<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 22, 1996
-------------------------------
GLOBAL NATURAL RESOURCES INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
New Jersey 0-11307 93-0835865
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
Of Incorporation) File Number) Identification No.)
5300 Memorial Drive, Suite 800, Houston Texas 77007
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 880-5464
-----------------------------
EXHIBIT INDEX ON PAGE 5 PAGE 1 OF 71 PAGES
<PAGE> 2
Item 5. OTHER EVENTS.
On July 22, 1996, Seagull Corporation ("Seagull"), GNR Merger
Corporation, a wholly-owned subsidiary of Seagull ("Merger Sub"), and Global
Natural Resources Inc. (the "Company") executed and delivered an Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which Merger Sub shall
merge with and into the Company (the "Merger"). If the Merger is consummated,
each share of the Company's Common Stock, par value $1.00 (the "Global
Shares"), shall be converted into such number of shares of fully paid and
nonassessable voting common stock, par value $.10 per share, of Seagull
("Seagull Common Stock") equal to the Common Stock Exchange Ratio. The "Common
Stock Exchange Ratio" shall be determined as follows: (i) if the Seagull
Transaction Value is equal to or greater than $27.50, then the Common Stock
Exchange Ratio shall be equal to .72, (ii) if the Seagull Transaction Value is
equal to or less than $22.50, then the Common Stock Exchange Ratio shall be
equal to .88 and (iii) if the Seagull Transaction Value is less than $27.50 and
greater than $22.50, the Common Stock Exchange Ratio shall be determined by
linear interpolation between .72 and .88. The term "Seagull Transaction Value"
shall mean the closing sales price of Seagull Common Stock, rounded to four
decimal places, as reported under "NYSE Composite Transaction Reports" in The
Wall Street Journal for each of the first 20 consecutive trading days in the
period commencing 25 trading days prior to the date of the Company's
shareholder meeting to vote upon the proposed merger.
The Merger Agreement was approved by Seagull's and the
Company's Boards of Directors.
EXHIBIT INDEX ON PAGE 5 PAGE 2 OF 71 PAGES
<PAGE> 3
The Merger is intended to constitute a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended, and is
intended to be accounted for as a "pooling of interests" for financial
accounting purposes.
The Merger transactions are subject to the approval of the
stockholders of the Company and Seagull and requisite regulatory approvals. The
Merger is expected to be submitted to the stockholders of the Company in
October, 1996. The Merger is also subject to several other material conditions.
The Company has amended its Amended and Restated Rights
Agreement dated as of September 28, 1993 between the Company and Registrar and
Transfer Company to provide that the Merger will not trigger the issuance of
Rights under, or any other provision of, such Amended and Restated Rights
Agreement.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
1.1 Agreement and Plan of Merger by and among Seagull
Energy Corporation, GNR Merger Corporation and Global
Natural Resources Inc. dated as of July 22, 1996.
1.2 Press Release dated July 22, 1996.
EXHIBIT INDEX ON PAGE 5 PAGE 3 OF 71 PAGES
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed by the
undersigned hereunto duly authorized.
GLOBAL NATURAL RESOURCES INC.
Dated: July 30, 1996 By: /s/ Robert F. Vagt
---------------------------------
Robert F. Vagt
Chairman, President and
Chief Executive Officer
EXHIBIT INDEX ON PAGE 5 PAGE 4 OF 71 PAGES
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY NUMBERED PAGE
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<S> <C> <C>
1.1 Agreement and Plan of Merger by and 6
among Seagull Energy Corporation,
GNR Merger Corporation and Global
Natural Resources Inc. dated as of
July 22, 1996.
1.2 Press Release dated July 22, 1996. 69
</TABLE>
PAGE 5 OF 71 PAGES
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EXHIBIT 1.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SEAGULL ENERGY CORPORATION,
GNR MERGER CORPORATION
AND
GLOBAL NATURAL RESOURCES INC.
Dated as of July 22, 1996
PAGE 6 OF 71 PAGES
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EXHIBIT 1.1
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.2 Surrender and Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.3 Global Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.4 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GLOBAL
Section 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.5 Global SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.11 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.12 Environmental Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.13 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.15 Labor Matters; Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.16 Reserve Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.17 Oil and Gas Reserves; Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.18 Title to Oil and Gas Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.19 Title to Other Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.20 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.21 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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EXHIBIT 1.1
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Section 4.22 Required Stockholder Vote or Consent . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.23 Proxy Statement/Prospectus; Registration Statement . . . . . . . . . . . . . . . . . . 22
Section 4.24 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.25 Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.26 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.27 Tax-Free Reorganization and Pooling . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SEAGULL AND MERGER SUB
Section 5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.5 Seagull Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.7 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.8 Seagull SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.11 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.12 Environmental Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.13 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.16 Reserve Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.17 Oil and Gas Reserves; Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.18 Title to Oil and Gas Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.19 Title to Other Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.20 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.21 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.22 Required Shareholder Vote or Consent . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.23 Proxy Statement/Prospectus; Registration Statement . . . . . . . . . . . . . . . . . . 37
Section 5.24 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.25 Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.26 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.27 Merger Sub's Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.28 Pooling; Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by Global Pending the Merger . . . . . . . . . . . . . . . . . . . 40
Section 6.2 Conduct of Business by Seagull Pending the Merger . . . . . . . . . . . . . . . . . . 42
Section 6.3 Conduct of Business of Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
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EXHIBIT 1.1
<TABLE>
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.2 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.3 Directors' and Officers' Indemnification and Insurance . . . . . . . . . . . . . . . . 45
Section 7.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.6 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.8 Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.9 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.10 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.11 Employee Matters; Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.12 Seagull Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.13 Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.14 Preparation of the Proxy Statement/Prospectus
and Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.15 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.16 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.17 Site Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.18 Affiliate Agreements; Tax Treatment; Pooling . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to the Obligation of Each Party . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.2 Conditions to the Obligations of Seagull and Merger Sub . . . . . . . . . . . . . . . 53
Section 8.3 Conditions to the Obligations of Global . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX
SURVIVAL
Section 9.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.2 Survival of Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.2 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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EXHIBIT 1.1
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Section 11.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.8 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 11.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 11.10 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
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EXHIBIT 1.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of July
22, 1996, by and among Seagull Energy Corporation, a Texas corporation
("Seagull"), GNR Merger Corporation, a New Jersey corporation and a wholly
owned subsidiary of Seagull ("Merger Sub"), and Global Natural Resources Inc.,
a New Jersey corporation ("Global").
WHEREAS, the respective Boards of Directors of Seagull, Merger Sub and
Global deem it advisable and in the best interests of their respective
stockholders that Merger Sub merge (the "Merger") with and into Global upon the
terms and subject to the conditions set forth herein, and such Boards of
Directors have approved the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, the Merger is intended to be treated as a "pooling of
interests" (a "Pooling Transaction") in accordance with United States generally
accepted accounting principles ("GAAP") and the rules, regulations and
interpretations of the Securities and Exchange Commission (the "SEC");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2 hereof), Merger Sub
shall be merged with and into Global and the separate corporate existence of
Merger Sub shall thereupon cease, and Global shall be the surviving corporation
in the Merger (sometimes referred to herein as the "Surviving Corporation").
The Merger shall have the effects set forth in Section 14A:10-6 of the New
Jersey Business Corporation Act (the "NJBCA"), including without limitation,
the Surviving Corporation's succession to and assumption of all rights and
obligations of Global.
Section 1.2 Effective Time of the Merger. The Merger shall become
effective (the "Effective Time") when a properly executed Certificate of Merger
is duly filed with the Secretary of State of the State of New Jersey, which
filing shall be made as soon as practicable after the satisfaction or waiver of
the conditions set forth in Article VIII hereof.
PAGE 11 OF 71 PAGES
<PAGE> 7
EXHIBIT 1.1
Section 1.3 Tax Treatment. It is intended that the Merger shall
constitute a reorganization under section 368(a) of the Code.
Section 1.4 Accounting Treatment. It is intended that the Merger
shall be accounted for as a "pooling of interests" for financial accounting
purposes.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of Global as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation at and
after the Effective Time.
Section 2.2 Bylaws. The Bylaws of Global as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation at
and after the Effective Time, and thereafter may be amended in accordance with
their terms and as provided by the Certificate of Incorporation of the
Surviving Corporation and the NJBCA.
Section 2.3 Directors and Officers. At and after the Effective Time,
(a) the Board of Directors of the Surviving Corporation shall be comprised of
the persons set forth on Schedule A and (b) the officers of Global immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
in the case of both clause (a) and (b) until their respective successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders of
Global's common stock, par value $1.00 per share (the "Global Common Stock"):
(a) Each share of Global Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into such number of
shares of fully paid and nonassessable voting common stock, par value $0.10 per
share, of Seagull ("Seagull Common Stock") equal to the Common Stock Exchange
Ratio (as hereinafter defined). The "Common Stock Exchange Ratio" shall be
determined as follows: (i) if the Seagull Transaction Value (as hereinafter
defined) is equal to or greater than $27.50, then the Common Stock Exchange
Ratio shall be equal to .72, if the Seagull Transaction Value is equal to or
less than $22.50, then the Common Stock Exchange Ratio shall be equal to .88
and (iii) if the Seagull Transaction Value is less than $27.50 and greater than
$22.50, the Common Stock Exchange Ratio shall be determined by linear
interpolation between the Common Stock Exchange Ratios set forth in clauses (i)
and (ii). The term "Seagull Transaction Value" shall mean the closing sales
price of Seagull Common Stock, rounded to four decimal places,
2 PAGE 12 OF 71 PAGES
<PAGE> 8
EXHIBIT 1.1
as reported under "NYSE Composite Transaction Reports" in The Wall Street
Journal for each of the first 20 consecutive Trading Days in the period
commencing 25 Trading Days prior to the date of the Global Special Meeting (as
hereinafter defined). For purposes of this Agreement, "Trading Day" shall mean
a day on which the New York Stock Exchange (the "NYSE") is open for trading.
All such Global Common Stock, when so converted, shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
the holder of a certificate ("Common Stock Certificate") that, immediately
prior to the Effective Time, represented outstanding shares of Global Common
Stock shall cease to have any rights with respect thereto, except the right to
receive, upon the surrender of such Common Stock Certificate, the Seagull
Common Stock (the "Merger Consideration") to which such holder is entitled
pursuant to this Section 3.1(a), without interest. Until surrendered as
contemplated by this Section 3.1, each Common Stock Certificate shall be deemed
at any time after the Effective Time to represent only the right to receive
upon such surrender the Merger Consideration as contemplated by this Section
3.1. Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time the outstanding shares of Seagull Common Stock or Global
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Common Stock Exchange Ratio shall be correspondingly adjusted to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(b) Each share of common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one share of common stock of the Surviving
Corporation.
(c) Each share of Seagull Common Stock, issued and
outstanding immediately prior to the Effective Time shall remain an issued and
outstanding share of Seagull Common Stock, and shall not be affected by the
Merger.
(d) No dividends or other distributions declared or made
after the Effective Time with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Common Stock Certificate with respect
to the Merger Consideration represented thereby until the holder of record of
such Common Stock Certificate shall surrender such Common Stock Certificate.
Subject to the effect of applicable laws (including, without limitation,
escheat and abandoned property laws), following surrender of any such Common
Stock Certificate there shall be paid to the record holder of the certificate
or certificates representing the Merger Consideration issued in exchange
therefor, without interest, (i) the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such Merger Consideration, and (ii) if the payment date for any dividend or
distribution payable with respect to such Merger Consideration has not occurred
prior to the surrender of such Common Stock Certificate, at the appropriate
payment date therefor, the amount of dividends or other distributions with a
record date after the Effective Time but prior to the surrender of such Common
Stock Certificate and a payment date subsequent to the surrender of such Common
Stock Certificate.
(e) All Seagull Common Stock issued upon the surrender of
Common Stock Certificates in accordance with the terms hereof shall be deemed
to have been issued in full satisfaction of all rights pertaining to such
Common Stock Certificates and the Global Common Stock formerly represented
thereby, and from and after the Effective Time there shall be no further
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registration of transfers effected on the stock transfer books of the Surviving
Corporation of shares of Global Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Common Stock
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article III.
Section 3.2 Surrender and Payment.
(a) Prior to the Effective Time, Seagull shall appoint an
agent reasonably acceptable to Global (the "Exchange Agent") for the purpose of
exchanging Common Stock Certificates formerly representing Global Common Stock.
At or prior to the Effective Time, Seagull shall deposit with the Exchange
Agent for the benefit of the holders of Global Common Stock (other than Global,
Seagull or any Subsidiary of Seagull), for exchange in accordance with this
Section 3.2 through the Exchange Agent, (i) as of the Effective Time,
certificates representing the Merger Consideration to be issued pursuant to
Section 3.1(a) and (ii) from time to time as necessary, cash to be paid in lieu
of fractional shares pursuant to Section 3.4 (such certificates for the Merger
Consideration and such cash being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the Merger Consideration and cash in exchange for surrendered Common
Stock Certificates formerly representing Global Common Stock pursuant to
Section 3.1 out of the Exchange Fund. Except as contemplated by Section
3.2(f), the Exchange Fund shall not be used for any other purpose.
(b) Promptly after the Effective Time, but in any event not
later than five business days thereafter, Seagull will send, or will cause the
Exchange Agent to send, to each holder of a Common Stock Certificate or
Certificates that immediately prior to the Effective Time represented
outstanding Global Common Stock a letter of transmittal and instructions for
use in effecting the exchange of such Common Stock Certificates for
certificates representing the Merger Consideration and, if applicable, cash in
lieu of a fractional share. Provision also shall be made for holders of Common
Stock Certificates to procure in person immediately after the Effective Time a
letter of transmittal and instructions and to deliver in person immediately
after the Effective Time such letter of transmittal and Common Stock
Certificates in exchange for the Merger Consideration and, if applicable, cash.
(c) After the Effective Time, Common Stock Certificates shall
represent the right, upon surrender thereof to the Exchange Agent, together
with a duly executed and properly completed letter of transmittal relating
thereto, to receive in exchange therefor that number of whole shares of Seagull
Common Stock, and, if applicable, cash that such holder has the right to
receive pursuant to Sections 3.1 and 3.4 after giving effect to any required
tax withholding, and the Common Stock Certificate or Certificates so
surrendered shall be canceled. No interest will be paid or will accrue on any
cash amount payable upon the surrender of any such Common Stock Certificates.
Until so surrendered, each such Common Stock Certificate shall, after the
Effective Time, represent for all purposes only the right to receive, upon such
surrender, Seagull Common Stock and, if applicable, cash as contemplated by
this Article III.
(d) If any shares of Seagull Common Stock are to be issued
and/or cash to be paid to a Person other than the registered holder of the
Common Stock Certificate or Certificates surrendered in exchange therefor, it
shall be a condition to such issuance that the Common Stock Certificate or
Certificates so surrendered shall be properly endorsed or otherwise be in
proper form
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EXHIBIT 1.1
for transfer and that the Person requesting such issuance shall pay to the
Exchange Agent any transfer or other taxes required as a result of such
issuance to a Person other than the registered holder or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. For purposes of this Agreement, "Person" means an individual, a
corporation, a limited liability company, a partnership, an association, a
trust or any other entity or organization, including a governmental or
political subdivision or any agency or instrumentality thereof.
(e) After the Effective Time, the stock transfer books of
Global shall be closed and there shall be no further registration of transfers
of Global Common Stock outstanding prior to the Effective Time. If, at or
after the Effective Time, Common Stock Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged as provided for,
and in accordance with the procedures set forth, in this Article III.
(f) Any Merger Consideration and any cash in the Exchange
Fund that remain unclaimed by the holders of Global Common Stock one year after
the Effective Time shall be returned to Seagull, upon demand, and any such
holder who has not exchanged such holder's Common Stock Certificates in
accordance with this Section 3.2 prior to that time shall thereafter look only
to Seagull, as general creditors thereof, to exchange such Common Stock
Certificates or to pay amounts to which they are entitled pursuant to Section
3.1. If outstanding Common Stock Certificates are not surrendered prior to six
years after the Effective Time (or, in any particular case, prior to such
earlier date on which any Merger Consideration issuable in respect of such
Common Stock Certificates or the dividends and other distributions, if any,
described below would otherwise escheat to or become the property of any
governmental unit or agency), the Merger Consideration issuable in respect of
such Common Stock Certificates, and the amount of dividends and other
distributions, if any, which have become payable and which thereafter become
payable on the Merger Consideration evidenced by such Common Stock Certificates
as provided herein shall, to the extent permitted by applicable law, become the
property of Seagull, free and clear of all claims or interest of any Person
previously entitled thereto. Notwithstanding the foregoing, none of Seagull,
Global or the Surviving Corporation shall be liable to any holder of Common
Stock Certificates for any amount paid, or Merger Consideration, cash or
dividends delivered, to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) No dividends or other distributions on any Merger
Consideration shall be paid to the holder of any unsurrendered Common Stock
Certificates with respect to the Seagull Common Stock represented thereby until
such Common Stock Certificates are surrendered as provided in this Section 3.2.
Following such surrender, there shall be paid, without interest, to the Person
in whose name the certificates representing the Merger Consideration issued in
exchange therefor are registered, (i) promptly all dividends and other
distributions paid in respect of such Merger Consideration with a record date
on or after the Effective Time and theretofore paid, and (ii) at the
appropriate date, all dividends or other distributions in respect of such
Merger Consideration with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender.
(h) If any Common Stock Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Common Stock Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as Seagull may direct as indemnity against any claim
that may
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EXHIBIT 1.1
be made against it with respect to such Common Stock Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Common Stock
Certificate the Merger Consideration and, if applicable, cash and unpaid
dividends and other distributions on any Merger Consideration deliverable in
respect thereof pursuant to this Agreement.
Section 3.3 Global Stock Options.
(a) At the Effective Time, automatically and without any
action on the part of the holder thereof, each outstanding employee or director
stock option of Global outstanding at the Effective Time (the "Global Stock
Options") shall be assumed by Seagull and become an option to purchase that
number of shares of Seagull Common Stock obtained by multiplying the number of
shares of Global Common Stock issuable upon the exercise of such option by the
Common Stock Exchange Ratio at an exercise price per share equal to the per
share exercise price of such option divided by the Common Stock Exchange Ratio
and otherwise upon the same terms and conditions as such outstanding options to
purchase Global Common Stock; provided, however, that in the case of any option
to which Section 421 of the Code applies by reason of the qualifications under
Section 422 or 423 of such Code, the exercise price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such option shall comply with Section 424(a) of the Code.
(b) At the Effective Time, subject to any requirements or
restrictions necessary in order for the Merger to constitute a Pooling
Transaction, automatically and without any action by any person, each
outstanding Global Stock Option then held by an employee of Global or any of
its Subsidiaries shall become immediately exercisable.
(c) Seagull shall take all corporate actions necessary to
reserve for issuance a sufficient number of shares of Seagull Common Stock for
delivery upon exercise of Global Stock Options assumed by Seagull pursuant to
Section 3.3(a) above.
(d) As promptly as practicable after the Effective Time,
Seagull shall file a Registration Statement on Form S-8, as the case may be (or
any successor or other appropriate forms) with respect to the shares of Seagull
Common Stock subject to Global Stock Options and shall use all reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(e) Except as provided herein or as otherwise agreed to by
the parties, each of the Global stock option plans providing for the issuance
or grant of options in respect to the stock of Global shall be assumed as of
the Effective Time by Seagull with such amendments thereto as may be required
to reflect the Merger.
(f) In connection with the submission of the Proxy
Statement/Prospectus to its shareholders, Seagull shall seek such shareholder
approval as may be necessary so that grants of options and issuances of
securities pursuant to the exercise of such options under the Global stock
option plans assumed by it hereunder, as amended, and all other Global stock
option plans as in effect on the date hereof shall qualify for the exemption
for such issuances provided by Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
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EXHIBIT 1.1
Section 3.4 No Fractional Shares. No fractional shares of Seagull
Common Stock shall be issued in the Merger and fractional share interests shall
not entitle the owner thereof to vote or to any rights of a shareholder of
Seagull. All holders of fractional shares of Seagull Common Stock shall be
entitled to receive, in lieu thereof, an amount in cash determined by
multiplying the fraction of a share of Seagull Common Stock to which such
holder would otherwise have been entitled by the Closing Sales Price of Seagull
Common Stock on the NYSE. For purposes of this Agreement, (i) "Closing Sales
Price" shall mean the average of the closing sales price of Seagull Common
Stock, rounded to four decimal places, as reported under "NYSE Composite
Transaction Reports" in The Wall Street Journal for each of the first 20
consecutive Trading Days in the period commencing 25 Trading Days prior to the
Effective Time.
Section 3.5 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at a location mutually
acceptable to Global and Seagull, at 10:00 a.m., local time, on the day (the
"Closing Date") on which all of the conditions set forth in Article VIII hereof
are satisfied or waived, or at such other date and time as Seagull and Global
shall agree in writing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GLOBAL
Global represents and warrants to Seagull and Merger Sub as
follows:
Section 4.1 Organization and Qualification.
(a) Global is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey, is duly
qualified to do business as a foreign corporation and is in good standing in
the jurisdictions set forth in Section 4.1(a) of the disclosure letter
delivered to Seagull and Merger Sub contemporaneously with the execution hereof
(the "Global Disclosure Schedule"), which include each jurisdiction in which
the character of Global's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not result in a Global Material Adverse Effect (as
defined below). Global has all requisite corporate or other power and
authority to own, use or lease its properties and to carry on its business as
it is now being conducted and as it is now proposed to be conducted. Global
has made available to Seagull and Merger Sub a complete and correct copy of its
certificate of incorporation and bylaws, each as amended to date, and Global's
certificate of incorporation and bylaws as so delivered are in full force and
effect. Global is not in default in any respect in the performance,
observation or fulfillment of any provision of its certificate of incorporation
or bylaws.
(b) Section 4.1(b) of the Global Disclosure Schedule lists
the name and jurisdiction of organization of each Subsidiary of Global and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to
do business as a foreign corporation or other organization as of the date
hereof. Each of Global's Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business as a
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EXHIBIT 1.1
foreign corporation and is in good standing in the jurisdictions listed in
Section 4.1(b) of the Global Disclosure Schedule, which includes each
jurisdiction in which the character of such Subsidiary's properties or the
nature of its business makes such qualification necessary, except in
jurisdictions, if any, where the failure to be so qualified would not result in
a Global Material Adverse Effect. Each of Global's Subsidiaries has the
requisite corporate or other power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. Global has made available to Seagull and
Merger Sub a complete and correct copy of the certificate of incorporation and
bylaws (or similar organizational documents) of each of Global's Subsidiaries,
each as amended to date, and the certificate of incorporation and bylaws (or
similar charter documents) as so delivered are in full force and effect. No
Subsidiary of Global is in default in any respect in the performance,
observation or fulfillment of any provision of its articles of incorporation or
bylaws (or similar organizational documents). Other than Global's
Subsidiaries, Global does not beneficially own or control, directly or
indirectly, 5% or more of any class of equity or similar securities of any
corporation or other organization, whether incorporated or unincorporated.
(c) For purposes of this Agreement, (i) a "Global Material
Adverse Effect" shall mean any event, circumstance, condition, development or
occurrence causing, resulting in or having (or with the passage of time likely
to cause, result in or have) a material adverse effect on the financial
condition, business, assets, properties, prospects or results of operations of
Global and its Subsidiaries taken as a whole; provided, that such term shall
not include effects that are not applicable primarily to Global resulting from
market conditions generally in the oil and gas industry; and (ii) "Subsidiary"
shall mean, with respect to any party, any corporation or other organization,
whether incorporated or unincorporated, of which (x) at least a majority of the
securities or other interests having by their terms voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
beneficially owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries, or (y) such
party or any Subsidiary of such party is a general partner of a partnership or
a manager of a limited liability company.
Section 4.2 Capitalization.
(a) The authorized capital stock of Global consists of
100,000,000 shares of Global Common Stock and 750,000 shares of preferred
stock, par value $1.00 per share, all of which have been designated as Series B
Junior Preferred Stock. As of June 30, 1996, (i) 29,766,500 shares of Global
Common Stock were issued and outstanding, (ii) no shares of preferred stock
were issued and outstanding, and (iii) stock options to acquire 1,564,850
shares of Global Common Stock were outstanding under all stock option plans and
agreements of Global. All of the outstanding shares of Global Common Stock are
validly issued, fully paid and nonassessable, and free of preemptive rights.
Except as set forth above and the Rights Agreement dated as of October 5, 1988
between Global and Registrar and Transfer Company (as amended, the "Global
Rights Plan"), there are no outstanding subscriptions, options, rights,
warrants, convertible securities, stock appreciation rights, phantom equity, or
other agreements or commitments obligating Global to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock of any
class. Except for any amendments filed with the Global SEC Reports (as defined
below), the Global Rights Plan has not been amended except to provide that the
Global Rights Plan is inapplicable to the execution and delivery of this
Agreement and the transactions contemplated hereby (including the Voting
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EXHIBIT 1.1
Agreement referred to below) and any other agreement executed and delivered in
connection herewith. No "Distribution Date" has occurred within the meaning of
the Global Rights Plan, and the consummation of the transactions contemplated
hereby will not result in the occurrence of a Distribution Date. Global has
taken all action required to render the Global Rights Plan (and the "Rights"
thereunder) inapplicable to this Agreement and the transactions contemplated
hereby (including without limitation the execution, delivery or performance of
that certain Voting Agreement (the "Voting Agreement") dated of even date
herewith between Seagull and The Prudential Life Insurance Company of America
(the "Stockholder") and any other agreement executed and delivered in
connection herewith).
(b) Except as set forth on Schedule 4.2(b), Global is,
directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each Global Subsidiary, there are no
irrevocable proxies with respect to any such shares, and no equity securities
of any Global Subsidiary are or may become required to be issued by reason of
any options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable or exercisable for, shares of any capital stock of any Global
Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which Global or any Global Subsidiary is or may be bound to
issue additional shares of capital stock of any Global Subsidiary or securities
convertible into or exchangeable or exercisable for any such shares. All of
such shares so owned by Global are validly issued, fully paid and nonassessable
and are owned by it free and clear of all Liens (as hereinafter defined).
Section 4.3 Authority. Global has full corporate power and authority
to execute and deliver this Agreement and the other agreements contemplated
hereby (the "Ancillary Agreements") to which Global is or will be a party and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Ancillary Agreements to
which Global is or will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
Global's Board of Directors, and no other corporate proceedings on the part of
Global are necessary to authorize this Agreement and the Ancillary Agreements
to which Global is or will be a party or to consummate the transactions
contemplated hereby or thereby, other than the approval of this Agreement and
the Merger by its stockholders as contemplated by Section 7.13 hereof. This
Agreement has been, and the Ancillary Agreements to which Global is or will be
a party are, or upon execution will be, duly and validly executed and delivered
by Global and, assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto, constitutes, or upon
execution will constitute, valid and binding obligations of Global enforceable
against Global in accordance with their respective terms, except as such
enforceability may be subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting the rights
of creditors and of general principles of equity (the "Enforceability
Exception").
Section 4.4 Consents and Approvals; No Violation. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance by Global of its obligations hereunder will not:
(a) subject to the obtaining of any requisite approvals of
Global's stockholders as contemplated by Section 7.13 hereof, conflict with any
provision of Global's certificate of
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EXHIBIT 1.1
incorporation or bylaws or the certificates of incorporation or bylaws (or
other similar organizational documents) of any of its Subsidiaries;
(b) require any consent, waiver, approval, order,
authorization or permit of, or registration, filing with or notification to,
(i) any governmental or regulatory authority or agency (a "Governmental
Authority"), except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Securities
Act of 1933, as amended (the "Securities Act"), the Exchange Act, state laws
relating to takeovers, if applicable, state securities or blue sky laws and
Customary Post-Closing Consents (as defined in Section 4.18) or (ii) except as
set forth in Section 4.4(b) of the Global Disclosure Schedule, any third party
other than a Governmental Authority, other than such non-Governmental Authority
third party consents, waivers, approvals, orders, authorizations and permits
that would (i) result in a Global Material Adverse Effect, (ii) materially
impair the ability of Global or any of its Subsidiaries, as the case may be, to
perform its obligations under this Agreement or any Ancillary Agreement or
(iii) prevent the consummation of any of the transactions contemplated by this
Agreement;
(c) except as set forth in Section 4.4(c) of the Global
Disclosure Schedule, result in any violation of or the breach of or constitute
a default (with notice or lapse of time or both) under, or give rise to any
right of termination, cancellation or acceleration or guaranteed payments or a
loss of a material benefit under, any of the terms, conditions or provisions of
any note, lease, mortgage, license, agreement or other instrument or obligation
to which Global or any of its Subsidiaries is a party or by which Global or any
of its Subsidiaries or any of their respective properties or assets may be
bound, except for such violations, breaches, defaults, or rights of
termination, cancellation or acceleration, or losses as to which requisite
waivers or consents have been obtained or which, individually or in the
aggregate, would not (i) result in a Global Material Adverse Effect, (ii)
materially impair the ability of Global or any of its Subsidiaries to perform
its obligations under this Agreement or any Ancillary Agreement or (iii)
prevent the consummation of any of the transactions contemplated by this
Agreement;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to Global or any
Subsidiary of Global;
(e) result in the creation of any Lien upon any shares of
capital stock, properties or assets of Global or any of its Subsidiaries under
any agreement or instrument to which Global or any of its Subsidiaries is a
party or by which Global or any of its Subsidiaries or any of their properties
or assets is bound; or
(f) result in any holder of any securities of Global being
entitled to appraisal, dissenters' or similar rights.
Section 4.5 Global SEC Reports. Global has filed with the SEC, and
has heretofore made available to Seagull and Merger Sub true and complete
copies of, each form, registration statement, report, schedule, proxy or
information statement and other document (including exhibits and amendments
thereto), including without limitation its Annual Reports to Stockholders
incorporated by reference in certain of such reports, required to be filed with
the SEC since December 31, 1992 under the Securities Act or the Exchange Act
(collectively, the "Global SEC Reports"). As of the respective dates such
Global SEC Reports were filed or, if any such Global SEC Reports were
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EXHIBIT 1.1
amended, as of the date such amendment was filed, each of the Global SEC
Reports, including without limitation any financial statements or schedules
included therein, (a) complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, as the case may be,
and the applicable rules and regulations promulgated thereunder, and (b) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 4.6 Financial Statements. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
Global (including any related notes and schedules) included (or incorporated by
reference) in its Annual Reports on Form 10-K for each of the three fiscal
years ended December 31, 1993, 1994 and 1995 and its Quarterly Report on Form
10-Q for its fiscal quarter ended March 31, 1996 (collectively, the "Financial
Statements") have been prepared from, and are in accordance with, the books and
records of Global and its consolidated Subsidiaries, comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto and subject, in the case of quarterly financial
statements, to normal and recurring year-end adjustments) and fairly present,
in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of Global
and its Subsidiaries as of the date thereof and the consolidated results of
operations and cash flows (and changes in financial position, if any) of Global
and its Subsidiaries for the periods presented therein (subject to normal
year-end adjustments and the absence of financial footnotes in the case of any
unaudited interim financial statements).
Section 4.7 Absence of Undisclosed Liabilities. Except (a) as
specifically disclosed in the Global SEC Reports and (b) for liabilities and
obligations incurred in the ordinary course of business and consistent with
past practice since December 31, 1995, neither Global nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature
(contingent or otherwise) that would have a Global Material Adverse Effect or
would be required by GAAP to be reflected on a consolidated balance sheet of
Global and its Subsidiaries or the notes thereto which is not so reflected.
Section 4.8 Absence of Certain Changes. Except as disclosed in the
Global SEC Reports or as contemplated by this Agreement, since December 31,
1995 (a) Global and its Subsidiaries have conducted their business in all
material respects in the ordinary course consistent with past practices, (b)
there has not been any change or development, or combination of changes or
developments that, individually or in the aggregate, would have a Global
Material Adverse Effect, (c) there has not been any declaration, setting aside
or payment of any dividend or other distribution with respect to any shares of
capital stock of Global, or any repurchase, redemption or other acquisition by
Global or any of its Subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, Global or any of its
Subsidiaries, (d) there has not been any amendment of any term of any
outstanding security of Global or any of its Subsidiaries, and (e) there has
not been any change in any method of accounting or accounting practice by
Global or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in generally accepted accounting principles or to
conform a Subsidiary's accounting policies and practices to those of Global.
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EXHIBIT 1.1
Section 4.9 Taxes. Except as otherwise disclosed in Section 4.9 of
the Global Disclosure Schedule (and for matters that would have no adverse
effect on Global):
(a) Global and each of its Subsidiaries have timely filed (or
have had timely filed on their behalf) or will file or cause to be timely
filed, all material Tax Returns (as defined below) required by applicable law
to be filed by any of them prior to or as of the Closing Date. All such Tax
Returns and amendments thereto are or will be true, complete and correct in all
material respects.
(b) Global and each of its Subsidiaries have paid (or have
had paid on their behalf), or where payment is not yet due, have established
(or have had established on their behalf and for their sole benefit and
recourse), or will establish or cause to be established on or before the
Closing Date, an adequate accrual for the payment of all material Taxes (as
defined below) due with respect to any period ending prior to or as of the
Closing Date.
(c) No Audit (as defined below) by a Tax Authority (as
defined below) is pending or threatened with respect to any Tax Returns filed
by, or Taxes due from, Global or any Subsidiary. No issue has been raised by
any Tax Authority in any Audit of Global or any of its Subsidiaries that if
raised with respect to any other period not so audited could be expected to
result in a material proposed deficiency for any period not so audited. No
material deficiency or adjustment for any Taxes has been threatened, proposed,
asserted or assessed against Global or any of its Subsidiaries. There are no
liens for Taxes upon the assets of Global or any of its Subsidiaries, except
liens for current Taxes not yet delinquent.
(d) Neither Global nor any of its Subsidiaries has given or
been requested to give any waiver of statutes of limitations relating to the
payment of Taxes or have executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date.
(e) Prior to the date hereof, Global and its Subsidiaries
have disclosed, and provided or made available true and complete copies to
Seagull of, all material Tax sharing, Tax indemnity, or similar agreements to
which Global or any of its Subsidiaries are a party to, is bound by, or has any
obligation or liability for Taxes.
(f) As used in this Agreement, (i) "Audit" shall mean any
audit, assessment of Taxes, other examination by any Tax Authority, proceeding
or appeal of such proceeding relating to Taxes; (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign Governmental Authority responsible for the administration of any Taxes;
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
Section 4.10 Litigation. Except as disclosed in the Global SEC
Reports or Section 4.10 of the Global Disclosure Schedule, there is no suit,
claim, action, proceeding or investigation pending or, to Global's knowledge,
threatened against or directly affecting Global, any Subsidiaries of Global or
any of the directors or officers of Global or any of its Subsidiaries in their
capacity as
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EXHIBIT 1.1
such, nor is there any reasonable basis therefor that could reasonably be
expected to have a Global Material Adverse Effect, if adversely determined.
Neither Global nor any of its Subsidiaries, nor any officer, director or
employee of Global or any of its Subsidiaries, has been permanently or
temporarily enjoined by any order, judgment or decree of any court or any other
Governmental Authority from engaging in or continuing any conduct or practice
in connection with the business, assets or properties of Global or such
Subsidiary nor, to the knowledge of Global, is Global, any Subsidiary or any
officer, director or employee of Global or its Subsidiaries under investigation
by any Governmental Authority. Except as disclosed in the Global SEC Reports
or Section 4.10 of the Global Disclosure Schedule, there is not in existence
any order, judgment or decree of any court or other tribunal or other agency
enjoining or requiring Global or any of its Subsidiaries to take any action of
any kind with respect to its business, assets or properties. Notwithstanding
the foregoing, no representation or warranty in this Section 4.10 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 4.12.
Section 4.11 Employee Benefit Plans; ERISA.
(a) Section 4.11(a) of the Global Disclosure Schedule
contains a true and complete list of the employee benefit plans or arrangements
of any type (including but not limited to plans described in section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
sponsored, maintained or contributed to by Global or any trade or business,
whether or not incorporated, which together with Global would be deemed a
"single employer" within the meaning of Section 414(b), (c) or (m) of the Code
or section 4001(b)(1) of ERISA (an "Global ERISA Affiliate") within six years
prior to the Effective Time, which provide benefits to Global's employees
("Global Benefit Plans").
(b) With respect to each Global Benefit Plan: (i) if
intended to qualify under section 401(a) or 401(k) of the Code, such plan
satisfies the requirements of such sections, has received a favorable
determination letter from the Internal Revenue Service with respect to its
qualification, and its related trust has been determined to be exempt from tax
under section 501(a) of the Code and, to the knowledge of Global, nothing has
occurred since the date of such letter to adversely affect such qualification
or exemption; (ii) each such plan has been administered in substantial
compliance with its terms and applicable law; (iii)neither Global nor any
Global ERISA Affiliate has engaged in, and Global and each Global ERISA
Affiliate do not have any knowledge of any person that has engaged in, any
transaction or acted or failed to act in any manner that would subject Global
or any Global ERISA Affiliate to any liability for a breach of fiduciary duty
under ERISA that could reasonably be expected to result in a Global Material
Adverse Effect; (iv) no disputes are pending or, to the knowledge of Global or
any Global ERISA Affiliate, threatened; (v) neither Global nor any Global ERISA
Affiliate has engaged in, and Global and each Global ERISA Affiliate do not
have any knowledge of any person that has engaged in, any transaction in
violation of Section 406(a) or (b) of ERISA for which no exemption exists under
Section 4975(c)(1) of the Code or Section 4975(d) of the Code that could
reasonably be expected to result in a Global Material Adverse Effect; (vi)
there have been no "reportable events" within the meaning of Section 4043 of
ERISA for which the 30 day notice requirement of ERISA has not been waived by
the Pension Benefit Guaranty Corporation (the "PBGC"); (vii) all contributions
due have been made on a timely basis (within, where applicable, the time limit
established under section 302 of ERISA or Code section 412); (viii) no notice
of intent to terminate such plan has been given under section 4041 of ERISA and
no proceeding has been instituted under section 4042 of ERISA to terminate
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EXHIBIT 1.1
such plan; and (ix) except for defined benefit plans, such plan may be
terminated on a prospective basis without any continuing liability for benefits
other than benefits accrued to the date of such termination. All contributions
made or required to be made under any Global Benefit Plan meet the requirements
for deductibility under the Code, and all contributions which are required and
which have not been made have been properly recorded on the books of Global or
a Global ERISA Affiliate.
(c) No Global Benefit Plan is a "multiemployer plan" (as
defined in section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of section 413(c) of the Code). No event has occurred with respect
to Global or a Global ERISA Affiliate in connection with which Global could be
subject to any liability, lien or encumbrance with respect to any Global
Benefit Plan or any employee benefit plan described in section 3(3) of ERISA
maintained, sponsored or contributed to by a Global ERISA Affiliate under ERISA
or the Code.
(d) Except as set forth in Section 4.11(d) of the Global
Disclosure Schedule, no employees of Global or any of its Subsidiaries are
covered by any severance plan or similar arrangement.
Section 4.12 Environmental Liability. Except as set forth in Section
4.12 of the Global Disclosure Schedule:
(a) The businesses of Global and its Subsidiaries have been
and are operated in material compliance with all federal, state and local
environmental protection, health and safety or similar laws, statutes,
ordinances, restrictions, licenses, rules, regulations, permit conditions and
legal requirements, including without limitation the Federal Clean Water Act,
Safe Drinking Water Act, Resource Conservation & Recovery Act, Clean Air Act,
Comprehensive Environmental Response, Compensation and Liability Act, and
Emergency Planning and Community Right to Know, each as amended and currently
in effect (together, "Environmental Laws").
(b) Neither Global nor any of its Subsidiaries has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, discharge, release, disposal, transport or handling of any chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum, petroleum products or any substance regulated under any
Environmental Law ("Hazardous Substances") at any of its properties or
facilities, except in material compliance with all Environmental Laws, and, to
Global's knowledge, no generation, manufacture, processing, distribution, use,
treatment, handling, storage, discharge, release, disposal, transport or
handling of any Hazardous Substances has occurred at any property or facility
owned, leased or operated by Global or any of its Subsidiaries except in
material compliance with all Environmental Laws.
(c) Neither Global nor any of its Subsidiaries has received
any written notice from any Governmental Authority or, to the knowledge of
Global, any other communication alleging or concerning any material violation
by Global or any of its Subsidiaries of, or responsibility or liability of
Global or any of its Subsidiaries under, any Environmental Law. There are no
pending, or to the knowledge of Global, threatened, claims, suits, actions,
proceedings or investigations with respect to the businesses or operations of
Global or any of its Subsidiaries alleging or concerning any material violation
of or responsibility or liability under any Environmental Law that, if
adversely determined, could reasonably be expected to have a Global Material
Adverse Effect, nor does Global
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EXHIBIT 1.1
have any knowledge of any fact or condition that could give rise to such a
claim, suit, action, proceeding or investigation.
(d) Global and its Subsidiaries are in possession of all
material approvals, permits, licenses, registrations and similar type
authorizations from all Governmental Authorities under all Environmental Laws
with respect to the operation of the businesses of Global and its Subsidiaries;
there are no pending or, to the knowledge of Global, threatened, actions,
proceedings or investigations seeking to modify, revoke or deny renewal of any
of such approvals, permits, licenses, registrations and authorizations; and
Global does not have knowledge of any fact or condition that is reasonably
likely to give rise to any action, proceeding or investigation to modify,
revoke or deny renewal of any of such approvals, permits, licenses,
registrations and authorizations.
(e) Without in any way limiting the generality of the
foregoing, (i) all off-site locations where Global or any of its Subsidiaries
has transported, released, discharged, stored, disposed or arranged for the
disposal of pollutants, contaminants, hazardous wastes or toxic substances
required by law to be disposed at a licensed disposal site are identified in
Section 4.12 of the Global Disclosure Schedule, (ii) to Global's knowledge, all
underground storage tanks, and the operating status, capacity and contents of
such tanks, located on any property owned, leased or operated by Global or any
of its Subsidiaries are identified in Section 4.12 of the Global Disclosure
Schedule, (iii) to the knowledge of Global, there is no asbestos contained in
or forming part of any building, building component, structure or office space
owned or leased by Global, and (iv) no polychlorinated biphenyls ("PCBs") or
PCB-containing items are used or stored at any property owned, leased or
operated by Global or any of its Subsidiaries.
Section 4.13 Compliance with Applicable Laws. Global and each of its
Subsidiaries hold all material approvals, licenses, permits, registrations and
similar type authorizations necessary for the lawful conduct of its respective
businesses, as now conducted, and such businesses are not being, and neither
Global nor any of its Subsidiaries has received any notice from any
Governmental Authority or person that any such business has been or is being
conducted in violation of any law, ordinance or regulation, including without
limitation any law, ordinance or regulation relating to occupational health and
safety, except for possible violations which either individually or in the
aggregate have not resulted and would not result in a Global Material Adverse
Effect; provided, however, notwithstanding the foregoing, no representation or
warranty in this Section 4.13 is made with respect to Environmental Laws, which
are covered exclusively by the provisions set forth in Section 4.12.
Section 4.14 Insurance. Section 4.14 of the Global Disclosure
Schedule lists each of the insurance policies relating to Global or its
Subsidiaries which are currently in effect. Global has provided Seagull with a
true, complete and correct copy of each such policy or the binder therefor.
With respect to each such insurance policy or binder none of Global, any of its
Subsidiaries or any other party to the policy is in breach or default
thereunder (including with respect to the payment of premiums or the giving of
notices), and Global does not know of any occurrence or any event which (with
notice or the lapse of time or both) would constitute such a breach or default
or permit termination, modification or acceleration under the policy, except
for such breaches or defaults which, individually or in the aggregate, would
not result in a Global Material Adverse Effect. Section 4.14 of the Global
Disclosure Schedule describes any self-insurance arrangements affecting Global
or its Subsidiaries. The insurance policies listed in Section 4.14 of the
Global Disclosure
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EXHIBIT 1.1
Schedule include all policies which are required in connection with the
operation of the businesses of Global and its Subsidiaries as currently
conducted by applicable laws and all agreements relating to Global and its
Subsidiaries.
Section 4.15 Labor Matters; Employees.
(a) Except as set forth in Section 4.15 of the Global
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of Global, threatened
against or affecting Global or any of its Subsidiaries and, during the past
five years, there has not been any such action, (ii) none of Global or any of
its Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to employees of
Global or any of its Subsidiaries, (iii) none of the employees of Global or any
of its Subsidiaries are represented by any labor organization and none of
Global or any of its Subsidiaries have any knowledge of any current union
organizing activities among the employees of Global or any of its Subsidiaries
nor does any question concerning representation exist concerning such
employees, (iv) Global and its Subsidiaries have each at all times been in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no unfair labor practice charge or
complaint against any of Global or any of its Subsidiaries pending or, to the
knowledge of Global, threatened before the National Labor Relations Board or
any similar state or foreign agency, (vi) there is no grievance or arbitration
proceeding arising out of any collective bargaining agreement or other
grievance procedure relating to Global or any of its Subsidiaries, and (vii)
neither the Occupational Safety and Health Administration nor any corresponding
state agency has threatened to file any citation, and there are no pending
citations, relating to Global or any of its Subsidiaries.
(b) Since the enactment of the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN Act"), none of Global or any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of any of Global or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of Global or any of its Subsidiaries, nor
has Global or any of its Subsidiaries been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law, in each case that could
reasonably be expected to have a Global Material Adverse Effect.
Section 4.16 Reserve Reports.
(a) All information supplied to Netherland, Sewell &
Associates, Inc. and Ryder Scott Company Petroleum Engineers by or on behalf of
Global and its Subsidiaries that was material to each such firm's estimates of
proved oil and gas reserves attributable to the Oil and Gas Interests (as
hereinafter defined) of Global and its Subsidiaries in connection with the
preparation of the proved oil and gas reserve reports concerning the Oil and
Gas Interests of Global and its Subsidiaries as of December 31, 1995 and
prepared by Netherland, Sewell & Associates, Inc. and Ryder Scott Company
Petroleum Engineers, respectively (such reserve reports, together with the
reserve report
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EXHIBIT 1.1
concerning the Indonesian properties of Global and its Subsidiaries as of
December 31, 1995, the "Global Reserve Report") was (at the time supplied or as
modified or amended prior to the issuance of the Global Reserve Report) true
and correct in all material respects and Global has no knowledge of any
material errors in such information that existed at the time of such issuance.
For purposes of this Agreement "Oil and Gas Interests" means direct and
indirect interests in and rights with respect to oil, gas, mineral, and related
properties and assets of any kind and nature, direct or indirect, including
working, leasehold and mineral interests and operating rights and royalties,
overriding royalties, production payments, net profit interests and other
nonworking interests and nonoperating interests; all interests in rights with
respect to oil, condensate, gas, casinghead gas and other liquid or gaseous
hydrocarbons (collectively, "Hydrocarbons") and other minerals or revenues
therefrom, all contracts in connection therewith and claims and rights thereto
(including all oil and gas leases, operating agreements, unitization and
pooling agreements and orders, division orders, transfer orders, mineral deeds,
royalty deeds, oil and gas sales, exchange and processing contracts and
agreements, and in each case, interests thereunder), surface interests, fee
interests, reversionary interests, reservations, and concessions; all
easements, rights of way, licenses, permits, leases, and other interests
associated with, appurtenant to, or necessary for the operation of any of the
foregoing; and all interests in equipment and machinery (including wells, well
equipment and machinery), oil and gas production, gathering, transmission,
treating, processing, and storage facilities (including tanks, tank batteries,
pipelines, and gathering systems), pumps, water plants, electric plants,
gasoline and gas processing plants, refineries, and other tangible personal
property and fixtures associated with, appurtenant to, or necessary for the
operation of any of the foregoing. Except for changes (including changes in
commodity prices) generally affecting the oil and gas industry, there has been
no change in respect of the matters addressed in the Global Reserve Report that
would have a Global Material Adverse Effect.
(b) Set forth in Section 4.16(b) of the Global Disclosure
Schedule is a list of all material Oil and Gas Interests that were included in
the Global Reserve Report that have been disposed of prior to the date of this
Agreement.
Section 4.17 Oil and Gas Reserves; Equipment. Except as otherwise
set forth in Section 4.17 of the Global Disclosure Schedule:
(a) None of the wells included in the Oil and Gas Interests
of Global and its Subsidiaries has been overproduced, except where such
overproduction individually, or in the aggregate with all other such
overproduction, would not have a Global Material Adverse Effect;
(b) There have been no material changes proposed in the
production allowables for any wells included in the Oil and Gas Interests of
Global and its Subsidiaries;
(c) All wells included in the Oil and Gas Interests of Global
and its Subsidiaries have been drilled and (if completed) completed, operated,
and produced in accordance with good oil and gas field practices and in
compliance in all respects with applicable oil and gas leases and applicable
laws, rules, and regulations, except where any failure or violation would not
have a Global Material Adverse Effect;
(d) Except as set forth in Section 4.17(d) of the Global
Disclosure Schedule, there are no wells included in the Oil and Gas Interests
of Global and its Subsidiaries that:
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EXHIBIT 1.1
(i) Global or any of its Subsidiaries is currently
obligated by law or contract to plug and abandon or will be obligated
by law or contract to plug and abandon with the lapse of time or
notice or both because the well is not currently capable of producing
in commercial quantities, except for such wells that will not
individually, or in the aggregate with all other such wells, result in
Global and its Subsidiaries incurring plugging and abandonment costs
(net of salvage value) in an amount in excess of $500,000;
(ii) are subject to exceptions to a requirement to
plug and abandon issued by a Governmental Authority having
jurisdiction over the wells; or
(iii) have been plugged and abandoned but have not
been plugged or reclaimed in accordance with all applicable
requirements of each Governmental Authority having jurisdiction over
such wells;
(e) Proceeds from the sale of Hydrocarbons produced from the
Oil and Gas Interests of Global and its Subsidiaries are being received by
Global and its Subsidiaries in a timely manner and are not being held by third
parties in suspense for any reason (except for amounts, individually or in the
aggregate, not in excess of $500,000 and held in suspense in the ordinary
course of business);
(f) No person has any call on, option to purchase, or similar
rights with respect to the production of Hydrocarbons attributable to the Oil
and Gas Interests of Global and its Subsidiaries, except where any call, option
or similar right would not have a Global Material Adverse Effect and except for
any such call, option or similar right at market prices, and upon consummation
of the transactions contemplated by this Agreement, Global or its Subsidiaries
will have the right to market production from the Oil and Gas Interests of
Global and its Subsidiaries on terms no less favorable than the terms upon
which such production is currently being marketed;
(g) Except for gas imbalances between Global or any of its
Subsidiaries and any third party working interest owners or pipelines relative
to the Oil and Gas Interests of Global or any of its Subsidiaries, which are
described in Section 4.17(g) of the Global Disclosure Schedule, neither Global
nor any of its Subsidiaries is obligated by any gas prepayment arrangement or
by any "take-or-pay" requirement to deliver any gas at a future time without
then or thereafter receiving payment therefor; and
(h) To the knowledge of Global, all equipment and machinery
currently in use and material to the operation of the Oil and Gas Interests of
Global or any of its Subsidiaries as conducted prior to the date hereof are in
reasonable working condition, ordinary wear and tear excepted.
Section 4.18 Title to Oil and Gas Interests.
(a) Except as set forth in Section 4.18 of the Global
Disclosure Schedule, Global or its Subsidiaries has defensible title to all of
the Oil and Gas Interests classified as proved developed producing, proved
developed nonproducing and proved undeveloped in the Global Reserve Report
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EXHIBIT 1.1
(each, a "Global Classified Property") except to the extent that such interests
have thereafter been disposed of in the ordinary course of business consistent
with past practice. For the purposes of this Agreement, "defensible title"
means, with respect to any Global Classified Property, such record and
beneficial title that (x) entitles the party named to receive, from its
ownership of such interest, a percentage of all Hydrocarbons produced, saved,
and marketed from each well or property included in the Oil and Gas Interests
of Global and its Subsidiaries, not less than the net revenue interest set
forth in the Global Reserve Report for such well or property, without
reduction, suspension, or termination for the productive life of such well or
property, except as a result of elections not to participate in an operation
under an applicable operating, unit or other agreement, or readjustments of
interest provided for under the terms of the applicable operating, unit or
other agreement, in each case, after the date hereof; (y) obligates the party
named to bear a percentage of the costs and expenses relating to operations on,
and the maintenance and production of, such well or property, not greater than
the working or operating interest set forth in the Global Reserve Report
without increase for the productive life of such well or property, except as a
result of an election of other parties not to participate in an operation under
an applicable operating, unit or other agreement, contribution requirements
with respect to defaulting co-owners, or readjustments of interest provided for
under the terms of the applicable operating or unit agreement, in each case,
after the date hereof; and (z) is free and clear of any liens, mortgages,
pledges, security interests, encumbrances, claims or charges of any kind
(collectively, "Liens") except the Global Permitted Encumbrances. For the
purposes of this Agreement, "Global Permitted Encumbrances" means (i)
royalties, overriding royalties, reversionary interests and similar burdens if
the cumulative effect of such burdens does not and will not reduce the net
revenue interest with respect to a well or property below the net revenue
interest shown therefor in the Global Reserve Report or increase the working
interest with respect to such well or property above the working interest shown
therefor in the Global Reserve Report; (ii) the terms and conditions of all
leases, servitudes, production sales contracts, division orders, contracts for
sale, purchase, exchange, refining or processing of Hydrocarbons, unitization
and pooling designations, declarations, orders and agreements, operating
agreements, agreements of development, area of mutual interest agreements,
farmout agreements, gas balancing or deferred production agreements, processing
agreements, plant agreements, pipeline, gathering and transportation
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or geophysical permits or agreements, and
other agreements including, without limitation, the terms and conditions of any
and all contracts and agreements set forth in the Global Reserve Report
covering production sales contracts and all other contracts and agreements
disclosed in such Disclosure Schedule, to the extent that such contracts and
agreements do not and will not reduce the net revenue interest of any well or
property included in the Oil and Gas Interests of Global or any of its
Subsidiaries below the net revenue interest shown therefor in the Global
Reserve Report or increase the working interest with respect to such well or
property above the working interest shown therefor in the Global Reserve Report
without a proportionate increase in the net revenue interest with respect to
such well or property; (iii) easements, rights of way, servitudes, permits,
surface leases and other rights with respect to surface obligations, pipelines,
grazing, canals, ditches, reservoirs, or the like, conditions, covenants or
other restrictions, and easements of streets, alleys, highways, pipelines,
telephone lines, power lines, railways and other easements and rights of way
on, over or in respect of any of the Oil and Gas Interests of Global and its
Subsidiaries, so long as they are not such that would have a Global Material
Adverse Effect; (iv) any preferential purchase rights, required third party
consents to assignment and similar agreements and obligations applicable to the
transactions contemplated hereby with respect to which prior to the Effective
Time (A) waivers or consents have been obtained from the appropriate person, or
(B)
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EXHIBIT 1.1
the applicable period of time for asserting such rights has expired without any
exercise of such rights; (v) liens for Taxes or assessments not yet delinquent;
(vi) materialmen's mechanic's, repairman's, employee's, contractor's,
operator's, and other similar liens or charges arising in the ordinary course
of business (A) if they have not been filed pursuant to law, (B) if filed,
they have not yet become due and payable or payment is being withheld as
provided by law or (C) if their validity is being contested in good faith in
the ordinary course of business by appropriate action; (vii) approvals that are
ministerial in nature and are customarily obtained from Governmental
Authorities after the Effective Time in connection with transactions of the
same nature as are contemplated hereby ("Customary Post- Closing Consents");
(viii) conventional rights of reassignment arising in respect of abandonment,
cessation of production or expiration of leases; (ix) all rights reserved to or
vested in any Governmental Authority to control or regulate any of the Global
Oil and Gas Interests in any manner, and all applicable laws, rules and orders
of Governmental Authorities; and (x) any other liens, charges, encumbrances,
contracts, agreements, instruments, obligations, defects or irregularities of
any kind whatsoever that would not have a Global Material Adverse Effect.
Notwithstanding the foregoing, title to the Global Classified Properties is of
a type and nature customarily acceptable to the reasonably prudent oil and gas
operator of oil and gas interests.
(b) Except as set forth in Section 4.18(b) of the Global
Disclosure Schedule, (i) each oil and gas lease included in the Oil and Gas
Interests of Global and its Subsidiaries is valid, binding and enforceable in
accordance with its terms, except for the Enforceability Exception, and (ii)
neither Global nor the Global Subsidiary that is party to each such lease, nor,
to the knowledge of Global, any other party to any such lease, is in breach or
default thereunder in any material respect, no notice of default or termination
thereunder has been given or received by Global or any of its Subsidiaries, and
no event has occurred which would, with the giving of notice or passage of time
or both, constitute a breach or default thereunder or permit termination,
modification or acceleration thereunder that could reasonably be expected to
result in a Global Material Adverse Effect.
Section 4.19 Title to Other Properties. Except as set forth in
Section 4.19 of the Global Disclosure Schedule, Global or its Subsidiaries
owns, of record (to the extent applicable) and beneficially, all material
personal property and all real property (other than real property included in
the Oil and Gas Interests of Global and its Subsidiaries), in each case, as
reflected on the consolidated financial statements of Global included in the
Global SEC Documents as being owned by it or any of its Subsidiaries and all
such property thereafter acquired by it or any of its Subsidiaries (except to
the extent that such properties have thereafter been disposed of in the
ordinary course of business consistent with past practice or after the date
hereof in compliance with Section 6.1(d)), free and clear of any Liens except
Global Permitted Encumbrances.
Section 4.20 Permits. Global holds all of the permits, licenses,
certificates, consents, approvals, entitlements, plans, surveys, relocation
plans, environmental impact reports and other authorizations of Governmental
Authorities ("Permits") required or necessary to construct, own, operate, use
and/or maintain its properties and conduct its operations as presently
conducted, except for such Permits, the lack of which, individually or in the
aggregate, would not have a Global Material Adverse Effect; provided, however,
that notwithstanding the foregoing, no representation or warranty in this
Section 4.20 is made with respect to Permits issued pursuant to Environmental
Laws, which are covered exclusively by the provisions set forth in Section
4.12.
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EXHIBIT 1.1
Section 4.21 Material Contracts.
(a) Set forth in Section 4.21(a) of the Global Disclosure
Schedule is a list of each contract, lease, indenture, agreement, arrangement
or understanding to which Global or any of its Subsidiaries is a party or to
which any of the assets or operations of the Global or any of its Subsidiaries
is subject that is of a type that would be required to be included as an
exhibit to a Form S-1 Registration Statement pursuant to the rules and
regulations of the SEC if such a registration statement was filed by Global
(collectively, the "Global Material Contracts").
(b) Except as set forth in Section 4.21(a) or 4.21(b) of the
Global Disclosure Schedule, the Global Oil and Gas Interests are not subject to
(i) any instrument or agreement evidencing or related to indebtedness for
borrowed money, whether directly or indirectly, or (ii) any agreement not
entered into in the ordinary course of business in which the amount involved is
in excess of $250,000. With respect to the Global Oil and Gas Interests, (A)
all Global Material Contracts are in full force and effect and are the valid
and legally binding obligations of the parties thereto and are enforceable in
accordance with their respective terms; (B) no party to any Global Material
Contract is in material breach or default with respect to its obligations
thereunder, including with respect to payments or otherwise; (C) no party to
any Global Material Contract has given notice of any action to terminate,
cancel, rescind or procure a judicial reformation thereof; and (D) no Global
Material Contract contains any provision that prevents Global or any of its
Subsidiaries from owning, managing and operating the Global Oil and Gas
Interests in accordance with historical practices.
(c) As of the date of this Agreement, except as set forth in
Section 4.21(c) of the Global Disclosure Schedule, with respect to
authorizations for expenditure executed on or after January 1, 1996, (i) there
are no material outstanding calls for payments that are due or that Global or
its Subsidiaries are committed to make that have not been made; (ii) there are
no material operations with respect to which Global or its Subsidiaries have
become a non- consenting party; and (iii) there are no commitments for the
material expenditure of funds for drilling or other capital projects other than
projects with respect to which the operator is not required under the
applicable operating agreement to seek consent.
(d) Except as set forth in Section 4.21(d) of the Global
Disclosure Schedule, (i) there are no express contractual obligations to engage
in continuous development operations in order to maintain any producing Global
Oil and Gas Interest in force and effect; (ii) there are no provisions
applicable to the Global Oil and Gas Interests which increase the royalty
percentage of the lessor thereunder; and (iii) none of the Global Oil and Gas
Interests are limited by terms fixed by a certain number of years (other than
primary terms under oil and gas leases).
Section 4.22 Required Stockholder Vote or Consent. The only vote of
the holders of any class or series of Global's capital stock that will be
necessary to consummate the Merger and the other transactions contemplated by
this Agreement is the approval of the Merger by the holders of a majority of
the outstanding shares of Global Common Stock (the "Global Shareholders'
Approval").
Section 4.23 Proxy Statement/Prospectus; Registration Statement.
None of the information to be supplied by Global for inclusion in (a) the joint
proxy statement relating to the Global Special
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EXHIBIT 1.1
Meeting and the Seagull Special Meeting (in each case, as defined below) (also
constituting the prospectus in respect of Seagull Common Stock into which
shares of Global Common Stock will be converted) (the "Proxy
Statement/Prospectus"), to be filed by Global and Seagull with the SEC, and any
amendments or supplements thereto, or (b) the Registration Statement on Form
S-4 (the "Registration Statement") to be filed by Seagull with the SEC in
connection with the Merger, and any amendments or supplements thereto, will, at
the respective times such documents are filed, and, in the case of the Proxy
Statement/Prospectus, at the time the Proxy Statement/Prospectus or any
amendment or supplement thereto is first mailed to stockholders of Global, at
the time such stockholders vote on approval and adoption of this Agreement and
at the Effective Time, and, in the case of the Registration Statement, when it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be made therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 4.24 Intellectual Property. Global and its Subsidiaries own,
or are licensed or otherwise have the right to use, all patents, patent rights,
trademarks, rights, trade names, trade name rights, service marks, service mark
rights, copyrights, technology, know-how, processes and other proprietary
intellectual property rights and computer programs ("Intellectual Property")
currently used in the conduct of the business and operations of Global and its
Subsidiaries, except where the failure to so own or otherwise have the right to
use such intellectual property would not, individually or in the aggregate,
have a Global Material Adverse Effect. No person has notified either Global or
any of its Subsidiaries that their use of the Intellectual Property infringes
on the rights of any person, subject to such claims and infringements as do
not, individually or in the aggregate, give rise to any liability on the part
of Global and its Subsidiaries that could have a Global Material Adverse
Effect, and, to Global's knowledge, no person is infringing on any right of
Global or any of its Subsidiaries with respect to any such Intellectual
Property. No claims are pending or, to Global's knowledge, threatened that
Global or any of its Subsidiaries is infringing or otherwise adversely
affecting the rights of any person with regard to any Intellectual Property.
Section 4.25 Hedging. Section 4.25 of the Global Disclosure Schedule
sets forth for the periods shown obligations of Global and each of its
Subsidiaries for the delivery of Hydrocarbons attributable to any of the
properties of Global or any of its Subsidiaries in the future on account of
prepayment, advance payment, take-or-pay or similar obligations without then or
thereafter being entitled to receive full value therefor. Except as set forth
in Section 4.25 of the Global Disclosure Schedule, as of the date of this
Agreement, neither Global nor any of its Subsidiaries is bound by futures,
hedge, swap, collar, put, call, floor, cap, option or other contracts that are
intended to benefit from or reduce or eliminate the risk of fluctuations in the
price of commodities, including Hydrocarbons, or securities.
Section 4.26 Brokers. No broker, finder or investment banker (other
than Petrie Parkman & Co., Inc. the fees and expenses of which will be paid by
Global) is entitled to any brokerage, finder's fee or other fee or commission
payable by Global or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Global or any of its Subsidiaries. True and correct copies of all
agreements and engagement letters currently in effect with Petrie Parkman &
Co., Inc. (the "Global Engagement Letters") have been provided to Seagull.
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EXHIBIT 1.1
Section 4.27 Tax-Free Reorganization and Pooling. Neither Global
nor, to the knowledge of Global, any of its affiliates has taken or agreed to
take any action that would prevent the Merger from (a) being treated for
financial accounting purposes as a Pooling Transaction or (b) constituting a
reorganization within the meaning of section 368(a) of the Code. Specifically:
(a) To the knowledge of Global, there is no plan or
intention by any shareholder of Global who owns five percent or more
of the Global Common Stock, and to the best of the knowledge of the
management of Global there is a plan or intention on the part of any
of the remaining shareholders of Global, to sell, exchange or
otherwise dispose of a number of shares of Seagull Common Stock to be
received in the Merger that would reduce the Global shareholders'
ownership of Seagull Common Stock to a number of shares having a
value, as of the Effective Time, of less than 50 percent of the value
of all of the Global Common Stock (including shares of Global Common
Stock exchanged for cash in lieu of fractional shares of Seagull
Common Stock) outstanding immediately prior to the Effective Time.
(b) Global and the shareholders of Global will each
pay their respective expenses, if any, incurred in connection with the
Merger.
(c) There is no intercorporate indebtedness existing
between Global and Seagull or between Global and Merger Sub that was
issued, acquired, or will be settled at a discount.
(d) Global is not an investment company as defined
in section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) Global is not under the jurisdiction of a court
in a title 11 or similar case within the meaning of section
368(a)(1)(A) of the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SEAGULL AND MERGER SUB
Seagull and Merger Sub jointly and severally represent and warrant to
Global as follows:
Section 5.1 Organization and Qualification.
(a) Seagull is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas, is duly qualified to
do business as a foreign corporation and is in good standing in the
jurisdictions set forth in Section 5.1(a) of the disclosure letter delivered to
Global contemporaneously with the execution hereof (the "Seagull Disclosure
Schedule"), which include each jurisdiction in which the character of Seagull's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Seagull Material Adverse Effect (as defined below). Seagull has
all requisite corporate or other power and authority to own, use or lease its
properties and to carry on
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EXHIBIT 1.1
its business as it is now being conducted. Seagull has made available to Global
a complete and correct copy of its articles of incorporation and bylaws, each
as amended to date, and Seagull's articles of incorporation and bylaws as so
delivered are in full force and effect. Seagull is not in default in any
respect in the performance, observation or fulfillment of any provision of its
articles of incorporation or bylaws.
(b) Section 5.1(b) of the Seagull Disclosure Schedule lists
the name and jurisdiction of organization of each Subsidiary of Seagull and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to
do business as a foreign corporation or other organization as of the date
hereof. Each of Seagull's Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions set forth in Section 5.1(b) of the
Seagull Disclosure Schedule, which includes each jurisdiction in which the
character of such Subsidiary's properties or the nature of its business makes
such qualification necessary, except in jurisdictions, if any, where the
failure to be so qualified would not result in a Seagull Material Adverse
Effect. Each of Seagull's Subsidiaries has all requisite corporate or other
power and authority to own, use or lease its properties and to carry on its
business as it is now being conducted and as it is now proposed to be
conducted. Seagull has made available to Global a complete and correct copy of
the certificate of incorporation and bylaws (or similar organizational
documents) of each of Seagull's Subsidiaries, each as amended to date, and the
certificate of incorporation and bylaws (or similar charter documents) as so
delivered are in full force and effect. No Subsidiary of Seagull is in default
in any respect in the performance, observation or fulfillment of any provision
of its certificate of incorporation or bylaws (or similar organizational
documents). Other than Seagull's Subsidiaries, Seagull does not beneficially
own or control, directly or indirectly, 5% or more of any class of equity or
similar securities of any corporation or other organization, whether
incorporated or unincorporated.
(c) Merger Sub has no Subsidiaries.
(d) For purposes of this Agreement, a "Seagull Material
Adverse Effect" shall mean any event, circumstance, condition, development or
occurrence causing, resulting in or having (or with the passage of time likely
to cause, result in or have) a material adverse effect on the financial
condition, business, assets, properties, prospects or results of operations of
Seagull and its Subsidiaries, taken as a whole; provided, that such term shall
not include effects that are not applicable primarily to Seagull resulting from
market conditions generally in the oil and gas industry.
Section 5.2 Capitalization.
(a) The authorized capital stock of Seagull consists of
100,000,000 shares of Seagull Common Stock, and 5,000,000 shares of preferred
stock of Seagull, par value $1.00 per share, of which 500,000 shares have been
designated as Series B Junior Participating Preferred Stock. As of the date of
this Agreement, Seagull has 36,462,866 shares of Seagull Common Stock issued
and outstanding, and no shares of preferred stock outstanding. All such shares
have been validly issued, fully paid and nonassessable, and free of preemptive
rights. Other than this Agreement and other than the Preferred Stock Purchase
Rights set forth in the Rights Agreement dated March 21, 1989, by and between
Seagull and NCNB Texas National Bank, as Rights Agent (as amended, the
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EXHIBIT 1.1
"Seagull Rights Plan"), there are no outstanding subscriptions, options,
rights, warrants, convertible securities, stock appreciation rights, phantom
equity, or other agreements or commitments obligating Seagull to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock of any class. Except for any amendments filed with the Seagull
SEC Reports (as defined below), the Seagull Rights Plan has not been amended,
and no amendment thereof is proposed. No "Distribution Date" has occurred
within the meaning of the Seagull Rights Plan, and the consummation of the
transactions contemplated hereby will not result in the occurrence of a
Distribution Date.
(b) Except as set forth in Section 5.1(b) of the Seagull
Disclosure Schedule, Seagull is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock of each
Seagull Subsidiary, there are no irrevocable proxies with respect to any such
shares, and no equity securities of any Seagull Subsidiary are or may become
required to be issued by reason of any options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable or exercisable for, shares of any
capital stock of any Seagull Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which Seagull or any Seagull
Subsidiary is or may be bound to issue additional shares of capital stock of
any Seagull Subsidiary or securities convertible into or exchangeable or
exercisable for any such shares. All of such shares so owned by Seagull are
validly issued, fully paid and nonassessable and are owned by it free and clear
of all Liens.
Section 5.3 Authority. Each of Seagull and Merger Sub has full
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is or will be a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Ancillary Agreements to which it is or
will be a party and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by the Board of Directors of
each of Seagull and Merger Sub, and no other corporate proceedings on the part
of Seagull or Merger Sub are necessary to authorize this Agreement or the
Ancillary Agreements to which any of them are or will be a party or to
consummate the transactions contemplated hereby or thereby, other than the
approval of this Agreement and the Merger by Seagull's stockholders as
contemplated by Section 7.13 hereof. This Agreement has been, and the
Ancillary Agreements to which Seagull or Merger Sub are or will be a party are,
or upon execution will be, duly and validly executed and delivered by each of
Seagull and Merger Sub and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto,
constitutes or upon execution will constitute, valid and binding obligations of
each of Seagull and Merger Sub enforceable against each of Seagull and Merger
Sub in accordance with their respective terms, except for the Enforceability
Exception.
Section 5.4 Consents and Approvals; No Violation. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance by each of Seagull and Merger Sub of its obligations
hereunder will not:
(a) subject to the obtaining of any requisite approvals of
Seagull's stockholders as contemplated by Section 7.13 hereof, conflict with
any provision of the articles of incorporation or bylaws of either Seagull or
Merger Sub;
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EXHIBIT 1.1
(b) subject to obtaining of any requisite approvals of
Seagull's shareholders as contemplated by Section 7.13 hereof, require any
consent, waiver, approval, order, authorization or permit of, or registration,
filing with or notification to, (i) any Governmental Authority, except for
applicable requirements of the HSR Act, the Securities Act, the Exchange Act,
state laws relating to takeovers, if applicable, state securities or blue sky
laws and Customary Post-Closing Consents or (ii) except as set forth in Section
5.4(b) of the Seagull Disclosure Schedule, any third party other than a
Governmental Authority, other than such non-Governmental Authority third party
consents, waivers, approvals, orders, authorizations and permits that would not
(i) result in a Seagull Material Adverse Effect, (ii) materially impair the
ability of Seagull or Merger Sub or any other Subsidiaries to perform its
obligations under this Agreement or any Ancillary Agreement or (iii) prevent
the consummation of any of the transactions contemplated by this Agreement;
(c) except as set forth in Section 5.4(c) of the Seagull
Disclosure Schedule, result in any violation of or the breach of or constitute
a default (with notice or lapse of time or both) under, or give rise to any
right of termination, cancellation or acceleration or guaranteed payments or a
loss of a material benefit under, any of the terms, conditions or provisions of
any note, lease, mortgage, license, agreement or other instrument or obligation
to which Seagull or any of its Subsidiaries is a party or by which Seagull or
any of its Subsidiaries or any of their respective properties or assets may be
bound, except for such violations, breaches, defaults, or rights of
termination, cancellation or acceleration, or losses as to which requisite
waivers or consents have been obtained or which, individually or in the
aggregate, would not (i) result in a Seagull Material Adverse Effect, (ii)
materially impair the ability of Seagull or Merger Sub or any other
Subsidiaries to perform its obligations under this Agreement or any Ancillary
Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to Seagull or any
Subsidiary of Seagull.
(e) result in the creation of any Lien upon any material
assets or on any shares of capital stock, properties or assets of Seagull or
its Subsidiaries under any agreement or instrument to which Seagull or any of
its Subsidiaries is a party or by which Seagull or any of its Subsidiaries or
any of their properties or assets is bound.
Section 5.5 Seagull Financial Statements. Each of the audited
consolidated financial statements and unaudited consolidated interim financial
statements of Seagull (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-K for each of the
three fiscal years ended December 31, 1993, 1994 and 1995 and its Quarterly
Report on Form 10-Q for its fiscal quarter ended March 31, 1996 (collectively,
the "Financial Statements") have been prepared from, and are in accordance
with, the books and records of Seagull and its consolidated Subsidiaries,
comply in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP applied on a consistent basis (except as
may be indicated in the notes thereto and subject, in the case of quarterly
financial statements, to normal and recurring year-end adjustments) and fairly
present, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial position of
Seagull and its Subsidiaries as of the date thereof and the consolidated
results of operations and cash flows (and changes in financial position, if
any) of Seagull and its Subsidiaries for the periods presented therein
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EXHIBIT 1.1
(subject to normal year-end adjustments and the absence of financial footnotes
in the case of any unaudited interim financial statements).
Section 5.6 Absence of Undisclosed Liabilities. Except (a) as
specifically disclosed in the Seagull SEC Reports and (b) for liabilities and
obligations incurred in the ordinary course of business and consistent with
past practice since December 31, 1995, neither Seagull nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature
(contingent or otherwise) that would have a Seagull Material Adverse Effect or
would be required by GAAP to be reflected on a consolidated balance sheet of
Seagull and its Subsidiaries or the notes thereto which is not so reflected.
Section 5.7 Absence of Certain Changes. Except as contemplated by
this Agreement, as set forth in Section 5.7 of the Seagull Disclosure Schedule
or disclosed in the Seagull Balance Sheet, since December 31, 1995 (a) Seagull
and its Subsidiaries have conducted their business in all material respects in
the ordinary course consistent with past practices, (b) there has not been any
change or development, or combination of changes or developments that,
individually or in the aggregate, would have a Seagull Material Adverse Effect,
(c) there has not been any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
Seagull or Merger Sub or any repurchase, redemption or other acquisition by
Seagull or any of its Subsidiaries of any outstanding shares of capital stock
or other securities of, or other ownership interests in, Seagull or Merger Sub,
(d) there has not been any amendment of any term of any outstanding security of
Seagull or Merger Sub, and (e) there has not been any change in any method of
accounting or accounting practice by Seagull or Merger Sub, except for any such
change required by reason of a concurrent change in GAAP or to conform a such
accounting policies and practices to those of Seagull.
Section 5.8 Seagull SEC Reports. Seagull has filed with the SEC, and
has heretofore made available to Global true and complete copies of, each form,
registration statement, report, schedule, proxy or information statement and
other document (including exhibits and amendments thereto), including without
limitation its Annual Reports to Shareholders incorporated by reference in
certain of such reports, required to be filed with the SEC since December 31,
1992 under the Securities Act or the Exchange Act (collectively, the "Seagull
SEC Reports"). As of the respective dates such Seagull SEC Reports were filed
or, if any such Seagull SEC Reports were amended, as of the date such amendment
was filed, each of the Seagull SEC Reports, including without limitation any
financial statements or schedules included therein, (a) complied in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act, as the case may be, and the applicable rules and regulations
promulgated thereunder, and (b) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 5.9 Taxes. Except as otherwise disclosed in Section 5.9 of
the Seagull Disclosure Schedule and for matters that would have no adverse
effect on Seagull or Merger Sub:
(a) Seagull and each of its Subsidiaries have timely filed
(or have had timely filed on their behalf) or will file or cause to be timely
filed, all material Tax Returns required by
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EXHIBIT 1.1
applicable law to be filed by any of them prior to or as of the Closing Date.
All such Tax Returns and amendments thereto are or will be true, complete and
correct in all material respects.
(b) Seagull and each of its Subsidiaries have paid (or have
had paid on their behalf), or where payment is not yet due, have established
(or have had established on their behalf and for their sole benefit and
recourse), or will establish or cause to be established on or before the
Closing Date, an adequate accrual for the payment of all material Taxes due
with respect to any period ending prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with
respect to any Tax Returns filed by, or Taxes due from, Seagull or any
Subsidiary. No issue has been raised by any Tax Authority in any Audit of
Seagull or any of its Subsidiaries that if raised with respect to any other
period not so audited could be expected to result in a material proposed
deficiency for any period not so audited. No material deficiency or adjustment
for any Taxes has been threatened, proposed, asserted or assessed against
Seagull or any of its Subsidiaries. There are no liens for Taxes upon the
assets of Seagull or any of its Subsidiaries, except liens for current Taxes
not yet delinquent.
(d) Neither Seagull nor any of its Subsidiaries has given or
been requested to give any waiver of statutes of limitations relating to the
payment of Taxes or have executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date.
(e) Prior to the date hereof, Seagull and its Subsidiaries
have disclosed, and provided or made available true and complete copies to
Global of, all material Tax sharing, Tax indemnity, or similar agreements to
which Seagull or any of its Subsidiaries is a party to, is bound by, or has any
obligation or liability for Taxes.
Section 5.10 Litigation. Except as disclosed in the Seagull SEC
Reports or Section 5.10 of the Seagull Disclosure Schedule and for matters that
would not have a Seagull Material Adverse Effect, there is no suit, claim,
action, proceeding or investigation pending or, to Seagull's knowledge,
threatened against or directly affecting Seagull, any Subsidiaries of Seagull
or any of the directors or officers of Seagull or any of its Subsidiaries in
their capacity as such, nor is there any reasonable basis therefor that could
reasonably be expected to have a Seagull Material Adverse Effect, if adversely
determined. Neither Seagull nor any of its Subsidiaries, nor any officer,
director or employee of Seagull or any of its Subsidiaries, has been
permanently or temporarily enjoined by any order, judgment or decree of any
court or any other Governmental Authority from engaging in or continuing any
conduct or practice in connection with the business, assets or properties of
Seagull or such Subsidiary, nor, to the knowledge of Seagull, is Seagull, any
Subsidiary or any officer, director or employee of Seagull or its Subsidiaries
under investigation by any Governmental Authority. Except as disclosed in the
Seagull SEC Reports or Section 5.10 of the Seagull Disclosure Schedule, there
is not in existence any order, judgment or decree of any court or other
tribunal or other agency enjoining or requiring Seagull or any of its
Subsidiaries to take any action of any kind with respect to its business,
assets or properties. Notwithstanding the foregoing, no representation or
warranty in this Section 5.10 is made with respect to Environmental Laws, which
are covered exclusively by the provisions set forth in Section 5.12.
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EXHIBIT 1.1
Section 5.11 Employee Benefit Plans; ERISA.
(a) Section 5.11(a) of the Seagull Disclosure Schedule
contains a true and complete list of the employee benefit plans or arrangements
of any type (including but not limited to plans described in section 3(3) of
ERISA), sponsored, maintained or contributed to by Seagull or any trade or
business, whether or not incorporated, which together with Seagull would be
deemed a "single employer" within the meaning of Section 414(b), (c) or (m) of
the Code or section 4001(b)(1) of ERISA (a "Seagull ERISA Affiliate") within
six years prior to the Effective Time, which provide benefits to Seagull's
employees ("Seagull Benefit Plans").
(b) With respect to each Seagull Benefit Plan: (i) if
intended to qualify under section 401(a) or 401(k) of the Code, such plan
satisfies the requirements of such sections, has received a favorable
determination letter from the Internal Revenue Service with respect to its
qualification, and its related trust has been determined to be exempt from tax
under section 501(a) of the Code and, to the knowledge of Seagull, nothing has
occurred since the date of such letter to adversely affect such qualification
or exemption; (ii) each such plan has been administered in substantial
compliance with its terms and applicable law; (iii) neither Seagull nor any
Seagull ERISA Affiliate has engaged in, and Seagull and each Seagull ERISA
Affiliate do not have any knowledge of any person that has engaged in, any
transaction or acted or failed to act in any manner that would subject Seagull
or any Seagull ERISA Affiliate to any liability for a breach of fiduciary duty
under ERISA that could reasonably be expected to result in a Seagull Material
Adverse Effect; (iv) no disputes are pending, or, to the knowledge of Seagull
or any Seagull ERISA Affiliate, threatened; (v) neither Seagull nor any Seagull
ERISA Affiliate has engaged in, and Seagull and each Seagull ERISA Affiliate do
not have any knowledge of any person that has engaged in, any transaction in
violation of Section 406(a) or (b) of ERISA for which no exemption exists under
Section 4975(c)(1) of the Code or Section 4975(d) of the Code that could
reasonably be expected to result in a Seagull Material Adverse Effect; (vi)
there have been no "reportable events" within the meaning of Section 4043 of
ERISA for which the 30 day notice requirement of ERISA has not been waived by
the PBGC; (vii) all contributions due have been made on a timely basis (within,
where applicable, the time limit established under section 302 of ERISA or Code
section 412); (viii) no notice of intent to terminate such plan has been given
under Section 4041 of ERISA and no proceeding has been instituted under section
4042 of ERISA to terminate such plan; and (ix) such plan may be terminated on a
prospective basis without any continuing liability for benefits other than
benefits accrued to the date of such termination. All contributions made or
required to be made under any Seagull Benefit Plan meet the requirements for
deductibility under the Code, and all contributions which are required and
which have not been made have been properly recorded on the books of Seagull or
a Seagull ERISA Affiliate.
(c) No Seagull Benefit Plan is a "multiemployer plan" (as
defined in section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of section 413(c) of the Code). No event has occurred with respect
to Seagull or a Seagull ERISA Affiliate in connection with which Seagull could
be subject to any liability, lien or encumbrance with respect to any Seagull
Benefit Plan or any employee benefit plan described in Section 3(3) of ERISA
maintained, sponsored or contributed to by a Seagull ERISA Affiliate under
ERISA or the Code.
Section 5.12 Environmental Liability. Except as set forth in Section
5.12 of the Seagull Disclosure Schedule:
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EXHIBIT 1.1
(a) The businesses of Seagull and its Subsidiaries have been
and is operated in material compliance with all Environmental Laws.
(b) Neither Seagull nor any of its Subsidiaries has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, discharge, release, disposal, transport or handling of any Hazardous
Substances at any of its properties or facilities except in material compliance
with all Environmental Laws, and, to Seagull's knowledge, no generation,
manufacture, processing, distribution, use, treatment, handling, storage,
discharge, release, disposal, transport or handling of any Hazardous
Substances has occurred at any property or facility owned, leased or operated
by Seagull or any of its Subsidiaries except in material compliance with all
Environmental Laws.
(c) Neither Seagull nor any of its Subsidiaries has received
any written notice from any Governmental Authority or, to the knowledge of
Seagull, any other communication alleging or concerning any material violation
by Seagull or any of its Subsidiaries of, or responsibility or liability of
Seagull or any of its Subsidiaries under, any Environmental Law. There are no
pending, or to the knowledge of Seagull, threatened, claims, suits, actions,
proceedings or investigations with respect to the businesses or operations of
Seagull or any of its Subsidiaries alleging or concerning any material
violation of or responsibility or liability under any Environmental Law that,
if adversely determined, could reasonably be expected to have a Seagull
Material Adverse Effect, nor does Seagull have any knowledge of any fact or
condition that could give rise to such a claim, suit, action, proceeding or
investigation.
(d) Seagull and its Subsidiaries are in possession of all
material approvals, permits, licenses, registrations and similar type
authorizations from all Governmental Authorities under all Environmental Laws
with respect to the operation of the businesses of Seagull and its
Subsidiaries; there are no pending or, to the knowledge of Seagull, threatened,
actions, proceedings or investigations seeking to modify, revoke or deny
renewal of any of such approvals, permits, licenses registrations and
authorizations; and Seagull does not have knowledge of any fact or condition
that is reasonably likely to give rise to any action, proceeding or
investigation to modify, revoke or deny renewal of any of such approvals,
permits, licenses, registrations and authorizations.
(e) Without in any way limiting the generality of the
foregoing, (i) all off-site locations where Seagull or any of its Subsidiaries
has transported, released, discharged, stored, disposed or arranged for the
disposal of pollutants, contaminants, hazardous wastes or toxic substances
required by law to be disposed at a licensed disposal site are identified in
Section 5.12 of Seagull Disclosure Schedule, (ii) to Seagull's knowledge, all
underground storage tanks, and the operating status, capacity and contents of
such tanks, located on any property owned, leased or operated by Seagull or any
of its Subsidiaries are identified in Section 5.12 of the Seagull Disclosure
Schedule, (iii) to the knowledge of Seagull, there is no asbestos contained in
or forming part of any building, building component, structure or office space
owned or leased by Seagull and (iv) no PCBs or PCB-containing items are used or
stored at any property owned, leased or operated by Seagull or any of its
Subsidiaries.
Section 5.13 Compliance with Applicable Laws. Seagull and each of
its Subsidiaries hold all material approvals, licenses, permits, registrations
and similar type authorizations necessary for
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EXHIBIT 1.1
the lawful conduct of its respective businesses, as now conducted, and such
businesses are not being, and neither Seagull nor any of its Subsidiaries has
received any notice from any Governmental Authority or person that any such
business has been or is being, conducted in violation of any law, ordinance or
regulation, including without limitation any law, ordinance or regulation
relating to occupational health and safety, except for possible violations
which either individually or in the aggregate have not resulted and would not
result in a Seagull Material Adverse Effect; provided, however, notwithstanding
the foregoing, no representation or warranty in this Section 5.13 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 5.12.
Section 5.14 Insurance. Section 5.14 of the Seagull Disclosure
Schedule lists each of the insurance policies relating to Seagull or its
Subsidiaries which are currently in effect. Seagull has provided Global with a
true, complete and correct copy of each such policy or the binder therefor.
With respect to each such insurance policy or binder none of Seagull, any of
its Subsidiaries or any other party to the policy is in breach or default
thereunder (including with respect to the payment of premiums or the giving of
notices), and Seagull does not know of any occurrence or any event which (with
notice or the lapse of time or both) would constitute such a breach or default
or permit termination, modification or acceleration under the policy, except
for such breaches or defaults which, individually or in the aggregate, would
not result in a Seagull Material Adverse Effect. Section 5.14 of the Seagull
Disclosure Schedule describes any self-insurance arrangements affecting Seagull
or its Subsidiaries. The insurance policies listed in Section 5.14 of the
Seagull Disclosure Schedule include all policies which are required in
connection with the operation of the businesses of Seagull and its Subsidiaries
as currently conducted by applicable laws and all agreements relating to
Seagull and its Subsidiaries.
Section 5.15 Labor Matters; Employees.
(a) Except as set forth in Section 5.15(a) of the Seagull
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of Seagull,
threatened against or affecting Seagull or any of its Subsidiaries and, during
the past five years, there has not been any such action, (ii) none of Seagull
or any of its Subsidiaries is a party to or bound by any collective bargaining
or similar agreement with any labor organization, or work rules or practices
agreed to with any labor organization or employee association applicable to
employees of Seagull or any of its Subsidiaries, (iii) none of the employees of
Seagull or any of its Subsidiaries are represented by any labor organization
and none of Seagull or any of its Subsidiaries have any knowledge of any
current union organizing activities among the employees of Seagull or any of
its Subsidiaries nor does any question concerning representation exist
concerning such employees, (iv) Seagull and its Subsidiaries have each at all
times been in material compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and are not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
applicable law, ordinance or regulation, (v) there is no unfair labor practice
charge or complaint against any of Seagull or any of its Subsidiaries pending
or, to the knowledge of Seagull, threatened before the National Labor Relations
Board or any similar state or foreign agency, (vi) there is no grievance or
arbitration proceeding arising out of any collective bargaining agreement or
other grievance procedure relating to Seagull or any of its Subsidiaries, and
(vii) neither the Occupational
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EXHIBIT 1.1
Safety and Health Administration nor any corresponding state agency has
threatened to file any citation, and there are no pending citations, relating
to Seagull or any of its Subsidiaries.
(b) Except as set forth in Section 5.15(b) of the Seagull
Disclosure Schedule, since the enactment of the WARN Act, none of Seagull or
any of its Subsidiaries has effectuated (i) a "plant closing" (as defined in
the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of Seagull or
any of its Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of Seagull or any of its
Subsidiaries, nor has Seagull or any of its Subsidiaries been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law, in each case
that could reasonably be expected to have a Seagull Material Adverse Effect.
Section 5.16 Reserve Reports.
(a) All information supplied to DeGolyer and McNaughton by or
on behalf of Seagull and its Subsidiaries that was material to such firm's
estimates of proved oil and gas reserves attributable to the Oil and Gas
Interests of Seagull and its Subsidiaries in connection with the preparation of
the proved oil and gas reserve report concerning the Oil and Gas Interests of
Seagull and its Subsidiaries as of December 31, 1995 by DeGolyer and McNaughton
(the "Seagull Reserve Report") was (at the time supplied or as modified or
amended prior to the issuance of the Seagull Reserve Report) true and correct
in all material respects and Seagull has no knowledge of any material errors in
such information that existed at the time of such issuance. Except for changes
(including changes in commodity prices) generally affecting the oil and gas
industry, there has been no change in respect of the matters addressed in the
Seagull Reserve Report that would have a Seagull Material Adverse Effect.
(b) Set forth in Section 5.16(b) of the Seagull Disclosure
Schedule is a list of all material Oil and Gas Interests that were included in
the Seagull Reserve Report that have been disposed of prior to the date of this
Agreement.
Section 5.17 Oil and Gas Reserves; Equipment. Except as otherwise
set forth in Section 5.17 of the Seagull Disclosure Schedule:
(a) None of the wells included in the Oil and Gas Interests
of Seagull and its Subsidiaries has been overproduced, except where such
overproduction individually, or in the aggregate with all other such
overproduction, would not have a Seagull Material Adverse Effect;
(b) There have been no material changes proposed in the
production allowables for any wells included in the Oil and Gas Interests of
Seagull and its Subsidiaries;
(c) All wells included in the Oil and Gas Interests of
Seagull and its Subsidiaries have been drilled and (if completed) completed,
operated, and produced in accordance with good oil and gas field practices and
in compliance in all respects with applicable oil and gas leases and applicable
laws, rules, and regulations, except where any failure or violation would not
have a Seagull Material Adverse Effect;
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EXHIBIT 1.1
(d) Except as set forth in Section 5.17(d) of the Seagull
Disclosure Schedule, there are no wells included in the Oil and Gas Interests
of Seagull and its Subsidiaries that:
(i) Seagull or any of its Subsidiaries is currently
obligated by law or contract to plug and abandon or will be obligated
by law or contract to plug and abandon with the lapse of time or
notice or both because the well is not currently capable of producing
in commercial quantities, except for such wells that will not
individually, or in the aggregate with all other such wells, result in
Seagull and its Subsidiaries incurring plugging and abandonment costs
(net of salvage value) in an amount in excess of $500,000;
(ii) are subject to exceptions to a requirement to
plug and abandon issued by a Governmental Authority having
jurisdiction over the wells; or
(iii) have been plugged and abandoned but have not
been plugged or reclaimed in accordance with all applicable
requirements of each Governmental Authority having jurisdiction over
such wells;
(e) Proceeds from the sale of Hydrocarbons produced from the
Oil and Gas Interests of Seagull and its Subsidiaries are being received by
Seagull and its Subsidiaries in a timely manner and are not being held by third
parties in suspense for any reason (except for amounts, individually or in the
aggregate, not in excess of $500,000 and held in suspense in the ordinary
course of business);
(f) No person has any call on, option to purchase, or similar
rights with respect to the production of Hydrocarbons attributable to the Oil
and Gas Interests of Seagull and its Subsidiaries, except where any call,
option or similar right would not have a Seagull Material Adverse Effect and
except for any such call, option or similar right at market prices, and upon
consummation of the transactions contemplated by this Agreement, Seagull or its
Subsidiaries will have the right to market production from the Oil and Gas
Interests of Seagull and its Subsidiaries on terms no less favorable than the
terms upon which such production is currently being marketed;
(g) Except for gas imbalances between Seagull or any of its
Subsidiaries and any third party working interest owners or pipelines relative
to the Oil and Gas Interests of Seagull or any of its Subsidiaries, which gas
imbalances (to the extent constituting overproduction of the wells of Global or
its Subsidiaries) are described in Section 5.17(g) of the Seagull Disclosure
Schedule, neither Seagull nor any of its Subsidiaries is obligated by any gas
prepayment arrangement or by any "take-or-pay" requirement to deliver any gas
at a future time without then or thereafter receiving payment therefor; and
(h) To the knowledge of Seagull, all equipment and machinery
currently in use and material to the operation of the Oil and Gas Interests of
Seagull or any of its Subsidiaries as conducted prior to the date hereof are in
reasonable working condition, ordinary wear and tear excepted.
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EXHIBIT 1.1
Section 5.18 Title to Oil and Gas Interests.
(a) Except as set forth in Section 5.18 of the Seagull
Disclosure Schedule, Seagull or its Subsidiaries has defensible title to all of
the real property included in the Oil and Gas Interests classified as proved
developed producing, proved developed nonproducing and proved undeveloped in
the Seagull Reserve Report (each, a "Seagull Classified Property") except to
the extent that such interests have thereafter been disposed of in the ordinary
course of business consistent with past practice. For the purposes of this
Agreement, "defensible title" means, with respect to any Seagull Classified
Property, such record and beneficial title that (x) entitles the party named to
receive, from its ownership of such interest, a percentage of all Hydrocarbons
produced, saved, and marketed from each well or property included in the Oil
and Gas Interests of Seagull and its Subsidiaries, not less than the net
revenue interest set forth in the Seagull Reserve Report for such well or
property, without reduction, suspension, or termination for the productive life
of such well or property, except as a result of elections not to participate in
an operation under an applicable operating, unit or other agreement, or
readjustments of interest provided for under the terms of the applicable
operating, unit or other agreement, in each case, after the date hereof; (y)
obligates the party named to bear a percentage of the costs and expenses
relating to operations on, and the maintenance and production of, such well or
property, not greater than the working or operating interest set forth in the
Seagull Reserve Report without increase for the productive life of such well or
property, except as a result of an election of other parties not to participate
in an operation under an applicable operating, unit or other agreement,
contribution requirements with respect to defaulting co-owners, or
readjustments of interest provided for under the terms of the applicable
operating or unit agreement, in each case, after the date hereof; and (z) is
free and clear of any Liens except the Seagull Permitted Encumbrances. For the
purposes of this Agreement, "Seagull Permitted Encumbrances" means (i)
royalties, overriding royalties, reversionary interests and similar burdens if
the cumulative effect of such burdens does not and will not reduce the net
revenue interest with respect to a well or property below the net revenue
interest shown therefor in the Seagull Reserve Report or increase the working
interest with respect to such well or property above the working interest shown
therefor in the Seagull Reserve Report; (ii) the terms and conditions of all
leases, servitudes, production sales contracts, division orders, contracts for
sale, purchase, exchange, refining or processing of Hydrocarbons, unitization
and pooling designations, declarations, orders and agreements, operating
agreements, agreements of development, area of mutual interest agreements,
farmout agreements, gas balancing or deferred production agreements, processing
agreements, plant agreements, pipeline, gathering and transportation
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or geophysical permits or agreements, and
other agreements including, without limitation, the terms and conditions of any
and all contracts and agreements set forth in the Seagull Reserve Report
covering production sales contracts and all other contracts and agreements
disclosed in such Disclosure Schedule, to the extent that such contracts and
agreements do not and will not reduce the net revenue interest of any well or
property included in the Oil and Gas Interests of Seagull and its Subsidiaries
below the net revenue interest shown therefor in the Seagull Reserve Report or
increase the working interest of such well above the working interest shown
therefor in the Seagull Reserve Report without a proportionate increase in the
net revenue interest of such well or property; (iii) easements, rights of way,
servitudes, permits, surface leases and other rights with respect to surface
obligations, pipelines, grazing, canals, ditches, reservoirs, or the like,
conditions, covenants or other restrictions, and easements of streets, alleys,
highways, pipelines, telephone lines, power lines, railways and other easements
and rights of way on, over or in respect of any of the Oil and Gas Interests of
Seagull and its Subsidiaries, so long as they are not
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EXHIBIT 1.1
such that would have a Seagull Material Adverse Effect; (iv) any preferential
purchase rights, required third party consents to assignment and similar
agreements and obligations applicable to the transactions contemplated hereby
with respect to which prior to the Effective Time (A) waivers or consents have
been obtained from the appropriate person, or (B) the applicable period of time
for asserting such rights has expired without any exercise of such rights; (v)
liens for Taxes or assessments not yet delinquent; (vi) materialmen's
mechanic's, repairman's, employee's, contractor's, operator's, and other
similar liens or charges arising in the ordinary course of business (A) if
they have not been filed pursuant to law, (B) if filed, they have not yet
become due and payable or payment is being withheld as provided by law or (C)
if their validity is being contested in good faith in the ordinary course of
business by appropriate action; (vii) Customary Post-Closing Consents; (viii)
conventional rights of reassignment arising in respect of abandonment,
cessation of production or expiration of leases; (ix) all rights reserved to or
vested in any Governmental Authority to control or regulate any of the Oil and
Gas Interests of Seagull and its Subsidiaries in any manner, and all applicable
laws, rules and orders of Governmental Authorities; (x) any other liens,
charges, encumbrances, contracts, agreements, instruments, obligations, defects
or irregularities of any kind whatsoever that would not have a Seagull Material
Adverse Effect or that are set forth in Section 5.18 of the Seagull Disclosure
Schedule. Notwithstanding the foregoing, title to the Seagull Classified
Properties is of a type and nature customarily acceptable to the reasonably
prudent oil and gas operator of oil and gas interests.
(b) Except as set forth in Section 5.18(b) of the Seagull
Disclosure Schedule, (i) each oil and gas lease included in the Oil and Gas
Interests of Seagull and its Subsidiaries is valid, binding and enforceable in
accordance with its terms, except for the Enforceability Exception (to the
extent applicable), and (ii) neither Seagull nor the Seagull Subsidiary that is
party to each such lease, nor, to the knowledge of Seagull, any other party to
any such lease, is in breach or default thereunder in any material respect, no
notice of default or termination thereunder has been given or received by
Seagull or any of its Subsidiaries, and no event has occurred which would, with
the giving of notice or passage of time or both, constitute a breach or default
thereunder or permit termination, modification or acceleration thereunder that
could reasonably be expected to result in a Seagull Material Adverse Effect.
Section 5.19 Title to Other Properties. Except as set forth in
Section 5.19 of the Seagull Disclosure Schedule, Seagull or its Subsidiaries
owns, of record (to the extent applicable) and beneficially, all material
personal property and all real property (other than real property included in
the Oil and Gas Interests of Seagull and its Subsidiaries), purported to be
owned by Seagull or its Subsidiaries (except to the extent that such properties
have thereafter been disposed of in the ordinary course of business consistent
with past practice or after the date hereof in compliance with Section 6.2(d)),
free and clear of any Liens except Seagull Permitted Encumbrances.
Section 5.20 Material Contracts.
(a) Set forth in Section 5.20(a) of the Seagull Disclosure
Schedule is a list of each contract, lease, indenture, agreement, arrangement
or understanding to which Seagull or any of its Subsidiaries is subject that
is of a type that would be required to be included as an exhibit to a Form S-1
Registration Statement pursuant to the rules and regulations of the SEC if such
a registration was filed by Seagull (the "Seagull Material Contracts").
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EXHIBIT 1.1
(b) Except as set forth in Section 5.20(a) or 5.20(b) of the
Seagull Disclosure Schedule, the Oil and Gas Interests of Seagull and its
Subsidiaries are not subject to (i) any instrument or agreement evidencing or
related to indebtedness for borrowed money, whether directly or indirectly, or
(ii) any agreement not entered into in the ordinary course of business in which
the amount involved is in excess of $250,000. With respect to the Oil and Gas
Interests of Seagull and its Subsidiaries, (A) all Seagull Material Contracts
are in full force and effect and are the valid and legally binding obligations
of the parties thereto and are enforceable in accordance with their respective
terms; (B) no party to any Seagull Material Contract is in material breach or
default with respect to its obligations thereunder, including with respect to
payments or otherwise; (C) no party to any Seagull Material Contract has given
notice of any action to terminate, cancel, rescind or procure a judicial
reformation thereof; and (D) no Seagull Material Contract contains any
provision that prevents Seagull or any of its Subsidiaries from owning,
managing and operating the Oil and Gas Interests of Seagull and its
Subsidiaries in accordance with historical practices.
(c) As of the date of this Agreement, except as set forth in
Section 5.20(c) of the Seagull Disclosure Schedule, with respect to
authorizations for expenditure executed on or after January 1, 1996, (i) there
are no material outstanding calls for payments that are due or which Seagull or
its Subsidiaries are committed to make that have not been made; (ii) there are
no material operations with respect to which Seagull or its Subsidiaries have
become a non-consenting party; and (iii) there are no commitments for the
material expenditure of funds for drilling or other capital projects other than
projects with respect to which the operator is not required under the
applicable operating agreement to seek consent.
(d) Except as set forth in Section 5.20(d) of the Seagull
Disclosure Schedule, (i) there are no express contractual obligations to engage
in continuous development operations in order to maintain any producing Oil and
Gas Interest of the Seagull in force and effect; (ii) there are no provisions
applicable to the Oil and Gas Interests of Seagull and its Subsidiaries which
increase the royalty percentage of the lessor thereunder; and (iii) none of the
Oil and Gas Interests of Seagull and its Subsidiaries are limited by terms
fixed by a certain number of years (other than primary terms under oil and gas
leases).
Section 5.21 Permits. Immediately prior to the Effective Time and
except for Customary Post-Closing Consents, Seagull or its Subsidiaries will
hold all of the Permits required or necessary to construct, run, operate, use
and/or maintain their properties and conduct the their operations as presently
conducted, except for such Permits, the lack of which, individually or in the
aggregate, would not have a Seagull Material Adverse Effect; provided, however,
that notwithstanding the foregoing, no representation or warranty in this
Section 5.21 is made with respect to Permits issued pursuant to Environmental
Laws, which are covered exclusively by the provisions set forth in Section
5.12.
Section 5.22 Required Shareholder Vote or Consent. The only vote of
the holders of any class or series of Seagull's capital stock that will be
necessary to consummate the Merger and the other transactions contemplated by
this Agreement is (a) the approval of the Merger by the holders of a majority
of the shares represented in person or by proxy and voting with respect thereto
and (b) the election of the directors contemplated by Section 7.12 by the
holders of a plurality of shares of Seagull Common Stock represented in person
or by proxy and voting with respect thereto (the "Seagull Shareholders'
Approval").
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EXHIBIT 1.1
Section 5.23 Proxy Statement/Prospectus; Registration Statement.
None of the information to be supplied by Seagull or Merger Sub for inclusion
in (a) the Proxy Statement/Prospectus to be filed by Global and Seagull with
the SEC, and any amendments or supplements thereto, or (b) the Registration
Statement to be filed by Seagull with the SEC in connection with the Merger,
and any amendments or supplements thereto, will, at the respective times such
documents are filed, and, in the case of the Proxy Statement/Prospectus, at the
time the Proxy Statement/Prospectus or any amendment or supplement thereto is
first mailed to stockholders of Global and Seagull, at the time such
stockholders vote on approval and adoption of this Agreement and at the
Effective Time, and, in the case of the Registration Statement, when it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be made therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 5.24 Intellectual Property. Seagull or its Subsidiaries own,
or are licensed or otherwise have the right to use, and Seagull or its
Subsidiaries, after the Contribution, will own or be licensed or otherwise have
the right to use, all Intellectual Property currently used in the conduct of
the business of Seagull and its Subsidiaries, except where the failure to so
own or otherwise have the right to use such intellectual property would not,
individually or in the aggregate, have a Seagull Material Adverse Effect. No
person has notified either Seagull or any of its Subsidiaries that their use of
the Intellectual Property infringes on the rights of any person, subject to
such claims and infringements as do not, individually or in the aggregate, give
rise to any liability on the part of Seagull and its Subsidiaries that could
have a Seagull Material Adverse Effect, and, to Seagull's knowledge, no person
is infringing on any right of Seagull or any of its Subsidiaries with respect
to any such Intellectual Property. No claims are pending or, to Seagull's
knowledge, threatened that Seagull or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property.
Section 5.25 Hedging. Section 5.25 of the Seagull Disclosure
Schedule sets forth for the periods shown obligations of Seagull and each of
its Subsidiaries for the delivery of Hydrocarbons attributable to any of the
properties of Seagull or any of its Subsidiaries in the future on account of
prepayment, advance payment, take-or-pay or similar obligations without then or
thereafter being entitled to receive full value therefor. Except as set forth
in Section 5.25 of the Seagull Disclosure Schedule, as of the date of this
Agreement, neither Seagull nor any of its Subsidiaries is bound by futures,
hedge, swap, collar, put, call, floor, cap, option or other contracts that are
intended to benefit from or reduce or eliminate the risk of fluctuations in the
price of commodities, including Hydrocarbons or securities.
Section 5.26 Brokers. No broker, finder or investment banker (other
than Donaldson, Lufkin & Jenrette Securities Corporation, the fees and expenses
of which will be paid by Seagull) is entitled to any brokerage, finder's fee or
other fee or commission payable by Seagull or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Seagull or any of its Subsidiaries. True
and correct copies of all agreements and engagement letters currently in effect
with Donaldson, Lufkin & Jenrette Securities Corporation (the "Seagull
Engagement Letters") have been provided to Global.
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EXHIBIT 1.1
Section 5.27 Merger Sub's Operations. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
Section 5.28 Pooling; Tax Matters. Neither Seagull nor, to the
knowledge of Seagull, any of its affiliates has taken or agreed to take any
action that would prevent the Merger from (a) being treated for financial
accounting purposes as a Pooling Transaction or (b) constituting a
reorganization within the meaning of section 368(a) of the Code. Specifically:
(a) Following the Merger, Global will hold at least
90 percent of the fair market value of its net assets and at least 70
percent of the fair market value of its gross assets and at least 90
percent of the fair market value of Merger Sub's net assets and at
least 70 percent of the fair market value of Merger Sub's gross
assets, held immediately prior to the Merger, taking into account
amounts used to pay merger expenses and any distributions other than
regular dividends.
(b) Seagull has no plan or intention to (i)
liquidate Global, (ii) merge Global with or into another corporation,
(iii) sell or otherwise dispose of the stock of Global except for
transfers of stock to corporations controlled (within the meaning of
section 368(c) of the Code) by Seagull, (iv) cause or permit Global to
issue additional shares of its capital stock that would result in
Seagull's losing control (within the meaning of section 368(c) of the
Code) of Global, (v) cause or permit Global to sell or otherwise
dispose of any of its assets or of any of the assets acquired from
Merger Sub except for dispositions made in the ordinary course of
business or transfers of assets to a corporation controlled by Global,
or (vi) reacquire any of Seagull Common Stock issued to the holders of
Global Common Stock pursuant to the Merger.
(c) Merger Sub will have no liabilities assumed by
Global and will not transfer to Global any assets subject to
liabilities in the Merger.
(d) Following the Merger, Global will continue its
historic business or use a significant portion of its historic assets
in a business.
(e) There is no intercorporate indebtedness existing
between Seagull and Global or between Merger Sub and Global that was
issued, acquired, or will be settled at a discount.
(f) Seagull is not an investment company as defined
in section 368(a)(2)(F)(iii) and (iv) of the Code.
(g) Seagull does not own, nor has it owned during
the past five years, any shares of the capital stock of Global.
(h) None of the compensation to be received by any
shareholder-employees of Global will be separate consideration for, or
allocable to, any of their shares of Global Common Stock; none of the
shares of Seagull Common Stock to be received by any
shareholder-employees will be separate consideration for, or allocable
to, any employment
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EXHIBIT 1.1
agreement; and the compensation paid to any shareholder-employees will
be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar
services.
(i) The payment of cash in lieu of fractional shares
of Seagull Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Seagull of issuing fractional shares and
does not represent separately bargained-for consideration. The total
cash consideration that will be paid instead of issuing fractional
shares of Seagull Common Stock will not exceed one percent (1%) of the
total consideration that will be issued pursuant to the Merger to the
Global shareholders in exchange for their Global Common Stock. The
fractional share interests will be aggregated, and no Global
shareholder will receive cash in an amount greater than the value of
one full share of Seagull Common Stock.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by Global Pending the Merger. From
the date hereof until the Effective Time, unless Seagull shall otherwise agree
in writing, or except as set forth in the Global Disclosure Schedule or as
otherwise contemplated by this Agreement, Global and its Subsidiaries shall
conduct their business in the ordinary course consistent with past practice and
shall use all reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and key employees, subject to the terms of
this Agreement. Except as set forth in the Global Disclosure Schedule or as
otherwise provided in this Agreement, and without limiting the generality of
the foregoing, from the date hereof until the Effective Time, without the
written consent of Seagull, which consent shall not be unreasonably withheld:
(a) Neither Global nor its Subsidiaries will adopt or propose
any change to its Certificate of Incorporation or By-Laws;
(b) Global will not, and will not permit any of its
Subsidiaries to (i) declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of Global or its
Subsidiaries or (ii) repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other securities of, or other ownership interests
in, Global or any of its Subsidiaries, other than intercompany acquisitions of
stock;
(c) Global will not, and will not permit any of its
Subsidiaries to, merge or consolidate with any other person or acquire a
material amount of assets of any other person;
(d) Except as set forth in Section 6.1(d), Global will not,
and will not permit any of its Subsidiaries to, sell, lease, license or
otherwise surrender, relinquish or dispose of any assets or properties with an
aggregate fair market value exceeding $1,000,000;
(e) Global will not settle any material Audit, make or change
any material Tax election or file any material amended Tax Return;
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EXHIBIT 1.1
(f) Except as otherwise permitted by this Agreement, Global
will not issue any securities (except pursuant to existing obligations
disclosed in the Global SEC Reports or the Global Disclosure Schedule), enter
into any amendment of any term of any outstanding security of Global or of any
of its Subsidiaries, incur any indebtedness except trade debt in the ordinary
course of business or pursuant to existing credit facilities or arrangements,
fail to make any required contribution to any Global ERISA Plan, increase
compensation, bonus (except as set forth in Section 6.1(f) of the Global
Disclosure Schedule) or other benefits payable to any executive officer or
former employee or enter into any settlement or consent with respect to any
pending litigation;
(g) Global will not change any method of accounting or
accounting practice by Global or any of its Subsidiaries, except for any such
change required by GAAP;
(h) Global will not take any action that would give rise to a
claim under the WARN Act or any similar state law or regulation because of a
"plant closing" or "mass layoff" (each as defined in the WARN Act);
(i) Global will not amend or otherwise change the terms of
the Global Engagement Letters, except to the extent that any such amendment or
change would result in terms more favorable to Global;
(j) Neither Global nor any of its Subsidiaries will become
bound or obligated to participate in any operation, or consent to participate
in any operation, with respect to any Oil and Gas Interests that will
individually cost in excess of $5 million unless the operation is a currently
existing obligation of Global or any of its Subsidiaries or necessary to
extend, preserve or maintain an Oil and Gas Interest;
(k) Neither Global nor any of its Subsidiaries will enter
into any futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from or reduce or eliminate the risk of
fluctuations in the price of commodities, including Hydrocarbons, or
securities, other than in the ordinary course of business in accordance with
Global's current policies;
(l) Global will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing;
(m) Global will not, and will not permit any of its
Subsidiaries to (i) take, or agree or commit to take, any action that would
make any representation and warranty of Global hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time or (ii) omit, or
agree or commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time; and
(n) Neither Global nor any of its Subsidiaries shall (A)
adopt, amend (other than amendments that reduce the amounts payable by Global
or any Subsidiary, or amendments required by law to preserve the qualified
status of a Global Benefit Plan) or assume an obligation to contribute to any
employee benefit plan or arrangement of any type or collective bargaining
agreement or enter into any employment, severance or similar contract with any
person (including, without limitation, contracts with management of Global or
any Subsidiaries that might require that
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EXHIBIT 1.1
payments be made upon the consummation of the transactions contemplated hereby)
or amend any such existing contracts to increase any amounts payable thereunder
or benefits provided thereunder, (B) engage in any transaction (either acting
alone or in conjunction with any Global Benefit Plan or trust created
thereunder) in connection with which Global or any Subsidiary could be
subjected (directly or indirectly) to either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code, (C) terminate any Global
Benefit Plan in a manner, or take any other action with respect to any Global
Benefit Plan, that could result in the liability of Global or any Subsidiary to
any person, (D) take any action that could adversely affect the qualification
of any Global Benefit Plan or its compliance with the applicable requirements
of ERISA, (E) fail to make full payment when due of all amounts which, under
the provisions of any Global Benefit Plan, any agreement relating thereto or
applicable law, Global or any Subsidiary are required to pay as contributions
thereto or (F) fail to file, on a timely basis, all reports and forms required
by federal regulations with respect to any Global Benefit Plan.
Section 6.2 Conduct of Business by Seagull Pending the Merger. From
the date hereof until the Effective Time, unless Global shall otherwise agree
in writing, or except as set forth in the Seagull Disclosure Schedule or as
otherwise contemplated by this Agreement, Seagull shall conduct, and shall
cause its Subsidiaries to conduct, its business in the ordinary course
consistent with past practice and shall use, and shall cause its each of its
Subsidiaries to use, all reasonable efforts to preserve intact its business
organizations and relationships with third parties and to keep available the
services of its key employees, subject to the terms of this Agreement. Except
as set forth in the Seagull Disclosure Schedule or as otherwise provided in
this Agreement, and without limiting the generality of the foregoing, from the
date hereof until the Effective Time, without the written consent of Global,
which consent shall not be unreasonably withheld:
(a) Neither Seagull nor Merger Sub will adopt or propose any
change to its Certificate of Incorporation or By-Laws;
(b) Seagull will not, and will not permit any of its
Subsidiaries to (i) declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of Seagull or (ii)
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other securities of, or other ownership interests in, Seagull or any of its
Subsidiaries, other than intercompany acquisitions of stock or, subject to the
provisions of Section 7.18(b) market purchases conducted in accordance with
Rules 10b-18 under the Exchange Act.
(c) Neither Seagull nor Merger Sub will merge or consolidate
with any other person or acquire assets having aggregate purchase prices of
more than $150 million (excluding the acquisition of Esso Seuz, Inc. and
certain assets of Esso Egypt Limited);
(d) Except as set forth in Section 6.2(d) of the Seagull
Disclosure Schedule, neither Seagull nor any of its Subsidiaries will sell,
lease, license or otherwise surrender, relinquish or dispose of any assets or
properties with an aggregate fair market value exceeding $1,000,000;
(e) Seagull will not settle any material Audit, make or
change any material Tax election or file any material amended Tax Return;
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EXHIBIT 1.1
(f) Except as otherwise permitted by this Agreement, Seagull
will not issue any securities (except pursuant to existing obligations
disclosed in the Seagull SEC Reports or the Seagull Disclosure Schedule), enter
into any amendment of any term of any outstanding security of Seagull or of any
of its Subsidiaries, incur any indebtedness except trade debt in the ordinary
course of business or pursuant to existing credit facilities or arrangements,
fail to make any required contribution to any Seagull ERISA Plan, increase
compensation, bonus (except as set forth in Section 6.2(e) of the Seagull
Disclosure Schedule) or other benefits payable to any executive officer or
former employee or enter into any settlement or consent with respect to any
pending litigation;
(g) Seagull will not change any method of accounting or
accounting practice, except for any such change required by GAAP;
(h) Seagull will not amend or otherwise change the terms of
the Seagull Engagement Letters, except to the extent that any such amendment or
change would result in terms more favorable to Seagull;
(i) Neither Seagull nor any of its Subsidiaries will become
bound or obligated to participate in any operation, or consent to participate
in any operation, with respect to any Oil and Gas Interest that will
individually cost in excess of $5 million unless the operation is a currently
existing obligation of Seagull or any of its Subsidiaries or necessary to
extend, preserve or maintain an Oil and Gas Interest;
(j) Neither Seagull nor any of its Subsidiaries will enter
into any futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from or reduce or eliminate the risk of
fluctuations in the price of commodities, including Hydrocarbons other than in
the ordinary course of business in accordance with Seagull's current policies;
(k) Seagull will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing;
(l) Seagull will not, and will not permit any of its
Subsidiaries to (i) take, or agree or commit to take, any action that would
make any representation and warranty of Seagull or Merger Sub hereunder
inaccurate in any respect at, or as of any time prior to, the Effective Time or
(ii) omit, or agree or commit to omit, to take any action necessary to prevent
any such representation or warranty from being inaccurate in any respect at any
such time; and
(m) Neither Seagull nor any of its Subsidiaries shall (A)
adopt, amend (other than amendments that reduce the amounts payable by Seagull
or any Subsidiary, or amendments required by law to preserve the qualified
status of a Seagull Benefit Plan) or assume an obligation to contribute to any
employee benefit plan or arrangement of any type or collective bargaining
agreement or enter into any employment, severance or similar contract with any
person (including, without limitation, contracts with management of Seagull or
any Subsidiaries that might require that payments be made upon consummation of
the transactions contemplated hereby) or amend any such existing contracts to
increase any amounts payable thereunder or benefits provided thereunder, (B)
engage in any transaction (either acting alone or in conjunction with any
Seagull Benefit Plan or trust created thereunder) in connection with which
Seagull or any Subsidiary could be subjected (directly or indirectly) to either
a civil penalty assessed pursuant to subsections (c), (i) or (l) of
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EXHIBIT 1.1
Section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of
the Code, (C) terminate any Seagull Benefit Plan in a manner, or take any other
action with respect to any Seagull Benefit Plan, that could result in the
liability of Seagull or any Subsidiary to any person, (D) take any action that
could adversely affect the qualification of any Seagull Benefit Plan or its
compliance with the applicable requirements or ERISA, (E) fail to make full
payment when due of all amounts which, under the provisions of any Seagull
Benefit Plan, any agreement relating thereto or applicable law, Seagull or any
Subsidiary are required to pay as contributions thereto or (F) fail to file, on
a timely basis, all reports and forms required by federal regulations with
respect to any Seagull Benefit Plan.
Section 6.3 Conduct of Business of Merger Sub. From the date hereof
to the Effective Time, Merger Sub shall not engage in any activities of any
nature except as provided in or contemplated by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The parties shall each afford to
the other and to the other's financial advisors, legal counsel, accountants,
consultants, financing sources, and other authorized representatives access
during normal business hours throughout the period prior to the Effective Time
to all of its books, records, properties, contracts, leases, plants and
personnel and, during such period, each shall furnish promptly to the other (a)
a copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws, and (b) all
other information as such other party reasonably may request, provided that no
investigation pursuant to this Section 7.1 shall affect any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the Merger. Each party shall hold in confidence all
nonpublic information until such time as such information is otherwise publicly
available and, if this Agreement is terminated, each party will deliver to the
other all documents, work papers and other materials (including copies)
obtained by such party or on its behalf from the other party as a result of
this Agreement or in connection herewith, whether so obtained before or after
the execution hereof. Notwithstanding the foregoing, the Confidentiality
Agreement dated July 8, 1996 between Seagull and Global shall survive the
execution and delivery of this Agreement.
Section 7.2 Acquisition Proposals.
(a) From the date hereof until the termination hereof, Global
and its Subsidiaries will not, and will cause their respective officers,
directors, employees or other agents not to, directly or indirectly, (i) take
any action to solicit, initiate or encourage any Global Acquisition Proposal
(as hereinafter defined) or (ii) engage in negotiations with, or disclose any
nonpublic information relating to Global or its Subsidiaries, respectively, or
afford access to their respective properties, books or records to any person
that may be considering making, or has made, a Global Acquisition Proposal.
Nothing contained in this Section 7.2 shall prohibit Global and its Board of
Directors from (i) taking and disclosing a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated by the
SEC under the Exchange Act, or (ii) furnishing
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EXHIBIT 1.1
information, including without limitation nonpublic information to, or entering
into negotiations with, any person or entity that has indicated its willingness
to make an unsolicited bona fide proposal to acquire Global pursuant to a
merger, consolidation, share exchange, purchase of a substantial portion of the
assets, business combination or other similar transaction, if, and only to the
extent that, (A) such unsolicited bona fide proposal relating to a Global
Acquisition Proposal is made by a third party that the Board of Directors of
Global determines in good faith that the third party has the good faith intent
to proceed with negotiations to consider, and financial capability to
consummate, such Global Acquisition Proposal, (B) the Board of Directors of
Global, after duly considering the written advice of outside legal counsel to
Global, determines in good faith that such action is required for the Board of
Directors of Global to comply with its fiduciary duties to stockholders imposed
by applicable law, (C) contemporaneously with furnishing such information to,
or entering into discussions or negotiations with, such person or entity Global
provides written notice to Seagull to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity and (D) Global uses all reasonable efforts to keep Seagull informed
in all material respects of the status and terms of any such negotiations or
discussions (including without limitation the identity of the person or entity
with whom such negotiations or discussions are being held) and provides Seagull
copies of such written proposals and any amendments or revisions thereto or
correspondence related thereto; provided, that Seagull agrees to execute a
confidentiality agreement, in form reasonably acceptable to it, with respect to
any such information delivered to Seagull pursuant to this clause (D), which
confidentiality agreement shall be subject to Seagull's disclosure obligations
arising under applicable law or securities exchange regulations.
(b) The term "Global Acquisition Proposal" as used herein
means any offer or proposal for, or any indication of interest in, a merger or
other business combination directly or indirectly involving Global or any
Global Subsidiary or the acquisition of a substantial equity interest in, or a
substantial portion of the assets of, any such party, other than the
transactions contemplated by this Agreement.
Section 7.3 Directors' and Officers' Indemnification and Insurance.
(a) For six years after the Effective Time, Seagull shall
cause the Surviving Corporation to indemnify, defend and hold harmless the
present and former officers, directors, employees and agents of Global and its
Subsidiaries (each an "Indemnified Party") against all losses, claims, damages,
liabilities, fees and expenses (including reasonable fees and disbursements of
counsel and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the prior
written consent of Seagull)) arising out of actions or omissions in their
capacity as such occurring at or prior to the Effective Time to the full extent
permitted under New Jersey law or Global's Certificate of Incorporation, Bylaws
or written indemnification agreements in effect at the date hereof, including
provisions therein relating to the advancement of expenses incurred in the
defense of any action or suit; provided, that in the event any claim or claims
are asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until disposition of any
and all such claims; and provided,
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EXHIBIT 1.1
further, that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under New
Jersey law, Global's Certificate of Incorporation or Bylaws or such agreements,
as the case may be, shall be made by independent counsel mutually acceptable to
Seagull and the Indemnified Party; and provided, further, that nothing herein
shall impair any rights or obligations of any present or former directors or
officers of Global. In the event that any claim or claims are brought against
any Indemnified Party (whether arising before or after the Effective Time),
such Indemnified Party may select counsel for the defense of such claim, which
counsel shall be reasonably acceptable to Global (if selected prior to the
Effective Time) and the Surviving Corporation (if selected after the Effective
Time).
(b) Seagull shall cause the Surviving Corporation to maintain
Global's existing officers' and directors' liability insurance policy ("D&O
Insurance") for a period of not less than six years after the Effective Time,
but only to the extent related to actions or omissions prior to the Effective
Time; provided, that the Surviving Corporation may substitute therefor policies
of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers; provided further, that the
aggregate amount of premiums to be paid with respect to the maintenance of such
D&O Insurance for such six year period shall not exceed $1,000,000.
Section 7.4 Further Assurances. Each party hereto agrees to use all
reasonable efforts to obtain all consents and approvals and to do all other
things necessary for the consummation of the transactions contemplated by this
Agreement. The parties agree to take such further action to deliver or cause
to be delivered to each other at the Closing and at such other times thereafter
as shall be reasonably agreed by such additional agreements or instruments as
any of them may reasonably request for the purpose of carrying out this
Agreement and agreements and transactions contemplated hereby and thereby. The
parties shall afford each other access to all information, documents, records
and personnel who may be necessary for any party to comply with laws or
regulations (including without limitation the filing and payment of taxes and
handling tax audits), to fulfill its obligations with respect to
indemnification hereunder or to defend itself against suits or claims of
others. Seagull and Global shall duly preserve all files, records or any
similar items of Seagull or Global received or obtained as a result of the
Merger with the same care and for the same period of time as it would preserve
its own similar assets.
Section 7.5 Expenses.
(a) Except as provided in paragraph (c), all Expenses (as
defined below) incurred by the parties hereto shall be borne solely and
entirely by the party that has incurred such Expenses; provided, however, that
if this Agreement is terminated for any reason, then the allocable share of
Seagull and Merger Sub, as a group, and Global for all Expenses (including any
fees and expenses of accountants, experts, and consultants, but excluding the
fees and expenses of legal counsel and investment bankers) related to
preparing, printing, filing and mailing the Registration Statement, the Proxy
Statement/Prospectus and all SEC and other regulatory filing fees incurred in
connection with the Registration Statement, Proxy Statement/Prospectus and HSR,
shall be allocated one-half each.
(b) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all
reasonable fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Registration
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EXHIBIT 1.1
Statement, the Proxy Statement/Prospectus, the solicitation of stockholder
approvals, requisite HSR filings and all other matters related to the
consummation of the transactions contemplated hereby.
(c) Global agrees that, if (i) Seagull terminates this
Agreement pursuant to Section 10.1(g) or (ii) Global terminates this Agreement
pursuant to Section 10.1(h) or (iii) Seagull terminates this Agreement pursuant
to Section 10.1(d) or Seagull terminates this Agreement pursuant to Section
10.1(b) at a time that a Global Breach (as hereinafter defined) exists and in
each case described in clauses (i), (ii) and (iii) within nine months after the
termination of this Agreement (A) a transaction is consummated, which
transaction, if offered or proposed, would constitute a Global Acquisition
Proposal, (B) a definitive agreement (the execution and delivery of which has
been authorized by the boards of directors, or comparable bodies, that would if
consummated constitute a Global Acquisition Proposal) for such a transaction is
entered into or (C) (X) any person shall have acquired beneficial ownership or
the right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated hereunder), shall have been formed that beneficially owns, or has
the right to acquire beneficial ownership of, outstanding shares of capital
stock of Global then representing 50% or more of the combined power to vote
generally for the election of directors and (Y) the Board of Directors of
Global has taken any action, including without limitation the redemption of the
Rights under the Global Rights Plan, or the amendment, termination of similar
action with respect to the Global Rights Plan for the benefit of such person,
that facilitates the acquisition by such person or group of such beneficial
ownership, then in any such case Global shall pay to Seagull a Termination Fee
of $20 million, plus the reasonably documented Expenses of Seagull and Merger
Sub up to $2 million. In no event shall any such Termination Fee be payable in
the event that the Seagull Board of Directors withdraws, modifies or changes
its recommendation of this Agreement or the Merger.
Section 7.6 Cooperation. Subject to compliance with applicable law,
from the date hereof until the Effective Time, each of the parties hereto shall
confer on a regular and frequent basis with one or more representatives of the
other parties to report operational matters of materiality and the general
status of ongoing operations and shall promptly provide the other party or its
counsel with copies of all filings made by such party with any Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby.
Section 7.7 Publicity. Neither Global, Seagull nor any of their
respective affiliates shall issue or cause the publication of any press release
or other announcement with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange.
Section 7.8 Additional Actions. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement, subject, however, to the appropriate vote of
stockholders of Global and Seagull required so to vote.
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EXHIBIT 1.1
Section 7.9 Filings. Each party hereto shall make all filings
required to be made by such party in connection herewith or desirable to
achieve the purposes contemplated hereby, and shall cooperate as needed with
respect to any such filing by any other party hereto.
Section 7.10 Consents. Each of Seagull, Merger Sub and Global shall
use all reasonable efforts to obtain all consents necessary or advisable in
connection with its obligations hereunder.
Section 7.11 Employee Matters; Benefit Plans. Seagull will evaluate
its personnel needs and consider continuing the employment of certain employees
of Global on a case-by-case basis. After the Effective Time, Seagull will
provide to any employees of Global who are employed by Global as of the
Effective Time (the "Retained Employees") the same base salary or wages
provided to such employees prior to the Effective Time. From and after the
Effective Time until January 1, 1997, any Global Benefit Plan shall be
continued separately without change, except for (i) changes required by
applicable law, and (ii) changes not adverse to the Retained Employees, for the
benefit of, and participation therein shall continue to be made available to,
the Retained Employees. From and after the Effective Time until January 1,
1997, in the event that a Retained Employee is transferred or reassigned from
Global to a position with Seagull and is no longer covered under any Global
Benefit Plan, such individual shall be afforded coverage under the Seagull
employee plans that are available to similarly situated employees of Seagull.
Any Retained Employee who is terminated after the Effective Time shall be
provided benefits under the Seagull Energy Corporation Management Stability
Plan (or, at the election of Seagull, one or more such Retained Employees shall
receive comparable benefits under a separate severance agreement). From and
after January 1, 1997, Seagull will provide, or cause to be provided to, the
Retained Employees employee plans that are comparable to the employee plans
that Seagull provides to its similarly situated employees or provide coverage
under existing Seagull benefit plans provided to similarly situated employees.
Further, Seagull shall (i) waive, or cause to be waived, any preexisting
condition limitations applicable to the Retained Employees under any group
medical plan to the extent that a Retained Employee's condition would not have
operated as a preexisting condition limitation under Global's group medical
plan, (ii) cause any employee pension benefit plan (as such term is defined in
Section 3(2) of ERISA) which is intended to be qualified under Section 401 of
the Code to be amended to provide that the Retained Employees shall receive
credit for participation and vesting purposes under such plan for their period
of employment with Global and its predecessors to the extent such predecessor
employment was recognized by Global, and (iii) credit the Retained Employees
under each other employee benefit plan or policy which is not described in
clause (ii) above for their period of employment with Global or its
predecessors to the extent such predecessor employment was recognized by
Global, but not in excess of the maximum credit available to Seagull's
employees under such plan or policy.
Section 7.12 Seagull Board. Seagull shall take action to cause the
number of directors on the Seagull Board at the Effective Time to be increased
by three directors and shall use all reasonable efforts to have three
individuals designated by Global prior to the Effective Time (the "Global
Designees") to be elected by Seagull's shareholders at the Seagull Special
Meeting (as defined below) to fill such number of additional directors. The
Global Designees shall be elected to serve in the board classes, with the
corresponding terms, set forth on Schedule 7.12.
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EXHIBIT 1.1
Section 7.13 Stockholders Meetings.
(a) Approval of Global Shareholders. Global shall, as
promptly as reasonably practicable after the date hereof (i) take all steps
reasonably necessary to call, give notice of, convene and hold a special
meeting of its shareholders (the "Global Special Meeting") for the purpose of
securing the Global Shareholders' Approval, (ii) distribute to its shareholders
the Proxy Statement/Prospectus in accordance with applicable federal and state
law and with its articles of incorporation and bylaws, which Proxy
Statement/Prospectus shall contain the recommendation of the Board of Directors
of Global that its shareholders approve the Global Merger, this Agreement and
the transactions contemplated hereby, (iii) use all reasonable efforts to
solicit from its shareholders proxies in favor of the approval and adoption of
the Global Merger, this Agreement and the transactions contemplated hereby and
to secure the Global Shareholders' Approval, and (iv) cooperate and consult
with Seagull with respect to each of the foregoing matters; provided, that
nothing contained in this Section 7.4(a) shall prohibit the Global Board of
Directors from failing to make or from withdrawing or modifying its
recommendation to the Global shareholders hereunder if the Board of Directors
of Global, after consultation with and based upon the written advice of
independent legal counsel, determines in good faith that such action is
necessary for such Board of Directors to comply with its fiduciary duties to
its shareholders under applicable law.
(b) Approval of Seagull Shareholders. Seagull shall, as
promptly as reasonably practicable after the date hereof (i) take all steps
reasonably necessary to call, give notice of, convene and hold a special
meeting of its shareholders (the "Seagull Special Meeting") for the purpose of
securing the Seagull Shareholders' Approval, (ii) distribute to its
shareholders the Proxy Statement/Prospectus in accordance with applicable
federal and state law and its articles of incorporation and bylaws, which Proxy
Statement/Prospectus shall contain the recommendation of the Seagull Board of
Directors that its shareholders approve the Reincorporation Merger, this
Agreement and the transactions contemplated hereby and (iii) use all reasonable
efforts to solicit from its shareholders proxies in favor of the approval and
adoption of the Reincorporation Merger, this Agreement and the transactions
contemplated hereby and to secure the Seagull Shareholders' Approval, and (iv)
cooperate and consult with Global with respect to each of the foregoing
matters; provided, that nothing contained in this Section 7.4(b) shall
prohibit the Seagull Board of Directors from failing to make or from
withdrawing or modifying its recommendation to the Seagull shareholders
hereunder if the Board of Directors of Seagull, after consultation with and
based upon the written advice of independent legal counsel, determines in good
faith that such action is necessary for such Board of Directors to comply with
its fiduciary duties to its shareholders under applicable law.
(c) Meeting Date. The Seagull Special Meeting and the Global
Special Meeting shall be held on the same day unless otherwise agreed by
Seagull and Global.
Section 7.14 Preparation of the Proxy Statement/Prospectus and
Registration Statement.
(a) Seagull and Global shall promptly prepare and file with
the SEC a preliminary version of the Proxy Statement/Prospectus and will use
all reasonable efforts to respond to the comments of the SEC in connection
therewith and to furnish all information required to prepare the definitive
Proxy Statement/Prospectus. At any time from (and including) the initial
filing with the SEC of the Proxy Statement/Prospectus until the date that is
five business days after the receipt from
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EXHIBIT 1.1
the SEC of comments on the Proxy Statement/Prospectus, Seagull shall file with
the SEC the Registration Statement containing the Proxy Statement/Prospectus so
long as Seagull shall have provided to Global a copy of the Registration
Statement containing the Proxy Statement/Prospectus at least ten days prior to
any filing thereof and any supplement or amendment at least two days prior to
any filing thereof. Subject to the foregoing sentence, the date that the
Registration Statement is filed with the SEC shall be determined by Seagull in
its reasonable judgment. Each of Seagull and Global shall use all reasonable
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing. Seagull shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or filing a general consent to service of
process in any jurisdiction) required to be taken under any applicable state
securities laws in connection with the issuance of Seagull Common Stock in the
Merger and Global shall furnish all information concerning Global and the
holders of shares of Global capital stock as may be reasonably requested in
connection with any such action. Promptly after the effectiveness of the
Registration Statement, each of Seagull and Global shall cause the Proxy
Statement/Prospectus to be mailed to its respective stockholders, and if
necessary, after the definitive Proxy Statement/Prospectus shall have been
mailed, promptly circulate amended, supplemented or supplemental proxy
materials and, if required in connection therewith, resolicit proxies. Seagull
shall advise Global and Global shall advise Seagull, as applicable, promptly
after it receives notice thereof, of the time when the Registration Statement
shall become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Seagull
Common Stock for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Proxy Statement/Prospectus or the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information.
(b) Letter of Seagull's Accountants. Following receipt by
KPMG Peat Marwick LLP, Seagull's independent auditors, of an appropriate
request from Global pursuant to SAS No. 72, Seagull shall use all reasonable
efforts to cause to be delivered to Global a letter of KPMG Peat Marwick LLP,
dated a date within two business days before the effective date of the
Registration Statement, and addressed to Global, in form and substance
reasonably satisfactory to Global and customary in scope and substance for
"cold comfort" letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Proxy Statement/Prospectus.
(c) Letter of Global's Accountants. Following receipt by
KPMG Peat Marwick, Global's independent auditors, of an appropriate request
from Seagull pursuant to SAS No. 72, Global shall use all reasonable efforts to
cause to be delivered to Seagull a letter of KPMG Peat Marwick LLP, dated a
date within two business days before the effective date of the Registration
Statement, and addressed to Seagull, in form and substance satisfactory to
Seagull and customary in scope and substance for "cold comfort" letters
delivered by independent public accountants in connection with registration
statements and proxy statements similar to the Proxy Statement/Prospectus.
(d) Fairness Opinions. Prior to mailing the Proxy
Statement/Prospectus to the shareholders of Global and Seagull (i) Seagull
shall have received an opinion from Donaldson, Lufkin & Jenrette Securities
Corporation, dated the date of the Proxy Statement/Prospectus, to the effect
that, as of the date thereof, the Common Stock Exchange Ratio is fair to the
holders of Seagull Common Stock from a financial point of view, and (ii) Global
shall have received an opinion from
49 PAGE 59 OF 71 PAGES
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EXHIBIT 1.1
Petrie Parkman & Co., Inc. dated the date of the Proxy Statement/Prospectus, to
the effect that, as of the date thereof, the consideration to be received by
holders of Global Common Stock pursuant to the Merger is fair to such holders
from a financial point of view.
Section 7.15 Stock Exchange Listing. Seagull shall use all
reasonable efforts to cause the Seagull Common Stock to be issued in the Merger
to be approved for listing on the NYSE prior to the Effective Time, in each
case, subject to official notice of issuance.
Section 7.16 Notice of Certain Events. Each party to this Agreement
shall promptly as reasonably practicable notify the other parties hereto of:
(i) any notice or other communication from any
Person alleging that the consent of such Person (or other Person) is
or may be required in connection with the transactions contemplated by
this Agreement;
(ii) any notice or other communication from any
Governmental Authority in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened
against, relating to or involving or otherwise affecting it or any of
its Subsidiaries which, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to Sections
4.11, 4.12, 5.11 or 5.12 or which relate to the consummation of the
transactions contemplated by this Agreement;
(iv) any notice of, or other communication relating
to, a default or event that, with notice or lapse of time or both,
would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Agreement, under any material
agreement; and
(v) any Global Material Adverse Effect or Seagull
Material Adverse Effect or the occurrence of any event which is
reasonably likely to result in a Global Material Adverse Effect or a
Seagull Material Adverse Effect, as the case may be.
Section 7.17 Site Inspections. Subject to compliance with applicable
law (including applicable Environmental Laws), from the date hereof until the
Effective Time, each of the parties hereto may undertake (at that party's sole
cost and expense) an environmental assessment or assessments (an "Assessment")
of any other party's operations, business and/or properties that are the
subject of this Agreement. An Assessment may include, but not be limited to, a
review of permits, files and records, as well as visual and physical
inspections and testing. Before conducting an Assessment, the party intending
to conduct such Assessment (the "Inspecting Party") shall confer with the party
whose operations, business or property is the subject of such Assessment (the
"Inspected Party") regarding the nature, scope and scheduling of such
Assessment, and shall comply with such conditions as the Inspected Party may
reasonably impose to avoid interference with the Inspected Party's operations
or business. The Inspected Party shall cooperate in good faith with the
Inspecting Party's effort to conduct an Assessment.
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EXHIBIT 1.1
Section 7.18 Affiliate Agreements; Tax Treatment; Pooling.
(a) Global shall use all reasonable efforts to obtain and
deliver to Seagull on or prior to the Effective Time an executed letter
agreement, in form mutually acceptable to the parties, from (i) each person who
is an affiliate of Global on the date hereof, (ii) any person who may be deemed
to have become an affiliate of Global after the date of this Agreement and
(iii) any person whose agreement thereto may be deemed reasonably necessary by
Seagull to sustain the Merger's status as a Pooling Transaction.
(b) Seagull shall use all reasonable efforts to obtain and
deliver t Global an executed letter agreement, in form mutually acceptable to
the parties, from (i) each person who is an affiliate of Seagull on the date
hereof, (ii) any person who may be deemed to have become an affiliate of
Seagull after the date of this Agreement and (iii) any person whose agreement
thereto may be deemed reasonably necessary by Seagull to sustain the Merger's
status as a Pooling Transaction.
(c) Each party hereto shall use all reasonable efforts to
cause the Merger to qualify, and shall not take, and shall use all reasonable
efforts to prevent any subsidiary of such party from taking, any actions which
could prevent the Merger from qualifying, as a reorganization under the
provisions of Section 368(a) of the Code.
(d) Seagull shall assume the obligations of Global under that
certain Registration Rights Agreement dated August 3, 1987 between the
Stockholder and Global.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to the Obligation of Each Party. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) The Global Shareholders' Approval and the Seagull
Shareholders' Approval shall have been obtained.
(b) No action, suit or proceeding instituted by any
Governmental Authority shall be pending and no statute, rule or regulation and
no injunction, order, decree or judgment of any court or Governmental Authority
of competent jurisdiction shall be in effect which would prohibit, restrain,
enjoin or restrict the consummation of the Merger.
(c) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceeding for such purpose shall be pending before or threatened by the
SEC.
(d) Each of Global and Seagull shall have obtained such
permits, authorizations, consents, or approvals required to consummate the
transactions contemplated hereby.
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EXHIBIT 1.1
(e) The shares of Seagull Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, in each case, subject
to official notice of issuance.
Section 8.2 Conditions to the Obligations of Seagull and Merger Sub.
The obligation of Seagull and Merger Sub to effect the Merger is subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Global shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of Global contained
in this Agreement, to the extent qualified with respect to materiality shall be
true and correct in all respects, and to the extent not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and as of such
time, except as expressly contemplated by the Global Disclosure Letter or this
Agreement, and Seagull shall have received a certificate of the Chief Executive
Officer, Chief Operating Officer, Corporate Counsel and Vice President -
Finance of Global as to the satisfaction of this condition.
(b) All proceedings to be taken by Global in connection with
the transactions contemplated by this Agreement and all documents, instruments
and certificates to be delivered by Global in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to Seagull and Merger Sub and their counsel.
(c) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business, operations or prospects of Global and its Subsidiaries, taken as a
whole, that would have or would be reasonably likely to have a Global Material
Adverse Effect, other than any such change that affects both Seagull and Global
in a substantially similar manner.
(d) Seagull shall have received from KPMG Peat Marwick LLP a
written opinion dated the Effective Time to the effect that the transactions
contemplated by this Agreement, including the Merger, when effected in
accordance with the terms thereof, shall be accounted for in the consolidated
financial statements of Seagull and its subsidiaries as a Pooling Transaction,
and a copy of such opinion shall have been delivered to Global.
(e) Seagull shall have received an opinion from Vinson &
Elkins L.L.P. prior to the effectiveness of the Registration Statement to the
effect that (i) the Merger will constitute a reorganization under section
368(a) of the Code, (ii) Seagull, Merger Sub and Global will each be a party to
that reorganization, and (iii) no gain or loss will be recognized by Seagull,
Merger Sub or Global by reason of the Merger.
Section 8.3 Conditions to the Obligations of Global. The obligation
of Global to effect the Merger is subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) Each of Seagull and Merger Sub shall have performed in
all material respects its obligations under this Agreement required to be
performed by it at or prior to the Effective Time and the representations and
warranties of each of Seagull and Merger Sub contained in this Agreement, to
the extent qualified with respect to materiality shall be true and correct in
all respects, and to the
52 PAGE 62 OF 71 PAGES
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EXHIBIT 1.1
extent not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and at and as of the Effective Time
as if made at and as of such time, except as expressly contemplated by the
Seagull Disclosure Letter or this Agreement, and Global shall have received a
certificate of the Chief Executive Officer, President, General Counsel and
Chief Financial Officer of Seagull and an executive officer and the chief
financial officer of Merger Sub as to the satisfaction of this condition.
(b) All proceedings to be taken by each of Seagull and Merger
Sub in connection with the transactions contemplated by this Agreement and all
documents, instruments and certificates to be delivered by each of Seagull and
Merger Sub in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in form and substance to Global and its
counsel.
(c) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business, operations or prospects of Seagull and its Subsidiaries, taken as a
whole, that would have or would be reasonably likely to have a Seagull Material
Adverse Effect, other than any such change that affects both Seagull and Global
in a substantially similar manner.
(d) Global shall have received an opinion from Fulbright &
Jaworski, L.L.P. prior to the effectiveness of the Registration Statement to
the effect that (i) the Merger will constitute a reorganization under section
368(a) of the Code, (ii) Global, Seagull and Merger Sub will each be a party to
that reorganization, and (iii) no gain or loss will be recognized by the
stockholders of Global upon the receipt of shares of Seagull Common Stock in
exchange for shares of Global Common Stock pursuant to the Merger except with
respect to any cash received in lieu of fractional share interests.
(e) Global shall have received the opinion of Petrie,
Parkman & Co., Global's financial advisor, to the effect that, as of the date
of the definitive Proxy Statement/Prospectus, the consideration to be received
in the Merger by the holders of the Global Common Stock is fair to such holders
from a financial point of view.
ARTICLE IX
SURVIVAL
Section 9.1 Survival of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement shall
not survive the Closing.
Section 9.2 Survival of Covenants and Agreements. The covenants and
agreements of the parties to be performed after the Closing contained in this
Agreement shall survive the Closing.
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EXHIBIT 1.1
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval by the
stockholders of Global:
(a) by the mutual written consent of Seagull and Global;
(b) by either Seagull or Global if the Effective Time shall
not have occurred on or before January 31, 1996 (provided that the right to
terminate this Agreement under this subsection (b) shall not be available to
any party who at the time of the proposed termination is in material breach of
any of its obligations under this Agreement);
(c) by Global if there has been a material breach by Seagull
or Merger Sub of any representation, warranty, covenant or agreement set forth
in this Agreement or the Voting Agreement which breach (if susceptible to cure)
has not been cured in all material respects within twenty business days
following receipt by Seagull of notice of such breach;
(d) by Seagull, if there has been a material breach by Global
or the Shareholder of any representation, warranty, covenant or agreement set
forth in this Agreement or the Voting Agreement which breach (if susceptible to
cure) has not been cured in all material respects within twenty business days
following receipt by Global of notice of such breach ("Global Breach");
(e) by either Global or Seagull, if there shall be any
applicable domestic law, rule or regulation that makes consummation of the
Merger illegal or if any judgment, injunction, order or decree of a court or
other Governmental Authority of competent jurisdiction shall restrain or
prohibit the consummation of the Merger, and such judgment, injunction, order
or decree shall become final and nonappealable;
(f) by either Global or Seagull, if the stockholder approvals
referred to in Section 7.13 shall not have been obtained by reason of the
failure to obtain the requisite vote upon a vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof;
(g) by Seagull, if (i) the Board of Directors of Global
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Seagull or shall have resolved to do any of the
foregoing or the Board of Directors of Global shall have recommended to the
stockholders of Global any Global Acquisition Proposal or resolved to do so;
(ii) a tender offer or exchange offer for outstanding shares of capital stock
of Global then representing 50% or more of the combined power to vote generally
for the election of directors is commenced, and the Board of Directors of
Global does not, within the applicable period required by law, recommend that
stockholders not tender their shares into such tender or exchange offer; or
(iii) Global does not receive the opinion contemplated by Section 8.3(e)
(unless such condition is waived by Global) within two business days after the
definitive Proxy Statement/Prospectus is otherwise ready to printed.
54 PAGE 64 OF 71 PAGES
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EXHIBIT 1.1
(h) by Global or Seagull, if Global accepts a Superior
Proposal and makes payment as required pursuant to Section 7.5 of this
Agreement and of the Expenses for which Global is responsible under Section 7.5
of this Agreement. For purposes of this Agreement, "Superior Proposal" means
an unsolicited bona fide proposal made by a third party relating to a Global
Acquisition Proposal on terms that the Board of Directors of Global determines
it cannot reject in favor of the Merger, based on applicable fiduciary duties
and the advice of Global's outside counsel; provided, however, that Global
shall not be permitted to terminate this Agreement pursuant to this Section
10.1(h) unless it has used all reasonable efforts to provide Seagull with two
business days prior written notice of its intent to so terminate this Agreement
together with a detailed summary of the terms and conditions of such Global
Acquisition Proposal; provided further, that prior to any such termination,
Global shall, and shall cause its respective financial and legal advisors to,
negotiate in good faith with Seagull to make such adjustments in the terms and
conditions of this Agreement as would enable Global to proceed with the
transactions contemplated herein, and it is acknowledged by Seagull that such
negotiations with Seagull shall be conducted in a manner consistent with the
fiduciary duties of the Global Board of Directors;
Section 10.2 Effect of Termination. In the event of termination of
the Agreement and the abandonment of the Merger pursuant to this Article X, all
obligations of the parties shall terminate, except the obligations of the
parties pursuant to this Section 10.2 and except for the provisions of Sections
7.5, 7.7, 11.8 and the last two sentences of Section 7.1, provided that nothing
herein shall relieve any party from liability for any breaches hereof.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices or communications hereunder shall
be in writing (including facsimile or similar writing) addressed as follows:
To Seagull or Merger Sub:
Seagull Energy Corporation
1001 Fannin, Suite 1700
Houston, Texas 77002
Attention: Chairman
Facsimile No.: (713) 951-4733
With a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: J. Mark Metts
Facsimile No.: (713) 615-5605
55 PAGE 65 OF 71 PAGES
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EXHIBIT 1.1
To Global:
Global Natural Resources Inc.
5300 Memorial Drive, Suite 800
Houston, Texas 77077
Attention: Chairman
Facsimile No.: (713) 865-4386
With a copy to:
Piliero Goldstein Jenkins & Hall, LLP
292 Madison Avenue
New York, New York 10017
Attention: Jon M. Jenkins
Facsimile No.: (212) 685-2028
Any such notice or communication shall be deemed given (i) when made, if made
by hand delivery, and upon confirmation of receipt, if made by facsimile, (ii)
one business day after being deposited with a next-day courier, postage
prepaid, or (iii) three business days after being sent certified or registered
mail, return receipt requested, postage prepaid, in each case addressed as
above (or to such other address as such party may designate in writing from
time to time).
Section 11.2 Separability. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect.
Section 11.3 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors, and assigns; provided, however, that neither this
Agreement nor any rights hereunder shall be assignable or otherwise subject to
hypothecation and any assignment in violation hereof shall be null and void.
Section 11.4 Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11.5 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same Agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to each party.
Section 11.6 Entire Agreement. This Agreement represents the entire
Agreement of the parties with respect to the subject matter hereof and shall
supersede any and all previous contracts, arrangements or understandings
between the parties hereto with respect to the subject matter hereof.
Section 11.7 Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of Texas, without
reference to rules relating to conflicts of law.
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EXHIBIT 1.1
Section 11.8 Attorneys' Fees. If any action at law or equity,
including an action for declaratory relief, is brought to enforce or interpret
any provision of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and expenses from the other party, which
fees and expenses shall be in addition to any other relief which may be
awarded.
Section 11.9 No Third Party Beneficiaries. Except as provided in
Section 7.3, no person or entity other than the parties hereto is an intended
beneficiary of this Agreement or any portion hereof.
Section 11.10 Disclosure Schedules. The disclosures made on any
disclosure schedule, including the Global Disclosure Schedule and the Seagull
Disclosure Schedule, with respect to any representation or warranty shall be
deemed to be made with respect to any other representation or warranty
requiring the same or similar disclosure to the extent that the relevance of
such disclosure to other representations and warranties is evident from the
face of the disclosure schedule. The inclusion of any matter on any disclosure
schedule will not be deemed an admission by any party that such listed matter
is material or that such listed matter has or would have a Global Material
Adverse Effect or a Seagull Material Adverse Effect, as applicable.
57 PAGE 67 OF 71 PAGES
<PAGE> 63
EXHIBIT 1.1
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SEAGULL ENERGY CORPORATION
By:
----------------------------------------
Barry J. Galt
Chairman of the Board, President
and Chief Executive Officer
GNR MERGER CORPORATION
By:
----------------------------------------
Barry J. Galt
Chairman of the Board
GLOBAL NATURAL RESOURCES INC.
By:
----------------------------------------
Robert F. Vagt
Chairman of the Board, President
and Chief Executive Officer
58 PAGE 68 OF 71 PAGES
<PAGE> 1
EXHIBIT 1.2
[GLOBAL NATURAL RESOURCES INC. LETTERHEAD]
NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT: ROBERT F. VAGT
JULY 22, 1996 E. LYNN HILL
(713) 880-5464
SEAGULL, GLOBAL MERGER TO FORM $1.5 BILLION COMPANY
Seagull Energy Corporation (NYSE: SGO) and Global Natural Resources
Inc. (NYSE: GNR) today announced plans for a merger of the two entities which
creates a new large capitalization international energy company with expanding
oil and gas production operations, growing levels of earnings and cash flow and
high-potential exploration prospects in several attractive areas, including
Egypt and Cote d' Ivoire.
"The combination creates a major energy independent with property
holdings in a variety of promising domestic and international areas," noted
Seagull's Barry J. Galt and Global Natural's Robert F. Vagt, each of whom
presently serves his company as Chairman, President and Chief Executive
Officer. "Global Natural's U.S. properties are located primarily in the Gulf
of Mexico and along the Gulf Coast where many of Seagull's properties are
concentrated, but it also has growing oil and gas production in Egypt, Cote d'
Ivoire, Indonesia and Tatarstan, with active exploratory drilling programs in
Egypt and Cote d' Ivoire. Add in Seagull's major positions in the U.S.
Mid-Continent and Mid-South as well as Canada and its emerging activity in the
U.K. and you have a company with a focused and yet diversified portfolio of
properties that offers upside potential in a variety of forms."
The two executives also said that significant increases in oil and gas
production are scheduled from several of Global's operating areas over the next
few years, especially in Egypt, where two 20,000 barrels-per-day production
units will go onstream in September. At current rates, the merged Company's
daily production would be nearly 400 million cubic feet of natural gas and over
16,000 barrels of crude oil and condensate. Its combined proved reserves as of
the
-more-
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<PAGE> 2
EXHIBIT 1.2
-2-
beginning of 1996 totaled approximately 1.2 trillion cubic feet of natural gas
and about 70 million barrels of crude oil and condensate.
Specifically, the companies disclosed that their Boards have approved
a definitive agreement calling for a stock merger of the two Houston-based
companies in which Global Natural holders will receive shares of Seagull common
stock. Each share of Global Natural common stock would be converted into a
right to receive between 0.72 and 0.88 shares of Seagull common stock. If
Seagull's average price for a specified 20-day period is not greater than
$22.50 per share, the exchange ratio would be fixed at 0.88 shares of Seagull.
Conversely, if the average price equals or exceeds $27.50 per share, the
exchange ratio would be fixed at 0.72 shares of Seagull. Within the specified
price range, the exchange ratio would be determined by interpolation.
If the applicable 20-day average were to equal the actual average
price for the 20 days ending with last Friday, July 19, which was $24.03 per
share, the exchange ratio would be 0.831. Accordingly, the indicated value of
the transaction, which would be accounted for as pooling of interests, would be
nearly $600 million. Under these conditions, the combined company would have
approximately 61 million shares outstanding and a market value of about $1.5
billion.
The parties plan to file merger proxy material with the Securities and
Exchange Commission in early August and have tentatively scheduled meetings of
each company's shareholders to vote on the transaction in October.
The Prudential Insurance Company of America, which holds slightly in
excess of 21 percent of Global Natural's common stock, has agreed to support
the proposed merger by its willingness to vote for the transaction.
As a result of the Seagull-Global Natural combination, the companies
expect certain cost savings, but noted that there is little redundancy in the
two work forces.
"We consider this a true merger of equals in which we'll have a need
for the key people in both organizations," said Mr. Galt, who will serve the
new Company as Chairman and Chief Executive Officer, while Mr. Vagt will be
President and Chief Operating Officer. A large majority of Global Natural's
executive and technical staffs will remain with the newly combined entity. Mr.
Vagt and two other Global Natural's directors will be invited to join Seagull's
Board shortly after each company's shareholders approve the merger.
-more-
PAGE 70 OF 71 PAGES
<PAGE> 3
EXHIBIT 1.2
-3-
Concurrently Seagull today announced that it has agreed to purchase
for cash the stock of Esso Suez, Inc. (ESI) and certain assets of Esso Egypt
Limited (EEL).
ESI holds a 100 percent interest in the East Zeit oil producing
concession in the offshore Gulf of Suez, where current production averages
about 16,000 barrels of crude oil per day. EEL owns the entire working
interest in the South Hurghada exploration concession located onshore on the
coast of the Gulf of Suez approximately 250 miles south of Cairo. The
exploration concession contains two oil discoveries.
Mr. Galt stressed that Seagull views the position in Egypt that will
result from the Global merger and the Esso purchase as fulfilling a
long-standing strategic goal for Seagull. "For some time now we have sought to
expand the international component of our search for major oil and natural gas
reserves and Egypt is a prime area where we seek to be active. Another
objective is to acquire existing production, cash flow and substantial
exploratory potential, and that is the exact profile that each of these
transactions fits.
"Financially, we expect the merged company, which will continue to
bear the Seagull Energy Corporation name, to produce growing levels of earnings
and cash flow," Messrs. Galt and Vagt explained. "The combined contributions
from the Global merger and the Esso acquisition are expected to reflect
sizeable accretion to Seagull's earnings per share immediately and to cash flow
per share beginning in 1998. Seagull's debt coverage rations will improve
immediately and then further still as production increases are realized."
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