and conditions and for
such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1.
EMPLOYMENT AND DUTIES
1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to subsidiaries of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time. Notwithstanding any other provision of this
Agreement to the contrary, any relocation of Employee by Employer to a principal
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of employment that is more than fifty miles from Employee's principal place of
employment as of the Effective Date without the prior written consent of
Employee (a "Prohibited Relocation") or any material modification of Employee's
duties without the prior written consent of Employee (a "Prohibited
Modification") shall give Employee the right to terminate this Agreement, which
right shall be exercisable for ten days after Employee receives notice of such
Prohibited Relocation or Prohibited Modification, unless the Prohibited
Relocation or Prohibited Modification is withdrawn by Employer within ten days
after Employer's receipt of such notice, and which termination shall constitute
an Involuntary Termination under Article 3 of this Agreement.
1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer, or requires any significant portion of Employee's
business time.
1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.
1.5 Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would injure Employer's
business, its interests, or its reputation. Employee shall not, during the Term
of this Agreement or any extension or renewal thereof, engage, directly or
indirectly, in any activity which constitutes a Conflict of Interest (as defined
below); provided that Employer acknowledges and agrees that Employee may have as
of the Effective Date passive investments or other interests, directly or
indirectly, in oil and gas wells, leases and pipelines, including some that may
be owned or operated by Employer, and that Employee shall be entitled to
maintain such passive investments or other interests after the Effective Date.
For purposes of this Agreement: (a) "Conflict of Interest" means, without
limitation, any act or activity, or any interest in connection with, or benefit
from any act or activity, which is adverse to the interests of or would in any
way injure Employer or any of its affiliates, provided that a passive investment
of not more than 5% of the outstanding equity securities of an entity whose
securities are then being regularly traded in open-market brokerage transactions
(either on a stock exchange or over-the-counter) shall not constitute a Conflict
of Interest; and (b) "directly or indirectly" means, without limitation,
participation for Employee's own account or as an owner, shareholder, partner,
director, officer, member, manager, employee, associate, creditor or agent of
any other person or organization or through Employee's spouse or other family
relation. In keeping with Employee's duties to Employer, Employee agrees that
Employee shall not knowingly become involved in a Conflict of Interest with
Employer or its affiliates, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee agrees that Employee shall disclose to Employer's
General Counsel any facts that might involve such a Conflict of Interest that
has not been approved by Employer's Board of Directors.
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1.6 Employer and Employee recognize that it is impossible to provide an
exhaustive list of actions or interests that constitute a "Conflict of
Interest." Moreover, Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by the Employee to
Employer's General Counsel may be all that is necessary to enable Employer or
its affiliates to protect its interests. In others, if no improper motivation
appears to exist and the interests of Employer or its affiliates have not
suffered, prompt elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the employment
relationship, subject to Section 3.1(i), below. Employer reserves the right to
take such reasonable action as, in its judgment, will end the conflict.
ARTICLE 2.
COMPENSATION AND BENEFITS
2.1 Employee's base salary during the Term shall be not less than the
amount set forth under the heading "Monthly Base Salary" on Exhibit A, which
shall be paid in equal or nearly equal installments in accordance with
Employer's standard payroll practice and not less frequently than semi-monthly.
Employee's base salary shall be reviewed not less often than annually and shall
be subject to such upward adjustments as Employer may deem appropriate in its
discretion.
2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the Effective Date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, vacation, 401(k) and pension plans. Nothing in this Agreement is to
be construed or interpreted to provide greater rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated employees pursuant to the terms and conditions of such benefit plans
and programs. In addition, Employee shall have the right to participate in an
incentive compensation plan to be adopted by Employer (the "Plan"). The Plan
shall provide for at least annual awards of cash, performance shares or units,
or other performance- or incentive-based compensation, or any combination
thereof, upon meeting the Employer's targeted performance objectives for the
award year. If Employer does not adopt the Plan, effective as of the Effective
Date, within 120 days after the Effective Date, Employee shall then have the
right to terminate this Agreement, which right shall be exercisable for 30 days
and which termination shall constitute an Involuntary Termination under Article
3 of this Agreement.
2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a
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written plan document adopted by the Board of Directors of Employer, none of the
benefits or arrangements described in this Article 2 shall be secured or funded
in any way, and each shall instead constitute an unfunded and unsecured promise
to pay money in the future exclusively from the general assets of Employer.
2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
ARTICLE 3.
TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
3.1 Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(i) For "cause" upon the good faith determination by the
Employer's management committee (or, if there is no management
committee, the highest applicable level of management) of Employer that
"cause" exists for the termination of the employment relationship. As
used in this Section 3.1(i), the term "cause" shall mean [a] Employee's
gross negligence or willful misconduct in the performance of the duties
and services required of Employee pursuant to this Agreement; [b]
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude; [c] a reasonable determination by Employer that
Employee has violated the Conflict of Interest provisions of Section
1.5 of this Agreement and failure by Employee to eliminate such
Conflict of Interest within ten days after notice from Employer to do
so, or, if it is impossible to eliminate such Conflict of Interest
within such ten days, failure to commence within such ten days any
action necessary to eliminate such Conflict of Interest and thereafter
to continue diligently to pursue such action until elimination of such
Conflict of Interest, within no more than 30 days after such notice; or
[d] Employee's material breach of any material provision of this
Agreement (other than Section 1.5) that remains uncorrected for sixty
(60) days following written notice to Employee by Employer of such
breach. It is expressly acknowledged and agreed that the decision as to
whether "cause" exists for termination of the employment relationship
by Employer is delegated to the management committee (or, if there is
no management committee, the highest applicable level of management) of
Employer for determination;
(ii) for any other reason whatsoever, with or without cause,
in the sole discretion of the management committee (or, if there is no
management committee, the highest applicable level of management) of
Employer;
(iii) upon Employee's death; or
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(iv) upon Employee's long-term disability. For purposes of
this Agreement, "long-term disability" shall have the same meaning as
the term "long-term disability" or "permanent disability" or similar
term in Employee's long-term or permanent disability policy provided by
Employer and covering Employee; provided that if there is no such
policy in effect covering Employee, "long-term disability" shall mean
that Employee has become incapacitated by accident, sickness, or other
circumstance which renders him mentally or physically incapable of
performing the duties and services required of Employee.
The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute a "Termination for Cause" if made
pursuant to Section 3.1(i); the effect of such termination is specified in
Section 3.4. The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.1(ii); the effect of such termination is specified in
Section 3.5. The effect of the employment relationship being terminated pursuant
to Section 3.1(iii) as a result of Employee's death is specified in Section 3.6.
The effect of the employment relationship being terminated pursuant to Section
3.1(iv) as a result of the Employee's long-term disability is specified in
Section 3.7.
3.2 Notwithstanding any other provisions of this Agreement except
Section 7.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(i) a material breach by Employer of any material provision of
this Agreement that remains uncorrected for 30 days following written
notice of such breach by Employee to Employer; or
(ii) for any other reason whatsoever, in the sole discretion
of Employee.
The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(ii); the effect of such termination is specified in
Section 3.3.
3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.3 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and
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other similar items), but Employee shall not be entitled to any individual
bonuses or individual incentive compensation not yet paid at the date of such
termination.
3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.4 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and other
similar items), but Employee shall not be entitled to any individual bonuses or
individual incentive compensation not yet paid at the date of such termination.
3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to expiration of the Term, Employee shall be
entitled, in consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's non-competition
obligations), to receive the compensation specified in Section 2.1 as if
Employee's employment (which shall cease as of the date of such Involuntary
Termination) had continue for the full Term of this Agreement. Employee shall
not be under any duty or obligation to seek or accept other employment following
Involuntary Termination and the amounts due Employee hereunder shall not be
reduced or suspended if Employee accepts subsequent employment. Employee's
rights under this Section 3.5 are Employee's sole and exclusive rights against
Employer or its affiliates, and Employer's sole and exclusive liability to
Employee under this Agreement for any Involuntary Termination of the employment
relationship. Employee covenants not to sue or lodge any claim, demand or cause
of action against Employer for any sums for Involuntary Termination other than
those sums specified in this Section 3.5. If Employee breaches this covenant,
Employer shall be entitled to recover from Employee all sums expended by
Employer (including costs and attorneys fees) in connection with such suit,
claim, demand or cause of action.
3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination plus
any other payments generally available to other departing employees of Employer
(such as unused personal vacation, personal days and other similar items), but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.7 Upon termination of the employment relationship as a result of
Employee's long-term disability, Employee shall be entitled to his or her pro
rata salary through the date of such termination plus any other payments
generally available to other departing employees of Employer (e.g., unused
vacation, personal days, etc.), but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
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3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans and policies of Employer or its affiliates; provided
that compensation for any accrued but unused vacation shall not constitute a
severance plan or policy of Employer under this Agreement.
3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement that are continuing obligations,
including, without limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4.
CONTINUATION OF EMPLOYMENT BEYOND TERM;
TERMINATION AND EFFECTS OF TERMINATION
4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.
ARTICLE 5.
OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) and that relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
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5.2 Employee acknowledges that the business of Employer and its
affiliates is highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or its affiliates use in their business to
obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such confidential business information and trade
secrets against unauthorized disclosure and use is of critical importance to
Employer or its affiliates in maintaining their competitive position. Employee
hereby agrees that Employee will not, at any time during or after his or her
employment by Employer, make any unauthorized disclosure of any confidential
business information or trade secrets of Employer or its affiliates, or make any
use thereof, except in the carrying out of his or her employment
responsibilities hereunder. As a result of Employee's employment by Employer,
Employee may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Employer and
its affiliates. Employee also agrees to preserve and protect the confidentiality
of such third party confidential information and trade secrets to the same
extent, and on the same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article 5 by Employee, and Employer
shall be entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies available at law or in
equity to Employer, including the recovery of damages from Employee and his or
her agents involved in such breach.
5.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer or its affiliates shall be and remain
the property of Employer or its affiliates, as the case may be. Upon termination
of Employee's employment by Employer, for any reason, Employee promptly shall
deliver the same, and all copies thereof, to Employer.
5.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other
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audiovisual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Employer shall be the author of the work. If such work is neither
prepared by the Employee within the scope of his or her employment nor a work
specially ordered and then not deemed to be a work made for hire, then Employee
hereby agrees to assign, and by these presents does assign, to Employer all of
Employee's worldwide right, title, and interest in and to such work and all
rights of copyright therein.
5.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.
ARTICLE 6.
POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area where Employer or
any of its subsidiaries are conducting any business as of the date of
termination of the employment relationship or have during the previous twelve
months conducted any business:
(i) engage in any business competitive with the business
conducted by Employer;
(ii) render advice or services to, or otherwise assist, any
other person, association, or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by
Employer; or
(iii) induce any employee of Employer or any of its affiliates
to terminate his or her employment with Employer or its affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not affiliated with Employer.
For all purposes of this Agreement, except with regard to a "Voluntary
Termination" described in Section 3.2(ii), "geographic area" shall be defined to
mean any township, and one half mile radius around each such township, in which
Employer or any of its subsidiaries own any oil and gas assets, or, any area
containing lands or properties which
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are included, as of the date of termination, or were planned to be included, in
any geologic or oil and/or gas development project planned or operated by
Employer or any of its subsidiaries. For purposes of a "Voluntary Termination"
described in Section 3.2(ii) "geographic area" shall be defined as the State of
Ohio, with regard to all geologic formations below the base of the Clinton
formation.
These non-competition obligations shall extend until the latter of [a]
the expiration of the Term or [b] six months after termination of the employment
relationship; provided that in the event of Involuntary Termination, these
non-competition obligations shall extend until the expiration of the Term; and
further provided that if Employee's employment ceases at the end of the Term or
at any time thereafter because Employer elects not to continue to employ
Employee at a compensation level at least equivalent to that at the end of the
Term, these non-competition obligations shall terminate upon termination of the
employment relationship. Notwithstanding the foregoing, if Employee's
non-competition obligations terminate hereunder, but four or more ex-employees
of Employer (including Employee) are employed by the same entity (or any
affiliate thereof) at any time within a period of three months after the
termination of Employee's employment relationship hereunder, these
non-competition obligations shall be reinstated and shall extend for a period of
six months after termination of Employee's employment relationship with
Employer.
6.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer, including,
without limitation, the recovery of damages from Employee and his or her agents
involved in such breach.
6.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7.
MISCELLANEOUS
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7.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, is controlled by, or is under common control with Employer.
7.2 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214-0981
Attention: Chairman of the Board of Directors
If to Employee, to the address shown on the first page hereof.
Either Employer or Employee may furnish a change of address to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.3 This Agreement shall be governed in all respects by the laws of the
State of Ohio, excluding any conflict-of-law rule or principle that might refer
the construction of this Agreement to the laws of another State or country.
7.4 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
7.5 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Sections 5.2, Article 5, or
Section 6.1, and if the dispute cannot be settled through direct discussions,
then Employer and Employee agree first to endeavor to settle the dispute in an
amicable manner by mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings legal action to
enforce the terms of this Agreement, the party who prevails in such legal
action, whether plaintiff or defendant, in addition to the remedy or relief
obtained in such legal action shall be entitled to recover its, his, or her
expenses incurred in connection with such legal action, including, without
limitation, costs of Court and attorneys fees.
7.6 It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
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enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
7.7 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.
7.8 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein: the
nature of Employee's employment relationship with Employer and the term and
termination of such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject matters, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect such subject matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby, provided that any such modification must be
authorized or approved by the Board of Directors of Employer.
7.9 If the Merger Agreement is terminated in accordance with its terms,
this Agreement shall terminate and the parties hereto shall have no further
obligations to any other party hereunder.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.
JENCO ACQUISITION, INC.
By:
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
By:
John L. Forman
This 24th day of May, 1996
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EXHIBIT 99.8
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between Jenco Acquisition, Inc., having offices at 4770
Indianola Avenue, Columbus, Ohio 43214-0981 ("Employer"), and William A.
Grubaugh, an individual currently residing in the State of Ohio ("Employee"), to
be effective as of the Effective Date (as hereinafter defined).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Employer, Clinton Gas Systems, Inc., an Ohio corporation ("Clinton"),
and Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership, are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Employer with and into Clinton (the
"Merger").
WHEREAS, Employer is desirous of having Clinton, as the surviving
corporation of the Merger, continue to employ Employee, effective as of the date
on which the "Effective Time", as defined in the Merger Agreement, occurs (the
"Effective Date"), pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is desirous of entering
into such employment relationship pursuant to such terms and conditions and for
such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1.
EMPLOYMENT AND DUTIES
1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to subsidiaries of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time. Notwithstanding any other provision of this
Agreement to the contrary, any relocation of Employee by Employer to a principal
place
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of employment that is more than fifty miles from Employee's principal place of
employment as of the Effective Date without the prior written consent of
Employee (a "Prohibited Relocation") or any material modification of Employee's
duties without the prior written consent of Employee (a "Prohibited
Modification") shall give Employee the right to terminate this Agreement, which
right shall be exercisable for ten days after Employee receives notice of such
Prohibited Relocation or Prohibited Modification, unless the Prohibited
Relocation or Prohibited Modification is withdrawn by Employer within ten days
after Employer's receipt of such notice, and which termination shall constitute
an Involuntary Termination under Article 3 of this Agreement.
1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer, or requires any significant portion of Employee's
business time.
1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.
1.5 Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would injure Employer's
business, its interests, or its reputation. Employee shall not, during the Term
of this Agreement or any extension or renewal thereof, engage, directly or
indirectly, in any activity which constitutes a Conflict of Interest (as defined
below); provided that Employer acknowledges and agrees that Employee may have as
of the Effective Date passive investments or other interests, directly or
indirectly, in oil and gas wells, leases and pipelines, including some that may
be owned or operated by Employer, and that Employee shall be entitled to
maintain such passive investments or other interests after the Effective Date.
For purposes of this Agreement: (a) "Conflict of Interest" means, without
limitation, any act or activity, or any interest in connection with, or benefit
from any act or activity, which is adverse to the interests of or would in any
way injure Employer or any of its affiliates, provided that a passive investment
of not more than 5% of the outstanding equity securities of an entity whose
securities are then being regularly traded in open-market brokerage transactions
(either on a stock exchange or over-the-counter) shall not constitute a Conflict
of Interest; and (b) "directly or indirectly" means, without limitation,
participation for Employee's own account or as an owner, shareholder, partner,
director, officer, member, manager, employee, associate, creditor or agent of
any other person or organization or through Employee's spouse or other family
relation. In keeping with Employee's duties to Employer, Employee agrees that
Employee shall not knowingly become involved in a Conflict of Interest with
Employer or its affiliates, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee agrees that Employee shall disclose to Employer's
General Counsel any facts that might involve such a Conflict of Interest that
has not been approved by Employer's Board of Directors.
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1.6 Employer and Employee recognize that it is impossible to provide an
exhaustive list of actions or interests that constitute a "Conflict of
Interest." Moreover, Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by the Employee to
Employer's General Counsel may be all that is necessary to enable Employer or
its affiliates to protect its interests. In others, if no improper motivation
appears to exist and the interests of Employer or its affiliates have not
suffered, prompt elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the employment
relationship, subject to Section 3.1(i), below. Employer reserves the right to
take such reasonable action as, in its judgment, will end the conflict.
ARTICLE 2.
COMPENSATION AND BENEFITS
2.1 Employee's base salary during the Term shall be not less than the
amount set forth under the heading "Monthly Base Salary" on Exhibit A, which
shall be paid in equal or nearly equal installments in accordance with
Employer's standard payroll practice and not less frequently than semi-monthly.
Employee's base salary shall be reviewed not less often than annually and shall
be subject to such upward adjustments as Employer may deem appropriate in its
discretion.
2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the Effective Date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, vacation, 401(k) and pension plans. Nothing in this Agreement is to
be construed or interpreted to provide greater rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated employees pursuant to the terms and conditions of such benefit plans
and programs. In addition, Employee shall have the right to participate in an
incentive compensation plan to be adopted by Employer (the "Plan"). The Plan
shall provide for at least annual awards of cash, performance shares or units,
or other performance- or incentive-based compensation, or any combination
thereof, upon meeting the Employer's targeted performance objectives for the
award year. If Employer does not adopt the Plan, effective as of the Effective
Date, within 120 days after the Effective Date, Employee shall then have the
right to terminate this Agreement, which right shall be exercisable for 30 days
and which termination shall constitute an Involuntary Termination under Article
3 of this Agreement.
2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a
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written plan document adopted by the Board of Directors of Employer, none of the
benefits or arrangements described in this Article 2 shall be secured or funded
in any way, and each shall instead constitute an unfunded and unsecured promise
to pay money in the future exclusively from the general assets of Employer.
2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
ARTICLE 3.
TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
3.1 Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(i) For "cause" upon the good faith determination by the
Employer's management committee (or, if there is no management
committee, the highest applicable level of management) of Employer that
"cause" exists for the termination of the employment relationship. As
used in this Section 3.1(i), the term "cause" shall mean [a] Employee's
gross negligence or willful misconduct in the performance of the duties
and services required of Employee pursuant to this Agreement; [b]
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude; [c] a reasonable determination by Employer that
Employee has violated the Conflict of Interest provisions of Section
1.5 of this Agreement and failure by Employee to eliminate such
Conflict of Interest within ten days after notice from Employer to do
so, or, if it is impossible to eliminate such Conflict of Interest
within such ten days, failure to commence within such ten days any
action necessary to eliminate such Conflict of Interest and thereafter
to continue diligently to pursue such action until elimination of such
Conflict of Interest, within no more than 30 days after such notice; or
[d] Employee's material breach of any material provision of this
Agreement (other than Section 1.5) that remains uncorrected for sixty
(60) days following written notice to Employee by Employer of such
breach. It is expressly acknowledged and agreed that the decision as to
whether "cause" exists for termination of the employment relationship
by Employer is delegated to the management committee (or, if there is
no management committee, the highest applicable level of management) of
Employer for determination;
(ii) for any other reason whatsoever, with or without cause, in
the sole discretion of the management committee (or, if there is no
management committee, the highest applicable level of management) of
Employer;
(iii) upon Employee's death; or
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(iv) upon Employee's long-term disability. For purposes of this
Agreement, "long-term disability" shall have the same meaning as the
term "long-term disability" or "permanent disability" or similar term
in Employee's long-term or permanent disability policy provided by
Employer and covering Employee; provided that if there is no such
policy in effect covering Employee, "long-term disability" shall mean
that Employee has become incapacitated by accident, sickness, or other
circumstance which renders him mentally or physically incapable of
performing the duties and services required of Employee.
The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute a "Termination for Cause" if made
pursuant to Section 3.1(i); the effect of such termination is specified in
Section 3.4. The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.1(ii); the effect of such termination is specified in
Section 3.5. The effect of the employment relationship being terminated pursuant
to Section 3.1(iii) as a result of Employee's death is specified in Section 3.6.
The effect of the employment relationship being terminated pursuant to Section
3.1(iv) as a result of the Employee's long-term disability is specified in
Section 3.7.
3.2 Notwithstanding any other provisions of this Agreement except
Section 7.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(i) a material breach by Employer of any material provision of this
Agreement that remains uncorrected for 30 days following written notice
of such breach by Employee to Employer; or
(ii) for any other reason whatsoever, in the sole discretion of
Employee.
The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(ii); the effect of such termination is specified in
Section 3.3.
3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.3 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and
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other similar items), but Employee shall not be entitled to any individual
bonuses or individual incentive compensation not yet paid at the date of such
termination.
3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.4 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and other
similar items), but Employee shall not be entitled to any individual bonuses or
individual incentive compensation not yet paid at the date of such termination.
3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to expiration of the Term, Employee shall be
entitled, in consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's non-competition
obligations), to receive the compensation specified in Section 2.1 as if
Employee's employment (which shall cease as of the date of such Involuntary
Termination) had continue for the full Term of this Agreement. Employee shall
not be under any duty or obligation to seek or accept other employment following
Involuntary Termination and the amounts due Employee hereunder shall not be
reduced or suspended if Employee accepts subsequent employment. Employee's
rights under this Section 3.5 are Employee's sole and exclusive rights against
Employer or its affiliates, and Employer's sole and exclusive liability to
Employee under this Agreement for any Involuntary Termination of the employment
relationship. Employee covenants not to sue or lodge any claim, demand or cause
of action against Employer for any sums for Involuntary Termination other than
those sums specified in this Section 3.5. If Employee breaches this covenant,
Employer shall be entitled to recover from Employee all sums expended by
Employer (including costs and attorneys fees) in connection with such suit,
claim, demand or cause of action.
3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination plus
any other payments generally available to other departing employees of Employer
(such as unused personal vacation, personal days and other similar items), but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.7 Upon termination of the employment relationship as a result of
Employee's long-term disability, Employee shall be entitled to his or her pro
rata salary through the date of such termination plus any other payments
generally available to other departing employees of Employer (e.g., unused
vacation, personal days, etc.), but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
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3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans and policies of Employer or its affiliates; provided
that compensation for any accrued but unused vacation shall not constitute a
severance plan or policy of Employer under this Agreement.
3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement that are continuing obligations,
including, without limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4.
CONTINUATION OF EMPLOYMENT BEYOND TERM;
TERMINATION AND EFFECTS OF TERMINATION
4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.
ARTICLE 5.
OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) and that relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
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5.2 Employee acknowledges that the business of Employer and its
affiliates is highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or its affiliates use in their business to
obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such confidential business information and trade
secrets against unauthorized disclosure and use is of critical importance to
Employer or its affiliates in maintaining their competitive position. Employee
hereby agrees that Employee will not, at any time during or after his or her
employment by Employer, make any unauthorized disclosure of any confidential
business information or trade secrets of Employer or its affiliates, or make any
use thereof, except in the carrying out of his or her employment
responsibilities hereunder. As a result of Employee's employment by Employer,
Employee may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Employer and
its affiliates. Employee also agrees to preserve and protect the confidentiality
of such third party confidential information and trade secrets to the same
extent, and on the same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article 5 by Employee, and Employer
shall be entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies available at law or in
equity to Employer, including the recovery of damages from Employee and his or
her agents involved in such breach.
5.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer or its affiliates shall be and remain
the property of Employer or its affiliates, as the case may be. Upon termination
of Employee's employment by Employer, for any reason, Employee promptly shall
deliver the same, and all copies thereof, to Employer.
5.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other
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audiovisual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Employer shall be the author of the work. If such work is neither
prepared by the Employee within the scope of his or her employment nor a work
specially ordered and then not deemed to be a work made for hire, then Employee
hereby agrees to assign, and by these presents does assign, to Employer all of
Employee's worldwide right, title, and interest in and to such work and all
rights of copyright therein.
5.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.
ARTICLE 6.
POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area where Employer or
any of its subsidiaries are conducting any business as of the date of
termination of the employment relationship or have during the previous twelve
months conducted any business:
(i) engage in any business competitive with the business
conducted by Employer;
(ii) render advice or services to, or otherwise assist, any other
person, association, or entity who is engaged, directly or indirectly,
in any business competitive with the business conducted by Employer; or
(iii) induce any employee of Employer or any of its affiliates to
terminate his or her employment with Employer or its affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not affiliated with Employer.
For all purposes of this Agreement, except with regard to a "Voluntary
Termination" described in Section 3.2(ii), "geographic area" shall be defined to
mean any township, and one half mile radius around each such township, in which
Employer or any of its subsidiaries own any oil and gas assets, or, any area
containing lands or properties which
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are included, as of the date of termination, or were planned to be included, in
any geologic or oil and/or gas development project planned or operated by
Employer or any of its subsidiaries. For purposes of a "Voluntary Termination"
described in Section 3.2(ii) "geographic area" shall be defined as the State of
Ohio, with regard to all geologic formations below the base of the Clinton
formation.
These non-competition obligations shall extend until the latter of [a]
the expiration of the Term or [b] six months after termination of the employment
relationship; provided that in the event of Involuntary Termination, these
non-competition obligations shall extend until the expiration of the Term; and
further provided that if Employee's employment ceases at the end of the Term or
at any time thereafter because Employer elects not to continue to employ
Employee at a compensation level at least equivalent to that at the end of the
Term, these non-competition obligations shall terminate upon termination of the
employment relationship. Notwithstanding the foregoing, if Employee's
non-competition obligations terminate hereunder, but four or more ex-employees
of Employer (including Employee) are employed by the same entity (or any
affiliate thereof) at any time within a period of three months after the
termination of Employee's employment relationship hereunder, these
non-competition obligations shall be reinstated and shall extend for a period of
six months after termination of Employee's employment relationship with
Employer.
6.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer, including,
without limitation, the recovery of damages from Employee and his or her agents
involved in such breach.
6.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7.
MISCELLANEOUS
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7.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, is controlled by, or is under common control with Employer.
7.2 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214-0981
Attention: Chairman of the Board of Directors
If to Employee, to the address shown on the first page hereof.
Either Employer or Employee may furnish a change of address to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.3 This Agreement shall be governed in all respects by the laws of the
State of Ohio, excluding any conflict-of-law rule or principle that might refer
the construction of this Agreement to the laws of another State or country.
7.4 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
7.5 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Sections 5.2, Article 5, or
Section 6.1, and if the dispute cannot be settled through direct discussions,
then Employer and Employee agree first to endeavor to settle the dispute in an
amicable manner by mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings legal action to
enforce the terms of this Agreement, the party who prevails in such legal
action, whether plaintiff or defendant, in addition to the remedy or relief
obtained in such legal action shall be entitled to recover its, his, or her
expenses incurred in connection with such legal action, including, without
limitation, costs of Court and attorneys fees.
7.6 It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
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enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
7.7 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.
7.8 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein: the
nature of Employee's employment relationship with Employer and the term and
termination of such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject matters, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect such subject matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby, provided that any such modification must be
authorized or approved by the Board of Directors of Employer.
7.9 If the Merger Agreement is terminated in accordance with its terms,
this Agreement shall terminate and the parties hereto shall have no further
obligations to any other party hereunder.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.
JENCO ACQUISITION, INC.
By:
----------------------------
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
William A. Grubaugh
This 24th day of May, 1996
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EXHIBIT 99.9
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between Jenco Acquisition, Inc., having offices at 4770
Indianola Avenue, Columbus, Ohio 43214-0981 ("Employer"), and Mark D. Jordan, an
individual currently residing in the State of Ohio ("Employee"), to be effective
as of the Effective Date (as hereinafter defined).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Employer, Clinton Gas Systems, Inc., an Ohio corporation ("Clinton"),
and Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership, are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Employer with and into Clinton (the
"Merger").
WHEREAS, Employer is desirous of having Clinton, as the surviving
corporation of the Merger, continue to employ Employee, effective as of the date
on which the "Effective Time", as defined in the Merger Agreement, occurs (the
"Effective Date"), pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is desirous of entering
into such employment relationship pursuant to such terms and conditions and for
such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1.
EMPLOYMENT AND DUTIES
1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to subsidiaries of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time. Notwithstanding any other provision of this
Agreement to the contrary, any relocation of Employee by Employer to a principal
place
<PAGE> 2
of employment that is more than fifty miles from Employee's principal place of
employment as of the Effective Date without the prior written consent of
Employee (a "Prohibited Relocation") or any material modification of Employee's
duties without the prior written consent of Employee (a "Prohibited
Modification") shall give Employee the right to terminate this Agreement, which
right shall be exercisable for ten days after Employee receives notice of such
Prohibited Relocation or Prohibited Modification, unless the Prohibited
Relocation or Prohibited Modification is withdrawn by Employer within ten days
after Employer's receipt of such notice, and which termination shall constitute
an Involuntary Termination under Article 3 of this Agreement.
1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer, or requires any significant portion of Employee's
business time.
1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.
1.5 Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would injure Employer's
business, its interests, or its reputation. Employee shall not, during the Term
of this Agreement or any extension or renewal thereof, engage, directly or
indirectly, in any activity which constitutes a Conflict of Interest (as defined
below); provided that Employer acknowledges and agrees that Employee may have as
of the Effective Date passive investments or other interests, directly or
indirectly, in oil and gas wells, leases and pipelines, including some that may
be owned or operated by Employer, and that Employee shall be entitled to
maintain such passive investments or other interests after the Effective Date.
For purposes of this Agreement: (a) "Conflict of Interest" means, without
limitation, any act or activity, or any interest in connection with, or benefit
from any act or activity, which is adverse to the interests of or would in any
way injure Employer or any of its affiliates, provided that a passive investment
of not more than 5% of the outstanding equity securities of an entity whose
securities are then being regularly traded in open-market brokerage transactions
(either on a stock exchange or over-the-counter) shall not constitute a Conflict
of Interest; and (b) "directly or indirectly" means, without limitation,
participation for Employee's own account or as an owner, shareholder, partner,
director, officer, member, manager, employee, associate, creditor or agent of
any other person or organization or through Employee's spouse or other family
relation. In keeping with Employee's duties to Employer, Employee agrees that
Employee shall not knowingly become involved in a Conflict of Interest with
Employer or its affiliates, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee agrees that Employee shall disclose to Employer's
General Counsel any facts that might involve such a Conflict of Interest that
has not been approved by Employer's Board of Directors.
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1.6 Employer and Employee recognize that it is impossible to provide an
exhaustive list of actions or interests that constitute a "Conflict of
Interest." Moreover, Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by the Employee to
Employer's General Counsel may be all that is necessary to enable Employer or
its affiliates to protect its interests. In others, if no improper motivation
appears to exist and the interests of Employer or its affiliates have not
suffered, prompt elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the employment
relationship, subject to Section 3.1(i), below. Employer reserves the right to
take such reasonable action as, in its judgment, will end the conflict.
ARTICLE 2.
COMPENSATION AND BENEFITS
2.1 Employee's base salary during the Term shall be not less than the
amount set forth under the heading "Monthly Base Salary" on Exhibit A, which
shall be paid in equal or nearly equal installments in accordance with
Employer's standard payroll practice and not less frequently than semi-monthly.
Employee's base salary shall be reviewed not less often than annually and shall
be subject to such upward adjustments as Employer may deem appropriate in its
discretion.
2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the Effective Date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, vacation, 401(k) and pension plans. Nothing in this Agreement is to
be construed or interpreted to provide greater rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated employees pursuant to the terms and conditions of such benefit plans
and programs. In addition, Employee shall have the right to participate in an
incentive compensation plan to be adopted by Employer (the "Plan"). The Plan
shall provide for at least annual awards of cash, performance shares or units,
or other performance- or incentive-based compensation, or any combination
thereof, upon meeting the Employer's targeted performance objectives for the
award year. If Employer does not adopt the Plan, effective as of the Effective
Date, within 120 days after the Effective Date, Employee shall then have the
right to terminate this Agreement, which right shall be exercisable for 30 days
and which termination shall constitute an Involuntary Termination under Article
3 of this Agreement.
2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a
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written plan document adopted by the Board of Directors of Employer, none of the
benefits or arrangements described in this Article 2 shall be secured or funded
in any way, and each shall instead constitute an unfunded and unsecured promise
to pay money in the future exclusively from the general assets of Employer.
2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
ARTICLE 3.
TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
3.1 Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(i) For "cause" upon the good faith determination by the
Employer's management committee (or, if there is no management
committee, the highest applicable level of management) of Employer that
"cause" exists for the termination of the employment relationship. As
used in this Section 3.1(i), the term "cause" shall mean [a] Employee's
gross negligence or willful misconduct in the performance of the duties
and services required of Employee pursuant to this Agreement; [b]
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude; [c] a reasonable determination by Employer that
Employee has violated the Conflict of Interest provisions of Section
1.5 of this Agreement and failure by Employee to eliminate such
Conflict of Interest within ten days after notice from Employer to do
so, or, if it is impossible to eliminate such Conflict of Interest
within such ten days, failure to commence within such ten days any
action necessary to eliminate such Conflict of Interest and thereafter
to continue diligently to pursue such action until elimination of such
Conflict of Interest, within no more than 30 days after such notice; or
[d] Employee's material breach of any material provision of this
Agreement (other than Section 1.5) that remains uncorrected for sixty
(60) days following written notice to Employee by Employer of such
breach. It is expressly acknowledged and agreed that the decision as to
whether "cause" exists for termination of the employment relationship
by Employer is delegated to the management committee (or, if there is
no management committee, the highest applicable level of management) of
Employer for determination;
(ii) for any other reason whatsoever, with or without cause, in
the sole discretion of the management committee (or, if there is no
management committee, the highest applicable level of management) of
Employer;
(iii) upon Employee's death; or
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(iv) upon Employee's long-term disability. For purposes of this
Agreement, "long-term disability" shall have the same meaning as the
term "long-term disability" or "permanent disability" or similar term
in Employee's long-term or permanent disability policy provided by
Employer and covering Employee; provided that if there is no such
policy in effect covering Employee, "long-term disability" shall mean
that Employee has become incapacitated by accident, sickness, or other
circumstance which renders him mentally or physically incapable of
performing the duties and services required of Employee.
The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute a "Termination for Cause" if made
pursuant to Section 3.1(i); the effect of such termination is specified in
Section 3.4. The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.1(ii); the effect of such termination is specified in
Section 3.5. The effect of the employment relationship being terminated pursuant
to Section 3.1(iii) as a result of Employee's death is specified in Section 3.6.
The effect of the employment relationship being terminated pursuant to Section
3.1(iv) as a result of the Employee's long-term disability is specified in
Section 3.7.
3.2 Notwithstanding any other provisions of this Agreement except
Section 7.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(i) a material breach by Employer of any material provision of
this Agreement that remains uncorrected for 30 days following written
notice of such breach by Employee to Employer; or
(ii) for any other reason whatsoever, in the sole discretion of
Employee.
The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(ii); the effect of such termination is specified in
Section 3.3.
3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.3 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and
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other similar items), but Employee shall not be entitled to any individual
bonuses or individual incentive compensation not yet paid at the date of such
termination.
3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.4 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and other
similar items), but Employee shall not be entitled to any individual bonuses or
individual incentive compensation not yet paid at the date of such termination.
3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to expiration of the Term, Employee shall be
entitled, in consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's non-competition
obligations), to receive the compensation specified in Section 2.1 as if
Employee's employment (which shall cease as of the date of such Involuntary
Termination) had continue for the full Term of this Agreement. Employee shall
not be under any duty or obligation to seek or accept other employment following
Involuntary Termination and the amounts due Employee hereunder shall not be
reduced or suspended if Employee accepts subsequent employment. Employee's
rights under this Section 3.5 are Employee's sole and exclusive rights against
Employer or its affiliates, and Employer's sole and exclusive liability to
Employee under this Agreement for any Involuntary Termination of the employment
relationship. Employee covenants not to sue or lodge any claim, demand or cause
of action against Employer for any sums for Involuntary Termination other than
those sums specified in this Section 3.5. If Employee breaches this covenant,
Employer shall be entitled to recover from Employee all sums expended by
Employer (including costs and attorneys fees) in connection with such suit,
claim, demand or cause of action.
3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination plus
any other payments generally available to other departing employees of Employer
(such as unused personal vacation, personal days and other similar items), but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.7 Upon termination of the employment relationship as a result of
Employee's long-term disability, Employee shall be entitled to his or her pro
rata salary through the date of such termination plus any other payments
generally available to other departing employees of Employer (e.g., unused
vacation, personal days, etc.), but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
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3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans and policies of Employer or its affiliates; provided
that compensation for any accrued but unused vacation shall not constitute a
severance plan or policy of Employer under this Agreement.
3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement that are continuing obligations,
including, without limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4.
CONTINUATION OF EMPLOYMENT BEYOND TERM;
TERMINATION AND EFFECTS OF TERMINATION
4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.
ARTICLE 5.
OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) and that relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
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5.2 Employee acknowledges that the business of Employer and its
affiliates is highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or its affiliates use in their business to
obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such confidential business information and trade
secrets against unauthorized disclosure and use is of critical importance to
Employer or its affiliates in maintaining their competitive position. Employee
hereby agrees that Employee will not, at any time during or after his or her
employment by Employer, make any unauthorized disclosure of any confidential
business information or trade secrets of Employer or its affiliates, or make any
use thereof, except in the carrying out of his or her employment
responsibilities hereunder. As a result of Employee's employment by Employer,
Employee may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Employer and
its affiliates. Employee also agrees to preserve and protect the confidentiality
of such third party confidential information and trade secrets to the same
extent, and on the same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article 5 by Employee, and Employer
shall be entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies available at law or in
equity to Employer, including the recovery of damages from Employee and his or
her agents involved in such breach.
5.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer or its affiliates shall be and remain
the property of Employer or its affiliates, as the case may be. Upon termination
of Employee's employment by Employer, for any reason, Employee promptly shall
deliver the same, and all copies thereof, to Employer.
5.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other
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audiovisual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Employer shall be the author of the work. If such work is neither
prepared by the Employee within the scope of his or her employment nor a work
specially ordered and then not deemed to be a work made for hire, then Employee
hereby agrees to assign, and by these presents does assign, to Employer all of
Employee's worldwide right, title, and interest in and to such work and all
rights of copyright therein.
5.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.
ARTICLE 6.
POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area where Employer or
any of its subsidiaries are conducting any business as of the date of
termination of the employment relationship or have during the previous twelve
months conducted any business:
(i) engage in any business competitive with the business
conducted by Employer;
(ii) render advice or services to, or otherwise assist, any other
person, association, or entity who is engaged, directly or indirectly,
in any business competitive with the business conducted by Employer; or
(iii) induce any employee of Employer or any of its affiliates to
terminate his or her employment with Employer or its affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not affiliated with Employer.
For all purposes of this Agreement, except with regard to a "Voluntary
Termination" described in Section 3.2(ii), "geographic area" shall be defined to
mean any township, and one half mile radius around each such township, in which
Employer or any of its subsidiaries own any oil and gas assets, or, any area
containing lands or properties which
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are included, as of the date of termination, or were planned to be included, in
any geologic or oil and/or gas development project planned or operated by
Employer or any of its subsidiaries. For purposes of a "Voluntary Termination"
described in Section 3.2(ii) "geographic area" shall be defined as the State of
Ohio, with regard to all geologic formations below the base of the Clinton
formation.
These non-competition obligations shall extend until the latter of [a]
the expiration of the Term or [b] six months after termination of the employment
relationship; provided that in the event of Involuntary Termination, these
non-competition obligations shall extend until the expiration of the Term; and
further provided that if Employee's employment ceases at the end of the Term or
at any time thereafter because Employer elects not to continue to employ
Employee at a compensation level at least equivalent to that at the end of the
Term, these non-competition obligations shall terminate upon termination of the
employment relationship. Notwithstanding the foregoing, if Employee's
non-competition obligations terminate hereunder, but four or more ex-employees
of Employer (including Employee) are employed by the same entity (or any
affiliate thereof) at any time within a period of three months after the
termination of Employee's employment relationship hereunder, these
non-competition obligations shall be reinstated and shall extend for a period of
six months after termination of Employee's employment relationship with
Employer.
6.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer, including,
without limitation, the recovery of damages from Employee and his or her agents
involved in such breach.
6.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7.
MISCELLANEOUS
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7.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, is controlled by, or is under common control with Employer.
7.2 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214-0981
Attention: Chairman of the Board of Directors
If to Employee, to the address shown on the first page hereof.
Either Employer or Employee may furnish a change of address to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.3 This Agreement shall be governed in all respects by the laws of the
State of Ohio, excluding any conflict-of-law rule or principle that might refer
the construction of this Agreement to the laws of another State or country.
7.4 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
7.5 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Sections 5.2, Article 5, or
Section 6.1, and if the dispute cannot be settled through direct discussions,
then Employer and Employee agree first to endeavor to settle the dispute in an
amicable manner by mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings legal action to
enforce the terms of this Agreement, the party who prevails in such legal
action, whether plaintiff or defendant, in addition to the remedy or relief
obtained in such legal action shall be entitled to recover its, his, or her
expenses incurred in connection with such legal action, including, without
limitation, costs of Court and attorneys fees.
7.6 It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
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enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
7.7 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.
7.8 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein: the
nature of Employee's employment relationship with Employer and the term and
termination of such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject matters, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect such subject matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby, provided that any such modification must be
authorized or approved by the Board of Directors of Employer.
7.9 If the Merger Agreement is terminated in accordance with its terms,
this Agreement shall terminate and the parties hereto shall have no further
obligations to any other party hereunder.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.
JENCO ACQUISITION, INC.
By:
--------------------------------
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
Mark D. Jordan
This 24th day of May, 1996
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EXHIBIT 99.10
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between Jenco Acquisition, Inc., having offices at 4770
Indianola Avenue, Columbus, Ohio 43214-0981 ("Employer"), and Donald E. Kreager,
an individual currently residing in the State of Ohio ("Employee"), to be
effective as of the Effective Date (as hereinafter defined).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Employer, Clinton Gas Systems, Inc., an Ohio corporation ("Clinton"),
and Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership, are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Employer with and into Clinton (the
"Merger").
WHEREAS, Employer is desirous of having Clinton, as the surviving
corporation of the Merger, continue to employ Employee, effective as of the date
on which the "Effective Time", as defined in the Merger Agreement, occurs (the
"Effective Date"), pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is desirous of entering
into such employment relationship pursuant to such terms and conditions and for
such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1.
EMPLOYMENT AND DUTIES
1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to subsidiaries of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time. Notwithstanding any other provision of this
Agreement to the contrary, any relocation of Employee by Employer to a principal
place
<PAGE> 2
of employment that is more than fifty miles from Employee's principal place of
employment as of the Effective Date without the prior written consent of
Employee (a "Prohibited Relocation") or any material modification of Employee's
duties without the prior written consent of Employee (a "Prohibited
Modification") shall give Employee the right to terminate this Agreement, which
right shall be exercisable for ten days after Employee receives notice of such
Prohibited Relocation or Prohibited Modification, unless the Prohibited
Relocation or Prohibited Modification is withdrawn by Employer within ten days
after Employer's receipt of such notice, and which termination shall constitute
an Involuntary Termination under Article 3 of this Agreement.
1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer, or requires any significant portion of Employee's
business time.
1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.
1.5 Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would injure Employer's
business, its interests, or its reputation. Employee shall not, during the Term
of this Agreement or any extension or renewal thereof, engage, directly or
indirectly, in any activity which constitutes a Conflict of Interest (as defined
below); provided that Employer acknowledges and agrees that Employee may have as
of the Effective Date passive investments or other interests, directly or
indirectly, in oil and gas wells, leases and pipelines, including some that may
be owned or operated by Employer, and that Employee shall be entitled to
maintain such passive investments or other interests after the Effective Date.
For purposes of this Agreement: (a) "Conflict of Interest" means, without
limitation, any act or activity, or any interest in connection with, or benefit
from any act or activity, which is adverse to the interests of or would in any
way injure Employer or any of its affiliates, provided that a passive investment
of not more than 5% of the outstanding equity securities of an entity whose
securities are then being regularly traded in open-market brokerage transactions
(either on a stock exchange or over-the-counter) shall not constitute a Conflict
of Interest; and (b) "directly or indirectly" means, without limitation,
participation for Employee's own account or as an owner, shareholder, partner,
director, officer, member, manager, employee, associate, creditor or agent of
any other person or organization or through Employee's spouse or other family
relation. In keeping with Employee's duties to Employer, Employee agrees that
Employee shall not knowingly become involved in a Conflict of Interest with
Employer or its affiliates, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee agrees that Employee shall disclose to Employer's
General Counsel any facts that might involve such a Conflict of Interest that
has not been approved by Employer's Board of Directors.
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1.6 Employer and Employee recognize that it is impossible to provide an
exhaustive list of actions or interests that constitute a "Conflict of
Interest." Moreover, Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by the Employee to
Employer's General Counsel may be all that is necessary to enable Employer or
its affiliates to protect its interests. In others, if no improper motivation
appears to exist and the interests of Employer or its affiliates have not
suffered, prompt elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the employment
relationship, subject to Section 3.1(i), below. Employer reserves the right to
take such reasonable action as, in its judgment, will end the conflict.
ARTICLE 2.
COMPENSATION AND BENEFITS
2.1 Employee's base salary during the Term shall be not less than the
amount set forth under the heading "Monthly Base Salary" on Exhibit A, which
shall be paid in equal or nearly equal installments in accordance with
Employer's standard payroll practice and not less frequently than semi-monthly.
Employee's base salary shall be reviewed not less often than annually and shall
be subject to such upward adjustments as Employer may deem appropriate in its
discretion.
2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the Effective Date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, vacation, 401(k) and pension plans. Nothing in this Agreement is to
be construed or interpreted to provide greater rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated employees pursuant to the terms and conditions of such benefit plans
and programs. In addition, Employee shall have the right to participate in an
incentive compensation plan to be adopted by Employer (the "Plan"). The Plan
shall provide for at least annual awards of cash, performance shares or units,
or other performance- or incentive-based compensation, or any combination
thereof, upon meeting the Employer's targeted performance objectives for the
award year. If Employer does not adopt the Plan, effective as of the Effective
Date, within 120 days after the Effective Date, Employee shall then have the
right to terminate this Agreement, which right shall be exercisable for 30 days
and which termination shall constitute an Involuntary Termination under Article
3 of this Agreement.
2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a
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written plan document adopted by the Board of Directors of Employer, none of the
benefits or arrangements described in this Article 2 shall be secured or funded
in any way, and each shall instead constitute an unfunded and unsecured promise
to pay money in the future exclusively from the general assets of Employer.
2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
ARTICLE 3.
TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
3.1 Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(i) For "cause" upon the good faith determination by the
Employer's management committee (or, if there is no management
committee, the highest applicable level of management) of Employer that
"cause" exists for the termination of the employment relationship. As
used in this Section 3.1(i), the term "cause" shall mean [a] Employee's
gross negligence or willful misconduct in the performance of the duties
and services required of Employee pursuant to this Agreement; [b]
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude; [c] a reasonable determination by Employer that
Employee has violated the Conflict of Interest provisions of Section
1.5 of this Agreement and failure by Employee to eliminate such
Conflict of Interest within ten days after notice from Employer to do
so, or, if it is impossible to eliminate such Conflict of Interest
within such ten days, failure to commence within such ten days any
action necessary to eliminate such Conflict of Interest and thereafter
to continue diligently to pursue such action until elimination of such
Conflict of Interest, within no more than 30 days after such notice; or
[d] Employee's material breach of any material provision of this
Agreement (other than Section 1.5) that remains uncorrected for sixty
(60) days following written notice to Employee by Employer of such
breach. It is expressly acknowledged and agreed that the decision as to
whether "cause" exists for termination of the employment relationship
by Employer is delegated to the management committee (or, if there is
no management committee, the highest applicable level of management) of
Employer for determination;
(ii) for any other reason whatsoever, with or without cause,
in the sole discretion of the management committee (or, if there is no
management committee, the highest applicable level of management) of
Employer;
(iii) upon Employee's death; or
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(iv) upon Employee's long-term disability. For purposes of
this Agreement, "long-term disability" shall have the same meaning as
the term "long-term disability" or "permanent disability" or similar
term in Employee's long-term or permanent disability policy provided by
Employer and covering Employee; provided that if there is no such
policy in effect covering Employee, "long-term disability" shall mean
that Employee has become incapacitated by accident, sickness, or other
circumstance which renders him mentally or physically incapable of
performing the duties and services required of Employee.
The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute a "Termination for Cause" if made
pursuant to Section 3.1(i); the effect of such termination is specified in
Section 3.4. The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.1(ii); the effect of such termination is specified in
Section 3.5. The effect of the employment relationship being terminated pursuant
to Section 3.1(iii) as a result of Employee's death is specified in Section 3.6.
The effect of the employment relationship being terminated pursuant to Section
3.1(iv) as a result of the Employee's long-term disability is specified in
Section 3.7.
3.2 Notwithstanding any other provisions of this Agreement except
Section 7.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(i) a material breach by Employer of any material provision of
this Agreement that remains uncorrected for 30 days following written
notice of such breach by Employee to Employer; or
(ii) for any other reason whatsoever, in the sole discretion
of Employee.
The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(ii); the effect of such termination is specified in
Section 3.3.
3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.3 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and
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other similar items), but Employee shall not be entitled to any individual
bonuses or individual incentive compensation not yet paid at the date of such
termination.
3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.4 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and other
similar items), but Employee shall not be entitled to any individual bonuses or
individual incentive compensation not yet paid at the date of such termination.
3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to expiration of the Term, Employee shall be
entitled, in consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's non-competition
obligations), to receive the compensation specified in Section 2.1 as if
Employee's employment (which shall cease as of the date of such Involuntary
Termination) had continue for the full Term of this Agreement. Employee shall
not be under any duty or obligation to seek or accept other employment following
Involuntary Termination and the amounts due Employee hereunder shall not be
reduced or suspended if Employee accepts subsequent employment. Employee's
rights under this Section 3.5 are Employee's sole and exclusive rights against
Employer or its affiliates, and Employer's sole and exclusive liability to
Employee under this Agreement for any Involuntary Termination of the employment
relationship. Employee covenants not to sue or lodge any claim, demand or cause
of action against Employer for any sums for Involuntary Termination other than
those sums specified in this Section 3.5. If Employee breaches this covenant,
Employer shall be entitled to recover from Employee all sums expended by
Employer (including costs and attorneys fees) in connection with such suit,
claim, demand or cause of action.
3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination plus
any other payments generally available to other departing employees of Employer
(such as unused personal vacation, personal days and other similar items), but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.7 Upon termination of the employment relationship as a result of
Employee's long-term disability, Employee shall be entitled to his or her pro
rata salary through the date of such termination plus any other payments
generally available to other departing employees of Employer (e.g., unused
vacation, personal days, etc.), but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
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3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans and policies of Employer or its affiliates; provided
that compensation for any accrued but unused vacation shall not constitute a
severance plan or policy of Employer under this Agreement.
3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement that are continuing obligations,
including, without limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4.
CONTINUATION OF EMPLOYMENT BEYOND TERM;
TERMINATION AND EFFECTS OF TERMINATION
4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.
ARTICLE 5.
OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) and that relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
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<PAGE> 8
5.2 Employee acknowledges that the business of Employer and its
affiliates is highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or its affiliates use in their business to
obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such confidential business information and trade
secrets against unauthorized disclosure and use is of critical importance to
Employer or its affiliates in maintaining their competitive position. Employee
hereby agrees that Employee will not, at any time during or after his or her
employment by Employer, make any unauthorized disclosure of any confidential
business information or trade secrets of Employer or its affiliates, or make any
use thereof, except in the carrying out of his or her employment
responsibilities hereunder. As a result of Employee's employment by Employer,
Employee may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Employer and
its affiliates. Employee also agrees to preserve and protect the confidentiality
of such third party confidential information and trade secrets to the same
extent, and on the same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article 5 by Employee, and Employer
shall be entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies available at law or in
equity to Employer, including the recovery of damages from Employee and his or
her agents involved in such breach.
5.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer or its affiliates shall be and remain
the property of Employer or its affiliates, as the case may be. Upon termination
of Employee's employment by Employer, for any reason, Employee promptly shall
deliver the same, and all copies thereof, to Employer.
5.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other
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<PAGE> 9
audiovisual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Employer shall be the author of the work. If such work is neither
prepared by the Employee within the scope of his or her employment nor a work
specially ordered and then not deemed to be a work made for hire, then Employee
hereby agrees to assign, and by these presents does assign, to Employer all of
Employee's worldwide right, title, and interest in and to such work and all
rights of copyright therein.
5.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.
ARTICLE 6.
POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area where Employer or
any of its subsidiaries are conducting any business as of the date of
termination of the employment relationship or have during the previous twelve
months conducted any business:
(i) engage in any business competitive with the business
conducted by Employer;
(ii) render advice or services to, or otherwise assist, any
other person, association, or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by
Employer; or
(iii) induce any employee of Employer or any of its affiliates
to terminate his or her employment with Employer or its affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not affiliated with Employer.
For all purposes of this Agreement, except with regard to a "Voluntary
Termination" described in Section 3.2(ii), "geographic area" shall be defined to
mean any township, and one half mile radius around each such township, in which
Employer or any of its subsidiaries own any oil and gas assets, or, any area
containing lands or properties which
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are included, as of the date of termination, or were planned to be included, in
any geologic or oil and/or gas development project planned or operated by
Employer or any of its subsidiaries. For purposes of a "Voluntary Termination"
described in Section 3.2(ii) "geographic area" shall be defined as the State of
Ohio, with regard to all geologic formations below the base of the Clinton
formation.
These non-competition obligations shall extend until the latter of [a]
the expiration of the Term or [b] six months after termination of the employment
relationship; provided that in the event of Involuntary Termination, these
non-competition obligations shall extend until the expiration of the Term; and
further provided that if Employee's employment ceases at the end of the Term or
at any time thereafter because Employer elects not to continue to employ
Employee at a compensation level at least equivalent to that at the end of the
Term, these non-competition obligations shall terminate upon termination of the
employment relationship. Notwithstanding the foregoing, if Employee's
non-competition obligations terminate hereunder, but four or more ex-employees
of Employer (including Employee) are employed by the same entity (or any
affiliate thereof) at any time within a period of three months after the
termination of Employee's employment relationship hereunder, these
non-competition obligations shall be reinstated and shall extend for a period of
six months after termination of Employee's employment relationship with
Employer.
6.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer, including,
without limitation, the recovery of damages from Employee and his or her agents
involved in such breach.
6.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7.
MISCELLANEOUS
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7.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, is controlled by, or is under common control with Employer.
7.2 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214-0981
Attention: Chairman of the Board of Directors
If to Employee, to the address shown on the first page hereof.
Either Employer or Employee may furnish a change of address to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.3 This Agreement shall be governed in all respects by the laws of the
State of Ohio, excluding any conflict-of-law rule or principle that might refer
the construction of this Agreement to the laws of another State or country.
7.4 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
7.5 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Sections 5.2, Article 5, or
Section 6.1, and if the dispute cannot be settled through direct discussions,
then Employer and Employee agree first to endeavor to settle the dispute in an
amicable manner by mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings legal action to
enforce the terms of this Agreement, the party who prevails in such legal
action, whether plaintiff or defendant, in addition to the remedy or relief
obtained in such legal action shall be entitled to recover its, his, or her
expenses incurred in connection with such legal action, including, without
limitation, costs of Court and attorneys fees.
7.6 It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
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enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
7.7 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.
7.8 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein: the
nature of Employee's employment relationship with Employer and the term and
termination of such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject matters, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect such subject matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby, provided that any such modification must be
authorized or approved by the Board of Directors of Employer.
7.9 If the Merger Agreement is terminated in accordance with its terms,
this Agreement shall terminate and the parties hereto shall have no further
obligations to any other party hereunder.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.
JENCO ACQUISITION, INC.
By:
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
Donald E. Kreager
This 24th day of May, 1996
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EXHIBIT 99.11
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between Jenco Acquisition, Inc., having offices at 4770
Indianola Avenue, Columbus, Ohio 43214-0981 ("Employer"), and Connie J. Slocum,
an individual currently residing in the State of Ohio ("Employee"), to be
effective as of the Effective Date (as hereinafter defined).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Employer, Clinton Gas Systems, Inc., an Ohio corporation ("Clinton"),
and Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership, are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the merger of Employer with and into Clinton (the
"Merger").
WHEREAS, Employer is desirous of having Clinton, as the surviving
corporation of the Merger, continue to employ Employee, effective as of the date
on which the "Effective Time", as defined in the Merger Agreement, occurs (the
"Effective Date"), pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is desirous of entering
into such employment relationship pursuant to such terms and conditions and for
such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1.
EMPLOYMENT AND DUTIES
1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to subsidiaries of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time. Notwithstanding any other provision of this
Agreement to the contrary, any relocation of Employee by Employer to a principal
place
<PAGE> 2
of employment that is more than fifty miles from Employee's principal place of
employment as of the Effective Date without the prior written consent of
Employee (a "Prohibited Relocation") or any material modification of Employee's
duties without the prior written consent of Employee (a "Prohibited
Modification") shall give Employee the right to terminate this Agreement, which
right shall be exercisable for ten days after Employee receives notice of such
Prohibited Relocation or Prohibited Modification, unless the Prohibited
Relocation or Prohibited Modification is withdrawn by Employer within ten days
after Employer's receipt of such notice, and which termination shall constitute
an Involuntary Termination under Article 3 of this Agreement.
1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer, or requires any significant portion of Employee's
business time.
1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.
1.5 Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would injure Employer's
business, its interests, or its reputation. Employee shall not, during the Term
of this Agreement or any extension or renewal thereof, engage, directly or
indirectly, in any activity which constitutes a Conflict of Interest (as defined
below); provided that Employer acknowledges and agrees that Employee may have as
of the Effective Date passive investments or other interests, directly or
indirectly, in oil and gas wells, leases and pipelines, including some that may
be owned or operated by Employer, and that Employee shall be entitled to
maintain such passive investments or other interests after the Effective Date.
For purposes of this Agreement: (a) "Conflict of Interest" means, without
limitation, any act or activity, or any interest in connection with, or benefit
from any act or activity, which is adverse to the interests of or would in any
way injure Employer or any of its affiliates, provided that a passive investment
of not more than 5% of the outstanding equity securities of an entity whose
securities are then being regularly traded in open-market brokerage transactions
(either on a stock exchange or over-the-counter) shall not constitute a Conflict
of Interest; and (b) "directly or indirectly" means, without limitation,
participation for Employee's own account or as an owner, shareholder, partner,
director, officer, member, manager, employee, associate, creditor or agent of
any other person or organization or through Employee's spouse or other family
relation. In keeping with Employee's duties to Employer, Employee agrees that
Employee shall not knowingly become involved in a Conflict of Interest with
Employer or its affiliates, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee agrees that Employee shall disclose to Employer's
General Counsel any facts that might involve such a Conflict of Interest that
has not been approved by Employer's Board of Directors.
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1.6 Employer and Employee recognize that it is impossible to provide an
exhaustive list of actions or interests that constitute a "Conflict of
Interest." Moreover, Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by the Employee to
Employer's General Counsel may be all that is necessary to enable Employer or
its affiliates to protect its interests. In others, if no improper motivation
appears to exist and the interests of Employer or its affiliates have not
suffered, prompt elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the employment
relationship, subject to Section 3.1(i), below. Employer reserves the right to
take such reasonable action as, in its judgment, will end the conflict.
ARTICLE 2.
COMPENSATION AND BENEFITS
2.1 Employee's base salary during the Term shall be not less than the
amount set forth under the heading "Monthly Base Salary" on Exhibit A, which
shall be paid in equal or nearly equal installments in accordance with
Employer's standard payroll practice and not less frequently than semi-monthly.
Employee's base salary shall be reviewed not less often than annually and shall
be subject to such upward adjustments as Employer may deem appropriate in its
discretion.
2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the Effective Date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, vacation, 401(k) and pension plans. Nothing in this Agreement is to
be construed or interpreted to provide greater rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated employees pursuant to the terms and conditions of such benefit plans
and programs. In addition, Employee shall have the right to participate in an
incentive compensation plan to be adopted by Employer (the "Plan"). The Plan
shall provide for at least annual awards of cash, performance shares or units,
or other performance- or incentive-based compensation, or any combination
thereof, upon meeting the Employer's targeted performance objectives for the
award year. If Employer does not adopt the Plan, effective as of the Effective
Date, within 120 days after the Effective Date, Employee shall then have the
right to terminate this Agreement, which right shall be exercisable for 30 days
and which termination shall constitute an Involuntary Termination under Article
3 of this Agreement.
2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a
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written plan document adopted by the Board of Directors of Employer, none of the
benefits or arrangements described in this Article 2 shall be secured or funded
in any way, and each shall instead constitute an unfunded and unsecured promise
to pay money in the future exclusively from the general assets of Employer.
2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
ARTICLE 3.
TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION
3.1 Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(i) For "cause" upon the good faith determination by the
Employer's management committee (or, if there is no management
committee, the highest applicable level of management) of Employer that
"cause" exists for the termination of the employment relationship. As
used in this Section 3.1(i), the term "cause" shall mean [a] Employee's
gross negligence or willful misconduct in the performance of the duties
and services required of Employee pursuant to this Agreement; [b]
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude; [c] a reasonable determination by Employer that
Employee has violated the Conflict of Interest provisions of Section
1.5 of this Agreement and failure by Employee to eliminate such
Conflict of Interest within ten days after notice from Employer to do
so, or, if it is impossible to eliminate such Conflict of Interest
within such ten days, failure to commence within such ten days any
action necessary to eliminate such Conflict of Interest and thereafter
to continue diligently to pursue such action until elimination of such
Conflict of Interest, within no more than 30 days after such notice; or
[d] Employee's material breach of any material provision of this
Agreement (other than Section 1.5) that remains uncorrected for sixty
(60) days following written notice to Employee by Employer of such
breach. It is expressly acknowledged and agreed that the decision as to
whether "cause" exists for termination of the employment relationship
by Employer is delegated to the management committee (or, if there is
no management committee, the highest applicable level of management) of
Employer for determination;
(ii) for any other reason whatsoever, with or without cause,
in the sole discretion of the management committee (or, if there is no
management committee, the highest applicable level of management) of
Employer;
(iii) upon Employee's death; or
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(iv) upon Employee's long-term disability. For purposes of
this Agreement, "long-term disability" shall have the same meaning as
the term "long-term disability" or "permanent disability" or similar
term in Employee's long-term or permanent disability policy provided by
Employer and covering Employee; provided that if there is no such
policy in effect covering Employee, "long-term disability" shall mean
that Employee has become incapacitated by accident, sickness, or other
circumstance which renders him mentally or physically incapable of
performing the duties and services required of Employee.
The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute a "Termination for Cause" if made
pursuant to Section 3.1(i); the effect of such termination is specified in
Section 3.4. The termination of Employee's employment by Employer prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.1(ii); the effect of such termination is specified in
Section 3.5. The effect of the employment relationship being terminated pursuant
to Section 3.1(iii) as a result of Employee's death is specified in Section 3.6.
The effect of the employment relationship being terminated pursuant to Section
3.1(iv) as a result of the Employee's long-term disability is specified in
Section 3.7.
3.2 Notwithstanding any other provisions of this Agreement except
Section 7.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(i) a material breach by Employer of any material provision of
this Agreement that remains uncorrected for 30 days following written
notice of such breach by Employee to Employer; or
(ii) for any other reason whatsoever, in the sole discretion
of Employee.
The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute an "Involuntary Termination" if made
pursuant to Section 3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(ii); the effect of such termination is specified in
Section 3.3.
3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.3 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and
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other similar items), but Employee shall not be entitled to any individual
bonuses or individual incentive compensation not yet paid at the date of such
termination.
3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination; provided that this
Section 3.4 shall not constitute a waiver by Employee of any statutory right or
rights Employee may have to continue to receive benefits after termination of
employment. Employee shall be entitled to pro rata salary through the date of
such termination plus any other payments generally available to other departing
employees of Employer (such as unused personal vacation, personal days and other
similar items), but Employee shall not be entitled to any individual bonuses or
individual incentive compensation not yet paid at the date of such termination.
3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to expiration of the Term, Employee shall be
entitled, in consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's non-competition
obligations), to receive the compensation specified in Section 2.1 as if
Employee's employment (which shall cease as of the date of such Involuntary
Termination) had continue for the full Term of this Agreement. Employee shall
not be under any duty or obligation to seek or accept other employment following
Involuntary Termination and the amounts due Employee hereunder shall not be
reduced or suspended if Employee accepts subsequent employment. Employee's
rights under this Section 3.5 are Employee's sole and exclusive rights against
Employer or its affiliates, and Employer's sole and exclusive liability to
Employee under this Agreement for any Involuntary Termination of the employment
relationship. Employee covenants not to sue or lodge any claim, demand or cause
of action against Employer for any sums for Involuntary Termination other than
those sums specified in this Section 3.5. If Employee breaches this covenant,
Employer shall be entitled to recover from Employee all sums expended by
Employer (including costs and attorneys fees) in connection with such suit,
claim, demand or cause of action.
3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination plus
any other payments generally available to other departing employees of Employer
(such as unused personal vacation, personal days and other similar items), but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
3.7 Upon termination of the employment relationship as a result of
Employee's long-term disability, Employee shall be entitled to his or her pro
rata salary through the date of such termination plus any other payments
generally available to other departing employees of Employer (e.g., unused
vacation, personal days, etc.), but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.
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3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans and policies of Employer or its affiliates; provided
that compensation for any accrued but unused vacation shall not constitute a
severance plan or policy of Employer under this Agreement.
3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement that are continuing obligations,
including, without limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4.
CONTINUATION OF EMPLOYMENT BEYOND TERM;
TERMINATION AND EFFECTS OF TERMINATION
4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.
ARTICLE 5.
OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) and that relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
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5.2 Employee acknowledges that the business of Employer and its
affiliates is highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or its affiliates use in their business to
obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such confidential business information and trade
secrets against unauthorized disclosure and use is of critical importance to
Employer or its affiliates in maintaining their competitive position. Employee
hereby agrees that Employee will not, at any time during or after his or her
employment by Employer, make any unauthorized disclosure of any confidential
business information or trade secrets of Employer or its affiliates, or make any
use thereof, except in the carrying out of his or her employment
responsibilities hereunder. As a result of Employee's employment by Employer,
Employee may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Employer and
its affiliates. Employee also agrees to preserve and protect the confidentiality
of such third party confidential information and trade secrets to the same
extent, and on the same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article 5 by Employee, and Employer
shall be entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies available at law or in
equity to Employer, including the recovery of damages from Employee and his or
her agents involved in such breach.
5.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer or its affiliates shall be and remain
the property of Employer or its affiliates, as the case may be. Upon termination
of Employee's employment by Employer, for any reason, Employee promptly shall
deliver the same, and all copies thereof, to Employer.
5.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other
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audiovisual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Employer shall be the author of the work. If such work is neither
prepared by the Employee within the scope of his or her employment nor a work
specially ordered and then not deemed to be a work made for hire, then Employee
hereby agrees to assign, and by these presents does assign, to Employer all of
Employee's worldwide right, title, and interest in and to such work and all
rights of copyright therein.
5.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.
ARTICLE 6.
POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area where Employer or
any of its subsidiaries are conducting any business as of the date of
termination of the employment relationship or have during the previous twelve
months conducted any business:
(i) engage in any business competitive with the business
conducted by Employer;
(ii) render advice or services to, or otherwise assist, any
other person, association, or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by
Employer; or
(iii) induce any employee of Employer or any of its affiliates
to terminate his or her employment with Employer or its affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not affiliated with Employer.
For all purposes of this Agreement, except with regard to a "Voluntary
Termination" described in Section 3.2(ii), "geographic area" shall be defined to
mean any township, and one half mile radius around each such township, in which
Employer or any of its subsidiaries own any oil and gas assets, or, any area
containing lands or properties which
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are included, as of the date of termination, or were planned to be included, in
any geologic or oil and/or gas development project planned or operated by
Employer or any of its subsidiaries. For purposes of a "Voluntary Termination"
described in Section 3.2(ii) "geographic area" shall be defined as the State of
Ohio, with regard to all geologic formations below the base of the Clinton
formation.
These non-competition obligations shall extend until the latter of [a]
the expiration of the Term or [b] six months after termination of the employment
relationship; provided that in the event of Involuntary Termination, these
non-competition obligations shall extend until the expiration of the Term; and
further provided that in the event of Involuntary Termination, these
non-competition obligations shall extend until the expiration of the Term; and
further provided that if Employee's employment ceases at the end of the Term or
at any time thereafter because Employer elects not to continue to employ
Employee at a compensation level at least equivalent to that at the end of the
Term, these non-competition obligations shall terminate upon termination of the
employment relationship. Notwithstanding the foregoing, if Employee's
non-competition obligations terminate hereunder, but four or more ex-employees
of Employer (including Employee) are employed by the same entity (or any
affiliate thereof) at any time within a period of three months after the
termination of Employee's employment relationship hereunder, these
non-competition obligations shall be reinstated and shall extend for a period of
six months after termination of Employee's employment relationship with
Employer.
6.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer, including,
without limitation, the recovery of damages from Employee and his or her agents
involved in such breach.
6.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7.
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MISCELLANEOUS
7.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, is controlled by, or is under common control with Employer.
7.2 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Clinton Gas Systems, Inc.
4770 Indianola Avenue
Columbus, Ohio 43214-0981
Attention: Chairman of the Board of Directors
If to Employee, to the address shown on the first page hereof.
Either Employer or Employee may furnish a change of address to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.3 This Agreement shall be governed in all respects by the laws of the
State of Ohio, excluding any conflict-of-law rule or principle that might refer
the construction of this Agreement to the laws of another State or country.
7.4 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
7.5 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Sections 5.2, Article 5, or
Section 6.1, and if the dispute cannot be settled through direct discussions,
then Employer and Employee agree first to endeavor to settle the dispute in an
amicable manner by mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings legal action to
enforce the terms of this Agreement, the party who prevails in such legal
action, whether plaintiff or defendant, in addition to the remedy or relief
obtained in such legal action shall be entitled to recover its, his, or her
expenses incurred in connection with such legal action, including, without
limitation, costs of Court and attorneys fees.
7.6 It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term,
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<PAGE> 12
provision, covenant, or remedy shall be construed in a manner so as to permit
its enforceability under the applicable law to the fullest extent permitted by
law. In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
7.7 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.
7.8 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein: the
nature of Employee's employment relationship with Employer and the term and
termination of such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject matters, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect such subject matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby, provided that any such modification must be
authorized or approved by the Board of Directors of Employer.
7.9 If the Merger Agreement is terminated in accordance with its terms,
this Agreement shall terminate and the parties hereto shall have no further
obligations to any other party hereunder.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.
JENCO ACQUISITION, INC.
By:
W. Craig Childers
Vice President
This 24th day of May, 1996
EMPLOYEE
Connie J. Slocum
This 24th day of May, 1996
<PAGE> 1
EXHIBIT 99.12
AGREEMENT
In consideration of the payment of $4,000 per month, F. Daniel Ryan
agrees that for a period of two years after the "Effective Time," as defined in
the Agreement and Plan of Merger providing for the merger of Jenco Acquisition,
Inc. with and into Clinton Gas Systems, Inc., he will not, unless prior written
approval of Enron Capital & Trade Resources is obtained, directly or
indirectly, for himself or for others, transact any business relating to the
energy industry, including, but not limited to, natural gas and power, with, or
in any manner pertaining to, any commercial and industrial end user customers
of Clinton Gas Marketing, Inc. ("CGM"). For purposes of this agreement,
commercial and industrial end user customers of CGM shall mean any commercial
and industrial end user customers of CGM with whom CGM transacted business
within one year of the Effective Time.
ENRON CAPITAL & TRADE RESOURCES
/s/ F. Daniel Ryan By: /s/ William David Duran
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F. Daniel Ryan William David Duran, Vice President
