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EXHIBIT 4.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
POGO PRODUCING COMPANY
AND
NORIC CORPORATION
AND THE
SHAREHOLDERS SIGNATORY HERETO
Dated as of November 19, 2000
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms....................................... 1
ARTICLE II
THE MERGER
SECTION 2.01. The Merger.................................................. 13
SECTION 2.02. Effective Time; Closing..................................... 13
SECTION 2.03. Effect of the Merger........................................ 13
SECTION 2.04. Certificate of Incorporation; Bylaws........................ 14
SECTION 2.05. Directors and Officers...................................... 14
SECTION 2.06. Purchaser's Stock Unchanged................................. 14
ARTICLE III
TREATMENT OF COMMON STOCK
SECTION 3.01. Treatment of Common Stock................................... 14
SECTION 3.02. Cancellation of Treasury Shares............................. 18
SECTION 3.03. Exchange Agent; Exchange Procedures......................... 18
SECTION 3.04. Transfer Books.............................................. 19
SECTION 3.05. No Fractional Share Certificates............................ 19
SECTION 3.06. Lost, Stolen or Destroyed Certificates...................... 20
SECTION 3.07. Termination of Exchange Fund................................ 20
SECTION 3.08. Certain Adjustments......................................... 20
SECTION 3.09. Restricted Securities....................................... 20
SECTION 3.10. Taking of Necessary Action; Further Action.................. 21
SECTION 3.11. Dissenters' Rights.......................................... 21
SECTION 3.12. Purchaser Price Adjustment.................................. 21
SECTION 3.13. Escrow...................................................... 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization, Authority and Qualification of the Company.... 23
SECTION 4.02. Capital Stock of the Company; Ownership of the Shares....... 23
SECTION 4.03. Company Subsidiaries........................................ 24
SECTION 4.04. Corporate Books and Records................................. 25
SECTION 4.05. No Conflict................................................. 25
SECTION 4.06. Governmental Consents and Approvals......................... 25
SECTION 4.07. Financial Information, Books and Records.................... 26
SECTION 4.08. No Undisclosed Liabilities.................................. 26
(ii)
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SECTION 4.09. Absence of Certain Changes, Events and Conditions........... 26
SECTION 4.10. Litigation.................................................. 27
SECTION 4.11. Compliance with Laws........................................ 27
SECTION 4.12. Material Contracts.......................................... 27
SECTION 4.13. Title to Property........................................... 29
SECTION 4.14. Intellectual Property....................................... 30
SECTION 4.15. Employee Benefit Matters.................................... 31
SECTION 4.16. Environmental Matters....................................... 32
SECTION 4.17. Reserve Reports............................................. 33
SECTION 4.18. Hedging..................................................... 33
SECTION 4.19. Taxes....................................................... 33
SECTION 4.20. Insurance................................................... 34
SECTION 4.21. Brokers..................................................... 34
SECTION 4.22. Tax Treatment............................................... 34
SECTION 4.23. Production and Pipeline Imbalances.......................... 34
SECTION 4.24. Equipment................................................... 35
SECTION 4.25. Operation of the Properties................................. 35
SECTION 4.26. Plugging and Abandonment.................................... 35
SECTION 4.27. No Parachute Payments....................................... 35
SECTION 4.28. Vote Required............................................... 35
SECTION 4.29. Voting Power of Significant Stockholders; Dissenting
Shares...................................................... 36
SECTION 4.30. Non-Energy Company Activity................................. 36
SECTION 4.31. Seismic Data................................................ 36
SECTION 4.32. Suspense Funds.............................................. 36
SECTION 4.33. Future Sales Contracts...................................... 36
SECTION 4.34. Holding Company; Investment Company......................... 36
SECTION 4.35. Federal Regulations......................................... 37
SECTION 4.36. Securities Act.............................................. 37
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 5.01. Organization and Authority of the Purchaser................. 37
SECTION 5.02. Certificate of Incorporation and Bylaws..................... 38
SECTION 5.03. Capitalization.............................................. 38
SECTION 5.04. Financing................................................... 38
SECTION 5.05. No Conflict................................................. 38
SECTION 5.06. Governmental Consents and Approvals......................... 39
SECTION 5.07. Litigation.................................................. 39
SECTION 5.08. Tax Treatment............................................... 39
SECTION 5.09. SEC Filings; Financial Statements........................... 39
SECTION 5.10. Compliance With Laws........................................ 40
SECTION 5.11. Taxes....................................................... 40
SECTION 5.12. Authorization and Issuance of Purchaser Common Stock........ 40
SECTION 5.13. Absence of Purchaser Material Adverse Effect................ 41
SECTION 5.14. Brokers..................................................... 41
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SECTION 5.15. Vote Required............................................... 41
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Conduct of Business Prior to the Closing.................... 41
SECTION 6.02. Access to Information....................................... 46
SECTION 6.03. Confidentiality............................................. 46
SECTION 6.04. Company Stockholders' Meeting and Voting.................... 46
SECTION 6.05. Purchaser Stockholders' Meeting............................. 47
SECTION 6.06. Regulatory and Other Authorizations; Notices and Consents... 47
SECTION 6.07. Notice of Certain Matters................................... 48
SECTION 6.08. Non-Accredited Investor Advisor............................. 48
SECTION 6.09. No Solicitation of Transactions............................. 48
SECTION 6.10. Registration................................................ 49
SECTION 6.11. Directors' and Officers' Indemnification and Insurance...... 50
SECTION 6.12. Plan of Reorganization...................................... 50
SECTION 6.13. Other Shareholders.......................................... 51
SECTION 6.14. Phantom Stock Plan and Severance Payments................... 51
SECTION 6.15. No Trading.................................................. 51
SECTION 6.16. Standstill and Voting Agreement............................. 52
ARTICLE VII
EMPLOYEE MATTERS
SECTION 7.01. Compensation and Benefits; Service Recognition.............. 52
ARTICLE VIII
TAX MATTERS
SECTION 8.01. Indemnity................................................... 53
SECTION 8.02. Tax Returns and Payments.................................... 54
SECTION 8.03. Refunds/Tax Benefits........................................ 54
SECTION 8.04. Contests.................................................... 56
SECTION 8.05. Cooperation and Exchange of Information..................... 56
SECTION 8.06. Conveyance Taxes............................................ 57
SECTION 8.07. Miscellaneous............................................... 57
ARTICLE IX
CONDITIONS TO CLOSING
SECTION 9.01. Conditions to the Obligations of Each Party................. 58
SECTION 9.02. Conditions to the Obligations of the Company................ 58
SECTION 9.03. Conditions to the Obligations of the Purchaser.............. 59
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ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnification of the Purchaser............................ 61
SECTION 10.02. Indemnification of the Shareholders......................... 61
SECTION 10.03. Notice and Defense of Third Party Claims.................... 61
SECTION 10.04. Limitations................................................. 62
SECTION 10.05. Tax Matters................................................. 63
SECTION 10.06. Tax Benefits; Insurance Proceeds............................ 63
SECTION 10.07. Escrow Funds and Shares..................................... 63
SECTION 10.08. Security; Limited Recourse.................................. 63
SECTION 10.09. Exclusive Remedies.......................................... 64
ARTICLE XI
TERMINATION AND WAIVER
SECTION 11.01. Termination................................................. 65
SECTION 11.02. Effect of Termination....................................... 66
SECTION 11.03. Waiver...................................................... 66
ARTICLE XII
SHAREHOLDER REPRESENTATIVE
SECTION 12.01. Designation................................................. 66
SECTION 12.02. Authority................................................... 66
SECTION 12.03. Reliance by Third Parties on the Shareholder
Representative's Authority.................................. 67
SECTION 12.04. Exculpation and Indemnification............................. 67
ARTICLE XIII
GENERAL PROVISIONS
SECTION 13.01. Survival of Representations and Warranties.................. 68
SECTION 13.02. Expenses.................................................... 68
SECTION 13.03. Notices..................................................... 68
SECTION 13.04. Public Announcements........................................ 69
SECTION 13.05. Headings.................................................... 69
SECTION 13.06. Severability................................................ 69
SECTION 13.07. Entire Agreement............................................ 70
SECTION 13.08. Assignment.................................................. 70
SECTION 13.09. Amendment................................................... 70
SECTION 13.10. Governing Law; Forum........................................ 70
SECTION 13.11. Counterparts................................................ 70
SECTION 13.12. Specific Performance........................................ 71
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Exhibits
6.13 -- Form of Joinder Agreement
9.02(d) -- Form of Registration Rights Agreement
9.02(e) -- Form of Standstill and Voting Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of November 19, 2000, among
POGO PRODUCING COMPANY, a Delaware corporation (the "Purchaser"), NORIC
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CORPORATION, a New York corporation (the "Company"), and the shareholders of the
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Company signatory hereto, constituting holders of two-thirds of the issued and
outstanding shares of the Company (the "Significant Shareholders") and any other
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shareholder of the Company that agrees to become a party to this Agreement
pursuant to the provisions hereof (each shareholder of the Company that is or
becomes a party to this Agreement, including the Significant Shareholders, is
referred to herein as a "Shareholder", and collectively, the "Shareholders").
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W I T N E S S E T H:
WHEREAS, the Purchaser and the Company believe that the acquisition of
the Company by the Purchaser and the merger of the Company with and into the
Purchaser (the "Merger") in accordance with the New York Business Corporation
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Law (the "BCL") and the Delaware General Corporation Law (the "DGCL") in the
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manner provided by, and subject to the terms and conditions of, this Agreement,
is desirable and in the best interests of their respective corporations and
shareholders;
WHEREAS, the Boards of Directors of the Purchaser and the Company have
each approved the Merger, upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Significant Shareholders have determined to vote their
shares in favor of the adoption of this Agreement and in favor of the
transactions contemplated hereby at a special meeting of the Company's
shareholders to be held pursuant to BCL Section 903; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
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parties intend, by executing this Agreement, to adopt a plan of reorganization
within the meaning of section 368(a) of the Code;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
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proceeding or investigation by or before any Governmental Authority.
"Adjustment" has the meaning specified in Section 8.03(c).
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"Adjustment Amount" has the meaning specified in Section 3.12(c).
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"Affiliate" means, with respect to any specified Person, any other
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Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" or "this Agreement" means this Agreement, dated as of the
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date hereof, among the Company, the Purchaser and the Significant
Shareholders (including the Exhibits hereto and the Disclosure Schedule)
and all amendments hereto made in accordance with the provisions of Section
13.09 and as supplemented by all Joinder Agreements executed pursuant to
Section 6.13.
"Associate" has the meaning specified in Rule 12b-2 promulgated under
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the Exchange Act.
"Average Parent Share Price" has the meaning specified in Section
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3.01(a).
"BCL" has the meaning specified in the recitals to this Agreement.
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"Business Day" means any day that is not a Saturday, a Sunday or other
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day on which banks are required or authorized by law to be closed in The
City of New York.
"Cash Election" has the meaning specified in Section 3.01(c).
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"Cash Election Number" has the meaning specified in Section 3.01(b).
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"Cash Election Shares" has the meaning specified in Section 3.01(d).
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"Cash Fraction" has the meaning specified in Section 3.01(d).
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"Certificate" or "Certificates" has the meaning specified in Section
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3.02(b).
"Closing" has the meaning specified in Section 2.02.
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"Closing Date" has the meaning specified in Section 2.02.
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"Code" has the meaning specified in the recitals to this Agreement.
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"Common Conversion Number" has the meaning specified in Section
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3.01(a).
"Company" has the meaning specified in the preamble to this Agreement.
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"Company Certificates" has the meaning specified in Section 3.01(g).
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"Company Common Stock" has the meaning specified in Section 3.01(a).
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"Company Long-Term Debt" means long-term indebtedness for borrowed
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money and the current portion of long-term indebtedness for borrowed money of
the Company and the Company Subsidiaries as of the Effective Time.
"Company Stockholder Vote" has the meaning specified in Section 4.28.
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"Company Stockholders' Meeting" has the meaning specified in Section
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6.04(a).
"Company Subsidiary" means any and all corporations, partnerships,
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joint ventures, associations, limited liability companies and other
entities controlled by the Company, directly or indirectly through one or
more intermediaries.
"Company's Indemnified Persons" has the meaning specified in Section
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10.02.
"Competing Transaction" has the meaning specified in Section 6.09(b).
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"Contest" has the meaning specified in Section 8.04(b).
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"Control" (including the terms "controlled by" and "under common
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control with"), with respect to the relationship between or among two or
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more Persons, means the possession, directly or indirectly, or as trustee
or executor, of the power to direct or cause the direction of the affairs
or management of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or otherwise, including,
without limitation, the ownership, directly or indirectly, of securities
having the power to elect a majority of the board of directors or similar
body governing the affairs of such Person.
"Defensible Title" has the meanings specified in Section 4.13(b)-(e).
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"Disclosure Schedule" means the Disclosure Schedule attached hereto,
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dated as of the date hereof, and forming a part of this Agreement.
"Dissenting Shares" has the meaning specified in Section 3.11(a).
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"Easements" means all easements, rights-of-way, licenses, permits,
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servitudes, surface leases, and similar assets, rights and interests in any
way appertaining, belonging, affixed, incidental or applicable to, or used
in connection with, the ownership of the Leases, the Wells, Fee Mineral
Interests or Other Real Property or the Operations of the Company or any
Company Subsidiary, including, without limitation, those described in
Section 4.13(c) of the Disclosure Schedule.
"Effective Time" has the meaning specified in Section 2.02.
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"Election Deadline" has the meaning specified in Section 3.01(k).
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"Encumbrance" means any security interest, pledge, mortgage, lien
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(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any
kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of
ownership.
"Environmental Laws" means the Comprehensive Environmental Response,
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Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq.; the Resource
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Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq.; the Federal
Water Pollution Control Act,
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33 U.S.C. (S) 1251 et seq.; the Clean Air Act, 42 U.S.C. (S) 7401 et seq.;
-- --- -- ---
the Hazardous Materials Transportation Act, 49 U.S.C. (S) 1471 et seq.; the
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Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601 through 2629; the Oil
Pollution Act, 33 U.S.C. (S) 2701 et seq.; the Emergency Planning and
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Community Right-to-Know Act, 42 U.S.C. (S) 11001 et seq.; the Safe Drinking
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Water Act, 42 U.S.C. (S)(S) 300f through 300j; the Occupational Safety and
Health Act of 1970; and any similar Law in effect on the date of this
Agreement relating to pollution or protection of the environment, health,
safety or natural resources, and arising from the use, handling,
transportation, storage, disposal, release or discharge of Hazardous
Materials.
"Equipment" means all equipment, fixtures, physical facilities, tank
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batteries, surface and subsurface machinery, inventory, spare parts,
supplies, tools, and other tangible personal property owned or leased by
the Company or any Company Subsidiary and other personal property of any
kind on or associated with the Operations of the Company or any Company
Subsidiary on the date hereof, including, without limitation, casing,
tubing, tubular goods, rods, pumping units and engines, Christmas trees,
derricks, platforms, separators, compressors, gun barrels, gathering lines
and systems, pipelines, flow lines, tanks, wellheads, production units,
platforms, related plants, gas and extraction plants, valves, meters,
heaters, dehydrators, and communications systems and equipment, which are
located on or connected with the Leases, the Easements or the Operations of
the Company or any Company Subsidiary.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"Escrow Agent" has the meaning specified in Section 3.13.
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"Escrow Agreement" has the meaning specified in Section 3.13.
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"Escrow Consideration" has the meaning specified in Section 3.13.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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and the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning specified in Section 3.03(a).
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"Exchange Fund" has the meaning specified in Section 3.03(a).
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"Fee Mineral Interests" means all of the record and beneficial right,
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title and interest of the Company and any Company Subsidiary in and to the
oil, gas and other minerals in and under the land described in Section
4.13(d) of the Disclosure Schedule.
"FERC" has the meaning specified in Section 4.35.
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"Financial Statements" has the meaning specified in Section 4.07(a).
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"Form of Election" has the meaning specified in Section 3.01(c).
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"Governmental Authority" means any United States federal, state, local
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or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or
arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
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decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Materials" means (a) petroleum and petroleum products, by-
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products or breakdown products, radioactive materials, including, without
limitation, naturally occurring radioactive materials, asbestos-containing
materials and polychlorinated biphenyls, and (b) other chemicals, materials
or substances defined or regulated as toxic or hazardous or as pollutants,
contaminants or waste under any applicable Environmental Law.
"Hedges" has the meaning specified in Section 4.18(b).
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
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1976, as amended, and the rules and regulations promulgated thereunder.
"Hydrocarbons" means crude oil, natural gas, casinghead gas,
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condensate, sulphur, natural gas liquids, plant products and other liquid
or gaseous hydrocarbons produced in association therewith, including,
without limitation, coalbed gas and carbon dioxide, and all other minerals
of every kind and character which may be covered by or included in the
Property.
"Indebtedness" means, with respect to any Person, (a) all indebtedness
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of such Person, whether or not contingent, for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables), (c) all obligations of such Person
evidenced by notes, bonds, debentures, repurchase and reverse repurchase
agreements or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement, in the event of
default, are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under leases that have been or should
be, in accordance with U.S. GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, and (g) all Indebtedness of others
referred to in clauses (a) through (f) above guaranteed by such Person.
"Indemnified Person" has the meaning specified in Section 10.03.
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"Indemnifying Person" has the meaning specified in Section 10.03.
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"Intellectual Property" has the meaning specified in Section 4.14.
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"Interim Financial Statements" has the meaning specified in Section
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4.07(a).
"IRS" means the Internal Revenue Service of the United States.
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"Joinder Agreement" has the meaning specified in Section 6.13(a).
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"June 30 Balance Sheet" has the meaning specified in Section 4.07(a).
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"Knowledge", with respect to the Company, means such facts,
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information and matters that are actually known by any Senior Officer.
"Law" means any federal, state, local or foreign law, statute,
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ordinance, regulation, rule, code, decree, other requirement or rule of
law.
"Leases" means fee mineral interests other than Fee Mineral Interests
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as that term is defined herein, oil, gas and mineral leasehold interests
and other leasehold interests, subleases, mineral servitudes, licenses,
concessions, working interests, farmout or farmin rights, royalties,
overriding royalties or other non-working or carried interests, operating
rights or other rights and interests described or referred to in Section
4.13(b) of the Disclosure Schedule (other than Permitted Encumbrances),
including, without limitation, all right, title, and interest of the
Company and any Company Subsidiary in all pooled or unitized areas in which
the Leases are included, to the extent that such rights and interests arise
from and are associated with the Leases or Wells, and all right, title and
interest owned by the Company and any Company Subsidiary in, under or
derived from all or any presently existing unitization, pooling, operating,
communitization or other agreements, whether voluntary or involuntary, or
formed under orders, regulations, rules or declaration or other official
acts of any Governmental Authority.
"Liabilities" means any and all debts, liabilities and obligations,
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whether accrued or fixed, absolute or contingent, matured or unmatured, or
determined or determinable, including, without limitation, those arising
under any Law, Action or Governmental Order, and those arising under any
contract or agreement.
"Loss" means any and all Liabilities, losses, damages, claims, costs
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and expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) actually suffered or
incurred by a Person.
"Loss Ceiling" has the meaning specified in Section 10.04(e).
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"Material Adverse Effect" means any change in or effect on the Company
-----------------------
or any Company Subsidiary that, individually or in the aggregate with any
other changes in or effects on the Company or any Company Subsidiary, is
materially adverse to the financial condition, business or results of
operations of the Company and the Company Subsidiaries, taken as a whole or
is materially adverse to the financial condition, business or results of
operations of North Central, taken as a whole; provided, however, that
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"Material Adverse Effect" shall not be deemed to include any changes or
effects arising out of (a) changes in Law or interpretations thereof by
Governmental Authorities, (b) changes in U.S. GAAP or in the generally
applicable interpretation thereof, (c) events or conditions generally
affecting the energy industry (including, without limitation, any
reclassification or recalculation of reserves in the ordinary course of
business, unsuccessful drilling efforts or changes in the price of
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Hydrocarbons) or arising from changes in general business, economic or
political conditions or (d) changes resulting from entering into this
Agreement.
"Material Contracts" has the meaning specified in Section 4.12(a).
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"Maximum Amount" has the meaning specified in Section 10.04(b).
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"Merger" has the meaning specified in the recitals to this Agreement.
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"Merger Consideration" has the meaning specified in Section 3.03(b).
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"Merger S-4" has the meaning specified in Section 6.10.
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"Mixed Election" has the meaning specified in Section 3.01(c).
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"NCOC" means North Central Oil Corporation, a Delaware corporation.
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"Net Revenue Interest" means an overall interest in Hydrocarbons
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produced from or attributable to the Leases and Wells, after deducting all
lessors' royalties, overriding royalties, production payments, net profit
interests, reversionary interests, and other interests or burdens on or
that are measured by or are payable out of the production of Hydrocarbons
produced therefrom or the proceeds realized from the sale or other
disposition thereof.
"NGA" has the meaning specified in Section 4.35.
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"Non-Election" has the meaning specified in Section 3.01(c).
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"Non-Election Fraction" has the meaning specified in Section 3.01(g).
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"Non-Election Shares" has the meaning specified in Section 3.01(d).
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"Non-Energy Company Subsidiaries" means any Company Subsidiaries other
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than North Central.
"North Central" means NCOC and its subsidiary, NCO Services, Inc., a
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subsidiary of the Company.
"NORIC Cash" means the cash and cash equivalents held by the Company
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and the Non-Energy Company Subsidiaries as of the Effective Time.
"Operations" means all oil and gas exploration and all operations
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related thereto, including, without limitation, (a) the acquisition,
purchase, sale, development, operation, maintenance and abandonment of oil,
gas and mineral leases and related interests, (b) the drilling, reworking,
production, purchase, sale, transportation, storage, processing, treating,
manufacture and disposal of, or for, oil, gas, natural gas liquids, and
other hydrocarbon gases and liquids, and associated by-products and wastes,
and (c) the acquisition, construction, installation, maintenance and
operation of related
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plants, platforms, pipelines, gathering lines, compressors, facilities,
storage facilities and equipment.
"Other Real Property" means the real property described and identified
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in Section 4.13(e) of the Disclosure Schedule.
"Paying Agent" has the meaning specified in Section 3.01(i).
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"Per Share Cash Amount" has the meaning specified in Section 3.01(a).
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"Permitted Encumbrances" means such of the following as to which no
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enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) liens for taxes, assessments and governmental
charges or levies not yet due and payable; (b) Encumbrances imposed by Law,
such as materialmen's, mechanics', carriers', workmen's and repairmen's
liens and other similar liens arising in the ordinary course of business;
(c) pledges or deposits to secure obligations under workers' compensation
laws or similar legislation or to secure public or statutory obligations;
(d) minor survey exceptions, reciprocal easement agreements and other
customary encumbrances on title to real property that do not, individually
or in the aggregate, materially adversely affect the value, operation or
use of property subject thereto for its current and anticipated purposes;
(e) lessor's royalties, overriding royalties, nonparticipating royalties,
net profits interests, carried interests, production payments, reversionary
interests, and other burdens, if the net cumulative effect of such burdens
does not operate to reduce the Net Revenue Interest of the Company or the
Company Subsidiary, as applicable, in any Property to an amount less than
the Net Revenue Interest for such Property set forth on Section 4.13(b) of
the Disclosure Schedule, and does not obligate the Company or the Company
Subsidiary, as applicable, to bear costs and expenses relating to the
maintenance, development, and operation of any Property in a proportion
greater or less than the Working Interest of the Company or the Company
Subsidiary, as applicable, for such Property as set forth on Section
4.13(b) of the Disclosure Schedule (unless the actual Net Revenue Interest
for such Property is greater or less than the Net Revenue Interest set
forth on Section 4.13(b) of the Disclosure Schedule in the same proportion
as such costs and expenses required to be borne is greater or less than
such Working Interest); (f) easements, rights-of-way, servitudes, permits,
licenses, surface leases, and other rights in respect of surface
operations, pipelines, grazing, logging, canals, ditches, reservoirs or the
like; conditions, covenants or other restrictions, and easements for
streets, alleys, highways, pipelines, telephone lines, power lines,
railways, and other easements and rights-of-way on, over, or in respect of
any Property which will not materially interfere with the operation or use
of any of the affected Properties; (g) farmout and farmin agreements,
participation agreements, joint operating agreements, division orders,
pooling agreements, unitization orders or agreements, and Hydrocarbons
sales agreements entered into in the ordinary course of business to the
extent that such orders and agreements do not operate to reduce the Net
Revenue Interest of the Company or the Company Subsidiary, as applicable,
in any Property to an amount greater or less than the Net Revenue Interest
for such Property set forth on Section 4.13(b) of the Disclosure Schedule,
and do not obligate the Company or the Company Subsidiary to bear costs and
expenses relating to
8
15
the maintenance, development, and operation of any Property in a proportion
greater or less than the Working Interest of the Company or the Company
Subsidiary, as applicable, for such Property as set forth on Section
4.13(b) of the Disclosure Schedule (unless the actual Net Revenue Interest
for such Property is greater or less than the Net Revenue Interest set
forth on Section 4.13(b) of the Disclosure Schedule in the same proportion
as such costs and expenses required to be borne is greater or less than
such Working Interest); (h) calls on production, in effect as of the date
hereof, which entitle the Company or the Company Subsidiary, as the case
may be, to receive a current market price for such production; (i) all
liens, contracts, agreements, instruments, obligations, defects, and
irregularities affecting the Properties that, individually, or in the
aggregate, are not such as to materially and adversely interfere with the
operation or use, if any, of Properties, do not prevent the Company or the
Company Subsidiary, as applicable, from receiving the proceeds of
production from any of the Properties, do not reduce the Net Revenue
Interest of the Company or the Company Subsidiary, as applicable, for such
Property below that set forth on Section 4.13(b) of the Disclosure
Schedule, and do not obligate the Company or the Company Subsidiary to bear
costs and expenses relating to the maintenance, development, and operation
of any Properties in an amount greater than the Working Interest of the
Company or the Company Subsidiary, as applicable, for such Property as set
forth on Section 4.13(b) of the Disclosure Schedule (unless the actual Net
Revenue Interest for such Property is greater than the Net Revenue Interest
set forth on Section 4.13(b) of the Disclosure Schedule in the same
proportion as any increase in such Working Interest); (j) any liens created
by Law or reserved in oil, gas, and/or mineral leases for royalty, bonus,
or rental, or securing compliance with the terms of such leases; (k) all
agreements, instruments, documents, liens, Actions and other matters
described or referred to in the Disclosure Schedule or which are waived by
Purchaser; (l) traditional rights of reassignment requiring notice and/or
the reassignment of a leasehold interest to the holders of such
reassignment rights prior to surrendering or releasing such leasehold
interest or operating right; (m) rights reserved to or vested in any
Governmental Authority to control or regulate any Property in any manner,
and (n) any defect, irregularity, deficiencies in title, or other matter
that a reasonable and prudent operator, experienced and knowledgeable in
the domestic oil and gas business, would not consider a material impairment
of the Company's or the Company Subsidiary's title in such Property.
"Person" means any individual, partnership, corporation, limited
------
liability company, trust, incorporated or unincorporated organization or
other legal entity of any kind.
"Phantom Share Plan" means the North Central Oil Corporation Phantom
------------------
Share Plan (amended and restated, effective as of May 1, 1997), as amended.
"Plans" has the meaning specified in Section 4.15(a).
-----
"Prior Period Tax Decrease" has the meaning specified in Section
-------------------------
8.03(c).
"Prior Period Tax Increase" has the meaning specified in Section
-------------------------
8.03(c).
9
16
"Private Placement" has the meaning specified in Section 6.10.
-----------------
"Pro Rata Share" has the meaning specified in Section 10.04(c).
--------------
"Property" or "Properties" mean the Leases, Wells, Easements,
-------- ----------
Equipment, Other Real Property and Fee Mineral Interests.
"Proxy Statement" has the meaning specified in Section 6.05(a).
---------------
"Purchaser" has the meaning specified in the preamble to this
---------
Agreement.
"Purchaser Certificates" has the meaning specified in Section 3.03(a).
----------------------
"Purchaser Common Stock" has the meaning specified in Section 3.01(a).
----------------------
"Purchaser Material Adverse Effect" means any change in or effect on
---------------------------------
the Purchaser that, individually or in the aggregate with any other changes
in or effects on the Purchaser, is materially adverse to the financial
condition, business or results of operations of the Purchaser and its
subsidiaries, taken as a whole; provided, however, that "Purchaser Material
-------- -------
Adverse Effect" shall not be deemed to include any changes or effects
arising out of (a) changes in Law or interpretations thereof by
Governmental Authorities, (b) changes in U.S. GAAP or in the generally
applicable interpretation thereof, (c) events or conditions generally
affecting the energy industry (including, without limitation, any
reclassification or recalculation of reserves in the ordinary course of
business, unsuccessful drilling efforts or changes in the price of
Hydrocarbons) or arising from changes in general business, economic or
political conditions or (d) changes resulting from entering into this
Agreement.
"Purchaser Preferred Stock" has the meaning specified in Section 5.03.
-------------------------
"Purchaser SEC Reports" has the meaning specified in Section 5.09(a).
---------------------
"Purchaser Stock Issuance" has the meaning specified in Section
------------------------
6.05(a).
"Purchaser Stockholders' Meeting" has the meaning specified in Section
-------------------------------
6.05(a).
"Purchaser Tax Periods" has the meaning specified in Section 8.01(a).
---------------------
"Purchaser Tax Returns" has the meaning specified in Section 5.11.
---------------------
"Purchaser's Indemnified Persons" has the meaning specified in Section
-------------------------------
10.01.
"Registration Rights Agreement" has the meaning specified in Section
-----------------------------
9.02(d).
"Representatives" has the meaning specified in Section 6.02.
---------------
"Reserve Report" has the meaning specified in Section 4.17(a).
--------------
10
17
"Retention Bonus Plan" means the Retention Bonus Agreements entered
--------------------
into by and between certain employees of North Central.
"Rights Agreement" has the meaning specified in Section 3.01(m).
----------------
"SEC" means the United States Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Security" has the meaning specified in Section 10.08(a).
--------
"Seismic Data" has the meaning specified in Section 4.31.
------------
"Senior Officers" means Michael Becci, B.W. Beckham IV, William E.
---------------
Deupree, Robert Kiley, Mark Rosenbaum, James A. Winne III, Randall K.
Sadler, Michael Weissman, Doug Cohen, Tom Antoshak and Gary M. DeGrange.
"Severance Agreements" means the individual Change in Control
--------------------
Severance Payment Agreements dated June 1, 2000 and letter agreements dated
November 10, 1998 entered into by and between North Central and certain of
its officers.
"Severance Plan" means the Severance Pay Plan for Employees of North
--------------
Central, as amended.
"Shareholder Representative" has the meaning specified in Section
--------------------------
12.01.
"Shareholder Tax Periods" has the meaning specified in Section
-----------------------
8.01(a).
"Shareholders" has the meaning specified in the preamble to this
------------
Agreement.
"Shareholders' List" has the meaning specified in Section 4.02(b).
------------------
"Shares" has the meaning specified in Section 3.01(a).
------
"Significant Shareholders" means the persons specified in the
------------------------
Preamble.
"Standstill and Voting Agreement" has the meaning specified in Section
-------------------------------
9.02(e).
"Stock Election" has the meaning specified in Section 3.01(c).
--------------
"Stock Election Number" has the meaning specified in Section 3.01(b).
---------------------
"Stock Election Shares" has the meaning specified in Section 3.01(d).
---------------------
"Stock Fraction" has the meaning specified in Section 3.01(e).
--------------
"Stock Representative" has the meaning specified in Section 3.01(c).
--------------------
11
18
"Surviving Corporation" has the meaning specified in Section 2.01.
---------------------
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
--- -----
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added, or gains taxes; license, registration and documentation fees;
and customs duties, tariffs, and similar charges.
"Tax Asset" has the meaning specified in Section 8.03(b).
---------
"Tax Authority" means the IRS and any other domestic or foreign
-------------
Governmental Authority responsible for the administration of Taxes.
"Tax Returns" has the meaning specified in Section 4.19.
-----------
"Third Party Provisions" has the meaning specified in Section 13.08.
----------------------
"Transmittal Letter" means the letter of transmittal pursuant to which
------------------
holders of Company Common Stock shall (a) transfer their shares of Company
Common Stock to the Exchange Agent after the Effective Time, (b) confirm
that they have appointed a "Purchaser's Representative," as such term is
used in Regulation D promulgated under the Securities Act, if applicable,
or affirm that they are "Accredited Investors," as defined in Regulation D
and (c) acknowledge their investment intent with respect to shares of
Purchaser Common Stock and other matters arising under Regulation D.
"Unpaid Company Transaction Fees" means the fees and expenses incurred
-------------------------------
by the Company and the Company Subsidiaries for investment banking, legal,
engineering and other professional services not accrued on the consolidated
balance sheet of North Central dated September 30, 2000 or the consolidated
balance sheet of the Company dated June 30, 2000 included in the Interim
Financial Statements, in connection with the Merger and this Agreement,
which have not been paid in full prior to the Effective Time.
"Unpaid Severance, Retention and Phantom Share Costs" means an amount
---------------------------------------------------
equal to the sum of all amounts payable or which may become payable,
arising out of, related to or in connection with the Merger under the
Phantom Share Plan, the Severance Plan, the Severance Agreements and the
Retention Bonus Plan, which have not been paid in full prior to the
Effective Time.
"U.S. GAAP" means United States generally accepted accounting
---------
principles and practices as in effect from time to time and applied
consistently throughout the periods involved.
12
19
"Wells" means those oil, condensate or natural gas wells (whether
-----
producing, not producing, abandoned or temporarily abandoned), water source
wells, and water and other types of injection or disposal wells and systems
located on the Leases, including, without limitation, the wells described
and identified in Section 4.13(b) of the Disclosure Schedule.
"Working Interests" means that share of all of the costs, expenses,
-----------------
burdens and obligations of any type or nature attributable to the Company's
or the Company Subsidiaries', as applicable, interest in any Lease or Well.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms of this Agreement and
----------
subject to the conditions set forth in Article IX, and in accordance with the
BCL and the DGCL, at the Effective Time, the Company shall be merged with and
into the Purchaser. As a result of the Merger, the separate corporate existence
of the Company shall cease and the Purchaser shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation").
---------------------
SECTION 2.02. Effective Time; Closing. As promptly as practicable and
-----------------------
in no event later than the fifth Business Day or such other day as may be agreed
in writing by each of the parties hereto (such date being the "Closing Date")
------------
following the satisfaction or, if permissible, waiver of the conditions set
forth in Article IX, the parties hereto shall cause the Merger to be consummated
(a) by filing a certificate of merger with the New York Secretary of State in
such form as required by, and executed in accordance with, the relevant
provisions of the BCL and (b) a certificate of merger with Delaware Secretary of
State in such form as required by, and executed in accordance with, the relevant
provisions of the DGCL. The "Effective Time" of the Merger, as that term is used
--------------
in this Agreement, shall mean the date on which the certificates of merger are
filed with the New York Secretary of State and the Delaware Secretary of State
with respect to the Merger (or such later time as may be agreed in writing by
each of the parties hereto and specified in the certificates of merger).
Immediately prior to the filing of the certificates of merger, the closing (the
"Closing") will be held at the offices of Shearman & Sterling, 599 Lexington
-------
Avenue, New York, NY 10022 (or such other place as the parties may agree) to
confirm the satisfaction or waiver of the conditions set forth in Article IX.
SECTION 2.03. Effect of the Merger. At the Effective Time, the effect
--------------------
of the Merger shall be as provided in the applicable provisions of the BCL and
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and the Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of the Company and the Purchaser shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
13
20
SECTION 2.04. Certificate of Incorporation; Bylaws. At the Effective
------------------------------------
Time, the Restated Certificate of Incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Law and such Certificate of Incorporation. At the Effective Time, the Bylaws
of the Purchaser, as in effect immediately prior to the Effective Time, shall be
the Bylaws of the Surviving Corporation until thereafter amended as provided by
Law, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
SECTION 2.05. Directors and Officers. (a) The directors of the
----------------------
Purchaser immediately prior to the Effective Time shall continue as the
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and Bylaws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified.
(b) The officers of the Purchaser immediately prior to the Effective
Time shall continue as the officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
SECTION 2.06. Purchaser's Stock Unchanged. Each share of Purchaser
---------------------------
Common Stock and each share of each other class of stock of Purchaser
outstanding immediately prior to the Effective Time shall be unchanged by virtue
of the Merger and remain outstanding. Each share of Purchaser Common Stock held
in the Purchaser's treasury immediately prior to the Effective Time shall be
unchanged by virtue of the Merger and shall remain a share held in the
Purchaser's treasury.
ARTICLE III
TREATMENT OF COMMON STOCK
SECTION 3.01. Treatment of Common Stock. At the Effective Time:
-------------------------
(a) Subject to Section 3.12, each share of voting and non-voting
common stock (the "Shares"), par value $0.01 per share of the Company
------
("Company Common Stock"), issued and outstanding immediately prior to the
--------------------
Effective Time, other than those shares of Company Common Stock to be
cancelled pursuant to Section 3.02, shall forthwith cease to exist and
shall be converted into the right to receive: (i) a number of validly
issued, fully paid and nonassessable shares of common stock of the
Purchaser, par value $1.00 per share ("Purchaser Common Stock"), equal to:
----------------------
(x) if the Average Parent Share Price is less than $22.25, 322.174; (y) if
the Average Parent Share Price is at least $22.25, but less than $27.25,
the result obtained by dividing $7,168.38 by the Average Parent Share Price
and rounding the result to the nearest one-thousandth of a Parent Share;
and (z) if the Average Parent Share Price is equal to or greater than
$27.25, 263.059 Parent Shares (such number, the "Common Conversion
-----------------
Number"), or (ii) $7,168.38 in cash, without interest (the "Per Share Cash
------ --------------
Amount"), or (iii) a combination of shares of Purchaser Common Stock and
------
cash, determined in accordance with Sections 3.01(d), 3.01(e), 3.01(f) and
3.01(g). The "Average Parent Share Price"
--------------------------
14
21
means the average, over the 20 consecutive trading days ending on the
trading day which is five days prior to the Closing Date, of the mean
between the high and low sales prices per share of Purchaser Common Stock
on the New York Stock Exchange, regular way on each such date. Those
certificates previously evidencing Shares shall be exchanged for (i)
certificates evidencing whole shares of Purchaser Common Stock issued in
consideration therefor, (ii) the Per Share Cash Amount multiplied by the
number of shares previously evidenced by the canceled certificate or (iii)
a combination of clauses (i) and (ii), in each case in accordance with the
allocation procedures of this Section 3.01 and upon the surrender of the
certificates in accordance with the provisions of Section 3.03, without
interest.
(b) The aggregate number of shares of Company Common Stock that will
be converted into the right to receive Purchaser Common Stock in the Merger
will be 43,943 (such amount being equal to 50% of the shares of Company
Common Stock issued and outstanding immediately prior to the Effective
Time) (the "Stock Election Number"). The aggregate number of shares of
---------------------
Company Common Stock that will be converted into the right to receive cash
in the Merger will be 43,943 (such amount being equal to 50% of the shares
of Company Common Stock issued and outstanding immediately prior to the
Effective Time) (the "Cash Election Number"). In the event that there are
--------------------
Dissenting Shares and the holders of such Dissenting Shares do not, prior
to the Effective Time, withdraw notice of election to dissent, vote in
favor of the Merger or otherwise lose their rights to appraisal, the Cash
Election Number shall be reduced by an amount equal to twice the number of
Dissenting Shares and the Stock Election Number shall be increased by the
same amount, provided, however that in no such event shall the Cash
-------- -------
Election Number be reduced by more than 8,789.
(c) Subject to the allocation and election procedures set forth in
this Section 3.01, each record holder, immediately prior to the Effective
Time, of Shares will be entitled (i) to elect to receive cash for all of
the Shares (a "Cash Election"), (ii) to elect to receive shares of
-------------
Purchaser Common Stock for all of the Shares (a "Stock Election"), (iii) to
--------------
elect to receive shares of Purchaser Common Stock for part of the holder's
Shares and cash for the remaining part of the holder's Shares (a "Mixed
-----
Election"), or (iv) to indicate that the record holder has no preference as
--------
to the receipt of cash or Purchaser Common Stock for the shares (a "Non-
---
Election"). All elections shall be made on a form designed for that purpose
--------
(a "Form of Election"). A holder of record of Shares who holds Shares as
----------------
trustee, nominee, or in another representative capacity (a "Stock
-----
Representative"), may submit multiple Forms of Election, provided that the
-------------- --------
Stock Representative certifies that each Form of Election covers all the
Shares held by the Stock Representative for a particular beneficial owner.
(d) If the aggregate number of Shares covered by Cash Elections (the "Cash
----
Election Shares") exceeds the Cash Election Number, all Shares covered by
---------------
Stock Elections (the "Stock Election Shares") and all Shares covered by
---------------------
Non-Elections (the "Non-Election Shares") shall be converted into the right
-------------------
to receive shares of Purchaser Common Stock, and the Cash Election Shares
shall be converted into the right to receive shares of Purchaser Common
Stock and cash in the following manner: each Cash Election Share shall be
converted into the right to receive (i) cash equal to the
15
22
product of (A) the Per Share Cash Amount and (B) a fraction (the "Cash
----
Fraction") the numerator of which shall be the Cash Election Number and the
--------
denominator of which shall be the total number of Cash Election Shares, and
(ii) a number of shares of Purchaser Common Stock equal to the product of
(A) the Common Conversion Number and (B) a fraction equal to one minus the
Cash Fraction.
(e) If the aggregate number of Stock Election Shares exceeds the
Stock Election Number, all Cash Election Shares and all Non-Election Shares
shall be converted into the right to receive cash, and the Stock Election
Shares shall be converted into the right to receive shares of Purchaser
Common Stock and cash in the following manner: each Stock Election Share
shall be converted into the right to receive (i) a number of shares of
Purchaser Common Stock equal to the product of (A) the Common Conversion
Number and (B) a fraction (the "Stock Fraction") the numerator of which
--------------
shall be the Stock Election Number and the denominator of which shall be
the total number of Stock Election Shares and (ii) cash equal to the
product of (A) the Per Share Cash Amount and (B) a fraction equal to one
minus the Stock Fraction.
(f) With respect to each holder of Company Common Stock who makes a
Mixed Election, the Shares the holder elects to be converted into the right
to receive cash shall be treated as Cash Election Shares for purposes of
this Section 3.01 and the shares the holder elects to be converted into the
right to receive shares of Purchaser Common Stock shall be treated as Stock
Election Shares for purposes of this Section 3.01.
(g) In the event that neither Section 3.01(d) nor Section 3.01(e)
above is applicable, all Cash Election Shares shall be converted into the
right to receive cash, all Stock Election Shares shall be converted into
the right to receive shares of Purchaser Common Stock, and the Non-Election
Shares, if any, shall be converted into the right to receive shares of
Purchaser Common Stock and cash in the following manner: each Non-Election
Share shall be converted into the right to receive (i) a number of shares
of Purchaser Common Stock equal to the product of (A) the Common Conversion
Number and (B) a fraction (the "Non-Election Fraction"), the numerator of
---------------------
which shall be the excess of the Stock Election Number over the total
number of Stock Election Shares and the denominator of which shall be the
excess of (x) 87,886 over (y) the sum of the total number of Stock Election
Shares and the total number of Cash Election Shares, (ii) an amount in
cash, without interest, equal to the product of the Per Share Cash Amount
and (iii) a fraction equal to one minus the Non-Election Fraction.
(h) If either (i) the tax opinion of Shearman & Sterling referred to
in Section 9.02(c) cannot be rendered (as reasonably determined by Shearman
& Sterling and concurred in by Baker Botts L.L.P.) or (ii) the tax opinion
of Baker Botts L.L.P. referred to in Section 9.03(c) cannot be rendered (as
reasonably determined by Baker Botts, L.L.P. and concurred in by Shearman &
Sterling), in either case as a result of the Merger potentially failing to
satisfy continuity of interest requirements under applicable federal income
tax principles relating to reorganizations under section 368(a) of the
Code, then the Company shall have the right at its sole discretion to elect
to restructure the transaction as a taxable sale of Company Common Stock
(or, at the Company's
16
23
option, as a reverse subsidiary merger treated for federal income tax
purposes as a taxable sale of Company Common Stock). The parties confirm
their understanding that, under the Law as in effect on the date hereof,
the continuity of interest requirement, under applicable federal income tax
principles, shall be considered to be satisfied if at least 40% in value of
the sum of the Merger Consideration plus any other amount treated for
federal income tax purposes as consideration provided by the Purchaser or a
related party for the Shares constitutes shares of Purchaser Common Stock,
valued in accordance with the relevant federal income tax principles. In
the event that the Company elects the option to restructure the transaction
as a taxable sale of Company Common Stock (or as a taxable reverse
subsidiary merger) pursuant to this Subsection, the provisions of this
Agreement shall be applied to the transaction as if that transaction were
the Merger, except where the provision refers to section 368 of the Code or
clearly contemplates that the Merger will qualify as a tax-free
reorganization within the meaning of section 368.
(i) To be effective, a Form of Election must be properly completed,
signed and submitted to the Purchaser's transfer agent and registrar, as
paying agent (the "Paying Agent"), and accompanied by certificates
------------
representing shares of Company Common Stock (the "Company Certificates") as
--------------------
to which the election is being made. The Purchaser shall have the
discretion, which it may delegate in whole or in part to the Paying Agent,
to determine whether Forms of Election have been properly completed, signed
and submitted or revoked and to disregard immaterial defects in Forms of
Election. The decision of the Purchaser (or the Paying Agent) in these
matters shall be conclusive and binding. Neither the Purchaser nor the
Paying Agent shall be under any obligation to notify any person of any
defect in a Form of Election submitted to the Paying Agent. The Paying
Agent shall also make all computations contemplated by this Section
3.01(i), and all these computations shall be conclusive and binding on the
holders of shares of Company Common Stock.
(j) For the purposes of this Agreement, a holder of shares of Company
Common Stock who does not submit a Form of Election that is received by the
Paying Agent prior to the Election Deadline shall be deemed to have made a
Non-Election. If the Purchaser or the Paying Agent shall determine that any
purported Cash Election or Stock Election was not properly made, the shares
subject to improperly made Cash Election or Stock Election shall be treated
as Non-Election Shares.
(k) Each of the Purchaser and the Company shall use its best efforts
to cause copies of the Form of Election to be mailed to the record holders
of Company Common Stock not less than 20 days prior to the Effective Time.
A Form of Election must be received by the Paying Agent by 5:00 p.m., New
York City time, on the Business Day that is immediately prior to the
Effective Time (the "Election Deadline"), in order to be effective. All
-----------------
elections may be revoked until the Election Deadline in writing by the
record holders submitting Forms of Election.
(l) Notwithstanding any other provision of this Section 3.01 or in
any Form of Election to the contrary, unless the Company shall provide a
written notice to the Purchaser and to each holder of Shares stating that
the Board of Directors of the
17
24
Company has determined to permit holders of Shares to make individual
elections, each and every holder of Shares shall automatically be deemed to
have submitted a Mixed Election indicating that such holder elects to
receive shares of Purchaser Common Stock for 50% of such holder's Shares
and cash for 50% of such holder's Shares.
(m) Each share of Purchaser Common Stock issued to holders of Company
Common Stock pursuant to the Merger will be issued with an associated Right
(as defined in the Rights Agreement dated as of April 26, 1994 between the
Purchaser and Harris Trust Company of New York, as Rights Agent (the
"Rights Agreement")). Purchaser shall supplement the Rights Agreement to
----------------
provide that no Shareholder will be an "Acquiring Person" (as defined in
the Rights Agreement) by virtue of acquiring Purchaser Common Stock in the
Merger unless or until it or any of its "Affiliates" or "Associates" (as
defined in the Rights Agreement) shall purchase or otherwise become the
"Beneficial Owner" (as defined in the Rights Agreement) of additional
Shares of Purchaser Common Stock or any other Person or Persons who is (or
collectively are) the Beneficial Owners of shares of Purchaser Common Stock
shall become an Affiliate or Associate of such Shareholder unless, in
either such case, such Shareholder, together with all Affiliates or
Associates of such Shareholder, is not then the Beneficial Owner of 20% or
more of the Purchaser Common Stock then outstanding.
SECTION 3.02. Cancellation of Treasury Shares. Each share of Company
-------------------------------
Common Stock held in the Company treasury immediately prior to the Effective
Time, by virtue of the Merger and without any action on the part of the holder
thereof, shall cease to be outstanding, shall be cancelled and retired without
payment of any consideration therefor and shall cease to exist.
SECTION 3.03 Exchange Agent; Exchange Procedures. (a) Subject to
-----------------------------------
the terms and conditions of this Agreement, at or prior to the Effective Time,
the Purchaser shall appoint an exchange agent that is reasonably acceptable to
the Company (the "Exchange Agent"), to effect the exchange of Shares for shares
--------------
of Purchaser Common Stock and cash in accordance with the provisions of this
Article III. As soon as reasonably practicable following the Effective Time, the
Purchaser shall deposit, or cause to be deposited, with the Exchange Agent, for
exchange in accordance with this Article III, certificates representing shares
of Purchaser Common Stock (the "Purchaser Certificates"), and cash in amounts
----------------------
sufficient to allow the Exchange Agent to make all deliveries of the Purchaser
Certificates and cash in exchange for the Company Certificates in connection
with the Merger, as contemplated by this Article III, and any cash payable in
respect of fractional shares in accordance with Section 3.05 (the "Exchange
--------
Fund").
- ----
(b) The Purchaser shall instruct the Exchange Agent to mail to each
record holder of shares of Company Common Stock as soon as reasonably
practicable after the Effective Time, (i) a Transmittal Letter (which shall
specify that delivery shall be effected, and risk of loss and title to shares of
Company Common Stock shall pass, only upon the delivery of a Company Certificate
or Company Certificates representing those shares to the Exchange Agent, and
which letter shall otherwise be in the form and have the other provisions as the
Purchaser shall reasonably specify, which form shall be reasonably acceptable to
the Company) and (ii) instructions for use in effecting the surrender of the
Company Certificates for
18
25
(x) Purchaser Certificates to which the holder of shares of Company Common Stock
is entitled pursuant to Section 3.01(a), (y) the cash to which the holder of
shares of Company Common Stock is entitled pursuant to Section 3.01(a), and (z)
cash in lieu of fractional shares, if any (the shares of Purchaser Common Stock
and cash described in clauses (x), (y) and (z) above being referred to
collectively as the "Merger Consideration"). Commencing immediately after the
--------------------
Effective Time, upon the surrender to the Exchange Agent of a Company
Certificate, together with a duly executed and completed letter of transmittal
and all other documents and other materials reasonably required by the Exchange
Agent to be delivered in connection therewith, the holder thereof shall be
entitled to receive the Merger Consideration into which the shares of Company
Common Stock which immediately prior to the Effective Time were represented by
the Company Certificate so surrendered shall have been converted in accordance
with the provisions of Section 3.01, together with a cash payment in lieu of
fractional shares, if any, in accordance with Section 3.05. No interest will be
paid or will accrue on the cash payable, if any, upon surrender of the Company
Certificate. Unless and until any Company Certificate is so surrendered, no
dividends or other distributions, if any, payable to the holders of record of
shares of Purchaser Common Stock, as of any date subsequent to the Effective
Time, shall be paid to the holder of the Company Certificate in respect thereof.
Upon the surrender of any Company Certificate, the record holder of the
Purchaser Certificate or Purchaser Certificates representing shares of Purchaser
Common Stock issued in exchange therefor, if any, shall be entitled to receive,
(i) at the time of surrender, the amount of any dividends or other distributions
in respect of shares of Purchaser Common Stock having a record date after the
Effective Time and a payment date prior to the surrender date, and (ii) at the
appropriate payment date, the amount of dividends or other distributions in
respect of shares of Purchaser Common Stock having a record date after the
Effective Time and a payment date subsequent to the date of surrender. No
interest shall be payable in respect of the payment of dividends or
distributions pursuant to the immediately preceding sentence.
(c) The Purchaser or the Exchange Agent shall be entitled to deduct
and withhold from the Merger Consideration, and from any dividends or other
distributions which the holder is entitled to receive pursuant to Section
3.03(b), such amounts that the Purchaser or the Exchange Agent are required to
deduct or withhold therefrom under the Code and/or any applicable provision of
state, local or foreign law.
SECTION 3.04. Transfer Books. All shares of Purchaser Common Stock
--------------
issued upon the surrender for exchange of shares of Company Common Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock.
SECTION 3.05. No Fractional Share Certificates. No fraction of a
--------------------------------
share of Purchaser Common Stock shall be issued, but in lieu thereof, each
Shareholder who would otherwise be entitled to a fraction of a share of
Purchaser Common Stock shall, upon surrender of the shares of Company Common
Stock to the Exchange Agent, be paid an amount in cash by the Exchange Agent
(without interest) equal to the value of such fraction of a share based upon the
closing price of Purchaser Common Stock at the Effective Time. Promptly after
the determination of the aggregate amount of cash to be paid to holders of
fractional interests, the Exchange Agent shall send by mail, postage prepaid, to
each such holder a check payable to such holder for the amount of cash payable
in lieu of such holder's fractional interests.
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SECTION 3.06. Lost, Stolen or Destroyed Certificates. In the event
--------------------------------------
any Company Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit, which shall be accompanied by an
indemnity bond or other security or indemnity acceptable to the Purchaser, of
that fact by the holder thereof, such shares of Purchaser Common Stock and any
dividends or other distributions with respect to Purchaser Common Stock to which
such holder is entitled.
SECTION 3.07. Termination of Exchange Fund. Any portion of the
----------------------------
Exchange Fund which remains undistributed one year after the Effective Time
shall be delivered to the Purchaser upon demand, and each holder of shares of
Company Common Stock who has not theretofore surrendered the holder's Company
Certificates in accordance with the provisions of this Article III shall
thereafter look only to the Purchaser for satisfaction of the holder's Merger
Consideration and any dividends or distributions payable in accordance with
Section 3.03(b). Notwithstanding the foregoing, none of the Purchaser, the
Company or the Exchange Agent shall be liable to any former holder of shares of
Company Common Stock for any shares or amounts properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
SECTION 3.08. Certain Adjustments. If, in the period between the
-------------------
date of this Agreement and the Effective Time, the outstanding shares of
Purchaser Common Stock shall be changed into a different number of shares or
other securities by reason of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible into
Purchaser Common Stock), reorganization, recapitalization or other like change
with respect to Purchaser Common Stock, the Common Conversion Number and the
Cash Election Number and the form of securities issuable in the Merger shall be
appropriately adjusted to provide to the holders of shares of Company Common
Stock the same economic effect as contemplated by this Agreement prior to such
event.
SECTION 3.09. Restricted Securities. The parties acknowledge that
---------------------
the shares of Purchaser Common Stock to be issued pursuant to this Article III
and pursuant to Section 8.07 shall not have been registered and shall be
characterized as "restricted securities" under federal securities laws, and,
under such laws, such shares may be resold without registration under the
Securities Act only in certain limited circumstances. Each certificate
evidencing shares of Purchaser Common Stock to be issued pursuant to this
Article III shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). SUCH SHARES MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION WITHOUT AN EXEMPTION UNDER THE SECURITIES ACT OR AN
OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO
20
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THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
SECTION 3.10. Taking of Necessary Action; Further Action. The
------------------------------------------
parties hereto shall take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger, and the transactions
contemplated hereby, as promptly as possible.
SECTION 3.11. Dissenters' Rights. (a) Notwithstanding any provision
------------------
of this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
Persons who shall have not voted in favor of the Merger or consented thereto in
writing and who shall have demanded properly in writing payment of the fair
market value of such shares of Company Common Stock in accordance with the BCL
(collectively, the "Dissenting Shares") shall not be converted into or represent
-----------------
the right to receive shares of Purchaser Common Stock or cash as provided in
this Agreement. Such Persons shall be entitled to receive payment from the
Surviving Corporation of the fair market value of such shares of Company Common
Stock held by them in accordance with the provisions of the BCL, 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
shares under the BCL shall thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective Time, the right to receive
Purchaser Common Stock and/or cash as provided herein, upon surrender in the
manner provided in Section 3.01, of the certificate or certificates that
formerly evidenced such shares of Company Common Stock.
(b) The Company shall give to the Purchaser (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to the BCL and received by the Company and
(ii) the opportunity to direct all negotiations and proceedings with respect to
demands for payment of fair market value under the BCL. The Company shall not,
except with the prior written consent of the Purchaser, make any payment with
respect to any such demands, or offer to settle, or settle, any such demands.
Any amount payable to any Person exercising dissenters' rights shall be paid
solely by the Surviving Corporation out of its own funds.
SECTION 3.12. Purchase Price Adjustment. (a) The Per Share Cash
-------------------------
Amount and the Common Conversion Number will be adjusted on the Closing Date as
described below.
(b) The Company shall provide to the Purchaser three business days
before the Closing Date a Closing Statement stating, as of the Closing Date: (i)
the Company Long-Term Debt, (ii) the Unpaid Company Transaction Fees, (iii) the
Unpaid Severance, Retention and Phantom Share Costs, (iv) the NORIC Cash and (v)
Company dividends paid since September 30, 2000, accompanied by reasonable
detail as to the computation thereof.
(c) The Closing Statement shall also state an amount (the "Adjustment
----------
Amount") equal to
- ------
(i) NORIC Cash, minus $84,665,000; minus,
----- -----
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(ii) Company Long-Term Debt minus $135,000,000; minus
----- -----
(iii) Unpaid Company Transaction Fees minus $12,000,000; minus
----- -----
(iv) Unpaid Severance, Retention and Phantom Share Costs minus
-----
$57,165,000; minus
-----
(v) Company dividends paid since September 30, 2000 minus $500,000.
-----
(d) If the Adjustment Amount is greater than zero, then the Per
Share Cash Amount and the Common Conversion Number will be increased as follows:
(i) The Per Share Cash Amount will be increased by an amount in cash
equal to 50% of the Adjustment Amount, divided by 43,943; and
(ii) the Common Conversion Number will be increased by an amount
equal to the product of: (A) a fraction, the numerator of which is 50% of
the Adjustment Amount and the denominator of which is the Average Parent
Share Price, multiplied by (B) a fraction, the numerator of which is 1 and
the denominator of which is 43,943.
(e) If the Adjustment Amount is less than zero, then the Per Share
Cash Amount and the Common Conversion Number will be decreased as follows:
(i) the Per Share Cash Amount will be decreased by an amount in cash
equal to 50% of the absolute value of the Adjustment Amount divided by
43,943; and
(ii) the Common Conversion Number will be decreased by an amount
equal to the product of: (A) a fraction, the numerator of which is 50% of
the absolute value of the Adjustment Amount and the denominator of which is
the Average Parent Share Price, multiplied by (B) a fraction, the numerator
of which is one and the denominator of which is 43,943.
SECTION 3.13. Escrow. Upon the Closing, if less than all the
------
Shareholders of the Company shall have then executed Joinder Agreements, the
Company and the Purchaser shall enter into an escrow agreement with a bank
selected by the Purchaser with the approval of the Company (the "Escrow Agent")
------------
in form and substance reasonably satisfactory to the Purchaser and the Company
(the "Escrow Agreement"). Notwithstanding any other provision of this Agreement,
----------------
10% of the shares of Purchaser Common Stock and/or cash to be delivered at the
Closing to each holder of Shares that does not, prior to the Closing, execute
and deliver to the Company a Joinder Agreement (as defined in Section 6.13(a)
below), shall be delivered to the Escrow Agent to be held by the Escrow Agent in
accordance with the terms of the Escrow Agreement (the "Escrow Consideration").
--------------------
The Escrow Consideration will secure, and will be applied to the extent
necessary to satisfy, the rights of the Purchaser's Indemnified Persons to
receive indemnification for certain matters described in Section 10.01 and
Section 8.01. The Escrow Agreement will provide that the Escrow Consideration
will be applied to pay indemnification to the Purchaser on the same basis as the
security described in Section 10.08 can be applied to such indemnification
rights.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and (with respect to the representations concerning each
Shareholder contained in Section 4.01(b), 4.22, 4.29 and 4.36 only) each
Shareholder hereby represent and warrant to the Purchaser that, except as
disclosed in the Disclosure Schedule:
SECTION 4.01. Organization, Authority and Qualification of the
------------------------------------------------
Company. (a) The Company is a corporation duly organized, validly existing and
- - -------
in good standing under the laws of the State of New York and has all necessary
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by it and to carry on its business as it is currently
conducted, except where the failure to have such power and authority would not
have a Material Adverse Effect. The Company has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The Company is duly
licensed or qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its business makes such licensing or qualification necessary,
except for such failures to be so licensed or qualified and in good standing
that would not have a Material Adverse Effect. True and correct copies of the
Certificate of Incorporation and Bylaws of the Company, each as in effect on the
date hereof, have been made available by the Company to the Purchaser. The
execution and delivery of this Agreement by the Company, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Company.
(b) Each Shareholder has full legal capacity and authority to enter
into this Agreement and to carry out such person's obligations hereunder. This
Agreement has been duly executed and delivered by the Company and each
Shareholder, and (assuming due authorization, execution and delivery by the
Purchaser) this Agreement constitutes a legal, valid and binding obligation of
the Company and each Shareholder enforceable against the Company and each
Shareholder in accordance with its terms.
SECTION 4.02. Capital Stock of the Company; Ownership of the Shares.
-----------------------------------------------------
(a) The authorized capital stock of the Company consists of 200,000 shares of
Company Common Stock, of which 165,000 shares are voting Company Common Stock
and 35,000 shares are non-voting Company Common Stock. As of the date hereof
there are, and as of the Effective Date there will be, (i) 76,197 shares of
voting Company Common Stock and (ii) 11,689 shares of non-voting Company Common
Stock issued and outstanding, all of which are duly authorized, validly issued,
fully paid and nonassessable. No shares of Company Common Stock are held in the
treasury of the Company. None of the issued and outstanding shares of Company
Common Stock were issued in violation of any preemptive rights. Except as set
forth in Section 4.02(a) of the Disclosure Schedule, there are no (i) options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the capital stock of the Company or
obligating the Shareholders or the Company to issue or sell any shares of
capital stock of, or any other interest in, the Company and (ii) outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Company Common Stock or to provide funds to, or make any
investment (in the form of a
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loan, capital contribution or otherwise) in, any other Person. To the Knowledge
of the Company, Section 4.02(a) of the Disclosure Schedule sets forth all voting
trusts, stockholder agreements, proxies or other agreements in effect with
respect to the voting or transfer of any of the Company Common Stock, except
those contemplated or required by this Agreement.
(b) Section 4.02(b) of the Disclosure Schedule sets forth a list (the
"Shareholders' List") prepared by the Company that accurately reflects the name
-------------------
of each Shareholder and the number of shares of Company Common Stock held of
record by each Shareholder (and is based upon the stock register of the Company)
as of the date hereof.
SECTION 4.03. Company Subsidiaries. (a) Section 4.03(a) of the
--------------------
Disclosure Schedule sets forth a list, true and complete in all material
respects, of all Company Subsidiaries, listing for each Company Subsidiary its
name, type of entity, the jurisdiction and date of its incorporation or
organization, its authorized capital stock, partnership capital or equivalent,
the number and type of its issued and outstanding shares of capital stock,
partnership interests or similar ownership interests and the current ownership
of such shares, partnership interests or similar ownership interests.
(b) Other than the Company Subsidiaries, there are no other
corporations, partnerships, joint ventures, associations or other entities in
which the Company owns, of record or beneficially, any direct or indirect equity
or other interest, or any right (contingent or otherwise) to acquire the same.
There are no partnerships or joint venture agreements or other business entities
in which the Company or any Company Subsidiary owns any equity interest. The
agreement referenced in Section 4.03(b), Item 1 of the Disclosure Schedule does
not create any obligations or Liabilities on behalf of the Company or any
Company Subsidiary.
(c) Each Company Subsidiary that is a corporation: (i) is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation, (ii) has all necessary power and authority to
own, operate or lease the properties and assets owned, operated or leased by
such Company Subsidiary and to carry on its business as it is currently
conducted by such Company Subsidiary and (iii) is duly licensed or qualified as
a foreign corporation to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary, except for such
failures to be so licensed or qualified and in good standing that would not have
a Material Adverse Effect. Each Company Subsidiary that is not a corporation:
(i) is duly organized and validly existing under the laws of its jurisdiction of
organization, (ii) has all necessary power and authority to own, operate or
lease the properties and assets owned, operated or leased by such Company
Subsidiary and to carry on its business as it is currently conducted by such
Company Subsidiary and (iii) is duly licensed or qualified to do business and is
in good standing in each jurisdiction in which the properties owned or leased by
it or the operation of its business makes such licensing or qualification
necessary, except for such failures to be so licensed or qualified and in good
standing that would not have a Material Adverse Effect.
(d) All the outstanding shares of capital stock of each Company
Subsidiary are validly issued, fully paid and nonassessable and are owned by the
Company, whether directly or indirectly, free and clear of all Encumbrances.
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31
(e) There are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments of any character, relating to
the capital stock of any Company Subsidiary or obligating the Company or any
Company Subsidiary to issue or sell any shares of capital stock of, or any other
interest in, any Company Subsidiary.
(f) There are no voting trusts, stockholder agreements, proxies or
other agreements or understandings in effect with respect to the voting or
transfer of any shares of capital stock of, or any other interests in, any
Company Subsidiary.
(g) True and complete copies of the charter and by-laws (or similar
organizational documents), of each Company Subsidiary have been made available
by the Company to the Purchaser and are in full force and effect.
SECTION 4.04. Corporate Books and Records. In all material respects,
---------------------------
the minute books of the Company and the Company Subsidiaries contain accurate
records of all meetings and accurately reflect all other actions taken by the
shareholders, Boards of Directors and all committees of the Boards of Directors
of the Company and the Company Subsidiaries. Complete and accurate copies of all
such minute books of the Company and each Company Subsidiary have been made
available by the Company to the Purchaser.
SECTION 4.05. No Conflict. Assuming that all consents, approvals,
-----------
authorizations and other actions described in Section 4.06 have been obtained
and all filings, approvals and notifications listed in Section 4.06 of the
Disclosure Schedule have been made or obtained, the execution, delivery and
performance of this Agreement by the Company do not and will not (a) violate or
conflict with any provision of the Certificate of Incorporation or Bylaws or
similar organizational documents of the Company or any Company Subsidiary, (b)
violate or conflict with any Law or Governmental Order applicable to the
Company, any Company Subsidiary or any of their respective assets and
properties, or (c) conflict with, result in any breach of or constitute a
default (or an event which, with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment or cancellation of, or result in the creation
of any Encumbrance on any assets or properties of the Company or any Company
Subsidiary pursuant to any Material Contract or any other material license,
permit, franchise or other instrument or arrangement to which the Company or any
Company Subsidiary is a party or by which any of the Company Common Stock or any
of such assets or properties is bound or affected, except any such conflicts,
violations, breaches, defaults or other occurrences which would not have a
Material Adverse Effect.
SECTION 4.06. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery and performance of this Agreement by the Company do not and will not
require any consent, approval, authorization or other order of, action by,
filing with or notification to, any Governmental Authority, except (a) the pre-
merger notification requirements of the HSR Act, (b) the filing and recordation
of appropriate merger documents as required by the BCL and the DGCL, (c) any
other consent, approval, authorization, filing or notice the failure of which to
make or obtain would have a Material Adverse Effect or prevent or materially
delay the consummation of the Merger and (d) any consent, approval,
authorization, filing or notice required as a result of the identity of the
Purchaser.
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SECTION 4.07. Financial Information, Books and Records. (a) True
----------------------------------------
and complete copies of (i) the audited consolidated balance sheets of the
Company for each of the two fiscal years ended as of December 31, 1998 and
December 31, 1999, and the related audited consolidated statements of operations
and cash flows of the Company, (ii) the audited consolidated balance sheet of
Rhode Island Corporation for the fiscal year ended December 31, 1997 and the
related audited consolidated statements of operations and cash flows of Rhode
Island Corporation, together with all related notes and schedules thereto, and
(iii) the audited consolidated balance sheets of NCOC for each of the three
fiscal years ended as of December 31, 1997, December 31, 1998 and December 31,
1999 and the related audited consolidated statements of operations and cash
flows of NCOC; in each case together with all related notes and schedules
thereto, accompanied by the reports thereon of Arthur Andersen LLP (collectively
referred to herein as the "Financial Statements") and (iv) the unaudited
--------------------
consolidated balance sheet of (A) the Company as of June 30, 2000, and the
related consolidated statement of operations, together with all related notes
and schedules thereto (the "June 30 Balance Sheet") and (B) NCOC as of September
---------------------
30, 2000, and the related consolidated statement of operations, together with
all related notes and schedules thereto (collectively referred to herein as the
"Interim Financial Statements"), have been made available by the Company to the
----------------------------
Purchaser. The Financial Statements and the Interim Financial Statements
(including the related notes and schedules thereto) (x) were prepared in
accordance with the books of account and other financial records of the Company,
NCOC and Rhode Island Corporation, as applicable, (y) present fairly, in all
material respects, the consolidated financial condition of the Company and the
Company Subsidiaries and NCOC, as applicable, as of the dates thereof or for the
periods covered thereby, subject, in the case of unaudited financial statements,
to normal year-end adjustments, and (z) have been prepared in accordance with
U.S. GAAP applied on a basis consistent with the past practices of the Company,
except as noted in the opinion of Arthur Andersen LLP for financial statements
of Rhode Island Corporation.
(b) The books of account and other financial records of the Company
and the Company Subsidiaries (i) are in all material respects complete and
correct, and do not contain or reflect any material inaccuracies or
discrepancies and (ii) have been maintained in accordance with good business and
accounting practices and in accordance with U.S. GAAP.
SECTION 4.08. No Undisclosed Liabilities. Except as would not
--------------------------
reasonably be expected to have a Material Adverse Effect, to the Knowledge of
the Company, there are no Liabilities of the Company or any Company Subsidiary
other than Liabilities (a) reflected or reserved against on the balance sheets
included in the Interim Financial Statements or (b) incurred since the dates of
such balance sheets in the ordinary course of the business, consistent with past
practice, of the Company and the Company Subsidiaries.
SECTION 4.09. Absence of Certain Changes, Events and Conditions.
-------------------------------------------------
Since September 30, 2000, the business of the Company and the Company
Subsidiaries has been conducted in all material respects in the ordinary course,
consistent with past practice, and, since such date, there has not been (a) any
Material Adverse Effect, (b) any material change by the Company or any Company
Subsidiary in its accounting methods, principles or practices, or (c) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation,
26
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pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan, except in the ordinary course of business consistent with
past practice.
SECTION 4.10. Litigation. As of the date hereof, there is no Action
----------
pending or, to the Knowledge of the Company, threatened against the Company, any
Company Subsidiary or any Property of the Company or any Company Subsidiary,
before any Governmental Authority. There are no outstanding Governmental Orders
against the Company or any Company Subsidiary or any Property of the Company or
any Company Subsidiary that would reasonably be expected to have a Material
Adverse Effect.
SECTION 4.11. Compliance with Laws. Each of the Company and the
--------------------
Company Subsidiaries has conducted and continues to conduct its business in
compliance with all Laws (other than Environmental Laws which are governed
solely by Section 4.16) and Governmental Orders applicable to the Company or any
Company Subsidiary, except for violations or failures so to comply, if any, that
are not reasonably expected to have a Material Adverse Effect.
SECTION 4.12. Material Contracts. (a) As of the date hereof,
Section 4.12(a) of the Disclosure Schedule lists each of the following contracts
and agreements (whether oral or written) of the Company and the Company
Subsidiaries (collectively, the "Material Contracts"):
------------------
(i) any agreement (other than an oil and gas lease) for capital
expenditures or the acquisition or construction of fixed assets which
requires aggregate future payments in excess of $1,500,000;
(ii) any gas, crude oil or liquids sales agreement, gas, crude oil or
liquids purchase agreement, or gas, crude oil or liquids marketing
agreement, under which the Company or any Company Subsidiary is a seller,
that cannot be terminated by the Company or the Company Subsidiary, as the
case may be, without penalty upon not more than ninety (90) calendar days'
notice;
(iii) any agreement for, or that contemplates, the sale of any Working
Interests in any Property, or the sale of any other asset (other than sales
of oil and gas production in the ordinary course of business), which
involves any payment to the Company or the Company Subsidiaries in excess
of $500,000;
(iv) any agreement that constitutes a lease (other than an oil and
gas lease) under which the Company or any Company Subsidiary is the lessor
or lessee of real or personal property, that (A) cannot be terminated by
the Company or the Company Subsidiary, as the case may be, without penalty
upon not more than ninety (90) calendar days' notice and (B) involves an
annual base rental in excess of $250,000;
(v) any agreement for the future acquisition of Seismic Data that
requires aggregate future payments in excess of $1,000,000;
(vi) any Hydrocarbon or financial hedge, swap, exchange or similar
agreement;
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(vii) all contracts and agreements relating to Indebtedness of the
Company or any Company Subsidiary in excess of $500,000, other than
Permitted Encumbrances;
(viii) all material contracts and agreements with any Governmental
Authority (other than oil and gas leases and any unitization agreement or
operating agreement listed in Section 4.12(a)(xi) of the Disclosure
Schedule) to which the Company or any Company Subsidiary is a party;
(ix) all non-competition agreements or other contracts and
agreements that limit or purport to limit the ability of the Company or any
Company Subsidiary to compete in any line of business or with any Person or
in any geographic area or during any period of time;
(x) all contracts and agreements between or among the Company or
any Company Subsidiary and the Shareholders or any Affiliate of the
Shareholders;
(xi) all contracts or agreements establishing any joint ventures or
partnerships and all unit agreements and operating agreements applicable to
the Properties;
(xii) all employment agreements;
(xiii) all collective bargaining agreements with labor unions covering
the employees of the Company or the Company Subsidiaries;
(xiv) all profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other material plan or
arrangement for the benefit of current or former directors, officers and
employees;
(xv) all contracts with independent contractors or consultants (or
similar arrangements) to which the Company or any Company Subsidiary is a
party and which are not cancelable without penalty or further payment and
without more than ninety (90) days' notice;
(xvi) all approved authorizations for expenditure requiring the
expenditure by the Company or any Company Subsidiary of more than $500,000,
as of November 10, 2000; and
(xvii) all other contracts and agreements the absence of which would
reasonably be expected to have a Material Adverse Effect.
(b) Each of the Material Contracts listed on Section 4.12(a) of the
Disclosure Schedule is a valid agreement, arrangement or commitment of the
Company or a Company Subsidiary party thereto, enforceable in all material
respects in accordance with its terms, and neither the Company nor any such
Company Subsidiary nor, to the Knowledge of the Company, any other party to
such Material Contract is in violation, breach or default of any material
provision thereof (including the occurrence of any event that, with notice,
lapse of time or both, would constitute a default).
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SECTION 4.13. Title to Property. (a) Except as to those matters set
-----------------
forth in Section 4.13 of the Disclosure Schedule, the Company or a Company
Subsidiary, as the case may be, has Defensible Title to the Property, free and
clear of Encumbrances, other than Permitted Encumbrances.
(b) Section 4.13(b) of the Disclosure Schedule sets forth a brief
description of all Leases and Wells. With respect to any Lease or Well,
"Defensible Title" shall mean such record and beneficial right, title and
----------------
interest in and to such Lease or Well that:
(i) entitles the Company or the Company Subsidiary, as applicable,
to receive a Net Revenue Interest in such Well that is equal to or greater
than the Net Revenue Interest set forth in Section 4.13(b) of the
Disclosure Schedule therefor, without reduction, suspension or diminution
throughout the duration of the estate constituting such Property, except as
shown in Section 4.13(b) of the Disclosure Schedule, and except for changes
or adjustments that result from the establishment of units, changes in
existing units (or the participating areas therein), whether voluntary or
by order of the appropriate regulatory agency having jurisdiction, or the
entry into of pooling or unitization agreements after the date hereof or
that result from or are incidental to Operations conducted as permitted or
required by Section 6.01;
(ii) obligates or subjects the Company or the Company Subsidiary, as
applicable, to bear a Working Interest in each Well that is no greater than
the record title or operating rights interest set forth in Section 4.13(b)
of the Disclosure Schedule therefor, without increase throughout the
duration of the estate constituting such Property, except as shown in
Section 4.13(b) of the Disclosure Schedule and except for any changes or
adjustments that are caused by contribution requirements provided for under
provisions contained in any operating agreement listed in Section 4.12 of
the Disclosure Schedule, that result from the establishment of units,
changes in existing units (or the participating areas therein), or the
entry into of pooling or unitization agreements, whether voluntary or by
order of the appropriate regulatory agency having jurisdiction, after the
date hereof or that result from or are incidental to Operations conducted
as permitted or required by Section 6.01; and
(iii) the Leases are valid and enforceable and grant the rights
purported to be granted thereby and all rights necessary thereunder for the
current Operations of the Company or the Company Subsidiary, as applicable.
(c) Section 4.13(c) of the Disclosure Schedule contains a
description of the Easements. With respect to Easements and related Equipment,
Defensible Title shall mean record or beneficial right, title and interest in
the applicable Easement sufficient to enable the Company or any Company
Subsidiary to conduct its Operations as currently conducted with respect
thereto, without material interference by any other Person, and, to the
Knowledge of the Company or the Company Subsidiary, as applicable, all material
Easements are valid and enforceable and grant the rights purported to be granted
thereby and all rights necessary for the current Operations of such business
without material interference by any other Person.
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(d) Section 4.13(d) of the Disclosure Schedule sets forth a brief
description of each parcel of real property comprising the Fee Mineral
Interests. With respect to Fee Mineral Interests, Defensible Title means all the
record and beneficial right, title and interest in and to each such parcel of
land, respectively, that was conveyed or granted to the Company or any Company
Subsidiary, or their respective predecessors-in-title in and to the lands
described in Section 4.13(d) of the Disclosure Schedule, or in the instrument of
conveyance referred to and described by volume or book and page in Section
4.13(d) of the Disclosure Schedule, as each instrument of conveyance is recorded
in the county or parish where the land is located.
(e) Section 4.13(e) of the Disclosure Schedule sets forth a brief
description of each parcel of Other Real Property. With respect to Other Real
Property, Defensible Title shall mean the right of quiet enjoyment of all such
real property, whether leased or fee, for the term of any applicable agreement
relating thereto, and all such interests in Other Real Property are valid and
enforceable and grant the rights purported to be granted thereby and all rights
necessary thereunder for the current Operations of such business without
material interference.
(f) To the Knowledge of the Company, no material portion of the royalties,
rentals, and other payments due under the Leases are past due. All material
Leases are in full force and effect. To the Knowledge of the Company, neither
the Company nor any Company Subsidiary has ever been notified of a material
breach or default by the Company or any Company Subsidiary under any material
Lease, which claim of breach or default has not been resolved. To the Knowledge
of the Company, no event has occurred or failed to occur which constitutes, or
which, with the giving of notice or the passage of time or both, would
constitute a default, violation, or breach under any such Lease.
(g) As used in this Section 4.13 only, Knowledge of the Company means the
actual knowledge of the Senior Officers based upon North Central's periodical
attendance of operators' meetings, conduct of joint audits under operating
agreements and conduct of periodic field tours of its Properties.
SECTION 2.14. Intellectual Property. The Company and the Company
---------------------
Subsidiaries own or license, or otherwise have the right to use, all patent,
patent rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, copyrights, technology, know-how, processes
and other proprietary intellectual property rights and computer programs
("Intellectual Property") currently used in the conduct of the business of the
---------------------
Company and the Company Subsidiaries, except where the failure to so own or
otherwise have the right to use such Intellectual Property would not have a
Material Adverse Effect. No Person has notified either the Company or any
Company Subsidiary that their use of the Intellectual Property infringes on the
rights of any Person, subject to such claims and infringements as do not give
rise to any liability on the part of the Company and the Company Subsidiaries
that could have a Material Adverse Effect, and, to the Company's Knowledge, no
Person is infringing on any right of the Company or any Company Subsidiary with
respect to any such Intellectual Property. No claims are pending or, to the
Company's Knowledge, threatened that the Company or any Company Subsidiary is
infringing or otherwise adversely affecting the rights of any Person with regard
to any Intellectual Property that would give rise to a Material Adverse Effect.
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SECTION 4.15. Employee Benefit Matters. (a) With respect to each employee
------------------------
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in section 3(3) of ERISA), maintained or
contributed to by the Company or any Company Subsidiary (the "Plans"), the
-----
Company has made available to the Purchaser a true and correct copy of (i) the
most recent annual report (Form 5500) filed with the IRS for each Plan, (ii) a
complete copy of each such Plan, (iii) each trust agreement relating to each
such Plan, (iv) the most recent summary plan description for each Plan for which
a summary plan description is required, and (v) the most recent determination
letter, if any, issued by the IRS with respect to any Plan qualified under
section 401(a) of the Code. Neither the Company nor any Company Subsidiary
maintains any plan subject to Title IV of ERISA, and neither the Company nor any
Company Subsidiary has any actual or contingent liability under ERISA.
(b) With respect to the Plans, no event has occurred and, to the Knowledge
of the Company, there exists no condition or set of circumstances in connection
with which the Company or any Company Subsidiary could be subject to any
liability under the terms of such Plans, ERISA, the Code or any other applicable
Law that would have a Material Adverse Effect. Each of the Plans has been
operated and administered in all material respects in accordance with applicable
Laws and administrative or governmental rules and regulations, including, but
not limited to, ERISA and the Code, except where a violation of any such law,
rule or regulation would not have a Material Adverse Effect. Each Plan intended
to be "qualified" within the meaning of section 401(a) of the Code has received
a favorable determination letter as to such qualification from the IRS, and no
event has occurred, either by reason of any action or failure to act, which
would cause the loss of any such qualification, except where such loss of
qualification would not have a Material Adverse Effect.
(c) There is no labor dispute, strike or work stoppage against the Company
or any Company Subsidiary, pending or threatened in writing, which may interfere
with the respective business activities of the Company or any Company
Subsidiary. As of the date of this Agreement, to the Knowledge of the Company,
neither the Company nor any Company Subsidiary, nor their representatives or
employees, has committed any unfair labor practices in connection with the
operation of the respective businesses of the Company or any Company Subsidiary,
and there is no charge or complaint against the Company by the National Labor
Relations Board or any comparable state agency pending or, to the knowledge of
the Company, threatened, except where such unfair labor practice, charge or
complaint would not have a Material Adverse Effect.
(d) The Company has made available to the Purchaser (i) copies of all
employment agreements with officers of the Company or any Company Subsidiary;
(ii) copies of all severance agreements, programs and policies of the Company or
any Company Subsidiary with or relating to its employees; and (iii) copies of
all plans, programs, agreements and other arrangements of the Company or any
Company Subsidiary with or relating to its employees which contain change of
control provisions.
(e) Except as listed in Schedule 4.15(e) or as may be required by Law, no
Plan provides retiree medical or retiree life insurance benefits to any Person.
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(f) Section 4.15(f) of the Disclosure Schedule sets forth, as of the
date of this Agreement, the number of outstanding phantom shares under the
Phantom Share Plan by date of grant and the Initial Value (as defined in the
Phantom Share Plan) applicable to each date of grant. In addition, Section
4.15(f) of the Disclosure Schedule sets forth the methodology determined by the
board of directors of NCOC for computing the amount to be paid for Phantom
Shares, pursuant to the terms of the Phantom Share Plan. Section 4.15(f) of the
Disclosure Schedule also sets forth, for each eligible employee under the
Severance Pay Plan, the annual base salary of each such employee, the number of
years or partial years of Continuous Service (as such terms are defined in such
Plan), the service anniversary date for purposes of determining Continuous
Service and the lump sum severance payment under Section 5 of such Plan that
would be payable to such employee assuming a termination as of October 31, 2000,
and the aggregate of such payments for all eligible employees. Section 4.15(f)
of the Disclosure Schedule sets forth, in the aggregate, amounts due under all
Severance Agreements other than amounts due under the Severance Pay Plan and
Severance Agreements, for any director, officer, employee or consultant of the
Company and any Company Subsidiary including, without limitation, severance
payments to Messrs. Winne, Becci, Deupree and Beckham. Except for amounts
payable pursuant to the Severance Pay Plan and the Severance Agreements as set
forth on Section 4.15(f) of the Disclosure Schedule, neither the Company nor any
Company Subsidiary has agreed to pay any amounts relating to termination of
employment with the Company or any Company Subsidiary, other than accrued salary
and vacation, and two weeks' pay to employees terminated on less than two weeks'
notice. Schedule 4.15(f) of the Disclosure Schedule sets forth individually and
on a collective basis for all eligible employees (assuming all such eligible
employees remain with the Company through the Closing Date) for each employee
eligible to receive payments under the Retention Bonus Plans dated June 1, 2000,
the Retention Bonus payable to each such eligible employee.
SECTION 4.16. Environmental Matters. Except as disclosed in Section
4.16 of the Disclosure Schedule or as would not reasonably be expected to have a
Material Adverse Effect:
(a) the Company and the Company Subsidiaries are in compliance with
all applicable Environmental Laws and the Properties have been operated by
the Company and the Company Subsidiaries in compliance with all applicable
Environmental Laws;
(b) there are no existing, pending or, to the Company's Knowledge,
threatened actions, suits, investigations, inquiries, proceedings or clean-
up obligations by any Governmental Authority relating to any Environmental
Laws with respect to the Properties; and
(c) all notices, permits or similar authorizations, if any, required
to be obtained or filed in connection with the operation of the Properties
by the Company or the Company Subsidiaries, including, without limitation,
treatment, storage, disposal or release of Hazardous Materials or solid
waste into the environment, have been duly obtained or filed.
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SECTION 4.17. Reserve Reports. (a) The Company has delivered to the
---------------
Purchaser a copy of the oil and gas reserve report for the Company prepared by
NCOC and reviewed by Miller & Lents, Ltd. as of June 30, 2000 (the "Reserve
-------
Report"). Neither the Company nor any Company Subsidiary has Knowledge of any
- ------
facts that would make the factual information provided by the Company and the
Company Subsidiaries to Miller & Lents, Ltd., and on which the Reserve Report
was based, inaccurate in any material respect at the time provided. The
estimates of proved reserves provided by NCOC to Miller & Lents in connection
with their review of the Reserve Report are in accordance with definitions
contained in Rule 4-10(a) of Regulation S-X promulgated by the SEC. The
estimates of probable and possible reserves provided by NCOC to Miller & Lents
in connection with their review of the Reserve Report are in accordance with the
definitions of the Society of Petroleum Engineers, Inc.
(b) OTHER THAN AS EXPRESSLY SET FORTH ABOVE IN THIS SECTION 4.17, THE
COMPANY MAKES NO REPRESENTATION OR WARRANTY, AND HEREBY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, THAT THE RESERVE ESTIMATES, COST AND CASH FLOW
ESTIMATES, PRICE ESTIMATES OR PRODUCTION OR FLOW RATE ESTIMATES CONTAINED IN THE
RESERVE REPORT, OR IN ANY SUPPLEMENT THERETO OR UPDATE THEREOF, ARE IN ANY WAY
COMPLETE, ACCURATE OR NOT MISLEADING, THE SAME BEING PREDICTIONS AS TO FUTURE
EVENTS WHICH ARE INHERENTLY SUBJECT TO INCOMPLETENESS OR INACCURACY.
SECTION 4.18. Hedging. (a) The Company and the Company Subsidiaries do
-------
not have any outstanding obligations for the delivery of Hydrocarbons
attributable to any of the Properties of the Company or any Company Subsidiary
in the future on account of prepayment, advance payment, take-or-pay or similar
obligations without then or thereafter being entitled to receive full value
therefor.
(b) Section 4.18(b) of the Disclosure Schedule sets forth all futures,
hedge, swap, collar, put, call, floor, cap, option or other contracts that are
intended to benefit from, relate to or reduce or eliminate the risk of
fluctuations in interest rates, basis risk or the price of commodities
("Hedges"), including Hydrocarbons or securities, to which the Company or any
------
Company Subsidiary is bound as of the date hereof. Such Hedges are in full force
and effect on the date of this Agreement.
(c) Since September 30, 2000, no prepayments, payments or other amounts
have been paid with respect to any Hedges, other than monthly settlement
payments in the ordinary course on the Hedges shown in Section 4.18(b) of the
Disclosure Schedules.
SECTION 4.19. Taxes. Except as set forth in Section 4.19 of the
-----
Disclosure Schedule, and except for matters that would not have a Material
Adverse Effect, (a) the Company and each of the Company Subsidiaries have timely
filed all returns and reports required to be filed by them with respect to Taxes
("Tax Returns") prior to the date of this Agreement, taking into account any
-----------
extension of time to file granted to or obtained on behalf of the Company and
the Company Subsidiaries, (b) all Taxes shown to be payable on such Tax Returns
or reports have been paid or will be paid, (c) all such Tax Returns are true,
correct, and
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complete, (d) the liabilities and reserves for Taxes reflected in the June 30
Balance Sheet are adequate to cover all Taxes for all periods ending at or prior
to the date thereof and, in the case of Taxes attributable to the activities or
assets of North Central, there is no liability for Taxes for any period or
portion of a period beginning after such date other than Taxes arising in the
ordinary course of business, (e) neither the Company nor any of the Company
Subsidiaries has waived or agreed to an extension of the statute of limitations
with respect to assessment of any Tax (other than waivers or agreements which
are no longer in effect), (f) neither the Company nor any of the Company
Subsidiaries has filed a consent to the application of Section 341 of the Code,
(g) there are no stock elimination transactions, within the meaning of Treas.
Reg. (S) 1.1502-13(1)(3), as to which either the Company or any of the Company
Subsidiaries will be required to recognize income as a result of the Merger, and
(h) as of the date of this Agreement, no deficiency for any material amount of
Tax has been asserted or assessed by a taxing authority against the Company or
any of the Company Subsidiaries. Except as set forth in Section 4.19 of the
Disclosure Schedule, and except for matters that would not have a Material
Adverse Effect, all ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of property or the
production of Hydrocarbons or the receipt of proceeds therefrom assessed against
the Properties have been properly paid. Neither the Company nor any of the
Company Subsidiaries has paid any estimated Taxes or other Taxes for a Tax
period or portion thereof that is included in the Shareholder Tax Periods, as
defined in Section 8.01(a), in excess of amounts which the Company or Company
Subsidiary has determined in good faith are due for such Tax period or portion
thereof.
SECTION 4.20. Insurance. The Company has all insurance policies that it
---------
believes are required in connection with the operation of the business of the
Company and the Company Subsidiaries. The Company has made available to the
Purchaser true and correct summaries of each of the insurance policies relating
to the Company or the Company Subsidiaries that are currently in effect. With
respect to each such insurance policy, none of the Company, any Company
Subsidiary or, to the Knowledge of the Company, any other party to the policy is
in breach or default thereunder (including with respect to the payment of
premiums or the giving of notice) and the Company does not know of any
occurrence of any event which, with notice or the lapse of time or both, would
constitute such a breach or default or permit termination, modification or
acceleration under the policy, except for such breaches or defaults as would not
result in a Material Adverse Effect.
SECTION 4.21. Brokers. Except for Goldman, Sachs & Co., no broker, finder
-------
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of the Shareholders or the Company.
SECTION 4.22. Tax Treatment. Neither the Company nor the Shareholders has
-------------
or have knowingly taken or failed to take any action that would prevent the
Merger from qualifying as a tax-free reorganization within the meaning of
section 368(a) of the Code.
SECTION 4.23. Production and Pipeline Imbalances. Section 4.23 of the
----------------------------------
Disclosure Schedule sets forth all Company and Company Subsidiary pipeline and
production imbalances and penalties as of September 30, 2000 with respect to the
Properties.
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SECTION 4.24. Equipment. All Wells and Equipment constituting a part
---------
of the Properties (a) are, in the aggregate, in a state of repair so as to be
adequate in all material respects for reasonable prudent operations in the areas
in which they are operated, and (b) are adequate, together with all related
Properties, to comply in all material respects with the requirements of all
applicable contracts, including sales contracts. Subject to the Permitted
Encumbrances, the Company or the Company Subsidiaries have defensible title to
the Equipment owned by the Company or the Company Subsidiaries and constituting
a part of the Properties.
SECTION 4.25. Operation of the Properties. Since September 30, 2000
---------------------------
through the date hereof, North Central:
(a) has caused the Properties to be maintained and operated in a
reasonable manner and in substantially the same manner as such Properties
were maintained and operated prior to September 30, 2000;
(b) has not sold, assigned, transferred, farmed out, conveyed,
encumbered, mortgaged, or otherwise disposed of any of the Properties with
a value in excess of $500,000, except for the sale of Hydrocarbons in the
ordinary course of business;
(c) has not, to the extent related to the Properties, made any major
change in the character of North Central's business or operations or
otherwise conducted North Central's business and operations other than in
the ordinary course of business;
(d) except as would not have a Material Adverse Effect, has not
permitted any Leases or rights with respect to the Properties to expire, or
waived any material rights with respect to the Properties;
(e) has not entered into any agreement or made any commitment (other
than this Agreement) to take any of the actions referred to in clauses (a)
through (d) above; and
(f) to the Company's Knowledge, there have been no material casualty
losses (above or below the surface of the ground) which affected any of the
Properties.
SECTION 4.26. Plugging and Abandonment. There are no Wells on the
------------------------
Properties that have been permanently plugged and abandoned by North Central
that were not plugged and abandoned in accordance in all material respects with
the applicable requirements of the Leases and applicable Laws. To the Knowledge
of the Company, there are no Wells on the Properties that the Company or the
Company Subsidiaries are currently required by Law or contract to plug and
abandon.
SECTION 4.27. No Parachute Payments. Neither the Company nor any
---------------------
Company Subsidiary is a party to an agreement that provides for the payment of
any amount that would constitute a "parachute payment" within the meaning of
Section 280G of the Code.
SECTION 4.28. Vote Required. The affirmative vote of (a) the holders
-------------
of two-thirds of the voting power of all the outstanding Company Common Stock,
voting together as a
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single class, (b) the holders of two-thirds of the voting power of the voting
Company Common Stock, voting separately as a single class and (c) the holders of
two-thirds of the voting power of the non-voting Company Common Stock, voting
separately as a single class, in each case to adopt this Agreement and to
approve the transactions contemplated hereby (the "Company Stockholder Vote") is
------------------------
the only vote of the holders of any class or series of Company capital stock
necessary to approve or adopt this Agreement or the transactions contemplated
hereby.
SECTION 4.29. Voting Power of Significant Stockholders; Dissenting
----------------------------------------------------
Shares. (a) The Significant Shareholders hold (i) two-thirds of the voting
- - ------
power of the outstanding Company Common Stock, (ii) two-thirds of the voting
power of the outstanding voting Company Common Stock and (iii) two-thirds of the
voting power of the outstanding non-voting Company Common Stock, and therefore
hold sufficient voting power to approve the Merger.
(b) Immediately prior to the Effective Time, less than 5% of all the
outstanding shares of Company Common Stock will be Dissenting Shares.
SECTION 4.30. Non-Energy Company Activity. Substantially all cash
---------------------------
and cash equivalent investments held by the Company and its Non-Energy Company
Subsidiaries are held in interest-bearing bank accounts at the Boston Safe
Deposit & Trust Company. Since October 12, 2000, the sole activity of the
Company and its Non-Energy Company Subsidiaries has been to manage its cash and
cash equivalent investments, and to pay its expenses as they come due in the
ordinary course and consistent with past practices.
SECTION 4.31. Seismic Data. Section 4.31(a) of the Disclosure
------------
Schedule sets forth all material seismic data held by the Company or any Company
Subsidiary with respect to its Properties (the "Seismic Data"). Except as
------------
provided in Section 4.31 of the Disclosure Schedule, the Company or the relevant
Company Subsidiary owns or has the right to use without any limitations or
restrictions adversely affecting the use of the same in the ordinary conduct of
its business, the Seismic Data. The execution of this Agreement (a) has not
altered or impaired, nor will alter or impair, any such rights, and (b) has not
breached, or will not breach, any agreements pertaining to such Seismic Data.
Section 4.31(b) of the Disclosure Schedule sets forth the Seismic Data which is
subject to restrictions on transfer and change of control provisions, including,
without limitation, consents to assign and the payment of transfer fee.
SECTION 4.32. Suspense Funds. Section 4.32 of the Disclosure
--------------
Schedule sets forth all suspense funds held by the Company or the Company
Subsidiaries for the account of a third party or an Affiliate that are
associated with the Properties as of September 30, 2000.
SECTION 4.33. Future Sales Contracts. The Company or the Company
----------------------
Subsidiaries have not collected any proceeds from the sale of Hydrocarbons from
the Properties which are subject to a later refund.
SECTION 4.34. Holding Company; Investment Company. Seller is not a
-----------------------------------
"holding company," or a "subsidiary company" of a "holding company," or an
affiliate of a "holding company" or of a "subsidiary company" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended. Seller is
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not an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.35. Federal Regulations. Any gas gathering system
-------------------
constituting a part of the Properties has as its primary function the provision
of natural gas gathering services, as the term "gathering" is interpreted under
Section 1(b) of the Natural Gas Act (the "NGA"). None of the Properties have
---
been or are certificated by the Federal Energy Regulatory Commission (the
"FERC") under Section 7(c) of the NGA or are now subject to FERC jurisdiction
----
under the NGA. None of the Properties have been or are providing service
pursuant to Section 311 of the NGA.
SECTION 4.36. Securities Act. (a) Each of the Significant
--------------
Shareholders is an "accredited investor" as defined in Rule 501 promulgated
under the Securities Act.
(b) Each Shareholder is acquiring the Shares of Purchaser Common
Stock to be issued to such Shareholder for such Shareholder's own account and
not with a view to, or for sale in connection with, any distribution thereof in
violation of the Securities Act. Each Shareholder acknowledges that the Shares
of Purchaser Common Stock have not been registered and that such Shares of
Purchaser Common Stock may not be transferred or sold under the Securities Act
and that such Shares of Purchaser Common Stock may not be transferred or sold
unless they are registered under the Securities Act or an exemption is
available.
(c) Each Shareholder understands that the Shares of Purchaser Common
Stock issuable in the Merger have not been registered under the Securities Act
or any applicable state securities laws and that such Shares may not be resold
unless they are registered under the Securities Act or an exemption is
available.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
SECTION 5.01. Organization and Authority of the Purchaser. The
-------------------------------------------
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation, and has all necessary
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by it and to carry on its business as it is currently
conducted, except where the failure to have such power and authority would not
have a Purchaser Material Adverse Effect. The Purchaser has all necessary
corporate power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Purchaser, the performance
by the Purchaser of its obligations hereunder and the consummation by the
Purchaser of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the part of the Purchaser and no other
corporate proceedings on the part of the Purchaser are necessary to authorize
this Agreement or the consummation of the transactions contemplated hereby
(other than, with respect to the Merger, the approval of the holders of a
majority of the issued and outstanding common stock of the
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44
Purchaser, and the filing and recording of appropriate merger documents as
required by the BCL and the DGCL). This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Company) this Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms.
SECTION 5.02. Certificate of Incorporation and Bylaws. The Purchaser
---------------------------------------
has filed with the SEC complete and correct copies of the Restated Certificate
of Incorporation and the Bylaws, each as amended to date, of the Purchaser. Such
Restated Certificate of Incorporation and Bylaws are in full force and effect.
SECTION 5.03. Capitalization. The authorized capital stock of the
--------------
Purchaser consists of (a) 100,000,000 shares of Purchaser Common Stock and (b)
2,000,000 shares of preferred stock, par value $1.00 per share ("Purchaser
---------
Preferred Stock"). As of September 30, 2000, (i) 40,521,081 shares of Purchaser
- ---------------
Common Stock were issued and outstanding, (ii) zero shares of Purchaser
Preferred Stock were issued and outstanding, (iii) 15,575 shares of Purchaser
Common Stock were held in the treasury of the Purchaser and (iv) 4,551,966
shares of Purchaser Common Stock were reserved for future issuance pursuant to
incentive plans (primarily in the form of stock options). In addition,
100,000,000 Preferred Stock Purchase Rights related to Purchaser's Shareholder
Rights Plan were authorized; $115,000,000 in aggregate principal amount of
5 1/2% Convertible Subordinated Notes due 2006 were outstanding which are
convertible into Purchaser Common Stock at the rate of 23.7051 shares per $1,000
in principal amount of such notes; and $150,000,000 in aggregate principal
amount of 6 1/2% Cumulative Quarterly Income Convertible Securities of Pogo
Trust I, which are convertible into Purchaser Common Stock at the rate of 2.1053
shares per $50 in principal amount of such convertible securities, were
outstanding.
SECTION 5.04. Financing. The Purchaser has, or has commitments from
---------
responsible financial institutions to enable it to borrow, sufficient funds to
permit the Purchaser to acquire all the outstanding shares of Company Common
Stock in the Merger. The Purchaser has delivered to the Company a true and
correct copy of a commitment letter relating to such commitment.
SECTION 5.05. No Conflict. Assuming compliance with the notification
-----------
requirements of the HSR Act and the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 5.06, except as may result from any facts or circumstances relating
solely to the Company, the execution, delivery and performance of this Agreement
by the Purchaser do not and will not (a) violate, conflict with or result in the
breach of any provision of the Restated Certificate of Incorporation or Bylaws
of the Purchaser, (b) conflict with or violate any Law or Governmental Order
applicable to the Purchaser or by which any property or asset of the Purchaser
is bound or (c) conflict with, result in any breach of or constitute a default
(or an event which, with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give to others any rights
of termination, amendment or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of the Purchaser pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or obligation to which the
Purchaser is a party or by which any of
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such assets or properties are bound or affected, except for any such conflicts,
breaches, defaults or other occurrences which would not be reasonably expected
to have a Purchaser Material Adverse Effect, prevent or delay the consummation
of the Merger or otherwise prevent the Purchaser from performing its obligations
under this Agreement.
SECTION 5.06. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery and performance of this Agreement by the Purchaser do not and will not
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Authority on the part of the
Purchaser, except (a) as described in a writing given to the Company by the
Purchaser on the date of this Agreement, (b) the pre-merger notification
requirements of the HSR Act and the Investment Canada Act, (c) the filing and
recordation of appropriate merger documents as required by the BCL and the DGCL
and (d) the filing with the SEC under Section 14(a) of the Securities Exchange
Act of proxy material relating to the meeting of its stockholders to approve the
Merger, the filing of such registration statements and other documents as may be
required to comply with Section 6.10, such other reports and information under
the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, and such filings, authorizations, orders and
approvals as may be required under state securities laws and the rules of the
New York Stock Exchange and (e) the filing of Form D under Regulation D under
the Securities Act and (f) any other consent, approval, authorization, filing or
notice the failure to make or obtain which would not reasonably be expected to
have a Purchaser Material Adverse Effect or prevent or materially delay the
consummation of the Merger.
SECTION 5.07. Litigation. Except as disclosed in a writing given to
----------
the Company by the Purchaser on the date of this Agreement, there is no Action
pending or, to the knowledge of the Purchaser, threatened against the Purchaser
or any properties or assets of the Purchaser, before any Governmental Authority,
(a) which seeks to delay or prevent the consummation of, or which would be
likely to materially adversely affect the Purchaser's ability to consummate, the
transactions contemplated by this Agreement, or (b) which would be reasonably
likely to have a Purchaser Material Adverse Effect.
SECTION 5.08. Tax Treatment. The Purchaser has not knowingly taken
-------------
or failed to take any action which would prevent the Merger from qualifying as a
tax-free reorganization within the meaning of section 368(a) of the Code.
SECTION 5.09. SEC Filings; Financial Statements. (a) The Purchaser
---------------------------------
has filed all forms, reports and documents required to be filed by it with the
SEC since January 1, 1998 through the date of this Agreement (collectively, the
"Purchaser SEC Reports"). As of the respective dates they were filed, (i) the
---------------------
Purchaser SEC Reports were prepared in all material respects in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) none of the Purchaser SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited
financial statements of the Purchaser included in the Purchaser's Annual Report
on Form 10-K for the
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12 months ended December 31, 1999 and the Purchaser's Quarterly Report on Form
10-Q for the quarterly periods ended March 31, 2000, June 30, 2000 and September
30, 2000 have been prepared in accordance with U.S. GAAP applied on a consistent
basis (except, in the case of the unaudited financial statements, for the
omission of information as permitted by Form 10-Q promulgated by the SEC), and
fairly present, in all material respects, the financial position of the
Purchaser and its consolidated subsidiaries as of the dates thereof and the
results of their operations and changes in financial position for the periods
then ended (subject, in the case of any unaudited interim financial statements,
to normal audit adjustments).
(c) The Purchaser has heretofore made available to the Company
complete and correct copies of (i) all agreements, documents and other
instruments not yet filed by the Purchaser with the SEC but that are currently
in effect and that the Purchaser expects to file with the SEC after the date of
this Agreement, and (ii) all material amendments and modifications that have not
been filed by the Purchaser with the SEC to all agreements, documents and other
instruments that previously had been filed with the SEC and are currently in
effect.
(d) Neither the Purchaser nor any subsidiary of the Purchaser has any
Liabilities of a nature or character required to be disclosed in a Purchaser SEC
Report or included in the financial statements of the Company included in the
Purchaser SEC Reports, except for liabilities and obligations (i) reflected or
disclosed on the consolidated balance sheet of the Purchaser and the
consolidated subsidiaries of the Purchaser as at December 31, 1999, including
any notes thereto, (ii) reflected or disclosed in any Purchaser SEC Report filed
since December 31, 1999 and prior to the date of this Agreement, or (iii)
incurred since December 31, 1999 in the ordinary course of business consistent
with past practice which have not had, and would not reasonably be expected to
have, a Purchaser Material Adverse Effect.
SECTION 5.10. Compliance With Laws. Each of the Purchaser and its
--------------------
subsidiaries has conducted and continues to conduct its business in compliance
with all Laws and Governmental Orders applicable to the Purchaser or any of its
subsidiaries, except for violations or failures so to comply, if any, that are
not reasonably expected to have a Purchaser Material Adverse Effect.
SECTION 5.11. Taxes. Except for matters that would not have a
-----
Purchaser Material Adverse Effect, (a) the Purchaser and its subsidiaries have
timely filed all returns and reports required to be filed by them with respect
to Taxes ("Purchaser Tax Returns") prior to the date of this Agreement, taking
---------------------
into account any extension of time to file granted to or obtained on behalf of
the Purchaser and its subsidiaries, (b) all Taxes shown to be payable on such
Tax Returns or reports have been paid or will be paid, (c) all such Tax Returns
are true, correct, and complete in all material respects, (d) the liabilities
and reserves for Taxes reflected in the balance sheet dated September 30, 2000
contained in the Purchaser SEC Reports are adequate to cover all Taxes for all
periods ending at or prior to the date thereof and there is no liability for
Taxes for any period or portion of a period beginning after such date other than
Taxes arising in the ordinary course of business.
SECTION 5.12. Authorization and Issuance of Purchaser Common Stock.
----------------------------------------------------
The authorization, issuance and delivery of Purchaser Common Stock pursuant to
this Agreement
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have been duly authorized by all requisite corporate action on the part of the
Purchaser, and when issued and delivered in accordance with this Agreement, the
Purchaser Common Stock will be validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the ownership thereof,
free of any Encumbrances created by the Purchaser and not subject to preemptive
or similar rights created by statute, the Purchaser's Restated Certificate of
Incorporation or Bylaws or any agreement to which the Purchaser is a party or by
which the Purchaser is bound.
SECTION 5.13. Absence of Purchaser Material Adverse Effect. Since
--------------------------------------------
September 30, 2000, except as disclosed in the Purchaser SEC Reports, there has
not been any Purchaser Material Adverse Effect.
SECTION 5.14. Brokers. No broker, finder or investment banker (other
-------
than Merrill Lynch & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Purchaser.
SECTION 5.15. Vote Required. The affirmative vote of the holders of
-------------
a majority of the voting power of the outstanding shares of Purchaser Common
Stock to adopt this Agreement, to approve the issuance of shares of Purchaser
Common Stock and the other transactions contemplated hereby, is the only vote of
the holders of any class of shares of Purchaser capital stock necessary to
approve or adopt this Agreement or the transactions contemplated hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Conduct of Business Prior to the Closing. (a) The
----------------------------------------
Company covenants and agrees that, between the date of this Agreement and the
time of the Closing, except as set forth in Section 6.01(a) of the Disclosure
Schedule or as contemplated by any other provision of this Agreement, unless the
Purchaser shall otherwise consent in writing (which consent shall not be
unreasonably withheld):
(i) the businesses of the Company and the Company Subsidiaries
shall be conducted only in, and the Company and the Company Subsidiaries
shall not take any action except in, the ordinary course of business and in
a manner consistent with past practice;
(ii) the Company shall use its commercially reasonable efforts to
preserve substantially intact its business organization, to keep available
the services of the current employees of the Company and the Company
Subsidiaries and to preserve the current relationships of the Company and
the Company Subsidiaries with customers, contract holders and other Persons
with whom the Company or any Company Subsidiary has significant business
relations; and
(iii) the Company shall cause North Central to take the following
actions:
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(A) Continue to operate (or cause to be operated) the Properties only
in the ordinary course of business, as a reasonably prudent operator, in
accordance with all applicable Laws;
(B) Maintain in full force and effect all policies of insurance
covering the Properties now maintained by the Company or any Company
Subsidiary through the Closing Date;
(C) Use its reasonable best efforts to preserve in full force and
effect all of the material Leases, Easements, and other contracts which
relate to or constitute a part of the Properties and to perform all
obligations of the Company and any Company Subsidiary in or under such
material Leases, Easements, and other contracts;
(D) Not to enter into any agreement or arrangement granting any
preferential right to purchase any of the Properties or requiring the
consent of any Person to the transactions contemplated hereunder;
(E) Not to enter into any contracts or other agreements relating to
the Properties that are not terminable on notice of ninety (90) days or
less without penalty;
(F) Promptly notify the Purchaser of any asserted or threatened claim
or Action involving or affecting the Properties of which the Company or any
Company Subsidiary receives notice or of which the Company has Knowledge;
(G) Not to relinquish voluntarily its position as operator with
respect to any of the Properties;
(H) Maintain all Equipment and personal property included in the
Properties in accordance with reasonably prudent operating practices and
procedures;
(I) Pay all ad valorem, severance and production, property and sales
Taxes and assessments with respect to the Properties which become due and
payable prior to the Closing Date;
(J) Not to cancel any material indebtedness or waive any material
claims or rights against any third party or Affiliate; and
(K) Not to initiate any unitization with respect to any Property and
to notify the Purchaser promptly upon receiving notice of any unitization
of any Property.
(b) By way of amplification and not limitation, except as contemplated by
this Agreement, as reflected in Section 6.01(b) of the Disclosure Schedule or as
required by Law, neither the Company nor any Company Subsidiary shall, between
the date of this Agreement and the Closing, directly or indirectly do, or
propose to do, any of the following,
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without the prior written consent of the Purchaser (which consent shall not
be unreasonably withheld):
(i) amend or otherwise change its Restated Certificate of
Incorporation or Bylaws or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, grant, encumber, farmout,
lease or authorize the issuance, sale, pledge, disposition, grant, farmout,
lease or Encumbrance of (A) any shares of capital stock of the Company or
any Company Subsidiary of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without
limitation, any phantom interest) of the Company or any Company Subsidiary,
or (B) any assets of the Company or any Company Subsidiary having a value
in excess of $100,000 individually or $300,000 in the aggregate, except
sales of Hydrocarbons in the ordinary course of business and in a manner
consistent with past practice;
(iii) declare, set aside, make or pay any dividend or other
distribution payable in cash, stock, property or otherwise, with respect to
any of its capital stock;
(iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(v) (A) acquire or dispose of (including, without limitation, by
merger, consolidation or acquisition or disposition of stock or assets) any
interest in any corporation, partnership, other business organization or
any division thereof or any assets, other than in the ordinary course of
business, consistent with past practice, and any other acquisitions for
consideration which are not, in the aggregate, in excess of $5,000,000; (B)
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any Person (other than the Company or a
wholly owned Company Subsidiary), except for indebtedness incurred in the
ordinary course of business, consistent with past practice, in amounts not
in excess of $10,000,000 in the aggregate, net of any repayments made after
the date of this Agreement and except for amounts necessary to pay the
Company's obligations under Article VII of this Agreement; (C) make any
loans or advances to any Persons (other than loans or advances by the
Company and/or the Non-Energy Company Subsidiaries to North Central, or
between NCOC and its subsidiary), except loans or advances not in excess of
$100,000 in the aggregate to employees in the ordinary course of business,
consistent with past practice; (D) make or obligate itself to make any
capital expenditure in excess of the amounts specified in North Central's
2000 fiscal year budget or 2001 fiscal year budget proposed by North
Central and approved by the Purchaser; provided, however, if no budget is
-------- -------
proposed and approved, the limit will be $5,000,000 in the aggregate per
month, other than pursuant to any commitment as of the date hereof; or (E)
enter into or amend any contract, agreement, commitment or arrangement
that, if fully performed, would not be permitted under this subsection (v);
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(vi) increase the compensation payable or to become payable to its
officers or employees, issue, or reprice the initial value of, any shares
under the Phantom Stock Plan, or grant any severance or termination pay to,
or enter into any employment or severance agreement with, any director,
officer or other employee of the Company or any Company Subsidiary, or
establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee; provided, however, no
-------- -------
provision of this Section 6.01(b)(vi) shall restrict or prohibit the
payment of bonuses to officers and employees not to exceed $850,000 in the
aggregate;
(vii) take any action with respect to accounting policies or
procedures, except in accordance with GAAP;
(viii) pay, discharge or satisfy any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the consolidated balance sheet
of the Company and the Company Subsidiaries as at June 30, 2000 or the
consolidated balance sheet of North Central as at September 30, 2000, or
subsequently incurred in the ordinary course of business and consistent
with past practice or in accordance with the provisions of this Section
6.01; or
(ix) permit the Company or any Non-Energy Company Subsidiary to
engage in any active trade or business or to take any action other than to
lend or contribute to North Central their available cash balances as
provided in Section 6.14 and to pay their normal general and administrative
expenses, in the ordinary course and consistent with past practices, as
they become due.
(c) The Purchaser covenants and agrees that, between the date of
this Agreement and the time of the Closing, except as disclosed in a writing
given to the Company by the Purchaser on the date of this Agreement or as
contemplated by any other provision of this Agreement, unless the Company shall
otherwise consent in writing (which consent shall not be unreasonably withheld):
(i) the businesses of the Purchaser and its subsidiaries shall be
conducted only in, and the Purchaser and its subsidiaries shall not take
any action except in, the ordinary course of business and in a manner
consistent with past practice; and
(ii) the Purchaser shall use its commercially reasonable efforts to
preserve substantially intact its business organization, to keep available
the services of the current employees of the Purchaser and its subsidiaries
and to preserve the current relationships of the Purchaser and its
subsidiaries with customers, contract holders and other Persons with whom
the Purchaser or any of its subsidiaries has significant business
relations.
44
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(d) By way of amplification and not limitation, except as
contemplated by this Agreement, except as disclosed in a writing given to the
Company by the Purchaser on the date of this Agreement or as required by Law,
the Purchaser shall not, between the date of this Agreement and the Closing,
directly or indirectly, do, or propose to do, any of the following, without the
prior written consent of the Company (which consent shall not be unreasonably
withheld):
(i) amend or otherwise change its Restated Certificate of
Incorporation or Bylaws or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, grant, encumber or authorize
the issuance, sale, pledge, disposition, grant or Encumbrance of (A) any
shares of capital stock of the Purchaser of any class, except upon
conversion of convertible securities outstanding on the date hereof, upon
any issuance of stock upon the exercise of rights outstanding under the
Rights Agreement, and upon exercise of employee or director stock options
or other compensatory rights outstanding on the date hereof or hereafter
issued or granted in the ordinary course of business consistent with past
practice, or (B) any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest) of the Purchaser or any of its subsidiaries except any such
issuance, sale or other disposition by a subsidiary of the Purchaser to the
Purchaser or another subsidiary of the Purchaser, options or restricted
stock or other compensatory rights issued or granted in the ordinary course
of business consistent with past practice;
(iii) declare, set aside, make or pay any dividend or other
distribution payable in cash, stock, property or otherwise, with respect to
any of its capital stock, except in the ordinary course of business in a
manner consistent with past practice;
(iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
for Purchaser Common Stock acquired as consideration for the exercise of
employee or director stock options or to satisfy tax withholding
obligations with respect thereto and for Purchaser Common Stock acquired to
satisfy matching contribution obligations under Purchaser's 401(k) plan;
(v) (A) acquire or dispose of or permit any subsidiary of the
Purchaser to acquire or dispose of (including, without limitation, by
merger, consolidation or acquisition or disposition of stock or assets) any
interest in any corporation, partnership, other business organization or
any division thereof or any assets, other than in the ordinary course of
business, consistent with past practice, and any other acquisitions for
consideration which are not, in the aggregate, in excess of $75,000,000 or
any other dispositions for consideration which are not, in the aggregate,
in excess of $50,000,000, and except for transactions between the Purchaser
and one or more subsidiaries of the Purchaser or between subsidiaries of
the Purchaser; (B) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person (other
than the Purchaser or its wholly owned subsidiaries), except for
indebtedness
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incurred in the ordinary course of business, consistent with past practice,
in amounts not in excess of $50,000,000 in the aggregate, net of any
repayments made after the date of this Agreement; or (C) enter into or
amend any contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this subsection (v); or
(vi) enter into a merger, consolidation, share exchange or other
business combination transaction with any other Person, provided, however,
-------- -------
in the event that the Purchaser becomes the subject of an unsolicited
tender offer or exchange offer, or any third party publicly announces a
Competing Transaction (as defined in Section 6.09) which was not solicited
by the Purchaser, the Purchaser may enter into a merger, consolidation,
share exchange or other business combination transaction, with a Person
other than the Person who made such tender offer or exchange offer or made
such public announcement of a Competing Transaction.
SECTION 6.02. Access to Information. Except as required pursuant to
---------------------
any confidentiality agreement or similar agreement or arrangement to which the
Company or any Company Subsidiary is a party or pursuant to applicable Law, from
the date hereof until the Closing, upon reasonable notice, the Company shall,
and shall cause each of the Company Subsidiaries and each of the Company's and
the Company Subsidiaries' officers, directors, employees, agents,
representatives, accountants and counsel to: (a) afford the officers, employees
and authorized agents, accountants, counsel and representatives of the Purchaser
(collectively, "Representatives") reasonable access, during normal business
---------------
hours, to the offices, properties, oil and gas fields, other facilities, books
and records of the Company and each Company Subsidiary and to those officers,
directors, employees, agents, accountants and counsel of the Company and of each
Company Subsidiary who have any knowledge relating to the Company, any Company
Subsidiary or the business and (b) furnish to the Representatives such
additional financial and operating data and other information regarding the
assets, properties and goodwill of the Company and the Company Subsidiaries as
the Purchaser may from time to time reasonably request.
SECTION 6.03. Confidentiality. The parties shall comply with, and
---------------
shall cause their respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreements dated September 16,
2000 and November 16, 2000, between the Company and the Purchaser.
SECTION 6.04. Company Stockholders' Meeting and Voting. (a) As soon
----------------------------------------
as practicable after the date hereof, the Company shall call and hold a special
meeting of its stockholders (the "Company Stockholders' Meeting") for the
-----------------------------
purpose of voting upon the approval of the Merger.
(b) The Shareholders agree to vote their shares in all classes of
the Company Common Stock in favor of the approval of the Merger at the Company
Special Meeting. Any solicitation of votes or consents from any holder of
Company Common Stock who is not an accredited investor shall be made only in
conjunction with a purchaser representative as contemplated by Regulation D.
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(c) From the date hereof until the earlier of the Effective Time
and the termination of this Agreement, the Shareholders agree not to sell or
otherwise transfer any of their shares of Company Common Stock to any Person
other than a Person that (i) agrees with the Purchaser in writing to vote in
favor of the approval of the Merger at the Company Special Meeting and to be
bound by the provisions of Section 6.04(c) and (ii) (A) upon the closing of such
transfer, will, assuming the conversion of all such shares of Company Common
Stock into shares of Purchaser Common Stock, own less than 5% of the Voting
Securities (as defined in the Standstill and Voting Agreement) of the Purchaser,
(B) is not a member of a "group" (as defined in Section 13(d)(3) of the Exchange
Act) or an Affiliate or an Associate of a member of such a "group" with respect
to the Purchaser and (C) has not publicly announced that he, she or it is
accumulating Voting Securities for any of the purposes set forth in Section 2.1
of the Standstill and Voting Agreement.
(d) The Company and the Purchaser shall cooperate in preparing
solicitation and/or information materials in connection with such meeting so as
to comply with applicable Law, including Regulation D under the Securities Act,
and the Company will include in such materials all information the Purchaser
reasonably deems necessary regarding the Purchaser in order to effect such
compliance.
SECTION 6.05. Purchaser Stockholders' Meeting. (a) The Purchaser
-------------------------------
shall call and hold a special meeting of its stockholders (the "Purchaser
---------
Stockholders' Meeting") as promptly as practicable for the purpose of voting
- ---------------------
upon (i) the approval and (ii) the adoption of this Agreement, the Merger and
the approval of the issuance of shares of Purchaser Common Stock pursuant to the
terms of the Merger (the "Purchaser Stock Issuance"). The Purchaser shall
------------------------
prepare and file with the SEC a proxy statement (together with any amendments
thereof or supplements thereto, the "Proxy Statement") relating to the Purchaser
---------------
Stockholders' Meeting. The Proxy Statement shall include the recommendation of
the Board of Directors of the Purchaser to vote in favor of (i) the approval and
adoption of this Agreement and the Merger and (ii) the Purchaser Stock Issuance;
provided, however, that the Board of Directors of the Purchaser may, at any time
- -------- -------
prior to the Purchaser Stockholders' Meeting, withdraw, modify or change its
recommendation to the extent the Board of Directors of the Purchaser determines
in good faith after consultation with independent legal counsel (who may be the
Purchaser's regular outside counsel) that such action is required by reason of
the fiduciary duties of the Board of Directors of the Purchaser to the
Purchaser's stockholders under applicable Law.
(b) Subject to the proviso to the last sentence of Section 6.05(a),
the Purchaser shall use its reasonable best efforts to solicit from its
stockholders proxies in favor of the approval of the Merger and the Purchaser
Stock Issuance and shall take all other actions necessary or advisable to secure
the vote or consent of its stockholders required by the DGCL and the rules of
the New York Stock Exchange.
SECTION 6.06. Regulatory and Other Authorizations; Notices and
------------------------------------------------
Consents. (a) Upon the terms and subject to the conditions hereof, each of the
- --------
parties hereto shall (i) use its commercially reasonable efforts to take, or
cause to be taken, all appropriate action and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement, (ii) use its commercially reasonable efforts to obtain from
Governmental
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Authorities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by the Purchaser or the Company or any
of their subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement and (iii) make all necessary
filings, and thereafter make any other required submissions with respect to this
Agreement, the Merger and the other transactions contemplated by this Agreement
required under the HSR Act and any other applicable Law. The parties hereto
shall cooperate with each other in connection with the making of all such
filings.
(b) The Purchaser and the Company shall file promptly (but in no
more than ten (10) Business Days from the date hereof) notifications under the
HSR Act and shall respond as promptly as practicable to all inquiries or
requests received from the Federal Trade Commission or the Antitrust Division of
the Department of Justice for additional information or documentation and shall
respond as promptly as practicable to all inquiries and requests received from
any State Attorney General or other Governmental Authority in connection with
antitrust matters. The parties shall cooperate with each other in connection
with the making of all such filings or responses, including providing copies of
all such documents to the other party and its advisors prior to filing or
responding.
SECTION 6.07. Notice of Certain Matters. The Purchaser shall give
-------------------------
prompt notice to the Company, and the Company shall give prompt notice to the
Purchaser, of (a) the occurrence, or non-occurrence, of any event the occurrence
or non-occurrence of which would be likely to cause (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate or (ii) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied, and (b) any failure of the Purchaser or the Company, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder.
SECTION 6.08. Non-Accredited Investor Advisor. Prior to the Company
-------------------------------
Stockholders Meeting, the Company shall engage a qualified person or persons to
serve as a representative to advise those Shareholders who are not accredited
investors (as defined in Section 501(a) of Regulation D promulgated under the
Securities Act) on their rights in connection with and the risks associated with
their investment in shares of Purchaser Common Stock, and the transactions
contemplated hereby.
SECTION 6.09. No Solicitation of Transactions. (a) The Company, each
-------------------------------
Shareholder and the Purchaser each agree that, for a period of time from the
date hereof until the date of termination of this Agreement in accordance with
the provisions of Section 11.01 hereof, such party will not, directly or
indirectly, through any officer, director, employee, representative or agent or
otherwise, (i) solicit, initiate or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, any Competing
Transaction (as defined below) or (ii) agree to, enter into, accept, approve or
recommend any Competing Transaction, or enter into or conduct any negotiations
in respect thereof. Unless precluded by a confidentiality agreement in
connection with an unsolicited proposal, the Company or any Shareholder, on the
one hand, will notify the Purchaser, on the other hand, or the Purchaser, on the
one hand, shall notify the Company, on the other hand, of any proposal of a
Competing Transaction or any request for information in connection with any
Competing Transaction or
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for access to the properties, books or records of the Company or the Purchaser
by any person or entity that informs the Company or the Purchaser that it is
considering making, or has made, any proposal of a Competing Transaction. Such
notice shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact. Nothing contained in this Agreement shall prohibit
the Board of Directors of the Purchaser from furnishing information to, or
entering into discussions or negotiations with, any Person in connection with an
unsolicited proposal by such Person to acquire the Purchaser pursuant to any
Competing Transaction, if, and only to the extent that, (i) the Board of
Directors of Purchaser, after consultation with independent legal counsel (who
may be such party's regularly engaged independent legal counsel), determines in
good faith that the failure to take such action would cause the Board of
Directors to breach its fiduciary duties to its stockholders imposed by
applicable Law and (ii) prior to furnishing such information to, or entering
into discussions or negotiations with, such Person, such party uses its
reasonable best efforts to obtain from such Person an executed confidentiality
agreement on customary terms. In addition, in circumstances in which Purchaser's
Board of Directors has received a bona fide unsolicited proposal with respect to
a Competing Transaction which the Purchaser's Board of Directors has determined
in good faith, after consultation with its financial advisors, creates a
substantial risk that the Merger will not be consummated, and Purchaser's Board
of Directors determines in good faith that taking such action is an appropriate
response to such proposal and is required by its fiduciary duties under
applicable law, Purchaser may solicit or initiate discussions with a Person
other than the Person who made such unsolicited proposal, and enter into
discussions or negotiations with such other Person.
(b) A "Competing Transaction" means any of the following involving
---------------------
the Purchaser or the Company, as the case may be (other than the Merger and the
other transactions contemplated by this Agreement): (i) a merger, consolidation,
share exchange, business combination or other similar transaction; (ii) any
sale, lease, exchange, transfer or other disposition of 25% or more of the
assets of such party and its subsidiaries, taken as a whole; (iii) a tender
offer or exchange offer for 25% or more of the outstanding voting securities of
such party; or (iv) in the case of the Purchaser, any solicitation in opposition
to approval of the Merger or the issuance of shares of Purchaser Common Stock
pursuant to the Merger.
SECTION 6.10. Registration. If the Purchaser so elects by giving
------------
written notice to the Company, or in the event that the issuance of Purchaser
Common Stock in the Merger is determined not to be exempt from registration
under the Securities Act (a "Private Placement") in the reasonable judgment of
-----------------
the Company or the Purchaser in reliance upon the advice of counsel, (a) the
Purchaser as promptly as practicable will prepare and file with the SEC a
Registration Statement on Form S-4 (the "Merger S-4") with respect to the Merger
----------
and use reasonable best efforts to cause the Merger S-4 to become effective, (b)
the Company will cooperate with the Purchaser in the preparation of the Merger
S-4 and use its reasonable best efforts to assist and facilitate such filing and
declaration of effectiveness, and (c) the parties hereto shall cooperate with
each other and use commercially reasonable efforts to cause the consummation of
the Merger notwithstanding the inability or failure to achieve a Private
Placement, including negotiating expeditiously and in good faith with respect to
any and all amendments to this Agreement necessary or appropriate to permit
consummation of the Merger.
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SECTION 6.11. Directors' and Officers' Indemnification and Insurance.
------------------------------------------------------
(a) The indemnification provisions of the Restated Certificate of Incorporation
and Bylaws of the Surviving Corporation and each subsidiary thereof shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who, at or prior to the Effective Time, were directors, officers,
employees, fiduciaries or agents of the Company, unless such modification shall
be required by Law.
(b) In the event the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation, or at its option,
the Purchaser, shall assume the obligations set forth in this Section 6.11.
(c) For a period of six years after the Effective Time, the
Purchaser shall maintain in effect the current directors' and officers'
liability insurance policies maintained by the Company or any Company Subsidiary
(provided that the Purchaser may substitute therefor policies of at least the
--------
same coverage containing terms and conditions which are no less advantageous)
with respect to claims arising from facts or events that occurred prior to the
Effective Time.
SECTION 6.12. Plan of Reorganization. (a) This Agreement is intended
----------------------
to constitute a "plan of reorganization" within the meaning of section 1.368-
2(g) of the income tax regulations promulgated under the Code. From and after
the date of this Agreement and until the Effective Time, each party hereto shall
use its reasonable best efforts to cause the Merger to qualify, and no party
hereto will knowingly take any action, cause any action to be taken, fail to
take any action or cause any action to fail to be taken which action or failure
to act could prevent the Merger from qualifying, as a reorganization under the
provisions of section 368(a) of the Code. Following the Effective Time, neither
the Purchaser nor any of its affiliates shall knowingly take any action, cause
any action to be taken, fail to take any action or cause any action to fail to
be taken, which action or failure to act could cause the Merger to fail to
qualify as a reorganization under section 368(a) of the Code.
(b) As of the date hereof, the Company does not know of any reason
(i) why it would not be able to deliver to Baker Botts, L.L.P. or Shearman &
Sterling, at the date of the legal opinions referred to below, certificates
substantially in compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, to enable such firms to deliver
the legal opinions contemplated by Sections 9.02(c) and 9.03(c), or (ii) why
Baker Botts, L.L.P. or Shearman & Sterling would not be able to deliver the
opinions required by Sections 9.02(c) and 9.03(c).
(c) As of the date hereof, the Purchaser does not know of any
reason (i) why it would not be able to deliver to Baker Botts, L.L.P. or
Shearman & Sterling, at the date of the legal opinions referred to below,
certificates substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto, to enable such
firms to deliver the legal opinions contemplated by Sections 9.02(c) and
9.03(c), or (ii) why
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Baker Botts, L.L.P. or Shearman & Sterling would not be able to deliver the
opinions required by Sections 9.02(c) and 9.03(c).
SECTION 6.13. Other Shareholders. (a) Subject to the terms and
------------------
conditions hereof, until the Closing Date, the Company shall use its
commercially reasonable efforts to cause all holders of Shares that are not
parties hereto to become parties to this Agreement prior to the Closing, and to
agree to be bound by all provisions hereof applicable to the Shareholders,
including the obligation to indemnify the Purchaser's Indemnified Persons
pursuant to Article X, by executing and delivering to the Company an irrevocable
consent to be bound by the provisions of, and to become a party to, this
Agreement, in the form attached hereto as Exhibit 6.13 (a "Joinder Agreement").
-----------------
By executing and delivering to the Company a completed Joinder Agreement, a
holder of Shares shall be deemed to be a "Shareholder" party hereto, and shall
be bound by all covenants, agreements, representations and warranties made by
the Shareholders hereunder, as if such holder was an original party hereto. Each
holder of Shares that is not a party hereto and that desires to exchange all of
such holder's Shares upon the terms and conditions set forth herein will be
entitled to become a party to this Agreement prior to the Closing by complying
with the provisions of this Section 6.13 and will not be subject to any escrow
requirements under this Agreement.
(b) Notwithstanding any other provision of this Agreement, 10% of
the shares of Purchaser Common Stock and/or cash to be delivered at the Closing
to each holder of Shares that does not, prior to the Closing, execute and
deliver to the Company a Joinder Agreement, shall be delivered to the Escrow
Agent as provided in Section 3.13.
SECTION 6.14. Phantom Stock Plan and Severance Payments. The parties
-----------------------------------------
acknowledge that the Merger will constitute a Change of Control, as that term is
defined in the Phantom Share Plan, as amended, in the Severance Pay Plan, the
Severance Agreement, and in the Retention Bonus Plan instituted by North Central
(collectively, the "Phantom Stock and Severance Plans"). The board of directors
---------------------------------
of NCOC has determined that Section 4.15(f) of the Disclosure Schedule sets
forth the correct methodology for computing the amount to be paid for Phantom
Shares pursuant to the terms of the Phantom Share Plan. Except with respect to
payments under the Severance Pay Plan and Severance Agreement to employees of
North Central designated by Purchaser in writing at least five days prior to the
closing, all payments required by a Change of Control under the terms of the
Phantom Stock and Severance Plans shall be made by North Central immediately
prior to the Effective Time. In order to fund such payments, the Company and/or
one or more of the Non-Energy Company Subsidiaries shall lend or contribute the
required funds to North Central prior to the time that North Central is required
to make such payments or North Central will borrow such funds pursuant to the
NCOC revolving credit facility.
SECTION 6.15. No Trading. Each Shareholder covenants and agrees
----------
that, after the date hereof and prior to the Effective Time, neither such
Shareholder nor any Affiliate or Associate of such Shareholder will buy or sell
any Shares of Purchaser Common Stock, including any short sale, or any option,
warrant on or other derivative security with respect to Purchaser Common Stock.
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SECTION 6.16. Standstill and Voting Agreement. As of the Effective
-------------------------------
Time, each of the Shareholders (or the Shareholders' Representative on behalf of
the Shareholders) shall execute and deliver to the Purchaser the Standstill and
Voting Agreement.
ARTICLE VII
EMPLOYEE MATTERS
SECTION 7.01. Compensation and Benefits; Service Recognition. (a)
----------------------------------------------
Effective upon the Effective Time, employees of North Central who continue as
employees of North Central following the Merger shall be afforded the right to
participate in employee welfare, pension and savings plans on the same basis as
similarly situated employees of Purchaser; provided, however, that changes may
-------- -------
be made to such employee benefit plans to the extent necessary to comply with
applicable Law.
(b) For the period of time that the terms and conditions of the
Severance Plan and Severance Agreements are in full force and effect, the
Purchaser shall maintain, and cause its subsidiaries to maintain, welfare plans
which in the aggregate will provide a level of benefits for former employees
covered by such severance arrangements that are at least as favorable to
participants as those in effect immediately prior to the Effective Time;
provided, however, that changes may be made to such employee benefit plans to
- -------- -------
the extent necessary to comply with applicable Law.
(c) For the purposes of the welfare benefits described in Sections
7.01(b) of this Agreement, the Purchaser shall provide, or cause its
subsidiaries to provide, such welfare benefits at a cost to employees or former
employees in a ratio at least as favorable to participants as the ratio of
employee contributions to employer contributions in effect immediately prior to
the Effective Time.
(d) For a period of two years following the Effective Time or until
an earlier termination of employment, the Purchaser shall ensure, and cause its
subsidiaries to ensure, that each individual employed by the Company or any of
the Company Subsidiaries as of the Effective Time shall continue to be paid
after the Effective Time a base salary at no lower a rate than in effect
immediately before the Effective Time.
(e) The Purchaser shall maintain, and cause its subsidiaries to
maintain, the Severance Plan in effect as of the Effective Time for a period of
one year after the Effective Time; provided, however, that, if the Purchaser
-------- -------
desires to amend or modify such plan, no such amendment or modification may
adversely impair the rights of any participant under the plan without his
consent.
(f) Anything above to the contrary notwithstanding, as of the
Effective Time, in the event that a "Change of Control," as defined in the
following described agreements and plans, occurs and a payment is due to any
employee or participant, the Company agrees to make such payments, or to cause
North Central to make such payments to the employee or participant, on the
effective date of Change of Control or the Effective Time, whichever is earlier,
and to the extent such payments are not made by the Company or North Central,
the Purchaser agrees to assume and honor the following arrangements and payments
thereunder for
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employees of the Company or the Company Subsidiary relating to a Change in
Control in accordance with the terms of the relevant plans or agreements as they
existed immediately prior to the Effective Time: (i) the Severance Plan, as
amended, (ii) the Severance Agreements dated as of June 1, 2000 with Messrs.
Winne, Becci, Deupree and Beckham and (iii) the Retention Bonus Plan dated June
1, 2000, as revised. If the Purchaser desires to amend such plans, agreements or
letters after the Effective Time, no such amendment shall be made if it
adversely impairs the rights of any affected employee, unless the employee's
consent is obtained.
(g) To the extent service is relevant for purposes of eligibility,
participation or vesting under any employee benefit plan, program or arrangement
established or maintained by the Purchaser or its subsidiaries for the benefit
of employees of the Purchaser or its subsidiaries, the employees of the Company
shall be credited for service accrued prior to the Effective Time with the
Company or the Company Subsidiaries.
(h) The current and former employees of the Company and the Company
Subsidiaries are intended third party beneficiaries of this Article VII, and may
enforce its provisions in the same manner as if they were signatories to this
Agreement.
ARTICLE VIII
TAX MATTERS
SECTION 8.01. Indemnity. (a) The Shareholders agree to indemnify
---------
the Purchaser against all Taxes of the Company and the Company Subsidiaries, or
of any member of any affiliated group with which the Company or any Company
Subsidiary files or has previously filed a consolidated or combined income tax
return, with respect to any period or portion thereof (i) insofar as such Taxes
are attributable to North Central, that ends on or before the date of this
Agreement, and (ii) insofar as such Taxes are attributable to the Company and
the Non-Energy Company Subsidiaries, that ends immediately prior to the
Effective Time (collectively, the "Shareholder Tax Periods"). The Purchaser
-----------------------
agrees to indemnify the Shareholders against all Taxes for periods or portions
thereof (collectively, the "Purchaser Tax Periods") which are not included in
---------------------
the Shareholder Tax Periods. Estimated Taxes paid on or before the end of a
Shareholder Tax Period shall be treated as a payment of Taxes with respect to
such period.
(b) With respect to any Tax that is payable with respect to a taxable
period that is included in both the Shareholder Tax Periods and the Purchaser
Tax Periods, the portion of any such Tax allocable to the Shareholder Tax
Periods shall be deemed to equal: (i) in the case of Taxes that are based upon
or related to income or receipts, the amount which would be payable if the
taxable year ended with the last date included in the Shareholder Tax Periods;
and (ii) in the case of Taxes imposed on a periodic basis and measured by the
level of any item, the amount of such Taxes for the entire period multiplied by
a fraction the numerator of which is the number of calendar days in the period
ending with the last date included in the Shareholder Tax Periods and the
denominator of which is the number of calendar days in the entire period.
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SECTION 8.02. Tax Returns and Payments. (a) From the date of this
------------------------
Agreement through and after the Closing Date, the Shareholders shall prepare and
submit to the Purchaser for filing or otherwise furnish to the appropriate party
(or cause to be prepared and submitted or so furnished) in a timely manner all
Tax Returns relating to the Company or the Company Subsidiaries for any taxable
period that ends before or includes the Closing Date. With respect to any such
Tax Return, as to which an amount of Tax is allocable to the Purchaser, the
Shareholders shall provide the Purchaser with a copy of such completed Tax
Return and a statement (with which the Shareholders will make available
supporting schedules and information) certifying the amount of Tax shown on such
Tax Return that is allocable to the Purchaser at least 20 days prior to the due
date (including any extension thereof) for the filing of such Tax Return, and
the Purchaser shall have the right to review such Return and statement prior to
the filing of such Tax Return. The Shareholders and the Purchaser agree to
consult and to attempt in good faith to resolve any issues arising from the
Purchaser's review of such Tax Return and statement.
(b) The Shareholders shall pay or cause to be paid, when due and
payable, all Taxes which accrue with respect to the Company and the Company
Subsidiaries for the Shareholder Tax Periods, and taking into account the last
sentence of Section 8.01(a). Payments by the Shareholders of any amounts due
hereunder in respect of Taxes shall be made (i) at least three Business Days
before the due date of the applicable estimated or final Tax Return required to
be prepared by the Shareholders and filed by the Purchaser, and (ii) within 10
Business Days following either an agreement between the Shareholders and the
Purchaser that an indemnity amount is payable, or a "determination" as defined
in section 1313(a) of the Code.
SECTION 8.03. Refunds/Tax Benefits. (a) Except as indicated in
--------------------
the last sentence of this Section 8.03(a), any refunds (including interest to
the extent actually received) received by the Purchaser, the Company or any
Company Subsidiary of Taxes relating to and attributable to events arising in
any period or portion thereof which is included in the Shareholder Tax Periods
shall be for the account of the Shareholders, and the Purchaser shall pay over
to the Shareholders any such refund for the account of the Shareholders, within
five Business Days of receipt. The Purchaser shall, if the Shareholders so
request and at the Shareholders' expense, file (or cause to be filed) a claim
for any refunds or equivalent amounts to which the Shareholders are entitled
hereunder (including, without limitation, any refunds arising from payments
described in the second succeeding sentence). The Purchaser shall permit the
Shareholders to control (at the Shareholders' expense) the prosecution of any
such refund claimed. In addition, any refund or other Tax benefit arising from
the payment by North Central on or prior to the Closing Date of amounts
described in Section 6.14 shall be for the account of the Shareholders,
regardless of the Tax period to which such refund or other Tax benefit relates.
If any refund which the Purchaser has paid over to the Shareholders pursuant to
this Section 8.03 is subsequently adjusted, whether on audit or otherwise, a
payment in the amount of such adjustment will be made by the Shareholders to the
Purchaser or by the Purchaser to the Shareholders, as appropriate, so as to put
the parties as nearly as possible in the same position as if the original
payment by the Purchaser to the Sellers had been in the amount of the refund as
finally determined.
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(b) The Purchaser agrees to pay to the Shareholders the benefit
received by the Company or any Company Subsidiary from the use in any Tax period
or portion thereof which is included in the Purchaser Tax Periods of a
carryforward of a Tax Asset arising in a Tax period or portion thereof which is
included in the Shareholder Tax Periods. Such benefit shall be considered to
equal the excess of (i) the amount of Taxes that would have been payable by the
Company or the Company Subsidiary in the absence of such carryforward over (ii)
the amount of Taxes actually payable by the Company or the Company Subsidiary.
Payment of such amount shall be made within five Business Days of filing the
applicable Tax Returns for the period to which the Tax Asset is carried forward.
If, subsequent to any such payment by the Purchaser to the Shareholders, there
shall be a "determination" (as defined in section 1313 of the Code) resulting
from an audit which results in a reduction of the Tax Asset so carried forward,
the Shareholders shall promptly repay to the Purchaser any amount that would not
have been payable to the Shareholders pursuant to the preceding sentence had the
amount of the benefit been calculated taking into account such determination,
together with any amount equal to any interest and penalties payable by the
Purchaser as a result of such determination. For this purpose, "Tax Asset" means
---------
any net operating loss, net capital loss, investment tax credit, foreign tax
credit or charitable deduction or any other similar tax attribute (including
deductions or credits relating to alternative minimum taxes) which is
apportioned under applicable Treasury Regulations or allocable under applicable
state or local income or franchise Tax law to the Company or any Company
Subsidiary.
(c) If an audit adjustment, claim for refund or amended return
("Adjustment") after the date hereof shall both increase a Tax liability which
----------
is allocated to the Shareholders (or reduce losses or credits otherwise
available) for a Tax period or portion thereof which is included in the
Shareholder Tax Periods (a "Prior Period Tax Increase") and decrease a Tax
-------------------------
liability of the Purchaser, the Company or any Company Subsidiary for a Tax
period or portion thereof which is included in the Purchaser Tax Periods, then,
when and to the extent that the Purchaser, the Company or any Company Subsidiary
derives a benefit from such decrease (through a reduction of Taxes, refund of
Taxes paid or credit against Taxes due), the Prior Period Tax Increase shall not
be indemnifiable by the Shareholders pursuant to Section 8.01 to the extent of
such refund, reduction or credit. Similarly, if an Adjustment shall both
decrease a Tax liability which is allocated to the Shareholders for a Tax period
or portion thereof which is included in the Shareholder Tax Periods and increase
the Tax liability of the Purchaser, the Company or any Company Subsidiary (or
reduce losses or credits otherwise available) for a Tax period or portion
thereof which is included in the Purchaser Tax Periods (a "Prior Period Tax
----------------
Decrease"), then, to the extent of such increase, the Purchaser shall not be
- --------
required to pay over the Prior Period Tax Decrease to the Shareholders.
(d) Any estimated Taxes paid during a Tax period or portion thereof
which is included in the Shareholder Tax Periods that result in the total Taxes
paid by the Company or the Company Subsidiaries (including estimated Taxes paid
with respect to Tax periods or portions thereof which are included in the
Shareholder Tax Periods) to exceed the Taxes due and payable with respect to
such Tax periods or portions thereof shall be for the account of the
Shareholders. The Shareholders shall provide the Purchaser with a statement
(with which the Shareholders will make available supporting schedules and
information) certifying the amount of any such excess, and the Purchaser shall
pay over to the Shareholders any such excess within five Business Days of the
Shareholders providing such statement to the Purchaser.
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(e) Any Tax benefits attributable to the Retention Bonus Plan paid to
North Central employees shall be for the account of the Purchaser.
SECTION 8.04. Contests. (a) After the Closing, the Purchaser shall
--------
promptly notify the Shareholders in writing of the commencement of any Tax audit
or administrative or judicial proceeding or of any demand or claim on the
Purchaser, the Company or any Company Subsidiary which, if determined adversely
to the taxpayer or after the lapse of time, is likely to give rise to grounds
for indemnification by the Shareholders. Such notice shall contain factual
information (to the extent known to the Purchaser) describing the asserted Tax
liability in reasonable detail and shall include copies of any notice or other
document received from any Tax Authority in respect of any such asserted Tax
liability. If the Purchaser fails to give the Shareholders prompt notice of an
asserted Tax liability, then (i) if the Shareholders are precluded by the
failure to give prompt notice from contesting the asserted Tax liability in both
the administrative and judicial forums, the Shareholders shall not have any
obligation to indemnify for any loss arising out of such asserted Tax liability,
and (ii) if the Shareholders are not so precluded from contesting, but such
failure to give prompt notice results in a detriment to the Shareholders, any
amount which the Shareholders are otherwise required to pay the Purchaser with
respect to such liability shall be reduced by the amount of such detriment.
(b) Except as indicated in the last sentence of this Section 8.04(b),
the Shareholders may elect to direct, through counsel of their own choosing and
at their own expense, any audit, claim for refund and administrative or judicial
proceeding involving any asserted liability with respect to which indemnity may
be sought from the Shareholders (any such audit, claim for refund or proceeding
relating to an asserted Tax liability are referred to herein collectively as a
"Contest"). If the Shareholders elect to direct the Contest of an asserted Tax
-------
liability, they shall, within 30 calendar days of receipt of the notice of
asserted Tax liability, notify the Purchaser of their intent to do so, and the
Purchaser shall cooperate and shall cause the Company and the Company
Subsidiaries to cooperate, at the Shareholders' expense, in each phase of such
Contest. If the Shareholders elect not to direct the Contest, fail to notify the
Purchaser of their election as herein provided or contest their indemnification
obligation, the Purchaser may pay, compromise or contest, at its own expense,
such asserted liability. However, in such case, the Purchaser may not settle or
compromise any asserted liability over the objection of the Shareholders;
provided, however, that consent to settlement or compromise shall not be
- -------- -------
unreasonably withheld. In any event, both the Purchaser and the Shareholders may
participate, at their own expense, in the Contest. If a Contest includes both an
asserted liability with respect to which an indemnity may be sought from the
Shareholders and an asserted liability for which no such indemnity may be
sought, the foregoing provisions of this Section 8.04(b) shall apply only to
such portion of the Contest as involves the asserted liability with respect to
which an indemnity may be sought from the Shareholders.
SECTION 8.05. Cooperation and Exchange of Information. The
---------------------------------------
Shareholders and the Purchaser will provide each other with such cooperation and
information as either of them reasonably may request of the other in filing any
Tax Return, amended return or claim for refund, determining a liability for
Taxes or a right to a refund of Taxes or participating in or conducting any
audit or other proceeding in respect of Taxes. Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules and related records (whether in
computerized or written form),
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work papers and documents relating to rulings or other determinations by Tax
authorities. Each party shall make its employees available on a mutually
convenient basis to provide explanations of any documents or information
provided hereunder. Each party will retain all returns, schedules and work
papers and all material records or other documents relating to Tax matters of
the Company and the Company Subsidiaries for its taxable period first ending
after the last date which is included in the Shareholder Tax Periods and for all
prior taxable periods until the later of (i) the expiration of the statute of
limitations of the taxable periods to which such returns and other documents
relate, including extensions, or (ii) six years following the due date (without
extension) for such returns. Any information obtained hereunder shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of returns or claims for refund or in conducting an audit or other proceeding.
SECTION 8.06. Conveyance Taxes. Liability for all sales, transfer,
----------------
stamp, real property transfer or gains and similar Taxes incurred as a result of
the sale of Shares contemplated hereby shall be borne 50% by the Purchaser and
50% by the Shareholders.
SECTION 8.07. Miscellaneous. (a) The Shareholders and the
-------------
Purchaser agree to treat all payments made under the indemnity provisions of
this Agreement or Section 3.12, and for any misrepresentations or breach of
warranties or covenants, as adjustments to the Merger Consideration for Tax
purposes. If, in the reasonable opinion of either counsel to the Purchaser or
counsel to the Shareholders, the making by the Purchaser of any such payment or
a specified portion thereof or any payment or a specified portion thereof, by
the Purchaser pursuant to this Article VIII in cash would jeopardize the
qualification of the Merger as a tax-free reorganization within the meaning of
section 368(a) of the Code, then the Purchaser (if Purchaser's counsel so
concludes) or the Shareholders (if the Shareholders' counsel so concludes) may
elect that such payment or portion thereof be made in Purchaser Common Stock
having a value equal to the amount of such payment or portion thereof. For this
purpose, the value of the Purchaser Common Stock shall be determined in the same
manner as the Average Parent Share Price, except that the last trading day used
for this purpose shall be the trading day which is five days prior to the date
of the payment. For this purpose, the Average Parent Share Price shall be not
less than $22.25 nor greater than $27.25.
(b) Payments by the Shareholders hereunder shall be limited to the
amount of any liability or damage that remains after deducting therefrom (i) any
tax benefit realizable by the Purchaser, the Company or any Company Subsidiary
by reason of the deductibility of such liability or damage (determined by
multiplying such deductible amount by the then applicable highest effective
corporate income tax rate), and any deferred tax benefit attributable to such
liability or damage (determined on the same basis but present valued to the
extent obtained through depreciation or amortization deductions), and (ii) any
indemnity, contribution or other similar payment recoverable by the Purchaser
from any third party with respect thereto.
(c) The Shareholders shall cause any tax-sharing agreements or
arrangements with the Company Subsidiaries to be terminated as of the date of
this Agreement.
(d) Any breach of the representations and warranties contained in
Section 4.19 shall be a ground for indemnification by the Shareholders of the
Purchaser, subject to Section 10.04(d) and other applicable provisions of this
Agreement.
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(e) Any breach of the representations and warranties contained in
Section 5.11 shall be a ground for indemnification by the Purchaser of the
Shareholders.
(f) Notwithstanding any provision of this Agreement to the contrary,
the obligations of the Shareholders and the Purchaser to indemnify and hold
harmless each other pursuant to this Article VIII or the representations and
warranties contained in Section 4.19 or Section 5.11 shall terminate at the
close of business on the expiration of the applicable statute of limitations
with respect to the Tax liabilities in question (giving effect to any waiver,
mitigation or extension thereof).
(g) It is intended that all Tax benefits and refunds attributable to
the payments by North Central on or prior to the Closing Date which are
described in Section 6.14 of this Agreement shall be for the account of the
Shareholders, and this Article VIII and all other provisions of this Agreement
shall be construed accordingly.
(h) Prior to the Effective Time, each of the Shareholders will
provide the Purchaser a certification of non-foreign status, in the manner
prescribed by Treas. Reg. (S) 1445-2(b)(2).
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 9.01. Conditions to the Obligations of Each Party. The
-------------------------------------------
obligations of the Company and the Purchaser to consummate the Merger are
subject to the satisfaction or waiver (where permissible), at or prior to the
Closing, of each of the following conditions:
(a) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(b) no Governmental Authority or court of competent jurisdiction
located or having jurisdiction in the United States shall have enacted,
issued, promulgated, enforced or entered any Law or Governmental Order
which is then in effect making the consummation of the Merger illegal or
otherwise prohibiting the consummation of the Merger;
(c) this Agreement and the Merger shall have been approved and
adopted by the requisite affirmative vote of the Shareholders in accordance
with the rules of the BCL; and
(d) this Agreement, the Merger and the Purchaser Stock Issuance shall
have been approved and adopted by the requisite affirmative vote of the
stockholders of the Purchaser in accordance with the DGCL, the rules of the
New York Stock Exchange and the Purchaser's charter.
SECTION 9.02. Conditions to the Obligations of the Company. The
--------------------------------------------
obligations of the Company to consummate the Merger shall be subject to the
satisfaction or waiver (where permissible), at or prior to the Closing, of each
of the following conditions:
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(a) Representations, Warranties and Covenants. (i) The
-----------------------------------------
representations and warranties of the Purchaser contained in this Agreement
shall have been true and correct when made and shall be true and correct as
of the Closing Date, with the same force and effect as if made on the
Closing Date, other than such representations and warranties as are made as
of another date, which shall be true and correct as of such date, except to
the extent that the failures to be so true and correct would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect;
(ii) the covenants and agreements contained in this Agreement to be
complied with by the Purchaser on or before the Closing shall have been
complied with in all material respects; and (iii) the Company shall have
received a certificate from the Purchaser to such effect signed by a duly
authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been
---------------------------
commenced or threatened by any Governmental Authority against either the
Company or the Purchaser seeking to restrain or materially and adversely
alter the transactions contemplated by this Agreement which do, or would
reasonably be expected to, render it impossible or unlawful to consummate
such transactions;
(c) Reorganization Opinion. The Shareholders shall have received
----------------------
from Shearman & Sterling a written opinion, reasonably satisfactory to the
Shareholders and dated as of the Closing Date, addressed to the Company and
the Shareholders, that the Merger will be treated for federal income tax
purposes as a reorganization qualifying under section 368(a) of the Code
and no gain or loss will be recognized by the Shareholders who exchange
their Company Common Stock in the Merger except with respect to cash
received in the Merger;
(d) Registration Rights Agreement. The Purchaser shall have
-----------------------------
executed and delivered to the Shareholder Representative, on behalf of the
Shareholders, a registration rights agreement substantially in the form of
Exhibit 9.02(d) hereto (the "Registration Rights Agreement"); and
-----------------------------
(e) Standstill and Voting Agreement. The Purchaser shall have
-------------------------------
executed and delivered to the Shareholder Representative, on behalf of the
Shareholders, a standstill and voting agreement substantially in the form
of Exhibit 9.02(e) hereto (the "Standstill and Voting Agreement").
-------------------------------
SECTION 9.03. Conditions to the Obligations of the Purchaser. The
----------------------------------------------
obligations of the Purchaser to consummate the Merger shall be subject to the
satisfaction or waiver (where permissible), at or prior to the Closing, of each
of the following conditions:
(a) Representations, Warranties and Covenants. (i) The
-----------------------------------------
representations and warranties of the Company contained in this Agreement
shall have been true and correct when made and shall be true and correct as
of the Closing Date, with the same force and effect as if made on the
Closing Date, other than such representations and warranties as are made as
of another date, which shall be true and correct as of such date, except to
the extent that the failures to be so true and correct would not,
individually or in the aggregate, have a Material Adverse Effect; (ii) the
covenants and agreements contained
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in this Agreement to be complied with by the Company and the Company
Subsidiaries on or before the Closing shall have been complied with except
to the extent that any failure to perform in the aggregate does not or
would not reasonably be expected to have a Material Adverse Effect; and
(iii) the Purchaser shall have received a certificate from the Company and
the Company Subsidiaries to such effect signed by a duly authorized officer
thereof;
(b) No Proceeding or Litigation. No Action shall have been
---------------------------
commenced or threatened by any Governmental Authority against either the
Company or the Purchaser seeking to restrain or materially and adversely
alter the transactions contemplated by this Agreement which do, or would
reasonably be expected to, render it impossible or unlawful to consummate
such transactions; and
(c) Reorganization Opinion. Except as otherwise provided in
----------------------
Section 9.03(c), the Purchaser shall have received from Baker Botts, L.L.P.
a written opinion, reasonably satisfactory to the Purchaser and dated as of
the Closing Date, addressed to the Purchaser that the Merger will be
treated for federal income tax purposes as a reorganization qualifying
under section 368(a) of the Code and no gain or loss will be recognized by
the Purchaser or the Company as a result of the Merger. If the Company has
elected to restructure the transaction as a taxable sale of Company Common
Stock (or as a taxable reverse subsidiary merger) pursuant to Section
3.01(h), the Purchaser shall have received from Baker Botts, L.L.P. a
written opinion, reasonably satisfactory to the Purchaser and dated as of
the Closing Date, addressed to the Purchaser that no gain or loss will be
recognized by the Purchaser or the Company as a result of the transaction.
(d) Standstill and Voting Agreement. Each of the Shareholders (or
-------------------------------
the Shareholder Representative on behalf of the Shareholders) shall have
executed and delivered to the Purchaser, on behalf of the Shareholders, the
Standstill and Voting Agreement.
(e) Registration Rights Agreement. Each of the Shareholders (or the
-----------------------------
Shareholder Representative on behalf of the Shareholders) shall have
executed and delivered to the Purchaser, on behalf of the Shareholders, the
Registration Rights Agreement.
(f) Credit Agreement. The Company shall have delivered to the
----------------
Purchaser evidence of the termination of the Credit Agreement dated as of
July 1, 1999 between Morgan Guaranty Trust Company of New York and Rhode
Island Corporation and the release of all security and collateral pledged
by the Company or any Company Subsidiary in connection therewith.
(g) Service Agreement. The Company shall have delivered to the
-----------------
Purchaser evidence of termination of the service agreement between Goelet,
LLC, the Company and Company Subsidiaries without further liability to the
Company and the Company Subsidiaries.
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ARTICLE VIII
INDEMNIFICATION
SECTION 10.01. Indemnification of the Purchaser. Each Shareholder
--------------------------------
agrees jointly and not severally, subject to the other terms and conditions of
this Agreement (including the limitations contained in Section 10.04) and
without gross-up for Taxes, to defend, indemnify and hold harmless the Purchaser
and each of the Purchaser's subsidiaries, Affiliates, officers, directors,
employees, agents and their successors and assigns (the Purchaser and all such
other Persons are collectively referred to as the "Purchaser's Indemnified
-----------------------
Persons"), from and against each and every Loss paid, imposed on or incurred by
- -------
the Purchaser's Indemnified Persons relating to, resulting from or arising out
of: (a) any breach of any representation, warranty, covenant or agreement made
by the Company in this Agreement or (b) any Liability of the Company or any Non-
Energy Company Subsidiary, incurred or arising out of events which occurred
prior to the Effective Time (but excluding any Liability directly relating to,
arising out of or resulting from the operations of North Central, for which
North Central has liability). The Purchaser's Indemnified Persons shall also be
entitled to recourse against the Escrow Consideration for any indemnifiable loss
on the same pro rata basis as would have been applied if the Persons on whose
behalf the shares and cash have been placed into escrow had executed Joinder
Agreements pursuant to Section 6.13. A Purchaser's Indemnified Person shall give
the Shareholders written notice of any matter which such Purchaser's Indemnified
Person has determined has given or could give rise to a right of indemnification
hereunder within sixty (60) days of such determination, supported by reasonable
documentation setting forth the nature of the circumstances entitling the
Purchaser's Indemnified Person to indemnity hereunder (including, but not
limited to, references to the provisions hereof upon which the Purchaser's
Indemnified Person is relying in making such claim).
SECTION 10.02. Indemnification of the Shareholders. The Purchaser
-----------------------------------
agrees, subject to the other terms and conditions of this Agreement and without
gross-up for Taxes, to defend, indemnify and hold harmless the former directors,
officers, employees and agents of the Company, the Company Subsidiaries, the
Shareholders and their respective successors, assigns, heirs and legal and
personal representatives (the Shareholders and such other Persons are
collectively referred to as the "Company's Indemnified Persons") from and
-----------------------------
against, and shall reimburse the Company's Indemnified Persons for, each and
every Loss paid, imposed on or incurred by the Company's Indemnified Persons,
directly or indirectly, relating to, resulting from or arising out of any breach
of any representation, warranty, covenant or agreement made by the Purchaser in
this Agreement. A Company's Indemnified Person shall give the Purchaser prompt
written notice of any matter which such Shareholders' Representative has
determined has given or could give rise to a right of indemnification hereunder
within sixty (60) days of such determination, supported by reasonable
documentation setting forth the nature of the circumstances entitling the
Company's Indemnified Person to indemnity hereunder (including, but not limited
to, references to the provisions hereof upon which the Company's Indemnified
Person is relying in making such claim).
SECTION 10.03. Notice and Defense of Third Party Claims. If any
----------------------------------------
claim or proceeding shall be brought or asserted under this Article X against an
indemnified party or any successor thereto (each, an "Indemnified Person") in
------------------
respect of which indemnity may be sought
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under this Article X from an indemnifying Person or any successor thereto (each,
an "Indemnifying Person"), the Indemnified Person shall give prompt written
-------------------
notice of such claim or proceeding to the Indemnifying Person in accordance with
Section 10.01 or 10.02, as applicable, who shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Person and the payment of all expenses; provided that any delay or failure so to
--------
notify the Indemnifying Person shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Person shall
have the right to employ separate counsel in any of the foregoing claims or
proceedings and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnified Person unless the
Indemnified Person shall in good faith determine that there exist actual or
potential conflicts of interest which make representation by the same counsel
inappropriate. The Indemnified Person's right to participate in the defense or
response to any claim or proceeding should not be deemed to limit or otherwise
modify its obligations under this Article X. In the event that the Indemnifying
Person, within fifteen (15) days after notice of such claim or proceeding, fails
to assume the defense thereof, the Indemnified Person shall have the right to
undertake the defense, compromise or settlement of such claim or proceeding,
subject to the right of the Indemnifying Person to assume the defense of such
claim or proceeding with counsel reasonably satisfactory to the Indemnified
Person at any time prior to the settlement, compromise or final determination
thereof. Anything in this Article X to the contrary notwithstanding, the
Indemnifying Person shall not, without the Indemnified Person's prior written
consent, settle or compromise any claim or proceeding or consent to the entry of
any judgment with respect to any claim or proceeding. In the event the
Indemnifying Party exercises the right to undertake any such defense against any
claim hereunder, the Indemnified Person shall cooperate with the Indemnifying
Person in such defense and make available to the Indemnifying Person all
witnesses, pertinent records, materials and information in the Indemnified
Person's possession or reasonably available to the Indemnified Person or under
the Indemnified Person's control relating thereto as is reasonably requested by
the Indemnifying Person.
SECTION 10.04. Limitations. (a) An Indemnified Person shall not be
-----------
entitled to indemnification under Article VIII and this Article X unless notice
of a claim for indemnity shall have been given within the applicable survival
period under Sections 8.07(d) and 13.01.
(b) The Shareholders' aggregate obligation to indemnify the Purchaser
and hold it harmless under Article VIII and Section 10.01 shall in no event
exceed $63,000,000 (the "Maximum Amount"). At such time, if any, as an aggregate
--------------
amount equal to the Maximum Amount has been paid to the Purchaser by the
Shareholders under this Section 10.04, no Shareholder shall thereafter have any
further liability under Article VIII and Article X.
(c) Each Shareholder's obligation to indemnify the Purchaser and hold
it harmless under Section 10.01 (and Article VIII with respect to Tax matters)
shall in no event exceed a percentage of the Maximum Amount equal to the
percentage of the total aggregate Merger Consideration received by such
Shareholder ("Pro Rata Share"). Each Shareholder's obligation to pay any
--------------
indemnifiable Loss pursuant to Section 10.01 (and Article VIII with respect to
Tax matters) shall be limited to such Shareholder's Pro Rata Share of such Loss.
At such time, if any, as any Shareholder shall have paid to the Purchaser an
amount equal to such
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Shareholder's Pro Rata Share of the Maximum Amount under Section 10.01 (and
Article VIII with respect to Tax matters), such Shareholder shall have no
further liability under such Section 10.01 (and Article VIII with respect to Tax
matters).
(d) No claim may be made against any Shareholder for indemnification
pursuant to Section 10.01 or Article VIII with respect to any individual item of
Loss, unless the aggregate dollar amount of all claims against the Shareholders
for indemnification shall exceed $7,000,000, in which case the Shareholders
shall be liable for claims for indemnification only in excess of such aggregate
amount. Any adjustment to any Tax benefit attributable to a payment pursuant to
Section 6.14 shall not be subject to this Section 10.04(d).
(e) Notwithstanding anything herein to the contrary, (i) in no event
shall the aggregate liability of the Purchaser hereunder exceed $63,000,000 (the
"Loss Ceiling") and (ii) the Purchaser shall have no further obligations under
------------
this Article X at the time when the Purchaser has paid indemnification hereunder
in amounts equal in the aggregate to the Loss Ceiling.
(f) No claim may be made against the Purchaser for indemnification
pursuant to Section 10.02 or Article VIII with respect to any individual item of
Loss, unless the aggregate dollar amount of all claims for indemnification shall
exceed $7,000,000, in which case the Purchaser shall be liable for claims for
indemnification only in excess of such aggregate amount. Any adjustment to any
Tax benefit attributable to a payment pursuant to Section 6.14 shall not be
subject to this Section 10.04(f).
SECTION 10.05. Tax Matters. Anything in this Article X to the
-----------
contrary notwithstanding, the rights and obligations of the parties with respect
to indemnification for any and all Tax matters (including those contained in
Section 4.19 and Section 5.12) shall be governed by Article VIII; provided that
--------
the limitations, manner of payment and procedures shall be governed by this
Article X.
SECTION 10.06. Tax Benefits; Insurance Proceeds. Any
--------------------------------
indemnification payment required to be made pursuant to this Agreement shall be
reduced by (a) any net Tax benefits derived or to be derived by the Indemnified
Person or any of its Affiliates with respect to the item giving rise to the
indemnification payment, and (b) any insurance proceeds received by the
Indemnified Person or any of its Affiliates with respect to the item giving rise
to the indemnification payment.
SECTION 10.07. Escrow Funds and Shares. The shares of Purchaser
-----------------------
Common Stock and cash placed in escrow pursuant to Section 3.13 shall be applied
to satisfy the indemnification rights of the Purchaser's Indemnified Persons
pursuant to Article VIII and Article X on the same pro rata basis as would have
been applied if the Persons on whose behalf the shares and cash have been placed
into escrow had executed Joinder Agreements pursuant to Section 6.13 and
otherwise in accordance with the terms of the Escrow Agreement.
SECTION 10.08. Security; Limited Recourse. (a) The Shareholders
--------------------------
will arrange for the issuance, on the Closing Date, of an irrevocable letter of
credit in an amount equal to the Maximum Amount minus the amount of the Escrow
-----
Consideration, issued by a
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bank or other financial institution having a rating of at least "A+" from
Standards & Poor's selected by the Shareholders, in favor of the Purchaser (the
"Security"). The Security shall be in form and substance reasonably satisfactory
--------
to the Company and the Purchaser. In the event that the issuer of the Security
is downgraded below "A+", the Shareholders will replace the Security with a new
irrevocable letter of credit issued by a financial institution having a rating
of at least "A+." For purposes of this Section 10.08(a), the amount of the
Escrow Consideration will be deemed to be the sum of (x) the amount of cash
placed into escrow, plus (y) the product of the number of shares of Purchaser
----
Common Stock placed into escrow multiplied by the Average Parent Share Price.
(b) The Security will be drawable in an amount necessary to satisfy
the indemnification obligations of the Shareholders under Article VIII and
Article X (i) upon the written request of the Shareholder Representative or (ii)
upon the presentation to the issuer of the Security of the final non-appealable
decision of an arbitrator or the final non-appealable judgment of a court having
jurisdiction over the matters relating to the indemnification obligations of the
Shareholders, in which instance the Security shall be drawable in the amount of
such final non-appealable judgment.
(c) The Security and the Escrow Consideration, if any, shall be the
sole and exclusive remedy for any claims, demands, actions or causes of action
by any of the Purchaser's Indemnified Persons under Article VIII and Article X
of this Agreement, and the Purchaser's Indemnified Persons shall make claims
under this Agreement only against the Security and the Escrow Consideration.
SECTION 10.09. Exclusive Remedies. (a) The Purchaser, the Company
------------------
and the Shareholders acknowledge and agree that (i) following the Closing, the
indemnification provisions of Article VIII and this Article X shall be the sole
and exclusive remedy of each party for any breach by the other party of the
representations and warranties in this Agreement and for any failure by the
other party to perform and comply with any covenants and agreements that, by
their terms, were to have been performed or complied with by such party prior to
the Closing. In furtherance of the foregoing, each party hereby waives, to the
fullest extent permitted under applicable law, any and all other rights, claims
and causes of action it may have, from and after the Closing, against the other
party hereto or its officers, directors, employees, agents, representatives and
Affiliates relating thereto.
(b) Except as set forth in this Agreement, the parties hereto are not
making any representation, warranty, covenant or agreement with respect to the
matters contained herein. Notwithstanding anything to the contrary contained in
this Agreement, no breach of any representation, warranty, covenant or agreement
contained herein shall give rise to any right on the part of any party hereto,
after the consummation of the transactions contemplated by this Agreement, to
rescind this Agreement or any of the transactions contemplated hereby.
(c) Notwithstanding anything to the contrary contained in this
Agreement, no party hereto shall have any liability under any provision of this
Agreement for, and in no event shall the amount specified in Section 10.04(d) be
applied to, any indirect, consequential or punitive damages or claims for loss
of business or loss of profits.
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ARTICLE XI
TERMINATION AND WAIVER
SECTION 11.01. Termination. This Agreement may be terminated at any
-----------
time prior to the Closing:
(a) by the Purchaser upon a material breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in
this Agreement or if any representation or warranty of the Company shall
have become untrue in any material respects, in either case such that the
conditions set forth in Section 9.03 would not be satisfied; provided,
--------
however, that, if such breach is curable by the Company, through the
-------
exercise of its reasonable best efforts and for so long as the Company
continues to exercise such reasonable best efforts after written notice
thereof from the Purchaser to the Company, the Purchaser may not terminate
this Agreement under this Section 11.01(a);
(b) by the Company upon a material breach of any representation,
warranty, covenant or agreement on the part of the Purchaser set forth in
this Agreement, or if any representation or warranty of the Purchaser shall
have become untrue in any material respect, in either case such that the
conditions set forth in Section 9.02 would not be satisfied; provided,
--------
however, that, if such breach is curable by the Purchaser through the
-------
exercise of its reasonable best efforts and the Purchaser continues to
exercise such reasonable best efforts after written notice thereof from the
Company to the Purchaser, the Company may not terminate this Agreement
under this Section 11.01(b);
(c) by the Purchaser or the Company if this Agreement shall fail to
receive the requisite affirmative vote for approval at the Company
Shareholders' Meeting;
(d) by the Company or the Purchaser if this Agreement and the
issuance of shares of Purchaser Common Stock pursuant to the terms of the
Merger shall fail to receive the requisite affirmative vote for approval at
the Purchaser Stockholders' Meeting;
(e) by either the Company or the Purchaser if the Closing shall not
have occurred by June 1, 2001; provided, however, that the right to
-------- -------
terminate this Agreement under this Section 11.01(e) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
shall have been the cause of, or shall have resulted in, the failure of the
Closing to occur on or prior to such date;
(f) by either the Purchaser or the Company in the event that any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and nonappealable; or
(g) by the mutual written consent of the Company and the Purchaser.
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SECTION 11.02. Effect of Termination. In the event of termination of
---------------------
this Agreement as provided in Section 11.01, this Agreement shall forthwith
become void and there shall be no liability on the part of either party hereto
except (a) as set forth in Sections 6.03 and 13.02, (b) that nothing herein
shall relieve either party from liability for any willful breach of this
Agreement, (c) that upon the termination of this Agreement by the Company or the
Purchaser pursuant to Section 11.01(d), the Purchaser shall pay the Company a
fee of $12,600,000 and (d) that, upon termination of this Agreement by the
Company or the Purchaser pursuant to Section 11.01(c), the Company shall pay the
Purchaser a fee of $12,600,000.
SECTION 11.03. Waiver. Either party to this Agreement may (a) extend
------
the time for the performance of any of the obligations or other acts of the
other party, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.
ARTICLE XII
SHAREHOLDER REPRESENTATIVE
SECTION 12.01. Designation. Subject to the terms and conditions of
-----------
this Article XII, Goelet, LLC is designated as the representative of the
Shareholders (the "Shareholder Representative") by each Shareholder to serve,
--------------------------
and the Purchaser hereby acknowledges that the Shareholder Representative shall
serve, as the sole representative of the Shareholders from and after the
Effective Time with respect to the matters set forth in this Agreement, such
service to be without compensation except for the reimbursement of out-of-pocket
expenses and indemnification specifically provided herein. The Shareholder
Representative has accepted such designation as of the date hereof.
Notwithstanding anything to the contrary contained in this Agreement, the
Shareholder Representative shall have no duties or responsibilities except those
expressly set forth herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on behalf of any
Shareholder shall otherwise exist against the Shareholder Representative.
SECTION 12.02. Authority. Each of the Shareholders, by executing this
---------
Agreement, will and hereby does, effective as of the Effective Time, irrevocably
appoint the Shareholder Representative as the agent, proxy and attorney-in-fact
for such Shareholder for all purposes of this Agreement, including full power
and authority on such Shareholder's behalf (a) to execute and deliver to the
Purchaser the Registration Rights Agreement and the Standstill and Voting
Agreement, (b) to take all actions which the Shareholder Representative
considers reasonably necessary or desirable in connection with the defense,
pursuit or settlement of any determinations relating to any claims for
indemnification pursuant to Article X, including to sue, defend, negotiate,
settle and compromise any such claims for indemnification made by or against,
and other disputes with, the Purchaser or the Purchaser Indemnified Persons
pursuant
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to this Agreement or any of the agreements or transactions contemplated hereby;
(c) to engage and employ agents and representatives (including accountants,
legal counsel and other professionals) and to incur such other expenses as the
Shareholder Representative shall deem necessary or prudent in connection with
the administration of the foregoing; (d) to accept and receive notices to the
Shareholders pursuant to this Agreement; and (e) to take all other actions and
exercise all other rights which the Shareholder Representative (in his sole
discretion) considers necessary or appropriate in connection with this
Agreement. Each of the Shareholders, by executing this Agreement, agrees that
such agency and proxy are coupled with an interest, and are therefore
irrevocable without the consent of the Shareholder Representative and shall
survive the death, incapacity, bankruptcy, dissolution or liquidation of any
Shareholder. All decisions and acts by the Shareholder Representative shall be
binding upon all of the Shareholders, and no Shareholder shall have the right to
object, dissent, protest or otherwise contest the same.
SECTION 12.03. Reliance by Third Parties on the Shareholder
--------------------------------------------
Representative's Authority. The Shareholder Representative is authorized to act
- --------------------------
on the Shareholders' behalf and, notwithstanding any dispute or disagreement
among the Shareholders and the other parties hereto, shall be entitled to rely
on any and all action taken by the Shareholder Representative without any
liability to, or obligation to inquire of, any of the Shareholders even if such
party shall be aware of any actual or potential dispute or disagreement among
the Shareholders. Each of the other parties hereto is expressly authorized to
rely on the genuineness of the signature of the Shareholder Representative and,
upon receipt of any writing which reasonably appears to have been signed by the
Shareholder Representative, the other parties hereto may act upon the same
without any further duty of inquiry as to the genuineness of the writing.
SECTION 12.04. Exculpation and Indemnification. Neither the
-------------------------------
Shareholder Representative nor any agent employed by him shall be liable to any
Shareholder relating to the performance of his duties under this Agreement for
any errors in judgment, negligence, oversight, breach of duty or otherwise,
except to the extent it is finally determined in a court of competent
jurisdiction by clear and convincing evidence that the actions taken or not
taken by the Shareholder Representative constituted fraud or were taken or not
taken in bad faith. The Shareholder Representative shall be indemnified and held
harmless by the Shareholders against all Losses paid or incurred in connection
with any action, suit, proceeding or claim to which the Shareholder
Representative is made a party by reason of the fact that he was acting as the
Shareholder Representative pursuant to this Agreement; provided, however, that
-------- -------
the Shareholder Representative shall not be entitled to indemnification
hereunder to the extent it is finally determined in a court of competent
jurisdiction that the actions taken or not taken by the Shareholder
Representative constituted fraud or were taken or not taken in bad faith. The
Shareholder Representative shall be protected in acting upon any notice,
statement or certificate believed by him to be genuine and to have been
furnished by the appropriate person and in acting or refusing to act in good
faith on any matter.
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ARTICLE XIII
GENERAL PROVISIONS
SECTION 13.01. Survival of Representations and Warranties. (a) The
------------------------------------------
representations, warranties and agreements in this Agreement and in any
certificate delivered pursuant hereto shall survive the Effective Time for a
period of 12 months, provided, however, that Section 4.19 shall survive until
-------- -------
the close of business on the applicable statute of limitations with respect to
the Tax Liabilities in question (giving effect to any waiver, mitigation or
extension thereof).
(b) The Purchaser acknowledges and agrees (and, upon the occurrence
of the Closing, shall be deemed to have acknowledged and agreed as of the
Closing Date) that it (i) has made its own inquiry and investigation into, and,
based thereon, has formed an independent judgment concerning, the Company and
the Company Subsidiaries, (ii) has been furnished with or given adequate access
to such information about the Company and the Company Subsidiaries as it has
requested and (iii) except as provided for pursuant to this Agreement, will not
assert any claim against any of the Company's or any Company Subsidiaries'
directors, officers, employees, agents, stockholders, affiliates, consultants,
investment bankers or representatives, or hold any such Person liable for any
inaccuracies, misstatements or omissions with respect to information furnished
by the Company, any Company Subsidiary or any such Person concerning the Company
and the Company Subsidiaries.
SECTION 13.02. Expenses. All costs and expenses, including, without
--------
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 13.03. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
13.03):
(a) if to the Company:
NORIC Corporation
c/o Goelet LLC
425 Park Avenue
New York, NY 10022
Telecopy: (212) 588-9499
Attention: Robert Kiley
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with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: (212) 848-7179
Attention: Whitney D. Pidot, Esq.
(b) if to the Purchaser:
Pogo Producing Company
5 Greenway Plaza, Suite 2700
P.O. Box 2504
Houston, Texas 77252-2504
Telecopy: (713) 297-4970
Attention: Gerald A. Morton, Vice President-Law and
Corporate Secretary
with a copy to:
Baker Botts, L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002
Telecopy: (713) 229-1522
Attention: Stephen A. Massad
(c) If to any Shareholder, at the address specified below such
person's name on the signature pages to this Agreement or in the relevant
Joinder Agreement.
SECTION 13.04. Public Announcements. No party to this Agreement shall
--------------------
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated hereby, or otherwise
communicate with any news media without the prior consent of the other party,
unless required by law or stock exchange rule, and the parties shall cooperate
as to the timing and contents of any such press release or public announcement.
SECTION 13.05. Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 13.06. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as
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possible in a mutually acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the fullest
extent possible.
SECTION 13.07. Entire Agreement. This Agreement constitutes the
----------------
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
SECTION 13.08. Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by operation of law
or otherwise without the prior written consent of the parties hereto, which
consent may be granted or withheld in the sole discretion of the 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. Notwithstanding anything contained in this Agreement to the
contrary, except for the provisions of Articles III, VII, VIII and X
(collectively, the "Third Party Provisions"), nothing in this Agreement, express
----------------------
or implied, is intended to confer on any Person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement. The Third Party Provisions may
be enforced by the beneficiaries thereof.
SECTION 13.09. Amendment. This Agreement may not be amended or
---------
modified except (a) by an instrument in writing signed by each of, or on behalf
of each of, the parties or (b) by a waiver in accordance with Section 11.03.
SECTION 13.10. Governing Law; Forum. Except to the extent that the
--------------------
laws of the State of Delaware are applicable to the internal affairs of the
Purchaser or mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State. Any
dispute or controversy arising under or in connection with this Agreement that
cannot be mutually resolved by the parties hereto shall be settled exclusively
by arbitration in New York, New York, United States of America, before one
arbitrator of exemplary qualifications and stature, who shall be selected
jointly by the Purchaser and the Company or (after the Effective Time) the
Shareholder Representative, or, if the Purchaser and the Company or (after the
Effective Time) the Shareholder Representative, cannot agree on the selection of
the arbitrator, shall be selected by the American Arbitration Association from
its Large and Complex Cases Panel; provided that any arbitrator selected by the
--------
American Arbitration Association shall not, without the consent of the parties
hereto, be affiliated with the Purchaser, the Company, the Shareholders or any
of their respective affiliates. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. The arbitrator's award shall be issued
in writing.
SECTION 13.11. Counterparts. This Agreement may be executed and
------------
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement.
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SECTION 13.12. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
[The Remainder of This Page is Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed by their respective officers thereunto duly authorized
and each Significant Shareholder has executed this Agreement, in each case as of
the date first written above.
POGO PRODUCING COMPANY
By: /s/ Paul G. Van Wagenen
_________________________________________
Name: Paul G. Van Wagenen
Title: Chairman, President and Chief
Executive Officer
79
NORIC CORPORATION
By: /s/ Robert W. Kiley
_____________________________________
Name: Robert W. Kiley
Title: President and Chief Operating Officer
By: /s/ Mark Rosenbaum
_____________________________________
Name: Mark Rosenbaum
Title: Chief Financial Officer and Treasurer
80
SIGNIFICANT SHAREHOLDERS:
TRUSTEES OF THE TRUST U/W TRUSTEES OF THE TRUST U/W
ROBERT WALTON GOELET F/B/O ROBERT WALTON GOELET F/B/O
BEATRICE G. MANICE ROBERT G. GOELET
/s/ Robert G. Goelet /s/ Robert G. Goelet
_______________________________ _________________________________
Robert G. Goelet, as Trustee Robert G. Goelet, as Trustee
/s/ Philip Goelet /s/ Alexandra C. Goelet
_______________________________ _________________________________
Philip Goelet, as Trustee Alexandra C. Goelet, as Trustee
/s/ Edmond de La Haye Jousselin /s/ Philip Goelet
_______________________________ _________________________________
Edmond de La Haye Jousselin, Philip Goelet, as Trustee
as Trustee
/s/ John H. Manice /s/ Edmond de La Haye Jousselin
_______________________________ _________________________________
John H. Manice, as Trustee Edmond de La Haye Jousselin,
as Trustee
_______________________________
Pamela Manice, as Trustee
TRUSTEES OF THE TRUST U/W
ROBERT WALTON GOELET F/B/O
JOHN GOELET
/s/ Robert G. Goelet
_______________________________
Robert G. Goelet, as Trustee
/s/ Christopher Goelet
_______________________________
Christopher Goelet, as Trustee
/s/ Philip Goelet
_______________________________
Philip Goelet, as Trustee
/s/ Edmond de La Haye Jousselin
_______________________________
Edmond de La Haye Jousselin,
as Trustee
/s/ Robert S. Rich
_______________________________
Robert S. Rich, as Trustee
81
TRUSTEES OF THE TRUST U/A TRUSTEES OF THE TRUST U/A
DATED August 26, 1930 F/B/O DATED August 26, 1930 F/B/O
BEATRICE G. MANICE ROBERT G. GOELET
/s/ Robert G. Goelet /s/ Alexandra C. Goelet
_______________________________ _______________________________
Robert G. Goelet, as Trustee Alexandra C. Goelet, as Trustee
/s/ Philip Goelet /s/ Philip Goelet
_______________________________ _______________________________
Philip Goelet, as Trustee Philip Goelet, as Trustee
/s/ Edmond de La Haye Jousselin /s/ Edmond de La Haye Jousselin
_______________________________ _______________________________
Edmond de La Haye Jousselin, Edmond de La Haye Jousselin,
as Trustee as Trustee
/s/ John H. Manice
_______________________________
John H. Manice, as Trustee
_______________________________
Pamela Manice, as Trustee
TRUSTEES OF THE TRUST U/A
DATED December 18, 1931
F/B/O JOHN GOELET
/s/ Robert G. Goelet
_______________________________
Robert G. Goelet, as Trustee
/s/ Christopher Goelet
_______________________________
Christopher Goelet, as Trustee
/s/ Philip Goelet
_______________________________
Philip Goelet, as Trustee
/s/ Edmond de La Haye Jousselin
_______________________________
Edmond de La Haye Jousselin,
as Trustee
/s/ Robert S. Rich
_______________________________
Robert S. Rich, as Trustee
82
TRUSTEES OF THE TRUST U/A TRUSTEES OF THE TRUST U/A
DATED JULY 27, 1935 F/B/O DATED JULY 27, 1935 F/B/O
BEATRICE G. MANICE ROBERT G. GOELET
/s/ Robert G. Goelet /s/ Alexandra C. Goelet
_______________________________ ________________________________
Robert G. Goelet, as Trustee Alexandra C. Goelet, as Trustee
/s/ Philip Goelet /s/ Philip Goelet
_______________________________ ________________________________
Philip Goelet, as Trustee Philip Goelet, as Trustee
/s/ Edmond de La Haye Jousselin /s/ Edmond de La Haye Jousselin
_______________________________ ________________________________
Edmond de La Haye Jousselin, Edmond de La Haye Jousselin,
as Trustee as Trustee
/s/ John H. Manice
_____________________________
John H. Manice, as Trustee
_____________________________
Pamela Manice, as Trustee
TRUSTEES OF
TRUSTEES OF THE TRUST U/A TRUSTEES OF THE TRUST U/A
DATED JULY 27, 1935 F/B/O DATED JULY 27, 1935 F/B/O
FRANCIS GOELET JOHN GOELET
/s/ Robert G. Goelet /s/ Robert G. Goelet
_____________________________ ________________________________
Robert G. Goelet, as Trustee Robert G. Goelet, as Trustee
/s/ Philip Goelet /s/ Christopher Goelet
_____________________________ ________________________________
Philip Goelet, as Trustee Christopher Goelet, as Trustee
/s/ Edmond de La Haye Jousselin /s/ Philip Goelet
_____________________________ ________________________________
Edmond de La Haye Jousselin, Philip Goelet, as Trustee
as Trustee
/s/ Edmond de La Haye Jousselin
________________________________
Edmond de La Haye Jousselin,
as Trustee
/s/ Robert S. Rich
________________________________
Robert S. Rich, as Trustee
83
/s/ Robert G. Goelet
________________________________
Name: Robert G. Goelet
/s/ Philip Goelet
________________________________
Name: Philip Goelet
/s/ Christopher Goelet
________________________________
Name: Christopher Goelet
/s/ Gilbert Kerlin
________________________________
Name: Gilbert Kerlin
WINDWARD OIL & GAS CORPORATION
By: /s/ Gilbert Kerlin
____________________________
Name: Gilbert Kerlin
Title: President