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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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MAXUS ENERGY CORPORATION
(Name of Subject Company)
MAXUS ENERGY CORPORATION
(Name of Person filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
577730 10 4
(CUSIP Number of Class of Securities)
MCCARTER MIDDLEBROOK, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
MAXUS ENERGY CORPORATION
717 NORTH HARWOOD STREET
DALLAS, TEXAS 75201-6594
(214) 953-2000
(NAME, ADDRESS, AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
COPY TO:
ROBERT A. PROFUSEK, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Maxus Energy Corporation, a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 717 North Harwood Street, Dallas, Texas 75201-6594. The class of
equity securities to which this Statement relates is the Common Stock, par value
$1.00 per share, of the Company (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the tender offer disclosed in a Schedule 14D-1,
dated March 3, 1995, by YPF Acquisition Corp., a Delaware corporation
("Purchaser"), and a wholly owned subsidiary of YPF Sociedad Anonima, a sociedad
anonima organized under the laws of the Republic of Argentina ("YPF"), to
purchase all outstanding Shares at a price of $5.50 per Share, net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated March 3, 1995 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together, as amended
from time to time, constitute the "Offer"). The Offer is being made pursuant to
an Agreement of Merger, dated as of February 28, 1995 (the "Merger Agreement"),
among YPF, Purchaser, and the Company. See Item 3(b)(2) for a description of the
Merger Agreement.
The address of the principal executive offices of Purchaser is Avenida Pte.
Roque Saenz Pena 777, Buenos Aires 1364, Argentina.
ITEM 3. IDENTITY AND BACKGROUND
(a) Name and Address of the Company. The name and address of the Company,
which is the person filing this Statement, are set forth in Item 1 above.
(b)(1) Certain Contracts, Etc.. Certain contracts, agreements, arrangements,
or understandings between the Company or its affiliates and certain of its
directors and executive officers are described under the captions "Director
Compensation," "Termination of Employment and Change in Control Arrangements,"
and "Retirement Program" on pages 8, 10, 11, and 12 of the Company's Proxy
Statement, dated March 22, 1994, for its 1994 Annual Meeting of Stockholders
(the "1994 Annual Meeting Proxy Statement"). A copy of such portions of the 1994
Annual Meeting Proxy Statement is filed as Exhibit 1 hereto.
The Merger Agreement provides that the Company will cooperate with YPF and
Purchaser in an effort to obtain the surrender of all employee stock options and
similar rights (the "Options") in accordance with the provisions of Schedule 2.6
to the Merger Agreement, which schedule is based, in general, on the
Black-Scholes methodology for valuing options. If all Options are surrendered,
the holders thereof, including certain directors and executive officers of the
Company, will receive an aggregate amount of approximately $4.7 million. Of that
amount, Charles L. Blackburn, the Chairman, President and Chief Executive
Officer of the Company, the four next highest compensated executive officers of
the Company (collectively, the "Named Executives"), all executive officers of
the Company as a group (the "Executive Officer Group"), and all directors of the
Company as a group would receive approximately the following amounts: Mr.
Blackburn, $1,100,000; Mr. M.C. Forrest, $385,000; Mr. S.G. Crowell, $390,000;
Mr. G.W. Pasley, $335,000; and Mr. M. Middlebrook, $160,000; the Executive
Officer Group, $2,900,000; and all directors of the Company as a group,
$545,000. In addition, the Merger Agreement provides that all restrictions on
restricted Shares, which include restricted Shares owned by certain executive
officers of the Company, will lapse at the Effective Time. The aggregate value
of all restricted Shares, based on a price per Share to be paid under the
Merger, is approximately $5.2 million. Of that amount, the Named Executives and
the Executive Officer Group would receive the following amounts: Mr. Blackburn,
$104,588; Mr. Forrest, $0; Mr. Crowell, $34,430; Mr. Pasley, $20,658; Mr.
Middlebrook, $14,916; and the Executive Officer Group, $215,000.
The Merger Agreement provides that, except as may be expressly provided in a
valid written waiver voluntarily signed by an affected employee party thereto,
the Company will honor and, on and after the Effective Time, YPF will cause the
Surviving Corporation to honor in accordance with the
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terms thereof, without offset, deduction, counterclaim, interruption, or
deferment (other than withholdings under applicable law), all employment,
change-in-control, severance, termination, consulting, and unfunded retirement
or benefit agreements to which the Company or any of its subsidiaries was a
party as of February 28, 1995. The Company is presently a party to
change-in-control agreements with 17 senior executives of the Company, including
each of the executive officers of the Company, which agreements (or predecessors
thereof) were entered into in 1987 or, if later, the date that the executive
first attained the position of general manager or above. In the event that all
of the persons who are parties to change-in-control agreements terminate their
employment with the Company (or are terminated) under circumstances in which
they have rights to severance payments thereunder, the maximum aggregate amount
which the Company would be obligated to pay under all such agreements (assuming
such termination occurred on April 1, 1995 and was discounted to the
then-present value using a % discount rate) is estimated to be $14.7
million. Of that amount, the Named Executives and the Executive Officer Group
would receive the following amounts: Mr. Blackburn, $2.7 million; Mr. Forrest,
$1.0 million; Mr. Crowell, $1.0 million; Mr. Pasley, $0.9 million; Mr.
Middlebrook, $0.8 million; and the Executive Officer Group, $8.2 million.
The Merger Agreement also provides that, subject to Purchaser's purchase of
Shares pursuant to the Offer, the Company will, for a period of 12 months
following the Effective Time, continue, without amendment or change, except for
changes that increase such compensation or benefits or as may be required by
law, the Benefit Plans and the other compensation and benefit policies,
practices, programs, and arrangements (collectively, the "Plans"), which provide
compensation or benefits to employees of the Company and its subsidiaries,
except that the Surviving Corporation (as defined below) may replace any of the
Plans with another plan or program that provides not less than a substantially
equivalent level of compensation or benefits, and may amend or replace any Stock
Plan with another plan which is determined in good faith by the Board of
Directors of the Surviving Corporation to provide comparable incentive
compensation opportunities.
Prior to the Company's entry into the Merger Agreement, representatives of
YPF informed Mr. Blackburn that YPF expected Mr. Blackburn to resign his
positions as Chairman, President and Chief Executive Officer if YPF acquired the
Company, and on February 28, 1995, YPF announced that it had identified an
interim successor to Mr. Blackburn (Mr. Peter Gaffney, a founding partner of
Gaffney, Cline and Associates and a reservoir engineer who is currently
President of the Society of Petroleum Engineers). YPF has asked Mr. Blackburn to
become an international consultant to YPF and to remain a director of the
Company following the merger contemplated by the Merger Agreement (the
"Merger"). If Mr. Blackburn accepts YPF's offer, he would be paid an annual
retainer of $500,000, have offices in Dallas and Buenos Aires, be expected to
spend 50-75% of his time working for YPF, and have direct access to YPF's Chief
Executive and Chief Operating Officers. The term of the proposed consulting
arrangement is two years. Although Mr. Blackburn has informally indicated that
he is willing to entertain this proposal, Mr. Blackburn has informed YPF that he
will not formally respond thereto until after the completion (or termination) of
the Offer.
The Prudential Preferred Waiver Agreement. In accordance with the provisions
of the Company's Restated Certificate of Incorporation (the "Certificate"), The
Prudential Insurance Company of America ("Prudential"), which is the current
holder of all of the outstanding shares of the Company's $9.75 Cumulative
Convertible Preferred Stock, par value $1.00 per share (the "$9.75 Preferred
Stock"), must approve the Merger in order for the Merger to be consummated. On
February 28, 1995, the Company and Prudential entered into an agreement (the
"Prudential Preferred Waiver Agreement"), a copy of which is filed as Exhibit 2
hereto, pursuant to which Prudential agreed to consent to the Merger and,
effective upon the Effective Time of the Merger, to (i) waive certain rights,
including appraisal rights, conversion rights, rights under the Rights Agreement
(as defined below), and the right to receive increased dividends under certain
circumstances, (ii) waive certain covenants restricting the Company's ability to
take certain actions, and (iii) terminate the registration rights associated
with the $9.75 Preferred Stock. Pursuant to the Prudential Preferred Waiver
Agreement, the Company has agreed, effective as of the Effective Time of the
Merger, to (a) waive certain rights, including the right
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to redeem the $9.75 Preferred Stock at its option and the right of first offer
with respect to the transfer of the shares of $9.75 Preferred Stock, and (b) pay
to Prudential a restructuring fee of $250,000 at the Effective Time of the
Merger. To induce Prudential to enter into the Prudential Preferred Waiver
Agreement, YPF also agreed, effective as of the Effective Time of the Merger,
among other things, to guarantee the payment and performance of each and every
obligation of the Company to the registered owners of $9.75 Preferred Stock.
(b)(2) The Merger Agreement. The following is a summary of the material
provisions of the Merger Agreement, a copy of which is filed as Exhibit 3
hereto. For purposes of this Item 3(b)(2), except as set forth herein with
respect to certain terms the meaning of which is not readily apparent,
capitalized terms used and not otherwise defined herein have the meanings given
to such terms in the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer.
The obligation of Purchaser to accept for payment Shares tendered pursuant to
the Offer is subject to the satisfaction of a number of conditions set forth on
Exhibit A to the Merger Agreement, including without limitation (i) the closing
of the financings described in Item 8 hereof (the "Financing Condition"), (ii)
the taking by the Company of all steps necessary to redeem certain rights (the
"Rights") issued pursuant to a Rights Agreement, dated September 8, 1988 (the
"Rights Agreement"), between the Company and AmeriTrust Company National
Association, as Rights Agent, attached to Shares at a redemption price of $0.10
per Right so that such Rights will not become exercisable as a result of the
consummation of the transactions contemplated by the Merger Agreement, and (iii)
that the number of Shares being validly tendered and not withdrawn prior to the
expiration date provided in the Offer, when added to the Shares and $4.00
Cumulative Convertible Preferred Stock, par value $1.00 per share, of the
Company (the "$4.00 Preferred Stock" and, together with the Shares, the "Voting
Stock") beneficially owned by YPF and Purchaser, represents not less than a
majority of the Voting Stock outstanding on a fully diluted basis (the "Minimum
Share Condition"). Any condition other than the Minimum Share Condition may be
waived by Purchaser in its sole discretion. Pursuant to the Merger Agreement,
Purchaser reserved the right to increase the price per Share payable in the
Offer or to otherwise amend the Offer, except that Purchaser may make no
amendment that decreases the price per Share payable in the Offer, reduces the
minimum number of Shares to be purchased in the Offer, imposes additional
conditions to the Offer, or makes any other change in the terms and conditions
of the Offer that is materially adverse to the holders of the Shares. In the
event the Merger Agreement is terminated pursuant to its terms, YPF and
Purchaser have agreed that, without the consent of the Board of Directors of the
Company (the "Board"), neither they nor their affiliates will acquire or seek to
acquire shares of Voting Stock of the Company other than pursuant to the Offer
or the Merger for a period of not less than 24 months following such
termination.
The Merger. The Merger Agreement provides that, unless the Merger Agreement
is terminated or abandoned (see "Termination" in this Item 3), as soon as
practicable following fulfillment or waiver of the conditions described in this
Item 3 under "Conditions to the Merger," at the Effective Time, Purchaser will
be merged with and into the Company, whereupon the separate existence of
Purchaser will cease and the Company will be the surviving corporation in the
Merger (as such, the "Surviving Corporation"). The Merger Agreement further
provides that (i) the Certificate and the By-Laws of the Company as in effect at
the Effective Time will be the certificate of incorporation and the by-laws of
the Surviving Corporation, (ii) the directors of Purchaser immediately prior to
the Effective Time will be the directors of the Surviving Corporation, and (iii)
the officers of the Company immediately prior to the Effective Time will be the
officers of the Surviving Corporation.
Consideration to be Paid in the Merger. The Merger Agreement provides that
each Share outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company, Shares owned by YPF, Purchaser, or
any other direct or indirect subsidiary of YPF, and Shares held by stockholders
that perfect their appraisal rights under the Delaware General Corporation Law
(the "DGCL")) will, at the Effective Time, be cancelled and retired and be
converted into a right
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to receive in cash an amount per Share equal to the highest price per Share paid
by Purchaser pursuant to the Offer, without interest, upon the surrender of the
certificate which prior to the Effective Time represented such Shares, and each
Share held in the treasury of the Company and each Share held by YPF, Purchaser,
or any other direct or indirect subsidiary of YPF immediately prior to the
Effective Time will, at the Effective Time, be cancelled and retired and no
payment will be made with respect thereto. Each share of common stock of
Purchaser issued and outstanding immediately prior to the Effective Time will,
at the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become one share of common
stock of the Surviving Corporation, and each outstanding share of $4.00
Preferred Stock, $9.75 Preferred Stock, and $2.50 Cumulative Preferred Stock,
par value $1.00 per share (the "$2.50 Preferred Stock"), of the Company
(collectively, the "Preferred Stock") will remain outstanding and have, as to
the Surviving Corporation, the identical powers, preferences, rights,
qualifications, limitations, and restrictions as such shares of Preferred Stock
presently have, except as agreed to by the holder of the $9.75 Preferred Stock
(see Item 3(b)(1) above).
Employee Benefits and Stock Awards. See "Certain Contracts, Etc." and "The
Prudential Preferred Waiver Agreement" in Item 3(b)(1) above for a discussion of
certain provisions of the Merger Agreement relating to employee benefits and
stock awards.
Stockholders' Meeting. In the Merger Agreement, the Company has agreed to
take all action necessary in accordance with applicable law and the Certificate
and its By-Laws to convene a meeting of its stockholders as promptly as
reasonably practicable after the date of the Merger Agreement to consider and
vote upon the adoption of the Merger Agreement, if such stockholder approval is
required by applicable law. Nothing in the Merger Agreement affects the right of
Purchaser to take action by written consent in lieu of a meeting or otherwise to
the extent permitted by applicable law. At any such meeting, all Voting Stock
then owned by YPF, Purchaser, or any other direct or indirect subsidiary of YPF
will be voted in favor of adoption of the Merger Agreement. Subject to its
fiduciary duties under applicable law, the Board has resolved to recommend that
the Company's stockholders approve adoption of the Merger Agreement, if such
stockholder approval is required.
Representations and Warranties. The Merger Agreement also contains various
customary representations and warranties by the Company relating to, among other
things, (i) the organization of the Company and its subsidiaries and other
corporate matters, (ii) the capital structure of the Company, (iii) the
authorization, execution, delivery, and consummation of the transactions
contemplated by the Merger Agreement, (iv) consents and approvals, (v) documents
filed by the Company with the Securities and Exchange Commission (the
"Commission") and the accuracy of the information contained therein, (vi) the
absence of certain changes and events, (vii) the accuracy of the information
contained in documents filed with the Commission in connection with the Offer
and the Merger, (viii) litigation, (ix) compliance with laws and certain
environmental matters, (x) tax, insurance, and labor matters, and (xi) matters
relating to Title IV of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder. The Company has
also represented in the Merger Agreement that it will take the necessary steps
to redeem, on or prior to March 23, 1995, all of the outstanding Rights issued
pursuant to the Rights Agreement in accordance with the terms of the Rights
Agreement and applicable law.
The Merger Agreement contains certain similar representations and warranties
by YPF and Purchaser concerning (i) the organization of YPF and Purchaser and
other corporate matters, (ii) the authorization, execution, delivery, and
consummation of the transactions contemplated by the Merger Agreement, (iii) the
accuracy of the information contained in documents filed with the Commission in
connection with the Offer and the Merger, and (iv) the financing of the Offer
and the Merger. YPF has also represented and warranted that, based on its review
of the Company's financial condition, operations, and business plan, the
representations made by the Company in the Merger Agreement, the financial
condition of YPF and its subsidiaries, and Purchaser's plans with respect to the
Company and its subsidiaries, YPF has no reason to believe that following the
Merger and financings contemplated in
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respect thereof the Company will not be able to meet its obligations as they
become due, including, solely for purposes of this representation and warranty,
preferred stock dividend and mandatory redemption payments. As described below
under "Certain Additional YPF Obligations," YPF has, under certain circumstances
and subject to certain limitations, agreed to capitalize the Company in respect
of such obligations.
Board Representation. The Merger Agreement provides that, upon Purchaser's
acquisition of a majority of the outstanding shares of Voting Stock pursuant to
the Offer, and from time to time thereafter so long as YPF and/or any of its
direct or indirect wholly owned subsidiaries (including Purchaser) owns a
majority of the outstanding shares of Voting Stock, YPF will be entitled,
subject to compliance with applicable law, the Certificate, and the provisions
described in the next sentence, to designate at its option up to that number of
directors, rounded up to the nearest whole number, of the Company as will make
the percentage of the Company's directors designated by YPF equal to the
percentage of outstanding shares of Voting Stock held by YPF and any of its
direct or indirect wholly owned subsidiaries (including Purchaser), including
Shares accepted for payment pursuant to the Offer. The Company has agreed that
it will, upon the request of YPF, promptly increase the size of its Board and/or
use its reasonable best efforts to secure the resignation of such number of
directors as is necessary to enable YPF's designees to be elected to the Board
and will use its reasonable best efforts to cause YPF's designees to be so
elected, subject to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), except that, prior to the Effective Time, the
Company will use its reasonable best efforts to assure that the Board always has
(at its election) at least three members who were directors of the Company as of
February 28, 1995. At such times, the Company will use its reasonable best
efforts, subject to any limitations imposed by law or the rules of the New York
Stock Exchange (the "NYSE"), to cause persons designated by YPF to constitute
the same percentage as such persons represent on the Board of (i) each committee
of the Board, (ii) each board of directors or board of management of each
subsidiary of the Company, and (iii) each committee of each such board.
Agreements with Respect to the Conduct of Business. The Merger Agreement
provides that, except as specifically contemplated by the Merger Agreement or as
otherwise approved by YPF in writing, during the period from the date of the
Merger Agreement to the earlier of the time that the designees of YPF have been
elected to, and constitute a majority of, the Board or the Effective Time, the
Company will, and will cause each of its subsidiaries to, conduct their
respective businesses only in, and not take any action except in, the ordinary
and usual course of business substantially consistent with past practice, and
use reasonable efforts to preserve intact the business organization of the
Company and each of its subsidiaries, to keep available the services of its and
their present officers and key employees, and to preserve the goodwill of those
having business relationships with the Company or its subsidiaries. In addition,
subject to certain exceptions, during such period, the Company will not, and
will not permit any of its subsidiaries to, (i) make or propose any change or
amendment to their respective certificates of incorporation or by-laws (or
comparable governing documents), except as may be required by law; (ii)
authorize for issuance, issue, sell, or deliver any capital stock or any other
securities of any of them (other than pursuant to the Options, Options and
Converts, the $4.00 Preferred Stock, the $9.75 Preferred Stock, or the 401(k)
Plan, or the issuance of Shares issued under the terms of the Director Plan in a
manner consistent with any such plan or past practice), or issue any securities
convertible into or exchangeable for, or options, warrants to purchase, scrip,
rights to subscribe for, calls, or commitments of any character whatsoever
relating to, or enter into any contract with respect to the issuance of, any
shares of capital stock or any other securities of any of them (other than
pursuant to the Options, Options and Converts, the $4.00 Preferred Stock, the
$9.75 Preferred Stock, the 401(k) Plan (or in connection with the 401(k) Plan or
the Director Plan as aforesaid)), purchase, or otherwise acquire or enter into
any contract with respect to the purchase or voting of shares of their capital
stock, or adjust, split, combine, or reclassify any of their capital stock or
other securities, or make any other changes in their capital structures; (iii)
declare, set aside, pay, or make any dividend or other distribution or payment
(whether in cash, stock, or property) with respect to, or purchase or redeem,
any shares of the capital stock of any of them other than (a) regular quarterly
cash dividends on
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the Preferred Stock, (b) dividends, distributions, or payments paid by its
subsidiaries to the Company or its subsidiaries with respect to their capital
stock, (c) the Rights in accordance with the Rights Agreement, and (d) loans and
payments from the Company to any of its subsidiaries or from any of such
subsidiaries to the Company or another such subsidiary; (iv) except in limited
circumstances, prior to the Effective Time, adopt or amend any bonus, profit
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, welfare benefit plan, change-in-control
agreement, restricted stock, performance unit, employment, or other employee
benefit agreements, trusts, plans, funds, or other arrangements for the benefit
or welfare of any director, officer, or employee, or (except, other than with
respect to employees at the Company's Pay Grade 12 or above, for normal
increases in the ordinary course of business that are consistent with past
practice and that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or pursuant to collective
bargaining agreements or other contracts presently in effect) increase in any
manner the compensation or fringe benefits of any director or officer or pay any
benefit not required by any existing plan, arrangement, or contract (including
without limitation the granting of stock options, stock appreciation rights,
shares of restricted stock, or performance units) or take any action or grant
any benefit not expressly required under the terms of any existing contracts,
trusts, plans, funds, or other such arrangements or enter into any contract to
do any of the foregoing; or (v) except in the ordinary course of business, (a)
incur or assume any indebtedness, (b) assume, guarantee, endorse, or otherwise
become liable (whether directly, contingently, or otherwise) for the obligation
of any other Person except in the ordinary course of business and consistent
with past practice, or (c) make any loans, advances, or capital contributions
to, or investments (other than intercompany accounts and short-term investments
pursuant to customary cash management systems of the Company in the ordinary
course and consistent with past practice) in, any other Person other than such
of the foregoing as are made by the Company to or in a wholly owned subsidiary
of the Company.
Conditions to the Merger. The Merger is conditioned upon the satisfaction of
certain conditions including (i) adoption of the Merger Agreement by the
requisite vote of holders of Voting Stock, (ii) acceptance by the Purchaser for
payment of Shares pursuant to the Offer, (iii) the absence of certain orders,
injunctions, or actions which prevent or materially restrict consummation of the
Merger or that would make the acquisition or holding by YPF or its subsidiaries
of the Shares or shares of common stock of the Surviving Corporation illegal,
and (iv) expiration or termination of applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. In addition,
the obligations of YPF and Purchaser to consummate the Merger are conditioned
upon the satisfaction of certain conditions, including (i) compliance by the
Company in all material respects with each of its covenants under the Merger
Agreement, (ii) the accuracy in all material respects as of the Closing Date of
the representations and warranties of the Company, and (iii) the Financing
Condition.
No Solicitation, Etc. The Merger Agreement provides that neither the Company
nor any of its subsidiaries will, directly or indirectly (and each will instruct
or otherwise use its reasonable best efforts to cause its affiliates that are
controlled by the Company and the officers, directors, employees, agents, or
advisors or other representatives or consultants of the Company not to),
encourage, solicit, initiate, engage in, or participate in discussions or
negotiations with, or provide information to, any Person (other than YPF,
Purchaser, or subsidiaries, affiliates, or representatives of any of the
foregoing) in connection with any tender offer, exchange offer, merger,
consolidation, business combination, sale of substantial assets, sale of
securities, liquidation, dissolution, or similar transaction involving the
Company or any of its subsidiaries or divisions (including without limitation
Midgard Energy Company ("Midgard")). Notwithstanding the foregoing, the Company
may do any of the foregoing if outside counsel to the Company advises the Board
that any action is required for the Company's directors to satisfy their
fiduciary duties under applicable law. The Company will promptly (i) notify YPF
in the event of any discussion, negotiation, proposal, or offer, or any decision
to furnish information or take any other action referred to above in this
paragraph, and (ii) furnish YPF copies of all such written information furnished
to any Person to the extent not previously furnished to YPF.
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Indemnification of Directors and Others. Pursuant to the Merger Agreement,
for a period of seven years following the Effective Time, YPF will cause the
Surviving Corporation to indemnify, defend, and hold harmless the present and
former officers, directors, employees, and agents of the Company and its
subsidiaries (each an "Indemnified Party") against all losses, claims, damages,
or liabilities arising out of actions or omissions occurring on, prior to, or
after the Effective Time to the full extent provided under Delaware law, the
Certificate, and By-Laws of the Company in effect on the date of the Merger
Agreement, or any agreement in effect at the date of the Merger Agreement,
except that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under Delaware
law, the Certificate, or By-Laws of the Company, or under any such agreement
will be made by independent counsel selected by the Indemnified Party and
reasonably satisfactory to the Surviving Corporation. The Surviving Corporation
will maintain the Company's existing officers' and directors' liability
insurance ("D&O Insurance") in full force and effect without reduction of
coverage for a period of seven years after the Effective Time, except that (i)
the Surviving Corporation will not be required to pay an annual premium therefor
in excess of 250% of the last annual premium paid prior to the date of the
Merger Agreement (the "Current Premium") and (ii) if the existing D&O Insurance
expires, is terminated, or is cancelled during such seven-year period, the
Surviving Corporation will use its best efforts to obtain as much D&O Insurance
as can be obtained for the remainder of such period for a premium on an
annualized basis not in excess of 250% of the Current Premium.
Certain Additional YPF Obligations. The Merger Agreement provides that
whenever it requires Purchaser to take any action, such requirements will be
deemed to include an undertaking on the part of YPF to cause Purchaser to take
such action.
Pursuant to the Merger Agreement, in the event that the Company is unable to
meet its obligations as they come due, whether at maturity or otherwise,
including solely for purposes of this covenant dividend and redemption payments
with respect to the Preferred Stock, YPF has agreed for a period of nine years
following the Effective Time to capitalize the Company in an amount necessary to
permit the Company to meet such obligations (the "Keepwell Covenant"). This
obligation (i) is limited to the amount of debt service obligations under the
Purchaser Facility (as described in Item 8 hereof) and, to the extent the
Purchaser Facility is replaced by the Midgard Loan and/or the Subsidiaries Loan
(as described in Item 8 hereof), the amount of debt service obligations under
the Midgard Loan and/or the Subsidiaries Loan, and (ii) will be reduced by the
amount of any capital contributions received by the Company after the Effective
Time and the net proceeds of any sale by the Company of common stock or
non-redeemable preferred stock after the Effective Time.
Subject to certain limitations, YPF and the Company have agreed to use
reasonable efforts to continue the listing on the NYSE of the shares of
Preferred Stock which are currently listed on the NYSE or, if delisted, to cause
such shares of Preferred Stock to be listed on another national securities
exchange or admitted for trading on the National Association of Securities
Dealers Automated Quotation System and on other organized securities markets in
such foreign jurisdictions in which such shares are presently traded, subject to
certain limitations.
Termination. According to its terms, the Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval by the stockholders of the Company (i) by the mutual
consent of the Boards of Directors of YPF, Purchaser, and the Company, (ii) by
YPF and Purchaser, on the one hand, or the Company, on the other hand, if the
Offer expires or is terminated or withdrawn in accordance with the terms of the
Merger Agreement without any Shares being purchased thereunder or the Offer is
terminated, or has not been commenced by the close of business on March 7, 1995,
or if Purchaser has not purchased Shares validly tendered and not withdrawn
pursuant to the Offer in accordance with the terms of the Merger Agreement
within 75 calendar days after commencement of the Offer, provided, however, that
the party seeking to terminate the Merger Agreement is not in material breach
thereof; (iii) by the Company, if YPF or Purchaser materially breaches any of
the representations and warranties or covenants contained in the
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Merger Agreement, or by YPF and Purchaser if the Company materially breaches any
of the representations and warranties or covenants contained in the Merger
Agreement; (iv) by either YPF and Purchaser or the Company, if the Merger is not
consummated prior to June 30, 1995, provided, however, that the right to
terminate the Merger Agreement pursuant to this provision will not be available
to any party whose failure to fulfill any obligation under the Merger Agreement
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date; (v) by either YPF and Purchaser, on the one hand,
or the Company, on the other hand, if either one (or any permitted assignee
under the Merger Agreement) is restrained, enjoined, or otherwise precluded by
an order, decree, ruling, or injunction (other than an order or injunction
issued on a temporary or preliminary basis) of a court, domestic or foreign, of
competent jurisdiction, governmental authority, or other regulatory or
administrative agency or commission, from consummating the Merger or making the
acquisition or holding by YPF or its subsidiaries of the Shares or shares of
common stock of the Surviving Corporation illegal and all means of appeal and
all appeals from such order decree, ruling, injunction, or other action have
been finally exhausted; (vi) by the Company if the Board determines that it will
not recommend acceptance of the Offer and approval of the Merger by the
Company's stockholders (or if such recommendation is withdrawn) based upon the
advice of outside counsel that such action is necessary for the Board to comply
with its fiduciary duties to stockholders under applicable law; and (vii) by YPF
and Purchaser, if (a) the Board shall not have recommended or shall withdraw,
modify, or change its recommendation relating to the Merger or the Offer in a
manner materially adverse to YPF or shall have resolved to do any of the
foregoing; (b) the Board recommends to the stockholders of the Company that they
accept or approve, or the Company or any of its subsidiaries shall have agreed
to engage in, a Competing Transaction (as defined below); or (c) any Person
shall have acquired beneficial ownership or the right to acquire beneficial
ownership or any "group" (as such term is defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder) shall have
been formed which beneficially owns, or has the right to acquire "beneficial
ownership" (as defined in the Rights Agreement) of, more than 20% of the
then-outstanding Shares. "Competing Transaction" is defined in the Merger
Agreement as any of the following involving the Company or any of its
subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction except for such of the foregoing in
which the only parties are the Company or one or more subsidiaries of the
Company; (ii) any sale, lease, exchange, mortgage, pledge, transfer, or other
disposition of the assets of the Company or any of its subsidiaries constituting
5% or more of the consolidated assets of the Company or accounting for 5% or
more of the consolidated revenues of the Company in a single transaction or
series of related transactions involving any Person other than the Company or
one or more subsidiaries of the Company; or (iii) any tender or exchange offer
for 20% or more of the outstanding Voting Stock or the filing of a registration
statement under the Securities Act of 1933, as amended, in connection therewith.
In the event of any termination and abandonment pursuant to the Merger
Agreement, no party to the Merger Agreement (or any of its directors or
officers) will have any liability or further obligation to any other party to
the Merger Agreement, except for certain express obligations under the Merger
Agreement and except that no party will be relieved from liability for any
breach of the Merger Agreement. Any action by the Company to terminate the
Merger Agreement as described herein will require only the approval of a
majority of the directors of the Company then in office who were directors of
the Company on the date of the Merger Agreement, or persons nominated or elected
to succeed such directors by a majority of such directors.
In the event the Merger Agreement is terminated by the Company as provided
therein, (i) YPF and the Purchaser will not, and will cause their subsidiaries
and affiliates controlled by them not to, acquire or offer to acquire or request
permission to acquire or offer to acquire (either directly or pursuant to a
waiver of this or any other covenant in the Merger Agreement) Shares otherwise
than pursuant to the Offer or the Merger for a period of not less than 24 months
after termination of the Merger Agreement without prior written approval of the
Board, and (ii) the provisions of a confidentiality agreement previously entered
into between the Company and YPF will continue to apply.
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Termination Fees; Expenses. Whether or not the Offer or Merger is
consummated, all costs and expenses incurred in connection with the Offer, the
Merger Agreement, and the transactions contemplated thereby will be paid by the
party incurring such costs and expenses, provided, however, that the Company
must promptly pay $20 million to Purchaser in the event of a termination of the
Merger Agreement (i) by the Company if the Board determines that it will not
recommend acceptance of the Offer and adoption of the Merger Agreement by the
Company's stockholders (or if such recommendation is withdrawn) based upon the
advice of outside counsel that such action is necessary for the Company's
directors to comply with their fiduciary duties to stockholders under applicable
law; (ii) by YPF and Purchaser if the Board shall not have recommended or shall
withdraw, modify, or change its recommendation relating to the Merger or the
Offer in a manner materially adverse to YPF; or (iii) by YPF and Purchaser if
the Board recommends to the stockholders of the Company that they accept or
approve, or the Company or any of its subsidiaries agree to engage in, a
Competing Transaction.
The Merger Agreement also provides that YPF and Purchaser, jointly and
severally, must promptly pay $20 million to the Company in the event of a
termination of the Merger Agreement by the Company or YPF if, at the date of
such termination, any condition to the funding of the YPF Facility or the
Purchaser Facility has not been satisfied, provided that at such time no other
condition to YPF's obligation to consummate the Offer or the Merger is
unsatisfied (other than the failure to meet the Minimum Share Condition as a
result of the failure to obtain such funding).
Waiver and Amendment. Subject to applicable law, any provision of the Merger
Agreement may be waived at any time by the party which is, or whose stockholders
are, entitled to the benefits thereof, and the Merger Agreement may be amended
or supplemented at any time, provided that no amendment may be made after any
stockholder approval of the adoption of the Merger Agreement that reduces the
price to be paid per Share pursuant to Merger, without further approval of the
holders of the Voting Stock.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Board Recommendation. On February 28, 1995, the Board, by unanimous vote
(with the director elected by Prudential pursuant to the terms of the $9.75
Preferred Stock abstaining) (i) determined that the Offer and Merger were in the
best interest of the Company and the stockholders of the Company, (ii) approved
the Merger Agreement, the Offer, and the Merger, and determined that such
approval satisfied the requirements of Section 203(a)(1) of the DGCL, rendering
the special stockholder vote requirements of such Section inapplicable to the
Merger Agreement, Offer, and Merger, (iii) subject to the fiduciary duties of
the Board, resolved to recommend acceptance of the Offer by holders of Shares
and adoption of the Merger Agreement by holders of shares of Voting Stock, and
(iv) approved certain other actions to be undertaken pursuant to the terms of
the Merger Agreement, including redemption of the Rights by the Company at the
redemption price of $0.10 per Right. A joint press release announcing the Offer
and the other transactions pursuant to the Merger Agreement and the Company's
letter to stockholders with respect thereto are filed as Exhibits 4 and 5
hereto, respectively.
(b) Background of the Board Recommendation. In light of, among other
factors, the limitations on the Company's financial flexibility resulting from,
among other things, the pressures from continuing depressed oil and gas prices
and the Company's limited access to the capital markets, balanced against the
Company's obligations and its exploration, development, and production program
to maximize the value of and/or replace the Company's oil and gas reserves, in
the last half of 1994 the Company began exploring financial alternatives
available to it. The alternatives considered involved a broad range of possible
actions, including potential sales of assets, subsidiaries or divisions, joint
ventures, public debt and equity offerings of securities of several of the
Company's subsidiaries, private sales of equity securities of such subsidiaries,
and possible sales of a substantial equity interest in the Company. Management
of the Company decided to study all reasonable alternatives available to the
Company to increase the Company's financial flexibility and maximize stockholder
value.
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In the late Autumn of 1994, the Company was contacted by a possible
strategic buyer ("Company I") that indicated that it desired to initiate
substantive discussions relating to the possible acquisition of the entire
equity interest in the Company. A confidentiality agreement with Company I was
signed in November 1994 and during the next several months, the Company, with
the assistance of CSFB, furnished Company I extensive information relating to
the Company's business, financial condition, results of operations, and
prospects. This extensive due diligence included site visitations to the
Company's principal worldwide locations. However, on January 27, 1995, Company I
informed the Company that it was no longer interested in pursuing the possible
acquisition of the entire equity interest in the Company, but rather that it
desired to pursue the possible acquisition of Midgard and/or the Company's
Indonesian subsidiaries.
In early December of 1994, Mr. Blackburn met with YPF's Chief Executive
Officer to discuss a wide variety of possible transactions, including the
possible purchase by YPF of a substantial equity interest in the Company. The
companies signed a confidentiality agreement and YPF and its representatives
undertook an extensive due diligence review of the Company.
One of the other alternatives given serious consideration was a public
offering of the Company's mid-continent gas production and processing
operations, later to be named "Midgard." On December 20, 1994, Midgard filed
with the Commission a registration statement relating to the possible public
offering of approximately 37.5% of its common stock. At the time of the filing
(the "Initial Filing"), Midgard estimated that the offering, together with an
expected subsequent offering of $200 million of debt securities, would result in
net proceeds of approximately $340 million, which would be used to retire
indebtedness of Midgard to the Company. On January 9, 1995, Midgard filed with
the Commission a registration statement relating to the possible public offering
of $200 million of debt securities of Midgard. With the assistance of CS First
Boston Corporation ("CSFB"), the Company's financial advisor, commencing in the
latter part of 1994, the Company also solicited offers for the private sale of a
minority interest in Midgard. A substantial number of possible financial and
strategic investors were contacted during this process. Subsequent to the
Initial Filing, the prices for natural gas, which represent virtually all of
Midgard's 1994 production and current reserves, remained depressed, thus
reducing the potential value to the Company of the possible public offerings of
Midgard equity and debt securities (together, the "Midgard Offering
Alternative"). The Midgard Offering Alternative continued to be pursued and was
considered by the Board in connection with its consideration of other
alternatives at the time the Offer and the Merger Agreement were approved by the
Board. However, in connection with and in light of such approval, the Company
agreed to suspend its pursuit of the Midgard Offering Alternative (or any other
sale of equity securities or substantial assets) pursuant to the Merger
Agreement.
In mid January 1995, CSFB, on behalf of the Company, requested that
potential bidders submit proposals in respect of a range of possible
transactions, including a minority-interest in Midgard, the possible sale of a
substantial equity interest in the Company, and the possible acquisition of the
entire equity interest in the Company. None of the potential financial or
strategic investors expressed an interest in pursuing the acquisition of a
minority interest in Midgard although a number of possible strategic buyers
expressed an interest in acquiring the entire equity interest in, or
substantially all of the assets of, Midgard (the "Midgard Disposition
Alternative"). At a meeting of the Board on January 31, 1995, the alternatives
then available to the Company, none of which was believed by management of the
Company to be acceptable due to the terms and conditional nature thereof, were
reviewed. While no decision had been made with respect to the course of action
to be taken, the Board instructed the Company's management at the January 31,
1995 meeting to continue to explore all reasonable alternatives, following which
CSFB, on behalf of the Company, requested what were determined to be the best
potential bidders in respect of the Midgard Disposition Alternative to submit
proposals by February 21, 1995. In addition, CSFB requested that YPF (the other
potential bidder for the entire equity interest in the Company having previously
informed CSFB and the Company that it was no longer interested in pursuing such
a transaction) consider increasing its prior proposal for the possible
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acquisition of all of the Shares at $5.00 per Share in cash and also still
consider a substantial equity investment in the Company.
On February 21, 1995, the Company received indications of interest in
respect of the Midgard Disposition Alternative. The indication of interest
judged most favorable to the Company by management (the "Final Midgard
Alternative") was from Company I. In addition, on February 25, 1995, the Company
received a proposal from YPF (the "YPF Alternative") to acquire all of the
Shares for $5.50 per Share, which proposal contemplated that holders of Rights
would receive an additional $0.10 per Share in connection with the redemption of
the Rights.
At a meeting of the Board held on February 26, 1995, the Board carefully
considered the Final Midgard Alternative, the Midgard Offering Alternative, and
the YPF Alternative. At that meeting, the Board received presentations from
management of the Company, CSFB, and the Company's legal advisors, in respect of
the various alternatives available to the Company, the terms of the Final
Midgard Alternative and the YPF Alternative and then-unresolved issues relating
thereto, the status of the Midgard Offering Alternative, legal matters, the
Company's business and prospects, historical trading prices for Shares, YPF's
business, financial condition, and prospects, and the potential effects of the
various alternatives then available on stockholder value and the Company's
financial position. However, the Board did not take any action in respect of any
alternatives available to the Company at the February 26, 1995 Board meeting the
Board did instruct management of the Company to engage in further negotiations
with YPF in an effort to resolve various points arising under the YPF
Alternative.
At a meeting of the Board held on February 28, 1995, the Company again
considered the alternatives then available to the Company. At the meeting, the
Board heard presentations from management of the Company, CSFB, and the
Company's legal advisors as to various matters, including the negotiations that
had been held with representatives of YPF with respect to the points still open
in the YPF Alternative at the time of the February 26, 1995 Board meeting,
additional information relating to YPF's business, financial condition, and
prospects, conditions in the bank finance and capital markets generally and as
affected by recent events in the Republic of Mexico and other Latin and South
American countries, and the Company's capital requirements and financial
position. Following further deliberation, and a presentation by CSFB of its
views as to the fairness of the YPF Alternative to holders of Shares (discussed
in the following paragraph), the Board unanimously voted, with the director
elected by Prudential abstaining, to approve the YPF Alternative.
In making the determination and recommendations set forth in paragraph (a)
above, the Board considered a number of factors, including without limitation
the matters referred to above in this Item 4(b) and the following:
(i) The alternatives available to the Company and the consideration to
be received for the Shares pursuant to the Offer and Merger. In connection
with its analysis of this issue, among other factors, the Board considered
detailed presentations from CSFB and management of the Company at the
February 26 and 28, 1995 Board meetings as to the range of possible values
of Shares, based upon various assumptions, including without limitation
assumptions as to oil and gas prices, the Company's ability to execute its
business plan, the alternatives available to the Company, and other factors.
It was the consensus of the Board that the Company should elect either the
Final Midgard Alternative or the YPF Alternative (as modified in the
negotiations that took place between the February 26 and the February 28,
1995 Board meetings) and that the YPF Alternative (as so modified) was more
likely to create substantially greater value for holders of the Shares than
would the Final Midgard Alternative.
(ii) The opinion of CSFB to the effect that, as of February 28, 1995,
the consideration to be received by the holders of the Shares in the Offer
and the Merger was fair to such holders from a financial point of view. A
copy of such opinion is filed as Exhibit 6 hereto. Stockholders are urged to
read such opinion in its entirety for an understanding of the assumptions
and limitations thereon and CSFB's interests and relationships with respect
to both the Company and YPF.
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(iii) The provisions of the Merger Agreement, including the provisions
which permit the Company to terminate the agreement, upon payment to YPF of
$20 million, if the Board determines to withdraw its recommendation to
holders of Shares to accept the Offer based upon the advice of outside
counsel that such action is necessary to comply with the fiduciary duties of
the directors under applicable law.
(iv) The fact that, under the YPF Alternative, YPF's and Purchaser's
obligations under the Offer were subject to financing. In this regard, the
Board considered, among other things, the terms of the commitment letter YPF
had obtained to provide financing (see Item 8 below), the financial
condition of YPF and the Company, conditions in the bank finance and capital
markets as described above, the Keepwell Covenant, and the provision of the
Merger Agreement that the Company would be entitled to a $20 million
termination fee, subject to certain limitations (see "Termination Fees;
Expenses" in Item 3(b)(2) above), if any condition to such financing is not
satisfied.
(v) YPF's direct investment in connection with the Offer and Merger, as
well as YPF's financial condition and ability to meet its obligations under
the Merger Agreement.
(vi) The fact that the Preferred Stock would not be redeemed or
otherwise monetized in connection with the Offer and the Merger. In this
regard, the Board considered, among other factors, (a) the terms of the
Preferred Stock; (b) the provisions of the Prudential Preferred Waiver
Agreement, which had been negotiated between representatives of YPF and
Prudential relating to the $9.75 Preferred Stock without substantial
participation by representatives of the Company; (c) the possibility that
the $4.00 Preferred Stock and the $2.50 Preferred Stock might be delisted
from trading on the NYSE and possibly other securities exchanges on which
the $4.00 Preferred Stock and the $2.50 Preferred Stock are now listed or
admitted for trading as a result of the Offer or the Merger, the covenant in
the Merger Agreement to the effect that the parties would use their
reasonable efforts to maintain such listings or provide for listing or
admission for trading of such Preferred Stock on another exchange or market,
and advice of CSFB to the effect that the failure to obtain such alternative
listing or admission should not have a material adverse effect on the value
of such Preferred Stock; and (d) the Keepwell Covenant and the
representation of YPF in the Merger Agreement described above to the effect
that it had no reason to believe that, following the Merger and financings
in respect thereof, the Company would not be able to meet its obligations as
they become due, including for this purpose the obligation to cause
dividends and redemption payments on all series of Preferred Stock to be
paid in accordance with the terms thereof.
(vii) The provisions of the Merger Agreement and other matters described
in Item 3(b)(2) above.
In making its decision in respect of the Offer and the Merger Agreement, the
Board did not attempt to rank the relative importance of the various factors
discussed in this Item 4(b). However, the Company generally believes that the
factors listed in this paragraph were the most significant factors pertaining to
such decision.
ITEM 5. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED
The Company retained CSFB to act as exclusive financial advisor to the
Company with respect to the matters referred to in Item 4 hereof. Pursuant to
the terms of the engagement letter, dated January 23, 1995, the Company agreed
to pay CSFB (i) in the event of sale of all or substantially all of the Shares
in connection with the sale of the Company, 0.45% of the total enterprise value
of the Company, as determined pursuant to the engagement letter, or (ii) in the
event of any other sale of an equity interest in the Company other than a sale
of the Company, an amount equal to 1.9% to 2.15% of the aggregate consideration
received. If the Offer and Merger are consummated in accordance with the terms
thereof, it is estimated that CSFB will be entitled to receive approximately $8
million. Under the January 23, 1995 engagement letter, the Company will also
reimburse CSFB for its reasonable out-of-pocket expenses, including all fees and
disbursements of counsel and other advisors retained by CSFB. In addition, the
Company has agreed to indemnify CSFB and certain related persons against certain
liabilities in connection with CSFB's engagement.
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Pursuant to an engagement letter dated January 23, 1995, the Company agreed
(i) to pay to CSFB, in the event of the sale of all, substantially all, or a
minority interest in Midgard, an amount equal to 1.75% to 2.50% of the aggregate
consideration received in a private sale up to a maximum of $5 million, or (ii)
to give CSFB, in the event of the sale of equity or debt securities in the
public market, the right to act as lead manager and receive customary
underwriting fees.
CSFB has from time to time for a period of more than five years provided
financial advisory services to the Company and has received fees for the
rendering of such services . CSFB has informed the Company that an officer of
CSFB is an alternate member of the Board of YPF and that CSFB has from time to
time provided investment banking services to YPF. In addition, CSFB has informed
the Company that in the ordinary course of CSFB's business, it and its
affiliates may actively trade in the debt and equity securities of the Company
and its affiliates for CSFB's own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
As of February 28, 1995, CSFB held 34,625 Shares in discretionary and
proprietary trading accounts.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained, or compensated any person to make solicitations
or recommendations to the Company's stockholders with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Share Transactions in Last 60 Days. There have been no transactions in
Shares which were effected during the past 60 days by the Company, or, to the
knowledge of the Company, any executive officer, director, affiliate, or
subsidiary of the Company, except for transactions effected in the Company's
401(k) employee savings plan in accordance with the terms thereof and consistent
with past practice.
In addition, pursuant to the Director Stock Purchase Plan (the "Director
Plan"), each of the non-employee directors of the Company, as a portion of their
director's compensation for 1994, is entitled to that number of Shares having a
fair market value (as determined under the Director Plan) equal to $6,800 on the
date of acquisition. It is anticipated that such directors will acquire such
Shares in accordance with the terms of the Director Plan after the consummation
or termination of the Offer.
(b) Intent to Tender. To the knowledge of the Company, (i) all of its
executive officers, directors, affiliates, or subsidiaries presently intend to
tender Shares to Purchaser pursuant to the Offer, and (ii) none of its executive
officers, directors, affiliates, or subsidiaries presently intends to otherwise
sell any Shares which are owned beneficially or held of record by such persons.
The foregoing does not include any Shares over which, or with respect to which,
any such executive officer, director, affiliate, or subsidiary acts in a
fiduciary or representative capacity or is subject to instructions from a third
party, as to which Shares, to the Company's knowledge, no determination has been
made.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Certain Negotiations. Except as referred to in Item 3(b) or Item 4
hereof, as of the date hereof, no negotiation is being undertaken or is underway
by the Company in response to the Offer which relates to or would result in (i)
an extraordinary transaction such as a merger or reorganization involving the
Company or any subsidiary of the Company; (ii) a purchase, sale, or transfer of
a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company. Pursuant to the Merger Agreement, however, and as
described under "No Solicitation, Etc." in Item 3(b)(2) above, the Company may,
subject to certain limitations, take certain actions in respect of proposed
transactions if in the opinion of outside counsel the taking of
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such actions is necessary for the directors of the Company to discharge their
fiduciary obligations under applicable law.
(b) Certain Transactions. Except as described in Item 3(b), there are no
transactions, board resolutions, agreements in principle, or signed contracts
which relate to or would result in one or more of the matters referred to in
Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) YPF Financing. The following information regarding the financing of the
Offer and Merger has been provided by YPF and Purchaser. The total amount of
funds required by Purchaser to purchase all outstanding Shares and to pay
related fees and expenses is estimated to be approximately $800 million. The
funds necessary to purchase Shares pursuant to the Offer and to pay related fees
and expenses will be furnished to Purchaser (i) by YPF as a capital
contribution, and (ii) through the financings described below.
YPF has received a commitment letter (the "Commitment Letter") from The
Chase Manhattan Bank (National Association) ("Chase") pursuant to which Chase
has agreed to provide four credit facilities aggregating up to 800,000,000: (i)
a $200,000,000 credit facility to be extended to YPF (the "YPF Facility"), (ii)
a credit facility of up to $600,000,000 to be extended to Purchaser (the
"Purchaser Facility"), (iii) a credit facility of up to $250,000,000 to be
extended to Midgard (the "Midgard Facility"), and (iv) a credit facility of up
to $250,000,000 to be extended to certain other subsidiaries of the Company as
described below (the "Subsidiaries Facility"). The proceeds of the Midgard
Facility and the Subsidiaries Facility will be used to repay, in part, the
Purchaser Facility. Chase has confirmed that it is willing to provide the entire
amount of these four facilities. Chase also has advised YPF that it intends to
arrange one or more syndicates of commercial banks, financial institutions, and
other investors to provide a portion of these facilities (Chase together with
such other banks, institutions, and investors, if any, are collectively referred
to as the "Lenders") and that it proposes to act as the agent for the Lenders in
connection with each of the facilities.
YPF Facility. The YPF Facility will be made in a single loan (the "YPF
Loan") on or before the funding date of the Purchaser Loan described below and
mature on the earlier of: (i) November 5, 1995 and (ii) the date that is seven
months from the date of its funding (such earlier date being the "YPF Maturity
Date"). At YPF's option, the interest rate applicable to the YPF Loan will be
the one-, two-, or three-month London Interbank Offered Rate plus 1%. The YPF
Loan will be repaid in three consecutive monthly installments: (i) $50,000,000
to be paid two months prior to the YPF Maturity Date, (ii) $75,000,000 to be
paid one month prior to the YPF Maturity Date, and (iii) $75,000,000 to be paid
on the YPF Maturity Date. It is anticipated that the YPF Loan will be repaid
with funds generated by YPF's business operations, including crude oil export
revenues.
Purchaser Facility. The Purchaser Facility will be made available in not
more than two advances (collectively, the "Purchaser Loan"), and mature on the
earlier of: (i) the date that is 90 days after the expiration of the Tender
Offer (the "Tender Offer Closing Date"), and (ii) July 5, 1995 (such earlier
date being the "Purchaser Maturity Date"). At Purchaser's option, the interest
rate applicable to the Purchaser Loan will be (i) the one month London Interbank
Offered Rate plus a margin of (a) 1 3/4% until the date 60 days after the Tender
Offer Closing Date, and (b) 2 1/2% thereafter on that portion of the aggregate
outstanding principal amount of the Purchaser Loan equal to or less than
$500,000,000 and 3 1/2% on the aggregate outstanding principal amount of the
Purchaser Loan in excess of $500,000,000, or (ii) Chase's base rate plus a
margin of (a) 3/4% until the date 60 days after the Tender Offer Closing Date,
and (b) 1 1/2% thereafter on that portion of the aggregate outstanding principal
amount of the Purchaser Loan that is equal to or less than $500,000,000 and 2
1/2% on the aggregate outstanding principal amount of the Purchaser Loan in
excess of $500,000,000. The Purchaser Loan will be guaranteed by YPF as
described below. In addition, prior to the Merger, the Purchaser Loan will
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be secured by a pledge by Purchaser of all of the Shares purchased pursuant to
the Offer, or if such pledge is not permissible under the Federal Reserve
Board's Margin Regulations, Purchaser will agree not to dispose of any such
Shares except for cash at fair market value. The Lenders' obligation to fund the
Purchaser Loan is subject to certain conditions as described below. It is
anticipated that up to $100,000,000 of the Purchaser Loan will be repaid on or
before the Purchaser Maturity Date from cash of the Company.
Midgard Facility. YPF currently anticipates that, on or before the Purchaser
Maturity Date, up to $250,000,000 of the Purchaser Loan will be repaid with
funds provided to the Company by Midgard. Midgard will provide the funds from
the proceeds of a loan of up to $250,000,000 (the "Midgard Loan") to be extended
by the Lenders pursuant to the Midgard Facility. The Midgard Loan will be made
in a single drawing, will mature on the date that is seven years after the date
the initial Purchaser Loan is funded (the "Purchaser Initial Funding Date"), and
will be repaid in up to 20 consecutive quarterly installments commencing on the
date (the "Amortization Date") that is two years after the Purchaser Initial
Funding Date. At Midgard's option, the interest rate applicable to the Midgard
Loan will be (i) the one-, two-, or three-month London Interbank Offered Rate
plus a margin of (a) 1 3/8% until the Amortization Date, and (b) 1 7/8%
thereafter until maturity, or (ii) Chase's base rate plus a margin of (a) 3/8%
until the Amortization Date, and (b) 7/8% thereafter until maturity. The Midgard
Loan will not be secured but will be guaranteed by YPF and the Company. The
agreement evidencing the Midgard Loan (the "Midgard Loan Agreement") will
contain, among other things, a negative pledge on all assets of Midgard. The
Lenders' obligation to fund the Midgard Loan is subject to certain conditions as
described below. It is anticipated that the Midgard Loan will be repaid with
funds generated by Midgard's business operations.
Subsidiaries Facility. YPF currently anticipates that on or before the
Purchaser Maturity Date, up to $250,000,000 of the Purchaser Loan will be repaid
with funds provided to the Company by Natomas Energy Company ("Natomas"), Maxus
Northwest Java, Inc. ("Java"), and Maxus Southeast Sumatra, Inc. ("Sumatra")
(collectively, the "Designated Subsidiaries"). The Designated Subsidiaries will
provide these funds from the proceeds of a loan of up to $250,000,000 (the
"Subsidiaries Loan") made to them by the Lenders pursuant to the Subsidiaries
Facility. The Subsidiaries Loan will be made in a single drawing on the
Purchaser Maturity Date, will mature on the date that is six years after the
Purchaser Initial Funding Date and will be repaid in up to 16 consecutive
quarterly installments commencing on the Amortization Date. At the option of the
Designated Subsidiaries, the interest rates applicable to the Subsidiaries Loan
will be (i) the one-, two-, or three-month London Interbank Offered Rate plus a
margin of (a) 1 3/4% until the Amortization Date, and (b) 2 1/4% thereafter
until maturity, or (ii) Chase's base rate plus a margin of (a) 3/4% until the
Amortization Date, and (b) 1 1/4% thereafter until maturity. The Subsidiaries
Loan will be guaranteed by YPF and the Company and will be secured by certain
intangible assets and rights to payment of Java and Sumatra arising out of their
respective operations in Indonesia. The agreement evidencing the Subsidiaries
Loan (the "Subsidiaries Loan Agreement") will contain a negative pledge on all
of the other assets of the Designated Subsidiaries. The Lenders' obligation to
fund the Subsidiaries Loan is subject to certain conditions as described below.
It is anticipated that the Subsidiaries Loan will be repaid with funds generated
by the Designated Subsidiaries' business operations. Upon further review of the
value of the assets of Midgard and the Designated Subsidiaries, the terms of the
Midgard Loan and the Subsidiaries Loan may be modified to provide for
intercompany guarantees or other arrangements whereby Midgard and the Designated
Subsidiaries provide support for each other's loans.
Conditions to Funding. The obligation of the Lenders to provide the YPF
Facility, the Purchaser Facility, the Midgard Facility and the Subsidiaries
Facility is subject to the fulfillment of certain conditions, including without
limitation, (i) the absence of any material adverse change in the condition
(financial or otherwise), business operations, assets, nature of assets or
liabilities of (a) YPF and its subsidiaries (taken as a whole), (b) the Company
and its subsidiaries (taken as a whole), or (c) Midgard, Natomas, Java and
Sumatra, (ii) the receipt by Purchaser of at least $200,000,000 from the
16
<PAGE>
issuance of its common stock or a capital contribution from its immediate parent
or both, (iii) approval by the Board of the Offer and the Merger and
recommendation that the Company's stockholders tender their Shares, (iv) the
Lenders' satisfaction that $800,000,000 is sufficient to (and does not exceed
the amount required to) consummate the Merger and to pay all related commissions
and expenses, and (v) the Lenders' satisfaction that the Company will have
sufficient cash available to pay the lesser of (a) $100,000,000, and (b) the
difference between (1) the principal amount of the Purchaser Loan outstanding on
the Purchaser Maturity Date, and (2) the lesser of $500,000,000 or such other
amount as is available under the Commitment Letter for the Midgard Loan and
Subsidiaries Loan as described above.
The obligation of the Lenders to fund the Midgard Loan and the Subsidiaries
Loan will be subject to certain additional conditions, including without
limitation, (i) the effectiveness of the Merger, (ii) the absence of any
material adverse change in the condition (financial or otherwise), business,
operations, assets, nature of assets or liabilities of (a) YPF and its
subsidiaries (taken as a whole), (b) the Company and its subsidiaries (taken as
a whole), and (c) Midgard, Natomas, Java, or Sumatra, (iii) the payment in full
of the Purchaser Loan, and (iv) all indebtedness and other obligations of each
of Midgard, Natomas, Java, and Sumatra to the Company and its other subsidiaries
shall have been paid in full or satisfactorily subordinated to the repayment of
the Midgard Loan and the Subsidiaries Loan.
Prepayment. Each of the YPF Loan, the Purchaser Loan, the Midgard Loan, and
the Subsidiaries Loan (collectively, the "Loans") may be prepaid in whole or in
part without premium or penalty, except for costs associated with the prepayment
of any portion of a Loan bearing interest at a rate determined by reference to
the London Interbank Offered Rate prior to the end of any applicable interest
period.
YPF Guarantee. YPF will guarantee the repayment of the Purchaser Facility,
the Midgard Facility, and the Subsidiaries Facility. The YPF guarantee of the
Purchaser Facility may be secured, prior to the Merger, by a pledge of the
Purchaser's shares, and after the Merger by a pledge of the Company's shares.
The guarantee will also contain certain covenants, including a limitation on
YPF's debt level and a required level of tangible net worth.
Keepwell Covenant. See "Certain Additional YPF Obligations" in Item 3(b)(2)
above for a description of YPF's Keepwell Covenant under the Merger Agreement.
(b) Certain Litigation. The Company has obtained copies of nine complaints
filed on March 1, 1995 in the Chancery Court of the State of Delaware by alleged
holders of Shares. In the various complaints, the plaintiffs purport to sue
individually and on behalf of classes comprised of the holders of Shares,
stockholders of the Company, or all holders of the Company's securities. The
complaints name as defendants the Company, the directors and certain of the
officers of the Company, a former director of the Company, and/or, with respect
to some of the complaints, YPF and allege, among other things, that the
defendant directors and officers of the Company breached their fiduciary duties
in approving the Offer and the Merger and that the Company and YPF assisted and
aided and abetted the alleged breach of duties. The plaintiffs purport to seek
orders enjoining the consummation of the Offer and the Merger (or the rescission
of those transactions) or, in the alternative, accountings for any damages to
the alleged classes, together with their attorneys' fees and other relief. The
defendants intend to vigorously defend these lawsuits. The absence of an
injunction, among other things, is a condition to Purchaser's obligation to
purchase Shares tendered pursuant to the Offer. See "Termination" in Item
3(b)(2) above.
17
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
Exhibit 1 --Information under the captions "Director Compensation," "Termination of
Employment and Change-in-Control Arrangements," and "Retirement Program" of
the Company's Proxy Statement, dated March 22, 1994, for its 1994 Annual
Meeting of Stockholders.
Exhibit 2 --Prudential Preferred Waiver Agreement.
Exhibit 3 --Merger Agreement.
Exhibit 4 --Press Release issued on February 28, 1995.
Exhibit 5* --Letter to Stockholders of the Company, dated March 3, 1995.
Exhibit 6* --Opinion of CSFB, dated February 28, 1995.
</TABLE>
- ------------
* Included in the materials sent to stockholders of the Company.
18
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
MAXUS ENERGY CORPORATION
By: /s/ MCCARTER MIDDLEBROOK
................................
McCarter Middlebrook,
Vice President and General Counsel
Dated: March 3, 1995
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------
<S> <C>
Exhibit 1 --Information under the captions "Director Compensation," "Termination of
Employment and Change-in-Control Arrangements," and "Retirement Program" of
the Company's Proxy Statement, dated March 22, 1994, for its 1994 Annual
Meeting of Stockholders.
Exhibit 2 --Prudential Preferred Waiver Agreement.
Exhibit 3 --Merger Agreement.
Exhibit 4 --Press Release issued on February 28, 1995.
Exhibit 5* --Letter to Stockholders of the Company, dated March 3, 1995.
Exhibit 6* --Opinion of CSFB, dated February 28, 1995.
</TABLE>
- ------------
* Included in the materials sent to stockholders of the Company.
<PAGE>
Exhibit 1
[EXCERPTS FROM 1994 PROXY STATEMENT OF MAXUS ENERGY CORPORATION]
Director Compensation
Directors who are not employees of the Corporation receive
an annual retainer of $20,000 and a fee of $1,000 for each Board
meeting attended and for Board committee meetings attended on
days other than those on which the Board meets. Under a deferred
compensation plan, such amounts may be deferred in whole or in
part at the election of the director. Compensation so deferred
may be denominated in dollars or in shares of Common Stock
determined by reference to the market price on the business day
immediately preceding the date of credit. Share-denominated
accounts will be created with dividends, if any, and dollar
amounts will bear interest at a rate indexed to an investment
fund selected from time to time by the plan's administrator. The
annual rate of such interest accruals for 1994 is 5.34%. The
non-employee directors also participate in the 1992 Director
Stock Option Plan (the "1992 Director Plan"). Under the 1992
Director Plan, non-employee directors receive grants of options
to purchase 10,000 shares of Common Stock each when first elected
and when re-elected as a director. Such options generally are
not exercisable for 6 months, are for a 10-year term, have an
exercise price equal to the closing market price on the day
preceding the granted date and are not transferable except by
will or the laws of descent and distribution. The directors may
participate in the Corporation's health insurance program
available to all employees.
Termination of Employment and Change in Control Arrangements
Change in Control Agreements. The Corporation has entered
into agreements with Mr. Blackburn and each of the other named
executive officers which were binding upon execution but become
operative only upon the occurrence of a change in control of the
Corporation as defined therein.
Under these agreements, in the event of a change in control
the executive officer will be entitled to continue in the employ
of the Corporation until the earlier of the expiration of the
third anniversary of the occurrence of a change in control or the
executive's death at an annual base salary of not less than the
rate in effect upon the occurrence of a change in control plus an
incentive award of not less than the highest such award received
by the executive for any year in the three calendar years
immediately preceding the change in control. In the event the
Corporation terminates the executive's employment during such
term without cause, the executive will be entitled to receive as
severance compensation a lump-sum payment equal to the present
value of the cash compensation payable under the agreement in the
<PAGE>
absence of such termination, not to exceed 299% of his "base
amount" as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), without any reduction for subsequent
earnings.
Under these agreements, continuation of benefits under
employee benefit plans of the Corporation is provided after
termination during the remainder of the original term of
employment. The agreements include provisions which limit the
amounts payable under them in certain circumstances in which the
net after-tax amount received by the officer would be reduced as
a result of the applicability of the 20% excise tax imposed in
respect of certain change in control payments under the Code.
The Corporation has assumed the obligation to pay certain fees
and expenses of counsel incurred by the executive officers if
legal action is required to enforce their rights under the
agreements and has secured such obligation by obtaining a letter
of credit issued by a commercial bank.
Separation Pay Plan. Under the Separation Pay Plan, most
employees (other than non-resident aliens), including Mr.
Blackburn and the other named executive officers, are eligible
for separation pay if their employment is terminated for any
reason other than death, voluntary termination of employment,
voluntary retirement or discharge for reasons of criminal
activity, willful misconduct, gross negligence in the performance
of duties or violation of Corporation policy. The payment to be
received under the plan by a particular employee depends on his
job classification and length of service and whether termination
occurs after the elimination of the employee's position or a
change in control of the Corporation (as defined in the plan).
In the case of the named executive officers, the plan provides in
most cases for separation pay in an amount equal to two-weeks'
base pay for each year of service with the Corporation, plus
three months' base pay, not to exceed a maximum of twelve months
base pay; and, in the case of a change in control of the
Corporation, separation pay in an amount equal to one month's
base pay for each year of service with the Corporation, plus
three months' base pay, but not less than twelve months' base pay
nor more than twenty-four months' base pay. The plan requires
that employees sign releases as a condition of receiving
separation pay. Executive officers are not entitled to
separation pay under the plan to the extent they receive
severance payments under the change in control agreements
discussed above.
Retirement Program
In January 1987, the Board of Directors authorized a new
retirement income plan (the "New Retirement Income Plan")
applicable to most of its employees to replace the Corporation's
former retirement income plans under which such employees ceased
to accrue benefits on January 31, 1987. Under the New Retirement
Income Plan, a covered employee acquires a right upon retirement
-2-
<PAGE>
to a yearly amount equal to 2% of the employee's earnings during
each year from February 1, 1987 forward (rather than on final
compensation or average final compensation) without offset for
social security benefits. Benefits under the New Retirement
Income Plan become vested after five years of service, giving
effect to service under the prior retirement income plans.
Benefits may be paid in equal monthly installments, starting on
the date of retirement and continuing until death, or any
employee may select any one of a number of optional forms of
payment having equal actuarial value as provided in the plan.
The benefits payable under the New Retirement Income Plan are
subject to maximum limitations under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Code.
If benefits at the time of retirement exceed the then permissible
limits of such statutes, the excess would be paid by the
Corporation from an Excess Benefits Plan which the Corporation
maintains to provide employees (other than participants in the
"SERP" described below) benefits that would otherwise be payable
but for the limitations imposed by ERISA and the Code.
In addition, an unfunded Supplemental Executive Retirement
Plan (the "SERP") effective March 1, 1990 provides additional
benefits to the Corporation's highest ranking officer (Mr.
Blackburn), the other named executives and certain other officers
and executive employees designated by said highest ranking
officer. Under the SERP, a participant acquires the right upon
retirement to a lump sum amount which is the actuarial equivalent
of a straight life or, if married, a 50% joint and survivor
annuity payable monthly in an amount equal to (A) the sum of (1)
1.6% of the participant's average monthly compensation in 1986
times his years of service through January 31, 1987, plus (2) 2%
of the participant's average monthly compensation after
January 31, 1987 times his years of service after January 31,
1987 plus an additional five years less (B) the amount of the
benefits calculated for such participant under the Corporation's
other retirement plans. The maximum benefit payable is 60% of
the participant's high three-year average pay. The amounts
calculated under the SERP are not subject to any reduction for
Social Security and are not determined primarily by final
compensation or average final compensation and years of service.
If a participant dies while still employed by the Corporation and
is survived by an eligible spouse, his surviving spouse will
receive a lump-sum payment equal the present value of one-half of
the benefit which would have been payable to the participant at
his normal retirement age under the SERP assuming he had
terminated employment with the Corporation at the time of his
death with a vested interest under the SERP and that he survived
to his normal retirement age. In the case of retirement after
age 55 but before age 60, the supplemental retirement benefits
generally will be reduced by 5% for each year that the employee's
actual retirement date precedes age 60. The benefits provided
under the plan will vest upon completion of five years of service
or attainment of age 55.
-3-
<PAGE>
The estimated annual benefits payable upon retirement at
normal retirement age (or January 1, 1994 in those cases where
the participant's age on that date was greater than normal
retirement age) under the Corporation's retirement plans as
supplemented by the SERP based on service and compensation
through December 31, 1993 for the executive officers named in the
compensation table are as follows: Mr. Blackburn -- $165,930,
Mr. Forrest - $51,671, Mr. Crowell - $88,519, Mr. Rietman -
$145,433 and Mr. Schuepbach - $57,879.
Whether any amounts actually become payable in whole or in
part depends on the contingencies and conditions governing the
applicable retirement plan.
-4-
<PAGE>
Exhibit 2
MAXUS ENERGY CORPORATION
717 North Harwood Street
Dallas, Texas 75201
February 28, 1995
The Prudential Insurance
Company of America
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Gentlemen:
On February 1, 1987, the undersigned, MAXUS ENERGY CORPORATION (the
"Company"), a Delaware corporation, and you entered into a Preferred Stock
Purchase Agreement, dated February 1, 1987 (the "Original Stock Purchase
Agreement"), providing for the issuance to you of 3,000,000 shares of $9.75
Cumulative Convertible Preferred Stock of the Company (the "Shares"). The
Original Stock Purchase Agreement was subsequently amended by agreements
between the undersigned and you dated February 8, 1987 (the "First
Amendment"), and April 12, 1990 (the "Second Stock Purchase Agreement"), and
pursuant to the Second Stock Purchase Agreement (a) the Company reacquired
from you 500,000 of the Shares, and (b) you executed and delivered a Waiver
of Certain Equity Offering Rights dated as of April 12, 1990 and a Waiver of
Certain Rights Relating to $9.75 Preferred Stock dated June 5, 1990
(collectively, the "Waivers"), relating to certain provisions of the
Certificate of Designations, the Registration Rights Agreement and the
Company's Preferred Stock Purchase Rights Plan. The Original Stock Purchase
Agreement, as amended as aforesaid, is herein called the "Stock Purchase
Agreement," and except as otherwise expressly provided herein, all
capitalized terms used herein and defined in the Stock Purchase Agreement or
the Second Stock Purchase Agreement, as the case may be, are used herein as
so defined.
The undersigned has advised you that it contemplates entering into
the Transactions, including a cash tender offer by a wholly-owned subsidiary
of Gaucho for shares of the Common Stock of the Company (the "Tender Offer"),
as a result of which the Company would become a subsidiary of Gaucho, and in
connection therewith has obtained the agreement of Gaucho, effective upon the
merger into the Company of such wholly-owned subsidiary of Gaucho, to
guarantee the Company's obligations under the Certificate of Designations,
the Stock Purchase Agreement and the Second Stock Purchase Agreement
<PAGE>
The Prudential Insurance
Company of America
February 28, 1995
Page 2
(each as heretofore and hereby amended or to be amended or certain provisions
thereof heretofore and hereby waived or to be waived, as the case may be),
such guarantee to be substantially in the form annexed hereto as Exhibit A
(the "Gaucho Guarantee"). In consideration of the execution and delivery to
you of the Gaucho Guarantee, you have agreed to consent to the Transactions
and waive all provisions of applicable agreements and other instruments
necessary in connection therewith, effective upon the execution and delivery
of this Agreement and the execution and delivery to you of the Gaucho
Guarantee, and to further amendments of or, with respect to the Certificate
of Designations, amendments or permanent waivers of (and, in anticipation of
the effectiveness of such amendment and/or permanent waivers, temporary
waivers of certain provisions of) the Stock Purchase Agreement ,the Second
Stock Purchase Agreement and the Certificate of Designations, a waiver of
certain rights under the Company's Preferred Stock Purchase Rights Plan, and
termination of the Registration Rights Agreement, such amendments and/or
permanent waivers and termination to become effective upon the merger into
the Company of the wholly-owned subsidiary of Gaucho, and such temporary
waivers to become effective immediately, all as more fully hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing, and of the
mutual covenants and agreements herein contained, the Company and you agree
as follows:
1. Consent to Transactions. Notwithstanding any provisions of
-----------------------
the Certificate of Designations, the Stock Purchase Agreement, the Second
Stock Purchase Agreement, the Registration Rights Agreement, or of any other
agreement or instrument which would prohibit, restrict, impose conditions
upon, or otherwise adversely affect, the Company's consummation of all or any
portion of the Transactions, or pursuant to which you do or may have the
right to consent to or impose conditions upon the Company's consummation of
all or any portion of the Transactions, you do hereby unconditionally and
irrevocably waive your rights under any such provisions (including, without
limitation, Section 3(b) of the Certificate of Designations) and any
appraisal rights in connection with the Transactions, and grant your
unqualified, unconditional and irrevocably consent to the Company's
consummation of the Transactions, such waiver and consent to become and be
effective upon execution and delivery of this Agreement and the execution and
delivery to you of the Gaucho Guarantee.
2. Amendments, etc.
---------------
2A. Amendments of Stock Purchase Agreement. You and the Company
--------------------------------------
agree that, effective upon the effectiveness of the Gaucho Guarantee, the
Stock Purchase Agreement shall be amended to delete therefrom paragraphs 5F,
5H, 7A, 7B, 7C and 7D thereof.
<PAGE>
The Prudential Insurance
Company of America
February 28, 1995
Page 3
2B. Amendments of Second Stock Purchase Agreement. You and the
---------------------------------------------
Company agree that, effective upon the effectiveness of the Gaucho Guarantee,
the Second Stock Purchase Agreement shall be amended
(a) to delete therefrom paragraphs 5A, 5B, 5C(b), 5D(a) and
5D(b) thereof; and
(b) to delete therefrom paragraphs 7A, 7B and 7C thereof.
2C. Amendment or Waiver of Certificate of Designations; Certain
-----------------------------------------------------------
Waivers. Without limitation of paragraph 1, Prudential and the Company
-------
hereby agree effective upon the effectiveness of the Gaucho Guarantee, to the
amendment of the Certificate of Designations with respect to all outstanding
Shares to delete therefrom Section 2(b), Section 3(b), Section 5(a), Section
5(c), Section 8 and Section 9 thereof, and all defined terms, if any, used
only in one or more of such deleted Sections, and to effect any other
modifications thereof (including but not limited to deletion of cross-
references to deleted provisions) necessary or appropriate to give effect to
the aforementioned amendments. Alternatively, in lieu of such amendments, if
the Company shall so request, you and the Company shall execute and deliver
unconditional, irrevocable and permanent waivers (i) in the case of such
waivers to be executed and delivered by you, of any and all rights of the
holders of Shares under Section 2(b), Section 3(b), Section 8 and Section 9
of the Certificate of Designations, (ii) in the case of such waivers to be
executed and delivered by the Company, of any and all rights of the Company
under Section 5(a) and Section 5(c) of the Certificate of Designations, and
(iii) the in case of such waivers to be executed and delivered by you and the
Company, of any other provisions of the Certificate of Designations necessary
to give effect to the intent of the foregoing waivers, all such waivers
specified in clauses (i), (ii) and (iii) of this sentence to be effective
upon the effectiveness of the Gaucho Guarantee. In furtherance thereof,
effective upon the execution and delivery hereof and execution and delivery
to you of the Gaucho Guarantee, you agree that until such amendment of, or
permanent waivers with respect to, the Certificate of Designations shall
become effective (but subject to the following proviso) you will take no
action to exercise, and do hereby unconditionally and irrevocably waive, any
right to receive increased dividends pursuant to said Section 2(b), or to
convert any Shares into Common Stock of the Company pursuant to said
Section 8; and (subject to the following proviso) without limitation as to
time you unconditionally and irrevocably waive any rights attributable to the
Convertible Shares you would otherwise have with respect to Rights granted
under the Company's Preferred Stock Purchase Rights Plan, including the right
to receive any redemption payment with respect thereto (you having previously
and effectively waived such rights with respect to the Conversion Waiver
Shares under date of June 5, 1990); provided, however, that the waivers in
this sentence shall become null and void and of no force or effect, ab initio
and as if the
<PAGE>
The Prudential Insurance
Company of America
February 28, 1995
Page 4
same had never been granted, if the Transactions shall not have been
consummated and said amendment of, or waivers with respect to, the
Certificate of Designations shall not have become effective, on or before
June 30, 1995.
2D. Termination of Registration Rights Agreement. You and the
--------------------------------------------
Company agree that, effective upon the effectiveness of the Gaucho Guarantee,
the Registration Rights Agreement shall be terminated and be of no further
force or effect, and agree that, effective upon the execution and delivery
hereof and until such termination shall become effective (but subject to the
following proviso), you will take no action to exercise, and do hereby
unconditionally and irrevocably waive, any right to obtain registration of
any Registrable Securities (as defined in the Registration Rights Agreement)
pursuant thereto; provided, however, that the waiver in this paragraph 2D
shall become null and void and of no force or effect, ab initio and as if the
same had never been granted, if the Transactions shall not have been
consummated and such termination shall not have become effective, on or
before June 30, 1995.
3. Representations and Agreements of the Holder. You represent
--------------------------------------------
and warrant that this Agreement has been duly authorized, executed and
delivered by you, the performance hereof is within your corporate powers and
this Agreement constitutes your valid and binding obligations, enforceable in
accordance with its terms.
You hereby agree that if you shall sell, transfer or otherwise
dispose of any Shares, any transferee, as a condition of the transfer shall,
by written agreement satisfactory to the Company and its counsel delivered to
the Company at least five business days prior to the proposed effective date
of such transfer, expressly assume all of your obligations, waivers, duties
and covenants under the Stock Purchase Agreement, the Second Stock Purchase
Agreement and this Agreement (as each may have been amended or modified, or
any provisions thereof waived, and shall at such time be in effect),
including without limitation your obligations under this paragraph 3, as to
the Shares to be so transferred.
Concurrently with the execution and delivery hereof, the
certificates currently evidencing the Conversion Waiver Shares and the
Convertible Shares are being surrendered against delivery to you of one or
more certificates evidencing a like aggregate number of Shares which shall
not contain the legends provided for in paragraph 7A of the Second Stock
Purchase Agreement but which, in addition to any other legend placed upon
such certificate(s), shall bear a legend to the following effect:
"The securities represented by this certificate are
subject to certain provisions of an agreement, dated
April 12, 1990, and the provisions of an agreement, dated
February 28, 1995, each
<PAGE>
The Prudential Insurance
Company of America
February 28, 1995
Page 5
between the Corporation and The Prudential Insurance Company of
America, the terms of which require the holder hereof to execute
certain unconditional and irrevocable waivers of certain rights of
the holder, including without limitation the right to convert these
securities into Common Stock of the Corporation, to receive
increased dividends in certain circumstances and to vote in respect
of certain matters, and, under certain circumstances, to consent to
amendments of, or, at the request of the Company, waivers with
respect to, the Certificate of Designations and amendments of
certain agreements to which the Corporation is a party. Copies of
such agreements are on file at the principal executive offices of
the Corporation."
If the Gaucho Guarantee, and the amendments and waivers of various
instruments provided in paragraphs 2A, 2B and 2C hereof shall not have become
effective, on or before June 30, 1995, on the next succeeding business day
the Company shall deliver to you, against delivery to it of the certificates
evidencing the Shares issued as provided hereinabove in this paragraph 3,
replacement certificates for a like aggregate number of Shares bearing the
legends required by the Second Stock Purchase Agreement (disregarding the
amendments thereof provided in said paragraph 2B hereof). You represent and
warrant that you are as of the date hereof the sole record and beneficial
owner of 1,250,000 Shares (of which 375,000 Shares are Conversion Waiver
Shares and 875,000 Shares are Convertible Shares).
4. Effect of Amendments. If any provision of the Waivers shall
--------------------
be inconsistent with any provision hereof, or of the Stock Purchase Agreement
or the Second Stock Purchase Agreement as amended hereby, the provisions of
this Agreement, or the Stock Purchase Agreement or the Second Stock Purchase
Agreement (as so amended), as the case may be, shall govern. As amended
hereby, the Stock Purchase Agreement and the Second Stock Purchase Agreement,
and (subject to the preceding sentence) the Waivers, shall be and remain in
full force and effect.
5. Definitions. In addition to the definitions contained and
-----------
referred to in the preamble of this Agreement, for the purpose of this
Agreement the following terms shall have the meanings specified with respect
thereto below:
"Gaucho" shall mean YPF Sociedad Anonima, a corporation
------
(sociedad anonima) organized and existing under the laws of the Republic
of Argentina.
<PAGE>
The Prudential Insurance
Company of America
February 28, 1995
Page 6
"Transactions" shall mean and include a tender offer for the
------------
Company's Common Stock as a result of which, if successful, the Company
will become a subsidiary of Gaucho, the subsequent merger of Gaucho's
wholly-owned subsidiary that is the holder of a majority of the
outstanding shares of common stock of the Company into the Company, and
the incurrence of not in excess of $600,000,000 aggregate principal
amount of indebtedness by the Company and/or its subsidiaries, a portion
of which may be secured by liens upon the Common Stock of the Company
acquired in such tender offer and/or upon assets of the Company and/or
its subsidiaries, and certain related transactions (including the
repayment and making of loans and advances, and/or payment of dividends)
among the Company and its subsidiaries.
6. Miscellaneous.
-------------
6A. Restructuring Fee. The Company agrees to pay you a
-----------------
restructuring fee of $250,000 upon the effectiveness of the Gaucho Guarantee.
The obligation of the Company under this paragraph 6A shall survive the
transfer or redemption of any Shares.
6B. Consent to Amendments. This Agreement may be amended with the
---------------------
consent of the Company and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act of the holder or holders of not less than 66-2/3% of the
Shares at the time outstanding and each holder of the Shares at the time or
thereafter outstanding shall be bound by any consent authorized by this
paragraph 6B. The Company shall promptly send copies of any amendment,
consent or waiver (and any request for any such amendment, consent or waiver)
relating to this Agreement to you and each other Institutional Holder then
holding any of the Shares and, to the extent practicable, shall consult with
you and each other Institutional Holder then holding any of the Shares in
connection with each such amendment, consent and waiver. No course of
dealing between the Company and the holder of any Shares nor any delay in
exercising any rights hereunder shall operate as a waiver of any rights of
any holder of such Shares.
6C. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained herein or made in writing by the
Company or you in connection herewith shall survive the execution and
delivery of this Agreement and any disposition of the Shares.
6D. Successors and Assigns. All covenants and agreements in this
----------------------
Agreement contained by or on behalf of either of the parties hereto shall
bind and inure to
<PAGE>
The Prudential Insurance
Company of America
February 28, 1995
Page 7
the benefit of the Company and its successors and assigns and you and your
successors and assigns to the extent they are the registered owners of Shares
acquired in compliance with Section 3 of this Agreement.
6E. Notices. All communications provided for hereunder shall be
-------
sent by first class mail and (a) if to you, addressed to you at the address
set forth by you for such communications on Schedule I hereto, or to such
other address as you may have designated to the Company in writing, (b) if to
any other holder of Shares, addressed to such holder at the address of such
holder in the stock record books of the Company, and (c) if to the Company,
addressed to it at: 717 North Harwood Street, Dallas, Texas 75201,
Attention: Secretary, or to such other address or addresses as the Company
may have designated in writing to you and each other holder of any of the
Shares at the time outstanding.
6F. Descriptive Headings. The descriptive headings of the several
--------------------
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
6G. Governing Law. This Agreement is being delivered and is
-------------
intended to be performed in the State of Delaware, and shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the law of such state.
6H. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
<PAGE>
The Prudential Insurance
Company of America
February 28, 1995
Page 8
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to
the undersigned, whereupon this letter shall become a binding agreement
between you and the undersigned.
Very truly yours,
MAXUS ENERGY CORPORATION
By:/s/ McCARTER MIDDLEBROOK
------------------------
Name: McCarter Middlebrook
Title: Vice President
The foregoing Agreement is hereby
accepted as of the date first above written:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ R.A. WALKER
---------------------
Name: R.A. Walker
Title: Vice President
<PAGE>
Exhibit 3
=================================================================
AGREEMENT OF MERGER
Among
YPF Sociedad Anonima
YPF Acquisition Corp.
and
Maxus Energy Corporation
February 28, 1995
=================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
(Not a part of the Agreement)
Page
----
I. THE TENDER OFFER . . . . . . . . . . . . . . . . . . 1
1.1. The Offer . . . . . . . . . . . . . . . . . . 1
1.2. Company Action . . . . . . . . . . . . . . . . 4
1.3. Stockholder Lists . . . . . . . . . . . . . . 6
1.4. Board of Directors of the Company . . . . . . 6
II. THE MERGER . . . . . . . . . . . . . . . . . . . . . 8
2.1.1. Merger . . . . . . . . . . . . . . . . 8
2.1.2. Effective Time . . . . . . . . . . . . 8
2.1.3. Effect of Merger . . . . . . . . . . . 9
2.1.4. Conversion of Shares of Common Stock . 9
2.2. Stockholders' Meeting of the Company . . . . . 11
2.3. Consummation of the Merger . . . . . . . . . . 11
2.4. Payment for Shares of Common Stock . . . . . . 12
2.5. Closing of the Company's Transfer Books . . . 14
2.6. The Company Stock Options and Related Matters 14
III. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
15
3.1. Corporate Organization . . . . . . . . . . . . 15
3.2. Authority . . . . . . . . . . . . . . . . . . 15
3.3. Offer Documents . . . . . . . . . . . . . . . 16
3.4. Proxy Statement . . . . . . . . . . . . . . . 17
3.5. Fees . . . . . . . . . . . . . . . . . . . . . 17
3.6. Consents and Approvals; No Violation . . . . . 17
3.7. Financing . . . . . . . . . . . . . . . . . . 19
3.8. Operations of the Company Following the Merger 19
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . 20
4.1. Corporate Organization . . . . . . . . . . . . 20
4.2. Capitalization . . . . . . . . . . . . . . . . 21
4.3. Authority . . . . . . . . . . . . . . . . . . 22
4.4. Consents and Approvals; No Violation . . . . . 23
4.5. Commission Filings . . . . . . . . . . . . . . 24
4.6. Absence of Certain Changes . . . . . . . . . . 25
4.7. Litigation . . . . . . . . . . . . . . . . . . 26
4.8. Compliance with Applicable Laws . . . . . . . 27
4.9. Fees . . . . . . . . . . . . . . . . . . . . . 28
4.10. Offer Documents . . . . . . . . . . . . . . . 28
4.11. Schedule 14D-9 . . . . . . . . . . . . . . . . 28
4.12. Proxy Statement . . . . . . . . . . . . . . . 29
4.13. Rights . . . . . . . . . . . . . . . . . . . . 29
4.14. Certain Actions. . . . . . . . . . . . . . . . 30
4.15. Subsidiaries . . . . . . . . . . . . . . . . . 30
4.16. No Default . . . . . . . . . . . . . . . . . . 32
(i)
<PAGE>
Page
----
4.17. Taxes . . . . . . . . . . . . . . . . . . . . 32
4.18. Insurance . . . . . . . . . . . . . . . . . . 35
4.19. Benefit Plans . . . . . . . . . . . . . . . . 36
4.20. Labor Matters . . . . . . . . . . . . . . . . 38
4.21. Certain Environmental Matters . . . . . . . . 40
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . 40
5.1. Acquisition Proposals . . . . . . . . . . . . 40
5.2. Interim Operations . . . . . . . . . . . . . . 41
5.2.1. Conduct of Business . . . . . . . . . 41
5.2.2. Certificate and By-Laws . . . . . . . 42
5.2.3. Capital Stock . . . . . . . . . . . . 42
5.2.4. Dividends . . . . . . . . . . . . . . 43
5.2.5. Debt . . . . . . . . . . . . . . . . . 43
5.3. Employee Plans, Compensation, Etc. . . . . . . 44
5.4. Access and Information . . . . . . . . . . . . 46
5.5. Certain Filings, Consents and Arrangements . . 48
5.6. State Takeover Statutes . . . . . . . . . . . 48
5.7. Proxy Statement . . . . . . . . . . . . . . . 48
5.8. Indemnification and Insurance . . . . . . . . 49
5.9. Additional Agreements . . . . . . . . . . . . 50
5.10. Compliance with Antitrust Laws . . . . . . . . 52
5.11. Publicity . . . . . . . . . . . . . . . . . . 52
5.12. Notice of Actions and Proceedings . . . . . . 53
5.13. Notification of Certain Other Matters . . . . 53
5.14. Listing of Preferred Stock . . . . . . . . . . 54
5.15. Certain Obligations of Parent . . . . . . . . 54
VI. CONDITIONS . . . . . . . . . . . . . . . . . . . . . 55
6.1. Conditions . . . . . . . . . . . . . . . . . . 55
6.1.1. Stockholder Approval . . . . . . . . . 55
6.1.2. Purchase of Shares of Voting Stock . . 55
6.1.3. Injunctions; Illegality . . . . . . . 55
6.1.4. HSR Act . . . . . . . . . . . . . . . 56
6.2. Parent Obligations. . . . . . . . . . . . . . 56
VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 57
7.1. Termination . . . . . . . . . . . . . . . . . 57
7.2. Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . . 60
7.3. Waiver and Amendment . . . . . . . . . . . . . 60
7.4. Entire Agreement . . . . . . . . . . . . . . . 61
7.5. Applicable Law . . . . . . . . . . . . . . . . 61
7.6. Interpretation . . . . . . . . . . . . . . . . 61
7.7. Notices . . . . . . . . . . . . . . . . . . . 61
7.8. Counterparts . . . . . . . . . . . . . . . . . 63
7.9. Parties in Interest; Assignment . . . . . . . 63
7.10. Expenses; Termination Fee . . . . . . . . . . 64
7.11. Obligation of Parent . . . . . . . . . . . . . 64
7.12. Enforcement of the Agreement . . . . . . . . . 64
(ii)
<PAGE>
Page
----
7.13. Severability . . . . . . . . . . . . . . . . . 65
7.14. Consent to Jurisdiction and Service of Process 65
(iii)
<PAGE>
TABLE OF DEFINED TERMS
----------------------
(Not a part of the Agreement)
Term Section
---- -------
Agreement . . . . . . . . . . . . . . . . . . . . . . . Preamble
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . 4.19(b)
Benefits Agreements . . . . . . . . . . . . . . . . . . . 5.3(c)
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 4.19
Certificate of Merger . . . . . . . . . . . . . . . . . . . 2.1.2
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17(a)
Commission . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Company . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Competing Transaction . . . . . . . . . . . . . . . . . . . 7.1
Confidentiality Agreement . . . . . . . . . . . . . . . . . . 1.1
Constituent Corporations . . . . . . . . . . . . . . . . . 2.1.2
Continuing Directors . . . . . . . . . . . . . . . . . . . . 7.1
Controlled Group . . . . . . . . . . . . . . . . . . . . 4.19(e)
CSFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Current Premium . . . . . . . . . . . . . . . . . . . . . . . 5.8
D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . . 5.8
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Director Plan . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Domestic Taxes . . . . . . . . . . . . . . . . . . . . . 4.17(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . 2.1.2
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . 1.1
$4.00 Preferred Stock . . . . . . . . . . . . . . . . . . . . 1.1
401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Fully Diluted . . . . . . . . . . . . . . . . . . . . . . . . 1.1
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Governmental Entity . . . . . . . . . . . . . . . . . . . . . 3.6
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . 5.8
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1
Merger Price . . . . . . . . . . . . . . . . . . . . . . . 2.1.4
Minimum Share Condition . . . . . . . . . . . . . . . . . . . 1.1
$9.75 Preferred Stock . . . . . . . . . . . . . . . . . . . 2.1.4
Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Offer Documents . . . . . . . . . . . . . . . . . . . . . . . 3.3
Option Plans . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Options and Converts . . . . . . . . . . . . . . . . . . . . 1.1
Parent . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . 2.4
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19(e)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 2.1.4
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . 3.4
Purchaser . . . . . . . . . . . . . . . . . . . . . . . Preamble
(iv)
<PAGE>
Term Section
---- -------
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Rights Agreement . . . . . . . . . . . . . . . . . . . . . . 1.1
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . 3.3
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . 1.2
Securities Act . . . . . . . . . . . . . . . . . . . . . . . 4.5
SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Senior Executives . . . . . . . . . . . . . . . . . . . . . . 4.6
Significant Subsidiary . . . . . . . . . . . . . . . . . . 4.16
Stock Certificate . . . . . . . . . . . . . . . . . . . . . . 2.4
Stock Plans . . . . . . . . . . . . . . . . . . . . . . . 5.3(b)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
Surviving Corporation . . . . . . . . . . . . . . . . . . . 2.1.3
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17(b)
Tax Affiliates . . . . . . . . . . . . . . . . . . . . . 4.17(a)
Tax Return . . . . . . . . . . . . . . . . . . . . . . . 4.17(b)
Transmittal Letter . . . . . . . . . . . . . . . . . . . . . 2.4
$2.50 Preferred Stock . . . . . . . . . . . . . . . . . . . 2.1.4
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . 1.1
(v)
<PAGE>
AGREEMENT OF MERGER
-------------------
AGREEMENT OF MERGER, dated as of February 28, 1995 (the
"Agreement"), among YPF Sociedad Anonima, a sociedad anonima
organized under the laws of the Republic of Argentina ("Parent"),
YPF Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Maxus Energy Corporation,
a Delaware corporation (the "Company").
Parent, Purchaser and the Company hereby agree as follows:
I. THE TENDER OFFER
----------------
1.1. The Offer. Provided that this Agreement has not been
---------
terminated in accordance with Section 7.1 hereof and none of the
events set forth in Exhibit A hereto has occurred or exists,
Purchaser will, and Parent will cause Purchaser to, commence
(within the meaning of Rule 14d-2(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) as promptly as
practicable after the date hereof, but in any event not later
than March 7, 1995, a tender offer for all outstanding shares of
Common Stock, par value $1.00 per share ("Common Stock"), of the
Company at a price of $5.50 per share, net to the seller in cash.
(Such tender offer, as it may be amended from time to time
pursuant to this Agreement, is referred to herein as the
"Offer.") The Offer will be subject only to the conditions set
forth in Exhibit A, including without limitation the conditions
that (a) the Board of Directors of the Company, within the time
provided in the Rights Agreement, dated as of September 8, 1988,
between the Company and AmeriTrust Company National Association
<PAGE>
as rights agent (the "Rights Agreement") shall have taken the
steps necessary to redeem the preferred stock purchase rights
(the "Rights") issued pursuant to the Rights Agreement so that
the Rights issued pursuant to the Rights Agreement will not
become exercisable as a result of the consummation of the
transactions contemplated in this Agreement (such action, the
"Redemption") and (b) the number of shares of Common Stock being
validly tendered and not withdrawn prior to the expiration date
provided in the Offer which, when added to the shares of Common
Stock and $4.00 Cumulative Convertible Preferred Stock, par value
$1.00 per share, of the Company ("$4.00 Preferred Stock" and,
together with the Common Stock, "Voting Stock") beneficially
owned by Parent and Purchaser, represent not less than a majority
of the shares of Voting Stock outstanding on a Fully Diluted (as
hereinafter defined) basis (the "Minimum Share Condition"). For
purposes of this Agreement, "Fully Diluted" means the number of
shares of Voting Stock outstanding as of the close of business on
February 23, 1995, increased by the number of shares of Voting
Stock (i) issued between such date and the expiration date of the
Offer and (ii) issuable pursuant to the exercise of rights (other
than the Rights) to purchase Voting Stock or upon conversion or
exchange of other securities, including without limitation the
rights and securities listed on Schedule 1.1 (collectively, the
"Options and Converts"), reduced, however, by the number of
employee stock options and other rights to be cancelled as
contemplated by Section 2.6. Any such condition other than the
Minimum Share Condition may be waived by Purchaser in its sole
2
<PAGE>
discretion. Purchaser may, at any time, transfer or assign to
one or more corporations directly or indirectly wholly owned by
Parent the right to purchase all or any portion of the shares of
Common Stock tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its
obligations under the Offer or prejudice the rights of tendering
stockholders to receive payment for shares of Common Stock
validly tendered and accepted for payment. Purchaser will accept
for payment all shares of Common Stock validly tendered pursuant
to the Offer and not withdrawn as soon as legally permissible,
and pay for all such shares of Common Stock as promptly as
practicable thereafter, in each case upon the terms and subject
to the conditions of the Offer. Purchaser reserves the right to
increase the price per share of Common Stock payable in the Offer
or otherwise to amend the Offer; provided, however, that no such
amendment may be made that decreases the price per share of
Common Stock payable pursuant to the Offer, reduces the minimum
number of shares of Common Stock to be purchased in the Offer,
imposes additional conditions to the Offer or makes any other
change in the terms and conditions of the Offer that is
materially adverse to the holders of shares of Common Stock. If
the Agreement is terminated pursuant to Section 7.1 hereof,
(A) Parent and Purchaser will not, and will cause their
subsidiaries and affiliates controlled by them not to, acquire or
offer to acquire or request permission to acquire or offer to
acquire (either directly or pursuant to a waiver of this or any
other covenant) shares of Voting Stock otherwise than pursuant to
3
<PAGE>
the Offer or the Merger (as defined in Section 2.1.1 hereof) for
a period of not less than 24 months after termination of this
Agreement without the prior written approval of the Board of
Directors of the Company and (B) the provisions of the
confidentiality agreement previously entered into (the
"Confidentiality Agreement") between the Company and Parent (or
one of its affiliates) will continue to apply.
1.2. Company Action. The Company consents to the Offer.
--------------
As soon as practicable on the date of commencement of the Offer,
the Company will file with the Securities and Exchange Commission
(the "Commission") and mail to the holders of shares of Common
Stock a Solicitation/Recommendation Statement on Schedule 14D-9
pursuant to the Exchange Act (the "Schedule 14D-9"). The
Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company has at a meeting duly
called and held and at which a quorum was present and acting
throughout, by the requisite vote of all directors present,
(a) determined, based in part on the advice of CS First Boston
Corporation ("CSFB") described in the sixth sentence of this
Section 1.2, the Company's financial advisor in connection with
the Offer and the Merger, that the Offer and the Merger are in
the best interests of the Company and its stockholders,
(b) approved the Offer, this Agreement and the Merger, and
determined that such approval satisfies the requirements of
Section 203(a)(1) of the General Corporation Law of the State of
Delaware (the "DGCL") and, as a result, renders inapplicable to
the Offer, the Merger and this Agreement the other provisions of
4
<PAGE>
Section 203(a) of the DGCL, (c) subject to the fiduciary duties
of the Board of Directors, recommended acceptance of the Offer
and adoption of this Agreement by the holders of shares of Common
Stock, (d) taken all such action as may be required by law and
the Rights Agreement to redeem the Rights, and (e) taken all such
action as may be required by law and the Company's Restated
Certificate of Incorporation (the "Certificate") so that Sections
1 and 2 of Article Ninth of the Certificate are not applicable to
the transactions contemplated in this Agreement and, as a result,
the requirements of Sections 1 and 2 of Article Ninth of the
Certificate will not apply to the Offer, the Merger and the
transactions with Parent and Purchaser contemplated in this
Agreement. The Company will provide Purchaser's counsel a
reasonable opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the Commission. The Company
will provide Purchaser's counsel a copy of any written comments
or a summary of telephonic notification of any verbal comments
the Company or its counsel may receive from the Commission or its
Staff with respect to the Schedule 14D-9 promptly after receipt
of such comments and provide Purchaser's counsel with a copy of
any written responses and a summary of any such verbal responses.
The Company further represents and warrants that CSFB has advised
the Board of Directors of the Company that, in the opinion of
CSFB as of the date hereof, the consideration to be received by
the existing holders of shares of Common Stock pursuant to the
Offer and the Merger is fair to such stockholders from a
financial point of view. The Company will, and the Board of
5
<PAGE>
Directors of the Company has resolved to, take all actions
reasonably requested by Purchaser necessary to exempt the Offer
and the Merger from the provisions of any applicable takeover,
business combination or control share acquisition law or
regulation adopted by any State of the United States of America.
1.3. Stockholder Lists. The Company will promptly furnish
-----------------
Purchaser a list of the holders of Common Stock and mailing
labels containing the names and addresses of all record holders
relating to Common Stock and lists of securities positions of
shares of Common Stock held in stock depositories, each as of a
recent date, and will promptly furnish Purchaser with such
additional information, including updated lists of stockholders
of the Company, mailing labels and lists of securities positions,
and such other assistance as Purchaser or its agents may
reasonably request in connection with the Offer. Subject to the
requirements of law, and except for such steps as are necessary
to disseminate the Offer Documents (as defined in Section 3.3
hereof), Parent and Purchaser will hold in confidence the
information contained in any of such labels and lists and the
additional information referred to in the preceding sentence,
will use such information only in connection with the Offer and,
if this Agreement is terminated, will upon request deliver to the
Company all such written information and any copies or extracts
therefrom in its possession or under its control.
1.4. Board of Directors of the Company. Upon Purchaser's
---------------------------------
acquisition of a majority of the outstanding shares of Voting
Stock pursuant to the Offer, and from time to time thereafter so
6
<PAGE>
long as Parent and/or any of its direct or indirect wholly owned
subsidiaries (including Purchaser) owns a majority of the
outstanding shares of Voting Stock, Parent will be entitled,
subject to compliance with applicable law, the Certificate and
the provisions of the next sentence, to designate at its option
up to that number of directors, rounded up to the nearest whole
number, of the Company's Board of Directors as will make the
percentage of the Company's directors designated by Parent equal
to the percentage of outstanding shares of Voting Stock held by
Parent and any of its direct or indirect wholly owned
subsidiaries (including Purchaser), including shares of Common
Stock accepted for payment pursuant to the Offer. The Company
will, upon the request of Parent, promptly increase the size of
its Board of Directors and/or use its reasonable best efforts to
secure the resignation of such number of directors as is
necessary to enable Parent's designees to be elected to the
Company's Board of Directors and will use its reasonable best
efforts to cause Parent's designees to be so elected, subject in
all cases to Section 14(f) of the Exchange Act, it being
understood that the Company will have no obligation to comply
with Section 14(f) of the Exchange Act until after the Offer is
completed in accordance with the terms hereof and that the
Company agrees to comply with such Section of the Exchange Act as
promptly as practicable thereafter, provided that, prior to the
Effective Time (as defined in Section 2.1.2 hereof), the Company
will use its reasonable best efforts to assure that the Company's
Board of Directors always has (at its election) at least three
7
<PAGE>
members who are directors of the Company as of the date hereof.
At such times, the Company will use its reasonable best efforts,
subject to any limitations imposed by applicable laws or rules of
the New York Stock Exchange, to cause persons designated by
Parent to constitute the same percentage as such persons
represent on the Company's Board of Directors of (a) each
committee of the Board of Directors of the Company, (b) each
board of directors or board of management of each subsidiary of
the Company, and (c) each committee of each such board.
II. THE MERGER
----------
2.1.1. Merger. Subject to the terms and conditions
------
hereof, (a) Purchaser will be merged with and into the Company
and the separate corporate existence of Purchaser will thereupon
cease (the "Merger") in accordance with the applicable provisions
of the DGCL and (b) each of the Company and Parent will use its
reasonable best efforts to cause the Merger to be consummated as
soon as practicable following the expiration of the Offer.
2.1.2. Effective Time. As soon as practicable
--------------
following fulfillment or waiver of the conditions specified in
Article VI hereof, and provided that this Agreement has not been
terminated or abandoned pursuant to Section 7.1 hereof, the
Company and Purchaser (the "Constituent Corporations") will cause
a Certificate of Merger (the "Certificate of Merger") to be filed
with the Secretary of State of the State of Delaware as provided
in Section 251 of the DGCL. The Merger will become effective on
the date on which the Certificate of Merger has been filed with
8
<PAGE>
the Secretary of State of the State of Delaware (the "Effective
Time").
2.1.3. Effect of Merger. The Company will be the
----------------
surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and will continue to
be governed by the laws of the State of Delaware, and the
separate corporate existence of the Company and all of its
rights, privileges, powers and franchises of a public as well as
of a private nature, and being subject to all of the
restrictions, disabilities and duties as a corporation organized
under the DGCL, will continue unaffected by the Merger. The
Merger will have the effects specified in the DGCL. The
Certificate and the By-Laws of the Company in effect at the
Effective Time will be the Certificate of Incorporation and
By-Laws of the Surviving Corporation until duly amended in
accordance with their terms and the DGCL. The directors of
Purchaser immediately prior to the Effective Time will be the
directors of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time will be the
officers of the Surviving Corporation, from and after the
Effective Time, until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation
or removal in accordance with the terms of Surviving
Corporation's Certificate of Incorporation and By-Laws and the
DGCL.
2.1.4. Conversion of Shares of Common Stock. At the
------------------------------------
Effective Time, (a) each then-outstanding share of Common Stock
9
<PAGE>
not owned by Parent, Purchaser or any other direct or indirect
subsidiary of Parent (other than those shares of Common Stock
held in the treasury of the Company and shares of Common Stock
held by stockholders who perfect their appraisal rights under the
DGCL) will be cancelled and retired and be converted into a right
to receive in cash an amount per share of Common Stock equal to
the highest price per share paid for a share of such stock by
Purchaser pursuant to the Offer (the "Merger Price"), without
interest thereon, (b) each then-outstanding share of Common Stock
owned by Parent, Purchaser or any other direct or indirect
subsidiary of Parent will be cancelled and retired, and no
payment will be made with respect thereto, (c) each share of
Common Stock issued and held in the Company's treasury will be
cancelled and retired, and no payment will be made with respect
thereto, (d) each outstanding share of common stock of Purchaser
will, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one share of
common stock of the Surviving Corporation, and (e) each
outstanding share of $4.00 Preferred Stock, $9.75 Cumulative
Convertible Preferred Stock, par value $1.00 per share ("$9.75
Preferred Stock"), and $2.50 Cumulative Preferred Stock, par
value $1.00 per share ("$2.50 Preferred Stock"), of the Company
(collectively, the "Preferred Stock") will remain outstanding and
have, as to the Surviving Corporation, the identical powers,
preferences, rights, qualifications, limitations and restrictions
as such shares of Preferred Stock presently have, except as
agreed to by the holder of $9.75 Preferred Stock.
10
<PAGE>
2.2. Stockholders' Meeting of the Company. The Company
------------------------------------
will take all action necessary in accordance with applicable law
and the Certificate and its By-Laws to convene a meeting of its
stockholders as promptly as reasonably practicable following the
date hereof to consider and vote upon the adoption of this
Agreement, if such stockholder approval is required by applicable
law; provided, however, that nothing herein will affect the right
of Purchaser to take action by written consent in lieu of a
meeting or otherwise to the extent permitted by applicable law.
At any such meeting, all shares of Voting Stock then owned by
Parent, Purchaser or any other direct or indirect subsidiary of
Parent will be voted in favor of adoption of this Agreement.
Subject to its fiduciary duties under applicable law, the Board
of Directors of the Company will recommend that the Company's
stockholders approve adoption of this Agreement if such
stockholder approval is required.
2.3. Consummation of the Merger. The closing of the Merger
--------------------------
(the "Closing") will take place (a) at the principal executive
offices of the Company as promptly as practicable after the later
of (i) the business day of (and immediately following) the
receipt of approval of adoption of this Agreement by the
Company's stockholders if such approval is required, or as soon
as practicable after completion of the Offer if such approval by
stockholders is not required, and (ii) the day on which the last
of the conditions set forth in Article VI hereof is satisfied or
duly waived or (b) at such other time and place and on such other
date as Purchaser and the Company may agree.
11
<PAGE>
2.4. Payment for Shares of Common Stock. Purchaser will
----------------------------------
authorize the depositary for the Offer (or one or more commercial
banks organized under the laws of the United States or any state
thereof with capital, surplus and undivided profits of at least
$100,000,000) to act as Paying Agent hereunder with respect to
the Merger (the "Paying Agent"). Each holder (other than Parent,
Purchaser or any subsidiary of Parent) of a certificate or
certificates which prior to the Effective Time represented shares
of Common Stock will be entitled to receive, upon surrender to
the Paying Agent of such certificate or certificates for
cancellation and subject to any required withholding of taxes,
the aggregate amount of cash into which the shares of Common
Stock previously represented by such certificate or certificates
shall have been converted in the Merger. On or before the
Effective Time, Purchaser will make available to the Paying Agent
sufficient funds to make all payments pursuant to the preceding
sentence. Pending payment of such funds to the holders of shares
of Common Stock, such funds shall be held and invested by the
Paying Agent as Parent directs. Any net profit resulting from,
or interest or income produced by, such investments will be
payable to the Surviving Corporation or Parent, as Parent
directs. Parent will promptly replace any monies lost through
any investment made pursuant to this Section 2.4. Until
surrendered to the Paying Agent, each certificate which
immediately prior to the Effective Time represented outstanding
shares of Common Stock (other than shares of Common Stock owned
by Parent, Purchaser or any other direct or indirect subsidiary
12
<PAGE>
of Parent and shares of Common Stock held by stockholders who
perfect their appraisal rights under the DGCL) (a "Stock
Certificate") will be deemed for all corporate purposes to
evidence only the right to receive upon such surrender the
aggregate amount of cash into which the shares of Common Stock
represented thereby will have been converted, subject to any
required withholding of taxes. No interest will be paid on the
cash payable upon the surrender of the Stock Certificate or Stock
Certificates. Any cash delivered or made available to the Paying
Agent pursuant to this Section 2.4 and not exchanged for Stock
Certificates within three months after the Effective Time will be
returned by the Paying Agent to the Surviving Corporation which
thereafter will act as Paying Agent, subject to the rights of
holders of unsurrendered Stock Certificates under this Article
II, and any former stockholders of the Company who have not
theretofore complied with the instructions for exchanging their
Stock Certificates will thereafter look only to the Surviving
Corporation for payment of their claim for the consideration set
forth in Section 2.1, without any interest thereon, but will have
no greater rights against the Surviving Corporation (or either
Constituent Corporation) than may be accorded to general
creditors thereof under applicable law. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto will be
liable to a holder of shares of Common Stock for any cash or
interest thereon delivered to a public official pursuant to
applicable abandoned property laws. Promptly after the Effective
Time, the Paying Agent will mail to each record holder of Stock
13
<PAGE>
Certificates a form of letter of transmittal (the "Transmittal
Letter") and instructions for use thereof in surrendering such
Stock Certificates which will specify that delivery will be
effected and risk of loss and title to the Stock Certificates
will pass to the Paying Agent only upon proper delivery of the
Stock Certificates to the Paying Agent in accordance with the
terms of delivery specified in the Transmittal Letter and
instructions for use thereof in surrendering such Stock
Certificates and receiving the applicable Merger Price for each
share of Common Stock previously represented by such Stock
Certificates. From and after the Effective Time, holders of
Stock Certificates immediately prior to the Merger will have no
right to vote or to receive any dividends or other distributions
with respect to any shares of Common Stock which were theretofore
represented by such Stock Certificates, other than any dividends
or other distributions payable to holders of record as of a date
prior to the Effective Time, and will have no other rights other
than as provided herein or by law.
2.5. Closing of the Company's Transfer Books. At the
---------------------------------------
Effective Time, the stock transfer books of the Company will be
closed with respect to Common Stock and no transfer of shares of
Common Stock will thereafter be made. If, after the Effective
Time, Stock Certificates are presented to the Surviving
Corporation, they will be cancelled, retired and exchanged for
cash as provided in Section 2.4 hereof.
2.6. The Company Stock Options and Related Matters. The
---------------------------------------------
Company will cooperate with Parent and Purchaser in an effort to
14
<PAGE>
obtain the surrender of all options to purchase shares of Common
Stock and other rights (collectively, "Options") granted pursuant
to the 1992 Director Stock Option Plan, the 1992 Long-Term
Incentive Plan, the 1986 Long-Term Incentive Plan, the 1980
Long-Term Incentive Plan or any other plans in effect as of the
date hereof (collectively, the "Option Plans") in accordance with
the provisions of Schedule 2.6. Effective immediately prior to
the Effective Time, the restrictions on all shares of restricted
Common Stock identified in Schedule 2.6 will lapse without
further action.
III. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
------------------------------------------------------
Parent and Purchaser hereby jointly and severally represent
and warrant to the Company that:
3.1. Corporate Organization. Each of Parent and Purchaser
----------------------
is a corporation duly organized, validly existing and in good
standing under the laws of its state or other jurisdiction of
incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and assets and to carry
on its business as it is now being conducted, except where the
failure to have such power or authority would not individually or
in the aggregate have a material adverse effect on the financial
condition, properties, business or results of operations of
Parent and Purchaser, taken as a whole. Parent beneficially owns
all of the outstanding capital stock of Purchaser.
3.2. Authority. Each of Parent and Purchaser has the
---------
requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
15
<PAGE>
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly approved by the respective Boards of Directors of Parent and
Purchaser and by Parent as the sole stockholder of Purchaser, and
no other corporate proceedings on the part of Parent or Purchaser
are necessary to consummate the transactions so contemplated.
This Agreement has been duly executed and delivered by each of
Parent and Purchaser and constitutes a valid and binding
obligation of each of Parent and Purchaser, enforceable against
Parent and Purchaser in accordance with its terms.
3.3. Offer Documents. The documents (the "Offer
---------------
Documents") pursuant to which the Offer will be made, including
the Schedule 14D-1 filed by Purchaser pursuant to the Exchange
Act (the "Schedule 14D-1"), will comply as to form in all
material respects with the provisions of the Exchange Act and the
rules and regulations thereunder. The information contained in
the Offer Documents (other than information supplied in writing
by the Company expressly for inclusion in the Offer Documents)
will not, at the respective times the Schedule 14D-1 or any
amendments or supplements thereto are filed with the Commission,
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 made therein, in light of the
circumstances under which they were made, not misleading.
Purchaser will promptly correct any statements in the Schedule
14D-1 and the Offer Documents that have become false or
misleading and take all steps necessary to cause such Schedule
16
<PAGE>
14D-1 as so corrected to be filed with the Commission and such
Offer Documents as so corrected to be disseminated to holders of
shares of Common Stock, in each case as and to the extent
required by applicable law.
3.4. Proxy Statement. None of the information to be
---------------
supplied by Parent or Purchaser in writing expressly for
inclusion in a proxy or information statement of the Company
required to be mailed to the Company's stockholders in connection
with the adoption of this Agreement (the "Proxy Statement"), or
in any amendments or supplements thereto will, at the time of (a)
the first mailing thereof and (b) the meeting, if any, of
stockholders to be held in connection with the adoption of this
Agreement, 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 were made, not misleading.
3.5. Fees. In no event, including without limitation
----
termination of this Agreement and abandonment of the Merger
pursuant to Section 7.1 hereof, will the Company or any of its
subsidiaries, prior to the Merger, be obligated to pay any fee or
commission to any financial advisor, broker, finder or
intermediary in connection with the transactions contemplated
hereby pursuant to or as a consequence of any agreement or
commitment of Parent, Purchaser or any of their respective
affiliates.
3.6. Consents and Approvals; No Violation. Except as set
------------------------------------
forth in Schedule 3.6, neither the execution and delivery of this
17
<PAGE>
Agreement by Parent and Purchaser nor the consummation by Parent
and Purchaser of the transactions contemplated hereby will (a)
conflict with or result in any breach of any provision of their
respective certificates of incorporation or by-laws (or
comparable governing instruments), (b) violate, conflict with,
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in the creation of any lien or other encumbrance upon any
of the properties or assets of Parent or any of its subsidiaries
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease
agreement or other instrument or obligation to which Parent or
any such subsidiary is a party or to which they or any of their
respective properties or assets are subject, except for such
violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens or other encumbrances, which,
individually or in the aggregate, will not have a material
adverse effect on the business, financial condition or results of
operations of Parent and its subsidiaries, taken as a whole, or
(c) require any consent, approval, authorization or permit of or
from, or filing with or notification to, any court, governmental
authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity"), except
(i) pursuant to the Exchange Act, (ii) filing certificates of
merger pursuant to the DGCL and the laws of any other state,
(iii) filings required under the securities or blue sky laws of
18
<PAGE>
the various states, (iv) filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
(v) consents, approvals, authorizations, permits, filings or
notifications under laws and regulations of various foreign
jurisdictions, other than Argentina and its provinces, or
(vi) consents, approvals, authorizations, permits, filings or
notifications which if not obtained or made will not,
individually or in the aggregate, have a material adverse effect
on the business, financial condition or results of operations of
Parent and its subsidiaries, taken as a whole.
3.7. Financing. Prior to the execution of this Agreement
---------
by the parties hereto, Parent executed a commitment letter with
Chase Manhattan Bank, N.A. (the "Commitment"), a copy of which
has been previously furnished to the Company, providing for up to
$800 million of acquisition financing. As of the date hereof,
the executive officers of Parent have no reason to believe that
any condition to the financing contemplated by the Commitment
will not be satisfied in accordance with the terms of the
Commitment. Parent and Purchaser hereby covenant that they will
use their respective reasonable best efforts to obtain the
financing contemplated by the Commitment.
3.8. Operations of the Company Following the Merger. Based
----------------------------------------------
upon, among other things, Parent's review of the Company's
financial condition and operations, the Company's business plan
and the representations made by the Company in this Agreement,
the financial condition of Parent and its subsidiaries and
Parent's and Purchaser's present plans with respect to the
19
<PAGE>
Company and its subsidiaries following the Merger, Parent has no
reason to believe that, following the consummation of the Merger
and the completion of the financings contemplated by the
Commitment, the Company will not be able to meet its obligations
as they come due, including solely for purposes of this
representation preferred stock dividend and mandatory redemption
payments.
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to each of Parent
and Purchaser that:
4.1. Corporate Organization. The Company is a corporation
----------------------
duly organized, validly existing and in good standing under the
laws of its state of incorporation and is in good standing as a
foreign corporation in each jurisdiction where failure to so
qualify or be in good standing is reasonably likely to have a
material adverse effect on the financial condition, properties,
business or results of operation of the Company and its
subsidiaries, taken as a whole. The Company has the requisite
corporate power to own, lease and operate its properties and
assets and to carry on its businesses as they are now being
conducted. The Company has furnished Parent true and correct
copies of the certificate of incorporation and by-laws (or other
governing instruments), as amended to the date hereof, of the
Company and each of its subsidiaries (except the inactive
subsidiaries identified as such on Schedule 4.1). The Company's
and each subsidiary's certificate of incorporation and by-laws
20
<PAGE>
(or other governing instruments) as so delivered are in full
force and effect.
4.2. Capitalization. As of the date hereof, the authorized
--------------
capital stock of the Company consists of (i) 300,000,000 shares
of Common Stock and (ii) 100,000,000 shares of Preferred Stock.
As of the close of business on February 23, 1995, (a) 135,497,705
shares of Common Stock were validly issued and outstanding, fully
paid and nonassessable and not subject to preemptive rights,
(b) 4,358,658 shares of $4.00 Preferred Stock were validly issued
and outstanding, fully paid and nonassessable, (c) 1,250,000
shares of $9.75 Preferred Stock were validly issued and
outstanding, fully paid and nonassessable, and (d) 3,500,000
shares of $2.50 Preferred Stock were validly issued and
outstanding, fully paid and nonassessable. Since such date, the
Company has not issued any additional shares of capital stock
other than pursuant to (i) the exercise or conversion of Options
and Converts, (ii) the Company's Employee Shareholding and
Investment Plan (the "401(k) Plan"), or (iii) the Company's
Director Stock Compensation Plan (the "Director Plan"). Except
for the Options and Converts, the Rights, shares issued pursuant
to the Director Plan and as otherwise set forth in this
Section 4.2, there are not now, and at the Effective Time there
will not be, any shares of capital stock of the Company
authorized, issued or outstanding and there are not now, and at
the Effective Time there will not be, any outstanding
subscriptions, options, warrants, rights, convertible securities
or any other agreements or commitments of any character relating
21
<PAGE>
to the issued or unissued capital stock or other securities of
the Company obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of
capital stock of the Company or obligating the Company to grant,
extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment.
Except as set forth in this Section 4.2, on Schedule 4.2 or
otherwise in this Agreement, and except for provisions in
employee plans relating to the pass-through of voting rights,
there are not now, and at the Effective Time there will not be,
any voting trusts or other agreements or understandings to which
the Company or any subsidiary of the Company is a party or is
bound with respect to the voting of the capital stock of the
Company.
4.3. Authority. The Company has the requisite corporate
---------
power and authority to enter into this Agreement and, except for
any required adoption of this Agreement by the holders of the
Voting Stock, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are
necessary to enter into this Agreement or to consummate the
transactions so contemplated, subject only, to the extent
required with respect to the consummation of the Merger, to
adoption of this Agreement, if necessary, by the holders of
Voting Stock. This Agreement has been duly executed and
22
<PAGE>
delivered by, and constitutes a valid and binding obligation of,
the Company, enforceable against the Company in accordance with
its terms.
4.4. Consents and Approvals; No Violation. Neither the
------------------------------------
execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated
hereby will (a) conflict with or result in any breach or
violation of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation
of any lien or other encumbrance upon any of the properties or
assets of the Company or any of its subsidiaries under, any of
the terms, conditions or provisions of (i) their respective
certificates of incorporation or by-laws or (ii) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any such
subsidiary is a party or to which they or any of their respective
properties or assets are subject, except for such violations,
conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other encumbrances which are set forth on
Schedule 4.4 or which, individually or in the aggregate, will not
have a material adverse effect on the business, financial
condition or results of operations of the Company and its
subsidiaries, taken as a whole, or (b) require any consent,
approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) pursuant to
23
<PAGE>
the Exchange Act, (ii) filing certificates of merger pursuant to
the DGCL and the laws of any other state, (iii) filings required
under the securities or blue sky laws of the various states, (iv)
filings under the HSR Act, (v) consents, approvals,
authorizations, permits, filings or notifications under laws and
regulations of various foreign jurisdictions listed or described
on Schedule 4.4, and (vi) consents, approvals, authorizations,
permits, filings or notifications which if not obtained or made
will not, individually or in the aggregate, have a material
adverse effect on the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
4.5. Commission Filings. The Company has heretofore filed
------------------
all statements, forms, reports and other documents with the
Commission required to be filed pursuant to the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act
since January 1, 1993, and has made available to Parent copies of
all such statements, forms, reports and other documents,
including without limitation each registration statement, Current
Report on Form 8-K, proxy or information statement, Annual Report
on Form 10-K and Quarterly Report on Form 10-Q filed during such
period (in the case of each such report, including all exhibits
thereto) (the "SEC Documents"). The SEC Documents, as of their
respective filing dates, complied as to form in all material
respects with all applicable requirements of the Securities Act
and the Exchange Act and did not (as of their respective filing
dates) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
24
<PAGE>
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The
audited and unaudited consolidated financial statements, together
with the notes thereto, of the Company included (or incorporated
by reference) in the SEC Documents present fairly, in all
material respects, the financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the results
of their operations and changes in financial position for the
periods then ended in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis
(except as stated in such financial statements), subject, in the
case of the unaudited financial statements, to normal year-end
audit adjustments.
4.6. Absence of Certain Changes. Except as disclosed in
--------------------------
the SEC Documents, as disclosed to Parent by the Company in a
writing which makes express reference to this Section 4.6 or as
set forth on Schedule 4.6, since December 31, 1994, the Company
and its subsidiaries have conducted their respective businesses
only in the ordinary course, and there has not been (a) any event
or change having or that is reasonably expected to have a
material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken
as a whole, (b) in the case of the Company, any declaration,
setting aside or payment of any dividend or other distribution
with respect to its capital stock, other than the regular cash
dividends on shares of $4.00 Preferred Stock, $9.75 Preferred
Stock and $2.50 Preferred Stock, or relating to the redemption of
25
<PAGE>
the Rights as herein contemplated, (c) in the case of the
Company, any change by the Company in accounting principles used
for purposes of financial reporting, (d) any entry into any
agreement or understanding, whether written or (if enforceable)
oral, between the Company or any of its subsidiaries on the one
hand, and any of their respective employees at Pay Grade 12 or
above ("Senior Executives"), on the other hand, providing for the
employment of any such Senior Executive or any severance or
termination benefits payable or to become payable by the Company
or any subsidiary to any Senior Executive, or (e) except as
permitted by this Agreement, any increase (including any increase
effective in the future) in (i) the compensation, severance or
termination benefits payable or to become payable by the Company
or any subsidiary to any Senior Executive (or any increase in
benefits under any change in control severance arrangement
applicable to employees of the Company and its subsidiaries,
generally) or (ii) any bonus, insurance, pension or other
employee benefits (including without limitation the granting of
stock options, stock appreciation rights or restricted stock
awards) made to, for or with any Senior Executive, except for
normal increases associated with regular annual performance
evaluations in the ordinary course of business or normal accruals
of benefits under the terms of any such plan or arrangement.
4.7. Litigation. Except as disclosed in SEC Documents
----------
filed prior to the date of this Agreement or on Schedule 4.7,
there is no suit, action, investigation or proceeding pending,
or, to the knowledge of the executive officers of the Company,
26
<PAGE>
threatened against or affecting the Company or any subsidiary of
the Company which is reasonably expected to have a material
adverse effect on the Company and its subsidiaries taken as a
whole, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding
against the Company having, or which, insofar as reasonably can
be foreseen, in the future would have, any such effect.
4.8. Compliance with Applicable Laws. The Company and each
-------------------------------
of its subsidiaries hold, and at all relevant times have held,
all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of its business substantially as
it is currently conducted. Except as required to be disclosed in
the SEC Documents filed prior to the date of this Agreement or as
to matters for which reserves have been established and which
reserves have been disclosed to Purchaser, to the knowledge of
the executive officers of the Company, the businesses of the
Company and its subsidiaries are not presently being conducted,
and to the knowledge of the executive officers of the Company,
have not previously been conducted, in violation of any law,
ordinance or regulation of any Governmental Entity, except for
possible violations which individually or in the aggregate do
not, and, insofar as reasonably can be foreseen, in the future
will not, have a material adverse effect on the Company and its
subsidiaries taken as a whole. Except as described in SEC
Documents filed prior to the date of this Agreement, no
investigation or review by any Governmental Entity concerning any
such possible violations by the Company or any of its
27
<PAGE>
subsidiaries is pending or, to the knowledge of the executive
officers of the Company, threatened, nor has any Governmental
Entity indicated an intention to conduct the same in each case
other than those the outcome of which will not have a material
adverse effect on the Company and its subsidiaries taken as a
whole.
4.9. Fees. Except as will be set forth in the Schedule
----
14D-9, neither the Company nor any of its subsidiaries has paid
or become obligated to pay any fee or commission to any financial
advisor, broker, finder or intermediary in connection with the
transactions contemplated hereby. The Company has previously
furnished Parent a copy of its engagement letter with CSFB.
4.10. Offer Documents. None of the information supplied by
---------------
the Company or its subsidiaries in writing expressly for
inclusion in the Offer Documents or in any amendments thereto or
supplements thereto will, at the time supplied or upon the
expiration of the Offer, 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 were
made, not misleading.
4.11. Schedule 14D-9. The Schedule 14D-9 will comply as to
--------------
form in all material respects with the applicable requirements of
the Exchange Act and the rules and regulations thereunder and
will not, at the respective times the Schedule 14D-9 or any
amendments thereto or supplements thereto are filed with the
Commission, contain any untrue statement of a material fact or
28
<PAGE>
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 were made, not misleading.
The Company will promptly correct any statements in the Schedule
14D-9 that have become materially false or misleading and take
all steps necessary to cause such Schedule 14D-9 as so corrected
to be filed with the Commission and to be disseminated to holders
of shares of Voting Stock, in each case as and to the extent
required by applicable law.
4.12. Proxy Statement. The Proxy Statement and all
---------------
amendments and supplements thereto will comply as to form in all
material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder and will
not, at the time of (a) the first mailing thereof and (b) the
meeting, if any, of stockholders to be held in connection with
the Merger, together with any amendments and supplements thereto,
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 were made, not misleading, except
that no representation is made by the Company with respect to
information supplied in writing by Parent or any affiliate of
Parent expressly for inclusion in the Proxy Statement.
4.13. Rights. The Company has, or prior to the
------
commencement of the Offer shall have, taken the necessary steps
to redeem prior to the close of business on the 20th calendar day
after commencement of the Offer all of the outstanding Rights
29
<PAGE>
issued pursuant to the Rights Agreement in accordance with the
terms of the Rights Agreement and applicable law.
4.14. Certain Actions. The actions referred to in Section
---------------
1.2 have been duly taken by the Board of Directors of the Company
prior to the date hereof.
4.15. Subsidiaries. (a) Each subsidiary of the Company is
------------
a corporation or other legal entity duly incorporated or
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has all
requisite corporate or similar power and authority to own its
properties and assets and to carry on its business as now
conducted except where the failure to have such power and
authority would not have a material adverse effect on the
financial condition, properties, business or results of
operations of the Company and its subsidiaries taken as a whole.
Each subsidiary of the Company is duly qualified to do business
as a foreign corporation or other legal entity and is in good
standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such
qualification necessary, except for those jurisdictions where
failure to be so qualified or in good standing would not,
individually or in the aggregate, have a material adverse effect
on the financial condition, properties, business or results of
operations of the Company and its subsidiaries taken as a whole.
Schedule 4.15(a) sets forth the name, jurisdiction of
incorporation or organization, capitalization and equity holders
of each subsidiary of the Company. Except as disclosed in
30
<PAGE>
Schedule 4.15(a) and except for insignificant equity or other
interests received in the ordinary course of business of the
Company, the Company does not own, directly or indirectly, or
have voting rights with respect to, any capital stock or other
equity securities of any corporation or have any direct or
indirect equity or ownership interest in any business.
(b) Except as disclosed on Schedule 4.15(a) or
4.15(b), or as may be disclosed on the certificates representing
the capital stock of the subsidiaries of the Company or provided
pursuant to the terms of partnership agreements, joint venture
agreements or other constituent documentation, copies of which
have been provided or made available to representatives of
Parent, and except as may be required under the securities laws
of any jurisdiction, (i) all of the outstanding capital stock of,
or other ownership interests in, each subsidiary of the Company,
has been validly issued, is (in the case of capital stock) fully
paid and nonassessable and (in the case of partnership interests)
not subject to current or future capital calls, and is owned by
the Company, directly or indirectly, free and clear of any lien
and free of any other charge, claim, encumbrance, limitation or
restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership
interests) and (ii) there are not now, and at the Effective Time
there will not be, any outstanding subscriptions, options,
warrants, calls, rights, convertible securities or other
agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of any of the
31
<PAGE>
Company's subsidiaries, or otherwise obligating the Company or
any such subsidiary to issue, transfer or sell any such
securities or to make any payments in respect of any of its
securities or its equity.
4.16. No Default. Neither the Company nor any of its
----------
subsidiaries which would be a "significant subsidiary" within the
meaning of Regulation S-X (a "Significant Subsidiary") is in
default or violation (and no event has occurred which with notice
or the lapse of time or both would constitute a default or
violation) of any term, condition or provision of (a) the
Certificate or the By-Laws of the Company, (b) the organizational
documentation of any Significant Subsidiary, or (c) except as set
forth in Schedule 4.16, any note, bond, mortgage, indenture,
license, contract, franchise, permit, lease, agreement or other
instrument or obligation to which the Company or any of its
Significant Subsidiaries is a party or by which they or any of
their properties or assets may be bound, except for defaults or
violations which, in the case of clauses (b) or (c) of this
sentence, will not, individually or in the aggregate, have a
material adverse effect on the financial condition, properties,
business or results of operations of the Company and its
Significant Subsidiaries taken as a whole.
4.17. Taxes. (a) Except as set forth in Schedule 4.17, the
-----
Company has filed all federal, state, local and foreign tax
returns required to be filed by itself and by each of its and any
member of its consolidated, combined or similar group (each such
member a "Tax Affiliate") and by any of the Company's
32
<PAGE>
subsidiaries and has paid or caused to be paid, or has made
adequate provision or set up adequate accruals or reserves which,
in the aggregate, are adequate under GAAP in respect of,
liabilities for taxes required to be paid in respect of the
periods for which returns are due, and has established (or will
establish at least quarterly) similar accruals or reserves for
the payment of all taxes payable in respect of periods subsequent
to the last of such periods required to be so accrued or
reserved, as the case may be. Except as set forth in Schedule
4.17, neither the Company nor any of its Tax Affiliates or
subsidiaries has entered into any written agreement or other
document waiving or extending the time to assess any taxes due to
any United States jurisdiction ("Domestic Taxes") nor, to the
knowledge of the executive officers of the Company, has any such
entity entered into any such agreement or other document in
respect of any tax due to any jurisdiction outside the United
States. Except as set forth in Schedule 4.17, the tax returns of
the Company, its Tax Affiliates and subsidiaries of the Company
relating to Domestic Taxes are not under active audit by the
Internal Revenue Service or any comparable state or local agency.
The open taxable years of the Company, its Tax Affiliates and its
subsidiaries relating to United States federal income taxes are
set forth in Schedule 4.17. At no time within the last five
years, and to the knowledge of the executive officers of the
Company, (i) at no time in the preceding eight years, have the
Company, any of its Tax Affiliates or any of its subsidiaries
ever filed a consent under Section 341(f) of the Internal Revenue
33
<PAGE>
Code of 1986, as amended (the "Code"), concerning collapsible
corporations, (ii) except as set forth on Schedule 4.17, none of
the Company, any of its Tax Affiliates or any of its subsidiaries
has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances obligates
it to make any payments that will not be deductible under
Sections 280G or 162(m) of the Code; provided, however, that the
foregoing representation will not apply to any payments made as a
result of this Agreement or the transactions contemplated hereby,
(iii) the Company is not currently a United States real property
holding corporation within the meaning of Section 897(c)(2) of
the Code, (iv) each of the Company, each of its Tax Affiliates
and each of its subsidiaries has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a
material understatement of federal income tax within the meaning
of Section 6662 of the Code, (v) none of the Company, any of its
Tax Affiliates or any of its subsidiaries is a party to any tax
allocation or sharing agreement other than as set forth in
Schedule 4.17, and (vi) none of the Company, any of its Tax
Affiliates or any of its subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income tax return
(other than a group the common parent of which was the Company)
for any open taxable year or (B) has any liability for the taxes
of any person or entity (other than any of the Company and any of
its Affiliates and any of its subsidiaries) under Treas. Reg.
Sec. 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract, or otherwise
34
<PAGE>
except as set forth in Schedule 4.17 or as otherwise disclosed to
Purchaser.
(b) For the purposes of this Section, (i) the term
"tax" means income, gross receipts, payroll, employment, excise,
severance, stamp, windfall profits, environmental (including
taxes under Section 59A of the Code), customs duties, capital
stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any
kind, levies, penalties, or interest imposed by any United States
federal, state, local and foreign or other taxing authority on
the Company or any of its Tax Affiliates, and (ii) the term "tax
return" includes any return, declaration, claim for refund or
information return relating to taxes, including without
limitation any schedule or attachment thereto and including any
amendment thereof.
4.18. Insurance. Schedule 4.18 lists all insurance
---------
policies carried by the Company or any of its subsidiaries
insuring occurrences or claims on or made on the date hereof.
There is no default by the Company or any subsidiary with respect
to any provision contained in any such insurance policy which
would permit the denial of coverage or cancellation of coverage
thereunder, except for defaults or failures which, individually
or in the aggregate, would not have a material adverse effect on
the Company and its subsidiaries taken as a whole.
35
<PAGE>
4.19. Benefit Plans. (a) Schedule 4.19(a) lists (i) the
-------------
material "employee benefit plans" (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), which the Company or any of its
subsidiaries maintains or sponsors or with respect to which the
Company or any of its subsidiaries has any material liability
(actual or contingent, primary or secondary), and (ii) all other
(A) employee benefit plans, programs or arrangements, (B) stock
purchase, stock option, severance, bonus, incentive and deferred
compensation plans, (C) written employment contracts, and (D)
change-in-control agreements which the Company or any of its
subsidiaries maintains, sponsors or is a party to or with respect
to which the Company or any of its subsidiaries has any material
liability. (The plans, programs, arrangements, contracts and
agreements referred to in the preceding sentence are collectively
referred to herein as the "Benefit Plans.")
(b) Except as set forth on Schedule 4.19(b), (i) the
reserves reflected in the balance sheet contained in the audited
financial statements for the period ending December 31, 1994
(together with all footnotes attached thereto, the "Balance
Sheet") relating to any unfunded benefits under the Benefit Plans
were adequate in the aggregate under GAAP as of December 31, 1994
and (ii) neither the Company nor any of its subsidiaries has
incurred any material unfunded liability in respect of any such
plans since that date.
(c) There are no suits or claims pending or, to the
knowledge of the Company's executive officers, threatened
36
<PAGE>
relating to or for benefits under the Benefit Plans, except for
those suits or claims set forth on Schedule 4.19(c) or which,
individually or in the aggregate, will not have a material
adverse effect on the business, financial condition or results of
operation of the Company or its subsidiaries, taken as a whole.
(d) (i) Each Benefit Plan has been established and
administered in all material respects in accordance with its
terms, and in all material respects in compliance with the
applicable provisions of ERISA, the Code and other applicable
laws, rules and regulations and (ii) each Benefit Plan which is
intended to be qualified within the meaning of Code Section
401(a) is so qualified and nothing has occurred, to the knowledge
of the executive officers of the Company, whether by action or
failure to act, which is reasonably expected to cause the loss of
such qualification except where such loss of qualification would
not have a material adverse effect on the business, financial
condition or results of operation of the Company or its
subsidiaries, taken as a whole.
(e) Except as set forth on Schedule 4.19(e), (i) no
Benefit Plan currently has any "accumulated funding deficiency"
as such term is defined in ERISA Section 302 and Code Section 412
(whether or not waived); (ii) to the knowledge of the executive
officers of the Company, no event or condition exists which is a
reportable event within the meaning of ERISA Section 4043 with
respect to any Benefit Plan that is subject to Title IV of ERISA;
(iii) each member of the Company's Controlled Group (as defined
below) has made all required premium payments when due to the
37
<PAGE>
Pension Benefit Guaranty Corporation ("PBGC"); (iv) neither the
Company nor any member of its Controlled Group is subject to any
liability to the PBGC for any plan termination; (v) no amendment
has occurred which requires the Company or any member of its
Controlled Group to provide security pursuant to Code Section
401(a)(29); and (vi) neither the Company nor any member of its
Controlled Group has engaged in a transaction which is reasonably
likely to subject it to liability under ERISA Section 4069,
except, in each case, where any such circumstance will not have a
material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken
as a whole. For the purposes of this Section 4.19, the term
"Controlled Group" means all corporations, trades or businesses
which, together with the Company, are treated as a single
employer under Section 414 of the Code.
(f) No Benefit Plan is a multiemployer plan (within
the meaning of Section 3(37) of ERISA) and neither the Company
nor any member of its Controlled Group is reasonably likely to
incur any liability to any multiemployer plan nor is engaged in a
transaction which is reasonably expected to subject the Company
to any material liability under ERISA Section 4212(c).
4.20. Labor Matters. Except as set forth in Schedule 4.20,
-------------
(a) neither the Company nor any of its subsidiaries is party to
an unexpired collective bargaining agreement or other unexpired
material contract or agreement with any labor organization or
other representative of employees nor is any such contract being
negotiated; (b) there is no material unfair labor practices
38
<PAGE>
charge or complaint pending nor, to the knowledge of the
executive officers of the Company, threatened, with regard to
employees of the Company or any of its subsidiaries; (c) there is
no labor strike, material organized slowdown, material organized
work stoppage or other material organized labor controversy in
effect or, to the knowledge of the executive officers of the
Company, threatened against the Company or any of its
subsidiaries; (d) as of the date hereof, to the knowledge of the
executive officers of the Company, no representation question
exists and no campaigns are being conducted to solicit cards from
the employees of the Company or any subsidiary of the Company to
authorize representation by any labor organization; (e) neither
the Company nor any subsidiary of the Company is party to, or is
otherwise bound by, any consent decree with any governmental
authority relating to employees or employment practices of the
Company or any subsidiary of the Company which is material to the
Company or its subsidiaries taken as a whole; and (f) the Company
and each subsidiary of the Company is in compliance with all
applicable agreements, contracts and policies relating to
employment, employment practices, wages, hours and terms and
conditions of employment of the employees except where failure to
be in compliance with each such agreement, contract and policy is
not, individually or in the aggregate, reasonably likely to have
a material adverse effect on the financial condition, properties,
business or results of operations of the Company and its
subsidiaries taken as a whole.
39
<PAGE>
4.21. Certain Environmental Matters. To the knowledge of
-----------------------------
the executive officers of the Company, (a) the reserves reflected
in the Balance Sheet relating to environmental matters were
adequate under GAAP as of December 31, 1994, and neither the
Company nor any of its subsidiaries has incurred any material
liability in respect of any environmental matter since that date,
and (b) the SEC Documents include all information relating to
environmental matters required to be included therein under the
rules and regulations of the Commission applicable thereto.
V. COVENANTS
---------
5.1. Acquisition Proposals. Neither the Company nor any of
---------------------
its subsidiaries may, directly or indirectly, and each will
instruct and otherwise use its reasonable best efforts to cause
its affiliates that are controlled by the Company, and the
officers, directors, employees, agents or advisors or other
representatives or consultants of the Company not to, encourage,
solicit, initiate, engage or participate in discussions or
negotiations with, or provide information to, any Person (as
hereafter defined) (other than Parent, Purchaser or subsidiaries,
affiliates or representatives of any of the foregoing) in
connection with any tender offer, exchange offer, merger,
consolidation, business combination, sale of substantial assets,
sale of securities, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries or
divisions, including, without limitation, Midgard Energy Company.
Notwithstanding the foregoing, the Company may do any of the
foregoing if outside counsel to the Company advises the Company's
40
<PAGE>
Board of Directors that any such action is required for the
Company's directors to satisfy their fiduciary duties to the
Company and its constituencies under applicable law. The Company
will (a) promptly notify Parent in the event of any discussion,
negotiation, proposal or offer of the type referred to in the
first sentence of this Section 5.1 or any decision to furnish
information or take any other action referred to in the second
sentence of this Section 5.1 and (b) promptly furnish Parent
copies of all written information furnished to any Person
pursuant to the second sentence of this Section 5.1 to the extent
not previously furnished to Parent.
5.2. Interim Operations. During the period from the date
------------------
of this Agreement to the earlier of the time that the designees
of Parent have been elected to, and constitute a majority of, the
Board of Directors of the Company pursuant to Section 1.4 hereof
or the Effective Time, except as specifically contemplated by
this Agreement, as set forth in Schedule 5.2 or as otherwise
approved by Parent in a writing which makes express reference to
this Section 5.2:
5.2.1. Conduct of Business. The Company will, and
-------------------
will cause each of its subsidiaries to, conduct their
respective businesses only in, and not take any action
except in, the ordinary and usual course of business
substantially consistent with past practice. The Company
will use reasonable efforts to preserve intact the business
organization of the Company and each of its subsidiaries, to
keep available the services of its and their present
41
<PAGE>
officers and key employees and to preserve the goodwill of
those having business relationships with it or its
subsidiaries.
5.2.2. Certificate and By-Laws. The Company will not
-----------------------
and will not permit any of its subsidiaries to make or
propose any change or amendment to their respective
certificates of incorporation or by-laws (or comparable
governing instruments), except as may be required by law.
5.2.3. Capital Stock. The Company will not and will
-------------
not permit any of its subsidiaries to authorize for
issuance, issue, sell or deliver any shares of capital stock
or any other securities of any of them (other than pursuant
to the Options, Options and Converts, the $4.00 Preferred
Stock, the $9.75 Preferred Stock or the 401(k) Plan or the
issuance of shares issued under the terms of the Director
Plan in a manner consistent with any such plan or past
practice) or issue any securities convertible into or
exchangeable for, or options, warrants to purchase, scrip,
rights to subscribe for, calls or commitments of any
character whatsoever relating to, or enter into any contract
with respect to the issuance of, any shares of capital stock
or any other securities of any of them (other than pursuant
to the Options, Options and Converts, the $4.00 Preferred
Stock, the $9.75 Preferred Stock, the 401(k) Plan (or in
connection with the 401(k) Plan or the Director Plan as
aforesaid), purchase or otherwise acquire or enter into any
contract with respect to the purchase or voting of shares of
42
<PAGE>
their capital stock, or adjust, split, combine or reclassify
any of their capital stock or other securities, or make any
other changes in their capital structures.
5.2.4. Dividends. The Company will not and will not
---------
permit any of its subsidiaries to declare, set aside, pay or
make any dividend or other distribution or payment (whether
in cash, stock or property) with respect to, or purchase or
redeem, any shares of the capital stock of any of them other
than (a) regular quarterly cash dividends on the $4.00
Preferred Stock, the $9.75 Preferred Stock and the $2.50
Preferred Stock, (b) dividends, distributions or payments
paid by its subsidiaries to the Company or its subsidiaries
with respect to their capital stock, (c) the Rights in
accordance with the Rights Agreement, and (d) loans and
payments from the Company to any of its subsidiaries or from
any of such subsidiaries to the Company or another such
subsidiary.
5.2.5. Debt. Except as set forth in Schedule 5.2.5,
----
the Company and its subsidiaries will not, except in the
ordinary course of business, (a) incur or assume any
indebtedness, (b) assume, guarantee, endorse or otherwise
become liable (whether directly, contingently or otherwise)
for the obligation of any other Person except in the
ordinary course of business and consistent with past
practice, or (c) make any loans, advances or capital
contributions to, or investments (other than intercompany
accounts and short-term investments pursuant to customary
43
<PAGE>
cash management systems of the Company in the ordinary
course and consistent with past practices) in, any other
Person other than such of the foregoing as are made by the
Company to or in a wholly owned subsidiary of the Company.
5.3. Employee Plans, Compensation, Etc. (a) Except as
----------------------------------
provided in Section 2.6 hereof, this Section 5.3 or as set forth
in Schedule 5.3 or required by applicable law, prior to the
Effective Time the Company will not and will not permit any of
its subsidiaries to adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension,
retirement, deferred compensation, welfare benefit plan, change-
in-control agreement, restricted stock, performance unit,
employment or other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or welfare of any
director, officer or employee, or (except, other than with
respect to the Senior Executives, for normal increases in the
ordinary course of business that are consistent with past
practices and that, in the aggregate, do not result in a material
increase in benefits or compensation expense to the Company or
pursuant to collective bargaining agreements or other contracts
presently in effect) increase in any manner the compensation or
fringe benefits of any director or officer or pay any benefit not
required by any existing plan, arrangement or contract (including
without limitation the granting of stock options, stock
appreciation rights, shares of restricted stock or performance
units) or take any action or grant any benefit not expressly
required under the terms of any existing contracts, trusts,
44
<PAGE>
plans, funds or other such arrangements or enter into any
contract to do any of the foregoing.
(b) Subject to Purchaser's purchase of Common Stock
pursuant to the Offer and for a period of 12 months following the
Effective Time, the Company or Surviving Corporation, as the case
may be, will continue without amendment or change, except changes
which increase compensation or benefits paid or payable
thereunder or as may be required by law, the Benefit Plans and
other sponsored, maintained or offered compensation and benefit
policies, practices, programs and arrangements which provide
compensation or benefits to employees of the Company or its
subsidiaries. Anything in the preceding sentence to the contrary
notwithstanding, (i) to the extent any Benefit Plan, or such
other compensation or benefit policy, practice, program or
arrangement other than any stock option, restricted stock or
other stock-based award plan or program ("Stock Plans") so
allows, the Surviving Corporation may replace any of such
individual plans, policies, practices, programs or arrangements
with another plan, policy, practice, program or arrangement
providing, in the aggregate, not less than a substantially
equivalent level of compensation or benefits, as the case may be,
and (ii) the Company or the Surviving Corporation, as the case
may be, may amend or replace any Stock Plan of the Company with
another plan, policy, practice, program or arrangement that the
Board of Directors of the Company or the Surviving Corporation,
as the case may be, determines in good faith provides comparable
incentive compensation opportunities.
45
<PAGE>
(c) Except as may be expressly provided in a valid
written waiver voluntarily signed by an affected employee, the
Company will honor and, on and after the Effective Time, Parent
will cause the Surviving Corporation to honor in accordance with
the terms thereof, without offset, deduction, counterclaim,
interruption or deferment (other than withholdings under
applicable law), all employment, change-in-control, severance,
termination, consulting and unfunded retirement or benefit
agreements to which the Company or any of its subsidiaries is
presently a party ("Benefits Agreements"). All of the Benefits
Agreements which require the Company to make payments in excess
of $250,000 from and after the Effective Date are set forth in
Schedule 5.3.
(d) Without limiting the obligations of Parent,
Purchaser, the Company or the Surviving Corporation contained
herein, the parties will take the actions, if any, with respect
to employment, severance and other benefits as set forth in
Schedule 5.3.
(e) Parent will consult with the human resources
department of the Company regarding the appropriate treatment of
the insurance, compensation and other benefit plans of the
Company after the Merger.
5.4. Access and Information. The Company will (and will
----------------------
cause each of its subsidiaries to) afford to Parent and its
representatives (including without limitation directors, officers
and employees of Parent and its affiliates, and counsel,
accountants and other professionals retained by Parent) such
46
<PAGE>
access, during normal business hours throughout the period prior
to the Effective Time, to the Company's books, records (including
without limitation tax returns and work papers of the Company's
independent auditors), properties, personnel and to such other
information as Parent reasonably requests and will permit Parent
to make such inspections as Parent may reasonably request and
will cause the officers of the Company and those of its
subsidiaries to furnish Parent with such financial and operating
data and other information with respect to the business,
properties and personnel of the Company and its subsidiaries as
Parent may from time to time reasonably request, provided,
however, that no investigation pursuant to this Section 5.4 will
affect or be deemed to modify any of the representations or
warranties made by the Company in this Agreement. Subject to the
requirements of law, Parent will hold in confidence, and will
instruct and use its reasonable best efforts to cause its
representatives to keep confidential, all such non-public
information it may acquire in its investigation pursuant to this
Section 5.4, and if this Agreement is terminated, Parent will,
and will instruct and use its reasonable best efforts to cause
its representatives to, destroy or deliver to the Company all
documents, work papers and other material (including copies)
obtained by Parent or such representatives pursuant to this
Section 5.4 and such of the foregoing as has been furnished by
the Company to Parent or Purchaser prior to the date hereof,
whether so obtained or furnished before or after the execution
hereof. Nothing in this Section 5.4 will require the Company to
47
<PAGE>
afford Parent or its representatives access to any information,
documents or materials which are privileged or which are
confidential and as to which such disclosure would cause the loss
of privilege or breach the terms of a confidentiality agreement.
5.5. Certain Filings, Consents and Arrangements. Parent,
------------------------------------------
Purchaser and the Company will (a) promptly make their respective
filings, and will thereafter use their best efforts promptly to
make any required submissions under the HSR Act with respect to
the Offer, the Merger and the other transactions contemplated by
this Agreement and (b) cooperate with one another (i) in promptly
determining whether any filings are required to be made or
consents, approvals, permits or authorizations are required to be
obtained under any other federal, state or foreign law or
regulation and (ii) in promptly making any such filings,
furnishing information required in connection therewith and
seeking timely to obtain any such consents, approvals, permits or
authorizations.
5.6. State Takeover Statutes. The Company will use its
-----------------------
reasonable best efforts to (a) exempt the Company, the Offer and
the Merger from the requirements of any state takeover law by
action of the Company's Board of Directors or otherwise and (b)
assist in any challenge by Purchaser to the validity or
applicability to the Offer or the Merger of any state takeover
law.
5.7. Proxy Statement. As soon as reasonably practicable
---------------
after the date hereof, the Company will, if required by
applicable law in order to consummate the Merger, prepare the
48
<PAGE>
Proxy Statement, file it with the Commission and mail it to all
holders of shares of Voting Stock. Parent, Purchaser and the
Company will cooperate with each other in the preparation of the
Proxy Statement; without limiting the generality of the
foregoing, Parent and Purchaser will furnish to the Company the
information relating to Parent and Purchaser required by the
Exchange Act to be set forth in the Proxy Statement. The
Company, acting through its Board of Directors, subject to the
fiduciary duties of the Company's Board of Directors as advised
by counsel, will include in the Proxy Statement the
recommendation of its Board of Directors that stockholders of the
Company vote in favor of the adoption of this Agreement and use
its reasonable best efforts to secure such adoption.
5.8. Indemnification and Insurance. For seven years after
-----------------------------
the Effective Time, Parent will cause the Surviving Corporation
to indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company and its
subsidiaries (an "Indemnified Party") against all losses, claims,
damages or liabilities arising out of actions or omissions
occurring on, prior to or after the Effective Time (whether or
not based in whole or in part on the sole or concurrent
negligence of the Indemnified Party or on the theory of strict
products liability) to the full extent provided under Delaware
law, the Certificate and By-Laws of the Company in effect at the
date hereof and under all agreements to which the Company is a
party as of the date hereof, including without limitation
provisions relating to advances of expenses incurred in the
49
<PAGE>
defense of any action or suit (including without limitation
attorneys' fees of counsel selected by the Indemnified Party),
provided that any determination required to be made with respect
to whether an Indemnified Party's conduct complies with the
standards set forth under Delaware law, the Certificate or
By-Laws of the Company or under any such contract will be made by
independent counsel selected by the Indemnified Party and
reasonably satisfactory to the Surviving Corporation. Nothing in
this Agreement shall diminish or impair the rights of any
Indemnified Party under the Certificate or By-Laws of the Company
or any agreement to which the Company is a party at the date
hereof. The Surviving Corporation will maintain the Company's
existing officers' and directors' liability insurance ("D&O
Insurance") in full force and effect without reduction of
coverage for a period of seven years after the Effective Time,
provided, however, that the Surviving Corporation will not be
required to pay an annual premium therefor in excess of 250% of
the last annual premium paid prior to the date hereof (the
"Current Premium"), and, provided, further, however, that if the
existing D&O Insurance expires, is terminated or cancelled during
such seven-year period, the Surviving Corporation will use its
best efforts to obtain as much D&O Insurance as can be obtained
for the remainder of such period for a premium on an annualized
basis not in excess of 250% of the Current Premium.
5.9. Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties will use its
reasonable best efforts to take promptly, or cause to be taken
50
<PAGE>
promptly, all actions and to do promptly, or cause to be done
promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using
its reasonable best efforts to obtain all necessary actions or
non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Entities, effecting all necessary
registrations and filings (including without limitation filings
under the HSR Act) and obtaining any required contractual
consents, subject, however, to any required vote of the
stockholders of the Company. If, at any time after the Effective
Time, the Surviving Corporation considers or is advised that any
deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Corporations
acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with the Merger or otherwise to carry
out the purposes of this Agreement, the officers and directors of
the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of each of the Constituent
Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on
behalf of each of the Constituent Corporations or otherwise, all
such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest
51
<PAGE>
in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of
this Agreement.
5.10. Compliance with Antitrust Laws. Each of Parent and
------------------------------
the Company will use its reasonable best efforts to resolve such
objections, if any, which may be asserted with respect to the
Offer or the Merger under the antitrust laws. In the event a
suit is instituted challenging the Offer or the Merger as
violative of the antitrust laws, each of Parent and the Company
will use its best efforts to resist or resolve such suit. Parent
and the Company will use their reasonable best efforts to take
such action as may be required (a) by the Antitrust Division of
the Department of Justice or the Federal Trade Commission in
order to resolve such objections as either of them may have to
the Offer or the Merger under the antitrust laws or (b) by any
federal or state court of the United States, in any suit brought
by a private party or Governmental Entity challenging the Offer
or the Merger as violative of the antitrust laws, in order to
avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order which has
the effect of preventing the consummation of the Offer or the
Merger.
5.11. Publicity. The initial press release announcing this
---------
Agreement will be a joint press release and thereafter the
Company and Parent will consult with each other in issuing any
press releases or otherwise making public statements with respect
to the transactions contemplated hereby and in making any filings
52
<PAGE>
with any Governmental Entity or with any national securities
exchange with respect thereto, and will not issue any such press
release or make any such public statement prior to such
consultation except as may be required by law or by obligation
pursuant to any listing agreement with any national securities
exchange or the National Association of Securities Dealers or any
rules or regulations of a foreign securities exchange upon which
the securities are traded.
5.12. Notice of Actions and Proceedings. The Company will
---------------------------------
promptly notify Parent of any actions, suits, claims,
investigations or proceedings commenced or, to the knowledge of
the executive officers of the Company, threatened in writing
against, relating to or involving or otherwise affecting the
Company or any of its subsidiaries which, if pending on the date
hereof, would have been required to have been disclosed in
writing pursuant to any Schedule required hereby or which relates
to the consummation of the Offer or the Merger.
5.13. Notification of Certain Other Matters. The Company
-------------------------------------
will promptly notify Parent of:
(a) any written notice or other written communication
from any third party alleging that the consent of such third
party is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any written notice or other written communication
from any Governmental Entity in connection with the transactions
contemplated hereby; and
53
<PAGE>
(c) any fact, development or occurrence that
constitutes a material adverse effect on the business, financial
condition or results of operations of the Company and its
subsidiaries taken as a whole or is reasonably expected to result
in such an effect.
5.14. Listing of Preferred Stock. The Company will, and
--------------------------
Parent will cause the Surviving Corporation to, use their
respective reasonable efforts to continue the listing on the
New York Stock Exchange of the shares of Preferred Stock which
are currently listed on such Exchange or, if such shares are
delisted, to cause such shares of Preferred Stock to be listed on
another national securities exchange within the United States or
admitted to trading on the National Association of Securities
Dealers Automated Quotation System and on other organized
securities markets in such foreign jurisdictions in which such
shares are presently traded. Notwithstanding anything in this
Agreement to the contrary, the obligations of the Company and
Parent under this Section 5.14 will survive the Effective Time
with respect to any series of Preferred Stock until such time as
the aggregate market value of all outstanding shares of such
series is less than $2 million or the number of outstanding
shares of such series is less than 100,000.
5.15. Certain Obligations of Parent. In the event that the
-----------------------------
Company is unable to meet its obligations as they come due,
whether at maturity or otherwise, including solely for the
purposes of this Section 5.15 dividend and redemption payments
with respect to the Preferred Stock, Parent will capitalize the
54
<PAGE>
Company in an amount necessary to permit the Company to meet such
obligations, provided that Parent's aggregate obligation under
this Section 5.15 shall be (a) limited to the amount of debt
service obligations under "Tranche 1" of the loan agreement
contemplated by the Commitment and, to the extent "Tranche 1" is
replaced by "Tranche 2 and/or Tranche 3" under the Commitment,
the amount of debt service obligations under such "Tranche 2
and/or Tranche 3," and (b) reduced by the amount, if any, of
capital contributions received by the Company after the Effective
Time and the net proceeds of any sale by the Company of common
stock or non-redeemable preferred stock after the Effective Time.
Notwithstanding anything in this Agreement to the contrary, the
obligations of Parent under this Section 5.15 will survive until
the ninth anniversary of the Effective Time.
VI. CONDITIONS
----------
6.1. Conditions. The obligations of Parent, Purchaser and
----------
the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the
following conditions, as applicable thereto:
6.1.1. Stockholder Approval. The holders of the
--------------------
Voting Stock shall have duly adopted this Agreement.
6.1.2. Purchase of Shares of Voting Stock. Purchaser
----------------------------------
shall have accepted for payment shares of Common Stock
pursuant to the Offer.
6.1.3. Injunctions; Illegality. The consummation of
-----------------------
the Merger shall not be precluded or materially restricted
by any order, injunction, decree or ruling of a court of
55
<PAGE>
competent jurisdiction or Governmental Entity (each party
agreeing to use its reasonable best efforts to rectify any
such occurrence), and there shall not have been any action
taken or any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents or materially restricts
the consummation of the Merger or that would make the
acquisition or holding by Parent or its subsidiaries of the
shares of Common Stock or shares of common stock of the
Surviving Corporation illegal.
6.1.4. HSR Act. Any applicable waiting period under
-------
the HSR Act shall have expired or been terminated.
6.2. Parent Obligations. The obligations of Parent and
------------------
Purchaser to consummate the Merger are subject to the
satisfaction at or prior to the Effective Time of the additional
conditions that (a) the Company in all material respects shall
have satisfied and complied with each of the covenants of the
Company contained herein, (b) the representations and warranties
of the Company contained in this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall be true and
correct in all material respects as of such specified date) and
(c) Purchaser and Parent shall have the right to draw down funds
under the loan agreement contemplated by the Commitment.
56
<PAGE>
VII. MISCELLANEOUS
-------------
7.1. Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned (a) by the mutual
consent of the Boards of Directors of Parent, Purchaser and the
Company; (b) by Parent and Purchaser, on the one hand, or the
Company, on the other hand, if the Offer expires or is terminated
or withdrawn in accordance with the terms hereof without any
shares of Common Stock being purchased thereunder or the Offer is
terminated, or has not been commenced in accordance with the
terms hereof by the close of business on March 7, 1995, or if
Purchaser has not purchased shares of Common Stock validly
tendered and not withdrawn pursuant to the Offer in accordance
with the terms hereof within 75 calendar days after commencement
of the Offer; provided, however, that the party seeking to
terminate this Agreement pursuant to this Section 7.1(b) is not
in material breach of this Agreement; (c) by the Company, if
Parent or Purchaser materially breaches any of the
representations and warranties or covenants contained in this
Agreement, or by Parent and Purchaser if the Company materially
breaches any of the representations and warranties or covenants
contained in this Agreement; (d) by either Parent and Purchaser
or the Company, if the Merger is not consummated prior to
June 30, 1995; provided, however, that the right to terminate
this Agreement under this Section 7.1(d) will not be available to
any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before such date; (e) by either
57
<PAGE>
Parent and Purchaser, on the one hand, or the Company, on the
other hand, if either one (or any permitted assignee hereunder)
is restrained, enjoined or otherwise precluded by an order,
decree, ruling or injunction (other than an order or injunction
issued on a temporary or preliminary basis) of a court, domestic
or foreign, of competent jurisdiction or other Governmental
Entity from consummating the Merger or making the acquisition or
holding by Parent or its subsidiaries of the shares of Common
Stock or shares of common stock of the Surviving Corporation
illegal and all means of appeal and all appeals from such order
decree, ruling, injunction or other action have been finally
exhausted; (f) by the Company if the Board of Directors of the
Company determines that it will not recommend acceptance of the
Offer and approval of the Merger by the Company's stockholders
(or if such recommendation is withdrawn) based upon the advice of
outside counsel that such action is necessary for the Board of
Directors to comply with its fiduciary duties to stockholders
under applicable law; and (g) by Parent and Purchaser, if (i) the
Board of Directors of the Company shall not have recommended or
shall withdraw, modify or change its recommendation relating to
the Merger or the Offer in a manner materially adverse to Parent
or shall have resolved to do any of the foregoing; (ii) the Board
of Directors of the Company shall have recommended to the
stockholders of the Company that they accept or approve, or the
Company or any of its subsidiaries shall have agreed to engage
in, a Competing Transaction; or (iii) any Person shall have
acquired beneficial ownership or the right to acquire beneficial
58
<PAGE>
ownership or any "group" (as such term is defined under Section
13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) shall have been formed which beneficially
owns, or has the right to acquire "beneficial ownership" (as
defined in the Rights Agreement) of, more than 20% of the then-
outstanding shares of Common Stock of the Company. For the
purposes of this Agreement, "Competing Transaction" means any of
the following involving the Company or any of its subsidiaries:
(i) any merger, consolidation, share exchange, business
combination or other similar transaction except for such of the
foregoing as to which the only parties are the Company or one or
more subsidiaries of the Company; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of the assets of
the Company or any of its subsidiaries constituting 5% or more of
the consolidated assets of the Company or accounting for 5% or
more of the consolidated revenues of the Company in a single
transaction or series of related transactions involving any
Person other than the Company or one or more subsidiaries of the
Company; or (iii) any tender or exchange offer for 20% or more of
the outstanding shares of Voting Stock or the filing of a
registration statement under the Securities Act in connection
therewith. In the event of any termination and abandonment
pursuant to this Section 7.1, no party hereto (or any of its
directors or officers) will have any liability or further
obligation to any other party to this Agreement, except for
obligations under the last sentences of Sections 1.1 and 1.3, the
second sentence of Section 5.4 and all of Section 7.10 hereof and
59
<PAGE>
except that nothing herein will relieve any party from liability
for any breach of this Agreement. Any action by the Company to
terminate this Agreement pursuant to this Section 7.1 will
require only the approval of a majority of the directors of the
Company then in office who are directors of the Company on the
date hereof, or persons nominated or elected to succeed such
directors by a majority of such directors (the "Continuing
Directors").
7.2. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. The representations and warranties or agreements in
----------
this Agreement will terminate at the Effective Time or the
earlier termination of this Agreement pursuant to Section 7.1, as
the case may be, provided, however, that if the Merger is
consummated, Sections 2.6, 5.3, 5.8, 5.9, 5.14 and 5.15 hereof
will survive the Effective Time to the extent contemplated by
such Sections, and provided further, however, that the last
sentences of Sections 1.1 and 1.3, the second sentence of
Section 5.4 and all of Section 7.10 hereof will in all events
survive any termination of this Agreement.
7.3. Waiver and Amendment. Subject to applicable
--------------------
provisions of the DGCL, any provision of this Agreement may be
waived at any time by the party which is, or whose stockholders
are, entitled to the benefits thereof, and this Agreement may be
amended or supplemented at any time, provided that no amendment
will be made after any stockholder approval of the adoption of
the Merger Agreement which reduces the Merger Price without
further approval of the holders of the Voting Stock, provided
60
<PAGE>
further that any action by the Company to waive or amend any
provision of this Agreement will require the approval of a
majority of the Continuing Directors. No such waiver, amendment
or supplement will be effective unless in a writing which makes
express reference to this Section 7.3 and is signed by the party
or parties sought to be bound thereby.
7.4. Entire Agreement. This Agreement contains the entire
----------------
agreement among Parent, Purchaser and the Company with respect to
the Offer, the Merger and the other transactions contemplated
hereby and thereby, and supersedes all prior agreements among the
parties with respect to such matters other than, prior to the
Effective Time, the Confidentiality Agreement.
7.5. Applicable Law. This Agreement will be governed by
--------------
and construed in accordance with the laws of the State of
Delaware, without giving effect in the principles of conflict of
laws of that State.
7.6. Interpretation. For purposes of this Agreement, a
--------------
"subsidiary" of a corporation means any corporation or other
legal entity (including without limitation partnerships or
limited liability companies) more than 50% of the outstanding
voting securities or similar rights of which are directly or
indirectly owned by such other corporation and "Person" means an
individual or legal entity. The descriptive headings contained
herein are for convenience and reference only and will not affect
in any way the meaning or interpretation of this Agreement.
7.7. Notices. All notices and other communications
-------
hereunder will be in writing and will be given by delivery (and
61
<PAGE>
will be deemed to have been duly given upon receipt) in person,
by cable, facsimile transmission, telegram, telex or other
standard form of telecommunications, or by registered or
certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company to:
Maxus Energy Corporation
717 North Harwood Street
Dallas, Texas 75201
Attention: General Counsel
Telephone: 214/953-2000
Telecopy: 214/979-1986
With a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue, 22nd Floor
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Telephone: 212/326-3800
Telecopy: 212/755-7306
If to Parent or Purchaser to:
YPF Sociedad Anonima
Avenida Pte. Roque Saenz Pena 777
Buenos Aires 1364, Argentina
Attention: President
Telephone: 011-541-329-5705
Telecopy: 011-541-329-5704
With a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: P. Dexter Peacock, Esq.
Telephone: 713/220-4354
Telecopy: 713/220-3690
or to such other address as any party may have furnished to the
other parties in writing in accordance herewith.
62
<PAGE>
7.8. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which will be deemed to be an
original but all of which together will constitute but one
agreement.
7.9. Parties in Interest; Assignment. Except for
-------------------------------
Sections 2.6 and 5.3 hereof (which are intended to be for the
benefit of directors and Senior Executives to the extent
contemplated thereby and their beneficiaries, and may be enforced
by such persons) and Section 5.8 hereof (which is intended to be
for the benefit of directors, officers, agents and employees to
the extent contemplated thereby and their beneficiaries, and may
be enforced by such persons), this Agreement is not intended to
nor will it confer upon any other person (other than the parties
hereto) any rights or remedies. Except as otherwise expressly
provided herein, this Agreement is binding upon and is solely for
the benefit of the parties hereto and their respective
successors, legal representatives and assigns. Purchaser will
have the right (a) to assign to Parent or any direct or indirect
wholly owned subsidiary of Parent any and all rights and
obligations of Purchaser under this Agreement, including without
limitation the right to substitute in its place Parent or such a
subsidiary as one of the constituent corporations in the Merger
(such subsidiary assuming all of the obligations of Purchaser in
connection with the Merger), provided that any such assignment
will not relieve Parent or Purchaser from any of its obligations
hereunder, and (b) to transfer to Parent or to any direct or
indirect wholly owned subsidiary of Parent the right to purchase
63
<PAGE>
shares of Common Stock tendered pursuant to the Offer, provided
that any such transfer will not relieve Purchaser from any of its
obligations hereunder.
7.10. Expenses; Termination Fee. Whether or not the Offer
-------------------------
or Merger is consummated, all costs and expenses incurred in
connection with the Offer, this Agreement and the transactions
contemplated hereby will be paid by the party incurring such
costs and expenses, provided, however, that (a) in the event of a
termination of this Agreement by the Company pursuant to
Section 7.1(f) or by Parent and Purchaser pursuant to
Section 7.1(g)(i) or (ii) hereof, the Company will be obligated
to promptly pay to Purchaser $20 million in cash, and (b) in the
event of a termination of this Agreement by the Company or by
Parent if at the date of such termination any condition to the
funding of the loans contemplated by the Commitment has not been
satisfied, provided that at such time no other condition to
Parent's obligation to consummate the Offer or the Merger, as the
case may be, is unsatisfied (other than the failure to meet the
Minimum Share Condition as a result of the failure to obtain such
funding), Parent and Purchaser, jointly and severally, will be
obligated to promptly pay to the Company $20 million in cash.
7.11. Obligation of Parent. Whenever this Agreement
--------------------
requires Purchaser to take any action, such requirement will be
deemed to include an undertaking on the part of Parent to cause
Purchaser to take such action.
7.12. Enforcement of the Agreement. The parties hereto
----------------------------
agree that irreparable damage would occur in the event that any
64
<PAGE>
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties hereto will be entitled
to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any State of the
United States having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity,
including without limitation under Section 7.10 hereof.
7.13. 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 terms and provisions
of this Agreement will 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 hereto. Upon any such determination that
any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto will negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the
end that the transactions contemplated by this Agreement are
consummated to the extent possible.
7.14. Consent to Jurisdiction and Service of Process.
----------------------------------------------
(a) Parent consents to the non-exclusive jurisdiction of any
court of the State of New York or any United States federal court
sitting in the Borough of Manhattan, New York City, New York,
United States, and any appellate court from any thereof, and
65
<PAGE>
waives any immunity from the jurisdiction of such courts over any
suit, action or proceeding that may be brought in connection with
this Agreement. Parent irrevocably waives, to the fullest extent
permitted by law, any objection to any suit, action or proceeding
that may be brought in connection with this Agreement in such
courts whether on the grounds of venue, residence or domicile or
on the ground that any such suit, action or proceeding has been
brought in an inconvenient forum. Parent agrees that final
judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon Parent and may be
enforced in any court to the jurisdiction of which Parent is
subject by suit upon such judgment; provided that service of
process is effected upon Parent in the manner provided in this
Agreement. Notwithstanding the foregoing, any suit, action or
proceeding brought in connection with this Agreement may be
instituted in any competent court in Argentina.
(b) Parent agrees that service of all writs, process
and summonses in any suit, action or proceeding brought in
connection with this Agreement against Parent in any court
sitting in the Borough of Manhattan, New York City, New York,
United States may be made upon CT Corporation System at
1633 Broadway, New York, New York 10019, whom Parent irrevocably
appoints as its authorized agent for service of process. Parent
represents and warrants that CT Corporation System has agreed to
act as Parent's agent for service of process. Parent agrees that
such appointment shall be irrevocable so long as this Agreement
shall remain in effect or until the irrevocable appointment by
66
<PAGE>
Parent of a successor in The City of New York as its authorized
agent for such purpose and the acceptance of such appointment by
such successor. Parent further agrees to take any and all
action, including the filing of any and all documents and
instruments, that may be necessary to continue such appointment
in full force and effect as aforesaid. If CT Corporation System
shall cease to be Parent's agent for service of process, Parent
shall appoint without delay another such agent and provide prompt
written notice to the Company, to the extent known to it, of such
appointment. With respect to any such action in any court of the
State of New York or any United States federal court in the
Borough of Manhattan, New York City, service of process upon CT
Corporation System, as the authorized agent of Parent for service
of process, and written notice of such service to Parent, shall
be deemed, in every respect, effective service of process upon
Parent.
(c) Nothing in this Section 7.14 shall affect the
right of any party to serve legal process in any other manner
permitted by law or affect the right of any party to bring any
action or proceeding against any other party or its property in
the courts of other jurisdictions.
67
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement.
ATTEST: YPF SOCIEDAD ANONIMA
By By
--------------------------- ---------------------------
YPF ACQUISITION CORP.
By By
--------------------------- ---------------------------
MAXUS ENERGY CORPORATION
By By
--------------------------- ---------------------------
68
<PAGE>
Exhibit A
---------
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment, purchase
or pay for any shares of Common Stock tendered pursuant to the
Offer (the "Shares"), and may postpone the acceptance for
payment, the purchase of, and/or payment for Shares, and/or may,
subject to the terms of the Agreement, amend or terminate the
Offer if (i) the Minimum Share Condition has not been satisfied,
(ii) the Company shall not have taken the steps necessary to
redeem the Rights, (iii) the applicable waiting period under the
HSR Act shall not have expired or been terminated, (iv) the
closing of the loans in connection with the Offer shall not have
occurred under the Loan Agreement contemplated by the commitment
letter, dated February 24, 1995, addressed to Parent from The
Chase Manhattan Bank (National Association), a copy of which has
heretofore been delivered to the Company, or (v) at any time at
or before payment for any Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the
Offer), any of the following events shall have occurred and be
continuing:
(a) there shall be in effect any temporary
restraining order, preliminary or final injunction or
other order or decree issued by any United States
federal or state court of competent jurisdiction or
<PAGE>
United States federal or state governmental, regulatory
or administrative agency or authority, (1) enjoining,
restraining or otherwise prohibiting the Offer, the
Merger or the acquisition by Parent or Purchaser of
shares of Common Stock; (2) prohibiting or materially
limiting the ownership or operation by Parent or
Purchaser of all or any substantial portion of the
business or material assets of the Company and its
subsidiaries, taken as a whole, or, as a consequence of
the Offer, Merger or Parent or Purchaser's acquisition
of shares of Common Stock, of Parent or any of its
subsidiaries, or compelling Parent or Purchaser to
dispose of or to hold separate all or any material
portion of the business or material assets of the
Company and its subsidiaries, taken as a whole, or of
Parent or any of its subsidiaries, or imposing any
material limitation on the ability of Parent or
Purchaser to conduct such business or own such assets,
(3) imposing material limitations on the ability of
Parent or Purchaser (or any other affiliate of Parent)
to acquire or hold or to exercise full rights of
ownership of the shares of Common Stock, including
without limitation the right to vote the shares of
Common Stock purchased by them on all matters properly
presented to the stockholders of the Company, or
(4) requiring material divestitures by Parent or
Purchaser or any of their subsidiaries or affiliates of
-2-
<PAGE>
any Shares, as a consequence of the Offer, Merger or
Parent or Purchaser's acquisition of shares of Common
Stock; or
(b) there shall be any statute, rule, regulation
or order promulgated, enacted, entered or deemed
applicable to the Offer or the Merger, or any other
action shall have been taken, by any Governmental
Entity that is reasonably likely to result in any of
the consequences referred to in clauses (1) through (4)
of paragraph (a) above; or
(c) there shall have occurred (1) any general
suspension of trading in, or limitation on prices for,
trading in securities on the New York Stock Exchange or
in the over-the-counter-market, (2) a declaration of a
banking moratorium or any limitation or suspension of
payments by United States authorities on the extension
of credit by United States lending institutions, (3) a
commencement of war, armed hostilities or other
international or national calamity directly or
indirectly involving the United States, or (4) in the
case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration
or worsening thereof; or
(d) it shall have been publicly disclosed or
Purchaser shall have learned that any Person shall have
entered into a definitive agreement or an agreement in
principle with the Company with respect to a tender
-3-
<PAGE>
offer or exchange offer for any shares of capital stock
of the Company (including without limitation the shares
of Common Stock) or a merger, consolidation or other
business combination or any acquisition or disposition
of a material amount of assets or any comparable event
with or involving the Company (other than such of the
foregoing as is permitted by the Agreement); or
(e) any of the representations and warranties of
the Company in the Agreement shall not have been, or
shall cease to be, true and correct in all material
respects (whether because of circumstances or events
occurring in whole or in part prior to, on or after the
date of the Agreement), or the Company shall have not
performed in all material respects the covenants to be
performed by it pursuant to the Agreement; or
(f) the Agreement shall have been terminated by
the Company, on the one hand, or Parent and Purchaser,
on the other hand, in accordance with its terms or
Purchaser or Parent, on the one hand, and the Company,
on the other hand, shall have reached an agreement
providing for the termination of the Offer; or
(g) the Company's Board of Directors shall have
failed to recommend and approve, or shall no longer
recommend and approve, the Offer or the adoption of the
Merger Agreement, or shall materially modify or amend
its recommendation and approval with respect thereto,
or shall have resolved to do any of the foregoing
-4-
<PAGE>
(except that the foregoing shall not apply to a
modification or amendment solely in the reasons for
such recommendation and approval so long as the Board
of Directors of the Company continues to recommend and
approve acceptance of the Offer and adoption of the
Merger Agreement by holders of Voting Stock); or
(h) without limiting the generality or effect of
Paragraph (e) of this Section, except as disclosed to
Parent pursuant to the Agreement, there shall have been
any material adverse change in the business, financial
condition or results of operations of the Company and
its subsidiaries, taken as a whole;
which, in the sole judgment of Purchaser, in any such case
regardless of the circumstances (including any action or inaction
by Purchaser or any of its affiliates other than a material
breach by Purchaser or Parent of the Agreement) giving rise to
any such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment or purchase of or
payment for any of the Shares.
The foregoing conditions (i) may be asserted by
Purchaser regardless of the circumstances (including any action
or inaction by Purchaser or any of its affiliates other than a
breach by Purchaser or Parent of the Agreement) giving rise to
such condition and (ii) other than the Minimum Share Condition,
are for the sole benefit of Purchaser and its affiliates. The
foregoing conditions, other than the Minimum Share Condition, may
be waived by Purchaser in whole or in part at any time and from
-5-
<PAGE>
time to time in its sole discretion. The failure by Purchaser at
any time to exercise any of the foregoing rights will not be
deemed a waiver of any other rights and each such right will be
deemed an ongoing right which may be asserted at any time and
from time to time.
-6-
<PAGE>
I. THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . 1
----------------
1.1. The Offer . . . . . . . . . . . . . . . . . . 1
---------
1.2. Company Action . . . . . . . . . . . . . . . 4
--------------
1.3. Stockholder Lists . . . . . . . . . . . . . . 6
-----------------
1.4. Board of Directors of the Company . . . . . . 6
---------------------------------
II. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 8
----------
2.1.1. Merger . . . . . . . . . . . . . 8
------
2.1.2. Effective Time . . . . . . . . . 8
--------------
2.1.3. Effect of Merger . . . . . . . . 9
----------------
2.1.4. Conversion of Shares of Common
------------------------------
Stock . . . . . . . . . . . . . . . . . . . . 9
-----
2.2. Stockholders' Meeting of the Company . . . . 11
------------------------------------
2.3. Consummation of the Merger . . . . . . . . . 11
--------------------------
2.4. Payment for Shares of Common Stock . . . . . 12
----------------------------------
2.5. Closing of the Company's Transfer Books . . . 14
---------------------------------------
2.6. The Company Stock Options and Related
-------------------------------------
Matters . . . . . . . . . . . . . . . . . . . . . . 14
-------
III. REPRESENTATIONS AND WARRANTIES OF PARENT AND
--------------------------------------------
PURCHASER . . . . . . . . . . . . . . . . . . . . . . . 15
---------
3.1. Corporate Organization . . . . . . . . . . . 15
----------------------
3.2. Authority . . . . . . . . . . . . . . . . . . 15
---------
3.3. Offer Documents . . . . . . . . . . . . . . . 16
---------------
3.4. Proxy Statement . . . . . . . . . . . . . . . 17
---------------
3.5. Fees . . . . . . . . . . . . . . . . . . . . 17
----
-7-
<PAGE>
3.6. Consents and Approvals; No Violation . . . . 17
------------------------------------
3.7. Financing . . . . . . . . . . . . . . . . . . 19
---------
3.8. Operations of the Company Following the
---------------------------------------
Merger . . . . . . . . . . . . . . . . . . . . . . 19
------
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 20
---------------------------------------------
4.1. Corporate Organization . . . . . . . . . . . 20
----------------------
4.2. Capitalization . . . . . . . . . . . . . . . 21
--------------
4.3. Authority . . . . . . . . . . . . . . . . . . 22
---------
4.4. Consents and Approvals; No Violation . . . . 23
------------------------------------
4.5. Commission Filings . . . . . . . . . . . . . 24
------------------
4.6. Absence of Certain Changes . . . . . . . . . 25
--------------------------
4.7. Litigation . . . . . . . . . . . . . . . . . 26
----------
4.8. Compliance with Applicable Laws . . . . . . . 27
-------------------------------
4.9. Fees . . . . . . . . . . . . . . . . . . . . 28
----
4.10. Offer Documents . . . . . . . . . . . . . . 28
---------------
4.11. Schedule 14D-9 . . . . . . . . . . . . . . . 28
--------------
4.12. Proxy Statement . . . . . . . . . . . . . . 29
---------------
4.13. Rights . . . . . . . . . . . . . . . . . . . 29
------
4.14. Certain Actions. . . . . . . . . . . . . . . 30
---------------
4.15. Subsidiaries . . . . . . . . . . . . . . . . 30
------------
4.16. No Default . . . . . . . . . . . . . . . . . 32
----------
4.17. Taxes . . . . . . . . . . . . . . . . . . . 32
-----
4.18. Insurance . . . . . . . . . . . . . . . . . 35
---------
4.19. Benefit Plans . . . . . . . . . . . . . . . 36
-------------
4.20. Labor Matters . . . . . . . . . . . . . . . 38
-------------
4.21. Certain Environmental Matters . . . . . . . 40
-----------------------------
-8-
<PAGE>
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 40
---------
5.1. Acquisition Proposals . . . . . . . . . . . . 40
---------------------
5.2. Interim Operations . . . . . . . . . . . . . 41
------------------
5.2.1. Conduct of Business . . . . . . . 41
-------------------
5.2.2. Certificate and By-Laws . . . . . 42
-----------------------
5.2.3. Capital Stock . . . . . . . . . . 42
-------------
5.2.4. Dividends . . . . . . . . . . . . 43
---------
5.2.5. Debt . . . . . . . . . . . . . . 43
----
5.3. Employee Plans, Compensation, Etc. . . . . . 44
----------------------------------
5.4. Access and Information . . . . . . . . . . . 46
----------------------
5.5. Certain Filings, Consents and Arrangements . 48
------------------------------------------
5.6. State Takeover Statutes . . . . . . . . . . . 48
-----------------------
5.7. Proxy Statement . . . . . . . . . . . . . . . 48
---------------
5.8. Indemnification and Insurance . . . . . . . . 49
-----------------------------
5.9. Additional Agreements . . . . . . . . . . . . 50
---------------------
5.10. Compliance with Antitrust Laws . . . . . . . 52
------------------------------
5.11. Publicity . . . . . . . . . . . . . . . . . 52
---------
5.12. Notice of Actions and Proceedings . . . . . 53
---------------------------------
5.13. Notification of Certain Other Matters . . . 53
-------------------------------------
5.14. Listing of Preferred Stock . . . . . . . . . 54
--------------------------
5.15. Certain Obligations of Parent . . . . . . . 54
-----------------------------
VI. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 55
----------
6.1. Conditions . . . . . . . . . . . . . . . . . 55
----------
6.1.1. Stockholder Approval . . . . . . 55
--------------------
6.1.2. Purchase of Shares of Voting
----------------------------
Stock . . . . . . . . . . . . . . . . . . . . 55
-----
-9-
<PAGE>
6.1.3. Injunctions; Illegality . . . . . 55
-----------------------
6.1.4. HSR Act . . . . . . . . . . . . . 56
-------
6.2. Parent Obligations. . . . . . . . . . . . . . 56
------------------
VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 57
-------------
7.1. Termination . . . . . . . . . . . . . . . . . 57
-----------
7.2. Non-Survival of Representations, Warranties
-------------------------------------------
and Agreements . . . . . . . . . . . . . . . . . . 60
--------------
7.3. Waiver and Amendment . . . . . . . . . . . . 60
--------------------
7.4. Entire Agreement . . . . . . . . . . . . . . 61
----------------
7.5. Applicable Law . . . . . . . . . . . . . . . 61
--------------
7.6. Interpretation . . . . . . . . . . . . . . . 61
--------------
7.7. Notices . . . . . . . . . . . . . . . . . . . 61
-------
7.8. Counterparts . . . . . . . . . . . . . . . . 63
------------
7.9. Parties in Interest; Assignment . . . . . . . 63
-------------------------------
7.10. Expenses; Termination Fee . . . . . . . . . 64
-------------------------
7.11. Obligation of Parent . . . . . . . . . . . . 64
--------------------
7.12. Enforcement of the Agreement . . . . . . . . 64
----------------------------
7.13. Severability . . . . . . . . . . . . . . . . 65
------------
7.14. Consent to Jurisdiction and Service of Process . 65
----------------------------------------------
-10-
<PAGE>
Exhibit 4
Press Release
YPF Announces Tender Offer for Maxus Common Shares
Buenos Aires, Argentina and Dallas, Texas, February 28, 1995 - YPF Sociedad
Anonima (NYSE: YPF) and Maxus Energy Corporation (NYSE: MXS) today jointly
announced an agreement whereby YPF will acquire all of the Common Stock of Maxus
at $5.50 per share through a tender offer to be followed by a merger in which
the remaining Maxus Common Stock will be exchanged for the same $5.50 per share.
Holders of Maxus Common Stock will also receive a cash payment of $0.10 per
share upon the redemption of rights issued under Maxus' Shareholder Rights Plan.
Maxus' Board of Directors have approved the tender offer and the merger and have
recommended that stockholders accept the tender offer. Maxus' preferred stock
will remain outstanding.
The tender offer for all of the Maxus Common Stock will commence in the next few
days. YPF has received a commitment letter from The Chase Manhattan Bank to
provide loans of up to $800 million for the purchase. The tender offer, the
merger and the financing are subject to various conditions, including that at
least a majority of Maxus' voting stock be tendered.
As a part of the agreement, Maxus will suspend all efforts to sell Midgard,
Maxus' mid-continent natural gas subsidiary.
Jose A. Estenssoro, Chief Executive Officer of YPF, said that this acquisition
will establish YPF as an international oil and gas company, which has been a
cornerstone of the strategy for YPF since its privatization in 1993. He said
that Maxus' assets--in Indonesia, Venezuela, Ecuador, Bolivia, and the United
States--were a great fit for YPF in this respect, and that YPF's financial
strength will be important in realizing the potential that YPF sees in Maxus'
assets. He also said he believed that operational management and personnel were
first-class and would provide essential interaction with YPF's present
operations and future expansion. Conversely, he added that he believed that YPF
could be of substantial help to Maxus in adding value to its South American
operations.
Estenssoro added that, following the merger, Peter Gaffney, a founding partner
of Gaffney, Cline and Associates, reservoir engineers, who is currently also
President of the Society of Petroleum Engineers, will become the interim chief
executive officer of Maxus. Charles L. Blackburn, the current CEO of Maxus, has
been asked to become an international consultant to YPF and to remain a Board
member.
Estenssoro added that he was particularly gratified that Peter Gaffney had
agreed to take the Interim CEO's job at Maxus. Mr. Gaffney has been an advisor
to Maxus for a number of years and is familiar with Maxus' personnel, operations
and assets.
<PAGE>
Exhibit 5
[MAXUS LETTERHEAD]
March 3, 1995
Dear Stockholder:
I am pleased to inform you that the Board of Directors
of Maxus Energy Corporation (the "Company") has approved the
acquisition of all of the outstanding shares of the Company's
common stock (the "Shares") by a subsidiary of YPF Sociedad
Anonima ("YPF"). The YPF subsidiary is commencing a tender offer
to purchase all outstanding Shares at $5.50 per share, net to the
seller in cash. Subject to certain conditions, each Share not
acquired in the tender offer will be converted into a right to
receive the same price of $5.50 per share and the YPF subsidiary
will be merged into the Company. In connection with the offer,
the rights previously attached to Shares will be redeemed, with
the result that holders of Shares as of the close of business on
March 22, 1995 will also receive the redemption price of $0.10
per Share.
The Board of Directors of the Company has determined
that the YPF offer and merger are in the best interests of the
stockholders of the Company and recommends that stockholders
accept the YPF offer and tender their Shares pursuant to the
offer. In arriving at its recommendation, the Board of Directors
gave careful consideration to a number of factors, including the
opinion of CS First Boston Corporation, the Company's financial
advisor, that the consideration to be received by holders of
Shares in the tender offer and the merger is fair to such holders
from a financial point of view.
Accompanying this letter is the Company's Solicitation/
Recommendation Statement on Schedule 14D-9, which contains
information regarding the factors considered by the Board of
Directors, a copy of the CS First Boston Corporation opinion
letter, and other information regarding the tender offer and the
merger. Also enclosed is the offer to purchase of YPF's
subsidiary, together with related materials. These documents set
forth the terms and conditions of the tender offer and other
important information. We encourage you to read the enclosed
materials carefully.
On behalf of the Company's Board of Directors,
management, and employees, I thank you for your support over the
years.
Sincerely,
/s/ CHARLES L. BLACKBURN
------------------------
Charles L. Blackburn
Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit 6
[letterhead of CS First Boston]
February 28, 1995
The Board of Directors
Maxus Energy Corporation
717 North Harwood Street
Dallas, Texas 75201
Dear Sirs:
You have asked us to advise you with respect to the fairness
to the holders of shares of the Common Stock, par value $1.00 per
share (the "Shares"), of Maxus Energy Corporation ("Maxus" or the
"Company") from a financial point of view of the consideration to
be received by such stockholders pursuant to the terms of the
Merger Agreement, dated as of February 28 (the "Merger
Agreement"), among the Company, YPF Sociedad Anonima ("YPF"), and
YPF Acquisition Corp., a wholly owned subsidiary of YPF
("Acquisition Corp."). The Merger Agreement provides, among
other things, for (i) a tender offer (the "Tender Offer") by
Acquisition Corp. for all of the outstanding Shares at $5.50 per
Share net to the seller in cash and (ii) a subsequent merger (the
"Merger") of Acquisition Corp. with and into the Company in which
the Company will become a wholly owned subsidiary of YPF and each
remaining outstanding Share will be converted into the right to
receive $5.50 in cash.
In arriving at our opinion, we have reviewed certain
publicly available business and financial information relating to
the Company, including financial statements. We have also
reviewed certain other information, including financial forecasts
and reserve information, provided to us by the Company and have
met with the Company's management to discuss the business
prospects and strategic and financial plans of the Company.
We have also considered certain financial and stock market
data of the Company, and we have compared that data with similar
data for other publicly held companies in businesses similar to
those of the Company and we have considered the financial terms
of certain other business combinations and other transactions
which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and
financial, economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any
responsibility for independent verification of any of the
foregoing information and have relied on its being complete and
accurate in all material respects. You have instructed us to
assume that the strategic and financial plans of the management
of the Company will be implemented as scheduled. With respect to
<PAGE>
The Board of Directors
Maxus Energy Corporation
February 28, 1995
Page 2
the financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Company's management as
to the future financial performance of the Company. In addition,
we have not made an independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company,
nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon financial,
economic, market and other conditions as they exist and can be
evaluated on the date hereof. We were not requested to, and did
not, solicit third party indications of interest in acquiring all
or any part of the Company, except in regard to Midgard Energy
Company, a wholly owned subsidiary of the Company. A number of
companies did, however, approach the Company with respect to a
possible acquisition of all or a substantial part of the Company,
and at your request we did engage in discussions with such
interested parties.
We have acted as financial advisor to Maxus in connection
with the Merger and will receive a fee for our services, which is
contingent upon the consummation of the Merger.
In the past, we have performed certain investment banking
services for both Maxus and YPF and have received customary fees
for such services. In addition, an officer of CS First Boston is
an alternate member of YPF's Board of Directors.
In the ordinary course of our business, CS First Boston and
its affiliates may actively trade the debt and equity securities
of both the Company and YPF for their own account and for the
accounts of customers and, accordingly, may at any time hold a
long or short position in such securities.
It is understood that this letter is for the information of
Maxus' Board of Directors only in connection with its
consideration of the Merger, does not constitute a recommendation
to any stockholder as to whether or not such stockholder should
tender Shares pursuant to the Tender Offer or how such
stockholder should vote on the proposed Merger and is not to be
quoted or referred to, in whole or in part, in any registration
statement, prospectus or proxy statement, or in any other
document used in connection with the offering or sale of
securities, nor shall this letter be used for any other purposes,
without CS First Boston's prior written consent.
Based upon and subject to the foregoing, it is our opinion
that, as of the date hereof, the consideration to be received by
the stockholders of the Company in the Tender Offer and the
<PAGE>
The Board of Directors
Maxus Energy Corporation
February 28, 1995
Page 3
Merger is fair to such stockholders from a financial point of
view.
Very truly yours,
CS FIRST BOSTON CORPORATION
By: /s/ WILLIAM M. WICKER
---------------------
William M. Wicker
Managing Director
