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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DOMINION RESOURCES, INC.,
CONSOLIDATED NATURAL GAS COMPANY
AND
LOUIS DREYFUS NATURAL GAS CORP.
Dated as of September 9, 2001
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger.....................................................1
Section 1.2 The Closing....................................................2
Section 1.3 Effective Time.................................................2
Section 1.4 Certificate of Incorporation...................................2
Section 1.5 Bylaws.........................................................2
Section 1.6 Board of Directors and Officers................................2
ARTICLE II
CONVERSION OF COMPANY SHARES
Section 2.1 Effect On Capital Stock........................................2
Section 2.2 Exchange of Certificates for Shares............................3
Section 2.3 Dissenters' Rights.............................................5
Section 2.4 Adjustments to Prevent Dilution................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Existence; Good Standing; Corporate Authority..................6
Section 3.2 Authorization, Validity and Effect of Agreements...............6
Section 3.3 Capitalization.................................................7
Section 3.4 Subsidiaries...................................................7
Section 3.5 No Violation...................................................8
Section 3.6 No Conflict....................................................8
Section 3.7 SEC Documents and Financial Statements.........................9
Section 3.8 Litigation.....................................................9
Section 3.9 Absence of Certain Changes.....................................10
Section 3.10 Taxes..........................................................10
Section 3.11 Employee Benefit Plans.........................................12
Section 3.12 Labor and Employment Matters...................................13
Section 3.13 Environmental Matters..........................................14
Section 3.14 Compliance with Laws...........................................15
Section 3.15 Intellectual Property..........................................16
Section 3.16 Oil and Gas Reserves...........................................16
Section 3.17 Financial and Commodity Hedging................................16
Section 3.18 Indebtedness and Certain Contracts.............................16
Section 3.19 Title to Properties............................................17
Section 3.20 Insurance......................................................18
Section 3.21 No Brokers.....................................................18
Section 3.22 Opinion of Financial Advisors..................................18
Section 3.23 Board Recommendation; Vote Required............................18
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Section 3.24 Holding Company; Investment Company; Utility...................19
Section 3.25 Certain Approvals..............................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1 Existence; Good Standing; Corporate Authority..................19
Section 4.2 Authorization, Validity and Effect of Agreements...............20
Section 4.3 Capitalization.................................................20
Section 4.4 No Violation...................................................20
Section 4.5 No Conflict....................................................21
Section 4.6 SEC Documents..................................................21
Section 4.7 Financing......................................................22
Section 4.8 No Brokers.....................................................22
Section 4.9 No Vote Required...............................................22
Section 4.10 Absence of Changes.............................................22
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Merger..........22
Section 5.2 Conduct of Business of Parent..................................25
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 No Solicitation by the Company.................................26
Section 6.2 Shareholders' Meeting..........................................28
Section 6.3 Filings; Reasonable Best Efforts...............................28
Section 6.4 Access to Information..........................................30
Section 6.5 Notification of Certain Matters................................30
Section 6.6 Registration Statement; Proxy Statement........................31
Section 6.7 Listing Application............................................31
Section 6.8 Agreements of Affiliates.......................................32
Section 6.9 Indemnification and Insurance..................................32
Section 6.10 Employee Benefits..............................................33
Section 6.11 Reorganization.................................................36
Section 6.12 Public Statements..............................................36
Section 6.13 Fees and Expenses..............................................36
Section 6.14 Company Name and Trademarks....................................36
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger....37
Section 7.2 Conditions to Obligation of the Company to Effect the Merger...37
Section 7.3 Conditions to Obligation of Parent to Effect the Merger........38
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ARTICLE VIII
TERMINATION
Section 8.1 Termination by Mutual Consent..................................39
Section 8.2 Termination by Parent or the Company...........................39
Section 8.3 Termination by the Company.....................................39
Section 8.4 Termination by Parent..........................................40
Section 8.5 Effect of Termination..........................................40
Section 8.6 Extension; Waiver..............................................41
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations, Warranties and Agreements......42
Section 9.2 Notices........................................................42
Section 9.3 Assignment; Binding Effect; Benefit............................43
Section 9.4 Entire Agreement...............................................43
Section 9.5 Amendments.....................................................43
Section 9.6 Governing Law..................................................43
Section 9.7 WAIVER OF JURY TRIAL...........................................44
Section 9.8 Counterparts; Facsimile Transmission of Signatures.............44
Section 9.9 Headings.......................................................44
Section 9.10 Interpretation.................................................44
Section 9.11 Waivers........................................................45
Section 9.12 Incorporation of Exhibits......................................45
Section 9.13 Severability...................................................45
Section 9.14 Enforcement of Agreement.......................................45
Section 9.15 Obligation of Sub..............................................45
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of September
9, 2001, is among DOMINION RESOURCES, INC., a Virginia corporation ("Parent"),
CONSOLIDATED NATURAL GAS COMPANY, a Delaware corporation and a direct and wholly
owned subsidiary of Parent ("Sub"), and LOUIS DREYFUS NATURAL GAS CORP., an
Oklahoma corporation (the "Company").
RECITALS
A. The respective Boards of Directors of each of Parent, Sub and the
Company have determined that the merger of the Company with and into Sub (the
"Merger"), in the manner contemplated herein, is advisable and in the best
interests of their respective corporations and shareholders, and, by resolutions
duly adopted, have approved and adopted this Agreement.
B. It is intended for federal income tax purposes that the Merger qualify
as a reorganization within the meaning of section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder (the "Treasury Regulations").
C. As a condition and inducement to the willingness of Parent to enter into
this Agreement, certain principal shareholders of the Company have entered into
an agreement with Parent and Sub pursuant to which such shareholders have (i)
agreed, among other things, to vote their Company Shares in favor of the Merger
and (ii) granted to Parent and Sub an irrevocable proxy to vote their Company
Shares upon the terms and conditions set forth therein (the "Principal
Shareholders Agreement").
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), the Company shall
be merged with and into Sub in accordance with this Agreement, and the separate
corporate existence of the Company shall thereupon cease. Sub (sometimes
hereinafter referred to as the "Surviving Corporation") shall be the surviving
corporation in the Merger and shall be a wholly owned subsidiary of Parent. The
Merger shall have the effects specified in the Delaware General Corporation Law
("DGCL") and the Oklahoma General Corporation Act (the "OGCA"). At the election
of Parent, any direct wholly owned subsidiary of Parent may be substituted for
Sub as a constituent corporation in the Merger. In such event, the parties
hereto agree to execute an appropriate amendment to this Agreement in order to
reflect such substitution.
Section 1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (i) at the
offices of McGuireWoods LLP, One James Center, Richmond, Virginia, at 9:00 a.m.,
local time, on the first business day immediately following the day on which the
last to be fulfilled or waived of the conditions set forth in Article VII (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to fulfillment or waiver of those conditions) shall be fulfilled or
waived in accordance herewith or (ii) at such other time, date or place as
Parent and the Company may agree in writing. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
Section 1.3 Effective Time. If all the conditions to the Merger set forth
in Article VII shall have been fulfilled or waived in accordance herewith and
this Agreement shall not have been terminated as provided in Article VIII, on
the Closing Date, certificates of merger (the "Certificates of Merger") meeting
the requirements of Section 251 of the DGCL and Section 1082 of the OGCA shall
be properly executed and filed with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Oklahoma, respectively. The
Merger shall become effective upon the filing of the Certificates of Merger with
the Secretaries of State of the State of Delaware and Oklahoma in accordance
with the DGCL and the OGCA, or at such later time that the parties hereto shall
have agreed upon and designated in such filing as the effective time of the
Merger (the "Effective Time").
Section 1.4 Certificate of Incorporation. The certificate of incorporation
of Sub in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law.
Section 1.5 Bylaws. The bylaws of Sub in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
Section 1.6 Board of Directors and Officers. The board of directors of the
Surviving Corporation shall consist of the board of directors of Sub, as it
existed immediately prior to the Effective Time. The officers of Sub immediately
prior to the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE II
CONVERSION OF COMPANY SHARES
Section 2.1 Effect On Capital Stock. At the Effective Time, the Merger
shall have the following effects on the capital stock of the Company and Sub,
without any action on the part of the holder of any capital stock of the Company
or Sub:
(a) Conversion of the Company Shares. Subject to the provisions of this
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Section 2.1 and Section 2.3, each share of common stock, $0.01 par value, of the
Company (each a "Company Share" and collectively the "Company Shares") issued
and outstanding immediately prior to the Effective Time (but not including any
Dissenting Shares (as defined below) and any Company Shares that are owned by
(i) Parent, Sub or any other direct or indirect Subsidiary of Parent or (ii) by
the Company (the "Excluded Company Shares")) shall, by virtue of the Merger
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and without any action on the part of the holder thereof, be converted into the
right to receive (i) $20.00 in cash (the "Cash Consideration"), (ii) 0.3226 (the
"Exchange Ratio") of a Parent Common Share (the "Share Consideration" and,
together with the Cash Consideration, the "Merger Consideration") and (iii), in
the event the Effective Time does not occur on or before the record date for the
regular quarterly dividend on Parent Common Shares payable in December 2001 (the
"December 2001 Dividend") and/or March 2002 (the "March 2002 Dividend"), as the
case may be, and such failure was not the result of a failure by the Company to
perform or observe in any material respect any of its obligations under this
Agreement, an amount in cash equal to the December 2001 Dividend and/or the
March 2002 Dividend, as the case may be, payable in respect of a Parent Common
Share multiplied by the Exchange Ratio (which sum shall be part of the Cash
Consideration). "Parent Common Share" shall mean the common shares, no par
value, of Parent.
(b) Cancellation of Excluded Company Shares. Each Excluded Company
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Share issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
no longer be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(c) Sub. At the Effective Time, each share of common stock, $2.75 par
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value, of Sub issued and outstanding immediately prior to the Effective Time
shall remain outstanding as shares of common stock of the Surviving Corporation,
and the Surviving Corporation shall continue as a wholly owned subsidiary of
Parent.
Section 2.2 Exchange of Certificates for Shares.
(a) Exchange Procedures. Prior to the Effective Time, Parent shall
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designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of Company Shares in connection with the Merger (the
"Exchange Agent") to receive the Merger Consideration to which holders of such
shares shall become entitled pursuant to Section 2.1(a). Prior to the Effective
Time, Parent will deposit with the Exchange Agent certificates representing
Parent Common Shares and cash sufficient to make all payments pursuant to
Sections 2.1(a) and 2.2(d) and, when and as needed, Parent shall deposit with
the Exchange Agent cash sufficient to make all payments pursuant to Section
2.2(b). As promptly as practicable after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of record as
of the Effective Time of a certificate which immediately prior to the Effective
Time represented Company Shares (each a "Certificate") (other than holders of a
Certificate in respect of Excluded Company Shares) (i) a letter of transmittal
specifying that delivery of the Certificates shall be effected, and that risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or, in lieu of such Certificates, affidavits of loss together with
either a reasonable undertaking to indemnify Parent or the Surviving
Corporation, if Parent believes that the person providing the indemnity is
sufficiently creditworthy, or, if Parent does not so believe, indemnity bonds)
to the Exchange Agent, such letter of transmittal to be in such form and have
such other provisions as Parent and the Surviving Corporation may reasonably
agree, and (ii) instructions for exchanging the Certificates and receiving the
Merger Consideration to which such holder shall be entitled therefor pursuant to
Section 2.1(a). Subject to Section 2.2(g), upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to
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receive in exchange therefor (i) a certificate representing that number of whole
Parent Common Shares that such holder is entitled to receive pursuant to Section
2.1(a) and (ii) a check in the aggregate amount (after giving effect to any
required tax withholdings) of (A) the cash that such holder is entitled to
receive pursuant to Section 2.1(a) plus (B) any cash in lieu of fractional
shares determined in accordance with Section 2.2(d) plus (C) any cash dividends
and any other dividends or other distributions that such holder has the right to
receive pursuant to the provisions of Section 2.2(b). The Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
any amount payable upon due surrender of any Certificate. In the event of a
transfer of ownership of Company Shares that occurred prior to the Effective
Time, but is not registered in the transfer records of the Company, the Merger
Consideration may be issued and/or paid to such a transferee if the Certificate
formerly representing such Company Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. If any
certificate for Parent Common Shares is to be issued in a name other than that
in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Person requesting such exchange
shall pay any transfer or other taxes required by reason of the issuance of
certificates for Parent Common Shares in a name other than that of the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of Parent or the Exchange Agent that such tax has been paid or is
not applicable.
(b) Distributions with Respect to Unexchanged Shares. Whenever a
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dividend or other distribution is declared by Parent in respect of Parent Common
Shares, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
Parent Common Shares issuable pursuant to this Agreement. No dividends or other
distributions so declared in respect of such Parent Common Shares shall be paid
to any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Section 2.2. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be issued or paid, less the amount of any withholding taxes that may be
required thereon, to the holder of the certificates representing whole Parent
Common Shares issued in exchange for such Certificate, without interest, (i) at
the time of such surrender, the dividends or other distributions with a record
date that is at or after the Effective Time and a payment date on or prior to
the date of surrender of such whole Parent Common Shares and not previously paid
and (ii) at the appropriate payment date, the dividends or other distributions
payable with respect to such whole Parent Common Shares with a record date at or
after the Effective Time but with a payment date subsequent to surrender. For
purposes of dividends or other distributions in respect of Parent Common Shares,
all Parent Common Shares to be issued pursuant to the Merger shall be deemed
issued and outstanding as of the Effective Time.
(c) Transfers. After the Effective Time, there shall be no transfers on
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the stock transfer books of the Company of the Company Shares that were
outstanding immediately prior to the Effective Time.
(d) No Fractional Shares. No certificates or scrip or Parent Common
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Shares representing fractional Parent Common Shares shall be issued upon the
surrender for exchange of Certificates and such fractional interests will not
entitle the owner thereof to vote or to have any rights of a shareholder of
Parent or a holder of Parent Common Shares. Notwithstanding
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any other provision of this Agreement, each holder of Company Shares exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a Parent Common Share (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
Parent Common Share multiplied by (ii) the closing price of Parent Common Shares
as reported on the New York Stock Exchange Composite Transaction Tape on the
Closing Date.
(e) Termination of Exchange Period; Unclaimed Merger Consideration. Any
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Parent Common Shares and any portion of the cash, dividends or other
distributions with respect to the Parent Common Shares deposited by Parent with
the Exchange Agent (including the proceeds of any investments thereof) that
remain unclaimed by the shareholders of the Company 180 days after the Effective
Time shall be paid to Parent upon demand. Any shareholders of the Company who
have not theretofore complied with this Article II shall thereafter be entitled
to look only to Parent (subject to abandoned property, escheat and other similar
laws) for payment of their Merger Consideration and any cash, dividends and
other distributions in respect thereof issuable and/or payable pursuant to
Section 2.1, Section 2.2(b) and Section 2.2(d) upon due surrender of their
Certificates (or, in lieu of such Certificates, affidavits of loss together with
either a reasonable undertaking to indemnify Parent or the Surviving
Corporation, if Parent believes that the Person providing the indemnity is
sufficiently creditworthy, or, if Parent does not so believe, indemnity bonds),
in each case, without any interest thereon. Notwithstanding the foregoing, none
of Parent, the Surviving Corporation, the Exchange Agent or any other Person
shall be liable to any former holder of Company Shares for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) Lost, Stolen or Destroyed Certificates. In the event any
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Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed, and if Parent believes that the Person providing the
indemnity is sufficiently creditworthy, the making of a reasonable undertaking
to indemnify Parent or the Surviving Corporation, or, if Parent does not so
believe, the posting by such Person of a bond in the form customarily required
by Parent to indemnify against any claim that may be made against it with
respect to such Certificate, Parent will issue the Parent Common Shares and the
Exchange Agent will distribute such Merger Consideration, dividends and other
distributions in respect thereof issuable or payable in exchange for such lost,
stolen or destroyed Certificate pursuant to Section 2.1, Section 2.2(b) and
Section 2.2(d), in each case, without interest.
(g) Affiliates. Notwithstanding anything in this Agreement to the
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contrary, Certificates surrendered for exchange by any Rule 145 Affiliate (as
determined pursuant to Section 6.8) of the Company shall not be exchanged until
Parent has received a written agreement from such Person as provided in Section
6.8.
Section 2.3 Dissenters' Rights. Company Shares that are outstanding
immediately prior to the Effective Time and that are held by shareholders who
shall have not voted in favor of the Merger and who shall have made written
demand for payment of the fair value for such shares in accordance with Section
1091 of the OGCA (collectively, the "Dissenting Shares") shall not be converted
into or represent the right to receive the Merger Consideration. Such
shareholders shall be entitled to receive payment of the fair value of the
Company Shares held by
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them in accordance with the OGCA, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Company Shares under the
OGCA shall thereupon be deemed to have been converted into and to be
exchangeable, as of the Effective Time, for Merger Consideration in the manner
provided in Section 2.1(a).
Section 2.4 Adjustments to Prevent Dilution. In the event that prior to the
Effective Time, there shall have been declared or effected a reclassification,
stock split (including a reverse split), stock dividend, stock distribution or
similar event made with respect to the Company Shares or the Parent Common
Shares, the Merger Consideration shall be equitably adjusted to reflect such
event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as publicly disclosed by the Company in the Company Reports (as
defined in Section 3.7) filed with the SEC prior to the date of this Agreement
and except as set forth in the disclosure letter (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein, provided that any disclosure set forth with
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respect to any particular section shall be deemed to be disclosed in reference
to all other applicable sections of this Agreement if the disclosure in respect
of the particular section is sufficient on its face without further inquiry
reasonably to inform Parent of the information required to be disclosed in
respect of the other sections to avoid a breach under the representation and
warranty or covenant corresponding to such other sections) previously delivered
by the Company to Parent (the "Company Disclosure Letter"), the Company hereby
represents and warrants to Parent as follows:
Section 3.1 Existence; Good Standing; Corporate Authority. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Oklahoma. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of any jurisdiction
in which the character of the properties owned or leased by it therein or in
which the transaction of its business makes such qualification necessary, except
where the failure to be so qualified and in good standing would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect (as defined in Section 9.10). The Company has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted. The copies of the Company's articles of
incorporation and bylaws previously made available to Parent are true and
correct and contain all amendments as of the date hereof.
Section 3.2 Authorization, Validity and Effect of Agreements. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements and documents contemplated hereby, to which
it is a party. The consummation by the Company of the transactions contemplated
hereby has been duly authorized by all requisite corporate action, other than,
with respect to the Merger, the approval and adoption of this Agreement by the
Company's shareholders. Assuming the valid authorization, execution and delivery
of this Agreement by Parent and Sub, this Agreement constitutes the valid and
legally binding obligation of the Company, enforceable in accordance with its
terms, subject to
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applicable bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to creditors' rights generally or general principles of equity.
Section 3.3 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 Company Shares, and 10,000,000 shares of the Company
preferred stock, $0.01 par value ("Company Preferred Stock"). As of August 31,
2001, there were (i) 43,758,077 Company Shares issued and outstanding (excluding
359,315 treasury shares), (ii) no shares of Company Preferred Stock issued and
outstanding and (iii) 1,911,552 Company Shares subject to outstanding employee
or director stock options, of which the weighted average exercise price was
approximately $23.30 per share. All issued and outstanding Company Shares (i)
are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights, (ii) were not issued in violation of the terms of any
agreement or other understanding binding upon the Company and (iii) were issued
in compliance with all applicable charter documents of the Company and all
applicable federal and state securities laws, rules and regulations. Except as
set forth in this Section 3.3 and except for any Company Shares issued pursuant
to the plans listed in Section 3.11 of the Company Disclosure Letter, as of the
date of this Agreement there are no outstanding shares of capital stock and
there are no options, warrants, calls, subscriptions, shareholder rights plan or
similar instruments, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other voting securities of the
Company or any of its Subsidiaries. The Company has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of the Company on any matter on which the
shareholders of the Company are entitled to vote.
Section 3.4 Subsidiaries. Section 3.4 of the Company Disclosure Letter sets
forth for each Subsidiary of the Company, its name and jurisdiction of
incorporation or organization and indicates whether such Subsidiary is a
Significant Subsidiary, in each case as of the date of this Agreement. For
purposes of this Agreement, "Significant Subsidiary" shall mean significant
subsidiary as defined in Rule 1-02 of Regulation S-X of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Each of the Company's Subsidiaries
is a corporation, limited liability company or partnership duly organized,
validly existing and in good standing (where applicable) under the laws of its
jurisdiction of incorporation or organization, has the corporate or partnership
power and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, and is duly qualified to do business and is in
good standing (where applicable) in each jurisdiction in which the ownership,
operation or lease of its property or the conduct of its business requires such
qualification, except where the failure to be so qualified or to be in good
standing would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. All of the outstanding shares of
capital stock of, or other ownership interests in, each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and is owned, directly or indirectly, by the Company free and clear of all
liens, pledges, security interests, claims, preferential purchase rights or
other rights, interests or encumbrances ("Liens"). Other than joint ventures,
operating agreements and similar arrangements typical in the Company's industry
entered into in the ordinary course of business, neither the Company nor any of
the
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Company's Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any other person that would reasonably be expected to be material to the
Company and the Company's Subsidiaries taken as a whole.
Section 3.5 No Violation. Neither the Company nor any of its Subsidiaries
is, or has received notice that it would be with the passage of time, in
violation of any term, condition or provision of (i) its charter documents or
bylaws, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
contract, agreement, lease, license or other instrument or (iii) any order of
any court, governmental authority or arbitration board or tribunal, or any law,
ordinance, governmental rule or regulation to which the Company or any of its
Subsidiaries or any of their respective properties or assets is subject, or is
delinquent with respect to any report required to be filed with any governmental
entity, except, in the case of matters described in clause (ii) or (iii), as
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except where it would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company and its Subsidiaries hold all permits, licenses, variances,
exemptions, orders, franchises and approvals of all governmental authorities
necessary for the lawful conduct of their respective businesses (the "Company
Permits") and the Company and its Subsidiaries are in compliance with the terms
of the Company Permits. No investigation by any governmental authority with
respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, other than those that would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 3.6 No Conflict.
(a) Neither the execution and delivery by the Company of this Agreement
nor the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof will: (i) conflict with or result in a breach
of any provisions of the charter documents or bylaws of the Company; (ii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of the Company or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, or
otherwise result in the loss of a material benefit to the Company or any of its
Subsidiaries under any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, Company Permit, lease, contract,
agreement, joint venture or other instrument or obligation to which the Company
or any of its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries or any of their properties is bound or affected; or (iii) subject
to the governmental filings and other matters referred to in paragraph (b) of
this Section 3.6, contravene or conflict with or constitute a violation of any
provision of any law, rule, regulation, judgment, order or decree binding upon
or applicable to the Company or any of its Subsidiaries, except, in the case of
matters described in clause (ii) or (iii), as would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
-8-
(b) Neither the execution and delivery by the Company of this Agreement
nor the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof will require any consent, approval or
authorization of, or filing or registration with, any governmental or regulatory
authority, other than (i) the filings provided for in Article I and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business and (ii) filings required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Exchange
Act, the Securities Act of 1933, as amended (the "Securities Act") or applicable
state securities and "Blue Sky" laws ((i) and (ii) collectively, the "Regulatory
Filings"), except for any consent, approval or authorization the failure of
which to obtain and for any filing or registration the failure of which to make
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.7 SEC Documents and Financial Statements. The Company has made
available to Parent, each registration statement, report, proxy statement or
information statement (other than preliminary materials) filed by the Company
with the Securities and Exchange Commission ("SEC") since January 1, 2000, each
in the form (including exhibits and any amendments thereto) filed with the SEC
prior to the date hereof (collectively, the "Company Reports"), and the Company
has filed all forms, reports and documents required to be filed by it with the
SEC pursuant to relevant securities statutes, regulations, policies and rules
since such time. As of their respective dates, the Company Reports (i) were
prepared in accordance with the applicable requirements of the Securities Act,
the Exchange Act, and the rules and regulations thereunder and complied with the
then applicable accounting requirements and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of the Company and its Subsidiaries as of its date and each
of the consolidated statements of earnings, cash flows and stockholders' equity
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents in all material respects the
results of operations, cash flows or changes in stockholders' equity, as the
case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to such exceptions as may
be permitted by Form 10-Q under the Exchange Act), in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein.
Section 3.8 Litigation. There are no actions, suits or proceedings pending
against the Company or any of its Subsidiaries or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries, at law or in equity,
or before or by any federal, state or foreign commission, board, bureau, agency
or instrumentality, other than those that would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. There
are no outstanding judgments, decrees, injunctions, awards or orders against the
Company or any of its Subsidiaries, other than those that would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
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Section 3.9 Absence of Certain Changes. Since June 30, 2001, the Company
has conducted its business in all material respects only in the ordinary and
usual course of business, and during such period there have not been (i) events,
conditions, actions, occurrences or omissions that would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect;
(ii) any change by the Company or any of its Subsidiaries in any of its
accounting methods, principles or practices or any of its tax accounting methods
or elections, except for changes required by law or generally accepted
accounting principles; (iii) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of the Company,
or any direct or indirect redemption, purchase or any other acquisition by the
Company of any such stock; (iv) any change in the capital stock or in the number
of shares or classes of the Company's authorized or outstanding capital stock
(other than as a result of issuances under the Employee Benefit Plans or issued
as permitted hereunder); (v) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option, stock purchase or other employee benefit plan, except in
the ordinary course of business; or (vi) any event, condition, action,
occurrence or omission that is prohibited on or after the date of this Agreement
under Section 5.1(b) of this Agreement (other than clauses (i), (xiv) or (xx) of
Section 5.1(b)), and (vii) neither the Company nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature, whether accrued,
contingent or absolute or otherwise (including without limitation under royalty
arrangements), except for those arising in the ordinary course of business
consistent with past practice and that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.10 Taxes.
(a) The Company and its Subsidiaries have timely filed (after taking
into account any extensions to file) all federal, state, local, and other tax
returns, estimates and reports required to be filed on or before the Effective
Time by the Company and each of its Subsidiaries under applicable laws and all
such tax returns and reports were true, complete and correct, and the Company
and its Subsidiaries have paid all other taxes (including any additions to taxes
and penalties and interest thereon) required to be paid on or before the date
hereof, except for such failures to file or pay or failures to be true and
correct as would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect. The Company and its Subsidiaries have
withheld and paid over all taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding requirements,
including the maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor or other third party, except for such failures to withhold or pay
over and such failures to comply as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. There are no
encumbrances on any of the assets, rights or properties of the Company or any of
its Subsidiaries with respect to taxes, other than liens for taxes not yet due
and payable or for taxes that the Company or any of its Subsidiaries is
contesting in good faith through appropriate proceedings, except for such
encumbrances that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(b) No audit of the tax returns of the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened. No
deficiencies or adjustments have
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been asserted against the Company or any of its Subsidiaries as a result of or
in connection with examinations by any state, local, federal or foreign taxing
authority which would, individually and in the aggregate, reasonably be expected
to have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is subject to any private letter ruling of the Internal Revenue
Service or comparable rulings of other tax authorities that will be binding on
the Company or any of its Subsidiaries with respect to any period following the
Effective Time.
(c) There are no agreements, waivers of statutes of limitations, or
other arrangements providing for extensions of time in respect of the assessment
or collection of any unpaid taxes against the Company or any of its Subsidiaries
The Company and each of its Subsidiaries have disclosed on their federal income
tax returns all positions taken therein that could, if not so disclosed, give
rise to a substantial understatement penalty within the meaning of Section 6662
of the Code.
(d) Neither the Company nor any of its Subsidiaries is a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by The Tax Equity and Fiscal Responsibility Act of
1982. None of the property owned by the Company or any of its Subsidiaries is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
Neither the Company nor any of its Subsidiaries is required to make any
adjustment under Code Section 481(a) by reason of a change in accounting method
or otherwise except possibly by reason of the Merger. Neither the Company nor
any of its Subsidiaries has been a member of an affiliated group of corporations
filing a consolidated federal income tax return (other than a group the common
parent of which was the Company) or has any liability for the taxes of another
person arising pursuant to Treasury Regulation Section 1.1502-6 or analogous
provision of state, local or foreign law, or as a transferee or successor, or by
contract, tax sharing agreement, tax indemnification agreement, or otherwise.
Neither the Company nor any of its Subsidiaries has filed a consent under
Section 341(f) of the Code with respect to the Company or any of its
Subsidiaries or agreed to have Section 341(f)(2) of the Code apply to a
subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the
Company or any of its Subsidiaries. There is no contract, agreement, plan or
arrangement to which the Company or any of its Subsidiaries is a party as of the
date of this Agreement, including but not limited to the provisions of this
Agreement, covering any employee or former employee of the Company that,
individually or collectively, would reasonably be expected to give rise to the
payment of any amount that would not be deductible pursuant to Sections 280G,
404 or 162(m) of the Code, or in respect of which an excise tax would be payable
under Section 4999 of the Code. None of the Company or any of its Subsidiaries
has been a "distributing corporation" or a "controlled corporation" in a
distribution to which Section 355 of the Code applies (x) in the two years prior
to the date of this Agreement or (y) in a distribution which could otherwise
constitute a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
(e) The Company is not a party to, nor does it have any obligation
under, any tax sharing, tax indemnification or tax allocation agreement or
arrangement.
(f) The Company has not taken, or agreed to take any action, and has no
knowledge of any condition, that would prevent the Merger from qualifying as a
reorganization under section 368(a) of the Code.
-11-
(g) None of the Company or any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code at any time during the five year period ending at the Effective
Time.
(h) None of the Company's or any of its Subsidiaries' material assets
constitutes either an interest in, or property of, an unincorporated
organization that files a tax return as a partnership for federal income tax
purposes. None of the Company or any of its Subsidiaries owns an interest in any
controlled foreign corporation (as defined in Section 957 of the Code), passive
foreign investment company (as defined in section 1297 of the Code) or other
Person the income of which is required to be included in the income of the
Company or any of its Subsidiaries.
(i) For purposes of this Agreement, "tax" or "taxes" means all federal,
state, county, local, foreign or other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, accumulated earnings, personal holding, excess
profits, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, disability, capital stock, or
windfall profits taxes, customs duties or other taxes, fees, assessments or
governmental charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign).
Section 3.11 Employee Benefit Plans.
(a) Other than as set forth in Section 3.11(a) of the Company
Disclosure Letter, there are no Employee Benefit Plans established, maintained
or contributed to by the Company. An "Employee Benefit Plan" means any employee
benefit plan, program, policy, practice, agreement or other arrangement
providing benefits to any current or former employee, officer or director of the
Company or any of its Subsidiaries or any beneficiary or dependent thereof that
is sponsored or maintained by the Company or any of its Subsidiaries or to which
the Company or any of its Subsidiaries contributes or is obligated to
contribute, whether or not written, including without limitation any employee
welfare benefit plan within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of control
or fringe benefit plan, program or policy.
(b) With respect to each Employee Benefit Plan, the Company has made
available to Parent a true, correct and complete copy of: (i) each writing
constituting a part of such Employee Benefit Plan (or to the extent no copy
exists, a materially accurate description); (ii) for the three most recent plan
years, Annual Report (Form 5500 Series), if any; (iii) the current summary plan
description and any material modifications thereto, if required to be furnished
under ERISA; and (iii) the most recent determination letter from the Internal
Revenue Service, if any.
(c) Each Employee Benefit Plan that is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service that has not been
revoked, and to the knowledge of the
-12-
Company, no event has occurred and no condition exists that could reasonably be
expected to result in the revocation of any such determination letter.
(d) Except as would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, all contributions required
to be made to any Employee Benefit Plan (or to any person pursuant to the terms
thereof) have been made or the amount of such payment or contribution obligation
has been reflected in the Company Reports filed with the SEC prior to the date
of this Agreement.
(e) Except as would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, with respect to each
Employee Benefit Plan, the Company and its Subsidiaries have complied, and are
now in compliance, with all provisions of ERISA, the Code and all laws and
regulations applicable to such Employee Benefit Plans and each Employee Benefit
Plan has been established and administered in accordance with its terms.
(f) No Employee Benefit Plan is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan with the meaning of
Section 4001(a)(3) of ERISA) and no liability (other than for premiums to the
PBGC) under Title IV of ERISA has been or is expected to be incurred by the
Company or any of its Subsidiaries.
(g) The Company and its Subsidiaries have no material liability for
life, health or medical benefits to former employees or beneficiaries or
dependents thereof, except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA.
(h) Except as expressly provided in this Agreement, the consummation of
the transactions contemplated by this Agreement will not, either alone or in
connection with termination of employment, (i) entitle any current or former
director, employee or officer of the Company or the its Subsidiaries to
severance pay or any other material payment, except as expressly provided in
this Agreement, (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer or (iii) increase any
benefit payable under any Employee Benefit Plan.
(i) Except as would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, there are no pending or,
to the knowledge of the Company, threatened claims, actions or suits by or on
behalf of any Employee Benefit Plan or by any employee or beneficiary covered
under any such Employee Benefit Plan, involving any such Employee Benefit Plan
(other than claims in the ordinary course of business) and, to the knowledge of
the Company, no facts or circumstances exist that could reasonably be expected
to give rise to any such claims, actions or suits.
(j) Neither the Company nor any of its Subsidiaries has outstanding
loans to any employees of the Company or its Subsidiaries, other than expense
advances in the ordinary course of business and consistent with past practices.
Section 3.12 Labor and Employment Matters. Neither the Company nor any of
its Subsidiaries: (i) is a party to or otherwise bound by any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is any
-13-
such contract or agreement presently being negotiated, nor, to the knowledge of
the Company, is there, nor has there been in the last five years, a
representation campaign respecting any of the employees of the Company or any of
its Subsidiaries, and, to the knowledge of the Company, there are no campaigns
being conducted to solicit cards from employees of Company or any of its
Subsidiaries to authorize representation by any labor organization; (ii) is a
party to, or bound by, any consent decree with, or citation by, any governmental
agency relating to employees or employment practices which would reasonably be
expected to have a Company Material Adverse Effect; or (iii) is the subject of
any proceeding asserting that it has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization nor,
as of the date of this Agreement, is there pending or, to the knowledge of the
Company, threatened, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries which,
with respect to any event described in this clause (iii), would, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
Section 3.13 Environmental Matters. Except for such matters that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(a) To the knowledge of the Company, there is no condition existing on
any real property or other asset owned, leased or operated by the Company or any
of its Subsidiaries or resulting from operations conducted thereon that would
reasonably be expected to give rise to any liability to the Company or any of
its Subsidiaries under Environmental Laws or constitute a violation of any
Environmental Laws, and the Company and each of its Subsidiaries is otherwise in
compliance with all applicable Environmental Laws.
(b) None of the Company or any of its Subsidiaries, no current or
former real property or other asset owned, leased or operated by the Company or
any of its Subsidiaries, nor the operations currently or formerly conducted
thereon or in relation thereto by the Company or any of its Subsidiaries or by
any prior owner, lessee or operator of such real property or other asset, is
subject to any pending or, to the knowledge of the Company, threatened action,
suit, investigation, inquiry or proceeding relating to any Environmental Laws by
or before any court or other governmental authority.
(c) All material permits, notices and authorizations, if any, required
to be obtained or filed in connection with the operation or use of any real
property or other asset owned, leased or operated by the Company or any of its
Subsidiaries, including without limitation past or present treatment, storage,
disposal or release of a Hazardous Substance or solid waste into the
environment, have been duly obtained or filed, and the Company is in compliance
in all material respects with the terms and conditions of all such permits,
notices and authorizations. The Company does not know of any reason that would
preclude it from renewing or obtaining a reissuance of the material permits and
other authorizations required pursuant to applicable Environmental Laws required
to operate or use any of the Company's or its Subsidiaries' material assets for
their current purposes or uses.
(d) Hazardous Substances have not been Released, disposed of or
arranged to be disposed of by the Company or any of its Subsidiaries, in
violation of, or in a manner or to a
-14-
location that would reasonably be expected to give rise to liability under, any
Environmental Laws.
(e) None of the Company or any of its Subsidiaries has assumed,
contractually or, to the knowledge of the Company, by operation of law, any
liabilities or obligations of third parties under any Environmental Laws, except
in connection with the acquisition of assets or entities associated therewith.
(f) "Environmental Laws" means any federal, state and local energy,
public utility, health, safety and environmental laws, regulations, orders,
permits, licenses, approvals, ordinances, rule of common law, and directives
relating to the environment, preservation or reclamation of natural resources,
health and safety or the use, management, disposal, Release or threatened
Release of or exposure to, Hazardous Substances or noxious odors, including
without limitation the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Occupational Health and
Safety Act, the Toxic Substances Control Act, the Endangered Species Act, the
Oil Pollution Act and any similar foreign, state or local law.
(g) "Hazardous Substance" means (i) any "hazardous substance," as
defined by CERCLA, (ii) any "hazardous waste," as defined by RCRA, or (iii) any
pollutant or contaminant or hazardous, dangerous or toxic chemical or material
or any other substance including, but not limited to asbestos, buried
contaminants, regulated chemicals, flammable explosives, radioactive materials
(including without limitation naturally occurring radioactive materials),
polychlorinated biphenyls, natural gas, natural gas liquids, liquified natural
gas, condensates, petroleum (including without limitation crude oil and
petroleum products), regulated by, or that could result in the imposition of
liability under, any Environmental Law or other applicable law of any applicable
governmental authority relating to or imposing liability or standards of conduct
concerning any hazardous, toxic, or dangerous waste, substance or material, all
as amended or hereafter amended.
(h) "Release" means any spilling, leaking, pumping, pouring, emitting,
purging, emptying, discharging, injecting, escaping, leaching, dumping,
migrating or disposing into the environment (including the abandonment or
discarding of barrels, containers, and other closed receptacles containing any
Hazardous Substance).
Section 3.14 Compliance with Laws. The Company and its Subsidiaries are in
compliance with any applicable law, rule or regulation of any United States
federal, state, local or foreign government or agency thereof except where the
failure to comply would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. No notice, charge, claim,
action or assertion has been received by the Company or any of its Subsidiaries
or, to the Company's knowledge, has been filed, commenced or threatened against
the Company or any of its Subsidiaries alleging any such violation, in each case
that would reasonably be expected to have a Company Material Adverse Effect. All
licenses, permits and approvals required under such laws, rules and regulations
are in full force and effect, except where the failure to be in full force and
effect would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. Notwithstanding the foregoing, no
representation or warranty in this Section 3.14 is made with respect to permits
-15-
issued under or matters relating to Environmental Laws, which are covered
exclusively by the provisions set forth in Section 3.13, or with respect to
permits to conduct exploratory operations that have not been commenced as of the
date of this Agreement.
Section 3.15 Intellectual Property. The Company and its Subsidiaries own or
possess all necessary licenses (including seismic licenses) or other valid
rights to use all patents, patent rights, trademarks, trademark rights and
proprietary information used or held for use in connection with their respective
businesses as currently being conducted, free and clear of Liens, except where
the failure to own or possess such licenses and other rights would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, and to the knowledge of the Company, there are no
assertions or claims challenging the validity of any of the foregoing which
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except in the ordinary course of business,
neither the Company nor any of its Subsidiaries has granted to any other person
any license to use any of the foregoing. The conduct of the Company's and its
Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses (including seismic licenses),
trademarks, trademark rights, trade names, trade name rights or copyrights of
others in a way which would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. There is no infringement of
any proprietary right owned by or licensed by or to the Company or any of its
Subsidiaries in a way which would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
Section 3.16 Oil and Gas Reserves. The Company has furnished to Parent the
Company's estimate of Company's and its Subsidiaries' oil and gas reserves as of
January 1, 2001, as reviewed by Ryder Scott Company ("Company Reserve Report").
Except as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, the factual, non-interpretive data on
which the Company Reserve Report was based for purposes of estimating the oil
and gas reserves set forth in the Company Reserve Report was accurate in all
material respects.
Section 3.17 Financial and Commodity Hedging. The Company Reports
accurately summarize, in all material respects the outstanding hydrocarbon and
financial hedging positions attributable to the production of the Company and
its Subsidiaries (including fixed price contracts, collars, swaps, caps, hedges
and puts) as of the date reflected therein, and there have been no changes since
the date thereof.
Section 3.18 Indebtedness and Certain Contracts.
(a) Set forth in Section 3.18(b) of the Company Disclosure Letter is
the aggregate amount of outstanding indebtedness for borrowed money of the
Company or its Subsidiaries as of the date of this Agreement under all loan or
credit agreements, notes, bonds, mortgages, indentures and other agreements
evidencing such indebtedness.
(b) Neither the Company nor any of its Subsidiaries is a party to or
bound by any agreement or other arrangement that would, after the Effective
Time, to the knowledge of the Company, materially limit or restrict Parent or
any of its Subsidiaries or any of their respective affiliates or any successor
thereto, from engaging or competing in the oil and gas
-16-
exploration and production business in any significant geographic area, except
for joint ventures, area of mutual interest agreements entered into in
connection with prospect reviews and similar arrangements entered into in the
ordinary course of business.
(c) Neither the Company nor any of its Subsidiaries is a party to or
bound by (i) any non-competition agreement, confidentiality, joint venture, area
of mutual interest or any other agreement or obligation which purports to limit
the manner in which, or the localities in which, the business of the Company and
its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a
whole, is conducted or (ii) any executory agreement or obligation which pertains
to the acquisition or disposition of any asset, or which provides any third
party any lien, claim, right of first refusal or first offer or preferential
right with regard thereto, except, in the case of either clause (i) or (ii), for
such agreements or obligations that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries has received any
material advance, take-or-pay, production or other similar payments that entitle
purchasers of production to receive deliveries of hydrocarbons without paying
therefor, and, on a net, Company-wide basis, the Company is neither materially
underproduced nor overproduced under gas balancing or similar arrangements.
(e) There are no contracts, agreements or binding arrangements between
the Company or any of its Subsidiaries, on the one hand, and S. A. Louis Dreyfus
et Cie or any of its affiliates, on the other hand.
Section 3.19 Title to Properties. Except for goods and other property sold,
used or otherwise disposed of since December 31, 2000 in the ordinary course of
business, the Company has defensible title to all oil and gas properties forming
the basis for the reserves reflected in the Company Reserve Report as
attributable to interests owned by the Company and its Subsidiaries, and to all
other properties, interests in properties and assets, real and personal,
reflected in its Annual Report on Form 10-K for the year ended December 31, 2000
(the "2000 10-K"), free and clear of any Lien, except: (i) Liens reflected in
the 2000 10-K; (ii) Liens for current taxes not yet due and payable; and (iii)
such imperfections of title, easements, Liens, or other matters and failures to
title as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. The leases and other agreements pursuant
to which the Company or any of its Subsidiaries leases or otherwise acquires or
obtains operating rights affecting any real or personal property are in good
standing, valid, and effective except where the failure to be in good standing,
valid and effective would not, individually or the aggregate, reasonably be
expected to have a Company Material Adverse Effect; and there is not, under any
such leases, any existing or prospective default or event of default or event
which with notice or lapse of time, or both, would constitute a default by the
Company or any of its Subsidiaries that would reasonably be expected to have a
Company Material Adverse Effect. All operating equipment of the Company and its
Subsidiaries has in all material respects been maintained in reasonable
operating condition and repair, ordinary wear and tear excepted, and is in all
material respects sufficient to permit the Company and its Subsidiaries to
conduct their operations in the ordinary course of business in a manner
consistent with their past practices, except for any such deficiency as would
not reasonably be expected to have a Company Material Adverse Effect. No claim,
notice or order from any Governmental Authority has been received by the Company
or
-17-
any Subsidiary due to hydrocarbon production in excess of allowables or similar
violations which could result in curtailment of production after the Closing
Date, reformation, amendment, cancellation or other alteration of any unit or
taking (whether permanent, temporary, whole, or partial) of any part of the
assets of the Company or any Subsidiary by reason of eminent domain or
otherwise, except any such violations which would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect.
There are no wells on any lease in which the Company currently has or previously
had an interest that have been permanently plugged and abandoned that were not
plugged and abandoned in accordance in all material respects with applicable
laws or contracts, except any such violations which would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect. The Company has the ability and right to obtain access to, produce,
treat, transport, process and otherwise market hydrocarbons from all of the oil
and gas properties for which reserves are shown in the Company Reserve Report,
except any such inability which would not reasonably be expected, individually
or in the aggregate, to have a Company Material Adverse Effect.
Section 3.20 Insurance. The Company and its Subsidiaries maintain insurance
coverage adequate and customary in the industry for the operation of their
respective businesses.
Section 3.21 No Brokers. Except for Lehman Brothers, Inc. ("Lehman"), whose
fees and expenses will be paid by the Company in accordance with the Company's
agreement with Lehman, a copy of which has been provided to Parent, no agent,
broker, person or firm acting on behalf of the Company or under its authority is
or will be entitled to any advisory, commission or broker's or finder's fee from
any of the parties hereto in connection with any of the transactions
contemplated herein.
Section 3.22 Opinion of Financial Advisors. The board of directors of the
Company has received the opinion of Lehman to the effect that, as of the date of
this Agreement, the Merger Consideration is fair, from a financial point of
view, to the holders of the Company Shares (other than Parent); it being
understood and acknowledged by Parent that such opinion has been rendered for
the benefit of the board of directors of the Company, and is not intended to,
and may not, be relied upon by Parent, its affiliates or their respective
Subsidiaries. The Company has been authorized by Lehman to include such opinion
in its entirety in the Proxy Statement/Prospectus, so long as such inclusion is
in form and substance reasonably satisfactory to Lehman and its counsel.
Section 3.23 Board Recommendation; Vote Required.
(a) The board of directors of the Company has by resolutions duly
adopted by the unanimous vote of its entire board of directors at a meeting of
such board duly called and held on September 9, 2001, determined that the Merger
is fair to and in the best interests of the Company and its shareholders,
approved and declared advisable this Agreement, the Merger and the other
transactions contemplated hereby and recommended that the shareholders of the
Company approve and adopt this Agreement and the Merger.
(b) The affirmative vote of shareholders of the Company required for
approval and adoption of this Agreement and the Merger is and will be no greater
than a majority
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of the outstanding Company Shares (the "Company Requisite Vote") and no other
vote of any holder of the Company's securities is required for the approval and
adoption of this Agreement or the Merger.
Holding Company; Investment Company; Utility. None of the real property of
the Company or any of its Subsidiaries has been or is certified by the Federal
Energy Regulatory Commission ("FERC") under Section 7(c) of the NGA or is now
subject to FERC jurisdiction under the Natural Gas Act nor has it been or is it
now providing service pursuant to Section 311 of the Natural Gas Policy Act. The
Company or its Subsidiaries, as the case may be, has complied with Texas law
relating to its Texas gas gathering system, except to the extent any failure to
comply would not, individually or in the aggregate, be reasonably expected to
have a Company Material Adverse Effect.
Section 3.24 Certain Approvals. The Company has opted out of Section 1090.3
of the OGCA and the Company's board of directors has taken any and all necessary
and appropriate action to render inapplicable to the Merger and the transactions
contemplated by this Agreement and the Principal Shareholders Agreement the
provisions of any other "fair price," "moratorium," control share acquisition,
interested shareholder or other similar antitakeover provision or regulation and
any restrictive provision of any antitakeover provision in the certificate of
incorporation or bylaws of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Except as publicly disclosed by Parent in the Parent Reports (as defined in
Section 4.6) filed with the SEC prior to the date of this Agreement and except
as set forth in the disclosure letter (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein, provided that any disclosure set forth with respect to any
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particular section shall be deemed to be disclosed in reference to all other
applicable sections of this Agreement if the disclosure in respect of the
particular section is sufficient on its face without further inquiry reasonably
to inform the Company of the information required to be disclosed in respect of
the other sections to avoid a breach under the representation and warranty or
covenant corresponding to such other sections) previously delivered by Parent to
the Company (the "Parent Disclosure Letter"), Parent and Sub hereby represent
and warrant to the Company as follows:
Section 4.1 Existence; Good Standing; Corporate Authority. Parent is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Virginia. Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent and Sub is duly qualified to do business as a foreign corporation
and is in good standing under the laws of any jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified and in good standing would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect (as
defined in Section 9.10). Each of Parent and Sub has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now conducted. As of the date hereof, the copies of each of Parent's
and Sub's
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certificate of incorporation and bylaws previously made available to the Company
are true and correct and contain all amendments.
Section 4.2 Authorization, Validity and Effect of Agreements. Each of
Parent and Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all other agreements and documents contemplated
hereby, to which it is a party. The consummation by each of Parent and Sub of
the transactions contemplated hereby, including the issuance and delivery by
Parent of Parent Common Shares pursuant to the Merger, has been duly authorized
by all requisite corporate action. Assuming the valid authorization, execution
and delivery of this Agreement by the Company, this Agreement constitutes the
valid and legally binding obligation of each of Parent and Sub, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to creditors' rights
generally and general principles of equity.
Section 4.3 Capitalization. The authorized capital stock of Parent consists
of 500,000,000 Parent Common Shares and 20,000,000 preferred shares, no par
value. 665,000 of the preferred shares have been designated as Series A
Mandatorily Convertible Preferred Stock. As of September 5, 2001, (i) there were
248,362,308 Parent Common Shares issued and outstanding, (ii) there were 665,000
shares of Series A Mandatorily Convertible Preferred Stock issued and
outstanding, all of which were owned by a trust of which Parent is the
beneficial owner, (iii) 20,661,169 Parent Common Shares were subject to
outstanding employee stock options (including 333 options exercised but not yet
settled) and (iv) 8,250,000 Premium Income Equity Security stock purchase units
("PIES") were outstanding which require the holders to purchase up to 8,088,300
Parent Common Shares by November 16, 2004. All issued and outstanding Parent
Common Shares and preferred shares (i) are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights, (ii) were not issued in
violation of the terms of any agreement or other understanding binding upon
Parent and (iii) were issued in compliance with all applicable charter documents
of Parent and all applicable federal and state securities laws, rules and
regulations. The Parent Common Shares to be issued in connection with the
Merger, when issued in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights. As
of the date of this Agreement, except as set forth in this Section 4.3 and
except for any Parent Common Shares issued pursuant to employee benefit plans,
upon conversion of the Series A Mandatorily Convertible Preferred Stock and in
connection with the PIES, there are no outstanding shares of capital stock and
there are no options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate Parent or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Parent. As of the date of this Agreement, Parent has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of Parent on any
matter.
Section 4.4 No Violation. Neither Parent nor any of its Subsidiaries is, or
has received notice that it would be with the passage of time, in violation of
any term, condition or provision of (i) its charter documents or bylaws, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license or other instrument or (iii) any order of any court,
governmental authority or arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which Parent or any of its Subsidiaries or
any of their
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respective properties or assets is subject, or is delinquent with respect to any
report required to be filed with any governmental entity, except, in the case of
matters described in clause (ii) or (iii), as would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect.
Except as would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect, Parent and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders, franchises and approvals
of all governmental authorities necessary for the lawful conduct of their
respective businesses (the "Parent Permits") and Parent and its Subsidiaries are
in compliance with the terms of the Parent Permits. No investigation by any
governmental authority with respect to Parent or any of its Subsidiaries is
pending or, to the knowledge of Parent, threatened, other than those that would
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.5 No Conflict
(a) Neither the execution and delivery by Parent and Sub of this
Agreement nor the consummation by Parent and Sub of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict with
or result in a breach of any provisions of the charter documents or bylaws of
Parent or Sub; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
or in a right of termination or cancellation of, or give rise to a right of
purchase under, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties of Parent or its Subsidiaries
under, or result in being declared void, voidable, or without further binding
effect, or otherwise result in the loss of a material benefit to Parent or any
of its Subsidiaries under any of the terms, conditions or provisions of, any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, agreement, joint venture or other instrument or obligation to
which Parent or any of its Subsidiaries is a party, or by which Parent or any of
its Subsidiaries or any of their properties is bound or affected; or (iii)
subject to the governmental filings and other matters referred to in paragraph
(b) of this Section 4.5, contravene or conflict with or constitute a violation
of any provision of any law, rule, regulation, judgment, order or decree binding
upon or applicable to Parent or any of its Subsidiaries, except, in the case of
matters described in clause (ii) or (iii), as would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect.
(b) Neither the execution and delivery by Parent or Sub of this
Agreement nor the consummation by Parent or Sub of the transactions contemplated
hereby in accordance with the terms hereof will require any consent, approval or
authorization of, or filing or registration with, any governmental or regulatory
authority, other than Regulatory Filings, and listing of the Parent Common
Shares to be issued in the Merger on the New York Stock Exchange, except for any
consent, approval or authorization the failure of which to obtain and for any
filing or registration the failure of which to make would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section 4.6 SEC Documents. Parent has made available to the Company each
registration statement, report, proxy statement or information statement (other
than preliminary materials) filed by Parent with the SEC since January 1, 2000,
each in the form (including exhibits and any amendments thereto) filed with the
SEC prior to the date hereof (collectively,
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the "Parent Reports"), and Parent has filed all forms, reports and documents
required to be filed by it with the SEC pursuant to relevant securities
statutes, regulations, policies and rules since such time. As of their
respective dates, the Parent Reports (i) were prepared in accordance with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder and complied with the then applicable accounting
requirements and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading except for such statements, if any, as have been
modified by subsequent filings with the SEC prior to the date hereof. Each of
the consolidated balance sheets included in or incorporated by reference into
the Parent Reports (including the related notes and schedules) fairly presents
in all material respects the consolidated financial position of Parent and its
Subsidiaries as of its date and each of the consolidated statements of income,
cash flows and stockholders' equity included in or incorporated by reference
into the Parent Reports (including any related notes and schedules) fairly
presents in all material respects the results of operations, cash flows or
changes in stockholders' equity, as the case may be, of Parent and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to such exceptions as may be permitted by Form 10-Q under
the Exchange Act), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein.
Section 4.7 Financing. Parent has available to it sources of financing
sufficient to satisfy its obligation to make the payment of the aggregate Cash
Consideration required under this Agreement when such payment is required
pursuant to this Agreement.
Section 4.8 No Brokers. Except for Merrill Lynch & Co. ("Merrill"), whose
fees and expenses will be paid by Parent in accordance with Parent's agreement
with Merrill, no agent, broker, person or firm acting on behalf of Parent or
under its authority is or will be entitled to any advisory, commission or
broker's or finder's fee from any of the parties hereto in connection with any
of the transactions contemplated herein.
Section 4.9 No Vote Required. No vote is required by the holders of any
class or series of Parent's or Sub's (other than Parent) capital stock to
approve the adoption of this Agreement or the Merger or pursuant to the rules
and regulations of the New York Stock Exchange as a result of this Agreement or
the transactions contemplated hereby.
Absence of Changes. Since June 30, 2001, there have not been any events,
conditions, actions, occurrences or omissions that would reasonably be expected
to have a Parent Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that from the date hereof to the Effective Time or
the earlier termination of this Agreement pursuant to Article VIII, except as
set forth in Section 5.1 of the Company Disclosure Letter or as expressly
contemplated by any other provision of this
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Agreement, unless Parent shall otherwise agree in writing (such agreement by
Parent not to be unreasonably withheld or delayed):
(a) The businesses of the Company and each of its Subsidiaries shall be
conducted only in the ordinary, regular and usual course, consistent with past
practices, and the Company and each of its Subsidiaries shall use all reasonable
efforts to maintain and preserve intact their respective business organizations,
to maintain significant beneficial business relationships with suppliers,
contractors, distributors, customers, licensors, licensees and others having
business relationships with it, keep available the services of its current key
officers and employees, and use reasonable best efforts to maintain with
financially responsible insurance companies insurance in such amounts and
against such risks and losses as are customary for such party; and
(b) Without limiting the generality of Section 5.1(a), except as set
forth in Section 5.1 of the Company Disclosure Letter, the Company shall not
directly or indirectly, and shall cause its Subsidiaries not to, do any of the
following:
(i) acquire, sell, encumber, lease, transfer or dispose of any
assets, rights or securities that are material to the Company or its
Subsidiaries or terminate, cancel, materially modify or enter into any
material commitment, transaction, line of business or other agreement,
in each case out of the ordinary course of business consistent with
past practice or acquire by merging or consolidating with or by
purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business, corporation,
partnership, association or other business organization or division
thereof;
(ii) amend or propose to amend its certificate of incorporation
or bylaws or, in the case of its Subsidiaries, their respective
constituent documents;
(iii) split, combine or reclassify any outstanding shares of, or
interests in, its capital stock;
(iv) declare, set aside or pay any dividend or distribution,
payable in cash, stock, property or otherwise, with respect to any of
its capital stock;
(v) other than pursuant to the terms of Employee Benefit Plans,
redeem, purchase or otherwise acquire, or offer to redeem, purchase or
otherwise acquire, any shares of its capital stock or any options,
warrants or rights to acquire capital stock of the Company;
(vi) except for the Company Shares issuable upon exercise of
options outstanding on the date hereof as disclosed in Section 3.3,
issue, sell, pledge, dispose of or encumber, or authorize, propose or
agree to the issuance, sale, pledge or disposition or encumbrance by
the Company or any of its Subsidiaries of, any shares of, or any
options, warrants or rights of any kind to acquire any shares of, or
any securities convertible into or exchangeable for any shares of, its
capital stock of any class, or any other securities in respect of, in
lieu of, or in substitution for any class of its capital stock
outstanding on the date hereof;
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(vii) modify the terms of any existing indebtedness for borrowed
money or incur any indebtedness for borrowed money or issue any debt
securities, except indebtedness incurred in the ordinary course of
business consistent with past practice for working capital management
purposes pursuant to the terms of existing lines of credit and the
Company's bank credit agreement;
(viii) assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any other
person, or make any loans or advances, except to or for the benefit of
the Company's Subsidiaries or except for those not in excess of
$5,000,000 in the aggregate;
(ix) authorize, recommend or propose to shareholders any material
change in its capitalization;
(x) take any action with respect to the grant or increase of
severance or termination pay;
(xi) adopt or establish any new employee benefit plan or,
terminate or amend in any material respect any employee benefit plan
or, other than in the ordinary course of business consistent with past
practice, increase the compensation or fringe benefits of any employee
(except as required by any existing employee benefit plans or
employment agreements or applicable law) or pay any material benefit
not required by any existing employee benefit plan (other than payment
of annual bonuses for the year 2001 on or after February 15, 2002 in
the aggregate amount of no more than $3.4 million);
(xii) other than in the ordinary course of business consistent
with past practice, enter into or amend in any material respect (other
than as required by existing employee benefit plans or employment
agreements or by applicable law) any employment, consulting, severance
or indemnification agreement entered into or made by the Company or
any of its Subsidiaries with any of their respective directors,
officers, agents, consultants or employees, or any collective
bargaining agreement or other obligation to any labor organization or
employee incurred or entered into by the Company or any of its
Subsidiaries (other than as required by existing employee benefit
plans or employment agreements or by applicable law);
(xiii) (A) settle or compromise any material claim for taxes, (B)
compromise, settle or otherwise resolve litigation involving a payment
of more than $5,000,000 in any one case by or to the Company or any of
its Subsidiaries or (C) other than in the ordinary course of business,
pay or discharge any claims, liens or liabilities involving more than
$5,000,000 individually or $10,000,000 in the aggregate, which are not
reserved for on the balance sheet included in the Company Reports;
(xiv) make or commit to make capital expenditures in excess of
$5,000,000 net to the Company and its Subsidiaries for any individual
authorization for expenditures, or, without having notified Parent,
make or
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commit to make capital expenditures in excess of $1,000,000 net to the
Company and its Subsidiaries (and less than $5,000,000 net) for any
individual authorization for expenditures, except, in each case, with
respect to emergency operations on any well, pipeline or other
facility ;
(xv) make any material changes in tax accounting methods except
as required by applicable law or generally accepted accounting
principles;
(xvi) write off any accounts or notes receivable in excess of
$5,000,000 except in the ordinary course of business;
(xvii) take any action that would reasonably be expected to
prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code;
(xviii) enter into or amend any agreement with any holder of
Company Shares with respect to holding, voting or disposing of shares;
(xix) by resolution of its board of directors cause the
acceleration of rights, benefits or payments under any Employee
Benefit Plans other than as a result of the transactions contemplated
by this Agreement;
(xx) except for gas sales agreements with Parent or any of its
Subsidiaries, enter into any additional fixed price forward sales
contracts or fixed price purchase or sale contracts that would result
in physical delivery of its oil or gas production for the year 2001,
2002 or 2003, as the case may be, or any fixed price financial swaps,
collars, options or other hedging arrangements with respect to (A) its
oil production or (B) more than 10% of its budgeted gas production for
the year 2001, 2002 or 2003, as the case may be, and, in any event,
for a term longer than 12 months;
(xxi) for the five full trading days immediately following the
parties' execution of this Agreement, sell gas-related financial
derivatives in excess of fifty (50) NYMEX gas contracts equivalents
per month for the calendar years 2002 and 2003; or
(xxii) take or agree in writing or otherwise to take any of the
actions precluded by clauses (i) through (xxi) of this Section 5.1.
Section 5.2 Conduct of Business of Parent. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time or
earlier termination of this Agreement, neither Parent nor any of its
Subsidiaries (including Sub), without the prior written consent of the Company
(which consent will not unreasonably be withheld or delayed), shall:
(i) acquire, by merging or consolidating with, or by purchasing
an equity interest in or the assets of, or by any other manner, any
business or corporation, partnership or other business organization or
division thereof, or
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otherwise acquire any assets of any other entity (other than the
purchase of assets from suppliers, clients or vendors in the ordinary
course of business and consistent with past practice) unless, at the
time it enters into a definitive agreement with respect to such
transaction, Parent has a good faith belief that such transaction
would not prevent or materially delay the consummation of the
transactions contemplated by this Agreement;
(ii) adopt or propose to adopt any amendments to its articles of
incorporation which would have a material adverse impact on the
consummation of the transactions contemplated by this Agreement;
(iii) take any action that would reasonably be expected to
prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code;
(iv) with respect to Parent only, split, combine or reclassify
any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock, make any
other actual, constructive or deemed distribution in respect of its
capital stock or otherwise make any payments to shareholders in their
capacity as such, except for the payment of ordinary cash dividends in
respect of the Parent Common Shares, unless the Exchange Ratio and Per
Share Amount (as defined in Section 6.10) are proportionately
increased or decreased, as applicable, in which case the prior written
consent of the Company shall not be required, but the Company shall be
entitled to written notice of such event;
(v) adopt a plan of complete or partial liquidation or
dissolution of Parent; or
(vi) take or agree in writing or otherwise to take any of the
actions precluded by clauses (i) through (v) of this Sections 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 No Solicitation by the Company.
(a) The Company agrees that it and its Subsidiaries (i) will not (and
it will not permit their officers, directors, employees, agents or
representatives, including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries to) (A) solicit, initiate or encourage
(including by way of furnishing material non-public information) any inquiry,
proposal or offer, whether or not in writing (including any proposal or offer to
its shareholders), with respect to a third party tender offer, merger,
consolidation, business combination or similar transaction involving all or more
than 10% of the assets of the Company and its Subsidiaries taken as a whole or
10% or more of any class of capital stock of the Company, or any acquisition,
directly or indirectly, of 10% or more of the capital stock or assets of the
Company and its subsidiaries, taken as a whole, in a single transaction or a
series of related transactions, or
-26-
any combination of the foregoing (any such proposal, offer or transaction being
hereinafter referred to as a "Company Acquisition Proposal"), (B) participate or
engage in any discussions or negotiations concerning, furnish to any person any
information with respect to, or take any action to facilitate any inquiries or
the making of any proposal or offer that constitutes or may reasonably be
expected to lead to, a Company Acquisition Proposal or (C) approve or recommend
any Company Acquisition Proposal, accept any Company Acquisition Proposal or
enter into a letter of intent, agreement in principle or agreement with respect
to any Company Acquisition Proposal (or resolve to or publicly propose to do any
of the foregoing); and (ii) will immediately cease and cause to be terminated
any existing negotiations with any third parties conducted heretofore with
respect to any of the foregoing; provided that, subject to Section 6.1(b), (A)
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nothing contained in clause (i) above shall prohibit the Company or its board of
directors from disclosing to the Company's shareholders a position with respect
to a tender offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, provided that the board of directors of the Company
shall not recommend that the shareholders of the Company tender their Company
Shares in connection with any such tender or exchange offer unless the board of
directors shall have determined in good faith, after consultation with its
financial advisors and outside counsel, that the relevant Company Acquisition
Proposal is a Superior Proposal and (B) prior to the Shareholders' Meeting, if
the Company receives an unsolicited bona fide written Company Acquisition
Proposal from a third party that the board of directors of the Company
determines in good faith (after receiving the advice of a financial adviser of
nationally recognized reputation) is reasonably likely to be a Superior Proposal
(as defined below), the Company and its representatives may conduct such
discussions or provide such information as the board of directors of the Company
shall determine, but only if, prior to such provision of information or conduct
of such discussions (x) such third party shall have entered into a
confidentiality agreement not materially less favorable to the Company than the
existing confidentiality agreement dated June 5, 2001, between the Parent and
the Company (the "Parent/Company Confidentiality Agreement") (and containing
additional provisions that expressly permit the Company to comply with the
provisions of this Section 6.1) and (y) the board of directors of the Company
determines in its good faith judgment, after consultation with outside counsel,
that it is required to do so in order to comply with its fiduciary duties. For
purposes of this Agreement, "Superior Proposal" means any unsolicited bona fide
written Company Acquisition Proposal which (i) contemplates (A) a merger or
other business combination, reorganization, share exchange, recapitalization,
liquidation, dissolution, tender offer, exchange offer or similar transaction
involving the Company as a result of which the Company's shareholders prior to
such transaction in the aggregate cease to own at least 50% of the voting
securities of the ultimate parent entity resulting from such transaction or (B)
a sale, lease, exchange, transfer or other disposition (including, without
limitation, a contribution to a joint venture) of at least 50% of the value of
the assets of the Company and its Subsidiaries, taken as a whole, and (ii) is on
terms which the board of directors of the Company determines (after consultation
with its financial advisor and outside counsel), taking into account, among
other things, all legal, financial, regulatory and other aspects of the proposal
and the person making the proposal, (A) would, if consummated, result in a
transaction that is more favorable to its shareholders from a financial point of
view (in their capacities as such) than the transactions contemplated by this
Agreement (including the terms of any proposal by the Parent to modify the terms
of the transactions contemplated by this Agreement) and (B) is reasonably likely
to be financed and otherwise completed without undue delay.
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(b) The Company will promptly (but in any event within 24 hours)
notify Parent of any requests referred to in Section 6.1(a) for information or
the receipt of any Company Acquisition Proposal, including the identity of the
person or group engaging in such discussions or negotiations, requesting such
information or making such Company Acquisition Proposal, and the material terms
and conditions of any Company Acquisition Proposal, and shall keep Parent
informed on a timely basis (but in any event within 24 hours) of any material
changes with respect thereto. Prior to taking any action referred to in the
proviso of Section 6.1(a), if the Company intends to participate in any such
discussions or negotiations or provide any such information to any such third
party, the Company shall give prompt prior notice to Parent of each such action.
(c) Nothing in this Section 6.1 shall permit the Company to enter into
any agreement with respect to a Company Acquisition Proposal during the term of
this Agreement, it being agreed that, during the term of this Agreement, the
Company shall not enter into any agreement with any person that provides for, or
in any way facilitates, a Company Acquisition Proposal, other than a
confidentiality agreement not materially less favorable to the Company than the
Parent/Company Confidentiality Agreement.
Section 6.2 Shareholders' Meeting. The Company, acting through its board of
directors, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and Bylaws, (i) duly call, give notice of, convene
and hold a meeting of its shareholders as soon as practicable following the date
hereof for the purpose of considering and taking action on this Agreement and
the transactions contemplated hereby (the "Shareholders' Meeting") and (ii)
subject to its fiduciary duties under applicable law after consultation with
outside counsel, (A) include in the Proxy Statement/Prospectus (as defined in
Section 6.6) the unanimous recommendation of the board of directors that the
shareholders of the Company vote in favor of the approval and adoption of this
Agreement and the transactions contemplated hereby and (B) use its reasonable
best efforts to obtain the necessary approval and adoption of this Agreement and
the transactions contemplated hereby by its shareholders. Notwithstanding the
Company's failure to include the recommendation contemplated by clause (A) of
the preceding sentence (in the circumstances permitted thereby), unless this
Agreement shall have been terminated pursuant to Article VIII, the Company shall
submit this Agreement to its shareholders at the Shareholders' Meeting for the
purpose of adopting this Agreement and nothing contained herein shall be deemed
to relieve the Company of such obligation.
Section 6.3 Filings; Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided, the Company
and Parent each agrees to use its reasonable best efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
promptly as is practicable, including:
(i) promptly make their respective filings under the HSR Act with
respect to the Merger and thereafter shall promptly make any other
required submissions under the HSR Act and respond to any requests for
additional
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information, and cause the waiting periods under the HSR Act to
terminate or expire at the earliest possible date after the date of
filing;
(ii) satisfy the conditions to closing in Article VII (including,
in the case of the Company, obtaining the opinion described in Section
7.2(b) and, in the case of Parent, obtaining the opinion described in
Section 7.3(b)) and to cooperate with one another in (A) determining
which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits or authorizations are
required to be obtained prior to the Effective Time from governmental
or regulatory authorities of the United States, the several states,
and foreign jurisdictions in connection with the execution and
delivery of this Agreement and the consummation of the Merger and the
transactions contemplated hereby; and (B) timely making all such
filings and timely seeking all such consents, approvals, permits or
authorizations;
(iii) promptly notify each other of any communication concerning
this Agreement or the Merger to that party from any governmental
authority and permit the other party to review in advance any proposed
communication concerning this Agreement or the Merger to any
governmental entity;
(iv) not agree to participate in any meeting or discussion with
any governmental authority in respect of any filings, investigation or
other inquiry concerning this Agreement or the Merger unless it
consults with the other party in advance and, to the extent permitted
by such governmental authority, gives the other party the opportunity
to attend and participate thereat;
(v) furnish the other party with copies of all correspondence,
filings and communications (and memoranda setting forth the substance
thereof) between them and their affiliates and their respective
representatives on the one hand, and any government or regulatory
authority or members or their respective staffs on the other hand,
with respect to this Agreement and the Merger; and
(vi) furnish the other party with such necessary information and
reasonable assistance as such other parties and their respective
affiliates may reasonably request in connection with their preparation
of necessary filings, registrations or submissions of information to
any governmental or regulatory authorities, including without
limitation, any filings necessary or appropriate under the provisions
of the HSR Act.
(b) Without limiting Section 6.3(a), Parent and the Company shall:
(i) each use its reasonable best efforts to avoid the entry of,
or to have vacated or terminated, any decree, order or judgment,
including without limitation defending through litigation on the
merits any claim asserted in any court by any party, that would
restrain, prevent or delay the Closing; and
(ii) each use reasonable best efforts to avoid or eliminate each
and every impediment under any antitrust, competition or trade
regulation law that
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may be asserted by any governmental entity with respect to the Merger
so as to enable the Closing to occur as soon as reasonably possible
following the termination of all applicable waiting periods under the
HSR Act.
(c) Notwithstanding anything to the contrary in this Agreement, (i)
the Company shall not, without Parent's prior written consent, commit to any
divestitures, licenses, hold separate arrangements or similar matters, including
covenants affecting business operating practices (or allow its Subsidiaries to
commit to any divestitures, licenses, hold separate arrangements or similar
matters), and the Company shall commit to, and shall use reasonable best efforts
to effect (and shall cause its Subsidiaries to commit to and use reasonable best
efforts to effect), any such divestitures, licenses, hold separate arrangements
or similar matters as Parent shall request, but solely if such divestitures,
licenses, hold separate arrangements or similar matters are contingent on
consummation of the Merger and (ii) neither Parent nor any of its Subsidiaries
shall be required (pursuant to Section 6.3(a)(ii) or otherwise) to agree (with
respect to (x) Parent or its Subsidiaries or (y) the Company or its
Subsidiaries) to any divestitures, licenses, hold separate arrangements or
similar matters, including covenants affecting business operating practices, if
such divestitures, licenses, arrangements or similar matters, individually or in
the aggregate, would reasonably be expected to have a Parent Material Adverse
Effect or a Company Material Adverse Effect.
Section 6.4 Access to Information. From the date hereof through Effective
Time, the Company and Parent shall allow all designated officers, attorneys,
accountants and other representatives of the other party access at all
reasonable times upon reasonable notice to the records and files,
correspondence, audits and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise pertaining
to the business and affairs of the Company and its Subsidiaries or Parent and
its Subsidiaries, including inspection of such properties; provided that no
--------
investigation pursuant to this Section 6.4 shall affect any representation or
warranty given by any party hereunder, and provided further that notwithstanding
-------- -------
the provision of information or investigation by any party, no party shall be
deemed to make any representation or warranty except as expressly set forth in
this Agreement. Notwithstanding the foregoing, neither party shall be required
to provide any information which it reasonably believes it may not provide to
the other party by reason of applicable law, rules or regulations, which that
party reasonably believes constitutes information protected by attorney/client
privilege, or which it is required to keep confidential by reason of contract or
agreement with third parties. The parties hereto will make reasonable and
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. The Company and Parent agree that
they will not, and will cause their representatives not to, use any information
obtained pursuant to this Section 6.4 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
Section 6.5 Notification of Certain Matters. Each of the Company and Parent
agrees to give prompt notice to the other of, and to use its respective
reasonable best efforts to prevent or promptly remedy, to the extent within
their control, (i) the occurrence or failure to occur, or the impending or
threatened occurrence or failure to occur, of any event which occurrence or
failure to occur would reasonably be expected to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect at the Effective Time and (ii) any material failure on its
part to comply with or satisfy any covenant, condition or
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agreement to be complied with or satisfied by it hereunder; provided that the
delivery of any notice pursuant to this Section 6.5 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
Section 6.6 Registration Statement; Proxy Statement.
(a) Each of Parent and the Company shall cooperate and promptly
prepare and Parent shall file with the SEC as soon as practicable a Registration
Statement on Form S-4 under the Securities Act (the "Registration Statement"),
with respect to the Parent Common Shares issuable in the Merger. A portion of
the Registration Statement shall also serve as the proxy statement (the "Proxy
Statement/Prospectus") with respect to the Shareholders' Meeting. The respective
parties will cause the Proxy Statement/Prospectus and the Registration Statement
to comply as to form in all material respects with the applicable provisions of
the Securities Act, the Exchange Act and the rules and regulations thereunder.
Each of Parent and the Company shall use its reasonable best efforts to have the
Registration Statement declared effective by the SEC as promptly as practicable.
Each of Parent and the Company shall use its reasonable best efforts to obtain,
prior to the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement. Parent will advise the Company,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed,
the issuance of any stop order, the suspension of the qualification of the
Parent Common Shares issuable in connection with the Merger for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. The Company will advise Parent, promptly after it
receives notice thereof, of any request by the SEC for amendment of the Proxy
Statement/Prospectus or comments thereon and responses thereto or requests by
the SEC for additional information.
(b) The Company will use its reasonable best efforts to cause the
Proxy Statement/Prospectus to be mailed to its shareholders as promptly as
practicable after the Registration Statement is declared effective by the SEC.
(c) Each of Parent and the Company agrees that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the respective meetings of shareholders of Parent and of the Company, or, in
the case of information provided by it for inclusion in the Registration
Statement or any amendment or supplement thereto, at the time it is filed or
becomes effective, (i) will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC thereunder and (ii) will not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 6.7 Listing Application. Parent shall use its reasonable best
efforts to cause the Parent Common Shares to be issued in the Merger and the
Parent Common Shares to be issued upon exercise of Substituted Options and
Assumed Options (as such terms are defined in
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Section 6.10(f)) to be approved for listing, subject to official notice of
issuance, on the New York Stock Exchange prior to the Effective Time.
Section 6.8 Agreements of Affiliates. Not less than thirty (30) days before
the Effective Time, the Company shall cause to be prepared and delivered to
Parent a list identifying all persons who the Company believes may be deemed, at
the time of the Shareholders' Meeting, to be "affiliates" of the Company, for
purposes of Rule 145 under the Securities Act (the "Rule 145 Affiliates").
Parent shall be entitled to place restrictive legends on any Parent Common
Shares received by such Rule 145 Affiliates relating to transfer restrictions
imposed by Rule 145 under the Securities Act. The Company shall use its
reasonable best efforts to cause each person who is identified as a Rule 145
Affiliate in such list to deliver to Parent, at or prior to the Effective Time,
a written agreement, in the form attached hereto as Exhibit A.
Section 6.9 Indemnification and Insurance.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify, defend and hold harmless to the fullest
extent permitted under applicable law each person who is, or has been at any
time prior to the Effective Time, an officer or director of the Company (or any
Subsidiary or division thereof) and each person who served at the request of the
Company as a director, officer, trustee or fiduciary of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise (individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") against all losses, claims, damages, liabilities, costs
or expenses (including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), (i) Parent shall cause
the Surviving Corporation to pay, as incurred, the fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to Parent, in advance of the final disposition of any such Action to the fullest
extent permitted by applicable law, and, if required, upon receipt of any
undertaking required by applicable law, and (ii) Parent will, and will cause the
Surviving Corporation to, cooperate in the defense of any such matter; provided
--------
that neither Parent nor the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed), and provided further that neither Parent nor
-------- -------
the Surviving Corporation shall be obligated pursuant to this Section 6.9(a) to
pay the fees and disbursements of more than one counsel for all Indemnified
Parties in any single Action, unless, in the good faith judgment of any of the
Indemnified Parties, there is or may be a conflict of interests between two or
more of such Indemnified Parties, in which case there may be separate counsel
for each similarly situated group.
(b) The parties agree that the rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, in the certificate of incorporation, bylaws and any indemnification
agreement of the Company and its Subsidiaries with respect to matters occurring
through the Effective Time, shall survive the Merger and shall continue in full
force and effect for a period of six years from the Effective Time; provided
--------
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that all rights to indemnification in respect of any Action pending or asserted
or claim made within such period shall continue until the disposition of such
Action or resolution of such claim.
(c) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain officers' and directors' liability insurance covering
the Indemnified Parties who are or at any time prior to the Effective Time were
covered by the Company's existing officers' and directors' liability insurance
("D&O Insurance") policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance with respect to acts or
omissions, or alleged acts or omissions, prior to the Effective Time (whether
claims, actions or other proceedings relating thereto are commenced, asserted or
claimed before or after the Effective Time); provided that after the Effective
--------
Time, the Surviving Corporation shall not be required to pay annual premiums in
excess of 200% of the last annual premium paid by the Company prior to the date
hereof (the amount of which premiums are set forth in the Company Disclosure
Letter) (the "Maximum Premium"), but in such case shall purchase as much
coverage as reasonably practicable for such amount. Parent shall have the right
to cause coverage to be extended under the Company's D&O Insurance by obtaining
"tail" coverage for such six-year period on terms and conditions no less
advantageous than the Company's existing D&O Insurance, and such "tail" policy
shall satisfy the provisions of this Section 6.9(c).
(d) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, under the OGCA, under existing indemnification agreements, or
otherwise, all of which will be assumed by the Surviving Corporation and remain
in effect for a period of at least six years following the Effective Time.
(e) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Parent, as the case may be, shall assume the
obligations set forth in this Section 6.9.
(f) The provisions of this Section 6.9 shall survive the consummation
of the Merger and expressly are intended to benefit each of the Indemnified
Parties.
Section 6.10 Employee Benefits.
(a) From and after the Effective Time, the Surviving Corporation shall
assume and honor, all Employee Benefit Plans including all employment agreements
with officers of the Company in accordance with their terms as in effect
immediately before the consummation of the Merger, subject to any amendment or
termination thereof that may be permitted by such terms; provided that the
--------
foregoing shall not be construed as prohibiting Parent or the Surviving
Corporation from terminating the employment of any employee of the Surviving
Corporation after the Effective Time. It is acknowledged and agreed that the
approval of the Merger by the Company Requisite Vote will constitute a "change
of control" for purposes of all those Employee Benefit Plans containing "change
of control" provisions including existing change of control agreements between
the Company and certain of its officers ("CIC
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Agreements"). Notwithstanding any provisions in the CIC Agreements to the
contrary, the amounts payable thereunder shall be paid on the Closing Date.
(b) For 12 months following the Effective Time, the Surviving
Corporation shall continue to provide to those individuals who are employed by
the Company as of the Effective Time and who remain employed following the
Effective Time by the Surviving Corporation or any Subsidiary of the Surviving
Corporation ("Affected Employees"), compensation and employee benefits which, in
the aggregate, are no less favorable than the compensation and benefits provided
by the Company to such employees immediately prior to consummation of the
Merger; provided that (i) as of January 1, 2002, Affected Employees shall become
--------
eligible to participate in the employee benefit plans, programs, policies and
arrangements of Parent or any Subsidiary of Parent (the "Parent Plans") on the
same basis as similarly situated employees of the Parent, and (ii) the Parent
Plans shall be deemed to satisfy this Section 6.10(b). Additionally, any
employee of Company who is not covered by a CIC Agreement whose employment is
terminated by the Surviving Corporation on or after the Effective Time other
than for cause will be eligible for the severance benefits under the Parent
Severance Program effective January 27, 2000 which provides for, among other
things, two months advance notice prior to termination, severance payments of
one month's salary for each year of service or partial year of more than six
months with the Company and the Surviving Corporation (including credited
service with the Company as provided in Section 6.10(c) below), up to six months
of paid COBRA coverage, outplacement services and minimum and maximum severance
payment periods of 2 and 18 months, respectively.
(c) The Surviving Corporation shall give Affected Employees full
credit for their continuous service with the Company and its Subsidiaries
(including deemed service credited by such entities) for purposes of eligibility
to participate and vesting (but not benefit accruals under any defined benefit
pension plan) under all employee benefit plans, programs, policies or
arrangements which are maintained by Parent or any Subsidiary of Parent or the
Surviving Corporation for such Affected Employees to the same extent recognized
by the Company immediately prior to the Effective Time under similar Employee
Benefit Plans.
(d) Parent and the Surviving Corporation shall (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans that such employees may be eligible to
participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such employees under the
Employee Benefit Plans and that have not been satisfied as of the Effective Time
and (ii) provide each Affected Employee with credit for any co-payments and
deductibles paid prior to the Effective Time (in the calendar year of the
Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements for the year in which the Effective Time occurs under any welfare
plans that such employees are eligible to participate in after the Effective
Time.
(e) The Surviving Corporation shall sponsor the Company's 401(k) Plan
as of the Effective Time. The Surviving Corporation either shall continue to
sponsor such 401(k) Plan or shall merge such Plan into the 401(k) Plan of Parent
with the result that the participants in the Company's 401(k) Plan shall be
entitled to repay any outstanding participant loans pursuant to the terms of the
Company's 401(k) Plan and to avoid any deemed distribution.
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(f) With respect to each outstanding option to acquire Company Shares
(the "Company Options") under the Company's Stock Option Plan, (the "Stock
Option Plan") :
(i) Prior to the Effective Time, the Company will offer to all
employees and directors of the Company holding Company Options the
opportunity to elect to amend their Company Options so that they may
be converted into Substituted Options (as defined below). Prior to
approval of the Merger by shareholders of the Company, the Company
shall cause the Committee to exercise its authority under the Stock
Option Plan to make a determination that optionees will not be
permitted to surrender for cancellation their outstanding Company
Options for a cash payment following a Change in Control (as defined
in the Stock Option Plan).
(ii) Parent shall take all necessary action to provide that, at
the Effective Time, for each Company employee and director who holds a
Company Option and who elects to receive a Substituted Option, each
then outstanding Company Option will automatically be converted into
an option of equivalent value in Parent Common Shares (the
"Substituted Option") as follows. Each Company Option will be
converted into a Substituted Option to purchase a number of Parent
Common Shares equal to the product of (A) the number of shares of
Company Shares that could have been purchased under such Company
Option immediately prior to the Effective Time multiplied by (B) the
quotient of (1) the Per Share Amount (as defined below) divided by (2)
the Average Price (as defined below) (rounded to the nearest whole
number of Parent Common Shares). The exercise price per share of the
Substituted Option shall be equal to the quotient of (C) the per-share
option exercise price specified in the Company Option divided by (D)
the quotient of (1) the Per Share Amount divided by (2) the Average
Price (rounded up to the nearest whole cent). The "Per Share Amount"
shall mean the sum of the (E) the Cash Consideration and (F) the
product of the Exchange Ratio and the Average Price. The Average Price
shall mean the average (rounded to the nearest 1/10,000) of the volume
weighted averages (rounded to the nearest 1/10,000) of the trading
prices of Parent Common Shares on the New York Stock Exchange, as
reported by Bloomberg Financial markets (or such other source as the
parties shall agree in writing), for the ten consecutive Trading Days
ending on the third Trading Day immediately before the Effective Time.
Trading Day shall mean any day on which securities are traded on the
New York Stock Exchange.
(iii) Parent shall take all necessary action to provide that, at
the Effective Time, for each Company employee and director holding a
Company Option who does not elect to accept a Substituted Option, each
then outstanding Company Option will automatically be converted into
an option ("Assumed Option") to acquire the Merger Consideration
(including the cash payment to be made pursuant to Section 2.2(d) in
lieu of a fraction of a Parent Common Share), and the per share
exercise price shall be appropriately adjusted, as if such Company
Option had been exercised immediately prior to the Effective Time.
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(iv) Except as provided above, the terms and conditions of the
Substituted Options and the Assumed Options shall be the same as the
terms of the Company Options and the existing individual agreements
with the holders thereof.
(g) If the Effective Time occurs prior to the payment of 2001 annual
bonuses to employees as provided in Section 5.1(b)(xi), the Surviving
Corporation shall pay such bonuses as set forth on a schedule delivered by
Company to Parent prior to Closing. The aggregate amount of 2001 annual bonuses
set forth on such schedule shall not exceed $3.4 million multiplied by (A) the
quotient of the number of days of calendar 2001 elapsed prior to the Effective
Time divided by (B) 365. Bonuses set forth on the schedule shall be paid by the
Surviving Corporation to employees who are parties to CIC Agreements (as defined
in Section 6.10(a) hereof) on the Closing Date. All other employees listed on
the schedule who do not prior thereto voluntarily terminate employment with the
Surviving Corporation or who are not terminated by the Surviving Corporation for
cause shall be paid their 2001 annual bonuses on or before February 15, 2002.
Section 6.11 Reorganization. From and after the date hereof and until the
Effective Time, none of Parent, the Company or any of their respective
Subsidiaries shall knowingly (i) take any action, or fail to take any reasonable
action, as a result of which the Merger would fail to qualify as a
reorganization within the meaning of section 368(a) of the Code or (ii) enter
into any contract, agreement, commitment or arrangement to take or fail to take
any such action. Following the Effective Time, Parent shall not knowingly take
any action or knowingly cause any action to be taken which would cause the
Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code.
Section 6.12 Public Statements. The parties will consult with each other
and will mutually agree upon any press releases or public announcements
pertaining to this Agreement or the transactions contemplated hereby and shall
not issue any such press releases or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange.
Section 6.13 Fees and Expenses. Except as set forth in Section 8.5, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
Section 6.14 Company Name and Trademarks. As soon as practicable after the
Effective Time, the Surviving Corporation shall cease using the Company's name
and logo in any manner. At the Effective Time, the Company shall assign its
rights to such name to S. A. Louis Dreyfus et Cie or one or more of its
affiliates subject to the terms of a licensing agreement permitting the
Surviving Corporation to use the name and trademark for a limited transitional
period not to exceed one year.
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ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) The Company Requisite Vote shall have been obtained.
(b) The waiting period applicable to the consummation of the Merger
shall have expired or been terminated under the HSR Act.
(c) None of the parties hereto shall be subject to any decree, order
or injunction of a court of competent jurisdiction, U.S. or foreign, which
prohibits the consummation of the Merger; and no statute, rule or regulation
shall have been enacted by any governmental authority of competent jurisdiction
which prohibits or makes unlawful the consummation of the Merger.
(d) The Registration Statement shall have become effective and no stop
order with respect thereto shall be in effect and no proceedings for that
purpose shall have been commenced or threatened by the SEC.
(e) The Parent Common Shares to be issued pursuant to the Merger shall
have been authorized for listing on the New York Stock Exchange, subject to
official notice of issuance.
Section 7.2 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger shall be subject to the
fulfillment or waiver by the Company at or prior to the Closing Date of the
following conditions:
(a) (i) Parent shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date and (ii) the representations and warranties of
Parent and Sub contained in this Agreement and in any document delivered in
connection herewith (A) to the extent qualified by Parent Material Adverse
Effect or any other materiality qualification shall be true and correct and (B)
to the extent not qualified by Parent Material Adverse Effect or any other
materiality qualification shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date (except
for representations and warranties made as of a specified date, which need be
true and correct only as of the specified date) ; provided that the condition
--------
set forth in clause (ii) shall be deemed to have been satisfied unless such
breaches of representations and warranties (without regard to Parent Material
Adverse Effect or any other materiality qualification or threshold),
individually or in the aggregate, would reasonably be expected to have a Parent
Material Adverse Effect; and the Company shall have received a certificate of
Parent, executed on its behalf by its President or a Senior Vice President of
Parent, dated the Closing Date, certifying to such effect.
(b) The Company shall have received the opinion of Crowe & Dunlevy,
counsel to the Company, in form and substance reasonably satisfactory to the
Company, on the
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basis of certain facts, representations and assumptions set forth in such
opinion, dated the Closing Date, a copy of which shall be furnished to Parent,
to the effect that (i) the Merger will qualify for United States federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code and Parent, Sub and the Company will be "parties" to a reorganization
within the meaning of Section 368(b) of the Code, (ii) no gain or loss will be
recognized by the Company in connection with the Merger and (iii) a shareholder
of the Company that is a United States Person (within the meaning of Section
7701(a)(30) of the Code) and that receives both (A) Parent Common Shares and (B)
cash in the Merger in exchange for Company Shares will recognize realized gain
only to the extent of the lesser of such realized gain or the cash received in
the exchange (but will not recognize any loss). In rendering such opinion, such
counsel shall be entitled to receive and rely upon representations of officers
of the Company, Sub and Parent as to such matters as such counsel may reasonably
request.
Section 7.3 Conditions to Obligation of Parent to Effect the Merger. The
obligations of Parent and Sub to effect the Merger shall be subject to the
fulfillment or waiver by Parent at or prior to the Closing Date of the following
conditions:
(a) (i) The Company shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date and (ii) the representations and warranties of the
Company contained in this Agreement and in any document delivered in connection
herewith (A) to the extent qualified by Company Material Adverse Effect or any
other materiality qualification shall be true and correct and (B) to the extent
not qualified by Company Material Adverse Effect or any other materiality
qualification shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date); provided that the condition set
--------
forth in clause (ii) shall be deemed to have been satisfied unless such breaches
of representations and warranties (without regard to Company Material Adverse
Effect or any other materiality qualification or threshold), individually or in
the aggregate, would reasonably be expected to have a Company Material Adverse
Effect; and Parent shall have received a certificate of the Company, executed on
its behalf by its President or a Vice President of the Company, dated the
Closing Date, certifying to such effect.
(b) Parent shall have received the opinion of McGuireWoods LLP,
counsel to Parent, in form and substance reasonably satisfactory to Parent, on
the basis of certain facts, representations and assumptions set forth in such
opinion, dated the Closing Date, a copy of which will be furnished to the
Company, to the effect that (i) the Merger will qualify for United States
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and Parent, Sub and the Company will be "parties" to a
reorganization within the meaning of Section 368(b) of the Code and (ii) no gain
or loss will be recognized in connection with the Merger by any corporation
which is a party to the reorganization. In rendering such opinion, such counsel
shall be entitled to receive and rely upon representations of officers of the
Company, Sub and Parent as to such matters as such counsel may reasonably
request.
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ARTICLE VIII
TERMINATION
Section 8.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Effective Time by the mutual written consent of the
Company and Parent.
Section 8.2 Termination by Parent or the Company. This Agreement may be
terminated by action of the board of directors of the Company (upon payment of
the Termination Amount (as defined below), if payable pursuant to Section
8.5(a)) or by action of the board of directors of Parent, if:
(i) the Merger shall not have been consummated by March 31, 2002;
provided that the right to terminate this Agreement pursuant to this
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clause (i) shall not be available to any party whose failure to
perform or observe in any material respect any of its obligations
under this Agreement in any manner shall have been the cause of, or
resulted in, the failure of the Merger to occur on or before such
date; provided further that such time period shall be tolled for any
-------- -------
period during which any party shall be subject to a non-final order,
decree, ruling or action restraining, enjoining or otherwise
prohibiting the consummation of the Merger; or
(ii) if the Company Requisite Vote shall not have been obtained
at the Shareholders' Meeting (including adjournment and postponement
thereof); or
(iii) a United States federal or state court of competent
jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
non-appealable; provided that the party seeking to terminate this
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Agreement pursuant to this clause (iii) shall have complied with
Section 6.3 and with respect to other matters not covered by Section
6.3 shall have used its reasonable best efforts to remove such
injunction, order or decree.
Section 8.3 Termination by the Company. This Agreement may be terminated
prior to the Effective Time, by action of the board of directors of the Company
after consultation with its legal advisors, if:
(i) prior to the Shareholders' Meeting, the Company receives a
Superior Proposal as described in Section 6.1(a) and resolves to
accept such Superior Proposal, but only if the Company has acted in
all material respects in accordance with, and has otherwise complied
in all material respects with the terms of, Section 6.1, including the
notice provisions therein; provided that the Company has paid or
--------
concurrently pays Parent the sums required by Section 8.5(a) hereof;
or
(ii) (A) there has been a breach by Parent or Sub of any
representation, warranty, covenant or agreement set forth in this
Agreement or if any
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representation or warranty of Parent or Sub shall have become untrue,
in either case such that the conditions set forth in Section 7.2(a)
will not be satisfied at the Closing Date and (B) such breach is not
curable, or, if curable, is not cured within 30 days after written
notice of such breach is given to Parent by the Company; provided that
--------
the right to terminate this Agreement pursuant to this clause (ii)
shall not be available to the Company if it, at such time, is in
material breach of any representation, warranty, covenant or agreement
set forth in this Agreement such that the conditions set forth in
Section 7.3(a) will not be satisfied at the Closing Date.
Section 8.4 Termination by Parent. This Agreement may be terminated at any
time prior to the Effective Time, by action of the board of directors of Parent
after consultation with its legal advisors, if:
(i) the board of directors of the Company shall have withdrawn,
modified or changed, in a manner adverse to Parent, the board's
approval or recommendation of the Merger or recommended approval of a
Company Acquisition Proposal, or resolved to do any of the foregoing;
(ii) the Company shall have breached Section 6.1 in any material
respect, and Parent shall have been adversely affected thereby;
(iii) the Company shall have exempted for purposes of Section
1090.3 of the OGCA any acquisition of Company Shares by any person or
"group" (as defined in Section 13(d)(3) of the Exchange Act), other
than Parent or its affiliates; or
(iv) (A) there has been a breach by the Company of any
representation, warranty covenant or agreement set forth in this
Agreement or if any representation or warranty of the Company shall
have become untrue, in either case such that the conditions set forth
in Section 7.3(a) will not be satisfied at the Closing Date and (B)
such breach is not curable, or, if curable, is not cured within 30
days after written notice of such breach is given by Parent to the
Company; provided that the right to terminate this Agreement pursuant
--------
to this clause (iv) shall not be available to Parent if it, at such
time, is in material breach of any representation, warranty, covenant
or agreement set forth in this Agreement such that the conditions set
forth in Section 7.2(a) will not be satisfied at the Closing Date.
Section 8.5 Effect of Termination.
(a) If this Agreement is terminated (i) by the Company or Parent
pursuant to clause (i) or (ii) of Section 8.2 or clause (iv) of section 8.4 and
(A) (1) in the case of a termination pursuant to clause (i) of Section 8.2 or
clause (iv) of Section 8.4, such termination results from the breach by the
Company in a material respect of any of its material agreements or covenants set
forth in this Agreement and at the time of such breach, any person shall have
made a Company Acquisition Proposal that had become public and then remained
pending or shall
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have publicly announced and not withdrawn an intention (whether or not
conditional) to make a Company Acquisition Proposal, or (2) in the case of a
termination pursuant to clause (ii) of Section 8.2, at the time of the
Shareholders' Meeting, any person shall have made a Company Acquisition Proposal
that had become public and then remained pending or shall have publicly
announced and not withdrawn an intention (whether or not conditional) to make a
Company Acquisition Proposal, (B) Parent was not in material breach of this
Agreement, (C) the condition set forth in Section 7.1(a) was not satisfied at
the time of such termination, (D) the board of directors at no time withdrew,
modified or changed, in any manner adverse to Parent, the board's approval or
recommendation of the Merger or recommended approval of a Company Acquisition
Proposal, or resolved to do any of the foregoing and (E) within 12 months after
such termination the Company shall consummate or enter into a definitive
agreement which is ultimately consummated with the proponent of such Company
Acquisition Proposal or with another party pursuant to a proposal which is
superior to such proposal, (ii) by the Company pursuant to clause (i) of Section
8.3 or (iii) by Parent pursuant to clause (i), (ii) or (iii) of Section 8.4;
then, the Company shall pay Parent $70 million (the "Termination Amount") upon
termination of this Agreement. All payments shall be made in cash by wire
transfer to an account designated by Parent on (1) in the case of clause
8.5(a)(ii) the date of termination of this Agreement, (2) in the case of clause
8.5(a)(iii), the date which is the third business day following the date of
termination of this Agreement if this Agreement is terminated by Parent, and (3)
in the case of clause 8.5(a)(i), the date on which the Company Acquisition
Proposal referred to in clause (E) thereof is consummated. The Company
acknowledges that the agreements contained in this Section 8.5(a) are an
integral part of the transactions contemplated by this Agreement and constitute
liquidated damages and not a penalty, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails promptly
to pay any amount due pursuant to this Section 8.5(a), and, in order to obtain
such payment, Parent commences a suit which results in a judgment against the
Company for the payment set forth in this Section 8.5(a), the Company shall pay
to Parent its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on such amount from the date payment was
required to be made until the date such payment is actually made at the annual
prime lending rate of Citigroup, N.A. in effect from time to time from the date
such payment was required to be made, plus one percent (1%).
(b) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article VIII, all obligations of the parties
hereto shall terminate, except the obligations of the parties pursuant to this
Section 8.5 and Sections 3.21, 4.8, 6.13 and the provisions of the
Parent/Company Confidentiality Agreement and except for the provisions of
Article IX, provided that nothing herein shall relieve any party from any
--------
liability for any breach by such party of any of its covenants or agreements set
forth in this Agreement and all rights and remedies of such non-breaching party
under this Agreement in the case of such a breach, at law or in equity, shall be
preserved.
Section 8.6 Extension; Waiver. At any time prior to the Effective Time,
each party may by action taken by its board of directors, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party
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hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger;
provided that the agreements contained in Article II and in Sections 6.8, 6.9,
- --------
6.10, 6.11, 6.13 and 6.14 and this Article IX and the agreements delivered
pursuant to this Agreement shall survive the Merger, unless otherwise provided
herein.
Section 9.2 Notices. All notices required to be given hereunder shall be in
writing and shall be deemed to have been given if (i) delivered personally or by
documented courier or delivery service, (ii) transmitted by facsimile during
normal business hours or (iii) mailed by registered or certified mail (return
receipt requested and postage prepaid) to the following listed persons at the
addresses and facsimile numbers specified below, or to such other persons,
addresses or facsimile numbers as a party entitled to notice shall give, in the
manner hereinabove described, to the others entitled to notice:
(a) if to Parent or Sub:
Dominion Resources, Inc.
120 Tredegar Street
Richmond, Virginia 23219
Attention: James F. Stutts
Vice President and General Counsel
Facsimile No.: 804-819-2233
with a copy to:
McGuireWoods LLP
One James Center
Richmond, Virginia 23219
Facsimile: 804-775-1061
Attention: Leslie A. Grandis
(b) if to the Company:
Louis Dreyfus Natural Gas Corp.
14000 Quail Springs Parkway, Suite 600
Oklahoma City, Oklahoma 73114
Facsimile: 405-748-2789
Attention: Mark E. Monroe
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with a copy to:
Crowe & Dunlevy
1800 Mid-America Tower
Oklahoma City, Oklahoma 73102
Facsimile: 405-272-5238
Attention: Michael M. Stewart
If given personally or by documented courier or delivery service, or
transmitted by facsimile, a notice shall be deemed to have been given when it is
received. If given by mail, it shall be deemed to have been given on the third
business day following the day on which it was posted.
Section 9.3 Assignment; Binding Effect; Benefit. Except as provided in
Section 1.1 hereof, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except as provided in Section 6.9, notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
Section 9.4 Entire Agreement. This Agreement, the Gas Sale Agreement
between Louis Dreyfus Natural Gas Corp. and Dominion Exploration and Production,
Inc. dated as of the date of this Agreement, the Parent/Company Confidentiality
Agreement (other than the third paragraph thereof, which are hereby terminated
and of no further force or effect), the exhibits to this Agreement, the Company
Disclosure Letter and the Parent Disclosure Letter constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of this Agreement shall
be binding upon any party hereto unless made in writing and signed by all
parties hereto.
Section 9.5 Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their boards of directors, at any time
before or after approval of matters presented in connection with the Merger by
the shareholders of the Company, but after any such shareholder approval, no
amendment shall be made which by law requires the further approval of
shareholders of the Company without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 9.6 Governing Law. Except to the extent that the OGCA or the DGCL
governs this Agreement, this agreement shall be governed by and construed in
accordance with the laws of the State of New York regardless of laws that might
otherwise govern under applicable principles of conflicts of laws.
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Section 9.7 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
Section 9.8 Counterparts; Facsimile Transmission of Signatures. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, and delivered by means of facsimile
transmission or otherwise, each of which when so executed and delivered shall be
deemed to be an original and all of which when taken together shall constitute
but one and the same agreement. If any party hereto elects to execute and
deliver a counterpart signature page by means of facsimile transmission, it
shall deliver an original of such counterpart to each of the other parties
hereto within ten days of the date hereof, but in no event will the failure to
do so affect in any way the validity of the facsimile signature or its delivery.
Section 9.9 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
Section 9.10 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and words denoting any
gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa.
(b) The words "include", "includes" and "including" are not limiting.
(c) The phrase "to the knowledge of" and similar phrases relating to
knowledge of the Company or Parent, as the case may be, shall mean the actual
knowledge of its executive officers.
(d) "Material Adverse Effect" with respect to the Company or Parent
shall mean a material adverse effect on or change in (i) the business, assets
and liabilities (taken together) or financial condition of a party and its
Subsidiaries on a consolidated basis or (ii) the ability of the party to
consummate the transactions contemplated by this Agreement or fulfill the
conditions to closing set forth in Article VII; provided that (x) any adverse
--------
effect or change that is caused by or results from conditions affecting the
United States economy generally or the economy of any nation or region in which
the Company or Parent, as the case may be, or any of their Subsidiaries conducts
business on a consolidated basis, (y) any adverse effect or change that is
caused by or results from conditions generally affecting the industries
(including the natural gas industry) in which the Company or Parent, as the case
may be, conducts its business, including, without limitation, the price of
natural gas and (z) any adverse effect or change that is
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caused by or results from the announcement or pendency of this Agreement, the
Merger or the transactions contemplated hereby, shall not be taken into account
in determining whether there has been a "Material Adverse Effect" with respect
to the Company or Parent, as the case may be.
(e) "Person" or "person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or other entity or
organization.
(f) "Subsidiary" when used with respect to any person means any
person, whether incorporated or unincorporated, of which such person directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization (or 50% or more of its equity interests), or
any organization of which such party is a general partner.
Section 9.11 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
Section 9.12 Incorporation of Exhibits. The Company Disclosure Letter, the
Parent Disclosure Letter and all exhibits attached hereto and referred to herein
are hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
Section 9.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 9.14 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court with
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
Section 9.15 Obligation of Sub. Whenever this Agreement requires Sub (or
its successors) to take any action prior to the Effective Time, such requirement
shall be deemed to include an undertaking on the part of Parent to cause Sub to
take such action and a guarantee of the performance thereof.
[END OF PAGE]
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
DOMINION RESOURCES, INC.
By:
--------------------------------------
Name: Thos. E. Capps
Title: Chairman, President and
Chief Executive Officer
CONSOLIDATED NATURAL GAS COMPANY
By:
--------------------------------------
Name: Thos. E. Capps
Title: Chairman, President and
Chief Executive Officer
LOUIS DREYFUS NATURAL GAS CORP.
By:
--------------------------------------
Name: Mark E. Monroe
Title: President and Chief Executive Officer
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